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SECTION I: GENERAL

DEFINITIONS AND ABBREVIATIONS

Term Description “We”, “us”, “our”, “the Issuer”, “the Company”, “our Company” or “YOU”

Unless the context otherwise indicates or implies, refers to YOU Broadband & Cable India Limited on a standalone basis.

Conventional and General Terms/ Abbreviations

Term Description

Act or Companies Act Companies Act, 1956 and amendments made from time to time AGM Annual General Meeting

AS Accounting Standards issued by the Institute of Chartered Accountants of India

BIS Bureau of Indian Standards

BSE Bombay Stock Exchange Limited

CAGR Compounded Annual Growth Rate

CDSL Central Depository Services (India) Limited

CESTAT Central Excise and Service Tax Appellate Tribunal

Companies Act Companies Act, 1956 as amended from time to time

Depositories NSDL and CDSL Depositories Act The Depositories Act, 1996 as amended from time to time DER Debt Equity Ratio Diluted EPS Diluted Earning Per Share DIN Director Identification Number DP/ Depository Participant A depository participant as defined under the Depositories Act, 1996 EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation

ECS Electronic Clearing Service

EGM Extraordinary General Meeting

EPS Earning Per Share

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act, 1999 read with rules and regulations thereunder and amendments thereto

FEMA Regulations FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 and amendments thereto

FII(s) Foreign Institutional Investors as defined under SEBI (Foreign Institutional Investor) Regulations, 1995 registered with SEBI under applicable laws in India

Financial Year/ Fiscal/fiscal/ FY

Period of twelve months ended March 31 of that particular year

FIPB Foreign Investment Promotion Board, Ministry of Finance, Government of India

FVCI Foreign Venture Capital Investor registered under the Securities and Exchange Board of India (Foreign Venture Capital Investor) Regulations, 2000

GDP Gross Domestic Product

GoI/Government Government of India

HUF Hindu Undivided Family

IFRS International Financial Reporting Standards

Income Tax Act The Income Tax Act, 1961, as amended from time to time

INR/Rs. Indian Rupees

IT Information Technology

IT Department Income Tax Department

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Term Description

Indian GAAP Generally Accepted Accounting Principles in India IPO Initial Public Offering

JV Joint Venture

JVA Joint Venture Agreement

Mn / mn Million MoU Memorandum of Understanding NA Not Applicable

NAV Net Asset Value

NM Not Meaningful

NEFT National Electronic Fund Transfer

NOC No Objection Certificate

NR Non Resident NRE Account Non Resident External Account

NRI Non Resident Indian, is a person resident outside India, as defined under FEMA and the FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000

NRO Account Non Resident Ordinary Account

NSDL National Securities Depository Limited

NSE The National Stock Exchange of India Limited

OCB A company, partnership, society or other corporate body owned directly or indirectly to the extent of up to 60% by NRIs including overseas trusts in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly and which was in existence on October 3, 2003 and immediately before such date was eligible to undertake transactions pursuant to the general permission granted to OCBs under the FEMA. OCBs are not allowed to invest in this Issue

p.a. per annum

PAN Permanent Account Number allotted under the Income Tax Act, 1961

PAT Profit After Tax

PBT Profit Before Tax

P/E Price by Earning Per Share

RBI The Reserve Bank of India

RoC The Registrar of Companies Maharashtra, Mumbai located at Everest, 100 Marine Drive, Mumbai 400 002

RoNW Return on Net Worth

Rs. Indian Rupees

RTGS Real Time Gross Settlement

SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992

SEBI Act Securities and Exchange Board of India Act 1992, as amended from time to time

SEBI ICDR Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended from time to time

SEBI Takeover Regulations

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended from time to time

Sec. Section

Securities Act US Securities Act, 1933, as amended

SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended from time to time

Stamp Act The Indian Stamp Act, 1899, as amended

State Government The government of a state of India

Stock Exchange(s) BSE and/ or NSE as the context may refer to

U.S. / USA / US United States of America

US GAAP Generally Accepted Accounting Principles in the United States of America

USD/ US$ / US Dollars United States Dollar

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Term Description

VCFs Venture Capital Funds as defined and registered with SEBI under the SEBI (Venture Capital Fund) Regulations, 1996, as amended from time to time

Issue Related Terms

Term Description

Allotment/Allot Unless the context otherwise requires, the allotment of Equity Shares pursuant to the Issue

Allottee A successful Bidder to whom the Equity Shares are Allotted

Anchor Investor A Qualified Institutional Buyer, applying under the Anchor Investor Portion with a minimum Bid of Rs.100 million.

Anchor Investor Bid/Issue Period

The date one day prior to the Bid/Issue Opening Date, on which Bidding by Anchor Investors shall open and shall be completed

Anchor Investor Issue Price

The final price at which Equity Shares will be issued and Allotted to Anchor Investors in terms of the Red Herring Prospectus and Prospectus, which price will be equal to or higher than the Issue Price but not higher than the Cap Price. The Anchor Investor Issue Price will be decided by our Company in consultation with the BRLM.

Anchor Investor Portion Up to 30% of the QIB Portion which may be allocated by the Company to Anchor Investors on a discretionary basis. One-third of the Anchor Investor Portion shall be reserved for domestic mutual funds, subject to valid Bids being received from domestic mutual funds at or above the price at which allocation is being done to Anchor Investors

Application Supported by Blocked Amount/ ASBA

An application, whether physical or electronic, used by a Bidder (other than QIBs) to make a Bid authorising a SCSB to block the Bid Amount in their specified bank account maintained with the SCSB

ASBA Bidder Any Bidder (other than a QIB) who intends to apply through ASBA ASBA Bid cum Application Form or ASBA BCAF

The form, whether physical or electronic, used by an ASBA Bidder to make a Bid, which will be considered as the application for Allotment for the purposes of the Red Herring Prospectus and the Prospectus

Banker(s) to the Issue/ Escrow Collection Bank(s)

The banks which are clearing members and registered with SEBI as Banker to the Issue with whom the Escrow Account will be opened, in this case being [●]

Basis of Allotment The basis on which Equity Shares will be Allotted to Bidders under the Issue and which is described in “Issue Procedure” beginning on page 209 of this Draft Red Herring Prospectus

Bid An indication to make an offer during the Bidding Period (including, in the case of Anchor Investors, the Anchor Investor Bid/Issue Period) by a Bidder pursuant to submission of a Bid cum Application Form to subscribe to the Equity Shares of our Company at a price within the Price Band, including all revisions and modifications thereto, as applicable and in accordance with the SEBI ICDR Regulations. For the purposes of ASBA Bidders, it means an indication to make an offer during the Bidding Period by a Bidder (other than QIBs) to subscribe for the Equity Shares of the Company.

Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form and which is payable by the Bidder (other than an Anchor Investor) on submission of the Bid in the Issue.

Bid/Issue Closing Date The date after which the Syndicate and SCSB will not accept any Bids for the Issue, which shall be notified in an English national newspaper, a Hindi national newspaper and a Marathi newspaper, each with wide circulation (except for the Anchor Investors)

Bid/Issue Opening Date The date on which the Syndicate and SCSB shall start accepting Bids for the Issue, which shall be the date notified in an English national newspaper, a Hindi national newspaper and a Marathi newspaper, each with wide circulation except for the Anchor Investors

Bid cum Application Form The form used by a Bidder to make a Bid and which will be considered as the application for Allotment for the purposes of the Red Herring Prospectus and the Prospectus

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form and the ASBA Bid-cum-Application Form

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Term Description

Bidding/Issue Period The period between the Bid/ Issue Opening Date and the Bid/ Issue Closing Date inclusive of both days and during which prospective Bidders (excluding Anchor Investors) can submit their Bids, including any revisions thereof

Book Building Process/ Method

Book building route as provided in Schedule XI of the SEBI ICDR Regulations, in terms of which this Issue is being made

BRLM/Book Running Lead Manager/Edelweiss

Edelweiss Capital Limited

Business Day Any day, other than Saturday and Sunday, on which commercial banks are open for business in Mumbai, India.

CAN/Confirmation of Allocation Note

Note or advice or intimation of allocation of Equity Shares sent to the Bidders who have been allocated Equity Shares after discovery of the Issue Price in accordance with the Book Building Process including revision thereof. In relation to Anchor Investors, the note or advice or intimation of allocation of Equity Shares sent to the successful Anchor Investors who have been allocated Equity Shares after discovery of the Anchor Investor Issue Price, including any revisions thereof.

Cap Price The higher end of the Price Band, above which the Issue Price will not be finalised and above which no Bids will be accepted

Controlling Branches Such branches of the SCSB which coordinate with the BRLM, the Registrar to the Issue and the Stock Exchanges

Cut-off Price Issue Price, finalised by our Company in consultation with the BRLM. Retail Individual Bidders and Eligible Employees whose Bid Amount does not exceed Rs.100,000 are entitled to bid at the Cut Off Price, for a Bid Amount not exceeding Rs.100,000. QIBs and Non-Institutional Bidders are not entitled to bid at the Cut-Off Price.

Designated Branches Such branches of the SCSBs which shall collect the ASBA Bid cum Application Form used by ASBA Bidders and a list of which is available on http://www.sebi.gov.in

Designated Date The date on which funds are transferred from the Escrow Account to the Public Issue Account or the amount blocked by the SCSB is transferred from the bank account of the ASBA Bidder to the Public Issue Account, as the case may be, after the Prospectus is filed with the RoC, following which the Board of Directors shall Allot Equity Shares to successful Bidders

Designated Stock Exchange

[●]

DP ID Depository Participant’s Identity Draft Red Herring Prospectus or DRHP

This Draft Red Herring Prospectus dated March 30, 2010 issued in accordance with Section 60B of the Companies Act, which does not contain complete particulars of the price at which the Equity Shares are issued and the size (in terms of value) of the Issue

Eligible Employee All or any of the following: (a) a permanent and full-time employee of our Company as of the date of the Red Herring Prospectus and based and working in India or abroad as on the date of submission of the Bid cum Application Form; and (b) a Director, whether whole-time or part-time, of the Company as of the date of the Red Herring Prospectus and based in India as on the date of submission of the Bid cum Application Form and does not include Promoter and an immediate relative of the Promoter (i.e. any spouse of that person, or any parent, brother, sister or child of the person or of the spouse) For the purpose of this definition, an employee of the Company who is recruited against regular vacancy but is on probation as on the date of submission of the Bid cum Application Form will also be deemed as a permanent employee.

Eligible NRI NRIs from jurisdictions outside India where it is not unlawful to make an issue or invitation under the Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to subscribe to the Equity Shares Allotted herein

Employee Reservation Portion

The portion of the Issue aggregating upto Rs. 15 million, available for allocation to the Eligible Employees.

Equity Shares Equity shares of our Company of face value of Rs.10/- each, unless otherwise specified

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Term Description

Escrow Account Account opened with the Escrow Collection Bank(s) for the Issue and in whose favour the Bidder (including Anchor Investor and excluding the ASBA Bidders) will issue cheques or drafts in respect of the Bid Amount when submitting a Bid

Escrow Agreement Agreement to be entered into by our Company, the Registrar to the Issue, the BRLM, the Syndicate Members and the Escrow Collection Bank(s) for collection of the Bid Amounts and where applicable, refunds of the amounts collected to the Bidders (excluding the ASBA Bidders) on the terms and conditions thereof

Escrow Collection Bank [●]

First Bidder The Bidder whose name appears first in the Bid cum Application Form or Revision Form or the ASBA Bid cum Application Form

Floor Price The lower end of the Price Band, at or above which the Issue Price will be finalised and below which no Bids will be accepted

Foreign Investment Limits Shareholding of FIIs in aggregate not exceeding 24% of the total issued equity share capital of our Company and individual shareholding of each FII in our Company not exceeding 10% of the total paid up equity share capital and the total foreign shareholding in our Company not exceeding 49% of the total paid up equity share capital of our Company

Issue Public issue of [•] Equity Shares of Rs.10 each of YOU Broadband & Cable India Limited for cash at a price of Rs.[•] per Equity Share (including a share premium of Rs.[•] per Equity Share) aggregating up to Rs.3,600 million

Issue Price The final price at which Equity Shares will be issued and allotted in terms of the Red Herring Prospectus and the Prospectus. The Issue Price will be decided by our Company in consultation with the BRLM on the Pricing Date

Issue Proceeds The proceeds of the Issue that are available to the Company

Mutual Fund Portion 5% of the QIB Portion (excluding the Anchor Investor Portion) or such number of Equity Shares of Rs.10 each aggregating to Rs.[•], (assuming the QIB Portion is for 50% of the Net Issue Size) available for allocation to Mutual Funds only, out of the QIB Portion on a proportionate basis

Mutual Funds A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996

Net Issue Issue less the Employee Reservation Portion, consisting of [●] Equity Shares to be Allotted pursuant to this Issue

Net Proceeds The Issue Proceeds less the Issue expenses. For further information about use of the Issue Proceeds and the Issue expenses see “Objects of the Issue” on page 39 of this Draft Red Herring Prospectus

Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid for Equity Shares for an amount more than Rs.100,000 (but not including NRIs other than eligible NRIs) including sub-accounts of FIIs registered with SEBI which are foreign corporate or foreign individuals

Non-Institutional Portion The portion of the Issue being not less than [●] Equity Shares of Rs.10 aggregating to Rs. [●] million each available for allocation to Non-Institutional Bidders

Non-Resident A person resident outside India, as defined under FEMA and includes a non-resident Indian

Pre-IPO Placement A pre-issue placement of up to 90,000,000 Equity Shares for cash aggregating upto Rs. 900 million with certain investors, at the sole discretion of the Company. If undertaken, the Pre-IPO Placement shall be completed by the Company, prior to the filing of the Red Herring Prospectus with the Registrar of Companies Maharashtra, Mumbai. If the Pre-IPO Placement is completed, the Issue size offered to the public would be reduced to the extent of such Pre-IPO Placement, subject to minimum public Issue size being at least 25% of our post-Issue share capital.

Price Band Price band of a minimum price (floor of the price band) of Rs.[•] and the maximum price (cap of the price band) of Rs.[•] and includes revisions thereof. The price band will be decided by the Company in consultation with the Book Running Lead Manager and advertised in the English language, in the Hindi language and in the Marathi language newspapers with wide circulation at least two working days prior to the Bid/Issue Opening Date.

Pricing Date The date on which our Company in consultation with the BRLM finalizes the Issue Price

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Term Description

Preference Shares Non-cumulative Redeemable Preference Shares of our Company of Rs.10 each, unless otherwise specified.

Prospectus The Prospectus to be filed with the RoC in accordance with Section 60 of the Companies Act, containing, inter alia, the Issue Price that is determined at the end of the Book Building process, the size of the Issue and certain other information

Public Issue Account Account opened with the Bankers to the Issue to receive monies from the Escrow Account on the Designated Date

QIB Portion The portion of the Issue being not less than [●] Equity Shares of Rs.10 each aggregating to Rs.[•] million, to be allotted to QIBs

Qualified Institutional Buyers or QIBs

Public financial institutions specified in Section 4A of the Companies Act, FIIs (and their sub-accounts registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual), scheduled commercial banks, mutual funds registered with SEBI, multilateral and bilateral development financial institutions, FVCIs registered with SEBI, venture capital funds registered with SEBI, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with a minimum corpus of Rs. 250 million, pension funds with a minimum corpus of Rs. 250 million, insurance funds set up and managed by the army, navy and air force of the Union of India and the National Investment Fund set up by resolution F. No. 2/3/2005-DD-II dated November 23, 2005 of the GoI, published in the Gazette of India

Refund Account The account opened with Escrow Collection Bank(s), from which refunds, if any, of the whole or part of the Bid Amount (excluding to the ASBA Bidders) shall be made.

Refund Banker(s) [•] Refunds through electronic transfer of funds

Refunds through electronic transfer of funds means refunds through ECS, Direct Credit, RTGS or the ASBA process as applicable

Registrar to the Issue Registrar to the Issue, in this case being Karvy Computershare Private Limited

Retail Individual Bidder(s) Individual Bidders (including HUFs applying through their Karta and eligible NRIs) who have not Bid for Equity Shares for an amount more than Rs.100,000 in any of the bidding options in the Issue

Retail Portion The portion of the Issue being not less than [•]Equity Shares of Rs.10 each aggregating to Rs.[•] million available for allocation to Retail Individual Bidder(s)

Revision Form The form used by the Bidders, excluding ASBA Bidders, to modify the quantity of Equity Shares or the Bid Price in any of their Bid cum Application Forms or any previous Revision Form(s)

RHP or Red Herring Prospectus

The Red Herring Prospectus issued in accordance with Section 60B of the Companies Act, which does not have complete particulars of the price at which the Equity Shares are offered and the size of the Issue. The Red Herring Prospectus will be filed with the RoC at least three (3) days before the Bid Opening Date and will become a Prospectus upon filing with the RoC after the Pricing Date

Self Certified Syndicate Bank or SCSB

The Banks which are registered with SEBI under SEBI (Bankers to an Issue) Regulations, 1994 and offers services of ASBA, including blocking of bank account and a list of which is available on http://www.sebi.gov.in

Stock Exchanges BSE and NSE

Syndicate The BRLM and the Syndicate Members collectively

Syndicate Agreement The agreement to be entered into between the Syndicate and our Company in relation to the collection of Bids in this Issue (excluding Bids from the ASBA Bidders)

Syndicate Members [•]

TRS/ Transaction Registration Slip

The slip or document issued by a member of the Syndicate or the SCSB to the Bidder as proof of registration of the Bid

Underwriters The BRLM and the Syndicate Members

Underwriting Agreement The agreement among the Underwriters and our Company to be entered into on or after the Pricing Date

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Company Related Terms

Term Description Articles/Articles of Association

The Articles of Association of our Company

Auditors The statutory auditors of our Company, M/s. B S R & Associates, Chartered Accountants

Board of Directors/Board The board of directors of our Company or a committee constituted thereof

CVCIEL Citigroup Venture Capital International Ebene Limited

CVCIGPML Citigroup Venture Capital International Growth Partnership Mauritius Limited

CVCIJL Citigroup Venture Capital International Jersey Limited

CVCIML Citigroup Venture Capital International Mauritius Limited

Director(s) Director(s) of our Company, unless otherwise specified

DOPL Digital Outsourcing Private Limited and its subsidiaries and associate company on a consolidated basis where relevant

DOPL Acquisition Proposed acquisition of additional equity shares of DOPL over and above our current shareholding of 36.24% in of the paid-up equity share capital of DOPL by our Company

DOPL Selling Shareholders Mrs. Rambhaben Ukabhai, Mrs. Gita T. Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti

DOPL Share Subscription and Purchase Agreement

Share Subscription and Purchase Agreement dated March 30, 2010 entered into between Mrs. Rambhaben Ukabhai, Mrs. Gita T. Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti through their representative Mr Jitendra R Tanti and our Company

Group Companies Means those companies, firms and ventures promoted by our Promoters, irrespective of whether such entities are covered under section 370(1)(B) of the Companies Act and disclosed in the section “Our Promoters and Group Companies” on page 119 of this Draft Red Herring Prospectus

KMP Key Managerial Personnel Memorandum/Memorandum of Association

The Memorandum of Association of our Company.

Promoters Mr. Eyyuni Venkat Srinivas Chakravarthy, You Telecom (Mauritius) Limited, and Citigroup Venture Capital International Growth Partnership Mauritius Limited

Promoter Group Includes such persons and entities constituting our promoter group in terms of Regulation 2(zb) of the SEBI ICDR Regulations

Registered Office The registered office of our Company located at Plot No. 54, Marol Co-operative Industrial Estate, Makwana, Andheri East, Mumbai, Maharashtra – 400059

Scheme of Amalgamation The scheme of arrangement and amalgamation pursuant to the provisions under Sections 391 and 394 of the Companies Act, between the erstwhile You Telecom India Private Limited and our Company, as approved by Hon’ble High Court of Bombay vide its Order dated April 11, 2007.

Scheme of Capital Reduction The scheme of reduction of the issued, subscribed and paid up share capital of our Company from Rs.3,913,220,040 to Rs.2,308,611,910, reduction of securities premium account from Rs.171,017,920 to nil and reduction of capital reserve account from Rs.60,528,942 to nil pursuant to the provisions of Sections 78, 100 to 103 of the Companies Act, as approved by the Hon’ble High Court of Bombay vide its order dated December 18, 2009 and supplementary order dated January 28, 2010, as effective from March 31, 2009.

YTML You Telecom (Mauritius) Limited

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Technical/Industry Related Terms

Term Description

3 G International Mobile Telecommunications-2000 (IMT-2000)', better known as 3G or 3rd Generation, is a family of standards for mobile telecommunications defined by the International Telecommunication Union

ADSL Asymmetric Digital Subscriber Line

ARPU Average Revenue Per User

Bandwidth A Measure of data transmission rate; the maximum amount of information (bits/second) that can be transmitted along a channel

C&S Cable and Satellite

Cable Broadband Broadband Internet access using cable modem

CAGR Compounded Annual Growth Rate

CAS Conditional Access System

CAT5 Category 5 cable which is a twisted pair high signal cable used in Telecom

CDMA Code Division Multiple Access

CMTS Cable Modem Termination System

Dark Fiber Unused optical fibers, available for lease to other service providers

DNS Domain Name Server

DOCSIS Data Over Cable Service Interface Specifications

DoT Department of Telecommunications.

DSL Digital Subscriber Line

DSLAM Digital Subscriber Line Access Multiplexer

DTH Direct To Home.

DVD Digital Video Disc Or Digital Versatile Disk

DVR Digital Video Recorder

EPG Electronic Programme Guide

FICCI-KPMG Report, 2009 FICCI-KPMG Media & Entertainment Industry Report, 2009

GSM Global System for Mobile communications

HFC Hybrid Fibre Co-Axial.

HITS Head end in the Sky.

IPTV Internet Protocol Television.

IRD Integrated Receiver Descrambler/Decoder

ISP Internet Service Provider.

Kbps Kilo bits per second

LCO Local Cable Operator

LED Light Emitting Diode

MB Mega Byte

Mbps Mega bits per second

MHz Mega Hertz

MIB Ministry of Information and Broadcasting

Modem Modulator-demodulator

MPA report Report The Media Partners Asia Report titled Asia Pacific Pay TV & Broadband Markets 2009.

MSO Multi Systems Operator

Non-C&S Non-Cable and Satellite

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Term Description

One Way Network Represents a HFC network where a service provider can offer only signals on the downstream path on its cable network.

QAM Quadrature Amplitude Moderation

RF Radio Frequency

SEC A & SEC B Categories falling under a five-tiered socioeconomic classification ("SEC") scale, which groups Indian households according to the occupation and educational profile of the main wage earner, ranging from SEC A, SEC B, SEC C, SEC D to SEC E. SEC A and SEC B comprise the top two segments based on this socioeconomic classification.

STB Set Top Box

Starter Pack Product of the Company which is used to acquire new customers which offers installation to the potential customer and limited trial usage

TDSAT Telecom Dispute Settlement & Appellate Tribunal

TRAI Telecom Regulatory Authority of India.

Two way Network Represents a HFC network where a service provider can offer signals on both the upstream and downstream paths on its cable network.

VOD Video on Demand

VoIP Voice over Internet Protocol

Wi Fi Wireless Fidelity – This term is used to describe a set of standards for devices that connect to a network using wireless technology

Wimax Worldwide Interoperability for Microwave Access, is a telecommunications technology that provides wireless transmission of data using a variety of transmission modes

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PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA Financial Data Unless indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our Company’s restated financial statements as of and for the years ended March 31, 2005, 2006, 2007, 2008 and 2009 and as of and for the six months ended September 30, 2009, prepared in accordance with Indian GAAP and the Companies Act, 1956 and restated in accordance with SEBI ICDR Regulations, as stated in the report of our Auditor, B S R & Associates, Chartered Accountants, and included in this Draft Red Herring Prospectus. Our fiscal/ financial year commences on April 1 and ends on March 31 of a particular year. Unless stated otherwise, references herein to a fiscal year (e.g., fiscal 2007) or a financial year or to “FY”, are to the year ended March 31 of a particular year. Our Company currently holds 36.24% of the paid-up equity share capital of our associate company Digital Outsourcing Private Limited. We have entered into agreements with certain other shareholders of Digital Outsourcing Private Limited for the acquisition of additional equity shares in Digital Outsourcing Private Limited. For further information, see “History and Certain Corporate Matters” beginning on page 101, "Objects of the Issue" on page 39, "Risk Factors - We have entered into various agreements in connection with the proposed acquisition of additional equity shares in Digital Outsourcing Private Limited. We may not be able to complete such proposed acquisitions which could affect our business strategy and results of operations" beginning on page xiv and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 130. We have also included in this Draft Red Herring Prospectus the restated standalone and consolidated financial statements of Digital Outsourcing Private Limited as of and for the years ended March 31, 2008 and 2009 and as of and for the six months ended September 30, 2009, together with the report thereon of B S R & Company, Chartered Accountants. See "Financial Statements of Digital Outsourcing Private Limited" beginning on page 129. In the Draft Red Herring Prospectus, any discrepancies in any table between the total and the sum of the amounts listed are due to rounding-off. There are significant differences between generally accepted accounting principles in India (Indian GAAP), International Financial Reporting Standards (IFRS) and generally accepted accounting principles in the United States of America (U.S. GAAP); accordingly, the degree to which the Indian GAAP financial statements included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices, Indian GAAP, the Companies Act and the SEBI ICDR Regulations. Any reliance by persons not familiar with Indian accounting practices, Indian GAAP, the Companies Act and the SEBI ICDR Regulations on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. Our Company has not attempted to explain these differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. Unless otherwise specified or the context otherwise requires, all references to “India” in this Draft Red Herring Prospectus are to the Republic of India, together with its territories and possessions and all references to the “US”, the “USA”, the “United States” or the “U.S.” are to the United States of America, together with its territories and possessions. Unless otherwise indicated in the Draft Red Herring Prospectus, all figures have been expressed in millions. Currency of Presentation All references to “Rupees” or “Rs.” or “INR” are to Indian Rupees, the official currency of the Republic of India. All references to “$”, “US$”, “USD”, “U.S.$”, “U.S. Dollar(s)” or “US Dollar(s)” are to United States Dollars, the official currency of the United States of America.

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Period Average Rate (Rs.) Closing Rate (Rs.)

For the period January 01, 2006- December 31, 2006

45.32 44.12

For the period January 01, 2007- December 31, 2007

41.36 39.44

For the period January 01, 2008- December 31, 2008

43.81 49.72

For the conversion of financial information of Promoter and Group Companies from USD to INR, we have used

average rate for items relating to Profit & Loss account and closing rate for items relating to Balance

Sheet(Source:www.oanda.com)

This Draft Red Herring Prospectus contains translations of certain US Dollar and other currency amounts into Indian Rupees that have been presented solely to comply with the requirements of Item VIII (G) of Part A to Schedule VIII of the SEBI ICDR Regulations. These translations should not be construed as a representation that those US Dollar or other currency amounts could have been, or can be converted into Indian Rupees, at any particular rate. Unless otherwise stated, our Company has in this Draft Red Herring Prospectus used a conversion rate of Rs.50.95 for one US Dollar, being the RBI reference rate as of December 31, 2009 (Source: RBI website at www.rbi.org/in/scripts/BS_PressReleaseDisplay.aspx). Such translations should not be considered as a representation that such U.S Dollar amounts have been, could have been or could be converted into Rupees at any particular rate, the rates stated above or at all. Industry and Market Data Unless stated otherwise, industry data used throughout this Draft Red Herring Prospectus has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although our Company believes that the industry data used in this Draft Red Herring Prospectus is reliable, neither we nor the BRLM have independently verified such information. Further, the extent to which the market data presented in this Draft Red Herring Prospectus is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data. There are no standard data gathering methodologies in the industry in which we conduct our business, and methodologies and assumptions may vary widely among different industry sources.

In accordance with SEBI ICDR Regulations, we have included in the section “Basis for Issue Price” on page 47 information relating to our peer group companies. Such information has been derived from publicly available sources and neither we nor the BRLM have independently verified such information.

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NOTICE TO INVESTORS

The Equity Shares have not been recommended by any US federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Draft Red Herring Prospectus. Any representation to the contrary is a criminal offence in the United States.

The Equity Shares have not been and will not be registered under the US Securities Act of 1933, as amended (“Securities Act”), and, unless so registered, may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act and referred to in this Draft Red Herring Prospectus as “U.S. QIBs”, for the avoidance of doubt, the term U.S. QIBs does not refer to a category of institutional investor defined under applicable Indian regulations and referred to in this Draft Red Herring Prospectus as “QIBs”), in transactions exempt from the registration requirements of the Securities Act and (b) outside the United States in compliance with Regulation S and the applicable laws of the jurisdiction where those offers and sales occur.

This Draft Red Herring Prospectus has been prepared on the basis that all offers of Equity Shares will be made pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the European Economic Area (“EEA”), from the requirement to produce a prospectus for offers of Equity Shares. The expression “Prospectus Directive” means Directive 2003/71/EC of the European Parliament and Council and includes any relevant implementing measure in each Relevant Member State (as defined below). Accordingly, any person making or intending to make an offer within the EEA of Equity Shares which are the subject of the placement contemplated in this Draft Red Herring Prospectus should only do so in circumstances in which no obligation arises for the Company or any of the Underwriters to produce a prospectus for such offer. None of the Underwriters and the Company has authorised, nor do they authorise, the making of any offer of Equity Shares through any financial intermediary, other than the offers relating to the Equity Shares contemplated in this Draft Red Herring Prospectus.

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FORWARD-LOOKING STATEMENTS

This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward-looking statements generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant statement.

These forward looking statements are based on our current plans and expectations. Actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, regulatory changes pertaining to the industries in India in which we have our businesses and our ability to respond to them, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic laws, regulations and taxes and changes in competition in our industry. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following:

i. Our inability to effectively manage our growth or to successfully implement our business plan and growth strategy;

ii. General economic and business conditions in India and other countries;

iii. Statutory and/or regulatory changes relating to telecommunications, media and broadcasting industry including the broadband industry and the cable television industry in India and our ability to respond to them;

iv. Our ability to successfully implement our strategy, our growth and expansion, subject to technological changes and our exposure to market risks that have an impact on our business activities or investments;

v. The occurrence of natural disasters or calamities;

vi. Change in political conditions in India;

vii. Foreign exchange rates, equity prices or other rates or prices; and

viii. The performance of the financial markets in India

For further discussion of factors that could cause our actual results to differ from our expectations, see “Risk Factors”, “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages xiv, 76 and 130 of this Draft Red Herring Prospectus. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither our Company, our Directors, nor any of the Underwriters nor any of their respective affiliates has any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof. In accordance with SEBI requirements our Company and the BRLM will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.

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SECTION II: RISK FACTORS

RISK FACTORS

An investment in Equity Shares involves a high degree of risk. You should carefully consider all the

information in this Draft Red Herring Prospectus, including the risks and uncertainties described below

and the sections "Business" and "Management's Discussion and Analysis on Financial Condition and

Results of Operations" beginning on pages 76 and 130, respectively, of this Draft Red Herring Prospectus,

before making an investment in the Equity Shares of our Company. The risks described in this section are

those that we consider to be the most significant to the offering of our Equity Shares. If any of the following

risks, or other risks that are not currently known or are now deemed immaterial, actually occur, our

business, results of operations and financial condition could suffer materially, the trading price of our

Equity Shares could decline, and all or part of your investment may be lost. The risks set out in this Draft

Red Herring Prospectus may not be exhaustive and additional risks and uncertainties not presently known

to us, or which we currently deem to be immaterial, may arise or may become material in the future.

Further, some events may have a material impact from a qualitative perspective rather than a quantitative

perspective and may be material collectively rather than individually. Unless specified or quantified in the

relevant risk factors below, we are unable to quantify the financial or other implication of any of the risks

mentioned herein.

This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and

uncertainties. Our results could differ materially from those anticipated in these forward-looking statements

as a result of certain factors, including the considerations described below and elsewhere in this Draft Red

Herring Prospectus.

In this section, in addition to the risks relating to our Cable Broadband business, we have also included

risks relating to the cable television business and operations of our associate company Digital Outsourcing

Private Limited and its subsidiaries and associate company. The cable television business of Digital

Outsourcing Private Limited and its subsidiaries and associate company is distinct from the business and

operations of our Company.

In this section, unless the context otherwise requires, a reference to our "Company" or to "we", "us" and

"our" refers to YOU Broadband & Cable India Limited, and a reference to "DOPL" refers to Digital

Outsourcing Private Limited and its subsidiaries and associate company, on a consolidated basis. Unless

otherwise stated or the context otherwise requires, the financial information used in this section is derived

from the restated financial statements of our Company and the restated consolidated financial statements of

DOPL, as applicable.

INTERNAL RISK FACTORS

RISKS RELATING TO OUR CABLE BROADBAND BUSINESS AND THE DOPL ACQUISITION

1. There are certain criminal proceedings pending against the Promoter and Directors of our

Company which if decided against them, could have a material adverse impact on our reputation,

financial condition and results of operations.

There are certain criminal proceedings against our Promoter and Directors of our Company. These relate to unauthorized transmissions under the Indian Copyrights Act. As of the date of this Draft Red Herring Prospectus, 5 (five) criminal proceedings are pending against the Promoter, Mr. Eyyuni Venkat Srinivas Chakravarthy and another Director of our Company, namely Mr. Perumal Srinivasan. In case any of the charges pending against our aforenamed Promoter and Directors of our Company. They may be required to pay monetary compensation and/or be imprisoned.

We cannot provide any assurance that these matters will be decided in their favour. Further, there is no assurance that similar proceedings will not be initiated against us, our Directors or Promoters in

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the future. For further details of the cases mentioned above, see “Outstanding Litigation and

Material Developments” on page 161.

2. We have a history of net losses and there can be no assurance that we will not incur further losses

in the future.

In fiscal 2007, 2008 and 2009 and in the six months ended September 30, 2009, we incurred restated loss for the year/period of Rs.266.47 million, Rs.366.14 million, Rs.159.49 million and Rs.90.96 million respectively. Depreciation and amortization expenses of Rs.216.98 million, Rs.256.53 million, Rs.269.45 million and Rs.138.33 million in fiscal 2007, 2008 and 2009 and in the six months ended September 30, 2009, respectively, primarily relating to our Cable Broadband infrastructure and equipment, have been a significant factor in the net losses we incurred. We have also incurred and expect to incur significant other expenditure, including administrative and other expenses, primarily comprising personnel expenses, rent and pre-operational expenses, in connection with the growth of our business and development of our network infrastructure. As we continue to expand our network infrastructure and grow through strategic acquisitions, including the proposed acquisition of additional shareholding in Digital Outsourcing Private Limited and the acquisition of LCOs and other MSOs to expand into the cable television business, we expect our depreciation and amortization expenses and other expenditure to increase, and we expect this to continue to have a material adverse effect on our results of operations. There can be no assurance that we will not incur losses in the future. Our failure to generate profits may adversely affect the market price of our Equity Shares, restrict our ability to pay dividends and impair our ability to raise capital and expand our business.

3. In the event that we do not receive sufficient Applications/Bids from Applicants/Bidders who are

persons resident in India to ensure that more than 50.00% of the shareholding of our Company

following the Issue will be held by resident Indian citizens and/or Indian companies which are in turn owned by resident Indian citizens (“Residents”), we intend to withdraw the Issue subject to

compliance with applicable statutory and regulatory requirements.

As part of our growth strategy, we intend to acquire a majority equity interest in DOPL and other MSOs and LCOs in order to integrate our broadband business and infrastructure with the cable television business of DOPL and/or other MSOs and LCOs. Under applicable statutory and regulatory requirements, our Company may acquire a majority equity interest in DOPL and /or other MSOs and LCOs only if our Company is Indian owned and controlled, i.e., if (i) more than 50.00% of the equity interest in our Company is beneficially owned by Residents and (ii) Residents have the power to appoint a majority of the directors on the Board of our Company. In the event that we do not receive sufficient Applications/Bids from Applicants/Bidders who are Residents to ensure that more than 50.00% of the paid-up equity shareholding of our Company following the Issue will be held by Residents, we intend to withdraw the Issue subject to compliance with applicable statutory and regulatory requirements. In such event, we will not proceed to make any Allotments under the Issue and will refund the application money received from Bidders/ Applicants in accordance with applicable statutory and regulatory requirements. Under applicable regulations, we are required to refund all Bid Amounts deposited within 15 days of the Bid/Issue Closing Date, and pay interest at the rate of 15.00% per annum on the Bid Amounts received if refund orders are not dispatched within 15 days from the Bid/Issue Closing Date. For further information, see “Issue Procedure” beginning on page 209.

4. We have entered into various agreements in connection with the proposed acquisition of additional

equity shares in Digital Outsourcing Private Limited. We may not be able to complete such

proposed acquisitions which could affect our business strategy and results of operations.

Our Company currently holds 36.24% of the paid-up equity share capital of Digital Outsourcing Private Limited. We have entered into the following arrangements in connection with the proposed acquisition of additional equity shares in Digital Outsourcing Private Limited (the “DOPL

Acquisition”):

DOPL Sale Shares I

We have on March 30, 2010 entered into a share subscription and purchase agreement with certain

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other shareholders of Digital Outsourcing Private Limited (the “DOPL Selling Shareholders”) pursuant to to which our Company is entitled to to purchase 416,125 equity shares constituting 12.75% of issued and paid-up share capital of Digital Outsourcing Private Limited, (“DOPL Sale

Shares I”), inter-alia subject to allotment of 10,688,757 Equity Shares of our Company constituting 4.425% of our equity share capital as on the date of the DOPL Share Subscription and Purchase Agreement in consideration for an absolute and perpetual right to our Company (either itself or through its nominees or assignees) to acquire the DOPL Sale Share I, (ii) extinguishment of all rights and privileges of Tanti Family with respect to our Company, (iii) termination of all obligations of our Company under the shareholders agreement dated March 31, 2008 between our Company, the Tanti Family and Digital Outsourcing Private Limited and (iv) Rs 100,000 (Rupees One Hundred Thousand Only).

For further information relating to the DOPL Share Subscription and Purchase Agreement and the proposed acquisition of the DOPL Sale Shares I, see "History and Certain Corporate Matters" beginning on page 101.

DOPL Sale Shares II

Pursuant to the terms of the DOPL Share Subscription and Purchase Agreement, our Company has also agreed to acquire, as soon as reasonably practicable and in any event within a period of 60 business days of the completion of the Issue, an additional 433,875 equity shares of, representing an additional 13.29% of the equity shareholding in, Digital Outsourcing Private Limited (the “DOPL Sale Shares II”, and together with the DOPL Sale Shares I, the “DOPL Sale Shares”) from the DOPL Selling Shareholders, for an aggregate consideration of up to Rs.128.27 million to be agreed between our Company and the DOPL Selling Shareholders. We intend to pay such consideration amount out of the Net Proceeds of the Issue. For further information, see “Objects of the Issue” beginning on page 39. The completion of the proposed acquisition of the DOPL Sale Shares II is subject to certain closing conditions, including, among others, that (i) our Company shall have been listed on the Stock Exchanges, (ii) the acquisition of the DOPL Sale Shares I shall have been completed and (iii) our Company, the DOPL Selling Shareholders and DOPL shall have entered into an agreement terminating the DOPL Shareholders Agreement with effect from the completion of the acquisition of the DOPL Sale Shares II. For further information relating to the DOPL Share Subscription and Purchase Agreement and the proposed acquisition of the DOPL Sale Shares II, see "History and Certain Corporate Matters " beginning on page 101.

The transactions contemplated in the DOPL Share Subscription and Purchase Agreement are therefore subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. In the event that such conditions are not satisfied, we may not be able to complete the proposed DOPL Acquisition. There can be no assurance that we will complete the DOPL Acquisition as proposed, on schedule or at all. An inability to successfully complete such proposed acquisition could materially and adversely affect our growth strategy, particularly our strategy of expanding our operations into the cable television business in order to enable provision of integrated Cable Broadband and cable television services. Investors should not place undue reliance on the success of the proposed DOPL Acquisition.

5. If the DOPL Acquisition results in our Company acquiring a majority shareholding in Digital

Outsourcing Private Limited, our financial condition and results of operations may not be

comparable to those prior to such acquisition.

We have included in this Draft Red Herring Prospectus the restated financial statements of our Company as of and for the years ended March 31, 2005, 2006, 2007, 2008 and 2009 and as of and for the six months ended September 30, 2009. We have also included in this Draft Red Herring Prospectus the restated standalone and consolidated financial statements of Digital Outsourcing Private Limited as of and for the years ended March 31, 2008 and 2009 and as of and for the six months ended September 30, 2009 (collectively, the "DOPL Financial Statements"). Since our Company currently holds 36.24% of the paid-up equity share capital of Digital Outsourcing Private Limited, the restated financial statements of our Company included in this Draft Red Herring

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Prospectus do not reflect the financial condition and results of operations of Digital Outsourcing Private Limited or its subsidiaries and joint ventures.

This Draft Red Herring Prospectus does not include any pro forma balance sheet or pro forma profit and loss statement prepared in accordance with the laws and regulations of the United States or any other jurisdiction, which would have shown the effect on our historical financial condition and results of operations of DOPL pursuant to the proposed DOPL Acquisition, assuming that the DOPL Acquisition had occurred at the beginning of the relevant reporting period. Investors will therefore need to base their assessment of the financial condition and results of operations of our Company subsequent to the DOPL Acquisition on the basis of the restated financial statements of our Company, the DOPL Financial Statements and other information with respect to DOPL included in this Draft Red Herring Prospectus.

In fiscal 2008 and 2009 and in the six months ended September 30, 2009, DOPL incurred losses (after adjustment of minority interest) of Rs.25.71 million, Rs.481.59 million and Rs.171.12 million, respectively. Since the results of operations of DOPL are not reflected in the restated financial statements of our Company included in this Draft Red Herring Prospectus, the losses incurred by DOPL are not reflected in the financial statements of our Company. In addition, the Board of Directors of our Company have determined that these losses principally resulted from the high startup costs of the cable television business of DOPL, and accordingly, no adjustments were required to be made in our Company’s restated financial statements to the carrying value of the investments made in, and loans advanced to, DOPL and its subsidiaries. If the DOPL Acquisition results in our Company acquiring a majority shareholding in Digital Outsourcing Private Limited then the financial statements of DOPL will be consolidated with that of our Company's, and we expect that the DOPL Acquisition would materially affect our financial condition and results of operations. In addition, since the cable television business of DOPL is distinct from the existing broadband business of our Company, the form of presentation of the consolidated financial statements of our Company following the DOPL Acquisition may not be comparable to the form of presentation of the financial statements of our Company prior to such acquisition.

6. We may not be able to increase our customer base, revenues and profitability for our broadband

business, which could adversely affect our business, results of operations and financial condition.

Our revenues are dependent on our ability to expand our subscriber base, in both the residential segment and the enterprise segment, as well as maintain our existing subscriber base. Our revenues are also dependent on the nature of services provided to our subscribers and the extent of usage by subscribers.

Our ability to increase our subscriber base is dependent on various factors, including the quality and nature of services we provide, general economic conditions in India, the reach of our Cable Broadband infrastructure as well as competition. There can be no assurance that we will be able to increase our subscriber base in the residential or enterprise segments, or increase the average revenue generated from each such subscriber. In order to increase our subscriber base, it may be necessary to lower our rates or to increase our cost of customer acquisition. Turnover of subscribers in the form of subscriber service cancellations, or churn, may adversely affect our results of operations, as does the cost of upgrading and retaining subscribers. An increase in the upgrade and retention costs for our existing subscribers or an increase in other operating costs may result in an increase in the price of our services, leading to lower usage and decline in the average revenue generated from our subscribers, or higher churn rate, either or both of which could result in lower margins, slower growth and lower profitability. Churn may also increase due to factors beyond our control, including churn by subscribers who are unable to pay their monthly subscription fees, a slowing economy, consumer fraud and competitive offers. Any operational risks that could potentially have a material adverse impact on our costs or service quality or that could result in higher prices for our subscribers could also, in turn, cause an increase in churn and consequently have a material adverse effect on our earnings and financial performance.

The launch of new and commercially viable products and services is important to the success of our business. Commercial acceptance by consumers of the new or upgraded products and services we offer may not occur at the rate, duration or level expected, and we may not be able to successfully

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adapt the new services effectively and economically to meet consumers’ demand, which would limit the return from our investments. In addition, we face the risk of unforeseen complications or delays in the deployment of these new products and services, and we cannot assure you that our estimate of the necessary capital expenditure to offer such products and services will not be exceeded. We may be unable to develop and/or deploy new products and services according to expected schedules, and the failure of any of our products and services to achieve commercial acceptance could result in additional capital expenditures or a reduction in profitability. Any such failure may have a material adverse effect on our results of operations and financial condition.

7. The development of our network infrastructure and the execution of our growth strategy involve

significant capital expenditure, and an inability to fund such capital requirements may adversely

affect our business strategies, financial condition and results of operations.

The development of our network infrastructure is capital intensive and we have incurred significant capital expenditure in connection with the development and expansion of our quality triple-play capable two-way HFC cable network infrastructure in a scalable manner. Moreover, we will need substantial additional funding to implement our growth strategy, including the development of our network infrastructure, as well as the proposed expansion of the cable television business following the DOPL Acquisition and/or through other strategic acquisitions of MSOs and LCOs. In fiscal 2007, 2008 and 2009, and in the six months ended September 30, 2009, we incurred capital expenditure of Rs.216.89 million, Rs.441.48 million, Rs.127.67 million and Rs.40.08 million, respectively. Historically, we have funded such expenditure through a combination of equity and debt financing and internal accruals.

We expect to incur significant additional capital expenditure and other capital costs in connection with the proposed expansion of our cable broadband infrastructure to additional cities and towns in the future, including for the establishment of additional network operations control centers and fees payable to municipal authorities in connection with the laying of our cable infrastructure. We also expect to incur capital expenditure relating to the rollout of our wireless services in high density areas and in connection with the upgrading of our servers and billing systems. In addition, we expect to incur further expenditure to acquire STBs and other related equipment in connection with the cable television business and to upgrade DOPL's existing cable network infrastructure from one-way to two-way HFC cable network enabling simultaneous data, voice and video transmission. For further information relating to our planned capital expenditure, see "Management's Discussion and Analysis

of Financial Condition and Results of Operations" beginning on page 130.

Our ability to arrange financing and the cost of such financing are dependent on numerous factors, including but not limited to general economic and capital market conditions, the availability of credit from banks or other lenders, investor confidence in us and the performance of our business operations. We cannot predict when, if ever, our operations will generate sufficient cash flows to fund our capital investment requirements. Until they do, we will be required to finance our cash needs through public or private equity offerings, bank loans or other debt financing, or otherwise. There can be no assurance that international or domestic financing will be available on terms favorable to us or at all, which could force us to delay, reduce or abandon our growth strategy, increase our financing costs, or both.

Financial resources available to us may be inadequate and the actual amount and timing of future capital requirements may differ from our estimates. Our growth and business strategies may depend upon our ability to obtain funds through equity or debt financing. Our ability to continue to arrange for financing and the costs of such capital is dependent on various factors, including general economic and capital market conditions, availability of credit from banks and financial institutions, the success of our business and operations and other factors beyond our control. Additional funding from debt financings may make it more difficult for us to operate our business because we would need to make principal and interest payments on the indebtedness and may be obligated to abide by restrictive covenants contained in the debt financing agreements, which may, among other things, limit our ability to make business and operational decisions and pay dividends. Furthermore, raising capital through public or private sales of equity or equity-linked instruments to finance acquisitions or expansion could cause earnings or ownership dilution to your shareholding interests in our Company. There can no assurance regarding the availability of such financing on terms acceptable to us, and the

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lack of such financing could have a material adverse effect on our business, results of operations and financial condition.

8. We face significant competition in our broadband business which could adversely affect our results

of operations.

In our broadband business, we face significant competition from various established competitors, including Bharti Airtel Limited, Tata Communications Limited (formerly Videsh Sanchar Nigam Limited), Reliance Infocom Limited and Tata Teleservices Limited, and the government-controlled telecommunication companies, Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited. Following the liberalization of the ISP business in India, various additional competitors have emerged, including companies that provide comparable services through newer technologies, such as through wireless high-speed data cards. In the future, we may also have to compete with new technologies and additional products and services introduced by our competitors, including through broadband wireless access, Wimax and 3G technologies.

Our ability to compete also depends on various factors beyond our control, such as availability of skilled technical and marketing personnel, the price at which our competitors offer comparable services, and the extent of our competitors’ responsiveness to customer needs. Our competitors may enjoy significant competitive advantages over us, including greater financial resources and economies of scale, which may enable such entities to charge prices that are lower than the price of our product and service offerings in order to attract subscribers. We have in the past lowered the price of our product and service offerings in response to competition and there can be no assurance that we will not be similarly required to lower our prices in the future or that such decrease in the price of our product and service offerings will not result in a decrease in our revenues. We expect the market for the ISP and Cable Broadband services to remain extremely price competitive, and increased competition may result in loss of market share. In addition, we may be required to adopt pricing, service or marketing strategies that may result in a decrease in revenues and an increase in operating expenses and resultant losses.

9. Our business and operations may be subject to various risks arising out of the proposed DOPL

Acquisition, including the integration and expansion of DOPL's operations, which could adversely

impact our business strategy, results of operations and financial condition.

Our business and operations will be subject to various risks arising out of the proposed DOPL Acquisition, particularly if the DOPL Acquisition results in our Company acquiring a majority shareholding in Digital Outsourcing Private Limited. These risks may adversely impact our business strategy, financial condition and results of operations, which could in turn affect the value of the Equity Shares. For further information on risks relating to the business and operations of DOPL, see "Risk Factors - Risks Relating to the Cable Television Business of DOPL" beginning on page xiv.

We may not be successful in integrating the business and operations of DOPL with the operations of our Company or achieve the anticipated benefits of the proposed DOPL Acquisition. While we believe that the DOPL Acquisition is likely to result in increased operational synergies resulting from the ability to provide integrated broadband and cable television services and the acquisition of DOPL's existing subscriber base, there can be no assurance that we will be able to successfully carry out the cable television business or otherwise achieve the synergies and other benefits we expect from the DOPL Acquisition. Commercial acceptance by consumers of the integrated broadband and cable television services that we may offer following the DOPL Acquisition may not occur at the rate or level expected, and we may not be able to successfully adapt such integrated product and service offerings effectively and economically to meet subscriber demand. In addition, we face the risk of unforeseen complications in the integration of the cable network infrastructure and the deployment of integrated product and service offerings, and there can be no assurance that our estimate of the necessary capital expenditure to offer such integrated product and service offerings will not be exceeded. Any difficulties encountered in integrating and/or managing the cable television business could result in higher costs for our Company.

In addition, we may require additional capital for the successful expansion into the cable television business and the integration of the DOPL business and operations with that of our Company. We

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expect to incur further expenditure to acquire additional STBs and other related equipment in connection with the cable television business, to upgrade DOPL's existing cable network infrastructure from one-way to two-way HFC cable network enabling simultaneous data, voice and video transmission, and to upgrade "last mile" connections we may acquire through the acquisition of the operations of DOPL. For further information relating to our planned capital expenditure in connection with the cable television business, see "Objects of the Issue" and "Management's

Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 39 and page 130, respectively. An inability to raise adequate finances in a timely manner and on commercially acceptable terms for the expansion of the cable television business and the integration of the business and operations of DOPL with those of our Company could materially and adversely affect our results of operations.

10. The proposed DOPL Acquisition may be subject to risks with respect to valuation and unforeseen

risks and liabilities resulting from such acquisition, which may adversely affect our financial

condition and results of operations.

Digital Outsourcing Private Limited was incorporated in 2007 and has a limited operating history and we have a limited basis on which to evaluate the ability of DOPL to achieve its business objectives. We currently have a minority interest in DOPL and do not control the operations of DOPL. The information relied on by us with respect to the business and operations of DOPL may be incomplete or inaccurate, and following the DOPL Acquisition, we may be subject to unforeseen risks, liabilities and obligations. In addition, we may not have any recourse against the DOPL Selling Shareholders in connection with any loss that may arise out of the proposed DOPL Acquisition.

In connection with the DOPL Acquisition, SSPA & Co., independent accountants, have carried out a valuation of DOPL. There is however no standard valuation methodology for companies in the entertainment and media industry in India, including the cable television industry. Current valuations may not be reflective of future valuations within the entertainment and media industry or the cable television industry. In addition, current valuations of listed companies in the cable television industry may not be comparable with those of DOPL.

11. We may not be successful in implementing our business strategies, including the acquisition of

MSOs and LCOs, which could materially and adversely affect our business prospects, results of

operations and financial condition.

We may not be successful in implementing our business strategies with respect to our broadband business, including the expansion of our broadband subscriber base by leveraging our existing infrastructure at relatively low marginal cost or increasing our broadband revenues through the introduction of new value added product and service offerings to our residential and enterprise segment customers. We may also not be successful in implementing our strategy of expanding into the cable television business through the acquisition of DOPL or other MSOs and LCOs or benefiting from the operational and other synergies from the provision of integrated broadband and cable television services.

As of the date of this Draft Red Herring Prospectus, we have not identified any specific MSOs or LCOs for acquisition. We may not succeed or experience delays in the implementation of our business strategies for various reasons, including a failure to build out our cable networks and integrating the networks and technologies of DOPL or any other MSO or LCO that we may acquire in the future, capital shortfalls, failure of third party suppliers to deliver services and products in a timely manner and our inability to meet our own implementation schedules. There can be no assurance that our business strategies will be satisfactorily implemented, and the growth of our business may be adversely affected as a result of such failure, thereby adversely affecting our results of operations and financial condition.

12. Our computer systems and network infrastructure may be damaged or disrupted, which may

adversely affect our reputation, business prospects and results of operations.

Due to the importance of computer systems and network infrastructure to our business, any event affecting our systems could have a material adverse effect on our business. As part of our business strategy, we use our information systems and the Internet to deliver services to and perform

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transactions on behalf of our customers. We depend extensively on the capacity and reliability of the electronic systems supporting our operations. Although we have not experienced widespread disruptions of service to customers in the past, there can be no assurance that we will not encounter disruptions or damage in the future due to substantially increased numbers of customers and transactions or for other reasons. If we experience system interruptions, errors or downtime which could result from a variety of causes, including changes in client use patterns, technological failure, changes to systems, linkages with third-party systems and power failures or are unable to develop necessary technology, our business, prospects, financial condition and results of operations could be materially and adversely affected.

Our network infrastructure may be damaged or disrupted by fire, lightning, flooding and other calamities, technology failures, human error, terrorist attacks, power loss, telecommunications failures, network software flaws, vandalism, transmission cable cuts, hacker attacks and malicious actions and other similar events. Computer viruses or problems caused by third parties could lead to disruptions in our services to our customers. We may experience failures or shutdowns relating to individual points of presence or even catastrophic failure of our entire network. In addition to this, we may also encounter difficulties incorporating new services and businesses into our information technology systems and there can be no assurance that we will realize the efficiencies and other benefits we anticipate from doing so. We attempt to mitigate these risks by employing a variety of measures, including backup and protective systems, insurance and building security. We cannot, however, be certain that these measures will be sufficient and effective under all circumstances and that disruptions or damage will not occur. Any failure of our network, our servers, or any link in the delivery chain, whether from operational disruption, natural disaster or otherwise, resulting in an interruption in our operations, could have a material adverse effect on our reputation, business prospects, financial condition and results of operations.

13. We may be unable to keep pace with technological developments that may result in an inability to

acquire additional or maintain existing customers, which may adversely affect our business,

financial condition and results of operations.

The broadband business is characterized by rapid technological changes and the introduction of new products and services. The continuously changing nature of these services, and their increasingly shorter life cycles require us to continually improve our performance, services and network in order to compete successfully with the services offered by our competitors. Such changes could adversely affect our ability to maintain, expand or upgrade our network infrastructure and our product and service offerings and respond to competitive pressures. There can be no assurance that we will be able to fund the capital expenditures necessary to keep pace with future technological developments or that we will be able to successfully anticipate the demand for products and services requiring new technology. An inability to keep pace with technological developments and provide advanced products and services in a timely manner, or to anticipate current and future trends and demands of our customers, could adversely affect our business, financial condition and results of operations.

While we recognize existing and currently evolving technologies that we compete against in the broadband business, including DSL, LAN internet, dial-up services, wireless broadband services and WiMAX, there can be no assurance that we will be able to anticipate how these technologies and the use of such technologies will evolve in the future as a result of customer preferences or other developments.

In addition, we may not be able to successfully anticipate the emergence of new technologies that we may compete against in connection with the provision of cable television services in the future following the DOPL Acquisition or the acquisition of other MSOs and LCOs in the future.

Future technological advances may require us to expend substantial financial resources in the development or implementation of new competitive technologies and the integration of such technologies in our current and future operations. We may not have sufficient financial resources to fund the development or implementation of such technologies or access additional resources in connection therewith. An inability to introduce new technology and services that can successfully compete with products and services offered by our competitors may adversely affect our business, financial condition and results of operations.

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14. Our Cable Broadband business is subject to extensive governmental regulation, which may

adversely affect our results of operations and restrict our operations.

Our Cable Broadband business is subject to extensive regulation by the Telecom Regulatory Authority of India (“TRAI”), the Department of Telecommunications (“DoT”) and other regulatory authorities which, inter alia, require us to obtain and maintain various consents, approvals and licenses, including licenses in connection with offering ISP services, as well as requirements in relation to offering our services at regulated tariffs. These requirements may require us to change our business policies and practices and plans and may also increase the costs of providing services to customers, which could have a material adverse effect on our financial condition and results of operations.

Under our ISP license, we are required to ensure that objectionable, obscene, unauthorized or any other content, messages or communications infringing copyright, intellectual property rights and international and domestic cyber laws in any form or that are inconsistent with the laws of India, are not carried in our network. Any violation of these requirements can result in penalties and criminal action under the Information Technology Act, 2000, as amended. For more information, see “Regulations and Policies” beginning on page 93.

Under the current policy of the Government of India on foreign investment, foreign investment in companies carrying out ISP activities without gateway, infrastructure providers providing Dark Fiber, right of way, duct space tower (category I) and/or electronic mail and voice mail is permitted up to 100.00%, of which up to 49.00% foreign investment is permitted under the automatic route and an FIPB approval is required for any foreign exceeding 49.00%. However, pursuant to Press Note 2 (2007 Series) the Government of India has mandated all such companies to divest 26.00% of their equity in favor of the Indian public within five years, if such companies are listed in other parts of the world. Further, such limits are subject to applicable licensing and security requirements. Such regulatory restrictions limit our ability to obtain foreign investment, which in turn could constrain our ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, we cannot assure you that the required statutory/regulatory approvals, inter alia, including any approval from FIPB will be granted to us without onerous conditions, or at all. Limitations on foreign capital may have a material adverse impact on our business growth, financial condition and results of operations.

We cannot assure you that we will not be subject to any adverse regulatory action in the future. Further, these regulations are subject to frequent amendments and depend upon the relevant government policies from time to time. Our present operations may not meet all regulatory requirements or subsequent regulatory amendments. The costs of compliance may be high, which may affect our profitability. If we are unable to comply with any such regulatory requirements, our business and results of operations may be materially and adversely affected.

15. We may be unable to modify our existing network infrastructure to adapt to changes in industry

standards and broadband service delivery methods, which could adversely affect our business,

results of operations and financial condition.

We face the risk that fundamental changes may occur in the delivery of internet access services. Currently, our broadband services are accessed primarily through computers and are delivered by modems using our HFC Network on DOCSIS technology platform. As the internet becomes accessible by Wimax enabled devices, 3G cellular telephones, personal data assistants, television set-top boxes and other consumer electronic devices, and becomes deliverable through other means involving digital subscriber lines, or wireless transmission mediums, we may be required to modify our existing technology to enable the integration of our network infrastructure to such delivery methods and service offerings. The acquisition or development of such advanced technology, whether internally or pursuant to third-party licenses, may involve substantial time and expense. There can be no assurance that we will be able to modify our existing network infrastructure to other delivery systems and such new technologies may not be available to us at reasonable cost, or at all.

Further, our ability to compete successfully depends upon the continued compatibility and inter-operability of our services with products and network architectures offered by various vendors.

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Industry standards for internet access and broadband service delivery methods may not be established and, if such industry standards are established in the future, we may not be able to adopt such standards in a timely manner or maintain a competitive position in the market. The introduction of new services by our competitors and any adverse development in industry standards may result in customers deferring or canceling purchases of our products and services and this may result in customer churn, which could adversely affect our business, results of operations and financial condition.

16. We depend on leased wireline connectivity for a significant part of our inter-city network and to a

limited extent, for "last mile" connectivity, and disruptions in or inadequate performance of such

systems and connections may adversely affect our business and results of operations.

We lease a significant part of our inter-city network, bandwidth and capacity requirements. We also lease some intra-city network from third party service providers, through cable or wireless connectivity. We do not have direct control over leased cable networks or wireless systems, including control over maintenance of these cables and systems. Moreover, the parties leasing the cables to us retain responsibility for repairing any breakages or other damage to the cables and rectify the functioning of wireless systems that we lease from them. If a third party service provider fails to repair or rectify such wireline or wireless networks in a timely manner, our broadband services may remain disrupted for an extended period of time. In addition, our broadband services may slow down at peak times, especially with respect to transmission of multimedia content over such leased wireline and wireless connections. Failure to properly maintain or promptly repair the relevant cables networks and wireless systems on the part of a third party service provider from whom we lease capacity or inadequate performance of such systems and connections could result in reduced revenues, increased costs, service disruptions, loss of customers and damage to our reputation.

17. We may be liable for information disseminated over our Cable Broadband services network which

could increase our costs or cause us to discontinue certain services, thereby adversely affecting our

business and results of operations.

We intend to continue developing our Cable Broadband and internet telephony services for our residential and enterprise segment customers. Computer viruses, break-ins and other inappropriate or unauthorized uses of our network could affect the provision of our full suite of Internet access services, could result in interruption, delays or cessation in services to our customers, jeopardize the security of confidential information stored in the computer system of our customers and result in costly litigation. We may incur significant costs to protect us against the threat of security breaches or to alleviate problems caused by such breaches. In addition, alleviating these problems may cause interruptions, delays or cessation in service to our users, which could cause them to stop using our service or assert claims against us. We may be required to spend substantial resources or discontinue certain services, which could have a material adverse effect on our business, operating results and financial condition as a result of liability under Indian law for dissemination of information. Laws in India relating to liability of Internet service providers for information carried on or disseminated through their networks is relatively untested. The imposition of potential liability upon Internet service providers, such as liability for defamatory speech or copyright infringement, for materials carried on or disseminated over a network may cause us to adopt measures to reduce our exposure to such liability.

18. Our business relies on intellectual property, some of which is owned by third parties, and we may

inadvertently infringe proprietary rights of others, which could expose us to civil and criminal

proceedings.

Many entities, including some of our competitors, have obtained or may in the future obtain intellectual property rights that cover or affect products or services related to those that we currently offer or may offer in the future including value added services. In general, if it is determined that one or more of our services or the products used to transmit or receive our services infringes intellectual property owned by others, we and the applicable manufacturers or vendors may be required to cease developing or marketing those services and products, to obtain licenses from the owners of the intellectual property or to redesign those services and products in such a way as to avoid infringing the intellectual property rights. If a third party holds an intellectual property right, it may not allow us

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or the applicable developers to use its intellectual property at any price, which could materially adversely affect our competitive position.

We cannot estimate the extent to which we may be required in the future to obtain intellectual property licenses or the availability and cost of any such licenses. Those costs, and their impact on our earnings, could be material. To the extent that we are required in the future to pay royalties to third parties to whom we are not currently making payments, these increased costs of doing business could materially adversely affect our operating results. There can be no assurance that the courts will conclude that our services or the products used to transmit or receive our services do not infringe on the rights of third parties, that we or the manufacturers would be able to obtain licenses from these persons on commercially reasonable terms or, if we were unable to obtain such licenses, that we or the manufacturers would be able to redesign our services or the products used to transmit or receive our services to avoid infringement.

19. The loss of key suppliers or their failure to deliver equipment on a timely basis could negatively

impact our business prospects and results of operations.

We rely on various suppliers to provide equipment, underground cables and other key components in building our network infrastructure such as CMTS, coaxial cable, fiber, nodes, coaxial amplifiers, cable modems and transmitters. We must have an adequate supply of such equipment on hand to respond to new customer subscriptions in a timely manner. We purchase all of our network infrastructure component and other equipment from our suppliers on a purchase order basis and have no long-term contracts with our suppliers. If our suppliers are unable to supply us with these products in a timely manner or the costs of these products increase due to unforeseen circumstances, this could negatively impact our operating results, particularly if we are unable to add new subscribers or pass on such costs to our customers. In addition, if we are unable to source hardware, cables and other key components required for building our HFC cable network infrastructure, the build out of our network infrastructure may be delayed or impeded, which may adversely affect our ability to implement our business strategies and our results of operations.

20. Any significant increase in subscriber acquisition costs or subscriber upgrade and retention costs

may adversely affect our results of operations.

We incur subscriber acquisition costs relating to subscribers acquired by us and subscribers acquired through third parties. In addition, we pay commissions to our distribution agents for their efforts in offering our services at a lower cost to consumers. Our subscriber acquisition costs may materially increase to the extent we continue or expand current sales promotion activities or introduce other more aggressive promotions, or due to increased competition. Any material increase in subscriber acquisition costs from current levels would negatively impact our earnings and could materially adversely affect our financial performance.

21. The success of our Cable Broadband business depends on the costs which customers have to incur

for accessing the internet in our markets. High initial or recurring costs will curtail our broadband

services subscriber base and adversely affect our business and results of operations.

Bandwidth, as measured by the volume of data capable of being transported in a communication system in a given amount of time, remains expensive in India. We lease all the international bandwidth that we use to provide broadband services from gateway providers including Tata Communications Limited and Bharti Airtel Limited. There are only a few gateway providers of international bandwidth in India and consequently, the price that they may charge may not be competitive. Although prices for bandwidth in India have substantially declined recently, they are relatively high compared to other regions due to, among other reasons, capacity constraints and limited competition. An increase in bandwidth costs would increase our operating costs and may adversely affect our profitability.

Further, the market penetration rates of personal computers and online access in India is low. Alternate methods of obtaining access to the internet, such as through set-top boxes for televisions, are currently not popular in India. There can be no assurance that the number or penetration rate of personal computers in India will increase rapidly or at all or that alternate means of accessing the

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internet, which we can service through our existing broadband technology, will develop and become widely available in India. Customers will have to bear significant costs for obtaining the hardware and software necessary to connect to the internet in India. If such costs do not become affordable, our broadband services subscriber base will be curtailed, which may adversely affect our business and results of operations.

22. A significant portion of the equipment used in our Cable Broadband infrastructure is imported and

as a result we are subject to foreign currency fluctuations, which may have a material adverse

effect on our results of operations.

We import a significant portion of our equipment such as cable modems, coaxial cables, and other equipment for our broadband services and as a result we are subject to foreign currency fluctuations in respect of purchases made in various foreign currencies, most significantly the U.S. Dollar. Further, any political or economic disturbances in these areas could interrupt the timely supply of these equipment. The exchange rate between the Rupee and the U.S. Dollar and other currencies that we make purchases in, have changed substantially in recent years and may fluctuate substantially in the future. We do not have any outstanding forward contracts to hedge the risk of fluctuations in foreign exchange rates. Therefore, the depreciation of the Rupee may have a material adverse effect on our results of operations.

23. We are required to obtain and maintain certain governmental and regulatory licenses and permits

and the failure to obtain and maintain such licenses and permits in a timely manner, or at all, may

adversely affect our business and operations.

We are required to obtain and maintain certain approvals, licenses, registrations and permits in connection with its business and operations. There can be no assurance that we will be able to obtain and maintain such approvals, licenses, registrations and permits in the future. An inability to obtain or maintain such registrations and licenses in a timely manner, or at all, and comply with the prescribed conditions in connection therewith may adversely affect our ability to carry on our business and operations, and consequently our results of operations and financial condition.

24. Strategic investments or acquisitions and joint ventures may result in additional risks and

uncertainties in our business.

To the extent we make strategic investments or acquisitions or enter into joint ventures for furthering our business, we face numerous risks and uncertainties in relation to combining or integrating businesses, including integrating relationships with customers, business partners and internal data processing systems. In the case of joint ventures whether existing or proposed, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or damage to our reputation relating to, systems, controls and personnel that are not under our control. In addition, conflicts or disagreements between us and our joint venture partners may adversely impact our business.

Future acquisitions and joint ventures could entail a number of risks, including problems with the effective integration of operations, the inability to maintain key pre-acquisition business relationships and integrate new relationships, the inability to retain key employees, increased operating costs, exposure to unanticipated liabilities, risks of misconduct by employees not subject to our control, difficulties in realizing projected efficiencies, synergies and cost savings, and exposure to new or unknown liabilities. Any future growth of our business may require significant resources and/or result in significant unanticipated losses, costs or liabilities. In addition, expansions, acquisitions or joint ventures may require significant managerial attention, which may divert us from our other operations.

RISKS RELATING TO OUR COMPANY

25. We, our Promoters and our Directors are involved in certain legal and other proceedings that if

determined against us or our Promoters or Directors, could have a material adverse effect on our

financial condition and results of operations.

Our Company, our Directors, and our Promoters are currently involved in a number of proceedings in

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India, pending at different levels of adjudication before various authorities. The table below sets forth certain information with respect to legal proceedings that we and/or our Promoters and Directors are involved in:

Category Company Directors Promoters Group Companies

Number Amount Involved in

Rs. in

Million (where

quantifiable)

Number Amount Involved in

Rs. in

Million (where

quantifiable)

Number Amount Involved in

Rs. in

Million (where

quantifiable)

Number Amount Involved in

Rs. in

Million (where

quantifiable)

Criminal proceedings

- 5 NA 3 NA - -

Securities law

proceedings

- - - - - - -

Civil proceedings 3 10.53 1 NA 1 NA 1 NA

Tax proceedings 3 - - - - - -

Labor cases - - - - - - -

Consumer cases 5 1.10 - - - - - -

Other

proceedings/Notices etc.

5 1,017.05 - - - - - -

Should any new development arise, such as a change in the Indian law or rulings against us by appellate courts or tribunals, we may need to make provisions in our financial statements, which may increase our expenses and current liabilities. We can give no assurance that these legal proceedings will be decided in our favor or in favor of our Directors or Promoters. Any adverse decision may have a significant effect on our business, financial condition and results of operations. For further information relating to these proceedings, see “Outstanding Litigation and Material Developments” on page 161.

26. We have had negative cash flow from operating and investing activities in the past. Any negative

cash flow from operating and investing activities in the future would adversely affect our results of

operations and financial condition.

We had negative net cash flow from operating activities of Rs.233.61 million, Rs.265.94 million, Rs.46.93 million in fiscal 2007, 2008 and 2009 respectively. In the six months ended September 30, 2009, we generated nominal net cash from operating activities of Rs.5.94 million. In fiscal 2007, 2008 and 2009 and in the six months ended September 30, 2009, we had negative net cash flow from investing activities of Rs.102.47 million, Rs.514.50 million, Rs.128.51 million and Rs.32.31 million, respectively.

There can be no assurance that our net cash flow from operating and investing activities will be positive in the future. Any negative cash flows from operating and investing activities in future would adversely affect our results of operations and financial condition. See “Management's Discussion and

Analysis of Financial Condition and Results of Operations" beginning on page 130 of this Draft Red Herring Prospectus.

27. Our insurance coverage may not adequately protect us against all material hazards and such

hazards, if they occur, could adversely affect our business and results of operation.

Our insurance policies provide cover for risks relating to physical loss, theft or damage to our assets. The price, terms and availability of insurance vary significantly and all insurance policies on equipment may not continue to be available on commercially reasonable terms or at all. Although we believe that our Company have insurance that is customary for Cable Broadband companies in India, this insurance may not provide adequate coverage in certain circumstances and is subject to certain deductibles, exclusions and limits on coverage. There can be no assurance that our operations will not be affected by any of the incidents and hazards, or that the terms of our insurance policies, will

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adequately, if at all, cover all damage or losses caused by any such incidents and hazards as they contain exclusions and limitations on coverage. To the extent that we suffer damage or losses which exceeds our insurance coverage the loss would have to be borne by us. The proceeds of any insurance claim may also be insufficient to cover the rebuilding costs as a result of inflation, changes in regulations regarding Cable Broadband and cable television operations, and other factors. We cannot assure you that material losses in excess of insurance proceeds will not occur in the future. We do not maintain insurance policies to cover business interruption, telecommunications professionals’ liability, intellectual property claims, communications claims and certain other insurable risks. We cannot assure you that any losses we suffer would be adequately covered by our insurance policies. It may also not be possible to obtain adequate insurance against some risks on commercially reasonable terms. In addition, insurance coverage may not be available to us at economically acceptable premiums, or at all, in the future at any time that we may seek to purchase or renew such insurance. Failure to effectively cover ourselves against risks could expose us to substantial costs and potentially lead to material losses, and, as a result, our results of operations and financial condition could be adversely affected.

28. Our future results of operations could fluctuate because our expenses are relatively fixed in the

short term while future revenues are uncertain and any adverse fluctuations could adversely

impact the price of our Equity Shares. Further, you should not rely on period to period

comparisons of our results of operations as indicators of future performance

Our revenues and expenses have varied in the past and may fluctuate in the future due to a number of factors, many of which are outside our control. A significant portion of our investment and cost base is relatively fixed in the short term. Our revenues for the future may depend on many factors, including, without limitation, the following: our ability to acquire and retain subscribers for our broadband services; the number of subscribers to our broadband internet services and the prevailing prices charged by our competitors; the range of products and services provided by us and the usage thereof by our subscribers; services, products or pricing policies introduced by our competitors; capital expenditure and other costs relating to our operations; the timing and nature of, and expenses incurred in, our marketing efforts; our ability to successfully integrate operations and technologies from any acquisitions, joint ventures or other business combinations or investments; the introduction of alternative technologies; and technical difficulties or system failures affecting the telecommunication infrastructure in India or the internet generally. In addition, following the DOPL Acquisition, our results of operations will be affected by various factors affecting the cable television business of DOPL, including the subscription and carriage revenues received by DOPL and the costs of integrating DOPL's operations with our existing infrastructure and operations. If we acquire other MSOs or LCOs in the future, our results of operations will be similarly affected by factors relating to the business and operations of such acquired entities. We may be unable to adjust spending quickly enough to offset any unexpected revenues shortfall.

You should not rely on period to period comparisons of our results of operations as indicators of future performance. It is possible that in some future periods our results of operations may be below the expectations of public market analysts and investors. In such event, the price of our Equity Shares may decline.

29. Our ability to pay dividends in the future will depend on various factors, including our financial

condition, results of operations and capital expenditure requirements.

In the past, we have not made dividends payments to our equity shareholders in any form. We may retain all future earnings, if any, for use in the operations and expansion of the business. Our future ability to pay dividends will depend on our earnings, financial condition and capital requirements and those of our subsidiaries. We cannot assure you that we will receive dividends from our subsidiaries sufficient to cover our operating expenses or pay dividends to our shareholders.

Our business is capital intensive and we plan to make substantial capital expenditures to implement our growth strategies. We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend on our capital requirements and financing arrangements we enter into, our financial condition and results of operations. Accordingly, realization of a gain on shareholders' investments would depend on the appreciation of the price of the Equity Shares. There is no guarantee

xxviii

that our Equity Shares will appreciate in value.

30. Our indebtedness and the conditions and restrictions imposed by our financing arrangements

could restrict our ability to conduct our business and operations and thereby adversely affect our

business and results of operations.

As of September 30, 2009, our Company’s indebtedness aggregated to Rs.300.78 million, comprising (a) certain vendor financing arrangements with CISCO Systems Capital India Private Limited, and (b) a commercial loan facility from our Promoter, YTML. We expect to incur additional indebtedness in the future, including in connection with the expansion of our Cable Broadband infrastructure and the expansion of the cable television business following the DOPL Acquisition and/or through other strategic acquisitions of MSOs and LCOs. Some of our borrowings are secured by our movable and other assets. A significant indebtedness in the future could have several important consequences, including but not limited to the following:

• a portion of our cash flow may be used towards repayment of our existing debt, which will reduce the availability of cash to fund working capital, capital expenditures, acquisitions and other general corporate requirements;

• our ability to obtain additional financing in the future at reasonable terms may be restricted or our cost of borrowings may increase due to sudden adverse market conditions, including decreased availability of credit or fluctuations in interest rates;

• fluctuations in market interest rates may affect the cost of our borrowings, as some of our indebtedness are and are expected to be at variable interest rates;

• there could be a material adverse effect on our business, financial condition and results of operations if we are unable to service our indebtedness or otherwise comply with financial and other covenants specified in the financing agreements; and

• we may be more vulnerable to economic downturns, may be limited in our ability to withstand competitive pressures and may have reduced flexibility in responding to changing business, regulatory and economic conditions.

Some of our financing agreements also include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions. Failure to meet these conditions or obtain such consents in a timely manner, or at all, could have significant consequences on our business and operations. Specifically, under some of our financing agreements, we require, and may be unable to obtain, consents from the relevant lenders for, among others, the amendment of our charter documents, any merger, amalgamation, reconstruction, consolidation, restructuring, reorganization or other similar transaction, as well as transactions related to a change in our shareholding pattern (whether legal or beneficial) or management structure, where our Company is not the surviving entity or as a result of which an event of default arises, and undertaking any winding-up or liquidation proceedings. Some of our financing agreements are also subject to certain conditions and covenants, including the absence of a material adverse change in our business, assets, financial condition, prospects and credit standing, specified financial ratios and maintaining our shareholding and management structure. Such covenants may restrict or delay certain actions or initiatives that we may propose to take from time to time.

A failure to observe such covenants or conditions under our financing arrangements or to obtain necessary consents required thereunder may lead to the termination of our credit facilities, acceleration of all amounts due under such facilities and the enforcement of any security provided. Any acceleration of amounts due under such facilities may also trigger cross default provisions under our other financing agreements. Any of these circumstances could adversely affect our business, financial condition and results of operations, as well as adverse affect the price of the Equity Shares.

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31. An inability to effectively manage our growth could disrupt our business and adversely affect our

results of operations.

We expect our growth strategy will place significant challenges and demands on our management, financial and other resources and we may not be successful in expanding our business in accordance with our business plan. Our ability to successfully implement our business plan requires adequate information systems and resources and oversight from senior management. We will need to continuously develop and improve our financial, internal accounting and management controls, reporting systems and procedures as we continue to grow and expand our business. If we are unable to manage our costs effectively our business prospects, financial condition and results of operations may be adversely affected.

32. Our Promoters and certain related entities will continue to have significant influence on our

Company after the completion of the Issue.

After the completion of the Issue, our Promoters and certain related entities will continue to exercise significant influence over us, including having influence over the composition of our Board, as well as over matters requiring shareholder or Board approval. Our Promoters may take or block actions with respect to our business, which may conflict with the interests of our Company or the interests of our minority shareholders. By exercising their influence, our Promoters could delay, defer or cause a change in our capital structure, delay, defer or cause a merger, consolidation, takeover or other business combination involving us, discourage or encourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

For further details, see the sections “Capital Structure”, “History and Certain Corporate Matters”, "Our Promoters and Group Companies” beginning on pages 24, 101 and 119, respectively, of this Draft Red Herring Prospectus.

33. The interests of our Promoters, Directors and some of our Group Companies may cause significant

conflicts of interest in the ordinary course of our business.

Certain decisions concerning our operations or financial structure may present conflicts of interest among our Promoters, other shareholders, Directors, executive officers and the holders of the Equity Shares. Commercial transactions in the future between us and related parties could result in conflicting interests. A conflict of interest may occur between our business and the business of the Group Companies which could have an adverse effect on our operations. Conflicts of interest may also arise out of common business objectives shared by us, our Promoters, directors and their related entities. There can be no assurance that these or other conflicts of interest will be resolved in an impartial manner.

Among other matters, conflicts may arise in connection with our negotiations and dealings with our Promoters and their affiliates with respect to services that they may be required to provide to us and the arrangements that we may enter into with them. In addition, there may be conflicts of interest if Promoter Group companies invest in or carry out the same or similar businesses as us. One of our promoters, CVCIGPML, is engaged in the business of investing in Indian and overseas companies, listed and unlisted, in various sectors, which may include the sector in which the Company operates, and certain directors of our Company who are appointed by CVCIGPML may currently or in the future also serve on the boards of directors of such investee companies. Some of these actions may result in some of our board members also joining the board of such competing companies.

34. Our Promoters and Directors have interests in us other than reimbursement of expenses incurred

or normal remuneration or benefits.

Our Promoters are interested in our Company to the extent of any transactions entered into or its shareholding and dividend entitlement in our Company. Our Directors are also interested in our Company to the extent of remuneration paid to them for services rendered as Directors of our Company and reimbursement of expenses payable to them. Our Directors may also be interested to the extent of any transaction entered into by our Company with any other company or firm in which they are directors or partners. Our Promoter, YTML has provided an external commercial loan facility to our Company. Additionally, our Directors may be interested in the Equity Shares held by them or

xxx

by entities with which they are associated as promoters, directors, partners, proprietors or trustees or held by their relatives or that may be subscribed by or allotted to the companies, firms, ventures, trusts in which they are interested as promoters, directors, partners, proprietors, members or trustees, pursuant to this Issue.

35. Increases in interest rates may adversely impact our results of operations and financial condition.

As our business is capital intensive, we are exposed to interest rate risk. Our Company is seeking to finance growth in part with debt which means that any increase in interest expense may have an adverse effect on our financial results and business prospects. Our current debt facilities carry interest at variable rates. As of September 30, 2009, Rs.242.30 million, or 80.56% of our total debt was subject to variable rates, and an increase in interest expense is likely to have a significant adverse effect on our results of operations and also increase the cost of capital to our Company.

36. We have applied for, but have not yet received, trademark registrations for certain of our brand

names.

The registration of any trademark is a time-consuming process, and there can be no assurance that any such registration will be granted. Our applications may not be allowed or our competitors may challenge the validity or scope of our intellectual property. Unless our trademarks are registered, we may only get passing off relief for our marks if used by others, which could materially and adversely affect our brand image, goodwill and business. It is only upon registration that we can prohibit other persons from using our trademarks. However, we cannot provide any assurance that third parties will not infringe upon our trademark, trade names, logos or brand names, and thereby cause damage to our business prospects, reputation or goodwill. For example, we have applied for registration of the trademark “YOU Broadband” in classes 9, 16, 35, 38 and 41, which are currently pending.

37. We may have increased risks relating to associate companies that are partially owned by us.

We face increased risks relating to associate companies that are partially owned by us. For example, we currently hold 36.24% of the shareholding in Digital Outsourcing Private Limited. In the event that there are disagreements between us and the other shareholders regarding the business and operations of DOPL, we cannot assure you that we will be able to resolve them in a manner that will be in our best interests. Similarly, we own 50.00% of the equity shareholding in YOU Snapper Wireless India Private Limited ("YOU Snapper"). To the extent there are disagreements between us and any joint venture partner, we cannot assure you that we will be able to resolve them in a manner that will be in our best interests.

38. We may not be able to successfully develop and maintain our brand image, which could adversely

affect our subscriber base, revenues and affect our results of operations.

Our success, particularly in relation to our growth strategy for the broadband business, depends significantly on our ability to maintain the “YOU Broadband”, “YOU Digivision” and our other brands and effectively develop the brand image and reputation of our existing product and service offerings and that of our new value added services and integrated offerings. Although we continue to devote significant time and resources to advertising, promotional and other marketing events, there can be no assurance that we will be able to successfully develop and maintain our brand image, which could adversely affect our subscriber base, revenues and results of operations.

39. We are significantly dependent on our management team and our ability to attract and retain key

personnel. Any failure to attract and retain such personnel could have a material adverse effect on

our business, financial condition and results of operations.

We depend on our senior executives and other key management personnel for their business vision, management skills and technical expertise in the telecommunication and media industry, particularly the Cable Broadband and cable television industry, as well as their working relationships with relevant government agencies and other intermediaries and participants in the industry. We do not maintain key-man life insurance for any of our executive officers. If any of these executive officers were unable or unwilling to continue in their present positions, or if they left our Company, we may not be able to replace them with comparably skilled executives, which would adversely affect our

xxxi

ability to manage our business. If we are unable to retain or replace our key senior management personnel and other key employees, we may not be able to implement our business strategy and our financial condition and results of operations may be materially and adversely affected.

40. We have certain contingent liabilities which may adversely affect our financial condition.

Contingent liabilities as of September 30, 2009 included the following:

Particulars Amount

(Rs. in millions)

Revenue share on internet telephony services governed by ISP license relying on TDSAT judgment dated August 30, 2007 on Petition No. 7 of 2003

22.23

Notice issued by Mahanagar Gas Limited (“MGL”) seeking compensation damages with respect to fire accident in the gas pipeline of MGL

1,000.00

Consideration of contractual obligation to take on lease Dark Fiber from IOL Broadband Limited terminated by exercising force majeure clause

9.93

If a significant portion of these liabilities materializes, it could have a material adverse effect on our business, financial condition and results of operations. For further information on such contingent liabilities, see "Management's Discussion and Analysis of our Results of Operations - Contingent

Liabilities" and the section “Financial Statements” beginning on page 130 and 129 of this Draft Red Herring Prospectus, respectively.

41. Certain of our Group Companies have incurred losses in recent financial years.

Certain of our Group Companies have incurred losses in recent financial years. CVCIEL incurred losses of Rs.2.07 million and Rs.1.45 million in the year ended December 31, 2009 and 2008, respectively. YHCAPL also incurred losses of Rs. 32 million and Rs. 13 million in the year ended December 31, 2009 and 2008, respectively.

42. Our management will have flexibility in applying the Proceeds received from the Issue and the

deployment of the Proceeds is not subject to any monitoring by any independent agency. The

purposes for which the Proceeds of the Issue are to be utilized are based on management estimates

and have not been appraised by any banks or financial institutions.

We intend to use the Proceeds that we receive from the Issue for the purposes described in “Objects of

the Issue” on page 39. Our management may determine that it is appropriate to revise our estimated costs, fund requirements and deployment schedule owing to factors relating to our business and operations and external factors which may not be within the control of our management.

The utilization of the Proceeds of the Issue and other financings will be monitored only by the Board and is not subject to any monitoring by any independent agency. In proceeds of the Issue allocated to general corporate purposes and will be used at the discretion of the management. Further, pending utilization of the Proceeds of the Issue and other financings, we intend to invest such Proceeds in interest-bearing liquid instruments including money market mutual funds and bank deposits as approved by our Board of Directors.

Our funding requirements and the deployment of the Proceeds of the Issue are based on management estimates and have not been appraised by any banks or financial institutions. In view of the highly competitive nature of the industry in which we operate, we may have to revise our management estimates from time to time and, consequently, our funding requirements may also change.

43. We currently have not entered into any arrangements for borrowings, bank finance or institutional

finance in respect of working capital requirements.

We currently have not entered into any arrangements for borrowings, bank finance or institutional finance in respect of working capital requirements. The working capital requirement of our Company is estimated to be Rs. 171 million. The working capital requirement has been calculated on the basis

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of working capital requirement for FY 2011 considering growth in activities of our Company. For further details please refer to the section titled “Capital Structure” beginning on page 24 of this Draft Red Herring Prospectus. Our Company proposes to meet the aforesaid estimated working capital requirements from the Net Proceeds of the Issue. Our working capital requirements have been calculated based on management estimates and have not been appraised by any bank or financial institution. Hence we may have to revise our management estimates from time to time and, consequently, our funding requirements may also change.

44. We have allotted Equity Shares for consideration other than cash in the last six months preceding

the date of this Draft Red Herring Prospectus.

On March 30, 2010, our Company has allotted 10,688,757 Equity Shares constituting 4.425% of our equity share capital pursuant to the DOPL Share Subscription and Purchase Agreement in consideration for an absolute and perpetual right to our Company (either itself or through its nominees or assignees) to acquire the DOPL Sale Share I, (ii) extinguishment of all rights and privileges of Tanti Family with respect to our Company, (iii) termination of all obligations of our Company under the shareholders agreement dated March 31, 2008 between our Company, the Tanti Family and Digital Outsourcing Private Limited and (iv) Rs 100,000 (Rupees One Hundred Thousand Only). The aforementioned allotment of our Equity Shares is for a consideration other than cash .

45. We intend to use a portion of Proceeds of this Issue to procure equipment for planned activities.

Any delay in procuring the necessary equipment may delay the implementation of our business

plans, and thereby affect our business and results of operations.

A portion of the Proceeds of the Issue is proposed to be deployed for the purchase of equipment. We have not yet placed orders for all of the equipment required for our planned activities. As on the date of this Draft Red Herring Prospectus, we have not entered into any definitive agreements in connection with such purchase of equipment. We intend to place the orders as and when they are required in accordance with our implementation schedule. However, any delay in placing orders or in procuring the necessary equipment may delay our planned activities. Such delays may lead to increases in prices of the equipment, which may affect our cost and profit estimates. For more information, see “Objects of the Issue” beginning on page 39.

46. As of the date of this Draft Red Herring Prospectus, we have not identified the use of the funds, out

of the proceeds of the Issue proposed to be utilized for general corporate purposes and the

deployment of such funds will be at the discretion of our management and Board of Directors.

As of the date of this Draft Red Herring Prospectus, we have not entered into any definitive agreements for the deployment of the funds from the proceeds of the Issue proposed to be utilized for general corporate purposes as approved by our Board. The deployment of such funds is entirely at the discretion of our management and our Board of Directors.

47. We have entered into certain transactions with related parties and will continue to enter into

related party transactions in the future.

We have, in the course of our business, entered into various transactions with related parties, including lease arrangements over our Company's assets to DOPL, provision of customer billing services to DOPL through our Company's billing services platform, and loans extended by our Company and DOPL. While we believe that all such transactions have been conducted on an arm’s length basis, there can be no assurance that we could not have achieved more favorable terms, had such transactions not been entered into with related parties.

For example, as of September 30, 2009, our Company had made an investment of Rs.187.74 million in DOPL, and had granted a loan of Rs.189.04 million to DOPL. In addition, a part of the Net Proceeds of the Issue will be used for extending loans to DOPL. In addition, we lease Dark Fiber and other network equipment to DOPL and receive income from lease rental of network equipment from DOPL. For further information, see “Related Party Transactions” on page 127. We expect to continue to enter into related party transactions in the future. There can be no assurance that such

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transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and results of operations.

48. We do not own our registered office and other premises from which we operate.

We do not own the premises on which our registered corporate office and other offices are located. All our offices are located on leased premises. At times some equipment and network elements are also kept at such premises. If any of the owners of these premises does not renew an agreement under which we occupy the premises, or if any of the owners seeks to renew an agreement on terms and conditions unfavorable to us, we may suffer a disruption in our operations or increased costs, or both, which may adversely affect our business and results of operations.

49. Some of the lease agreements entered into by our Company with respect to our immovable

properties may not be duly registered or inadequately stamped, which may adversely affect our

operations.

Some of our lease agreements with respect to our immovable properties may not be adequately stamped or duly registered. Unless such documents are adequately stamped or duly registered, such documents may be rendered as inadmissible as evidence in a court in India or attract penalty as prescribed under applicable law, which may result in a material adverse effect on the continuance of the operations and business of our Company.

50. Our results of operations could be adversely affected by strikes, work stoppages or increased wage

demands by our employees or any other kind of disputes with our employees.

We employ a significant number of employees for our operations. Our employees are not affiliated to any trade or labor union. There can be no assurance that we will not experience disruptions to our operations due to disputes or other problems with our work force, which may adversely affect our business and results of operations. In addition, there can be no assurance that partners that we use to reach subscribers or our suppliers will not experience strikes, work stoppages or other such industrial action in the future.

We enter into contracts with independent contractors to complete specified assignments and these contractors are required to source the labor necessary to complete such assignments. Although we do not engage these laborers directly, it is possible under Indian law that we may be held responsible for wage payments to laborers engaged by contractors should the contractors default on wage payments. Any requirement to fund such payments may adversely affect our business, financial condition and results of operations. Furthermore, pursuant to the provisions of the Contract Labour (Regulation and Abolition) Act, 1970, we may be required to absorb a portion of such contract laborers as our employees. Any such order from a court or any other regulatory authority may adversely affect our business and results of our operations.

51. Significant differences exist between Indian GAAP and other accounting principles, such as US

GAAP and IFRS, which may be material to investors’ assessment of our financial condition and

results of operations. Our failure to successfully adopt IFRS required effective April 2013 could

have a material adverse effect on our stock price.

Our financial statements, including the audited consolidated financial statements included in this Draft Red Herring Prospectus are prepared in accordance with Indian GAAP. We have not attempted to quantify the impact of IFRS or U.S. GAAP on the financial data included in this Draft Red Herring Prospectus, nor do we provide a reconciliation of our financial statements to those of U.S. GAAP or IFRS. U.S. GAAP and IFRS differ in significant respects from Indian GAAP. We have made no attempt to quantify the effect of any of those differences. Accordingly, the degree to which the Indian GAAP financial statements included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. In making an investment decision, investors must rely upon their own examination of us, the terms of this Issue and the financial information contained in this Draft Red Herring Prospectus.

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The Institute of Chartered Accountants of India, the accounting body that regulates the accounting firms in India, has announced a road map for the adoption of, and convergence with, the International Financial Reporting Standards, or IFRS, pursuant to which all public companies in India, such as us, will be required to prepare their annual and interim financial statements under IFRS beginning with financial year period commencing April 1, 2013. Because there is significant lack of clarity on the adoption of and convergence with IFRS and there is not yet a significant body of established practice on which to draw in forming judgments regarding its implementation and application, we have not determined with any degree of certainty the impact that such adoption will have on our financial reporting. There can be no assurance that our financial condition, results of operations, cash flows or changes in shareholders' equity will not appear materially different under IFRS than under Indian GAAP. As we transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. Moreover, there is increasing competition for the small number of IFRS-experienced accounting personnel available as more Indian companies begin to prepare IFRS financial statements. There can be no assurance that our adoption of IFRS will not adversely affect our reported results of operations or financial condition and any failure to successfully adopt IFRS by April 2013 could have a material adverse effect on our stock price.

52. The requirements of being a listed company may strain our resources and distract management.

We have no experience as a listed company and have not been subjected to the increased scrutiny of our affairs by shareholders, regulators and the public at large that is associated with being a listed company. As a listed company, we will incur significant legal, accounting, corporate governance and other expenses that we did not incur as an unlisted company. We will be subject to the listing agreements with the Stock Exchanges which requires us to file audited annual and unaudited quarterly reports with respect to our business and financial condition. If we experience any delays, we may fail to satisfy our reporting obligations and/or we may not be able to readily determine and accordingly report any changes in our results of operations as timely as other listed companies. As a listed company, we will need to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, for which significant resources and management oversight will be required.

53. Our Company has availed unsecured loans from CISCO Systems Capital India Private Limited and

our promoter YTML, which subject to the terms and conditions of relevant agreements may be

recalled at any time. Further our Group Companies and/or associates may have availed of

unsecured loans which can can be recalled by the relevant lenders at any time.

Our Company has availed unsecured loans from CISCO Systems Capital India Private Limited and our promoter YTML, which subject to the terms and conditions of relevant agreements may be recalled at any time. In the event the aforementioned loans are recalled by the aforesaid lenders our financial condition and profitability could be adversely affected. Further our Group Companies and/or associates may have availed of unsecured loans which could be recalled by the relevant lenders at any time, which in turn could adversely affect the value of the investments of our Promoter and/or our Company, in such Group Companies and/or associates, as the case may be.

RISKS RELATING TO THE CABLE TELEVISION BUSINESS OF DOPL

1. DOPL's revenues are adversely affected by under-reporting of analog cable subscribers by LCOs.

DOPL delivers television channels on its cable distribution network through LCOs, who provide the "last mile" cable link to the homes of subscribers. Subscribers pay a fee for the provision of cable television to the LCOs, who in turn pay a fixed monthly fee to DOPL. DOPL's revenues from cable television subscriptions are therefore based on the number of subscribers connected to an LCO. Due to the non-addressable nature of analog cable television services technology, DOPL is unable to independently determine the number of analog subscribers that receive DOPL's cable television services through the LCOs, and relies on the subscriber count provided by the LCOs. LCOs may under-report their subscriber base to DOPL, thereby reducing the subscription revenues payable to DOPL. Such unauthorized usage may continue to result in a lower subscriber base being accounted for DOPL and adversely affecting its subscription revenues.

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2. DOPL's cable television business is subject to extensive governmental regulation, which could result

in increased operating expenses for DOPL or limit its operational flexibility.

DOPL's cable television business is subject to extensive regulation by the Telecom Regulatory Authority of India (“TRAI”) and the Ministry of Information and Broadcasting (“MIB”) and other regulatory authorities. Some of the key restrictive regulatory provisions affecting DOPL's business and operations include:

• In areas where CAS has not been notified, TRAI has imposed a ceiling on monthly tariffs payable by individual subscribers to LCOs and MSOs. For further information on the Government mandated CAS in India, see "Industry Overview” and "Regulations and

Policies".

• MSOs are required to re-transmit signals of television channels received from a broadcaster, on a nondiscriminatory basis to LCOs. MSOs are not allowed to engage in any practice or activity or enter into any understanding or arrangement, including exclusive contracts, with any broadcaster or distributor of TV channels that prevents any LCO from obtaining such TV channels;

• DOPL can disconnect the TV signals that it supplies to LCOs, including for non-payment of its share of subscription fees or breach of other terms of its interconnection agreements with such LCOs, only as provided under the procedure prescribed by the Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004, as amended, and not at the discretion of DOPL. DOPL may be unable to secure any compensation for continued use of its signals by LCOs in breach of its interconnection agreements pending the completion of such procedure;

• DOPL is required to maintain certain quality standards established by the Standards of Quality of Service (Broadcasting and Cable Services) (Cable Television – Non CAS Areas) Regulation, 2009 and other laws and regulations. Any amendment in such standards may require DOPL to incur additional costs in order to comply with such laws and regulations; and

• Foreign investment (consisting of FDI and FII investments combined) in activities relating to a cable network is also restricted to 49.00% of the paid-up equity capital of a company engaged in such activities and is subject to prior FIPB approval and to the Cable Television Network Rules, 1994, as amended. Under the Cable TV Act, Indian nationals are required to hold at least 51.00% of the paid-up equity capital of a cable television company. This restricts the amount of capital that DOPL may raise by means of foreign investments.

Although we believe that DOPL is in material compliance with such laws and regulations, government authorities may allege non compliance, and there can be no assurance that DOPL will not be subject to any adverse regulatory action in the future. Increased regulation or changes in existing regulation may require DOPL to change its business strategies and operations resulting in an increase in its operating expenses. For example, in July 2008, TRAI submitted recommendations to the MIB for the introduction of a separate licensing framework for MSOs and LCOs, including district, state and national level licenses for MSOs and LCOs, specifying a minimum quality of service and performance standards, digitization and software standardization. For further information, see “Regulations and

Policies” beginning on page 93 of this Draft Red Herring Prospectus.

DOPL's present operations may not meet all regulatory requirements or subsequent regulatory amendments. In addition, the laws and regulations under which DOPL operates, and its obligation to comply with such laws and regulations, may result in delays in the development and production of its products and services, cause it to incur increased costs, or prohibit or severely restrict its business and operations. Additionally, DOPL relies on LCOs to provide the "last mile" connection to its secondary subscribers. In the event the LCOs which DOPL use are subjected to any adverse regulatory action, it may have a material and adverse effect on DOPL's business prospects and results of operations.

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3. DOPL is required to obtain and maintain certain governmental and regulatory licenses and permits

and the failure to obtain and maintain such licenses and permits may adversely affect its business

and operations.

DOPL is required to obtain and maintain certain approvals, licenses, registrations and permits in connection with its business and operations. There can be no assurance that DOPL will be able to obtain and maintain such approvals, licenses, registrations and permits in the future. An inability to obtain or maintain such registrations and licenses and comply with applicable conditions may adversely affect DOPL's ability to carry on its business and operations, and consequently its results of operations and financial condition.

4. The failure by an LCO to maintain cable infrastructure and service standards or any violation of

applicable laws and regulations by an LCO may adversely affect DOPL's reputation and business

prospects.

DOPL delivers television channels on its cable distribution network through LCOs, who provide the "last mile" cable link to the homes of subscribers. LCOs, which typically have direct contact with subscribers in respect of sales, billing, technical support and general customer services, may not successfully deliver the digital and analog services in a manner consistent with the prescribed standards and requirements. Any negative publicity regarding the brand or services resulting from such circumstances could adversely affect the business and results of operations of DOPL.

DOPL does not have any control over the quality of cable infrastructure that LCOs use to provide services to the subscriber. Further, DOPL's subscription revenue is dependent on the LCOs' ability to generate and maintain subscription revenue. Therefore, any failure by LCOs to obtain adequate subscription fees from subscribers may materially and adversely affect DOPL's results of operations. Any illegal activity by LCOs could also potentially expose DOPL to liability. For example, LCOs may offer content and programs on their network for which it may not have obtained appropriate permission or consent. DOPL may not have any control over any such action by the LCOs but such actions may result in DOPL being exposed to legal proceedings and claims. Any failure by an LCO in providing appropriate service quality may also adversely affect DOPL's reputation and business prospects and may expose it to legal and regulatory proceedings. For further information, please see “Regulations

and Policies” beginning on page 93.

5. An inability to convert its subscribers from analog to digital cable television services will materially

and adversely affect DOPL's business, results of operations and financial condition.

DOPL's revenue growth in the future will be significantly dependent on its ability to convert its subscribers from analog to digital cable television services and the provision of paid-for value-added services to its digital subscribers. Analog cable television services are more susceptible to piracy and unauthorized access since the signals transmitted through an analog platform and are not protected by encryption technology. Such piracy and unauthorized access may lead to a loss of revenue. The conversion of its subscribers from analog to digital cable television services is expected to result in a decrease in the under-reporting of number of subscribers by LCOs and enable DOPL to offer value-added services. While the shift from analog to digital cable services is mandatory in the limited areas where CAS has been implemented, it is currently unclear whether a further rollout of CAS will be on a mandatory or voluntary basis. There can be no assurance that DOPL will be able to successfully convert its subscribers who currently utilize analog cable television services to digital cable television services in non-CAS areas. Additionally, television viewers in India are accustomed to receiving terrestrial broadcast television channels for free and analog cable transmission at a relatively low monthly price and may not be willing to pay higher costs for digital television services, or additional fees for value-added services.

6. Broadcasters may discontinue providing program content to DOPL, which may adversely affect its

subscription revenues and results of operations.

Subscription agreements between DOPL and broadcasters relating to the supply of television channel signals by the broadcaster to DOPL set out the commercial and technical terms for such arrangements. A broadcaster may choose to terminate its agreement with DOPL and/or discontinue supplying such

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television channel signals either at will or as a result of any default by DOPL in complying with the terms of such arrangements. Any discontinuation of such supply of television channel signals to DOPL will prevent DOPL from providing such channels to the LCOs, resulting in a decrease in, or refund of, subscription revenues. An inability to provide the LCOs with such channels or programs may also result in LCOs terminating their arrangements with DOPL and entering into arrangements with competing MSOs, which may adversely affect DOPL's business prospects and results of operations.

7. DOPL may experience increased customer attrition in the future, which may materially and

adversely affect its business, financial condition and results of operations.

Customer attrition, or “churn”, results in the loss of future revenues from customers whose services are discontinued and the inability to recover the costs incurred in acquiring such customer. Customer attrition may result from various factors, including as a result of customers switching to other cable television service providers or other television service providers such as DTH or IPTV, LCOs switching to other MSOs which compete against DOPL, as well as a result of disconnection of LCOs and primary subscribers for non-payment of subscription fees. A high rate of churn may materially and adversely affect DOPL's business, financial condition and results of operations. There can be no assurance that DOPL will be able to implement measures to reduce customer churn or that its churn rate will not increase in the future.

8. The cable television business is highly competitive, which affects DOPL's ability to attract and retain

subscribers, thereby having an adverse effect on its business and results of operations.

The cable television business is highly competitive and is subject to rapid and significant changes in the industry, technology and regulatory and legislative environments. Certain competitors of DOPL may have longer operating histories, easier access to financing, greater operational and other resources, better brand name recognition and access to larger customer bases, as well as long-standing relationships with regulatory authorities and industry intermediaries, including other MSOs and LCOs. DOPL primarily competes with other cable television service providers in the markets in which it operates, as well as with direct-to-home (“DTH”) service providers, internet protocol television (“IPTV”) service providers and their respective local affiliates, including Hathway Cable Datacom Limited, DEN Networks Limited, Indusind Media & Communications Limited, Digicable Network (India) Private Limited and Wire and Wireless (India) Limited. Many of these competitors have established operations in several cities across India, including cities and towns that DOPL operates in. DTH service providers that DOPL competes with include Tata Sky, Dish TV, Sun Direct TV, BIG TV, Videocon and Bharti Airtel.

Increasingly, competition in the cable television business is based not only on program offerings, customer satisfaction, network quality and price, but also with respect to value-added services offered by cable television operators. In addition, other factors such as the development of new technologies and services within the industry may require DOPL to compete with new types of services offered by other providers. DOPL may also face increased competition from cable television operators and other competitors with greater financial, operational and other resources that commence operations in the markets currently serviced by DOPL. Such competitors may also be able to identify and acquire other MSOs and LCOs resulting in increased competition for DOPL.

DOPL may also face competition from newer technology platforms introduced in the cable television business, such as head-end in the sky ("HITS") technology. The government recently permitted HITS technology to commence tier services in India. The emergence of cable television service providers based on HITS technology may result in increased competition for contracts with LCOs.

In addition to the various competitive factors applicable to the cable television industry, DOPL's business is subject to various risks relating to increasing competition for the leisure and entertainment time of consumers. The cable television business generally competes with all other sources of entertainment and information delivery, including broadcast television, films, live events, radio broadcasts, home video products, console games, print media and the internet. Technological advancements, such as new video formats and internet streaming and downloading, have increased the number of entertainment and information delivery choices available to consumers and intensified the challenges posed by audience fragmentation. The increasing number of choices available to audiences

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could negatively impact demand for DOPL's products and services.

There can be no assurance that DOPL will be able to compete successfully in the future, and this may adversely affect its business prospects, results of operations and financial condition.

9. DOPL faces risks in relation to its plans for acquisitions of MSOs and the MSOs acquired may not

be profitable.

The MSOs that DOPL has acquired a majority interest in have collectively contributed losses after tax to DOPL's consolidated financial statements.

DOPL faces risks in connection with its acquisition of MSOs, including: integration of the acquired business; disruption of DOPL's ongoing business operations; incurrence of higher than anticipated costs in the continuing support and development of acquired cable networks; problems in coordinating the sales and marketing functions of an acquired business with the existing business; and cultural challenges associated with integrating employees from the acquired business.

DOPL’s due diligence process may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business. While DOPL typically acquires only the businesses (excluding past liabilities) of an MSO, DOPL may face litigation or other claims in connection with the businesses acquired, including claims from customers and other third parties. These difficulties could disrupt the ongoing business of DOPL, distract its management and employees, and adversely affect its results of operations. Moreover, even though the share subscription, share purchase and shareholder agreements entered into when acquiring MSO businesses typically contain provisions indemnifying DOPL in respect of various types of claims, there can be no guarantee that DOPL will be successful in making a claim against an MSO in the event that DOPL incurs costs or expenses in relation to a claim for which DOPL is indemnified.

10. New value-added services introduced by DOPL may not be successful, which could affect its

business, results of operations and financial condition.

DOPL plans to further enhance its digital cable services by offering additional value-added services such as pay-per-view, premium digital content tiers, digital recording devices, mosaic viewing, and interactive educational offerings. DOPL may be unable to provide unique and compelling value-added services to differentiate its offerings from those provided by other pay television operators. DOPL has limited prior experience in delivering such services and may not be able to successfully provide these services due to unforeseen technical, operational or regulatory challenges. Commercial acceptance by consumers of such services may not occur at the rate or level expected and DOPL may not be able to successfully adapt such services effectively and economically to meet consumer demand. In addition, there can be no assurance that DOPL's estimate of the necessary capital expenditure to offer such services will not be exceeded, and any such new services it introduces may not be technically or commercially successful or launched according to expected schedules.

11. DOPL's revenue may decrease significantly in the event of a decline in demand for channel carriage

and placement services.

DOPL derives a significant portion of its subscription revenue from carriage and placement fees paid by broadcasters for carrying their channels and placing their channels on their preferred signal and frequency bands. Placement and carriage fees are dependent on the number of households reached, the availability of preferred frequency bandwidth, the socioeconomic status of the subscriber base, the markets and regions served, and competition among television broadcasters for the preferred frequency band. In the event of any decline in the growth of the broadcasting business in India or if new channels are not introduced, revenues from carriage and placement fees may decrease. In addition, if the preferred frequencies requested by a broadcaster have already been allocated to another broadcaster, or if DOPL is otherwise unable to provide the preferred frequency requested, its revenues from carriage and placement fees may be materially and adversely affected.

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12. DOPL relies on the cooperation of the minority shareholders of the MSOs in which DOPL has

acquired a majority interest to conduct its operations. If DOPL's relationships with these minority

shareholders deteriorate, it could have a material adverse effect on DOPL's business and results of

operations.

DOPL's expansion strategy is based to a large extent on the acquisition of majority interests in MSOs with a view to maintaining and leveraging such partnerships. Generally, DOPL enters into a joint venture with either an existing MSO owner or with other members of the cable trade, which then holds a significant minority interest in the MSO. If these minority shareholders do not assist DOPL in successfully operating and growing these MSOs, DOPL could lose subscribers, revenues and market share.

Moreover, in the event any of these minority shareholders breaches its non-compete obligation under the relevant shareholder agreement or enters into any dispute with DOPL, it may have an adverse effect on the business, financial condition and results of operations of DOPL.

13. LCOs may terminate their affiliation agreements with DOPL, resulting in loss of subscribers and

subscription revenues for DOPL.

DOPL enters into affiliation agreements with LCOs, pursuant to which the LCOs receive the signal feed and offer DOPL's cable television services. DOPL competes with other MSOs to enter into such affiliation agreements with LCOs. An LCO may generally terminate such affiliation agreement subject to the 21 days’ statutory notice period, provided that all accounts are fully settled between DOPL and such LCO. LCOs are therefore not under any long-term obligation to remain affiliated with DOPL. Termination of the affiliation agreement by the LCO may result in a loss of subscribers, which may adversely affect DOPL's results of operations. In addition, an LCO may terminate such affiliation agreement with DOPL in breach of the terms of its agreement with DOPL, enter into affiliation agreements with other MSOs without providing the requisite notice to DOPL, or fail to settle its accounts with DOPL on the termination of the affiliation agreement. Under applicable regulations, cable television service providers are prohibited from discontinuing signal feeds to LCOs, even under circumstances such as non-payment of subscription fees by the LCO or breach of the terms of the affiliate agreement by the LCO, unless pursuant to the procedure prescribed by the Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004, as amended. DOPL may therefore be unable to secure any compensation for the continued supply of signal feeds to such LCOs until the completion of such procedure, and any such losses may adversely affect its business and results of operations.

14. An inability to acquire distribution rights for third party programs and content on commercially

acceptable terms may adversely affect its DOPL's ability to attract and retain subscribers.

DOPL acquires distribution rights from broadcasters and content aggregators for the content that it transmits to subscribers. Under applicable regulations, broadcast content must be made available by all content providers to all platforms on a non-discriminatory basis. There can be no assurance that the distribution rights to such third party programs and content will be available to DOPL on commercially acceptable terms, or that such programs and content will be attractive to its subscribers. Furthermore, DOPL's ability to offer content to cater to local preferences depends upon its ability to acquire distribution rights for such contents. Any inability to provide adequate local content may affect its ability to compete effectively with other MSOs with more popular local content. Any failure on DOPL's part to anticipate, identify and respond effectively to subscriber demands could adversely affect subscriber acceptance of its cable television services and result in subscriber churn. In addition, DOPL may be unable to pass on to the LCOs or the subscribers any increased costs relating to the acquisition of distribution rights for popular third party programs and content, which could adversely affect its results of operations.

15. An inability to provide quality product and service offerings including value-added services may

result in increased subscriber churn and decrease in DOPL's revenues.

An inability to provide high quality digital cable television and value-added services may adversely affect DOPL's business, resulting in increase in subscriber churn and decrease in DOPL's revenues. In

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addition, actual or perceived problems with the quality of DOPL's product and service offerings may lead to a lack of consumer confidence and adversely affect its ability to successfully introduce and monetize new products and services.

16. In the event that an increased investment in STBs is necessary, onerous conditions in vendor

contracts or financing arrangements could have a material adverse effect on DOPL's cash flow,

revenues and financial condition.

Since fiscal 2008, DOPL has not been able to recover its investment in STBs, which DOPL provides to subscribers. In order to continue to increase its subscriber base in India, DOPL may need to further reduce entry costs. Depending upon DOPL's suppliers' pricing of STBs, this may translate into a higher investment requirement. As a result, continued or increased investments in STBs in the future or an adverse change in the terms of vendor contracts or financing arrangements for the procurement of STBs could have a material adverse effect on DOPL's cash flow, revenues and financial condition.

17. DOPL is exposed to liability under the Cable TV Act and other laws in connection with the third

party content it carries.

Under the Cable TV Act, DOPL must comply with program and advertisement code on the channels that it provides to customers. Programs and advertisements provided by a broadcaster is beyond DOPL's control. However, DOPL may face potential liability in the event of breach of the program or advertisement code by a broadcaster.

EXTERNAL RISK FACTORS

RISKS RELATING TO THIS ISSUE AND INVESTMENT IN OUR EQUITY SHARES

1. The price of our Equity Shares may be volatile, or an active trading market for our Equity Shares

may not develop.

Prior to this Issue, there has been no public market for our Equity Shares. The trading price of our Equity Shares may fluctuate after this Issue due to a variety of factors, including our results of operations and the performance of our business, competitive conditions, general economic, political and social factors, the performance of the Indian and global economy and significant developments in India’s fiscal regime, volatility in the Indian and global securities market, performance of our competitors, the Indian media and entertainment sector, particularly the ISP and cable television services industry and the perception in the market about investments in these sectors, changes in the estimates of our performance or recommendations by financial analysts and announcements by us or others regarding contracts, acquisitions, strategic partnerships, joint ventures, or capital commitments. There can be no assurance that an active trading market for our Equity Shares will develop or be sustained after this Issue, or that the price at which our Equity Shares are initially offered will correspond to the prices at which they will trade in the market subsequent to this Issue.

2. Any future issuance of Equity Shares by our Company or sales of the Equity Shares by any of its

significant shareholders may adversely affect the trading price of the Equity Shares.

Any future issuance of our Equity Shares by our Company could dilute your shareholding. Any such future issuance of our Equity Shares or sales of our Equity Shares by any of our significant shareholders may also adversely affect the trading price of our Equity Shares, and could impact our ability to raise capital through an offering of our securities. Any issuance of Equity Shares may dilute our existing shareholders.

After the completion of the Issue, our Promoters will own, directly and indirectly, approximately [●]% of our outstanding Equity Shares. Sales of a large number of our Equity Shares by our Promoters could adversely affect the market price of our Equity Shares. Similarly, the perception that any such primary or secondary sale may occur could adversely affect the market price of our Equity Shares.

There can be no assurance that we will not issue further Equity Shares or that our shareholders will not dispose of, pledge or otherwise encumber their Equity Shares. In addition, any perception by investors

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that such issuances or sales might occur could also affect the trading price of our Equity Shares. Upon completion of the Issue, 20.00% of our post-Offer paid-up capital held by certain of our Promoters will be locked up for a period of three years from the date of allotment of Equity Shares in the Issue. For further information relating to such Equity Shares that will be locked up, please see Note 4 (d) of the Notes to the Capital Structure in the section “Capital Structure” on page 24. All other remaining Equity Shares that are outstanding prior to the Offer will be locked up for a period of one year from the date of allotment of Equity Shares in the Issue.

3. You will not be able to immediately sell any of the Equity Shares you purchase in this Issue on the

Stock Exchanges.

Under the ICDR Regulations, we are permitted to allot the Equity Shares within 15 days of the closure of the Issue. Consequently, the Equity Shares you purchase in this Issue may not be credited to your demat account with Depository Participants within 15 days of the closure of the Issue. You can start trading in the Equity Shares only after they have been credited to your demat account and listing and trading permissions are received from the Stock Exchanges. The Equity Shares will be listed on the NSE and the BSE. Pursuant to Indian regulations, certain actions must be completed before the Equity Shares can be listed and trading may commence. Investors’ book entry, or “demat” accounts with depository participants in India are expected to be credited within two working days of the date on which the Designated Stock Exchange approves the basis of allotment. Thereafter, upon receipt of final approval of the stock exchanges, trading in the Equity Shares is expected to commence within seven working days of the date on which the Designated Stock Exchange approves the basis of allotment. Further, there can be no assurance that the Equity Shares allocated to you will be credited to your demat account, or that the trading in Equity Shares will commence within the specified time periods.

4. There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the BSE

and the NSE in a timely manner, or at all, and any trading closures at the BSE or the NSE may

adversely affect the trading price of our Equity Shares.

In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted until after those Equity Shares have been issued and allotted. Approval requires all other relevant documents authorizing the issuing of Equity Shares to be submitted. There could be a failure or delay in listing the Equity Shares on the BSE and the NSE. In accordance with section 73 of the Companies Act, in the event that the permission of listing the Equity Shares is denied by the Stock Exchanges, our Company is required to refund all monies collected to investors. Please see the section “Other Regulatory and Statutory Disclosures” beginning on page 186. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares.

The regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in Europe and the U.S. A closure or prolonged suspension of trading on either or both of the BSE and the NSE may adversely affect the trading price of the Equity Shares.

5. There may be restrictions on daily movements in the price of the Equity Shares, which may

adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a

particular point in time.

Following the Issue, we may be subject to a daily ‘circuit breaker’ imposed by the stock exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based, market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuit breakers may be set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The Stock Exchanges do not inform us of the percentage limit of the circuit breaker in effect from time to time and may change it without our knowledge. This circuit breaker may limit the upward and downward movements in the price of the Equity Shares. As a result of this no assurance may be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time.

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6. There may be less information available about our Company and the Indian securities markets than

in securities markets in other more developed countries.

There is a difference between the level of regulation, disclosure and monitoring of the Indian securities markets and the activities of investors, brokers and other participants and that of markets in the United States and other more developed economies. SEBI is responsible for ensuring and improving disclosure and other regulatory standards for the Indian securities markets. SEBI has issued regulations on disclosure requirements, insider trading and other matters. There may, however, be less publicly available information about Indian companies than is regularly made available by public companies in more developed economies. As a result, shareholders may have access to less information about our business, results of operations and financial condition than those of our competitors that are listed on the BSE and the NSE and other stock exchanges in India on an ongoing basis than shareholders may have in the case of companies subject to the reporting requirements of other more developed countries.

7. Rights of shareholders under Indian law may be more limited than under the laws of other

jurisdictions.

Our Articles of Association, regulations of our Board of Directors and Indian law govern our corporate affairs. Legal principles relating to these matters and the validity of corporate procedures, Directors' fiduciary duties and liabilities, and shareholders' rights may differ from those that would apply to a company in another jurisdiction. Shareholders' rights under Indian law may not be as extensive as shareholders' rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their rights as a shareholder of our Company than as a shareholder of a corporation in another jurisdiction.

8. We cannot guarantee the accuracy or completeness of facts and other statistics with respect to India,

the Indian economy and the broadband, cable, media and entertainment industries contained in this

Draft Red Herring Prospectus.

While facts and other statistics in this Draft Red Herring Prospectus relating to India, the Indian economy as well as the broadband, media and entertainment industries and the cable television industry have been based on various publications and reports from agencies that we believe are reliable, we cannot guarantee the quality or reliability of such materials, particularly since there is limited publicly available information specific to the energy sector. While we have taken reasonable care in the reproduction of such information, industry facts and other statistics have not been prepared or independently verified by us or any of our respective affiliates or advisers and, therefore we make no representation as to their accuracy or completeness. These facts and other statistics include the facts and statistics included in “Industry Overview” on page 60. Due to possibly flawed or ineffective data collection methods or discrepancies between published information and market practice and other problems, the statistics herein may be inaccurate or may not be comparable to statistics produced elsewhere and should not be unduly relied upon. Further, there is no assurance that they are stated or compiled on the same basis or with the same degree of accuracy, as the case may be, elsewhere.

9. After this Issue, the price of the Equity Shares may be highly volatile.

The price of the Equity Shares on the Stock Exchanges may fluctuate after this Issue as a result of several factors, including:

• volatility in the Indian and global securities market or in the value of the Rupee relative to the U.S. dollar, the Euro and other foreign currencies;

• our profitability and performance;

• perceptions about our future performance or the performance of Indian companies in general;

• performance of our competitors and the perception in the market about investments in the businesses we operate;

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• adverse media reports on us or the Indian media and entertainment industry in general and the broadband and cable television industry in particular;

• changes in the estimates of our performance or recommendations by financial analysts;

• significant developments in India's economic liberalization and deregulation policies;

• significant developments in India's fiscal regulations; and

• any other political or economic factors.

10. Fluctuations in the exchange rate between the Rupee and the U.S. dollar could have a material

adverse effect on the value of the Equity Shares, independent of our operating results.

The Equity Shares are quoted in Rupees on the BSE and the NSE. Any dividends in respect of the Equity Shares will be paid in Rupees and subsequently converted into US dollars for repatriation. Any adverse movement in exchange rates during the time it takes to undertake such conversion may reduce the net dividend to investors. In addition, any adverse movement in exchange rates during a delay in repatriating the proceeds from a sale of Equity Shares outside India, for example, because of a delay in regulatory approvals that may be required for the sale of Equity Shares may reduce the net proceeds received by shareholders. The exchange rate between the Rupee and the U.S. dollar has changed substantially in the last two decades and could fluctuate substantially in the future, which may have a material adverse effect on the value of the Equity Shares and returns from the Equity Shares, independent of our operating results.

11. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

Under current Indian tax laws and regulations, capital gains arising from the sale of Equity Shares in an Indian company are generally taxable in India. Any gain realized on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if Securities Transaction Tax (“STT”) has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which the Equity Shares are sold. Any gain realized on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognized stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Further, any gain realized on the sale of listed equity shares held for a period of 12 months or less will be subject to short-term capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from taxation in India in cases where the exemption from taxation in India is provided under a treaty between India and the country of which the seller is resident. Generally, Indian tax treaties do not limit India's ability to impose tax on capital gains. As a result, residents of other countries may be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the Equity Shares.

12. A third party could be prevented from acquiring control of us because of anti-takeover provisions

under Indian law.

There are provisions in Indian law that may delay, deter or prevent a future takeover or change in control of our Company, even if a change in control would result in the purchase of your Equity Shares at a premium to the market price or would otherwise be beneficial to you. These provisions may discourage or prevent certain types of transactions involving actual or threatened change in control of us. Under the SEBI Takeover Regulations, an acquirer has been defined as any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights or control over a company, whether individually or acting in concert with others. Although these provisions have been formulated to ensure that interests of investors/shareholders are protected, these provisions may also discourage a third party from attempting to take control of our Company. Consequently, even if a potential takeover of our Company would result in the purchase of the Shares at a premium to their market price or would otherwise be beneficial to its stakeholders, it is possible that such a takeover would not be attempted or consummated because of Indian takeover regulations.

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13. Foreign investment restrictions under Indian law limit our ability to attract foreign investors, which

may adversely impact the market price of the Equity Shares and the ability of investors to sell or

trade the Equity Shares.

Under the foreign exchange regulations currently in force in India, transfers of shares between non-residents and residents are freely permitted (subject to certain exceptions) if they comply with the pricing guidelines and reporting requirements specified by the RBI. If the transfer of shares is not in compliance with such pricing guidelines or reporting requirements or fall under any of the exceptions referred to above, then the prior approval of the RBI will be required. Additionally, shareholders who seek to convert the Rupee proceeds from a sale of shares in India into foreign currency and repatriate that foreign currency from India will require a no objection or a tax clearance certificate from the income tax authority. We cannot assure investors that any required approval from the RBI or any other Government agency can be obtained on any particular terms, or at all.

As an Indian company, we are also subject to exchange controls that regulate borrowing in foreign currencies. In addition, foreign investment in activities pertaining to cable television network is restricted to 49.00% of the paid up equity capital of a company engaged in such activities subject to prior FIPB approval with gateways and radio paging and the Cable Television Network Rules, 1994.

Under the current policy of the Government of India on foreign investment, foreign investment in companies carrying out ISP activities without gateway, and in infrastructure providers providing Dark Fiber, right of way, duct space tower (category I) and/or electronic mail and voice mail, is permitted up to 100.00%, of which up to 49.00% foreign investment is permitted under the automatic route and an FIPB approval is required for any foreign investment exceeding 49.00%. However, pursuant to Press Note 2 (2007 Series) the Government of India has mandated all such companies to divest 26.00% of their equity in favor of the Indian public within five years, if such companies are listed in other parts of the world.

The restriction on foreign investment may restrict an investor's ability to sell the Equity Shares to foreign investors, including FIIs. The restrictions on foreign investments may also restrict an investor's ability to trade in the Equity Shares.

RISKS RELATING TO INDIA

1. Political instability or changes in the Government of India could adversely affect economic

conditions in India and consequently our business, financial condition and results of operations.

Our Company is incorporated in India, derive its revenues in India and all our assets is located in India. Consequently, our performance and the market price and liquidity of the Equity Shares may be affected by changes in exchange rates and controls, interest rates, Government policies, taxation, social and ethnic instability and other political and economic developments affecting India. The Government has traditionally exercised and continues to exercise a significant influence over many aspects of the economy. Our business and the business of certain of our subsidiaries, and the market price and liquidity of the Equity Shares may be affected by interest rates, changes in Government policy, taxation, social and civil unrest and political, economic or other developments in or affecting India. Since 1991, successive governments have pursued policies of economic and financial sector liberalization and deregulation and encouraged infrastructure projects. The new Government, which has came to power in May 2009 has announced policies and taken initiatives that support the economic liberalization program pursued by previous governments. The policies of the new Government may change the rate of economic liberalization, specific laws and policies affecting our industry as well as foreign investment in our industry, which may have indirect implications for our business. A significant change in the Government's policies in the future could affect business and economic conditions in India, and could also adversely affect our business, financial condition and results of operations.

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2. If communal disturbances or riots erupt in India, or if regional hostilities increase, this would

adversely affect the Indian economy, and our business, financial condition and results of

operations.

India has experienced communal disturbances, terrorist attacks and riots during recent years. If such events recur, our operational and marketing activities and those of our subsidiary may be adversely affected, resulting in a decline in our income.

The Asian region has from time to time experienced instances of civil unrest and hostilities among neighboring countries, including those between India and Pakistan. The hostilities between India and Pakistan are particularly threatening because both India and Pakistan are nuclear powers. Hostilities and tensions may occur in the future and on a wider scale. Military activity or terrorist attacks in India, such as the recent attacks in Mumbai in November 2008, as well as other acts of violence or war could influence the Indian economy by creating a greater perception that investments in India involve higher degrees of risk. Events of this nature in the future, as well as social and civil unrest within other countries in Asia, could influence the Indian economy and could have a material adverse effect on the market for securities of Indian companies, including the Equity Shares. A slow down in economic growth in India could cause our business to suffer.

3. An outbreak of an infectious disease or any other serious public health concerns in Asia or

elsewhere could adversely affect our business.

The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern, such as swine influenza, could have a negative impact on the global economy, financial markets and business activities worldwide, which could adversely affect our business. Although, we have not been adversely affected by such outbreaks in the past, we can give you no assurance that a future outbreak of an infectious disease among humans or animals or any other serious public health concern will not have a material adverse effect on our business.

4. A slowdown in economic growth in India and financial instability of the Indian financial market

could materially and adversely affect our results of operations and financial condition.

We currently derive all of our revenues from operations in India and consequently, our performance and growth is dependent on the state of the Indian economy. The Indian financial market and the Indian economy are influenced by economic and market conditions in other countries, particularly in Asian emerging market countries. Financial turmoil in Asia and elsewhere in the world in recent years has affected the Indian economy. Although economic conditions are different in each country, investors’ reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss in investor confidence in the financial systems of other emerging markets may cause increased volatility in Indian financial markets and, indirectly, in the Indian economy in general. For example, the Annual Policy Statement of the Reserve Bank of India released in April 2009 placed real GDP growth for the fiscal 2009 at approximately 7.1% as compared to 9.0% in fiscal 2008 following the downturn precipitated by the global financial crisis. Any worldwide financial instability could also have a negative impact on the Indian economy. Financial disruptions may occur again and could harm our results of operations and financial condition.

5. Taxes and other levies imposed by the Central or State Governments, as well as other financial

policies and regulations, may have an adverse effect on our business, financial condition and results

of operations.

We are subject to taxes and other levies imposed by the Central or State Governments in India, including customs duties, excise duties, central sales tax, state sales tax, fringe benefit tax, service tax, income tax, value added tax, entertainment tax, and other taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. The central and state tax regime in India is extensive and subject to change from time to time. Any adverse changes in any of the taxes levied by the Central or State Governments, including on cable modems may adversely affect our competitive position and profitability. We cannot assure you that any existing tax incentives will continue to be available in the future. Changes in, or elimination of, such tax incentives could adversely affect our financial condition and results of operations.

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6. Difficult conditions in the global capital markets and a slowdown in economic growth in India or

financial instability in Indian financial markets have affected and may continue to affect our

business and results of operations.

Economic developments outside India have adversely affected the markets in which we operate and our overall business. As widely reported, financial markets in the United States, Europe and Asia, including India, have experienced extreme disruption in the recent past, including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. These and other related events, such as the collapse of a number of financial institutions, have had and continue to have a significant adverse impact on the availability of credit and the confidence of the financial markets, globally as well as in India. Although economic conditions are different in each country, investors' reactions to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss in investor confidence in the financial systems of other emerging markets may cause increased volatility in Indian financial markets and, indirectly, in the Indian economy in general. The performance, quality and growth of our business are dependent on the health of the overall Indian economy. There can be no assurance that future fluctuations of the economic or business cycle, or other events that could influence the gross domestic product, will not have an adverse effect on our financial results and business prospects, as well as the price of our Equity Shares. Additionally, the price of our Equity Shares could decrease if investors have concerns that our business, financial condition and results of operations will be negatively impacted by a worldwide macroeconomic downturn.

In addition, if there is a tightening of credit in the financial markets in the future, financing for our projects may not be available on commercially acceptable terms and as a result, we may experience serious cash flow problems and the implementation and planning of our projects may be delayed. Uncertainty and adverse changes in the economy could also increase costs associated with our business operations in a number of ways, including increased interest rates, and increase our exposure to material losses from our investments. Moreover, India has experienced high levels of inflation in the past. In the event of high inflation rates, our costs, such as salaries and equipment, may increase, and we may not be able to pass on our costs to our customers.

7. A decline in India’s foreign exchange reserves may affect liquidity and interest rates in the Indian

economy, which could adversely impact our financial condition.

According to a report released by the RBI, India’s foreign exchange reserves totaled USD 283.47 billion as at December 31, 2009. A decline in India’s foreign exchange reserves could impact the valuation of the Rupee and could result in reduced liquidity and higher interest rates which could adversely affect our future financial performance.

8. Any downgrading of India's debt rating by an international rating agency may have a negative

impact on our business.

Any adverse revisions to India's credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing may be available. This may have an adverse effect on our business and future financial performance, our ability to obtain financing for capital expenditures and the trading price of our Equity Shares.

9. It may not be possible for you to enforce any judgment obtained outside India, including in the

United States, against our Company or any of our affiliates in India, except by way of a suit in India

on such judgment.

We are incorporated under the laws of India and majority of our Directors and executive officers reside in India. Furthermore, all of our Company's assets are located in India. As a result, you may be unable to:

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• effect service of process in jurisdictions outside India, including in the United States, upon our Company; or

• enforce in Indian courts judgments obtained in courts of jurisdictions outside India against our Company, including judgments predicated upon the civil liability provisions of the securities laws of jurisdictions outside India.

India has reciprocal recognition and enforcement of judgments in civil and commercial matters with a limited number of jurisdictions. A judgment from certain specified courts located in a jurisdiction with

reciprocity must meet certain requirements of the Code of Civil Procedure, 1908, as amended, (the "Civil Code"). The United States and India do not currently have a treaty providing for reciprocal recognition and enforcement of judgments in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in a non-reciprocating territory, such as the United States, for civil liability, whether or not predicated solely upon the general securities laws of the United States, would not be enforceable in India under the Civil Code as a decree of an Indian court. However, the party in whose favor such final judgment is rendered may bring a new suit in a competent court in India based on a final judgment that has been obtained in the United States or other such jurisdiction within three years of obtaining such final judgment. It is unlikely that an Indian court would award damages on the same basis as a foreign court if an action is brought in India. Moreover, it is unlikely that an Indian court would award damages to the extent awarded in a final judgment rendered outside India if it believed that the amount of damages awarded were excessive or inconsistent with Indian practice. In addition, any person seeking to enforce a foreign judgment in India is required to obtain the prior approval of the RBI to repatriate any amount recovered.

10. Natural calamities could have a negative effect on the Indian economy, adversely affecting our

business and the price of our Equity Shares.

India has experienced natural calamities such as earthquakes, a tsunami, floods and drought in the past few years. The extent and severity of these natural disasters determines their effect on the Indian economy. For example, as a result of drought conditions in the country during fiscal 2003, the agricultural sector recorded negative growth for that period. The erratic progress of the monsoon in 2004 and 2009 affected sowing operations for certain crops. Further prolonged spells of below normal rainfall or other natural calamities could have a negative effect on the Indian economy, adversely affecting our business and the price of our Equity Shares.

Prominent Notes to Risk Factors

1. Investors may contact the BRLM who has submitted the due diligence certificate to SEBI for any complaint pertaining to the Issue.

2. The net worth of our Company as of September 30, 2009 was Rs.2,247.36 million based on restated financial information of our Company.

3. Public Issue of up to [●] Equity Shares for cash at a price of Rs. [●] per Equity Share (including a share premium of Rs. [●] per Equity Share) aggregating to Rs. 3,600 million. The Issue will constitute up to [●]% respectively of our post Issue paid-up equity share capital.

4. The average cost of acquisition of our Equity Shares by our Promoters:

Name of Promoters Average cost of acquisition per Equity Share (In Rs.)*

YOU Telecom (Mauritius) Limited 10.36

Eyyuni Venkat Srinivas Chakravarthy 2.50

*The average cost of acquisition of our Equity Shares by our Promoters has been calculated by taking into account the

amount paid by them to acquire, by way of fresh issuance or transfer, the Equity Shares, and pursuant to the Scheme of

Capital Reduction. For more information, please refer to the section titled “Capital Structure” beginning on page 24 of

the Draft Red Herring Prospectus.

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5. The book value per Equity Share was Rs.9.73 as of September 30, 2009, based on the restated financial information of our Company.

6. For details of our related party transactions, see section titled “Financial Statements” beginning on page 129 of this Draft Red Herring Prospectus.

7. For details of transactions in the securities of our Company by our Promoters, directors of YTML and/or CVCIGPML, the Promoter Group and Directors in the last six months, see section titled “Capital Structure” beginning on page 24 of this Draft Red Herring Prospectus.

8. For information relating to the incorporation of our Company and change in name of our Company during the last three years immediately preceding the date of filing of this Draft Red Herring Prospectus, including changes in our Memorandum of Association see “History and Certain Corporate

Matters” beginning on page 101 of this Draft Red Herring Prospectus.

9. There are no financing arrangements whereby the Promoter Group, the directors of YTML and/or CVCIGPML, the Directors of our Company and their relatives have financed the purchase by any other person of securities of our Company other than in the normal course of the business of the financing entity during the period of six months immediately preceding the date of filing this Draft Red Herring Prospectus with SEBI.

10. Except as disclosed in the sections titled “Promoters and Group Companies” or “Our Management” beginning on pages 119 and 109, respectively, none of our Promoters, our Directors and our other key managerial employees have any interest in our Company except to the extent of remuneration and reimbursement of expenses and to the extent of the Equity Shares held by them or held by the companies in which they are interested as directors or members, and to the extent of the benefits arising out of such shareholding.

11. The Issue is being made under sub-regulation (2) (a) (i) and (2) (b) (i) of Regulation 26 of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and through the 100% Book Building Process, wherein at least 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers. Provided that our Company may allocate up to 30% of the QIB portion to the Anchor Investors on discretionary basis. Further 5% of the QIB Portion (excluding Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only and the remaining QIB portion shall be available for allocation to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. If at least 50% of the Net Issue cannot be allocated to the QIBs then the entire application money will be refunded forthwith. Further, not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders and not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Issue Price. For further details see section “Issue Structure” beginning on page 203 of this Draft Red Herring Prospectus.

12. Other than as stated in section titled “Capital Structure” beginning on page 24 of this Draft Red Herring Prospectus, we have not issued any Equity Shares for consideration other than cash.

13. Under-subscription, if any, in the Non-Institutional and Retail Portion would be allowed to be met with spill over from any other category at the discretion of our Company in consultation with the BRLM and the Designated Stock Exchange.

14. In case of over-subscription of the Issue, allotment to QIBs, Non-Institutional Bidders and Retail Bidders shall be on a proportionate basis. For more information, please refer to the section titled “Issue

Procedure” beginning on page 209 of this Draft Red Herring Prospectus.

15. Investors are advised to refer to section titled “Basis for Issue Price” beginning on page 47 of this Draft Red Herring Prospectus.

16. Trading in Equity Shares for all investors shall be in dematerialised form only. For further details, see “Issue Procedure” beginning on page 209 of this Draft Red Herring Prospectus.

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17. Any clarification or information relating to the Issue shall be made available by the BRLM and our Company to the investors at large and no selective or additional information would be available for a section of investors in any manner whatsoever.

18. Other than as stated here, and as disclosed in “Financial Statements”, none of our Group Companies have any business interest in our Company. For further details, see section titled “History and Certain Corporate Matters” beginning on page 101 of this Draft Red Herring Prospectus.

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SECTION III: INTRODUCTION

SUMMARY OF INDUSTRY

Unless noted otherwise, the information in this section is derived from industry sources and government

publications. None of the Company, the BRLM and any other person connected with the Issue has

independently verified this information. Industry sources and publications generally state that the

information contained therein has been obtained from sources believed to be reliable, but their accuracy,

completeness and underlying assumptions are not guaranteed and their reliability cannot be assured.

Industry sources and publications are also prepared based on information as of specific dates and may no

longer be current or reflect current trends. Industry sources and publications may also base their

information on estimates, projections, forecasts and assumptions that may prove to be incorrect.

Accordingly, investors should not place undue reliance on this information.

The Indian Economy

Over the last few years, India has shown strong economic growth. Despite the global economic downturn during fiscal 2009, overall gross domestic product (“GDP”) growth for the fiscal 2009 was approximately 7.1% as compared to 9.0% in fiscal 2008 following the downturn precipitated by the global financial crisis (Source: The Annual Policy Statement of the Reserve Bank of India in April 2009). India’s GDP is predicted to be on an uptrend, keep increasing, with a concomitant increase in income levels across urban, semi- urban and rural households. The demographic distribution, with the average consumer in the lower age brackets, appears to be favorable for the country’s economic growth. Approximately 70% of the country’s population is below 35 years of age, while more than 50% is likely to be under the age of 30, even in 2015 (Source: Euromonitor, FICCI – KPMG Report 2009).

The Indian Internet Broadband Industry The Indian broadband internet subscriber market comprised approximately 5.52 million subscribers in 2008, compared to 46,000 subscribers in 2003. The MPA Report 2009 projects that the number of broadband internet households will increase to approximately 13.93 million by 2013. Expressed as a percentage of total households, broadband internet subscription has relatively low penetration, with only 2% of total households in India with internet access. This percentage is projected to grow to 5% of total Indian households by 2013. (Source: MPA Report 2009). The penetration of broadband in India is also low in comparison to as compared to other countries in Asia, indicating a potential for significant growth (For

further details, refer to Broadband Penetration in Asian Countries in the Industry Overview Section). Consumer behavior for internet access has evolved over the years. When internet access became available in India in 1995, a majority of users accessed the internet through dial-up connections. The websites accessed were simple text pages that used low bandwidth. The proliferation and popularity of internet applications has brought about a surge in internet usage. Now, the internet is commonly used for email communication with large attachments, while narrow band e-commerce applications, such as online bill payment facilities, are also gaining in popularity. In conjunction, the internet has emerged as source for personal entertainment. New usage categories are also emerging, such as social networking sites, for example, www.facebook.com, and file-sharing sites, such as www.youtube.com. The resulting steep rise in internet traffic has created a growing requirement for internet service that is “always on”, while capable of handing high throughputs levels. The cable TV infrastructure has the capability of delivering higher speeds to consumers as compared to alternate modes such as a DSL service. Due to the ability of the operator to bundle multiple products, such as television, telephone and internet access, in a single package, such bundled services can be offered at lower cost to the customer. It is estimated that these benefits of Cable Broadband internet will drive its growth in India, with the MPA Report 2009 predicting that the number of Cable Broadband subscribers will increase to approximately 2.30 million in 2013, representing 16.5% of all Indian broadband internet subscribers, compared to 11% in 2008. (Source: MPA Report 2009)

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According to the MPA Report 2009, the total revenue in 2008 from Cable Broadband subscriptions in India was US$42.0 million, up from US$7.8 million in 2003. The MPA Report 2009 estimates that Cable Broadband subscription revenues will reach US$149.5 million in 2013, reflecting a significant increase in Cable Broadband subscriptions through 2013. The Indian Cable Television Industry India’s cable television industry has grown rapidly since its inception almost twenty years ago. Cable television is now established as a mass medium for entertainment and information, available in more than 80 million consumer households across India. This represents 64% of television-owning homes in the country. Compared to cable industry in the United States and Europe, cable TV in India is still at a nascent stage (For further details, please refer to “Industry Overview” section). As of December 31, 2008, the Indian cable TV industry generated an approximate turnover of Rs. 230 billion: Rs. 151 billion derived from the distribution of television content over analogue cable networks; Rs. 4 billion from the distribution of television programming over addressable digital cable networks; and Rs. 75 billion from cable television advertising sales. (Source: Media Partners Asia, Asia Pacific Pay-TV & Broadband Markets 2009) In recent years, the cable industry has added approximately 6 to 7 million new TV subscribers per annum. (Source: Media Partners Asia, Asia Pacific Pay-TV & Broadband Markets 2009) One of the challenges that face the industry is the under-declaration by LCOs of subscriber revenue. Historically, the LCOs have declared only a small part of their subscriber base and have not paid subscription fees based on their full analog customer base. This has led to low levels of subscription revenue. The deployment of digital cable TV provides an addressable distribution framework for the industry, which will bring about more equitable revenue sharing arrangements within the industry value chain, lessen the incidence of piracy, as well as provide a platform for the growth of pay channel services and value-added interactive services, including video-on-demand (“VOD”). This will lead to better average revenue per customer or “ARPU” for the MSO. Other benefits of Digitization:

Better picture and sound quality: Digital cable television, with its DVD picture and sound quality, provides an enhanced viewing experience compared to analog cable television.

Significantly more channels: Digital cable networks have significantly higher capacity to carry channels than an analog cable network. This translates into a broader channel selection and caters to a wider demographic compared to analog cable networks. Using the current technology and network design, the maximum number of channels that can be carried on analog cable is 106. A digital cable service can cater to over 500 channels.

Value-added services: Digital cable allows operators to provide subscribers with value-added services, such as an electronic program guide, video-on-demand, pay-per view and interactive-TV services, which provide multiple monetization opportunities for the MSO. Television broadcasting has seen a very rapid growth in the past few years. The number of broadcasted channels has increased very rapidly in the past few years - from 175 in 2006 to 485 in 2009, with numbers expected to increase further. This trend points towards localization and specialization of content. A lot of content / channels now cater to audiences in a specific area or of a certain demographic profile. An analog cable service has limitations in terms of the number of channels that can be telecast. Hence, in order to cater to the growing number of channels, a digital service tier is required to cater to the customers who opt to view more channels. As consumers experience interactivity over the internet, the requirement to bring interactivity on television has grown. Customers are opting for Video on Demand ("VoD") where the customer uses his remote control to purchase content, such a movies, archived programs and serials. In a DTH service, this is difficult to achieve without alternate or additional cables for the back channel. This is more easily achieved on HFC cable that is two-way. Hence, a broadband cable service provider has network infrastructure that is more suitable for meeting customer needs for interactivity.

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SUMMARY OF OUR BUSINESS

The following information is qualified in its entirety by, and should be read in conjunction with, the more

detailed financial and other information included in the Draft Red Herring Prospectus, including the

information contained in the section “Risk Factors” and “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” beginning on page xiv and page 130, respectively, of this

Draft Red Herring Prospectus.

In this section, unless the context otherwise requires, a reference to the "Company" or to "we", "us" and

"our" refers to YOU Broadband & Cable India Limited, and a reference to "DOPL" refers to Digital

Outsourcing Private Limited and its subsidiaries and associate company, on a consolidated basis. Unless

otherwise stated or the context otherwise requires, the financial information used in this section is derived

from the restated financial statements of our Company and the restated consolidated financial statements of

DOPL, as applicable.

Overview

We are one of the leading Cable Broadband service providers in India. We commenced operations in 2001 and currently provide high-speed broadband cable internet services to our residential and enterprise segment customers across 11 cities in India. As of September 30, 2009, we owned and operated over 990 kilometers of fiber optic cable and over 4,100 kilometers of trunk coaxial cable network, supported by 11 NOCs. As of September 30, 2009, our residential broadband internet service subscriber base aggregated approximately 200,779 customers. Based on internal estimates, we believe that our network covers approximately 1.50 million homes passed, and our residential broadband internet service subscriber base represents an estimated penetration of 13.4% of two-way broadband-enabled homes. Based on industry information derived from the TRAI Report dated January 7, 2010 "The Indian Telecom Services Performance Indicators July - September 2009" (“TRAI Report (January 2010)”), in such period, we had a market share of approximately 32.0% of the Cable Broadband internet market in India. We currently offer high-speed broadband internet access through our two-way hybrid fiber optic coaxial ("HFC") cable network. Our technologically advanced cable network infrastructure is capable of simultaneously supporting broadband internet, cable television and voice communication and we believe that we are one of the few broadband service providers in India with such "triple-play" capabilities. Our residential subscribers access our broadband internet through cable modem utilizing data over cable service interface specifications ("DOCSIS") technology on a variety of data transfer and unlimited internet plans. We deliver high bandwidth internet broadband services to our enterprise segment customers through cable modem or through dedicated leased line access. We also provide storage and security services and solutions to our enterprise segment customers. In addition, we lease our excess fiber network capacities and spare duct inventories to other telecommunication service providers. We have invested significantly in the development and expansion of our quality "triple-play" capable two-way HFC cable network infrastructure in a scalable manner. In fiscal 2007, 2008 and 2009, and in the six months ended September 30, 2009, we incurred capital expenditure of Rs. 216.89 million, Rs.441.48 million, Rs.127.67 million and Rs.40.08 million, respectively. Based on internal estimates, we believe that our existing cable network infrastructure which accommodates an estimated 1.50 million home passes, is capable of being expanded, at relatively low incremental investment, to accommodate an additional 0.50 million home passes. Our fiber optic backbone, broadband nodes and data centers provide a reliable infrastructure for internet traffic, as well as any analog and digital television transmission. For our enterprise segment customers located in areas not directly covered by our current infrastructure footprint, we have entered into leased line agreements with other telecommunication infrastructure owners to provide our services to such enterprise segment customers. We also offer limited wireless services connectivity to some of our residential broadband customers. We hold a pan-India Category "A" ISP license for our broadband internet services, as well as an Infrastructure Provider Category – I (IP-I) license, which permits us to lease our passive network infrastructure to other service providers. In addition, our ISP license enables us to offer voice over internet protocol ("VoIP") services as an internet telephony services provider ("ITSP"), which allows our customers

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to make international calls through our broadband network. In April 2007, we acquired the ISP business of IceNet.Net Limited to enhance our enterprise solutions and VoIP products. As of January 31, 2010, the Company had over 478 permanent employees. We are accredited by the International Organization for Standardization, with our quality management systems certified to ISO 9001:2000 standards, and our operations are ISO-certified in all cities of operation. Our total income increased by 63.49% from Rs.484.25 million in fiscal 2007 to Rs.791.73 million in fiscal 2009. Our total income in the six months ended September 30, 2009 was Rs.376.47 million.

Proposed DOPL Acquisition In May 2007, we made a strategic investment in our associate company Digital Outsourcing Private Limited. DOPL carries on cable television services business. DOPL currently provides cable television services across 10 cities in India, including Mumbai, Navi Mumbai, Bangalore, Vishakapattam and Nagpur. Of these 10 cities, four cities, namely Mumbai, Navi Mumbai, Bangalore and Vishakapatnam, overlap with the Cable Broadband services footprint and network infrastructure of our Company. As of February 28, 2010, DOPL offered its services to an estimated 1.5 million homes through cable operators and approximately 8,000 direct residential subscribers. For further information relating to DOPL and its business and operations, see "Business " beginning on page 76 and “Financial Statements” beginning on page 129. We have entered into certain strategic arrangements with DOPL to benefit from our operational synergies. In cities where there is an overlap of our and DOPL's operations, we lease out our fiber network to DOPL, and DOPL lays additional fiber connecting to our network to develop an access network to cable operators. We have also entered into service agreements to provide IT and billing support services to DOPL.

Our Company currently holds 36.24% of the paid-up equity share capital of Digital Outsourcing Private Limited. We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL Selling Shareholders who in the aggregate hold 26.05% of the equity shareholding in Digital Outsourcing Private Limited for the acquisition of the DOPL Sale Shares. The transactions contemplated in the DOPL Share Subscription and Purchase Agreement are subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. In the event that such conditions are not satisfied, we may not be able to complete the proposed DOPL Acquisition. For further information relating to the DOPL Acquisition and the DOPL Share Subscription and Purchase Agreement, see “History and Certain

Corporate Matters” beginning on page 101, "Objects of the Issue" on page 39, "Risk Factors - We have

entered into various agreements in connection with the proposed acquisition of additional equity shares in

Digital Outsourcing Private Limited. We may not be able to complete such proposed acquisitions which

could affect our business strategy and results of operations" beginning on page xiv and “Management’s

Discussion and Analysis of Financial Condition and Results of Operations - Proposed DOPL Acquisition

and Presentation of Financial Information” beginning on page 130.

Our Strengths One of the leading Cable Broadband service providers in India with an extensive broadband cable

network infrastructure in key markets We are one of the leading Cable Broadband service providers in India, offering high-speed broadband cable internet services to residential and enterprise segment customers across 11 cities in India, namely Mumbai, Navi Mumbai, Surat, Vadodara, Ahmedabad, Pune, Bangalore, Hyderabad, Vishakhapatnam, Chennai, and Gurgaon. All these cities are in the top 20 cities in India in terms of maximum internet usage (Source:

IMRB I Cube 2008 – Home Segment Report). Our infrastructure is strategically located in high density areas in these cities with high PC penetration and a concentration of SEC A and SEC B households. As of September 30, 2009, we owned and operated over 990 kilometers of fiber optic cable and over 4,100 kilometers of trunk coaxial cable network, supported by 11 NOCs. As of September 30, 2009, our residential broadband internet service subscriber base aggregated approximately 200,779 customers. Based on industry information derived from the TRAI Report (January 2010), in such period, we had a market

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share of approximately 32.0% of the Cable Broadband internet market in India. Based on internal estimates, we believe that our existing cable network infrastructure which accommodates an estimated 1.50 million home passes, is capable of being expanded, at relatively low incremental investment, to accommodate an additional 0.50 million home passes. We believe that our contractual right-of-way for areas covered by our network infrastructure was acquired at competitive terms. Advanced HFC cable network infrastructure capable of supporting broadband internet, cable television

and voice communication Our technologically advanced cable network infrastructure is capable of simultaneously supporting broadband internet, cable television and voice communications and we believe that we are one of the few broadband service providers in India with such "triple-play" capabilities. We believe that this will enable us to capitalize on increasing business opportunities resulting from government policy and regulatory environment in India supporting the expansion of broadband and telecommunications services and digitization of cable television. Our "triple-play" capable HFC infrastructure enables us to deliver convergent products and services and new value added product and service offerings, including analog and digital cable television services, using the same infrastructure and technical support personnel across various product and service lines. We are therefore able to explore additional product and service offerings and new revenue streams at low incremental operational cost and capital expenditure, and leverage our existing infrastructure to expand into the cable television business. We believe that our network infrastructure provides us with a distinct competitive advantage against competitors with limited network infrastructure and capabilities. Billing systems and processes that enable convergence

We have implemented a convergent billing platform known as Oracle BRM (Billing and Revenue Management System) under license from Oracle. This billing platform is capable of addressing requirements of large-scale and diversified business operations. As we introduce additional product and service offerings, we believe that our ability to integrate the delivery of multiple products and services under a single billing platform will result in increased operational and cost efficiencies. We have also developed and implemented customer relationship management ("CRM") software and systems to manage service delivery and customer relations. We believe that our integrated processes and systems and ability to provide multiple products and service offerings using the same billing infrastructure and process provide us with a distinct competitive advantage. Quality product and service delivery

We believe that our advanced network infrastructure, significant "last mile" network and direct operational control over such infrastructure, enable us to deliver quality product and service offerings and maintain high service levels in terms of response time and delivery quality. Our direct operational control also enables us to efficiently and effectively address customer needs, including requests for additional services or bandwidth upgrades. We have implemented a range of training initiatives for our employees, including at our in-house training institute in Pune, to ensure that our subscribers receive quality customer service. Customer inquiries are handled through locally-focused and dedicated customer service centers trained in technological developments, as well as technical and commercial matters relating to our operations and product and service offerings. We believe that our dedicated customer service centers and relationship management systems enable us to enhance our brand, increase customer loyalty and control churn. Our direct operational control also enables us to establish direct relationships with customers and more effectively market our products and services. We believe that this is a distinct competitive strength compared to operations of those Cable Broadband providers whose customer relationships are handled by local cable operators. Industry-experienced management team

Our management team includes experienced and qualified professionals, many of whom have been with the Company since its initial operations. Our senior management team has extensive experience in the

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telecommunications, internet services, as well as the cable television industry. Our senior management team and capable middle management personnel have been responsible for the successful development and expansion of our extensive cable network infrastructure, the implementation of our business strategies, and achievement of our growth targets. Our Strategies

Increase our subscriber base by expanding our network infrastructure and leveraging our brand and

direct marketing We intend to leverage our significant broadband cable infrastructure and large residential customer base to further consolidate our position in our existing markets. We continue to focus on markets, areas and customer segments characterized by high PC penetration and a concentration of SEC A and SEC B households, subject to technical and other considerations that affect the implementation of our network infrastructure. We intend to expand our network in existing cities through low incremental investment to increase the number of homes passed by approximately 30.0%. We are also in the process of evaluating expansion opportunities in certain other key cities in India. In order to expand our broadband footprint and improve customer experience, we also intend to establish wireless access points in large high-density areas. We expect the wireless internet service to increase our revenues and expand our subscriber base to include customers that require mobile internet access. We continue to increase our subscriber base by leveraging our strong brand image, direct access to our extensive residential customer base and our direct marketing and operational control. Our direct marketing efforts, including door-to-door sales calls, and our aggressive marketing and sales promotions have been and we believe will continue to be, a highly effective mode of acquiring new customers in the residential subscriber segment. We also continue to focus on providing superior customer service through the implementation of training programs and customer feedback processes to build customer loyalty and control churn. Continue to develop and market new value added products and services to generate additional revenue

streams

We continue to focus on the development and marketing of new value added products and services that we can deliver on our extensive network infrastructure to generate additional revenue streams and increase the revenue from existing customers. According to IMRB I Cube 2008 – Home Segment Report, the use of broadband internet for entertainment and e-commerce has steadily increased in India in recent years and the share of entertainment and e-commerce as a percentage of total broadband internet use in India increased from 4.00% in 2000 to 16.00% in 2008. We believe that that there will be increased use of the internet for e-commerce and for value-added services, such as e-learning, net shopping, and online entertainment, and that we are well positioned to capitalize in and benefit from such growth. We currently provide our customers various value-added services, including online shopping, gaming and e-learning solutions pursuant to arrangements with third party content and value-added service developers. We have also entered into arrangements with payment gateways to facilitate online payments and transactions by our customers. We believe that by actively developing and participating in the delivery of value-added services, we will be able to offer a better customer experience on value-added services, resulting in increased customer loyalty, while increasing our revenues from higher broadband usage. For our residential customers, we intend to increase our product penetration for our internet telephony services. We also intend to introduce additional gaming services available to our Cable Broadband subscribers on "YOU Play", as well as educational materials offered as online customizable term and chapter based test packs through "YOU Learn". We also continue to focus on generating additional revenue streams from our enterprise segment customers by providing value added services such as unified threat management solutions that comprises advanced security features and applications to monitor and control internet traffic. We also offer storage and security services and solutions, web hosting and data disaster recovery services, and implement networking solutions, including procurement of hardware, such as servers, routers and allied software and establishing

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internet connectivity links. Expand operations in the cable television business through the DOPL Acquisition and strategic

acquisitions of other MSOs and LCOs

We intend to expand our business and operations to include cable television services. We currently have a 36.24% shareholding in DOPL, which provides cable television services to an estimated 1.50 million residential subscribers in 10 cities across India, of which four cities overlap with our broadband services footprint. We have entered into certain strategic arrangements with DOPL to benefit from operational synergies. In cities where there is an overlap of our and DOPL's operations, we lease out our fiber infrastructure to DOPL, and DOPL lays additional fiber connecting to our network to develop an access network to cable operators. We have also entered into service agreements to provide IT and billing services to DOPL. We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL Selling Shareholders for the acquisition of the DOPL Sale Shares. The proposed DOPL Acquisition is however subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. For further information on the proposed DOPL Acquisition, see "Business” beginning on page 76. Subject to compliance with applicable regulatory requirements, we intend to expand the cable television business in and around the cities where we have our cable network infrastructure. The DOPL Acquisition is expected to result in increased operational synergies and other benefits resulting from the integration of our broadband cable infrastructure and the ability to provide integrated internet and cable television services. We also continue to evaluate opportunities for the strategic acquisition of other MSOs and LCOs. We intend to grow the cable television business by introducing advanced video services, such as video on demand and interactive set top boxes, and raising service quality and customer service standards through improved infrastructure and operational efficiencies. Acquire last mile connectivity We continue to identify suitable acquisition opportunities among LCOs and MSOs to expand our subscriber base and geographic reach and achieve economies of scale and delivery of standardized integrated broadband internet and cable television services. Our strategy is to continue to acquire "last mile" connections through strategic acquisitions of other MSOs and LCOs, in order to consolidate the cable television business in DOPL's existing markets and expand into other cities in India that have significant cable television viewership, particularly cities where we have an existing network infrastructure. We believe the ability to provide integrated services, and direct marketing and operational control through "last mile" connectivity, will enable us to introduce additional value added product and service offerings, and increase subscription revenues through elimination of under-reporting of the subscriber base by LCOs. Increase digital penetration DOPL currently offers approximately 85 channels through its analog cable television services and about 200 channels through its digital television services. This channel count and the selection of channels vary based on the demographic profile of customers in the area catered to by the respective head-end. We believe that DOPL's ability to offer different local and regional content on its service provides a competitive advantage over DTH satellite television, which broadcasts the same channels all over India. We intend to increase the digitization of DOPL's cable television services to decrease the risk of subscribers switching to another digital platform, such as DTH satellite television, consequently strengthening DOPL's existing relationships with LCOs and its subscribers. Increased digitization of DOPL's cable television services is also expected to result in a decrease in under-reporting of the subscriber base by LCOs associated with the provision of analog cable television services in India. Digitization also enables provision of additional channels, better quality picture and sound, value-added services such as an interactive electronic program guides, pay-per-view program reservations, personal video recording, audio music channels. We believe increased digitization of DOPL's service offerings will enable it to compete more effectively with other digital technologies.

SUMMARY FINANCIAL INFORMATION The following tables set forth summary financial information derived from our restated financial statements

as of and for the years ended March 31, 2005, 2006, 2007, 2008 and 2009 and as of and for the six months

ended September 30, 2009. These financial statements have been prepared in accordance with Indian

GAAP, the Companies Act and the SEBI ICDR Regulations and are presented in "Financial Statements"

beginning on page 129. The summary financial information presented in the following pages should be

read in conjunction with our restated financial statements, the notes thereto and "Management’s Discussion

and Analysis of Financial Condition and Results of Operations" on page 130.

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SUMMARY FINANCIAL INFORMATION OF

YOU BROADBAND & CABLE INDIA LIMITED Annexure I : Summary statement of assets and liabilities, as restated (Rs in millions) PARTICULARS 30-Sep-09 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 A FIXED ASSETS Gross block 2,768.18 2,722.82 2,464.97 2,188.00 452.27 392.36

Less : Accumulated depreciation and amortisation 1,342.88 1,205.56 942.84 690.18 68.96 41.52

Net block 1,425.30 1,517.26 1,522.13 1,497.82 383.31 350.84 Capital work-in-progress 153.48 159.81 303.88 141.02 87.86 142.80 1,578.78 1,677.07 1,826.01 1,638.84 471.17 493.64 B INVESTMENTS 192.23 192.23 187.74 - - - 192.23 192.23 187.74 - - -

C CURRENT ASSETS, LOANS AND ADVANCES

Inventories 2.80 3.28 10.45 2.32 - - Sundry debtors 77.73 72.64 74.26 36.48 83.54 44.43 Cash and bank balances 300.35 91.93 246.08 584.97 1.16 17.85 Loans and advances 810.24 771.63 577.25 337.49 199.50 216.03 1,191.12 939.48 908.04 961.26 284.20 278.31 D LIABILITIES AND PROVISIONS Secured loans 58.48 76.90 102.35 - - - Unsecured loans 242.30 - - 223.70 11.23 11.23 Current liabilities 392.80 384.93 372.62 259.35 11.58 18.91 Provisions 21.19 19.10 16.97 8.70 - - 714.77 480.93 491.94 491.75 22.81 30.14 E NET WORTH 2,247.36 2,327.85 2,429.85 2,108.35 732.56 741.81 Represented by : Share capital 2,308.61 2,308.61 3,894.97 825.45 102.35 102.35 Share application money - - - 2,573.29 720.00 700.00 Equity share – warrants* 0.00 0.00 0.00 - - - Reserves and surplus 33.34 22.87 215.17 22.39 - - Profit and loss account (debit balance) (94.59) (3.63) (1,680.29) (1,312.78) (89.79) (60.54) NET WORTH 2,247.36 2,327.85 2,429.85 2,108.35 732.56 741.81 * Less than Rs. 10,000

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure II : Summary statement of profits and losses, as restated (Rs in millions)

PARTICULARS 30-Sep-09 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 INCOME Revenue 356.16 738.69 680.98 444.15 41.86 30.56 Other income 20.31 53.04 25.30 40.10 0.32 0.86 376.47 791.73 706.28 484.25 42.18 31.42 EXPENDITURE Network operation expenses 79.95 184.83 197.93 133.48 15.62 5.78 Advertisement and sales promotions expenses 16.40 34.29 102.74 33.48 - - Personnel cost 83.79 176.84 194.07 179.71 - 14.49 Other expenditure 138.67 247.55 315.42 181.71 28.37 19.69 318.81 643.51 810.16 528.38 43.99 39.96 Restated profit / (loss) before depreciation and amortisation, miscellaneous expenditure and interest and finance charges 57.66 148.22 (103.88) (44.13) (1.81) (8.54) Depreciation and amortisation 138.33 269.45 256.53 216.98 27.44 22.59 Miscellaneous expenditure written off - - - 1.67 - - Interest and finance charges 10.29 13.02 2.89 1.02 - 0.10 148.62 282.47 259.42 219.67 27.44 22.69 Restated (loss ) before exceptional item and tax (90.96) (134.25) (363.30) (263.80) (29.25) (31.23) Less: Exceptional Item [Refer Note 4 (XI) to Annexure IV] - 22.87 - - - - Restated (loss ) before tax (90.96) (157.12) (363.30) (263.80) (29.25) (31.23) Less: Fringe benefit tax - (2.37) (2.84) (2.67) - - Less: Deferred tax [Refer Note 4 (x) to Annexure IV] - - - - - - Restated (loss) for the period / year (90.96) (159.49) (366.14) (266.47) (29.25) (31.23) Profit/(Loss) in profit and loss account brought forward (3.63) (1,680.29) (1,312.78) (89.79) (60.54) (29.31) Loss brought forward of Merged Company - - - (956.52) - - Add: transitional liability in respect of employees benefit - - 1.37 - - - Less: Adjustment on account of capital reduction - (1,836.15) - - - - Restated (Loss)/Profit in profit and loss carried forward (94.59) (3.63) (1,680.29) (1,312.78) (89.79) (60.54)

Basic & diluted earnings per equity share of Rs. 10 each (in Rs.)

(0.39) (0.41) (2.24) (3.43) (2.86) (3.05)

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure III : Summary statement of cash flow, as restated (Rs in millions) 30-Sep-09 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 Cash flows from operating activities Net (loss) before tax, as restated (90.96) (157.12) (363.30) (263.80) (29.25) (31.23) Adjustments for: Depreciation and amortization 138.33 269.45 256.53 216.98 27.44 22.59 Miscellaneous expenditure written off - - 1.67 - (0.00) Pre-Operative expenses written off - - - 0.85 - Loss on sale of fixed assets 0.21 6.25 5.08 1.89 - - Interest income (18.34) (34.49) (17.66) (38.21) (0.32) (0.86) Unrealised foreign exchange gain on loan (net) (1.41) - - - - - Excess liability written back - 14.34 6.11 - - - Interest expense 8.39 9.83 - - - - Employees welfare scheme cost 10.47 32.50 27.87 22.39 - - Operating cash flows before working capital changes 46.69 140.76 (85.37) (59.08) (1.28) (9.50) (Increase)/ decrease in sundry debtors (5.09) 1.62 (37.78) 23.38 (39.10) (30.56) Decrease/ (increase) in inventories 0.48 7.17 (8.13) (1.48) - - (Increase)/ decrease in loans & advances (26.28) (192.84) (245.39) (229.87) 16.58 (185.00) (Decrease)/ increase in current liabilities and provisions (10.34) 0.51 114.27 35.95 (7.33) (35.61) Cash flows generated from / (used in) operating activities 5.46 (42.78) (262.40) (231.10) (31.13) (260.67) Direct taxes refund / (paid) 0.48 (4.15) (3.54) (2.51) (0.06) (0.15) Net cash flows from operating activities 5.94 (46.93) (265.94) (233.61) (31.19) (260.82) Cash flows from investing activities Purchase of fixed assets (38.06) (160.05) (275.80) (153.03) (5.83) (70.69) Assets taken over on business purchase - - (75.40) - - - Proceeds from sale of fixed assets 0.22 1.30 0.66 4.27 - - Interest received 5.53 34.73 23.78 31.01 0.33 0.90 Purchase of investment in units of mutual funds - - - (61.00) - - Proceeds from sale of units of mutual funds - - - 76.28 - - Investments made in equity shares (Associates) - (4.49) (187.74) - - - Net cash (used) in investing activities (32.31) (128.51) (514.50) (102.47) (5.50) (69.79) Cash flows from financing activities Proceeds from issuance of equity share capital - 25.00 436.79 2,256.10 - - Proceeds from receipt of share application money - - - (1,526.81) 20.00 320.00 Repayment of unsecured loan - - - (45.10) - - Issue of debenture - - - 223.70 - - Proceeds from term loan 243.70 12.57 4.76 - - - Repayment of term loan (1.34) (6.95) - - - - Interest on term loan / lease interest paid (7.57) (9.33) - - - - Net cash generated from financing activities 234.79 21.29 441.55 907.89 20.00 320.00 Net increase/ (decrease) in cash and cash equivalents 208.42 (154.15) (338.89) 571.81 (16.69) (10.61) Cash and cash equivalents at beginning of period/ year 91.93 246.08 584.97 13.16 17.85 28.46 Cash and cash equivalents at end of period/ year 300.35 91.93 246.08 584.97 1.16 17.85 Cash and cash equivalents includes deposits pledged with banks as margin money for guarantees / letter of credits issued by bank on behalf of the Company. 61.33 66.15 56.38 26.31 0.61 0.58 * Includes cash and cash equivalents of the merged company - - - 12.00 - - Notes : 1. Cash and cash equivalents consist of Cash on hand, Bank balances in current account and deposit account and Cheques in hand. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

12

THE ISSUE

Equity Shares offered:

Issue to the Public(5) Upto [●] Equity Shares

Of which

QIB Portion(1)(2)(3) (allocation on a proportionate basis)

At least [●] Equity Shares to be Allotted

Out of which: a) Reservation for Mutual Funds

[●] Equity Shares

b) Balance for all QIBs including Mutual Funds

[●] Equity Shares

Non Institutional Portion(2)(3) (allocation on a proportionate Basis)

Not less than [●] Equity Shares

Retail Portion (2)(3) (allocation on a proportionate basis)

Not less than [●] Equity Shares

Employee Reservation Portion(4) [●] Equity Shares

Equity Shares outstanding prior to the Issue 241,549,948 Equity Shares

Equity Shares outstanding after the Issue [●] Equity Shares

Use of Issue proceeds

Please see the section titled “Objects of the Issue” beginning on page 39 of this Draft Red Herring Prospectus.

_________

(1) Our Company in consultation with BRLM may consider allocation of up to 30% of the QIB Portion

to Anchor Investors on a discretionary basis. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from Domestic Mutual Funds at or above the price at which allocation is being done to Anchor Investors. Bidding in the Anchor Investor Portion shall open and close on the Anchor Investor Bid/Issue Date, i.e., one day prior to the Bid/Issue Opening Date. Allocation to QIBs is proportionate as per the terms of the Red Herring Prospectus. QIBs will not be allowed to withdraw their Bid-cum-Application Forms

after the Bid/Issue Closing Date. For further details, see the section “Issue Procedure” beginning on page 209 of the Draft Red Herring Prospectus.

(2) Subject to valid bids being received at or above the Issue Price allocation shall be made on a

proportionate basis. Any under-subscription in any category (except the QIB portion) would be allowed to be met with spill-over from the Employee Reservation Portion or any other category at the discretion of our Company, in consultation with the BRLM and the Designated Stock Exchange. If however, at least 50% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Any unsubscribed portion in the Employee Reservation Portion shall be added to the Net Issue.

(3) The Company is considering a pre-Issue placement of up to 90 million Equity Shares for cash

aggregating upto Rs. 900 million with various investors (“Pre-IPO Placement”). The Pre-IPO Placement is at the sole discretion of the Company. If undertaken, the Pre-IPO Placement shall be completed by the Company, prior to the filing of the Red Herring Prospectus with the Registrar of Companies, Maharashtra, Mumbai. If the Pre-IPO Placement is completed, the Issue size offered to the public would be reduced to the extent of such Pre-IPO Placement, subject to minimum public Issue size being atleast 25% of our post-Issue Equity share capital.

(4) The portion of the Issue, aggregating upto Rs. 15.00 million. (5) As disclosed in the Objects of the Issue on page 39 of this Draft Red Herring Prospectus, our

13

Company intends to invest in MSO/LCO companies, so as to have a controlling stake therein. As per statutory/regulatory requirements, our Company can only have a controlling stake in MSO/LCO companies, if our Company is Indian owned and controlled, (that is, if at least 51% of the equity interest in our Company is beneficially owned by resident Indian citizens and/or Indian companies which are in turn owned by resident Indian citizens). In furtherance of our intention of being Indian owned and controlled as detailed above, allotments to successful Bidders will be made subject to the following:

i. the shareholding of FIIs in aggregate will not exceed 24% and individual shareholding of each FII will not exceed 10% of the total paid up equity share capital of the Company; and

ii. the total foreign shareholding of our Company will not exceed 49% of the aggregate post-Issue paid-up equity share capital of our Company, (“Foreign Investment Limits”)

Proportionate allocation will be made in each category of Bidders (other than Anchor Investor Portion) so as to ensure that the aforesaid Foreign Investment Limits are not exceeded. To further clarify, in the event, that the allocation on a proportionate basis to Bidders who are persons resident outside India, (“Non Resident Bidders”), results in breaching of the Foreign Investment Limits as specified above, then such relevant Non Resident Bidders shall receive such lower proportion of the allocation within the category of Bidders to which he belongs (that is, QIBs, Non-Institutional or Retail, as the case may be), so as to ensure compliance with the Foreign Investment Limits. The Equity Shares which would otherwise have been available for allocation to such Non Resident Bidder/s shall be proportionately adjusted within the remaining Bidders who are resident in India in the relevant category to which the aforesaid Non Resident Bidder/s belonged for further allocation on a proportionate basis.

14

GENERAL INFORMATION

Our Company was originally incorporated as NetShastr Facilities India Private Limited under the Companies Act, 1956 on November 13, 2000 in NCT of Delhi. The name of our Company was changed to BG Broadband Networks India Private Limited and a fresh certificate of incorporation consequent to change of name was issued by the Registrar of Companies, Delhi on June 29, 2001. The Registered office of the Company was relocated from 11-A, Sucheta Bhawan, 2nd Floor, Vishnu Digambar Marg, New Delhi – 110 002 to 1st Floor, Midas, Sahar Plaza, Kondivita, M.V. Road, Andheri (East), Mumbai – 400 059, Maharashtra pursuant to the order of Company Law Board, Northern Region Bench, Delhi dated January 7, 2003 and a fresh certificate of incorporation was issued by the Registrar of Companies, Maharashtra, Mumbai on February 24, 2003. Subsequently, the registered office of our Company was relocated from 1st Floor, Midas, Sahar Plaza, Kondivita, M.V. Road, Andheri (East), Mumbai – 400 059 to Ground Floor, Building No.1-C, Nirlon complex, off Western Express Highway, Goregaon (East), Mumbai – 400 063 with effect from March 25, 2003. Subsequently, our Company’s name was further changed to YOU Broadband Networks India Private Limited and a fresh certificate of incorporation consequent to change of name was issued by Registrar of Companies, Maharashtra, Mumbai on December 21, 2006. Further, pursuant to the Scheme of Amalgamation, our Company’s name was changed to YOU Telecom India Private Limited and a fresh certificate of incorporation was issued by the Registrar of Companies, Maharashtra, Mumbai on November 23, 2007. The registered office of our Company was further relocated from 1-C, Ground Floor, Nirlon Complex, Off Western Express Highway, Goregaon – East, Mumbai – 400063 to Plot No.54, Marol Co-operative Industrial Estate, Makwana, Andheri (East), Mumbai – 400059, with effect from September 1, 2008. The name of our Company was once again changed to YOU Broadband & Cable India Private Limited and a fresh certificate incorporation consequent upon change of name was issued by the Registrar of Companies, Maharashtra, Mumbai on November 17, 2009. Our Company was converted into a public limited company and the name was changed to YOU Broadband & Cable India Limited and a fresh certificate of incorporation was issued by the Registrar of Companies, Maharashtra, Mumbai dated January 12, 2010.

Registered Office and Corporate Office of our Company Plot No. 54, Marol Co-operative Industrial Estate, Makwana, Andheri East, Mumbai, Maharashtra - 400059 Tel: 91-22 - 40190000 Fax: 91-22 - 40190155 Company Identification Number: U51909MH2000PTC139321 Registration Number: 00139321

Address of Registrar of Companies

Our Company is registered with the Registrar of Companies, Maharashtra, Mumbai situated at the following address: Registrar of Companies, Maharashtra, Mumbai 100 Everest, Marine Drive, Mumbai 400 002 Tel.: (91 22) 2281 2639 Board of Directors

Our Board comprises the following:

Name, Father’s Name, Address and

Occupation

Age (Years) Status of Director in our

Company

Mr. Girish Kasthuri Rangan S/o A S K Rangan 102,

53 Chairman, Independent Non-Executive Director

15

Name, Father’s Name, Address and

Occupation

Age (Years) Status of Director in our

Company

Venus, A. Soares Road, Chembur, Mumbai-400071 Maharashtra, India Management Consultant DIN 01592833

Mr. Eyyuni Venkat Srinivas Chakravarthy S/o Mr. E Rangaswamy Chakravarthy 603 F Block, Great Eastern Gardens, LBS Marg, Kanjur Marg (West), Mumbai-400076, Maharashtra, India Business DIN 00603085

49 Chief Executive Officer, Executive, Non-Independent

Director

Mr. Michael David Kazma S/o Gerald Joseph Kazma 340 Sw 16th St, Boca Raton, Florida, 33432, United States Of America Executive DIN 02114978

45 Non Independent Non-Executive Director

Mr. Perumal Srinivasan S/o Perumal Ramamurthy 7A Belvedere Court, Sane Guruji Marg, Mahalaxmi, Mumbai-400011, Maharashtra, INDIA Service DIN-00365025

44 Non-Independent Non-Executive Director

Mr. Sean George Cronin Sutcliffe S/o John Vernon Sutcliffe Thatched House, 1 High Street, Wargrave, Reading, United Kingdom- RG108JA Service DIN 03014252

46 Independent Non-Executive Director

16

For further details of our Directors, see “Our Management” on page 109 of this Draft Red Herring Prospectus.

Company Secretary and Compliance Officer Mr. Mohammad Abdul Nadeem. Plot No. 54, Marol Co-operative Industrial Area, Makwana Road, Andheri East, Mumbai 400 059 Tel: 91-22-40190000 Fax: 91 –22 - 40190155 Email: compliance@youtelecom.com Investors can contact the Compliance Officer, the BRLM or the Registrar to the Issue in case of any pre or post- Issue related problems such as non receipt of letters of allotment, credit of allotted shares in the respective beneficiary account and refund orders Book Running Lead Manager Edelweiss Capital Limited 14th Floor, Express Towers Nariman Point Mumbai – 400 021, India Telephone: +91 22 4086 3535 Facsimile: +91 22 4086 3610 Contact Person: Mr. Chitrang Gandhi/ Mr. Jai Baid Email: you.ipo@edelcap.com Investor Grievance e-mail: customerservice.mb@edelcap.com Website: www.edelcap.com SEBI registration number: INM0000010650

Syndicate Member

[●]

Self Certified Syndicate Banks

The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on http://www.sebi.gov.in. For details on designated branches of SCSBs collecting the ASBA Bid cum Application Form, please refer the above mentioned link on the SEBI website

Domestic Legal Advisor to the Issue

J Sagar Associates Vakils House, 18, Sprott Road, Ballard Estate, Mumbai- 400 001 Tel: +91 22 6656 1500 Fax: +91 22 6656 1515 Email: mumbai.helpdesk@jsalaw.com Contact Person: Mr. Avik Sen Gupta

International Legal Advisor to the BRLM

DLA Piper Singapore Pte. Ltd. 80 Raffles Place UOB Plaza 1 #48-01 Singapore 048624

17

Tel: +65 6512 9595 Fax: +65 6512 9500

Registrar to the Issue Karvy Computershare Private Limited Plot No. 17 – 24, Vithalrao Nagar Madhapur Hyderabad 500 086, India Tel : (+91 40) 2342 0815-20 Fax : (+91 40) 2342 0814 E-mail: you.ipo@karvy.com Website: www.karisma.karvy.com Contact Person: Mr. Murali Krishna SEBI Registration No: INR000000221 Bankers to the Issue and Escrow Collection Banks

[●]

Bankers to the Company

ICICI Bank Limited Ground Floor, Om Shoppie Complex, Opposite Prime Arcade, Anand Mahal Road, Adajan, Surat -395009 Tel: +91-261-2763642/2763620 Fax: +91-261-2763632

Email: mukundraj.deshpande@icicibank.com

CITIBANK N.A. 1st Floor, Pelican Building, Opposite Race Course Tower, Gotri Road, Varodara -390 007 Tel: +91-265-6639255 Fax: +91-265-2324831 Email: Shyam.unnithan@citi.com YES BANK LIMITED Nehru Centre, 9th Floor, Discovery of India, Dr. Annie Beasant Road, Worli, Mumbai – 400 018 Tel: +91-22-66699000 Fax: +91-22-24900314 Email: Saurabh.sarayan@yesbank.in

HDFC Bank Limited HDFC Bank House, Senapati Bapat Marg, Lower Parel (West), Mumbai – 400 013

Tel: +91- 261-3227354 Fax: +91-261-2242780 Email: aashish.oza@hdfcbank.com

18

Auditors to the Company

B S R & Associates Chartered Accountants Lodha Excelus, 1st Floor, Apollo Mills Compound, NM Joshi Marg, Mahalaxmi, Mumbai 400 011. Tel: 022 30440800 Fax: 022 30440900 Email: bdhupelia@kpmg.com Contact Person: Bhavesh Dhupelia ICAI Registration No: 116231W

Monitoring Agency Since the Issue size is less than Rs. 5,000 million, our Company is not required to appoint a monitoring agency in connection with the Issue in terms of Regulation 16 of the SEBI ICDR Regulations. Appraising Entities:

Our Company has not appointed any appraising entity with respect to any of its activities.

Inter se Allocation of Responsibilities

S. No.

Activity

Responsibility

Coordinator

1. Capital structuring with relative components and formalities such as composition of the debt and equity, type of instruments, etc.

Edelweiss

Edelweiss

2. Due diligence of the Company’s operations/management/ business/plans/legal etc. Drafting and design of the offer document and of statutory advertisements including a memorandum containing salient features of the offer document. The BRLM shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, the RoC and SEBI including finalization of the Prospectus and RoC filing of the same.

Edelweiss

Edelweiss

3. Drafting and approval of all publicity material other than statutory advertisements as mentioned in (2) above but including corporate advertisement, brochure, corporate films, FAQs in relation to the Issue, etc.

Edelweiss

Edelweiss

4. Appointment of Registrar to the Issue, printers, advertising agency and Bankers to the Issue.

Edelweiss

Edelweiss

5. Preparation of road show presentation and FAQs Edelweiss

Edelweiss

6. Institutional marketing strategy

• Domestic and international

Edelweiss

Edelweiss

19

S.

No.

Activity

Responsibility

Coordinator

7. Non-institutional and Retail marketing of the Issue, which will cover, inter alia:

• Formulating marketing strategies, preparation of publicity budget;

• Finalising media and public relations strategy;

• Finalising centres for holding conferences for brokers, etc.;

• Co-ordination with Stock Exchanges for book building software, bidding terminals and mock trading;

• Follow-up on distribution of publicity and Issue material including forms, the Prospectus and deciding on the quantum of Issue material; and

• Finalising collection centres.

Edelweiss

Edelweiss

8. Finalisation of pricing in consultation with the Company. Edelweiss

Edelweiss

9. Post-Bidding activities including management of escrow accounts, follow-up with Bankers to the Issue and SCSBs to get quick estimates of collection and advising the Company about the closure of the Issue, co-ordination of non-institutional allocation, intimation of allocation and dispatch of refunds to Bidders, etc. The post-Issue activities will involve essential follow up steps, which include, based on correct figures, finalisation of the basis of Allotment or weeding out of multiple applications, finalisation of listing of instruments and dispatch of certificates and demat delivery of shares, with the various agencies connected with the work such as the Registrar to the Issue, the Bankers to the Issue, SCSBs and the bank handling refund business and SCSBs. The BRLM shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with the Company.

Edelweiss

Edelweiss

Credit Rating As this is an Issue of Equity Shares, there is no credit rating required for this Issue. IPO Grading This Issue has been graded by [●] and has been assigned a grade of [●]/5 indicating [●] fundamentals. The IPO Grading is assigned on a five point scale from 1 to 5, with IPO Grade 5/5 indicating strong fundamentals and IPO Grade 1/5 indicating poor fundamentals. For details in relation to the rationale furnished by [●], see “Annexure I” on page [●]. Attention is drawn to the disclaimer appearing on page [●]. Experts Except for the report of [●] in respect of the IPO Grading of this Issue (a copy of which will be annexed to the Red Herring Prospectus as Annexure I), furnishing the rationale for its grading which will be provided to the Designated Stock Exchange and except for such persons or entities deemed to be ‘experts’ under the Companies Act, our Company has not obtained any expert opinions. Trustee As this is an Issue of Equity Shares, the appointment of Trustees is not required. Book Building Process Book Building refers to the process of collection of bids from investors on the basis of the Red Herring Prospectus within the Price Band. This Issue Price is determined by our Company, in consultation with

20

the BRLM after the Bid/Issue Closing Date. The principal parties involved in the Book Building Process are: (1) Our Company; (2) The Book Running Lead Manager, in this Issue being Edelweiss Capital Limited; (4) The Syndicate Members, in this Issue being [●]; (5) The Registrar to the Issue, in this Issue being Karvy Computershare Private Limited; (6) The Escrow Collection Banks; and (7) The SCSBs. The Issue is being made through the 100% Book Building Process, wherein atleast 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIB Portion”). Provided that our Company may allocate up to 30% of the QIB portion to the Anchor Investors on discretionary basis (“Anchor Investor Portion”). Further 5% of the QIB Portion (excluding Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only and the remaining QIB portion shall be available for allocation to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. If atleast 50% of the Net Issue cannot be allocated to the QIBs then the entire application money will be refunded forthwith. Further, not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders and not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Issue Price. Further, [●] Equity Shares aggregating upto Rs. 15 million shall be made available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received at or above the issue price in the Employee Reservation Portion. In case of over-subscription in all categories, at least 50% of the Issue shall be available for allocation on a proportionate basis to QIB Bidders, 5% of the QIB Portion (excluding Anchor Investor Portion) shall be available for allocation on a proportionate basis to Mutual Funds only and the remaining QIB Portion shall be available for allocation to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Furthermore, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in any category, except the QIB Portion, would be allowed to be met with spill-over from any other category or combination of categories at the discretion of our Company in consultation with the BRLM and the Designated Stock Exchange. If at least 50% of the Issue is not allocated to the QIBs then, the entire subscription monies shall be refunded. In case of under-subscription in the Net Issue, would be allowed to be met with spill-over from the Employee Reservation Portion at the discretion of our Company, in consultation with the BRLM and the Designated Stock Exchange. Any unsubscribed portion in the Employee Reservation Portion shall be added to the Net Issue.

Bids by QIBs (including Anchor Investors) will have to be submitted to the BRLMs. QIBs are not

allowed to withdraw their Bid after the Bid/Issue Closing Date. Anchor Investors are not allowed to withdraw their Bids after the Bid/Issue Closing date. QIBs that are Anchor Investors are required

to pay their Bid Amount in full at the time of submission of the Bid Allocation to QIBs will be on a

proportionate basis and allocation to Anchor Investors will be on discretionary basis. For details

please see the section titled “Issue Structure” beginning on page 203 of this Draft Red Herring

Prospectus.

Bids by ASBA Bidders will only have to be submitted to the SCSBs at the Designated Branches.

The process of Book Building under SEBI ICDR Regulations is subject to change from time to time

and investors are advised to make their own judgment about investment through this process prior

to making a Bid or application in the Issue. Our Company will comply with the SEBI ICDR Regulations and any other ancillary directions issued by SEBI in connection with the issue of securities by an Indian company to the public in India. In this regard, our Company has appointed Edelweiss Capital Limited as the BRLM to manage the Issue and to procure subscriptions for the Issue.

21

Illustration of Book Building and Price Discovery Process (Investors should note that the following is solely for the purpose of illustration and is not specific to the

Issue)

Bidders can bid at any price within the price band. For instance, assuming a price band of Rs.20 to Rs.24 per share, an issue size of 3,000 equity shares and receipt of five bids from bidders, details of which are shown in the table below, the illustrative book would be as given below. A graphical representation of the consolidated demand and price would be made available at the bidding centres during the bidding period. The illustrative book as shown below indicates the demand for the shares of the company at various prices and is collated from bids from various investors.

Bid Quantity

Bid Price (Rs.)

Cumulative Equity Shares Bid

for

Subscription

500 24 500 16.67%

1,000 23 1,500 50.00%

1,500 22 3,000 100.00%

2,000 21 5,000 166.67%

2,500 20 7,500 250.00%

The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the desired number of shares is the price at which the book cuts off, i.e., Rs.22 in the above example. The issuer, in consultation with the BRLM, will finalize the issue price at or below such cut off, i.e., at or below Rs.22. All bids at or above this issue price and cut-off bids are valid bids and are considered for allocation in the respective categories. Steps to be taken by the Bidders for Bidding

1. Check eligibility for making a Bid (see “Issue Procedure” beginning on page 209 of this Draft

Red Herring Prospectus); 2. Ensure that you have a demat account and the demat account details are correctly mentioned in

the Bid cum Application Form and the ASBA Bid cum Application Form; 3. In accordance with the SEBI ICDR Regulations, the PAN would be the sole identification

number for participants transacting in the securities market, irrespective of the amount of transaction except for Bids on behalf of the Central or State Government, residents of Sikkim and the officials appointed by the courts;

4. Ensure that the Bid cum Application Form is duly completed as per instructions given in this

Draft Red Herring Prospectus and in the Bid cum Application Form and the ASBA Bid cum Application Form;

5. Ensure the correctness of your demographic details (as defined in the “Issue Procedure” on page

209) given in the Bid cum Application Form and the ASBA Bid cum Application Form, with the details recorded with your Depository Participant.

6. Bids by QIBs will only have to be submitted to the BRLM. 7. Bids by ASBA Bidders will have to be submitted to the designated branches of the SCSBs.

ASBA Bidders should ensure that their bank accounts have adequate credit balance at the time of submission to the SCSB to ensure that the ASBA Bid cum Application Form is not rejected.

Withdrawal of the Issue

Our Company, in consultation with the BRLM, reserves the right not to proceed with the Issue anytime after the Bid/Issue Opening Date but before the Allotment of Equity Shares. In such an event the Company would issue a public notice in the newspapers, in which the pre-Issue advertisements were published, within two days of the Bid/Issue Closing Date, providing reasons for not proceeding with the

22

Issue. The Company shall also inform the same to Stock Exchanges on which the Equity Shares are proposed to be listed. In the event that the Company decides not to proceed with the Issue after Bid/Issue Closing Date, the Company would be required to file fresh draft red herring prospectus with SEBI. Notwithstanding the foregoing, the Issue is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for only after Allotment, and (ii) the final RoC approval of the Prospectus after it is filed with the Stock Exchanges. Bid/Issue Programme*

BID/ISSUE OPENS ON [●]

BID/ISSUE CLOSES ON [●] *The Company may consider participation by Anchor Investors. The Anchor Investor Bid/Issue Period shall be one day prior to the

Bid/Issue Opening Date

Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centers mentioned on the Bid cum Application Form or incase of bids submitted through ASBA, the designated branches of the SCSBs except that on the Bid/Issue Closing Date, Bids shall be accepted only between 10.00 a.m. and 3.00 p.m. (Indian Standard Time) and uploaded till (i) 4.00 p.m. in case of Bids by QIB Bidders and Non-Institutional Bidders and Eligible Employees (ii) till until 5.00 p.m. in case of Bids by Retail Individual Bidders. Due to limitation of the time available for uploading the Bids on the Bid/Issue Closing Date, the Bidders are advised to submit their Bids one day prior to the Bid/Issue Closing Date and, in any case, no later than 3.00 p.m. (Indian Standard Time) on the Bid/Issue Closing Date. Bidders are advised that due to clustering of last day applications, as is typically experienced in public offerings, some Bids may not get uploaded on the last date. Such Bids that cannot be uploaded will not be considered for allocation under the Issue. If such Bids are not uploaded, the Issuer, BRLM and Syndicate members will not be responsible. Bids will be accepted only on Business Days, i.e. Monday to Friday (excluding any public holiday). Bids by ASBA Bidders shall be uploaded by the SCSB in the electronic system to be provided by the NSE and the BSE. On the Bid/Issue Closing Date, extension of time may be granted by the Stock Exchanges only for uploading the Bids received by Retail Individual Bidders after taking into account the total number of Bids received up to the closure of timings for acceptance of Bid cum Application Forms and ASBA Form as stated herein and reported by the BRLM to the Stock Exchange within half an hour of such closure. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical Bid form, for a particular bidder, the details as per physical application form of that Bidder may be taken as the final data for the purpose of allotment. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical or electronic Bid cum Application Form, for a particular ASBA Bidder, the Registrar to the Issue shall ask for rectified data from the SCSB. The Company reserves the right to revise the Price Band during the Bid/Issue Period in accordance with the SEBI ICDR Regulations provided that the Cap Price is less than or equal to 120% of the Floor Price. The Floor Price can be revised up or down to a maximum of 20% of the Floor Price. In case of revision of the Price Band, the Issue Period will be extended for three additional working

Days after revision of the Price Band subject to the total Bid /Issue Period not exceeding 10

working Days. Any revision in the Price Band and the revised Bid/Issue, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a press release and also by

indicating the changes on the website of the BRLM and at the terminals of the Syndicate. Underwriting Agreement

After the determination of the Issue Price and allocation of Equity Shares, but prior to filing of the Prospectus with RoC, our Company and the Underwriters intend to enter into an Underwriting Agreement for the underwriting of the Equity Shares proposed to be offered through the Issue. Pursuant to the terms of the Underwriting Agreement, the BRLM shall be responsible for bringing in the amount devolved in the event that the Syndicate Member does not fulfill its underwriting obligations. Pursuant to the terms of

23

the Underwriting Agreement, the obligations of the Underwriters are several and are subject to certain conditions to closing, as specified therein. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: (This portion has been intentionally left blank and will be completed before filing of the Prospectus with

the RoC.)

Name and Address of the

Underwriters

Indicative Number of Equity

Shares to be Underwritten

Amount Underwritten (Rs.

Million)

[●] [●] [●]

[●] [●] [●]

Total [●] [●]

The above-mentioned amount is an indicative underwriting and would be finalized after determination of the Issue Price and actual allocation of the Equity Shares. The Underwriting Agreement has been entered into on [●], 2010 and has been approved by our Company’s Board of Directors. Allocation among the Underwriters may not necessarily be in the proportion of their underwriting commitments. Notwithstanding the above table, the BRLM and the Syndicate Members shall be severally responsible for ensuring payment with respect to Equity Shares allocated to investors procured by them in accordance with the terms of the Underwriting Agreement. In the event of any default in payment, the respective Underwriter, in addition to other obligations defined in the Underwriting Agreement, will also be required to procure/subscribe to Equity Shares to the extent of the defaulted amount, except in case where allocation to QIBs is less than 50% in which case the entire subscription money will be refunded. The underwriting arrangements mentioned above shall not apply to the subscriptions by the ASBA Bidders in this Issue. In the opinion of the Board of Directors (based on a certificate given by the Underwriters), the resources of the Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. Each Underwriter is registered with SEBI under Section 12(1) of the Securities and Exchange Board of India Act, 1992 or registered as brokers with the Stock Exchanges. The BRLM has an interest in our Company as a shareholder of 1,076,555 Equity Shares, representing approximately 0.45% of the pre-Issue share capital of the Company. For further information, see "Capital Structure" on page 24 of this Draft Red Herring Prospectus.

24

CAPITAL STRUCTURE

The share capital of the Company as at the date of filing this Draft Red Herring Prospectus, before and after the Issue, is set forth below.

(Rs. in Million)

Aggregate

nominal

Value

Aggregate

value at

Issue

Price

A. Authorized Share Capital

750,000,000 Equity Shares of face value of Rs 10 each 7,500.00 -

B. Issued, Subscribed and Paid-up Share Capital before the Issue

241,549,948* Equity Shares of Rs 10/- each fully paid up 2,415.50 -

C. Present Issue in terms of this Draft Red Herring Prospectus

[●] Equity Shares [●] 3,600.00

D. Employee Reservation Portion#

[●] Equity Shares [●] 15.00

E. Net Issue to the Public

[●] Equity Shares [●] 3,585.00

F. Paid up capital after the Issue

[●] Equity Shares [●] -

G. Securities Premium Account

Before the Issue NIL -

After the Issue [●] -

* Pursuant to the Scheme of Capital Reduction vide an order dated December 18, 2009 and

supplementary order dated January 28, 2010 of the High Court of Bombay the paid up equity share

capital of our Company was reduced from Rs.3,913,220,040 to Rs.2,308,611,910. Pursuant to resolution

dated March 30, 2010 passed by the shareholders of our Company, 10,688,757 equity shares of face

value of Rs. 10 each were allotted for consideration other than cash.

# subject to such reservation not exceeding Rs. 15.00 million

The Issue has been authorized under section 81 (1A) of the Companies Act by the shareholders of our

Company at an extra-ordinary general meeting dated February 16, 2010

Changes in Authorised Share Capital 1. The initial Authorised Share capital of Rs.500,000 divided into 50,000 Equity Shares of Rs.10

each was increased to Rs.200,000,000 divided into 20,000,000 Equity Shares of Rs.10 each ranking pari passu with the existing Equity Shares of the Company pursuant to a resolution of shareholders passed at an EGM held on July 31, 2002.

2. The Authorised Share capital of Rs.200,000,000 divided into 20,000,000 Equity Shares of Rs.10

each was increased to Rs.500,000,000 divided in to 50,000,000 Equity Shares of Rs.10 each pursuant to resolution of shareholders passed at an EGM held on March 31, 2004.

3. The Authorised Share capital of Rs.500,000,000 divided into 50,000,000 Equity Shares of Rs.10

each was increased to Rs.830,000,000 and reclassified comprising of 10,250,000 Equity Shares of Rs.10 each and 72,750,000 Preference Shares of Rs.10 each pursuant to resolution of shareholders passed at an EGM held on May 30, 2006.

4. The Authorised Share capital of Rs.830,000,000 comprising of 10,250,000 Equity Shares of

Rs.10 each and 72,750,000 Preference Shares of Rs.10 each was reclassified as Rs.830,000,000 comprising of 83,000,000 Equity Shares of Rs.10 each pursuant to resolution of shareholders passed at an EGM held on January 5, 2007.

5. The Authorised Share capital of Rs.830,000,000 comprising of 83,000,000 Equity Shares of

Rs.10 each was increased to Rs.3,430,000,000 divided into 188,000,000 Equity Shares of Rs 10 each and 155,000,000 Preference Shares of Rs 10 each pursuant to a resolution passed by the shareholders of our Company at an EGM dated January 5, 2007 and subsequently approved by

25

Hon’ble High Court vide its Order dated April 11, 2007 under the Scheme of Amalgamation. 6. The Authorised Share capital of the Company of Rs.3,430,000,000 divided in to 188,000,000

Equity Shares of Rs.10 each and 155,000,000 Preference Shares of Rs.10 each was reclassified as Rs.3,430,000,000 comprising of 242,999,998 Equity Shares of Rs.10 each and 100,000,002 Preference Shares of Rs.10 each pursuant to resolution of shareholders passed at an EGM held on May 25, 2007.

7. The Authorised Share capital of Rs.3,430,000,000 divided into 242,999,998 Equity Shares of

Rs.10 each and 100,000,002 Preference Shares of Rs.10 each were reclassified as Rs.3,430,000,000 comprising of 247,999,998 Equity Shares of Rs.10 each and 95,000,002 Preference Shares of Rs.10 each pursuant to a resolution of shareholders passed at an AGM held on October 29, 2007.

8. The Authorised Share Capital of the Company consisting of Rs.3,430,000,000 divided in to

247,999,998 Equity Shares of Rs.10 each and 95,000,002 Preference Shares of Rs.10 each was increased and reclassified to consist of Rs.4,180,000,000 divided in to 418,000,000 Equity Shares of Rs.10 each pursuant to a resolution of shareholders at an EGM on February 29, 2008.

9. The Authorised Share Capital of the Company consisting of Rs. Rs.4,180,000,000 divided in to

418,000,000 Equity Shares of Rs.10 each was increased to Rs. 7,500,000,000 divided in to 750,000,000 Equity Shares of Rs.10 each pursuant to the resolution of shareholders at an EGM on February 16, 2010

Pre-IPO Placement

Our Company is considering Pre-IPO Placement of up to 90 million Equity Shares for cash aggregating upto Rs. 900 million with various investors. If undertaken, the Pre-IPO Placement shall be completed by our Company, prior to the filing of the Red Herring Prospectus with the Registrar of Companies, Maharashtra, Mumbai. If the Pre-IPO Placement is completed, the Issue size offered to the public would be reduced to the extent of such Pre-IPO Placement, subject to minimum public Issue size being atleast 25% of our post-Issue equity share capital.

Notes to the Capital Structure 1. Share Capital History of our Company

a. The following is the history of the Equity Share capital of our Company:

Date of

Allotment

(*)

Number of

Equity

Shares

Nature of

Allotment

Face

Value

(Rs.)

Issue

Price

(Rs.)

Nature of

Consideration

Cumulative

No. of

Equity

Shares

Cumulative

Share Capital

(Rs.)

Cumulative

Share

Premium

Account (Rs.)

November 06, 2000

2 Subscription to Memorandum of Association of our Company

10.00 10.00 Cash 2 20.00 0.00

September 5, 2001

10,000 Preferential allotment of Equity Shares to BG India Telecom (Mauritius) Limited (erstwhile

name for YOU

Telecom

10.00 10.00 Cash 10,002 100,020.00 0.00

26

Date of

Allotment

(*)

Number of

Equity

Shares

Nature of

Allotment

Face

Value

(Rs.)

Issue

Price

(Rs.)

Nature of

Consideration

Cumulative

No. of

Equity

Shares

Cumulative

Share Capital

(Rs.)

Cumulative

Share

Premium

Account (Rs.)

(Mauritius)

Limited)

September 11, 2002

10,225,488 Preferential allotment of Equity Shares to BG India Telecom (Mauritius) Pte Limited (erstwhile

name for YOU

Telecom

(Mauritius)

Limited)

10.00 10.00 Cash 10,235,490 102,354,900.00 0.00

January 5, 2007

72,310,000 Allotment of Equity Shares pursuant to conversion of Preference Shares allotted to YOU Telecom (Mauritius) Limited

10.00 NA Conversion of Preference Shares

82,545,490 825,454,900.00 0.00

October 26, 2007

95,009,998 Allotment of Equity Shares to YOU Telecom (Mauritius) Limited pursuant to the Scheme of Amalgamation

10.00 NA Consideration other than cash, (pursuant to the Scheme of Amalgamation)

177,555,488 1,775,554,880.00 0.00

October 26, 2007

2 Allotment of Equity Shares to Growth Partnership P.R. Srinivasan Co-Investment Trust

10.00 NA Consideration other than cash, (pursuant to the Scheme of Amalgamation)

177,555,490 1,775,554,900.00 0.00

October 26, 2007

66,088,190 Allotment of Equity Shares to YOU Telecom (Mauritius) Limited

10.00 10.00 Cash 243,643,680 2,436,436,800.00 0.00

February 29, 2008

85,500,002 Allotment of Equity Shares to YOU Telecom (Mauritius) Limited pursuant to conversion of Preference

10.00 NA Conversion of Preference Shares

329,143,682 3,291,436,820.00 0.00

27

Date of

Allotment

(*)

Number of

Equity

Shares

Nature of

Allotment

Face

Value

(Rs.)

Issue

Price

(Rs.)

Nature of

Consideration

Cumulative

No. of

Equity

Shares

Cumulative

Share Capital

(Rs.)

Cumulative

Share

Premium

Account (Rs.)

Shares

February 29, 2008

9,500,000 Allotment of Equity Shares to YOU Telecom Employee Welfare Trust pursuant to conversion of Preference Shares

10.00 NA Conversion of Preference Shares

338,643,682 3,386,436,820.00 0.00

February 29, 2008

32,781,004 Preferential allotment of Equity Shares to You Telecom (Mauritius) Limited

10.00 13.70 Cash 371,424,686 3,714,246,860.00 121,289,714.80

March 31, 2008

100 Preferential allotment of Equity Shares to Mrs. Rambhaben Ukabhai Tanti, Mrs. Gita T. Tanti, Mrs. Lina J. Tanti, Mrs. Sangita V. Tanti, and Mrs. Radha Girish Tanti

10.00 13.70 Cash 371,424,786 3,714,247,860.00 121,290,084.80

March 31, 2008

18,072,400 Allotment of Equity Shares To Bennett Coleman & Company Limited pursuant to conversion of convertible debentures

10.00 NA Conversion of convertible debentures

389,497,186 3,894,971,860.00 164,302,396.80

November 24, 2008

1,824,818 Preferential allotment of Equity Shares to Edelweiss Capital Limited

10.00 13.70 Cash 391,322,004 3,913,220,040.00 171,054,223.40

December 18, 2009

(160,460,813) Pursuant to the Scheme of Capital Reduction vide an order dated December 18, 2009 and supplementary order dated January 28, 2010 of the High Court of Bombay

230,861,191 2,308,611,910.00 NIL

March 30, 2010

10,688,757 Equity shares allotted other than for

10.00 N.A. Consideration other than cash

241,549,948 2,415,499,480.00 NIL

28

Date of

Allotment

(*)

Number of

Equity

Shares

Nature of

Allotment

Face

Value

(Rs.)

Issue

Price

(Rs.)

Nature of

Consideration

Cumulative

No. of

Equity

Shares

Cumulative

Share Capital

(Rs.)

Cumulative

Share

Premium

Account (Rs.)

cash**

(*) – All of the Equity Shares issued by the Company were fully paid up when issued and allotted.

(**) - Pursuant to a special resolution dated March 30, 2010 passed by the shareholders of our Company,

10,688,757 Equity Shares of our Company were allotted to Mrs. Rambhaben Ukabhai Tanti, Mrs. Gita T. Tanti,

Mrs. Lina J. Tanti, Mrs. Sangita V. Tanti, and Mrs. Radha Girish Tanti .

b. The following is the history of the Preference Share capital of our Company:

Date of

Allotment

(*)

Number of

Preference

Shares

Nature of

Allotment

Face

Value

(Rs.)

Issue

Price

(Rs.)

Nature of

Consideration

Cumulative

No. of

Preference

Shares

Cumulative

Preference

Share Capital

(Rs.)

Cumulative

Share

Premium

Account (Rs.)

May 31, 2006

72,310,000 Preferential allotment of Preference Shares to YOU Telecom (Mauritius) Limited

10.00 10.00 Cash 72,310,000 723,100,000.00 0.00

January 5, 2007

(72,310,000)

Allotment of Equity Shares pursuant to conversion of Preference Shares allotted to YOU Telecom (Mauritius) Limited

10.00 - Conversion of Preference Shares

0 0.00 0.00

October 26, 2007

95,000,002 Allotment of Preference Shares to YOU Telecom (Mauritius) Limited pursuant to Scheme of Amalgamation

10.00 - Consideration other than cash, (pursuant to the Scheme of Amalgamation)

95,000,002 950,000,020 -

February 29, 2008

(85,500,002)

Allotment of Equity Shares to YOU Telecom (Mauritius) Limited pursuant to conversion of Preference Shares

10.00 - Conversion of Preference Shares

9,500,000 95,000,000.00 -

February 29, 2008

(9,500,000) Allotment of Equity Shares to YOU Telecom Employee

10.00 - Conversion of Preference Shares

0 0.00 -

29

Date of

Allotment

(*)

Number of

Preference

Shares

Nature of

Allotment

Face

Value

(Rs.)

Issue

Price

(Rs.)

Nature of

Consideration

Cumulative

No. of

Preference

Shares

Cumulative

Preference

Share Capital

(Rs.)

Cumulative

Share

Premium

Account (Rs.)

Welfare Trust pursuant to conversion of Preference Shares

(*) – All of the Preference Shares issued by the Company were fully paid up when issued and allotted. 2. a) The following Equity Shares were issued and allotted by our Company for

consideration other than in cash:

Date of

allotment

Number

of Equity Shares

Face Value

(Rs.)

Reasons for

allotment

Persons to whom Equity

Shares allotted

Benefit to the Issuer

January 05, 2007

72,310,000 10.00 Conversion of Preference Shares

YOU Telecom (Mauritius) Limited

None

October 26, 2007

95,009,998 10.00 Pursuant to scheme of amalgamation

YOU Telecom (Mauritius) Limited

None

October 26, 2007

2 10.00 Pursuant to scheme of amalgamation

Growth Partnership P.R. Srinivasan Co-Investment Trust

None

February 29, 2008

85,500,002 10.00 Conversion of Preference Shares

YOU Telecom (Mauritius) Limited

None

February 29, 2008

9,500,000 10.00 Conversion of Preference Shares

YOU Telecom Employee Welfare Trust

None

March 31, 2008

18,072,400 10.00 Conversion of convertible debentures

Bennett Coleman & Company Limited

None

March 30, 2010

10,688,757 10.00 Consideration for a right to acquire equity shares in Digital Outsourcing Private Limited, pursuant to the DOPL Share Subscription and Purchase Agreement

Mrs. Rambhaben Ukabhai Tanti, Mrs. Gita T. Tanti, Mrs. Lina J. Tanti, Mrs. Sangita V. Tanti, and Mrs. Radha Girish Tanti

Consideration for a right to acquire equity shares in

Digital Outsourcing Private Limited, pursuant

to the DOPL Share Subscription and Purchase

Agreement

b) The following Preference Shares were issued and allotted by our Company for

consideration other than in cash:

Date of

allotment

Number

of

Preference

Shares

Face Value

(Rs.)

Reasons for

allotment

Persons to whom Preference

Shares allotted

Benefit to the Issuer

October 26, 2007

95,000,002 10.00 Pursuant to the Scheme of Amalgamation*

YOU Telecom (Mauritius) Limited

None

* For further details in connection with the Scheme of Amalgamation please refer to the section “History

and Certain Corporate Matters” on page 101 of this Draft Red Herring Prospectus.

3. History of Equity Shares held by our Promoters

The Equity Shares held by the Promoters were allotted /acquired in the following manner:

30

Date of Allotment/

Transfer(#)

Allotment/ Transfer

Consideration (Cash, Bonus,

kind, etc.)

No of Shares Face Value

(Rs.)

Issue/ Acquisition

Price (Rs.)

% of Pre-Issue Paid

Up Capital (##)

% of Post-

Issue paid Up Capital

Pledged Shares

No %

YOU Telecom (Mauritius) Limited September 5, 2001

Allotment Cash 10,000 10.00 10.00 Negligible [●] NIL NIL

September 11, 2002

Allotment Cash 10,225,488

10.00 10.00 4.23 [●] NIL NIL

January 5, 2007

Conversion from Pref Shares (*)

Other than Cash

72,310,000 10.00 10.00 29.94 [●] NIL NIL

October 26, 2007

Transfer to YOU Telecom Employee Welfare Trust

Cash (24,364,368) 10.00 10.00 (10.09) [●] NIL NIL

October 26, 2007

Under scheme of Amalgamation (**)

Other than Cash

95,009,998 10.00 10.00 39.33 [●] NIL NIL

October 26, 2007

Allotment Cash 66,088,190 10.00 10.00 27.36 [●] NIL NIL

February 29, 2008

Conversion from Pref Shares (***)

Other than Cash

85,500,002 10.00 10.00 35.40 [●] NIL NIL

February 29, 2008

Allotment Cash 32,781,004 10.00 13.70 13.57 [●] NIL NIL

December 18, 2009

Pursuant to the scheme of capital reduction under section 100 of the Companies Act and vide order dated December 18, 2009 and supplementary order dated January 28, 2010 of the High Court of Bombay

(138,415,939) 10.00 - (57.30) - - -

Total 199,144,375 82.44

Mr. Eyyuni Venkat Srinivas Chakravarthy March 22, 2010

Transfer from YOU Telecom Employee Welfare Trust

1 10.00 2.50 Negligible [●] NIL NIL

Total 1 Negligible

(#) – All of the Equity Shares issued by the Company were fully paid up when issued and allotted.

(##)-Percentage of Pre-Issue Paid up Capital has been calculated after considering the impact of capital

reduction in the Equity Share capital pursuant to the Scheme of Capital Reduction vide an order dated

December 18, 2009 and supplementary order dated January 28, 2010 of the High Court of Bombay

(*) - 72,310,000 Equity Shares were issued and allotted pursuant to the conversion of 72,310,000

convertible Preference Shares allotted on May 31, 2006 (**) - 95,009,998 Equity Shares were issued and allotted on October 26, 2007 pursuant to a Scheme of

Amalgamation between erstwhile You Telecom India Private Limited and our Company (***) - 85,500,002 Equity Shares were issued and allotted pursuant to the conversion of 85,500,002 convertible Preference Shares allotted on October 26, 2007 As on the date of this Draft Red Herring Prospectus one of our Promoters, namely, Citigroup Venture Capital International Growth Partnership Mauritius Limited does not hold any Equity Shares in the issued and paid-up Equity Share capital of our Company. 4. Promoters’ Contribution and Lock -in

31

a. Pursuant to Regulation 36 of the SEBI ICDR Regulations, an aggregate of 20% of the post-Issue equity share capital of the Company shall be locked in by the Promoters for a period of three years from the date of Allotment in the Issue.

b. The Equity Shares, which are being locked-in, are not ineligible for computation of Promoter’s contribution under Regulation 33 of the SEBI ICDR Regulations. In this respect, the Company confirms that the Equity Shares being locked in do not consist of:

i. Equity Shares acquired during the preceding three years (a) for consideration other

than cash and revaluation of assets or capitalization of intangible assets or (b) arising from bonus issue by utilization of revaluation reserves or unrealized profits of the Company or from a bonus issue against Equity Shares which are otherwise ineligible for computation of Promoters’ contribution;

ii. Equity Shares acquired by the Promoters during the one year preceding the date of

the Draft Red Herring Prospectus, at a price lower than the price at which Equity Shares are being offered to the public in the Issue; and

iii. Equity Shares issued to the Promoters upon conversion of a partnership firm.

iv. Equity shares offered by Promoters and offered for minimum promoter

contribution are not subject to pledge.

c. The Promoters have given an undertaking whereby they have consented to offer such number of Equity Shares held by them to be considered as promoters’ contribution which aggregate to 20% of the post-Issue equity share capital and are locked-in for a period of three years from the date of Allotment. Further, the Promoters have consented to not sell/transfer/dispose of in any manner, Equity Shares forming part of the Promoters’ contribution from the date of filing the Draft Red Herring Prospectus till the date of commencement of lock-in as per the SEBI ICDR Regulations

d. Details of the Equity Shares forming the Promoters’ contribution, which shall be

locked-in for three years, are as follows:

(This portion has been intentionally left blank and will be completed upon finalization of the

number of Equity Shares to be issued pursuant to this Issue.)

You Telecom (Mauritius) Limited

Date of

Allotment

(*)/

Acquisition

Consideration

(Cash, Bonus,

Other than

Cash)

No. of

Equity

Shares

Face

value

(Rs.)

Issue/

Acquisition

Price (Rs.)

Nature of

Allotment

% of Pre-

Issue

paid up

capital

% of

Post-

issue

paid

up

capital

Date

upto

which

Equity

Shares

are subject

to

Lock-

in September 5, 2001

Cash 5,900 10.00 10.00 Allotment Negligible [●] [●]

September 11, 2002

Cash 6,032,547 10.00 10.00 Allotment 2.50 [●] [●]

January 5, 2007

Other than Cash (**)

28,285,620 10.00 NA Conversion from Pref Shares

11.71 [●] [●]

October 26, 2007

Other than Cash(***)

56,051,337 10.00 N.A. Under scheme of Amalgamation (**)

23.20 [●] [●]

October 26, 2007

Cash 38,988,858 10.00 10.00 Allotment 16.14 [●] [●]

32

You Telecom (Mauritius) Limited

Date of

Allotment

(*)/

Acquisition

Consideration

(Cash, Bonus,

Other than

Cash)

No. of

Equity

Shares

Face

value

(Rs.)

Issue/

Acquisition

Price (Rs.)

Nature of

Allotment

% of Pre-

Issue

paid up

capital

% of

Post-

issue

paid up

capital

Date

upto

which

Equity Shares

are

subject

to

Lock-in

February 29, 2008

Other than Cash (****)

50,440,895 10.00 NA Conversion from Pref Shares

20.88 [●] [●]

February 29, 2008

Cash 19,339,218 10.00 13.70 Allotment 8.01 [●] [●]

Total 199,144,375 82.44

(*) - All of the Equity Shares issued by the Company were fully paid up when issued and

allotted. None of these Equity Shares were allotted pursuant to any rights, bonus or

preferential issue.

(**) - 28,285,620 Equity Shares were issued and allotted pursuant to the conversion of

28,285,620 convertible Preference Shares allotted on May 31, 2006

(***) - 56,051,337 Equity Shares were issued and allotted on October 26, 2007 pursuant to a

Scheme of Amalgamation between erstwhile You Telecom India Private Limited and our

Company

(****) - 50,440,895 Equity Shares were issued and allotted pursuant to the conversion of

50,440,895 convertible Preference Shares allotted on October 26, 2007

e. For details regarding individual allotments of Equity Shares of our Company to our

Promoters, from the date of incorporation of our Company, please see the “History of Equity Shares held by our Promoters” in the section “Capital Structure” on page 24 of this Draft Red Herring Prospectus.

f. Except as otherwise disclosed herein, none of our Promoters have acquired any Equity

Shares of the Company in the secondary market.

g. Details of Pre-Issue Equity Share capital locked in for one year:

In terms of the SEBI ICDR Regulations, in addition to the lock-in of 20% of the post-Issue shareholding of the Promoters for three years, as specified above, the balance pre-Issue share capital of the Company ([•] Equity Shares) shall be locked-in for a period of one year from the date of Allotment in the Issue.

h. Other requirements in respect of lock-in

Pursuant to Regulation 39 of the SEBI ICDR Regulations the locked-in Equity Shares held by the Promoters can be pledged only with banks or financial institutions as collateral security for any loans granted by such banks or financial institutions, provided that the pledge of shares is one of the conditions under which the loan is sanctioned. Further, Equity Shares locked in as minimum promoters’ contribution may be pledged only in respect of a financial facility which has been granted for the purpose of financing one or more of the objects of the Issue; Pursuant to Regulation 40 of the SEBI ICDR Regulations, Equity Shares held by persons other than Promoters prior to the Issue may be transferred to any other person holding the Equity Shares which are locked-in in accordance with Regulation 37 of the SEBI ICDR Regulations, subject to the continuation of the lock-in in he hands of the transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable;

33

Pursuant to Regulation 40 of the SEBI ICDR Regulations, Equity Shares held by the Promoters may be transferred to another Promoter or any person of the Promoter Group or a new promoter or a person in control of the Company subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.

i. Lock in of Equity Shares Allotted to Anchor Investors

Equity Shares, if Allotted to Anchor Investors, in the Anchor Investor Portion, shall be locked in for a period of 30 days from the date of Allotment of Equity Shares in the Issue.

5. Shareholding pattern of our Company The shareholding pattern of our Company as on the date of filing of this Draft Red Herring Prospectus is as follows:

Total shareholding as a percentage of total

no. of shares (pre

Issue)

Total shareholding as a percentage of

total no. of shares

(post Issue)

Shares pledged or otherwise

encumbered

Category of shareholder

No. of shareholders

Total No. of shares

(Pre Issue)

Total No. of shares

(Post

Issue)

No. of shares

held in

de material

ized

form

As a percent

age of

(A+B)

As a percentage

of

(A+B+C)

As a percent

age of

(A+B)

As a percent

age of

(A+B+C)

Number of

shares

As a percent

age of

(A+B+C)

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII)=(

XI)/(IV)*100

(A)

Shareholding of

Promoter and Promoter Group

(1) Indian

(a) Individuals/ Hindu Undivided Family

1.00 1.00 [●] 0.00 Negligible

Negligible [●] [●] NIL NIL

(b)

Central Government/ State Government(s)

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

NIL NIL

(c) Bodies Corporate 0.00 0.00 [●] 0.00 0.00 0.00 [●] [●] NIL NIL

(d) Financial Institutions/Banks

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●] NIL NIL

(e) Any Other (specify)

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●] NIL NIL

Sub-Total (A) (1) 0.00 0.00 [●] 0.00 0.00 0.00 [●] [●] NIL NIL

(2) Foreign

(a)

Individuals (Non-Resident Individuals/Foreign individuals)

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●] NIL

NIL

(b) Bodies Corporate 1.00 199,144,375 [●] 0.00 82.44 82.44 [●] [●] NIL NIL

(c) Institutions 0.00 0.00 [●] 0.00 0.00 0.00 [●] [●] NIL NIL

(d) Any Other (specify)

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●] NIL NIL

Sub-Total (A) (2) 2.00 199,144,376 [●] 0.00 82.44 82.44 [●] [●] NIL NIL

Total

Shareholding of

Promoter and Promoter Group

(A) =

(A)(1)+(A)(2)

2.00 199,144,376 [●] 0.00 82.44 82.44 [●] [●] NIL NIL

34

Total shareholding as

a percentage of total no. of shares (pre

Issue)

Total shareholding

as a percentage of total no. of shares

(post Issue)

Shares pledged or

otherwise encumbered

Category of

shareholder

No. of

shareholders

Total No. of

shares (Pre Issue)

Total No.

of shares (Post

Issue)

No. of

shares held in

de

materialized

form

As a

percentage of

(A+B)

As a

percentage of

(A+B+C)

As a

percentage of

(A+B)

As a

percentage of

(A+B+

C)

Numbe

r of shares

As a

percentage of

(A+B+

C)

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII)=(

XI)/(IV

)*100

(B)

Public

Shareholding

(1) Institutions

(a) Mutual Funds /UTI

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(b) Financial Institutions/Banks

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(c)

Central Government/ State Government(s)

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(d) Venture Capital Funds

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(e) Insurance Companies

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(f)

Foreign Institutional Investors

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(g) Foreign Venture Capital Investors

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(h) Any Other (specify)

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

Sub-Total (B) (1) 0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(2) Non-Institutions

(a) Bodies Corporate 2.00 11,738,403 [●] 0.00 4.86 4.86 [●] [●]

(b) Individuals

i. Individual shareholders holding nominal share capital up to Rs. 0.1 million

12 10,688,824

[●] 0.00 4.42 4.42 [●] [●]

ii. Individual shareholders holding nominal share capital in excess of Rs. 0.1 million

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

(c) Any Other (specify)

i. Clearing Members

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

ii. Non Resident Indians

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

iii. Non Resident (Non Repatriables)

0.00 0.00 [●] 0.00 0.00 0.00 [●] [●]

iv.Trusts 2.00 19,978,345 [●] 0.00 8.27 8.27 [●] [●]

Sub-Total (B) (2) 16.00 42,405,572 [●] 0.00 17.56 17.56 [●] [●]

Total Public Shareholding (B)

= (B)(1)+(B)(2)

16.00 42,405,572 [●] 0.00 17.56 17.56 [●] [●]

Total (A) + (B) 18.00 241,549,948

[●] 0.00 100 100 [●] [●]

(C) Shares held by

Custodians and against which

35

Total shareholding as

a percentage of total no. of shares (pre

Issue)

Total shareholding

as a percentage of total no. of shares

(post Issue)

Shares pledged or

otherwise encumbered

Category of

shareholder

No. of

shareholders

Total No. of

shares (Pre Issue)

Total No.

of shares (Post

Issue)

No. of

shares held in

de

materialized

form

As a

percentage of

(A+B)

As a

percentage of

(A+B+C)

As a

percentage of

(A+B)

As a

percentage of

(A+B+

C)

Numbe

r of shares

As a

percentage of

(A+B+

C)

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX) (X) (XI) (XII)=(

XI)/(IV

)*100

Depository

Receipts have

been issued

GRAND TOTAL (A)+(B)+(C)

18.00 241,549,948

[●] 0.00 100 100 [●] [●]

6. The list of top ten shareholders of our Company and the number of Equity Shares held by

them is as under:

a. As of the date of filing of this Draft Red Herring Prospectus

Sr. No.

Name of Shareholders Number of Equity Shares

Percentage Shareholding

1. YOU Telecom (Mauritius) Limited

199,144,375 82.44

2. YOU Telecom Employee Welfare Trust

19,978,343 8.27

3. Bennett Coleman & Company Limited

10,661,848 4.41

4. Mrs. Radha Girish Tanti. 2,137,764 0.89

5. Mrs. Lina J. Tanti; 2,137,764 0.89

6. Mrs. Sangita V. Tanti 2,137,763 0.89

7. Mrs. Gita T. Tanti 2,137,763 0.89

8. Mrs. Rambhaben Ukabhai Tanti; 2,137,763 0.89

9. Edelweiss Capital Limited 1,076,555 0.45

10. P R Srinvasan Growth Partnership Co-Investment Trust

2 Negligible

b. Ten days prior to the filing of this Draft Red Herring Prospectus:

Sr.

No.

Name of Shareholders Number of Equity

Shares

Percentage

Shareholding

1. YOU Telecom (Mauritius) Limited

199,144,375 86.26

2. YOU Telecom Employee Welfare Trust

19,978,351 8.65

3. Bennett Coleman & Company Limited

10,661,848 4.62

4. Edelweiss Capital Limited 1,076,555 0.47

5. Mrs. Rambhaben Ukabhai Tanti; 12 Negligible

6. Mrs. Gita T. Tanti 12 Negligible

7. Mrs. Lina J. Tanti; 12 Negligible

8. Mrs. Sangita V. Tanti 12 Negligible

9. Mrs. Radha Girish Tanti. 12 Negligible

36

Sr.

No.

Name of Shareholders Number of Equity

Shares

Percentage

Shareholding

10. P R Srinvasan Growth Partnership Co-Investment Trust

2 Negligible

c. Two years prior to the filing of this Draft Red Herring Prospectus:

Sr.

No.

Name of Shareholders Number of Equity

Shares*

Percentage

Shareholding

1. YOU Telecom (Mauritius) Limited

337,560,314 90.87

2. You Telecom Employee Welfare Trust

33,864,368 9.12

3. P.R. Srinivasan Co-Investment Trust

4 Negligible

* Number of Equity Shares in the above table are prior to the impact of capital reduction in the Equity

Share capital pursuant to the Scheme of Capital Reduction vide an order dated December 18, 2009 of the

High Court of Bombay and supplementary order dated January 28,2010.

7. Each of the Company, its Directors, the Promoters, the Promoter Group, their respective

directors and the BRLM have not entered into any buy-back and/or safety net and/or standby arrangements for purchase of Equity Shares from any person.

8. None of our Directors or key managerial personnel hold Equity Shares in the Company, except

as stated in the section titled “Capital Structure” and “Our Management” beginning on page 24 and page 109 respectively of this Draft Red Herring Prospectus.

9. The Promoter Group and the directors of the Promoters do not currently hold any Equity Shares

in our Company. 10. Except as stated hereinafter, the Promoter Group, the directors of the Promoters, the Directors of

the Company and their immediate relatives have not purchased or sold any Equity Shares during a period of six months preceeding the date on which this Draft Red Herring Prospectus is filed with SEBI:

Date of Allotment/

Transfer

Allotment/ Transfer

Consideration (Cash, Bonus,

kind, etc.)

No of Shares Face Value

(Rs.)

Issue/ Acquisition

Price (Rs.)

March 22, 2010

Transfer from YOU Telecom Employee Welfare Trust to Mr. Eyyuni Venkat Srinivas Chakravarthy

Cash 1 10.00 2.50

11. We have allotted the following Equity Shares during the preceding one year for consideration

other than cash (which may be construed to be at a price which may be lower than the issue price):

Sr.

No.

Date of

Allotment

Name of

Shareholders

Number of

Equity Shares

Nature of

Consideration

Issue Price

(Rs.)

1. March 30, 2010

Mrs. Radha Girish Tanti.

2,137,752 Other than cash NA

2. March 30, 2010

Mrs. Lina J. Tanti;

2,137,752 Other than cash NA

3. March 30, 2010

Mrs. Sangita V. Tanti

2,137,751 Other than cash NA

4. March 30, 2010

Mrs. Gita T. Tanti 2,137,751 Other than cash NA

37

Sr.

No.

Date of

Allotment

Name of

Shareholders

Number of

Equity

Shares

Nature of

Consideration

Issue Price

(Rs.)

5. March 30, 2010

Mrs. Rambhaben Ukabhai Tanti;

2,137,751 Other than cash NA

12. There are no financing arrangements whereby the Promoter Group, and/or the directors of the

corporate Promoter, and/or the directors of the Company and their relatives have financed the purchase by any other person of securities of the Company during the period of six months immediately preceding the date of filing of this Draft Red Herring Prospectus with the SEBI.

13. The Company, the Directors, the Promoters or the Promoter Group shall not make any, direct or

indirect, payments, discounts, commissions or allowances under this Issue, except as disclosed in this Draft Red Herring Prospectus

14. There are no outstanding warrants, options or rights to convert debentures, loans or other instruments convertible into the Equity Shares.

15. As of the date of this Draft Red Herring Prospectus, the BRLM holds 1,076,555 Equity Shares

of our Company. 16. A Bidder cannot make a Bid for more than the number of Equity Shares offered through the

Issue, subject to the maximum limit of investment prescribed under relevant laws applicable to each category of investor.

17. Except for the Pre-IPO Placement, as disclosed in the Draft Red Herring Prospectus, there will

be no further issue of Equity Shares, whether by way of issue of bonus shares, preferential allotment, and rights issue or in any other manner during the period commencing from submission of this Draft Red Herring Prospectus with SEBI and ending on the date on which our Equity Shares to be issued pursuant to the issue are listed.

18. Our Company presently does not intend or propose to alter the capital structure for a period of

six months from the Bid/Issue Opening Date, by way of split or consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly for Equity Shares) whether preferential or otherwise or issue of bonus or rights or further public issue of specified securities or qualified institutional placements, except that if we enter into acquisitions, joint ventures or other arrangements, we may, subject to necessary approvals, consider raising additional capital to fund such activity or use Equity Shares as currency for acquisitions or participation in such joint ventures.

19. At least 50% of the Net Issue shall be allotted on a proportionate basis to Qualified Institutional

Buyers, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. 5% of the QIB portion (excluding Anchor Investor portion) shall be available for allocation to Mutual Funds only. Mutual Funds participating in the 5% share in the QIB Portion will also be eligible for allocation in the remaining QIB Portion.

20. Our Promoters and Group Companies will not participate in this Issue. 21. There shall be only one denomination of the Equity Shares, unless otherwise permitted by law.

We shall comply with such disclosure and accounting norms as may be specified by SEBI from time to time.

22. As of the date of filing of this Draft Red Herring Prospectus the total number of holders of the

Equity Shares is 18. 23. The Company has not raised any bridge loans against the proceeds of the Issue.

38

24. We have not issued any Equity Shares by way of bonus out of revaluation reserves. We have not

issued any Equity Shares for consideration other than cash except as stated in this Draft Red Herring Prospectus

25. As per the RBI regulations, OCBs are not allowed to participate in the Issue. 26. An over-subscription to the extent of 10% of the net offer to public, subject to permissible limit,

can be retained for the purpose of rounding off to the nearer multiple of minimum allotment lot. 27. The Equity Shares issued pursuant to the Issue shall be fully paid-up. 28. Under-Subscription

a. Subject to valid bids being received at or above the Issue Price allocation shall be made

on a proportionate basis. Any under-subscription in the Net Issue, would be allowed to be met with spill-over from the Employee Reservation Portion at the discretion of our Company, in consultation with the BRLM and the Designated Stock Exchange. Any unsubscribed portion in the Employee Reservation Portion shall be added to the Net Issue.

b. Under-subscription, if any, in any category, except the QIB Portion, would be allowed

to be met with spill-over from any other category or combination of categories at the discretion of our Company in consultation with the BRLM and the Designated Stock Exchange. If at least 50% of the Issue is not allocated to the QIBs, the entire subscription monies shall be refunded. For further details, see “Issue Structure” beginning on page 203 of this Draft Red Herring Prospectus.

39

OBJECTS OF THE ISSUE

The objects of the Issue are (a) capital expenditure of our Company in connection with our broadband business (b) acquisition of additional equity shares in Digital Outsourcing Private Limited, (c) to invest in Digital Outsourcing Private Limited by way of providing loans and/or through purchase/subscription of an equity interest therein for purchase of set-top boxes, head-end equipments, software, other related equipment, and acquisition of customers in connection with cable network services, (d) to meet expenses towards working capital, (e) repayment of outstanding loan and (f) to fund expenditure for general corporate purposes. The main objects clause of our Company’s Memorandum of Association and objects incidental or ancillary to the main objects enable us to undertake our existing activities and the activities for which funds are being raised by our Company pursuant to the Issue. The details of proceeds of the Issue are summarized in the following table:

(Rs. million)

Sr. No. Description Amount

1. Gross Proceeds of the Issue 3,600.00

2. Issue Expenses * [●]

3. Net proceeds of the Issue [●]

*To be finalized upon completion of the Issue. Requirement of Funds We intend to utilize the Net Proceeds of the Issue of Rs. [●] million, for financing the objects as set forth below:

(Rs. million)

Sr.

No.

Particulars Estimated Total

Cost

1. Capital expenditure of our Company in connection with our broadband business

1,573.90

2. Acquisition of additional equity shares in Digital Outsourcing Private Limited

128.27

3. To invest in Digital Outsourcing Private Limited by way of providing loans and/or through purchase/subscription of an equity interest therein for purchase of set-top boxes, head-end equipment, software, other related equipments, and towards acquisition of customers in connection with cable network services

850.00

4. To meet expenses towards working capital 171.00

5. Repayment of outstanding loan 48.40

6. To fund expenditure for general corporate purposes * [●]*

Total [●]*

*To be finalized upon determination of Issue Price. The fund requirements described herein are based on management estimates and our Company’s current business plan and have not been appraised by any bank or financial institution. In view of the dynamic nature of the broadband and cable industry, our Company may have to revise its capital expenditure requirements as a result of variations in the cost structure, changes in estimates, exchange rate fluctuations and other external factors, which may not be within the control of the management of our Company. This may entail rescheduling or revising the planned capital expenditure and increasing or decreasing the capital expenditure for a particular purpose from its planned expenditure at the discretion of our Company‘s management. Means of Finance The requirements of the funds detailed above are intended to be funded as under:

(Rs. million)

Description Amount

Net Proceeds of the Issue [●]

40

Description Amount

Total [●]

The entire requirements of the objects detailed above are intended to be funded from the Net Proceeds of the Issue. Accordingly, we confirm that there is no requirement for us to make firm arrangements of finance through verifiable means towards at least 75% of the stated means of finance, excluding the amount to be raised through the Issue. Estimated Schedule of Deployment of Funds - Year-wise Break-up of the Net Proceeds of the Issue The year-wise break down of the Net Proceeds of the Issue to be utilized is set forth below in the following table:

(Rs. million)

Estimated Schedule of

Deployment of Funds

Sr. No. Object

FY 2011 FY 2012

Total

1. Capital expenditure of our Company in connection with our broadband business.

850.20 723.70 1,573.90

2. Acquisition of additional equity shares in Digital Outsourcing Private Limited

128.27 - 128.27

3. To invest in Digital Outsourcing Private Limited by way of providing loans and/or through purchase/subscription of an equity interest therein for purchase of set-top boxes, head-end equipments, software, other related equipment, and acquisition of customers in connection with cable network services

569.50 280.50 850.00

4. Expenses towards Working Capital 171.00 - 171.00

5. Repayment of outstanding loan 48.40 - 48.40

6. Fund expenditure for general corporate purposes [●] [●] [●]

Total [●] [●] [●]

While we intend to utilise the Net Proceeds of the Issue in the manner provided above, in the event of a surplus, we will use such surplus towards general corporate purposes including meeting future growth requirements. In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this Issue. In the event of any shortfall in the Net Proceeds of the Issue, our Company will bridge the fund requirements from internal accruals or debt. Details of the Objects 1. To fund the capital expenditure of our Company in connection with our broadband business. We intend to utilize Rs. 1,573.90 million from the Net Proceeds of this Issue to fund the capital expenditure of our Company in connection with our broadband business, including inter-alia for the purposes of purchase of assets related to the broadband business. The capital investment in the equipments and networks for our broadband business will allow us to expand geographically as well as in the existing areas of operations. The following sets forth the break-up of the details of such capital expenditure, based on the internal estimates of our Company’s management and based on pro-forma invoices/ quotations received from various parties. We have not entered into any contracts in relation to the estimated amount to be deployed.

41

Item Brief description of

equipments

Unit

of

Measurem

ent

Rate per

Unit

(Rs)

Total Qty

(Mtrs, nos)

Value (Rs

million)

Date of

Quotation

Amplifier MB Amplify the Signal Nos. 36,940.00

9,030 333.6 19-Jan-10

Line Power Inserter For line powering Nos. 3,536 33,110 117.1 19-Jan-10

500 Series Coaxial cable and Messenger Wire

For Trunk network and carry RF Signal

Mtrs. 44.1 3,000,000 132.3 15-Mar-10

Amplifier LE Amplify the Signal Nos. 15,637.00

6,020 94.1 19-Jan-10

Tap off (2 Port and 4 port)

Catering the signal from main trunk to Subscribers

Nos. 416 120,400 50.1 15-Mar-10

500 Series pin connector

Connector Nos. 167.508 90,300 15.1 11-Feb-10

Equalizer Balancing of Signal Level

Nos. 250 77,400 19.4 19-Jan-10

500 Series Splice Connector

Jointer for 500 Series Cable

Nos. 325.71 15,050 4.9 11-Feb-10

Reducers Connector Nos. 128.78 60,200 7.8 16-Mar-10

Node and Accessories

UPS 2.2 KVA For providing electrical backup

Nos. 25,480.00

195 5.0 13-Mar-10

Node Box Cabinet for installing Node

Nos. 23,700.00

195 4.6 15-Mar-10

Node with return Kit

For converting Optical to RF Signal

Nos. 15944.28 195 3.1 16-Feb-10

Power Supply For powering Node Nos. 7,000.00 195 1.4 15-Mar-10

Optic Fibre Cables

Civil work & ROW charges (Metro

Cities)

Mtrs. 3310 57,362 189.9 Management estimate

Civil work & ROW charges (Non Metro

cities)

Mtrs. 1310 96,320 126.2 Management estimate

96 Fibre Cable For carrying optical signal to desired location

Mtrs 57.2 201,240 11.5 15-Mar-10

40 MM HDPE Ducts

For routing underground fiber cable

Mtrs 32.7 335,400 11.0 15-Mar-10

12 Fibre Cable For carrying optical signal

Mtrs 13.5 335,400 4.5 22-Jan-10

06 Fibre cable For carrying optical signal

Mtrs 9.1 335,400 3.1 12-Mar-10

48 Fibre Cable For carrying optical signal

Mtrs 41.6 67,080 2.8 15-Mar-10

24 Fibre Cable For carrying optical signal

Mtrs 24.96 67,080 1.7 16-Jan-10

40 MM HDPE Coupler

Joining Ducts Qty 190 1006 0.2 12-Mar-10

Fiber Accessories Fiber management trays, coupler, jointers

Qty - - 0.6 5-Feb-10

42

Item Brief description of

equipments

Unit

of

Meas

urement

Rate per

Unit

(Rs)

Total Qty

(Mtrs, nos)

Value (Rs

million)

Date of

Quotation

CPE

Modems Communication devise

Nos. 1364.88 198,000 270.2 10-Dec-09

RG11 Connectors For feeder network cable

Nos. 90 396,000 35.6 11-Feb-10

RG6 Coaxial Cable For drop connection Mtrs 7 4,464,000 31.2 15-Jan-10

RG11 Cable Feeder Network Mtrs 14.55 1,674,000 24.4 15-Mar-10

RG6 Connectors For drop cables Nos. 12 558,000 6.7 11-Feb-10

Cat5 Cable For drop connection Mtrs 8.85 620,000 5.5 15-Mar-10

Adapters for Cable Modems

For providing Power to Cable Modem

Nos. 180 11,000 2.0 5-Feb-10

RJ45 Connectors For drop connection Nos. 1.9 620,000 1.2 5-Feb-10

Head End Equipment

CMTS For Converting internet signal into RF format and manages modems

Nos. 2,908,187

18 52.3 18-Mar-10

Transmitter with accessories

Convert RF to optical signal

Nos. 176,970 26 4.6 19-Jan-10

Rack including Accessories

For placement of equipment

Nos. 31,270 6 0.2 17-Mar-10

TOTAL 1,573.90

2. Acquisition of additional equity shares in Digital Outsourcing Private Limited

We intend to be ‘Indian owned and controlled’ (namely to have at least 50.00% of the equity interest of our Company beneficially owned by resident Indian citizens and/or Indian companies which are in turn owned by resident Indian citizens) on the completion of the Issue. As an Indian owned and controlled Company we will be able to purchase or acquire a controlling stake in MSO/LCO companies. As part of the objects of this issue, we intend to purchase 433,875 equity shares in Digital Outsourcing Private Limited which constitute 13.29% of the equity share capital of Digital Outsourcing Private Limited. We have entered into a Share Purchase Agreement dated March 30, 2010 with Mrs. Rambhaben Ukabhai, Mrs. Gita T. Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti (“Sellers”) to acquire from the Sellers, 433,875 equity shares of Digital Outsourcing Private Limited for an aggregate consideration of Rupees 128,265,084 (Rupees One Hundred and Twenty Eight Million Two Hundred and Sixty Five Thousand and Eighty Four Only or such lower amount as agreed in writing between the aforesaid parties. This price is based on a valuation carried out by SSPA & Company, Chartered Accountants and as per their report dated March 26, 2010. See “History and Other Corporate Matters” beginning on page 101, "Objects of the Issue" on page 39, and "Risk Factors" beginning on page xiv.

3. To invest in DOPL by way of providing loans and/or through purchase/subscription of an equity

interest therein for purchase of set-top boxes, head-end equipments, software, other related equipments, and towards acquisition of customers in connection with cable network services

Our Company intends to invest in DOPL by way of providing loans and/or through purchase/subscription of an equity interest therein for an amount of Rs. 628.50 million for purchase of set-top boxes, head-end equipment, software and other related equipments. Our associate company, DOPL provides cable television services to its customers. Digital cable

43

television service requires a set-top box to be provided to the subscriber. The set-top box is provided with an encryption technology which is required to decode the encrypted signals. These set-top boxes and encryption technology are purchased from third party suppliers. In addition to the set-top boxes other equipments such as smart cards, digital compression equipments and infrastructure such as fiber coaxial cable are also required.

We intend to utilize Rs. 628.50 million from the Net Proceeds of this Issue to to invest in Digital Outsourcing Private Limited by way of providing loans and/or through purchase/subscription of an equity interest therein for purchase of set-top boxes, digital head end equipments and other accessories . The following sets forth the break-up of the details of such capital expenditure, based on the quotations from above mentioned suppliers:

Item Description Qty Rate/ unit (

Rs )

Value

(Rs

million)

Date of

quotation

STB Set Top Box 387,000 1515 586.30 7-Dec-09

MPEG 2 ENCODER Analog to Digital Conversion

90 154536 13.9 25-Jan-10

QAM Modulator Modulation of Digital Signal

17 360114 6.1 25-Jan-10

Digital Content management hardware and software with accessories

To Manage the encryption, transmission and compression of digital signals

1 7,422,863 7.4 25-Jan-10

Analog Modulator RF Signal Modulation 86 26959 2.3 30-Jan-10

Premultiplexer Multiplexing of Digital signal

5 439920 2.2 25-Feb-08

Encoder with built in Multiplexer

Analog to digital signal conversion, compression & multiplexing

3 736020 2.2 13-Mar-10

Network Management hardware and software

Server for providing service information

1 2,780,443 2.8 20-Feb-10

Digital signal Receiver Reception of Digital signals

40 46192 1.8 25-Jan-10

Connector Card Digital Satellite receiving accessory

24 32372 0.8 20-Feb-10

Descrambler Digital Signal Descrambling

12 56400 0.7 25-Jan-10

C-band Band Pass Filter - TI Filter

Interference blocking 15 28350 0.4 12-Mar-10

ASI Coprocessor Card Digital Headend Accessory 2 153972 0.3 20-Feb-10

12 feet dish antenna Signal reception from Satellite

6 27187 0.2 12-Mar-10

Active Splitter Satellite signal splitter 4 38352 0.2 20-Feb-10

Modular Rack Rack Management 3 55554 0.2 25-Jan-10

Rack Power supply Power supply unit 3 67342 0.2 25-Jan-10

Ethernet Switch 24 ports Networking switch 15 10500 0.2 18-Mar-10

16 feet dish antenna Signal reception from Satellite

3 48982 0.1 12-Mar-10

LNBC Noise Filtering & signal receiving from Dishes

18 6075 0.1 12-Mar-10

Connector Card Accessory for Digital Head end

12 6556 0.1 20-Feb-10

Total 628.50

Our Company also intends to invest in Digital Outsourcing Private Limited by way of providing loans and/or through purchase/subscription of an equity interest therein for an amount of Rs. 221.50 million for

44

acquisition of new customers through acquisition of MSOs and LCOs. We currently hold 36.24% of the equity share capital of Digital Outsourcing Private Limited as a strategic investment. In continuation of our growth strategy we propose to acquire MSOs and LCOs either directly or through Digital Outsourcing Private Limited, to the extent permitted under the applicable regulations. Further, from the period beginning fiscal 2008 till date, Digital Outsourcing Private Limited acquired interests in 5 MSOs and 9 LCOs. Acquisition of MSOs and LCOs provide the opportunity to expand the areas of operation. Further, acquisition of LCOs enables to have the “last mile” access to the customer and thereby enhance realisation. The acquisition of MSOs and LCOs will be through equity investment or through an acquisition of their assets and / or operations. Digital Outsourcing Private Limited constantly evaluates potential acquisitions and its management makes the decision on such acquisitions and valuations based on amongst other things, potential revenue realization, costs involved in the acquisition and the potential growth in subscriber base as a result of such acquisition. However, as on the date of this Draft Red Herring Prospectus, Digital Outsourcing Private Limited has not entered into any letter of intent, memorandum of understanding or an agreement to acquire any MSO or LCO. Our Company has executed a loan agreement dated March 22, 2010, whereby our Company has agreed to provide an unsecured loan of upto Rs. 1,000 million to Digital Outsourcing Private Limited, at a rate of interest which is equivalent to the State Bank of India prime lending rate plus 200 basis points, at any given point of time, repayable within a period of 60 months, in 48 number of installments, payable monthly, of principal outstanding and the interest which may have accrued thereon. As per the terms of this loan agreement, the loan can be utilized by Digital Outsourcing Private Limited only for the purpose of capital expenditure of its cable television service business and such other purposes as may be agreed to in writing with our Company.

3. To meet expenses towards Working Capital The working capital requirement of the Company is estimated to be Rs. 171 million. The working capital requirement has been calculated on the basis of working capital requirement for FY 2011 considering growth in activities of our Company.

(Rs. million)

Particulars Holding

Level

(Days)

As on

September

30, 2009

Holding

Level

(Days)

Estimate

for FY

2011

Debtors 54 77 45 85

Inventories 21 3 75 97

Loans, Advances and Others 254 150

Total Curent Assets (A) 334 332

Creditors 103 185 60 120

Advances and Deposits 122 70

Other Liabilities 77 21

Total Current Liabilities (B) 384 211

Net Working Capital (A-B) (50) 121

Additional working capital requirement

171

Justification for holding period levels:

• Debtors holdings has been considered at 45 days revenue from the enterprise segment and the post paid residential segment on the basis of the past trends and business situation

• Inventory holdings has been considered at 75 days of purchase of certain network equipments based on their lead times for procurement and the criticality of the same to connect subscribers on time so as to avoid backlog of connections and customer dissatisfaction.

45

• Creditors are considered at 30 days holding on the basis of standard terms

• Deposits from customers are considered at a specific rate on the basis of equipments already deployed and reduced by churns

Our Company proposes to meet the working capital requirement to the extent of Rs. 171.00 million from the Net Proceeds of the Issue. Our working capital requirements have been calculated based on management estimates and have not been appraised by any bank or financial institution. 4. Repayment of outstanding loan We have obtained loans from CISCO Systems Capital India Private Limited (“CISCO”) pursuant to loan agreements whereby CISCO has sanctioned a total loan amount of Rs. 184.30 million for purchase of equipments. Pursuant to these loan agreements, our Company had availed of loan amounting to Rs. 184.30 million from CISCO. As on March 23, 2010, we have outstanding loan aggregating Rs. 60.28 million (including interest) which we propose to prepay to the extent of Rs. 48.40 million, which is the principal amount of the loans outstanding, out of the Net proceeds of the Issue, which will enable us to bring down our interest costs. The details of our current outstanding loan are detailed in the table below:

Particulars Particulars of the loan from CISCO

Nature of Loan Financial lease and loan

Object of the Loan To enable purchase of equipments

Nature of Interest Charge Fixed

Sanction Amount (Rs. In Million)

Rs. 184.30 million

Amount outstanding as on March 23, 2010 (including interest)

Rs. 60.28 million

Rate of Interest on the Loan 20.78%

Security First charge on the equipments included in the objects of the loan

Prepayment Penalty Nil

As certified by GAR & Associates, Chartered Accountants, vide their certificate dated March 24, 2010, our Company had utilised the loan amounts for procurement of equipments. 5. Fund expenditure for general corporate purposes. Our management, in accordance with the policies of the Board of Directors, will have the flexibility in utilizing any surplus amounts from the proceeds of the Issue for general corporate purposes including meeting future growth requirements, repayment of existing loans, working capital and other general corporate purposes. In case of variations in the actual utilization of funds designated for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any which are not applied to the other purposes set out above. Issue Related Expenses The Issue related expenses inter alia includes, underwriting and management fees, selling commissions, printing and distribution expenses, legal fees, advertisement expenses and registrar and depository expenses and listing fees. The estimated Issue expenses are as follows:

Activity

Expense (Rs.

million) (1)

As a % of

Total

Issue Expenses

As a % of

Issue Size

Lead Management fees, brokerage and selling [●] [●] [●]

46

Activity

Expense (Rs.

million) (1)

As a % of

Total

Issue Expenses

As a % of

Issue Size

commission and underwriting commission

Fees payable to the Registrar to the Issue [●] [●] [●]

Fees payable to Escrow Collection Banks [●] [●] [●]

Printing and Stationery [●] [●] [●]

SCSB commission [●] [●] [●]

IPO Grading expenses [●] [●] [●]

Other (Legal fees, auditors fess, advertising and marketing expenses etc.)

[●] [●] [●]

Total estimated Issue expenses [●] [●] [●]

________ (1) Will be updated in the Prospects, post the completion of the Issue Funds Deployed As on February 28, 2010, we have not deployed any funds towards the Objects of the Issue as stated under this section, in this Draft Red Herring Prospectus.

Appraisal Report None of the projects for which the Net Proceeds of the Issue will be utilised have been financially appraised. The estimates of the costs of objects mentioned above are based on internal estimates of our Company and quotes received from vendors of equipments. Interim use of funds The management of our Company, in accordance with the policies established by our Board from time to time, will have flexibility in deploying the Net Proceeds of the Issue. Pending utilization for the purposes described above, we intend to invest the funds in high quality interest/dividend bearing liquid instruments including investments in mutual funds, deposits with banks and other investment grade interest bearing securities. Such investments would be in accordance with investment policies approved by our Board from time to time. Our Company confirms that pending utilization of the Net Proceeds of the Issue it shall not use the funds for any investments in the equity markets.

Monitoring Utilization of Funds As this is an Issue for less than Rs. 5,000 million, there is no need for an appointment of a monitoring agency. Our Board will monitor the utilization of the Net Proceeds of the Issue, through its Audit Committee. We will disclose the details of the utilization of the Issue proceeds, including interim use, under a separate head in our financial statements until FY 2012, specifying the purpose for which the Net Proceeds of the Issue have been utilization as per the disclosure requirements of our listing agreements with the Stock Exchanges and in particular clause 49 of the Listing Agreement. As per the requirements of clause 49 of the Listing Agreement, we will disclose to the Audit Committee the uses/applications of funds on a quarterly basis as part of our quarterly declaration of results. Further, on an annual basis, we shall prepare a statement of funds utilized for purposes other than those stated in this Draft Red Herring Prospectus and place it before the Audit Committee. The said disclosure shall be made until such time that the money raised through the Issue has been fully spent. The statement shall be certified by Auditors. Further, we will furnish to the Stock Exchanges on a quarterly basis, a statement indicating material deviations, if any, in the use of proceeds from the objects stated in this Draft Red Herring Prospectus. No part of the proceeds from the Net Issue will be paid by us as consideration to our Promoters, our Directors, Group Companies, associates or key managerial employees, except in the normal course of our business.

47

BASIS FOR ISSUE PRICE

The Issue Price will be determined by the Company in consultation with the BRLM on the basis of assessment of market demand for the Equity Shares through the Book Building Process. The face value of the Equity Shares is Rs. 10 each, and the Issue Price is [●] times the face value at the lower end of the Price Band and [●] times the face value at the higher end of the Price Band. The financial data presented in this section are based on the Company‘s restated financial statements. Investors should also refer to the sections “Risk Factors” and “Financial Information” on pages xiv and 129, respectively, to get a more informed view before making the investment decision.

Qualitative Factors

Some of the qualitative factors which form the basis for computing the price are:

• One of the leading Cable Broadband service providers in India with an extensive broadband

cable network infrastructure in key markets

• Advanced HFC cable network infrastructure capable of supporting broadband internet, cable

television and voice communication

• Billing systems and processes that enable convergence

• Quality product and service delivery

• Industry-experienced management team

Quantitative Factors 1. Earnings Per Share (EPS)

Period Basic EPS (Rs.) Diluted EPS (Rs.) Weightage

Year ended March 31, 2009 (0.41) (0.41) 3

Year ended March 31, 2008 (2.24) (2.24) 2

Year ended March 31, 2007 (3.43) (3.43) 1

Weighted Average (3.05) (3.05)

Six months ended September 30, 2009 (not annualized)

(0.39) (0.39)

Note: The earning per share has been computed by dividing net profit, as restated, after tax and after excluding

extra ordinary items attributable to equity shareholders by weighted average number of Equity Shares

outstanding during the year. Weighted average number of Equity Shares has been computed as per

Accounting Standard -20 “Earning per Share” issued by Institute of Chartered Accountants of India. On

March 30, 2010, the number of outstanding Equity Shares of the Company stands at 241,549,948. 2. Price to Earnings (P/E) ratio in relation to Issue Price of Rs. [●] a. Based on Basic EPS of Rs. (0.39) as per the restated financial statements of our Company for the

year ended March 31, 2009, the P/E ratio is [●]. b. Based on the Diluted EPS of Rs. (0.39) as per restated financial statements of our Company for the

year ended March 31, 2009, the P/E ratio is [●]. c. Based on the weighted average Basic EPS of Rs. (3.05), as per restated financial statements of our

Company, the P/E ratio is [●]. d. Based on the weighted average Diluted EPS Rs. (3.05), as per restated financial statements of our

Company the P/E ratio is [●]. e. Industry P/E#

(i) Highest: 106.6 (ii) Lowest: 14.7 (iii) Average: 27.3

48

# Source: Capital Market Volume XXV/02; 22 March 2010 - 4 April 2010; 23/03/10

Industry Classification: Entertainment / Electronic Media Software

3. Return on Net Worth

Period Return on Net Worth

(%)

Weightage

Year ended March 31, 2009 (6.85) 3

Year ended March 31, 2008 (15.07) 2

Year ended March 31, 2007 (12.64) 1

Weighted Average (21.11)

For the six months period ending September 30, 2009 (not annualised): (4.05) %

Note: Net worth has been computed by aggregating share capital and reserves and surplus as per our

audited restated financial statements.

4. Minimum Return on Increased Net Worth required to maintain pre-Issue earnings per share

(“EPS”) for fiscal 2009.

The minimum return on increased net worth required to maintain pre-Issue Basic EPS of Rs. [●]. The minimum return on increased net worth required to maintain pre-Issue Diluted EPS of Rs. [●]:

Based on restated financial statements of our Company: a. At the Floor Price – [●]% b. At the Cap Price – [●]%

5. Net Asset Value per Equity Share

a. As of March 31, 2009, as per our restated financial statements is Rs. 10.08

b. As of September 30, 2009, as per our restated financial statements is Rs. 9.73

• NAV per Equity Share after the Issue is Rs. [●]

• Issue Price per Equity Share is Rs. [●]* *Issue Price per Equity Share will be determined on conclusion of book building process.

#Net Asset Value per Equity Share represents Net Worth at the end of the year / period, as restated

divided by the number of Equity Shares outstanding at the end of the period/ year. 6. Comparison of Accounting Ratios

EPS (Rs.) P/E Return on Net

Worth (%)

Book Value/

Share

You Broadband & Cable India Ltd. (0.41) [●] (6.85) 10.08

Hathway Cable NM NM NM 69.5 # Source: Capital Market Volume XXV/02; 22 March 2010 - 4 April 2010; 23/03/10

Industry Classification: Entertainment / Electronic Media Software

Note: EPS, RONW and NAV based on March 31, 2009 and P/E based on trailing twelve months and

market data

49

The peer group above has been determined on the basis of listed public companies comparable in size to our Company whose business portfolio is comparable with that of our business. The Issue Price of Rs. [●] is determined by the Company, in consultation with the BRLMs, on the basis of assessment of market demand for the Equity Shares through the Book Building Process and is justified based on the above accounting ratios. See the section titled “Risk Factors”, “Our Business” and “Financial Information” on pages xiv, 76 and 129 to have a more informed view.

50

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO

THE COMPANY AND ITS SHAREHOLDERS

The tax benefits listed below are the possible benefits available under the current tax laws in India. Several of these benefits are dependent on the Company or its Shareholders fulfilling the conditions

prescribed under the relevant tax laws. Hence, the ability of the Company or its Shareholders to

derive the tax benefits is dependent upon fulfilling such conditions, which based on business

imperatives it faces in the future, it may not choose to fulfill.

You Broadband & Cable India Limited (formerly You Telecom India Private Limited)

Plot No 54, Marol Co-operative Industrial Estate, Makwana, Andheri (E), Mumbai – 400 059 India. Dear Sirs

Statement of Possible Tax Benefits available to the Company and its shareholders

We report that the enclosed statement states the possible tax benefits available to the Company and to the

shareholders of the Company under the Income-tax Act, 1961 and Wealth Tax Act, 1957, presently in

force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the

conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or

its shareholders to derive the tax benefits is dependent upon their fulfilling such conditions, which based

on business imperatives the Company faces in the future, the Company may or may not choose to fulfill.

The benefits discussed in the enclosed annexure are not exhaustive. This statement is only intended to

provide general information to the investors and is neither designed nor intended to be a substitute for

professional tax advice. In view of the individual nature of the tax consequences and the changing tax

laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax

implications arising out of their participation in the issue

We do not express any opinion or provide any assurance as to whether:

(i) the Company or its shareholders will continue to obtain these benefits in the future; or

(ii) the conditions prescribed for availing the benefits have been / would be met with.

The contents of the enclosed statement are based on information, explanations and representations

obtained from the Company and on the basis of their understanding of the business activities and

operations of the Company.

For B S R & Associates

Chartered Accountants

Bhavesh Dhupelia Membership No: 042070 Place: Mumbai Date: March 22, 2010

51

ANNEXURE

Statement of general direct tax benefits available to the Company and the shareholders I. Tax Benefits available to the Company under the Income-tax Act, 1961

General Tax Benefits

1. Under section 10(34) of the Income-tax Act, 1s961 (“the IT Act”), any income by way of

dividends referred to in Section 115-O (i.e. dividends declared (whether interim or final), distributed or paid on or after April 1, 2003 by domestic companies) received on the shares of any company is exempt from tax in the hands of recipient. However, the expenses incurred for earning such exempt dividend will not be allowed under Section 14A of the IT Act read with Rule 8D of the Income-tax Rules, 1962 (“IT Rules”).

2. The Company is required to pay a Dividend Distribution Tax (“DDT”) currently at the rate of 15%

percent (plus applicable surcharge and education cess) on the total amount distributed or declared or paid as dividend.

3. The short-term capital gains (as defined in section 2(42A) of the IT Act) accruing to the Company

on sale of shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), tax will be chargeable at 15 percent (plus applicable surcharge* and education cess) as per provisions of Section 111A of the IT Act. Further, no deduction under Chapter VI-A of the IT Act would be allowed from such short term capital gains subjected to tax under Section 111A. In other cases, where the transaction is not subjected to STT, the short term capital gains would be taxable at the normal corporate tax rate as a part of the total income.

4. The long-term capital gains (as defined in section 2(29B) of the IT Act) accruing to the Company

on sale of shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax as per provisions of Section 10(38) of the IT Act.

5. As per the provisions of Section 112 of the IT Act, long term gains accruing to the Company from

the transfer of shares otherwise than as mentioned in point 3 above, is chargeable to tax at 10 percent (plus applicable surcharge* and education cess) after deducting from the sale proceeds the cost of acquisition without indexation. However, the shareholders claiming the benefit of indexation would be subject to tax at 20 percent (plus applicable surcharge* and education cess) on the long term gains. Further, no deduction under Chapter VI-A of the IT Act would be allowed from such long term capital gains subjected to tax under Section 112 of the IT Act.

6. Under Section 10(35) of the IT Act, any income received from units of a Mutual Fund specified

under Section 10(23D) of the IT Act, is exempt from tax. 7. Under Section 32 of the IT Act, the Company can claim depreciation allowance at the prescribed

rates on tangible assets such as building, plant and machinery, furniture and fixtures, etc. and intangible assets such as patent, trademark, copyright, know-how, licenses, etc. if acquired after 31 March 1998. Unabsorbed depreciation if any, can be carried forward and set off against any source of income in subsequent years in accordance with the provisions of the IT Act.

8. Under Section 72 of the IT Act, unabsorbed business losses, if any, for any year can be carried

forward and set off against business profits for subsequent years (up to 8 years) subject to the conditions specified therein.

9. Under Section 74 of the IT Act, unabsorbed loss (if any) under the head “Capital gains”, for any

year can be carried forward and set off in the specified manner against the capital gains for subsequent years (up to 8 years) subject to the conditions specified therein.

10. The filing of return of income within the time allowed under Section 139(1) of the IT Act is

mandatory for claiming the carry forward of the loss under Section 72(1) or Section 74(1) of the IT Act

52

11. As per the provisions of Section 112 of the IT Act, long term gains accruing to the Company from

the transfer of shares, is chargeable to tax at 10 percent (plus applicable surcharge* and education cess) after deducting from the sale proceeds the cost of acquisition without indexation. However, the Company claiming benefit of indexation would be subject to tax at 20 percent (plus applicable surcharge* and education cess) on the long term gains. Further, no deduction under Chapter VI-A of the IT Act would be allowed to the Company from such long term capital gains subjected to tax under Section 112 of the IT Act.

12. The Company is entitled to claim exemption in respect of tax on long term capital gains (other than

those exempt under Section 10(38) of the IT Act) under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds / securities within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds permissible on and after April 1, 2007 for claiming the exemption, by any person in a financial year, is Rs. 5 million. However, according to Section 54EC(2) of the IT Act, if the Company transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the previous year in which such bonds are transferred or otherwise converted into money.

13. The company is entitled to deduction under Section 80G of the IT Act in respect of amounts

contributed as donations to various charitable institutions and funds covered under that section, subject to fulfillment of conditions specified therein.

14. Under Section 35D of the Act, the Company will be entitled to a deduction equal to 1/5th of the

expenditure incurred of the nature specified in the said section, including expenditure incurred on present issue, such as under writing commission, brokerage and other charges, as specified in the provision, by way of amortization over a period of 5 successive years, beginning with the previous year in which the business commences, subject to the stipulated limits.

15. Under Section 35DD of the Act, the company will be entitled to a deduction equal to 1/5th of the

expenditure incurred in connection with amalgamation of an undertaking by way of amortization over a period of 5 successive years, beginning with the previous year in which the amalgamation or demerger takes place.

Special Tax Benefits

16. The company is eligible for deduction under section 80-IA(4)(ii) (any undertaking which has

started or starts providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services on or after the 1st day of April, 1995, but on or before the 31st day of March,2005) for a period of 10 consecutive years in a block of 15 years starting from the commencement of business subject to the fulfillment of the specified conditions.

* For the Assessment Year 2011-12 - Surcharge is applicable @ 7.5 percent if total income is in excess of INR

10,000,000 in the case of corporate tax payers, education cess of 3 percent.

II. Tax Benefits available to shareholders of the Company under the IT Act

A. Resident Shareholders

General Tax Benefits 1. Under Section 10(32) of the IT Act, any income of minor children clubbed in the total income of

the parent under Section 64(1A) of the IT Act, will be exempt from tax to the extent of Rs.1,500 per minor child whose income is so included.

2. Dividend (whether interim or final) declared, distributed or paid, as referred under Section 115-O

of the IT Act, by the Company is exempt in the hands of shareholders as per the provisions of Section 10(34) of the IT Act. However, the expenses incurred for earning such exempt dividend will not be allowed under Section 14A of the IT Act read with Rule 8D of the IT Rules. Further,

53

the credit of DDT paid by the Company will not be available to the resident shareholders of the Company.

3. The characterization of the gains/losses, arising from sale of shares, as capital gains or business

income in the hands of shareholders would depend on the nature of holding and various other factors.

4. The short-term capital gains (as defined in section 2(42A) of the IT Act) accruing to the

shareholders of the Company on sale of the Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to securities transaction tax (“STT”), tax will be chargeable at 15 percent (plus applicable surcharge* and education cess) as per provisions of Section 111A of the IT Act. Further, no deduction under Chapter VI-A of the IT Act would be allowed to a shareholder from such short term capital gains subjected to tax under Section 111A. In other cases, where the transaction is not subjected to STT, the short term capital gains would be taxable as a part of the total income and the tax payable thereon would depend on the income tax rates applicable to the shareholders.

5. The long-term capital gains (as defined in section 2(29B) of the IT Act) accruing to the

shareholders of the Company on sale of the Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax as per provisions of Section 10(38) of the IT Act. In case the shareholder is a company and the income is taxable under section 115JB of the IT Act then exemption on long term capital gain would not be available.

6. As per the provisions of Section 112 of the IT Act, long term gains accruing to the shareholders of

the Company from the transfer of shares of the Company otherwise than as mentioned in point 5 above, is chargeable to tax at 10 percent (plus applicable surcharge* and education cess) after deducting from the sale proceeds the cost of acquisition without indexation. However, the shareholders claiming the benefit of indexation would be subject to tax at 20 percent (plus applicable surcharge* and education cess) on the long term gains. Further, no deduction under Chapter VI-A of the IT Act would be allowed to a shareholder from such long term capital gains subjected to tax under Section 112 of the IT Act.

7. The shareholders are entitled to claim exemption in respect of tax on long term capital gains (other

than those exempt under Section 10(38) of the IT Act) under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds / securities within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds permissible on and after April 1, 2007 for claiming the exemption, by any person in a financial year, is Rs. 5 million. However, according to Section 54EC(2) of the IT Act, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the previous year in which such bonds are transferred or otherwise converted into money.

8. Shareholders who are individuals or Hindu undivided families can avail of an exemption in respect

of long term capital gain under Section 54F of the IT Act by utilization of the net sales consideration arising from the sale of the Company’s share held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase / construction of a residential house (“new asset”) within the specified time period and subject to the fulfillment of the conditions specified therein which also includes conditions to be satisfied post acquisition of a new asset.

9. The filing of return of income within the time allowed under Section 139(1) of the IT Act is

mandatory for claiming the carry forward of the loss under Section 74(1) of the IT Act 10. In case the income of the Shareholder from transfer of shares is treated as business income then the

income would need to be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of his business during the previous year would be eligible for deduction as per section 36(xv) of the IT Act.

* For the Assessment Year 2011-12 - Surcharge is applicable @ 7.5 percent if total income is in excess of INR

54

10,000,000 in the case of corporate tax payers, no surcharge for non-corporate taxpayers, education cess of 3

percent.

Special Tax Benefits

11. There are no special tax benefits available to the resident members. B. Non Resident Shareholders B.1 Non-resident shareholders– other than Foreign Institutional Investors and Non Resident

Indians

General Tax Benefits 1. Dividend (whether interim or final) declared, distributed or paid, as referred under Section 115-O

of the IT Act, by the Company is exempt in the hands of shareholders as per the provisions of Section 10(34) of the IT Act. However, the expenses incurred for earning such exempt dividend will not be allowed under Section 14A of the IT Act read with Rule 8D of the IT Rules. Further, the credit of DDT paid by the Company to the non-resident shareholders of the Company will be subject to the Double Taxation Avoidance Agreement (“DTAA”) between India and any specified territory / country of residence of the non-resident shareholder and the local laws of the country of residence of the non-resident shareholder

2. The characterization of the gains/losses, arising from sale of shares, as capital gains or business

income in the hands of shareholders would depend on the nature of holding and various other factors.

3. The short-term capital gains (as defined in section 2(42A) of the IT Act) accruing to the

shareholder of the Company on sale of the Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, tax will be chargeable at 15 percent (plus applicable surcharge* and education cess) as per provisions of Section 111A of the IT Act. Further, no deduction under Chapter VI-A of the IT Act would be allowed to a shareholder from such short term capital gains subjected to tax under Section 111A. In other case, i.e. where the transaction is not subjected to STT, the short term capital gains would be chargeable as a part of the total income and the tax payable thereon would depend on the income tax rates applicable to the shareholders.

4. The long-term capital gains (as defined in section 2(29B) of the IT Act) accruing to the

shareholders of the Company on sale of the Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT is exempt from tax as per provisions of Section 10(38) of the IT Act. In case the shareholder is a company having a Permanent Establishment (“PE”) in India and the income is taxable under section 115JB of the IT Act then exemption on long term capital gain would not be available.

5. As per the provisions of Section 112 of the IT Act, long term gains accruing to the shareholders of

the Company, being non-residents, from the transfer of shares of the Company, otherwise than as mentioned in point 4 above, are chargeable to tax at 20 percent (plus applicable surcharge* and education cess) after deducting from the sale proceeds the cost of acquisition. Such non-resident shareholders are allowed to adjust the cost of acquisition by the amount of foreign exchange rate fluctuations in computing capital gains. The benefit of indexation would not be allowed to the non-resident shareholders. As per the proviso to Section 112(1) of the IT Act, where the tax payable in respect of any income arising on transfer of a long-term capital asset being listed securities etc. exceeds 10 percent of the amount of capital gains before giving the effect to the provisions of the second proviso to Section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the shareholder. Further, no deduction under Chapter VI-A of the IT Act would be allowed to a shareholder from such long term capital gains subjected to tax under Section 112.

6. Under the provisions of Section 90(2) of the IT Act, if the provisions of the DTAA between India

and any specified territory / country of residence of the non-resident are more beneficial to the non-resident, then the provisions of the DTAA shall be applicable provided the non-resident is the tax resident of that country and fulfills the other condition specified in DTAA.

55

7. The shareholders are entitled to claim exemption in respect of tax on long term capital gains (other

than those exempt under Section 10(38) of the IT Act) under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds / securities within six months from the date of transfer subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds permissible for claiming the exemption by any person in a financial year is Rs. 5 million. However, according to Section 54EC(2) of the IT Act, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the previous year in which such bonds are transferred or otherwise converted into money.

8. Shareholders who are individuals can avail of an exemption in respect of long term capital gain

under Section 54F of the IT Act by utilization of the net sales consideration arising from the sale of the Company’s share held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase / construction of a residential house (“new asset”) within the specified time period and subject to the fulfillment of the conditions specified therein which also includes conditions to be satisfied post acquisition of a new asset.

9. The filing of return of income within the time allowed under Section 139(1) of the IT Act is

mandatory for claiming the carry forward of the loss under Section 74(1). 10. In case the income of the Shareholder from transfer of shares is treated as business income then the

income would need to be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of his business during the previous year would be eligible for deduction as per section 36(xv) of the IT Act.

* For the Assessment Year 2011-12 - Surcharge is applicable @ 7.5 percent if total income is in excess of INR

10,000,000 in the case of corporate tax payers, no surcharge for non-corporate taxpayers, education cess of 3

percent.

Special Tax Benefits

11. There are no special tax benefits available to the non- resident members. B.2 Foreign Institutional Investors

General Tax Benefits

1. Dividend (whether interim or final) declared, distributed or paid, as referred under Section 115-O

of the IT Act, by the Company is exempt in the hands of shareholders as per the provisions of Section 10(34) of the IT Act. However, the expenses incurred for earning such exempt dividend will not be allowed under Section 14A of the IT Act read with Rule 8D of the IT Rules. Further, the credit of DDT paid by the Company to the non-resident shareholders of the Company will be subject to the DTAA between India and any specified territory / country of residence of the non-resident shareholder and the local laws of the country of residence of the non-resident shareholder

2. The characterization of the gains/losses, arising from sale of shares, as capital gains or business

income in the hands of the shareholder would depend on the nature of holding and various other factors.

3. The short-term capital gains (as defined in section 2(42A) of the IT Act) accruing to the

shareholders of the Company on sale of the Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, tax will be chargeable at 15 percent (plus applicable surcharge* and education cess) as per provisions of Section 115AD of the IT Act. In other case, i.e. where the transaction is not subjected to STT, as per the provisions of Section 115AD of the IT Act, the short term capital gains would be chargeable to tax at 30 percent (plus applicable surcharge* and education cess).

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4. The long-term capital gains (as defined in section 2(29B) of the IT Act) accruing to the shareholders of the Company on sale of the Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, is exempt from tax as per provisions of Section 10(38). In case the shareholder is a company having a Permanent Establishment (“PE”) in India and the income is taxable under section 115JB of the IT Act then exemption on long term capital gain would not be available.

5. As per the provisions of Section 115AD of the IT Act, long term gains accruing to the shareholders

of the Company being Foreign Institutional Investors (“FIIs”) from the transfer of shares of the Company listed on recognized stock exchanges, otherwise than as mentioned in point 4 above, are chargeable to tax at 10 percent (plus applicable surcharge* and education cess). The benefit of indexation would not be allowed to such shareholders. However, adjustment with respect to fluctuation in foreign exchange rate would be available. Further, where the Gross Total Income (“GTI”) of the shareholders includes any income on which tax has been paid as per special rates provided under Section 115AD, then the GTI shall be reduced by the amount of such income and deduction under chapter VIA shall be allowed in respect of reduced GTI.

6. The shareholders are entitled to claim exemption in respect of tax on long term capital gains (other

than those exempt under Section 10(38) of the IT Act) under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds /securities within six months from the date of transfer subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds permissible for claiming the exemption by any person in a financial year is Rs. 5 million. However, according to section 54EC(2) of the IT Act, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the previous year in which such bonds are transferred or otherwise converted into money.

7. Under the provisions of Section 90(2) of the IT Act, if the provisions of the DTAA between India

and any specified territory / country of residence of the non-resident are more beneficial to the non-resident, then the provisions of the DTAA shall be applicable provided the non-resident is the tax resident of that country and fulfills the other condition specified in DTAA.

8. The filing of return of income within the time allowed under Section 139(1) of the IT Act is

mandatory for claiming the carry forward of the loss under Section 74(1) of the IT Act. 9. In case the income of the Shareholder from transfer of shares is treated as business income then the

income would need to be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of his business during the previous year would be eligible for deduction as per section 36(xv) of the IT Act.

* For the Assessment Year 2011-12 - Surcharge is applicable @ 7.5 percent if total income is in excess of INR

10,000,000 in the case of corporate tax payers, no surcharge for non-corporate taxpayers, education cess of 3

percent.

Special Tax Benefits

10. There are no special tax benefits available to the Foreign Institutional Investors. B.3 Non-Resident Indians

General Tax Benefits 1. Under Section 10(32) of the IT Act, any income of minor children clubbed in the total income of

the parent under Section 64(1A) of the IT Act, will be exempt from tax to the extent of Rs.1,500 per minor child whose income is so included.

2. Dividend (whether interim or final) declared, distributed or paid, as referred under Section 115-O

of the IT Act, by the Company is exempt in the hands of shareholders as per the provisions of

57

Section 10(34) of the IT Act. However, the expenses incurred for earning such exempt dividend will not be allowed under Section 14A of the IT Act read with Rule 8D of the IT Rules. Further, the credit of DDT paid by the Company to the non-resident Indian shareholder of the Company will be subject to the DTAA between India and any specified territory / country of residence of the non-resident Indian shareholder and the local laws of the country of residence of the non-resident Indian shareholder.

3. The characterization of the gains/losses, arising from sale of shares, as capital gains or business

income in the hands of shareholders would depend on the nature of holding and various other factors.

4. The short-term capital gains (as defined in section 2(42A) of the IT Act) accruing to the

shareholder of the Company on sale of the Company’s shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT, tax will be chargeable at 15 percent (plus applicable surcharge* and education cess) as per provisions of Section 111A of the IT Act. Further, no deduction under Chapter VI-A of the IT Act would be allowed to a shareholder from such short term capital gains subjected to tax under Section 111A. In other case, i.e. where the transaction is not subjected to STT, the short term capital gains would be chargeable as a part of the total income and the tax payable thereon would depend on the income tax rates applicable to the shareholders.

5. The long-term capital gains accruing to the shareholders of the Company on sale of the Company’s

shares in a transaction carried out through a recognized stock exchange in India, and where such transaction is chargeable to STT is exempt from tax as per provisions of Section 10(38) of the IT Act.

6. As per the provisions of Section 115E of the IT Act, long term capital gains accruing to the non-

resident Indian shareholders of the Company from the transfer of shares of the Company acquired or purchased or subscribed in foreign currency is chargeable to tax at 10 percent (plus applicable surcharge* and education cess).. The benefit of indexation would not be allowed to such shareholders. Further as per Section 115D(2) of the IT Act, no deduction under Chapter VI-A of the IT Act would be allowed to such shareholder from such long term capital gains subjected to tax under Section 115E of the IT Act.

7. Under the provisions of Section 90(2) of the IT Act, if the provisions of the DTAA between India

and any specified territory / country of residence of the non-resident Indian are more beneficial to the non-resident Indian, then the provisions of the DTAA shall be applicable provided the non-resident Indian is the tax resident of that country and fulfills the other condition specified in DTAA.

8. The shareholders are entitled to claim exemption from capital gain (other than those exempt under

Section 10(38) of the IT Act) in respect of long term capital asset under Section 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds / securities within six months from the date of transfer, subject to the fulfillment of the conditions specified therein. The maximum amount of investment in the above bonds permissible on and after April 1, 2007 for claiming the exemption, by any person in a financial year, is Rs. 5 million. However, according to Section 54EC(2) of the IT Act, if the shareholder transfers or converts the notified bonds into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the previous year in which such bonds are transferred or otherwise converted into money.

9. Exemption from capital gain (other than those exempt under Section 10(38) of the IT Act) in

respect of long term capital asset (other than residential house) can be availed under Section 54F of the IT Act by the Shareholders by utilization of the net sales consideration arising from the sale of the Company’s share held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase / construction of a residential house (“new asset”) within the specified time period and subject to the fulfillment of the conditions specified therein which also includes conditions to be satisfied post acquisition of a new asset.

10. Exemption in respect of long term capital gain (as defined in section 115C(d) of the IT Act) can be

availed under Section 115F of the IT Act by the non-resident Indian shareholders by investing the net sales consideration arising from transfer of shares of the Company acquired or purchased or

58

subscribed in foreign currency, in any specified asset (as defined in section 115C(f) of the IT Act) or in the savings certificates referred to in Section 10(4B) of the IT Act within the specified time period and subject to the fulfillment of the conditions specified therein.

11. It is not necessary for a non-resident Indian Shareholder to furnish the return of income under

Section 139(1) of the IT Act if his total income consists only of the investment income (from a foreign exchange asset) or income by way of long-term capital gain (from a foreign exchange asset) and any tax deductible under the provisions of the IT Act have been so deducted. However, if the total income of the non-resident shareholder consists of any other income then it is mandatory for him to file the return of income within the time allowed under Section 139(1) for claiming the carry forward of the loss under Section 74(1) of the IT Act

12. Under the provisions of Section 115G of the IT Act, it shall not be necessary for a non-resident

Indian to furnish his return of income if - (a) his total income in respect of which he is assessable under this Act during the previous year

consisted only of investment income or income by way of long-term capital gains or both; and

(b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.

13. As per Section 115H of the IT Act, in case the non-resident Indian shareholder becomes a resident

in India, the provisions of the Chapter XII-A can continue to apply in relation to investment made when he was a non-resident Indian. Towards this, the non-resident Indian shareholder needs to furnish a declaration in writing to the Assessing Officer along with his return of income.

14. A non-resident Indian Shareholder may elect not to be governed by the special provisions of the

Chapter XII-A of the IT Act and if he does so then the tax on total income will be charged in accordance with the other provisions of the IT Act.

15. In case the income of the non-resident Indian shareholder from transfer of shares is treated as

business income then the income would need to be computed under the head profit and gains from business / profession and the provisions of the IT Act would apply accordingly. Further, the amount of STT paid by the shareholder in respect of the taxable securities transactions entered into the course of his business during the previous year would be eligible for deduction as per section 36(xv) of the IT Act.

* For the Assessment Year 2011-12 - Surcharge is applicable @ 7.5 percent if total income is in excess of INR

10,000,000 in the case of corporate tax payers, no surcharge for non-corporate taxpayers, education cess of 3

percent.

Special Tax Benefits

16. There are no special tax benefits available to the Non- Resident Indians.

III. Tax Benefits available to the shareholders under the Wealth-Tax Act, 1957

Shares of company held by the shareholder will not be treated as an asset within the meaning of Section 2(ea) of Wealth Tax Act, 1957. Hence, no Wealth Tax will be payable on the value of shares held by the shareholder of the Company.

IV. Tax Benefits available to Mutual Funds

As per the provisions of Section 10(23D) of the IT Act, any income of Mutual Funds registered under the SEBI Act, 1992 or regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions or authorised by the Reserve Company of India would be exempt from income tax, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf. However, Mutual Funds will be liable to pay tax on income distributed to unit holders under Section 115R of the IT Act.

V. Tax Deduction at Source

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No income-tax is deductible at source from income by way of capital gains under the present provisions of the IT Act, in case of residents. However, as per the provisions of section 195 of the IT Act, any income by way of capital gains (except the long-term capital gains exempt under section 10(38) of the IT Act), payable to non residents, may be covered by the provisions of withholding tax, subject to the provisions of the relevant DTAA with the country of residence of the non-resident provided the non-resident is the tax resident of that country and fulfills the other condition specified in DTAA. Accordingly, income tax may have to be deducted at source in the case of a non- resident shareholder at the rate under the domestic tax laws or under the DTAA, whichever is beneficial to the non-resident unless a lower withholding tax certificate is obtained by the non-resident from the Indian Tax authorities and the same is submitted to the Company.

Notes

a) All the above benefits are as per the Finance Act 2009 and Finance Bill 2010. Many of these

benefits are subject to the Company and the Shareholders complying with various conditions

specified in the relevant tax laws.

b) The above statement of possible tax benefits sets out the provisions of law in a summary manner

only and is not a complete analysis or list of all potential tax consequences. This is not an opinion

or assurance that the Company and/or shareholders will be eligible for any of the tax benefits.

c) In respect of non-residents, the tax rates and the consequent taxation, mentioned in this section

shall be further subject to any benefits available under the, if any, between the Government of India

and the Government of any specified territory / country in which the non-resident has fiscal

domicile provided the non-resident is the tax resident of that country and fulfills the other condition

specified in DTAA;

d) The stated benefits will be available only to the sole / first named holder in case the share is held by

joint holders.

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SECTION IV: ABOUT OUR COMPANY

INDUSTRY OVERVIEW Unless noted otherwise, the information in this section is derived from industry sources and government

publications. None of the Company, the BRLM and any other person connected with the Issue has

independently verified this information. Industry sources and publications generally state that the

information contained therein has been obtained from sources believed to be reliable, but their accuracy,

completeness and underlying assumptions are not guaranteed and their reliability cannot be assured.

Industry sources and publications are also prepared based on information as of specific dates and may

no longer be current or reflect current trends. Industry sources and publications may also base their

information on estimates, projections, forecasts and assumptions that may prove to be incorrect.

Accordingly, investors should not place undue reliance on this information. The Indian Economy

Over the last few years, India has shown strong economic growth. Despite the global economic downturn during fiscal 2009, overall gross domestic product (“GDP”) growth for the fiscal 2009 was approximately 7.1% as compared to 9.0% in fiscal 2008 following the downturn precipitated by the global financial crisis (Source: The Annual Policy Statement of the Reserve Bank of India in April 2009). According to the “Union Budget and Economic Survey 2007-2008” issued by the Ministry of Finance, Government of India, the per capita income in India grew at an annual average rate of 7.2% during the period from fiscal 2004 to fiscal 2008. India’s GDP is predicted to be on an uptrend, keep increasing, with a concomitant increase in income levels across urban, semi- urban and rural households. These gains are predicted to lead to an increase in the number of households in the consuming class. The chart below shows the distribution of various income groups in India in 2005, compared to projections for 2015 and 2025:

Classification of Households by Income Groups

The demographic distribution, with the average consumer in the lower age brackets, appears to be favorable for the country’s economic growth. Approximately 70% of the country’s population is below 35 years of age, while more than 50% is likely to be under the age of 30, even in 2015.

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Population Distribution Across Various Age Groups Source: Euromonitor, FICCI – KPMG Report 2009

The Indian Internet Broadband Industry

Internet services in India were launched on August 15, 1995 through Videsh Sanchar Nigam Limited, a state owned entity. Subsequently, in November 1998, the Government permitted private participants to provide internet services. Internet services grew by more than 200% per year from March 1998 to March 2001 due largely to a supportive policy stance by the Government, coupled with the entry of a large number of private participants. (Source: TRAI Broadband Paper) The Indian broadband internet subscriber market comprised approximately 5.52 million subscribers in 2008, compared to 46,000 subscribers in 2003. The MPA Report 2009 projects that the number of broadband internet households will increase to approximately 13.93 million by 2013. Expressed as a percentage of total households, broadband internet subscription has relatively low penetration, with only 2% of total households in India with internet access. This percentage is projected to grow to 5% of total Indian households by 2013. (Source: MPA Report 2009)

Total Broadband Internet Subscribers in India

The penetration of broadband in India is also low in comparison to as compared to other countries in Asia, indicating a potential for significant growth.

Broadband Penetration in Asian countries

Country 2008 2013

Singapore 88% 99%

Hong Kong 82% 83%

Korea 82% 86%

Taiwan 64% 71%

Japan 62% 73%

Australia 61% 73%

New Zealand 49% 74%

Malaysia 22% 41%

China 19% 33%

34 33 3027

27 2727

27

25 2425 27

15 16 18 19

0%

20%

40%

60%

80%

100%

2000 2005 2010 2015

Above 50 years

30 - 50 years

15 - 30 years

Below 15 years

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Country 2008 2013

Thailand 8% 14%

Vietnam 8% 26%

Philippines 4% 11%

India 2% 5%

Indonesia 2% 7%

Source: MPA Report 2009

Technological Platforms for Broadband

Some of the more popular technological platforms for broadband are described below:

• ADSL Broadband

• Cable Broadband Internet

• Fiber Network

• Wireless Network ADSL Broadband

As of June 2009, 86.6% of India's broadband subscribers accessed the internet via asymmetric digital subscriber line (ADSL). ADSL works alongside frequencies used for telephone calls on a single connection, allowing users to download data and make voice calls simultaneously. The distinguishing feature of ADSL is that the flow of data is greater in one direction than it is in the other, hence the term ‘asymmetric’. ADSL download speeds are far greater than upload speeds. The top speeds for downloads are usually 8 Mbps, and the top speeds for uploads are usually below 1 Mbps. (Source: MPA Report

2009) In ADSL technology, download speeds also vary depending on the subscriber’s distance from the DSLAM, which typically needs to be placed about at a distance of within a kilometer from the end customer. Cable Broadband Internet

A Cable Broadband company lays bi-directional hybrid fiber coaxial ("HFC") cables to deliver its services to customers. This HFC network consists of a combination of fiber cable and coaxial cable that delivers broadband services to the end customer. This high-capacity network is capable of delivering internet as well as cable television services to customers. In Cable Broadband operations, subscribers receive data sent over a bi-directional cable television network. Under currently implemented technology and equipment in India, Cable Broadband connection speeds can range up to 38 Mbps, which is faster than ADSL or dial up internet. Cable Broadband internet is generally considered the most reliable of internet connections, since transmission is through fiber-optic material and coaxial cables (rather than a combination of fiber and ordinary twisted pair copper wires). Coaxial cables are considered more suitable for high-speed data transfers, such as for cable television, which require multiple channel delivery. In addition, coaxial cables are robust and can be laid out over longer distances in an outdoor environment. In comparison, ADSL service runs broadband on twisted pair cables. These cables are optimized to carry single-channel voice traffic, which is typically low bandwidth. Due to the ability of the operator to bundle multiple products, such as television, telephone and internet access, in a single package, such bundled services can be offered at lower cost to the customer. It is estimated that these benefits of Cable Broadband internet will drive its growth in India, with the MPA Report 2009 predicting that the number of Cable Broadband subscribers will increase to approximately 2.30 million in 2013, representing 16.5% of all Indian broadband internet subscribers, compared to 11% in 2008. (Source: MPA Report 2009) According to the MPA Report 2009, the total revenue in 2008 from Cable Broadband subscriptions in India was US$42.0 million, up from US$7.8 million in 2003. The MPA Report 2009 estimates that Cable Broadband subscription revenues will reach US$149.5 million in 2013, reflecting a significant increase in Cable Broadband subscriptions through 2013.

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Total Cable Broadband Internet Subscribers in India

A year-on-year growth chart of the broadband internet market from 2005 till 2009 and its projected growth until 2018 is shown below: Broadband Internet Growth Potential

Broadband Internet

Y/E Dec 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total Broadband internet subs (000) 903 2,211 2,963 5,521 7,248 8,771 10,327 11,939 13,925 15,947 17,649 18,943 19,895 20,435

Cable (000) 191 297 398 623 854 1,103 1,454 1,859 2,295 2,746 3,155 3,507 3,809 4,091

ADSL (000) 712 1,898 2,513 4,711 5,629 6,021 6,297 6,553 6,752 6,910 7,011 7,086 7,101 7,120

FTTx (000) 16 52 118 625 1,421 2,023 2,526 2,855 3,248 3,501 3,649 3,753 3,753

Wireless (000) 69 140 226 553 1,001 2,023 3,043 3,982 4,701 5,235 5,471

%Change % 692% 145% 34% 86% 31% 21% 18% 16% 17% 15% 11% 7% 5% 3% (Source: MPA Report, 2009)

Fiber-Based Ethernet Network

Fiber optic cable uses lasers or light emitting diodes (LEDs) to transmit pulses of light through fiber cable. Fiber optic cable transmits data in light form and can carry more data over longer distances. A fiber-based network uses fiber cable up to the curb to transmit signals in light form, after which it is reconverted to electrical data signals and carried over CAT5 cables to end customers. The network is managed through switches and routers placed at multiple points throughout the network.

Unless there is a customer end device, such as a cable or DSL modem, which separates the customer’s PCs from the network, such networks are regarded as less secure. Computer machines on such a shared network are more vulnerable to hacking and data theft. To increase data security, a customer must either be connected on a single fiber strand up to the ISP data center or high end routers must be used both at the central data center as well at each distribution point to limit access and isolate the customers’ computers.

Wireless Network

Wireless technologies usually provide wider broadband access solutions in areas with limited communications infrastructure. Wireless technology is suitable for harsh landscapes and thinly populated areas, but can also be deployed to provide specialized services in urban areas. Amongst the various technologies available for broadband, wireless service enjoys the advantage of ease of installation, operation and maintenance, flexibility for service providers, and convenience on the part of end users. Moreover, wireless technology is suitable in areas where copper loop installation is not wide-spread, such as in rural areas.

Therefore, wireless technology could present an ideal solution for widespread last mile coverage through a combination of different technologies, such as WiMAX, WiFi and 3G. For the deployment of any wireless technology, suitable and sufficient spectrum availability at a cost-effective investment and its efficient utilization is a pre-requisite. Presently, wireless internet is available through GSM and CDMA networks (Source: TRAI Recommendations on Growth of Broadband 2007).

Similar to other wireless services, wireless broadband also requires higher amounts of spectrum to accommodate increased usage and a growing customer base. The popular platforms for delivering broadband are ADSL and Cable Broadband internet. An estimated 4.71 million, or 85.3% of all of broadband internet subscribers, accessed the internet via ADSL through the telephone network in India in

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2008 (Source: MPA Report, 2009), with a further 11% access through Cable Broadband. However, Cable Broadband has been hampered by the availability of bi-directional cable networks. These are being built as cable networks and upgraded by various companies.

Trends in Broadband Access Consumer behavior for internet access has evolved over the years. When internet access became available in India in 1995, a majority of users accessed the internet through dial-up connections. The websites accessed were simple text pages that used low bandwidth. At the time, the internet was used primarily as a tool to obtain information easily and to facilitate communication through applications such as email.

The proliferation and popularity of internet applications has brought about a surge in internet usage. The internet is commonly used for email communication with large attachments, while narrow band e-commerce applications, such as online bill payment facilities, are also gaining in popularity. In conjunction, the internet has emerged as source for personal entertainment. New usage categories are also emerging, such as social networking sites, for example, www.facebook.com, and file-sharing sites, such as www.youtube.com. Such sites require large bandwidth consumption at the consumer level.

The resulting steep rise in internet traffic has created a growing requirement for internet service that is “always on”, while capable of handing high throughputs levels. The cable TV modem infrastructure has the capability of delivering higher speeds to consumers as compared to a DSL service, where the speeds to a consumer are dependent on the distance of the customer from the DSLAM. Cable TV infrastructure is built with fiber and coaxial cable meant for carriage of television channels, since television channels require higher bandwidth. Once interactivity is built into this infrastructure by making it two-way, the same high capacity infrastructure can be used for the delivery of broadband internet.

The Indian Entertainment and Media Industry The Indian entertainment and media industry which, according to the FICCI-KPMG Report 2009, comprises television, film, radio, print, music, internet, animation, gaming and outdoor media, has been one of the fastest-growing industries in India over the last few years, with a growth rate of 15% between 2006 and 2008. In 2008, the Indian entertainment and media industry recorded growth of 12.3% over the previous year, from an estimated Rs. 520 billion in 2007 to Rs. 584 billion in 2008. The FICCI-KPMG Report 2009 states that the key factors driving the growth of the industry have been deregulation, regionalization of content, availability of organized funding, digitization, convergence of platforms, creation of niche content, growing global demand for Indian content and a favorable socio-economic environment. The total market size for India’s entertainment and media industry is projected to grow at 12.5% per year from Rs. 584 billion in 2008 to a total of Rs. 1.05 trillion in 2013. The following table sets forth the historic and projected revenue of India’s entertainment and media industry as a whole and for the various segments of this industry for the period 2005 through 2013 is as follows:

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India’s Television Industry

As of the end of 2008, 123 million households in India had television sets, with 86 million of those households being cable and satellite (“C&S”) households and 37 million of those households being non-cable and satellite (“Non-C&S”) households with access to terrestrial television. The number of households in India owning television sets increased by 15 million between 2005 and 2008, registering a growth of 13.0%. Rapid urbanisation and an increase in disposable income have accelerated the addition of new viewers thus driving up the viewership numbers.

The Indian television industry comprises two main categories:

• Broadcasters of television channels; and

• Distributors of television channels. In addition, there are television content aggregators who bundle and create bouquets of television channels and sell these bouquets to MSOs. Television Broadcast Industry

The Indian television broadcast industry began in 1959 when Doordarshan, a Government-owned channel, commenced operations. With the advent of the first Gulf war in 1990, satellite channels, such as CNN and BBC, began beaming content in India through satellites. This was carried into homes via co-axial cables through the entrepreneurial initiatives of small independent local area businessmen. In 1992, the Government authorized the licensing of privately-owned cable and satellite television channels. The number of channels has grown from two in 1992 to approximately 120 in 2003 and to 485 as of the end of 2009. This is also illustrated in the table shown below.

A table showing the number of channels that have been granted downlink permission follows:

2005 2006 2007 2008 2009

No of channels granted downlink permission 15 39 74 160 76

Cumulative 136 175 249 409 485

Source: Ministry of Information & Broadcasting website

Television Distribution Industry

India’s television distribution industry can be divided into three main categories:

• Terrestrial television.

• DTH

• Cable television In addition, the other television distribution technologies that have emerged in India are IPTV and head-end in the sky ("HITS").

Terrestrial Television

Terrestrial television is a term that describes modes of television broadcasting that do not involve satellite or cable transmission. Prasar Bharti, the Broadcasting Corporation of India, which is owned by the Government, is the only terrestrial television broadcaster in India. It operates a network of free to air channels in Hindi and several other regional languages under the umbrella brand of “Doordarshan”. Terrestrial television enjoys greater penetration in rural areas where cable and satellite television are less prevalent. Competition to Doordarshan started in the early 1990s due to the growth of cable TV. The number of non-C&S households (i.e., households only receiving terrestrial television) was 46 million in 2005, which decreased to 37 million in 2008, and is projected to further decrease to 23 million in 2013. DTH Satellite Television

A DTH service provider has a digital head-end to receive and encode the content of broadcast channels. The DTH provider receives content, encodes and re-encrypts the signals before retransmitting the same

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on satellite transponders. In a DTH service, a small dish antenna and a set top box ("STB") is installed at the viewer’s premises, which is capable of directly receiving and unscrambling television signals from the service provider.

DTH service has the advantage of wide reach. A DTH service may be offered to all customers within the footprint of the transmitting satellite. A potential customer of a DTH service only needs to install a dish antenna and an STB in his home. The DTH dish receives the signals from the satellite and connects to the STB, which in turn descrambles and decodes the channels and displays it to the customers’ television sets. In effect, in a DTH system, the HFC of the cable TV network is replaced by a satellite transponder and a Dish antenna at the customer premises. However, the DTH network operates like a one way cable plant, with dishes in the customer premises only receiving signals from the head end but not transmitting anything back. Hence, a DTH operation cannot offer interactive services without the help of a third party telecommunications network, such as a mobile, wireless or a telephony network. The following chart sets forth the historic and projected number of pay DTH satellite television households in India for the period 2005 through 2013:

The Indian Cable Television Industry

India’s cable television industry has grown rapidly since its inception almost twenty years ago. Cable television is now established as a mass medium for entertainment and information, available in more than 80 million consumer households across India. This represents 64 per cent of television-owning homes in the country.

Global Cable Television Industry Comparison

Compared to cable industry in the United States and Europe, cable TV in India is still at a nascent stage. Cable has developed strongly in Europe and the United States over the last decade, even after reaching high penetration levels by 2003. The conversion of subscribers from analog to digital services and the introduction of broadband and interactive services was a key driver enabling this growth. Digitization helped by adding subscriber addressability and opening a window for sale of additional services and content. This was also a period when the cable industry migrated from being a single service provider to a multi service provider. Most cable companies in the US and Europe now offer their customers a host of services spread across the three core services of cable television, broadband access, and digital cable telephony. This has helped to expand the subscriber base while growing revenues. This digital transition and growth in the number of services offered to the customers that fueled the growth in developed markets over the last decade has yet to take place in India, evidenced by the comparatively small number of digital subscribers and low broadband penetration. This uniquely positions Indian cable television companies to take advantage of growth in (a) the subscriber base; (b) the introduction of broadband services; (c) the addition of new services and (d) the evolution of new value-added services.

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Cable TV Subscribers and Penetration, Leading Global Markets (December 31, 2008)

Cable television distribution networks currently deliver television channels largely in the analog mode to subscribers. The following chart sets forth the historic and projected number of cable households in India as a whole and for the analog and digital segments for the period 2005 through 2013 in millions:

As of December 31, 2008, the Indian cable TV industry generated an approximate turnover of Rs. 230 billion: Rs. 151 billion derived from the distribution of television content over analogue cable networks; Rs. 4 billion from the distribution of television programming over addressable digital cable networks; and Rs. 75 billion from cable television advertising sales. (Source: Media Partners Asia, Asia Pacific Pay-TV

& Broadband Markets 2009) In recent years, the cable industry has added approximately 6 to 7 million new TV subscribers per annum. (Source: Media Partners Asia, Asia Pacific Pay-TV & Broadband

Markets 2009)

Competition from emerging digital direct-to-home or “DTH” satellite pay-TV networks, which have grown in scale over the past five years and had more than 11 million subscribers at the end of 2008, is another key trend. Concurrently, there is increasing consumer demand for more entertainment and information services from television distribution networks and communications platforms. To benefit from this demand upswing, incumbent cable operators are investing to upgrade existing distribution infrastructure and technology by quickening the deployment of digital set-top boxes (“STBs”), consolidating last mile networks.

Cable television broadcasting operates by uplinking a broadcaster’s channel to a satellite which then provides a downlink signal to a particular region. The downlink signal is received by ground-based MSOs through dish antennas. Using modulators, decoders, encoders, transmitters and amplifiers, the signal is then distributed to end-user subscribers. In India, the MSOs usually connect to LCOs that provide the “last mile” cable link to a subscriber’s home. For further information on MSOs and LCos, see the section "Business" beginning on page 76 of this Draft Red Herring Prospectus.

One of the evils that beset the industry is the under-declaration by LCOs of subscriber revenue. Historically, the LCOs have declared only a small part of their subscriber base and have not paid subscription fees based on their full analog customer base. This has led to low levels of subscription revenue.

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The deployment of digital cable TV provides an addressable distribution framework for the industry, which will bring about more equitable revenue sharing arrangements within the industry value chain, lessen the incidence of piracy, as well as provide a platform for the growth of pay channel services and value-added interactive services, including video-on-demand (“VOD”). This will lead to better average revenue per customer or “ARPU” for the MSO.

Cable Television Operations A cable TV service provider (MSO type) has the following main components: Reception unit: This consists of a satellite dish farm that received signals of various broadcast channels via satellite. Processing unit: The signals from the dishes are processed to get individual channels in analog form. Signals of a chosen set of analog channels are processed and combined to form a single analog stream. In addition, the channels are also encoded so that they may be carried in a digital format. The digital content may then be encrypted and combined with the analog signal Transmission and distribution: This combined signal (analog plus digital) is then transmitted over a fiber cable infrastructure. The fiber terminates into nodes that interface with Coaxial cable. Coaxial cables then carry the signals further. They interconnect with the cables of the cable operator. The cable operator then carries the signals into the customer premises (i.e. the last mile). Reception (Customer Premises Equipment or "CPE"): In homes where only an analog service is available, the operator taps the customer's cable to connect the home, no CPE is needed. In places with a digital service, a STB needs to be in place to convert the signals into a format suitable for television viewing. Since the signals were encrypted earlier, the STB also needs to have decryption keys so that the signals send by the operators can be decrypted. The STB is provided by the MSO alone and also controlled by the MSO. The MSO is able to program the STB which channels to decrypt. Multi-System Operators

There are approximately 6,000 MSOs and head ends in India. The MSOs receive broadcasters’ signals and transmit the broadcasted signals to the LCOs for a fee, which is typically based on the number of subscribers (agreed between the MSO and LCO) receiving the signals through each LCO. However, the lack of transparency has resulted in under-reporting of subscriber numbers. Consequently, where the MSOs access their customers through LCOs, a significant portion of the subscription revenues is retained by LCOs. The growth of digital cable, is expected to result in a higher percentage of subscription revenues being payable to MSOs. Placement and carriage fees are paid by broadcasters to MSOs for the carriage of their channels, with a premium paid for carriage on a preferred frequency band. This is of particular relevance for analog cable transmission, since only a limited number of channels can be transmitted; in this regard, the frequency band where the channel is placed can significantly impact the viewing experience and channel viewership. The placement and carriage fees market doubled from approximately Rs. 6.0 billion in 2007 to Rs. 12.0 billion in 2008, but was flat in 2009.

Local Cable Operators

There are over 60,000 LCOs in India. LCOs are typically local operators who operate in specific areas within a town or city and with operations are restricted to that particular area. LCOs receive their signals from MSOs for onward transmission to the subscribers. LCOs act as franchisees to MSOs, providing the "last mile connection" to the MSOs. Therefore while LCO services the end customer, the signal being provided to the subscribers is that of the MSO. For digital cable, LCOs necessarily have to provide to its subscribers the set-top boxes provided by the MSOs.

For further information on MSOs and LCos, see the section "Business " beginning on page 76 of this Draft Red Herring Prospectus.

Digital Cable

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In digital cable television, the MSO downlinks the broadcasters' channels and converts them to a digital form. He then re-transmits the signals to the ultimate subscriber through the last mile connection provided by the LCOs. The STBs decrypt the signals, allowing the subscriber to view the channels. In 2003, the Government introduced the Conditional Access System ("CAS") in limited parts of some cities as a measure of implementing compulsory digital cable TV service. Benefits of Digitisation

Better picture and sound quality: Digital cable television, with its DVD picture and sound quality, provides an enhanced viewing experience compared to analog cable television.

Significantly more channels: Digital cable networks have significantly higher capacity to carry channels than an analog cable network. This translates into a broader channel selection and caters to a wider demographic compared to analog cable networks. Using the current technology and network design, the maximum number of channels that can be carried on analog cable is 106. A digital cable service can cater to over 500 channels.

Value-added services: Digital cable allows operators to provide subscribers with value-added services, such as an electronic program guide, video-on-demand, pay-per view and interactive-TV services, which provide multiple monetization opportunities for the MSO.

Prevents under-reporting of subscribers and unauthorized access Digitisation enables encryption of content, which helps to prevent unauthorized viewing of the content by non-subscribers and also makes it much more difficult for LCOs to under-report subscriber numbers. Due to the benefits resulting from digitisation, MSOs have encouraged digitisation of their cable services. As per the MPA Report, in 2009, out of the estimated 105 million connected households (a household with access to cable television, DTH, IP-TV or any other form of connectivity other than terrestrial), digital platforms will have a market share of approximately 15.7 percent, representing 21.3 million subscribers.

Revenue Drivers for the Indian Television and Cable Industry

Revenues of the Indian television industry are primarily derived from subscription revenues and advertising revenues. The following chart illustrates the historic and projected growth of subscription revenues and advertising revenues of India’s television industry over the period 2005 - 2013:

The growth of the television industry between 2009 and 2013 is likely to be driven by a variety of factors including:

• rapid growth in the number of digitised households; • increase in the ARPU’s realized through digital distribution platforms; • growth in the number of television channels, especially in niche and regional categories; • growth in the number of television and C&S households. The total number of digital pay TV households (including digital cable, DTH satellite television and IPTV) is projected to grow at a CAGR of 35.4% from 2009-2013 to reach 71 million by 2013, or about 56% the total C&S households at that time.

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With digitization of distribution, the rapid growth in channels is likely to continue, which will lead to increasing choice for subscribers. Television and C&S penetration is also likely to continue to increase at a steady rate. By the end of 2013, the total number of households with televisions in India is projected to increase to 149 million compared with 123 million at the end of 2008, with 84.6% of those households being C&S households (compared to 69.9% at the end of 2008). The chart below illustrates the estimated distribution of households with televisions in India between 2005 and 2013.

Of the projected 149 million television households in India as at the end of 2013, 60.4% are projected to be cable households (36.9% analog cable households and 23.5% digital cable households), of which 18.8% are projected to be DTH satellite television households and 2.7% IPTV households. The average pay television ARPU per month in India, at around US$ 4 in 2008, remains low by global standards compared to the major Asia Pacific nations, as shown in the chart below:

The FICCI-KPMG Report 2009 states that pay television ARPUs are expected to increase from 2010 onwards, the main growth drivers being the increased usage of add-on services associated with digital distribution (e.g., pay-per-view), as well as the cooling down of the highly competitive environment in the television distribution sector that exists today. Driven by rising ARPUs from digital distribution and increasing C&S penetration, subscription revenues have been projected to grow at a CAGR of 14.9% over 2009-2013 compared with a CAGR of 12.4% over 2006-2008. Cable TV subscription fees

Subscription fees are revenue earned by MSOs. Out of the total current revenues of Rs. 139 billion, subscription contributed 53% . Primary operators receive subscription fees from the subscribers and share these revenues with broadcasters. However, in the secondary network, subscription fee income is shared between the LCOs and the MSOs, and ultimately the broadcaster. The following chart illustrates the historical and projected growth of subscription revenues over the period 2006 through 2018:

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Subscription Revenues (US$ mn)

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Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Analog Cable 2,930 3,299 3,775 4,038 4,337 4,566 4,881 5,189 5,572 5,949 6,380 6,765 7,122

Digital Cable 6 28 90 171 265 405 594 830 1,090 1,355 1,614 1,871 2,080

Source: Asia Pacific Pay – TV & Broadband Markets 2009 (MPA Report)

Advertising revenue

The following chart illustrates the historical and projected growth of advertising revenue over the period 2006 through 2018:

Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Advertising Revenues (US$ mn)

Cable 1,241

1,483

1,719

1,836

2,004

2,271

2,574

2,895

3,241

3,591

3,911

4,216

4,495

DTH - - - 6

10

18

34

61

94

130

165

196

222

Total Advertising Revenues (US$ mn)

1,241

1,483

1,719

1,842

2,014

2,289

2,608

2,956

3,335

3,721

4,076

4,412

4,717

Source: Asia Pacific Pay – TV & Broadband Markets 2009 (MPA Report)

Technology Overview of Cable TV Operations:

A cable company’s technical operations are divided into to two key parts:

• Head-end: content acquisition and processing takes place at the head-end to create a composite signal consisting of all the content; and

• Network: the network performs the role of the delivering the composite signal created at the head-end to the end customer.

The Head-end Head-end processing is divided into two parts, consisting of reception and analog or digital processing. Content is received through multiple dish antennas. Content (i.e. channels) is beamed down by broadcasters. The channels may be “pay” channels or “free” channels. The pay channels are beamed in encrypted form. The MSO operates its head-end contracts separately for content with each of the broadcasting companies. After a contract is signed, the broadcasting company provides the head-end with a decoder box. This decoder decrypts the channel of such a broadcaster. Thus, the set of channels that is selected to be offered to customers is first received at the MSO’s head-end

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For analog transmission, the signal received is subsequently modulated. The process of modulation determines the position of the channel in the reception sequence in the television set. After the selected channels are modulated, they are then combined to form a single signal stream for analog transmission. For digital transmission, each received channel is encoded into digital form (or converted to digital form) by the process of encoding. The encoded channels are then encrypted and combined. The encryption permits the MSO to control the availability of the channel at the STB level. Based on the rights granted to a STB by the MSO, the box may be able to decrypt any specific channel. The analog combined stream and the digital combined stream are then recombined to create a signal stream from the head-end. Cable Television Network Architecture – One -way and Two-way Infrastructure

Network Architecture and Infrastructure

The network infrastructure performs the role of carriage and delivery of the composite signal created at the head-end to the end customer. Cable Network

Cable television uses a network of coaxial or fiber optic cable to transmit multiple channels between a head end and a subscriber’s house. Coaxial cable is a type of cable used for broadband data and cable systems. This type of cable has high-capacity, noise immunity and physical durability. Fiber optic cable is a communication medium that uses hair-thin glass fibers to transmit signals overlong distances with less signal loss or distortion than coaxial cable. At the head-ends, programming signals are received, processed and sent through the distribution network, which consists of fiber optic and coaxial cables. A node, which services a number of subscribers, is connected to Fiber network at one end and coaxial network at the other end. Cable television signals then travel, via coaxial cable, from nodes into subscribers’ homes. In most of the cities, the signal is first carried up to a hub, which caters to an area with a city. Form the hub, the signal is redistributed to local cable operators, who then carry the signal to individual customer homes on their coaxial cable network.

A one-way cable TV system only permits transmission from the head end to the customer homes. In comparison, a two-way cable television system allows customers to receive and send information between the head end and their set-top box or any other device at the customer premise. The figure below shows a two-way cable television system and some of the services that may run on it. This diagram shows that the two-way cable television system adds a cable modem termination system (CMTS) at the head-end and a cable modem (CM) at the customer’s location. The CMTS also provides an interface to other networks such as the Internet.

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Two-Way Cable Television System

Internet

PSTN

VoiceGateway

CANUpconverter

Data

Gateway

Modulator

CableModem

Set TopBox

Internet Phone

Bi-Directional

Amplifier

Bi-Directional

Amplifier

Head End

Broadband on Cable As discussed, traditional cable TV infrastructure is a “unidirectional” or a one-way non-interactive infrastructure. This implies that while cable television signals can be transmitted from the MSO to the home, no signals/request can be received back from the home by the head end. This is on account of unidirectional components (similar to unidirectional amplifiers) being used in the network. A vast majority of the networks laid by LCOs are unidirectional one-way networks. To launch broadband and telephony services at homes on these networks, these networks need to be upgraded to be made bi-directional. After having made an investment in a two-way enabled cable plant, cable operators may, in conjunction with MSOs, roll out high-speed internet access to consumers. This may be at an attractive incremental cost, often bundled with existing cable television services, to grow consumer offerings, increase yields and boost profit margins. This gradual structural transformation is similar to what has already been witnessed in developed markets, such as the U.S. and Europe. However in India, very few LCOs have upgraded their cable infrastructure. Broadband has largely been deployed by MSOs directly by building parallel cable infrastructure into homes. Hence, its availability has been limited to the reach of the MSO’s own direct cable plant. Converged Cable TV and Broadband Operations As mentioned, two-way cable TV infrastructure is capable of offering high speed broadband internet apart from other services, like interactive digital cable and voice telephony. Such operations will have the following components: Head-end: The head-end of such an operator has a dish to receive broadcast channels via satellite. This is converted to analog and digital signals by way of the head-end, and a composite signal for video service is created. CMTS: In addition, such a head-end has a CMTS to be able to control all the cable modems at homes. The CMTS, in turn, is connected to the internet gateway to permit seamless connectivity between the cable modems at the customer premises and the content on the world-wide-web.

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Voice gateway: Such a head-end also has a voice gateway. The voice gateway interfaces between equipment of mobile and land line telephone providers and VoIP telephony devices installed in the customer premises by the service provider.

DOWNSTREAM

Internet

Head End

CMTS/ Router

Node Node

Node

Cable Modem to PC and STB to TV

Node

Coax

UPSTREAM

Node

Node

HUB

HUB

HUB

Node Node

Fiber

Fiber

DOWNSTREAM

InternetInternet

Head End

CMTS/ Router

Node Node

Node

Cable Modem to PC and STB to TV

Node

Coax

UPSTREAM

Node

Node

HUB

HUB

HUB

Node Node

Fiber

Fiber

Signals in a converged HFC network service

In a converged network, signals for various services are carried on the same infrastructure. The capacity of the cables is logically partitioned for each service. Such a service approach does not involve additional network capital expenditure for each service and no additional operational maintenance expenditure is required for each service.

Cable Television

HFC Cable Infra.

Cable Telephony

Broadband Internet

Cable Television

HFC Cable Infra.

Cable Telephony

Broadband Internet

The signal partitioning is combined with the head end components described earlier and is implemented across the entire network.

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This results in a converged HFC network that has the following main components:

� Head-end

o Reception unit – Ability to provide video signals and also connect to the world wide web (i.e. internet) and interconnect with PSTN and mobile providers;

o Signal Processing – Conversion of the signals for the voice, video and broadband internet services into a form that is suitable for carrying on HFC cable and also ease the reception at the customer’s end.

� Distribution

o Fiber Distribution – to carry the signals over long distances with minimum distortion so that the customer gets good quality;

o Nodes – for conversion that interface between a fiber cables and a high capacity co-axial cable;

o Coaxial cable – to carry the signals up to the homes. � Customer Premise Equipment

o Depending on the services opted by the customer - e.g. digital cable, broadband or telephony – suitable end devices are put into the network so that the services may be provisioned and activated for the customers.

Trends in Television Broadcasting and Customer Behavior Television broadcasting has seen a very rapid growth in the past few years. The number of broadcasted channels has increased very rapidly in the past few years - from 175 in 2006 to 485 in 2009, with numbers expected to increase further. This trend points towards localization and specialization of content. A lot of content / channels now cater to audiences in a specific area or of a certain demographic profile. An analog cable service has limitations in terms of the number of channels that can be telecast. Hence, in order to cater to the growing number of channels, a digital service tier is required to cater to the customers who opt to view more channels. Digital service may be offered ether via satellite (DTH) or by an MSO over cable. In a satellite service, the number of channels is limited to amount of satellite capacity contracted by the DTH service provider. Another trend in consumer behavior in developed markets is interactivity on television. As consumers experience interactivity over the internet, the requirement to bring interactivity on television will grow. Developed markets such as US and Europe have seen a high preference for customers opting for Video on Demand ("VoD"). VoD is a service where the customer uses his remote control to purchase content, such a movies, archived programs and serials. The customer also has full control over the process and can pause a live television program without the assistance of the service provider. The requirements for running such an interactive service are that the customer premise equipment should be able to send a service request to the MSO or the DTH head-end. In a DTH service, this is difficult to achieve without alternate or additional cables for the back channel. This is more easily achieved on HFC cable that is two-way. Hence, a broadband cable service provider has network infrastructure that is more suitable for meeting customer needs for interactivity.

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BUSINESS The following information is qualified in its entirety by, and should be read in conjunction with, the more

detailed financial and other information included in the Draft Red Herring Prospectus, including the

information contained in the section “Risk Factors” and “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” beginning on page xiv and page 130, respectively, of this

Draft Red Herring Prospectus.

In this section, in addition to a description of the business and operations of our Company, we have also

included a description of the cable television business and operations of our associate company Digital

Outsourcing Private Limited and its subsidiaries and associate company. The cable television business of

Digital Outsourcing Private Limited and its subsidiaries and associate company is distinct from the

business and operations of our Company.

In this section, unless the context otherwise requires, a reference to the "Company" or to "we", "us" and

"our" refers to YOU Broadband & Cable India Limited, and a reference to "DOPL" refers to Digital

Outsourcing Private Limited and its subsidiaries and associate company, on a consolidated basis. Unless

otherwise stated or the context otherwise requires, the financial information used in this section is

derived from the restated financial statements of our Company and the restated consolidated financial

statements of DOPL, as applicable.

Overview

We are one of the leading Cable Broadband service providers in India. We commenced operations in 2001 and currently provide high-speed broadband cable internet services to our residential and enterprise segment customers across 11 cities in India. As of September 30, 2009, we owned and operated over 990 kilometers of fiber optic cable and over 4,100 kilometers of trunk coaxial cable network, supported by 11 NOCs. As of September 30, 2009, our residential broadband internet service subscriber base aggregated approximately 200,779 customers. Based on internal estimates, we believe that our network covers approximately 1.50 million homes passed, and our residential broadband internet service subscriber base represents an estimated penetration of 13.4% of two-way broadband-enabled homes. Based on industry information derived from the TRAI Report dated January 7, 2010 "The Indian Telecom Services Performance Indicators July - September 2009" (“TRAI Report (January 2010)”), in such period, we had a market share of approximately 32.0% of the Cable Broadband internet market in India. We currently offer high-speed broadband internet access through our two-way hybrid fiber optic coaxial ("HFC") cable network. Our technologically advanced cable network infrastructure is capable of simultaneously supporting broadband internet, cable television and voice communication and we believe that we are one of the few broadband service providers in India with such "triple-play" capabilities. Our residential subscribers access our broadband internet through cable modem utilizing data over cable service interface specifications ("DOCSIS") technology on a variety of data transfer and unlimited internet plans. We deliver high bandwidth internet broadband services to our enterprise segment customers through cable modem or through dedicated leased line access. We also provide storage and security services and solutions to our enterprise segment customers. In addition, we lease our excess fiber network capacities and spare duct inventories to other telecommunication service providers. We have invested significantly in the development and expansion of our quality "triple-play" capable two-way HFC cable network infrastructure in a scalable manner. In fiscal 2007, 2008 and 2009, and in the six months ended September 30, 2009, we incurred capital expenditure of Rs. 216.89 million, Rs.441.48 million, Rs.127.67 million and Rs.40.08 million, respectively. Based on internal estimates, we believe that our existing cable network infrastructure which accommodates an estimated 1.50 million home passes, is capable of being expanded, at relatively low incremental investment, to accommodate an additional 0.50 million home passes. Our fiber optic backbone, broadband nodes and data centers provide a reliable infrastructure for internet traffic, as well as any analog and digital television transmission. For our enterprise segment customers located in areas not directly covered by our current infrastructure footprint, we have entered into leased line agreements with other telecommunication infrastructure owners to provide our services to such enterprise segment customers. We also offer limited wireless services connectivity to some of our residential broadband customers.

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We hold a pan-India Category "A" ISP license for our broadband internet services, as well as an Infrastructure Provider Category – I (IP-I) license, which permits us to lease our passive network infrastructure to other service providers. In addition, our ISP license enables us to offer voice over internet protocol ("VoIP") services as an internet telephony services provider ("ITSP"), which allows our customers to make international calls through our broadband network. In April 2007, we acquired the ISP business of IceNet.Net Limited to enhance our enterprise solutions and VoIP products. As of January 31, 2010, the Company had over 478 permanent employees. We are accredited by the International Organization for Standardization, with our quality management systems certified to ISO 9001:2000 standards, and our operations are ISO-certified in all cities of operation. Our total income increased by 63.49% from Rs.484.25 million in fiscal 2007 to Rs.791.73 million in fiscal 2009. Our total income in the six months ended September 30, 2009 was Rs.376.47 million. Proposed DOPL Acquisition In May 2007, we made a strategic investment in our associate company Digital Outsourcing Private Limited. DOPL carries on cable television services business. DOPL currently provides cable television services across 10 cities in India, including Mumbai, Navi Mumbai, Bangalore, Vishakhapatnam and Nagpur. Of these 10 cities, four cities, namely Mumbai, Navi Mumbai, Bangalore and Vishakhapatnam, overlap with the Cable Broadband services footprint and network infrastructure of our Company. As of February 28, 2010, DOPL offered its services to an estimated 1.5 million homes through cable operators and approximately 8,000 direct residential subscribers. For further information relating to DOPL and its business and operations, see "Business" beginning on page 76 and the "Financial Statements" beginning on page 129. We have entered into certain strategic arrangements with DOPL to benefit from our operational synergies. In cities where there is an overlap of our and DOPL's operations, we lease out our fiber network to DOPL, and DOPL lays additional fiber connecting to our network to develop an access network to cable operators. We have also entered into service agreements to provide IT and billing support services to DOPL.

Our Company currently holds 36.24% of the paid-up equity share capital of Digital Outsourcing Private Limited. We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL Selling Shareholders who in the aggregate hold 26.05% of the equity shareholding in Digital Outsourcing Private Limited for the acquisition of the DOPL Sale Shares. The transactions contemplated in the DOPL Share Subscription and Purchase Agreement are subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. In the event that such conditions are not satisfied, we may not be able to complete the proposed DOPL Acquisition. For further information relating to the DOPL Acquisition and the DOPL Share Subscription and Purchase Agreement, see “History and Other

Corporate Matters” beginning on page 101, "Objects of the Issue" on page 39, and "Risk Factors"

beginning on page xiv and “Management’s Discussion and Analysis of Financial Condition and Results

of Operations” beginning on page 130.

History Our Company was incorporated as “NetShastr Facilities India Private Limited” under the Companies Act, 1956, pursuant to a certificate of incorporation dated November 13, 2000 issued by the Registrar of Companies, Delhi and Haryana. In 2001, the Company became a wholly-owned subsidiary of BG India Telecom (Mauritius) Limited; subsequently, the name of the Company was changed to “BG Broadband Networks India Private Limited” on June 29, 2001. In February 2003, the registered office of the Company was transferred from the state of NCT of Delhi to the State of Maharashtra, Mumbai. In June 2006, Citigroup Venture Capital International Growth Partnership Mauritius Limited acquired a majority shareholding in our Company through YOU Telecom (Mauritius) Limited. Subsequently, on December 21, 2006, our Company’s name was changed to “YOU Broadband Networks India Private Limited”. Pursuant to the order of the High Court of Bombay dated April 11, 2007 on the scheme of amalgamation between YOU Telecom India Private Limited and our Company, our Company’s name was changed to

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“YOU Telecom India Private Limited” on November 23, 2007. The name of our Company was thereafter changed to “YOU Broadband & Cable India Private Limited” effective November 17, 2009. Our Company was converted into a public limited company and its name changed to "YOU Broadband & Cable India Limited" pursuant to a certificate of incorporation consequent to change of name dated January 12, 2010. For further information, please see “History and Certain Corporate Matters” on page 101 of this Draft Red Herring Prospectus. Our Strengths One of the leading Cable Broadband service providers in India with an extensive broadband cable

network infrastructure in key markets We are one of the leading Cable Broadband service providers in India, offering high-speed broadband cable internet services to residential and enterprise segment customers across 11 cities in India, namely Mumbai, Navi Mumbai, Surat, Vadodara, Ahmedabad, Pune, Bangalore, Hyderabad, Vishakhapatnam, Chennai, and Gurgaon. All these cities are in the top 20 cities in India in terms of maximum internet usage (Source: IMRB I Cube 2008 – Home Segment Report). Our infrastructure is strategically located in high density areas in these cities with high PC penetration and a concentration of SEC A and SEC B households. As of September 30, 2009, we owned and operated over 990 kilometers of fiber optic cable and over 4,100 kilometers of trunk coaxial cable network, supported by 11 NOCs. As of September 30, 2009, our residential broadband internet service subscriber base aggregated approximately 200,779 customers. Based on industry information derived from the TRAI Report (January 2010), in such period, we had a market share of approximately 32.0% of the Cable Broadband internet market in India. Based on internal estimates, we believe that our existing cable network infrastructure which accommodates an estimated 1.50 million home passes, is capable of being expanded, at relatively low incremental investment, to accommodate an additional 0.50 million home passes. We believe that our contractual right-of-way for areas covered by our network infrastructure was acquired at competitive terms. Advanced HFC cable network infrastructure capable of supporting broadband internet, cable

television and voice communication Our technologically advanced cable network infrastructure is capable of simultaneously supporting broadband internet, cable television and voice communications and we believe that we are one of the few broadband service providers in India with such "triple-play" capabilities. We believe that this will enable us to capitalize on increasing business opportunities resulting from government policy and regulatory environment in India supporting the expansion of broadband and telecommunications services and digitization of cable television. Our "triple-play" capable HFC infrastructure enables us to deliver convergent products and services and new value added product and service offerings, including analog and digital cable television services, using the same infrastructure and technical support personnel across various product and service lines. We are therefore able to explore additional product and service offerings and new revenue streams at low incremental operational cost and capital expenditure, and leverage our existing infrastructure to expand into the cable television business. We believe that our network infrastructure provides us with a distinct competitive advantage against competitors with limited network infrastructure and capabilities. Billing systems and processes that enable convergence

We have implemented a convergent billing platform known as Oracle BRM (Billing and Revenue Management System) under license from Oracle. This billing platform is capable of addressing requirements of large-scale and diversified business operations. As we introduce additional product and service offerings, we believe that our ability to integrate the delivery of multiple products and services under a single billing platform will result in increased operational and cost efficiencies. We have also developed and implemented customer relationship management ("CRM") software and systems to manage service delivery and customer relations. We believe that our integrated processes and systems and ability to provide multiple products and service offerings using the same billing infrastructure and process provide us with a distinct competitive advantage.

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Quality product and service delivery

We believe that our advanced network infrastructure, significant "last mile" network and direct operational control over such infrastructure, enable us to deliver quality product and service offerings and maintain high service levels in terms of response time and delivery quality. Our direct operational control also enables us to efficiently and effectively address customer needs, including requests for additional services or bandwidth upgrades. We have implemented a range of training initiatives for our employees, including at our in-house training institute in Pune, to ensure that our subscribers receive quality customer service. Customer inquiries are handled through locally-focused and dedicated customer service centers trained in technological developments, as well as technical and commercial matters relating to our operations and product and service offerings. We believe that our dedicated customer service centers and relationship management systems enable us to enhance our brand, increase customer loyalty and control churn. Our direct operational control also enables us to establish direct relationships with customers and more effectively market our products and services. We believe that this is a distinct competitive strength compared to operations of those Cable Broadband providers whose customer relationships are handled by local cable operators. Industry-experienced management team

Our management team includes experienced and qualified professionals, many of whom have been with the Company since its initial operations. Our senior management team has extensive experience in the telecommunications, internet services, as well as the cable television industry. Our senior management team and capable middle management personnel have been responsible for the successful development and expansion of our extensive cable network infrastructure, the implementation of our business strategies, and achievement of our growth targets. Our Strategies

Increase our subscriber base by expanding our network infrastructure and leveraging our brand and

direct marketing We intend to leverage our significant broadband cable infrastructure and large residential customer base to further consolidate our position in our existing markets. We continue to focus on markets, areas and customer segments characterized by high PC penetration and a concentration of SEC A and SEC B households, subject to technical and other considerations that affect the implementation of our network infrastructure. We intend to expand our network in existing cities through low incremental investment to increase the number of homes passed by approximately 30.0%. We are also in the process of evaluating expansion opportunities in certain other key cities in India. In order to expand our broadband footprint and improve customer experience, we also intend to establish wireless access points in large high-density areas. We expect the wireless internet service to increase our revenues and expand our subscriber base to include customers that require mobile internet access. We continue to increase our subscriber base by leveraging our strong brand image, direct access to our extensive residential customer base and our direct marketing and operational control. Our direct marketing efforts, including door-to-door sales calls, and our aggressive marketing and sales promotions have been and we believe will continue to be, a highly effective mode of acquiring new customers in the residential subscriber segment. We also continue to focus on providing superior customer service through the implementation of training programs and customer feedback processes to build customer loyalty and control churn. Continue to develop and market new value added products and services to generate additional revenue

streams

We continue to focus on the development and marketing of new value added products and services that we can deliver on our extensive network infrastructure to generate additional revenue streams and increase the revenue from existing customers.

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According to IMRB I Cube 2008 – Home Segment Report, the use of broadband internet for entertainment and e-commerce has steadily increased in India in recent years and the share of entertainment and e-commerce as a percentage of total broadband internet use in India increased from 4.00% in 2000 to 16.00% in 2008. We believe that that there will be increased use of the internet for e-commerce and for value-added services, such as e-learning, net shopping, and online entertainment, and that we are well positioned to capitalize in and benefit from such growth. We currently provide our customers various value-added services, including online shopping, gaming and e-learning solutions pursuant to arrangements with third party content and value-added service developers. We have also entered into arrangements with payment gateways to facilitate online payments and transactions by our customers. We believe that by actively developing and participating in the delivery of value-added services, we will be able to offer a better customer experience on value-added services, resulting in increased customer loyalty, while increasing our revenues from higher broadband usage. For our residential customers, we intend to increase our product penetration for our internet telephony services. We also intend to introduce additional gaming services available to our Cable Broadband subscribers on "YOU Play", as well as educational materials offered as online customizable term and chapter based test packs through "YOU Learn". We also continue to focus on generating additional revenue streams from our enterprise segment customers by providing value added services such as unified threat management solutions that comprises advanced security features and applications to monitor and control internet traffic. We also offer storage and security services and solutions, web hosting and data disaster recovery services, and implement networking solutions, including procurement of hardware, such as servers, routers and allied software and establishing internet connectivity links. Expand operations in the cable television business through the DOPL Acquisition and strategic

acquisitions of other MSOs and LCOs

We intend to expand our business and operations to include cable television services. We currently have a 36.24% shareholding in DOPL, which provides cable television services to an estimated 1.50 million residential subscribers in 10 cities across India, of which four cities overlap with our broadband services footprint. We have entered into certain strategic arrangements with DOPL to benefit from operational synergies. In cities where there is an overlap of our and DOPL's operations, we lease out our fiber infrastructure to DOPL, and DOPL lays additional fiber connecting to our network to develop an access network to cable operators. We have also entered into service agreements to provide IT and billing services to DOPL. We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL Selling Shareholders for the acquisition of the DOPL Sale Shares. The proposed DOPL Acquisition is however subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. For further information on the proposed DOPL Acquisition, see "Business” on page 76. Subject to compliance with applicable regulatory requirements, we intend to expand the cable television business in and around the cities where we have our cable network infrastructure. The DOPL Acquisition is expected to result in increased operational synergies and other benefits resulting from the integration of our broadband cable infrastructure and the ability to provide integrated internet and cable television services. We also continue to evaluate opportunities for the strategic acquisition of other MSOs and LCOs. We intend to grow the cable television business by introducing advanced video services, such as video on demand and interactive set top boxes, and raising service quality and customer service standards through improved infrastructure and operational efficiencies. Acquire last mile connectivity We continue to identify suitable acquisition opportunities among LCOs and MSOs to expand our subscriber base and geographic reach and achieve economies of scale and delivery of standardized integrated broadband internet and cable television services. Our strategy is to continue to acquire "last mile" connections through strategic acquisitions of other MSOs and LCOs, in order to consolidate the cable television business in DOPL's existing markets and expand into other cities in India that have significant cable television viewership, particularly cities where we have an existing network infrastructure. We believe the ability to provide integrated services, and direct marketing and operational control through "last mile" connectivity, will enable us to introduce additional value added product and service offerings, and increase subscription revenues through elimination of under-reporting of the

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subscriber base by LCOs. Increase digital penetration DOPL currently offers approximately 85 channels through its analog cable television services and about 200 channels through its digital television services. This channel count and the selection of channels vary based on the demographic profile of customers in the area catered to by the respective head-end. We believe that DOPL's ability to offer different local and regional content on its service provides a competitive advantage over DTH satellite television, which broadcasts the same channels all over India. We intend to increase the digitization of DOPL's cable television services to decrease the risk of subscribers switching to another digital platform, such as DTH satellite television, consequently strengthening DOPL's existing relationships with LCOs and its subscribers. Increased digitization of DOPL's cable television services is also expected to result in a decrease in under-reporting of the subscriber base by LCOs associated with the provision of analog cable television services in India. Digitization also enables provision of additional channels, better quality picture and sound, value-added services such as an interactive electronic program guides, pay-per-view program reservations, personal video recording, audio music channels. We believe increased digitization of DOPL's service offerings will enable it to compete more effectively with other digital technologies. Description of our Business We are engaged in the distribution of high-speed broadband cable internet services to residential subscribers, SMEs and large corporate customers across 11 cities. As of September 30, 2009, we owned and operated over 990 kilometers of fiber optic cable and over 4,100 kilometers of trunk coaxial cable network, supported by 11 NOCs. We provide our broadband internet services through our HFC cable network. Our residential subscribers access our broadband network through cable modem utilizing DOCSIS technology on a variety of metered and unlimited internet plans. We deliver high bandwidth internet broadband services to our enterprise segment customers through cable modem or through dedicated leased line access. We also provide storage and security services and solutions to our enterprise segment customers. In addition, we lease our excess fiber network capacities and spare duct inventories to other telecommunication service providers. As of September 30, 2009, our residential broadband internet service subscriber base aggregated approximately 200,779 customers. Based on internal estimates, we believe that our network covers approximately 1.50 million homes passed, and our residential broadband internet service subscriber base represents an estimated penetration of 13.4% of two-way broadband-enabled homes. Based on industry information derived from the TRAI Report dated January 7, 2010 "The Indian Telecom Services Performance Indicators July - September 2009" (“TRAI Report (January 2010)”), in such period, we had a market share of approximately 32.0% of the Cable Broadband internet market in India.

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The map below indicates the cities in which we currently offer Cable Broadband services:

(Map not to scale)

Residential Broadband Internet Services

Our broadband internet service plans are divided into two categories: (a) unlimited access; and (b) data transfer access plans. In the unlimited category, the customer opts for a specified download speed limit and unlimited access to the Internet. In the data transfer access plans category, the customer pays a fixed charge for higher download speed (up to 2 Mbps) with a limit on the total data transfer in the relevant period. Additional data transfer is charged on an incremental basis, based on the total number of additional bytes transferred in the period. Our broadband customers are also able to select either pre-paid or post-paid plans, as well as single service (broadband only) or dual service combination plans (broadband and VoIP). In a prepaid data transfer plan, the customer purchases a package with a predefined MB download quota and a fixed validity period. When the allocated MB quota is utilized or the validity period expires, the service is suspended and the customer is required to reactivate the account through the purchase of additional prepaid data transfer packages. The following table sets out our broadband internet service plans for residential subscribers:

Plans for New Sales

Plan Speed up to Free Data Transfer Plan Charges Validity

Mini 750 2 Mbps 3 GB Rs.680 2 Months

SP 5 GB 2 Mbps 5 GB Rs.1,499 3 Months

SP UN-450-N 192 Kbps Unlimited Rs.1,499 2 Months

Prepaid Plans - Data Transfer

Plan Speed up to Free GBs Plan Charges Validity

PP 1GB 2 Mbps 1 GB Rs.319 1 Month

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Plan Speed up to Free GBs Plan Charges Validity

PP 3 GB 2 Mbps 3 GB Rs.899 3 Months

PP 6 GB 2 Mbps 6 GB Rs.1,749 6 Months

PP 12 GB 2 Mbps 12 GB Rs.2,804 12 Months

Prepaid Plans - Unlimited Usage

Plan Speed up to Free GBs Plan Charges Validity

UN-450-N 192 Kbps Unlimited Rs.450 1 Month

UN-775-N 512 Kbps Unlimited Rs.775 1 Month

Post Paid Plans

Plan Speed up to Free GBs Monthly

Charges *

Excess Charges per

MB

Modem

Rental

YOU Explore 250 2 Mbps 1 GB Rs.250 Rs.0.9 60

YOU Explore 500 2 Mbps 2.5 GB Rs.500 Rs.0.8 60

DT650 512 Kbps 4 GB Rs.650 Rs.0.99 60

DT800 512 Kbps 5 GB Rs.800 Rs.0.99 60

DT950 512 Kbps 6 GB Rs.950 Rs.0.99 60

Broadband Internet and Voice - Combination Plans

Plan Speed up to Free GBs Monthly

Charges

Free Talktime Modem Rental

Ultimate 649 2 Mbps 1 GB Rs.649 200 60

Ultimate 899-UL 192 Kbps Unlimited Rs.899 150 60

Ultimate 899 2 Mbps 2.5 GB Rs.899 300 60

Special Plans

Top-up Plans

Plan Speed up to Free Data Transfer Monthly

Charges*

Validity

Night Booster 256 Kbps Unlimited from 11p.m. to 7a.m.

Rs.199 30 Days

Prepaid - Day Night Plans

Angel 192-512 kbps Day Speed - 192 kbps

Night Speed - 512 kbps Unlimited Rs.599 31 Days

Angel 192-512 kbps Day Speed - 192 kbps

Night Speed - 512 kbps Unlimited Rs.2,720 184 Days

Value-Added Services for Residential Broadband Customers

The Company offers a variety of value-added services to its residential broadband customers: Internet telephony. Our internet telephony services provider ("ITSP") license authorizes us to offer VoIP services, marketed as "YOU Call", enabling our subscribers to access our broadband network for international phone calls. We distribute international calling cards, with a range of denominations, to enable our subscribers to make VoIP calls. With our VoIP solutions, customers can substantially lower their international subscriber dialing ("ISD") costs. We introduced internet protocol ("IP") phones in India in 2003, marketed as "YOU Fone". IP phones are fixed landline devices that link to a broadband connection, instead of a telephone line, for telephone calls. VoIP telephony permits lower cost voice communications, since the network is used more efficiently. However, under current regulations, VoIP telephony is limited to calls between VoIP devices or to international connections. VoIP calls to landlines or mobile phones in India are currently not permitted. However, TRAI has recommended to the Government that ISPs that provide VoIP be permitted to offer unrestricted voice telephony, including interconnections to landlines or mobile phones in India.

Gaming services and educational materials. We provide access to "YOU Play", an online suite of gaming services with new games added every month. Game content is provided by third party content providers. In addition, we offer "YOU Learn", an education service for students featuring online

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customizable term- and chapter-based test packs and related material.

The key features of our broadband internet services are: High speed. We offer high download speeds for the residential sector, ranging from 256 Kbps to 2 Mbps. Flexible service plans. We offer flexible subscription plans at either flat fees, or on usage- or time-based billing. We provide both pre-paid and post-paid services. In addition, the customer may opt for both broadband and VoIP services simultaneously under a single service plan Security. Our residential broadband internet services are provided utilizing DOCSIS technology, which we believe provides robust online security. Our services require a DOCSIS cable modem to be installed as customer premise equipment ("CPE") either in the subscriber's residence or in close proximity. This device isolates the customer’s computer from the network and restricts any unauthorized access to the computer, while permitting a continuous connection to the internet. Customer service. We own and maintain our network, which provides us with direct operational control. Accordingly, we are able to achieve better response time and quality control, thereby providing our customers with a higher quality of service though higher uptimes.

Enterprise Segment Subscribers We provide dedicated bandwidth solutions to small and medium enterprises ("SMEs") and large corporate clients, i.e. our enterprise customers. Our HFC infrastructure allows us to deliver high bandwidth broadband services to our enterprise subscribers either through cable modems or directly through dedicated fiber core, according to customer requirements. In addition, we use other access solutions, such as third party telecom leased lines and wireless links, to connect to enterprise customers in places where we have not yet built our network.

We provide our enterprise customers premium bandwidth links, which offer enhanced throughput and enhanced internet connectivity on account of the higher allocation of bandwidth. We enter into contracts on negotiated terms with our corporate and SME customers. Our high service levels in response time and quality control, which we are able to provide due to the direct operational control we exercise over our network, attract new enterprise customers and enable us to retain our existing subscriber base. Our operational control also enables us to efficiently respond to the requirements of enterprise customers, such as urgent requirements for an upgrade in bandwidth throughputs. We serve a large variety of enterprise subscribers across various geographical regions, sectors and industries. Revenue from our enterprise segment subscribers represented 24.69% and 25.24% of our total income in fiscal 2009 and in the six months ended September 30, 2009, respectively. Value-Added Solutions for Enterprise Segment Subscribers

Unified Threat Management ("UTM") solutions. In addition to our internet bandwidth services, we offer our enterprise segment customers unified threat management solutions as an optional value-added service. Traditionally, an electronic firewall was the only security device enterprises deployed for network protection, and other security solutions, such as virtual private networks, anti-virus, anti-spam, content filtering, and intrusion detection and prevention are available as distinct solutions. A UTM device is an integrated security suite that incorporates all these solutions, as well as bandwidth management and multiple ISP link management. Our UTM devices include advanced security features and applications that can assist the customer's information technology officers to monitor and control internet traffic. The key functions performed by UTM devices sold and managed by us include: (a) firewall; (b) intrusion detection and prevention; (c) content filtering; (d) anti-virus; (e) anti-spam; (f) bandwidth management; and (g) multiple link management. Storage services and solutions. We also offer storage services and solutions to our enterprise customers, as well as web hosting and disaster recovery services. For this service, we coordinate and implement networking solutions for our customers, including the procurement of hardware, such as servers, routers and allied software, and also setting up internet connectivity links for our customers.

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Wireless broadband. We offer limited wireless services to our broadband customers. In this connection, we have also formed a joint venture company, YOU Snapper, with a Malaysian telecommunications company. Sales, Marketing and Distribution In order to effectively serve the various territories in which we operate, we maintain a sales force composed of dedicated sales teams ("feet-on-street" teams) and sales agents to market our broadband services. As of January 31, 2010, we employed approximately 132 permanent employees as direct sales personnel and engaged approximately 62 sales agents. These sales agents are typically compensated based on a sales-target incentive-based system. Our sales personnel conduct door-to-door marketing calls within our areas of operation, promoting our broadband internet services, supported by a sales telemarketing team for lead generation. We believe that our direct marketing approach is effective in acquiring new residential customers, and our door-to-door sales account for most of new customer acquisition. Our marketing and promotional activities are locally focused in media such as local area newspaper inserts, area-specific road shows and local area billboards. Apart from these core marketing activities, we sponsor various local events and festivals to build a local brand presence. Customer Service We believe that providing superior customer service helps to build customer loyalty and promotes customer retention. We are able to maintain high service levels in response time and quality control, due to the direct operational control we exercise over our propriety network. We also employ local customer support teams, in order to provide high customer service levels. We have implemented a range of training initiatives for our employees to ensure that our subscribers receive quality customer service. Customer inquiries are routed to our outsourced dedicated call center, which enables us to maintain high response levels to customer requirements. We have outsourced our call center operations to a third party service provider, vCustomer India Private Limited (“vCustomer”). We provide vCustomer with connectivity to all our locations so that inbound customer calls are routed to their call center. We also provide customer relationship management software to the center, so that the customer requests are logged into our system. We have provided the call center with tools to conduct primary level customer fault diagnosis. This enables call center staff to provide customers with solutions in the course of the call, which leads to higher first-call-resolution of customer requests and helps build customer satisfaction. Call centre personnel are trained to respond to questions and complaints concerning our broadband internet service packages and to arrange for service or repairs, in addition to contacting potential subscribers, marketing our services and receiving payment. Collection Our broadband internet services are offered with the option of either pre-paid or post-paid payment plans. Our prepaid customers subscribe to the service by advance payments for the applicable service period. On expiry of the validity period or allowed usage limit, whichever occurs first, the customer can extend the service period by making an additional payment. Post-paid customers subscribe to our broadband internet service by making payments on a monthly basis. Billing is typically done in advance on a monthly basis, although we also offer annual payment options. We process billing and payment transactions through a centralized billing system. Our subscribers may select from various payment alternatives. Subscribers have the option to (a) make payments through designated drop boxes located at high-traffic areas in cities; (b) request for payment collection at their residence; (c) make online payments through internet banking or by credit card; (d) make payments through credit card through an interactive voice response ("IVR") gateway. We operate a robust billing platform which allows us to offer convergent billing for multiple services. We use customer relationship management software that is customized to our business, and allows us to provide billing updates to customers through short message service methods ("SMS"). Subscribers who are in arrears in their scheduled payments are contacted through telephone or in writing.

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If, after being contacted, the subscriber fails to make the payment within stipulated grace period following the payment due date, the service is suspended.

Technology Overview Network Operating Centre (NOC)

Our broadband network is monitored by our Network Operation Centre, or "NOC", which enables us to ensure that the network infrastructure is functioning to provide high-quality service to broadband internet customers. By maintaining a central NOC in Surat, and regional NOCs in each city we operate in we are able to:

• Promptly detect and report problems in service area

• Co-ordinate with regional customer support centers in a timely manner to solve problems;

• Monitor the following aspects of the network: internet links and network parameters, such as number of cable modems and traffic and corporate network devices; and

• Escalate service response based on priority of problems. NOC Operations

The centralized NOC team is comprised of about ten expert network engineers working in shifts to provide twenty-four hours a day, seven days a week technical support services. The network operations provide centralized network monitoring, management and troubleshooting support for our regional NOCs at each ISP locations. Using various network tools and monitoring systems, all of our NOCs are able to proactively plan and predict network and bandwidth requirements. Our IT System

We have our own in-house IT team consisting of about 15 experienced engineers. Our IT team is central to our business operations as they are primarily responsible for our centralized IT infrastructure. The team’s responsibilities include maintenance of the billing system and the generation of new bills. The team has also developed a customer report and billing system that assists us in approaching prepaid customers upon expiry of their account. Our IT team has built and maintains the customer relations management software (“CRMS”) that helps log and track customer service requests to ensure that all customer calls are attended to in a timely fashion. Apart from this, our IT team performs various functions, such as the maintenance of the payment gateway, the implementation of new customer offerings and promotional plans, as well as software development and configuration for the maintenance of intranet applications for intra-office communication.

Competition The key factors in competition are network availability, reputation for customer service, service offering against broadband speed, ease of use, pricing and quality of service. We were one of the early movers in the cable ISP space using HFC-DOCSIS technology. We believe that we are able to compete effectively in the residential internet service segment using this technology, which is the focus of our broadband internet service business. Our key competitors include telecommunications companies such as BSNL, MTNL, Airtel, Tata Communications and Reliance Communications, which rely on ADSL and Ethernet technology and cable companies such as Hathway Cable & Datacom Limited, which also use HFC-DOCSIS technology. The principal advantage that our two-way enabled HFC technology enjoys over the ADSL and Ethernet platform is our ability to provide cable television services over the same cable infrastructure as our broadband internet services. We believe that this will enable us to offer competitive pricing packages and bundled offerings for our subscribers resulting in operational efficiencies and lower costs. In addition, we believe that our HFC network, designed as a video broadcast network, enables us to provide higher quality content at comparatively higher speeds compared to the ADSL network, which is based on voice and data-switching infrastructure. Suppliers We purchase all of our equipment from reputable manufacturers. We have not entered into any long-term supply agreements. We use equipment that is based on widely adopted standards, such as DOCSIS

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Internet Protocol. In the event that our current suppliers are unable to fulfill our requirements, we believe that there are various alternative suppliers, including suppliers in India. Our principal suppliers include Motorola for field electronics and cable modems, Cisco for routers, switches, CMTS, modems, and field electronics, and Commscope for coaxial cables. As of September 30, 2009, we owned and operated over 990 kilometers of fiber optic cable and over 4,100 kilometers of trunk coaxial cable network, supported by 11 NOCs. Our trunk coaxial cable suppliers provide us with a 10-year warranty covering any manufacturing defect from date of purchase. Human Resources

As of January 31, 2010, the Company had over 478 permanent employees. We also hire temporary employees to provide assistance in collection of dues and to provide installation support. Out employees are not organized into any unions. We provide our employees with a range of benefits, including medical coverage, incentive bonus schemes, workmen’s compensation and accident and life insurance. Intellectual Property

We rely on a combination of trademark, service mark and domain name registrations, copyright protection and contractual restrictions to protect our brand name and logos, marketing designs and Internet domain names. We have registered "YOU Digivision (label)" in Classes 9, 16. 38 and 41 on March 1, 2009, and in Class 35 on November 14, 2009. We are also the registered trademark owner of "YOU SCOD18 Digivision" in Classes 9, 16, 35, 38 and 41 as of November 14, 2009. Moreover, we have registered the trademark "YOU Telecom (label)" in Classes 9, 16 and 35 on March 1, 2009, December 12, 2008, March 8, 2009, respectively, and in Classes 38 and 41 on October 1, 2009. We hold the trademark to "YOU (label)" in Classes 9, 16, 35, 38 and 41 as of October 1, 2009. In addition we have applied for registration of the trademark “YOU Broadband” in classes 9, 16, 35, 38 and 41. Insurance We are covered by commercial general liability insurance for loss caused to our property or operations by theft, earthquakes, accident, fire, flood, riot, strike or malicious damage. We also maintain group medical insurance and life insurance policies for the benefit of our employees, and maintain directors’ and officers' liability cover. Property

We operate all our businesses from leased and rental properties. Our registered corporate offices are also located on leased property. We also have several offices across India, which house our local operations, technical, sales and customer support staff in those areas. The following table sets out the details of our material leased property: Property Use Duration

2nd & 3rd Floors, Millenium Arcade, Opp. Samarth Park, Adajan-Hazira Road, Surat - 395009. Gujarat

office and internet data center

11 years commencing September 1,

2001

54, Marol Co-Op. Industrial Estate, Marol, Andheri, Mumbai registered office and corporate office

5 years commencing

February 1, 2008

1st Floor, Times Square Building, Block - A, Sushant Lok, Gurgaon office and NOC 6 years commencing May 20, 2005

2nd Floor Sarthik Bldg, Satellite, Ahmedabad office and NOC 9 years commencing July

1, 2003

Sapphire Complex, Old Padra Road, Vadodara office and NOC 3 years commencing

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Property Use Duration

October 1, 2007

Plot No. 11, Sector 19 – C, Crown Plaza, Vashi office and NOC 3 years commencing May 15, 2008

107, Zenith Complex, 28/2, Shivaji Nagar, Pune office and NOC 3 years commencing

February 1, 2009

#10, Anna Mansion, Avenue Road, Nungabukkam, Chennai office and NOC 9 years commencing June 1, 2004

3rd Floor, Gowra Plaza, Sp Road, Secunderabad office and NOC 9 years commencing

February 5, 2004

#47-11-11, Eswar Madhav Mansions, 1St Lane, Dwarakanagar, Vizag – 530016

office and NOC 3 years commencing

March 15, 2009

Plot No. 10/13, Marol Co-Op. Industrial Estate, Marol, Andheri, Mumbai office and NOC 5 years commencing

August 9, 2007

CABLE TELEVISION BUSINESS OF DOPL

The following section describes the cable television business and operations of our associate company Digital Outsourcing Private Limited and its subsidiaries and associate company. The cable television business of DOPL is distinct from the business and operations of our Company. Our interest in the cable television business is currently limited to the 36.24% shareholding held by our Company in Digital Outsourcing Private Limited. We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL Selling Shareholders for the acquisition of the DOPL Sale Shares. The proposed DOPL Acquisition is however subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. For further information relating to the DOPL Acquisition and the DOPL Share Subscription and Purchase Agreement, see “History and Other Corporate Matters” on page 101, "Objects of the Issue" beginning on page 39, "Risk Factors" on page xiv and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 130.

Overview of the Cable Television Business of DOPL DOPL (including its subsidiaries and associates) carrys on the business of cable television services. DOPL currently provides analog cable services across 10 cities in India, including Mumbai – Navi Mumbai, Bangalore Vishakapattam, and Nagpur. Of these 10 cities, four cities, namely Mumbai, Navi Mumbai, Bangalore and Vishakapatnam, overlap with the Cable Broadband services footprint and network infrastructure of our Company. Currently, with the exception of Dharwad, DOPL also provides digital cable services in all of its cities of operation. As of February 28, 2010, DOPL offered its services to an estimated 1.5 million homes through cable operators and approximately 8,000 direct residential subscribers. DOPL has also commenced the digitization of its cable services and over 100,000 customers of DOPL are provided with digital cable television services. DOPL offers its digital cable television services under various brands, including “YOU SCOD18 Digivision” and “YOU Digivision”. Since its incorporation in February 2007, DOPL has acquired strategic interests in five MSOs in key markets, and has integrated and expanded the cable television business of these MSOs to achieve economies of scale and deliver standardized quality cable television services. For further information on the corporate group structure of DOPL and its subsidiaries and associate company, see Financial Statements beginning on page 129. DOPL delivers cable television services through its own cable network infrastructure, which consists of fiber from the head-end to the cable operator, or pursuant to arrangements with third parties for the lease of cable network infrastructure. As of December 31, 2009, DOPL had entered into distribution arrangements with approximately 1,100 LCOs. DOPL has also acquired significant “last mile” connectivity in certain cities through the acquisition of LCOs with “last mile” network infrastructure. In

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cities where our Company has operations, we enter into Dark Fiber lease arrangements with DOPL. Any such lease arrangement is between our Company and DOPL is entered into on terms no more favorable than those that would be extended by our Company to an unrelated third party. In fiscal 2008 and 2009 and in the six months ended September 30, 2009, DOPL incurred losses (after adjustment for minority interest) of Rs.25.71 million, Rs.481.59 million and Rs.171.12 million, respectively. For further information, see the “Financial Statements” beginning on page 129. Cable Television Operations

MSOs and LCOs Cable television operations involve the downlinking of signals from a broadcaster’s satellite in a particular region. The downlinked signal is received by MSOs through dish antennas. Using modulators, decoders, encoders, transmitters, nodes and amplifiers, the signal is then distributed to end subscribers.

The Indian cable television distribution business is essentially two-layered, consisting of MSOs (or single head-end operators) and LCOs. MSOs are entities which operate on several head-ends across various regions of the country. A single head-end operator performs the same functions of an MSO, although at a much smaller scale. MSOs enter into content contracts with broadcasters, set up a head-end and fiber backbone infrastructure, and transmit the broadcasters' channel content to LCOs, which in turn lay cables to carry the signals into homes. MSOs usually enter into agreements with LCOs to provide the “last mile” cable link to the subscriber’s home. The primary source of revenue of MSOs is comprised of subscription charges paid by LCOs and fees received from certain broadcasters as carriage and placement fees. LCOs are local operators in specific areas of a city that generally do not own head-ends, but obtain services and signals from MSOs to provide the “last mile” connection to subscriber homes. LCOs contract for content from MSOs for a fee, while collecting subscription fees from end customers. A diagrammatic representation of the cable television business is set out below:

The operation of the cable television business by an MSO is done either on a primary basis (i.e., the operator provides directly to the end subscribers) or on secondary basis (i.e., the operator relies on a LCO for the "last mile connection"). Most MSOs have mixed operations, comprising both primary and secondary segments.

Cable television signals can be transmitted in either analog or digital form. An analog signal is sent as a continuous data stream, while digital signals are sent in discrete coded signals that are less susceptible to noise interference and data loss during transfer. Analog signals are directly received by television sets, while digital signals require a STB installed at the customer's premises for reception on the television set. DOPL sets up both analog and digital head-ends within the same premises and offers LCOs affiliated to it the choice of analog and digital broadcast services. DOPL’s strategy is to encourage its LCOs to install digital STBs in the customer premises to enhance the cable service offering. In this manner, DOPL works with LCOs to strengthen customer relationships through improved service offerings, while enable DOLP to sell additional content and value-added services to customers. DOPL intends to leverage the digital STB platform and its operator relationships to sell additional content

LCOs

Fees

Cable TV signals Signals

Sharing of fees

Purchasing

Single head-

end

operators

Broadcasters Customers

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to cable customers. DOPL also intends to acquire full ownership of a significant number of LCOs to which it provides cable services. DOPL also intends to selectively upgrade such networks and to offer broadband services to customer homes. Analog and Digital Television Services Analog Cable Television Services

DOPL's analog cable television services involve the distribution of video programming from broadcast channels through its own or third party fiber infrastructure network. A significant majority of DOPL's subscribers currently receive analog cable services. Analog transmission is distributed to subscribers through a franchise arrangement with an LCO, with the broadcast feed processed at an analog head-end through a control room maintained by DOPL. The analog cable television service subscribers of DOPL currently receive up to 85 channels. There is no selective bundling of channel content offered by DOPL on its analog cable services platform. DOPL's analog cable services are provided by downlinking signals containing content from various broadcasters using multiple satellite dish antennas located at the various analog head-ends. As of February 28, 2010, DOPL had 11 analog head-ends across the country. The signals received by the antennas for a particular channel are then fed into an integrated receiver and decoder (“IRD”) which is used to decrypt the scrambled channel. Signals from multiple channels are then modulated and combined after which they are transmitted through a single cable throughout the network. The cable television network distributes the signals from the head-end to LCOs in various service areas. These signals are then retransmitted by the LCOs and delivered to end subscribers on the LCO’s cables. Digital Cable Television Services

DOPL currently offers about 200 channels through its digital cable television services. Digital services are currently offered in nine cities. DOPL's digital cable services are enhanced with value-added features, such as interactive electronic program guides, program reservations, audio music channels and parental controls. DOPL has recently commenced offering its digital cable subscribers additional value-added services, pay-per-view and additional channels in a digital tier in certain key markets. Digital cable services delivery to subscribers involves receiving signals containing content from various broadcasters using satellite dish antennas located at various digital head-ends. DOPL currently has four operational digital head-ends that feed their signals to nine cities across India. The signals received by the antennas are then fed into an IRD, which has the ability to receive the signal. The signal is then encoded and encrypted to prevent the unauthorized reception of the signal. Once encrypted, a signal undergoes a final digital modulation process and is then combined with other analog-modulated signals before being transmitted through the network for transmission of the signals from the head-ends to LCOs and DOPL's direct subscribers. DOPL installs STBs, which are required to receive digital cable signals, in subscribers’ homes. These STBs are identified by a unique serial number assigned by their respective vendors. The STBs are captured in DOPL's subscriber management system and inventory management system by these serial numbers, and are assigned to subscribers in the process of activating their digital cable television services. STBs are connected to the subscriber’s television in the LCO's network. The STB decodes and decrypts the signals, which results in the conversion of the signals into the content that is displayed on the subscriber’s television screen. The subscriber management system activates the STB and records transactions for all STBs. For digital transmission, each channel received is encoded into digital form (or converted to digital form) by the process of encoding. The encoded channels are then encrypted and combined. The encryption permits the MSO to control the availability of the channel at the STB level. Based on the rights granted to an STB by the MSO, the STB may be able to decrypt specific channels enabling customers to view such channels. The analog combined stream and the digital combined stream are then recombined to create a signal stream from the head-end. The following diagram provides a description of the transmission process:

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DOPL's digital cable television offerings are categorized into the following tiers: Basic. These are benchmarked at analog cable prices and offerings include free-to-air channels, the most popular general entertainment channels, and few genre specific-channels like news, children and themed channels to complete the bouquet. Premium. Certain channels for entertainment, movie, and sports features with a demand in select consumer segments are offered at premium subscriptions in some markets. Selective bundling of channel content determines the pace of conversion from analog to digital basic subscriptions, as well as from digital basic to digital premium subscriptions. Value-added services. These include pay-per view subscriptions to films and specific events, as well as access to educational programs. Customers, Sales and Marketing

DOPL delivers television channels on the cable distribution network directly and through distribution arrangements with LCOs, who provide the “last mile” cable link to subscriber homes. In cases where services are delivered through DOPL's own “last mile” cable link directly to the subscriber, the subscriber is classified as a primary subscriber, while a subscriber who receives services through the “last mile” cable link of an LCO is classified as a secondary subscriber. DOPL collaborates with LCOs to serve subscribers for its cable television distribution services. Each subscriber pays a subscription fee to the LCO, which then pays an agreed monthly amount to DOPL. DOPL typically enters into agreements with LCOs, pursuant to which the LCOs receive the cable signal feed and agree to offer cable services. DOPL also works with the LCO to sell digital services and to install STBs into customer premises.

Programming

DOPL currently offers about 85 channels of local and international programming on its analog cable television platform and about 200 channels on its digital cable television platform. The number of channels offered is dependent on the location and subscriber demographics in the target market. To meet the diverse needs of the large, culturally diverse and multi-lingual Indian market, DOPL offers a broad range of content. Over the years, DOPL has developed strong relationships with broadcasters and content providers, across popular, niche, ethnic and regional genres. DOPL's program offering, in each of the digital platforms, is structured around popular categories, such as General Entertainment, News and Current Affairs, Sports, Movies, Music, Infotainment. Regional and Devotional program content. Competition

Channels Received Via Satellite from Broadcasters

Channels Digitized

Multiple Channels Combined

Encryption

Transmission Decryption at STB after authentication

Viewed on TV at customers’ home

Received by LCO and sent to

subscribers

HFC Distribution Network

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DOPL faces competition in the cable television services business from national cable television service providers, as well as providers of television services through alternative technology platforms, such as DTH satellite television and IPTV. DOPL's principal competitors include national level MSOs such as Hathway Cable & Datacom Limited, DEN Networks, InCable and WWIL. DOPL also competes with providers of DTH satellite television such as TataSky, DishTV, Sun Direct, BIG TV and Airtel Digital. However, the bandwidth capacity of cable television networks is higher than that of DTH satellite television, and this enables cable television service providers to provide subscribers with a wider range of channels, including additional exclusive local content based on local demographic profile of subscribers in a particular area. In the case of DTH, each additional channel requires additional transponder space to be contracted, thus leading to an increase in operating costs with each additional channel transmitted. In addition, adverse weather conditions, particularly heavy rain, may affect the quality of DTH television services, whereas cable television services remain largely unaffected by adverse weather conditions. DOPL also faces competition from providers of IPTV, including BSNL, MTNL, and Airtel. However, market penetration of IPTV has been relatively limited in India. Suppliers DOPL purchases all of its equipment from reputable manufacturers. DOPL has not entered into any long-term supply agreements, except for the supply of STBs. DOPL's principal suppliers include Cisco for the head-end, encryption devices, STBs and transmitters. Employees

As of January 31, 2010, DOPL had approximately 219 permanent employees and 76 temporary contract employees. DOPL hires temporary employees to provide assistance in the collection of subscription payments and to provide technical support. DOPL’s employees are not organized into any unions. DOPL provides its employees with a range of benefits, including medical coverage, incentive bonus schemes, workmen’s compensation and accident and life insurance. Intellectual Property

DOPL relies on a combination of trademark, service mark and domain name registrations, copyright protection and contractual restrictions to protect its brand name and logos, marketing designs and Internet domain names. DOPL contracts for its content from the relevant copyright holder. In the case of broadcast channels, this is achieved by contracting for the content either directly with the broadcasters or with their respective distribution arm. Insurance

DOPL's cable network infrastructure is covered by commercial general liability insurance policies for loss caused by earthquakes, accident, fire, flood, riot, strike or malicious damage. DOPL also has group medical insurance and life insurance policies for the benefit of its employees.

Property

DOPL leases various properties across the various cities in which DOPL operates.

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REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the

government that are applicable to us. The regulations set out below are not exhaustive, and are only

intended to provide general information to the investors and are neither designed nor intended to be a

substitute for professional legal advice.

The Primary Laws Applicable to the Business of the Company

Foreign Direct Investment

Under the current policy of the Government of India on foreign investment, foreign investment in companies carrying out ISP activities without gateway, infrastructure providers providing dark fiber, right of way, duct space tower (category I) and/or electronic mail and voice mail is permitted up to 100.00%, of which up to 49.00% foreign investment is permitted under the automatic route and an FIPB approval is required for any foreign investment exceeding 49.00%. However, pursuant to Press Note 2 (2007 Series) the Government of India has mandated all such companies to divest 26.00% of their equity in favor of the Indian public within five years, if such companies are listed in other parts of the world. Further, such limits are subject to applicable licensing and security requirements prescribed by the DoT. Other Regulations

The Indian Telegraph Act, 1885, as amended (the “ Telegraph Act”) The Telegraph Act governs all forms of the usage of ‘telegraph’ which expression has been defined to mean any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images, and sounds or intelligence of any nature, by wire, visual or other electro-mangnetic emissions, radio waves or hertzian waves, galvanic, electric or magnetic means. Under Section 4 of the Telegraph Act, the Director-General of Posts and Telegraphs may grant a license to any person to establish, maintain or work a telegraph within any part of India with such conditions as it may think fit. In addition, the Telegraph Act provides that if the holder of a license granted under Section 4 contravenes any condition contained in the license, such person shall be punished with fine which may extend to Rs.1,000 and with a further fine that may extend up to Rs.500 for every week during which the breach of the condition continues. The Wireless Telegraphy Act, 1933, as amended (“Wireless Telegraphy Act”) In addition to a telegraph license under Section 4 of the Telegraph Act, land -based wireless providers and users also require an additional license under the Wireless Telegraphy Act. Section 3 of the Wireless Telegraphy Act forbids any person from possessing a wireless telegraphy apparatus without a license. Under Section 5 of the Wireless Telegraphy Act, the license to possess the wireless and radio equipment and to use it for wireless services is issued by the telegraph authority designated under the Telegraph Act, i.e. the Director-General of Posts and Telegraphs. Section 11 of the Wireless Telegraphy Act states that a license under the Wireless Telegraphy Act does not authorize the licensee to do anything that is prohibited under the Telegraph Act and that such license shall not authorize any person to do anything for which a license or permission under the Telegraph Act is required.

Broadband Policy, 2004 (the “Broadband Policy”)

The Broadband Policy issued by the DoT provides a framework for the creation of infrastructure through various access technologies which can contribute to the growth of broadband services in India.

The Broadband Policy states that a cable TV network can be used as a franchisee network of the service provider for providing broadband services. However, all responsibilities for ensuring compliance with the terms and conditions of the license vest with the licensee company. The terms of the franchise agreement between the licensee company and its franchisee are to be settled mutually by negotiation between the two parties involved. Further, the licensee company must comply with the quality of service parameters for broadband services by the TRAI.

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Guidelines and General Information for Grant of Licence for Operating Internet Services dated August

24, 2007, (“ISP License Guidelines”)

The DoT issued the ISP License Guidelines for the grant of licenses to provide Internet Services on a non-exclusive basis. The ISP License Guidelines provide for inter alia, the following

a. Service area: Licenses are awarded in categories, namely, Category A and B depending on

the territory covered by the License.

b. Foreign direct investment: Foreign investment in companies carrying out ISP activities without gateway, infrastructure providers providing dark fiber, right of way, duct space tower (category I) and/or electronic mail and voice mail is permitted up to 100.00%, of which up to 49.00% foreign investment is permitted under the automatic route and an FIPB approval is required for any foreign investment exceeding 49.00%. However, pursuant to Press Note 2 (2007 Series) the Government of India has mandated all such companies to divest 26.00% of their equity in favor of the Indian public within five years, if such companies are listed in other parts of the world. Further, such limits are subject to applicable licensing and security requirements prescribed by the DoT.

c. Security conditions: The licensee company is required to take adequate and timely

measures to ensure that the information transacted through a network by subscribers is secure and protected. In addition, a majority of the board of directors of the licensee company is required to be Indian citizens.

d. Fees payable: A one-time entry fee of Rs.2 million is required to be paid for a Category A

Internet Service Licence before signing the license agreement. An annual license fee at the rate of 6% of adjusted gross revenue, subject to a minimum of Rs.50,000 and Rs.10,000 for Category A and Category B respectively is charged per annum. Further, a financial bank guarantee of Rs.1 million for Category A and Rs.0.1 million for category B each valid for one year, and a performance bank guarantee of Rs.20 million for Category A, and Rs.2 million for Category B, each valid for two years, are to be provided in favour of DoT before signing the license agreement.

The licensee company is required to provide service within 24 months from the date of signing the license agreement. The license is valid for a period of 20 years and access to the Internet through an authorized cable operator is permitted to ISPs without additional licensing subject to the provisions of the Cable Television Act. In addition, the license is governed by the provisions of the Telegraph Act, the Wireless Telegraphy Act and the TRAI Act. License Agreement for Provision of Internet Service

An internet service provider is required to obtain a license and enter into a standard agreement (the “ISP

License Agreement”) with the DoT before starting operations as an ISP. In addition to the conditions required to be followed by a licensee company under the ISP License Guidelines, the ISP License Agreement provides for further requirements to be adhered to by the licensee. The licensee is required to make its own arrangements for the infrastructure involved in providing the service and is solely responsible for the installation, networking and operation of the necessary equipment and systems, treatment of subscriber complaints, issue of bills to subscribers, collection of revenue, and attending to claims and damages arising out of its operations. In the process of operating the Internet service, the licensee is responsible for the installation of the Internet nodes, i.e., routers/servers, and the proper operation and maintenance of its network infrastructure. The licensee is required to adhere to such quality of service standards and to provide timely information as required by DoT. The licensee is responsible for:

a. maintaining performance and quality of service standards;

b. maintaining the mean time to restore within the specified limits of the quality of service; and

c. keeping a record of number of faults and rectification reports in respect of the service, which is

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required to be produced before the DoT or the TRAI as and when and in whatever form desired.

In addition, the licensee is required to ensure that objectionable, obscene, unauthorized or any other content, messages or communications infringing copyright, intellectual property rights or international and domestic cyber laws, in any form, or inconsistent with the laws of India, are not carried in its network.

In particular, the licensee is obliged to provide, without delay, all tracing facilities with respect to nuisance or malicious messages or communications transported through its equipment and network, to authorized officers of Government of India and the relevant state government, when such information is required for investigations of crimes or in the interest of national security. The licensee company must also comply with the provisions of the Telegraph Act and the TRAI Act.

The DoT may, without prejudice to any other remedy available for the breach of any conditions of the licence agreement, by written notice of 30 days after affording a reasonable opportunity of hearing, issued to the licensee company at its registered office 30 days in advance, terminate the licence agreement if the licensee company:

a. fails to perform any obligation(s) under the licence agreement including timely payments of fee

due to the DoT;

b. fails to commission or deliver Internet services within the time period specified in the license or in any extension thereof granted by the DoT;

c. goes into liquidation or is ordered to be wound up; or

d. is recommended for termination by the TRAI for non-compliance of the terms and conditions of the licence agreement.

The DoT reserves the right to impose any penalty as it may deem fit for violations of terms and conditions of the license agreement.

The Telecom Regulatory Authority of India Act, 1997 (“TRAI Act”) The Telecom Regulatory Authority of India (the “TRAI”) was established in 1997 by the TRAI Act, to regulate telecommunication services in India, including broadcasting and cable services. The TRAI is vested with recommendatory, regulatory and tariff setting functions, including (a) making recommendations on the need and timing for introduction of new service providers, (b) making recommendations on the terms and conditions of license to a service provider, (c) ensuring compliance of terms and conditions of license, (d) ensuring technical capability and effective inter-connection between service providers, (e) specifying standards of quality of service to be provided by the service provider and ensuring the quality of service, and conducting a periodical survey of such service provided by the service providers, (f) protecting interest of consumers of telecommunication services, (g) levying fees and other charges at such rates and in respect of such services as may be determined by regulations. In addition, the TRAI Act contains penalty provisions for offences committed by a company under the TRAI Act. TRAI Press Release – No. 73/2005

TRAI, by a press release dated September 12, 2005, issued a directive to all ISPs mandating ISPs to obtain explicit consent of the subscribers before making value-added services chargeable. The Telecommunication Tariff Order, 1999, as amended (“Tariff Order 1999”)

The Tariff Order 1999 issued by TRAI, provides the terms and conditions under which telecommunication services within India and outside India may be provided, including rates and related conditions under which messages shall be transmitted to any country outside India, deposits, installation fees, rentals, free calls, usage charges and any other related fees or service charge. Reporting requirements are not applicable for services provided to bulk customers, provided that all ISPs providing dialing internet services shall, within seven days after the close of every quarter, furnish brief details about the number of plans and the bulk customers availing of such plans along with a

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certification for information and record.

A tariff plan, once offered by an ISP, is available to a subscriber for a minimum period of six months from the date of enrolment of the subscriber to that tariff plan. However, any tariff plan presented, marketed or offered as valid for any prescribed period exceeding six months or as having lifetime or unlimited validity in lieu of an upfront payment shall continue to be available to the subscriber for the duration of the period as prescribed in the plan and in the case of lifetime or unlimited validity plans, as long as the ISP is permitted to provide such telecom service under the current license or renewed license. In the case of plans with lifetime validity or unlimited validity, the service provider shall also inform the subscribers of the month and year of expiry of his current license.

ISPs are free to reduce tariffs under any tariff plan at any time. However, no tariff item in a tariff plan can be increased by ISPs:

a. In respect of tariff plans with prescribed periods of validity of more than six months,

including tariff plans with lifetime or unlimited validity and also involving an upfront payment to be made by the subscriber towards such validity period, during the entire period of validity specified in the tariff plan;

b. In respect of other tariff plans, within six months from the date of enrolment of the subscriber;

and

c. In the case of recharge coupons with a validity of more than six months under any tariff

plan, during the entire period of validity of such recharge coupon.

Guidelines for Issue of Permission to Offer Internet Telephony Services, 2002 (the “Internet Telephony Guidelines”) As per the Internet Telephony Guidelines, only ISP licensees are permitted to offer Internet telephony services within their service area. ISPs desirous of offering Internet telephony services are required to sign an amendment to their ISP license to such effect. The Internet Telephony Guidelines also mandate security monitoring requirements.

Guidelines for Permission to offer Virtual Private Network (“VPN”) Services by Internet Service Providers (ISPs), 2004 (the“VPN Guidelines”) The VPN Guidelines provide for the provision of VPN services by ISPs in addition to the services envisaged by their respective licenses. ISPs desirous of offering VPN services are required to sign an amendment to their ISP license to such effect. Such amendment to the ISP license agreement is issued and governed by the provisions of the Telegraph Act, the Wireless Telegraphy Act and the TRAI Act. The VPN Guidelines also mandate security monitoring requirements.

Information Technology Act, 2000 as amended (“IT Act”)

The Information Technology Act regulates and governs the communications made and services provided in the electronic form. The provisions of the IT Act are applicable to an internet service provider who is a third party and does not actually host any content. The IT Act prescribes punishment for publication of inter alia obscene, offensive materials through electronic means The IT Act has been amended by the Information Technology Amendment Act, 2008.

As per Section 66A of the IT Act, any person who sends information which is grossly offensive or has menacing character, or any information which he knows to be false for inter alia causing annoyance, danger by making use of computer resource is punishable with imprisonment which may extend to three years and fine. Under section 67 of the IT Act, the publication of or causing the publication in electronic form, lascivious material or material which is likely to corrupt the persons who read, see or hear the matter is punishable with on a first conviction with imprisonment of which may extend to three years and with fine which may extend to Rs.5,00,000 and in the event of a second or subsequent conviction with imprisonment of for a term which may extend to five years and also with fine which may extend to Rs.1,000,000.

Further, Section 67A of the IT Act provides that whoever publishes or transmits or causes to be

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published or transmitted in the electronic form, any material which contains sexually explicit act or conduct will be punished on the first conviction with imprisonment for a term which may extend to five years and with a fine which may extend to Rs.1,000,000 and in the event of a second or subsequent conviction, with imprisonment which may extend to seven years and a similar fine, unless it can be proved that the publication is justified for religious purposes or for public good on the ground that it is in the interest of science, literature, art or learning or other objects of general concern. Similarly Section 67B of the IT Act provides that whoever publishes or transmits or causes to be published or transmitted in the electronic form, any material which (a) depicts children engaged in sexually explicit act or conduct or (b) creates text or digital images, collects, seeks, browses, downloads, advertises, promotes, exchanges or distributes material which depicts children in obscene or indecent or sexually explicit manner, (c) cultivates, entices or induces children to online relationships for sexually explicit acts or in any manner which is offensive, (d) facilitates the abuse of children online, or (e) records in any electronic form any sexually explicit acts which children, shall be liable to the similar penalties as that provided in Section 67A of the IT Act.

Competition Act, 2002, as amended (the “Competition Act”)

The Competition Act 2002, has been enacted to prevent anti-competitive practices, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in markets in India.

As per the notified sections of the Competition Act, entering into agreements between enterprises which inter alia affect the prices, supply, distribution or other such collusive arrangements are anti – competitive in nature and are prohibited under Section 3 of the Competition Act. Section 4 of the Competition Act, prohibits an enterprise that is in a dominant position from abusing its dominant position. Further, Section 5 of the Competition Act provides the assets/ turnover thresholds applicable to acquisitions, merger and amalgamations in order to determine whether the transaction would be regarded as a combination for the purposes of the Competition Act. However, Section 6 of the Competition Act which provides for regulation of ‘combinations’ has not been notified yet. Section 6 (1) of the Competition Act provides that no person or enterprise shall enter into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and such a combination shall be void .

Telecom Consumers Protection and Redressal of Grievances Regulations, 2007 (3 of 2007) f.no. 303-

10/2006-qos

The Regulation made it mandatory for the service provider to establish a “Call Centre” for redressal of grievances of its consumers, and , such Call Centre shall be accessible to its consumers round the clock during all days in a week. The Regulation also stipulates handling of consumer grievances by authority of service providers namely Nodal Officers and Appellate Authority and also stipulates the time frame within which such grievances shall be addressed. The Regulation also makes it mandatory upon the service provider to publish a manual of practice for handling consumer complaints and file reports before TRAI. Primary statutory and regulatory requirements in connection with Cable Television The following acts, rules and regulations govern the Cable Television business that the Company proposes to enter: Foreign Direct Investment

FDI, including FII investments in the activities pertaining to proposed cable television network business that the company is permitted up to 49% of the paid up equity share capital of the Company with prior approval of FIPB. DOT August 24, 2007 No 820-1/2006-LR The Cable Television Networks (Regulation) Act, 1995, as amended (the “Cable Television Act”)

Cable television services are governed by Cable Television Act and the guidelines and notifications issued by the Telecom Regulatory Authority of India (the “TRAI”) and the Ministry of Information and Broadcasting, Government of India (the “MIB”) from time to time. The Cable Television Act regulates

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the operation of cable television networks in India. Section 3 of the Cable Television Act requires any cable television network operator to be registered with the head post master of the area in which the cable television network is proposed to be set up. Under the Cable Television Act and the Cable Television Rules (as hereinafter defined), companies wherein minimum 51% of the paid up share capital is held by Indian citizens are eligible to provide cable television services. The Cable Television Act further stipulates that no programme or advertisement shall be transmitted or re-transmitted unless it is in conformity with the prescribed programme and advertisement code provided in the Cable Television Rules. The Cable Television Act also mandates that the equipment to be used by a cable operator has to be in conformity with the standards prescribed by the Bureau of Indian Standards (the “BIS”). The Cable Television Rules also stipulate that registration, as a cable operator should be renewed every 12 months. Under an amendment to the Cable Television Act in 2002, every cable operator, in the CAS notified area, whose transmission is through an addressable system, is required to submit a report to the Government of India in a prescribed form regarding (i) the total number of subscribers, (ii) the subscription rates and (iii) the number of subscribers receiving programmes transmitted in the basic service tier or a particular programme or set of programmes transmitted on pay channels. Further, every cable operator is also required to publicise, in a prescribed manner, to the subscribers, the subscription rates and the periodic intervals at which such subscriptions are payable. The Cable Television Network Rules, 1994 (the “Cable Television Rules”)

The Cable Television Rules stipulate that registration as a cable operator should be renewed every 12 months. Rule 11 of the Cable Television Rules stipulates that no MSO shall provide cable television network services with addressable systems in any one or more of the notified areas (“CAS Areas”) without the prior permission of the MIB. Every subscriber who seeks to receive one or more pay channels is required to apply to the MSO to supply and install a set-top box. Upon the installation of such set-top box, every MSO shall start transmitting the pay channel in encrypted as well as unencrypted form for a period of not less than 15 days and in the event of a successful completion of the same, the MSO shall transmit the pay channels only through an encrypted form. The Cable Television Rules stipulates that no programme or advertisement shall be carried in a cable service which offends public morality, decency and religious susceptibilities of subscribers. TRAI Notifications Pertaining to the Cable TV Business.

` The following regulations have been notified by the TRAI:

1. The Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004, as

amended (the “Interconnection Regulations”)

The Interconnection Regulations apply to all arrangements among service providers, including MSOs, and LCO’s for interconnection and revenue sharing for all telecommunication services, including cable services in India. Interconnection means the commercial and technical arrangements under which the service providers connect, including through electro-magnetic signals, their equipment networks and services to enable their customers to have access to the customers, services/and or networks of other service providers. The Interconnection Regulations issued by TRAI specify, inter alia, the following:

a. Must Provide Clause: Broadcasters are required to provide signals on non-discriminatory

terms to all distributors of television channels. Similarly, MSOs are required to re-transmit signals received from a broadcaster on a non-discriminatory basis to LCOs. Broadcasters are not allowed to engage in any practice or activity or enter into any understanding or arrangement, including exclusive contracts with any distributor of TV channels, that prevents any other distributor of TV channels from obtaining such TV channels for distribution. However, these provisions do not apply in the event that a distributor of TV channels has defaulted in payments.

b. Disconnection with respect to any of TV Channel Signals: No Broadcaster/MSO shall

disconnect the TV channel signals with respect to any distributor of TV channels without giving three weeks’ prior written notice and public notices in two newspapers briefly indicating the reasons for the proposed action.

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c. Interconnection Agreements: In areas where CAS has not been notified, the

interconnection agreements between broadcasters and MSOs are required to be based on the standard terms in the Reference Interconnection Offer ( the “RIO”) published by the broadcasters, which, interalia, describes the technical and commercial conditions for interconnection.

d. In March 2009, the TRAI, by an amendment to the Interconnection Regulations, made it

mandatory for all broadcasters to have RIO’s for their addressable systems in order to facilitate the introduction and roll-out of CAS on a voluntary basis. The amendment bars distributors of television channels from seeking signals in terms of the must provide clause of the Interconnect Regulations from a broadcaster for those channels for which a carriage fee is being demanded by such distributor. In addition, minimum technical specifications for addressable systems have been specified. The amendment also makes it mandatory for the broadcasters of pay channels and distributors of TV channels to provide the terms and conditions of all their interconnection agreements to writing.

2. The Standards of Quality of Service (Broadcasting and Cable Services) (Cable Television – Non CAS Areas) Regulation, 2009, as amended (the “SQS non-CAS Regulations”)

The SQS Non CAS Regulations contain provisions relating to connection/disconnection or shifting of cable services, the billing procedure and billing related complaints, the mechanism for the handling of complaints and additional standards of quality of service relating to digital decoders and set-top boxes for digital cable service in non-CAS areas.

3. The Telecommunication (Broadcasting And Cable) Services (Second) Tariff 2004, as amended

In areas where CAS has not been notified, TRAI has imposed a ceiling on tariffs of bouquets being offered by (i) broadcasters to MSOs, (ii) MSOs to LCOs, and (iii) MSOs/LCOs directly to subscribers. By an amendment in 2007, tariffs applicable were fixed at rates prevalent as of December 1, 2007 plus 4%. This was further increased by an amount not exceeding 7% of the prevailing tariff by an amendment in 2008. However, there are no price caps on channels being provided to subscribers through addressable platforms in such areas where CAS has not been notified.

MSOs are permitted to subscribe to pay channels from broadcasters on an a-la-carte basis and retransmit such pay channels to LCOs in a bouquet format.

4. Draft Recommendations on Restructuring of Cable TV Services, July 2008

In July 2008, TRAI submitted recommendations to the MIB relating to the restructuring of the regulatory framework for cable TV services in India. TRAI has recommended, inter alia, the introduction of a separate licensing framework for MSOs and LCOs, pursuant to which licenses will be granted by the MIB either directly or through any other administrative unit under its direct control. The duration of such licenses shall be five years. TRAI has recommended that all existing MSOs and LCOs obtain the new prescribed license, within a period of 12 months from March 31 of the year in which the revised procedure is notified or from the date of expiry of their respective existing registration, whichever is earlier. The non-refundable entry fee for MSO and LCO licenses, based on the recommendations, was stipulated as follows:

Type of License LCO MSO

District Level Rs.10,000 Rs.100,000

State Level Rs.100,000 Rs.1,000,000

National Level N/A Rs.2,500,000

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Further, all cable television service providers, including MSOs, will be required to comply with BIS Standard IS 13420 (revised) relating to system performance and ensure the delivery of proper signals at subscriber premises. TRAI has made a provision for existing cable operators to digitise their transmission within five years from the date of notification of the new licensing regime. TRAI has also recommended that the Indian Broadcasting Federation maintain an indicative list of accepted encryption and subscriber management softwares which can be deployed by MSOs. The recommendations of TRAI are currently under consideration from the MIB.

Guidelines for obtaining License for Providing Direct-to-Home (DTH) Broadcasting Service in India (the“DTH Guidelines”)

DTH service providers are licensed under the DTH Guidelines and are, subject to the mandatory preliminary requirements stipulated thereunder. A DTH licensee is additionally required to execute a separate license with the MIB.

Guidelines for Obtaining License for providing Head-End In The Sky (HITS) Broadcasting Service in India), (the“HITS Guidelines”)

On November 26, 2009 the GoI issued the HITS Guidelines for Providing Headend-In-The-Sky (HITS) Broadcasting Service in India.

The main features of the guidelines are detailed below

a. Total direct and indirect foreign investment including FDI is allowed up to 74%. However, prior approval of the Foreign Investment Promotion Board or FIPB is required for FDI beyond 49%.

b. Cross media holding is restricted to 20% of total paid-up equity is prescribed for various segment of broadcasting services so as to avoid vertical integration and prevent discriminatory practices among various players in the distribution chain and to promote competition.

c. HITS service providers are allowed in both ‘C-Band’ and ‘Ku-Band’ to beam their signals

d. HITS operators will have to set up a monitoring facility as prescribed by the Government and can carry only those channels registered with I&B and permitted under the downlink policy.

e. HITS operators are not permitted to provide signals directly to the end consumers or cable subscribers. However, if a HITS operator is also an MSO or LCO, it can do so through its distribution network.

f. One-time, non-refundable entry fee of Rs.100 million is required to be paid to become a HITS operator.

g. The HITS operator license is valid for 10 years.

h. There is no restriction on the number of permissions that may be given to operate as a HITS operator. All those found to be eligible and fulfill the terms and conditions can apply for the license.

Entertainment Tax Regulations

In majority of states in India, the payment of entertainment tax is a liability of the cable operators. Cable operators are required to register themselves under the respective state entertainment laws and to deposit the entertainment tax with the concerned department on a monthly basis. Cable operators are also required to file returns from time to time.

In the States of West Bengal, Karnataka and Andhra Pradesh, the respective State Governments have amended the entertainment tax laws and rules such that the payment of entertainment tax is the liability of the MSOs. The constitutional validity of such amendments of these regulations are pending before the Karnataka High Court and other courts. In the other states, only the LCOs are liable for entertainment tax for providing cable television services, which must be deposited with concerned authority/department/agency.

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HISTORY AND CERTAIN CORPORATE MATTERS

Background:

Our Company was originally incorporated as NetShastr Facilities India Private Limited under the Companies Act, 1956 on November 13, 2000 in NCT of Delhi. The name of our company was changed to BG Broadband Networks India Private Limited and a fresh certificate of incorporation consequent upon change of name was issued by the Registrar of Companies, Delhi on June 29, 2001 to reflect the nature of business activities carried out by our Company. Subsequently, our Company’s name was further changed to YOU Broadband Networks India Private Limited and a fresh certificate of incorporation consequent upon change of name was issued by the Registrar of Companies, Maharashtra, Mumbai on December 21, 2006, pursuant to change in name of our Promoter in our Company. Further, pursuant to the order of High Court of Bombay on the Scheme of Amalgamation between YOU Telecom India Private Limited and our Company, our Company’s name was changed to YOU Telecom India Private Limited and a fresh certificate of incorporation was issued by the Registrar of Companies, Maharashtra, Mumbai on November 23, 2007. The name of our Company was once again changed to YOU Broadband & Cable India Private Limited and a fresh certificate incorporation consequent upon change of name was issued by the Registrar of Companies, Maharashtra, Mumbai on November 17, 2009 to reflect the nature of business activities in our Company. Our Company was converted into a public limited company and the name was changed to YOU Broadband & Cable India Limited and a fresh certificate of incorporation was issued by the Registrar of Companies, Maharashtra, Mumbai dated January 12, 2010.

We commenced operations in 2001 and currently provide high-speed broadband cable internet services to our residential and enterprise segment customers across 11 cities in India. We currently offer high-speed broadband internet access through our two-way HFC cable network. For further details, please refer to section titled “Business” on page 76 of this Draft Red Herring Prospectus.

Change in Registered Office of our Company

Previous Address New Address Reasons for change Date of change

11-A, Sucheta Bhawan, 2nd Floor, Vishnu Digambar Marg, New Delhi – 110 002

1st Floor, Midas, Sahar Plaza, Kondivita, M.V. Road, Andheri (East), Mumbai – 400 059, Maharashtra

Growth of the Company (Operational)

February 24, 2003

1st Floor, Midas, Sahar Plaza, Kondivita, M.V. Road, Andheri (East), Mumbai – 400 059, Maharashtra

Ground Floor, Building No.1-C, Nirlon complex, off Western Express Highway, Goregaon (East), Mumbai – 400 063

Growth of the Company (Larger premises)

March 25, 2003

Ground Floor, Building No.1-C, Nirlon complex, off Western Express Highway, Goregaon (East), Mumbai – 400 063

Plot No.54, Marol Co-operative Industrial Estate, Makwana, Andheri (East), Mumbai – 400059

Growth of the Company (Operational and Larger premises)

September 1, 2008

Scheme of Amalgamation

The High Court of Bombay through its order dated April 11, 2007, approved the scheme of arrangement and amalgamation of the then You Telecom India Private Limited (“Transferor Company”) with our Company, (“Scheme of Amalgamation”) which became effective from the date on which the certified copies of the orders of the High Court of Bombay under Sections 391 and 394 of the Companies Act were filed with the RoC (“Effective Date”). The appointed date was April 1, 2006, (“Appointed Date”), and the record date for the purposes of re-organisation and issue of shares was January 05, 2007 (“Record Date”). Upon the Scheme of Amalgamation taking effect, in consideration of the amalgamation, our Company issued and allotted one equity share of Rs.10 each of our Company, and one 0.000001% non-cumulative redeemable preference share of face value Rs.10 each of our Company to the shareholders of the transferor company, whose names appeared in the register of members on the Record

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Date, in the ratio of one fully paid up equity shares of the face value of Rs 10/- each, of our Company, for one fully paid up equity share of the face value of Rs.10/- each, of the transferor company, and one fully paid up 0.000001% non-cumulative redeemable preference share of face value Rs.10/- each of our Company, for 1 fully paid up 0.000001% non-cumulative redeemable preference share of face value Rs.10/- each of the transferor company, respectively.

Upon the Scheme of Amalgamation becoming effective, the transferor company was dissolved. Further, with effect from November 23, 2007, the name of our Company was changed from ‘YOU Broadband Networks India Private Limited’ to ‘YOU Telecom India Private Limited’.

Scheme of Capital Reduction

The High Court of Bombay through its order dated December 18, 2009 and supplementary order dated January 28, 2010 approved reduction of issued, subscribed and paid up equity share capital of our Company from Rs.3,913,220,040 (divided into 391,322,004 Equity Shares of Rs.10 each) to Rs.2,308,611,910 (divided into 230,861,191 Equity Shares of Rs.10 each), a reduction in securities premium account from Rs.171,017,920 to nil and a reduction in capital reserve account from Rs.60,528,942 to nil pursuant to the provisions of Sections 78, 100 to 103 of the Companies Act.

Our Company has 18 shareholders as on the date of filing of this Draft Red Herring Prospectus with SEBI. For further details, please refer to section titled “Capital Structure” on page 24 of this Draft Red Herring Prospectus.

Our Main Objects

Our main objects as contained in our Memorandum of Association are:

1. To carry on the business as Internet Service Provider, Application Service Provider and other related value added services including video streaming, voice mail, electronic mail, videotext, video conferencing, electronic commerce platform, close circuit messaging, interactive and enriched television content to all users including industrial, commercial and residential users and to do all incidental acts or things necessary for attainment of above objective.

2. To carry on the business of providing communications infrastructure including network facilities such as dark fibre, fixed links and cables, right of way, duct space, towers, poles and pits to communication service providers, cable operators, internet service providers, uplinking and broadcasting entities or any other entity for transmission of data, voice, visual or any other electronic, electrical, magnetic or optical signal whether now known or hereafter devised.

3. To buy, sell, lease, hire, own, lay or deal in all capacities, applications, specifications, characteristics and descriptions of all kinds of wires and cables inter-alia including optical fibre cable, co-axial cables, communication equipment and other allied goods used for all types of voice communication.

Key Milestones

Sr. No. Year Details

1. November 13, 2000

Our Company was originally incorporated as Net Shastr Facilities India Private Limited with IP-I License

2. June 29, 2001

The name of our Company was changed to BG Broadband Networks Private India Limited.

3. November 2001

Launch of the operations of the Company in Surat.

4. April 2002 Launch of operations in Baroda.

5. February 2003

Launch of operations in Mumbai and Ahmedabad

6. February 24, 2003

The registered office of our Company was relocated from 11-A, Sucheta Bhawan, 2nd Floor, Vishnu Digambar Marg, New Delhi – 110 002 to 1st Floor, Midas, Sahar Plaza, Kondivita, M.V. Road, Andheri (East), Mumbai – 400 059, Maharashtra

7. July 2003 Launch of operations in Vishakhapatnam

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Sr. No. Year Details

8. October 2003

Launch of operations in Pune and Hyderabad

9. February 2004

Launch of operations in Chennai, Bangalore, and Gurgaon including the establishment of a national level call centre at Mumbai.

10. June 2006 Citigroup Venture Capital International Growth Partnership Mauritius Limited

acquired YTML.

11. December 21, 2006

The name of our Company was changed to YOU Broadband Networks India Private Limited.

12. April 2007 Our Company entered into the business transfer agreement with Icenet.Net

Limited.

13. April 11, 2007

Our Company was amalgamated with then YOU Telecom India Private Limited by an order of the High Court.

14. November 23, 2007

Pursuant to the amalgamation, the name of our Company was changed to YOU Telecom India Private Limited.

15. April 2007 Our Company received approval from Foreign Investment Promotion Board to

invest in downstream cable companies and then ventured into Cable TV business and stake in Digital Outsourcing Private Limited was bought to manage this business.

16. November 17, 2009

The name of our Company was changed from YOU Telecom India Private Limited to YOU Broadband & Cable India Private Limited

17. January 12, 2010

Pursuant to the conversion of our Company from a private limited company to a public limited company, the name of our Company has been changed to YOU Broadband & Cable India Limited.

Awards/ Certifications Received by our Company

Our Company has received the following awards/ certifications:

ISO 9001-2000 certification bearing number FS 536974 for design development and provision of broadband internet enabled data, voice services.

Amendments to the Memorandum of Association

Since our incorporation, the following changes have been made to our memorandum of association:

Date Particulars

June 29, 2001 Change of name from Netshastr Facilities India Private Limited to BG Broadband Networks India Private Limited.

July 31, 2002 Increase in authorized share capital from Rs. 500,000 to Rs.200,000,000

February 24, 2003

Shifting of registered office from NCT of Delhi to State of Maharashtra

March 31, 2004 Increase in the authorised share capital from Rs.200,000,000 to Rs. 500,000,000

May 30, 2006 The authorised share capital from Rs. 500,000,000 was increased to Rs.830,000,000 and reclassified comprising of 10,250,000 Equity Shares of Rs.10 each and 72,750,000 Preference Shares of Rs.10 each

December 21, 2006

Change of name from BG Broadband Networks India Private Limited to YOU Broadband Networks India Private Limited.

January 5, 2007 The authorised share capital of Rs.830,000,000 comprising of 10,250,000 equity shares of Rs.10 each and 72,750,000 Redeemable Non-Cumulative Preference shares of Rs.10 each is reclassified as Rs.830,000,000 comprising of 83,000,000 equity shares of Rs.10 each.

April 11, 2007 The authorised share capital of Rs.830,000,000 was increased to Rs.3,430,000,000 divided into 188,000,000 Equity Shares of Rs 10 each and 155,000,000 Preference Shares of Rs 10 each under the Scheme of Amalgamation.

May 25, 2007 The authorised share capital of Rs.3,430,000,000 divided in to 188,000,000 Equity Shares of Rs.10 each and 155,000,000 Preference Shares of Rs.10 each was reclassified as Rs.3,430,000,000 comprising of 242,999,998 Equity Shares of Rs.10

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Date Particulars each and 100,000,002 Preference Shares of Rs.10 each

October 29, 2007

The authorised share capital of Rs.3,430,000,000 divided into 242,999,998 Equity Shares of Rs.10 each and 100,000,002 Preference Shares of Rs.10 each was reclassified as Rs.3,430,000,000 comprising of 247,999,998 Equity Shares of Rs.10 each and 95,000,002 Preference Shares of Rs.10 each.

November 23, 2007

Change in the name of the Company from ‘YOU Broadband Networks India Private Limited’ to ‘YOU Telecom India Private Limited’

February 29, 2008

The authorized share capital consisting of Rs.343,00,00,000 divided into 247,999,998 equity shares of Rs.10 each and 95,000,002 preference shares of Rs.10 each is increased and reclassified to consist of Rs.4,180,000,000 divided in to 418,000,000 equity shares of Rs.10 each

October 12, 2009 Shifting of other objects to the main objects

November 17, 2009

Change of name from YOU Telecom India Private Limited’ to YOU Broadband and Cable India Private Limited

January 12, 2010 Conversion from private limited company to public limited company

February 16, 2010

The authorised share capital consisting of Rs. Rs.4,180,000,000 divided in to 418,000,000 Equity Shares of Rs.10 each was increased to Rs. 7,500,000,000 divided in to 750,000,000 Equity Shares of Rs.10 each

March 22, 2010 Change in object clause of our Company

Changes in activities of our Company during the last five years There have been no changes in the activities of our Company during the last five years preceding the date of this Draft Red Herring Prospectus, which may have a material adverse effect on our profits or loss, including discontinuance of our lines of business, loss of agencies or markets and similar factors.

Promoters and Subsidiaries

For details regarding our Promoters, please see “Our Promoters and Group Companies” on page 119 of the Draft Red Herring Prospectus. Our Company does not have any subsidiary.

For details regarding corporate profile, history, the description of the activities, services, products, market of each segment, the growth of our Company, the standing of our Company with reference to the prominent competitors with reference to its products, management, major suppliers and customers, environmental issues, segment, i.e. geographical, etc, please refer to section titled “Business” and “Industry Overview” on page 76 and 60 respectively of this Draft Red Herring Prospectus respectively.

Strategic Investments

Our Company has invested in the paid-up share capital of Digital Outsourcing Private Limited, and holds approximately 36.24% of the paid-up equity share capital thereof. DOPL is a Company incorporated under the Companies Act pursuant to a certificate of incorporation dated February 8, 2007 and its registered office is situated at Plot No. 97, Marol Co-operative Industrial Estate, Makwana, Andheri East, Mumbai, Maharashtra – 400059. Digital Outsourcing Private Limited together with its subsidiaries and associate companies is engaged in the business of providing cable television related services.

Shareholders and Investment Related Agreements

1. Share Subscription and Purchase Agreement dated March 30, 2010 between Mrs. Rambhaben

Ukabhai, Mrs. Gita T. Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish

Tanti (collectively referred to as “Tanti Family”) through their representative Mr Jitendra R

Tanti and our Company, (“DOPL Share Subscription and Purchase Agreement”) Pursuant to the DOPL Share Subscription and Purchase Agreement, our Company is entitled to to purchase 416,125 equity shares constituting 12.75% of issued and paid-up share capital of Digital Outsourcing Private Limited, (“DOPL Sale Shares I”), inter-alia subject to allotment of

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10,688,757 Equity Shares of our Company constituting 4.425% of our equity share capital as on the date of the DOPL Share Subscription and Purchase Agreement in consideration for an absolute and perpetual right to our Company (either itself or through its nominees or assignees) to acquire the DOPL Sale Share I, (ii) extinguishment of all rights and privileges of Tanti Family with respect to our Company, (iii) termination of all obligations of our Company under the shareholders agreement dated March 31, 2008 between our Company, the Tanti Family and Digital Outsourcing Private Limited and (iv) Rs 100,000 (Rupees One Hundred Thousand Only). The DOPL Share Subscription Agreement further provides that our Company shall, subject to certain conditions as stated in the DOPL Share Subscription Agreement, be entitled acquire, as soon as reasonably practicable and in any event within a period of 60 business days of the completion of the Issue, upto an additional 433,875 equity shares of, representing an additional 13.29% of the equity shareholding in, Digital Outsourcing Private Limited for an aggregate consideration of up to Rs.128.27 million to be agreed between our Company and the Tanti Family.

2. Deed of Termination dated March 30, 2010 between Mrs. Rambhaben Ukabhai, Mrs. Gita T.

Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti (collectively referred

to as “Tanti Family”) through their representative Mr Jitendra R Tanti, our Company and

Digital Outsourcing Private Limited, (“Termination Agreement”)

Pursuant to the Termination Agreement, the Tanti Family, our Company and Digital Outsourcing Private Limited have agreed in leiu of undertaking a proposed initial offering of our Company’s Equity Shares, (a) that the shareholders agreement dated March 31, 2008 as amended on February 19, 2010, (“DOPL First Shareholders Agreement”) shall stand terminated from the date of execution of the Termionation Agreement, (b) that each of the aforementioned parties to the DOPL First Shareholders Agreement, irrevocably and unconditionally waives, releases and forever discharges each other Party from any and all claims, demands, actions, suits, causes of action, duties, obligations, damages whenever incurred and liabilities of any nature whatsoever (including, without limitation, fees, costs, expenses, penalties, punitive and exemplary damages and legal fees), known, or unknown, suspected or unsuspected, in law or in equity, that it, whether directly or indirectly, has ever had, now has or can, shall or may have or purport to have relating in any way to or in connection with the DOPL First Shareholders Agreement, and (c) each of the aforesaid parties fully and expressly gives up all of its rights, benefits, privileges and entitlements available under the DOPL First Shareholders Agreement. However, under the terms of the Termination Agreement, if the proposed initial offering of our Company’s Equity Shares is not completed on or before December 31, 2010 whereby the Equity Shares of our Company are not listed and traded on the Bombay Stock Exchange Limited and the National Stock Exchange Limited, the said parties have agreed that they shall mutually identify such rights under the DOPL First Shareholders Agreement that could be provided to Tanti Family under applicable laws with respect to their continued shareholding in our Company and shall execute such documents to give effect to the same.

3. Escrow Agreement dated March 30, 2010 between Mrs. Rambhaben Ukabhai, Mrs. Gita T.

Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti (collectively referred

to as “Tanti Family”) through their representative Mr Jitendra R Tanti, our Company and

YES Bank Limited,(“DOPL Escrow Agreement”)

Pursuant to the terms of the DOPL Escrow Agreement, YES Bank Limited has been appointed as an escrow agent in connection with the shares proposed to be transferred by the Tanti Family to our Company pursuant to the terms and conditions of the DOPL Share Subscription and Purchase Agreement.

4. Shareholder dated March 30, 2010 between Mrs. Rambhaben Ukabhai, Mrs. Gita T. Tanti,

Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti (collectively referred to as

“Tanti Family”) through their representative Mr Jitendra R Tanti, our Company, and Digital

Outsourcing Private Limited, (“DOPL New Shareholder Agreement”)

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Pursuant to the the New DOPL Shareholder Agreement, the Tanti Family are entitled to certain rights in connection with their investment in Digital Outsourcing Private Limited which inter-alia include the following: Prior Consent: Till such time as the Tanti Family’s shareholding in Digital Outsourcing Private Limited, continues to remain at 5% or more of the equity share capital of Digital Outsourcing Private Limited computed on a fully diluted basis, decisions on the certain matters, whether at the board or shareholders meeting of Digital Outsourcing Private Limited, shall not be taken without the prior written consent of the Tanti Family, such as, (a) mergers, consolidations, reconstructions, bankruptcy, winding up and/or liquidation other than for merger of Digital Outsourcing Private Limited with our Company, (b) divestment, sale, lease, license, transfer of any freehold or leasehold property or any other fixed assets or interest in any of the same of a value exceeding 25% of the net-worth of Digital Outsourcing Private Limited, (c) acquisition of other businesses whereby the consideration is paid by way of an issuance of shares or securities of Digital Outsourcing Private Limited, incurring indebtedness, which adversely affects the debt:equity ratio of 0.5:1 (other than by way of loans received from our Company), (d) commencement of any new line of business which is unrelated to the business of Digital Outsourcing Private Limited, and (e) amendment of constitutional documents of Digital Outsourcing Private Limited. Anti-dilution: In the event that Digital Outsourcing Private Limited issues additional shares or any other instruments convertible into shares through a preferential allotment (“Further Issue”), the Tanti Family along with our Company or its nominees, shall have the pre-emptive right to subscribe to such Further Issue on the same terms and conditions. If the Tanti Family (the “Non-

participating Investor”) is unable to, or does not, for any reason whatsoever, subscribe to their entitlement of the Further Issue, then (i) the shareholding of the Tanti Family in Digital Outsourcing Private Limited shall stand diluted to that extent, and (ii) the unsubscribed entitlement of the Tanti Family can be allotted to any other person as determined by the board of directors of Digital Outsourcing Private Limited. In the event of a rights issue by Digital Outsourcing Private Limited, the shareholders of Digital Outsourcing Private Limited shall have the right to subscribe to such rights issue in their relevant proportion. Neither our Company nor the Tanti Family shall renounce its right in respect of participation in such rights issue shares directly or indirectly to any third party. If either our Company or the Tanti Family (the “Non-

participating Shareholder”) is unable to, or does not, for any reason whatsoever, subscribe to their entitlement of the rights issue, then (i) the shareholding percentage of the Non-Participating Shareholder in Digital Outsourcing Private Limited shall stand diluted to that extent; (ii) the unsubscribed entitlement of the Non-participating Shareholder shall be offered first to the participating party; and (iii) any further unsubscribed portion thereafter, can be allotted to any other investor as determined by the board of directors of Digital Outsourcing Private Limited at no more favourable terms as was offered to the shareholders.

5. Option Agreement dated December 4, 2007 entered into between YOU Telecom (Mauritius)

Limited (“YOU Mauritius”) and Girish Kasthuri Rangan (“Option Holder”); (“Option

Agreement”)

Pursuant to the Option Agreement, the Option Holder has agreed to acquire option(s) to subscribe to Equity Shares of our Company, in consideration of acting as a director of our Company for a period of three years from the date of the Option Agreement. Option granted by YOU Mauritius to Option holder denotes call options in connection with 300,000 Equity Shares of our Company exercisable at a price of Rs 2.50/- per share. Further in terms of the Option Agreement, such options shall be exercisable by the Option Holder at any time before: (i) 2 years from the date of the Option Agreement, or (ii) within 13 months from the date of the listing of our Company’s Equity Shares pursuant to an initial public offering.

6. Advertising agreement dated February 3, 2007 between Bennet, Coleman & Company Limited

(“BCCL”) and YOU Broadband Networks India Private Limited (“Company”); (“Advertising

Agreement”).

Pursuant to the Advertising Agreement, our Company has agreed to advertise on non-exclusive basis products, services and brands offered by our Company itself or YOU Telecom Private

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Limited or any other entity in which not less than 49% of the equity share capital is held by our Company, through which our Company carries its video business on BCCL print publication and BCCL’s non print media. The total commitment by our Company to place advertisements in the BCCL media is of the value of Rs 223,700,000/-. However, the total value of advertisements released in BCCL non print media shall not exceed 30% of the total commitment. The term of Advertising Agreement shall be valid from the commencement date i.e. November 1, 2006 for the period of four years.

7. Business Transfer Agreement dated April 05, 2007 between Icenet.Net Limited (“Icenet”) and

YOU Telecom India Private Limited (“the Company”), (“Business Transfer Agreement”)

Pursuant to the Business Transfer Agreement, Icenet transferred to the Company all of the rights, title and interest of the Icenet in transferred business comprising (i) movable assets, (ii) assumed liabilities, (iii) consents, (iv) contracts and (v) employees (and such other rights or tangible or intangible properties which Icenet may acquire in the ordinary course of business) for the purchase consideration as defined in clause 3.1 of the Business Transfer Agreement by the Company to Icenet.

8. Joint Venture Agreement dated February 12, 2008 between The Red Snapper (M) Sdn Bhd

(“TRS”), YOU Telecom India Private Limited (“the Company”) (hereinafter collectively

referred to as “Parties”) and Red Snapper Wireless India Private Limited (“RSWIPL”),

(“Joint Venture Agreement”)

Pursuant to the Joint Venture Agreement, TRS and the Company have acquired an equal shareholding in RSWIPL to establish and manage the business of providing WiFi broadband access, voice over WiFi, VoIP buffet plans and WiMax. The Parties will equally hold the total paid up capital of RSWIPL. Certain key features of the Joint Venture Agreement are as follows:

(a) Share Capital

The authorized share capital of RSWIPL is Rs. 5,000,000/- divided into 500,000/- shares of face value of Rs. 10/- each and the initial issued, subscribed and paid up capital of RSWIPL is Rs 4,000,000/-. The Company has subscribed to such number of equity shares of RSWIPL which would amount to 50% of the initial issued share capital.

(b) Issuance of further shares

Pursuant to the Joint Venture Agreement, RSWIPL shall ensure that any further shares offered or issued by RSWIPL shall be offered to the Parties in proportion of the percentage of shares held by the Parties in RSWIPL. In the event TRS is unable to subscribe to further issue of shares then TRS accepts a dilution to the extent TRS is unable to contribute and in consonance with the Company a partner may be inducted for the extent of the capital to be contributed in the total funding. However, the Company may have the further shares issued to it and thereby increase its shareholding in RSWIPL. Whereas, the Company is not able to subscribe to an issue of further shares, then the Company shall at its option designate a third party to subscribe to such further shares.

9. Option Agreement dated March 22, 2010 entered into between YOU Telecom (Mauritius)

Limited (“YOU Mauritius”) and Sean George Cronin Sutcliffe (“Option Holder”); (“Option

Agreement”)

Pursuant to the Option Agreement, the Option Holder has agreed to acquire option(s) to subscribe to Equity Shares of our Company, in consideration of acting as a director of our Company for a period of two years from the date of the Option Agreement. Option granted by YOU Mauritius to Option holder denotes call options in connection with 600,000 Equity Shares (“Option Shares”) of our Company exercisable at a price of Rs 7.00/- per share. Further in terms of the Option Agreement, 100% of the Option Shares shall be exercisable by the Option Holder at any time after 13 months from the date of the listing of our Company’s Equity Shares pursuant to an initial public offering.

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10. Option Agreement dated March 23, 2010 entered into between YOU Employee Welfare Trust

(“YOU Trust”) and Girish Kasthuri Rangan (“Option Holder”); (“Option Agreement”)

Pursuant to the Option Agreement, the Option Holder has agreed to acquire option(s) to subscribe to Equity Shares of our Company, in consideration of acting as a director of our Company for a period of three years from December 4, 2007. Option granted by YOU Mauritius to Option holder denotes call options in connection with 300,000 Equity Shares of our Company exercisable at a price of Rs 5.00/- per share. Further in terms of the Option Agreement, such options shall be exercisable by the Option Holder after 13 months from the date of the listing of our Company’s Equity Shares pursuant to an initial public offering.

Collaborations

Our Company has not entered into any collaboration with any third party as per Clause (VIII) (B) (1) (c) of Part A, Schedule VIII of the ICDR Regulations.

Strategic Partners

Our Company has not entered into any arrangements with any strategic partners as per Clause (VIII) (D) (6) of Part A, Schedule VIII of the ICDR Regulations. Financial Partners Apart from our various arrangements with our lenders and bankers, which we undertake in the ordinary course of our business, our Company does not have any other financial partners as per Clause (VIII) (D) (7) of Part A, Schedule VIII of the ICDR Regulations

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OUR MANAGEMENT

Board of Directors

The Articles of Association of our Company require that the number of Directors shall not be less than 3 (three) and shall not be more than 12 (twelve). The following table set forth details regarding our Board of Directors as on the date of this Draft Red Herring Prospectus:

Name, Father’s Name,

Address and Occupation

and DIN

Age (years) Designation Other Directorships

Mr. Girish Kasthuri Rangan S/o A S K Rangan 102, Venus A. Soares Road Chembur, Mumbai-400071 Maharashtra, India Management Consultant DIN 01592833 Term: Liable to retire by rotation

53 Chairman, Independent Non-Executive Director

-NIL-

Mr. Eyyuni Venkat Srinivas Chakravarthy S/o Mr. E Rangaswamy Chakravarthy 603 F Block, Great Eastern Gardens, LBS Marg , Kanjur Marg (West), Mumbai-400076, Maharashtra, India Business DIN 00603085 Term : Not liable to retire by rotation

48 Chief Executive Officer, Executive Non-Independent

Director

• You Hits Conditional Access Services Private Limited

Mr. Michael David Kazma S/o Gerald Joseph Kazma 340 Sw 16th St, Boca Raton, Florida, 334327205, ,

45 Non Independent Non-Executive

Director

NIL

110

Name, Father’s Name,

Address and Occupation

and DIN

Age (years) Designation Other Directorships

United States Of America Executive DIN 02114978 Term: Liable to retire by rotation

Mr. Perumal Srinivasan S/o Perumal Ramamurthy 7A Belvedere Court, Sane Guruji Marg, Mahalaxmi, Mumbai-400011, Maharashtra, INDIA Service DIN-00365025 Term: Liable to retire by rotation

44 Non-Independent Non-Executive

Director

• K S Oils Limited

• Human Value Developers Private Limited

• Sharekhan Limited

• JBF Industries Limited

• Ind Barath Power Infra Private Limited

• K S Natural Resources Pte Limited (Singapore)

Mr. Sean George Cronin Sutcliffe S/o John Vernon Sutcliffe Thatched House, 1 High Street, Wargrave, Reading, Berks, United Kingdom- RG108JA Service DIN-03014252 Term: Liable to retire by rotation

46 Independent Non-Executive Director

• Green Biologies Limited

• Sutcliffe Solutions Limited

• Practical Action Limited

Nationality and Relationship between Directors All the Directors the Company except Mr. Michael David Kazma and Mr. Sean George Cronin Sutcliffe are Indian nationals. Further, none of our Directors are related to each other.

Brief Profiles of the Directors

Mr. Girish Kasthuri Rangan, 53, is the Chairman, Independent Non-Executive Director of our Company. Mr. Girish Kasthuri Rangan holds a masters degree in science and business administration. He commenced his career with Procter & Gamble India in brand management and marketing. He has over 28 years of experience in spanning brand management, sales, communications and general management, across industry segments as diverse as FMCG, pharmaceuticals, advertising, mobile telephony and electronic transaction management. He has been associated as a chief executive officer/managing director of Warner Lambert, Wockhardt, BPL Mobile and Venture Infotek Global. He was also an associate

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director at Leo Burnett and associate director and general manager at Lintas India. In 2004, he started his own management consultancy practice for two years. In 2006, he became country manager- India branch of U21 Global and subsequently in the year 2008 he returned to his management consultancy practice. Mr. Eyyuni Venkat Srinivas Chakravarthy, 48, is the Chief Executive Officer and an Executive Non-Independent Director of our Company. Mr. Eyyuni Venkat Srinivas Chakravarthy holds a bachelors degree in commerce and is a qualified chartered accountant and company secretary. He started his career as a management trainee in Mafatlal Industries Limited, a leading textile conglomerate and went onto head their knitted apparel division. In September 1999, he joined Hathway Cable as head of the southern zone for the cable business. He joined our Company in March 2001 as operations and commercial director and also as a member of the board. Since 2002, he has been the chief executive officer of our Company. He joined our Company with general managerial and business experience in textiles and apparels sectors and cable/broadband sector. He has been responsible for expanding the business of our Company in 11 cities across India. Mr. Michael David Kazma, 45, is Non Independent Non-Executive Director of our Company. Mr. Michael David Kazma holds a bachelors degree in arts from the Bradley University. In 1992, he initiated his family’s first overseas investment by purchasing a 25 year old cable franchisee in Aruba. His entire career has been oriented to the business of building and operating cable franchises. He has been an investor, entrepreneur and manager in HFC Networks in Central America. Mr. Perumal Srinivasan, 44, is a Non-Independent Non-Executive Director of our Company. Mr. Perumal Srinivasan is a graduate in Mechanical Engineering from College of Engineering, Guindy, Anna University and a post graduate in Management from Indian Institute of Management, Bangalore. Currently, He is a Managing Director of Citi Venture Capital International and is the India - Region Head. He has been associated in the past with Hindustan Aeronautics Limited, HSBC Private Equity and ICICI Ventures. His investment track record includes investments in Suzlon, Axis Bank, Yes Bank, JSW and Balrampur Chini.

Mr. Sean George Cronin Sutcliffe, 46, is an Independent Non-Executive Director of our Company. He is a Chartered Mechanical Engineer with an Engineering degree from Cambridge University. Sean Sutcliffe has been chief executive of Green Biologics since April 2008, contributing to the company extensive commercial and operational experience across the energy and renewables sector. Prior to joining Green Biologics he was chief executive of Biofuels Corporation, a UK based biodiesel producer from the year 2005, and in the year 2007 he was chairman of Tidal Generation Limited, a developer of tidal stream devices. He has also worked for BG Group plc for 14 years in a variety of roles spanning operations, business development and strategy, most recently as Executive Vice President with responsibility for corporate development and new businesses. He is also a trustee of Practical Action, an international development charity.

Details of Remuneration of the Directors

Mr. Eyyuni Venkat Srinivas Chakravarthy, Chief Executive Officer and Executive Non-

Independent Director

Mr. Eyyuni Venkat Srinivas Chakravarthy was appointed as an executive director of our Company with effect from May 24, 2007 through a shareholders resolution dated October 29, 2007. The particulars of the remuneration paid to Mr. Eyyuni Venkat Srinivas Chakravarthy for the financial year 2009 is as detailed below:

Particulars ( Rs.) Salary and bonus 4,305,125 Allowances and perquisites 2,069,054 Contribution to provident and other funds 516,616 Stock based compensation 10,396,921 Total 17,287,716

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Details of terms and conditions for the appointment of Non-Executive Directors

We have not entered into any formal arrangements with our non-executive Directors. We pay our Non-Executive Directors a sitting fee of Rs. 20,000 per Board meeting and for each Committee meeting. Our Company has entered into an agreement with Mr. Sean George Cronin Sutcliffe appointing him as an Independent Director on the board of our Company with effect from March 22, 2010. Pursuant to the agreement Mr. Sean George Cronin Sutcliffe will be entitled to a sitting fee of Rs. 20,000 per Board and pursuant to Option Agreement dated March 22, 2010 entered into with YOU Telecom (Mauritius) Limited, Sean George Cronin Sutcliffe is entitled to 600,000 equity shares of our Company at an exercise price of Rs 7 per share The Board of Directors of our Company are not entitled to any benefits pursuant to the termination of their employment. Borrowing Powers

Pursuant to an Extra-Ordinary General Meeting Resolution dated February 29, 2008 passed by the shareholders of the Company in accordance with the provisions of the Companies Act, 1956, the Board has been authorized to borrow any sum or sums of monies, from time to time, upon such terms and conditions as the Board may deem fit, notwithstanding that, the monies to be borrowed, together with the monies already borrowed by the Company (apart from temporary loan obtained from the Company’s bankers in the ordinary course of business) will or may exceed in the aggregate, for the time being, the paid-up capital and free reserves of the Company, that is to say reserves not set apart for any specific purposes, provided however, the total amount so borrowed shall not at any time exceed Rs. 30,00,000,000/-. Bonus or profit sharing plan for our Directors

Our Company has not instituted any bonus or profit sharing plan for our Directors Details of any arrangement or understanding with major shareholders, customers pursuant to which director or members of senior management were selected etc.

NIL

Corporate Governance

The provisions of the listing agreement to be entered into with the Stock Exchanges with respect to corporate governance become applicable to us at time of seeking in-principal approval of the Stock Exchanges. The Company has complied with such provisions, including with respect to the appointment of independent Directors to the Board and the constitution of the following committees of the Board: the Audit Committee, the Remuneration Committee and the Investors Grievances Committee. The Company undertakes to take all necessary steps to comply with all the requirements of the guidelines on corporate governance and adopt the Corporate Governance Code as per Clause 49 of the listing agreement to be entered into with the Stock Exchanges, as would be applicable to the Company upon listing its Equity Shares. Board of Directors of the Company comprises of five (5) directors, of which one (1) is executive director and four (4) are non-executive Directors including two (2) Independent Directors. The Company has also constituted the various committees viz. Audit Committee, Share Transfer & Investor Grievance Committee and Remuneration Committee. Further, the Company undertakes to comply with all the other requirements of the SEBI ICDR Regulations on Corporate Governance as may be applicable to the Company upon listing of its equity shares.

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Committees of the Board of Directors

Audit Committee:

Members:

1. Mr. Girish Kasthuri Rangan, Chairman, Independent Non-Executive Director 2. Mr. Perumal Srinivasan, Non-Independent Non-Executive Director 3. Mr. Sean George Cronin Sutcliffe, Independent Non Executive Director Terms of Reference/ Scope of the Audit Committee

1. Overseeing the Company’s financial reporting process and disclosure of its financial information. 2. Regular review of accounts, accounting policies, disclosures, etc. 3. Regular review of the major accounting entries based on exercise of judgment by management. 4. Qualifications in the draft audit report. 5. Establishing and reviewing the scope of the statutory audit including the observations of the auditors

and review of the quarterly, half-yearly and annual financial statements before submission to the Board, with particular reference to matters required to be included in the Directors Responsibility Statement to be included in the Board’s report in terms of clause 2(AA) of S.217 of the Companies Act, 1956, changes in the accounting policies and practices and reasons for the same, significant adjustments made in the financial statements arising out of audit findings, and qualifications in the draft audit report.

6. The Committee shall have post audit discussions with the statutory auditors to ascertain any area of concern.

7. Regular review of the performance of statutory and internal auditors together with the management. 8. Discussion and follow up on any important findings with the internal auditors. In case there is a

suspected case of fraud or irregularity, review of the findings of the internal auditors and reporting the matter to the board.

9. Establishing the scope and frequency of internal audit, reviewing the findings of the internal auditors and ensuring the adequacy of internal control systems including structure of the internal audit department, frequency of internal audit, staffing and seniority of the official heading the department. Review the functioning of the whistle blower mechanism, in case the same is existing.

10. To look into reasons for substantial defaults in the payment to depositors, debenture holders, shareholders and creditors.

11. To look into the matters pertaining to the Director’s Responsibility Statement with respect to compliance with applicable accounting standards and accounting policies.

12. Compliance with Stock Exchange legal requirements concerning financial statements, to the extent applicable.

13. The Committee shall look into any related party transactions i.e., transactions of the company of material nature and disclose such transactions, with promoters or management, their subsidiaries or relatives etc., that may have potential conflict with the interests of company at large.

14. Recommending to the Board the appointment, re-appointment, and replacement of the statutory auditor and the fixation of audit fee.

15. Approval of payments to the statutory auditors for any other services rendered by them. 16. Review of management discussion and analysis of financial condition and results of operations,

statements of related party transactions submitted by management, management letters/letters of internal control weaknesses issued by the statutory auditors, internal audit reports relating to internal control weaknesses, and the appointment, removal and terms of remuneration of the chief internal auditor.

17. Such other matters as may from time to time be required by any statutory, contractual or other regulatory requirements to be attended to by the Audit Committee.

Share Debenture Transfer and Investor Grievance Committee:

Members: 1. Mr. Michael David Kazma, Non Independent Non-Executive Director 2. Mr. Eyyuni Venkat Srinivas Chakravarthy, Executive Director and Chief Executive Officer, Non-

Independent Director 3. Mr. Perumal Srinivasan, Non-Independent Non-Executive Director

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Terms of Reference/Scope of Share Debenture Transfer and Investor Grievance Committee

1. Investor relations and redressal of shareholders grievances in general and relating to non receipt of

dividends, interest, non- receipt of balance sheet etc. 2. Approve requests for share transfers and transmission and those pertaining to rematerialisation of

shares/ sub-division/ consolidation/ issue of renewed and duplicate share certificates etc. 3. Such other matters as may from time to time be required by any statutory, contractual or other

regulatory requirements to be attended to by such committee.

Remuneration Committee:

Members: 1. Mr. Girish Kasthuri Rangan, Chairman, Independent Non-Executive Director 2. Mr. Perumal Srinivasan, Non-Independent Non-Executive Director 3. Mr. Sean George Cronin Sutcliffe, Independent Non Executive Director

Terms of Reference/Scope of Remuneration Committee 1. Framing suitable policies and systems to ensure that there is no violation, by an Employee of the

Company of any applicable laws in India or overseas, including:

• The Securities and Exchange Board of India (Insider Trading) Regulations, 1992; or

• The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities market) Regulations, 1995.

2. Determine on behalf of the Board and the shareholders the company’s policy on specific remuneration packages for executive directors including pension rights and any compensation payments.

3. Perform such functions as are required to be performed under Clause 5 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999

4. Such other matters as may from time to time be required by any statutory, contractual or other regulatory requirements to be attended to by such committee

IPO Committee:

Members: 1. Mr. Eyyuni Venkat Srinivas Chakravarthy, Executive Director and Chief Executive Officer, Non-

Independent Director 2. Mr. Perumal Srinivasan, Non-Independent Non-Executive Director

Terms of Reference/Scope of IPOCommittee

1. To authorize any of the director or directors of the Company or such other officer or officers of the

Company, including by the grant of power of attorneys, to do such acts, deeds and things as such authorized person in his/her/its absolute discretion may deem necessary or desirable in connection with the issue, offer and allotment of the securities offered in the IPO, (“Offer Securities”);

2. To give or authorize the giving by concerned persons of such declarations, affidavits, certificates,

consents and authorities as may be required from time to time; 3. To appoint the Lead Managers to the Issue in accordance with the provisions of the ICDR

Regulations and other applicable statutory and/or regulatory requirements; 4. To seek, if required, consents and/or certifications from Directors and officers of the Company as

may be required in connection with the issue of securities; 5. To seek, if required, any approval, consent or waiver from the Company’s lenders, and/or parties

with whom the Company has entered into various commercial and other agreements, and/or any/all concerned government and regulatory authorities in India, and/or any other approvals, consents or waivers that may be required in connection with the issue, offer and allotment of the Offer Securities;

115

6. To decide pricing and terms of the Offer Securities, and all other related matters, including the

determination of the minimum subscription for the IPO; 7. To approve the draft and final offer documents (including amending, varying or modifying the same,

as may be considered desirable or expedient) as finalized in consultation with the lead managers, in accordance with all applicable laws, rules, regulations and guidelines;

8. To seek the listing of the Offer Securities on any Indian stock exchange/s, submitting the listing

application to such stock exchange/s and taking all actions that may be necessary in connection with obtaining such listing;

9. To appoint the registrar and other intermediaries to the IPO, in accordance with the provisions of the

ICDR Regulations and/or other statutory and/or regulatory requirements; 10. To finalize the arrangement for the submission of the draft prospectus to be submitted to the stock

exchange(s) for receiving comments from the public and the prospectus to be filed with the stock exchange(s), and any corrigendum, amendments supplements thereto;

11. To finalize the arrangement for the submission of the draft prospectus and any other representations,

documents etc. with the SEBI and any corrigendum, amendments supplements thereto; 12. To authorize maintenance of a register of holders of the Offer Securities; 13. To finalize the basis of allotment of the Offer Securities; 14. To finalize the allotment of the Offer Securities on the basis of the applications received; 15. To finalize acceptance and appropriation of the proceeds of the IPO; and 16. To issue, offer and allot the Offer Securities, and to execute any documents, provide consents and

certifications, and to generally do any other thing in connection with or incidental to the consummation of the IPO;

17. To generally do any other act and/or deed, to negotiate and execute any document/s, application/s,

agreement/s, undertaking/s, deed/s, affidavits, declarations and certificates, and/or to give such direction as it deems fit or as may be necessary or desirable with regard to the IPO.

Shareholding of Directors in our Company

The Articles does not require any director to hold any qualification shares in our Company. None of our Directors hold any Equity Shares of our Company except Mr. Eyyuni Venkat Srinivas Chakravarthy who holds 1(one) Equity Share in our Company. Interest of our Directors`

All the Directors of our Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee thereof as well as to the extent of other remuneration, reimbursement of expenses payable to them under the Articles of Association. All the Directors may also be deemed to be interested to the extent of equity shares, if any, already held by them and/or their friends and relatives in our Company or that may be subscribed for and allotted to them, out of the present Issue in terms of the Draft Red Herring Prospectus and also to the extent of any dividend payable to them and other distributions in respect of the said equity shares. The Directors may also be regarded as interested in the shares, if any, held by or that may be subscribed by and allotted to the companies, firms and trust, in which they are interested as Directors, Members, partners and/or trustees. Our Directors have no interest in any property acquired by us within two years of the date of filing of this Draft Red Herring Prospectus.

116

Change in the Board of Directors during the last three years

The following changes have occurred in Board of Directors of our Company in the last three years:

Name of Director Date of Appointment/ Re-

appointment

Date of cessation Reason

Mr. Neeraj Jaikrishan Bhatia

May 24, 2007 Resignation

Mr. Perumal Srinivasan May 24, 2007 Appointment Mr. Marc Desaedeleer May 24, 2007 Appointment Mr. Eyyuni Venkat Srinivas Chakravarthy

May 24, 2007 Appointment

Mr. Girish Kasthuri Rangan

May 24, 2007 Appointment

Mr. Michael David Kazma

October 29, 2007 Appointment

Mr. Vinayak Shenvi March 22, 2010 Resignation Mr. Marc Desaedeleer March 22, 2010 Resignation Mr. Sean George Cronin Sutcliffe

March 22, 2010 Appointment

Functional Organisational Chart

Key Management Personnel

All of our key managerial employees are permanent employees of our Company and none of them are related to each other or to any Director of our Company. The details regarding our key management personnel are as follows: Mr. Partha Choudhury, Chief Financial Officer, 45, holds a Masters degree in Commerce and is a qualified Chartered Accountant. He has over 21 years of industry experience at senior levels in various multinational companies. He worked for ABB for 8 years and for Coca-Cola for 3 years. He joined our company in 2001 and thereafter during 2004 to 2006, he had moved to Gujarat Gas Company Limited, (a BG Group plc Company) as finance director. He rejoined our Company towards the end to 2006. Mr. Khushrav Kabraji, Senior Vice President, Broadband Business, 43, holds a masters degree in business administration in marketing from Symbiosys Institute of Business Management. He joined our

Eyyuni Venkat Srinivas

Chakravarthy

Chief Executive Officer

Partha Choudhury

Chief Financial Officer

Khushrav Kabraji

Sr.Vice President Broadband Business

Kishore Velankar

Sr. Vice President – HR, Admin,

Training, Quality Assurance &

Customer Care

G.R. Sridhar

Sr. Vice President Technology

Hetal Shah

Sr. Vice President – Enterprise

Solutions Group

117

company in June, 2007. He has over 18 years of experience in marketing with some well-known brands such as Boots Heathcare International, Warner Lambert, Ogilvy & Mather, Parle Products Limited, etc. Mr. Hetal Shah, Senior Vice President, Enterprise Solutions Group, 38, holds a masters degree in business administration from NIIMS and is a computer engineer. He joined our Company in April, 2007. He handles ESG vertical, providing Internet and Data Storage and Data security related solution and services to various corporates. He brings along with him a rich experience and expertise of about 15 years in developing Lease line and System Integration. Prior to joining our Company he was associated with Icenet, D2VISP and Chase Technologies. Mr. Kishore Velankar, Senior Vice President, Human Resource Administration, Training, Quality Assurance & Customer Care, 45, graduated in commerce and postgraduated in human resource. He has over 22 years of experience in the human resource domain. He has worked with organizations such as Tata Infotech, Mahindra British Telecom, Datacraft India Limited and Integreon Managed Solutions. He has been associated with our Company since July, 2008. He has been responsible for streamlining various HR processes and making the HR function employee friendly in our Company. In addition to being in charge of training function, he is also responsible for revamping the YOU Academy based at Pune as a Hub for all trainings which take place in the Company. Mr. G.R. Sridhar, Vice President, Technology, 41, holds a degree in Engineering. He joined our Company in the year 2001. He heads the technology department in our Company and is responsible for the Internet Data Center & IT Operations. He is also responsible for designing and developing the technology strategy. He has over two decades of experience in the electronics & communications industries and over 15 years in the Internet domain. He has worked with organizations such as Reliance Infocomm, Hathway Datacom, Cyberwave Limited & Yemkay communications.

Retirement Benefits of Key Management Personnel

None of the KMP are entitled to any retirement benefits

Amount of Compensation paid to Key Management Personnel in the FY 2009

Compensation paid to our Key Management Personnels in the FY 2009 is as follows:

Sr.

No.

Key Management Personnel Compensation (Rs.)

1. Mr. Partha Choudhury, Chief Financial Officer 4,210,152

2. Mr. Khushrav Kabraji, Senior Vice President, Broadband Business

3,364,092

3. Mr. Hetal Shah, Senior Vice President, Enterprise Solutions Group

2,800,068

4. Mr. Kishore Velankar, Senior Vice President, Human Resource Administration, Training, Quality Assurance & Customer Care

5,200,200

5. Mr. G.R. Sridhar, Vice President, Technology 2,688,300

Shareholding of the Key Management Personnel (barring Directors of our Company)

The following KMPs (barring Directors of our Company) hold Equity Shares in our Company as on the date of filing of DRHP:

Sr.

No.

Name of the KMP No of Equity Shares

1. Mr. Partha Choudhury, Chief Financial Officer 1

2. Mr. Kishore Velankar, Senior Vice President, Human Resource Administration, Training, Quality Assurance & Customer Care

1

3. Mr. Mr. Khushrav Kabraji, Senior Vice President, Broadband 1

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Sr.

No.

Name of the KMP No of Equity Shares

Business

4. Mr. G.R. Sridhar, Vice President, Technology 1

5. Mr. Hetal Shah, Senior Vice President, Enterprise Solutions Group

1

Bonus or profit sharing plan of Key Management Personnel

NIL

Interests of Key Management Personnel

The KMP of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business.

None of our KMP have been paid any consideration of any nature from our Company, other than their remuneration.

Changes in the Key Management Personnel

The changes in our KMP in the last three years are as follows:

Name of the KMP Designation Date of change Reason for change

Ish Anand Head Customer Care July 03, 2009 Resignation

Sekhar Ariyur Krishnan

Chief Technology Officer

July 03, 2009 Resignation

Dinesh Rao Chief Operating Officer November 07, 2008 Resignation

Employees Welfare Benefits YTML, our Promoter, with an object of rewarding and providing an incentive to the employees of our Company and certain other companies, for their past association and performance as well as to motivate them to contribute to the growth and profitability of such companies, has formulated an employee welfare benefit scheme dated March 22, 2010 formulated by our Promoter, YTML, (“Scheme”). For the purposes of the Scheme YTML transferred (a) 9,500,000 preference shares of our Company which were subsequently converted into 9,500,000 equity shares of face value Rs. 10/- each of our Company on February 22, 2008, and (b) 24,364,368 equity shares of face value Rs. 10/- each of our Company, (collectively “Trust Shares”), to a trust, namely the You Telecom Employee Benefit Trust, (“Trust”). Pursuant to the terms and conditions of the Scheme, a committee constituted under the Scheme is empowered to grant to current or future employees of the aforesaid companies, including those of our Company working in India or out of India, or a director on the board of directors of any of the aforesaid companies, including those of our Company, options which gives such employees and directors of the aforesaid companies the right, but not an obligation, to purchase at a future date the Equity Shares out of the Trust Shares and such other Equity Shares of our Company as may be transferred from time to time by YTML to the Trust. Details of any arrangement or understanding with major shareholders, customers pursuant to

which Key Management Personnel were selected etc.

NIL

Payment or Benefit to Officers of our Company

Except as stated otherwise in this Draft Red Herring Prospectus, no amount or benefit has been paid or given or is intended to be paid or given to any of the officers except the normal remuneration for services rendered as Directors, officers or employees, since the incorporation of the Company.

Except as stated in section “Related Party Transactions” beginning on page 127 of this Draft Red Herring Prospectus, none of the beneficiaries of loans and advances and sundry debtors are related to the Directors.

119

OUR PROMOTERS AND GROUP COMPANIES

Our Promoters are: 1. Mr. Eyyuni Venkat Srinivas Chakravarthy; 2. You Telecom (Mauritius) Limited (“YTML”); and 3. Citigroup Venture Capital International Growth Partnership Mauritius Limited (“CVCIGPML”) Association of our Promoters with our Company

Our Company was originally promoted by BG India Telecom (Mauritius) Limited (“BGITML”) which in turn was controlled by British Gas Asia Pacific Holdings Pte Limited. In June 2006, the entire shareholding of British Gas Asia Pacific Holdings Pte Limited in the issued share capital of BGITML was transferred to CVCIGPML. In June 2006, the name of BGITML was changed to Iqara India Telecom (Mauritius) Limited (“Iqara”). The name of Iqara was changed to You Telecom (Mauritius) Limited (“YTML”) on September 20, 2006. Consequently YTML and CVCIGPML became the promoters of our Company. OUR INDIVIDUAL PROMOTER

Mr. Eyyuni Venkat Srinivas Chakravarthy

Driving License No: MH03 20100033056 PAN: AAAPE0659D Voter Identification No: Not Available Passport Number: Z1785991

Please refer to the section titled “Our Management” beginning on page 109 of this Draft Red Herring Prospectus, for further details in connection with Mr. Eyyuni Venkat Srinivas Chakravarthy.

OUR CORPORATE PROMOTERS

You Telecom (Mauritius) Limited (“YTML”)

YTML was incorporated under the laws of the Republic of Mauritius, as a private company limited by shares, in the year 2001, with an object of acting as investment company and to generally trade in the global business sector. The registered office of the Company is situated at 6th Floor, Tower A, 1 Cybercity, Ebene, Mauritius. The Board of Directors of YTML is comprised of the following persons: 1. Marc Desaedeleer; 2. Nousrath Bhugeloo; 3. Gordon Lam; 4. Venkatesen Saminada Chetty; 5. Bhoomija Juwaheer; and 6. Amit Gupta (Alternate director to Nousrath Bhugeloo) The issued share-capital of YTML comprises 25,408,728 ordinary shares at par value, which are held in the following manner as on date:

Sl.

No.

Name of Holder Number of Shares Percentage Holding

1. Citigroup Venture Capital International Growth Partnership Mauritius Limited

21,912,328 86.24%

2. Mr. Mike Kazma 3,496,400 13. 76%

Total 25,408,728 100%

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YTML was originally controlled by British Gas Asia Pacific Holdings Pte Limited, who held the entire issued share capital of YTML. The entire shareholding in the issued share capital of YTML, of British Gas Asia Pacific Pte Limited, comprising of 9,718,210 ordinary shares, was transferred to Citigroup Venture Capital International Growth Partnership Mauritius Limited, on June 9, 2006. The aforementioned acquisition did not require Citigroup Venture Capital International Growth Partnership Mauritius Limited to make an open offer or a similar declaration under the laws of Mauritius. Subsequently, You Telecom (Mauritius) Limited allotted an additional 11,914,000 ordinary shares, on June 12, 2006, and 280,118 ordinary shares, on February 26, 2008, to Citigroup Venture Capital International Growth Partnership Mauritius Limited. Accordingly, the current promoter of YTML is Citigroup Venture Capital International Growth Partnership Mauritius Limited. The audited financial results of YTML for the last three financial years are as follows:

Particulars As of 31 December

2008 (Rs. In

million)

As of 31 December

2007 (Rs. In million)

As of 31 December

2006 (Rs. In million)

Equity capital 1,776.53 951.65 1,064.62

Reserves (excluding revaluation reserves)

(2,349.36) (1,311.21) (163.58)

Sales/Turnover 0.08 0.02 3.77

Profit/(Loss) after Tax (613.58) (1,221.75) (2,407.94)

Earning per Share (INR) (24.15) (48.71) (96.01)

Net Asset Value per Share (INR)

(22.54) (14.34) 35.93

For rate of conversion, refer to “Presentation of Financial Information and Use of Market Data –

Currency of Presentation” on page x of this Draft Red Herring Prospectus

Particulars As of 31 December

2008 (USD in million)

As of 31 December

2007 (USD in million)

As of 31 December

2006 (USD in million)

Equity capital 35.73 24.13 24.13

Reserves (excluding revaluation reserves)

(47.25) (33.25) (3.71)

Sales/Turnover 0.00 0.00 0.08

Profit/(Loss) after Tax

(14.00) (29.54) 53.13

Earning per Share (USD)

(0.55) (1.18) 2.12

Net Asset Value per Share (USD)

(0.45) (0.36) 0.81

YTML is an unlisted company. It is neither a sick company within the meaning of SICA nor is it under winding up. The auditors of YTML have given a negative opinion with respect to the consolidated financial statements of YTML for the years ended December 31, 2008, 2007 and 2006, observing that YTML has not prepared consolidated financial statements as required by IFRS IAS 27. Since, this constitutes a departure from the aforesaid IFRS requirement, the auditors have not been able to provide a true and fair view with respect to the consolidated financial position of the YTML as of December 31, 2008, 2007 and 2006. The auditors of YTML, however have noted that the unconsolidated financial statements of YTML for the years ended December 31, 2008, 2007 and 2006 give a true and fair view of the financial position of YTML.

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Citigroup Venture Capital International Growth Partnership Mauritius Limited, (“CVCIGPML”)

Citigroup Venture Capital International Growth Partnership Mauritius Limited, ("CVCIGPML") was incorporated under the laws of the Republic of Mauritius, as a private company limited by shares, in the year 1998, and was licensed by the Financial Services Commission and started operating as a global business company in 1998. CVCIGPML is engaged in the business of investing in Indian and overseas companies, listed and unlisted, in various sectors inter-alia including the financial services sector, infrastructure, construction and textiles. As on March 30, 2010, CVCIGPML directly holds investment in 10 companies, of which 6 are incorporated in India, 1 in Netherlands and 3 in Mauritius. The registered office of CVCIGPML is located at c/o International Financial Services Limited, IFS Court, Twenty Eight, Cyber City, Ebene, Mauritius. Foreign Subsidiaries: The foreign subsidiaries of CVCIGPML include the following entities:

• Citigroup Venture Capital International Ebene Limited

• Citigroup Venture Capital International Mauritius Limited

• You Telecom (Mauritius) Limited Except Citigroup Venture Capital International Ebene Limited, Citigroup Venture Capital International Mauritius Limited and You Telecom (Mauritius) Limited, CVCIGPML does not have any controlling rights in any other companies in which it has any equity shareholding. The Board of Directors of CVCIGPML is comprised of the following persons:

• Dev Joory;

• Couldip Basant Lala;

• Marc Desaedeleer; and

• Gordon Lam. The issued share-capital of CVCIGPML as on filing of this Draft Red Herring Prospectus comprises 100,000 A ordinary shares of par value USD 1, which are entirely held by Citigroup Venture Capital International Jersey Limited, (“CVCIJL”). Consequently, the promoter of CVCIGPML is CVCIJL. CVCIJL is controlled and managed by the board of directors thereof, comprising of the following individuals:

• Michael Richardson

• Peter Byrne

• Gordon Lam

• Alfred Rodrigues CVCIJL is an investment company within the structure of the Citigroup Venture Capital International Growth fund L.P. (the “Fund”). The Fund is a private equity fund of which Citigroup Venture Capital International Partnership G.P. Limited (an indirect 100% owned subsidiary of Citigroup Inc) is the General Partner. The Fund has commitments from investors including Citicorp International Finance Corporation (an indirect 100% owned subsidiary of Citigroup Inc.) and a broad based group of high net-worth investors of Citigroup Private Bank and Smith Barney, and some institutional investors. Other than Citigroup, no other investor has beneficial ownership of more than 10% in the Fund. There has been no change in control of CVCIJL in the last 3 years immediately preceding the date of this Draft Red Herring Prospectus. The audited financial results of CVCIGPML for the last three financial years are as follows:

Particulars As of 31 December

2008 (Rs. In million)

As of 31 December

2007 (Rs. In million)

As of 31 December

2006 (Rs. In million)

Equity Capital 4.97 3.94 4.41

Reserves (excluding revaluation reserves)

12,209.82 15,322.74 13,309.34

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Particulars As of 31 December

2008 (Rs. In million)

As of 31 December

2007 (Rs. In million)

As of 31 December

2006 (Rs. In million)

Sales/Income 3,671.26 3,179.96 58.45

Profit/(Loss) after Tax (1,187.12) 5,074.58 35.58

Earning per Share (INR) (11,871.21) 50,745.77 355.77

Net Asset Value per Share (INR)

122,147.94 153,266.83 133,137.54

For rate of conversion, refer to “Presentation of Financial Information and Use of Market Data –

Currency of Presentation” on page x of this Draft Red Herring Prospectus

Particulars

As of 31 December

2008 (USD in

million)

As of 31 December

2007 (USD in

million)

As of 31 December

2006 (USD in

million)

Equity Capital 0.1 0.1 0.1

Reserves (excluding revaluation reserves)

245.58 388.56 301.66

Sales/Income 83.79 76.89 1.29

Profit/(Loss) after Tax (27.09) 122.70 0.79

Earning per Share (USD) (270.94) 1,227.02 7.85

Net Asset Value per Share (USD)

2,456.83 3,886.57 3,017.62

CVCIGPML is an unlisted company. It is neither a sick company within the meaning of SICA nor is it under winding up. The auditors of CVCIGPML have given a negative opinion with respect to the consolidated financial statements of CVCIGPML for the years ended December 31, 2008, 2007 and 2006, observing that CVCIGPML has not prepared consolidated financial statements as required by IFRS IAS 27. Since, this constitutes a departure from the aforesaid IFRS requirement, the auditors have not been able to provide a true and fair view with respect to the consolidated financial position of the CVCIGPML as of December 31, 2008, 2007 and 2006. The auditors of CVCIGPML, however have noted that the unconsolidated financial statements of CVCIGPML for the years ended December 31, 2008, 2007 and 2006 give a true and fair view of the financial position of CVCIGPML. Confirmations We confirm that the Permanent Account Number (as may be applicable), Bank Account Numbers, Passport Numbers, the Company Registration Number and the address of the Registrar of Companies where the Promoters are registered, (as applicable), will be submitted to the Stock Exchanges at the time of filing the Draft Red Herring Prospectus. Further, none of the Promoters or the relatives of our individual Promoter have been declared as willful defaulters by the Reserve Bank of India, or any other Government authority, and there are no violations of securities laws committed by any of the Promoters in the past, nor are there any proceedings pending against any of the Promoters in this regard.

Interest of our Promoters in our Company The number of Equity Shares and options held by our Promoters as of the date of this Draft Red Herring Prospectus is set forth below:

Promoter No. of Equity Shares

% Shareholding No. of stock options

YTML 199,144,375 82.44% Nil

Total 199,144,375 82.44% Nil

Except as stated herein, the Promoters do not have any interest in our Company other than to the extent of any dividend payable to them and other distributions in respect of their shareholding in our Company. Mr. Eyyuni Venkat Srinivas Chakravarthy is also interested to the extent of remuneration or benefits to which he is entitled to in his capacity as a director of our Company, as per his terms of appointment and

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reimbursement of expenses incurred by him during the ordinary course of business of our Company. YTML may also be deemed to be interested in our Company to the extent of the dividends payable by our Company to YTML as a shareholder of our Company. For further details, please refer to the section

titled “Our Management” on page 109 of this Draft Red Herring Prospectus.

No amount or benefit has been paid or given to our Promoters within the two years preceding the date of this Draft Red Herring Prospectus, except to the extent of the following: (a) the remuneration and/or benefits paid to Mr. Eyyuni Venkat Srinivas Chakravarthy to which he

is entitled to in his capacity as a director of our Company, as per the terms of his appointment. These amounts include the reimbursement of expenses incurred by Mr. Eyyuni Venkat Srinivas Chakravarthy during the ordinary course of business of our Company; and

(b) the dividends paid to YTML in its capacity as a shareholder of our Company. None of our Promoters are interested in any property acquired by our Company in the two years immediately preceding the date of this Draft Red Herring Prospectus, or proposed to be acquired by our Company. None of our Promoters are interested in any transaction in acquisition of land, construction of building and/or supply of machinery etc. Pursuant to a loan agreement dated August 12, 2009 between YTML and our Company, YTML has provided a loan facility to our Company for an aggregate amount of USD five million, in accordance with the statutory and/or regulatory requirements in connection with external commercial borrowings. The proceedings of the aforesaid loan facilities shall be utilized by our Company for general corporate purposes in terms of the approval received from the RBI vide their letters dated June 11, 2009, July 9, 2009 and August 10, 2009. The aforesaid loan facilities shall accrue interest at a rate of 6 month LIBOR plus 300 basis points per annum. The principal amount of the aforesaid loan facilities is payable in four annual installments commencing from August 2010 in accordance with the following schedule:

Month Year Amount

August 2010 USD 0.1 million

August 2011 USD 0.5 million

August 2012 USD 1.5 million

August 2013 USD 2.9 million

Our Group Companies

Our Group Companies comprise of the following entities:

• Citigroup Venture Capital International Ebene Limited;

• Citigroup Venture Capital International Mauritius Limited;

• YOU Hits Conditional Access Services Private Limited (India); and Citigroup Venture Capital International Ebene Limited (“CVCIEL”)

CVCIEL was incorporated under the laws of Mauritius as a private company limited by shares on March 24, 2006. The principal business activity of CVCIEL is to invest in the businesses of Indian and overseas companies. CVCIEL is promoted by CVCIGPML which holds the entire issued share capital of CVCIEL. The audited financial results of CVCIEL for the last three financial years are as follows:

Particulars As of 31 December

2008

(Rs. In million)

As of 31 December

2007

(Rs. In million)

As of 31 December

2006

(Rs. In million)

Equity Capital 1.24 0.99 1.10

Reserves (excluding revaluation reserves)

2,566.12 2,035.53 2275.43

Sales/Turnover 0.00 864.96 0.07

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Profit/(Loss) after Tax (1.45) 861.56 (0.28)

Earning per Share (INR) (58.11) 34,462.45 (11.02)

Net Asset Value per Share (INR)

102,694.57 81,460.72 91,061.16

For rate of conversion, refer to “Presentation of Financial Information and Use of Market Data – Currency of

Presentation” beginning on page x of this Draft Red Herring Prospectus

Particulars As of 31 December

2008

(USD in million)

As of 31 December

2007

(USD in million)

As of 31 December

2006

(USD in million)

Equity Capital 0.03 0.03 0.03

Reserves (excluding revaluation reserves)

51.61 51.62 51.57

Sales/Turnover 0.00 20.91 0.00

Profit/(Loss) after Tax (0.03) 20.83 (0.01)

Earning per Share (USD) 1.33 833.29 (0.24)

Net Asset Value per Share (USD)

2,065.55 2,065.70 2,063.94

Citigroup Venture Capital International Mauritius Limited (“CVCIML”) CVCIML was incorporated under the laws of Mauritius as a private company limited by shares on June 6, 2005. The principal business activity of CVCIML is to invest in the businesses of Indian and overseas companies. CVCIML is promoted by CVCIGPML which holds the entire issued share capital of CVCIML. The audited financial results of CVCIML for the last three financial years are as follows:

Particulars As of 31 December

2008

(Rs. In million)

As of 31 December

2007

(Rs. In million)

As of 31 December

2006

(Rs. In million)

Equity Capital 3.73 2.96 3.31

Reserves (excluding revaluation reserves)

3,159.48 3,792.14 3,576.81

Sales/Turnover 1,330.40 1,443.04 0.23

Profit/(Loss) after Tax 1,313.30 1,542.12 (5.89)

Earning per Share (INR) 17,510.71 20,561.57 (78.55)

Net Asset Value per Share (INR)

42,176.06 50,601.35 47,734.92

Particulars As of 31 December

2008

(USD in million)

As of 31 December

2007

(USD in million)

As of 31 December

2006

(USD in million)

Equity Capital 0.08 0.08 0.08

Reserves (excluding revaluation reserves)

63.55 96.16 81.07

Sales/Turnover 30.36 34.89 0.01

Profit/(Loss) after Tax 29.97 37.29 (0.13)

Earning per Share (USD) 399.66 497.17 (1.73)

Net Asset Value per Share (USD)

848.31 1,283.16 1,081.93

YOU Hits Conditional Access Services Private Limited (YHCAPL)

YHCAPL was originally incorporated as Iqara Hits Conditional Access Services Private Limited under the Companies Act pursuant to a certificate of incorporation dated July 16, 2003. Its name was subsequently changed to YOU Hits Conditional Access Services Private Limited pursuant to a fresh certificate of incorporation dated December 21, 2006. YHCAPL was incorporated with an object of doing

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the business of providing technology solutions for conditional access systems and subscriber management system, and buying, leasing, acquiring, installing and dealing in necessary software, hardware systems & equipments, set top boxes, rendering requisite technical services. YHCAPL has been promoted by YTML, which holds 9,990 equity shares of face value Rs.10 each therein aggregating to 99.99% of the total paid-up equity share capital of YTML.

The audited financial results of YHCAPL for the last three financial years are as follows:

Particulars As of 31 March

2009

(Rs. million)

As of 31 March

2008

(Rs. million)

As of 31 March

2007

(Rs. million)

Equity Capital 158.40 158.40 158.40

Reserves (excluding revaluation reserves)

(158.2) (157.87) 157.74

Sales/Turnover 0.19 0.19 0.09

Profit/(Loss) after Tax (0.32) (0.13) (2.44)

Earning per Share (INR) (32.56) (13.31) (243.97)

Net Asset Value per Share (INR)

20.00 53.00 66.00

None of the Group Companies has become a sick company under SICA and no winding up proceedings have been initiated against them. Further no application has been made, in respect of any of the Group Companies, to the Registrar of Companies for striking off their names. Additionally, none of our Group Companies have become defunct for which application would have to be made to RoC in the five years preceding the filing of this Draft Red Herring Prospectus. None of our Group Companies had a negative net worth in the last fiscal year. Other Confirmations The Group Companies have confirmed that they have not been declared as willful defaulters by the RBI or any other governmental authority and there are no violations of securities laws committed by them in the past and no proceedings pertaining to such penalties are pending against them. Additionally, none of the Promoters and relatives of our Promoters have been debarred or prohibited from accessing the capital markets for any reasons by the SEBI or any other authorities. None of the Promoter Group and persons in control of the Promoters (whether promoters are body corporates) or any companies in which the Promoters are or were associated as promoter, director or person in control have been debarred or prohibited from accessing the capital markets for any reasons by the SEBI or any other authorities. Litigation

For details relating to the legal proceeding involving the Promoters and the Group Companies, see “Outstanding Litigation and Material Developments” on page 161 of the Draft Red Herring Prospectus.

Common Pursuits

Our Group Company YHCAPL was incorporated with an object of doing the business of providing technology solutions for conditional access systems and subscriber management system, and buying, leasing, acquiring, installing and dealing in necessary software, hardware systems & equipments, set top boxes, rendering requisite technical services and hence YHCAPL may be deemed to have a pursuit common to our Company. Other than this, none of our Group Companies have common pursuits or are engaged in activities similar to the business of our Company Disassociations by our Promoters

Our Promoters have not disassociated themselves from any companies or firms promoted by them during preceding three years, from the date of filing this Draft Red Herring Prospectus.

126

Sales and Purchases between Companies in the Promoter Group

There have been no sales or purchase between companies in the Group companies where such sales or purchases exceed in value in the aggregate 10% of the total sales or purchases of our Company except as disclosed elsewhere in this Draft Red Herring Prospectus.

Payment of benefit to Promoter and Group Companies Except as stated above in “Interests of our Promoter” and “Financial Statements” beginning on page 129, there has been no payment of benefits to the Promoter and Group Companies during fiscal 2009, fiscal 2008 and the nine months period ended December 31, 2009. For further information on our Promoters and Group Companies, please refer to the section titled

“Risk Factors”beginning on page xiv of this Draft Red Herring Prospectus

127

RELATED PARTY TRANSACTIONS

For details of the related party transactions, see “Financial Statements” beginning on page 129 of this Draft Red Herring Prospectus.

128

DIVIDEND POLICY

The declaration and payment of dividends is recommended by the Board of Directors and approved by the shareholders of our Company at their discretion and will depend on a number of factors, including the results of operations, earnings, capital requirements and surplus, general financial conditions, contractual restrictions, applicable Indian legal restrictions and other factors considered relevant by the Board. The Board may also from time to time pay interim dividend. All dividend payments are made in cash to the shareholders of our Company. For details of dividends paid by the Company, see “Financial Statements” beginning on page 129 of this Draft Red Herring Prospectus.

129

SECTION V: FINANCIAL INFORMATION

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS OF YOU BROADBAND & CABLE INDIA LIMITED

Particulars Page No.

Restated Financial Information of YOU Broadband & Cable India Limited F-1

FINANCIAL STATEMENTS OF DIGITAL OUTSOURCING PRIVATE LIMITED

Particulars Page No.

Restated Standalone Financial Information of Digital Outsourcing Private Limited

F-49

Restated Consolidated Financial Information of Digital Outsourcing Private Limited

F-82

F - 1

RESTATED FINANCIAL INFORMATION OF YOU BROADBAND & CABLE INDIA LIMITED

The Board of Directors You Broadband & Cable India Limited (formerly You Telecom India Private Limited) Plot No 54, Marol Co-operative Industrial Estate, Makwana, Andheri (E), Mumbai – 400 059 India 22 March 2010 Dear Sirs

1 We have examined the attached financial information of You Broadband & Cable India Limited (formerly You Telecom India Private Limited) (‘ the Company’) as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 ('the Act') and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (‘SEBI Regulations’), and in terms of our engagement agreed upon with you in accordance with our engagement letter dated 17 March 2010 in connection with the proposed issue of equity shares of the Company.

2 This information have been extracted by the Management from the financial statements for the years ended 31 March 2005, 31 March 2006, 31 March 2007, 31 March 2008 and 31 March 2009 being the last date to which the accounts of the Company have been made up and audited for presentation to the members of the Company. Audit for the financial years ended 31 March 2005 and 31 March 2006 were carried out by previous auditors, Price Waterhouse and accordingly reliance has been placed on the financial statements audited by them for the respective years. The financial report included for these years, i.e. 31 March 2005 and 31 March 2006 are based solely on the reports submitted by them.

3 We have also examined the attached financial information of the Company for the period 1 April 2009 to 30 September 2009 prepared and approved by the Board of Directors and audited by us for the purpose of disclosure in the Draft Red Herring Prospectus being issued by the Company in connection with the proposed issue of equity shares of the Company.

The financial information for the above period was examined to the extent practicable, for the purpose of audit of financial information in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered Accountants of India. Those Standards require that we plan and perform our audit to obtain reasonable assurance, whether the financial information under examination is free of material misstatement.

Based on the above, we report that in our opinion and according to the information and explanations given to us, we have found the same to be correct and the same have been accordingly used in the financial information appropriately.

4 In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI Regulations, the (Revised) Guidance Note on Reports in Company Prospectuses issued by The Institute of Chartered Accountants of India and terms of our engagement agreed with you, we further report that:

(a) The Restated Summary Statement of Assets and Liabilities of the Company as at 31 March 2005, 31 March 2006, 31 March 2007, 31 March 2008, 31 March 2009 and 30 September 2009, examined by us, as set out in Annexure I to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Notes to the summary statement of assets and liabilities, summary statement of profit and losses and cash flow statement, as restated (Refer Annexure IV).

(b) The Restated Summary Statement of Profit or Losses and the Restated Statement of Cash Flow of the Company, for the years/ periods ended 31 March 2005, 31 March 2006, 31 March

F - 2

2007, 31 March 2008, 31 March 2009 and 30 September 2009 (together with Restated Summary Statement of Assets and Liabilities ‘Restated Summary Statements’), examined by us, as set out in Annexures II and III respectively to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Notes to the summary statement of assets and liabilities, summary statement of profit and losses and cash flow statement, as restated (Refer Annexure IV).

5 Without qualifying our opinion and as further elaborated in Note 3(vii) appearing in Annexure IV, we draw attention to the fact that for the purpose of these Restated Summary Statements, due to practical difficulties in retrospective application of Accounting Standard (“AS”) 15 (revised) – Employee Benefits, the Company has adopted the revised AS 15 on Employee Benefits as prescribed by the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards effective 1 April 2007. Accordingly, the impact of the revised AS 15 has not been considered as an adjustment item for the purpose of the restatement of all the other periods presented. As reported in the audited financial statements of the Company as at and for the year ended 31 March 2008, the impact of adoption of the revised AS 15 by the Company on 1 April 2007 is Rs 1.37 million on the accumulated balance of employee benefits payable as on 31 March 2007.

6 Without qualifying our opinion and as further elaborated in Note 3(viii) appearing in Annexure IV, we draw attention to the fact that during the year ended 31 March 2007, Iqara Telecoms India Private Limited has been merged with the Company with effect from 1 April 2006. During the years ended 31 March 2008 and 31 March 2009, certain liabilities of earlier years of Iqara Telecoms India Private Limited were written back which relate to period prior to merger. For the purpose of these Restated Summary Statements, the said liabilities have not been adjusted in the respective years as Iqara Telecoms India Private Limited was not a part of the Company’s operation in those years.

7 Based on the above and also as per the reliance placed on the audit reports submitted by the previous auditors, Price Waterhouse for the respective years, we are of the opinion that the restated financial information have been made after incorporating:

i. adjustments for the changes in accounting policies retrospectively in respective financial years/periods to reflect the same accounting treatment as per changed accounting policy for all the reporting periods except to the extent stated in paragraph 5 and 6 above;

ii. adjustments for the material amounts in the respective financial years/ periods to which they relate;

iii. and there are no extra-ordinary items that need to be disclosed separately in the accounts and qualifications requiring adjustments.

8 We have also examined the following other financial information set out in the Annexures prepared by the management and approved by the Board of Directors relating to the Company for the years/ periods ended 31 March 2005, 31 March 2006, 31 March 2007, 31 March 2008, 31 March 2009 and 30 September 2009. In respect of the years ended 31 March 2005 and 2006 these information have been included based on the audit reports submitted by previous auditors Price Waterhouse and relied upon by us.

i) Statement of accounting ratios, as appearing in Annexure V

ii) Statement of capitalization as at 30 September 2009, as appearing in Annexure VI

iii) Statement of dividend paid, as appearing in Annexure VII

iv) Statement of income from operation as appearing in Annexure VIII

v) Statement of other income as appearing in Annexure IX

vi) Statement of operating expenses as appearing in Annexure X

vii) Statement of secured loans as appearing in Annexure XI

F - 3

viii) Statement of unsecured loans as appearing in Annexure XII

ix) Statement of investments as appearing in Annexure XIII

x) Statement of sundry debtors, as appearing in Annexure XIV

xi) Statement of loans and advances, as appearing in Annexure XV

xii) Statement of current liabilities and provision as appearing in Annexure XVI

xiii) Statement of reserves & surplus as appearing in Annexure XVII

xiv) Statement of contingent liabilities as appearing in Annexure XVIII

xv) Statement of related party transactions as appearing in Annexure XIX

xvii) Statement of tax shelter as appearing in Annexure XX

9 The report should not in any way be construed as a reissuance or redating of any of the previous audit reports.

10 In our opinion the financial information contained in Annexure I to XX of this report read along with the Notes to the summary statement of assets and liabilities, summary statement of profit and losses and cash flow statement, as restated (Refer Annexure IV) prepared after making adjustments and regrouping as considered appropriate and read with paragraphs 5 and 6 above, have been prepared in accordance with Part IIB of Schedule II of the Act and the SEBI Regulations.

11 Our report is intended solely for use of the management and for inclusion in the offer document in connection with the proposed issue of equity shares of the Company. Our report and should not be used for any other purpose except with our consent in writing.

For B S R & Associates Chartered Accountants Bhavesh Dhupelia Partner Membership No: 042070 Mumbai

F - 4

Annexure I: Summary statement of assets and liabilities, as restated

(Rs in millions) PARTICULARS 30-Sep-09 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 A FIXED ASSETS Gross block 2,768.18 2,722.82 2,464.97 2,188.00 452.27 392.36

Less : Accumulated depreciation and amortisation 1,342.88 1,205.56 942.84 690.18 68.96 41.52

Net block 1,425.30 1,517.26 1,522.13 1,497.82 383.31 350.84 Capital work-in-progress 153.48 159.81 303.88 141.02 87.86 142.80 1,578.78 1,677.07 1,826.01 1,638.84 471.17 493.64 B INVESTMENTS 192.23 192.23 187.74 - - - 192.23 192.23 187.74 - - -

C CURRENT ASSETS, LOANS AND ADVANCES

Inventories 2.80 3.28 10.45 2.32 - - Sundry debtors 77.73 72.64 74.26 36.48 83.54 44.43 Cash and bank balances 300.35 91.93 246.08 584.97 1.16 17.85 Loans and advances 810.24 771.63 577.25 337.49 199.50 216.03 1,191.12 939.48 908.04 961.26 284.20 278.31 D LIABILITIES AND PROVISIONS Secured loans 58.48 76.90 102.35 - - - Unsecured loans 242.30 - - 223.70 11.23 11.23 Current liabilities 392.80 384.93 372.62 259.35 11.58 18.91 Provisions 21.19 19.10 16.97 8.70 - - 714.77 480.93 491.94 491.75 22.81 30.14 E NET WORTH 2,247.36 2,327.85 2,429.85 2,108.35 732.56 741.81 Represented by : Share capital 2,308.61 2,308.61 3,894.97 825.45 102.35 102.35 Share application money - - - 2,573.29 720.00 700.00 Equity share – warrants* 0.00 0.00 0.00 - - - Reserves and surplus 33.34 22.87 215.17 22.39 - - Profit and loss account (debit balance) (94.59) (3.63) (1,680.29) (1,312.78) (89.79) (60.54) NET WORTH 2,247.36 2,327.85 2,429.85 2,108.35 732.56 741.81 * Less than Rs. 10,000

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 5

Annexure II : Summary statement of profits and losses, as restated (Rs in millions)

PARTICULARS 30-Sep-09 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 INCOME Revenue 356.16 738.69 680.98 444.15 41.86 30.56 Other income 20.31 53.04 25.30 40.10 0.32 0.86 376.47 791.73 706.28 484.25 42.18 31.42 EXPENDITURE Network operation expenses 79.95 184.83 197.93 133.48 15.62 5.78 Advertisement and sales promotions expenses 16.40 34.29 102.74 33.48 - - Personnel cost 83.79 176.84 194.07 179.71 - 14.49 Other expenditure 138.67 247.55 315.42 181.71 28.37 19.69 318.81 643.51 810.16 528.38 43.99 39.96 Restated profit / (loss) before depreciation and amortisation, miscellaneous expenditure and interest and finance charges 57.66 148.22 (103.88) (44.13) (1.81) (8.54) Depreciation and amortisation 138.33 269.45 256.53 216.98 27.44 22.59 Miscellaneous expenditure written off - - - 1.67 - - Interest and finance charges 10.29 13.02 2.89 1.02 - 0.10 148.62 282.47 259.42 219.67 27.44 22.69 Restated (loss ) before exceptional item and tax (90.96) (134.25) (363.30) (263.80) (29.25) (31.23) Less: Exceptional Item [Refer Note 4 (XI) to Annexure IV] - 22.87 - - - - Restated (loss ) before tax (90.96) (157.12) (363.30) (263.80) (29.25) (31.23) Less: Fringe benefit tax - (2.37) (2.84) (2.67) - - Less: Deferred tax [Refer Note 4 (x) to Annexure IV] - - - - - - Restated (loss) for the period / year (90.96) (159.49) (366.14) (266.47) (29.25) (31.23) Profit/(Loss) in profit and loss account brought forward (3.63) (1,680.29) (1,312.78) (89.79) (60.54) (29.31) Loss brought forward of Merged Company - - - (956.52) - - Add: transitional liability in respect of employees benefit - - 1.37 - - - Less: Adjustment on account of capital reduction - (1,836.15) - - - - Restated (Loss)/Profit in profit and loss carried forward (94.59) (3.63) (1,680.29) (1,312.78) (89.79) (60.54)

Basic & diluted earnings per equity share of Rs. 10 each (in Rs.)

(0.39) (0.41) (2.24) (3.43) (2.86) (3.05)

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 6

Annexure III : Summary statement of cash flow, as restated (Rs in millions) 30-Sep-09 31-Mar-09 31-Mar-08 31-Mar-07 31-Mar-06 31-Mar-05 Cash flows from operating activities Net (loss) before tax, as restated (90.96) (157.12) (363.30) (263.80) (29.25) (31.23) Adjustments for: Depreciation and amortization 138.33 269.45 256.53 216.98 27.44 22.59 Miscellaneous expenditure written off - - 1.67 - (0.00) Pre-Operative expenses written off - - - 0.85 - Loss on sale of fixed assets 0.21 6.25 5.08 1.89 - - Interest income (18.34) (34.49) (17.66) (38.21) (0.32) (0.86) Unrealised foreign exchange gain on loan (net) (1.41) - - - - - Excess liability written back - 14.34 6.11 - - - Interest expense 8.39 9.83 - - - - Employees welfare scheme cost 10.47 32.50 27.87 22.39 - - Operating cash flows before working capital changes 46.69 140.76 (85.37) (59.08) (1.28) (9.50) (Increase)/ decrease in sundry debtors (5.09) 1.62 (37.78) 23.38 (39.10) (30.56) Decrease/ (increase) in inventories 0.48 7.17 (8.13) (1.48) - - (Increase)/ decrease in loans & advances (26.28) (192.84) (245.39) (229.87) 16.58 (185.00) (Decrease)/ increase in current liabilities and provisions (10.34) 0.51 114.27 35.95 (7.33) (35.61) Cash flows generated from / (used in) operating activities 5.46 (42.78) (262.40) (231.10) (31.13) (260.67) Direct taxes refund / (paid) 0.48 (4.15) (3.54) (2.51) (0.06) (0.15) Net cash flows from operating activities 5.94 (46.93) (265.94) (233.61) (31.19) (260.82) Cash flows from investing activities Purchase of fixed assets (38.06) (160.05) (275.80) (153.03) (5.83) (70.69) Assets taken over on business purchase - - (75.40) - - - Proceeds from sale of fixed assets 0.22 1.30 0.66 4.27 - - Interest received 5.53 34.73 23.78 31.01 0.33 0.90 Purchase of investment in units of mutual funds - - - (61.00) - - Proceeds from sale of units of mutual funds - - - 76.28 - - Investments made in equity shares (Associates) - (4.49) (187.74) - - - Net cash (used) in investing activities (32.31) (128.51) (514.50) (102.47) (5.50) (69.79) Cash flows from financing activities Proceeds from issuance of equity share capital - 25.00 436.79 2,256.10 - - Proceeds from receipt of share application money - - - (1,526.81) 20.00 320.00 Repayment of unsecured loan - - - (45.10) - - Issue of debenture - - - 223.70 - - Proceeds from term loan 243.70 12.57 4.76 - - - Repayment of term loan (1.34) (6.95) - - - - Interest on term loan / lease interest paid (7.57) (9.33) - - - - Net cash generated from financing activities 234.79 21.29 441.55 907.89 20.00 320.00 Net increase/ (decrease) in cash and cash equivalents 208.42 (154.15) (338.89) 571.81 (16.69) (10.61) Cash and cash equivalents at beginning of period/ year 91.93 246.08 584.97 13.16 17.85 28.46 Cash and cash equivalents at end of period/ year 300.35 91.93 246.08 584.97 1.16 17.85 Cash and cash equivalents includes deposits pledged with banks as margin money for guarantees / letter of credits issued by bank on behalf of the Company. 61.33 66.15 56.38 26.31 0.61 0.58 * Includes cash and cash equivalents of the merged company - - - 12.00 - - Notes : 1. Cash and cash equivalents consist of Cash on hand, Bank balances in current account and deposit account and Cheques in hand. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 7

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP

1 Background

You Broadband & Cable India Limited (‘YBCIL’ or ‘the Company’) (formerly You Telecom India Private Limited) was incorporated on 13 November 2000 as NetShastr Facilities India Private Limited for carrying on the business of providing infrastructure support to licensed telecommunications service providers, cable operators, Internet Service Providers by providing dark fibre, fixed links, duct space, towers, poles and pits.

The Company changed its name to BG Broadband Networks India Private Limited vide fresh certificate of incorporation dated 29 June 2001. Thereafter, the name of the Company was changed from BG Broadband Networks India Private Limited to You Broadband Networks India Private Limited vide a fresh certificate of incorporation dated 21 December 2006.

The Honorable High Court of Mumbai had approved the scheme of amalgamation of erstwhile You Telecom India Private Limited (“Merged Company”) with You Broadband Networks India Private Limited on 11 April 2007 pursuant to Sections 391 to 394 and other applicable provisions of the Companies Act, 1956 with effect from the appointed date of 1 April 2006. Pursuant to the amalgamation, the name of You Broadband Networks India Private Limited has been changed to You Telecom India Private Limited w.e.f. 23 November 2007.

The Company has changed its name to You Broadband & Cable India Private Limited vide fresh certificate of incorporation dated 17 November 2009. Thereafter, name of the Company changed from You Broadband & Cable India Private Limited to YOU Broadband & Cable India Limited vide a fresh certificate of incorporation dated 12 January 2010.

During the fiscal year ended 31 March 2007, the control of the Company has changed from BG Asia Pacific Holdings Pte Limited, Singapore (“BGAPHPL”) to Citigroup Venture Capital International Growth Partnership Mauritius Limited (“CVCIGPML”).

The restated financial statements of the Company have been prepared specifically for inclusion in the Draft Red Herring Prospectus (“Prospectus”) to be filed by the Company with the Securities and Exchange Board of India (“SEBI”) in connection with its proposed Initial Public Offering. The restated financial statements consist of the restated summary statement of assets and liabilities of the Company as at 31 March 2005, 2006, 2007, 2008, 2009 and 30 September 2009, the related restated summary statement of profits and losses for the years ended 31 March 2005, 2006, 2007, 2008, 2009 and for the six months period ended 30 September 2009 and the related restated summary statement of cash flows for each of the years ended 31 March 2005, 2006, 2007, 2008, 2009 and for the six months period ended 30 September 2009 (these restated financial statements hereinafter are collectively referred to as “Restated Summary Statements”).

The Restated Summary Statements have been prepared to comply in all material respects with the requirements of Paragraph B, Part II Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (“the SEBI Regulations”) notified by SEBI on August 26, 2009, as amended from time to time. The Act and the SEBI Regulations require the information in respect of the assets and liabilities and profits and losses of the Company for each of the six years/ period immediately preceding the issue of the Prospectus.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

2. Significant accounting policies

2.1 Basis of preparation of financial statement

The accompanying financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by the Securities and Exchange Board of India (‘SEBI’) and Generally Accepted Accounting Principles (‘GAAP’) in India, under the historical cost convention with the exception of certain fixed assets, which are stated at fair value, on the accrual basis of accounting. GAAP comprises mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards (‘NACAS’) and relevant provisions of Companies Act, 1956, to the extent applicable.

2.2 Use of estimate

The preparation of financial statements in conformity with generally accepted accounting principles (‘GAAP’) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of financial statements. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any revision to accounting estimate is recognised prospectively in current and future periods.

2.3 Fixed assets

a. Fixed assets are carried at cost, except for fixed assets, which are acquired under business purchase and are accounted at fair value, less accumulated depreciation / amortisation and impairment adjustment, if any. Cost includes freight, duties and other incidental expenses relating to acquisition or construction. Borrowing costs directly attributable to acquisition or construction of those fixed assets, which necessarily take a substantial period of time to get ready for their intended use, are capitalised.

b. Expenditure incurred during the period of construction including all directly attributable expenses, related and incidental to construction are carried forward as capital work in progress and on completion, the costs are allocated to the respective fixed assets. Fixed assets under construction, advance paid towards acquisition of fixed assets and cost of assets not ready for intended use as at the end of year are disclosed as capital work-in-progress.

c. Capital inventory represents items of capital nature lying in the stores valued at cost on first-in-first-out method.

d. Goodwill is recognised as a difference between the purchase consideration and the value of the net assets acquired on the acquisition of a business.

e. Intangible assets in the nature of Indefeasible Rights of Use (IRU’s) dark fiber circuits are recorded as fixed assets.

F - 9

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

2. Significant accounting policies (Continued)

2.4 Depreciation

a. Tangible assets

Depreciation on tangible fixed assets is provided on Straight Line Method (‘SLM’) at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Fixed assets individually costing up to Rs. 5,000 are depreciated at 100% over a period of one year.

The following assets are depreciated on straight-line basis over their estimated useful life: Optical fibre cable 15 Years Leasehold improvements Lower of 10 years or term of lease Equipments at customers premises 3-5 years

b. Intangible assets

Goodwill

Goodwill, which has a limited useful economic life, is amortised over a period of 3 to 5 years on a straight-line basis from the year of acquisition.

Trademark

Consideration paid for acquisition of trademark is amortised over a period of 3 years.

Indefeasible right of use

Indefeasible right of use (IRU’s) of dark fiber circuits is recorded as an intangible asset and is amortised over the contracted period of use of 10 years. Intangible assets are stated at cost less accumulated amortization.

2.5 Impairment

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.6 Inventory

Inventory comprising of internet protocol and other devices are valued at lower of cost and net realizable value. In determining the cost, first-in first-out method is used. The comparison of cost and net realisable value is made on an item-by-item basis.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

2. Significant accounting policies (Continued)

2.7 Foreign exchange transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year / period are recognized in the profit and loss account.

Monetary assets and liabilities in foreign currency, which are outstanding as at the year / period end are translated at the year / period-end at the closing exchange rate and the resultant exchange differences are recognized in the profit and loss account.

2.8 Revenue recognition

a. Internet access / internet telephony fee

Revenue (excluding indirect taxes, if any) is recognized based on actual usage by the subscriber. Revenue relating to unutilized time/mega bytes is recognized in the month in which the pack life expires. Revenue on sale of starter pack is recognized as income on activation. Installation charges are recognized as revenue on completion of installation. With respect to contracted customers, revenue is recognized on provision of the services ratably over the term of service in accordance with the terms of the contract.

b. Modem rentals

Modem rent (excluding indirect taxes, if any) is recognized over the period of usage of modem by the subscriber. One time modem rent is recognized as revenue on installation of modem and the same is included in revenue from broadband internet services.

c. Sale of modems, internet protocol & other devices

Revenue from sale of goods (excluding indirect taxes, if any) is recognised on transfer of all significant risks and rewards of ownership to the buyer.

d. Assets given on operating lease

Lease rentals (excluding indirect taxes, if any) for assets given on lease under operating lease arrangements are recognised on straight-line basis over the term of the lease.

e. Interest income

Interest income is recognised on a time proportion basis.

F - 11

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

2. Significant accounting policies (Continued)

2.9 Employee retirement benefits

a. Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized in the profit and loss account during the year.

b. Post-employment benefits

(i) Defined Contribution Plans:

The Company’s provident fund scheme and employee state insurance scheme are defined contribution plans.

The Company’s contribution paid/payable under the schemes is recognised as expense in the profit and loss account during the period in which the employee renders the related service. The Company makes specified monthly contributions towards employee provident fund.

(ii) Defined Benefit Plans:

The Company’s gratuity scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are based on the market yields on Government securities as at the balance sheet date.

Actuarial gains and losses are recognised immediately in the profit and loss account.

(iii) Other Long-term employment benefits:

Company’s liabilities towards compensated absences to employees are determined on the basis of valuations as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the profit and loss account.

F - 12

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

2. Significant accounting policies (Continued)

2.10 Assets taken on operating leases

Lease arrangements, where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease payments under operating lease are recognised as an expense in the profit and loss account on straight-line basis.

2.11 Assets taken on finance leases

Finance leases which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as assets taken on lease. Lease payments are apportioned between the finance charges and reduction of the lease liability. Finance charges are recognised as an expense in the profit and loss account.

2.12 Taxation

Income tax expense comprises of current tax expense and deferred tax expense or credit computed in accordance with the relevant provisions of the Income Tax Act 1961. Provision for current taxes is recognised under the taxes payable method based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Indian Income-tax Act, 1961.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements of the Company. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment rate. Deferred tax assets in respect of carry forward losses are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. Other deferred tax assets are recognised only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

For the six months period ended 30 September 2009, provision for taxes and deferred taxes have been determined based on effective tax rate applicable for the full year estimated financial statements for the year ending 31 March 2010 as required under Accounting Standard-25 Interim Financial Reporting.

Provision for Fringe Benefits Tax is made on the basis of the applicable rates on the taxable value of eligible expenses of the Company as prescribed under the Income-tax Act, 1961.

On August 18, 2009, an amendment was made to the Indian Income Tax Act, with retroactive effect from April 1, 2009, abolishing the provisions of FBT.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

2. Significant accounting policies (Continued)

2.13 Earnings per share

The basic earnings per share is computed by dividing the net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

2.14 Investments

Long-term investments are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of investments disposed off.

2.15 Borrowing costs

Borrowing costs directly attributable to the acquisition / construction of qualifying assets are capitalised as part of the cost of those assets. Other borrowing costs are recognised as an expense in the year/period in which they are incurred.

2.16 Provisions and contingent liabilities

The Company recognises a provision when there is a present obligation as a result of a past (or obligating) event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

2.18 Employee stock based compensation

The Company applies the Guidance Note on “Accounting for Employee Share based Payments” issued by the Institute of Chartered Accountants of India (‘ICAI’) to account for costs related to stock options granted under the You Telecom Employee Stock Option Scheme – 2006. The Company determines the compensation cost based on intrinsic value method. Accordingly, compensation expense as determined on the date of the grant is amortised on a straight line basis over the vesting period.

F - 14

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

3. Impact of material adjustments

Summary of results of restatements made in the audited financial statements of the Company for the respective periods / years and their impact on the profit / losses is as under:

Impact on Profit/ Losses

(Rs. in millions)

Particulars 30 September 2009

31 March 2009

31 March 2008

31 March 2007

31 March 2006

31 March 2005

Prior to 1 April

2004

Net (loss) as per audited Profit and Loss account

(109.30) (186.11) (327.11) (254.67) (27.62) (44.29) (29.31)

a. Exchange difference on foreign currency liability (refer note i) - Exchange Gain - - - 0.57 - - -- Depreciation 0.06 0.12 0.08 0.01 - - -

b. Miscellaneous expenditure (refer note ii) - - - 0.32 0.29 0.63 (1.24) c. Prior period (expenses)/income (refer note v)

- Advertisement and sales promotion expenses - - (2.00) - - - -

- Other expenditure - (0.12) (10.65) (0.04) - - -- Personnel cost - - (24.51) (22.39) - - -- Restatement impact (3.77) 59.71 - - - - -

- Depreciation - 1.92 1.85 - - - - d. Depreciation (charge)/ written

back (refer note iii) (0.92) (1.92) (1.85) (1.92) (1.92) 12.43 10.39 e. Excess liability written back (refer note iv)

- Network operation expenses - - 1.19 6.84 - - -- Other income - (10.41) (9.71) 0.76 - - -- Advertisement and sales

promotion expenses - - - 0.02 - - -- Other expenditure - - 0.20 0.95 - - -- Personnel cost - - 6.19 3.00 - - -- Depreciation 0.10 0.19 0.18 0.08 - - -

f. Exceptional item (refer note 4 XI)

- Personnel cost 22.87 (22.87) - - - - - Net (loss) as per restated Profit and Loss account

(90.96) (159.49) (366.14) (266.47) (29.25) (31.23) (20.16)

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

3. Impact of material adjustments (Continued) Impact on Assets and Liabilities

(Rs. in millions) Particulars 30 September

200931 March

200931 March

200831 March

2007 31 March

200631 March

2005 i. Fixed Assets As per Audited Financial Statement 2,768.57 2,723.21 2,473.09 2,188.24 452.27 392.36 - Gross Block Foreign exchange gain on liability related to acquisition of fixed assets. 0.57 0.57 0.57 0.57 - - Write back of unspent liabilities (0.96) (0.96) (0.96) (0.81) - - Prior period adjustment - - (7.73) - - - As per Restated Financial Statement 2,768.18 2,722.82 2,464.97 2,188.00 452.27 392.36 ii. Accumulated Depreciation As per Audited Financial Statement 1,358.00 1,225.21 965.41 709.26 89.86 64.34 Restatement Impact (15.12) (19.65) (22.57) (19.08) (20.90) (22.82) As per Restated Financial Statement 1,342.88 1,205.56 942.84 690.18 68.96 41.52 iii. Current liabilities As per Audited Financial Statement 392.80 384.93 374.87 271.66 11.58 18.91 Write back of unspent liabilities - - (10.41) (12.36) - - Prior period adjustment - - 8.22 0.05 - - Reclassification - - (0.06) - - - As per Restated Financial Statement 392.80 384.93 372.62 259.35 11.58 18.91 iv. Provisions As per Audited Financial Statement 21.19 19.10 16.91 8.70 - - Reclassification - - 0.06 - - - As per Restated Financial Statement 21.19 19.10 16.97 8.70 - - v. Miscellaneous expenditure (to the extent not written off) As per Audited Financial Statement - - - - 0.33 0.61 Preliminary and deferred revenue expenses to be written off in the year of incurrence - - - - (0.33) (0.61) As per Restated Financial Statement - - - - - - vi. Reserve and Surplus (Capital Reserve) As per Audited Financial Statement 33.34 231.55 168.27 - - - Prior period adjustment – employee stock based compensation - - 46.90 22.39 - - Exceptional item -– employee stock based compensation (refer note 4 XI) - 22.87 - - - - Capital Reduction - (231.55) - - - - As per Restated Financial Statement 33.34 22.87 215.17 22.39 - - vi. Share Capital As per Audited Financial Statement 2,308.61 3,913.21 3,894.97 825.45 102.35 102.35 Capital Reduction - (1,604.60) - - - - As per Restated Financial Statement 2,308.61 2,308.61 3,894.97 825.45 102.35 102.35 vi. Profit and Loss Account ( Debit Balance)

As per Audited Financial Statement (109.30) (1,836.15)

(1,650.04) (1,321.56) (110.37) (82.75) Capital Reduction - 1,836.15 - - - - Restatement impact of Profit and Loss Items for the year 18.34 26.62 (39.03) (11.80) (1.63) 13.06 Restatement impact of Profit and Loss Items – brought forward (3.63) (30.25) 8.78 20.58 22.21 9.15

As per Restated Financial Statement (94.59) (3.63)

(1,680.29) (1,312.78) (89.79) (60.54)

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

3. Impact of material adjustments (Continued)

Notes on Adjustments to Restated Summary Statements

Change in accounting policy and estimate

i. Exchange difference on foreign currency liability

Prior to 1 April 2007, the Company had capitalized exchange difference on foreign currency liability incurred for acquisition of fixed assets. As per the Accounting Standard 11- The Effects of Changes in Foreign Exchange Rates (revised 2003) w.e.f. 1 April 2007, exchange differences relating to acquisition of imported fixed assets, which were hitherto adjusted in the carrying amount of the related fixed assets upto year ended 31 March 2007, is required to be charged to profit and loss account from 1 April 2007. For the purpose of restatement, exchange differences capitalised prior to 1 April 2007 have been charged to profit and loss account and accordingly depreciation of fixed assets has been recomputed.

ii. Miscellaneous expenditure

Prior to year ended 31 March 2007, the Company had adopted the policy to amortise miscellaneous expenditure on a pro-rata basis over a period of 5 years. During the year ended 31 March 2007, the Company had changed its accounting policy and charged the entire unamortised balance of miscellaneous expenditure to the profit and loss account. For the purpose of restatement, such expenditure has been charged off to the respective years in which such expenditure was incurred.

iii. Change in useful life of plant and machinery

During the year ended 31 March 2006, the Company had reviewed the useful life of plant and machinery and revised the same from 9 years to 15 years. The effect of change in estimated useful life of plant and machinery had been accounted prospectively during the year ended 31 March 2006. For the purpose of restatement, the effect of change in estimate has been accounted retrospectively and has been adjusted to the respective years.

iv. Excess liability written back

During the years ended 31 March 2008 and 2009, the Company had written back unspent liabilities pertaining to earlier years. For the purpose of restatement, such amounts of unspent liabilities have been adjusted to the respective years in which these liabilities were incurred.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

3. Impact of material adjustments (Continued)

Prior period adjustments

v. Prior period expenses/ income:

During the period ended 30 September 2009 and year ended 31 March 2009, certain items have been disclosed as prior period items. For the purpose of restatement, such prior period items have been appropriately adjusted in respective years in which such expenditure was incurred.

Regroupings

vi. Figures have been regrouped for consistency of presentation.

Non-adjustments

vii Retirement benefits The Company has adopted revised AS 15 - Employee Benefits effective 1 April 2007. It has not been possible for the management to determine the effect on the losses for the years ended 31 March 2005 and 31 March 2006, had the revised standard been adopted by the Company for each of those years. Accordingly, no adjustment has been made for earlier years, since in the opinion of the Company, the impact of the same on the restated financial statements is not material.

viiii Unspent liabilities written back During the year ended 31 March 2007, Iqara Telecoms India Private Limited has been merged with the Company with effect from 1 April 2006. During the years ended 31 March 2008 and 31 March 2009, certain liabilities of earlier years of Iqara Telecoms India Private Limited were written back which relate to period prior to merger. For the purpose of this statement, the said liabilities have not been adjusted in the respective years, as Iqara Telecoms India Private Limited was not a part of the Company’s operation in those years.

4. Significant developments and other significant financial information

I Accounting for business purchase

On 3 April 2007, the Board of Directors of the Company has approved the acquisition of the “business of providing internet services and cable broadband, internet telephony, leased lines, enterprise solution and dial up services in the cities of Ahmedabad, Vadodara and Rajkot” (‘the Business’) of ICENET.Net Limited (‘ICENET’) by way of Circular Resolution. The Company has entered into a Business Transfer agreement (‘the agreement’) with ICENET, effective 5 April 2007, whereby the Company and the ICENET have agreed to transfer, as a slump sale on a going concern basis, all of the ICENET’s rights, title and interest in and to the transferred business, free and clear of all encumbrances for the net purchase consideration of Rs 66.18 million.

F - 18

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4 Significant developments and other significant financial information (Continued)

I Accounting for business purchase (Continued)

The Company has recorded the assets taken over at their fair values as determined by the Company's management based on the commercial and technical evaluation by an independent valuer. The details of the assets acquired pursuant to the said business transfer and the resultant capital reserve is ascertained as below:

(Rs. in millions)

Particulars Fixed assets taken over Plant and Machinery Computers Office Equipments Furniture, Fixtures & Fittings Total assets taken over Less: Sundry creditors taken over Net assets acquired (A) Net purchase consideration for the acquisition (B) Capital reserve arising out of the acquisition (A) – (B)

66.64 3.66 1.82 3.93

76.05

9.22 66.83 66.18 0.65

II Scheme of Amalgamation

During the year ended 31 March 2007, the Scheme of Amalgamation (‘the Scheme’) of erstwhile You Telecom India Private Limited (“the Merged Company”) (formerly known as Iqara Telecom India Private Limited) with the Company was sanctioned by the Hon’ble High Court of judicature at Bombay on 11 April 2007. The Company has filed the certified copy of the Order by the Hon’ble High Court of judicature at Bombay with the Registrar of Companies on 24 May 2007.

In accordance with the scheme all the assets and liabilities of the Merged Company were transferred to and vested in the Company with effect from 1 April 2006 (‘The Appointed Date’) and recorded by the Company at their book value. Further the debit balance in the profit and loss account of the Merged Company was added to the debit balance in the profit and loss account of the Company.

Equity shareholders of Merged Company were to be allotted equity shares of the Company, at par in the proportion of one equity share of Rs 10 each credited as fully paid up, for one equity share of Rs 10 each held in the Merged company. Accordingly 95,010,000 equity shares of Rs 10 each fully paid up of the Company were been issued in lieu of 95,010,000 equity shares of Rs 10 each fully paid up of the Merged Company.

Preference Shareholders of the Merged Company were allotted 0.000001% non-cumulative redeemable preference shares of the Company, at par in the proportion of one 0.000001% Non-cumulative redeemable preference share of Rs 10 each credited as fully paid up, for one 0.000001% Non-cumulative redeemable preference share of Rs 10 each held in the Merged Company. Accordingly 95,000,002 0.000001% Non-cumulative redeemable preference shares of Rs 10 each fully paid up of the Company were issued in lieu of 95,000,002 0.000001% Non-cumulative redeemable preference shares of Rs 10 each fully paid up of the Merged Company.

F - 19

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

II Scheme of Amalgamation (Continued)

Pending allotment of the above equity and preference shares to the shareholders of the Merged Company consequent to the scheme of amalgamation, the amount has been included in “Share Capital Pending Allotment” as at 31 March 2007.

The Company had made an application to Department of Telecommunications (“DoT”) for transferring the Internet Service Provider (“ISP”) license from the Merged Company to the Company. Management represents that since the Scheme of amalgamation has been approved by the Honorable High Court of Mumbai, it is reasonably certain that the consent permitting the transfer or assignment of the said license shall be granted.

III Capital reduction

On 30 September 2009, the members of the Company approved a proposal to write off accumulated losses of the Company as at 31 March 2009 against subscribed and paid up share capital, securities premium account and capital reserve as at 31 March 2009. The capital reduction proposal had been approved by the members in accordance with the provisions of Section 78, Section 100 to Section 103 of the Companies Act, 1956 and petition for the same had been filed with Honorable High Court, Bombay for necessary approvals.

The Company has received approval from Honorable High Court, Bombay for reduction of the issued, subscribed and paid up share capital of the Company being Rs. 3,913,220,040 (divided into 391,322,004 equity shares of Rs. 10 each) to Rs. 2,308,611,910 (divided into 230,861,191 equity shares of Rs. 10 each), securities premium account and capital reserve be hereby reduced to Nil from Rs. 171,017,920 and to Nil from Rs. 60,528,942, respectively.

IV Share capital

a. Equity Share capital

i. Equity share capital includes 112.10 million equity shares of Rs. 10 each, which have been allotted as fully paid up, for consideration other than in cash.

ii. During the year ended 31 March 2008, 95 million equity shares have been allotted in lieu and equal number of 0.000001% non-cumulative redeemable preference shares of Rs 10/- each which were allotted pursuant to scheme of amalgamation. Based on the capital reduction scheme approved by the Honorable High Court, Bombay, these equity shares have accordingly been reduced.

b. Preference Share capital

During the year ended 31 March 2007, 95 million 0.000001% non-cumulative redeemable preference shares of Rs 10/- each were allotted as fully paid up pursuant to scheme of amalgamation without payment being received in cash.

F - 20

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

V Capital work-in-progress

Capital work-in-progress as on 30 September 2009, includes –

a. capital advances aggregating Rs 6.39 million

b. expenditure incidental to construction of assets aggregating Rs. 7.06 million

c. capital inventory aggregating Rs 40.48 million

d. assets taken on finance lease aggregating Rs.8.40 million

VI Commitments

a. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances):

(Rs. in millions)

Particulars 30 September

2009 31 March

200931 March

200831 March

200731 March

2006 31 March

2005 Capital commitments

18.95

8.55

10.81

13.89

1.31

-

b. Lease commitments

i. Assets taken on operating leases

The Company’s significant leasing arrangements are in respect of operating lease taken for offices etc. These are cancelable operating lease agreements that are renewable on a periodic basis at the option of both lessee and lessor. The initial tenure of the lease generally is 3 to 5 years. The details of assets taken on operating lease during the period / year area as under:

(Rs. in millions)

Particulars 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Lease rentals recognized during the period / year 23.69 44.93 51.35 42.71 13.26 -

F - 21

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

i. Assets taken on operating leases

(Rs. in millions) Future lease rental obligation payable (under non-cancelable lease)

30 September 2009

31 March 2009

31 March 2008

31 March 2007

31 March 2006

31 March 2005

(i) not later than one year 3.50 3.15 3.83 2.67

Not available -

(ii) later than one year and not later than five years - - - - - -

(iii) later than five years - - - - - - 3.50 3.15 3.83 2.67 - -

ii. Assets taken on finance leases

Headend, router, modem and other devices have been obtained during the period/ year on finance lease. The legal title to assets acquired under the finance leases vests in the lessors. The total minimum lease payments as at year end, element of interest included in such payments, and present value of minimum lease payments are as follows:

(Rs. in millions)

Particulars 30 September

2009 31 March

200931 March

2008 31 March

2007 31 March

2006 31 March

2005 (a) Total minimum lease

payments 63.43 73.04 114.43 - - - (b) Future interest included in

(a) above 13.99 7.44 16.84 - - - (c) Present value of minimum

lease payments [(a) – (b)] 49.44 65.60 97.59 - - -

The maturity profile of finance lease obligation is as follows: (Rs. in millions)

Period

Minimum lease

payments

Presentvalue

Minimum lease

payments

Present Value

Minimum lease

payments

Present value

30 September

2009 30 September

200931 March

2009 31 March

2009 31 March

2008 31 March

2008 (i) Payable within 1 year 27.96 19.11 54.62 47.99 48.28 37.73(ii) Payable between 1-5 years 35.47 30.33 18.42 17.61 66.15 59.86 (iii) Payable later than 5 years - - - - - - 63.43 49.44 73.04 65.60 114.43 97.59

Finance lease is secured by the underlying assets.

F - 22

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

VII Right of use of optical fiber cable

The Company has given right of use of its optical fiber cable infrastructure to certain parties. The term has been mutually determined by the parties between 10 to 15 years with an option to extend it further. The agreement may be terminated by either party by giving a written notice of a specified period. The income on account of the same is disclosed as lease rental of dark fiber cables network.

VIII Assets given on Operating Leases

The Company has given on lease, certain assets by way of an operating lease. Total lease income for the period is Rs 32.29 million (March 2009: Rs 61.17 million, March 2008: Rs. 2.95 million, March 2007: Rs. 2.65 million, March 2006: Rs. 41.86 million, March 2005: Rs. 30.56 million). The initial tenure of the lease generally is 3 to 5 years. Details of leased assets are given below:

(Rs. in millions)

Particulars 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Gross value of assets 119.71 119.50 - - - -Accumulated depreciation

20.67 11.27 - - - -

Net value of assets 99.04 108.23 - - - - Depreciation for the period / year

9.40 11.27 - - - -

The above details are excluding fiber given on lease, as details for the same are not separately available.

The maturity profile of operating lease rental receivable is as follows:

(Rs. in millions)

Particulars 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Future lease rental receivable

Not later than one year 72.59 69.44 - - 0.27 0.27 Later than one year but not more than five years

194.45 214.59 - - 0.07 0.34

More than five years - - - - - -

F - 23

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

IX Contingent Liabilities

(Rs. in millions)

As at 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Claims against company not acknowledged as debt, including claim from project contractors i. Claim from Suppliers

/ Consultants - - 1.30 1.30 1.30 1.30 ii. Revenue Share

liability 22.23 18.67 9.03 2.54 iii. Other Claims 1,009.93 1,009.93 1,009.93 1,009.93 1,000.00 1,000.00

Description of Contingent Liabilities:

• The Company had engaged one OFC contractor viz Gypsum Structural Private Limited to lay underground ducts in the city of Vadodara. The work done was not satisfactory and the Company had to face issues with the Municipal Corporation of Vadodara, due to the negligence of the contractor. The contractor filed a civil suit against the company in Delhi for Rs. 1.30 million claiming charges as under :

Balance amount to be paid as per contract: Rs. 0.46 million

Loss of profit, mental torture and interest etc : Rs. 0.84 million

The management is of the view, based on legal advice, that the company had good grounds of defence, as the contractor was negligent in carrying out the contractual obligation and hence no provision for this has been established.

• Telecom Disputes Settlement and Appellate Tribunal (“TDSAT”), New Delhi, in its judgment dated 30 August 2007 on Petition No 7 of 2003, has decided that certain items of revenue nature should be excluded from the definition of Adjusted Gross Revenue (‘AGR’) for the purpose of computation of revenue share payable under various licenses to carry out the licensed telecom services. The judgment has been given on the grounds that such items, though revenue in nature, do not represent or arise from licensed activity i.e. specified telecom service.

F - 24

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

IX Contingent Liabilities (Continued)

The Company is subject to revenue share on its internet telephony services governed by ISP license effective 1 January 2006 for which Company has not considered Interest on fixed deposits, foreign exchange gain, excess liability written back, hardware sale, sale of scrap and other miscellaneous income aggregating to Rs 370.44 million in the computation of AGR and payment of its liability of revenue share, relying upon above judgment of TDSAT.

However, the TDSAT judgment has been challenged in the Supreme Court. There is a contingent liability of Rs 22.23 million as at 30 September 2009, being 6% of the above amount, which depends upon further proceeding on this judgment of TDSAT by various interested parties.

• The Company had contracted with IOL Broadband Limited on 14 January 2004 to take on lease 50 kilometers of dark fibre for consideration of Rs 0.11 million per pair of dark fibre per km per annum, fixed on the basis of Company’s requirement at that point of time and had paid Rs 4.36 million calculated as under:

- 100% of 29.262 kilometers for one year - 50% of 20.738 kilometers for one year

However, due to severe resistance from local cable operators and events beyond the control of the Company, the Company could not use any part of the lease fibre from inception of the lease agreement and consequently terminated the same by exercising force majeure clause w.e.f. 6 June 2006. Claims against the company not acknowledged as debts being IOL amounting to Rs. 9.93 million. Management considers the claim as not tenable against the Company and therefore, no provision for this contingency has been established.

• Mahanagar Gas Limited (MGL) had issued a notice dated 24 February 2003 to the Company and sought compensation damages of Rs. 1,000 million allegedly due to negligence of the Company with respect to fire accident in the gas pipeline of MGL.

In reply to the said notice, the Company in its communication refuted the claim of MGL and denied that there were any willful or gross lapses. Further the Company is of the opinion that Company will not have any liability on account of the above claim as the same will be indemnified by BG Asia Pacific Holdings Pte Limited, Singapore (“BGAPHPL”) (erstwhile promoter of the Company) vide the share purchase agreement between BGAPHPL and CVCIGPML (current promoters of the Company). Management considers the demand as not tenable against the Company and therefore, no provision for this contingency has been established.

F - 25

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

X Deferred Taxation

The Company has recognised deferred tax asset, which is on account of unabsorbed depreciation only to the extent of the deferred tax liabilities on account of excess depreciation allowable under the Income Tax Act, 1961, over depreciation provided in books of account, as this amount is considered to be virtually certain of realisation, accordingly deferred tax (net) as at and for the period ended 30 September 2009 is Rs Nil (March 2009 : Nil; March 2008 : Nil; March 2007 : Nil; March 2006: Nil; March 2005 : Nil).

XI Employee stock based compensation

The Company had a stock based compensation scheme called the You Telecom Employee Stock Option Scheme – 2006 (“the plan”) whereby 33,864,368 equity shares of the Company were transferred from its shareholder You Telecom Mauritius Limited to the You Employees Welfare Trust to issue equity shares to eligible employees. Employees covered by the plan are granted an option, which is based on service criteria, to purchase shares of the Company subject to the requirements of vesting. This plan did not involve any fresh issue of equity shares on exercise since the equity shares were to be awarded to the employees only from the shares held in trust by the You Employee Welfare Trust.

Based on the orders dated 18 December 2009 and 28 January 2010, received from the Honorable High Court, Bombay, the issued, subscribed and paid up share capital of the Company has been reduced from Rs 3,913,220,040 as at 31 March 2009 (divided into 391,322,004 equity shares of Rs. 10 each) to Rs. 2,308,611,910 (divided into 230,861,191 equity shares of Rs. 10 each). Accordingly, the shares held by the You Employees Welfare Trust for the plan were reduced from 33,864,368 equity shares to 19,969,493 equity shares w.e.f from 31 March 2009. Refer note 4 III.

The reduction in equity shares has been accounted for as a modification in the options granted in the existing share-based compensation plan. Accordingly, the difference in the fair value of the unvested outstanding options immediately before the modification and after the modification will be recognized as incremental share-based compensation over the remaining vesting period. For the options vested and outstanding as on the date of modification, such incremental cost has been recognized immediately on the date of modification. The incremental cost pursuant to the modification has been shown as Exception item in the profit and loss account.

The Company applies the Guidance Note on “Accounting for Employee Share based Payments” issued by the Institute of Chartered Accountants of India (‘ICAI’) to account for costs related to the stock options. Accordingly, compensation expense as determined on the date of the grant is amortised over the vesting period. The Company follows intrinsic value method to calculate the value of the grants.

F - 26

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

XI Employee stock based compensation (Continued)

The Company had four similar share-based payment arrangements, which are described below:

Type of Arrangement F.Y. 2006-07 F.Y. 2007-08 F.Y. 2008-09 Date of grant Shares arising out of options prior to capital reduction Shares arising out of options after capital reduction Contractual life Vesting Conditions

9 June 2006 13,545,747 7,991,340 Five years 50% vesting each year

9 June 2007 6,080,000 3,586,908 Five years 50% vesting each year

1 March 2009 5,855,000 3,454,169 Three years One third vesting each year

Further details of the option grants activity under the plans are as follows:

June 2006 grant 30 September 2009 31 March 2009 31 March 2008 31 March 2007 Number of

options Weighted

average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price Outstanding at start of period

13,545,747 Rs. 2.50 13,545,747 Rs. 2.50 13,545,747 Rs. 2.50 Nil Rs. 2.50

Adjustment for Capital Reduction

5,554,407 Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50

Revised outstanding at start of period

7,991,340 Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50

Granted Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 13,545,747 Rs. 2.50 Forfeited Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Exercised Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Outstanding at end of period

7,991,340 Rs. 2.50 13,545,747 Rs. 2.50 13,545,747 Rs. 2.50 13,545,747 Rs. 2.50

Exercisable at end of period

7,991,340 Rs. 2.50 13,545,747 Rs. 2.50 6,722,874 Rs. 2.50 Nil Rs. 2.50

F - 27

4. Significant developments and other significant financial information (Continued)

XI Employee stock based compensation (Continued)

June 2007 grant 30 September 2009 31 March 2009 31 March 2008 31 March 2007 Number of

options Weighted

average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price Outstanding at start of period

6,080,000 Rs. 2.50 6,080,000 Rs. 2.50 Nil Rs. 2.50 Nil Nil

Adjustment for Capital Reduction

2,493,092 Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50

Revised outstanding at start of period

3,586,908 Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50

Granted Nil Rs. 2.50 Nil Rs. 2.50 6,080,000 Rs. 2.50 Nil Nil Forfeited Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Nil Exercised Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Nil Outstanding at end of period

3,586,908 Rs. 2.50 6,080,000 Rs. 2.50 6,080,000 Rs. 2.50 Nil Nil

Exercisable at end of period

3,586,908 Rs. 2.50 6,080,000 Rs. 2.50 Nil Rs. 2.50 Nil Nil

March 2009 grant 31 September 2009 31 March 2009 31 March 2008 31 March 2007 Number of

options Weighted

average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price Outstanding at start of period

5,855,000 Rs. 2.50 Nil Rs. 2.50 Nil Nil Nil Nil

Adjustment for Capital Reduction

2,400,831 Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50

Revised outstanding at start of period

3,454,169 Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50

Granted Nil Rs. 2.50 5,855,000 Rs. 2.50 Nil Nil Nil Nil Forfeited Nil Rs. 2.50 Nil Rs. 2.50 Nil Nil Nil Nil Exercised Nil Rs. 2.50 Nil Rs. 2.50 Nil Nil Nil Nil Outstanding at end of period

3,454,169 Rs. 2.50 5,855,000 Rs. 2.50 Nil Nil Nil Nil

Exercisable at end of period

1,151,390 Rs. 2.50 1,951,667 Rs. 2.50 Nil Nil Nil Nil

F - 28

4. Significant developments and other significant financial information (Continued)

XI Employee stock based compensation (Continued)

As per the option agreement dated 4 December 2007, You Telecom (Mauritius) Limited (“You Mauritius”) has granted an option to the director of the Company to purchase 300,000 equity shares at an exercise price of Rs. 2.50 per share. Further, in terms of the Option Agreement, such options shall be exercisable by the Option Holder at any time before: (i) 2 years from the date of the Option Agreement, or (ii) within 13 months from the date of the listing of our Company’s Equity Shares pursuant to an initial public offering. Further details of the option grant activity is as follows:

December 2007 grant 30 September 2009 31 March 2009 31 March 2008 31 March 2007 Number of

options Weighted

average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price

Number of Options

Weighted average exercise

price Outstanding at start of period

300,000 Rs. 2.50 300,000 Rs. 2.50 Nil Rs. 2.50 Nil Nil

Granted Nil Rs. 2.50 Nil Rs. 2.50 300,000 Rs. 2.50 Nil Nil Forfeited Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Nil Exercised Nil Rs. 2.50 Nil Rs. 2.50 Nil Rs. 2.50 Nil Nil Outstanding at end of period

300,000 Rs. 2.50 300,000 Rs. 2.50 300,000 Rs. 2.50 Nil Nil

Exercisable at end of period

300,000 Rs. 2.50 300,000 Rs. 2.50 Nil Rs. 2.50 Nil Nil

The Company used the intrinsic value method of accounting for its employee stock based compensation costs. Accordingly the Company has adopted the pro-forma disclosure provisions as required by the Guidance Note on "Accounting for Employee Share-based payments" issued by the ICAI. Had the compensation cost been determined in a manner consistent with the fair value approach described in aforesaid Guidance Note, Company’s net loss and earning per share as reported would have been adjusted to the pro-forma amounts indicated below: (Rs in millions)

30 September 2009

31 March 2009

31 March 2008

31 March 2007

31 March 2006

31 March 2005

Restated Loss for the period after taxation as reported

(90.96) (159.49) (366.14) (266.47) (29.25) (31.23)

Add: Employee stock based compensation determined under the intrinsic value method

10.47 32.49 27.87 22.39 Nil Nil

Less Employee stock based compensation determined under the fair value method

(13.49) (49.18) (34.17) (28.33) Nil Nil

Pro-forma loss (93.98) (176.18) (372.44) (272.41) (29.25) (31.23) Reported earnings per equity share of Rs. 10 each

Basic / Diluted (0.39) (0.41) (2.24) (3.43) (2.86) (3.05) Pro-forma earnings per equity share of Rs10 each

Basic / Diluted (0.41) (0.45) (2.28) (3.51) (2.86) (3.05)

F - 29

4. Significant developments and other significant financial information (Continued)

XI Employee stock based compensation (Continued) The estimated fair value of each stock option granted in the June 2006 option plan is Rs 3.45. This was calculated by applying Black - Scholes valuation model. The model inputs were the share price at grant date of Rs. 5.23, exercise price of Rs. 2.50, expected volatility of 0 percent (as the Company is unlisted and there are no comparable similar listed enterprises), no expected dividends, average life of 4.5 years, and a risk-free interest rate of 7.5 per cent. The estimated fair value of each stock option granted in the June 2007 option plan is Rs 3.93. This was calculated by applying Black - Scholes valuation model. The model inputs were the share price at grant date of Rs. 5.67, exercise price of Rs. 2.50, expected volatility of 0 percent (as the Company is unlisted and there are no comparable similar listed enterprises), no expected dividends, average life of 4.5 years, and a risk-free interest rate of 8.0 per cent. The estimated fair value of each stock option granted in the December 2007 option plan is Rs. 11.56. This was calculated by applying Black - Scholes valuation model. The model inputs were the share price at grant date of Rs. 13.70, exercise price of Rs. 2.50, expected volatility of 0 percent (as the Company is unlisted and there are no comparable similar listed enterprises), no expected dividends, average life of 2 years, and a risk-free interest rate of 7.83 per cent. The estimated fair value of each stock option granted in the March 2009 option plan is Rs. 4.69. This was calculated by applying Black - Scholes valuation model. The model inputs were the share price at grant date of Rs. 6.48, exercise price of Rs. 2.50, expected volatility of 0 percent (as the Company is unlisted and there are no comparable similar listed enterprises), no expected dividends, average life of 4.5 years, and a risk-free interest rate of 7.50 per cent.

XII Share Warrants

The Company had entered into a Warrant Subscription Agreement dated 15 January 2008 with Mr. Girish Rangan granting him 450,000 warrants. Each warrant entitles Mr. Girish Rangan to purchase, at any time: (i) within thirty five months from the date of issuance, i.e. 15 January 2008 or (ii) before the submission of a Draft Red herring prospectus with Security and Exchange Board of India, whichever is earlier, one equity share having a face value of Rs. 10/- each of the Company at a price of Rs.14 per equity share. The Company has received an aggregate amount of Rs.10 from Mr. Rangan as subscription money for the warrants issued to him. Subsequently, on 19 March 2010, the Board of Directors of the Company has approved cancellation of the warrant subscription agreement

F - 30

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

XIII Dues to micro, small and medium scale enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED') which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the management, there are no outstanding dues to the Micro and Small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

XIV Segment Reporting

The Company has only one reportable business segment, which is carrying on the business as Internet Service Provider including application service provider, other related value added services provider and has only one reportable geographical segment i.e. domestic market. Accordingly, the segment information as required by the Accounting Standard 17 on Segment Reporting has not been separately disclosed.

XV Disclosure in respect of Joint Venture

The Company jointly owns 50% share in You Snapper Wireless India Private Limited (incorporated in India), which is a jointly controlled entity.

The aggregate amounts of assets, liabilities, income and expenditure to the extent of the interest of the Company in the above jointly controlled entity is given here under:

(Rs in million)

Sr. no Particulars 30 September 2009

31 March 2009

31 March 2008

1 Assets 22.48 22.62 0.21 2 Liabilities 22.48 22.62 0.21 3 Income 0.55 0.69 - 4 Expenditure 0.55 4.43 - 5 Contingent liability - - - 6 Capital commitment - - -

The Company did not have any joint venture prior to March 2008.

XVI Appointment of a whole-time company secretary

The financial statements for the year ended 31 March 2009 and 31 March 2008 have not been authenticated by a company secretary as required by the provisions of Section 215 of the Companies Act, 1956, as the Company was in the process of appointing a whole-time company secretary, as required by the provisions of Section 383A of the Companies Act, 1956. Subsequently on 29 December 2009, the Company has appointed whole time secretary.

XVII The financial statements upto year ended 31 March 2006 have been audited by a firm of Chartered Accountants other than B S R & Associates.

F - 31

Annexure V: Statement of accounting ratios

Six months

period ended Year ended Year ended Year ended Year ended Year ended

Particulars 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005

Restated profit / (loss) for the period / year (90.96) (159.49) (366.14) (266.47) (29.25) (31.23) Net Worth (Rs in millions) 2,247.36 2,327.85 2,429.85 2,108.35 732.56 741.81 Basic Earning per share (Rs.) (0.39) (0.41) (2.24) (3.43) (2.86) (3.05) Diluted Earning per share (Rs.) (0.39) (0.41) (2.24) (3.43) (2.86) (3.05) Return on net worth (%) -4.05% -6.85% -15.07% -12.64% -3.99% -4.21% Net asset value per share (Rs.) 9.73 10.08 6.24 25.54 71.57 72.47 Actual number of shares outstanding at period/year end (in millions) (Refer note 4 (III) to Annexure IV) 230.86 230.86 389.50 82.55 10.24 10.24 Weighted average number of equity shares outstanding used for: -Basic Earning per share (in millions) 230.86 389.70 163.31 77.72 10.24 10.24 -Diluted Earning per share (in millions) 230.86 389.70 163.31 77.72 10.24 10.24

Notes: 1. The ratios have been computed as under: Basic Earnings per share (Rs.) = Net profit after tax, as restated, attributable to equity shareholders Weighted average number of equity shares outstanding during the period/year Diluted Earnings per share (Rs.) = Net profit after tax as restated, attributable to equity share holders

Weighted average number of dilutive Equity Shares outstanding during the period/year

Return on Net Worth (%) = Net profit after tax, as restated

Net worth as restated, at the end of the year / period Net Asset Value per equity Share (Rs.) = Net worth, as restated, at the end of the year / period Number of equity shares outstanding at the end of the year / period 2. Net Worth represents Equity Share Capital & Reserves and Surplus less profit and loss account (debit balance).

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 32

Annexure VI: Statement of capitalization (Rs in millions)

As at Adjusted for Particulars 30 September 2009 Post Issue

Short term debt 21.24 [*] Long term debt (A) 279.54 [*] Total Debt (B) 300.78 [*] Shareholders' funds - Share Capital (Refer note 4 (III) to Annexure IV) 2,308.61 [*] - Share Warrants** 0.00 [*] - Reserves & Surplus 33.34 [*] - Profit & loss account (debit balance) (94.59) [*] Total Shareholders' funds ( C ) 2,247.36 [*] Total capitalization (B+C) 2,548.14 [*] Long term debt / equity ratio (A/C) 0.12:1 [*] ** Less than Rs. 10,000 Notes: 1. Short term debts represents amount repayable within one year from 30 September 2009 2. The figures disclosed above are based on the restated summary statement of assets and liabilities of the Company as at 30 September 2009 3. The corresponding post issue figures are not determinable at this stage pending the completion of Book building process and hence have not been furnished. 4. The Warrant Subscription Agreement was subsequently cancelled by the Company along with the outstanding warrants in its meeting of the Board of Directors held on 19th March 2010. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 33

Annexure VII: Statement of dividend paid

(Rs in millions)

Six months

period ended Year ended Year ended Year ended Year ended Year ended

Particulars 30 September

2009 31 March 2009 31 March 2008 31 March 2007 31 March 2006 31 March 2005 Number of Equity Shares at the end of period/ year (Refer note 4 (III) to Annexure IV)

230.86 230.86 389.50 82.55 10.24 10.24

Rate of Dividend Nil Nil Nil Nil Nil Nil Interim Dividend (%) Nil Nil Nil Nil Nil Nil Final Dividend (%) Nil Nil Nil Nil Nil Nil Amount of Dividend on Equity Shares Nil Nil Nil Nil Nil Nil Tax Paid on Dividend Nil Nil Nil Nil Nil Nil The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 34

Annexure VIII: Statement of Income from Operations

(Rs in millions)

Particulars Six months

period ended Year ended

Year ended

Year ended

Year ended

Year ended

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Revenue from Services Broadband internet 289.77 627.19 585.71 434.23 - - Internet telephony 3.26 10.76 16.23 3.27 - - Dial-up internet - - - 0.02 - - Lease rental of optic fibre & equipments 32.29 61.17 2.95 2.65 41.86 30.56 325.32 699.12 604.89 440.17 41.86 30.56 Revenue from sale of modems, internet protocol and other devices

30.84 39.57 76.09 3.98 - -

Total 356.16 738.69 680.98 444.15 41.86 30.56 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 35

Annexure IX: Statement of Other Income (Rs in millions)

Six months

period ended Year ended

Year ended

Year ended

Year ended

Year ended

Particulars Nature 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Other income: Interest income on fixed deposits & loan Recurring 18.34 34.49 17.66 38.21 0.32 0.86 Excess Liability Written Back Recurring - 14.34 6.11 - - -

Miscellaneous income Non-

recurring 1.97 4.21 1.53 1.89 - - Total 20.31 53.04 25.30 40.10 0.32 0.86 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 36

Annexure X: Statement of Operating Expenses (Rs in millions)

Particulars Six months

period ended Year ended

Year ended

Year ended

Year ended

Year ended

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Bandwidth charges 40.02 110.83 102.14 68.06 - - Lease rent – network 6.30 4.08 10.84 10.11 10.46 5.62 Call termination cost 1.83 8.07 13.05 2.47 - - Right of use expenses 4.65 2.14 3.03 2.07 - - Node rent 4.40 8.18 7.37 6.66 - - Repairs and maintenance - plant and machinery 22.55 51.23 60.88 43.38 5.16 0.16 Domain registration fees 0.20 0.30 0.62 0.73 - - Total 79.95 184.83 197.93 133.48 15.62 5.78 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 37

Annexure XI: Statement of Secured Loans (Rs in millions)Particulars As at As at As at As at As at As at

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Term loan from body corporate* 9.04 10.38 4.76 - - - (Secured by hypothecation of movable assets as specified in the deed of hypothecation between the Company and the Lendor) Finance lease obligations** 49.44 66.52 97.59 - - - (Secured by underlying assets) Total 58.48 76.90 102.35 - - - *Amount repayable within one year 2.13 4.69 1.54 - - - **Amount repayable within one year 19.11 47.99 37.73 - - - ** Includes interest accrued and due - 0.92 - - - - Note: 1. Loan and finance lease are secured against movable assets purchased for video business. 2. Loan and lease obligation re-payments are re-scheduled from 36 months to 54 months during the period ended 30th September 2009. 3. Interest rate for loan and finance lease as per revised schedules is payable at 20.78% The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 38

Annexure XII: Details of Unsecured Loans (Rs in millions)

As at As at As at As at As at As at

Particulars 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005

YOU Telecom (Mauritius) Limited (Note 1) 242.30 - - - - - One 0% Convertible debenture ( Note 2) - - - 223.70 - - Payable to Group Company - Iqara Telecoms India Private Limited ( Repayable within one year) - - - - 11.23 11.23 Total 242.30 - - 223.70 11.23 11.23 Note 1 : - YOU Telecom (Mauritius) Limited- holding company has granted loan to be used for general corporate purposes. - Interest accrues at a rate of 6 months LIBOR + 300 basis point per annum payable on last date of every quarter in each year commencing from 30th November 2010. - Principal amount advanced under the loan shall be fully repayable in 4 annual installments commencing from August, 2010, in accordance with the schedules. Note 2 : As per the terms, debentures are convertible within 7 days from the date of filing of a copy of the order approving the merger of the Company with the Merged Company, with the Registrar of Companies, Maharashtra. Further these debentures are convertible into equity shares of 18,072,400 in such a manner that the subscriber to the debentures shall hold 5% of the equity share capital of the Company post merger. Subsequent to the balance sheet date, the Company has received the order approving the merger from the Honorable High Court of Mumbai, which was filed by the Company with the RoC on 24 May 2007. This debenture was subsequently converted into 18,072,400 equity shares. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 39

Annexure XIII: Statement of Investments (Rs in millions)Particulars As at As at As at As at As at As at

30 September

2009

31 March 2009

31 March 2008

31 March 2007

31 March 2006

31 March 2005

Long-term Unquoted trade Investment in 1,177,725 (March 2009 : 1,177,725, March 2008 : 1,177,625, March 2007 :Nil, March 2006 :Nil, March 2005 :Nil ) equity shares of Digital Outsourcing Private Limited of Rs. 10 each fully paid-up

187.74 187.74 187.74 - - -

5,000 (March 2009 : 5,000, March 2008 : Nil, March 2007 :Nil, March 2006 :Nil, March 2005 :Nil ) equity shares of You Snapper Wireless India Private Limited of Rs. 10 each fully paid-up

0.05 0.05 - - - -

Share application money pending allotment in

You Snapper Wireless India Private Limited 4.44 4.44 - - - - Total 192.23 192.23 187.74 - - - The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 40

Annexure XIV: Statement of Sundry Debtors (Rs in millions)Particulars As at As at As at As at As at As at

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005

(Unsecured) Debts outstanding for a period exceeding six months Considered good 30.58 25.67 15.41 0.37 62.12 26.66 Considered doubtful 51.68 41.88 19.12 8.14 0.47 - Provision for doubtful debts (51.68) (41.88) (19.12) (8.14) (0.47) - Other debts Considered good 47.15 46.97 58.85 36.11 21.42 17.77 Considered doubtful 6.20 4.73 6.19 - - - Provision for doubtful debts (6.20) (4.73) (6.19) - - - Total 77.73 72.64 74.26 36.48 83.54 44.43 Debtors include debts due from Companies under the same management - - - - 83.54 44.23 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 41

Annexure XV: Statement of Loans & Advances

(Rs in millions) As at As at As at As at As at As at

Particulars

30 September

2009

31 March 2009

31 March 2008

31 March 2007

31 March 2006

31 March 2005

Unsecured Advances recoverable in cash or in kind or for value to be received 204.70 204.51 271.34 286.68 1.37 5.18 Unbilled revenue 0.32 0.65 - - - - Recoverable from group companies Considered good 556.26 508.08 233.81 - 190.88 197.98 Considered doubtful 22.82 - - - - - Provision for doubtful advances

(22.82) - - - - -

Deposits with government authorities and others 37.26 38.19 41.84 31.30 6.90 12.57 Tax deducted at source 5.29 5.78 4.00 3.52 0.33 0.27 Accrued interest 0.57 0.91 1.15 7.27 0.02 0.03 Balance with excise authorities 5.84 13.51 25.11 8.72 - - Total 810.24 771.63 577.25 337.49 199.50 216.03 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 42

Annexure XVI: Statement of Current Liabilities and Provisions

(Rs in millions)Particulars As at As at As at As at As at As at

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Current Liabilities Acceptances - 1.68 5.20 - - - Sundry Creditors 185.08 188.81 161.87 148.80 11.51 18.78 Book overdraft 29.75 34.14 50.87 8.61 - - Advances from subscribers 65.46 50.42 59.35 37.61 - - Deposits from subscribers and dealers 56.27 57.36 63.47 49.03 - - Interest accrued but not due 2.10 1.27 1.70 - - - Other current liabilities 54.14 51.25 30.16 15.30 0.07 0.13 Provisions Gratuity 7.00 6.22 5.21 3.26 - - Leave encashment 14.09 12.78 11.66 5.19 - - Fringe benefit tax 0.10 0.10 0.10 0.25 - - Total 413.99 404.03 389.59 268.05 11.58 18.91 Creditors include amounts due to Group companies 0.27 0.27 0.29 0.10 - - The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 43

Annexure XVII: Statement of Reserves & Surplus (Rs in millions)Particulars As at As at As at As at As at As at

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Capital Reserve At the commencement of the period / year 22.87 50.90 22.39 - - - Addition during the period / year - on account of business purchase - - 0.65 - - - - on account of employee stock options 10.47 32.50 27.86 22.39 - - Less: Adjustment on account of capital reduction (Refer note 4 (III) to Annexure IV) - (60.53) Total (A) 33.34 22.87 50.90 22.39 - - Securities Premium Account At the commencement of the period / year - 164.27 - - - - Addition during the period / year - 6.75 164.27 - - - Less: Adjustment on account of capital reduction (Refer note 4 (III) to Annexure IV) - (171.02) Total (B) - - 164.27 - - - Total (A + B) 33.34 22.87 215.17 22.39 - - The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 44

Annexure XVIII: Statement of Contingent Liabilities

(Rs in millions)Particulars As at As at As at As at As at As at

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Claims against the company not acknowledged as debt Revenue share on internet telephony services governed by ISP license relying on TDSAT judgement dated 30 August 2007 on Petition No 7 of 2003 22.23 18.67 9.03 2.53 - - Notice issued by Mahanagar Gas Limited (MGL) soughting compensation damages with respect to fire accident in the gas pipeline of MGL 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 Consideration of contractual obligation to take on lease dark fibre from IOL Broadband Ltd. consequently terminated by exercising force majeure clause 9.93 9.93 9.93 9.93 - - Obligation on account of contract to lay underground ducts disputed due to non-satisfactory work of Contractor - - 1.30 1.30 1.30 1.30 Total 1,032.16 1,028.60 1,020.26 1,013.76 1,001.30 1,001.30 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 45

Annexure XIX: List of Related Parties Relation

Six months period ended Year ended Year ended Year ended Year ended Year ended

30 September

2009 31 March 2009 31 March 2008 31 March 2007 31 March 2006 31 March 2005 Holding Company YOU Telecom

(Mauritius) Limited - Holding Company

YOU Telecom (Mauritius) Limited - Holding Company

YOU Telecom (Mauritius) Limited - Holding Company

YOU Telecom (Mauritius) Limited - Holding Company

BG India Telecom (Mauritius) Ltd. - Holding Company

BG India Telecom (Mauritius) Ltd. - Holding Company

--- --- --- Gujarat Gas Company Limited*

--- ---

--- --- --- BG E&P India Limited*

--- ---

--- --- --- British Gas India Private Limited*

British Gas India Private Limited

British Gas India Private Limited

--- --- --- BG India Energy Services Pvt Ltd*

--- ---

--- --- --- BG Energy Holding Limited*

BG Energy Holding Limited

BG Energy Holding Limited

--- --- --- BG Asia Pacific Holding Private Limited*

--- ---

Under Common control

--- --- --- BG Asia Pacific Holding Private Limited*

--- ---

Fellow Subsidiary YOU HITS Conditional Access Services Private Limited

YOU HITS Conditional Access Services Private Limited

YOU HITS Conditional Access Services Private Limited

YOU HITS Conditional Access Services Private Limited

Iqara Telecoms India Private

Limited

Iqara Telecoms India Private

Limited

Associate Digital Outsourcing Private Limited

Digital Outsourcing Private Limited

Digital Outsourcing Private Limited

--- --- ---

Digital Infotainment Private Limited

Digital Infotainment Private Limited

Digital Infotainment Private Limited

--- --- ---

SCOD 18 Networking Private Limited

SCOD 18 Networking Private Limited

SCOD 18 Networking Private Limited

--- --- ---

Digital Focus Entertainment Private Limited

Digital Focus Entertainment Private Limited

--- --- --- ---

Digital Neptune Teletainment Private Limited

Digital Neptune Teletainment Private Limited

--- --- --- ---

Digital Pluto Entertainment Private Limited

Digital Pluto Entertainment Private Limited

--- --- --- ---

Digital Earth Entertainment Private Limited

Digital Earth Entertainment Private Limited

--- --- --- ---

Enterprise over where key management personnel/employees exercise significant influence

--- --- You Snapper Wireless India Private Limited

--- --- ---

Joint Venture You Snapper Wireless India Private Limited

You Snapper Wireless India Private Limited

--- --- --- ---

EVS Chakravarthy –Director & Chief Executive Officer

EVS Chakravarthy –Director & Chief Executive Officer

EVS Chakravarthy –Director & Chief Executive Officer

EVS Chakravarthy –Whole Time Director

--- --- Key Management Personnel

Girish Kasturi Rangan – Director

Girish Kasturi Rangan – Director

Girish Kasturi Rangan – Director

--- --- ---

* Upto 9 June 2006 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 46

Annexure XIX: Statement of Related Party Transactions (Continued) (Rs in millions)

Particulars Six months

period ended Year ended

Year ended

Year ended

Year ended

Year ended

30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Services rendered Gujarat Gas Company Limited - - - 1.59 - - BG Asia Pacific Private Limited - - - 3.69 - - BG E&P India Limited - - - 0.12 - - BG India Energy Services Pvt Ltd - - - 0.48 - - Iqara Telecoms India Private Limited - - - - 39.31 30.36 Expenses recovered (including service tax) Digital Outsourcing Private Limited 8.48 29.53 65.90 - - - Digital Infotainment Private Limited 20.35 65.42 17.06 - - - SCOD18 Networking Private Limited 48.51 122.23 8.17 - - - You Snapper Wireless India Private Limited 0.61 27.95 0.26 - - - Digital BCN Entertainment Private Limited 0.26 0.69 - - - - Digital Neptune Teletainment Private Limited - 0.15 - - - - Digital Pluto Entertainment Private Limited 0.05 0.19 - - - - Digital Earth Entertainment Private Limited - 0.03 - - - - Expenses charged by (including service tax) Digital Outsourcing Private Limited 3.26 4.41 - - - - Digital Infotainment Private Limited - 0.75 - - - - Scod18 Networking Private Limited - 2.56 - - - - You Snapper Wireless India Private Limited 1.21 1.55 - - - - Iqara Telecoms India Private Limited - - - - 24.29 27.29 Loans and advances given (net) Digital Outsourcing Private Limited 5.96 0.56 142.41 - - - Digital Infotainment Private Limited (22.69) 4.80 0.01 - - - Scod18 Networking Private Limited (0.48) 5.85 - - - - You Snapper Wireless India Private Limited 0.84 1.01 - - - - Digital Pluto Entertainment Private Limited 0.01 0.01 - - - - Loan received (net) YOU Telecom (Mauritius) Limited 242.30 - - - - - Repayment of advances (net) Gujarat Gas Company Limited - - - 0.01 - - British Gas India Private Limited - - - 53.04 - - YOU Hits Conditional Access Services Private Limited 0.01 - 0.19 - - - Sale of fixed assets / CWIP Digital Outsourcing Private Limited 0.01 1.54 - - - - Digital Infotainment Private Limited 0.13 0.68 - - - - Scod18 Networking Private Limited - 0.44 - - - - Digital BCN Entertainment Private Limited 0.04 Digital Pluto Entertainment Private Limited - 0.01 - - - - Purchase of fixed assets / CWIP Digital Outsourcing Private Limited 0.01 0.04 - - - - Digital Infotainment Private Limited - 0.02 - - - - Scod18 Networking Private Limited - 0.04 - - - - Iqara Telecoms India Private Limited - - - - - 8.82

F - 47

Annexure XIX: Statement of Related Party Transactions (Continued) Particulars Six months

period ended Year

ended Year

ended Year

ended Year

ended Year

ended 30 September

2009 31 March

2009 31 March

2008 31 March

2007 31 March

2006 31 March

2005 Interest income Digital Outsourcing Private Limited 10.87 21.69 - - - - Digital Infotainment Private Limited 3.40 5.10 - - - - Interest expense YOU Telecom (Mauritius) Limited 0.83 - - - - - Issue of equity shares YOU Telecom (Mauritius) Limited - - 1,109.98 2,256.10 - - Remuneration EVS Chakravarthy 5.26 17.29 16.11 16.66 - - Girish Kasturi Rangan - - 3.36 - - - Issue of share warrants Girish Kasturi Rangan* - - 0.00 - - - Investments in equity shares Digital Outsourcing Private Limited* - 0.00 187.74 - - - You Snapper Wireless India Private Limited - 0.05 - - - - Share application money pending allotment in You Snapper Wireless India Private Limited - 4.44 - - - - Balance payable as at period / year end YOU Telecom (Mauritius) Limited 242.94 - - - - - YOU HITS Conditional Access Services Private Limited 0.27 0.27 0.29 0.10 - - British Gas India Private Limited - - - - 11.23 11.23 Balance receivable as at period / year end Digital Outsourcing Private Limited 279.23 257.18 208.32 - - - Digital Infotainment Private Limited 93.47 92.30 17.07 - - - You Snapper Wireless India Private Limited (Net of provision) - 23.39 0.26 - - - SCOD18 Networking Private Limited 182.12 134.09 8.17 - - - Digital BCN Entertainment Private Limited 0.99 0.73 - - - - Digital Neptune Teletainment Private Limited 0.15 0.15 - - - - Digital Pluto Entertainment Private Limited 0.26 0.21 - - - - Digital Earth Entertainment Private Limited 0.03 0.03 - - - - Iqara Telecoms India Private Limited - - - - 274.42 242.21 Share Application money received BG Energy Holding Limited 20.00 320.00 Share Application money outstanding BG Energy Holding Limited 720.00 700.00 * Represents amount ( in Rs.) 1,000 10 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

F - 48

Annexure XX: Statement of Tax Shelter For the year ended 31 March

(Rs in millions)Particulars 2009 2008 2007 2006 2005

Profit / (Loss) as per Profit and Loss Account (208.68) (327.12) (254.67) (306.96) (361.08) Income Tax Rates applicable 33.99% 33.99% 33.66% 33.66% 36.59% Tax at notional rates - - - - - Permanent Difference (A) Donations disallowed under the Income Tax Act - 0.00 0.00 - - Interest / Penalty on Income Tax / TDS 0.12 0.02 0.02 0.01 0.22 Fringe Benefit Tax 2.37 2.84 2.67 2.40 - Wealth Tax 0.02 0.02 0.05 0.07 0.09 Filing fees paid to ROC for increasing authorised share capital 0.03 3.23 15.77 - - Loss on disposal of assets debited to Profit & Loss a/c 6.25 0.60 1.89 1.95 0.61 Exchange loss on capital assets 1.41 - - - - Others - - - 0.01 - Total Permanent Difference (A) 10.20 6.71 20.40 4.44 0.92 Timing Difference (B) Differences between book depreciation and tax depreciation 53.47 50.44 17.98 (5.22) (178.63) Differences in tax and accounting treatment of Deferred Revenue expenditure

- - 2.00 1.75 1.83

Difference in tax and accounting treatment of Amalgamation expenses

(3.23) 10.63 1.82 - -

Sum not paid upto due date to the concerned authorities under section 36(1)(va)

- 0.05 0.64 0.69 -

Difference due to allowability / disallowability of Section 43B items - (7.34) 7.29 (0.03) 0.07 Amounts Inadmissible u/s 40(a) (ia) 0.04 (0.57) (3.52) (0.46) 4.55 Provision for Doubtful Debts, Advances and claims 20.52 17.18 2.20 3.85 1.72 Bonus (5.68) 2.03 3.26 1.27 1.17 Leave encashment 0.96 4.92 2.63 0.72 0.82 Provision for Gratuity disallowed u/s 40A(7) 1.00 2.28 0.80 0.51 1.26 Ex-gratia 3.14 - - - - Prior period expenses / (income) 61.05 - - - - Income from other sources considered separately (12.80) (17.66) (38.55) (1.34) (1.49) Total Timing Difference (B) 118.47 61.96 (3.45) 1.74 (168.70) Net Adjustments (A + B) 128.67 68.67 16.95 6.18 (167.78) Tax (Saving) / burden thereon 44.00 23.00 6.00 2.00 (61.00) Profits / (Losses) for the year taxable under the head Profit and Gains of Business or Profession

(80.01) (258.45) (237.72) (300.78) (528.86)

Income taxable under the head Capital Gains - - 0.34 - - Income taxable under the head Other sources 12.80 17.66 38.21 1.34 1.49 Profit / (losses) for the year before adjustment of brought forward losses

(67.21) (240.79) (199.17) (299.44) (527.37)

Brought forward losses adjusted - - - - - Net Taxable Income / (Loss) for the year (67.21) (240.79) (199.17) (299.44) (527.37) Less: Disallowance / Addition at the time of assessment - - (23.62) (116.75) (1.10) Assessed Loss (67.21) (240.79) (175.55) (182.69) (526.27) Total carried forward losses as per income tax returns (1,897.65) (1,830.44) (1,589.65) (1,390.48) (1091.04)

Note 1. The aforesaid Statement of Tax Shelters is not based on the Profits/ (Losses) as per the ‘Restated Unconsolidated Summary Statement of Assets and Liabilities’. It has been prepared based on audited accounts of the Company. 2. The permanent/timing differences have been computed considering the acknowledged copies of the income- tax returns filed by the Company for each of the respective years as stated above. 3. In view of tax loss incurred by the Company during each of the years considered in the tax shelters, the Company has not calculated tax under normal provision of the Act. Similarly, since the Company also has book losses as well as brought forward unabsorbed deprecation during years considered in the tax shelters, the Company is not liable to pay Minimum Alternate Tax (MAT) under Section 115JB(2) of the Act. 4. The total brought forward loss for the year ended 31 March 2009 is after effecting the disallowance made in the assessment order for the year ended 31 March 2007, 31 March 2006, 31 March 2005, 31 March 2004 and 31 March 2003.

F - 49

RESTATED STANDALONE FINANCIAL INFORMATION OF DIGITAL OUTSOURCING PRIVATE LIMITED

The Board of Directors Digital Outsourcing Private Limited Plot No 97, Marol Co-operative Industrial Estate, Makwana, Andheri (E), Mumbai – 400 059 India 23 March 2010 Dear Sirs

1 We have examined the attached financial information of Digital Outsourcing Private Limited (‘ the Company’) as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 ('the Act') and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (‘SEBI Regulations’), and in terms of our engagement agreed upon with you in accordance with our engagement letter dated 17 March 2010 in connection with the proposed issue of equity shares of an affiliate of the Company, You Broadband & Cable India Limited (formerly You Telecom India Private Limited).

2 This information have been prepared by the Management from the financial statements for the period ended 31 March 2008 and year ended 31 March 2009 being the last date to which the accounts of the Company have been made up and audited for presentation to the members of the Company.

3 We have also examined the attached financial information of the Company for the period 1 April 2009 to 30 September 2009 prepared and approved by the Board of Directors and audited by us for the purpose of disclosure in the Draft Red Herring Prospectus of an affiliate of the Company, You Broadband & Cable India Limited in connection with its proposed issue of equity shares.

The financial information for the above period was examined to the extent practicable, for the purpose of audit of financial information in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered Accountants of India. Those Standards require that we plan and perform our audit to obtain reasonable assurance, whether the financial information under examination is free of material misstatement.

Based on the above, we report that in our opinion and according to the information and explanations given to us, we have found the same to be correct and the same have been accordingly used in the financial information appropriately.

4 In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI Regulations, the (Revised) Guidance Note on Reports in Company Prospectuses issued by The Institute of Chartered Accountants of India and terms of our engagement agreed with you, we further report that:

(c) The Restated Summary Statement of Assets and Liabilities of the Company as at 31 March 2008, 31 March 2009 and 30 September 2009, examined by us, as set out in Annexure I to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Notes to summary statement of assets and liabilities, summary statement of profit and losses and cash flow statement, as restated (Refer Annexure IV).

(d) The Restated Summary Statement of Profit or Losses and the Restated Statement of Cash Flow of the Company, for the period/ years ended 31 March 2008, 31 March 2009 and 30 September 2009 (together with Restated Summary Statement of Assets and Liabilities ‘Restated Summary Statements’), examined by us, as set out in Annexures II and III respectively to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Notes to summary statement of assets and liabilities,

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summary statement of profit and losses and cash flow statement, as restated (Refer Annexure IV).

5 Based on the above, we are of the opinion that the restated financial information have been made after incorporating:

i. adjustments for the changes in accounting policies retrospectively in respective financial years/periods to reflect the same accounting treatment as per changed accounting policy for all the reporting periods;

ii. adjustments for the material amounts in the respective financial years/ periods to which they relate;

iii. and there are no extra-ordinary items that need to be disclosed separately in the accounts and qualifications requiring adjustments.

6 We have also examined the following other financial information set out in the Annexures prepared by the management and approved by the Board of Directors relating to the Company for the periods/ year ended 31 March 2008, 31 March 2009 and 30 September 2009. .

xvi) Statement of accounting ratios, as appearing in Annexure V

xvii) Statement of capitalization as at 30 September 2009, as appearing in Annexure VI

xviii) Statement of dividend paid, as appearing in Annexure VII

xix) Statement of secured loans as appearing in Annexure VIII.

xx) Statement of unsecured loans as appearing in Annexure IX.

xxi) Statement of investments as appearing in Annexure X

xxii) Statement of sundry debtors, as appearing in Annexure XI.

xxiii) Statement of loans and advances, as appearing in Annexure XII

xxiv) Statement of current liabilities and provision as appearing in Annexure XIII.

xxv) Statement of reserves & surplus as appearing in Annexure XIV.

xxvi) Statement of contingent liabilities as appearing in Annexure XV.

xxvii) Statement of related party transactions as appearing in Annexure XVI.

xxviii) Statement of income from operation as appearing in Annexure XVII.

xxix) Statement of other income as appearing in Annexure XVIII.

xxx) Statement of operating expenses as appearing in Annexure XIX.

7 The report should not in any way be construed as a reissuance or redating of any of the previous audit reports.

8 In our opinion the financial information contained in Annexure I to XIX of this report read along with the Notes to the summary of restated assets and liabilities, profits and losses and cash flows (Refer Annexure IV) prepared after making adjustments and regrouping as considered appropriate, have been prepared in accordance with Part IIB of Schedule II of the Act and the SEBI Regulations..

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9 Our report is intended solely for use of the management and for inclusion in the offer document in connection with the proposed issue of equity shares of the affiliate, You Broadband & Cable India Limited. Our report and should not be used for any other purpose except with our consent in writing.

For B S R & Company Chartered Accountants Bhavesh Dhupelia Partner Membership No: 042070 Mumbai

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Annexure I : Summary Statement of Assets and Liabilities, as restated

(Rs in millions)

Particulars 30-Sep-09 31-Mar-09 31-Mar-08 A FIXED ASSETS Gross block 433.98 397.48 11.84 Less : Accumulated depreciation and amortisation 63.98 31.07 1.12 Net block 370.00 366.41 10.72 Capital work-in-progress 65.71 102.06 130.91 435.71 468.47 141.63 B INVESTMENTS 311.89 267.90 79.59 311.89 267.90 79.59 C CURRENT ASSETS, LOANS AND ADVANCES Sundry debtors 44.25 26.86 0.72 Cash and bank balances 259.69 276.89 582.86 Loans and advances 163.98 183.48 120.96 467.92 487.23 704.54 D LIABILITIES AND PROVISIONS Secured loans 172.08 173.00 - Unsecured loans 189.04 173.41 - Current liabilities 307.26 278.53 243.13 668.38 624.94 243.13 E NET WORTH 547.14 598.66 682.63 Represented by : Share capital 32.64 32.64 32.64 Reserves and surplus 667.46 667.46 667.46 Profit and loss account (debit balance) (152.96) (101.44) (17.47) NET WORTH 547.14 598.66 682.63 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure II :Summary Statement of Profits and Losses, as restated (Rs in millions) Particulars 30-Sep-09 31-Mar-09 31-Mar-08 INCOME

Income from operations 26.97 51.94 2.03 Other income 27.15 42.80 9.34

54.12 94.74 11.37 EXPENDITURE

Operational cost 29.60 23.97 1.24 Advertisement and sales promotions expenses 0.01 0.69 0.01 Personnel cost 1.64 2.33 - Administrative and other expenditure 8.63 48.74 26.41 39.88 75.73 27.66

Restated profit /( loss) before depreciation and finance charges 14.24 19.01 (16.29)

Depreciation and amortisation 32.91 29.95 1.12 Interest and finance charges 32.85 36.23 0.06 65.76 66.18 1.18

Restated (loss ) before exceptional item and tax (51.52) (47.17) (17.47)

Less: Exceptional Item (Refer Note 4(XI) to Annexure IV) - 36.60 - Restated (loss ) before tax (51.52) (83.77) (17.47)

Less: Fringe benefit tax - (0.20) - Less: Deferred tax [Refer note (v) to Annexure IV] - - -

Restated (loss) for the period / year (51.52) (83.97) (17.47)

Loss in profit and loss brought forward (101.44) (17.47) -

Restated (Loss) in profit and loss carried forward (152.96) (101.44) (17.47) Basic & diluted earnings per equity share of Rs. 10 each (in Rs.) (15.78) (25.73) (116.28)

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure III :Summary Statement of Cash flow, as restated

(Rs in millions) Particulars 30-Sep-09 31-Mar-09 31-Mar-08 Cash flows from operating activities Net (loss) before tax, as restated (51.52) (83.77) (17.47) Adjustments for: Depreciation and amortization 32.91 29.95 1.12 Loss on sale of fixed assets 0.01 - - Interest income (18.83) (42.79) (9.34) Unrealised foreign exchange gain on loan (net) (9.62) 22.11 - Project incidental expenses written off - 36.60 - Interest expense 30.97 35.75 - Operating cash flows before working capital changes (16.08) (2.15) (25.69) (Increase) in sundry debtors (17.39) (26.14) (0.72) Decrease/ (increase) in loans & advances 24.15 (59.58) (119.29) Increase/ (decrease) in current liabilities and provisions 40.05 (105.33) 243.13 Cash generated from/ (used in) operating activities 30.73 (193.20) 97.43 Direct taxes (paid) (0.76) (0.81) (1.43) Net cash flows from operating activities 29.97 (194.01) 96.00 Cash flows from investing activities Purchase of fixed assets (11.07) (268.49) (142.74) Assets taken over on business purchase - (10.50) - Proceeds from sale of fixed assets 0.01 - - Interest received 14.94 40.45 9.09 Investments made in equity shares (Associates) (43.99) (188.30) (79.59) Net cash (used) in investing activities (40.11) (426.84) (213.24) Cash flows from financing activities Proceeds from issuance of equity share capital - - 700.10 Loan from associate company 4.76 151.33 - Proceeds from term loan - 251.76 - Repayment of term loan (0.91) (78.76) - Interest on term loan / lease interest paid (10.91) (9.45) - Net cash (used in)/ generated from financing activities (7.06) 314.88 700.10 Net (decrease)/ increase in cash and cash equivalents (17.20) (305.97) 582.86 Cash and cash equivalents at beginning of period/ year 276.89 582.86 - Cash and cash equivalents at end of period/ year 259.69 276.89 582.86 Cash and cash equivalents includes deposits pledged with banks as margin money for guarantees / letter of credits issued by bank on behalf of the Company. 178.00 178.00 71.00

Notes : 1. Cash and cash equivalents consist of Cash on hand, Bank balances in current account and deposit account and Cheques in hand. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP

1 Background

Digital Outsourcing Private Limited (‘DOPL’ or ‘the Company’) was incorporated on 8 February 2007 for carrying on the business of digital distribution of television channels. The Company has acquired its Multi System Operation (‘MSO’) license effective from 8 June 2007 for the city/town of Visakhapatnam. The Company and its subsidiaries are engaged in the distribution of television channels to retail customers through analogue mode subsequently converted into digital mode.

The restated financial statements of the Company have been prepared specifically for inclusion in the Draft Red Herring Prospectus (“Prospectus”) to be filed with the Securities and Exchange Board of India (“SEBI”) in connection with proposed Initial Public Offering of affiliate of the Company, You Broadband & Cable India Limited. The restated financial statements consist of the restated summary statement of assets and liabilities of the Company as at 31 March 2008, 2009 and 30 September 2009, the related restated summary statement of profits and losses for the years ended 31 March 2008, 2009 and for the six months period ended 30 September 2009 and the related restated summary statement of cash flows for each of the years ended 31 March 2008, 2009 and for the six months period ended 30 September 2009 (these restated financial statements hereinafter are collectively referred to as “Restated Summary Statements”).

The Restated Summary Statements have been prepared to comply in all material respects with the requirements of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (“the SEBI Regulations”) notified by SEBI on August 26, 2009, as amended from time to time. The Act and the SEBI Regulations require the information in respect of the assets and liabilities and profits and losses of the Company for each of the three years/ period immediately preceding the issue of the Prospectus.

2. Significant accounting policies

2.1 Basis of preparation

The accompanying financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by the Securities and Exchange Board of India (‘SEBI’) and Generally Accepted Accounting Principles (‘GAAP’) in India, under the historical cost convention with the exception of certain fixed assets which are stated at fair value, on the accrual basis of accounting. GAAP comprises mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards (‘NACAS’) and relevant provisions of Companies Act, 1956, to the extent applicable.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.2 Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles (‘GAAP’) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of financial statements. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from the estimates used in preparing the accompanying financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.3 Fixed assets

f. Fixed assets are carried at cost, except for fixed assets which are acquired under business purchase which are stated at fair value less accumulated depreciation. Cost includes freight, duties and other incidental expenses relating to acquisition or construction. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised.

g. Expenditure incurred during the period of construction including all directly attributable expenses, related and incidental to construction are carried forward as a capital work in progress and on completion, the costs are allocated to the respective fixed assets. Fixed assets under construction, advance paid towards acquisition of fixed assets and cost of assets not ready for intended use as at the end of year are disclosed as capital work-in-progress.

h. Capital inventory represents items of capital nature lying in the stores valued at cost on first-in-first-out method.

i. Goodwill is recognised as a difference between the cost of acquisition and the value of the net assets acquired on the acquisition of a business.

2.4 Depreciation and amortisation a) Tangible Assets

Depreciation on tangible fixed assets is provided on Straight Line Method (‘SLM’), at the rates specified in Schedule XIV to the Companies Act, 1956. Fixed assets costing individually costing up to Rs 5,000 are depreciated at 100% over a period of one year.

The following assets are depreciated on straight-line basis over their estimated useful life:

Optical fiber cable 15 Years Leasehold improvements Lower of 10 years or term of lease Equipments at customers premises 5 years

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

2. Significant accounting policies (Continued)

Tangible assets, which were acquired pursuant to acquisition of business by the company, wherein the depreciation is provided over a period of 36 months based on the estimated remaining useful lives of the tangible assets as determined by the Company's management.

b) Intangible Assets

Goodwill

Goodwill, which has a limited useful economic life, is amortised over a period of 36 months from effective date on a straight-line basis from the year of acquisition. The estimated useful life is consistent with the estimated churn of the subscribers.

2.5 Impairment

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

2.6 Foreign currency transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year / period are recognized in the profit and loss account.

Monetary assets and liabilities in foreign currency, which are outstanding as at the year / period - end are translated at the year / period-end at the closing exchange rate and the resultant exchange differences are recognized in the profit and loss account.

2.7 Revenue recognition

a) Income from Services

Subscription revenue is recognized on the provision of services on a pro-rata basis; the same is excluding service tax and entertainment tax, where applicable.

Advertisement revenue is recognised when the related advertisement appears before the public. Other advertisement revenue for slot sale is recognised on period basis.

One time Set Top Box (“STB”) activation charges is recognized as revenue on installation of STB and the same is included in Revenue from STB activation charges.

b) Assets given on operating lease

Lease rentals (excluding indirect taxes, if any) for assets given on lease under operating lease arrangements are recognised on straight-line basis over the term of the lease

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

c) Interest income

Interest income is recognised on a time proportion basis.

2.8 Assets taken on operating leases

Lease arrangements, where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease payments under operating lease are recognised as an expense in the profit and loss account on straight-line basis.

2.9 Taxation

Income tax expense comprises of current tax expense and deferred tax expense or credit computed in accordance with the relevant provisions of the Income Tax Act 1961. Provision for current taxes is recognised under the taxes payable method based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Indian Income-tax Act, 1961.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements of the Company. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment rate. Deferred tax assets in respect of carry forward losses are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. Other deferred tax assets are recognised only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

For the six months period ended 30 September 2009, provision for taxes and deferred taxes have been determined based on effective tax rate applicable for the full year estimated financial statements for the year ending 31 March 2010 as required under Accounting Standard-25 Interim Financial Reporting.

Provision for Fringe Benefits Tax is made on the basis of the applicable rates on the taxable value of eligible expenses of the Company as prescribed under the Income-tax Act, 1961.

On August 18, 2009, an amendment was made to the Indian Income Tax Act, with retroactive effect from April 1, 2009, abolishing the provisions of FBT.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.10 Earnings per share

The basic earnings per share is computed by dividing the net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

2.11 Investments

Long-term investments are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of investments disposed off.

2.12 Borrowing costs

Borrowing costs directly attributable to the acquisition / construction of qualifying assets are capitalised as part of the cost of those assets. Other borrowing costs are recognised as an expense in the period in which they are incurred.

2.13 Provisions and contingent liabilities

The Company recognises a provision when there is a present obligation as a result of a past (or obligating) event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

3. Impact of material adjustments

Summary of results of restatements made in the audited financial statements of the Company for the respective periods / years and their impact on the profit / losses and assets and liabilities is as under:

Impact on Profit / Loss

(Rs. in millions) Particulars 30 September 2009 31 March 2009 31 March 2008Net (loss) as per audited Profit and Loss

account (51.52) (97.79) (3.65)

(a) Prior period (expenses)income (refer note i)

- Broadcasting Charges - - (0.55)- Other expenditure - - (13.27)- Restatement impact - 13.82 -

Net (loss) as per restated Profit and Loss account

(51.52) (83.97) (17.47)

Impact on Assets and Liabilities (Rs. in millions)

Particulars 30 September 2009 31 March 2009 31 March 2008 Current liabilities As per Audited Financial Statement 836.11 704.65 262.28 Prior period adjustment - - 13.82 As per Restated Financial Statement 836.11 704.65 276.10

Notes on Adjustments to Restated Summary Statements

Prior period adjustments

i. Prior period expenses/ income:

During the year ended 31 March 2009, certain expenses have been disclosed as prior period items. For the purpose of restatement, such prior period items have been appropriately adjusted in respective years in which such expenditure was incurred.

ii. Regroupings

Figures have been regrouped for consistency of presentation.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information

I Accounting for business purchase

During the year ended 31 March 2008 and year ended 31 March 2009, the Company (“transferee) had acquired the “cable network business” (‘the Business’) of various local cable operators (‘LCOs’ or ‘the transferor). The Company has entered into Business Transfer agreements (‘the agreement’) with various cable operators, whereby the transferor agrees to transfer the business with all its rights, title, interest whatsoever pertaining to the said business on as is where is condition in favour of the transferee and the transferee agrees to acquire and takeover the business free of all encumbrances on as is where is condition in accordance with and in the manner provided in the agreement. The details of the LCOs acquired are as under:

Name of the LCO Location Agreement date Effective date

Period ended 31 March 2008

Venkatshwara Vision (D Hills) Vizag 1 August 2007 1 August 2007

Venkatshwara Vision (TC Palem) Vizag 1 August 2007 1 August 2007

Sri Sai Hanuman Cable Network (MVP Colony)

Vizag 1 August 2007 1 September 2007*

Sri Lalitha Sai Ayyappa Cable TV (Dondaparthy)

Vizag 1 November 2007 1 November 2007*

Sumukha Cable Bangalore 16 January 2008 1 March 2008*

M K Space Vision Bangalore 2 April 2008 1 March 2008*

Year ended 31 March 2009

Akash Cable TV Systems Bangalore 1 June 2008 1 May 2008*

Star Video Line ( Dwarka Nagar) Vizag 1 August 2008 1 July 2008*

Vani Cable Network Bangalore 1 October 2008 1 November 2008*

* The effective dates considered herein are the dates from which the revenues belongs to the Company

The fair value of the net assets of the business of various local cable operators taken over by the Company, as determined by the Company’s management is based on the commercial facts of the case. The fair value of the net assets taken over by the Company during the period ended 31 March 2008 and year ended 31 March 2009 is Rs 0.53 million and Rs 0.40 million, respectively. Accordingly, the excess purchase consideration aggregating Rs 11.30 million and Rs 10.10 million has been recognised as goodwill during the period ended 31 March 2008 and / year ended 31 March 2009, respectively.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

II Commitments a. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances):

(Rs. in millions) Particulars 30 September 2009 31 March 2009 31 March 2008

Capital Commitments

Nil

Nil

239.43

b. Lease commitments

Assets taken on operating leases The Company’s significant leasing arrangements are in respect of operating lease taken for offices etc. These are cancelable operating lease agreements that are renewable on a periodic basis at the option of both lessee and lessor. The initial tenure of the lease generally is 3 to 5 years. The details of assets taken on operating lease during the period / year area as under:

(Rs. in millions)

Particulars

30 September 2009

31 March 2009

31 March 2008

Lease rentals recognised

3.08 3.50 6.70

(Rs. in millions)

Future lease rental obligation payable (under non-cancelable lease) 30 September 2009 31 March

2009 31 March

2008

(i) not later than one year 1.24 1.34 3.02

(ii) later than one year and not later than five years - - -

(iii) later than five years - - -

1.24 1.34 3.02

III Assets given on Operating Leases

The Company has given on lease, certain assets by way of operating lease. The initial tenure of the lease generally is 3 to 5 years. Details of leased assets are given below:

(Rs in millions) Particulars

30 September 200931 March

2009 31 March

2008

Gross value of assets 316.80 282.57 -

Accumulated depreciation 41.30 18.01 -

Net value of assets 275.49 264.57 -

Depreciation for the period/ year 23.29 18.01 -

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

III Assets given on Operating Leases (Continued) (Rs. in millions)

Particulars 30 September 2009

31 March 2009

31 March 2008

Future lease rental receivable -

(i) not later than one year 15.68 47.57 -

(ii) later than one year and not later than five years

48.99 170.29 -

(iii) later than five years - - -

IV Contingent Liabilities Contingent liabilities as at 30 September 2009 is Rs. Nil (March 2009: Nil, March 2008:

Nil)

V Deferred Taxation The Company has recognised deferred tax asset, which is on account of unabsorbed depreciation only to the extent of the deferred tax liabilities on account of excess depreciation allowable under Income Tax law over depreciation provided in books of account, as this amount is considered to be virtually certain of realisation, accordingly deferred tax (net) as at and for the period ended 30 September 2009 is Nil (March 2009: Nil; March 2008: Nil).

VI Related Party Disclosure List of related parties alongwith their relationship and the details of related party transaction are attached herewith in Annexure XVI.

VII Earning per share

Particulars 30 September 2009 31 March 2009

31 March 2008

Net loss attributable to equity shareholders (Rs. in million)

(51.52) (83.97) (17.47)

Weighted average number of equity shares for calculation of earnings per share (in Nos.)

3,263,725

3,263,725

150,241

Basic earnings/(loss) per share of Rs 10 each (in Rs)

(15.78) (25.73) (116.28)

VIII Dues to micro, small and medium scale enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED') which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the management, there are no outstanding dues to the Micro and Small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

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Annexure IV: Notes to the summary statement of assets and liabilities, summary statement of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

X Segment Reporting

The Company has only one reportable business segment, which is carrying on the business of digital distribution of television channels and other related value added services and has only one reportable geographical segment i.e. domestic market. Accordingly, the segment information as required by the Accounting Standard 17 on Segment Reporting has not been separately disclosed.

XI Exceptional item

During the year ended 31 March 2009, Company scrapped its project in Delhi due to unfavorable conditions, as a result of which the deal required for successful implementation of the project could not be signed-off. The Company charged off Rs 36.60 million being the carrying value of the project to profit & loss account and the same shown as an exceptional item in restated financial statements.

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Annexure V: Statement of accounting ratios

Particulars

Six months period ended 30 September

2009

Year ended 31 March 2009

Period ended 31 March 2008

Restated (loss) for the period / year (Rs in millions) (51.52) (83.97) (17.47) Net Worth (Rs in millions) 547.14 598.66 682.63 Basic Earning per share (Rs.) (15.78) (25.73) (116.28) Diluted Earning per share (Rs.) (15.78) (25.73) (116.28) Return on net worth (%) -9.42% -14.03% -2.56% Net asset value per share (Rs.) 167.64 183.43 209.16 Actual number of shares outstanding at period/year end (in millions) 3.26 3.26 3.26 Weighted average number of equity shares outstanding used for: Basic Earning per share (in millions) 3.26 3.26 0.15 Diluted Earning per share (in millions) 3.26 3.26 0.15 Notes: 1. The ratios have been computed as under: Basic Earnings per share (Rs.) = Net profit after tax, as restated, attributable to equity shareholders

Weighted average number of equity shares outstanding during the period/year

Diluted Earnings per share (Rs.) = Net profit after tax as restated, attributable to equity share holders

Weighted average number of dilutive Equity Shares outstanding during the period/year

Return on Net Worth (%) = Net profit after tax, as restated Net worth as restated, at the end of the year / period Net Asset Value per equity Share (Rs.) = Net worth, as restated, at the end of the year / period Number of equity shares outstanding at the end of the year / period 2. Net Worth represents Equity Share Capital & Reserves and Surplus less profit and loss account (debit balance). The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure VI: Statement of capitalization (Rs in millions)

As at Particulars 30 September 2009

Short term debt 192.28 Long term debt (A) 168.84 Total Debt (B) 361.12 Shareholders' funds - Share Capital 32.64 - Reserves & Surplus 667.46 - Profit & loss account (debit balance) (152.96) Total Shareholders' funds (C) 547.14 Total capitalization (B+C) 908.26 Long term debt / equity ratio (A/C) 0.31:1 Notes: 1. Short term debts represents amount repayable within one year from 30 September 2009 2. The figures disclosed above are based on the restated summary statement of assets and liabilities of the Company as at 30 September 2009 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure VII: Statement of dividend paid (Rs in millions)

Particulars Six months

period ended 30 September 2009

Year ended 31 March 2009

Period ended 31 March 2008

Number of Equity Shares at the end of period/ year (in millions) 3.26 3.26 3.26 Rate of Dividend Nil Nil Nil Interim Dividend (%) Nil Nil Nil Final Dividend (%) Nil Nil Nil Amount of Dividend on Equity Shares Nil Nil Nil Tax Paid on Dividend Nil Nil Nil

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure VIII: Statement of secured loans

(Rs in millions)

Particulars As at 30 September 2009

As at 31 March 2009

As at 31 March 2008

Term loan from body corporate 172.08 173.00 - (Secured by hypothecation of movable assets as specified in the deed of hypothecation between the Company and the Lendor) Total 172.08 173.00 - Note: 1. Loan is secured against movable assets purchased for video business. 2. Loan re-payments is re-scheduled from 36 months to 54 months during the period ended 30 September 2009. 3. Interest rate as per revised schedules is payable at 20.78% The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure IX: Statement of unsecured loans

(Rs in millions)

Particulars As at 30 September 2009 As at 31 March 2009

As at 31 March 2008

You Broadband & Cable India Limited 189.04 173.41 - Total 189.04 173.41 -

Note: 1. Loan taken is at an interest rate linked to quarterly rests of SBI PLR plus 2%. They are repayable on demand. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV.

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Annexure X: Statement of investments

(Rs in millions)

Particulars As at 30 September 2009

As at 31 March 2009

As at 31 March 2008

Long-term Investments in subsidiary companies Digital Infotainment Private Limited 57.40 18.40 0.49 Digital Cable Entertainment Private Limited 0.10 0.10 0.10 SCOD18 Networking Private Limited 6.30 6.30 - Digital Pluto Entertainment Private Limited 0.10 0.10 - Digital BCN Entertainment Private Limited 0.10 0.10 - Digital Neptune Teletainment Private Limited 0.10 0.10 - Digital Galaxy Private Limited 0.10 0.10 - Digital Earth Entertainment Private Limited 0.10 0.10 - Digital Color Entertainment Private Limited 0.10 0.10 - Digital Drishti Entertainment Private Limited 0.10 0.10 - Digital Miles Entertainment Private Limited 0.10 0.10 - Digital Clearity Entertainment Private Limited 0.10 0.10 - Digital Transparency Entertainment Private Limited 0.10 0.10 -

Share application money pending allotment in Digital Infotainment Private Limited - - 16.00 SCOD18 Networking Private Limited 205.87 200.88 63.00 Digital Pluto Entertainment Private Limited 4.50 4.50 - Bharat Lotto World Private Limited 36.72 36.72 - Total 311.89 267.90 79.59 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XI: Details of sundry debtors

(Rs in millions)

Particulars As at 30 September 2009

As at 31 March 2009

As at 31 March 2008

(Unsecured) Debts outstanding for a period exceeding six months Considered good 25.99 14.35 - Other debts Considered good 18.26 12.51 0.72 Total 44.25 26.86 0.72

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XII: Statement of loans and advances

(Rs in millions)

Particulars As at 30 September 2009

As at 31 March 2009

As at 31 March 2008

(Unsecured) Advances recoverable in cash or in kind or for value to be received 1.65 1.80 3.01 Recoverable from group companies 77.59 99.14 74.62 Deposits with government authorities and others 25.12 25.17 25.41 Tax deducted at source 2.80 2.03 1.43 Accrued interest 1.53 2.58 0.25 Balance with excise authorities 55.29 52.76 16.24 Total 163.98 183.48 120.96

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XIII: Statement of current liabilities and provisions

(Rs in millions)

Particulars As at 30 September 2009 As at 31 March 2009 As at 31 March 2008

Current Liabilities Sundry Creditors 255.15 254.26 233.65 Book overdraft 36.62 16.68 6.31 Advances from subscribers 0.05 0.06 0.00 Interest accrued but not due 13.79 4.61 - Other current liabilities 1.65 2.92 3.17 Total 307.26 278.53 243.13 Creditors include amounts due to Group companies 90.19 83.77 208.32

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XIV: Statement of reserves & surplus

(Rs in millions)

Particulars As at 30 September 2009

As at 31 March 2009

As at 31 March 2008

Share premium account At the commencement of the period / year 667.46 667.46 - Addition during the period / year - on account of business purchase - - 667.46 Total 667.46 667.46 667.46

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XV: Statement of contingent liabilities

(Rs in millions)

Particulars As at 30 September 2009

As at 31 March 2009

As at 31 March 2008

Claims against the company not acknowledged as debt Nil Nil Nil

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XVI: Statement of related parties

Relation Six months period

ended 30 September 2009

Year ended 31 March 2009

Period ended 31 March 2008

Digital Infotainment Private Limited

Digital Infotainment Private Limited

Digital Infotainment Private Limited

Digital Cable Entertainment Private

Limited

Digital Cable Entertainment Private

Limited

Digital Cable Entertainment Private

Limited Scod 18 Networking

Private Limited Scod 18 Networking

Private Limited --- Digital Pluto

Entertainment Private Limited

Digital Pluto Entertainment Private

Limited --- Digital BCN

Entertainment Private Limited

Digital BCN Entertainment Private

Limited --- Digital Neptune

Teletainment Private Limited

Digital Neptune Teletainment Private

Limited --- Digital Earth

Entertainment Private Limited

Digital Earth Entertainment Private

Limited --- Digital Galaxy Private

Limited Digital Galaxy Private

Limited --- Digital Clearity

Entertainment Private Limited

Digital Clearity Entertainment Private

Limited --- Digital Color

Entertainment Private Limited

Digital Color Entertainment Private

Limited --- Digital Drishti

Entertainment Private Limited

Digital Drishti Entertainment Private

Limited --- Digital Miles

Entertainment Private Limited

Digital Miles Entertainment Private

Limited ---

Parties where control exists

Digital Transparency Entertainment Private

Limited

Digital Transparency Entertainment Private

Limited --- YOU Broadband & Cable India Limited

YOU Broadband & Cable India Limited

YOU Broadband & Cable India Limited Other related parties with

whom transactions have taken place during the period --- ---

Scod 18 Networking Private Limited

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Annexure XVI: Statement of related party transactions (Continued)

(Rs in millions) Six months

period ended Year ended Year ended Particulars 30 September

2009 31 March 2009 31 March 2008 Expenses recovered (including service tax) You Broadband & Cable India Limited 3.26 4.41 - Digital Infotainment Private Limited 10.83 26.07 3.66 SCOD18 Networking Private Limited 53.43 175.31 16.28 Digital Cable Entertainment Private Limited - 0.00 - Digital BCN Entertainment Private Limited 0.01 0.23 - Digital Pluto Entertainment Private Limited 0.06 1.12 - Digital Neptune Teletainment Private Limited 0.01 0.16 - Digital Earth Entertainment Private Limited 0.00 0.06 - Digital Transparency Private Limited - 0.01 - Digital Clearity Private Limited - 0.01 - Digital Galaxy Private Limited - 0.02 - Digital Drishti Private Limited - 0.01 - Digital Colour Private Limited - 0.01 - Digital Miles Private Limited - 0.01 - Expenses charged by (including service tax) You Broadband & Cable India Limited 8.48 29.53 65.90 Digital Infotainment Private Limited 0.34 - - Loans and advances received (net) You Broadband & Cable India Limited 5.96 0.56 142.41 Digital Infotainment Private Limited 2.04 - - Loans and advances given (net) Digital Infotainment Private Limited - 29.64 34.33 Scod18 Networking Private Limited - 133.98 20.36 Digital BCN Entertainment Private Limited 2.86 3.91 - Digital Pluto Entertainment Private Limited 0.74 1.77 - Digital Neptune Teletainment Private Limited 0.02 0.31 - Digital Earth Entertainment Private Limited 0.17 0.15 - Digital Drishti Private Limited - 0.01 - Digital Colour Private Limited - 0.01 - Digital Miles Private Limited - 0.01 - Digital Galaxy Private Limited - 0.01 - Digital Transparency Private Limited - 0.01 - Digital Clearity Private Limited - 0.01 - Capital work-in-progress transferred to You Broadband & Cable India Limited 0.01 0.04 - Digital Infotainment Private Limited - 1.65 - Scod18 Networking Private Limited - 1.33 - Digital Pluto Entertainment Private Limited - 0.76 - Digital BCN Entertainment Private Limited 0.21 0.23 - Digital Neptune Teletainment Private Limited - 0.06 - Digital Earth Entertainment Private Limited - 0.19 - Capital work-in-progress transferred from You Broadband & Cable India Limited 0.01 1.54 - Scod18 Networking Private Limited 0.21 64.51 - Digital Infotainment Private Limited 0.00 4.95 - Interest income Digital Infotainment Private Limited 4.94 12.01 - Interest expense You Broadband & Cable India Limited 10.87 21.69 - Issue of equity shares You Broadband & Cable India Limited - - 187.74

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Annexure XVI: Statement of related party transactions (Continued)

Six months period ended Year ended Year ended

Particulars 30 September 2009 31 March 2009 31 March 2008

Investments in equity shares Digital Infotainment Private Limited 39.00 1.90 0.49 Scod 18 Networking Private Limited - 6.30 0.10 Digital Pluto Entertainment Private Limited - 0.10 - Digital BCN Entertainment Private Limited - 0.10 - Digital Neptune Teletainment Private Limited - 0.10 - Digital Earth Entertainment Private Limited - 0.10 - Digital Galaxy Private Limited - 0.10 - Digital Clearity Entertainment Private Limited - 0.10 - Digital Color Entertainment Private Limited - 0.10 - Digital Drishti Entertainment Private Limited - 0.10 - Digital Miles Entertainment Private Limited - 0.10 - Digital Transparency Entertainment Private Limited - 0.10 - Share application money pending Allotment in Digital Infotainment Private Limited - - 16.00 Share application money pending Allotment in Scod18 Networking Private Limited 4.99 137.88 63.00 Share application money pending Allotment in Digital Pluto Entertainment Private Limited - 4.50 - Balance payable as at year / period end You Broadband & Cable India Limited- Others 90.19 83.77 - You Broadband & Cable India Limited- Loan 189.04 173.41 208.32 Balance receivable as at year / period end Digital Infotainment Private Limited 64.43 90.05 37.99 Digital Cable Entertainment Private Limited 0.00 0.00 - Digital BCN Entertainment Private Limited 7.47 4.37 - Digital Pluto Entertainment Private Limited 4.44 3.65 - Digital Neptune Teletainment Private Limited 0.55 0.52 - Digital Earth Entertainment Private Limited 0.57 0.40 - Digital Transparency Private Limited 0.02 0.02 - Digital Clearity Private Limited 0.02 0.02 - Digital Galaxy Private Limited 0.03 0.03 - Digital Drishti Private Limited 0.02 0.02 - Digital Colour Private Limited 0.02 0.02 - Digital Miles Private Limited 0.02 0.02 - Scod18 Networking Private Limited - - 36.63 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XVII: Statement of income from operations (Rs in millions)

Particulars

Six months period ended 30 September

2009

Year ended 31 March

2009

Period ended 31 March

2008

Subscription income 17.16 29.49 2.03 Activation charges for cable television access devices 0.21 0.45 - Advertisement income 2.45 0.67 - Lease rental of network equipments 7.15 21.33 - Total 26.97 51.94 2.03

1. Subscription income includes subscription fees from analog and digital television subscribers, activation charges for cable television access devices 2. Income from cable television access devices consists of activation charges of set-top boxes from subscribers. 3. Advertisement income consists of advertising revenues we generate from our in-house cable movie and music channels. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XVIII: Statement of other income

(Rs in millions)

Particulars Nature

Six months period ended 30 September

2009

Year ended 31 March 2009

Period ended 31 March 2008

Other income: Interest income on fixed deposits & loan

Recurring 18.83 42.80 9.34

Exchange gain (net) Recurring 8.32 - - Total 27.15 42.80 9.34

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XIX: Statement of operating expenses

(Rs in millions)

Six months period

ended Year ended Period ended Particulars 30 September 2009 31 March 2009 31 March 2008

Pay Channel Costs 11.61 18.60 1.03 Lease rent - network 16.88 1.60 - Node rent 0.11 0.18 0.01 Repairs and maintenance - network 1.00 3.59 0.20 Total 29.60 23.97 1.24 Note: 1. Pay Channel Costs consist of the cost paid to include certain pay television channels (such as STAR, Sony, Zee, Activation charges for cable television access devices The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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RESTATED CONSOLIDATED FINANCIAL INFORMATION OF DIGITAL OUTSOURCING PRIVATE LIMITED

The Board of Directors Digital Outsourcing Private Limited Plot No 97, Marol Co-operative Industrial Estate, Makwana, Andheri (E), Mumbai – 400 059 India 23 March 2010 Dear Sirs

1 We have examined the attached consolidated financial information of Digital Outsourcing Private Limited (‘ the Company’) and its subsidiaries and associate (collectively called ‘the Group’) as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 ('the Act') and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (‘SEBI Regulations’), and in terms of our engagement agreed with you in accordance with our engagement letter dated 17 March 2010 in connection with the proposed issue of equity shares of an affiliate of the Company, You Broadband & Cable India Limited (formerly You Telecom India Private Limited).

2 This information has been prepared by the Management from the financial statements for the financial period/ year ended 31 March 2008 and 31 March 2009.

We did not audit the financial statements of certain subsidiaries for the financial period/ year ended 31 March 2008 and 31 March 2009 whose financial statements reflect total assets of Rs 0.09 million and Rs 313.70 million and total revenue of Rs nil and Rs 235.95 million, respectively.

We did not audit the financial information statements of an associate, whose financial statement reflect the Group’s share of profit of Rs 0.02 million for the year ended 31 March 2009.

These financial statements have been audited by another firm of Chartered Accountants, whose reports have been furnished to us and our opinion in so far as it relates to the amounts included in these Consolidated Restated Summary Statements of Assets & Liabilities, Consolidated Restated Summary Statements of Profit & Loss Account and Consolidated Restated Summary Statement of Cash Flow are based solely on the report of other auditors.

We have relied on the unaudited financial statement of one of the subsidiary whose financial statements reflect total assets of Rs 0.09 million as at 31 March 2008, total revenues of Rs Nil for the period ended 31 March 2008. These unaudited financial statements have been furnished to us by the management, and our report in so far as it relates to the amounts included in respect of the Group is based solely on such unaudited financial statements.

3 We have also examined the consolidated financial information of the Company and its subsidiaries and an associate for the six months period 1 April 2009 to 30 September 2009 prepared and approved by the Board of Directors for the purpose of disclosure in the offer document of an affiliate of the Company mentioned in paragraph (1) above.

The consolidated financial information for the above period was examined to the extent applicable for the purpose of audit of financial information in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered Accountants of India. Those standards require that we plan and perform our audit to obtain reasonable assurance, whether the consolidated financial information under examination is free of material misstatement.

F - 83

Based on above, we report that in our opinion and according to the information and explanations given to us, we have found the same to be correct and the same have been used in the consolidated financial information appropriately.

We did not audit the financial statements of certain subsidiaries for the period ended 30 September 2009 whose financial statements reflect total assets of Rs 358.13 million and total revenue of Rs. 235.74 million.

We did not audit the financial information statements of an associate, whose financial statement reflect the Group’s share of profit of Rs 2.40 million for the period ended 30 September 2009.

These financial statements have been audited by another firm of Chartered Accountants, whose reports have been furnished to us and our opinion in so far as it relates to the amounts included in these Consolidated Restated Summary Statements of Assets & Liabilities, Consolidated Restated Summary Statements of Profit & Loss Account and Consolidated Restated Summary Statement of Cash Flow are based solely on the report of other auditors.

4 In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI Regulations and terms of our engagement agreed with you, we further report that:

(e) The Consolidated Restated Summary Statement of Assets and Liabilities of the Company and its subsidiaries and associate as at 31 March 2008, 31 March 2009 and 30 September 2009, examined by us, as set out in Annexure I to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Notes to the consolidated summary statement of assets and liabilities, consolidated summary statement of profit and losses and consolidated cash flow statement, as restated (Refer Annexure IV).

(f) The Consolidated Restated Summary Statement of Profit or Losses and Cash Flow of the Company and its subsidiaries and associate, for the financial period/ years ended 31 March 2008 and 31 March 2009 and for the period ended 30 September 2009 (together with Consolidated Restated Summary Statement of Assets and Liabilities ‘Consolidated Restated Summary Statements’), examined by us, as set out in Annexure II and III to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Notes to the consolidated summary statement of assets and liabilities, consolidated summary statement of profit and losses and consolidated cash flow statement, as restated (Refer Annexure IV).

(g) Based on the above and also as per the reliance placed on the reports submitted by other auditors for subsidiaries and associate, for the respective years/ period, we confirm that the restated financial information has been made after incorporating:

i. adjustments for the changes in accounting policies retrospectively in respective financial years/periods to reflect the same accounting treatment as per changed accounting policy for all the reporting periods;

ii. adjustments for the material amounts in the respective financial years/ periods to which they relate; and

iii. there are no extra-ordinary items that need to be disclosed separately in the accounts and qualifications requiring adjustments.

5 We have also examined the following consolidated other financial information set out in the Annexures prepared by the management and approved by the Board of Directors relating to the Group for the years ended 31 March 2008 and 31 March 2009 and for the period ended 30 September 2009.

xxxi) Consolidated statement of accounting ratios, as appearing in Annexure V

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xxxii) Consolidated statement of capitalization as at 30 September 2009, as appearing in Annexure VI

xxxiii) Consolidated statement of dividend paid, as appearing in Annexure VII

xxxiv) Consolidated statement of other income as appearing in Annexure VIII

xxxv) Consolidated statement of secured loans as appearing in Annexure IX

xxxvi) Consolidated statement of unsecured loans as appearing in Annexure X

xxxvii) Consolidated statement of sundry debtors, as appearing in Annexure XI

xxxviii) Consolidated statement of loans and advances, as appearing in Annexure XII

xxxix) Consolidated statement of current liabilities and provision as appearing in Annexure XIII

xl) Consolidated statement of reserves & surplus as appearing in Annexure XIV

xli) Consolidated statement of related party transactions as appearing in Annexure XV

xlii) Consolidated statement of income from operation as appearing in Annexure XVI

xliii) Consolidated statement of operating expenses as appearing in Annexure XVII

6 In our opinion the financial information contained in Annexure I to XVII of this report read along with the Notes to the consolidated summary statement of assets and liabilities, consolidated summary statement of profit and losses and consolidated cash flow statement, as restated (Refer Annexure IV) prepared after making adjustments and regrouping as considered appropriate, have been prepared in accordance with have been prepared in accordance with Part IIB of Schedule II of the Act and the SEBI Regulations.

7 The report should not in any way be construed as a reissuance or redating of any of the previous audit reports.

8 Our report is intended solely for use of the management and for inclusion in the offer document of its affiliate, You Broadband & Cable India Limited, in connection with its proposed issue of equity shares. Our report and should not be used for any other purpose except with our consent in writing.

For B S R & Company Chartered Accountants Bhavesh Dhupelia Partner Membership No: 042070 Mumbai

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Annexure I : Consolidated summary statement of assets and liabilities, as restated (Rs in millions)

PARTICULARS 30-Sep-09 31-Mar-09 31-Mar-08 A FIXED ASSETS Gross block 701.93 653.54 46.01 Less : Accumulated depreciation and amortisation 102.42 57.07 2.88 Net block 599.51 596.47 43.13 Capital work-in-progress 98.96 132.77 183.77 698.47 729.24 226.90 B INVESTMENTS 39.23 36.84 63.00 39.23 36.84 63.00 C CURRENT ASSETS, LOANS AND ADVANCES Sundry debtors 139.91 107.73 7.49 Cash and bank balances 270.67 303.07 583.28 Loans and advances 179.81 156.51 88.00 590.39 567.31 678.77 D LIABILITIES AND PROVISIONS Secured loans 172.08 173.00 - Minority Interest - - - Unsecured loans 234.87 225.34 - Current liabilities 836.10 704.63 276.10 Provisions 1.70 1.54 0.01 1,244.75 1,104.51 276.11 E NET WORTH 83.34 228.88 692.56 Represented by : Share capital 32.64 32.64 32.64 Share application money, pending allotment 36.33 36.33 18.00 Reserves and surplus 667.55 667.55 667.63 Miscellaneous Expenditure (0.14) (0.14) - (To the extent not written off) Profit and loss account (debit balance) (653.04) (507.50) (25.71) NET WORTH 83.34 228.88 692.56

The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure II : Consolidated summary statement of profits and losses, as restated (Rs in millions)

PARTICULARS 30-Sep-09 31-Mar-09 31-Mar-08 INCOME

Income from operations 295.86 336.04 10.60 Other income 22.30 32.29 9.41

318.16 368.33 20.01 EXPENDITURE

Operational cost 257.58 420.43 13.12 Advertisement and sales promotions expenses 2.63 24.29 0.01 Personnel cost 25.13 40.07 4.18 Other expenses 130.70 228.16 25.45 416.04 712.95 42.76

Restated ( loss) before depreciation, interest and finance charges and exceptional items (97.88) (344.62) (22.75)

Depreciation and amortisation 47.71 54.19 2.89 Miscellaneous expenditure written off 0.01 0.01 - Interest and finance charges 35.02 41.56 0.06 82.74 95.76 2.95

Restated (loss ) before share of profit in associates and exceptional items (180.62) (440.38) (25.70) Share of profit in Associates 2.40 0.02 - Pre-acquisition cost of investment in subsidiary 7.10 - - Restated (loss ) before exceptional item and tax (171.12) (440.36) (25.70)

Less: Exceptional item (Refer Note 4 (XI) to Annexure IV) - (61.60) - Restated (loss) before tax (171.12) (501.96) (25.70)

Less: Fringe benefit tax - (0.87) (0.01) Less: Deferred tax [refer note 4 (V) to Annexure IV] - - -

Restated (loss) for the period / year (before adjustment of minority interest) (171.12) (502.83) (25.71) Less: Share of loss transferred to minority - (21.24) (0.00) Restated (loss) for the period / year (after adjustment of minority interest) (171.12) (481.59) (25.71)

Loss in profit and loss brought forward (507.50) (25.71) - Loss in profit and loss brought forward SCOD 18 - (0.60) - Adjustment for pre-acquisition cost of investment in

subsidiary 25.58 0.40 - Restated (loss) for the period / year (653.04) (507.50) (25.71) Basic & diluted earnings per equity share of Rs. 10 each (in Rs.) (52.43) (147.56) (171.10) The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure III : Consolidated summary statement of cash flow, as restated (Rs in millions)

PARTICULARS 30-Sep-09 31-Mar-09 31-Mar-08 Cash flows from operating activities Net (loss) before tax, as restated (171.12) (501.96) (25.70) Adjustments for: Depreciation and amortisation 47.71 54.19 2.89 Miscellaneous expenditure written off 0.01 0.01 - Loss on sale of fixed assets 0.57 - - Interest income (13.89) (31.84) (9.40) Unrealised foreign exchange (gain)/ loss (net) (9.84) 22.33 - Project incidental expenses written off - 36.60 - Interest expense 33.03 40.86 - Share of profit in associates (2.40) (0.02) - Operating cash flows before working capital changes (115.93) (379.83) (32.21) (Increase) in sundry debtors (32.18) (100.24) (7.48) (Increase) in loans & advances (22.53) (63.60) (86.33) Increase in current liabilities and provisions 149.32 268.34 262.34 Cash (used in)/ generated from operating activities (21.32) (275.33) 136.32 Direct taxes (paid) (1.83) (3.56) (1.45) Net cash flows from operating activities (23.15) (278.89) 134.87 Cash flows from investing activities Purchase of fixed assets (28.55) (428.51) (197.84) Proceeds from sale of fixed assets 0.10 - - Interest received 14.94 29.50 9.15 Investments in equity shares of associates - 26.18 (63.00) Loss in profit and loss brought forward SCOD 18 - (0.60) - Net cash (used) in investing activities (13.51) (373.43) (251.69) Cash flows from financing activities Proceeds from issuance of equity share capital - 31.50 682.00 Proceeds from receipt of share application money - - 18.00 Loan from affiliate company - 177.06 - Proceeds from term loan 16.08 251.76 - Repayment of term loan (0.91) (78.76) - Interest on term loan / lease interest paid (10.91) (9.45) - Net cash generated from financing activities 4.26 372.11 700.00 Net (decrease)/ increase in cash and cash equivalents (32.40) (280.21) 583.17 Cash and cash equivalents at beginning of period/ year 303.07 583.28 0.11 Cash and cash equivalents at end of period/ year 270.67 303.07 583.28 Cash and cash equivalents includes deposits pledged with banks as margin money for guarantees / letter of credits issued by bank on behalf of the Company. 178.00 178.00 71.00 Notes : 1. Cash and cash equivalents consist of Cash on hand, Bank balances in current account and deposit account and Cheques in hand. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP

1 Background

Digital Outsourcing Private Limited (‘DOPL’ or ‘the Company’ or ‘the Parent’) was incorporated on 8 February 2007 for carrying on the business of digital distribution of television channels. The Company has acquired its Multi System Operation (‘MSO’) license effective from 8 June 2007 for the city/town of Visakhapatnam. The Company and its subsidiaries and associate (‘the Group’) are engaged in the distribution of television channels to retail customers through analogue mode subsequently converted into digital mode.

The restated consolidated financial statements of the Company have been prepared specifically for inclusion in the Draft Red Herring Prospectus (“Prospectus”) to be filed with the Securities and Exchange Board of India (“SEBI”) in connection with proposed Initial Public Offering of affiliate of the Company, You Broadband & Cable India Limited. The restated consolidated financial statements consist of the restated consolidated summary statement of assets and liabilities of the Company as at 31 March 2008, 2009 and 30 September 2009, the related restated consolidated summary statement of profits and losses for the years ended 31 March 2008, 2009 and for the six months period ended 30 September 2009 and the related restated consolidated summary statement of cash flows for each of the years ended 31 March 2008, 2009 and for the six months period ended 30 September 2009 (these restated consolidated financial statements hereinafter are collectively referred to as “Restated Consolidated Summary Statements”).

The Restated Consolidated Summary Statements have been prepared to comply in all material respects with the requirements of Paragraph B, Part II of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009 (“the SEBI Regulations”) notified by SEBI on August 26, 2009, as amended from time to time. The Act and the SEBI Regulations require the information in respect of the assets and liabilities and profits and losses of the Company for each of the three years/ period immediately preceding the issue of the Prospectus.

2. Significant accounting policies

2.1 Basis of preparation

The accompanying consolidated financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by the Securities and Exchange Board of India (‘SEBI’) and Generally Accepted Accounting Principles (‘GAAP’) in India, under the historical cost convention with the exception of certain fixed assets which are stated at fair value, on the accrual basis of accounting. GAAP comprises mandatory accounting standards as specified in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with the National Advisory Committee on Accounting Standards (‘NACAS’) and relevant provisions of Companies Act, 1956, to the extent applicable.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.17 Basis of consolidation These consolidated financial statements include the financial statements of the Digital Outsourcing Private Limited and its subsidiaries and associate. The subsidiaries and associate considered in the consolidated financial statements are as follows:

Name of subsidiaries Country of incorporation

Proportion of ownership

interest as on 30 September 2009

Proportion of ownership

interest as on 31 March 2009

Proportion of ownership

interest as on 31 March 2008

Name of the auditing firm of Chartered Accountants

Digital Infotainment Private Limited India 76.00% 50.00% 99.99% B S R & Company

SCOD18 Networking Private Limited India 66.67% 66.67% Nil B S R and Co Digital Cable Entertainment Private Limited

India 99.99% 99.99% 99.99%* GAR & Associates

Digital Clearity Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

Digital Color Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

Digital Drishti Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

Digital Earth Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

Digital Galaxy Private Limited India 99.99% 99.99% Nil GAR & Associates

Digital Miles Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

Digital Neptune Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

Digital Pluto Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

Digital Transparency Entertainment Private Limited

India 99.99% 99.99% Nil GAR & Associates

*Unaudited financial statements

The associate company considered in the consolidated financials statements is:

These consolidated financial statements are prepared in accordance with the principles and procedures prescribed by Accounting Standard 21- "Consolidated Financial Statements" ('AS-21') and Accounting Standard 23 –“Accounting for Investments in Associates in Consolidated Financial Statements” for the purpose of preparation and presentation of consolidated financial statements.

Digital BCN Entertainment Private Limited

India 30.60% 30.60% Nil GAR & Associates

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.2 Basis of consolidation (Continued)

The financial statements of the Parent Company and its subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances/transactions and resulting unrealized profits in full. Unrealized losses resulting from intra-group transactions have also been eliminated unless cost cannot be recovered in full. The amounts shown in respect of accumulated reserves comprises the amount of the relevant reserves as per the balance sheet of the Parent Company and its share in the post acquisition increase/decrease in the relevant reserves/accumulated deficit of its subsidiaries. Consolidated financial statements are prepared using uniform accounting policies across the Group.

The excess of cost to the Holding Company of its investment in subsidiaries over the Holding Company's portion of equity in the subsidiaries, at the respective dates on which investments in subsidiaries were made, is recognised in the consolidated financial statements as goodwill. The Holding Company's portion of equity in the subsidiaries is determined on the basis of the book value of assets and liabilities as per the financial statements of the subsidiaries as on the date of investment. The goodwill recorded in these consolidated financial statements has not been amortised, but instead evaluated for impairment. The Group evaluates the carrying amount of its goodwill whenever events or changes in circumstances indicate that its carrying amount may be impaired. Share of minority interest in the net profit of the consolidated subsidiaries is identified and adjusted against the profit after tax to arrive at the net income attributable to shareholders. Share of minority interest in losses of the consolidated subsidiaries, if exceeds the minority interest in equity, the excess and further losses applicable to the minority, are adjusted against the Group’s interest. Share of minority interest in net assets of consolidated subsidiaries is presented in the consolidated balance sheet separately from liabilities and the equity of the company’s shareholders. Investments in entities in which the Company directly or indirectly through subsidiaries has significant influence but not a controlling interest, are accounted for using equity method i.e. the investment is initially recorded at cost. The carrying amount of the investment is adjusted thereafter for the post acquisition change in the Group’s share of net assets of the associates. The consolidated profit and loss account includes the Group’s share of the results of the operations of the associate.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.14 Use of estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles (‘GAAP’) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of consolidated financial statements. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. Actual results may differ from the estimates used in preparing the accompanying consolidated financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods.

2.15 Fixed assets

j. Fixed assets are carried at cost, except for fixed assets which are acquired under business purchase which are stated at fair value less accumulated depreciation. Cost includes freight, duties and other incidental expenses relating to acquisition or construction. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised.

k. Expenditure incurred during the period of construction including all directly attributable expenses, related and incidental to construction are carried forward as capital work in progress and on completion, the costs are allocated to the respective fixed assets. Fixed assets under construction, advance paid towards acquisition of fixed assets and cost of assets not ready for intended use as at the end of year are disclosed as capital work-in-progress.

l. Capital inventory represents items of capital nature lying in the stores valued at cost on first-in-first-out method.

m. Goodwill is recognised as a difference between the cost of acquisition and the value of the net assets acquired on the acquisition of a business.

n. Intangible assets in the nature of Indefeasible Rights of Use (IRU’s) dark fiber circuits are recorded as fixed assets.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.16 Depreciation and amortisation a) Tangible Assets

Depreciation on tangible fixed assets is provided on Straight Line Method (‘SLM’), at the rates specified in Schedule XIV to the Companies Act, 1956. Fixed assets costing individually costing up to Rs 5,000 are depreciated at 100% over a period of one year.

The following assets are depreciated on straight-line basis over their estimated useful life:

Tangible assets, which were acquired pursuant to acquisition of business by the company, wherein the depreciation is provided over a period of 36 months based on the estimated remaining useful lives of the tangible assets as determined by the Company's management.

b) Intangible Assets

Goodwill

Goodwill, which has a limited useful economic life, is amortised over a period of 36 months from effective date on a straight-line basis from the year of acquisition. The estimated useful life is consistent with the estimated churn of the subscribers.

Indefeasible right of use

Indefeasible right of use (IRU’s) of dark fiber circuits is recorded as an intangible asset and is amortised over the contracted period of use of 10 years. Intangible assets are stated at cost less accumulated amortization.

2.17 Impairment

The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

Optical fiber cable 15 Years Leasehold improvements Lower of 10 years or term of lease Equipments at customers premises 5 years

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.18 Foreign currency transactions

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year / period are recognized in the profit and loss account.

Monetary assets and liabilities in foreign currency, which are outstanding as at the year / period - end are translated at the year / period-end at the closing exchange rate and the resultant exchange differences are recognized in the profit and loss account.

2.19 Revenue recognition

a) Income from Services

Subscription revenue is recognized on the provision of services on a pro-rata basis; the same is excluding service tax and entertainment tax, where applicable.

Carriage fees are recognised on accrual basis as per the terms of the related agreements / arrangements.

Advertisement revenue is recognised when the related advertisement appears before the public. Other advertisement revenue for slot sale is recognised on period basis.

One time Set Top Box (“STB”) activation charges is recognized as revenue on installation of STB and the same is included in Revenue from STB activation charges.

b) Interest income

Interest income is recognised on a time proportion basis.

2.20 Employee retirement benefits

a. Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized in the profit and loss account during the year.

b. Post-employment benefits

(i) Defined contribution plans:

The Company’s provident fund scheme and employee state insurance scheme are defined contribution plans.

The Company’s contribution paid/payable under the schemes is recognised as expense in the profit and loss account during the period in which the employee renders the related service. The Company makes specified monthly contributions towards employee provident fund.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.9 Employee retirement benefits (Continued)

(ii) Defined benefit plans:

The Company’s gratuity scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.

The present value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plans, are based on the market yields on Government securities as at the balance sheet date.

Actuarial gains and losses are recognised immediately in the profit and loss account.

(iii) Other long-term employment benefits:

Company’s liabilities towards compensated absences to employees are determined on the basis of valuations as at balance sheet date, carried out by an independent actuary using Projected Unit Credit Method. Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the profit and loss account.

2.10 Assets taken on operating leases

Lease arrangements, where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease payments under operating lease are recognised as an expense in the profit and loss account on straight-line basis.

2.11 Taxation

Income tax expense comprises of current tax expense and deferred tax expense or credit computed in accordance with the relevant provisions of the Income Tax Act 1961. Provision for current taxes is recognised under the taxes payable method based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Indian Income-tax Act, 1961.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.11 Taxation (Continued)

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the consolidated financial statements of the Company. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment rate. Deferred tax assets in respect of carry forward losses are recongnised only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. Other deferred tax assets are recognised only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.

For the six months period ended 30 September 2009, provision for taxes and deferred taxes have been determined based on effective tax rate applicable for the full year estimated financial statements for the year ending 31 March 2010 as required under Accounting Standard-25 Interim Financial Reporting.

Provision for Fringe Benefits Tax (‘FBT”) is made on the basis of the applicable rates on the taxable value of eligible expenses of the Company as prescribed under the Income-tax Act, 1961.

On August 18, 2009, an amendment was made to the Indian Income Tax Act, with retroactive effect from April 1, 2009, abolishing the provisions of FBT.

2.12 Earnings per share

The basic earnings per share is computed by dividing the consolidated net profit / loss attributable to the equity shareholders for the period by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

2.13 Investments

Long-term investments are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.

Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.

Profit or loss on sale of investments is determined on the basis of weighted average carrying amount of investments disposed off.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued) 2. Significant accounting policies (Continued)

2.14 Borrowing costs

Borrowing costs directly attributable to the acquisition / construction of qualifying assets are capitalised as part of the cost of those assets. Other borrowing costs are recognised as an expense in the period in which they are incurred.

2.15 Provisions and contingent liabilities

The Group recognises a provision when there is a present obligation as a result of a past (or obligating) event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

3. Impact of material adjustments

Summary of results of restatements made in the consolidated financial statements of the Company for the respective periods / years and their impact on the profit / losses and assets and liabilities is as under:

Impact on Profit / Losses

(Rs. in millions) Particulars 30 September 2009 31 March 2009 31 March 2008Net Profit/(Loss) as per audited Profit and Loss account

(137.01) (494.68) (11.90)

a. Prior period (expenses)/income (refer note i) - Broadcasting charges - - (0.54)- Other expenditure - - (13.27)- Restatement impact - 13.81 -

b. Audit Report qualification – Provision

for doubtful debts (refer note ii) (34.11) (21.96) - Net Profit/(Loss) as per restated Profit and Loss account

(171.12) (502.83) (25.71)

Impact on Assets and Liabilities

(Rs. in millions) Particulars 30 September 2009 31 March 2009 31 March 2008 a. Current liabilities As per Audited Financial Statement 836.10 704.63 262.29Prior period adjustment - - 13.81 As per Restated Financial Statement 836.10 704.63 276.10 b. Debtors (net) As per Audited Financial Statement 195.98 129.69 7.49 Audit Report qualification – Provision for doubtful debts (56.07) (21.96) - As per Restated Financial Statement 139.91 107.73 7.49

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

3. Impact of material adjustments (Continued)

Notes on Adjustments for Restated Summary Statements

Prior period adjustments

i. Prior period expenses/ income:

During the year ended 31 March 2009, certain expenses have been disclosed as prior period items. For the purpose of restatement, such prior period items have been appropriately adjusted in respective years in which such expenditure was incurred.

ii. Audit report qualification:

During the period ended 30 September 2009 and year ended 31 March 2009, the auditor’s report of a subsidiary of the Company was qualified for adequacy of the provision for doubtful debts with respect to certain debtors aggregating to Rs. 34.11 million and Rs. 21.96 million, respectively. For the purpose of restatement, the same has been appropriately adjusted in respective period/ years to which the qualification relates to.

iii. Regroupings

Figures have been regrouped for consistency of presentation.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information

I Accounting for business purchase

During the year ended 31 March 2008 and year ended 31 March 2009, the Company (“transferee) had acquired the “cable network business” (‘the Business’) of various local cable operators (‘LCOs’ or ‘the transferor). The Company has entered into Business Transfer agreements (‘the agreement’) with various cable operators, whereby the transferor agrees to transfer the business with all its rights, title, interest whatsoever pertaining to the said business on as is where is condition in favour of the transferee and the transferee agrees to acquire and takeover the business free of all encumbrances on as is where is condition in accordance with and in the manner provided in the agreement. The details of the LCOs acquired are as under:

Name of the LCO Location Agreement date Effective date

Period ended 31 March 2008

Venkatshwara Vision (D Hills) Vizag 1 August 2007 1 August 2007

Venkatshwara Vision (TC Palem) Vizag 1 August 2007 1 August 2007

Sri Sai Hanuman Cable Network (MVP Colony)

Vizag 1 August 2007 1 September 2007*

Sri Lalitha Sai Ayyappa Cable TV (Dondaparthy)

Vizag 1 November 2007 1 November 2007*

Sumukha Cable Bangalore 16 January 2008 1 March 2008*

M K Space Vision Bangalore 2 April 2008 1 March 2008*

Year ended 31 March 2009

Akash Cable TV Systems Bangalore 1 June 2008 1 May 2008*

Star Video Line ( Dwarka Nagar) Vizag 1 August 2008 1 July 2008*

Vani Cable Network Bangalore 1 October 2008 1 November 2008*

* The effective dates considered herein are the dates from which the revenues belongs to the Company.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

I Accounting for business purchase (Continued)

The fair value of the net assets of the business of various local cable operators taken over by the Company, as determined by the Company’s management is based on the commercial facts of the case. The fair value of the net assets taken over by the Company during the period ended 31 March 2008 and year ended 31 March 2009 is Rs 0.53 million and Rs 0.40 million, respectively. Accordingly, the excess purchase consideration aggregating Rs 11.30 million and Rs 10.10 million has been recognised as goodwill during the period ended 31 March 2008 and / year ended 31 March 2009, respectively.

Digital Infotainment Private Limited entered into a Business Transfer agreement (‘the agreement’) with Anush, effective 20 August 2007 (prior to incorporation of the Company), whereby Anush had agreed to transfer and assign all its rights, title and interest whatsoever pertaining to the Business in favour of the Company. The board of directors of the Company at its meeting held on 27 September 2007 had approved the acquisition of the “cable network business” (‘the Business’) under the name and style of M/s ASN Satellite Network (‘ASN’).

The Company has recorded the assets taken over at their fair values as determined by the Company's management based on the commercial and technical evaluation by an independent expert and independent valuer.

Digital Earth Entertainment Private Limited has entered into a Business Transfer agreement (‘the agreement’) with Army Cable Network (‘Transferor’), effective 10 July 2008, whereby Army Cable Network had agreed to transfer and assign all its rights, title and interest whatsoever pertaining to the Business in favour of the Company. The Board of Directors of the Company at its meeting held on 18 August 2008 had approved the acquisition of the “cable network business” (‘the Business’) under the name and style of M/s Army Cable Network.

The Company has recorded the assets taken over at their fair values as determined by the Company's management based on the commercial and technical evaluation.

Digital Pluto Entertainment Private Limited has entered into a Business Transfer agreement (‘the agreement’) with Dharwad One Entertainment Network (‘Transferor’), effective 04 April 2008, whereby Dharwad One Entertainment Network had agreed to transfer and assign all its rights, title and interest whatsoever pertaining to the Business in favour of the Company. The Board of Directors of the Company at its meeting held on 02 May 2008 had approved the acquisition of the “cable network business” (‘the Business’) under the name and style of M/s Dharward One Entertainment Network.

The Company has recorded the assets taken over at their fair values as determined by the Company's management based on the commercial and technical evaluation.

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

II Commitments a. Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances):

(Rs. in millions) Particulars 30 September 2009 31 March 2009 31 March 2008

Capital Commitments

3.55

Nil

244.90

b. Lease commitments

Assets taken on operating leases The Group’s significant leasing arrangements are in respect of operating lease taken for offices etc. These are cancelable operating lease agreements that are renewable on a periodic basis at the option of both lessee and lessor. The initial tenure of the lease generally is 3 to 5 years. The details of assets taken on operating lease during the period / year area as under:

(Rs. in millions)

Particulars

30 September 2009

31 March 2009

31 March 2008

Lease rentals recognised

40.62 46.57 0.11

(Rs. in millions)

Future lease rental obligation payable (under non-cancelable lease) 30 September 2009 31 March

2009 31 March

2008

(i) not later than one year 2.15 1.87 -

(ii) later than one year and not later than five years 1.33 1.74 -

(iii) later than five years - - -

3.48 3.61 -

III Assets given on Operating Leases

The Group has given on lease, certain assets by way of operating lease. The initial tenure of the lease generally is 3 to 5 years. Details of leased assets is given below:

(Rs. in millions) Particulars

30 September 200931 March

2009 31 March

2008

Gross value of assets 316.80 282.57 -

Accumulated depreciation 41.30 18.01 -

Net value of assets 275.49 264.57 -

Depreciation for the period 23.29 18.01 -

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

IV Contingent Liabilities Contingent liabilities as at 30 September 2009 is Rs. Nil (March 2009: Nil, March

2008: Nil)

V Deferred Taxation The Group has recognised deferred tax asset, which is on account of unabsorbed depreciation only to the extent of the deferred tax liabilities on account of excess depreciation allowable under Income Tax law over depreciation provided in books of account, as this amount is considered to be virtually certain of realisation, accordingly deferred tax (net) as at and for the period ended 30 September 2009 is Nil (March 2009: Nil; March 2008: Nil).

VI Minority interest The break-up of the minority interest balance as at 30 September 2009 is as follows:

(Rs. in millions)

Particulars 30 September 2009 31 March 2009 31 March 2008 Opening balance - - - Add/(less):Minority’s share of during the year/ period

- 21.15 -

Add/(less):Minority’s share of accumulated profit/(loss)

- - -

Add/(less):Minority’s share related to Capital Reserve

- 0.09

Add/(less):Share in current year profit/loss - (21.24) - Closing balance - - -

VII Earning per share

(Rs. in millions)

September 2009 31 March 2009 31 March 2008

Net loss attributable to equity shareholders (in Rs. million)

(171.12) (481.59) (25.71)

Weighted average number of equity shares for calculation of earnings per share (in Nos.)

3,263,725

3,263,725

150,241

Basic earnings/(loss) per share of Rs 10 each (in Rs)

(52.43) (147.56) (171.10)

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Annexure IV: Notes to the consolidated summary statements of assets and liabilities, consolidated summary statements of profits and losses and cash flow statement, as restated under Indian GAAP (Continued)

4. Significant developments and other significant financial information (Continued)

VIII Dues to micro, small and medium scale enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 ('MSMED') which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. On the basis of the information and records available with the management, there are no outstanding dues to the Micro and Small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006.

X Segment Reporting

The Group has only one reportable business segment, which is carrying on the business of digital distribution of television channels and other related value added services and has only one reportable geographical segment i.e. domestic market. Accordingly, the segment information as required by the Accounting Standard 17 on Segment Reporting has not been separately disclosed.

XI Exceptional item

During the year ended 31 March 2009, Company scrapped its project in Delhi due to unfavourable conditions, as a result of which the deal required for successful implementation of the project could not be signed-off. The Company charged off Rs 36.60 million being the carrying value of the project to profit & loss account and the same shown as exceptional item.

The group has incurred expense of Rs 25million towards professional services rendered by Edelweiss Capital Limited which is in the nature of “success fees” in which Edelweiss has acted as group’s exclusive financial advisors in connection with transactions for raising funds from strategic partners / financial investors.

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Annexure V: Consolidated statement of accounting ratios

Particulars Six months period

ended Year ended Year ended 30 September 2009 31 March 2009 31 March 2008

Restated (Loss) for the period/year (Rs in million)

(171.12) (481.59) (25.71)

Net Worth (Rs. in million) 83.34 228.89 692.56 Basic Earning per share (Rs.) (52.43) (147.56) (171.10) Diluted Earning per share (Rs.) (52.43) (147.56) (171.10) Return on net worth (%) -205.33% -210.41% -3.71% Net asset value per share (Rs.) 25.54 70.13 212.20 Actual number of shares outstanding at period/year end (in million)

3.26 3.26 3.26

Weighted average number of equity shares outstanding used for:

Basic Earning per share (in million) 3.26 3.26 0.15 Diluted Earning per share (in million) 3.26 3.26 0.15

Notes: 1. The ratios have been computed as under:

Basic Earnings per share (Rs.) = Net profit after tax, as restated, attributable to equity shareholders

Weighted average number of equity shares outstanding during the year/period

Diluted Earnings per share (Rs.) = Net profit after tax as restated, attributable to equity share holders

Weighted average number of dilutive Equity Shares outstanding during the year/period

Return on Net Worth (%) = Net profit after tax, as restated

Net worth as restated, at the end of the year / period Net Asset Value per equity Share (Rs.) = Net worth, as restated, at the end of the year / period

Number of equity shares outstanding at the end of the year / period 2. Net Worth represents Equity Share Capital & Reserves and Surplus less profit and loss (debit balance) and miscellaneous expenditure not written off or adjusted. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV.

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Annexure VI: Consolidated statement of capitalization (Rs in millions)

As at Particulars 30 September 2009

Short term debt 238.10 Long term debt 168.85 Total Debt 406.95 Shareholders' funds - Share capital 32.64 - Share application money, pending allotment 36.33 - Reserves & surplus 667.55 - Miscellaneous expenditure to the extent not written off or adjusted (0.14) - Profit & loss account (debit balance) (653.04) Total Shareholders' funds 83.34 Total capitalization 490.29 Long term debt / equity ratio 2.03:1 Notes: 1. The figures disclosed above are based on the consolidated restated summary statement of assets and liabilities of the Company as at 30 September 2009 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure VII: Consolidated statement of dividend paid

Six months period

ended Year ended Year ended Particulars 30 September 2009 31 March 2009 31 March 2008

Number of Equity Shares at the end of period (in millions) 3.26 3.26 3.26 Rate of Dividend Nil Nil Nil Interim Dividend (%) Nil Nil Nil Final Dividend (%) Nil Nil Nil Amount of Dividend on Equity Shares Nil Nil Nil Tax Paid on Dividend Nil Nil Nil The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure VIII: Consolidated statement of other income (Rs in millions)

Particulars Nature Six months period

ended Year ended Year ended 30 September 2009 31 March 2009 31 March 2008

Other income: Interest income Recurring 13.89 31.84 9.40 Foreign exchange gain, net Recurring 8.41 0.04 0.01 Miscellaneous income Non-recurring - 0.41 - Total 22.30 32.29 9.41 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure IX: Consolidated statement of secured loans (Rs in millions) As at As at As at Particulars 30 September 2009 31 March 2009 31 March 2008

Term loan from body corporate* 172.08 173.00 - (Secured by hypothecation of movable assets as specified in the deed of hypothecation between the Company and the Lendor) - Total 172.08 173.00 - *Amount repayable within one year 3.23 60.01 - Note: 1. Loan re-payments is re-scheduled from 36 months to 54 months during the period ended 30 September 2009. 2. Interest rate as per revised schedules is payable at 20.78% The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure X: Consolidated statement of unsecured loans (Rs in millions) As at As at As at Particulars 30 September 2009 31 March 2009 31 March 2008

You Broadband & Cable India Limited 234.87 225.34 - Total 234.87 225.34 - Note: 1. Loan taken are at an interest rate linked to quarterly rests of SBI PLR plus 2%. They are repayable on demand. The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XI: Consolidated statement of sundry debtors (Rs in millions) As at As at As at Particulars 30 September 2009 31 March 2009 31 March 2008

(Unsecured) Debts outstanding for a period exceeding six months Considered good 41.06 30.29 0.01 Considered doubtful 74.48 4.19 0.04 Provision for doubtful debts (74.48) (4.19) (0.04) Other debts Considered good 98.85 77.44 7.48 Considered doubtful 4.13 27.35 0.57 Provision for doubtful debts (4.13) (27.35) (0.57) Total 139.91 107.73 7.49 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XII: Consolidated statement of loans and advances (Rs in millions)

As at As at As at Particulars 30 September 2009 31 March 2009 31 March 2008

Advances recoverable in cash or in kind or for value to be received 20.64 21.00 3.55 Recoverable from subsidiaries 7.45 4.37 36.64 Unbilled revenue 13.33 1.55 - Deposits with government authorities and others 25.18 25.83 25.41 Tax deducted at source 5.95 4.12 1.44 Accrued interest 1.53 2.58 0.25 Balance with excise authorities 105.73 97.06 20.71 Total 179.81 156.51 88.00 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XIII: Consolidated statement of current liabilities and provisions (Rs in millions)

As at As at As at Particulars 30 September 2009 31 March 2009 31 March 2008

Current liabilities Sundry creditors 408.90 375.36 37.54 Payable to group companies 320.41 257.30 225.38 Advances from subscribers 8.38 7.84 - Book overdraft 63.50 40.44 8.93 Interest accrued but not due 13.79 4.61 - Other liabilities 21.12 19.08 4.25 Share application money refundable - - 0.00 Provisions Gratuity 0.55 0.39 - Leave encashment 1.15 1.15 - Fringe benefit tax - - 0.01 Total 837.80 706.17 276.11 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XIV: Consolidated statement of reserves & surplus (Rs in millions)

As at As at As at Particulars 30 September 2009 31 March 2009 31 March 2008

Capital reserve At the commencement of the period / year 0.10 0.18 - Adjustment during the period / year - on account of business purchase - - 0.18 - on account of minority share (0.08) Total (A) 0.10 0.10 0.18 Securities premium account At the commencement of the period / year 667.45 667.45 - Addition during the period / year - - 667.45 Total (B) 667.45 667.45 667.45 Total (A + B) 667.55 667.55 667.63 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XV: Consolidated statement of related party transactions (Rs in millions)

Six months period

ended Year ended Year ended Particulars 30 September 2009 31 March 2009 31 March 2008

List of Related Parties Other related parties with whom transactions have taken place during the period You Broadband &

Cable India Limited (formerly You Telecom India Private Limited)

You Broadband & Cable India Limited (formerly You Telecom India Private Limited)

You Broadband & Cable India Limited (formerly You Telecom India Private Limited)

Related party transactions Expenses recovered (including service tax) 3.26 7.66 - You Broadband & Cable India Limited Expenses charged by (including service tax) 71.09 195.54 75.90 You Broadband & Cable India Limited Loans and advances received (net) 5.97 52.49 142.42 You Broadband & Cable India Limited Loans and advances given (net) 0.48 - - You Broadband & Cable India Limited Capital work-in-progress transferred to 0.01 3.65 - You Broadband & Cable India Limited Capital work-in-progress transferred from 0.13 2.71 15.23 You Broadband & Cable India Limited Interest expense 14.27 26.79 - You Broadband & Cable India Limited Lease rental expenses 6.56 6.29 - You Broadband & Cable India Limited Repayment of loan (net) 22.69 - - You Broadband & Cable India Limited Issue of equity shares - - 187.74 You Broadband & Cable India Limited Balance payable as at year / period end – others 320.41 257.30 225.38 You Broadband & Cable India Limited Balance payable as at year / period end – loan 234.87 225.34 - You Broadband & Cable India Limited The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XVI: Consolidated statement of income from operations (Rs in millions)

Particulars Six months period

ended Year ended Year ended

30 September 2009 31 March

2009 31 March

2008

Subscription income 76.30 123.92 9.47 Activation charges for cable television access devices 8.90 38.06 - Carriage income 205.88 170.46 0.79 Advertisement income 4.78 3.60 0.34 Total 295.86 336.04 10.60 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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Annexure XVII: Consolidated statement of operating expenses (Rs in millions)

Particulars Six months period

ended Year ended Year ended 30 September 2009 31 March 2009 31 March 2008

Pay channel subscription / multi system operators costs 226.04 383.49 12.12 Lease rent – network 29.57 29.67 - Node rent 0.11 2.24 0.01 Repairs and maintenance – network 1.86 5.03 0.99 Total 257.58 420.43 13.12 The above statement should be read with notes to the summary of statements of restated assets and liabilities, profits and losses and cash flows, as restated under Indian GAAP as appearing in Annexure IV

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in

conjunction with our restated financial statements as of and for the years ended March 31, 2005, 2006,

2007, 2008, 2009 and as of and for the six months ended September 30, 2009, prepared in accordance

with the Companies Act, Indian GAAP and the SEBI ICDR Regulations, including the schedules,

annexures and notes thereto and the reports thereon, included in the section “Financial Statements”

beginning on page 129 of this Draft Red Herring Prospectus. Unless otherwise stated, the financial

information used in this section is derived from the restated financial statements of the Company.

Indian GAAP differs in certain material respects from U.S. GAAP and IFRS. We have not attempted to

quantify the impact of IFRS or U.S. GAAP on the financial data included in this Draft Red Herring

Prospectus, nor do we provide a reconciliation of our financial statements to those of U.S. GAAP or

IFRS. Accordingly, the degree to which the Indian GAAP financial statements included in this Draft Red

Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of

familiarity with Indian accounting practices.

This discussion contains forward-looking statements and reflects our current views with respect to future

events and financial performance. Actual results may differ materially from those anticipated in these

forward-looking statements as a result of certain factors such as those set forth in the section "Risk

Factors" beginning on page xiv of this Draft Red Herring Prospectus.

In this section, unless the context otherwise requires, a reference to the "Company" or to "we", "us" and

"our" refers to YOU Broadband & Cable India Limited, and a reference to "DOPL" refers to Digital

Outsourcing Private Limited and its subsidiaries and associate company, on a consolidated basis. Overview We are one of the leading Cable Broadband service providers in India. We commenced operations in 2001 and currently provide high-speed broadband cable internet services to our residential and enterprise segment customers across 11 cities in India. As of September 30, 2009, we owned and operated over 990 kilometers of fiber optic cable and over 4,100 kilometers of trunk coaxial cable network, supported by 11 NOCs. As of September 30, 2009, our residential broadband internet service subscriber base aggregated approximately 200,779 customers. Based on internal estimates, we believe that our network covers approximately 1.50 million homes passed, and our residential broadband internet service subscriber base represents an estimated penetration of 13.4% of two-way broadband-enabled homes. Based on industry information derived from the TRAI Report (January 2010), in such period, we had a market share of approximately 32.00% of the Cable Broadband internet market in India. We currently offer high-speed broadband internet access through our two-way HFC cable network. Our technologically advanced cable network infrastructure is capable of simultaneously supporting broadband internet, cable television and voice communication and we believe that we are one of the few broadband service providers in India with such "triple-play" capabilities. Our residential subscribers access our broadband internet through cable modem utilizing DOCSIS technology on a variety of data transfer and unlimited internet plans. We deliver high bandwidth internet broadband services to our enterprise segment customers through cable modem or through dedicated leased line access. We also provide storage and security services and solutions to our enterprise segment customers. In addition, we lease our excess fiber network capacities and spare duct inventories to other telecommunication service providers. We have invested significantly in the development and expansion of our quality "triple-play" capable two-way HFC cable network infrastructure in a scalable manner. In fiscal 2007, 2008 and 2009, and in the six months ended September 30, 2009, we incurred capital expenditure of Rs.216.89 million, Rs.441.48 million, Rs.127.67 million and Rs.40.08 million, respectively. Based on internal estimates, we believe that our existing cable network infrastructure which accommodates an estimated 1.50 million home passes, is capable of being expanded, at relatively low incremental investment, to accommodate an additional 0.50 million home passes. Our fiber optic backbone, broadband nodes and data centers provide a reliable infrastructure for internet traffic, as well as any analog and digital television transmission. For our enterprise segment customers located in areas not directly covered by our current infrastructure footprint, we have entered into leased line agreements with other telecommunication infrastructure

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owners to provide our services to such enterprise segment customers. We also offer limited wireless services connectivity to some of our residential broadband customers. Our total income increased by 63.49% from Rs.484.25 million in fiscal 2007 to Rs.791.73 million in fiscal 2009. Our total income in the six months ended September 30, 2009 was Rs.376.47 million. Proposed DOPL Acquisition and Presentation of Financial Information

Our Company currently holds 36.24% of the paid-up equity share capital of Digital Outsourcing Private Limited. We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL Selling Shareholders for the acquisition of the DOPL Sale Shares. The transactions contemplated in the DOPL Share Subscription and Purchase Agreement are subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. In the event that such conditions are not satisfied, we may not be able to complete the proposed DOPL Acquisition. For further information relating to the DOPL Acquisition and the DOPL Share Subscription and Purchase Agreement, see “History and Other Corporate Matters” beginning on page 101, "Objects of the Issue" on page 39, "Risk

Factors " beginning on page xiv.

We have included in this Draft Red Herring Prospectus the restated financial statements of our Company as of and for the years ended March 31, 2005, 2006, 2007, 2008 and 2009 and as of and for the six months ended September 30, 2009. We have also included in this Draft Red Herring Prospectus the restated standalone and consolidated financial statements of Digital Outsourcing Private Limited as of and for the years ended March 31, 2008 and 2009 and as of and for the six months ended September 30, 2009 (collectively, the "DOPL Financial Statements"). Since our Company currently holds 36.24% of the paid-up equity share capital of Digital Outsourcing Private Limited, the restated financial statements of our Company included in this Draft Red Herring Prospectus do not reflect the financial condition and results of operations of Digital Outsourcing Private Limited or its subsidiaries and joint ventures.

This Draft Red Herring Prospectus does not include any pro forma balance sheet or pro forma profit and loss statement prepared in accordance with the laws and regulations of the United States or any other jurisdiction, which would have shown the effect on our historical financial condition and results of operations of DOPL pursuant to the proposed DOPL Acquisition, assuming that the DOPL Acquisition had occurred at the beginning of the relevant reporting period. Investors will therefore need to base their assessment of the financial condition and results of operations of our Company subsequent to the DOPL Acquisition on the basis of the restated financial statements of our Company, the DOPL Financial Statements and other information with respect to DOPL included in this Draft Red Herring Prospectus.

In fiscal 2008 and 2009 and in the six months ended September 30, 2009, DOPL incurred losses (after adjustment of minority interest) of Rs.25.71 million, Rs.481.59 million and Rs.171.12 million, respectively. Since the results of operations of DOPL are not reflected in the restated financial statements of our Company included in this Draft Red Herring Prospectus, the losses incurred by DOPL are not reflected in the financial statements of our Company. In addition, the Board of Directors of our Company have determined that these losses principally resulted from the high startup costs of the cable television business of DOPL, and accordingly, no adjustments were required to be made in our Company’s restated financial statements to the carrying value of the investments made in, and loans advanced to, DOPL and its subsidiaries. If the DOPL Acquisition results in our Company acquiring a majority shareholding in Digital Outsourcing Private Limited then the financial statements of DOPL will be consolidated with that of our Company's, and we expect that the DOPL Acquisition would materially affect our financial condition and results of operations. In addition, since the cable television business of DOPL is distinct from the existing broadband business of our Company, the form of presentation of the consolidated financial statements of our Company following the DOPL Acquisition may not be comparable to the form of presentation of the financial statements of our Company prior to such acquisition.

Our strategy of expanding the cable television business through DOPL will also require significant additional capital expenditure and other investment to procure STBs and other related equipment in connection with the cable television business and to upgrade DOPL's existing cable network infrastructure from one-way to two-way HFC cable network. For further information see "Management's

Discussion and Analysis of Financial Condition and Results of Operations " beginning on page 130.

Factors Affecting Results of Operations

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Our business, results of operations and financial condition are affected by a number of factors, including the following: Subscriber base and mix of subscribers Our revenues are dependent on our ability to expand our subscriber base, in both the residential segment and the enterprise segment, as well as maintain our existing subscriber base. Our subscriber numbers are affected by various factors, including general economic conditions in India, the reach of our cable infrastructure as well as competition. We believe that India's current low internet penetration rate offers significant growth potential. Lack of broadband infrastructure and supply continues to be an important factor behind the low broadband penetration in India. Based on internal estimates, we believe that our network covers approximately 1.50 million homes passed, and we believe that this extensive cable infrastructure network provides us with an access to a large potential broadband subscriber base. Our cable infrastructure network currently covers 11 cities in India, all of which are in the top 20 cities in India in terms of maximum internet usage (Source: IMRB I Cube 2008 – Home Segment Report). Our cable infrastructure has been strategically implemented in high density areas in key cities in India with high PC penetration and a concentration of SEC A and SEC B households. We intend to increase the network penetration in these cities. Based on internal estimates, we believe that our existing cable network infrastructure which accommodates an estimated 1.50 million home passes, is capable of being expanded, at relatively low incremental investment, to accommodate an additional 0.50 million home passes. We are also in the process of evaluating expansion opportunities in certain other key cities in India. While residential subscribers continue to contribute a majority of our revenues, we continue to increase our focus on enterprise segment customer base as this segment enables us to diversify our revenue base through provision of various value added services such as security and systems integration solutions. The acquisition of the ISP business of IceNet.Net Limited in April 2007 resulted in a significant increase in customers in the enterprise segment. Expanding our enterprise segment customer base also enables us to optimally utilize available bandwidth, as bandwidth usage by residential subscribers is typically low during the day, while that of enterprise segment customers is higher during the day. Nature of services and subscriber usage Our revenues are also dependent on the nature of services provided to our subscribers and the extent of usage by subscribers. In addition to broadband internet services, we provide our residential subscribers other value added services such as internet telephony, gaming services and customizable online educational materials. For our enterprise segment subscribers, in addition to high bandwidth broadband services, we provide value added solutions such as security, storage and systems integration solutions. Our value added services and solutions are generally provided pursuant to revenue sharing arrangements with content and value added service developers. We believe that value added services result in delivery of better customer experience resulting in increasing customer loyalty as well as increasing our revenues from higher broadband usage. While we have experienced continuing pricing pressure from competition, and have maintained competitive prices for our offerings, historically we have not experienced any decrease in the average revenue per subscriber for our internet services as internet usage per subscriber has continued to increase steadily, particularly as a result of the popularity of online streaming video services. According to IMRB I Cube 2008 – Home Segment Report, the use of broadband internet for entertainment and e-commerce has steadily increased in India in recent years and the share of entertainment and e-commerce as a percentage of total broadband internet use in India increased from 4.00% in 2000 to 16.00% in 2008. We believe that internet usage in India will increase significantly in the future, particularly for e-commerce and value-added services such as e-learning, online shopping, and online entertainment. We have also entered into arrangements with payment gateways to facilitate online payments and transactions to decrease collection costs and provide superior customer experience which we believe results in a decrease in customer churn.

Integration of DOPL business and operations and success of the cable television business

Our Company currently holds 36.24% of the paid-up equity share capital of Digital Outsourcing Private Limited. We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL

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Selling Shareholders for the acquisition of the DOPL Sale Shares. The transactions contemplated in the DOPL Share Subscription and Purchase Agreement are subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. We expect that such proposed acquisition, and to the extent we acquire a majority of DOPL’s equity shareholding, the resultant consolidation of the financial statements of DOPL with those of our Company, will materially affect our financial condition and results of operations. For further information, see "Management's Discussion and

Analysis of Financial Condition and Results of Operations” beginning on page 130. The proposed acquisition is expected to result in increased operational synergies related to carriage and content negotiation and other benefits resulting from the integration of our broadband cable infrastructure and the ability to provide integrated internet and cable television services. DOPL’s cable television business is primarily dependent on subscription fees from cable television subscribers and placement and carriage fees from broadcasters. It is also dependent on installation income from STBs and advertisement income from its channels. The success of DOPL’s cable television business depends on the customer base and geographic reach, on the relationship of DOPL with LCOs who provide the "last mile" cable link to subscribers, and competition from other cable television service providers and DTH service providers. Placement and carriage fees from broadcasters are also typically dependent on the reach of DOPL’s cable network, whether directly or through LCOs, the availability of preferred frequency bandwidth, as well as competition. A majority of DOPL’s subscribers are currently secondary subscribers, for which subscribers DOPL enters into agreements with LCOs to determine fixed monthly fees payable by such LCOs to DOPL. Secondary subscriber numbers are estimated on the basis of information provided by LCOs as DOPL does not have the ability to independently verify the number of its analog subscribers. The cable television industry in India typically encounters under-reporting of subscriber base by LCOs, and MSOs do not receive revenues from unreported subscribers. We believe that following the proposed DOPL Acquisition and the increased integration of DOPL’s operations with those of our Company, the integrated offering of cable television and broadband internet services will enable DOPL to increase primary subscribers and benefit from higher revenues per subscriber by eliminating the LCOs' share of the subscription fee. The markets for our products and services are competitive and, in some instances, rapidly changing. We intend to grow the cable business through DOPL by introducing advanced cable services, such as video on demand and interactive STBs. The success of our growth strategies will depend upon the market acceptance of our products and services and our ability to introduce integrated internet and cable television products, services and offerings to meet changing customer demands and taste. We anticipate that content costs, i.e., the fees paid to television broadcasters or content aggregators for the right to telecast their channels, and to the extent we acquire any distribution rights for specific channels, the license fees for such distribution rights, will continue to increase with competition.

Other acquisitions

We continue to identify suitable acquisition opportunities among LCOs and other MSOs to expand our subscriber base and geographic reach, achieve economies of scale and delivery of standardized integrated broadband internet and cable television services and a single point of contact for both subscribers and broadcasters. Our strategy is to continue to acquire "last mile" connections from LCOs. We expect to fund such acquisitions through a combination of equity and debt financing and internal accruals. DOPL has acquired various MSOs for the expansion of its customer base and has simultaneously expanded its own infrastructure. We expect to incur significant costs associated with the digitization of the operations of the LCOs or MSOs we acquire and in connection with the integration and standardization of the business operations and services provided by such LCOs and MSOs.

Capital expenditure and other capital costs

We have incurred significant capital expenditure in connection with the development and expansion of our quality triple-play capable two-way HFC cable network infrastructure in a scalable manner. In fiscal 2007, 2008 and 2009, and in the six months ended September 30, 2009, we incurred capital expenditure of Rs. 216.89 million, Rs. 441.48 million, Rs. 127.67 million and Rs. 40.08 million, respectively. Historically, we have funded such expenditure through a combination of equity and debt financing and internal accruals. We expect to incur significant additional capital expenditure and other capital costs in connection with the proposed expansion of our broadband infrastructure to additional cities and towns in the future,

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including for the establishment of additional network operations control centers and fees payable to municipal authorities in connection with the laying of our cable infrastructure. We also expect to incur capital expenditure relating to the rollout of our wireless services in high density areas and in connection with the upgradation of our servers and billing systems. The success of our integrated Cable Broadband internet and cable television offerings will depend on the difficulty in integrating new technology into the existing operations and the unanticipated expenses related to such integration. We expect to incur further expenditure to procure STBs and other related equipment for the cable television business, as well as to upgrade DOPL's existing cable network infrastructure including the conversion from one-way to two-way HFC cable network enabling simultaneous data, voice and video transmission. For further information relating to our planned capital expenditure, see "Management's

Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 130 of this Draft Red Herring Prospectus. We have incurred and expect to incur significant depreciation and amortization expenses for our Cable Broadband infrastructure and the digital and other equipment as well as amortization expenses in connection with our acquisitions. Similarly, DOPL has in the past and is expected to continue to incur significant depreciation / amortization expenses in connection with its digital equipment, as well as in relation to acquisitions it has undertaken or will undertake in the future. Our depreciation and amortization expenses in fiscal 2007, 2008 and 2009, and in the six months ended September 30, 2009 were Rs.216.98 million, Rs.256.53 million, Rs.269.45 million and Rs.138.33 million, respectively. Depreciation and amortization expenses have been a significant factor in the net losses we incurred in fiscal 2007, 2008 and 2009 and in the six months ended September 30, 2009. As we continue to expand our operations organically and through strategic acquisitions, we expect our depreciation and amortization expenses to increase, and we expect this to have a material adverse effect on our results of operations. Significant Accounting Policies Our financial statements have been prepared in compliance with the Companies Act, regulations and guidelines issued by SEBI and in accordance with Indian GAAP. The financial statements are prepared under the historical cost convention, with the exception of certain fixed assets which are stated at fair value, on the accrual basis of accounting. Indian GAAP requires that we adopt accounting policies and make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements. The estimates and assumptions used in our financial statements are based on management's evaluation of the relevant fact and circumstances as of the date of the financial statements. Any revision to accounting estimates is recognised prospectively in current and future periods. By their nature, these estimates and assumptions are subject to an inherent degree of uncertainty, and there can be no assurance that such estimates and assumptions will prove correct. While we believe that all aspects of our financial statements should be studied and understood in assessing our current and expected financial condition and results, we believe that the following critical accounting policies warrant particular attention: Revenue recognition Internet access / internet telephony fee. Revenue (excluding indirect taxes, if any) is recognized based on actual usage by the subscriber. Revenue relating to unutilized time/MB is recognized in the month in which the pack life expires. Revenue on sale of Starter Pack is recognized as income on activation. Installation charges are recognized as revenue on completion of installation. With respect to contracted customers, revenue is recognized on provision of the services on a pro-rata basis in accordance with the terms of the contract. Modem rentals. Modem rent (excluding indirect taxes, if any) is recognized over the period of usage of modem by the subscriber. One time modem rent is recognized as revenue on installation of Modem and the same is included in revenue from broadband internet services. Sale of modems, internet protocol and other devices. Revenue from sale of goods (excluding indirect taxes, if any) is recognized on transfer of all significant risks and rewards of ownership to the buyer.

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Assets given on operating lease. Lease rentals (excluding indirect taxes, if any) for assets given on lease under operating lease arrangements are recognized on straight-line basis over the term of the lease.

Interest income. Interest income is recognized on a time proportion basis. Fixed assets

• Fixed assets are carried at cost, except those fixed assets which are acquired under business purchase and are accounted at fair value, less accumulated depreciation / amortization and impairment adjustment, if any. Cost includes freight, duties and other incidental expenses relating to acquisition or construction. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalized.

• Expenditure incurred during the period of construction including all directly attributable expenses, related and incidental to construction are carried forward as capital work in progress and on completion, the costs are allocated to the respective fixed assets. Fixed assets under construction, advance paid towards acquisition of fixed assets and cost of assets not ready for intended use as at the end of year are disclosed as capital work-in-progress.

• Capital inventory represents items of capital nature lying in the stores valued at cost on first-in-first-out method.

• Goodwill is recognized as a difference between the purchase consideration and the value of the net assets acquired on the acquisition of a business.

• Intangible assets in the nature of indefeasible rights of use in Dark Fiber circuits are recorded as fixed assets.

Depreciation and amortization Tangible assets

Depreciation on fixed assets, except those described below, is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Fixed assets individually costing up to Rs.5,000 are depreciated at 100% over a period of one year. The following assets are depreciated on straight-line basis over their estimated useful life:

Optical fibre cable 15 years Leasehold improvements Lower of 10 years or term of lease Equipments at customers premises 3-5 years

Intangible assets

Goodwill. Goodwill, which has a limited useful economic life, is amortized over a period of three to five years on a straight-line basis from the year of acquisition. Trademark. Consideration paid for acquisition of trademark is amortized over a period of three years.

Indefeasible right of use. Indefeasible right of use in Dark Fiber circuits is recorded as an intangible asset and is amortized over the contracted period of use of 10 years. Intangible assets are stated at cost less accumulated amortization. Impairment We assess at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, we estimate the recoverable amount of the asset. If such recoverable amount of the

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asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the profit and loss account. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost. Provisions and contingent liabilities We recognise a provision when there is a present obligation as a result of a past (or obligating) event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Inventory Inventory comprising of internet protocol and other devices are valued at lower of cost and net realizable value. In determining the cost, first-in first-out method is used. The comparison of cost and net realizable value is made on an item-by-item basis. Foreign exchange transactions Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the year / period are recognized in the profit and loss account. Monetary assets and liabilities in foreign currency, which are outstanding as at the year / period -end are translated at the year/ period-end at the closing exchange rate and the resultant exchange differences are recognized in the profit and loss account. Assets taken on operating leases Lease arrangements, where the risks and rewards incidental to ownership of an asset substantially vests with the lessor, are recognised as operating leases. Lease payments under operating lease are recognised as an expense in the profit and loss account on straight-line basis. Assets taken on finance leases Finance leases, which effectively transfer to us substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as assets taken on lease. Lease payments are apportioned between the finance charges and reduction of the lease liability. Finance charges are charged directly against income or capitalized to the fixed assets as the case may be. Taxation Income tax expense comprises current tax expense and deferred tax expense or credit computed in accordance with the relevant provisions of the Income Tax Act. Provision for current taxes is recognized under the taxes payable method based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act. The Fringe Benefit Tax has been abolished from 1 April 2009. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements of the Company. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment rate.

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Deferred tax assets in respect of carry forward losses are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. Other deferred tax assets are recognized only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized. Employee Welfare Scheme We apply the Guidance Note on “Accounting for Employee Share Based Payments” issued by the Institute of Chartered Accountants of India to account for costs related to the Employee Welfare Scheme. We follow intrinsic value method to calculate the compensation cost. Accordingly, compensation expense as determined on the date of the grant is amortized over the vesting period. Components of Income and Expenditure

Income We derive income from (i) revenue and (ii) other income. Revenue We derive revenue from (i) revenue from services and (ii) revenue from sale of modems, internet protocol and other devices. Revenue from services

Revenue from services includes the following:

• Broadband internet. Broadband internet represents income from subscription fees (prepaid and postpaid) for the delivery of Cable Broadband internet services to residential and enterprise segment customers, including revenue from security, storage and systems integration solutions and other value added services. We provide broadband services to our subscribers through our HFC network through cable modems. In certain cases, we provide broadband services to our enterprise customers through last mile connectivity taken on lease from third parties.

A majority of our broadband internet subscribers, particularly our residential subscribers, are on prepaid broadband internet packages, while our enterprise customers are typically under specific contracts. Revenue from prepaid packages is recognized based on the actual usage by our subscribers and revenue relating to any unutilized time or MB capacity is recognized as income in the month in which the package life expires. With respect to customers under specific contracts, revenue is recognized on provision of services on a pro rata basis in accordance with the terms of the contract.

Revenue from broadband internet services include revenue on sale of starter packs, installation charges and rental on modems. Revenue on sale of starter packs is recognized as income on activation, while installation charges are recognized on completion of installation. Modem rent is recognized over the period of usage of modems by the subscriber, while one-time modem rent is recognized as revenue on installation of modems.

• Internet telephony. Internet telephony represents income from provision of internet telephony services to our residential and enterprise segment customers.

• Dial up internet. Dial up internet represents income from provision of internet services through dial up internet modems. We received a small amount of revenue from such services in the past and currently do not provide such services;

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• Lease rental of Dark Fiber and equipment. Lease rental of Dark Fiber and equipment represents income from (i) leasing of excess capacity in our optic fiber backbone to other telecommunication and cable television service providers, including DOPL, and (ii) income from leasing of certain network equipment, including head-end equipment infrastructure, to DOPL for use in its cable television business. Lease rentals for assets given on lease under operating lease arrangements are recognized on a straight-line basis over the term of the lease.

Revenue from sale of modems, internet protocol and other devices

We also receive revenue from sale of modems, internet protocol and other devices that we provide our subscribers in connection with the provision of Cable Broadband services. Other income Other income includes (i) interest income on fixed deposits and loans, primarily relating to unutilized capital maintained as fixed deposits with banks; and (ii) miscellaneous income, including sale of scrap and foreign exchange gains, if any. Other income is recognized as adjusted for any excess liability written back. Expenditure

Our expenditure comprises: Network operation expenses

Network operation expenses include various expenses incurred in connection with our operations and the provision of Cable Broadband internet services, including bandwidth charges paid to gateway providers for use of bandwidth in connection with the provision of Cable Broadband services, lease rent for developing our network paid to municipal and other relevant authorities, call termination costs paid in connection with internet telephony services, right of use expenses paid to municipal authorities and the DoT in connection with revenue-share arrangements entered into with such authorities, node rent paid in connection with the placement of fiber nodes used in our network infrastructure, repairs and maintenance costs associated with our cable network and equipment, as well as domain registration fees. These expenses are directly or indirectly attributable to the services we provide to our subscribers and depend on the number of subscribers in our network. Advertisement and sales promotion expenses

Our advertisement and sales promotion expenses comprise advertising and marketing expenses, sales promotion expenses and incentives, and dealer commissions and related expenses. Personnel cost

Personnel costs comprise salaries and bonuses, provident fund contributions, staff welfare expenses and employee welfare scheme expenses.

Other expenditure

Other expenses consist of rent, repairs and maintenance, insurance, rates and taxes, cost of modem, internet protocol and other devices consumed, legal and professional charges, auditors' fees, electricity and water charges, traveling and conveyance expenses, vehicle operating and maintenance costs, recruitment expenses, printing and stationery, office and guest house maintenance costs, bank charges incurred and other miscellaneous expenses. Other expenses also include any provision made for doubtful debts or any loss incurred on the sale of fixed assets. Interest and finance charges

Interest and finance charges reflect the interest and finance charges payable by us on our borrowings from banks for working capital loans as well as long term loans.

Depreciation and amortization

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Depreciation on fixed assets, other than as described below, is provided on a straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act. Fixed assets individually costing up to Rs.5,000 are depreciated at 100% over a period of one year. The following assets are depreciated on straight-line basis over their estimated useful life: Optical fiber cable 15 years Leasehold improvements Lower of 10 years or term of lease Equipment at customer premises 3-5 years

Goodwill, which has a limited useful economic life, is amortized over a period of three to five years on a straight-line basis from the year of acquisition. Consideration paid for acquisition of trademark is amortized over a period of three years. The indefeasible right of use of Dark Fiber circuits obtained in connection with arrangements entered into with certain network provider in Bangalore is recorded as an intangible asset and is amortized over the contracted period of use of 10 years. Intangible assets are stated at cost less accumulated amortization. Taxation Income tax expense comprises current tax expense and deferred tax expense or credit computed in accordance with the relevant provisions of the Income Tax Act, as amended. Provision for current taxes is recognized under the taxes payable method based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act. The fringe benefit tax has been abolished from April 1, 2009. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences that result between the profits offered for income taxes and the profits as per the financial statements of the Company. Deferred tax assets and liabilities are measured using the tax rates and the tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment rate. Deferred tax assets in respect of carry forward losses are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. Other deferred tax assets are recognized only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized.

Results of Operations Our restated financial statements for fiscal 2005, 2006, 2007, 2008 and 2009 and our restated financial statements for the six months ended September 30, 2009 included in this Draft Red Herring Prospectus have been presented in compliance with paragraph B(1) of Part II of Schedule II to the Companies Act, Indian GAAP and the ICDR Regulations. The effect of such restatement is that our financial statements included in this Draft Red Herring Prospectus have been restated to conform to methods used in preparing our latest financial statements, as well as to conform to any changes in accounting policies and estimates. For further information relating to such restatement adjustments, see "Management's

Discussion and Analysis of Financial Condition and Results of Operations - Restatement Adjustments" below.

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The following table sets forth certain information with respect to our results of operations for the periods indicated:

Year ended March 31, Six months

ended

September 30,

2007 2008 2009 2009

(Rs. in millions)

Income

Revenue 444.15 680.98 738.69 356.16

Other income 40.10 25.30 53.04 20.31

484.25 706.28 791.73 376.47

Expenditure

Network operation expenses 133.48 197.93 184.83 79.95

Advertisement and sales promotion expenses 33.48 102.74 34.29 16.40

Personnel cost 179.71 194.07 199.71 83.79

Other expenditure 181.71 315.42 247.55 138.67

528.38 810.16 666.38 318.81

Restated loss before depreciation, miscellaneous expenditure, interest and finance charges and tax (44.13) (103.88) 125.35

57.66

Depreciation and amortization 216.98 256.53 269.45 138.33

Miscellaneous expenditure written off 1.67 - - -

Interest and finance charges 1.02 2.89 13.02 10.29

219.67 259.42 282.47 148.62

Restated loss before tax (263.80) (363.30) (157.12) (90.96)

Fringe benefit tax 2.67 2.84 2.37 -

Restated loss for the year/ period (266.47) (366.14) (159.49) (90.96)

Restatement Adjustments

The following table sets forth certain information relating to the restatement adjustments applied for the periods indicated:

Particulars Year ended March 31, Six months ended

September 30,

2007 2008 2009 2009

(Rs. in millions)

Net profit (loss) as per audited profit and loss account (254.67) (327.11) (186.11) (109.30)

Adjustments

Other income

Foreign exchange on liability related to acquisition of fixed assets

0.57 - -

-

Write back of unspent liabilities 0.76 (9.71) (10.41) -

Network operation expenses

Write-back of unspent liabilities 6.84 1.19 -

-

Advertisement and sales promotion expenses

Prior period adjustments - (2.00) - -

Write-back of unspent liabilities 0.01 (0.00) - -

Employee welfare scheme expenses

- prior period adjustments (22.39) (24.51) - -

- exceptional items - - (22.87) 22.87

Personnel Costs

Write-back of unspent liabilities 3.00 6.19 - -

Transitional liability in respect of employee benefits - - - -

Other expenditure

Prior period adjustment (0.05) (10.65) (0.12) -

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Write-back of unspent liabilities 0.95 0.20 - -

Depreciation and amortization

Change in rate of depreciation on plan and machinery (1.92) (1.85) (1.92) (0.92)

Foreign exchange gain on liability related to acquisition of fixed assets

0.01 0.08 0.12 0.06

Write back of unspent liabilities pertaining to acquisition of fixed assets

0.08 0.18 0.19 0.10

Prior period adjustment 0.01 1.85 1.92 -

Miscellaneous expenditure written off

Preliminary and deferred revenue expenses to be written off in the year of occurrence 0.33 - -

-

Prior period adjustments

Restatement impact - - 59.71 (3.77)

Net profit (loss) as per restated profit and loss account (266.47) (366.14) (159.49) (90.96)

The principal restatement adjustments are as follows: Changes in accounting policies and estimates Exchange difference on foreign currency liability. Prior to April 1, 2007, we capitalized exchange difference on foreign currency liability incurred for acquisition of fixed assets. In accordance with Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates (revised 2003) with effect from April 1, 2007, exchange differences relating to acquisition of imported fixed assets, which were previously adjusted in the carrying amount of the related fixed assets until the year ended March 31, 2007, is required to be charged to profit and loss account from April 1, 2007. For the purpose of restatement, exchange differences capitalized prior to April 1, 2007 have been charged to profit and loss account and accordingly depreciation of fixed assets has been recomputed. Miscellaneous expenditure. Prior to fiscal 2007, we had adopted the policy to amortize miscellaneous expenditure on a pro rata basis over a period of five years. In fiscal 2007, we changed our accounting policy and charged the entire unamortized balance of miscellaneous expenditure to the profit and loss account. For the purpose of restatement, such expenditure has been charged off to the respective years in which such expenditure was incurred. Change in useful life of plant and machinery. In fiscal 2006, we had reviewed and revised the useful life of plant and machinery from nine years to 15 years. The effect of change in the estimated useful life of plant and machinery had been accounted prospectively in fiscal 2006. For the purpose of restatement, the effect of change in such estimate has been calculated retrospectively and depreciation had been recomputed and has been adjusted to the respective years. Excess liability written back. In fiscal 2008 and 2009, we had written back unspent liabilities relating to earlier years. For the purpose of restatement, such amounts of unspent liabilities have been adjusted to the respective years in which these liabilities were incurred. Prior period adjustments Prior period expenses/ income. In fiscal 2009 and in the six months ended September 30, 2009, certain items have been disclosed as prior period items. For the purpose of restatement, such prior period items have been appropriately adjusted in respective years in which such expenditure was incurred. Regroupings Figures have been regrouped for consistency of presentation. Non adjustments Retirement benefits. We have adopted revised AS 15 - Employee Benefits with effect from April 1, 2007. It has not been possible for the management to determine the effect on the losses for fiscal 2005 and 2006, had the revised standard been adopted by us for each of those years. No adjustment has been made for earlier years, since in the opinion of the Company, the impact of the same on the restated financial statements is not material.

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Unspent liabilities written back. In fiscal 2007, Iqara Telecoms India Private Limited was merged with the Company with effect from April 1, 2006. In fiscal 2008 and 2009, certain liabilities of earlier years of Iqara Telecoms India Private Limited were written back which relate to periods prior to such merger. For the purpose of the restated financial statements, such liabilities have not been adjusted in the respective years as Iqara Telecoms India Private Limited was not a part of the Company’s operations in those years.

Results of Operations for the Six Months ended September 30, 2009

Income

Total income was Rs.376.47 million in the six months ended September 30, 2009, comprising revenue of Rs.356.16 million and other income of Rs.20.31 million. Revenue (comprising revenue from services and revenue from sales of modems, internet protocol and other devices) contributed 94.60% of our total income in the six months ended September 30, 2009. Revenue

The following table sets forth certain information relating to our revenue in the six months ended September 30, 2009: Six months ended September 30, 2009

(Rs. in millions)

Revenue

Revenue from Services

Broadband internet 289.77

Internet telephony 3.26

Lease rental of Dark Fiber and equipment 32.29

Revenue from sale of modems, internet protocol and other devices 30.84

Total 356.16

In the six months ended September 30, 2009, our revenue was Rs.356.16 million, comprising revenue from services of Rs.325.32 million and revenue from sale of modems, internet protocol and other devices of Rs.30.84 million. We received revenue from broadband internet services of Rs.289.77 million in the six months ended September 30, 2009. Broadband internet services contributed 76.97% of our total income in the six months ended September 30, 2009. Lease rental of Dark Fiber and equipment was Rs.32.29 million in the six months ended September 30, 2009, and contributed 8.58% of our total income in the six months ended September 30, 2009. We expect lease rental of Dark Fiber to continue to be a significant source of revenue in the future. Revenue from sale of modems, internet protocol and other devices was Rs.30.84 million in the six months ended September 30, 2009, and contributed 8.19% of our total income in the six months ended September 30, 2009. Other income

Other income was Rs.20.31 million in the six months ended September 30, 2009, primarily resulting from interest income from fixed deposit and loans of Rs.18.34 million. Miscellaneous income was Rs.1.97 million in the six months ended September 30, 2009. Other income contributed 5.40% of our total income in the six months ended September 30, 2009. Expenditure

Total expenditure was Rs.467.43 million in the six months ended September 30, 2009. Expressed as percentage of total income, total expenditure was 124.16% in the six months ended September 30, 2009.

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Network operation expenses

The following table sets forth certain information relating to our network operation expenses in the six months ended September 30, 2009:

Six months ended September 30, 2009

(Rs. in millions)

Network operation expenses

Bandwidth charges 40.03

Lease rent – network 6.30

Call termination cost 1.82

Right of use expenses 4.65

Node rent 4.40

Repairs and maintenance - plant and machinery 22.55

Domain registration fees 0.20

Total 79.95

Network operation expenses were Rs.79.95 million comprising primarily Rs.40.03 million of bandwidth charges and Rs.22.55 million of repairs and maintenance expenses for plant and machinery. Expressed as a percentage of total income, network operation expenses was 21.24% in the six months ended September 30, 2009. Advertisement and sales promotion expenses

Advertisement and sales promotion expenses was Rs.16.40 million in the six months ended September 30, 2009, comprising primarily dealer commission and related expenses of Rs.12.09 million. Expressed as a percentage of total income, advertisement and sales promotion expenses was 4.36% in the six months ended September 30, 2009. Personnel cost

Personnel cost was Rs. 83.79 million in the six months ended September 30, 2009, comprising primarily of Rs.65.06 million of salary and wages and Rs.10.47 million of employee welfare scheme costs. Expressed as a percentage of total income, personnel cost was 22.26% in the six months ended September 30, 2009.

Other expenditure

Other expenditure was Rs. 138.67 million in the six months ended September 30, 2009 comprising primarily cost of modems and internet protocol devices of Rs.26.72 million, rent of Rs.15.68 million, discounts to subscribers of Rs.15.23 million, electricity and water charges of Rs.14.19 million and provision of doubtful debts and advances of Rs. 34.08 million. Expressed as a percentage of total income, other expenditure was 36.84% in the six months ended September 30, 2009. Depreciation and amortization

In the six months ended September 30, 2009, depreciation and amortization expenses was Rs.138.33 million. Expressed as a percentage of total income, depreciation and amortization was 36.74% in the six months ended September 30, 2009.

Interest and finance charges

Interest and finance charges was Rs.10.29 million in the six months ended September 30, 2009, comprising of interest on secured loans of Rs.7.56 million. Expressed as a percentage of total income, interest and finance charges was 2.73% in the six months ended September 30, 2009.

Restated loss before tax

In the six months ended September 30, 2009, restated loss before taxes was Rs. 90.96 million.

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Restated loss for the period

Restated loss for the period was Rs. 90.96 million in the six months ended September 30, 2009. We did not incur any income taxes as a result of accumulated business losses and depreciation. There was no fringe benefit tax payable in the six months ended September 30, 2009 as the fringe benefit tax is no longer applicable with effect from April 1, 2009. Restatement adjustments For further information on the restatement adjustments to our financial statements as of and for the six months ended September 30, 2009, see "Management's Discussion and Analysis of Financial Condition

and Results of Operations" on page 130 of this Draft Red Herring Prospectus. Year ended March 31, 2009 compared to Year ended March 31, 2008

Income Total income increased by Rs.85.45 million, or 12.10%, from Rs.706.28 million in fiscal 2008 to Rs.791.73 million in fiscal 2009, primarily due to an increase in revenue from services. Revenue

The following table sets forth certain information relating to our revenue in the periods indicated:

Year ended March 31,

2008 2009

(Rs. in millions)

Revenue

Revenue from Services

Broadband internet 585.71 627.19

Internet telephony 16.23 10.76

Lease rental of Dark Fiber and equipment 2.95 61.17

Revenue from sale of modems, internet protocol and other devices

76.09 39.57

Total 680.98 738.69

Revenue increased by Rs.57.71 million, or 8.47%, from Rs.680.98 million in fiscal 2008 to Rs.738.69 million in fiscal 2009, primarily due to an increase in revenue from broadband internet and lease rental of Dark Fiber and equipment, offset in part of a decrease in revenue from sale of modems, internet protocol and other devices. Revenue from broadband internet increased by Rs.41.48 million, or 7.08%, from Rs.585.71 million in fiscal 2008 to Rs.627.19 million in fiscal 2009 primarily due to an increase in usage by our residential subscribers as well as additional business in the enterprise segment. Although we continued to face pricing pressures, this was compensated by an increase in the usage by our subscribers as a result of higher broadband access speeds, browsing and downloads. Revenue from broadband internet services contributed 82.93% and 79.22% of our total income in fiscal 2008 and 2009, respectively. Revenue from internet telephony decreased by Rs.5.47 million, or 33.70%, from Rs.16.23 million in fiscal 2008 to Rs.10.76 million in fiscal 2009, primarily due to increased competition from grey market operators. Revenue from internet telephony contributed 2.30% and 1.36% of our total income in fiscal 2008 and 2009, respectively. Lease rental of Dark Fiber and equipment increased significantly by Rs.58.22 million, or approximately 20 times, from Rs.2.95 million in fiscal 2008 to Rs.61.17 million in fiscal 2009. Lease rental of Dark Fiber and equipment increased significantly in fiscal 2009 primarily resulting from additional leases of our fiber optic cable network in fiscal 2009. In addition, we leased certain network equipment relating to the cable television business to DOPL. Lease rental of Dark Fiber and equipment contributed 0.42% and 7.73% of our total income in fiscal 2008 and 2009, respectively.

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Revenue from sale of modems, internet protocol and other devices however decreased by Rs.36.52 million, or 48.00%, from Rs.76.09 million in fiscal 2008 to Rs.39.57 million in fiscal 2009 due to a drop in the sale of internet product devices as a result of lower internet telephony business. Revenue from sale of modems, internet protocol and other devices contributed 10.77% and 5.00% of our total income in fiscal 2008 and 2009, respectively. Other income

Other income increased by Rs.27.74 million, or 109.61%, from Rs.25.30 million in fiscal 2008 to Rs.53.04 million fiscal 2009. Other income contributed 3.58% and 6.70% of our total income in fiscal 2008 and 2009, respectively. Interest income on fixed deposits and loans increased by Rs.16.83 million, or 95.25%, from Rs.17.66 million in fiscal 2008 to Rs.34.49 million in fiscal 2009, primarily due to fixed deposits and interest on loans advanced to DOPL. Miscellaneous income was Rs.1.53 million and Rs.4.21 million in fiscal 2008 and 2009, respectively. In addition, we also wrote back excess liability of Rs.6.11 million and Rs.14.34 million in fiscal 2008 and 2009, respectively.

Expenditure

Total expenditure decreased by Rs. 120.72 million, or 11.29%, from Rs. 1,069.57 million in fiscal 2008 to Rs. 948.85 million in fiscal 2009, primarily due to decreases in advertisement and sales promotion expenses and other expenditure. Network operation expenses

The following table sets forth certain information relating to our network operation expenses in the periods indicated: Year ended March 31,

2008 2009

(Rs. in millions)

Network operation expenses

Bandwidth charges 102.14 110.83

Lease rent – network 10.84 4.08

Call termination cost 13.05 8.07

Right of use expenses 3.03 2.14

Node rent 7.37 8.18

Repairs and maintenance - plant and machinery 60.88 51.23

Domain registration fees 0.63 0.30

Total 197.93 184.83

Network operation expenses decreased by Rs.13.10 million, or 6.62%, from Rs.197.93 million in fiscal 2008 to Rs.184.83 million in fiscal 2009, primarily due to lower repairs and maintenance costs in fiscal 2009 as well as lower lease rent - network, offset in part by an increase in bandwidth charges. Expressed as a percentage of total income, network operation expenses decreased from 28.02% in fiscal 2008 to 23.35% in fiscal 2009. Bandwidth charges increased by Rs.8.69 million, or 8.51%, from Rs.102.14 million in fiscal 2008 to Rs.110.83 million in fiscal 2009, primarily due to additional subscribers and increased usage of bandwidth by subscribers both in the residential and enterprise segment. Repairs and maintenance costs however decreased by Rs.9.65 million, or 15.85%, from Rs.60.88 million in fiscal 2008 to Rs.51.23 million in fiscal 2009, primarily due to lower repair and maintenance costs of plant and machinery as a result of better rates negotiated with vendors and contractors. Lease rent – network also decreased by Rs.6.76 million, or 62.31%, from Rs.10.84 million in fiscal 2008 to Rs.4.08 million in fiscal 2009. Advertisement and sales promotion expenses

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Advertisement and sales promotion expenses decreased by Rs.68.45 million, or 66.62%, from Rs.102.74 million in fiscal 2008 to Rs.34.29 million in fiscal 2009, primarily due to lower advertisement and marketing expenditure in fiscal 2009 compared to that in fiscal 2008. In fiscal 2008, we incurred higher advertisement and marketing expenditure as we undertook significant brand-building and publicity activities covering all our markets in various media. Expressed as a percentage of total income, advertisement and sales promotion expenses decreased from 14.55% in fiscal 2008 to 4.33% in fiscal 2009. Personnel cost

Personnel costs increased by Rs.5.64 million, or 2.91%, from Rs.194.07 million in fiscal 2008 to Rs. 199.71 million in fiscal 2009. Salaries and bonus decreased from Rs.148.19 million in fiscal 2008 to Rs.146.64 million in fiscal 2009 due to a decrease in the number of employees resulting from certain rationalization initiatives undertaken by us. Expressed as a percentage of total income, personnel cost decreased from 27.48% in fiscal 2008 to 25.23% in fiscal 2009. Other expenditure

Other expenditure decreased by Rs.67.87 million, or 21.52%, from Rs.315.42 million in fiscal 2008 to Rs.247.55 million in fiscal 2009, primarily due to a decrease in modem, internet protocol and other devices consumed as well as lower legal and professional costs incurred in fiscal 2009. Expressed as a percentage of total income, other expenditure decreased from 44.66% in fiscal 2008 to 31.27% in fiscal 2009. Modem, internet protocol and other devices consumed decreased by Rs.26.90 million, or 44.84%, from Rs.59.98 million in fiscal 2008 to Rs.33.09 million in fiscal 2009. The decrease in modem, internet protocol and other devices consumed was consistent with the corresponding decrease in revenue from sale of modems, internet protocol and other devices, reflecting the lower number of new subscribers in fiscal 2009. Legal and professional costs also decreased by Rs.22.06 million, or 35.43%, from Rs.62.27 million in fiscal 2008 to Rs.40.21 million in fiscal 2009. We incurred higher legal and professional costs in fiscal 2008 primarily relating to stamp duties and registration expenses incurred in connection with the court approved merger process undertaken by the Company with YOU Telecom India Private Limited. Interest and finance charges

Interest and finance charges increased by Rs.10.13 million, or 350.08%, from Rs.2.89 million in fiscal 2008 to Rs.13.02 million in fiscal 2009, primarily on account of an increase in interest paid on secured term loans from Rs.0.09 million in fiscal 2008 to Rs.9.83 million in fiscal 2009. We had total outstanding secured loans of Rs.102.35 million and Rs.76.90 million as of March 31, 2008 and 2009, respectively. However, interest and finance charges on secured loans were higher in fiscal 2009 as we incurred interest and finance charges on secured loans for the full year in fiscal 2009, compared to only part of the year in fiscal 2008. Expressed as a percentage of total income, interest and finance charges increased from 0.41% in fiscal 2008 to 1.64% in fiscal 2009. Depreciation and amortization

Depreciation and amortization costs increased by Rs.12.92 million, or 5.04% from Rs.256.53 million in fiscal 2008 to Rs.269.45 million in fiscal 2009. The increase was primarily attributable to additional customer premise equipments (CPE) installed in fiscal 2009 compared to that in fiscal 2008. Expressed as a percentage of total income, depreciation and amortization decreased from 36.32% in fiscal 2008 to 34.03% in fiscal 2009.

Restated loss before tax

For the reasons discussed above, our restated loss before taxes was Rs.363.30 million and Rs.157.12 million in fiscal 2008 and 2009, respectively.

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Restated loss for the year

For the reasons discussed above, our restated loss for the year was Rs.366.14 million and Rs.159.49 million in fiscal 2008 and 2009, respectively. We did not incur any income taxes as a result of accumulated business losses and depreciation. We incurred fringe benefit taxes of Rs.2.84 million and Rs.2.37 million in fiscal 2008 and 2009, respectively. Restatement adjustments For further information on the restatement adjustments to our financial statements for fiscal 2008 and 2009, see "Management's Discussion and Analysis of Financial Condition and Results of Operations " beginning on page 130 of this Draft Red Herring Prospectus. Year ended March 31, 2008 compared to Year ended March 31, 2007

Income Total income increased by Rs.222.03 million, or 45.85%, from Rs.484.25 million in fiscal 2007 to Rs.706.28 million in fiscal 2008, due to increases in revenue from services as well as revenue from sale of modems, internet protocol and other devices. Revenue

The following table sets forth certain information relating to our revenue in the periods indicated:

Year ended March 31,

2007 2008

(Rs. in millions)

Revenue

Revenue from Services

Broadband internet 434.23 585.71

Internet telephony 3.27 16.23

Dial up internet 0.02 -

Lease rental of Dark Fiber and equipment 2.65 2.95

Revenue from sale of modems, internet protocol and other devices

3.98 76.09

Total 444.15 680.98

Revenues increased by Rs.236.83 million or 53.32%, from Rs.444.15 million in fiscal 2007 to Rs.680.98 million in fiscal 2008, primarily due to an increase in revenue from broadband internet and revenue from sale of modems, internet protocol and other devices. Revenue contributed 91.72% and 96.42% of our total income in fiscal 2007 and 2008, respectively. Revenue from broadband internet increased by Rs.151.48 million, or 34.88%, from Rs.434.23 million in fiscal 2007 to Rs.585.71 million in fiscal 2008 primarily due to an increase in number of subscribers in the residential as well as the enterprise segment. In April 2007, we acquired the business of Icenet.Net Limited, which resulted in a significant increase in revenues from customers in the enterprise segment. Revenue from broadband internet services contributed 89.67% and 82.93% of our total income in fiscal 2007 and 2008, respectively. Revenue from internet telephony also increased by Rs.12.96 million, or 396.33%, from Rs.3.27 million in fiscal 2007 to Rs.16.23 million in fiscal 2008, primarily resulting from additional internet telephony subscribers acquired through the acquisition of the business of Icenet.Net Limited. Revenue from internet telephony contributed 0.68% and 2.30% of our total income in fiscal 2007 and 2008, respectively. Revenue from sale of modems, internet protocol and other devices increased by Rs.72.11 million, or 1,809.61%, from Rs.3.89 million in fiscal 2007 to Rs.76.09 million in fiscal 2008 primarily due to the addition of the business resulting from the acquisition of the business of Icenet.Net Limited. Revenue from sale of modems, internet protocol and other devices contributed 0.82% and 10.77% of our total income in fiscal 2007 and 2008, respectively.

148

Other income

Other income decreased by Rs.14.80 million, or 36.90%, from Rs.40.10 million in fiscal 2007 to Rs.25.30 million in fiscal 2008 primarily due to a decrease in interest income on fixed deposits and loans. Other income contributed 8.28% and 3.58% of our total income in fiscal 2007 and 2008, respectively. Interest income on fixed deposits and loans decreased by Rs.20.55 million, or 53.77%, from Rs.38.21 million in fiscal 2007 to Rs.17.66 million in fiscal 2008 primarily due to utilization of funds in our operations. Miscellaneous income was Rs.1.89 million and Rs.1.53 million in fiscal 2007 and 2008, respectively. In addition, we wrote back excess liability of Rs.6.11 million in fiscal 2008. Expenditure

Total expenditure increased by Rs.321.53 million, or 42.98%, from Rs.748.05 million in fiscal 2007 to Rs. 1,069.57 million in fiscal 2008. Network operation expenses

The following table sets forth certain information relating to our network operation expenses in the periods indicated: Year ended March 31,

2007 2008

(Rs. in millions)

Network operation expenses

Bandwidth charges 68.07 102.14

Lease rent – network 10.11 10.84

Call termination cost 2.47 13.05

Right of use expenses 2.07 3.03

Node rent 6.66 7.37

Repairs and maintenance - plant and machinery 43.38 60.88

Domain registration fees 0.72 0.63

Total 133.48 197.93

Network operation expenses increased by Rs.64.45 million, or 48.28%, from Rs.133.48 million in fiscal 2007 to Rs.197.93 million in fiscal 2008 primarily due to increases in bandwidth charges, repairs and maintenance costs and call termination costs. Expressed as a percentage of total income, network operation expenses increased from 27.56% in fiscal 2007 to 28.02% in fiscal 2008. Bandwidth charges increased by Rs.34.07 million, or 50.05%, from Rs.68.07 million in fiscal 2007 to Rs.102.14 million in fiscal 2008, primarily due to additional deployment as a result of the acquisition of the business of Icenet.Net Limited in April 2007. Similarly, repairs and maintenance costs also increased by Rs.17.50 million, or 40.34%, from Rs.43.38 million in fiscal 2007 to Rs.60.88 million in fiscal 2008 as a result of such acquisition and integration of the acquired assets in our existing network. Call termination costs also increased from Rs.2.47 million in fiscal 2007 to Rs.13.05 million in fiscal 2008 as a result of additional call minutes arising from the additional business acquired from Icenet.Net Limited. Network lease rent, node rent and other network operating expenses remained relatively steady in fiscal 2008 compared to that in fiscal 2007. Advertisement and sales promotion expenses

Our advertisement and sales promotion expenses increased by Rs.69.26 million, or 206.87%, from Rs.33.48 million in fiscal 2007 to Rs.102.74 million in fiscal 2008 due to increases in advertisement and marketing expenditure and sales promotion expenses and incentives. Expressed as a percentage of total income, advertisement and sales promotion expenses increased from 6.91% in fiscal 2007 to 14.55% in fiscal 2008. Advertisement and marketing expenditure increased by Rs.43.84 million, or 301.47%, from Rs.14.54 million in fiscal 2007 to Rs.58.38 million in fiscal 2008 on account of increased brand building and publicity activities that we undertook covering all our markets in various media. Sales promotion

149

expenses and incentives also increased by Rs.21.87 million, or 267.33%, from Rs.8.18 million in fiscal 2007 to Rs.30.05 million in fiscal 2008 on account of the expenses incurred on the distribution channel acquired along with the business of Icenet.Net Limited. Personnel cost

Personnel costs increased by Rs.14.36 million, or 7.99%, from Rs.179.71 million in fiscal 2007 to Rs.194.07 million in fiscal 2008. Salaries and bonus costs increased from Rs.142.66 million in fiscal 2007 to Rs.148.19 million in fiscal 2008, while provident fund contributions increased from Rs.8.72 million in fiscal 2007 to Rs.10.72 million in fiscal 2008, primarily due to an increase in the number of employees resulting from the acquisition of the business of Icenet.Net Limited as well as an increase in the number of field executives. Expressed as a percentage of total income, personnel cost decreased from 37.11% in fiscal 2007 to 27.48% in fiscal 2008. Other expenditure

Other expenditure increased by Rs.133.71 million, or 73.59%, from Rs.181.71 million in fiscal 2007 to Rs.315.42 million in fiscal 2008. Expressed as a percentage of total income, other expenditure increased from 37.52% in fiscal 2007 to 44.66% in fiscal 2008. Costs of modem, internet net protocol and other devices consumed increased by Rs.57.26 million, or 2,105.14%, from Rs.2.72 million in fiscal 2007 to Rs.59.98 million in fiscal 2008, corresponding to the increase in income from sales of modems and internet protocol and other devices in fiscal 2008 compared to that in fiscal 2007. Legal and professional costs also increased by Rs.24.41 million, or 64.48%, from Rs.37.86 million in fiscal 2007 to Rs.62.27 million in fiscal 2008 primarily relating to stamp duties and registration expenses incurred in connection with the court approved merger process undertaken by the Company with YOU Telecom India Private Limited. In addition, we made provisions for doubtful debts of Rs.2.2 million and Rs.17.18 million in fiscal 2007 and fiscal 2008, respectively. Interest and finance charges

Interest and finance charges increased by Rs.1.87 million, or 182.74% from Rs.1.02 million in fiscal 2007 to Rs.2.89 million in fiscal 2008, resulting from an increase in secured term loan facilities we availed in fiscal 2008. We had total outstanding secured loans of Rs. 102.34 million as of March 31, 2008, against no such secured loans in fiscal 2007. Expressed as a percentage of total income, interest and finance charges increased from 0.21% in fiscal 2007 to 0.41% in fiscal 2008.

Depreciation and amortization

Depreciation and amortization costs increased by Rs.39.55 million, or 18.23%, from Rs.216.98 million in fiscal 2007 to Rs.256.53 million in fiscal 2008, resulting from the additional network infrastructure relating to the business of Icenet.Net Limited and the expansion of our network infrastructure. Expressed as a percentage of total income, depreciation and amortization decreased from 44.81% in fiscal 2007 to 36.32% in fiscal 2008.

Restated loss before tax

For the reasons discussed above, our restated loss before tax was Rs.263.80 million and Rs.363.30 million in fiscal 2007 and 2008, respectively. Restated loss for the year

For the reasons discussed above, our restated loss for the year was Rs.266.47 million and Rs.366.14 million in fiscal 2007 and 2008, respectively. We did not incur any income taxes as a result of accumulated business losses and depreciation. We incurred fringe benefit taxes of Rs.2.67 million and Rs.2.84 million in fiscal 2007 and 2008, respectively. Restatement adjustments

150

For further information on the restatement adjustments to our financial statements for fiscal 2007 and 2008, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 130 of this Draft Red Herring Prospectus. Liquidity and Capital Resources Our requirement for liquidity and capital primarily arises from the capital cost of the expansion and development of our broadband infrastructure, our working capital requirements, and for financing any acquisitions. Our requirement of capital arises also from our strategic investments in and loans to DOPL for the expansion of DOPL’s business and operations. Historically, we have relied upon a combination of cash generated from operations, working capital facilities from banks and financing arrangement with vendors to fund our requirements and issue of equity shares. Cash Flows

The following table sets forth certain information relating to our cash flows for the periods indicated:

Year ended March 31,

Six months

ended September 30,

2007

2008

2009

2009

(Rs. in millions)

Net cash from (used in) operating activities................................ (233.61) (265.94) (46.93) 5.94

Net cash used in investment activities................................ (102.47) (514.50) (128.51) (32.31)

Net cash from financing activities................................................................907.89 441.55 21.29 234.79

Net increase (decrease) in cash and cash equivalents................................571.81 (338.89) (154.15) 208.42

Operating activities

Net cash from operating activities in the six months ended September 30, 2009 was Rs.5.94 million, but net loss before tax in the six months ended September 30, 2009 was Rs.90.96 million. The difference was primarily attributable to depreciation and amortization expenses of Rs.138.33 million, offset in part by interest income of Rs.18.34 million, and as adjusted for working capital changes of increase in loans and advances of Rs.26.28 million primarily relating to receivables from DOPL and decrease in current liabilities and provisions of Rs.10.34 million. Net cash used in operating activities in fiscal 2009 was Rs.46.93 million, but net loss before tax in fiscal 2009 was Rs.157.12 million. The difference was primarily attributable to depreciation and amortization expenses of Rs.269.45 million, offset in part by interest income of Rs.34.49 million, and as adjusted for working capital changes of increase in loans and advances of Rs.192.84 million primarily relating to receivables from DOPL. Net cash used in operating activities in fiscal 2008 was Rs.265.94 million, but net loss before tax in fiscal 2008 was Rs.363.30 million. The difference was primarily attributable to depreciation and amortization expenses of Rs.256.53 million and increase in current liabilities and provisions of Rs.114.27 million primarily relating to additional credit period from vendors, offset in part by interest income of Rs.17.66 million, increase in loans and advances of Rs.245.39 million primarily relating to receivables from DOPL and increase in sundry debtors of Rs.37.78 million. Net cash used in operating activities in fiscal 2007 was Rs.233.61 million, but net loss before tax in fiscal 2007 was Rs.263.80 million. The difference was primarily attributable to depreciation and amortization expenses of Rs.216.98 million, decrease in sundry debtors of Rs.23.38 million and increase in current liabilities and provisions of Rs.35.95 million, offset in part by interest income of Rs. 38.21 million and increase in loans and advances of Rs.229.87 million primarily relating to the prepaid advertisement charges under the equity and advertisement arrangements with BCCL. Investing Activities

Net cash used in investing activities in the six months ended September 30, 2009 was Rs.32.31 million, comprising primarily purchase of fixed assets of Rs.38.06 million, offset in part by interest received of

151

Rs.5.53 million. Net cash used in investing activities in fiscal 2009 was Rs.128.51 million, comprising primarily purchase of fixed assets (net of sales) of Rs.160.05 million and investments in equity shares of Digital Outsourcing Private Limited of Rs.4.49 million, offset in part by interest received of Rs.34.73 million. Net cash used in investing activities in fiscal 2008 was Rs.514.50 million, comprising primarily purchase of fixed assets of Rs.275.80 million, investments in equity shares of Digital Outsourcing Private Limited of Rs.187.74 million and assets taken over on business purchase of Rs.75.40 million relating to the acquisition of Icenet.Net Limited in April 2007, offset in part by interest received of Rs.23.78 million.

Net cash used in investing activities in fiscal 2007 was Rs. 102.47 million, comprising primarily purchase of fixed assets of Rs.153.03 million and purchase of investments in units of mutual funds of Rs.61.00 million, offset in part by interest received of Rs. 31.01 million. Financing activities

Net cash generated from financing activities in the six months ended September 30, 2009 was Rs.234.79 million, comprising proceeds from term loans of Rs.243.70 million from YTML, offset in part by repayment of term loans of Rs.1.34 million and interest on term loan/ lease interest paid of Rs. 7.57 million.

Net cash generated from financing activities in fiscal 2009 was Rs.21.29 million, comprising proceeds from issuance of equity shares of Rs.25.00 million to Edelweiss Capital Limited and proceeds from term loan of Rs.12.57 million, offset in part by repayment of term loans of Rs.6.95 million and interest on term loan/ lease interest paid of Rs.9.33 million. Net cash generated from financing activities in fiscal 2008 was Rs.441.55 million, comprising proceeds from issuance of equity shares of Rs.436.79 million to YTML and proceeds from term loans of Rs.4.76 million.

Net cash generated from financing activities in fiscal 2007 was Rs.907.89 million, comprising proceeds from issuance of equity shares of Rs.2,256.10 million to YTML as adjusted for proceeds from receipt of share application money of Rs.1,526.81 million in May 2006, proceeds from issue of debentures to BCCL of Rs.223.70 million under the advertisement arrangements with BCCL, offset in part by repayment of term loans of Rs.45.10 million.

Contractual obligations The following table provides certain information relating to our total indebtedness as of September 30, 2009:

Payment due by

Total indebtedness as

of September 30, 2009

Less than 1

year 1-3 years 3-5 years

More than 5

years

(Rs. in million)

Secured 9.04 2.13 5.67 1.24 -

Unsecured 242.30 4.85 237.45 - -

Estimated interest payment(1) 1.21 10.63 16.16 3.84 -

______________ (1) Interest payments for long-term fixed rate debts have been calculated based on applicable rates and payment dates. Interest

payments on floating rate debt have been calculated based on the payment dates and interest rates as of September 30, 2009 for each

relevant debt instrument.

We maintain debt levels that we establish through consideration of a number of factors, including

requirements for the expansion of our Cable Broadband network, cash flow expectations, cash

requirements for operations, and our overall cost of capital. See section “Financial Indebtedness” on page

156 and “Financial Statements” beginning on page 129 for additional information about our borrowings.

152

As of September 30, 2009, we had outstanding secured debt of Rs.58.48 million, consisting of loan

against hypothecation of movable assets of Rs.9.04 million and finance lease obligations of Rs.49.44

million, both from Cisco Capital India Private Limited, principal supplier of our network equipment. As

of September 30, 2009, we had outstanding unsecured debt of Rs.242.30 million, primarily from YTML.

We expect to incur significant additional indebtedness in the future, including in connection with the

expansion of our Cable Broadband network, and the expansion of the cable television business through

DOPL and its subsidiaries.

Some of our financing agreements also include various conditions and covenants that require us to obtain

lender consents prior to carrying out certain activities and entering into certain transactions. Failure to

meet these conditions or obtain such consents in a timely manner, or at all, could have significant

consequences on our business and operations. Specifically, under some of our financing agreements, we

require, and may be unable to obtain, consents from the relevant lenders for, among others, the

amendment of our charter documents, any merger, amalgamation, reconstruction, consolidation,

restructuring, reorganization or other similar transaction, as well as transactions related to a change in our

shareholding pattern (whether legal or beneficial) or management structure, where our Company is not

the surviving entity or as a result of which an event of default arises, and undertaking any winding-up or

liquidation proceedings. Some of our financing agreements are also be subject to certain conditions and

covenants, including the absence of a material adverse change in our business, assets, financial condition,

prospects and credit standing, specified financial ratios and maintaining our shareholding and

management structure. Such covenants may restrict or delay certain actions or initiatives that we may

propose to take from time to time.

A failure to observe such covenants or conditions under our financing arrangements or to obtain

necessary consents required thereunder may lead to the termination of our credit facilities, acceleration of

all amounts due under such facilities and the enforcement of any security provided. Any acceleration of

amounts due under such facilities may also trigger cross default provisions under our other financing

agreements. If the obligations under any of our financing documents are accelerated, we may have to

dedicate a substantial portion of our cash flow from operations to make payments under such financing

documents, thereby reducing the availability of cash for our working capital requirements and other

general corporate purposes.

The following table sets forth certain information relating to future payments due under known

contractual commitments as of September 30, 2009, aggregated by type of contractual obligation:

Payment due by

Total contractual obligations as of

September 30, 2009

Less than

1 year 1-3 years 3-5 years

More than

5 years

(Rs. in millions)

Obligations under capital

leases

49.44 19.11 30.11 0.22 -

Capital commitments 18.95 18.95 - - -

Non-cancelable operating

lease obligations

3.50 3.50 - - -

Capital Expenditure

Historical Capital Expenditure

The table below sets forth certain information with respect to our historical capital expenditure in the

periods indicated:

Year ended March 31,

Six months

ended

September 30,

2007

2008

2009

2009

(Rs. in millions)

Intangible Assets - - 14.32 19.50

Tangible Assets

153

Year ended March 31,

Six months

ended September 30,

2007

2008

2009

2009

(Rs. in millions)

Plant & Machinery 160.78 265.54 232.07 26.39

Office Infrastructures 2.95 13.08 25.35 0.52

Capital work-in-progress 53.16 162.86 (144.07) (6.33)

Total capital expenditure incurred 216.89 441.48 127.67 40.08

We have incurred significant capital expenditure in connection with the development and expansion of our quality triple-play capable two-way HFC cable network infrastructure in a scalable manner. In fiscal 2007, 2008 and 2009, and in the six months ended September 30, 2009, we incurred capital expenditure of Rs. 216.89 million, Rs. 441.48 million, Rs. 127.67 million and Rs. 40.08 million, respectively. Historically, we have funded such expenditure through a combination of equity and debt financing and internal accruals.

Planned Capital Expenditure

We expect to incur significant additional capital expenditure and other capital costs in connection with the proposed expansion of our broadband infrastructure to additional cities and towns in the future, including for the establishment of additional network operations control centers and fees payable to municipal authorities in connection with the laying of our cable infrastructure. We also expect to incur capital expenditure relating to the rollout of our wireless services in high density areas and in connection with the upgrade of our servers and billing systems. The success of our integrated Cable Broadband internet and cable television offerings will depend on the difficulty in integrating new technology into the existing businesses and the unanticipated expenses related to such integration. We expect to incur further expenditure to procure STBs and other related equipment in connection with the cable television business and to upgrade DOPL's existing cable network infrastructure from one-way to two-way HFC cable network enabling simultaneous data, voice and video transmission.

We expect to incur capital expenditure of Rs.850.20 million and Rs.723.7 million in fiscal 2011 and fiscal

2012, respectively. For further information, see “Objects of the Issue” on page 39 of this Draft Red

Herring Prospectus.

Our capital expenditure plans are based on management estimates and are subject to a number of

variables, including availability of financing on acceptable terms, desirability of current plans and

macroeconomic factors such as the economy or factors affecting the Cable Broadband internet and cable

television industry. For additional information relating to our capital expenditure plans, see "Objects of

the Issue" beginning on page 39 of this Draft Red Herring Prospectus.

Contingent Liabilities and Off Balance Sheet Arrangements Contingent liabilities as of September 30, 2009 included the following: Particulars Amount

(Rs. in millions)

Revenue share on internet telephony services governed by ISP license relying on TDSAT judgment dated August 30, 2007 on Petition No. 7 of 2003

22.23

Notice issued by Mahanagar Gas Limited (“MGL”) seeking compensation damages with respect to fire accident in the gas pipeline of MGL

1,000.00

Consideration of contractual obligation to take on lease Dark Fiber from IOL Broadband Limited terminated by exercising force majeure clause

9.93

For further information, see “Financial Statements” beginning on page 129 of this Draft Red Herring Prospectus. We do not have any off-balance sheet arrangements, derivative instruments or other relationships with unconsolidated entities that would have been established for the purpose of facilitating off-balance sheet

154

arrangements. Related Party Transactions We have entered into and expect to enter into transactions with a number of related parties, including Digital Outsourcing Private Limited and its subsidiaries and associate company. For further information regarding our related party transactions, see “Related Party Transactions” on page 127 and “Financial

Statements” beginning on page 129 of this Draft Red Herring Prospectus. Qualitative Disclosure about Market Risks General

Market risk is the risk of loss of future earnings, to fair values or to future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the foreign currency exchange rates, interest rates, commodity prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments, foreign currency payables and debt.

Exchange Rate Risk

Changes in currency exchange rates influence our results of operations. While all our revenues is denominated in Indian rupees, a significant portion of our expenses, including cost of certain equipment for our network infrastructure, are denominated in currencies other than Indian rupees, most significantly the U.S. dollar. In addition, approximately 80.56% of our total indebtedness as of September 30, 2009 was denominated in U.S. dollar. We also expect our future capital expenditure in connection with our proposed expansion plans to include expenditure in foreign currencies for imported network and other equipment. Depreciation of the Indian rupee against the U.S. dollar and other foreign currencies may adversely affect our results of operations by increasing the cost of financing any debt denominated in foreign currency or any proposed capital expenditure in foreign currencies.

Interest rate risk

As of September 30, 2009, Rs.242.30 million, or 80.56% of our total debt was subject to variable rates.

An increase in interest expense may have an adverse effect on our results of operations.

Inflation

In recent years, although India has experienced fluctuation in inflation rates, inflation has not had material

impact on our business and results of operations.

Known Trends or Uncertainties

Other than as described in this Draft Red Herring Prospectus, particularly in the sections “Risk Factors”

and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

beginning on page xiv and page 130, respectively, to our knowledge, there are no trends or uncertainties

that have or had or are expected to have a material adverse impact on our income from continuing

operations.

Unusual or Infrequent Events or Transactions

Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no events or

transactions that may be described as “unusual” or “infrequent”.

Seasonality of Business

We do not believe our business to be seasonal.

Future Relationship between Costs and Income

Other than as described in the sections “Risk Factors” and “Management’s Discussion and Analysis of

155

Financial Condition and Results of Operations” beginning on pages xiv and 130, respectively, to our

knowledge, there are no known factors which will have a material adverse impact on our operations and

finances.

Significant Dependence on a Single or Few Customers

We have a wide customer base in the form of residential customers and customers in the enterprise

segment and our business is not dependent on any significant customer or customers.

Competitive Conditions

We expect competition in the Cable Broadband and cable television industry from existing and potential

competitors to intensify. For further details regarding our competitive conditions and our competitors, see

the sections “Risk Factors” and “Business” beginning on pages xiv and 76, respectively.

Significant developments after September 30, 2009 that may affect our future results of operations

Except as stated in this Draft Red Herring Prospectus, to our knowledge no circumstances have arisen

since the date of the last financial statements as disclosed in this Draft Red Herring Prospectus which

materially and adversely affect or are likely to affect, the operations or profitability of our Company, or

the value of our assets or our ability to pay our material liabilities within the next twelve months. Except

as stated in this Draft Red Herring Prospectus, there is no development subsequent to September 30, 2009

that we believe is expected to have a material impact on the reserves, profits, earnings per share and book

value of our Company.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to impact our accounting policies or the

manner of our financial reporting. However, the Institute of Chartered Accountants of India has

announced a road map for the adoption of, and convergence of Indian GAAP with, IFRS, pursuant to

which all public companies in India, such as us, will be required to prepare their annual and

interim financial statements under IFRS beginning with financial year commencing April 1, 2011.

Because there is significant lack of clarity on the adoption of and convergence with IFRS and there is not

yet a significant body of established practice on which to draw in forming judgments regarding its

implementation and application, we have not determined with any degree of certainty the impact that

such adoption will have on our financial reporting.

156

FINANCIAL INDEBTEDNESS

As of March 23, 2010, we have secured loans of Rs. 60.28 million (including interest) and unsecured loan of Rs. 232.05 million (including interest) outstanding. Set forth below is a brief summary of our current financing arrangements as of March 23, 2010.

Secured Loans

Sr.

No.

Name of

the

Lender

Facility Interest Rate Security Repayment

Terms

Amount

outstanding

(Rs. million)

(As on March

23, 2010)

1. CISCO Systems Capital India Private Limited

a. Finance lease for the amount of Rs.12,508,756 for the equipment finance granted to our Company commencing on June 20, 2007 pursuant to Lease Schedule No 01 to Master Lease and Finance Agreement dated April 23, 2007

Pursuant to Lease Schedule No 01 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated March 20, 2009

First and exclusive charge to CISCO Systems Capital India Private Limited of all the right, title, interest, benefits, claims and demands whatsoever of the borrower, in and to or in respect of fixed assets together with all the records, documents and instruments which represent such fixed assets together with all the benefits, rights and incidentals attached thereto, as a security for repayment of the facility together with all the interest, additional interest , costs, charges, expenses, fees, dues, taxes and costs.

Term for repayment originally for the period of 36 months, extended up to June 2011 to be paid quarterly.

2.69 (including interest)

157

Sr.

No.

Name of

the

Lender

Facility Interest Rate Security Repayment

Terms

Amount

outstanding

(Rs. million)

(As on March 23, 2010)

b. Finance lease for the amount of Rs. 39,000,947/- for the equipment finance granted to our Company commencing on September 10, 2007 pursuant to Lease Schedule No 02 to Master Lease and Finance Agreement dated April 23, 2007

Pursuant to Lease Schedule No 02 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated March 10, 2009

Same as above

Term for repayment originally for the period of 36 months, extended up to December 2011 to be paid quarterly.

10.79 (including interest)

c. Finance lease for the amount of Rs. 23,669,733/- for the equipment finance granted to our Company commencing on September 20, 2007 pursuant to Lease Schedule No 03 to Master Lease and Finance Agreement dated April 23, 2007

Pursuant to Lease Schedule No 03 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated March 20, 2009

Same as above

Term of repayment originally for the period of 36 months, extended up to December 2011 to be paid quarterly.

6.55 (including interest)

d. Finance lease for the amount of Rs. 8,131,341/- for the equipment finance granted to our Company commencing on October 5, 2007 pursuant to Lease Schedule No 04 to Master Lease and

Pursuant to Lease Schedule No 04 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated April 05, 2009

Same as above

Term of repayment originally for the period of 36 months, extended up to January 2012 to be paid quarterly.

2.59 (including interest)

158

Sr.

No.

Name of

the

Lender

Facility Interest Rate Security Repayment

Terms

Amount

outstanding

(Rs. million)

(As on March 23, 2010)

Finance Agreement dated April 23, 2007

e. Finance lease for the amount of Rs. 78,032,950/- for the equipment finance granted to our Company commencing on October 20, 2007 pursuant to Lease Schedule No 05 to Master Lease and Finance Agreement dated April 23, 2007

Pursuant to Lease Schedule No 05 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated April 20, 2009

Same as above

Term of repayment originally for the period of 36 months, extended up to January 2012 to be paid quarterly.

24.88 (including interest)

f. Finance lease for the amount of Rs. 988,888/- for the equipment finance granted to our Company commencing on March 01, 2008 pursuant to Lease Schedule No 06 to Master Lease and Finance Agreement dated April 23, 2007

Pursuant to Lease Schedule No 06 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated March 01, 2009

Same as above

Term of repayment originally for the period of 36 months, extended up to September 2012 to be paid quarterly.

0.45 (including interest)

g. Finance lease for the amount of Rs. 2,360,396/- for the equipment finance granted to our Company commencing on September 01, 2008 pursuant to

Pursuant to Lease Schedule No 07 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated March

Same as above

Term of repayment originally for the period of 36 months, extended up to March 2013 to be paid quarterly.

1.50 (including interest)

159

Sr.

No.

Name of

the

Lender

Facility Interest Rate Security Repayment

Terms

Amount

outstanding

(Rs. million)

(As on March 23, 2010)

Lease Schedule No 07 to Master Lease and Finance Agreement dated April 23, 2007

01, 2009

h. Term Loan for the amount of Rs. 7,033,930/- for the purchase of equipments granted to our Company commencing on February 25, 2008 pursuant to Loan Schedule No 01 to Master Lease and Finance Agreement dated April 23, 2007

Pursuant to Loan Schedule No 01 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated February 25, 2009

Same as above

Term of repayment originally for the period of 36 months, extended up to August 2012 to be paid quarterly.

3.22 (including interest)

i. Term Loan for the amount of Rs. 12,574,007/- for the purchase of equipment granted to our Company commencing on July 15, 2008 pursuant to Loan Schedule No 02 to Master Lease and Finance Agreement dated April 23, 2007

Pursuant to Loan Schedule No 02 interest rate was 12.64%. Interest rate was changed to 20.78% pursuant to restructuring dated April 15, 2009

Same as above

Term of repayment originally for the period of 36 months, extended up to January 2013 to be paid quarterly.

7.61 (including interest)

160

Unsecured Loans

Sr.

No.

Name of the

Lender

Facility Interest Rate Repayment Terms Amount

outstanding (Rs. million)

(As on March

23, 2010)

1. YOU Telecom (Mauritius) Limited

External Commercial Borrowing of USD 5,000,000 (USD Five million only) pursuant to loan agreement dated August 12, 2009 for period of four years.

The loan shall accrue interest at the rate of 6 month LIBOR + 300 basis points per annum

Loan shall be fully repayable in 4 (four ) annual instalments commencing from August 2010 in the schedule as set forth below:

Repayment of Principal

Period Amount

August, 2010

US$ 0.1 million

August, 2011

US$ 0.5 million

August, 2012

US$ 1.5 million

August, 2013

US$ 2.9 million

232.05 (including interest)

I. Our Company requires the prior written consent of the YOU Telecom (Mauritius) Limited to undertake, inter alia any of the following actions: a) Formulate any scheme of merger, amalgamation, compromise or reconstruction; b) Any change in the ownership or control of the Company whereby the effective beneficial

ownership or control of the Company shall change; c) Any material change in the management of the business of the Company; d) Make any amendments in the objects clause of the Company’s Memorandum of Association and

in the Articles of Association; e) Any action which results into winding up, liquidation or dissolving of the Company f) Any action which jeopardise the interest of the lender and/or the repayment of the loan or any

part thereof and/or the obligations. Pursuant to written resolution dated February 15, 2010 passed in accordance with Section 7 of the Eight Schedule of the Companies Act, 2001, YOU Telecom (Mauritius) Limited has appointed Mr Partha Choudhury as an authorized representative of the YOU Telecom (Mauritius) Limited to attend the extra-ordinary general meeting of our Company dated February 16, 2010 and to vote in favour of the resolutions mentioned below: a) For increase in authorised share capital of our Company consisting of Rs. Rs.4,180,000,000

divided in to 418,000,000 Equity Shares of Rs.10 each to Rs. 7,500,000,000 divided in to 750,000,000 Equity Shares of Rs.10 each.

b) For adoption and approval of the altered sets of articles of our Company. c) For consideration and approval of further issue of equity shares under section 81 (1A) of the

Companies Act.

II. There are no restrictive covenants in connection with the secured loans granted by CISCO Systems Capital India Private Limited to our Company.

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SECTION VI: LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

Except as stated below there are no outstanding litigation, suits, criminal or civil prosecutions, proceedings or tax liabilities against our Company, our Directors, our Promoters and our Group Companies and there are no defaults, non-payment of statutory dues, overdue payments to banks/financial institutions, defaults against banks/financial institutions, defaults in dues payable to holders of any debenture, bonds and fixed deposits and arrears of preference shares issued by the Company, defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated for economic/civil/any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act) other than unclaimed liabilities of the Company, our Promoters and Directors and no disciplinary action has been taken by SEBI or any stock exchanges against the Company, its Promoters, Group Companies and Directors. Further, our Company, our Group Companies, our Directors, our Promoters and companies which our Directors are associated with as directors, have not been prohibited from accessing or operating in capital markets under any order or direction passed by SEBI and have not been declared as willful defaulters by the RBI or any other governmental authority and there are no proceedings in relation to violations of securities laws committed by our Promoters in the past or currently pending against our Promoter.

1. Contingent liabilities not provided for as of September 30, 2009, as per our restated financial

statements.

The Company, on a stand-alone basis, had contingent liabilities of Rs. 1,032.16 million, as set forth in its restated balance sheet as of September 30, 2009

2. Proceedings against our Company

2.1. Civil Proceedings initiated against our Company

(a) IOL Broadband Limited had initiated arbitral proceeding against our Company in connection

with the alleged termination of lease deed with IOL Broadband Limited, whereby IOL Broadband Limited had agreed to lease to our Company, 50 Kms of dark fibre pair. IOL Broadband Limited filed an application dated June 26, 2006 before the High Court of Mumbai for appointing an arbitrator. With the consent of both the parties the High Court appointed Advocate Mr. Milind Vasudeo as an arbitrator on October 6, 2006.

IOL Broadband Limited filed a statement of claim of Rs.99,32,590 before the arbitrator on December 19, 2006. Thereafter, our Company submitted its counter claim before the arbitrator for loss of profit and refund of advance amounts paid to IOL Broadband Limited aggregating to Rs.23,01,44,104. The aforesaid proceedings are pending hearing and final disposal.

(b) KD Enterprise filed a civil suit dated November 22, 2005 against our Company in connection

with alleged non payment of amount by our Company and sought recovery of amount aggregating to Rs.5,98,990 inclusive of the interest at the rate of 18%. Our Company filed a written statement dated November 26, 2009 denying the aforementioned allegations. The said proceedings are pending hearing and final disposal.

(c) IndusInd Media and Communications Limited have filed four different petitions dated April 20,

2008 against few of its erstwhile distributors in which our Company is also impleaded as a party. IndusInd Media has, pursuant to the aforesaid petitions sought relief against the action of our Company regarding alleged transmission of cable TV signals, which are allegedly against the principles of free and fair trade competition. The proceedings are pending hearing and final disposal.

162

2.2. Criminal proceedings filed against our Company

NIL

2.3. Consumer proceedings initiated against our Company

(a) One Ms. V. Sita Rama Murthy filed a complaint dated July 30, 2009 against our Company in

connection with an alleged non installation of internet connection at the complainant’s address and sought damages aggregating to an amount of Rs.7,75,874/-.Our Company in response to the aforementioned complaints, filed an affidavit denying the aforementioned allegations and claimed an amount of Rs.790.66/- from the complainant. The case is pending in District Consumers Forum No. II Vishakhapatnam, Andhra Pradesh.

(b) Jagrut Nagrik served a notice dated June 23, 2008 upon our Company in connection with alleged damage caused to the mother board allegedly due to faulty installation of modem and has sought damages aggregating to an amount of Rs.40,000 along with interest at the rate of 18% PA. Our Company responded to the aforementioned notice through a letter dated December 10, 2008 refuting the aforementioned allegations. Further, a complaint was filed by Jagrut Nagrik before the consumer forum dated February 19, 2009 in connection with their claims. Our Company filed a reply denying all the allegations made in the aforementioned. The case is pending with the Consumer Disputes Redressal Forum, Vadodara.

(c) One Mr. Mahesh Dharamshibhai Bhingradia filed a complaint dated February 6, 2008 against our Company in connection with allegedly declaring an invoice amounting to Rs.1622 as null and void since it was raised on games which were freely downloadable and sought damages of Rs.2,15,000/-. The matter is pending before District Consumer Forum, Surat

(d) One Mr. Vishal Surana filed a complaint dated May 6, 2009 against our Company in connection with the alleged delay in suspension of the internet broadband connection and sought damages of Rs.35,000/-.The matter is pending before District Consumer Disputes Redressal Forum, Chennai.

(e) M/s Cyberzone internet Café filed a complaint dated April 15, 2008 in connection with alleged failure and gross negligence in providing voice over internet protocol connection by our Company and sought damages aggregating to an amount of Rs.37,746 including interest at the rate of 6% p.a. The complaint was dismissed by the District Consumer Forum, Hyderabad. Further an appeal was filed with the Consumer Disputes Redressal Commission Hyderabad against the order of the Consumer forum

2.4. Tax matters initiated against our Company

NIL 3. Proceedings by our Company

3.1. Civil proceedings initiated by our Company

NIL

3.2. Criminal proceedings by our Company

NIL

3.3. Tax matters initiated by our Company (a) For the Assessment Year 2004-05, our Company has filed an appeal on January 29, 2007 to the

Commissioner of Income Tax (Appeals) against the order of the Assistant Commissioner of Income Tax . The total disallowance against which the appeal is preferred is Rs 2,01,56,654/-.The appeal is pending final hearing and disposal.

163

(b) For the Assessment Year 2006-2007 our Company has filed an appeal on January 20, 2010 to the Commissioner of Income Tax (Appeals) against the order of Deputy Commissioner of Income Tax. The total disallowance against which the appeal is preferred is Rs.11,51,26,796/-. The appeal is pending final hearing and disposal.

(c) For Assessment Year 2007-2008, our Company has filed an Appeal on January 28, 2010 to the Commissioner of Income Tax (Appeals) against the order of Assistant Commissioner of Income Tax. The total disallowance against which the appeal is preferred is Rs.2,36,20,236/-. The appeal is pending final hearing and disposal.

4. Pending proceedings for economic offences and/or disciplinary action taken by SEBI/Stock

Exchange against the company

NIL 5. Proceedings against Directors

5.1. Criminal proceedings filed against our Directors

Proceedings initiated against Mr. Eyyuni Venkat Srinivas Chakravarthy

(a) One Mr. Nilesh Anant Sawant, a field officer of Neo Sports Broadcast Private Limited, has filed

a first information report (FIR No II 54) on November 29, 2009, amongst others, against our Promoter E.V.S. Chakravarthy on alleged grounds of unauthorized retransmission of signals of Neo Sports Channel by M/s SCOD18 Networking Private Limited, under Section 37, 51, 63 and 69 of Indian Copyright Act before the Ambernath police station. The aforesaid proceedings is pending further action from the relevant authorities.

(b) One Mr. Jayesh Umakant Chikhale, a sole and exclusive licensee/distributor for Neo Cricket and Neo Sports Channels in India has filed a complaint (Criminal Complaint No 612 of 2009) dated December 01, 2009 before Judicial Magistrate First Class, Bhiwandi on alleged grounds of unauthorized retransmission of signals of by M/s SCOD18 Networking Private Limited, under Section 63, 69, 51 and 37 of Indian Copyright Act and under section 379 read with section 114 of the Indian Penal Code with section 2(7) of the Sales of Goods Act seeking an order to forward the complaint to the Inspector of Police, Bhiwandi under section 156 (3) of Criminal Procedure Code, 1978. Subsequently, Mr. Jayesh Umakant Chikhale has filed a first information report under section 154 of the Code of Criminal Procedure, 1978, on December 12, 2009, before the Bhiwandi Police Station .The aforesaid proceedings is pending further action from the relevant authorities.

(c) One Mr. Sachin Ramesh Gosavi, a field officer of Neo Sports Broadcast Private Limited, has filed a first information report on November 25, 2009, amongst others, against our Promoter E.V.S. Chakravarthy on alleged grounds of unauthorized retransmission of signals of NEO Sports Channel by M/s SCOD18 Networking Private Limited, under Section 37, 51, 63 and 69 of Indian Copyright Act before the before Tilaknagar Police Station; Chembur. The aforesaid proceedings is pending further action from the relevant authorities. Proceedings initiated against Mr. Perumal Srinivasan

(a) M/s Mittal Investment, Ahmedabad through its proprietor Mr. Bajranglal Balkrishan Agrawal,

has filed a first information report on May 16, 1997 against K.S. Oils Limited wherein Mr. Srinivasan has been named in his capacity as a director of K.S. Oils Limited, at the Shahibaug Police Station in connection with loss of a share certificate of K.S. Oils Limited. The aforesaid proceedings is pending further action from the relevant authorities.

(b) Mr. Shyam Garg has filed a first information report (FIR) dated July 07, 2009 before the Police

Station, Barakhamba Road, New Delhi against K.S. Oils Limited and others in which Mr. Perumal Srinivasan is impleaded as a party in his capacity as a director on the board of K.S. Oils Limited. The FIR has been filed on the alleged grounds of transfer of 5,296,000 shares by way of

164

forgery, cheating, breach of trust and the criminal conspiracy. Mr Shyam Garg thereafter filed an application under section 156(3) of the Criminal Procedure Code, 1978 before the Magistrate, Patiala House Courts, New Delhi in connection with non registration of FIR. The application under section 156(3) was dismissed by Court and the matter is now pending before the Court for pre-summoning evidence.

5.2. Tax matters against Directors

NIL

5.3. Civil proceedings filed against Directors

(a) Mr. Shyam Garg and others has filed an application dated May 11, 2009 before Company Law

Board, Mumbai under Section 111A of the Companies Act against K S Oils Limited, for declaration of rights on 5,296,000 shares already transferred in the names of various promoters of K S oils Limited in which Mr. Perumal Srinivasan has been included a a party in his capacity as a director of K S Oils Limited. K S Oils Limited has filed a reply before Company Law Board, Mumbai and also moved an application for vacation of stay order for transfer of impugned shares as passed in favour of Shyam Garg. The matter is pending final hearing and disposal.

6. Proceedings initiated by the Directors

NIL

6.1. Tax matters initiated by Directors

NIL

6.2. Civil proceedings initiated by Directors

NIL

6.3. Criminal proceedings filed by our Directors

NIL

7. Pending proceedings for economic offences and/ or Disciplinary action taken by the Stock

Exchange and / or SEBI against the Directors NIL

8. Proceedings against the Promoters

8.1. Tax matters against the Promoters

NIL

8.2. Civil proceedings initiated against the Promoters

NIL

8.3. Criminal proceedings against the Promoters

Proceedings initiated against Mr. Eyyuni Venkat Srinivas Chakravarthy

(a) One Mr. Nilesh Anant Sawant, a field officer of Neo Sports Broadcast Private Limited, has filed

a first information report (FIR No II 54) on November 29, 2009, amonst others, against our Promoter E.V.S. Chakravarthy on alleged grounds of unauthorized retransmission of signals of

165

by M/s SCOD18 Networking Private Limited, under Section 37, 51, 63 and 69 of Indian Copyright Act before the Ambernath police station. The aforesaid proceedings is pending further action from the relevant authorities.

(b) One Mr. Jayesh Umakant Chikhale, a sole and exclusive licesee/distributor for Neo Cricket and Neo Sports Channels in India has filed a complaint (Criminal Complaint No 612 of 2009) dated December 01, 2009 before Judicial Magistrate First Class, Bhiwandi on alleged grounds of unauthorized retransmission of signals of by M/s SCOD18 Networking Private Limited, under Section 63, 69, 51 and 37 of Indian Copyright Act and under section 379 read with section 114 of the Indian Penal Code with section 2(7) of the Sales of Goods Act seeking an order to forward the complaint to the Inspector of Police, Bhiwandi under section 156 (3) of Criminal Procedure Code, 1978. Subsequently, Mr. Jayesh Umakant Chikhale has filed a first information report under section 154 of the Code of Criminal Procedure, 1978, on December 12, 2009, before the Bhiwandi Police Station .The aforesaid proceedings is pending further action from the relevant authorities.

(c) One Mr. Sachin Ramesh Gosavi, a field officer of Neo Sports Broadcast Private Limited, has

filed a first information report on November 25, 2009, amongst others, against our Promoter E.V.S. Chakravarthy on alleged grounds of unauthorized retransmission of signals of NEO Sports Channel by M/s SCOD18 Networking Private Limited, under Section 37, 51, 63 and 69 of Indian Copyright Act before the before Tilaknagar Police Station; Chembur. The aforesaid proceedings is pending further action from the relevant authorities.

8.4. Defaults/ non payment of dues by the Promoters

NIL

9. Proceedings by the Promoters

9.1. Tax matters by the Promoters

NIL

9.2. Civil proceedings filed by the Promoters

NIL

9.3. Criminal proceedings filed by the Promoters

NIL

10. Proceedings against the Group Companies 10.1. Tax matters against the Group Companies

NIL

10.2. Civil proceedings initiated against Group Companies NIL

10.3. Criminal proceedings filed against Group Companies NIL

10.4. Defaults/ non payment of dues by the Group Companies

NIL

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11. Proceedings by the Group Companies

11.1. Tax matters by the Group Companies NIL

11.2. Civil proceedings filed by the Group Companies

(a) Pursuant to the option agreement dated March 29, 2006 entered into between CVCIEL and Emaar Properties PJSC (“Emaar”), CVCIEL has option to call upon Emaar to purchase all the remaining shares held by CVCIEL in Emaar MGF Land Limited, (“EMGF”). Emaar disputed CVCIEL’s put option right, and CVCIEL and its nominees commenced arbitration proceedings against Emaar to require, among other things, the enforcement of the put option under the Option Agreement. In connection with the above-mentioned arbitration proceedings, on September 29, 2009, Emaar and CVCIEL executed a Settlement Agreement (the “Settlement Agreement”).

The Settlement Agreement provides, inter alia, that the above-mentioned arbitration proceedings will be stayed subject to certain conditions, including (a) that the arbitral tribunal appointed in such arbitration proceedings will retain jurisdiction over any dispute under the Settlement Agreement (and related documents) and the Option Agreement and (b) the arbitration proceedings may be resumed by CVCIEL by filing a notice with the arbitral tribunal. Further, the Settlement Agreement provides that in the event that a put option or other similar arrangement with any other investor in EMGF is reinstated, the Option Agreement will also be reinstated on terms in relation to reinstatement that are no less favourable to CVCIEL than to any other investor in EMGF.

11.3. Criminal proceedings filed by the Group Companies

NIL

12. Pending proceedings for economic offences and/ or disciplinary action taken by the Stock

Exchange and / or SEBI against the Promoters and/ or the Group Companies

NIL

13. Details of violations of securities laws or willful defaults by our Company, Directors and

Promoters

There have been no violations of securities laws or willful defaults by our Company, Directors and Promoters

14. Past cases where penalties have been instituted against the Company, Promoters and

Group Companies. NIL

15. Notices received by our Company (a) Four P Telenet served a notice dated July 10, 2009 upon our Company demanding an amount

aggregating to Rs.42, 58,244.00 inclusive of interest at the rate of 24 % per annum till July 2009, in connection with the payment due against certain bills. Our Company responded to the aforementioned notice denying the allegations made by Four P Telenet. Our Company is awaiting further reply or action in connection with the aforementioned notice.

(b) Protivity Consulting Private Limited had served a notice dated July 25, 2009 upon our Company demanding an amount aggregating to Rs.3,65,171.00 along with interest at the rate of 15 % per annum in connection with the review, implementation and improvement in renewal management system done by Protivity Consulting Private Limited. Our Company has responded to the aforementioned notice, alleging that due to careless conduct of Protivity Consulting Private Limited, it suffered a huge loss and demanded a sum of

167

Rs.13,64,939.00 from Protivity together with compensation of Rs.50,00,000/-. Our Company is still awaiting further reply or action in connection with the aforementioned notice.

(c) Catamorph Business Services (P) Limited served a notice dated August 14, 2009 upon our Company for winding up alleging that an amount of Rs.84,58,761.00 is due from our Company. Our Company responded to the aforementioned notice refuting the allegations. Our Company is awaiting further reply or action in connection with the aforementioned notice.

(d) Mahanagar Gas Limited had served a notice dated February 24, 2003 upon our Company in connection with the fire accident in the gas pipeline of Mahanagar Gas Limited on February 13, 2003 which was allegedly caused due to the negligence of our Company (then B.G. Broadband Networks India Private Limited) which resulted in damages aggregating to an amount of Rs.1,000,000,000.00. Our Company responded through a letter dated September 6, 2003 refuting the allegations made in the notice. Mahanagar Gas Limited has issued a letter dated May 16, 2009 to our Company claiming damages to the tune of Rs.1,000,000,000.00 as damages on account of fire incident occurred at Kol Dongri, Andheri (East).

(e) Cozy Interiors Private Limited, Mumbai had served a notice dated February 13, 2010 upon our

Company for winding up, alleging that an amount aggregating to Rs. 39,71,615.00 along with interest @ 18 % p.a. from February 2010 onwards is due and payable by our Company for the services provided by Cozy Interiors Private Limited to our Company. Our Company responded to the above mentioned notice denying the allegations made by Cozy Interiors Private Limited. No further communication has been received in this regard till date.

16. Amount owed to Small Scale Undertakings

Except as disclosed in “Financial Information” on page 129, there are no amounts owed to small scale industries by our Company which are outstanding.

17. Material Developments post last balance sheet

Except as stated in “Management’s Discussions and Analysis of Financial Condition and

Results of Operations” on page 130, in the opinion of our Board, there have not arisen, since the date of the last financial statements disclosed in this Draft Red Herring Prospectus, any circumstances which materially and adversely affect or are likely to affect our profitability taken as a whole or the value of its consolidated assets or our ability to pay our liabilities within the next 12 months.

We have entered into the DOPL Share Subscription and Purchase Agreement with the DOPL Selling Shareholders for the acquisition of the DOPL Sale Shares. The transactions contemplated in the DOPL Share Subscription and Purchase Agreement are subject to various conditions, including the outcome of the Issue and applicable statutory and regulatory conditions and the closing conditions stipulated in the DOPL Share Subscription and Purchase Agreement. See “History and Other Corporate Matters” beginning on page 101, "Objects of the Issue" on page 39, "Risk Factors" beginning on page xiv of this Draft Red Herring Prospectus.

168

GOVERNMENT AND OTHER APPROVALS

We have received the necessary permissions/approvals/no-objections/certifications/registrations,

(collectively “Authorisations”), from GoI and various governmental agencies required for our present

business and except as disclosed in this Draft Red Herring Prospectus no further approvals are required

for carrying on our present business. The objects clause and objects incidental to the main objects of the

Memorandum of Association enable our Company to undertake its existing activities. It must be distinctly

understood that in granting these approvals, the GoI, RBI or any other authority does not take

responsibility for the financial soundness or for the correctness of any of the statements made or opinions

expressed in this behalf.

A. Approvals in relation to the Issue

• The Shareholders of our Company have pursuant to a resolution passed at their general meeting held on February 16, 2010, authorized this Issue under section 81 (1A) of the Companies Act.

• The Board of Directors has, pursuant to a resolution passed at its meeting held on February 10, 2010 authorized the Issue.

• Our Company has obtained in-principle listing approvals dated [●] and [●] from the BSE and the NSE, respectively.

B. Authorisations for our Operations: 1. Authorisations obtained by our Company: The following authorisations have been obtained

by our Company and continue to be effective as on the date of this Draft Red Herring Prospectus:

i. Authorisations in connection with our broadband and other internet services operations

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. Certificate of registration

ISP Registration numbers allotted to us are as follows: S/IS/GJ/B/000 404 S/IS/MU/B/000 404

Telecom Regulatory Authority of India

October 25, 2002

NA

2. Allotment of Six digit Access Code

Access code for All India service area - 172594

Government of India, Ministry of Communications & Information Technology, Department of Telecommunication

April 13, 2004

NA

3. Certificate of registration

Registration bearing number 10-444/2003-OSP for setting up bill payment terminals at Gujarat and Mumbai

Government of India, Ministry of Communications & Information Technology, Department of Telecommunications

March 05, 2003

NA

4. Certificate of registration

Certificate of registration bearing number 39/2001 for

Director (BS-II), Government of India, Ministry of

May 1, 2001

NA

169

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

providing Infrastructure Provider Category I (IP-I) to establish and maintain the assets such as dark fibres, right of way, duct spaces and tower for the purpose of grant on lease/rent/sale basis to the licensees of telecom services.

Communications, Department of Telecommunications

5. Certificate of registration

Certificate of registration – Quality Management System – ISO 9001-2000 bearing number FS 536974 covering design development and provision of broadband internet enabled data, voice & video services is issued to our Company

BSi Management Systems India Private Limited

June 19, 2008

June 18, 2011

6. License Agreement License Agreement for provision of internet service, including internet telephony (Category – A) for all India service area, bearing number 820-699/2003-LR executed.

Assistant Director General (LR-I), Ministry of Communications, Department of Telecommunications, Sanchar Bhavan, 20, Ashoka Road, New Delhi – 110 001.

September 4, 2003

Validity is 15 years from the date of issue

7. License Agreement License Agreement for provision of internet service, including internet telephony (Category – B) for Mumbai service area, bearing number 820-605/2002-LR executed.

Assistant Director General (LR-I), Ministry of Communications, Department of Telecommunications, Sanchar Bhavan, 20, Ashoka Road, New Delhi – 110 001.

December 30, 2002

Validity is 15 years from the date of issue

8. License Agreement License Agreement for provision of internet service, including internet telephony (Category – B) for Gujarat service area, bearing number 820-580/2002-LR executed.

Assistant Director General (LR-I), Ministry of Communications, Department of Telecommunications, Sanchar Bhavan, 20, Ashoka Road, New Delhi – 110 001.

June 14, 2002

Validity is 15 years from the date of issue

170

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

9. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company having its branch located at Ahmedabad, for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2008

June 18, 2011

10. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the corporate office located at Mumbai, for registering activities such as top management, MR functions, corporate HR, marketing strategy and ESG

BIS India June 19, 2009

November 13, 2010

11. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the corporate office located at Hazira road, Surat, Gujarat, for registering corporate functions such as IDC, IT, SCM, HR, BOT and BOC and location functions such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

12. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Ahmedabad, for registering activities

BIS India June 19, 2009

November 13, 2010

171

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

such as sales, retention, BOT, SCM, network operations, customer care and HR

13. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Bangalore, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

14. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Chennai, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

15. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Vadodara, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

16. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Andheri, Mumbai, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

172

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

17. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Vashi, Mumbai, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

18. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Shivajinagar, Pune, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

19. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Vishakhapatnam, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

20. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the office located at Begumpet, Secunderabad, for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

BIS India June 19, 2009

November 13, 2010

21. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to

BIS India June 19, 2009

November 13, 2010

173

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

our Company for the office located at Times Square, Gurgaon for registering activities such as sales, retention, BOT, SCM, network operations, customer care and HR

22. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company having its branch located at Bangalore, for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2009

November 13, 2010

23. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the corporate office located at Andheri, Mumbai for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2009

November 13, 2010

24. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for its branch located at Chennai, for operating a quality management system which complies with

Managing Director, BIS India

June 19, 2008

June 18, 2011

174

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

25. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company having its branch located at Secunderabad, for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2008

June 18, 2011

26. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for the corporate office located at Vashi for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2009

November 13, 2010

27. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for its corporate office located at Surat, for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design,

Managing Director, BIS India

June 19, 2008

June 18, 2011

175

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

development and provision of broadband internet enabled data, voice and video services.

28. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for its office located at Vadodara, for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2008

June 18, 2011

29. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for its branch located at Gurgaon, for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2008

June 18, 2011

30. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company having its branch located at Shivajinagar, Pune for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet

Managing Director, BIS India

June 19, 2008

June 18, 2011

176

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

enabled data, voice and video services.

31. Certificate of registration

Certificate of registration vide certificate number FS 536974 granted to our Company for its branch located at Dwarkanagar, Vishakapatnam for operating a quality management system which complies with the requirements of ISO 9001:2000 for the design, development and provision of broadband internet enabled data, voice and video services.

Managing Director, BIS India

June 19, 2008

June 18, 2011

ii. Taxation related approvals:

(a.) Value Added Tax Registration

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. Value Added Tax (“VAT”) registration

Andhra VAT TIN number 28740200313

Commercial Tax Officer, Government of Andhra Pradesh, Commercial Tax Department.

March 23, 2005

NA

2. Certificate of registration under Haryana Value Added Tax Act, 2003

Registration number 06261824382

Assessing Officer, Gurgaon (E) District

August 23, 2004

NA

3. Certificate of registration under Tamil Nadu Value Added Tax Act, 2006

Registration number 33620461325

Commercial Tax Officer, Nungambakkam Assessment

January 1, 2007

NA

4. Certificate of registration for value added tax under Central Sales Tax Act, 1956

VAT registration and registration as a dealer number 28740200313 allotted to us for the business situated at 3rd floor, Gowra Plaza, S.P. Road, Secunderabad

Commercial Tax Officer, Government of Andhra Pradesh, Commercial Tax Department.

December 14, 2007

NA

5. Certificate of registration

Certificate of registration number 27110134863V

Sales Tax Officer (3), Registration Branch, Mumbai

July 9, 2009

NA

177

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

allotted to us under Maharashtra Value Added Tax Act, 2002 as a dealer in manufacturer and others

(b.) Sales Tax Registration

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. Certificate of registration under Delhi Sales Tax Act, 1975

Certificate of registration under Delhi Sales Tax Act, 1975 LC/101/07740274769/0404 allotted to us authorizing us to purchase

• Cables & switches;

• Computer hardware; and

• Computer components and parts

Sales Tax Officer – Ward-101, Sales Tax Department, Delhi

April 05, 2004

NA

2. Certificate of registration

EAC Code 20186 allotted to us as a dealer under Central Sales Tax Act, 1956 for trading in optical fibre, accessories, test equipment and tools for the place of business situated at B-117m, 1st floor, South city – 1, Gurgaon (E), Haryana

Assessing Authority, Gurgaon

August 23, 2004

NA

3. Certificate of registration

Certificate of registration number 816152/13-02-2004 allotted to us as a dealer under the Central Sales Tax Act, 1956 for its business situated at Godown, 83/1, Tiruneermalai Road, Nagaikeni, Chrompet, Chennai – 44.

Commercial Tax Officer, Nungambakkam Assessment Circle, Chennai

February 13, 2004

NA

4. Certificate of registration

Karnataka Value Added Tax registration number and dealer

Assistant Commissioner of Commercial Taxes, Bangalore

February 12, 2009

NA

178

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

registration number in Net working products under Central Sales Tax Act, 1956 is 29730201225 for the businesses located at Peenya 3rd stage, Indiranagar and Jayanagar of Bangalore

5. Certificate of registration under the Central Sales Tax (Registration & Turnover) Rules, 1957

Certificate of registration number 27110134863C allotted to us under the Central Sales Tax (Registration & Turnover) Rules, 1957 as a manufacturer and reseller of cables and optical fibres, epabx, for its place of business situated at Plot no.54, Marol Co-op Industrial Estate Limited, Makwana, Andheri East, Mumbai.

Sales Tax Officer (3), Registration Branch, Mumbai

July 9, 2009

(c.) Other approvals related to taxation

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. Certificate of registration

Certificate of registration for enrollment bearing number 28274253343 is allotted to our Company under Andhra Pradesh Profession Tax Act, 1987

Government of Andhra Pradesh, Commercial Taxes Department, Hyderabad

December 28, 2007

NA

2. Certificate of registration

Certificate of registration bearing number 28931013967 is allotted to our Company under Andhra Pradesh Profession Tax Act, 1987

Government of Andhra Pradesh, Commercial Taxes Department, Hyderabad

December 28, 2007

NA

3. Certificate of registration

Certificate of registration bearing number PT/R/1/1/33 /14098 under The

Sales Tax Officer (1), Registration branch, Mumbai - 10

October 23, 2002

NA

179

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975 is issued to us

4. Certificate of registration

Certificate of registration bearing number PTNAN 07-109-PE-0273 under Tamil Nadu Urban Local Bodies Tax on Professions, Trades, Callings Employment Rules, 1998 is issued to our Company

Commissioner, Corporation of Chennai

July 29, 2004

NA

iii. Authorizations under other Regulations:

(a.) General approvals

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. Permanent Account Number (“PAN”)

PAN AABCB6062F is allotted to our Company

Income Tax Department, Government of India

November 13, 2009

NA

2. Tax Deduction Account Number (“TAN”)

TAN MUMY01908E is allotted to our Company

Income Tax Department, Government of India

March 31, 2007

NA

3. Import Export Code (“IEC”)

IEC bearing number 0501028714 is allotted to our Company

Foreign Trade Development Officer, Ministry of Commerce and Industry

August 16, 2001

NA

4. Centralized Registration under Section 69 of the Finance Act, 1994 (“Service Tax

Code”)

Service Tax Code for the following taxable services

• Online information & data access;

• Erection, commissioning & installation services;

• Internet tele- communication service;

• Supply of tangible goods for use service;

• Business support services; and

• Advertising space

Assistant Commissioner (Service Tax), Central Excise & Customs, Surat – I

March 19, 2010

NA

180

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

or time, is AABCB6062FSD001

(b.) Approvals related to employees/labour

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. Allotment of code number

Code number GJ/SRT/32574 allotted to us under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

Regional Provident Fund Commissioner in charge Sub-Regional office Surat

December 27, 2001

2. Renewal of Certificate of registration

Renewal of registration certificate of establishment bearing number JCL-VSP 33/2005 with regard to name of the establishment as “YOU Broadband and Cable India Limited” for the premises D.No.47-11-11, Eswar Madhav Mansions, Dwarakanagar, Vishakapatnam.

Joint Commissioner of Labour, Visakhapatnam

February 17, 2010

February 16, 2011

3. Certificate of Registration

Certificate of Registration bearing number B-ALC.I/35(21)/2009-R issued to our Company under Contract Labour (Regulation & Abolition) Act, 1970

Government of India, Ministry of Labour

November 11, 2009

NA

4. Certificate of Registration

Amended Certificate of Registration bearing number B.ALC/I/35(15)/07 was allotted to our Company

Government of India, Ministry of Labour, Assistant Labour Commissioner, Mumbai

November 19, 2007

NA

5. Certificate of registration

Amended Certificate of Registration bearing number B.ALC/I/35(11)/2005-R was allotted to our Company issued on employing new contractors.

Government of India, Ministry of Labour, Assistant Labour Commissioner (Central) - I, Mumbai

August 18, 2005

NA

6. Certificate of Registration

Employee State Insurance sub-code number 37-39-30242-

Assistant Director, Gujarat Regional Office, Employees

June 04, 2008

NA

181

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

67 (Ahmedabad) is allotted to our Company for the premises Sarthik Building, 2nd floor, Nr. Fun Republic, Ramdevnagar, Ahmedabad (date of coverage February 01, 2008) and 1-C Nirlon Complex, Off Western Express Highway, Goregaon (E), Mumbai (date of coverage March 10, 2003)

State Insurance Corporation, Ashram Road, Ahmedabad – 14

(c.) Approvals related to property/premises

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. Certificate of registration

Certificate of registration bearing number B-ALC-I35(II)/2005-R was allotted to our Company at the premises Building 1-C, Nirlon Complex, Off Western Express Highway, Goregaon (East), Mumbai – 400 063

Government of India, Ministry of Labour, Assistant Labour Commissioner (Central) - I, Mumbai

July 20, 2005

NA

2. Certificate of registration

Certificate of registration number 760055666/ Commercial II issued to us under Bombay Shops and Establishments Act, 1948 for the premises located at Plot no.54, Marol Co-op Industrial Estate Limited, Makwana, Andheri East, Mumbai.

The Inspector, the Bombay Shops and Establishments Act, 1948, K/E Ward.

June 11, 2008

December 31, 2010

3. Certificate of registration

Certificate of registration bearing number 760055702/ Commercial II issued to us under Bombay Shops and Establishments Act, 1948 for the premises located at 1st & Amp,

The Inspector, the Bombay Shops and Establishments Act, 1948, K/E Ward.

June 11, 2008

December 31, 2010

182

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

2nd floor, No.97, Marol Co-op Industrial area, Makwana, off Andheri-Kurla Road, Mumbai

4. Certificate of registration

Certificate of registration bearing number ggn/7 /2007/ 407 under Section 20 (1) of the Shops & Commercial Establishment Act, 1958 for the premises located at 1st floor, Times square, Sushant Loc, Phase I, Gurgoan

Labour Inspector, Gurgaon

July 23, 2007

March 31, 2010

iv. Foreign Investment Promotion Board (“FIPB”) approvals:

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

1. FIPB approval letter

Approval of FIPB to YOU Telecom (Mauritius) Limited through our Company to undertake cable network business through downstream investment in Indian company in Surat, in the state of Gujarat subject to equity participation of not more than 49% by our Company

Government of India, Ministry of Finance

April 2, 2007

Valid until cancellation

2. FIPB approval letter

Approval of FIPB for down stream investment of up to 49% in the paid up capital of Digital Outsourcing Private Limited.

Government of India, Ministry of Finance

February 8, 2008

Valid until cancellation

3. FIPB approval letter

Approval of FIPB to our Company for undertaking cable TV network business with an equity participation of not more than 49%.

Government of India, Ministry of Finance

February 8, 2008

Valid until cancellation

4. FIPB noting letter Noting by the FIPB of YOU Broadband Networks India

Government of India, Ministry of Finance

February 8, 2008

Valid until cancellation

183

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

Limited with YOU Telecom India Private Limited pursuant to approval of scheme of merger by the Hon’ble High Court, Bombay vide its order dated April 11, 2007.

5. FIPB approval letter

Approval of FIPB to YOU Telecom Mauritius Limited through our Company to undertake cable network business through downstream investment in Indian company in Surat, in the state of Gujarat subject to equity participation of not more than 49% by our Company

Government of India, Ministry of Finance

April 2, 2007

Valid until cancellation

6. FIPB noting letter Noting by the FIPB of change in the equity structure of our Company and change in the name of our Company from B. G. Broadband Networks India Private Limited to YOU Broadband Networks India Private Limited.

Government of India, Ministry of Finance

March 29, 2007

Valid until cancellation

7. FIPB approval letter

FIPB approval permitting our Company to act as operating-cum-holding company and to make downstream investment in a down stream company up to the maximum of 49% shareholding, to undertake cable network business.

Government of India, Ministry of Finance

March 29, 2007

Valid until cancellation

8. FIPB noting letter Noting by FIPB on the change in name of our Company from Netshastr Facilities India Private Limited

Government of India, Ministry of Finance

July 19, 2001

Valid until cancellation

184

Sr.

No.

Type of License/

Certificates

Details of the

License

Authority Issue date Date of

Expiry

to BG Broadband Networks India Private Limited. The approval was given to BG Energy Holdings Limited, UK to set up Wholly Owned Subsidiary to provide infrastructure services to communications service providers in the city of Surat.

9. FIPB approval letter

FIPB approval to BG Energy Holdings Limited to establish a wholly owned subsidiary to undertake inter alia infrastructure services to communications service providers in the city of Surat in the state of Gujarat.

Government of India, Ministry of Finance

March 13, 2001

Valid until cancellation

10. FIPB approval letter

FIPB approval amending approval given to our Company to establish and undertake business as Internet Service Provider in whole of India and not only in Surat as mentioned in earlier approval letter.

Government of India, Ministry of Finance

December 28, 2001

Valid until cancellation

11. FIPB noting letter Noting by FIPB on change in name from BG Broadband India Private Limited to Iqara Telecoms India Private Limited. (Iqara Telecoms India Private Limited was subsequently merged with our Company)

Government of India, Ministry of Finance

January 12, 2005

Valid until cancellation

v. Intellectual Property related Approvals

Sr.

No. Trademark Registration

No. Date of Certificate

of Registration Class and Goods/Services Date of Use Claimed

1. YOU DEMAND

1473378 October 14, 2008 Class 16 in respect of printed matters including computer hardware and software manuals,

July 26, 2006

185

Sr.

No. Trademark Registration

No. Date of Certificate

of Registration Class and Goods/Services Date of Use Claimed

computer documentation namely reference user, instructional and general utility manuals, systemisation of information into computer databases, compilation of information into computer databases, business information centres, instructional and teaching material.

2. YOU DEMAND

1473376 October 11, 2008 Class 16 in respect of printed matters including computer hardware and software manuals, computer documentation namely reference user, instructional and general utility manuals, systemisation of information into computer databases, compilation of information into computer databases, business information centres, instructional and teaching material.

July 26, 2006

3. YOU EXPLORE

1473372 October 11, 2008 Class 16 in respect of printed matters including computer hardware and software manuals, computer documentation namely reference user, instructional and general utility manuals, systemisation of information into computer databases, compilation of information into computer databases, business information centres, instructional and teaching material

July 26, 2006

The above mentioned approvals are valid as on the date of filing of this Draft Red Herring Prospectus. Some of these approvals may expire in the ordinary course of business and applications for renewals of these approvals may be submitted to the respective authorities before their expiry. Our Company has no pending applications as on the date of filing of this Draft Red Herring Prospectus.

186

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue The Board of Directors of our Company has, pursuant to resolutions passed at its meeting held on February 12, 2010, authorized the Issue subject to the approval by the shareholders of our Company under Section 81(1A) of the Companies Act, and such other authorities as may be necessary. The Board has, pursuant to a resolution dated February 12, 2010, formed a committee of its Directors, referred to as the IPO Committee, which has been authorized by the Board to execute and perform all necessary deeds, documents, assurances, acts and things in connection with the Issue on behalf of the Board. The Board has approved and authorized this Draft Red Herring Prospectus pursuant to its resolution dated March 30, 2010. The shareholders of our Company have, pursuant to resolutions dated February 16, 2010 passed at their extraordinary general meeting, under Section 81(1A) of the Companies Act, authorized the Issue. Our Company has also obtained other necessary contractual approvals required for the Issue. For further information, please see the section titled “Government and Other Approvals” beginning on page 168 of this Draft Red Herring Prospectus. Prohibition by Statutory/Regulatory Authorities We confirm that neither (i) our Company, the Promoters, members of the Promoter Group, Group Companies, Directors, persons in control of our Company, nor (ii) companies with which any of the Promoters or Directors are or were associated as a promoter, director or person in control, are debarred or prohibited from accessing the capital markets under any order or direction passed by SEBI. None of our Directors are associated with the securities market except Mr. Perumal Srinivasan who is a director on the board of Sharekhan Limited and SEBI has not initiated action against him. None of our Company, its Promoters, Promoter Group companies, Group Companies or relatives of the Promoters, its Directors and the companies in which the Directors are associated as directors, have been declared as willful defaulters by the RBI and there has been no violation of any securities law committed by any of them in the past and no such proceedings are pending against any of them. Eligibility for the Issue We are eligible for the Issue as per Regulation 26(2) of the SEBI ICDR REGULATIONS as explained under: Regulation 26(2) of the SEBI ICDR Regulations states as follows:

“An issuer not satisfying any of the conditions stipulated in sub-regulation (1) may make an initial public

offer if:

(a) (i) The issue is made through the book-building process and the issuer undertakes to allot

at least fifty per cent of the net offer to public to qualified institutional buyers and to

refund full subscription monies if it fails to make allotment to the qualified institutional

buyers.

Or

(ii) at least 15% of the cost of the project is contributed by scheduled commercial banks or

public financial institutions, of which not less than 10% shall come from the appraisers and the issuer undertakes to allot at least ten per cent of the net offer to public to

qualified institutional buyers and to refund full subscription monies if it fails to make

the allotment to the qualified institutional buyers.

(b) (i) The minimum post-issue face value capital of the issuer is Rs.10 crores (Rs.100

million).

187

Or

(ii) the issuer undertakes to provide market-making for at least 2 years from the date of

listing of the specified securities, subject to the following:

(A.) the market makers offer to buy and sell quotes for a minimum depth of 300

specified securities and ensure that the bid-ask spread for their quotes does

not, at any time, exceed 10%;

(B.) the inventory of the market makers, as on the date of allotment of the specified

securities, shall be at least 5% of the proposed issue.”

We are an unlisted company not complying with the conditions specified in Regulation 26(1) of the SEBI ICDR Regulations and are, therefore, required to meet both the conditions detailed in Regulation 26(2) of the SEBI ICDR Regulations. 1. We will comply with Regulation 26(2)(a)(i) of the SEBI ICDR Regulations and at least 50% of the

Issue is proposed to be Allotted to QIB Bidders and in the event we fail to do so, the full subscription monies shall be refunded to the Bidders.

2. We are also complying with Regulation 26(2)(b)(i) of the SEBI ICDR Regulations and the post-Issue

face value capital of our Company shall be Rs.[●] which is more than the minimum requirement of Rs.100 million.

Hence, we are eligible for the Issue under Regulation 26(2) of the SEBI ICDR Regulations. As per Regulation 43(2) of the SEBI ICDR Regulations, not less than 15% and 35% of the Net Issue to public shall be available for allocation to Non-Institutional Bidders and Retail Individual Bidders, respectively. Further, in accordance with Regulation 26(4) of the SEBI ICDR Regulations, we undertake that the number of allottees, to whom Equity Shares will be Allotted in the Issue shall be at least 1,000, failing which the entire application money will be refunded forthwith. In case of delay, if any, in refund, our Company shall pay interest on the application money at the rate of 15% per annum for the period of delay. Disclaimer Clause of the Securities and Exchange Board Of India, (“Board”)

AS REQUIRED, A COPY OF THIS DRAFT RED HERRING PROSPECTUS HAS BEEN

SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF

THE DRAFT RED HERRING PROSPECTUS TO SEBI SHOULD NOT IN ANY WAY BE

DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY

SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL

SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS

EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD

MANAGER, EDELWEISS CAPITAL LIMITED, HAS CERTIFIED THAT THE DISCLOSURES

MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND

ARE IN CONFORMITY WITH THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE

REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION

FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE OUR COMPANY IS

PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE

BOOK RUNNING LEAD MANAGER, EDELWEISS CAPITAL LIMITED, IS EXPECTED TO

EXERCISE DUE DILIGENCE TO ENSURE THAT OUR COMPANY DISCHARGES ITS

RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE

BOOK RUNNING LEAD MANAGER, EDELWEISS CAPITAL LIMITED HAS FURNISHED

TO SEBI, A DUE DILIGENCE CERTIFICATE DATED MARCH 30, 2010 IN ACCORDANCE

188

WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS

FOLLOWS:

“(1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES

WITH COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH

THE FINALIZATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING

TO THE SAID ISSUE;

(2) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH OUR COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES,

INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE

OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE

DOCUMENTS AND OTHER PAPERS FURNISHED BY OUR COMPANY,

WE CONFIRM THAT:

(A) THE DRAFT RED HERRING PROSPECTUS FILED WITH THE BOARD IS IN

CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPER

RELEVANT TO THE ISSUE;

(B) ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE, AS ALSO

THE REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC. FRAMED OR

ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY

OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY

COMPLIED WITH; AND

(C) THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS

ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO

MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE

PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE

WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL

AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER

APPLICABLE LEGAL REQUIREMENTS.

(3) WE CONFIRM THAT BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED

IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH THE BOARD AND TILL DATE SUCH REGISTRATION IS VALID.

(4) WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE

CAPABILITY OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING

COMMITMENTS. NOTED FOR COMPLIANCE

(5) WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTERS HAS BEEN

OBTAINED FOR INCLUSION OF THEIR EQUITY SHARES AS PART OF THE

PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE EQUITY

SHARES PROPOSED TO FORM PART OF THE PROMOTERS’ CONTRIBUTION

SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED OR SOLD OR TRANSFERRED

BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH THE BOARD TILL THE

DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE

DRAFT RED HERRING PROSPECTUS.

(6) WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)

REGULATIONS, 2009, WHICH RELATES TO EQUITY SHARES INELIGIBLE FOR

COMPUTATION OF PROMOTERS’ CONTRIBUTION, HAS BEEN DULY

COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE

WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT RED

HERRING PROSPECTUS.

189

(7) WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE

(C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES

AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, SHALL BE COMPLIED WITH. WE

CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT

PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY

BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’

CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD.

WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW

ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE

RELEASED TO OUR COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC

ISSUE. – NOT APPLICABLE.

(8) WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH

THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE

‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF

ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE

ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN

TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

(9) WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO

ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT

IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION 3

OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS

SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE

PROSPECTUS. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED

INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY

CONTAINS THIS CONDITION. NOTED FOR COMPLIANCE

(10) WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT RED

HERRING PROSPECTUS THAT THE INVESTORS SHALL BE GIVEN AN OPTION

TO GET THE SHARES IN DEMAT OR PHYSICAL MODE. – NOT APPLICABLE

(11) WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN

ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE

TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

(12) WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN

THE DRAFT RED HERRING PROSPECTUS:

(A) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME

THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY

SHARES OF THE ISSUER; AND

(B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE

BOARD FROM TIME TO TIME.

(13) WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO

ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS,

2009, WHILE MAKING THE ISSUE.

(14) WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE

HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT

BUSINESS BACKGROUND OR THE ISSUER, SITUATION AT WHICH THE

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PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS

EXPERIENCE, ETC.

(15) WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE

BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)

REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION

NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE

DRAFT RED HERRING PROSPECTUS WHERE THE REGULATION HAS BEEN

COMPLIED WITH AND OUR COMMENTS, IF ANY.

The filing of the Draft Red Herring Prospectus does not, however, absolve our Company from any liabilities under section 63 or 68 of the Companies Act, 1956 or from the requirement of obtaining such statutory and other clearances as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up, at any point of time, with the Book Running Lead Manager any irregularities or lapses in the Draft Red Herring Prospectus.” All legal requirements pertaining to the Issue will be complied with at the time of filing of the Red Herring Prospectus with the RoC in terms of section 60B of the Companies Act. All legal requirements pertaining to the Issue will be complied with at the time of registration of the Prospectus with the RoC in terms of section 56, section 60 and section 60B of the Companies Act. Caution - Disclaimer from our Company and the BRLM

Our Company, the Directors and the BRLM accept no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisements or any other material issued by or at our Company’s instance and anyone placing reliance on any other source of information, including our Company’s website www.youbroadband.in , or the website of any Promoters, Promoter Group company, or of any affiliate or associate of our Company, would be doing so at his or her own risk. The BRLM accepts no responsibility, save to the limited extent as provided in the Issue Agreement entered into among the BRLM and our Company on March 30, 2010, and the Underwriting Agreement to be entered into between the Underwriters and our Company. All information shall be made available by our Company and the BRLM to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports, at bidding centres or elsewhere. Neither our Company nor the Syndicate is liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system or otherwise. Investors that bid in the Issue will be required to confirm and will be deemed to have represented to our Company, the Underwriters and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company and will not offer, sell, pledge or transfer the Equity Shares of our Company to any person who is not eligible under applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company. Our Company, the Underwriters and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares of our Company. Disclaimer in Respect of Jurisdiction This Issue is being made in India to persons resident in India, including Indian nationals resident in India who are majors, HUFs, companies, corporate bodies and societies registered under applicable laws in India and authorized to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), or trusts under applicable trust law and who are authorized under their constitution to hold and invest in shares, public financial institutions as specified in Section 4A of the Companies Act, venture capital funds, state industrial development corporations, insurance companies registered with Insurance Regulatory and Development Authority, provident funds (subject to applicable law) with minimum

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corpus of Rs.250 million, pension funds with minimum corpus of Rs.250 million and the National Investment Fund, and permitted non-residents including FIIs, Eligible NRIs, multilateral and bilateral development financial institutions, FVCIs and eligible foreign investors, provided that they are eligible under all applicable laws and regulations to hold Equity Shares of our Company. The Draft Red Herring Prospectus does not, however, constitute an invitation to subscribe to Equity Shares offered hereby in any jurisdiction other than India to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession the Draft Red Herring Prospectus comes is required to inform himself or herself about, and to observe, any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in Mumbai in India only. No action has been, or will be, taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Draft Red Herring Prospectus has been filed with the SEBI for its observations. Accordingly, the Equity Shares represented hereby may not be offered or sold, directly or indirectly, and this Draft Red Herring Prospectus may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft Red Herring Prospectus nor any invitation, offer or sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of our Company from the date hereof or that the information contained herein is correct as of any time subsequent to this date. The Equity Shares have not been, and will not be, registered under the U.S. Securities Act 1933, as

amended (the “Securities Act”), and may not be offered or sold within the United States, except

pursuant to an exemption from, or in a transaction not subject to, the registration requirements of

the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are only

being offered and sold (i) within the United States only to persons reasonably believed to be

“qualified institutional buyers” (as defined in Rule 144A under the Securities Act and referred to in this Draft Red Herring Prospectus as “U.S. QIBs”; for the avoidance of doubt, the term U.S. QIBs

does not refer to a category of institutional investor defined under applicable Indian regulations

and referred to in the Draft Red Herring Prospectus as “QIBs”) in transactions exempt from, or

not subject to, the registration requirements of the Securities Act, and (ii) outside the United States

in reliance on Regulation S under the Securities Act.

The Equity Shares have not been, and will not be, registered, listed or otherwise qualified in any

other jurisdiction outside India and may not be offered or sold, and Bids may not be made by

persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Until the expiry of 40 days after the commencement of the Issue, an offer or sale of Equity Shares within the United States by a dealer (whether or not it is participating in the Issue) may violate the registration requirements of the Securities Act. Equity Shares Offered and Sold within the United States Each purchaser that is acquiring the Equity Shares issued pursuant to this Issue within the United States, by its acceptance of this Draft Red Herring Prospectus and of the Equity Shares, will be deemed to have acknowledged, represented to and agreed with the Company and the BRLM that it has received a copy of this Draft Red Herring Prospectus and such other information as it deems necessary to make an informed investment decision and that: (1) the purchaser is authorized to consummate the purchase of the Equity Shares issued pursuant to

this Issue in compliance with all applicable laws and regulations; (2) the purchaser acknowledges that the Equity Shares issued pursuant to this Issue have not been

and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to restrictions on transfer;

(3) the purchaser (i) is a U.S. QIB, (ii) is aware that the sale to it is being made in a transaction

exempt from or not subject to the registration requirements of the Securities Act, and (iii) is acquiring such Equity Shares for its own account or for the account of a qualified institutional buyer with respect to which it exercises sole investment discretion;

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(4) the purchaser is not an affiliate of the Company or a person acting on behalf of an affiliate; (5) if, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such Equity

Shares, or any economic interest therein, such Equity Shares or any economic interest therein may be offered, sold, pledged or otherwise transferred only (A) (i) to a person whom the beneficial owner and/or any person acting on its behalf reasonably believes is a U.S. QIB in a transaction meeting the requirements of Rule 144A or (ii) in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S under the Securities Act and (B) in accordance with all applicable laws, including the securities laws of the States of the United States;

(6) the Equity Shares are "restricted securities" within the meaning of Rule 144(a)(3) under the

Securities Act and no representation is made as to the availability of the exemption provided by Rule 144 for resales of any such Equity Shares;

(7) the purchaser will not deposit or cause to be deposited such Equity Shares into any depositary

receipt facility established or maintained by a depositary bank other than a Rule 144A restricted depositary receipt facility, so long as such Equity Shares are "restricted securities" within the meaning of Rule 144(a)3) under the Securities Act;

(8) the purchaser understands that such Equity Shares (to the extent they are in certificated form),

unless the Company determines otherwise in accordance with applicable law, will bear a legend substantially to the following effect:

THE EQUITY SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL

NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED

(THE "SECURITIES ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED

STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE

TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER OR ANY

PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIED

INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE

SECURITIES ACT, OR (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH

RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, IN

EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF

ANY STATE OF THE UNITED STATES. ( 9 ) the Company will not recognize any offer, sale, pledge or other transfer of such Equity Shares

made other than in compliance with the above- stated restrictions; and (10) the purchaser acknowledges that the Company, the BRLM, their respective affiliates and others

will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations and agreements deemed to have been made by virtue of its purchase of such Equity Shares are no longer accurate, it will promptly notify the Company, and if it is acquiring any of such Equity Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account.

All Other Equity Shares Offered and Sold in this Issue Each purchaser that is acquiring the Equity Shares issued pursuant to this Issue outside the United States, by its acceptance of this Draft Red Herring Prospectus and of the Equity Shares issued pursuant to this Issue, will be deemed to have acknowledged, represented to and agreed with the Company and the BRLM that it has received a copy of this Draft Red Herring Prospectus and such other information as it deems necessary to make an informed investment decision and that: (1) the purchaser is authorized to consummate the purchase of the Equity Shares issued pursuant to

this Issue in compliance with all applicable laws and regulations;

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(2) the purchaser acknowledges that the Equity Shares issued pursuant to this Issue have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to restrictions on transfer;

(3) the purchaser is purchasing the Equity Shares issued pursuant to this Issue in an offshore

transaction meeting the requirements of Rule 903 of Regulation S under the Securities Act; (4) the purchaser and the person, if any, for whose account or benefit the purchaser is acquiring the

Equity Shares issued pursuant to this Issue, was located outside the United States at the time the buy order for such Equity Shares was originated and continues to be located outside the United States and has not purchased such Equity Shares for the account or benefit of any person in the United Sates or entered into any arrangement for the transfer of such Equity Shares or any economic interest therein to any person in the United States;

(5) the purchaser is not an affiliate of the Company or a person acting on behalf of an affiliate; (6) if, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such Equity

Shares, or any economic interest therein, such Equity Shares, or any economic interest therein, may be offered, sold, pledged or otherwise transferred only (A) (i) to a person whom the beneficial owner and/or any person acting on its behalf reasonably believes is a U.S. QIB in a transaction meeting the requirements of Rule 144A or (ii) in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S under the Securities Act and (B) in accordance with all applicable laws, including the securities laws of the States of the United States;

(7) the purchaser understands that such Equity Shares (to the extent they are in certificated form),

unless the Company determines otherwise in accordance with applicable law, will bear a legend substantially to the following effect:

THE EQUITY SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL

NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED

(THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY

AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE

TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER OR ANY

PERSON ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QUALIFIED

INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A IN A

TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE

SECURITIES ACT, OR (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, IN

EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF

ANY STATE OF THE UNITED STATES. (8) the Company will not recognize any offer, sale, pledge or other transfer of such Equity Shares

made other than in compliance with the above-stated restrictions; and (9) the purchaser acknowledges that the Company, the BRLM, their respective affiliates and others

will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations and agreements deemed to have been made by virtue of its purchase of such Equity Shares are no longer accurate, it will promptly notify the Company, and if it is acquiring any of such Equity Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account.

Each person in a Member State of the EEA which has implemented the Prospectus Directive (each, a "Relevant Member State") who receives any communication in respect of, or who acquires any Equity Shares under, the offers contemplated in this Draft Red Herring Prospectus will be deemed to have represented, warranted and agreed to and with each Underwriter and the Company that: 1. it is a qualified investor within the meaning of the law in that Relevant Member State

implementing Article 2(1)(e) of the Prospectus Directive; and

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2. in the case of any Equity Shares acquired by it as a financial intermediary, as that term is used in

Article 3(2) of the Prospectus Directive, (i) the Equity Shares acquired by it in the placement have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Underwriters has been given to the offer or resale; or (ii) where Equity Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Equity Shares to it is not treated under the Prospectus Directive as having been made to such persons.

For the purposes of this provision, the expression an "offer of Equity Shares to the public" in relation to any of the Equity Shares in any Relevant Member States means the communication in any form and by any means of sufficient information on the terms of the offer and on the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State. Disclaimer clause of the BSE As required, a copy of this Draft Red Herring Prospectus shall be submitted to the BSE. The disclaimer clause as intimated by the BSE to us, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to the RoC filing.

Disclaimer clause of the NSE As required, a copy of this Draft Red Herring Prospectus shall be submitted to the NSE. The disclaimer clause as intimated by the NSE to us, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to the RoC filing. Disclaimer clause of IPO Grading Agency

[●] Filing A copy of this Draft Red Herring Prospectus has been filed with the SEBI at the Securities and Exchange Board of India, SEBI Bhavan, G Block, 3rd Floor, Bandra Kurla Complex, Bandra (E), Mumbai 400 051, India. A copy of the Red Herring Prospectus, along with the other documents required to be filed under Section 60B of the Companies Act, will be delivered for registration to the RoC and a copy of the Prospectus to be filed under Section 60 of the Companies Act will be delivered for registration to the RoC, situated at Everest, 100, Marine Drive, Mumbai – 400 002, India. Listing Applications have been made to the BSE and the NSE for permission to deal in and for an official quotation of the Equity Shares being offered and sold in the Issue. [●] will be the Designated Stock Exchange with which the basis of Allotment will be finalized. If the permissions to deal in, and for an official quotation of, the Equity Shares are not granted by any of the Stock Exchanges mentioned above, our Company shall forthwith repay, without interest, all monies received from applicants in reliance on the Red Herring Prospectus. If such money is not repaid within eight days after our Company has become liable to repay it (i.e., from the date of refusal or within 7 days from the Bid/Issue Closing Date, whichever is earlier), then our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be liable to repay the monies, with interest at the rate of 15% per annum on the application monies, as prescribed under Section 73 of the Companies Act. Our Company shall ensure that all steps for the completion of the necessary formalities for listing and

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commencement of trading at both the Stock Exchanges are taken within seven working days of finalization of the basis of allotment for the Issue. Consents Consents in writing of: (a) the Directors, our Company Secretary and Compliance Officer, the Auditors, M/s. B S R & Associates, Chartered Accountants, the legal advisors, the Bankers to the Issue, the lenders and experts; and (b) the BRLM, the Syndicate Members, the Escrow Collection Bankers and the Registrar to the Issue to act in their respective capacities, will be obtained and filed along with a copy of the Red Herring Prospectus with the RoC, as required under Sections 60 and 60B of the Companies Act and such consents will not be withdrawn up to the time of delivery of the Red Herring Prospectus for registration with the RoC. In accordance with the Companies Act and the SEBI ICDR Regulations, M/s. B S R & Associates, Chartered Accountants, have given their written consent to the inclusion of their report in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report will not be withdrawn up to the time of delivery of the Red Herring Prospectus to the RoC. M/s. B S R & Associates, Chartered Accountants, have given their written consent to inclusion of their report relating to the possible tax benefits accruing to our Company and its shareholders in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report will not be withdrawn up to the time of delivery of the Red Herring Prospectus with the RoC. M/s. B S R & Companies, Chartered Accountants, have given their written consent to inclusion of their report relating to the possible tax benefits accruing to DOPL and its shareholders in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report will not be withdrawn up to the time of delivery of the Red Herring Prospectus with the RoC. IPO Grading Agency

This Issue has been graded by [●] and has been assigned a grade of [●]/5 indicating [●] fundamentals. The IPO Grading is assigned on a five point scale from 1 to 5, with IPO Grade 5/5 indicating strong fundamentals and IPO Grade 1/5 indicating poor fundamentals. For details in relation to the rationale furnished by [●], see “Annexure I” on page [●]. Attention is drawn to the disclaimer appearing on page [●]. Expert Opinion Except the report of [●] in respect of the IPO grading of the Issue annexed herewith and except as stated in this Draft Red Herring Prospectus, we have not obtained any expert opinions. Issue Related Expenses The Issue related expenses include, among others, underwriting and management fees, selling commissions, printing and distribution expenses, legal fees, advertisement expenses and registrar and depository expenses and listing fees. The estimated Issue expenses are as follows:

Activity

Expense (Rs.

million) (1)

As a % of Total

Issue Expenses

As a % of Issue

Size

Lead Management fees, brokerage and selling commission and underwriting commission [●] [●] [●]

Fees payable to the Registrar to the Issue [●] [●] [●]

Fees payable to Escrow Collection Banks [●] [●] [●]

Printing and Stationery [●] [●] [●]

SCSB commission [●] [●] [●]

IPO Grading expenses [●] [●] [●]

Other (Legal fees, auditors fess, advertising and marketing expenses etc.) [●] [●] [●]

Total estimated Issue expenses [●] [●] [●]

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________ (1)

Will be completed after finalization of the Issue Price.

Fees Payable to the BRLM and the Syndicate Members The total fees payable to the Book Running Lead Manager and the Syndicate Members (including underwriting commission and selling commission and reimbursement of their out of pocket expenses) will be as per their engagement letter dated March 19, 2010, a copy of which is available for inspection at our Company’s registered office. Fees Payable to the Registrar to the Issue The fees payable to the Registrar to the Issue for processing of applications, data entry, printing of CANs/refund orders (or revised CANs, if required), preparation of refund data on magnetic tape and printing of bulk mailing register will be as per the issue agreement between our Company and the Registrar to the Issue dated March 22, 2010 a copy of which is available for inspection at our Company’s registered office. The Registrar to the Issue will be reimbursed for all out of pocket expenses including cost of stationery, postage, stamp duty, and communication expenses. Adequate funds will be provided to the Registrar to the Issue to enable them to make refunds in any of the modes described in this Draft Red Herring Prospectus or send allotment advice by registered post/speed post/under certificate of posting. Particulars regarding Public or Rights Issues during the last five years Our Company has not made any previous public issues (including any rights issues to the public) in the five years preceding the date of this Draft Red Herring Prospectus. Previous issues of Equity Shares otherwise than for cash Except as stated in the sections titled “Capital Structure” and “History and Certain Corporate Matters” beginning on pages 24 and 101, respectively, of this Draft Red Herring Prospectus, our Company has not made any previous issues of shares for consideration other than cash. Underwriting commission, brokerage and selling commission on Previous Issues Since this is the initial public offering of our Company’s Equity Shares, no sum has been paid or is payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of the Equity Shares since our Company’s incorporation.

Listed Companies under the Same Management No listed company under the same management within the meaning of section 370(1B) of the Companies Act has made any public or rights issue during the last three years. Promise v/s Performance There has been no public issue by our Company or any of the Group Companies. Outstanding Debentures or Bond Issues or Preference Shares Our Company has no outstanding debentures or bonds or redeemable preference shares as of the date of this Draft Red Herring Prospectus. Stock Market Data of the Equity Shares This being an initial public offering of the Equity Shares of our Company, the Equity Shares are not listed on any stock exchange.

Purchase of Property Except as stated in section “Related Party Transactions” beginning of page 127 of this Draft Red Herring

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Prospectus, there is no property which has been purchased or acquired or is proposed to be purchased or acquired which is to be paid for wholly or partly from the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of the Draft Red Herring Prospectus, other than property, in respect of which:

• The contract for the purchase or acquisition was entered into in the ordinary course of business, nor was the contract entered into in contemplation of the Issue, nor is the Issue contemplated in consequence of the contract; or

• The amount of the purchase money is not material. Our Company has not purchased any property in which any of its Promoters and/or Directors, have any direct or indirect interest in any payment made thereunder. Mechanism for Redressal of Investor Grievances The memorandum of agreement between the Registrar to the Issue and our Company will provide for retention of records with the Registrar to the Issue for a period of at least one year from the last date of dispatch of the letters of allotment, or refund orders, demat credit or where refunds are being made electronically, giving of refund instructions to the clearing system, to enable the investors to approach the Registrar to the Issue for redressal of their grievances. All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, application number, number of Equity Shares applied for, amount paid on application, Depository Participant, and the bank branch or collection centre where the application was submitted. All grievances relating to the ASBA process may be addressed to the SCSB, giving full details such as name, address of the applicant, number of Equity Shares applied for, amount paid on application and the Designated Branch or the collection centre of the SCSB where the Bid-cum-Application Form was submitted by the ASBA Bidders. Disposal of Investor Grievances by our Company Our Company estimates that the average time required by our Company or the Registrar to the Issue or the SCSB in case of ASBA Bidders for the redressal of routine investor grievances shall be ten Business Days from the date of receipt of the complaint. In case of complaints that are not routine or where external agencies are involved, our Company will seek to redress these complaints as expeditiously as possible. Our Company has appointed Mohammed Abdul Nadeem, Company Secretary, as the compliance officer and he may be contacted in case of any pre-Issue or post-Issue-related problems. He can be contacted at the following address: Plot No. 54, Marol Co-operative Industrial Area, Makwana Road, Andheri East, Mumbai 400 059 Tel: 91-22-40190000 Fax: 91 –22 - 40190155 Email: compliance@youtelecom.com Website: www.youbroadband.in

Other Disclosures Except as disclosed in this Draft Red Herring Prospectus, the Promoter Group, the directors of the Promoter Group companies or the Directors of our Company have not purchased or sold any securities of our Company during a period of six months preceding the date on which this Draft Red Herring Prospectus is filed with SEBI. Disposal of investor grievances by listed companies under the same management as our Company

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There is no listed company under the same management as our Company.

Change in Auditors (Last three years) There has been no change in the Auditors of our Company in the last three years. Capitalization of Reserves or Profits Except as disclosed in the section titled “Capital Structure” beginning on page 24 of this Draft Red Herring Prospectus, our Company has not capitalized its reserves or profits at any time since incorporation. Tax Implications Investors that are allotted Equity Shares in the Issue will be subject to capital gains tax on any resale of the Equity Shares at applicable rates, depending on the duration for which the investors have held the Equity Shares prior to such resale and whether the Equity Shares are sold on the stock exchanges. For details, please see the section titled “Statement of Possible Tax Benefits Available to our Company and its Shareholders” beginning on page 50 of this Draft Red Herring Prospectus. Revaluation of Assets Our Company has not revalued its assets in the last five years. Interests of Promoters and Directors Promoters

Except as stated in section “Our Promoters and Group Companies” beginning on page 119 of this Draft Red Herring Prospectus, none of our Promoters have any interest in our Company Directors All the Directors of our Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or any committee thereof. The Directors may also be regarded as interested in the Equity Shares, if any, held by or that may be subscribed by and allotted to the companies, firms and trusts, in which they are interested as directors, members, partners and/or trustees. Please also see the sections titled “Related Party Transactions” and “Our Management” beginning on pages 127 and 109 of this Draft Red Herring Prospectus. Payment or Benefit to Officers of our Company Except as stated otherwise in this Draft Red Herring Prospectus, no amount or benefit has been paid or given or is intended to be paid or given during the preceding two years to any of our Company’s officers except the normal remuneration rendered as Directors, officers or employees. Except statutory benefits upon termination of their employment in our Company or superannuation, no officer of our Company is entitled to any benefit upon termination of such officer’s employment in our Company or superannuation. Except as stated otherwise in this Draft Red Herring Prospectus, none of the beneficiaries of loans, and advances and sundry debtors are related to the Directors of our Company.

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SECTION VII: ISSUE INFORMATION

TERMS OF THE ISSUE

The Equity Shares being issued are subject to the provisions of the Companies Act, the Memorandum of Association and the Articles of Association, the terms of this Draft Red Herring Prospectus, the Red Herring Prospectus, the Prospectus, the Bid-cum-Application Form, the Revision Form, the ASBA Bid-cum-Application Form, the CAN and other terms and conditions as may be incorporated in the Allotment advice and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to all applicable laws, guidelines, rules, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the Registrar of Companies, the RBI, the FIPB and/or other authorities, as in force on the date of the Issue and to the extent applicable. Authority for the Issue The Board of Directors of our Company has, pursuant to resolutions passed at its meetings held on February 12, 2010 authorized the Issue subject to the approval by the shareholders of our Company under Section 81(1A) of the Companies Act, and such other authorities as may be necessary. The Board has, pursuant to a resolution dated February 12, 2010, formed a committee of its Directors, referred to as the IPO Committee which has been authorized by the Board to execute and perform all necessary deeds, documents, assurances, acts and things in connection with the Issue on behalf of the Board. The Board through a resolution has approved and authorized this Draft Red Herring Prospectus pursuant to its resolution dated March 30, 2010. The shareholders of our Company have, pursuant to resolutions dated February 16, 2010, under Section 81(1A) of the Companies Act, authorized the Issue. Ranking of Equity Shares The Equity Shares being issued shall be subject to the provisions of the Memorandum of Association and the Articles of Association and shall rank pari-passu with the existing Equity Shares of our Company including rights in respect of dividends. The Allottees of the Equity Shares in this Issue shall be entitled to dividends and other corporate benefits, if any, declared by our Company after the date of Allotment. For further details, please see the section titled “Main Provisions of the Articles of Association” beginning on page 253 of this Draft Red Herring Prospectus. Mode of Payment of Dividend Our Company shall pay dividends to its shareholders in accordance with the provisions of the Companies Act. Face Value and Issue Price The face value of each Equity Share is Rs.10. The Floor Price of Equity Shares is Rs.[●] per Equity Share and the Cap Price is Rs.[●] per Equity Share. At any given point of time, subject to applicable law, there shall be only one denomination of Equity Shares. The Price Band and the minimum Bid lot size for the Issue will be decided by our Company, in consultation with the BRLM, and advertised in two widely circulated national newspapers (one each in English and Hindi) and in one Marathi newspaper with wide circulation, at least two working days prior to the Bid/Issue Opening Date.

Compliance with SEBI ICDR Regulations Our Company shall comply with applicable disclosure and accounting norms specified by SEBI from time to time. Rights of the Equity Shareholders

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Subject to applicable laws, the equity shareholders of our Company shall have the following rights: 1. The right to receive dividends, if declared; 2. The right to attend general meetings and exercise voting powers, unless prohibited by law; 3. The right to vote on a poll either in person or by proxy; 4. The right to receive offers for rights shares and be allotted bonus shares, if announced; 5. The right to receive any surplus on liquidation subject to any statutory and other preferential claims

being satisfied; 6. The right to freely transfer their Equity Shares; and 7. Such other rights, as may be available to a shareholder of a listed public company under the

Companies Act, the terms of the listing agreements executed with the Stock Exchanges, and the Memorandum of Association and the Articles of Association of our Company.

For a detailed description of the main provisions of the Articles of Association relating to voting rights, dividend, forfeiture and lien, transfer and transmission, and/or consolidation/splitting, please see the section titled “Main Provisions of the Articles of Association” beginning on page 253 of this Draft Red Herring Prospectus. Market Lot and Trading Lot Under Section 68B of the Companies Act, the Equity Shares shall be allotted only in dematerialized form. As per the SEBI ICDR Regulations, the trading of the Equity Shares shall be in dematerialized form only. Since trading of the Equity Shares is in dematerialized form, the tradable lot is one Equity Share. Allotment in this Issue will be in electronic form in multiples of one (1) Equity Shares, subject to a minimum Allotment of [●] Equity Shares. Jurisdiction Exclusive jurisdiction for the purpose of this Issue is with the competent courts in Mumbai, India. The Equity Shares have not been and will not be registered under the Securities Act or any state

securities laws in the United States and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of

the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are only

being offered and sold (i) in the United States only to persons reasonably believed to be “qualified

institutional buyers” (as defined in Rule 144A under the Securities Act and referred to in this Draft

Red Herring Prospectus as “U.S. QIBs”; for the avoidance of doubt, the term U.S. QIBs does not

refer to a category of institutional investor defined under applicable Indian regulations and referred to in the Draft Red Herring Prospectus as “QIBs”) in transactions exempt from, or not

subject to, the registration requirements of the Securities Act, and (ii) outside the United States in

reliance on Regulation S under the Securities Act.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any

other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Nomination Facility to Investor In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidders, may nominate any one person in whom, in the event of the death of sole Bidder or in case of joint Bidders, the death of all the Bidders, as the case may be, the Equity Shares that are Allotted shall vest. A person, being a nominee entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same benefits to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/transfer/alienation of equity share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. A fresh nomination can only be made on the prescribed form available on request at the registered office of our Company or with the Registrar.

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In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either:

• to register himself or herself as the holder of the Equity Shares; or

• to make such transfer of the Equity Shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to register himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of 90 (ninety) days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Since the Allotment of Equity Shares in the Issue will be made only in dematerialized form, there is no need to make a separate nomination with our Company. Nominations registered with the respective depository participant of the applicant will prevail. If the investors wish to change their nomination, they are requested to inform their respective depository participant. Bid/Issue Period Bidders may submit their Bids only in the Bid/Issue Period. The Bid/Issue Opening Date is [●] and the Bid/Issue Closing Date is [●]. Provided that Anchor Investors are required to submit their Bid on the Anchor Investor Bidding Date Minimum Subscription If our Company does not receive a minimum subscription of 90% of the Issue including devolvement to the Underwriters within 60 days from the Bid/Issue Closing Date, our Company shall forthwith refund the entire subscription amount received. If there is a delay beyond eight days after our Company becomes liable to pay the amount, our Company shall pay interest prescribed under Section 73 of the Companies Act. If at least 50% of the Net Issue cannot be allotted to QIBs, then the entire application money shall be refunded forthwith. Furthermore, in accordance with Regulation 26(4) of the SEBI ICDR Regulations, our Company shall ensure that the number of Allottees under the Issue shall not be less than 1,000. Application by Eligible NRIs, FIIs registered with SEBI and FVCIs registered with SEBI It is to be distinctly understood that there is no reservation for NRIs and FIIs registered with SEBI or FVCIs registered with SEBI. The Equity Shares have not been and will not be registered under the Securities Act or any state

securities laws in the United States and may not be offered or sold within the United States or for the account or benefit of, "U.S. Persons" (as defined in Regulation S under the U.S. Securities Act),

except pursuant to an exemption from, or in a transaction not subject to, the registration

requirements of the Securities Act and applicable state securities laws. Accordingly, the Equity

Shares are only being offered and sold (i) in the United States only to persons reasonably believed to

be “qualified institutional buyers” (as defined in Rule 144A under the U.S. Securities Act and "Qualified Purchasers" as defined under the Investment Company Act and related rules and referred

to in this Draft Red Herring Prospectus as “U.S. QIBs”; for the avoidance of doubt, the term U.S.

QIBs does not refer to a category of institutional investor defined under applicable Indian regulations

and referred to in the Draft Red Herring Prospectus as “QIBs”) in transactions exempt from, or not

subject to, the registration requirements of the Securities Act, and (ii) outside the United States in

reliance on Regulation S under the Securities Act. As per RBI regulations, OCBs cannot participate in the Issue Arrangement for disposal of Odd Lots

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There are no arrangements for disposal of odd lots.

Restriction on transfer of shares Except for the lock-in of the post-Issue Equity Shares forming the Promoters' contribution in the Issue and the balance pre-Issue share capital of the Company as detailed in "Capital Structure" beginning on page 24 of this Draft Red Herring Prospectus, there are no restrictions on the transfer and transmission of shares/debentures and on their consolidation/splitting except as provided for in our Articles. Please see the section titled “Main Provisions of the Articles of Association” beginning on page 253 of the Draft Red Herring Prospectus. Withdrawal of the Issue Our Company, in consultation with the BRLM, reserves the right not to proceed with the Issue at any time after the Bid/Issue Opening Date but before the Board meeting for Allotment, without assigning any reason therefore. If our Company withdraws from the Issue, it shall issue a public notice within two days of the closure of the Issue. The notice shall be issued in the same newspapers where the pre-Issue advertisements have appeared and our Company shall also promptly inform the Stock Exchanges. If our Company withdraws the Issue after the Bid/Issue Closing Date and thereafter determines that it will proceed with an initial public offering of its Equity Shares, it shall file a fresh draft red herring prospectus with SEBI. Notwithstanding the foregoing, the Issue is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment and (ii) the final RoC approval of the Prospectus after it is filed with the RoC. In terms of the SEBI ICDR Regulations, the QIBs shall not be allowed to withdraw their Bids after the Bid/Issue Closing Date.

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ISSUE STRUCTURE

The Issue is comprised of [●] Equity Shares at the Issue Price for cash, aggregating Rs.3,600 million. The Issue will constitute [●]% of the fully diluted post-Issue paid up capital of our Company. The Company is considering Pre-IPO Placement of upto 90 million Equity Shares aggregating upto Rs. 900 million with certain investors. The Pre-IPO Placement is at the sole discretion of the Company. If undertaken, the Pre-IPO Placement shall be completed by the Company, prior to the filing of the Red Herring Prospectus with the Registrar of Companies Maharashtra, Mumbai. If the Pre-IPO Placement is completed, the Issue size offered to the public would be reduced to the extent of such Pre-IPO Placement, subject to minimum public Issue size being atleast 10% of our post-Issue share capital. If at least 50% of the Net Issue cannot be allotted to QIBs, then the entire application money shall be refunded forthwith. The Issue is being made through a 100% Book Building Process.

Employee

Reservation

Portion#

QIBs##

Non-Institutional

Bidders

Retail Individual

Bidders

Number of Equity Shares(1)

Reservation of [●] Equity Shares, subject to such reservation not exceeding 5% of the post Issue capital

At least [●] Equity Shares Shares or Net Offer less allocation to Non-Institutional Bidders and Retail Individual Bidders.

Not less than [●] Equity Shares or the Net Issue less allocation to QIB Bidders and Retail Individual Bidders shall be available for allocation.

Not less than [●] Equity Shares or the Net Issue less allocation to QIB Bidders and Non-Institutional Bidders shall be available for allocation.

Percentage of Issue size available for allotment/allocation

Reservation upto Rs. 15.00 million

At least 50% of the Net Issue shall be allotted to QIB Bidders. However, 5% of the QIB Portion (excluding the Anchor Investor portion) shall be available for allocation proportionately to Mutual Funds. Mutual Funds participating in the 5% reservation in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. The unsubscribed portion in the Mutual Fund reservation will

Not less than 15% of the Net Issue or the Issue less allocation to QIB Bidders and Retail Individual Bidders shall be available for allocation.

Not less than 35% of the Net Issue or Issue less allocation to QIB Bidders and Non-Institutional Bidders shall be available for allocation.

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Employee

Reservation

Portion#

QIBs##

Non-Institutional

Bidders

Retail Individual

Bidders

be available to QIBs.

Basis of Allocation if respective category is oversubscribed (Subject to the Foreign Investment Limits as given in Note below)3

Proportionate. Proportionate as follows: (a) [●]

Equity Shares shall be available for allocation on a proportionate basis to Mutual Funds; and

(b) [●] Equity Shares shall be Allotted on a proportionate basis to all QIBs including Mutual Funds receiving allocation as per (a) above.

Proportionate. Proportionate.

Minimum Bid [●] Equity Shares

Such number of Equity Shares so that the Bid Amount exceeds Rs.100,000 and in multiple of [●] Equity Shares thereafter.

Such number of Equity Shares so that the Bid Amount exceeds Rs.100,000 and in multiple of [●] Equity Shares thereafter.

[●] Equity Shares.

Maximum Bid Such number of Equity Shares in multiples of [●] Equity Shares so that the Bid does not exceed the Employee Reservation Portion and subject to the maximum bid by each Eligible Employee in this portion being Rs. 100,000.

Such number of Equity Shares in multiples of [●] Equity Shares not exceeding the Issue size, subject to applicable limits.

Such number of Equity Shares in multiples of [●] Equity Shares not exceeding the Issue size, subject to applicable limits.

Such number of Equity Shares in multiples of [●] Equity Shares whereby the Bid Amount does not exceed Rs.100,000.

Mode of Allotment Compulsorily in dematerialized form.

Compulsorily in dematerialized form.

Compulsorily in dematerialized form.

Compulsorily in dematerialized form.

Bid Lot [●] Equity [●] Equity [●] Equity Shares [●] Equity Shares

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Employee

Reservation

Portion#

QIBs##

Non-Institutional

Bidders

Retail Individual

Bidders

Shares and in multiples of [●] Equity Shares thereafter.

Shares and in multiples of [●] Equity Shares thereafter.

and in multiples of [●] Equity Shares thereafter.

and in multiples of [●] Equity Shares thereafter.

Allotment Lot [●] Equity Shares and in multiples of one Equity Share Thereafter

[●] Equity Shares and in multiples of one Equity Share Thereafter

[●] Equity Shares and in multiples of one Equity Share Thereafter

[●] Equity Shares and in multiples of one Equity Share Thereafter

Trading Lot One Equity Share.

One Equity Share.

One Equity Share. One Equity Share.

Who can Apply(2) All or any of the following: (a) a permanent employee of our Company as of the date of filing of the Red Herring Prospectus with the RoC and based, working and present in India as on the date of submission of the Bid cum Application Form;

(b) a Director of our Company, whether a whole time Director, part time Director or otherwise, except any Promoters or members of the Group Companies, as of the date of filing the Red Herring Prospectus with the RoC and based and present in India as on the date of submission of the Bid cum Application Form

Public financial institutions as specified in Section 4A of the Companies Act, FIIs and sub accounts (other than a sub-account which is a foreign corporate or foreign individual), scheduled commercial banks, Mutual Funds registered with SEBI, multilateral and bilateral development financial institutions, VCFs, FVCIs, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of Rs.250 million, pension funds with minimum corpus of Rs.250 million in accordance with applicable

Eligible NRIs, Resident Indian individuals, HUFs (in the name of the Karta), companies, corporate bodies, scientific institutions, any FII sub-account registered with SEBI, which is a foreign corporate or foreign individual, societies and trusts.

Individuals (including HUFs in the name of the karta and Eligible NRIs) applying for Equity Shares such that the Bid Amount per individual Bidder does not exceed Rs.100,000 in value.

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Employee

Reservation

Portion#

QIBs##

Non-Institutional

Bidders

Retail Individual

Bidders

law and the National Investment Fund and insurance funds set up and managed by the Indian Army, Navy or Air Force.

Terms o f Payment 100% of the Bid Amount

Full Bid Amount on Bidding..##

Full Bid Amount on Bidding.

Full Bid Amount on Bidding. ###

# The portion of the Issue, aggregating upto Rs. 15.00 million is available for allocation to the

Eligible Employees ## The QIB Portion includes the Anchor Investor Portion in accordance with the SEBI ICDR

Regulations. The Anchor Investor Amount shall be payable at the time of submission of the

application forms by the Anchor Investors.

### In case of ASBA Bidders, the SCSBs shall be authorized to block such funds in the bank account of

the ASBA Bidders that are specified in the ASBA Bid-cum-Application Forms.

*** Any unsubscribed portion in any reserved category shall be added to the Net Issue.

________ (1) The Issue is being made under sub-regulation (2) (a) (i) and (2) (b) (i) of Regulation 26 of the SEBI

ICDR Regulations, 2009 and through the 100% Book Building Process, wherein atleast 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers. Provided that our Company may allocate up to 30% of the QIB portion to the Anchor Investors on discretionary basis. Further 5% shall be available for allocation on a proportionate basis to Mutual Funds only (excluding Anchor Investor Portion) and the remaining QIB portion shall be available for allocation to the QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. If atleast 50% of the Net Issue cannot be allocated to the QIBs then the entire application money will be refunded forthwith. Further, not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders and not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in the Non-Institutional and Retail categories, would be allowed to be met with spill-over from any other category or combination of categories at the sole discretion of our Company, in consultation with the BRLM and the Designated Stock Exchange. Please see the section titled “Issue Procedure” beginning on page [●] of this Draft Red Herring Prospectus.

(2) In case the Bid-cum-Application Form is submitted in joint names, the investors should ensure that

the demat account is also held in the same joint names and the names are in the same sequence in which they appear in the Bid-cum-Application Form.

(3) As disclosed in the Objects of the Issue on page [●] of this Draft Red Herring Prospectus, our Company intends to invest in MSO/LCO companies, so as to have a controlling stake therein. As per statutory/regulatory requirements, our Company can only have a controlling stake in MSO/LCO companies, if our Company is Indian owned and controlled, (that is, if at least 51% of the equity interest in our Company is beneficially owned by resident Indian citizens and/or Indian companies which are in turn owned by resident Indian citizens). In furtherance of our intention of being Indian owned and controlled as detailed above, allotments to successful Bidders will be made subject to the following:

i. the shareholding of FIIs in aggregate will not exceed 24% and individual shareholding of each

FII will not exceed 10% of the total paid up equity share capital of the Company; and ii. the total foreign shareholding of our Company will not exceed 49% of the aggregate post-Issue

paid-up equity share capital of our Company, (“Foreign Investment Limits”)

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Proportionate allocation will be made in each category of Bidders (other than Anchor Investor Portion) so as to ensure that the aforesaid Foreign Investment Limits are not exceeded. To further clarify, in the event, that the allocation on a proportionate basis to Bidders who are persons resident outside India, (“Non Resident Bidders”), results in breaching of the Foreign Investment Limits as specified above, then such relevant Non Resident Bidders shall receive such lower proportion of the allocation within the category of Bidders to which he belongs (that is, QIBs, Non-Institutional or Retail, as the case may be), so as to ensure compliance with the Foreign Investment Limits. The Equity Shares which would otherwise have been available for allocation to such Non Resident Bidder/s shall be proportionately adjusted within the remaining Bidders who are resident in India in the relevant category to which the aforesaid Non Resident Bidder/s belonged for further allocation on a proportionate basis. Withdrawal of the Issue

Our Company, in consultation with the BRLM, reserves the right not to proceed with the Issue at any time after the Bid/Issue Opening Date but before the Board meeting for Allotment, without assigning any reason therefor. If our Company withdraws from the Issue, it shall issue a public notice within two days of the closure of the Issue. The notice shall be issued in the same newspapers where the pre-Issue advertisements have appeared and our Company shall also promptly inform the Stock Exchanges. If our Company withdraws the Issue after the Bid/Issue Closing Date and thereafter determines that it will proceed with an initial public offering of its Equity Shares, it shall file a fresh draft red herring prospectus with SEBI. Notwithstanding the foregoing, the Issue is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment and (ii) the final RoC approval of the Prospectus after it is filed with the RoC. Under the SEBI ICDR Regulations, QIBs are not permitted to withdraw their Bids after the Bid/Issue Closing Date. Letters of Allotment or Refund Orders Our Company shall credit each beneficiary account with its depository participant within two working days from the date of the finalization of the basis of allocation. Applicants that are residents of the 68 cities notified by SEBI through its notification (Ref. No. SEBI/CFD/DILDIP/29/2008/01/02) dated February 1, 2008 will receive refunds through ECS only (subject to availability of all information for crediting the refund through ECS) except where the applicant is eligible to receive refunds through Direct Credit, NEFT or RTGS. In the case of other applicants, our Company shall ensure the dispatch of refund orders, if any, of value up to Rs.1,500 by “Under Certificate of Posting”, and shall dispatch refund orders above Rs.1,500, if any, by registered post or speed post at the sole or first Bidder’s sole risk within 15 days of the Bid/Issue Closing Date. Interest in Case of Delay in Dispatch of Allotment Letters/Refund Orders

In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI ICDR Regulations, our Company undertakes that:

• Allotment shall be made only in dematerialised form within 15 days from the Bid/Issue Closing Date;

• Dispatch of refund orders, except for Bidders who can receive refunds through Direct Credit, NEFT, RTGS or NECS, shall be done within 15 days from the Bid/Issue Closing Date; and

• Our Company shall pay interest at 15% per annum, if Allotment is not made, refund orders are not dispatched to the applicants or if, in a case where the refund or portion thereof is made in electronic mode/manner, the refund instructions have not been given to clearing members, and/or demat credits are not made to investors within the 15 day time period prescribed above.

Our Company will provide adequate funds required for dispatch of refund orders or Allotment advice to the Registrar to the Issue. Refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payable at par at places where Bids are received, except where the refund or portion thereof is made in electronic mode/manner. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

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Bid/Issue Program

BID/ISSUE OPENS ON [●], 2010

BID/ISSUE CLOSES ON [●], 2010

Our Company may consider participation by Anchor Investors for up to [●] Equity Shares in accordance with the SEBI ICDR Regulations on the Anchor Investor Bid/Issue Date. For details, see the section “Issue Procedure” beginning on page 209 of the Draft Red Herring Prospectus. Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centers mentioned on the Bid cum Application Form or incase of bids submitted through ASBA, the designated branches of the SCSBs except that on the Bid/Issue Closing Date, Bids shall be accepted only between 10.00 a.m. and 3.00 p.m. (Indian Standard Time) and uploaded till (i) 4.00 p.m. in case of Bids by QIB Bidders and Non-Institutional Bidders and Eligible Employees (ii) till until 5.00 p.m. in case of Bids by Retail Individual Bidders. Due to limitation of the time available for uploading the Bids on the Bid/Issue Closing Date, the Bidders are advised to submit their Bids one day prior to the Bid/Issue Closing Date and, in any case, no later than 3.00 p.m. (Indian Standard Time) on the Bid/Issue Closing Date. Bidders are advised that due to clustering of last day applications, as is typically experienced in public offerings, some Bids may not get uploaded on the last date. Such Bids that cannot be uploaded will not be considered for allocation under the Issue. If such Bids are not uploaded, the Issuer, BRLM and Syndicate members will not be responsible. Bids will be accepted only on Business Days, i.e. Monday to Friday (excluding any public holiday). Bids by ASBA Bidders shall be uploaded by the SCSB in the electronic system to be provided by the NSE and the BSE. On the Bid/Issue Closing Date, extension of time may be granted by the Stock Exchanges only for uploading the Bids received by Retail Individual Bidders after taking into account the total number of Bids received up to the closure of timings for acceptance of Bid cum Application Forms and ASBA Form as stated herein and reported by the BRLM to the Stock Exchange within half an hour of such closure. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical Bid form, for a particular bidder, the details as per physical application form of that Bidder may be taken as the final data for the purpose of allotment. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical or electronic Bid cum Application Form, for a particular ASBA Bidder, the Registrar to the Issue shall ask for rectified data from the SCSB. Our Company, in consultation with the BRLM, reserves the right to revise the Price Band during the Bidding Period in accordance with the SEBI ICDR Regulations. The cap should not be more than 120% of the floor of the Price Band and the Floor Price shall not be less than the face value of Equity Shares. The floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band as disclosed at least two working days prior to the Bid/Issue Opening Date and the Cap Price will be revised accordingly. In case of revision in the Price Band, the Bidding Period shall be extended for three additional

Business Days after such revision, subject to the Bidding Period not exceeding ten Business Days.

Any revision in the Price Band, and the revised Bidding Period, if applicable, shall be widely

disseminated by notification to the Stock Exchanges, by issuing a press release and also by indicating the change on the websites of the BRLM and the terminals of the other members of the

Syndicate.

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ISSUE PROCEDURE

Book Building Procedure The Issue is being made under sub-regulation (2) (a) (i) and (2) (b) (i) of Regulation 26 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, and through the 100% Book Building Process wherein at least 50% of the Net Issue shall be allotted on a proportionate basis to QIBs, wherein 5% of the QIB Portion (excluding Anchor Investor portion), which shall be available for allocation on a proportionate basis to Mutual Funds only. If at least 50% of the Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. [●] Equity Shares aggregating upto Rs. 15 million, shall be reserved for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received. Any unsubscribed portion in Employee Reservation Portion shall be added to the Net Offer to the public. Under-subscription, if any, in any category except the QIB Portion, would be allowed to be met with spill-over from any other category or combination of categories at the discretion of our Company, in consultation with the BRLMs and the Designated Stock Exchange. Allocation to Anchor Investors shall be on a discretionary basis and not on a proportionate basis. Any Bidder (other than QIBs) may participate in this Issue through the ASBA process by providing the details of their respective bank accounts in which the corresponding Bid amounts will be blocked by SCSBs. For details in this regard, specific attention is invited to ―Issue Procedure beginning on page 209 Bidders are required to submit their Bids through the Syndicate. Further, QIB Bids can be submitted only through the BRLM. In case of QIB Bidders, our Company, in consultation with the BRLM may reject Bids at the time of acceptance of the Bid-cum-Application Form provided that the reasons for such rejection shall be disclosed to such Bidder in writing. In the cases of Non-Institutional Bidders and Retail Individual Bidders and Eligible Employees Bidding under the Employee Reservation Portion, our Company will have a right to reject the Bids only on technical grounds. Investors should note that allotment of Equity Shares to all successful Bidders will only be in the

dematerialized form. Bidders will not have the option of getting allotment of the Equity Shares in

physical form. The Equity Shares on allotment shall be traded only in the dematerialized segment

of the Stock Exchanges. Bid-cum-Application Form Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid. Before being issued to the Bidders, the Bid-cum-Application Form shall be serially numbered and date and time stamped at the Bidding centres and such form shall be issued in duplicate signed by the Bidder and countersigned by the relevant member of the Syndicate. The Bid-cum-Application Form shall contain information about the Bidder, the price and the number of Equity Shares that the Bidder wishes to Bid. The Bidders shall have the option to make a maximum of three Bids in the Bid-cum-Application Form and such options shall not be considered as multiple Bids. Upon the allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and submitting the Bid-cum-Application Form to a member of the Syndicate, the Bidder is deemed to have authorized our Company to make the necessary changes in the Red Herring Prospectus and the Bid-cum-Application Form as would be required for filing the Prospectus with the RoC and as would be required by the RoC after such filing, without prior or subsequent notice of such changes to the Bidder.

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The prescribed color of the Bid-cum-Application Form for various categories is as follows:

Category

Color of Bid-cum-

Application Form

Resident Indians and Eligible NRIs applying on a non-repatriation basis [●]

Eligible Employees in the Employee Reservation Portion [●] Anchor Investors [●] ASBA Bidders [●]

Eligible NRIs applying on a repatriation basis, FIIs or Foreign Venture Capital Funds, registered Multilateral and Bilateral Development Financial Institutions applying on a repatriation basis

[●]

ASBA Bidders shall submit an ASBA Bid cum Application Form either in physical or electronic form to the SCSB authorising blocking funds that are available in the bank account specified in the ASBA Bid cum Application Form used by ASBA Bidders. Upon completing and submitting the ASBA Bid cum Application Form to the SCSB, the ASBA Bidder is deemed to have authorised our Company to make the necessary changes in the Red Herring Prospectus and the ASBA as would be required for filing the Prospectus with the RoC and as would be required by RoC after such filing, without prior or subsequent notice of such changes to the ASBA Bidder. Upon the allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the RoC, the ASBA Bid cum Application Form shall be considered as the Application Form. In accordance with the SEBI ICDR Regulations, only QIBs can participate in the Anchor Investor Portion. In respect of QIBs that are Anchor Investors and ASBA Bidders, the issue procedure set out below should be read with, and is qualified by, the section “Issue Procedure” beginning on page 209 of the Draft Red Herring Prospectus, respectively.

Who can Bid? 1. Persons eligible to invest under all applicable laws, rules, regulations and guidelines.

2. Indian nationals resident in India who are majors, or in the names of their minor children as

natural/legal guardians in single or joint names (not more than three); 3. Indian nationals resident in India who are not minors in single or joint names (not more than three).

4. Hindu Undivided Families or HUFs in the individual name of the Karta. The Bidder should specify

that the Bid is being made in the name of the HUF in the Bid-cum-Application Form as follows: “Name of sole or first Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Bids by HUFs would be considered at par with those from individuals.

5. Eligible NRIs on a repatriation basis or a non-repatriation basis subject to compliance with applicable

laws. NRIs, other than Eligible NRIs, are not permitted to participate in this Issue. 6. FIIs and sub-accounts registered with the SEBI (other than a sub-account which is a foreign corporate

or foreign individual). 7. State Industrial Development Corporations.

8. Insurance companies registered with the Insurance Regulatory and Development Authority, India.

9. Provident Funds with a minimum corpus of Rs.250 million and who are authorized under their

constitution to invest in equity shares.

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10. Pension funds with a minimum corpus of Rs.250 million and who are authorized under their

constitution to invest in equity shares. 11. National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of

the Government of India published in the Gazette of India. 12. Companies, corporate bodies and societies registered under applicable laws in India and authorized to

invest in equity shares. 13. Venture Capital Funds registered with the SEBI.

14. Foreign Venture Capital Investors registered with the SEBI.

15. Mutual Funds registered with the SEBI.

16. Indian financial institutions, scheduled commercial banks (excluding foreign banks), regional rural

banks, co-operative banks (subject to the RBI regulations and the SEBI ICDR Regulations and other regulations, as applicable).

17. Multilateral and bilateral development financial institutions.

18. Trusts registered under the Societies Registration Act, 1860, as amended, or under any other law

relating to trusts and who are authorized under their constitution to hold and invest in equity shares. 19. Scientific and/or industrial research organizations in India authorized to invest in equity shares.

20. Insurance funds set up and managed by the army, navy and air force of the Union of India and

21. Eligible Employees

As per existing regulations, OCBs cannot Bid in the Issue. The Equity Shares have not been and will not be registered under the Securities Act and applicable

state securities laws, may not be offered or sold within the United States except pursuant to an

exemption from, or in a transaction not subject to, the registration requirements of the Securities

Act and applicable state securities laws. Accordingly, the Equity Shares are only being offered and

sold (i) in the United States only to persons reasonably believed to be “qualified institutional buyers” (as defined in Rule 144A under the Securities Act and referred to in this Draft Red

Herring Prospectus as “U.S. QIBs”; for the avoidance of doubt, the term U.S. QIBs does not refer

to a category of institutional investor defined under applicable Indian regulations and referred to

in the Draft Red Herring Prospectus as “QIBs”) in transactions exempt from, or not subject to, the

registration requirements of the Securities Act, and (ii) outside the United States in reliance on

Regulation S under the Securities Act.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any

other jurisdiction outside India and may not be offered or sold, and Bids may not be made by

persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation

or as specified in the Red Herring Prospectus. Bids by Mutual Funds An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual Funds Portion. In the event that the demand is greater than [●] Equity Shares, allocation shall be made to Mutual Funds on a proportionate basis to the extent of the Mutual Funds Portion. The remaining demand by Mutual Funds shall, as part of the aggregate demand by QIB Bidders, be made available for allocation proportionately out of the remainder of the QIB Portion, after excluding the allocation in the Mutual Funds Portion.

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The Bids made by the asset management companies or custodians of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with the SEBI and such Bids in respect of more than one scheme of the Mutual Fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been made. In accordance with current regulations, the following restrictions are applicable for investments by

Mutual Funds: No Mutual Fund scheme shall invest more than 10% of its net asset value in equity shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments in index funds or sector or industry-specific funds. No Mutual Fund under all its schemes should own more than 10% of any company’s paid-up capital carrying voting rights. Bids by Eligible NRIs Bid-cum-Application Forms have been made available for Eligible NRIs at the Registered Office of our Company and with members of the Syndicate. NRI applicants should note that only such applications as are accompanied by payment in free foreign exchange shall be considered for Allotment under the Eligible NRI Category. The Eligible NRIs who intend to make payment through the Non-Resident Ordinary (NRO) account shall use the application form meant for Resident Indians (white form) and shall not use the forms meant for any reserved category. Bids by FIIs In accordance with the current regulations, the following restrictions are applicable for investments by FIls: The issue of Equity Shares to a single FII should not exceed 10% of the post-Issue paid up capital of our Company (i.e., 10% of [●] Equity Shares). In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total paid up capital of our Company or 5% of the total paid-up capital of our Company, in case such sub-account is a foreign corporate or an individual. In accordance with the foreign investment limits applicable to us, the total FII investment cannot exceed 24% of our Company’s total paid-up capital. With the approval of the Board of Directors and the shareholders by way of a special resolution, the aggregate FII holding limit of our Company has been increased to 49% of the post-Issue paid-up capital of our Company. Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of Regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended, an FII may issue, deal or hold, offshore derivative instruments such as participatory notes, equity-linked notes or any other similar instruments against underlying securities listed or proposed to be listed on any stock exchange in India only in favor of those entities which are regulated by any relevant regulatory authorities in the countries of their incorporation or establishment subject to compliance of “know your client” requirements. An FII shall also ensure that no further downstream issue or transfer of any instrument referred to hereinabove is made to any person other than a regulated entity. .Bids by the SEBI-registered Venture Capital Funds and Foreign Venture Capital Investors

The SEBI (Venture Capital Funds) Regulations, 1996 and the SEBI (Foreign Venture Capital Investor) Regulations, 2000 prescribe investment restrictions on Venture Capital Funds and Foreign Venture Capital Investors registered with SEBI. Accordingly, the holding by any Venture Capital Fund should not exceed 25% of the corpus of the Venture Capital Fund. However, venture capital funds or foreign venture capital investors may invest not more than 33.33% of their respective investible funds in various prescribed instruments, including in initial public offers. Pursuant to the SEBI ICDR Regulations, the shareholding of SEBI-registered Venture Capital Funds and Foreign Venture Capital Investors held in a company prior to making an initial public offering would be exempt from lock-in requirements only if the shares have been held by them for at least one year prior to the time of filing the draft prospectus with SEBI.

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Bids by Eligible Employees For the purpose of the Employee Reservation Portion, Eligible Employee means all or any of the following: (a) permanent and full-time employee of our Company as of the date of the Red Herring Prospectus

and based and working in India as on the date of submission of the Bid cum Application Form; and (b) Director, whether whole-time or part-time, as of the date of the Red Herring Prospectus and based

in India as on the date of submission of the Bid cum Application Form. For the purpose of this definition, an employee who is recruited against regular vacancy but is on probation as on the date of submission of the Bid cum Application Form will also be deemed as a permanent employee. The maximum Bid Amount by an Eligible Employee under the Employee Reservation Portion cannot exceed Rs. 100,000. Bids under Employee Reservation Portion by Eligible Employees shall be:

• Made only in the prescribed Bid cum Application Form or Revision Form (i.e. pink colour form).

• Only Eligible Employees (as defined above) would be eligible to apply in this Issue under the Employee Reservation Portion.

• Eligible Employees, as defined above, should mention the Employee Number at the relevant place in the Bid cum Application Form.

• The sole/ first Bidder shall be the Eligible Employee as defined above.

• Bids by Eligible Employees, which are received at or above the Issue Price, would be considered for allocation under this category. Eligible Employees who Bid for Equity Shares of or for a value less than Rs. 100,000 in any of the Bid prices can apply at the Cut-off Price.

• The Bids must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares thereafter.

• The maximum Bid Amount under Employee Reservation Portion by an Eligible Employee cannot exceed Rs.100,000.

• Bids by Eligible Employees can also be made in the “Net Issue” portion and such Bids shall not be treated as multiple Bids.

• If the aggregate demand in this category is less than or equal to [●] Equity Shares at or above the Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand. Any unsubscribed portion in the Employee Reservation Portion shall be added to the Net Issue to the public. In case of under-subscription in the Net Issue to the public category, spill-over to the extent of under-subscription shall be permitted from the Employee Reservation Portion to the Net Issue to the public.

• If the aggregate demand in this category is greater than [●] Equity Shares, the allocation shall be made on a proportionate basis. For the method of proportionate basis of allocation, see “Issue Procedure” on page 209 of this Prospectus.

The above information is given for the benefit of the Bidders. The Bidders are advised to make their own enquiries about the limits applicable to them. Our Company and the BRLM do not accept any

responsibility for the completeness and accuracy of the information stated hereinabove. Our

Company and the BRLM are not liable to inform the investors of any amendments or modifications

or changes in applicable laws or regulations, which may occur after the date of this Draft Red

Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations. Maximum and Minimum Bid Size (a) For Retail Individual Bidders: The Bid must be for a minimum of [●] Equity Shares and in multiples

of [●] Equity Shares thereafter, so as to ensure that the Bid Amount payable by the Bidder does not exceed Rs.100,000. In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does not exceed Rs.100,000. Where the Bid Amount is over Rs.100,000 due to revision of the Bid or revision of the Price Band or on exercise of the option to bid at Cut-off Price, the Bid would be considered for allocation under the Non-Institutional Portion. The Cut-off Price option is given only to Retail Individual Bidders indicating their agreement to the Bid and to purchase the Equity Shares at the Issue Price as determined at the end of the Book Building Process.

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(b) For Non-Institutional Bidders and QIB Bidders: The Bid must be for a minimum of such number of

Equity Shares such that the Bid Amount exceeds Rs.100,000 and is a multiple of [●] Equity Shares. A Bid cannot be submitted for more than the Issue Size. However, the maximum Bid by a QIB investor should not exceed the investment limits prescribed for them under applicable laws. Under existing ICDR Regulations, a QIB Bidder bidding in the QIB Portion cannot withdraw its Bid after the Bid/Issue Closing Date.

In case of revision in Bids, the Non-Institutional Bidders, who are individuals, have to ensure that the Bid Amount is greater than Rs.100,000 for being considered for allocation in the Non-Institutional Portion. In case the Bid Amount reduces to Rs.100,000 or less due to a revision in Bids or revision of the Price Band, Bids by Non-Institutional Bidders who are eligible for allocation in the Non-Institutional Portion would be considered for allocation under the Retail Portion. Non-Institutional Bidders and QIB Bidders are not allowed to Bid at the Cut-off Price. Payments made upon any revision of Bids shall be adjusted against the payment made at the time of the original Bid or the previously revised Bid.

(c) For Bidders in the Employee Reservation Portion: The Bid must be for a minimum of [●] Equity

Shares and in multiples of [●] Equity Shares thereafter, so as to ensure that the Bid Amount payable by the Bidder does not exceed Rs.100,000. The Allotment in the Employee Reservation Portion will be on a proportionate basis. Eligible employees can bid at cut off indicating their agreement to the Bid and to purchase the Equity Shares at the Issue Price as determined at the end of the Book Building Process.

(d) For Bidders in the Anchor Investor Portion: The Bid must be for a minimum of such number of

Equity Shares such that the Bid Amount is Rs. 100 million and in multiples of [●] Equity Shares thereafter. A Bid cannot be submitted for more than 30% of the QIB Portion. Bids by Anchor Investors under the Anchor Investor Portion and the QIB Portion shall not be considered as multiple Bids. Anchor Investors cannot withdraw their bids after the Anchor Investor Bid/Offer Period.

Bidders are advised to ensure that any single Bid from them does not exceed the investment limits

or maximum number of Equity Shares that can be held by them under applicable law or regulation

or as specified in this Draft Red Herring Prospectus. Refund amounts following a permitted withdrawal of a Bid shall be paid in the manner described under paragraph “Payment of Refund” below. Information for the Bidder: 1. Our Company will file the Red Herring Prospectus with the RoC at least three days before the Bid/Issue

Opening Date. 2. The members of the Syndicate will circulate copies of the Bid-cum-Application Form to potential

investors, and at the request of potential investors, copies of the Red Herring Prospectus. 3. Any investor (who is eligible to invest in the Equity Shares) who would like to obtain the Red Herring

Prospectus along with the Bid-cum-Application Form can obtain the same from the Registered Office of our Company or from any of the members of the Syndicate.

4. Eligible investors who are interested in subscribing for the Equity Shares should approach any of the

BRLM or Syndicate Members or their authorized agent(s) to register their Bids. 5. The Bids should be submitted on the prescribed Bid-cum-Application Form only. Bid-cum-

Application Forms should bear the stamp of the member of the Syndicate. Bid-cum-Application Forms which do not bear the stamp of a member of the Syndicate will be rejected.

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Method and Process of Bidding 1. Our Company and the BRLM shall declare the Bid/Issue Opening Date, the Bid/Issue Closing Date and

Price Band in the Red Herring Prospectus to be filed with the RoC and also publish the same in two widely circulated national newspapers (one each in English and Hindi) and in one Marathi newspaper with wide circulation. This advertisement, subject to the provisions of Section 66 of the Companies Act, shall be in the format prescribed in Schedule XIII of the SEBI ICDR Regulations. The Price Band and the minimum Bid lot size for the Issue will be decided by our Company, in consultation with the BRLM, and advertised in two widely circulated national newspapers (one each in English and Hindi) and in one Marathi newspaper with wide circulation, at least two working days prior to the Bid/Issue Opening Date. The BRLM and Syndicate Members shall accept Bids from the Bidders during the Bidding Period in accordance with the terms of the Syndicate Agreement.

2. The Bidding Period shall be for a minimum of three working days and shall not exceed ten working

days, including the days for which the Issue is kept open in case of a revision in the Price Band. Where the Price Band is revised, the revised Price Band and Bid/lssue Period will be published in two widely circulated national newspapers (one each in English and Hindi) and in one Marathi newspaper with wide circulation and also by indicating the change on the website of the BRLM and at the terminals of the members of the Syndicate. The Bidding Period may be extended, if required, by an additional three working days, subject to the total Bidding Period not exceeding ten working days.

3. During the Bidding Period, eligible investors who are interested in subscribing for the Equity Shares

should approach the members of the Syndicate or their authorized agents to register their Bid. The BRLM shall accept Bids from the Anchor Investors on the Anchor Investor Bidding Date, i.e. one day prior to the Bid/Offer Opening Date. Bids by Anchor Investors under the Anchor Investor Portion and the QIB Portion shall not be considered as multiple Bids.

4. Each Bid-cum-Application Form will give the Bidder the choice to Bid for up to three optional prices

(for details refer to the paragraph “Bids at Different Price Levels”) within the Price Band and specify the demand (i.e., the number of Equity Shares Bid for) in each option. The price and demand options submitted by the Bidder in the Bid-cum-Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares Bid for by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s), irrespective of the Bid price, will become automatically invalid.

5. The Bidder cannot Bid on another Bid-cum-Application Form after Bid(s) on one Bid-cum-

Application Form have been submitted to any member of the Syndicate. Submission of a second Bid-cum-Application Form to either the same or to another member of the Syndicate will be treated as multiple bidding and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point in time before the Allotment of Equity Shares in the Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed under the paragraph “Build up of the Book and Revision of Bids”.

6. Except in relation to the Bids received from the Anchor Investors, the members of the Syndicate will

enter each Bid option into the electronic bidding system as a separate Bid and generate a Transaction Registration Slip (“TRS”) for each price and demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for each Bid-cum-Application Form.

7. During the Bidding Period, Bidders may approach the members of the Syndicate to submit their Bids.

Every member of the Syndicate shall accept Bids from all clients/investors who place orders through them and shall have the right to vet the Bids.

8. Along with the Bid-cum-Application Form, all Bidders will make payment in the manner described

under the paragraph “Terms of Payment”.

9. The identity of the QIB Bidders shall not be made public. Bids at Different Price Levels 1. The Bidders can Bid at any price within the Price Band in multiples of Rs.1.00. The Bidder has to Bid

for the desired number of Equity Shares at a specific price. Retail Individual Bidders and Eligible

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Employees in the Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding Rs.1,00,000 may Bid at Cut-off Price. However, bidding at Cut-off Price is prohibited for QIB or Non-Institutional Bidders and such Bids from QIBs and Non-Institutional Bidders shall be rejected.

2. Our Company, in consultation with the BRLM, reserves the right to revise the Price Band during the

Bidding Period in accordance with SEBI ICDR Regulations. The cap on the Price Band should not be more than 20% of the Floor Price. Subject to compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band.

3. In case of a revision of the Price Band, the Bidding Period shall be extended, if required, for three

additional working days, subject to a maximum of 10 working days. Any revision in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a public notice in two widely circulated national newspapers (one each in English and Hindi) and in one Marathi newspaper with wide circulation, and also by indicating the change on the website of the BRLM and at the terminals of the members of the Syndicate.

4. Our Company, in consultation with the BRLM, can finalize the Issue Price and Anchor Investor Issue

Price within the Price Band without the prior approval of, or intimation to, the Bidders. 5. The Bidder can Bid at any price within the Price Band. The Bidder has to Bid for the desired number of

Equity Shares at a specific price.

Retail Individual Bidders and Eligible Employees in the Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding up to Rs.100,000. However, bidding at the Cut-off Price is prohibited for QIB Bidders or Non-Institutional Bidders whose Bid Amount exceeds Rs.100,000 and such Bids from QIB or Non-Institutional Bidders shall be rejected.

6. Retail Individual Bidders and Eligible Employees in the Employee Reservation Portion who Bid at the

Cut-off Price agree that they shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders and Eligible Employees in the Employee Reservation Portion bidding at Cut-off Price shall submit the Bid cum Application Form along with a cheque / demand draft for the Bid Amount based on the Cap Price with a member of the Syndicate. In case of ASBA Bidders Bidding at the Cut-Off Price, the ASBA Bidders shall instruct the SCSBs to block amounts based on the Cap Price.

7. In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and

Eligible Employees in the Employee Reservation Portion who had Bid at the Cut-off Price could either (i) revise their Bid or (ii) make additional payment based on the higher cap of the revised Price Band (such that the total amount i.e., the original Bid Amount plus additional payment does not exceed Rs.100,000 if the Bidder wants to continue to Bid at the Cut-off Price), with the members of the Syndicate to whom the original Bid was submitted. In case the total amount (i.e., original Bid Amount plus additional payment) exceeds Rs.100,000, the Bid will be considered for allocation under the Non-Institutional Portion in terms of the Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the cap of the Price Band before revision, the number of Equity Shares Bid for shall be adjusted downwards for the purpose of Allotment, such that no additional payment would be required from the Bidder and the Bidder is deemed to have approved such revised Bid at the Cut-off Price.

8. In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders and

Eligible Employees in the Employee Reservation Portion who have Bid at the Cut-off Price could either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Escrow Account.

9. In the event of any revision in the Price Band, whether upwards or downwards, the minimum

application size shall remain [●] Equity Shares irrespective of whether the Bid Amount payable on such minimum application is not in the range of Rs. 5,000-7,000.

Escrow Mechanism (Not applicable to ASBA Investors) Our Company and the members of the Syndicate shall open Escrow Accounts with one or more Escrow Collection Banks in whose favor the Bidders make out the cheque or demand draft in respect of his or her

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Bid and/or revision of the Bid. Cheques or demand drafts received for the full Bid Amount from Bidders in a certain category would be deposited in the Escrow Accounts. The Escrow Collection Banks will act in terms of the Red Herring Prospectus, the Prospectus and the Escrow Agreement. The monies in the Escrow Accounts shall be maintained by the Escrow Collection Banks for and on behalf of the Bidders. The Escrow Collection Banks shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer the monies from the Escrow Accounts to the Issue Account and the Refund Account as per the terms of the Escrow Agreement, the Red Herring Prospectus and the Prospectus. The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as an arrangement between us, the Syndicate, the Escrow Collection Bank(s) and the Registrar to the Issue to facilitate collections from the Bidders. Terms of Payment and Payment into the Escrow Account Each Bidder shall with the submission of the Bid-cum-Application Form, draw a cheque or demand draft in favor of the Escrow Account of the Escrow Collection Bank(s) (see “Payment Instructions” at page 227 of this Draft Red Herring Prospectus), and submit such cheque or demand draft to the member of the Syndicate to whom the Bid is being submitted. The Bidder may also provide the Amount by way of an electronic transfer of funds through the RTGS mechanism. Each QIB shall provide their Amount only to the BRLM. Bid-cum-Application Forms accompanied by cash/Stockinvest/money order shall not be accepted. The Bid Amount has to be paid at the time of submission of the Bid-cum-Application Form. The Amount shall be entered and printed on the TRS. The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection Bank(s), which will hold the monies for the benefit of the Bidders until the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds from the Escrow Account, as per the terms of the Escrow Agreement, into the Issue Account. The balance amount after transfer to the Issue Account of our Company shall be transferred to the Refund Account on the Designated Date. No later than 15 days from the Bid/Issue Closing Date, the Escrow Collection Bank(s) shall also refund all amounts payable to unsuccessful Bidders and also the excess amount paid on bidding, if any, after adjustment for Allotment, to the Bidders. Each category of Bidders, i.e., QIB Bidders, Non-Institutional Bidders and Retail Individual Bidders and Eligible Employees in the Employee Reservation Portion would be required to pay their applicable mount at the time of submission of the Bid-cum-Application Form. The amount payable by each category of Bidders is mentioned under the heading “Issue Structure”. If the payment is not made favoring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be rejected. The full amount of payment has to be made at the time of submission of the Bid-cum-Application Form. Where the Bidder has been allocated a lesser number of Equity Shares than he or she had Bid for, the excess amount paid on Bidding, if any, after adjustment for Allotment, will be refunded to such Bidder within 15 days from the Bid/Issue Closing Date, failing which our Company shall pay interest according to the provisions of the Companies Act for any delay beyond the periods as mentioned above. Electronic Registration of Bids 1. The members of the Syndicate will register the Bids using the on-line facilities of the BSE and the NSE.

There will be at least one on-line connectivity in each city where a stock exchange is located in India and where Bids are being accepted.

2. The NSE and the BSE will offer a screen-based facility for registering Bids for the Issue. This facility

will be available on the terminals of the members of the Syndicate and their authorized agents during the Bidding Period. The members of the Syndicate can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently upload the off-line data file into the on-line facilities for book building on a regular basis. On the Bid/Issue Closing Date, the members of the Syndicate shall upload the Bids until such time as may be permitted by the Stock Exchanges.\

3. On the Bid/Issue Closing Date, the Members of the Syndicate shall upload the Bids until such time as

may be permitted by the Stock Exchanges. This information will be available with the BRLMs on a

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regular basis. Bidders are cautioned that a high inflow of bids typically experienced on the last day of the bidding may lead to some Bids received on the last day not being uploaded due to lack of sufficient uploading time, and such bids that could not uploaded will not be considered for allocation. Bids will only be accepted on working days, i.e., Monday to Friday (excluding any public holiday).

4. The aggregate demand and price for Bids registered on electronic facilities of the NSE and the BSE will

be uploaded on a regular basis, consolidated and displayed on-line at all bidding centres as well as on the NSE’s website at www.nseindia.com and on the BSE’s website at www.bseindia.com. The Bidding terminals shall contain an online graphical display of demand and Bid prices updated at periodic intervals, not exceeding 30 minutes. A graphical representation of consolidated demand and price will be made available at the bidding centres by the end of each day during the Bidding Period.

5. At the time of registering each Bid, the members of the Syndicate shall enter the following details of the

investor in the on-line system:

• Name of the Bidder(s). Bidders should ensure that the name given in the Bid-cum-Application Form is exactly the same as the name in which the Depositary Account is held. In case the Bid-cum-Application Form is submitted in joint names, Bidders should ensure that the Depository Account is also held in the same joint names and are in the same sequence in which they appear in the Bid-cum-Application Form;

• Investor category—Individual, Corporate, QIBs, Eligible NRI, FVCI, FII or Mutual Fund, Eligible Employees, etc.;

• Numbers of Equity Shares bid for;

• Bid price;

• Bid-cum-Application Form number;

• Amount paid upon submission of Bid-cum-Application Form; and

• Depository participant identification number and client identification number of the demat account of the Bidder.

6. A system-generated TRS will be given to the Bidder as proof of the registration of each of the bidding

options. It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the member of the Syndicate does not guarantee that the Equity Shares shall be allocated either by the members of the Syndicate or our Company.

7. Such TRS will be non-negotiable and by itself will not create any obligation of any kind. 8. In case of QIB Bidders, members of the Syndicate also have the right to accept the Bid or reject the Bid.

However, such rejection should be made at the time of receiving the Bid and only after assigning a reason for such rejection in writing. In case of Non-Institutional Bidders, Retail Individual Bidders, and Eligible Employees bidding in the Employee Reservation Portion, Bids would not be rejected except on the technical grounds listed in this Draft Red Herring Prospectus.

9. The permission given by the NSE and the BSE to use their network and software of the online IPO

system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company or the BRLM are cleared or approved by the NSE and the BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of our Company, the Promoters, the management or any scheme or project of our Company.

10. It is also to be distinctly understood that the approval given by the NSE and the BSE should not in any

way be deemed or construed that the Draft Red Herring Prospectus has been cleared or approved by the NSE or the BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring Prospectus; nor does it warrant that the Equity Shares

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will be listed or will continue to be listed on the NSE and the BSE. 11. Only Bids that are uploaded on the online Bidding system of the NSE and BSE shall be considered for

allocation/ Allotment. In case of discrepancy of data between the BSE or the NSE and the members of the Syndicate, the decision of the BRLMs based on the physical records of Bid Application Forms shall be final and binding on all concerned.

Build Up of the Book and Revision of Bids 1. The Bidding process shall only be conducted through an electronically linked transparent bidding

facility provided by the Stock Exchanges. Bids registered by various Bidders through the members of the Syndicate shall be electronically transmitted to the NSE or BSE mainframe on a regular basis. The SEBI ICDR Regulations require that the Bidding terminals shall contain an online graphical display of demand and Bid prices updated at periodic intervals, not exceeding 30 minutes.

2. The book will be built up at various price levels. This information will be available from the BRLM on

a regular basis. 3. During the Bidding Period, any Bidder who has registered his or her interest in the Equity Shares at a

particular price level is free to revise his or her Bid within the Price Band using the printed Revision Form, which is a part of the Bid-cum-Application Form.

4. Revisions can be made in both the desired number of Equity Shares and the Bid Amount by using the

Revision Form. Apart from mentioning the revised options in the revision form, the Bidder must also mention the details of all the options in his or her Bid cum Application Form or earlier Revision Form. For example, if a Bidder has Bid for three options in the Bid cum Application Form and he is changing only one of the options in the Revision Form, he must still fill the details of the other two options that are not being revised, in the Revision Form. The members of the Syndicate will not accept incomplete or inaccurate Revision Forms. The Bidder can make this revision any number of times during the Bidding Period. However, for any revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he or she had placed the original Bid. Bidders are advised to retain copies of the blank Revision Form and the revised Bid must be made only in such Revision Form or copies thereof. In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and Eligible Employees Bidding under the Employee Reservation Portion who had Bid at the Cut-off Price could either (i) revise their Bid or (ii) shall make additional payment based on the cap of the revised Price Band (such that the total amount i.e., original Bid Amount plus additional payment does not exceed Rs.100,000 if the Bidder wants to continue to Bid at Cut-off Price), with the member(s) of the Syndicate to whom the original Bid was submitted. In case the total amount (i.e., original Bid Amount plus additional payment) exceeds Rs.100,000, the Bid will be considered for allocation under the Non-Institutional Portion in terms of the Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the cap of the Price Band prior to revision, the number of Equity Shares Bid for shall be adjusted downwards for the purpose of allocation, such that no additional payment would be required from the Bidder and the Bidder is deemed to have approved such revised Bid at the Cut-off Price.

5. Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the

incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of this Draft Red Herring Prospectus. In the case of QIB Bidders, the members of the Syndicate shall collect the payment in the form of cheque or demand draft or electronic transfer of funds through RTGS for the incremental amount to be paid on account of the upward revision of the Bid at the time of one or more revisions by the QIB Bidders.

6. When a Bidder revises a Bid, the Bidder shall surrender the earlier TRS and get a revised TRS from the

members of the Syndicate. It is the responsibility of the Bidder to request and obtain the revised

TRS, which will act as proof of revision of the original Bid. 7. Only Bids that are uploaded on the online IPO system of the NSE and the BSE shall be considered for

allocation/Allotment. In the event of a discrepancy of data between the Bids registered on the online IPO system and the physical Bid-cum-Application Form, the decision of our Company, in consultation with the BRLM and the Designated Stock Exchange, based on the physical records of Bid-cum-

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Application Forms, shall be final and binding on all concerned. 8. In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders and

Eligible Employees Bidding under the Employee Reservation Portion who have bid at Cut-off Price could either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Escrow Account.

Price Discovery and Allocation 1. After the Bid/Issue Closing Date, the BRLM shall analyze the demand generated at various price levels

and discuss pricing strategy with our Company. 2. Our Company, in consultation with the BRLM, shall finalize the Issue Price and the number of Equity

Shares to be allocated in each investor category. 3. The allotment to QIBs will be at least 50% of the Net Issue, on a proportionate basis and the

availability for allocation to Non-Institutional and Retail Individual Bidders will be not less than 15% and 35% of the Net Issue, respectively, on a proportionate basis, in a manner specified in the SEBI ICDR Regulations and this Draft Red Herring Prospectus, subject to the Foreign Investment Limits, in consultation with the Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price. If at least 50% of the Net Issue cannot be allotted to QIBs then the entire application money will be refunded. Further, [●] Equity Shares shall be available for allocation on a proportionate basis to our Eligible Employees, subject to valid Bids being received at or above the Issue Price. Any unsubscribed portion in the Employee Reservation Portion shall be added to the Net Issue to the public. In case of under-subscription in the Net Issue to the public category, spill-over to the extent of under-subscription shall be permitted from the Employee Reservation Portion to the Net Issue to the public. Allocation to Anchor Investors shall be at the discretion of the Company in consultation with the BRLMs, subject to compliance with ICDR Regulations.

4. In case of over-subscription in all categories, at least 50% of the Net Issue shall be available for

allocation on a proportionate basis to QIBs, out of which 5% shall be reserved for Mutual Funds. Mutual Funds participating in the 5% share in the QIB Portion will also be eligible for allocation in the remaining QIB Portion. However, if the aggregate demand by Mutual Funds is less than 5% of the QIB Portion, the balance Equity Shares from the portion specifically available for allocation to Mutual Funds in the QIB Portion will first be added to the QIB Portion and be allocated proportionately to the QIBs in proportion to their Bids. In the event that the aggregate demand in the QIB Portion has been met, under-subscription, if any, will be met with spill-over from any other category or combination of categories at the discretion of our Company, in consultation with the BRLM and the Designated Stock Exchange.

In case of under-subscription in the Net Issue, would be allowed to be met with spill-over from the Employee Reservation Portion at the discretion of our Company, in consultation with the BRLM and the Designated Stock Exchange. Any unsubscribed portion in the Employee Reservation Portion shall be added to the Net Issue. Under-subscription, if any, in the Retail and Non-Institutional categories, would be allowed to be met with spill-over from any other category or combination of categories at the sole discretion of our Company, in consultation with the BRLM. However, if the aggregate demand by Mutual Funds is less than [●] Equity Shares, the balance Equity Shares available for allocation in the Mutual Fund Portion will first be added to the QIB Portion and be allotted proportionately to the QIB Bidders. 5. The Allocation under the shall be on a proportionate basis, in the manner specified under the ICDR

Regulations and the Red Herring Prospectus, subject to valid Bids being received at or above the Issue Price, and is approved by the Designated Stock Exchange.

6. Allotment to Eligible NRIs, FIIs (or their permitted sub-accounts) registered with the SEBI or Mutual

Funds or FVCls registered with the SEBI will be subject to applicable laws, rules, regulations, guidelines and approvals.

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7. Our Company reserves the right to cancel the Issue at any time after the Bid/Issue Opening Date but before the Board meeting for Allotment without assigning any reasons whatsoever.

8. In terms of the SEBI ICDR Regulations, QIBs shall not be allowed to withdraw their Bid after the

Bid/Issue Closing Date. . Further Anchor Investors shall not be allowed to withdraw their Bid after the Anchor Investor Bidding Date.

9. If the Issue Price is higher than the Anchor Investor Issue Price, the additional amount shall be paid by

the Anchor Investors. However, if the Issue Price is lower than the Anchor Investor Issue Price, the difference shall not be repayable to the Anchor Investors.

10. Our Company, in consultation with the BRLM, reserves the right to reject any Bid procured from QIB

Bidders, by any or all members of the Syndicate. Rejection of Bids made by QIBs, if any, will be made at the time of submission of Bids provided that the reasons for rejecting the same shall be provided to such Bidder in writing.

11. The allotment details shall be put on the website of the Registrar to the Issue. Signing of Underwriting Agreement and RoC Filing (a) Our Company, the BRLM and the Syndicate Members may enter into an Underwriting Agreement on

finalization of the Issue Price. (b) After signing the Underwriting Agreement, we will update and file the Red Herring Prospectus with

RoC, which then will be termed “Prospectus”. The Prospectus will have details of the Issue Price, Issue Size, underwriting arrangements and will be complete in all material respects.

Filing of the Red Herring Prospectus and the Prospectus with the RoC

We will file a copy of the Red Herring Prospectus and the Prospectus with the RoC in terms of section 56, section 60 and section 60B of the Companies Act. Announcement of Pre-Issue Advertisement

Subject to section 66 of the Companies Act, our Company shall, after receiving final observations, if any, on this Draft Red Herring Prospectus from the SEBI, publish an advertisement, in the form prescribed by the SEBI ICDR Regulations, in two widely circulated national newspapers (one each in English and Hindi) and a Marathi newspaper with a wide circulation.

Advertisement Regarding Issue Price and Prospectus

A statutory advertisement will be issued by our Company after the filing of the Prospectus with the RoC. This advertisement in addition to the information that has to be set out in the statutory advertisement shall indicate the Issue Price along with a table showing the number of Equity Shares and the amount payable by an investor. Any material updates between the date of the Red Herring Prospectus and the Prospectus shall be included in such statutory advertisement. Issuance of Confirmation of Allocation Note (“CAN”) (a) Upon approval of the basis of Allotment by the Designated Stock Exchange, the BRLM or the Registrar

to the Issue shall send to the members of the Syndicate a list of their Bidders who have been allocated Equity Shares in the Issue. The approval of the basis of allocation by the Designated Stock Exchange for QIB Bidders may be done simultaneously with or before the approval of the basis of allocation for the Retail Individual Bidders, Non-Institutional Bidders and Bids from Eligible Employees in the Employee Reservation Portion. However, the investor should note that our Company shall ensure that the instructions by our Company for demand credit of the Equity Shares to all investors in this Issue shall be given on the same date of Allotment. For Anchor Investors, see “Notice to Anchor Investors: Allotment Reconciliation and Revised CANs”

(b) The BRLM or the members of the Syndicate will then send a CAN to their Bidders who have been

allocated Equity Shares in the Issue. The dispatch of a CAN shall be deemed a valid, binding and

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irrevocable contract for the Bidder (c) Bidders who have been allocated Equity Shares and who have already paid into the Escrow Account at

the time of bidding shall directly receive the CAN from the Registrar to the Issue subject, however, to realization of their cheque or demand draft paid into the Escrow Account.

(d) The issuance of a CAN is subject to “Notice to Anchor Investors: Allotment Reconciliation and

Revised CANs” and “Notice to QIBs: Allotment Reconciliation and Revised CANs” as set forth below. Notice to Anchor Investors: Allotment Reconciliation and revised CANs

A physical book will be prepared by the Registrar to the Issue. Based on the physical book and at the discretion of the Company and the BRLMs, select Anchor Investors may be sent a CAN, within two working days of the Anchor Investor Bid Closing Date, indicating the number of Equity Shares that may be allocated to them. The provisional CAN shall constitute the valid, binding and irrevocable contract (subject only to the issue of a revised CAN) for the Anchor Investor. In the event the Issue Price is fixed higher that the Anchor Investor Issue Price, a revised CAN may be sent to Anchor Investors, price of the Equity Shares in such revised CAN may be different from that specified in the earlier CAN. Anchor Investors should note that they may be required to pay additional amounts, if any, for any increased price of Equity Shares, which shall in no event be later than two days after the Bid/Issue Closing Date. Any revised CAN, if issued, will supersede in entirety the earlier CAN.

Notice to QIBs: Allotment Reconciliation and Revised CANs

After the Bid/Issue Closing Date, an electronic book will be prepared by the Registrar on the basis of Bids uploaded on the BSE/NSE system. This shall be followed by a physical book prepared by the Registrar on the basis of Bid-cum-Application Forms received. Based on the electronic book or the physical book, as the case may be, QIBs will be sent a CAN within two working days of the Bid/Issue Closing Date, indicating the number of Equity Shares that may be allocated to them. This provisional CAN and the final allocation and is subject to (a) the basis of final Allotment, which will be approved by the Designated Stock Exchange and reflected in the reconciled book prepared by the Registrar, (b) physical application being valid in all respects along with stipulated documents being received by the Registrar to the Issue, and (c) Allotment by the Board of Directors. Subject to the SEBI ICDR Regulations, certain Bid applications may be rejected due to technical reasons, non-receipt of funds, cancellation of cheques, cheque bouncing, incorrect details, etc., and these rejected applications will be reflected in the reconciliation and basis of Allotment as approved by the Designated Stock Exchange. As a result, a revised CAN may be sent to QIBs and the allocation of Equity Shares in such revised CAN may be different from that specified in the earlier CAN. QIBs should note that they may be required to pay additional amounts, if any, specified in the revised CAN, for any increased allocation of Equity Shares. The CAN will constitute the valid, binding and irrevocable contract (subject only to the issue of a revised CAN) for the QIB. Any revised CAN, if issued, will supersede in its entirety the earlier CAN.

Designated Date and Allotment of Equity Shares (a) Our Company will ensure that the Allotment of Equity Shares is done within 15 days of the Bid/Issue

Closing Date. After the funds are transferred from the Escrow Accounts to the Issue Account and the Refund Account on the Designated Date, our Company will ensure the credit to the successful Bidder(s) depository account within two working days of the date of Allotment

(b) As per the SEBI ICDR Regulations, Allotment of the Equity Shares will be only in dematerialized

form to the Allottees. (c) Successful Bidders will have the option to re-materialize the Equity Shares so Allotted as per the

provisions of the Companies Act and the Depositories Act. Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated to them pursuant to this Issue.

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GENERAL INSTRUCTIONS DOs: (a) Check if you are eligible to apply having regard to applicable laws, rules, regulations, guidelines and

approvals and the terms of the Red Herring Prospectus; (b) Ensure that you Bid within the Price Band; (c) Read all the instructions carefully and complete the Bid-cum-Application Form; (d) Ensure that the details about your Depository Participant and beneficiary account are correct and the

beneficiary account is activated as Equity Shares will be Allotted in dematerialized form only; (e) Ensure that the Bids are submitted at the bidding centres only on forms bearing the stamp of a member

of the Syndicate; (f) Ensure that you have collected a TRS for all your Bid options; (g) Submit Revised Bids to the same member of the Syndicate through whom the original Bid was placed

and obtain a revised TRS; (h) Ensure that you mention your PAN allotted under the I.T. Act, irrespective of the amount of the Bid.

Applications in which PAN is not mentioned will be rejected. (Please see the section titled “Issue Procedure” beginning on page 209 of this Draft Red Herring Prospectus);

(i) Ensure that the name(s) given in the Bid-cum-Application Form is exactly the same as the name(s) in

which the beneficiary account is held with the Depository Participant. Where the Bid-cum-Application Form is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the Bid-cum-Application Form; and

(j) Ensure that the Demographic Details are updated, true and correct in all respects. DON’Ts: (a) Do not Bid for lower than the minimum Bid size; (b) Do not Bid/revise Bid to a price that is less than the Floor Price or higher than the Cap Price; (c) Do not Bid on another Bid-cum-Application Form after you have submitted a Bid to the members of

the Syndicate; (d) Do not pay the Bid amount in cash, postal order, money order or by Stockinvest; (e) Do not send Bid-cum-Application Forms by post; instead submit the same to a member of the

Syndicate only; (f) Do not Bid at the Cut-off Price (for QIB Bidders and Non-Institutional Bidders); (g) Do not fill up the Bid-cum-Application Form such that the Equity Shares Bid exceeds the Issue Size

and/or investment limit or maximum number of Equity Shares that can be held under the applicable laws or regulations or maximum amount permissible under the applicable regulations or under the terms of this Draft Red Herring Prospectus;

(h) Do not bid at Bid Amount exceeding Rs.100,000 for in case of a Bid by a Retail Individual Bidder and

Eligible Employees; and (i) Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. INSTRUCTIONS FOR COMPLETING THE BID-CUM-APPLICATION FORM

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Bidders can obtain Bid-cum-Application Forms and/or Revision Forms from the members of the Syndicate. Bids and Revisions of Bids

Bids and revisions of Bids must be: 1. Made only on the prescribed Bid-cum-Application Form or Revision Form, as applicable (white or

blue). 2. Made in a single name or in joint names (not more than three, and in the same order as their

Depository Participant details). 3. Completed in full, in BLOCK LETTERS in English and in accordance with the instructions

contained herein, on the Bid-cum-Application Form or in the Revision Form. Incomplete Bid-cum-Application Forms or Revision Forms are liable to be rejected.

4. Bids from the Retail Individual Bidders and Eligible Employees in the Employee Reservation Portion

must be for a minimum of [•] Equity Shares and in multiples of [•] Equity Shares thereafter subject to a maximum Bid Amount of Rs.100,000. In case the Bid Amount is over Rs. 100,000 due to revision of the Bid or revision of the Price Band or on exercise of Cut-off option, the Bid would be considered for allocation under the Non-Institutional Bidders portion. The Cut-off option is an option given only to the Retail Individual Bidders Eligible Employees in the Employee Reservation Portion indicating their agreement to Bid and purchase at the final Issue Price as determined at the end of the Book Building Process.

5. For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such number of

Equity Shares such that the Bid Amount exceeds Rs.100,000 and in multiples of [•] Equity Shares thereafter. Bids cannot be made for more than the Issue Size. Bidders are advised to ensure that a single Bid from them does not exceed the investment limits or maximum number of shares that can be held by them under the applicable laws and regulations. Anchor Investors cannot withdraw their Bids after the Anchor Investor Bidding Date and QIBs cannot withdraw their Bid after the Bid/Issue Closing Date.

6. In case of revision in Bids, the Non-Institutional Bidders, who are individuals, have to ensure that the

Bid Amount is greater than Rs. 100,000 for being considered for allocation in the Non-Institutional Portion. In case the Bid Amount reduces to Rs. 100,000 or less due to a revision in Bids or revision of the Price Band, Bids by Non-Institutional Bidders who are eligible for allocation in the Retail Portion would be considered for allocation under the Retail Portion. Non-Institutional Bidders and QIBs are not allowed to Bid at Cut off Price.

7. For Anchor Investors, Bids must be for a minimum of such number of Equity Shares that the Bid

Amount exceeds or equals to Rs. 100 million and in multiples of [●] Equity Shares thereafter. 8. Thumb impressions and signatures other than in the languages specified in the Eighth Schedule to the

Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

Bids by Anchor Investors The Company may consider participation by Anchor Investors for up to 30% of the QIB Portion in accordance with the applicable ICDR Regulations. Only QIBs as defined in regulation 2(1)(zd) of the ICDR Regulations and not otherwise excluded pursuant to item 10(k) of Part A of Schedule XI of the ICDR Regulations are eligible to invest in the Anchor Investor Portion. The QIB Portion shall be reduced to the extent of allocation under the Anchor Investor Portion. In accordance with the ICDR Regulations, the key terms for participation in the Anchor Investor Portion are as follows: (a) Anchor Investors Bid cum Application Forms have been made available for Anchor Investor Portion at

our Registered Office and members of the Syndicate.

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(b) The Bid must be for a minimum of such number of Equity Shares so that the Bid Amount is atleast Rs. 100 million. A Bid cannot be submitted for more than 30% of the QIB Portion.

(c) One-third of the Anchor Investor Portion shall be reserved for allocation to domestic mutual funds. (d) The Bidding for Anchor Investors shall open one day before the Bid/Issue Opening Date and shall be

completed on the same day. (e) The Company in consultation with the BRLMs, shall finalise Allocation to the Anchor Investors on a

discretionary basis, subject to compliance with requirements regarding minimum number of Allottees. (f) The number of Equity Shares allocated to Anchor Investors and the price at which the allocation is made,

shall be made available in public domain by the BRLMs before the Bid/Issue Opening Date. (g) In the event the Issue Price is higher than the price at which allocation is made to Anchor Investors, the

Anchor Investors shall be required to pay such additional amount to the extent of the shortfall between the price at which allocation is made to them and the Issue Price. If the Issue Price is lower than the price at which allocation is made to the Anchor Investors, the amount in excess of the Issue Price paid by the Anchor Investors shall not be refunded to them.

(h) The Equity Shares Allotted in the Anchor Investor Portion shall be locked-in for a period of 30 days

from the date of Allotment in the Issue. (i) The BRLMs nor any person related to the BRLMs shall participate in the Anchor Investor Portion. (j) Bids made by QIBs under both the Anchor Investor Portion and the QIB Portion shall not be considered

as multiple Bids. The minimum number of Allottees in the Anchor Investor Portion shall not be less than: (a) two, where the allocation under Anchor Investor Portion is up to Rs. 2,500 million; and (b) five, where the allocation under Anchor Investor Portion is more than Rs. 2,500 million. Additional details, if any, regarding participation in the Issue under the Anchor Investor Portion shall be disclosed in the advertisement for the Price Band which shall be taken out by the Company in a national English and Hindi newspaper (which is also the regional newspaper) at least two working days prior to the Bid/Issue Opening Date. The Red Herring Prospectus, in so far as it relates to terms of the Issue should be read in conjunction with the aforestated paragraphs, to the extent applicable. Bidder’s Depository Account and Bank Account Details

Bidders should note that on the basis of the name of the Bidders, Depository Participant’s name,

Depository Participant-Identification number and beneficiary account number provided by them in

the Bid-cum-Application Form, the Registrar to the Issue will obtain from the Depository,

demographic details of the Bidders such as their address, bank account details for printing on refund

orders or giving credit through ECS or Direct Credit, and occupation (hereinafter referred to as “Demographic Details”). These bank account details would be used for giving refunds to the Bidders

and it is mandatory to provide the bank account details in the space provided in the Bid-cum-

Application Forms. Hence, Bidders are advised to immediately update their bank account details as

appearing on the records of the Depository Participant. Please note that failure to do so could result

in delays in credit of refunds to Bidders at the Bidders sole risk and neither the BRLM nor our Company shall have any responsibility or undertake any liability for the same. Hence, Bidders should

carefully fill in their Depository Account details on the Bid-cum-Application Form. IT IS MANDATORY FOR ALL THE BIDDERS TO RECEIVE THEIR EQUITY SHARES IN

DEMATERIALIZED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY

PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND

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BENEFICIARY ACCOUNT NUMBER IN THE BID-CUM-APPLICATION FORM. INVESTORS

MUST ENSURE THAT THE NAME GIVEN ON THE BID-CUM-APPLICATION FORM IS

EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IF

THE BID-CUM-APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT

NAMES AND SUCH JOINT NAMES ARE IN THE SAME SEQUENCE IN WHICH THEY

APPEAR ON THE BID-CUM-APPLICATION FORM. These Demographic Details will be used for all correspondence with the Bidders including mailing of the refund orders/ECS credit for refunds/direct credit of refund/CANs/allocation advice/NEFT or RTGS for refunds and printing of Company particulars on the refund order. The Demographic Details given by Bidders in the Bid-cum-Application Form will not be used for any other purposes by the Registrar to the Issue. Hence the Bidders are advised to update their Demographic Details as provided to the DP and ensure they are true and correct. By signing the Bid-cum-Application Form, the Bidder will be deemed to have authorized the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Refund orders/allocation advice/CAN would be mailed to the address of the Bidder as per the Demographic Details received from the Depositories. Bidders may note that delivery of refund orders/allocation advice/CANs may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Bidder in the Bid-cum-Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidder’s sole risk and neither the Escrow Collection Bank(s) nor the BRLM shall be liable to compensate the Bidder for any losses caused to the Bidder due to any such delay or pay any interest for such delay. In case of refunds through electronic modes as detailed in this Draft Red Herring

Prospectus, Bidders may note that refunds may get delayed if bank particulars obtained from the

Depository Participant are incorrect. Where no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidder’s (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be rejected. See also “Bids under Power of Attorney” given below. Bids by Non-Residents, Eligible NRIs, FIIs and Foreign Venture Capital Funds registered with

SEBI on a Repatriation Basis. Bids and revisions to Bids must be made: 1. On the Bid-cum-Application Form or the Revision Form, as applicable (blue form), and completed in

full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein. 2. In the names of individuals, or in the names of FIIs or Foreign Venture Capital Funds registered with

the SEBI and multilateral and bilateral development financial institutions but not in the names of minors, OCBs, firms or partnerships, foreign nationals (excluding NRIs) or their nominees.

3. In a single name or joint names (not more than three and in the same order as their Depository

Participant details).

Bids by Eligible NRIs for a Bid Amount of up to Rs.100,000 would be considered under the Retail Portion for the purposes of allocation and Bids by NRIs for a Bid Amount of more than Rs.100,000 would be considered under the Non-Institutional Portion for the purposes of allocation.

Refunds, dividends and other distributions, if any, will be payable in Indian Rupees. In case of Bidders who remit money through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into U.S. Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registered post or if the Bidders so desire, will be credited to their NRE Accounts, details of which should be furnished in the space provided for this purpose on the Bid-cum-Application Form. Our Company will not be

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responsible for any loss incurred by the Bidder on account of conversion of foreign currency. It is to be clearly understood that there is no reservation for Non-Residents, Eligible NRIs and FIIs, and all such Bidders will be treated on the same basis as with other categories for the purpose of allocation. As per the existing policy of the Government of India, OCBs cannot participate in this Issue. Bids under Power of Attorney

In the case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the memorandum and articles of association and/or bye laws must be submitted along with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. In the case of Bids made pursuant to a power of attorney by FIIs, a certified copy of the power of attorney or the relevant resolution or authority as the case may be, along with a certified copy of their SEBI registration certificate must be submitted with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid, in whole or in part, in either case, without assigning any reason therefor. In the case of Bids made by insurance companies registered with the Insurance Regulatory and Development Authority, a certified copy of certificate of registration issued by the Insurance Regulatory and Development Authority must be lodged along with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. In the case of Bids made by provident funds, subject to applicable law, with minimum corpus of Rs.250 million (subject to applicable law) and pension funds with minimum corpus of Rs.250 million, a certified copy of a certificate from a chartered accountant certifying the corpus of the provident fund/pension fund must be lodged along with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. In the case of Bids made by Mutual Funds, venture capital funds registered with the SEBI and FVCIs registered with the SEBI, a certified copy of their SEBI registration certificate must be submitted with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. Our Company, in its absolute discretion, reserves the right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid-cum-Application Form, subject to such terms and conditions that our Company and the BRLM may deem fit. Our Company, in its absolute discretion, reserves the right to permit the holder of the power of attorney to request the Registrar to the Issue that, for the purpose of printing particulars on the refund order and mailing of the refund order/CANs/allocation advice, the Demographic Details given on the Bid-cum-Application Form should be used (and not those obtained from the Depository of the Bidder). In such cases, the Registrar to the Issue shall use Demographic Details as given on the Bid-cum-Application Form instead of those obtained from the Depositories. PAYMENT INSTRUCTIONS Our Company shall open Escrow Accounts with the Escrow Collection Banks for the collection of the Bid Amount payable upon submission of the Bid-cum-Application Form and for amounts payable pursuant to allocation in the Issue. (For further details on Escrow Mechanism, please refer to “Terms of Payment and Payment into the Escrow Account” on Page no 217)

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Payment into Escrow Accounts Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation as per the following terms: 1. The Bidders shall, with the submission of the Bid-cum-Application Form, draw a payment instrument

for the Bid Amount in favor of the Escrow Account and submit the same to the members of the Syndicate.

2. Where the above amount paid by the Bidders during the Bidding Period is less than the Issue Price

multiplied by the Equity Shares allocated to the Bidder, the balance amount shall be paid by the Bidders into the Escrow Account within the period specified in the CAN.

3. The payment instruments for payment into the Escrow Account should be drawn in favor of:

(a) In the case of Resident QIB Bidders: “[●]” (b) In the case of Non-Resident QIB Bidders: “[●]” (c) In the case of Resident Retail and Non-Institutional Bidders: “[●]” (d) In the case of Non-Resident Retail and Non-Institutional Bidders: “[●]” (e) In the case of Eligible Employees: “[●]”

(f) In the case of Resident Anchor Investors: “[●]”

(g) In the case of Non-Resident Anchor Investors: “[●]”

4. In the case of Bids by Eligible NRIs applying on a repatriation basis, the payments must be made

through Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in NRE Accounts or FCNR Accounts, maintained with banks authorized to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of Non-Resident Ordinary (NRO) Account of the Non-Resident Bidder bidding on a repatriation basis. Payment by draft should be accompanied by a bank certificate confirming that the draft has been issued by debiting a NRE Account or a FCNR Account.

5. In the case of Bids by Eligible NRIs applying on a non-repatriation basis, the payments must be made

by Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application, remitted through normal banking channels or out of funds held in NRE Accounts or FCNR Accounts, maintained with banks authorized to deal in foreign exchange in India, along with documentary evidence in support of the remittance or out of an NRO Account of a Non-Resident Bidder bidding on a non-repatriation basis. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting an NRE or a FCNR or an NRO Account.

6. In case of Bids by FIIs and FVCIs registered with the SEBI the payment should be made out of funds

held in a special rupee account along with documentary evidence in support of the remittance. Payment by draft should be accompanied by a bank certificate confirming that the draft has been issued by debiting a special rupee account.

7. Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for, the

excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Refund Account.

8. The monies deposited in the Escrow Accounts will be held for the benefit of the Bidders until the

Designated Date. 9. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow

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Accounts as per the terms of the Escrow Agreement into the Issue Account. 10. No later than 15 days from the Bid/Issue Closing Date, the Escrow Collection Banks shall refund all

amounts payable to unsuccessful Bidders and the excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders.

12. Payments should be made by cheque, or demand draft drawn on any bank (including a co-

operative bank), which is situated at, and is a member of or sub-member of the bankers’ clearing

house located at the centre where the Bid-cum-Application Form is submitted. Outstation

cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected.

Cash/Stockinvest/money orders/postal orders will not be accepted.

13. In case clear funds are not available in the Escrow Accounts as per final certificates from the Escrow

Collection Banks, such Bids are liable to be rejected. 14. Bidders are advised to mention the number of application form on the reverse of the cheque/demand

draft to avoid misuse of instruments submitted along with the Bid cum Application Form. Payment by Stockinvest

Under the terms of the RBI Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the option to use the stockinvest instrument in lieu of cheques or bank drafts for payment of Bid money has been withdrawn. Accordingly, payment through Stockinvest will not be accepted in this Issue. Submission of Bid-cum-Application Form

All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by account payee cheques or drafts shall be submitted to the members of the Syndicate at the time of submission of the Bid. Separate receipts shall not be issued for the money payable on the submission of Bid-cum-Application Forms or Revision Forms. However, the collection centre of the members of the Syndicate will acknowledge the receipt of the Bid-cum-Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid-cum-Application Form for the records of the Bidder. OTHER INSTRUCTIONS Joint Bids in case of Individuals

Bids may be made in single or joint names (not more than three). In the case of joint Bids, all refund payments will be made in favor of the Bidder whose name appears first in the Bid-cum-Application Form or Revision Form. All communications will be addressed to the first Bidder and will be dispatched to his or her address as per the Demographic Details received from the Depository. Multiple Bids

A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids will be deemed to be multiple Bids if the sole or first Bidder is one and the same. In this regard, the procedures to be followed by the Registrar to the Issue to detect multiple applications are given below: 1. All applications with the same name and age will be accumulated and taken to a separate process file

which would serve as a multiple master document. 2. In this master, a check will be carried out for the same PAN/GIR numbers. In cases where the

PAN/GIR numbers are different, the same will be deleted from this master. 3. The addresses of all these applications from the multiple master will be strung from the address master.

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This involves putting the addresses in a single line after deleting non-alpha and non-numeric characters, i.e., commas, full stops, hashes etc. Sometimes, the name, the first line of the address and pin code will be converted into a string for each application received and a photo match will be carried out among all the applications processed. A print-out of the addresses will be made to check for common names. Applications with the same name and same address will be treated as multiple applications.

4. The applications will be scanned for similar DP ID and client identity numbers. In cases where

applications bear the same numbers, these will be treated as multiple applications. 5. After the aforesaid procedures, a print-out of the multiple master will be taken and the applications

physically verified to tally signatures and also father’s/husband’s names. On completion of this, the applications will be identified as multiple applications.

In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Funds and such Bids in respect of more than one scheme of the Mutual Funds will not be treated as multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been made. Bids made by employees in the Issue shall not be treated as multiple bids. Our Company, in consultation with the BRLM, reserves the right to reject, in their absolute discretion, all or any multiple Bids in any or all categories. Permanent Account Number (“PAN”) Except for Bids on behalf of the Central or State Government, the officials appointed by the courts and residents of Sikkim, irrespective of the amount of the Bid, the Bidder or in the case of a Bid in joint names, each of the Bidders should mention his/her PAN allotted under the I.T. Act. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that

Bidders should not submit the GIR Number instead of the PAN as the Bid is liable to be rejected on

this ground.

Our Company’s Right to Reject Bids In case of QIB Bidders, our Company, in consultation with the BRLM, may reject Bids provided that the reason for rejecting the Bid shall be provided to such Bidders in writing. Provided further that, our Company in consultation with the BRLMs, reserves the right to reject any Bid received from Anchor Investors without assigning any reasons therefore. In case of Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees in the Employee Reservation Portion our Company will have a right to reject Bids based on technical grounds only. Consequent refunds shall be made as described in this Draft Red Herring Prospectus and will be sent to the Bidder’s address at the Bidder’s risk. Grounds for Technical Rejections

Bidders are advised to note that Bids are liable to be rejected on, inter alia, the following technical grounds: 1. Amount paid does not tally with the amount payable for the highest value of Equity Shares Bid for; 2. Bank account details (for refund) not given; 3. Age of first Bidder not given; 4. In case of partnership firms, Equity Shares may be registered in the names of the individual partners

and no firm as such shall be entitled to apply; 5. Bids by persons not competent to contract under the Indian Contract Act, 1872 including minors and

insane persons; 6. PAN not stated or GIR number given instead of PAN in the Bid-cum-Application Form; 7. Bids for lower number of Equity Shares than specified for that category of investors;

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8. Bids at a price less than the lower end of the Price Band; 9. Bids at a price more than the higher end of the Price Band; 10. Bids at Cut-off Price by Non-Institutional Bidders and QIB Bidders; 11. Bids for a number of Equity Shares, which are not in multiples of [●]; 12. Category not ticked; 13. Multiple Bids; 14. In the case of a Bid under power of attorney or by limited companies, corporates, trusts etc., relevant

documents are not submitted; 15. Bids accompanied by Stockinvest/money order/postal order/cash; 16. Signature of sole and/or joint Bidders missing; 17. Bid-cum-Application Form does not have the stamp of the BRLM or the Syndicate Members; 18. Bid-cum-Application Form does not have the Bidder’s depository account details; 19. Bid-cum-Application Form is not delivered by the Bidder within the time prescribed as per the Bid-

cum-Application Form and the Red Herring Prospectus and as per the instructions in the Red Herring Prospectus and the Bid-cum-Application Form;

20. In case no corresponding record is available with the Depositories that matches three parameters,

namely, names of the Bidders (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary account number;

21. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations; 22. Bids by QIBs not submitted through the BRLM; 23. Bids by OCBs; 24. Bids by U.S. residents or U.S. persons excluding “Qualified Institutional Buyers” as defined in

Rule 144A under the Securities Act or other than in reliance on Regulation S under the Securities Act; 25. Bids by persons who are not eligible to acquire Equity Shares of our Company under any applicable

law, rule, regulation, guideline or approval, inside India or outside India; 26. Bids where clear funds are not available in the Escrow Accounts as per the final certificate from the

Escrow Collection Banks; 27. Bids not uploaded in the Book would be rejected; 28. Bids or revision thereof by QIB Bidders and Non-Institutional Bidders where the Bid Amount is in

excess of Rs. 100,000 uploaded after 4.00 P.M. or after 5:00 P.M. in case of Retail Individual Bidders on the Bid/Issue Closing Date;

29. Bank account details for the refund not given; 30. Bids by persons prohibited from buying, selling or dealing in the shares directly or indirectly by SEBI or

any other regulatory authority; 31. Bids by any persons outside India if not in compliance with applicable foreign and Indian laws and 32. Bids by persons in the Employee Reservation Portion not qualifying as Eligible Employees.

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Equity Shares in Dematerialized Form with NSDL or CDSL

As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only in a dematerialized form (i.e., not in the form of physical certificates but fungible statements issued in electronic mode). In this context, two tripartite agreements have been signed among our Company, the respective Depositories and the Registrar to the Issue: (a) an agreement dated [●] among NSDL, our Company and the Registrar to the Issue; and (b) an agreement dated [●] among CDSL, our Company and the Registrar to the Issue. Bidders will be allotted Equity Shares only in dematerialized mode. Bids from any Bidder without relevant details of his or her depository account are liable to be rejected. 1. A Bidder applying for Equity Shares must have at least one beneficiary account with the Depository

Participants of either NSDL or CDSL prior to making the Bid. 2. The Bidder must necessarily fill in the details (including the beneficiary account number and

Depository Participant’s identification number) appearing on the Bid-cum-Application Form or Revision Form.

3. Allotment to a successful Bidder will be credited in electronic form directly to the beneficiary account

(with the Depository Participant) of the Bidder. 4. Names in the Bid-cum-Application Form or Bid Revision Form should be identical to those appearing

in the account details with the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details with the Depository.

5. If incomplete or incorrect details are given under the heading “Bidders Depository Account Details’ in

the Bid-cum-Application Form or Bid Revision Form, it is liable to be rejected. 6. The Bidder is responsible for the correctness of his or her Demographic Details given in the Bid-cum-

Application Form vis-à-vis those recorded with his or her Depository Participant. 7. Equity Shares in electronic form can be traded only on the Stock Exchanges having electronic

connectivity with NSDL and CDSL. All the Stock Exchanges where the Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.

8. The trading of the Equity Shares would be in dematerialized form only for all investors in the demat

segment of the respective Stock Exchanges. 9. Non-transferable allotment advice or refund orders will be directly sent to the Bidders by the Registrar

to the Issue. COMMUNICATIONS

All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or first Bidder, Bid-cum-Application Form number, details of Depository Participant, number of Equity Shares applied for, date of Bid-cum-Application Form, name and address of the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof. Investors can contact the Compliance Officer or the Registrar to the Issue in the case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary accounts, refund orders, etc. PAYMENT OF REFUND

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Bidders should note that on the basis of the name of the Bidders, Depository Participant’s name, Depository Participant Identification number and beneficiary account number provided by them in the Bid-cum-Application Form, the Registrar to the Issue will obtain from the Depository the Bidder’s bank account details including a nine digit Magnetic Ink Character Recognition (“MICR”) code. Hence, Bidders are advised to immediately update their bank account details as appearing on the records of the Depository Participant. Please note that failure to do so could result in delays in credit of refunds to Bidders at the Bidder’s sole risk and neither our Company, the Syndicate Members and the Escrow Collection Banks nor the BRLM shall have any responsibility and undertake any liability for the same. Bankers to the Issue nor the BRLMs shall be liable to compensate the Bidders for any losses caused to the Bidder due to any such delay or liable to pay any interest for such delay. Mode of Making Refunds

The payment of refund, if any, would be done through various modes in the following order of preference: 1. NECS—Payment of refund would be done through ECS for applicants having an account at any of the

68 centres notified by SEBI through its notification (Ref. No. SEBI/CFD/DILDIP/29/2008/01/02) dated February 1, 2008. This mode of payment of refunds would be subject to availability of complete bank account details including the nine-digit MICR code as appearing on a cheque leaf from the Depository. The payment of refund through ECS is mandatory for applicants having a bank account at any of the 68 centres, except where the applicant is otherwise disclosed as eligible to receive refunds through direct credit or RTGS.

2. NEFT—Payment of refund may be undertaken through NEFT wherever the applicants’ bank has been

assigned the Indian Financial System Code (“IFSC”), which can be linked to a Magnetic Ink Character Recognition (“MICR”) , if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as at a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method.

3. Direct Credit—Applicants having their bank account with the Refund Banker shall be eligible to

receive refunds, if any, through direct credit. Charges, if any, levied by the Refund Bank(s) for the same will be borne by our Company.

4. RTGS—Applicants having a bank account at any of the 68 centres notified by SEBI, and whose Bid

Amount exceeds Rs.1 million, shall have the option to receive refunds, if any, through RTGS. Such eligible applicants who indicate their preference to receive refunds through RTGS are required to provide the IFSC code in the Bid-cum-Application Form. In the event of failure to provide the IFSC code in the Bid-cum-Application Form, the refund shall be made through the ECS or direct credit, if eligibility is disclosed. Charges, if any, levied by the Refund Bank(s) for the same will be borne by our Company. Charges, if any, levied by the applicant’s bank receiving the credit will be borne by the applicant.

5. Please note that only applicants having a bank account at any of the 68 centres notified by SEBI where

clearing houses for ECS are managed by the RBI are eligible to receive refunds through the modes detailed hereinabove. For all the other applicants, including applicants who have not updated their bank particulars along with the nine-digit MICR Code, the refund orders will be dispatched “Under Certificate of Posting” for refund orders of value up to Rs.1,500 and through Speed Post/Registered Post for refund orders of Rs.1,500 and above. Some refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

Interest on Refund of Excess Bid Amount

Our Company shall pay interest at the rate of 15% per annum on the excess Bid Amount received if refund orders are not dispatched within 15 days from the Bid/Issue Closing Date.

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DISPOSAL OF APPLICATIONS AND APPLICATIONS MONEY AND INTEREST IN

CASE OF DELAY

Our Company shall ensure dispatch of allotment advice, transfer advice or refund orders and give benefit to the beneficiary account with Depository Participants and submit the documents pertaining to the allotment to the Stock Exchanges within fifteen days of the Bid/Issue Closing Date. Our Company shall dispatch refunds above Rs.1,500, if any, by registered post or speed post at the sole or first Bidder’s sole risk, except for Bidders who have opted to receive refunds through the ECS facility or RTGS or Direct Credit. Our Company shall use its best efforts to ensure that all steps for completion of the necessary formalities for allotment and trading at all the Stock Exchanges where the Equity Shares are proposed to be listed are taken within seven working days of the finalization of the basis of Allotment. In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI ICDR Regulations, we further undertake that:

• Allotment of Equity Shares only in dematerialized form shall be made within 15 days of the Bid/Issue Closing Date;

• Dispatch refund orders, except for Bidders who have opted to receive refunds through the ECS facility, shall be made within 15 days of the Bid/Issue Closing Date; and

• Our Company shall pay interest at 15% per annum for any delay beyond the 15 day time period as mentioned above, if allotment is not made or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner, and/or demat credits are not made to investors within the 15 day time period prescribed above.

Our Company will provide adequate funds required for dispatch of refund orders or allotment advice

to the Registrar to the Issue.

No separate receipts shall be issued for the money payable on the submission of Bid-cum-Application Forms or Revision Forms. However, the collection centre of the Syndicate Members will acknowledge the receipt of the Bid-cum-Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid–cum-Application Form for the records of the Bidder. Save and except for refunds effected through the electronic mode, i.e., ECS, NEFT, direct credit or RTGS, refunds will be made by cheques, pay orders or demand drafts drawn on a bank appointed by us, as an Escrow Collection Bank and payable at par at places where Bids are received, except for Bidders who have opted to receive refunds through the ECS facility. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. IMPERSONATION

Attention of the applicants is specifically drawn to the provisions of sub-section (1) of section 68A of

the Companies Act, which is reproduced below: “Any person who: (a) makes in a fictitious name, an application to a company for acquiring or subscribing for, any

shares therein, or

(b) otherwise induces a company to allot, or register any transfer of shares therein to him, or any

other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”.

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ALLOTMENT Basis of Allotment As disclosed in the Objects of the Issue on page 39 of this Draft Red Herring Prospectus, our Company intends to invest in MSO/LCO companies, so as to have a controlling stake therein. As per statutory/regulatory requirements, our Company can only have a controlling stake in MSO/LCO companies, if our Company is Indian owned and controlled, (that is, if at least 51% of the equity interest in our Company is beneficially owned by resident Indian citizens and/or Indian companies which are in turn owned by resident Indian citizens). In furtherance of our intention of being Indian owned and controlled as detailed above, the Basis of Allotment to successful Bidders will be made subject to the following:

• Our ensuring that the shareholding of FIIs in aggregate does not exceed 24% of the total issued equity share capital and individual shareholding of each FII does not exceed 10% of the total paid up equity share capital and the total foreign shareholding does not does not exceed 49% of the total paid up equity share capital (“Foreign Investment Limits”);

• In the event, that the allocation on a proportionate basis results in breaching of the Foreign Investment Limits as above, then that category of persons or such specific person shall receive such lower proportion of the allocation so as to comply with the Foreign Investment Limits. Such additional Equity Shares would be allocated to the remaining Bidders in the category to which the Bidder belonged for further allocation on a proportionate basis.

Proportionate allocation will be made in each category (other than Anchor Investor Portion) of Bidders so as to ensure that the aforesaid Foreign Investment Limits are not exceeded. To further clarify, in the event, that the allocation on a proportionate basis to Bidders who are persons resident outside India, (“Non Resident Bidders”), results in breaching of the Foreign Investment Limits as specified above, then such relevant Non Resident Bidders shall receive such lower proportion of the allocation within the category of Bidders to which he belongs (that is, QIBs, Non-Institutional or Retail, as the case may be), so as to ensure compliance with the Foreign Investment Limits. The Equity Shares which would otherwise have been available for allocation to such Non Resident Bidder/s shall be proportionately adjusted within the remaining Bidders who are resident in India in the relevant category to which the aforesaid Non Resident Bidder/s belonged for further allocation on a proportionate basis. A. For Retail Individual Bidders

• Bids received from Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The Allotment to all successful Retail Individual Bidders will be made at the Issue Price.

• The Issue Size less Allotment to Non-Institutional Bidders and QIB Bidders shall be available for Allotment to Retail Individual Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

• If the valid Bids in this portion are less than or equal to [●] Equity Shares at or above the Issue Price, full Allotment shall be made to Retail Individual Bidders to the extent of their valid Bids.

• If the valid Bids in this portion are greater than [●] Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis of not less than [●] Equity Shares and in multiples of [●] Equity Shares thereafter. For the method of proportionate basis of allocation, refer below.

• In the event, that the allocation to Retail Individual Bidders on a proportionate basis results in us breaching the Foreign Investment Limits, Non Resident Indians shall receive such lower proportion of the allocation such as to comply with the Foreign Investment Limits. Such additional Equity Shares would be allocated to the remaining Retail Individual Bidders on a proportionate basis.

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B. For Non-Institutional Bidders

• Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The Allotment to all successful Non-Institutional Bidders will be made at the Issue Price.

• The Issue Size less allocation to QIB Bidders and Retail Individual Bidders shall be available for allocation to Non-Institutional Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

• If the valid Bids in this portion are less than or equal to [●] Equity Shares at or above the Issue Price, full Allotment shall be made to Non-Institutional Bidders to the extent of their valid Bids.

• If the valid Bids in this portion are greater than [●] Equity Shares at or above the Issue Price, allocation shall be made on a proportionate basis of not less than [●] Equity Shares and in multiples of [●] Equity Shares thereafter. For the method of proportionate basis of allocation refer below.

• In the event, allocation to Non-Institutional Bidders on a proportionate basis results in us breaching the Foreign Investment Limits, Non Resident Indians shall receive such lower proportion of the allocation such as to comply with the Foreign Investment Limits. Such additional Equity Shares would be allocated to the remaining Non-Institutional Bidders on a proportionate basis.

C. For QIB Bidders

• Bids received from QIB Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to QIB Bidders will be made at the Issue Price.

• The QIB Portion shall be available for allocation to QIB Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

• Subject to the Foreign Investment Limits, Allotment shall be undertaken in the following manner:

(a) Allocation to Anchor Investors shall be made in accordance with SEBI ICDR

Regulations. (b) After allocation to Anchor Investors, in the first instance allocation to Mutual Funds for

up to 5% of the QIB Portion shall be determined as follows:

(i) If bids from Mutual Funds exceed 5% of the QIB Portion (excluding the Anchor Investor Portion), allocation to Mutual Funds shall be made on a proportionate basis for up to 5% of the QIB Portion (excluding the Anchor Investor Portion).

(ii) If the aggregate demand from Mutual Funds is less than 5% of the QIB Portion

(excluding the Anchor Investor Portion), then all Mutual Funds shall get full Allotment to the extent of valid bids received above the Issue Price.

(iii) Equity Shares remaining unsubscribed, if any, not allocated to Mutual Funds shall

be available to QIB Bidders as set out in (c) below.

(c) In the second instance allocation to all Bidders shall be determined as follows:

(i) In the event of an oversubscription in the QIB Portion, all QIB Bidders who have submitted Bids above the Issue Price shall be Allotted Equity Shares on a proportionate basis for up to 95% of the QIB Portion.

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(ii) Mutual Funds who have received allocation as per (b) above, for less than the

number of Equity Shares bid for by them, are eligible to receive Equity Shares on a proportionate basis along with other QIB Bidders.

(iii) Under subscription below 5% of the QIB Portion (excluding the Anchor Investor

Portion), if any, from Mutual Funds, would be included for allocation to the remaining QIB Bidders on a proportionate basis.

(iv) In the event allocation to remaining QIB Bidders on a proportionate basis results in

us breaching the Foreign Investment Limits, non-resident QIB Bidders such as FIIs, FVCIs, and multilateral financial institutions shall receive such lower proportion of allocation such as to comply with the Foreign Investment Limits. Such additional Equity Shares would be allocated to the remaining QIB Bidders on a proportionate basis.

D. For Anchor Investors Allocation of Equity Shares to Anchor Investors at the Anchor Investor Issue Price will be at the discretion of the Company, in consultation with the BRLMs, subject to compliance with the following requirements: (i) not more than 30% of the QIB Portion will be allocated to Anchor Investors; (ii) one-third of the Anchor Investor Portion shall be available for allocation to domestic Mutual Funds only, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to Anchor Investors; (iii) allocation to Anchor Investors shall be on a discretionary basis and subject to a minimum number of two Anchor Investors for allocation up to Rs. 2,500 million and a minimum number of five Anchor Investors for allocation more than Rs. 2,500 million. The number of Equity Shares Allotted to Anchor Investors and the Anchor Investor Issue Price, shall be made available in the public domain by the BRLMs before the Bid/Issue Opening Date E. For Employee Reservation Portion

(i) Bids received from the Eligible Employees at or above the Offer Price shall be grouped together to determine the total demand under this category. (ii) If the aggregate valid demand in this category is less than or equal to [●] Equity Shares at or above the Offer Price, full allocation shall be made to the Eligible Employees to the extent of their valid Bids. (iii) If the aggregate valid demand in this category is greater than [●] Equity Shares at or above the Offer Price, the Allotment shall be made on a proportionate basis. (iv) Only Eligible Employees are eligible to apply under Employee Reservation Portion. The BRLM, the Registrar to the Issue and the Designated Stock Exchange shall ensure that the basis of Allotment is finalised in a fair and proper manner in accordance with the SEBI ICDR Regulations. The drawing of lots (where required) to finalise the basis of Allotment shall be done in the presence of a public representative on the governing board of the Designated Stock Exchange. Procedure and Time of Schedule for Allotment and Demat Credit of Equity

The Issue will be conducted through a “100% book building process” pursuant to which the members of the Syndicate will accept bids for the Equity Shares during the Bidding Period. The Bidding Period will commence on [●], 2010 and expire on [●], 2010. Following the expiration of the Bidding Period, our Company, in consultation with the BRLM, will determine the Issue Price, and, in consultation with the BRLM, the basis of allocation and entitlement to Allotment based on the bids received and subject to

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confirmation by the BSE/NSE. Successful bidders will be provided with a confirmation of their allocation (subject to a revised confirmation of allocation) and will be required to pay any unpaid amount for the Equity Shares within a prescribed time. The SEBI ICDR Regulations require our Company to complete the Allotment to successful bidders within 15 days of the expiration of the Bidding Period. The Equity Shares will then be credited and Allotted to the investors’ demat accounts maintained with the relevant depository participant. Upon approval by the Stock Exchanges, the Equity Shares will be listed and trading will commence. Method of Proportionate Basis of Allotment

In the event the Issue is oversubscribed, the basis of Allotment shall be finalized by our Company, in consultation with the BRLM and the Designated Stock Exchange. The executive director or managing director (or any other senior official nominated by them) of the Designated Stock Exchange along with the BRLM and the Registrar to the Issue shall be responsible for ensuring that the basis of Allotment is finalized in a fair and proper manner. Allotment to Bidders shall be made in marketable lots on a proportionate basis as explained below (excluding the Anchor Investor Portion): (a) Bidders will be categorized according to the number of Equity Shares applied for by them. (b) The total number of Equity Shares to be Allotted to each category as a whole shall be arrived at on a

proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the oversubscription ratio.

(c) The number of Equity Shares to be allotted to the successful Bidders will be arrived at on a

proportionate basis, which is the total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the oversubscription ratio.

(d) If the proportionate Allotment to a Bidder is a number that is more than [●] but is not a multiple of

one (which is the market lot), the decimal will be rounded off to the higher whole number if that decimal is 0.5 or higher. If that number is lower than 0.5, it will be rounded off to the lower whole number. Allotment to all Bidders in such categories shall be arrived at after such rounding off.

(e) In all Bids where the proportionate Allotment is less than [●] Equity Shares per Bidder, the Allotment

shall be made as follows: Each successful Bidder shall be Allotted a minimum of [●] Equity Shares; and

The successful Bidders out of the total Bidders for a portion shall be determined by the drawing of lots in a manner such that the total number of Equity Shares Allotted in that category is equal to the number of Equity Shares calculated in accordance with (c) above; and

(f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity

Shares Allotted to the Bidders in that portion, the remaining Equity Shares available for Allotment shall be first adjusted against any other category, where the Equity Shares are not sufficient for proportionate Allotment to the successful Bidders in that category. The balance of Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for the minimum number of Equity Shares.

(g) Subject to valid Bids being received, Allotment of Equity Shares to Anchor Investors will be at the

discretion of the Company, in consultation with the BRLMs. Illustration of Allotment to QIBs (other than Anchor Investors) and Mutual Funds (“MF”)

Issue details

Particulars

Issue details

Issue size 200 million Equity Shares

Allocation to QIB (at least 50% of the Issue) 120 million Equity Shares

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Of which:

a. Reservation For Mutual Funds, (5%) 6 million Equity Shares

b. Balance for all QIBs including Mutual Funds 114 million Equity Shares

Number of QIB applicants 10

Number of Equity Shares applied for 500 million Equity Shares

Details of QIB Bids

S. No.

Type of QIBs

No. of shares bid for (in million)

1. A1 50

2. A2 20

3. A3 130

4. A4 50

5. A5 50

6. MF1 40

7. MF2 40

8. MF3 80

9. MF4 20

10. MF5 20

TOTAL 500

__________ * A1-A5: (QIBs other than Mutual Funds), MF1-MF5 (QIBs which are Mutual Funds)

Details of Allotment to QIBs Applicants

Type

of QIB

Shares

bid for

Allocation of 5% Equity

Shares to MF

proportionately

(see note 2 below)

Allocation of balance 95%

Equity Shares to QIBs

proportionately

(see note 4 below)

Aggregate

allocation to

Mutual

Funds

(I) (II) (III) (IV) (V)

(Number of equity shares in million)

A1 50 0 11.54 0

A2 20 0 4.62 0

A3 130 0 30.00 0

A4 50 0 11.54 0

A5 50 0 11.54 0

MF1 40 1.2 8.95 10.15

MF2 40 1.2 8.95 10.15

MF3 80 2.4 17.91 20.31

MF4 20 0.6 4.48 5.08

MF5 20 0.6 4.48 5.08

500 6 114 50.77 Notes: 1. The illustration presumes compliance with the requirements specified in this Draft Red Herring

Prospectus in the section titled “Issue Structure” at page 203 of this Draft Red Herring Prospectus. 2. Out of 120 million Equity Shares allocated to QIBs, 6 million (i.e., 5%) will be Allotted on a

proportionate basis among five Mutual Fund applicants who applied for 200 million Equity Shares in the QIB Portion.

3. The balance 114 million Equity Shares i.e., 120—6 (available for Mutual Funds only) will be Allotted

on a proportionate basis among 10 QIB Bidders who applied for 500 million Equity Shares (including 5 Mutual Fund applicants who applied for 200 million Equity Shares).

4. The figures in the fourth column entitled “Allocation of balance 114 million Equity Shares to QIBs

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proportionately” in the above illustration are arrived at as explained below:

For QIBs other than Mutual Funds (A1 to A5) = Number of Equity Shares Bid for × 114/494

For Mutual Funds (MF1 to MF5) = (No. of shares bid for (i.e., in column II of the table above) less

Equity Shares Allotted (i.e., column III of the table above) × 114/494

The numerator and denominator for arriving at the allocation of 114 million Equity Shares to the 10 QIBs are reduced by 6 million shares, which have already been Allotted to Mutual Funds in the manner specified in column III of the table above.

Letters of Allotment or Refund Orders Our Company shall credit each Equity Share Allotted to the applicable beneficiary account with its Depository Participant within 15 days of the Bid/Issue Closing Date. Applicants residing at the 68 centres notified RBI will get refunds through ECS only (subject to availability of all information for crediting the refund through ECS) except where the applicant is otherwise disclosed as eligible to receive refunds through direct credit and RTGS. In the case of other applicants, the Bank shall ensure dispatch of refund orders, if any, of value up to Rs.1,500 by “Under Certificate of Posting”, and shall dispatch refund orders above Rs.1,500, if any, by registered post or speed post, except for Bidders who have opted to receive refunds through the ECS facility. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter (refund advice) through ordinary post informing them about the mode of credit of refund within 15 days of the Closing of Issue. Save and except refunds effected through the electronic mode, i.e., ECS, NEFT, direct credit or RTGS, refunds will be made by cheques, pay orders or demand drafts drawn on a bank appointed by our Company, as a Refund Bank and payable at par at places where Bids are received, except for Bidders who have opted to receive refunds through the ECS facility. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. Undertakings by our Company

Our Company undertakes as follows:

• that complaints received in respect of this Issue shall be dealt with expeditiously and satisfactorily. Our Company has authorized our Company Secretary and Compliance Officer to redress all complaints, if any, of the investors participating in the Issue;

• that all steps will be taken for the completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed within seven working days of finalization of the basis of Allotment;

• that our Company shall apply in advance for the listing of Equity Shares;

• that the funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by us;

• that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of the Bid/Issue Closing Date, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund;

• that the refund orders or Allotment advice to the successful Bidders shall be dispatched within the specified time;

• that the certificates of the Equity Shares/refund orders to the non-resident Bidders shall be dispatched within specified time;

• that no further issue of Equity Shares shall be made until the Equity Shares offered through the Red Herring Prospectus and the Prospectus are listed or until the Bid monies are refunded on account of non-listing, under-subscription, etc; and

• that adequate arrangements shall be made to collect all ASBA Bids and to consider them similar to non-ASBA Bids while finalizing the basis of allotment

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Utilization of Issue proceeds

The Board of Directors certifies that:

• all monies received out of the Issue shall be credited/transferred to a separate bank account other than the bank account referred to in section 73(3) of the Companies Act;

• details of all monies utilized out of the Issue shall be disclosed under an appropriate heading in the balance sheet of our Company indicating the purpose for which such monies have been utilized; and

• details of all unutilized monies out of the Issue, if any, shall be disclosed under the appropriate head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested.

Our Company shall not have recourse to the Issue proceeds until the final listing and trading approvals from all the Stock Exchanges have been obtained. ISSUE PROCEDURE FOR ASBA BIDDERS This section is for the information of investors proposing to subscribe to the Issue through the

ASBA process. Our Company and the Book Running Lead Manager are not liable for any

amendments, modifications, or changes in applicable laws or regulations, which may occur after the date of this Draft Red Herring Prospectus. ASBA Bidders are advised to make their

independent investigations and to ensure that the ASBA Bid cum Application Form is correctly

filled up, as described in this section. The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process is available at http://www.sebi.gov.in/pmd/scsb.pdf. For details on designated branches of SCSBs collecting the ASBA Bid cum Application Form, please see the above mentioned SEBI link. ASBA Process All Investors except QIBs can submit their Bids through an ASBA Bid cum Application Form, either in physical or electronic mode, to the SCSB with whom the bank account of the ASBA Bidder or bank account utilised by the ASBA Bidder (“ASBA Account”) is maintained. The SCSB shall block an amount equal to the Bid Amount in the bank account specified in the ASBA Bid cum Application Form, physical or electronic, on the basis of an authorisation to this effect given by the account holder at the time of submitting the Bid. The Bid Amount shall remain blocked in the aforesaid ASBA Account until finalisation of the Basis of Allotment in the Issue and consequent transfer of the Bid Amount against the allocated shares to the Public Issue Account, or until withdrawal/failure of the Issue or until withdrawal/rejection of the ASBA Bid, as the case may be. The ASBA data shall thereafter be uploaded by the SCSB in the electronic Bidding system of the Stock Exchanges. Once the Basis of Allotment is finalised, the Registrar to the Issue shall send an appropriate request to the Controlling Branch of the SCSB for unblocking the relevant bank accounts and for transferring the requisite amount allocable to the successful ASBA Bidders to the Public Issue Account. In case of withdrawal/failure of the Issue, the blocked amount shall be unblocked on receipt of such information from the Book Running Lead Manager. ASBA Bid cum Application Form ASBA Bidders shall use the ASBA Bid cum Application Form bearing the stamp of the Syndicate Members and/or the Designated Branch of SCSB, as the case may be, for the purpose of making a Bid in terms of the Red Herring Prospectus. ASBA Bidders are required to submit their Bids, either in physical or electronic mode. In case of application in physical mode, the ASBA Bidder shall submit the ASBA Bid cum Application form at the Designated Branch of the SCSB. In case of application in electronic form, the ASBA Bidder shall submit the ASBA Bid cum Application Form either through the internet banking facility available with the SCSB, or such other electronically enabled mechanism for bidding and blocking funds in the ASBA account held with SCSB, and accordingly registering such Bids. On submission of the ASBA Bid cum Application Form, the ASBA Bidders are deemed to have authorised (i) the SCSB to do all acts as are necessary to make the Application in the Issue, including uploading his/her Bid, blocking or unblocking of funds in the bank account maintained with the SCSB specified in

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the ASBA Bid cum Application Form, transfer of funds to the Public Issue Account on receipt of instruction from the Registrar to the Issue after finalisation of the basis of Allotment; and (ii) the Registrar to the Issue to issue instructions to the SCSB to remove the block on the funds in the bank account specified in the ASBA Bid cum Application Form, upon finalisation of the basis of Allotment. Upon the allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the RoC, the ASBA Bid cum Application Form shall be considered as the Application Form. Upon completing and submitting the ASBA Bid cum Application Form to the Designated Branch of the SCSB, the ASBA Bidder is deemed to have authorised our Company to make the necessary changes in the Red Herring Prospectus and the ASBA Bid-cum-Application Form as would be required for filing the Prospectus with the RoC and as would be required by RoC after such filing, without prior or subsequent notice of such changes to the ASBA Bidder. The prescribed colour of the ASBA Bid cum Application Form shall be white. Who can Bid? In accordance with the ICDR Regulations, all Investors, except QIBs can submit their application through ASBA process to Bid for the Equity Shares of our Company. Information for the ASBA Bidders: a. The Book Running Lead Manager shall ensure that adequate arrangements are made to circulate

copies of the Red Herring Prospectus and ASBA Bid cum Application Form to the SCSBs, and the SCSBs will then make available such copies to investors applying under the ASBA process. Additionally, the Book Running Lead Manager shall ensure that the SCSBs are provided with soft copies of the abridged prospectus and the ASBA Bid cum Application Form and that the same are made available on the websites of the SCSBs.

b. ASBA Bidders, under the ASBA process, who would like to obtain the Red Herring Prospectus

and/or the ASBA Bid cum Application Form can obtain the same from the Designated Branches of the SCSBs or the Book Running Lead Manager. ASBA Bidders can also obtain a copy of the abridged prospectus and/or the ASBA Bid cum Application Form, in electronic form on the websites of the SCSBs.

c. The Bids should be submitted on the prescribed ASBA Bid cum Application Form if applied in

physical mode. SCSBs may provide the electronic mode of Bidding either through an internet enabled bidding and banking facility or such other secured, electronically enabled mechanism for bidding and blocking funds in the accounts of the respective eligible investors.

d. ASBA Bid cum Application Forms should bear the stamp of the Syndicate Members and/or

Designated Branch of the SCSB. ASBA Bid cum Application Forms which do not bear the stamp will be rejected.

e. ASBA Bidders shall correctly mention the bank account number in the ASBA Bid cum

Application Form and ensure that funds equal to the Bid Amount are available in the bank account maintained with the SCSB before submitting the ASBA Bid cum Application Form to the respective Designated Branch. In case the amount available in the bank account specified in the ASBA Bid cum Application Form is insufficient for blocking the amount equivalent to the Bid Amount, the SCSB shall reject the application

f. If the ASBA Account holder is different from the ASBA Bidder, the ASBA Bid cum

Application Form should be signed by the account holder as provided in the ASBA Bid cum Application Form. No more than five ASBA Bid cum Applications can be submitted per bank account in the Issue.

g. ASBA Bidders shall correctly mention their DP ID and Client ID in the ASBA Bid cum

Application Form. For the purpose of evaluating the validity of Bids, the demographic details of ASBA Bidders shall be derived from the DP ID and Client ID mentioned in the ASBA Bid cum Application Form.

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Method and Process of Bidding a. ASBA Bidders are required to submit their Bids, either in physical or electronic mode. ASBA

Bidders submitting their Bids in physical mode should approach the Designated Branches of the SCSBs. ASBA Bidders submitting their Bids in electronic form shall submit their Bids either using the internet enabled bidding and banking facility of the SCSBs or such other electronically enabled mechanism for bidding and blocking funds in the accounts of the respective eligible investors, and accordingly registering such Bids. Every Designated Branch of the SCSB shall accept Bids from all such investors who hold accounts with them and desire to place Bids through them. Such SCSBs shall have the right to vet the Bids, subject to the terms of the ICDR Regulations and the Red Herring Prospectus.

b. The Designated Branches of the SCSBs shall give an acknowledgment specifying the application

number to the ASBA Bidders as a proof of acceptance of the ASBA Bid cum Application Form. Such acknowledgment does not in any manner guarantee that the Equity Shares Bid for shall be Allocated to the ASBA Bidders.

c. If an ASBA Bidder is a Retail Investor and is bidding at the cut-off price then after

determination of the Issue Price, the number of Equity Shares Bid for by the ASBA Bidder at the Cut-off Price will be considered for allocation along with the Non-ASBA Bidders who have Bid for Equity Shares at or above the Issue Price or at Cut-off Price in case.

d. Upon receipt of the ASBA Bid cum Application Form, submitted whether in physical or

electronic mode, the Designated Branch of the SCSB shall verify if sufficient funds equal to the Bid Amount are available in the ASBA Account, as mentioned in the ASBA Bid cum Application Form, prior to uploading such Bids with the Stock Exchanges.

e. If sufficient funds are not available in the ASBA Account, the Designated Branch of the SCSB

shall reject such Bids and shall not upload such Bids with the Stock Exchanges. f. If sufficient funds are available in the ASBA Account, the SCSB shall block an amount

equivalent to the Bid Amount mentioned in the ASBA Bid cum Application Form. The Designated Branch shall thereafter enter the Bid details from the prescribed ASBA Bid cum Application Form, if submitted in physical mode, or the Bid information submitted through the electronic mode made available by the SCSBs, as the case may be, into the electronic bidding system of the Stock Exchanges and generates a Transaction Registration Slip (“TRS”). The TRS shall be furnished to the ASBA Bidder on request.

g. An ASBA Bidder cannot bid, either in physical or electronic mode, on another ASBA Bid cum

Application Form or a non-ASBA Bid cum Application Form after bidding on one ASBA Bid cum Application Form, either in physical or electronic mode, has been submitted to the Designated Branches of SCSBs or uploaded by the ASBA Bidder, as the case may be. Submission of a second ASBA Bid cum Application Form or a Non-ASBA Bid cum Application Form to either the same or to another Designated Branch of the SCSB will be treated as multiple Bids and will be liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the Allocation or Allotment of Equity Shares in this Issue

Bidding 1. The Price Band and the minimum Bid lot size for the Issue will be decided by our Company, in

consultation with the BRLM, and advertised in two widely circulated national newspapers (one each in English and Hindi) and in one Marathi newspaper with wide circulation, at least two working days prior to the Bid/Issue Opening Date. The ASBA Bidders can submit only one Bid in the ASBA Bid-cum-Application Form, that is, at Cut-off Price with a single option as to the number of Equity Shares.

2. Our Company, in consultation with the BRLM, reserves the right to revise the Price Band during the

Bidding Period in accordance with the SEBI ICDR Regulations. The cap on the Price Band should be less than or equal to 120% of the Floor Price. Subject to compliance with the immediately

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preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band.

3. In case of revision in the Price Band, the Bidding Period shall be extended, if required, for three

additional working days subject to a maximum of 10 working days. Any revision in the Price Band and the revised Bidding Period, if applicable, shall be widely disseminated by notification to the BSE and the NSE, by issuing a public notice in two widely circulated national newspapers (one each in English and Hindi) and one widely circulated Marathi newspaper and also by indicating the change on the website of the BRLM and at the terminals of the members of the Syndicate.

4. Our Company, in consultation with the BRLM, can finalize the Issue Price within the Price Band

without the prior approval of, or intimation to, the ASBA Bidders. 5. The ASBA Bidders agree that they shall purchase the Equity Shares at any price within the Price

Band. In the event the Bid Amount is higher than the subscription amount payable, the funds in the ASBA Account shall be unblocked to the extent of the difference between the Bid Amount and the subscription amount payable.

6. In case of an upward revision in the Price Band announced as above, the Retail Individual Bidders

and Eligible Employees who had Bid at Cut-off Price could either (i) revise their ASBA Bid or (ii) instruct to block additional amount based on the revised Cap Price (such that the total amount i.e., original Bid Amount plus additional payment does not exceed Rs. 100,000 for Retail Individual Bidders and Eligible Employees, if the Bidder wants to continue to Bid at Cut-off Price), with the Designated Branch of the SCSBs to whom the original ASBA Bid was submitted. In case the total amount (i.e., original Bid Amount plus additional amount blocked) exceeds Rs. 100,000 for Retail Individual Bidders/Eligible Employees, the Bid will be considered for allocation under the Non-Institutional Portion in terms of this Red Herring Prospectus. If, however, the ASBA Bidder does not either revise the ASBA Bid or instruct to block additional amount and the Issue Price is higher than the Cap Price prior to revision, the number of Equity Shares Bid for shall be adjusted downwards for the purpose of Allotment, such that no additional amount would be required to be blocked from the ASBA Bidder and the ASBA Bidder is deemed to have approved such revised Bid.

Mode of Payment Upon submission of an ASBA Bid-cum-Application Form with the SCSB, whether in physical or electronic mode, each ASBA Bidder shall be deemed to have agreed to block the entire Bid Amount and authorized the Designated Branch of the SCSB to block the Bid Amount, in the bank account maintained with the SCSB. Any Bid Amount paid in cash, by money order or by postal order or by stockinvest, or an ASBA Bid-cum-Application Form accompanied by cash, draft, money order, postal order or any mode of payment other than blocked amounts in the SCSB bank accounts, shall not be accepted. After verifying that sufficient funds are available in the ASBA Account, the SCSB shall block an amount equivalent to the Bid Amount mentioned in the ASBA Bid-cum-Application Form until the Designated Date. On the Designated Date, the SCSBs shall transfer the amounts allocable to the ASBA Bidders from the respective ASBA Accounts, in accordance with the SEBI ICDR Regulations, into the ASBA Public Issue Account. The balance amount, if any, against any Bid in the ASBA Accounts shall then be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue. The entire Bid Amount, as specified in the ASBA Bid-cum-Application Form submitted by an ASBA Bidder, will be required to be blocked in the relevant ASBA Account until the finalization of the basis of Allotment in the Issue and consequent transfer of the Bid Amount against allocated shares to the ASBA Public Issue Account, or until withdrawal or failure of the Issue or until rejection of the ASBA Bid, as the case may be.

Electronic Registration of Bids by SCSBs 1. In case of ASBA Bid-cum-Application Forms, whether in physical or electronic mode, the

Designated Branch of the SCSBs will register the Bids using the online facilities of the Stock

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Exchanges. An SCSB shall not upload any ASBA in the electronic bidding system of the Stock Exchanges unless:

(i) it has received the ASBA Bid-Cum-Application Form in a physical or electronic form; and

(ii) it has blocked the application money in the ASBA Account specified in the ASBA Bid-cum-

Application Form or has systems to ensure that electronic ASBAs are accepted in the system only after blocking of application money in the relevant bank account opened with it.

2. The Stock Exchanges will offer a screen-based facility for registering Bids for the Issue. This

facility will be available on the terminals of the Designated Branches during the Bidding Period. The Designated Branches can also set up facilities for offline electronic registration of Bids subject to the condition that they will subsequently upload the offline data file into the online facilities for book building on a regular basis. On the Bid/Issue Closing Date, the Designated Branches of the SCSBs shall upload the Bids until such time as may be permitted by the Stock Exchanges. ASBA Bidders are advised in the event a large number of Bids are received on the Bid/Issue Closing Date, as has been typically experienced in certain public offerings, this may lead to some Bids not being uploaded due to lack of sufficient time to upload, and such Bids that cannot be uploaded will not be considered for allocation in the Issue.

3. The SEBI ICDR Regulations require that the bidding terminals shall contain an online graphical

display of demand and Bid prices updated at periodic intervals not exceeding 30 minutes. The aggregate demand and price for Bids registered on electronic facilities of the Stock Exchanges will be uploaded at periodic intervals, not exceeding 30 minutes, consolidated and displayed on-line at all bidding centres as well as on the BSE’s website at www.bseindia.com and the NSE’s website at www.nse-india.com. A graphical representation of consolidated demand and price will be made available at the bidding centres during the Bidding Period.

4. At the time of registering each Bid, the Designated Branches of the SCSBs shall enter the

information relating to the investor into the online system, including the following details:

• Name of the Bidder(s);

• Application Number;

• Permanent Account Number;

• Number of Equity Shares Bid for and bid rate for each bid; and

• Depository Participant identification number and Client identification number of the Bidder’s beneficiary account.

In case of electronic ASBA, the ASBA Bidder shall himself complete the above-mentioned details, except the application number which shall be system generated. The SCSBs shall thereafter upload all the above-mentioned details in the electronic bidding system provided by the Stock Exchanges.

5. A system generated TRS will be given to the ASBA Bidder upon request as proof of the registration

of the Bid. It is the ASBA Bidder’s responsibility to obtain the TRS from the Designated Branches of the SCSBs. The registration of the Bid by the Designated Branch of the SCSB does not guarantee that the Equity Shares Bid for shall be allocated to the ASBA Bidders either by the members of the Syndicate or our Company.

6. Such TRS will be non-negotiable and will not, by itself, create any obligation of any kind. 7. The permission given by the Stock Exchanges to use their network and software of the online IPO

system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company or the BRLM or the Designated Branches of the SCSBs have been cleared or approved by the Stock Exchanges; nor does it in any manner warrant, certify or endorse the correctness or completeness of compliance with the statutory and other

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requirements; nor does it take any responsibility for the financial or other soundness of our Company, the Promoters, management or any scheme or any scheme or project of our Company.

8. The SCSB may reject the Bids made through the ASBA process if the ASBA Account maintained

with the SCSB as specified in the ASBA Bid-cum-Application Form does not have sufficient funds equivalent to the Bid Amount. Subsequent to the acceptance of the Bid by the Designated Branch, our Company will have a right to reject the Bids only on technical grounds.

9. Only Bids that are uploaded on the online Bidding system of the Stock Exchanges shall be

considered for allocation/Allotment. In case of discrepancy of data between the BSE or NSE and the Designated Branches of the SCSBs, the decision of the Registrar, in consultation with the BRLMs, our Company and the Designated Stock Exchange, based on the physical records of the ASBA Bid cum Application Forms shall be final and binding on all concerned.

Build Up of the Book and Revision of Bids

1. Bids registered through the Designated Branches of the SCSBs shall be electronically transmitted to

the BSE or the NSE mainframe on a regular basis. 2. The book gets built up at various price levels. This information will be available with the BRLM on a

regular basis. 3. After the Bid/Issue Closing Date, the SCSBs shall provide to the Registrar to the Issue aggregate

information relating to the total number of ASBA Bid-cum-Application Forms uploaded and the total number of Equity Shares and total amount blocked against the uploaded ASBA Bid-cum-Application Forms. The Registrar to the Issue shall reconcile the electronic data received from the Stock Exchanges and the information received from the SCSBs and inform the SCSBs of any error or discrepancy. The SCSBs shall be responsible for providing the rectified data within the time specified by the Registrar to the Issue.

4. Only Bids that are uploaded on the online IPO system of the Stock Exchanges shall be considered for

allocation and/or Allotment. In case of discrepancy of data between the BSE or NSE and the Designated Branches of the SCSBs, the decision of the Registrar, based on the physical records of the ASBA Bid-cum-Application Forms shall be final and binding.

5. The ASBA Bidder can make this revision any number of times during the Bid/Issue Period.

However, for any revision(s) in the Bid, the ASBA Bidders will have to use the services of the same Designated Branch of the SCSB with whom he/she or it holds the bank account. ASBA Bidders are advised to retain copies of the ASBA Revision Form and the revised Bid must be made only in such ASBA Revision Form or copies thereof.

6. Any revision of the Bid shall be accompanied by an instruction to block the incremental amount on

account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be unblocked by the SCSB.

7. When an ASBA Bidder revises his/her or its Bid, he/she or it shall surrender the earlier TRS and get

a revised TRS from the SCSBs. It is the responsibility of the ASBA Bidder to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid.

Price Discovery and Allocation After the Bid/Issue Closing Date, the Registrar to the Issue shall aggregate the demand generated under the ASBA process and the details provided to it by the SCSBs with the Investors that have applied under the non-ASBA process to determine the demand generated at different price levels. Issuance of CAN (a) Upon approval of the basis of Allotment by the Designated Stock Exchange, the Registrar to the

Issue shall send to the Controlling Branches of the SCSBs, a list of the ASBA Bidders who have been allocated Equity Shares in the Issue. However, the investor should note that our Company shall

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ensure that the instructions for credit of the Equity Shares to all investors in this Issue shall be given on the same date of Allotment.

(b) The ASBA Bidders shall directly receive the CAN from the Registrar. The dispatch of a CAN shall

be deemed a valid, binding and irrevocable contract for the ASBA Bidder

Unblocking of ASBA Account On the basis of instructions from the Registrar to the Issue, the SCSBs shall transfer the requisite amount against each successful ASBA Bidder to the Public Issue Account and shall unblock the excess amount, if any, in the ASBA Account. However, the Bid Amount may be unblocked in the ASBA Account prior to receipt of notification from the Registrar to the Issue by the Controlling Branch of the SCSB in relation to the finalization of the basis of Allotment in the Issue in the event of withdrawal or failure of the Issue or rejection of the ASBA Bid, as the case may be. Designated Date and Allotment of Equity Shares (a) Our Company will ensure that the Allotment of Equity Shares is done within 15 days of the Bid/Issue

Closing Date. After the funds are transferred from the bank account of the ASBA Bidders to the ASBA Public Issue Account on the Designated Date, to the extent applicable, our Company shall credit the successful ASBA Bidders’ depository accounts within two working days of the date of Allotment.

(b) As per the SEBI ICDR Regulations, Allotment of the Equity Shares will be only in dematerialized

form to the allottees. (c) Successful ASBA Bidders will have the option to re-materialize the Equity Shares so Allotted as per

the provisions of the Companies Act and the Depositories Act.

GENERAL INSTRUCTIONS DOs: (a) Check if you are eligible to Bid under ASBA process; (b) Ensure that you use the ASBA Bid-cum-Application Form specified for the purposes of ASBA

process; (c) Read all the instructions carefully and complete the ASBA Bid-cum-Application Form (if the Bid is

submitted in physical mode, the prescribed ASBA Bid-cum-Application Form is white in colour); (d) Ensure that the details of your Depository Participant and beneficiary account are correct and the

beneficiary account is activated as Equity Shares will be Allotted in dematerialized form only; (e) Ensure that your Bid is submitted at a Designated Branch of an SCSB, with a branch of which the

ASBA Bidder or a person whose bank account will be utilized by the ASBA Bidder for bidding has a bank account and not to the Bankers to the Issue or collecting banks (assuming that such collecting banks are not SCSBs), our Company, the Registrar or the BRLM;

(f) Ensure that the ASBA Bid-cum-Application Form is signed by the account holder in case the

applicant is not the account holder; (g) Ensure that you have mentioned the correct bank account numbers in the ASBA Bid-cum-

Application Form; (h) Ensure that you have funds equal to the number of Equity Shares Bid for at the Bid amount available

in the ASBA Account maintained with the SCSB before submitting the ASBA Bid-cum-Application Form to the Designated Branch of the SCSB;

(i) Ensure that you have correctly checked the authorization box in the ASBA Bid-cum-Application

Form, or have otherwise provided an authorization to the SCSB via the electronic mode, for the

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Designated Branch to block funds equivalent to the Bid Amount mentioned in the ASBA Bid-cum-Application Form in your ASBA Account maintained with a branch of the concerned SCSB;

(j) Ensure that you receive an acknowledgement from the Designated Branch of the concerned SCSB

for the submission of your ASBA Bid-cum-Application Form; (k) Ensure that you mention your PAN allotted under the I.T. Act irrespective of the amount of the Bid

in the Bid-cum-Application Form. Applications in which PAN is not mentioned are liable to be rejected;

(l) Ensure that the name(s) and PAN given in the ASBA Bid-cum-Application Form is exactly the same

as the name(s) and PAN in which the beneficiary account is held with the Depository Participant. In case the ASBA Bid-cum-Application Form is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the ASBA Bid-cum-Application Form; and

(m) Ensure that the demographic details are updated, true and correct in all respects.

DON’Ts: (a) Do not submit an ASBA Bid if you are a QIB; (b) Do not Bid for lower than the minimum Bid size; (c) Do not Bid on another ASBA or Non-ASBA Bid-cum-Application Form after you have submitted a

Bid to a Designated Branch of an SCSB; (d) Payment of Bid Amounts in any mode other than blocked amounts in the bank accounts maintained

by SCSBs shall not be accepted under the ASBA process; (e) Do not send your physical ASBA Bid-cum-Application Form by post; instead submit it only to a

Designated Branch of an SCSB; (f) Do not submit the GIR Number instead of the PAN; and (g) Do not instruct your respective banks to release the funds blocked in the bank account under the

ASBA process. (h) Do not submit more than five ASBA Bid cum Application Forms per bank account for the Issue. Bids by ASBA Bidders must be: a. Made only in the prescribed ASBA Bid cum Application Form, which is white in colour if submitted

in physical mode, or electronic mode. b. In single name or in joint names (not more than three, and in the same order as their Depository

Participant details). c. Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions

contained herein, in the ASBA Bid cum Application Form. d. The Bids must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares

thereafter subject to a maximum of Bid such that the Bid Amount does not exceed the maximum investment limits prescribed under law.

e. Thumb impressions and signatures other than in the languages specified in the Eighth Schedule in

the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

ASBA Bidder’s Depository Account and Bank Details

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ASBA Bidders should note that on the basis of name of the ASBA Bidders, PAN, Depository

Participant’s name, Depository Participant-Identification number and beneficiary account number

provided by them in the ASBA Bid-cum-Application Form, the Registrar to the Issue will obtain

from the Depository, demographic details of the ASBA Bidders such as their address and occupation (“Demographic Details”). Hence, ASBA Bidders should carefully fill in their Depository

Account details in the ASBA Bid-cum-Application Form. IT IS MANDATORY FOR ALL THE ASBA BIDDERS TO RECEIVE THEIR EQUITY SHARES

IN DEMATERIALIZED FORM. ALL ASBA BIDDERS SHOULD MENTION THEIR

DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER, BENEFICIARY ACCOUNT NUMBER AND PAN IN THE ASBA BID-CUM-

APPLICATION FORM. ASBA BIDDERS MUST ENSURE THAT THE NAME GIVEN IN THE

ASBA BID-CUM-APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH

THE DEPOSITORY ACCOUNT IS HELD. ADDITIONALLY, THE PAN IN THE ASBA BID-

CUM-APPLICATION FORM SHOULD BE EXACTLY THE SAME AS PROVIDED WITH THE DEPOSITORY PARTICIPANT. IF THE ASBA BID-CUM-APPLICATION FORM IS

SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY

ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND SUCH JOINT NAMES ARE

IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE ASBA BID-CUM-

APPLICATION FORM.

Since these Demographic Details will be used for all correspondence with the ASBA Bidders, they are advised to update the Demographic Details as provided to their Depository Participants. By signing the ASBA Bid-cum-Application Form, the ASBA Bidder will be deemed to have authorized the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. CAN/allocation advice and letters notifying the unblocking of the bank account of an ASBA Bidder will be mailed to the address of the ASBA Bidder as per the Demographic Details received from the Depositories. ASBA Bidders may note that delivery of CAN/allocation advice or letters notifying the unblocking of the bank account may be delayed if such documents, once sent to the address obtained from the Depositories, are returned undelivered. Please note that any such delay shall be at the the sole risk of the ASBA Bidder and none of the Designated Branches of the SCSBs, the members of the Syndicate or our Company shall be liable to compensate the ASBA Bidder for any losses caused to such ASBA Bidder due to any such delay or pay any interest for such delay. Where no corresponding record is available with the Depositories that matches three parameters, namely, names of the ASBA Bidder (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s account number, then such Bids are liable to be rejected. ASBA Bidders are required to ensure that the beneficiary account is activated, as Equity Shares will be Allotted in dematerialized form only. ASBA Bids under Power of Attorney In case of Bids made under the ASBA process pursuant to a power of attorney, a certified copy of the power of attorney must be submitted along with the ASBA Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. Our Company, in its absolute discretion, reserves the right to relax the above condition of simultaneous lodging of the power of attorney along with the ASBA Bid-cum-Application Form, subject to such terms and conditions that our Company and the BRLM may deem fit. Payment Mechanism under ASBA The ASBA Bidders shall specify the bank account number in the ASBA Bid-cum-Application Form and the SCSB shall block an amount equivalent to the application money in the bank account specified in the ASBA Bid-cum-Application Form. The SCSB shall keep the Bid Amount in the relevant bank account blocked until withdrawal or rejection of the Bid or receipt of instructions from the Registrar to the Issue

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to unblock the Bid Amount. In the event of withdrawal or rejection of the Bid or in respect of unsuccessful Bid-cum-Application Forms, the Registrar to the Issue shall give instructions to the Controlling Branch of the SCSB to unblock the application money in the relevant bank account. The Bid Amount shall remain blocked in the ASBA Account until finalization of the basis of Allotment in the Issue and consequent transfer of the Bid Amount to the Public Issue Account, or until withdrawal or failure of the Issue or until rejection of the ASBA Bid, as the case may be. OTHER INSTRUCTIONS

Withdrawal of ASBA Bids If an ASBA Bidder wants to withdraw the ASBA Bid-cum-Application Form during the Bidding Period, the ASBA Bidder shall submit the withdrawal request to the SCSB, which shall perform the necessary actions, including deletion of details of the withdrawn ASBA Bid-Cum-Application Form from the electronic bidding system of the Stock Exchanges and unblocking of funds in the relevant bank account. If an ASBA Bidder wants to withdraw the ASBA Bid-cum-Application Form after the Bid/Issue Closing Date, the ASBA Bidder shall submit the withdrawal request to the Registrar to the Issue before finalization of basis of Allotment. The Registrar to the Issue shall delete the withdrawn Bid from the Bid file. The instruction for and unblocking of funds in the relevant bank account, in such withdrawals, shall be forwarded by the Registrar to the Issue to the SCSB on finalization of the basis of Allotment. Joint ASBA Bids Bids under the ASBA process may be made in single or joint names (not more than three). In case of such joint Bids, all communications will be addressed to the First Bidder and will be dispatched to his or her address as per the Demographic Details received from the Depository.

Multiple ASBA Bids An ASBA Bidder should submit only one Bid for the total number of Equity Shares desired. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same. In this regard, the procedures which would be followed by the Registrar to the Issue to detect multiple applications are described in the section “Issue Procedure” beginning on page 209 of the Draft Red Herring Prospectus.

Permanent Account Number For details, see the section “Issue Procedure” beginning on page 209 of the Draft Red Herring Prospectus.

RIGHT TO REJECT ASBA BIDS

The Designated Branches of the SCSBs shall have the right to reject Bids made under the ASBA process if at the time of blocking the Bid Amount in the ASBA Bidder’s bank account, the relevant Designated Branch determines that sufficient funds are not available in such Bidder’s bank account maintained with the SCSB. Subsequent to the acceptance of the Bid by the SCSB, our Company will have a right to reject such Bid only on technical grounds. Further, if any DP ID, Client ID or PAN mentioned in the ASBA Bid-cum-Application Form does not match with the Depository Participant’s database, such Bid shall be rejected by the Registrar to the Issue. Grounds for Technical Rejections under the ASBA Process

In addition to the grounds listed under “Issue Procedure –Grounds for Technical Rejections” beginning on page 230 of the Draft Red Herring Prospectus, applications under the ASBA process are liable to be rejected on, inter alia, the following technical grounds: 1. Amount mentioned in the ASBA Bid-cum-Application Form does not tally with the amount payable

for the value of Equity Shares Bid for;

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2. Authorization for blocking funds in the ASBA Bidder’s bank account not ticked or provided; 3. ASBA Bids accompanied by stockinvest/ money order/ postal order/ cash; 4. Signature of sole and/or joint Bidders missing in case of ASBA Bid-cum-Application Forms

submitted in physical mode; 5. ASBA Bid-cum-Application Form does not have the stamp of the SCSB and/or a member of the

Syndicate; 6. ASBA Bid-cum-Application Form is not delivered, either in physical or electronic form, by the

ASBA Bidder within the specified time and in accordance with the instructions provided in the ASBA Bid-cum-Application Form and the Red Herring Prospectus;

7. Inadequate funds in the ASBA Account to block the Bid Amount specified in the ASBA Bid-cum-

Application Form at the time of blocking such Bid Amount in the ASBA Account; and 8. Revision of any Bid under the ASBA process. 9. Application on plain paper or on split form 10. Submission of more than five ASBA Bid cum Application Forms per account; 11. Age of first Bidder not given; 12. Bid made by QIBs; 13. Bids by persons not competent to contract under the Indian Contract Act, 1872, including minors and

persons of unsound mind; 14. PAN not stated, or GIR number furnished instead of PAN 15. ASBA Bid cum Application Forms not being signed by the account holder, if the account

holder is different from the Bidder; Bidders are advised that Bids under the ASBA process that are not uploaded in the electronic book of the Stock Exchanges due to any of the grounds mentioned above will be rejected. COMMUNICATIONS All future communication in connection with Bids made under the ASBA process in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or first ASBA Bidder, the ASBA Bid-cum-Application Form number, details of the Depository Participant, the number of Equity Shares applied for, the date of the ASBA Bid-cum-Application Form, the name and address of the Designated Branch of the SCSB where the ASBA Bid-cum-Application Form was submitted, the bank account number in which the amount equivalent to the Bid Amount was blocked and a copy of the acknowledgement slip. The Registrar to the Issue shall obtain the required information from the SCSBs for addressing any clarifications or grievances. The SCSB shall be responsible for any damage or liability resulting from any errors, fraud or willful negligence on the part of any employee of the concerned SCSB, including its Designated Branches and the branches where the ASBA Accounts are held. Our Company, the BRLM, the Syndicate Members and the Registrar accept no responsibility for errors, omissions, commission or any acts of SCSBs including any defaults in complying with its obligations under applicable SEBI ICDR Regulations. The ASBA Bidders can contact the Compliance Officer, the Designated Branch of the SCSB where the ASBA Bid-cum-Application Form was submitted, or the Registrar to the Issue in case of any pre- or post-Issue related problems such as non-receipt of credit of Allotted Equity Shares in the respective beneficiary accounts, unblocking of excess Bid Amount, etc.

Disposal of Investor Grievances

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All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSB, giving full details such as name and address of the applicant, the number of Equity Shares applied for, the Bid Amount blocked on application, bank account number and the Designated Branch or the collection centre of the SCSB where the ASBA Bid-cum-Application Form was submitted by the ASBA Bidder.

Impersonation For details, see the section “Issue Procedure – Impersonation” beginning on page 234 of this Draft Red Herring Prospectus. DISPOSAL OF APPLICATIONS AND APPLICATION MONEY AND INTEREST IN CASE OF

DELAY IN INSTRUCTIONS TO SCSBs BY THE REGISTRAR TO THE ISSUE In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI ICDR Regulations, our Company undertakes that:

• Allotment of Equity Shares only in dematerialized form shall be made within 15 days of the Bid/Issue Closing Date;

• Instructions for unblocking of the funds in the ASBA Bidder’s Bank Account shall be made within 15 days from the Bid/Issue Closing Date; and

• If the instructions to SCSBs to unblock funds in the ASBA accounts are not given within eight days after our Company becomes liable to repay all moneys received from the applicants, then our Company and every Director of our Company who is an officer in default shall, on and from such expiry of eight days, be liable to repay the monies, with interest at the rate of 15% per annum on the application monies, as prescribed under Section 73 of the Companies Act.

Basis of Allocation Bids received from ASBA Bidders will be considered at par with Bids received from non-ASBA Bidders. The basis of allocation to such valid ASBA and non-ASBA Bidders will be that applicable to Retail Individual Bidders. For details, see the section “Issue Procedure” beginning on page 209 of the Draft Red Herring Prospectus. Method of Proportionate Basis of Allocation in the Issue

ASBA Bidders, along with non-ASBA Bidders, will be categorized as Retail Individual Bidders. No preference shall be given to ASBA vis-à-vis non-ASBA Bidders or vice versa.

Undertaking by our Company In addition to the undertakings described under “Issue Procedure – Undertakings by our Company”, with respect to the ASBA Bidders, our Company undertakes that adequate arrangements shall be made to consider ASBA Bidders similar to other Bidders while finalizing the basis of allocation.

Utilization of Issue Proceeds For details, see the section “Issue Procedure” beginning on page 209 of this Draft Red Herring Prospectus. Description of Equity Shares

For details of the rights of members regarding voting, dividend, lien on shares and the process for modification of such rights and forfeiture of shares, see “Terms of the Issue” and “Main Provisions of the Articles of Association” beginning on pages 199 and 253 of this Draft Red Herring Prospectus, respectively.

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SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION

MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION

Article 5

Share Capital

a. The Authorized Share Capital of the Company shall be such amount and be divided into such Shares

as may, from time to time, be provided in Clause V of the Memorandum of Association payable in the manner as may be determined by the Directors from time to time, with powers to increase, reduce, sub-divide or repay the same or to divide the same into several classes and to attach thereto any rights and to consolidate or subdivide or reorganize the Shares and subject to section 106 of the Act, to vary such rights as may be determined in accordance with the regulations of the Company.

b. Issuance of the Shares, subject to clause 4(c) below, shall be under the control of the Directors who

shall allot the Shares as per the provisions of the Companies Act, 1956. c. i Any further issue of Shares shall be governed by provisions of the Act, as may be applicable and

will be offered to the Persons who, at the date of the offer, are holders of equity Shares of the company, in proportion, as nearly as circumstances admit, to the Capital paid-up on these Shares at that date.

ii Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capital of

the Company for the time being shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion and on such terms and conditions and either at a premium or at par or (subject to the compliance with the provision of Section 79 of the Act) at a discount and at such time as they may from time to time think fit and with the sanction of the Company in the General Meeting to give to any person or persons the option or right to call for any shares either at par or premium during such time and for such consideration as the Directors think fit, and may issue and allot shares in the capital of the Company on payment in full or part of any property sold and transferred or for any services rendered to the Company in the conduct of its business and any shares which may so be allotted may be issued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that option or right to call of shares shall not be given to any person or persons without the sanction of the Company in the General Meeting.

iii The Company may (subject to the provisions of Sections 100 to 105 or such other provisions as

may be applicable from time to time of the Act) from time to time by special resolution reduce its share capital or any Capital Redemption Reserve Account or Shares Premium Account in any way authorized by law and in particular may pay off any paid up share capital upon the footing that it may be called up again, or otherwise, and may, if and as far as is necessary, alter its Memorandum by reducing the amount of its share capital and of its shares accordingly.

iv The Company may in general meeting alter the conditions of Memorandum as follows:

(a) Consolidate and divide all or any of its share capital into share of larger amount than its existing shares.

(b) Sub-divide its shares or any of them into shares of smaller amount than originally fixed by the Memorandum, subject nevertheless to the provision of the Act and of these Articles.

(c) Cancel shares, which at the date of the passing of the resolution in that behalf have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.

(d) Convert all or any of its fully paid up shares into stock, and reconvert that stock into fully paid up shares of any denomination.

Article 6

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Buy Back

Subject to the provisions of section 77A, 77AA and 77B of the Companies Act, 1956, the Company may purchase its own fully paid up Shares. Article 7

The certificates of title to Equity Securities and duplicates thereof when necessary shall be issued under the Seal of the Company. Article 8 Every person holding Equity Securities of the Company shall be entitled to, without payment, one or more certificates in marketable lots, for all the Equity Securities registered in his name, or if the Board so approves, to several certificates each for one or more of such Equity Securities, but in respect of each additional certificate, there shall be paid to the Company a fee of Rs. 2/-, or such less sum as the Board may determine. Every certificate shall specify the number and denoting numbers of the Equity Securities in respect of which it is issued and the amount paid up thereon. The Board may in any case or generally waive the charging of such fees. The Company shall complete and have ready for delivery such certificates within three months from the date of allotment, unless the conditions of issue thereof otherwise provide, or within one month of the receipt of application for registration of transfer, transmission, sub-division, consolidation or renewal of any of its Equity Securities as the case may be. Every certificate of Equity Securities shall be under the seal of the Company and shall specify the number and distinctive numbers of Equity Securities in respect of which it is issued and amount paid-up thereon and shall be in such form as the Board may prescribe or approve, provided that in respect of Equity Securities held jointly by several persons, the Company shall not be borne to issue more than one certificate and delivery of a certificate of Equity Securities to one of several joint holders shall be sufficient delivery to all such joint holder. Article 9

If any certificate is worn out, defaced, mutilated or torn or if there is no further space on the back thereof for endorsement of transfer, then upon production and surrender thereof to the Company, a new certificate may be issued in lieu thereof, and if any certificate is lost or destroyed, then upon proof thereof to the satisfaction of the Company and on execution of such indemnity as the Company may deem adequate, being given, a new certificate in lieu thereof shall be given to the party entitled to such lost or destroyed certificate. Every certificate issued under this Article shall be issued without payment of fees, if the Board so decides, or on payment of such fees (not exceeding Rs.2/- for each certificate) as the Board shall prescribe. Provided that no fee shall be charged for issue of new certificates in replacement of those which are old, defaced or worn out or where there is no further space on the back thereof for endorsement of transfer.

Article 10 Provided that notwithstanding what is stated above, the Board shall comply with such Rules or Regulation or requirements of any Stock Exchange or the Rules made under the Act or the rules made under Securities Contracts (Regulation) Act, 1956 or any other Act, or rules applicable in this behalf.

Article 11 In the event a Non-Selling Member does not exercise his right under the above-mentioned Articles within a period of 14 days, then the Selling Member shall be entitled to offer his Shares first, to the other non selling Member(s), if any, in proportion to their existing shareholding, who shall exercise their option within a period of 14 days.

Article 12 The provisions of this Article shall mutatis mutandis apply to debentures of the Company.

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Article 13 Where two or more persons are registered as the holders of any share they shall be deemed to hold the same as joint-holders with benefits of survivorship subject to the following and other provisions contained in these Articles :- (a) The Company shall be entitled to decline to register more than four persons as the joint-holders of

any share. (b) The joint-holders of any share shall be liable severally as well as jointly for and in respect of all

calls and other payments which ought to be made in respect of such share. (c) On the death of any such joint-holder the survivor or survivors shall be the only person or persons

recognized by the Company as having any title to the share but the Board may require such evidence of death as they may deem fit and nothing herein contained shall be taken to release the estate of a deceased joint-holder from any liability on shares held by him jointly with any other person.

(d) Any one of such joint-holders may give effectual receipts of any dividends or other moneys

payable in respect of such share. (e) Only the person whose name stands first in the Register of Members as one of the joint-holders of

any share shall be entitled to delivery of the certificate relating to such share or to receive documents from the Company and any documents served on or sent to such person shall be deemed to be served on all the joint-holders.

(f) Any one of two or more joint-holders may vote at any meeting either personally or by attorney duly

authorized under a power of attorney or by proxy in respect of such share as if he were solely entitled thereto and if more than one of such joint-holders be present at any meeting personally or by proxy or by attorney then that one of such persons so present whose name stands first or higher (as the case may be) on the register in respect of such share shall alone be entitled to vote in respect thereof but the other or others of the joint-holders shall be entitled to be present at the meeting; Provided always that a joint-holder present at any meeting personally shall be entitled to vote in preference to a joint-holder present by an attorney duly authorized under power of attorney or by proxy although the name of such joint-holder present by an attorney or proxy stands first or higher in the register in respect of such shares. Several executors or administrators of a deceased member in whose (deceased member’s) sole name any share stands shall for the purposes of this clause be deemed joint-holders.

CALLS

Article 14

The Board may, from time to time, subject to the terms on which any shares may have been issued and subject to the conditions of allotment by a resolution passed at a meeting of the Board make such calls, as they think fit, upon members in respect of all moneys unpaid on the shares held by them respectively and each member shall pay the amount of every call so made on him to the person or persons and at the times and places appointed by the Board. A call may be made payable by instalments

Article 15

Fifteen day's notice in writing of any call be given by the Company specifying the time and place of payment and the person or persons to whom such call shall be paid.

Article 16

A call shall be deemed to have been made at the time when the resolution authorising such call is passed at a meeting of the Board.

Article 17

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A call may be revoked or postponed at the discretion of the Board.

Article 18

The joint-holders of a share shall be jointly and severally liable to pay all calls in respect thereof. Article 19 The Board may, from time to time at its discretion, extend the time fixed for the payment of any calls under Article 14.

CALLS TO CARRY INTEREST

Article 20

If any member fails to pay any call due from him on the day appointed for payment thereof, or any such extension thereof as aforesaid, he shall be liable to pay interest on the same from the day appointed for the payment thereof to time of actual payment at such rate as shall, from time to time, be fixed by the Board, but nothing in this Article shall render it obligatory for the Board to demand or recover any interest from any such member

Article 21

Any sum, which by the terms of issue of a share becomes payable on allotment or on any fixed date, whether on account of the nominal value of the share or by way of premium shall for the purpose of these Articles be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable, and in case of non-payment all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

PROOF ON TRIAL OF SUIT FOR MONEY DUE ON SHARES

Article 22 Subject to the provisions of the Act and these Articles, on the trial of or hearing of any action or suit brought by the Company against any member or his representatives for the recovery of any money(s) claimed to be due to the Company in respect of any share(s) it shall be sufficient to prove that the name of the member in respect of whose share(s) the money is sought to be recovered, appears entered on the Register of Members as the holder of the share(s) in respect of which such money is sought to be recovered that the resolution making the call is duly recorded in the Minute Book and that notice of such call was duly given to the member or his representatives sued in pursuance of these Articles and that it shall not be necessary to prove the appointment of the Directors who made such call, nor any other matter whatsoever but the proof of the matters aforesaid shall be conclusive evidence of the debt. PAYMENT IN ANTICIPATION OF CALLS MAY CARRY INTEREST

Article 23

Subject to the provisions of Section 92 of the Act, the Board may, if it thinks fit, agree to and accept from any member willing to advance the same, the whole or any part of the amount remaining unpaid on any shares held by him although no part of that amount has been called up, and upon the amount so paid or satisfied in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in respect of which such advance has been made, the Company may pay interest at such rate, as the member paying such sum in advance and the Board agrees upon, provided that the money paid in advance of calls shall not confer a right to participate in profits or dividend. The Board may at any time repay the amount so advanced. The members shall not be entitled to any voting rights in respect of the moneys so paid by him until the same would but for such payment, become presently payable Article 24 The provisions of these Articles shall mutatis mutandis apply to the calls on debentures of the Company.

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LIEN

Article 25

The Company shall have a first and paramount lien upon all shares (other than fully paid up shares/debentures) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares/debentures, and no equitable interest in any shares shall be created except upon the footing and upon the conditions that this Article will have full effect. Any such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares/debentures. Unless otherwise agreed the registration of a transfer of shares/debentures shall operate as a waiver of the Company's lien, if any, on such shares/debentures. The Directors may at any time declare any shares/debentures wholly or in part to be exempt from the provisions of this clause. Article 26 For the purpose of enforcing such lien the Board may sell the shares subject thereto in such manner as they shall think fit and for this purpose may cause to be issued duplicate certificate in respect of such shares and may authorise one of their members to execute a transfer thereof on behalf of and in the name of such member. No sale shall be made until notice in writing of the intention to sell shall have been served on such member or his representatives and default shall have been made by him or them in payment, fulfilment or discharge of such debts, liabilities or engagement for fourteen days after such notice.

Article 27 The net proceeds of any such sale be received by the Company and applied in or towards payment of such part of the amount in respect of which the lien exists as is presently payable and the residue, if any, shall (subject to a like lien for sums not presently payable as existed upon the shares before the sale) be paid to the persons entitled to the shares at the date of the sale.

FORFEITURE OF SHARES

Article 28

If any member fails to pay any call or installment of a call on or before the day appointed for the payment of the same or any such extension thereof as aforesaid, the Board may at any time thereafter, during such time as the call or installment remains unpaid, give notice to him requiring him to pay the same together with any interest that may have accrued by the Company by reason of such non-payment. Article 29

The notice shall name a day (not being less than fourteen days from the date of the notice) and a place or places on and at which such call or installment and such interest thereon at such rate as the Directors shall determine from the day on which such call or installment ought to have been paid and expenses as aforesaid are to be paid. The notice shall also state that, in the event of the non-payment before the time and at the place appointed the shares in respect of which the call was made or installment is payable, will be liable to be forfeited.

Article 30

If the requirements of any such notice as aforesaid shall not be complied with, every or any share in respect of which such notice has been given, may at time thereafter before payment of all calls or installments, interest and expenses due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared or any other moneys payable in respect of the forfeited share and not actually paid before the forfeiture.

Article 31

When any share shall have been so forfeited, notice of the forfeiture shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof shall forthwith be made in the Register of Members but no forfeiture shall be in any manner invalidated by any omission or neglect to make any such entry as aforesaid.

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Article 32

Any share so forfeited shall be deemed to be the property of the Company, and may be sold, re allotted, or otherwise disposed off, either to the original holder thereof or to any other person, upon such terms and in such manner as the Board shall think fit.

Article 33

Any member whose shares have been forfeited shall notwithstanding the forfeiture, be liable to pay and shall forthwith pay to the Company on demand all calls, installments, interest and expenses owing upon or in respect of such shares at the time of the forfeiture, together with interest thereon from the time of the forfeiture until payment, at such rate not exceeding nine percent per annum as the Board may determine and the Board may enforce the payment thereof, if it thinks fit.

Article 34

The forfeiture of a share shall involve extinction at the time of the forfeiture, of all interest in and all claims and demands against the Company, in respect of the share and all other rights incidental to the share, except only such of those rights as by these articles are expressly saved.

Article 35

A declaration in writing that the declarant is a Director or Secretary of the Company and that a share in the Company has been duly forfeited in accordance with these Articles on the date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share.

Subject to the Act, the Board may, from time to time, pay such interim dividends as appear to it to be justified by the distributable profits of the Company.

Article 36

Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers hereinbefore given, the Board may appoint some person to execute an instrument of transfer of the shares sold and cause the purchaser's name to be entered in the Register in respect of the shares sold, and the purchaser shall not to be bound to see the regularity of the proceedings, or to the application of the purchase money and after his name has been entered in the Register in respect of such shares, the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sales shall be in damages only and against the Company exclusively.

Article 37

Upon any sale, re-allotment or other disposal under the provisions of the preceding Articles, the certificate of shares originally issued in respect of the relative share shall (unless the same shall on demand by the Company have been previously surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect, and the Directors shall be entitled to issue a duplicate certificate or certificates in respect of the said shares to the person or persons entitled thereto.

Article 38

The Board may at any time before any share so forfeited shall have been sold, re-allotted or otherwise disposed off, annul the forfeiture thereof upon such conditions as it thinks fit.

DEMATERIALISATION OF SECURITIES

Article 39

Either the Company or the investor may exercise an option to issue, deal in, hold the securities (including shares) with a Depository in electronic form and the certificates in respect thereof shall be dematerialized, in which event the rights and obligations of the parties concerned and matters connected therewith or incidental thereof, shall be governed by the provisions of the Depositories Act, as amended from time to time or any statutory modification thereto or re-enactment thereof

Article 40

Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialize its existing securities and/or offer its fresh securities in the dematerialized form pursuant to the Depositories Act, 1996 and the rules framed thereunder, if any.

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Article 41

Every person subscribing to or holding securities of the Company shall have the option to receive security certificate or to hold the security with a Depository. The Company shall intimate such Depository the details of allotment of the security, and on receipt of the information, the Depository shall enter in its record the name of the allottee as the Beneficial Owner of the security.

Article 42

All securities held by a Depository shall be dematerialized and be in fungible form. Nothing contained in Sections 153, 153A, 187C and 372A of the Act shall apply to a Depository in respect of the securities held by it on behalf of the Beneficial Owners.

Article 43

a. Notwithstanding anything to the contrary contained in the Act or the Articles, a Depository shall be deemed to be the registered owner for the purpose of effecting transfer of ownership of security on behalf of the Beneficial Owner.

b. Save as otherwise provided in (a) above, the Depository as the registered owner of the securities

shall not have any voting rights or any other rights in respect of the securities held by it. c. Every person holding securities of the Company and whose name is entered as Beneficial Owner in

the records of the Depository shall be deemed to be the member of the Company. The Beneficial Owner of securities shall be entitled to all the rights and benefits subject to all the liabilities in respect of his securities which are held by a Depository.

Article 44

Except as ordered by a Court of competent jurisdiction or as required by law, the Company shall be entitled to treat the person whose name appears on the register of members as holder(s) of any share or where the name appears as Beneficial Owner of shares in the records of the Depository as the absolute owner thereof and accordingly shall not be bound to recognize any benami trust or equitable, contingent, future or partial interest in any share, or (except only as is by these Articles, otherwise expressly provided) any right in respect of a share other than an absolute right thereto in accordance with these Articles, on the part of any other person whether or not it has express or implied notice thereof, but the Board shall be at their sole discretion to register any share in the joint names of any two or more persons or the survivor or survivors of them. Article 45 Every Depository shall furnish to the Company about the transfer of securities in the name of the Beneficial Owner at such intervals and in such manner as may be specified by the bye-laws and the Company in that behalf

Article 46

Upon receipt of certificate of securities of surrender by a person who has entered into an agreement with the Depository through a Participant, the Company shall cancel such certificate and substitute in its records the name of Depository as the registered owner in respect of the said securities and shall also inform the Depository accordingly.

Article 47

If a Beneficial Owner seeks to opt out of a Depository in respect of any security, the Beneficial Owner shall inform the Depository accordingly. The Depository shall on receipt of information as above make appropriate entries in its records and shall inform the Company. The Company shall, within thirty (30) days of the receipt of intimation from the Depository and on fulfilment of such conditions and on payment of such fees as may be specified by the regulations, issue the certificate of securities to the Beneficial Owner or the transferee as the case may be.

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Article 48 Notwithstanding anything in the Act or these Articles to the contrary, if the securities are held in a Depository, the records of the beneficial ownership of securities held in a Depository may be served by such Depository on the Company by means of electronic mode or by delivery of floppies or discs.

Article 49

Except as specifically provided in these Articles, the provisions relating to joint holders of shares, calls, lien on shares, forfeiture of shares and transfer and transmission of shares shall be applicable to shares held in Depository so far as they apply to shares held in physical form subject to the provisions of the Depository Act.

Article 50

Notwithstanding anything in the Act or these Articles, where securities are dealt with by a Depository, the Company shall intimate the details thereof to the Depository immediately on allotment of such securities.

Article 51

The register of members and index of Beneficial Owners maintained by a Depository under the Depositories Act shall be deemed to be a register of members and other Security holders.

BORROWING POWERS

Article 52

Subject to the provision of Section 292 of the Act the Board may, from time to time at its discretion by a resolution passed at a meeting of the Board accept deposits from members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums of money for the purpose of the Company. Provided however, where the moneys to be borrowed together with the moneys already borrowed (apart from temporary loan(s) obtained from the Company's bankers in the ordinary course of business) exceed the aggregate of the paid up capital of the Company and its free reserves (not being reserves set apart for any specific purpose) the Board shall not borrow such moneys without the consent of the Company in General Meeting.

Article 53

Subject to the provisions of Articles (52) hereof, the payment or repayment of moneys borrowed as aforesaid may be secured in such manner and upon such terms and conditions in all respects as the Ordinary Resolution shall prescribe, including by the issue of debentures or debenture-stock of the Company charged upon, all or any part of the property of the Company (both present and future) including its uncalled capital for the time being and debentures, debenture-stock and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued.

Article 54

Any debenture, debenture-stock or other securities may be issued at a discount, premium or otherwise and may be issued on condition that they shall be convertible into shares of any denomination, and with any privileges and conditions as to redemption, surrender, drawing, allotment of shares and attending (but not voting) at General Meetings, appointment of Directors and otherwise. Debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in General Meeting accorded by a Special Resolution.

Article 55

The Board shall cause a proper Register to be kept in accordance with the provisions of Section 143 of the Act of all mortgages, debentures and charges specifically affecting the property of the Company; and

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shall cause the requirements of Sections 118, 125 and 127 to 144 (both inclusive) of the act in that behalf to be duly complied with, so far as they fall to be complied with by the Board. Article 56 The Company shall, if at any time it issues debentures, keep a register and index of debenture-holders in accordance with section 152 of the act and the depositories act, with details of debentures held in material and dematerialized forms or in any other mode, as may be permitted by law. The register and index of beneficial owners maintained by a depository under section 11 of the depositories act shall be deemed to be the register and index of debenture holders, as the case may be, for the purpose of the act. The Company shall have the power to keep in any state or country outside India a branch register of debenture- holders resident in that state or country.

TRANSFER AND TRANSMISSION OF SHARES

Article 57

a) The Instrument of transfer shall be in writing and all the provisions of Section 108 of the Act and of any statutory Form of transfer modification thereof for the time being shall be duly complied with, in respect of all transfer of shares and the registration thereof.

b) The Company shall have power to keep foreign Register of Members or debenture holder in any country or state outside India as may be decided by the Board from time to time. If any shares are to be entered in any such register, the instrument of transfer shall be in a form recognized under the law of such country or state or in such form as may be approved by the Board.

c) The Company shall cause to be kept a Register and Index of Members in accordance with all applicable provisions of the Act, 1956 and the Depositories Act, 1996 with details of shares held in material and dematerialized forms in any media as may be permitted by law including in any form of electronic media. The Company shall be entitled to keep in any state or country outside India a branch Register of Members Resident in that state or country.

d) The shares in the capital shall be numbered progressively according to their several denominations & except in the manner herein before mentioned, no share shall be sub-divided, provided however, that the provisions relating to progressive numbering shall not apply to the share of the Company which are in dematerialized form.

e) Save as herein otherwise provided, the Company shall be entitled to treat the person whose name appears on the Register of Member as the holder of any share or whose name appears as the beneficial owner of shares in the records of the depository, as the absolute owner thereof & accordingly shall not except as ordered by a court of competent jurisdiction or as by law required, be found to recognize any benami trust or equity or equitable, contingent, future or partial or other claim or claims or right to or interest in such share on the part of any other person whether or not it shall have express or implied notice thereof. No notice of any trust express, implied or constructive shall be entered in the Register of Members or of debenture holders.

f) The Company shall be entitled to dematerialize its existing shares, debentures and other securities & rematerialize its shares, debentures and other securities in a dematerialized form pursuant to the Depositories Act, 1996 and the rules framed thereby if any.

g) Subject to the provisions of Section 111 of the Act, 1956 or any statutory modifications of the said provisions for the time being in force, the Directors may, at their own absolute and uncontrolled discretion and without assigning any reason,

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decline to register or acknowledge any transfer of shares and in particular Directors may refuse to register transfer may so decline in any case in which the Company has lien upon the shares or any of them whilst any money in respect of the shares desired to be transferred or any of them remain unpaid or unless the transfer is approved by the Directors and such refusal shall not be affected by the fact that the proposed transferee is already a Member. The registration of a transfer shall be conclusive evidence of the approval of the Director of the transfer. Registration of a transfer shall not be refused on the ground of the transferor being either alone or jointly with any other person or persons indebted to the Company on any account whatsoever, except when the Company has a lien on the shares. Transfer of shares / debentures in whatever lot shall not be refused subject to the provisions of the Act and these articles.

h) If the Company refuse to register the transfer of any share or transmission of any right therein, Company within one month from the date on which the instrument of transfer or intimation of transmission was lodged with the Company, shall send notice of refusal to the transferee and the transferor or to the person giving intimation of the transmission, as the case may be, and thereupon the previsions of Section 111 of the Act or any statutory modification of the provisions for the time being in force shall apply.

i) The instrument of transfer shall after registration be retained by the Company and shall remain in its custody. Such instruments of transfer may be destroyed by the Company at the sole discretion of the Directors.

j) The Directors shall have power, on giving not less than seven days previous notice by advertisement as required under section 154 of the Act, to close the Register of Members and debenture holders of the Company in the manner provided under Section 154 of the Act.

k) Subject to the provisions of the Act and these Articles any person becoming entitled to a share in consequence of the death, bankruptcy or insolvency of any Member or by any lawful means other than by a transfer in accordance with these presents, may with the consent of the Directors (which they shall not be under any obligation to give) upon producing such evidence that he sustains the character in respect of which he proposes to Act under these clause s, or of his title, as the Board may think sufficient and upon giving such indemnity as the Directors may require either be registered himself as the holder of the shares or elect to have some person nominated by him and approved by the Board, registered as such holder provided nevertheless, that if such person shall elect to have his nominee registered, he shall testify the election by Registration of person entitle to shares otherwise than by transfer (transmission clause) execution, to his nominee of instrument of transfer of the shares in accordance with the provision herein contained, and until he does so, he shall not be free from any liability in respect of the share. This clause is herein referred to the “Transmission Clause”.

l) The Company shall keep a book to be called “Register of Transfer” and therein shall be fairly and distinctly entered particulars of every transfer or transmission of any shares held in material form.

m) In case of transfer or transmission of shares or other marketable securities where the Company has not issued any certificate and where such shares or securities are being held in an electronic and fungible form in a Depository, the provisions of the Depositories Act, 1996 shall apply.

n) Subject to the provisions of the Act and these Articles, the Directors shall have the same right to refuse to register a person entitled by transmission to any shares or his nominee as if the transferee, named in an ordinary transfer presented for registration.

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o) Every transmission of a share shall be verified in such manner as the Directors may require, and the Company may refuse to register any such transmission until the same be so verified, or until or unless an Indemnity be given to the Company with regard to such registration which the Board at its discretion shall consider sufficient provided nevertheless that there shall not be any obligation on the Company or the Board to accept any Indemnity.

p) The Company will not make any charge for:- (i) Registration of transfer/transmission of its shares and debentures. (ii) Subdivision and consolidation of shares and debenture certificates and subdivision of letters of Allotment and split, Consolidation or Renewal and Pucca Transfer Receipts into denominations corresponding to the market units of trading. (iii) Subdivision of renounceable Letters of Rights. (iv) Registration of any power of attorney, probate, succession certificate and letter of administration, certificate of death or marriage or similar other documents.

q) The Company shall incur no liability or responsibility whatever in consequence of its registering or giving effect to any transfer of shares made, or purporting to be made, by any apparent legal owner thereof (as shown or appearing in the Register) to the prejudice of persons having or claiming any equitable right, title, or interest to or in the same shares notwithstanding that the Company have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer, and may have entered such The Company not liable for disregard of a notice registration of a transfer notice or referred thereto in any book of the Company and the Company shall not be bound or required to regard or attend or give notice which may be given to them of any equitable right, title or interest or be under any liability whatsoever for refusing or neglecting to do so though it may have been entered or referred to in some books of the Company but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto if the Directors shall so think fit.

BOARD OF DIRECTORS

Article 58

The first Directors of the Company shall be:

(i) Mr. Akash Gupt;

(ii) Mr. Sridhar Ramachandran

The following are the Directors of the Company at the time of adoption of the Articles :

1. Perumal Srinivasan 2. Marc Desaedeleer 3. EVS Chakravarthy 4. Vinayak Shenvi 5. Girish Kasthuri Rangan 6. Michael David Kazma

Article 59

The Management of the Company shall be vested with the Board of Directors consisting of not less than 3 (Three) and not more than such number as may be stipulated by the Act for the time being in force.

Article 60

At every Annual General Meeting of the Company, one third of such Director for the time being as are liable to retire or if their number is not three or multiple of three, the number nearest to one third shall retire from office.

Subject to Section, 256 (2) of the Act, Director to retire by rotation shall be those who have been longest in office since their last Appointment but as between persons who become Directors on the same day those are to retire, shall, in default of and any agreement among themselves, be determined by lot.

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A retiring Director shall be eligible for re – appointment. 6

Article 61

The rights of nomination and/or appointment of the Directors conferred on the Members shall include the right at any time to remove any such Persons nominated or appointed by them and from time to time determine the period for which such Persons shall hold Office as Directors. On withdrawal of nomination, the Director shall be deemed to have retired.

Article 62

The Board may appoint an Alternate Director to Act for a Director (Original Director) during his absence for a period of not less than three Months from the State in which the Meetings of the Board are ordinarily held. The Original Director shall have a right to recommend, subject to appointment by the Board, any other person to be his alternate. The Alternate Director shall not hold Office for a period longer than the term of the Original Director.

Article 63

The Directors of Company shall be paid such sitting fee for each Board Meeting or Meetings or any committee thereof as may be prescribed by the Board of Directors from time to time and subject to the ceiling laid down by the Act.

Article 64

No Director or the Alternate Director of the Company shall be required to hold any qualification Shares.

Article 65

All casual vacancies, caused due to death, resignation, suspension or expulsion the Member from Directorship, shall be filled by the Board of Directors and the Director so elected shall hold Office till the conclusion of the next Annual General Meeting.

PROCEEDINGS OF BOARD

Article 66

The Board of Directors may meet for the despatch of business and shall so meet at least once in every three Months and at least four such Meetings shall be held in every year. Such Meetings may be held in India or abroad. The Board of Directors may adjourn and otherwise regulate its Meetings, as it thinks fit.

Article 67

No Meeting of the Board of the Company shall be held unless at least seven days written notice (which notice may be shortened or waived altogether if all the Directors entitled to vote at such Meeting accord their written consent thereto) of that Meeting has been given to each Director (including Alternate Directors) of the Company and a quorum is present. In the Meetings, only such agenda will be placed as is specified in the notice to the Directors and the agenda shall not be changed in any manner unless prior written approval of all Directors is obtained.

Article 68

Resolutions, other than those which the Act specifically requires to be passed at Board Meetings, shall be deemed to have been duly passed by the Board in circulation, if the resolutions have been circulated in draft, together with all necessary papers, if any, to all the Directors, whether in India or abroad, and have been approved by all of them.

Article 69

One third of the total strength of the Board or two Directors personally present, whichever is greater, shall constitute the quorum.

PROCEEDINGS AT GENERAL MEETINGS

Article 70

a) The ordinary business of an Annual General Meeting shall be to receive and consider the Profit and Loss Account, the Balance Sheet and the reports of the Directors and of the Auditors, to elect Directors in place of those retiring by rotation, to appoint Auditors and to fix their remuneration and to declare dividends. All other business

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transacted at an Annual General Meeting and all business transacted at an Extra-Ordinary General Meeting shall be deemed as Special Business.

b) The Board may, whenever it thinks fit, call an Extra ordinary General Meeting and it shall do so upon a requisition in writing by any member or members holding in the aggregate not less than one-tenth of such of the paid up capital as at that date carries the right of voting in regard to the matter in respect of which the requisition has been made.

c) No business shall be transacted at any General Meeting unless a quorum of Members is present at the time when the Meeting proceeds to business and throughout the Meeting.

Quorum shall be at least Five Members present in person. Presence of a validly appointed proxy and/or a representative appointed pursuant to Section 187 of the Act shall be counted towards quorum of the Company. Any company may limit the rights of voting of Proxy, appointed by it, in the Meeting of shareholders. The rights may be restricted by providing instructions to that effect on the proxy instrument.

Article 71

The Chairman of the Meeting shall be elected by the Members from among the Directors present at the Meeting. Such person shall preside as Chairman of the Meeting.

Article 72

General Meeting of the Company may be called by not less than twenty one days' notice in writing but may be called by giving shorter than that specified above as per the section 171 of the Act, and applicable provisions, if any, for the time being in force.

Article 73

If within half an hour from the time appointed for holding a General Meeting, a quorum is not present the Meeting shall stand adjourned to the same day in the next week at the same time and place or to such other day and at such time and place as the Chairman may determine.

Article 74

Notwithstanding anything contained in these Articles, the Company can adopt the mode of passing a resolution by the Members of the Company by means of a postal ballot and/or otherwise as may be prescribed by the Central Government in this behalf in respect of any business that can be transacted by the Company in the General Meeting and particularly, resolutions relating to such business as the Central Government may by notification, declare to be conducted only by postal ballot. The Company shall comply with the procedure for such postal ballot and/or other ways prescribed by the Central Government in this regard.

MANAGEMENT

Article 75

Subject to the provisions of the Act, the Board may from time to time appoint one or more of their body to be a Managing Director or Managing Directors (in which expression shall be included a Joint Managing Director) or Whole-time Director or Whole-time Directors of the Company for such term not exceeding five years at a time as they may think fit, to manage the affairs and business of the Company and may from time to time (subject to the provisions of any contract between him or them and the Company) remove or dismiss him or them from office and appoint another or others in his or their place or places. Article 76

Subject to the provisions of the Act and of these Articles, a Managing Director or a Whole-time Director shall not, while he continues to hold that office, be subject to retirement by rotation, if the Board so resolves at it’s independent discretion, but he shall, subject to the provisions of any contract between him and the Company, be subject to the same provisions as to resignation and removal as the other Directors

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of the Company and he shall ipso facto and immediately cease to be a Managing Director or Whole-time Director if he ceases to hold the office of Director for any cause, provided that if at any time the number of Directors (including the Managing Director or Whole-time Director) as are not subject to retirement by rotation shall exceed one-third of the total number of the Directors for the time being, then such Managing Director or Whole-time Director, as the Directors shall from time to time select, shall be liable to retirement by rotation to the intent that the Directors not liable to retirement by rotation shall not exceed one-third of the total number of Directors for the time being.

Article 77

The remuneration of a Managing Director or Whole-time Director (subject to Section 309 and other applicable provisions of the Act and of these Articles and of any contract between him or them and the Company) shall from time to time be fixed by the Board and may be by way of fixed salary, or commission on profits of the Company or by participation in any such profits or by any or all of those modes. A Managing Director or Whole-time Director shall not receive or be paid any commission on sales or purchases made by or on behalf of the Company. Article 78

superintendence, control and direction of the Board of Directors, the day to day management of the Company shall be in the hands of the Director or Directors appointed under point XIX above, with power to the Directors to distribute such day to day management functions among such Directors, if more than one, in any manner as directed by the Board or to delegate such power of distribution to any one of them. The Board may from time to time entrust to and confer upon a Managing Director or Whole-time Director for the time being save as prohibited in the Act, such of the powers exercisable under these presents by the Board as they may think fit and may confer such powers for such time and to be exercised for such objects and purposes, and upon such terms and conditions and with such restrictions as they think expedient and they may subject to the provisions of the Act and these Articles confer such powers either collaterally with or to the exclusion of or in substitution for all or any of the powers of the Board in that behalf and may from time to time revoke, withdraw, alter or vary all or any of such powers.

SECRETARY

Article 79

Subject to the provisions of the Act –

a) a Secretary may be appointed by the Board for such term, at such remuneration and upon such conditions as it may think fit and any Secretary so appointed may be removed by the Board.

b) a Director may be appointed as Secretary.

A provision of the Act, or these regulations requiring or authorizing a thing to be done by or to a director and the manager or secretary shall not be satisfied by its being done by or to the same person acting both as director and as or in place of, the manager or secretary

DIVIDENDS

Article 80

Subject to the Act and to these Articles, the Company may by Ordinary Resolution declare dividends in accordance with the respective rights of the Members, but no dividend shall exceed the amount recommended by the Board.

Article 81

Subject to the Act, the Board may, from time to time, pay such interim dividends as appear to it to be justified by the distributable profits of the Company.

Article 82

If dividends are declared, the Company shall pay dividends in proportion to the amount paid up or credited as paid up on each Share. The Board may deduct from any dividend payable to any Member all

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sums of money, if any, presently payable by him to the Company on account of calls or otherwise in relation to the Shares.

ACCOUNTS

Article 83

The Company shall cause to be kept proper books of account in accordance with Section 209 of the Act.

COMMON SEAL

Article 84

The Board shall provide for the safe custody of the Seal and the Seal shall not be affixed to any instrument except by the authority of a resolution of the Board and except in the presence of at least one Director or the Company Secretary or such other person(s) as the Board may appoint for the purpose.

AUDITORS

Article 85

The Company shall, at each Annual General Meeting, appoint an Auditor(s) to hold Office until the next Annual General Meeting. The rights and duties of the Auditors shall be regulated in accordance with Sections 224 to 234 of the Act.

DOCUMENTS AND SERVICE OF DOCUMENTS

Article 86

A document (which expression for this purpose shall be deemed to include and shall include any summon, notice, requisition, process, order, judgment or any other document in relation to or in the winding up of the Company) may be served or send by the Company on or to any Member in the manner prescribed by Section 53 of the Act. Article 87

Every person, who by operation of law, transfer or by other means whatsoever, shall become entitled to any share, shall be bound by every document in respect of such shares which, previously to his name and address being entered on the register shall have been duly served on or send to the person from whom he derives his title to such share Members bound by documents sent to previous holders. Article 88

All notice to be given on the part of Member shall be left at or sent by registered post or under certificate of posting to the registered office of the Company. Service of notice by Members.

Article 89

Any notice to be given by the Company shall be signed by such Director or Secretary or officer as the Board may appoint. The signature on any notice to be given by the Company may be written or printed or lithographed or be affixed by any other mechanical means.

AUTHENTICATION OF DOCUMENTS

Article 90

Save as otherwise expressly provided in the Act or these Articles a document or proceeding requiring authentication by the Company may be signed by a Director and / or Secretary or an Authorized Officer of the Company and need not be under its seal.

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NOTICES

Article 91

a) The notice for each Board Meeting shall be required to be given to each Director of the Company, whether residing in India or abroad, at the address given, by such Director to the Company.

b) The notice for each General Meeting shall be given to all Members, whether in India or abroad, existing on the date of such notice and whose name appears in the Register of Members. Such notice shall be given to all Members, at the address specified in the Register of Members, or at such other address as the Member may have specified in writing to the Company at least thirty (30) days prior to the date of such notice.

c) The notices mentioned above may be sent by registered post, courier, facsimile, telex or any other form of electronic communication capable of making a written record.

d) A document (which expression for this purpose shall be deemed to include and shall include any summon, notice, requisition, process, order, judgment or any other document in relation to or in the winding up of the Company) may be served or send by the Company on or to any Member in the manner prescribed by Section 53 of the Act.

e) Every person, who by operation of law, transfer or by other means whatsoever, shall become entitled to any share, shall be bound by every document in respect of such shares which, previously to his name and address being entered on the register, shall have been duly served on or sent to the person from whom he derives his title to such share Member.

f) All notices to be given on the part of Member shall be left at or sent by registered post or under certificate of posting to the registered office of the Company.

g) Any notice to be given by the Company shall be signed by such Director or Secretary or officer as the Board may appoint. The signature on any notice to be given by the Company may be written or printed or lithographed or be affixed by any other mechanical means

WINDING UP

Article 92

If the Company shall be wound up, and the assets available for distribution among the Member as such shall be insufficient to repay the whole of the paid up capital, such assets shall be distributed so that as nearly as may be the losses shall be borne by the Members in proportion to the capital paid up, or which ought to have been paid up (other than the amount of calls paid in advance), at the commencement of the winding up, on the shares held by them respectively, and if in a winding up, the assets available for Distribution of Assets distribution among the Members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst the Members in proportion to the capital at the commencement of the winding up or which ought to have been paid on the share held by them respectively. But this clause is to be without prejudice to the rights of the holders of shares issued upon special terms and condition.

Article 93

a) If the Company shall be wound up, the liquidator may, with the sanction of a special resolution of the Company and any other sanction required by the Act, divide amongst the Members, in specie or kind, the whole or any part of the assets or the Company, whether they shall consist of property of the same kind or not.

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b) For the purpose aforesaid, the liquidator may set such value as he deems fair upon the property and may determine how such division shall be carried out as between the Members or different classes of Members.

c) The liquidator may, with the like sanction, vest the whole or any part of the assets in trustees upon such trusts for the benefit of the contributors as the liquidator, with the like sanction, thinks fit, but so that no Member shall be compelled to accept any shares or other securities whereon there is any liability. Distribution in Specie and kind

INDEMNIFICATION

Article 94

Subject to the limitations included in this article, every person or entity who is, or has been, a Director or Officer of the Company who is made, or threatened to be made, a party to any claim, action, suit or proceeding in which such person or entity becomes involved as a party or otherwise by virtue of being, or having been, a Director or Officer of the Company, shall be indemnified by the Company, to the fullest extent permitted under the laws of India, concerning (a) any and all liabilities imposed on such person or entity, including judgments, fines and penalties, (b) any and all expenses, including costs and attorneys fees, reasonably incurred or paid by such person or entity, and (c) any and all amounts paid in settlement by such person or entity in connection with any such claim, action, suit or proceeding. A Director or Officer shall, however, have no right to be indemnified against any liability in any matter if it shall have been finally determined that such liability resulted from the willful malfeasance, bad faith or gross negligence of such Director or Officer. Furthermore, a Director or Officer shall have no right to be indemnified against any liability in any matter if it shall have been finally determined that such person or entity did not Act in good faith and in the reasonable belief that its action was in the best interests of the Company. The right to indemnification herein provided may be insured against by policies maintained by the Company and shall not affect any rights of indemnification to which any person or entity may be entitled by contract or otherwise.

SECRECY CLAUSE

Article 95

Every Director, Manager, Auditor, Treasurer, member of a Committee, servant, agent, accountant or other person employed in the business of the Company shall, if so required by the Directors, before entering upon his duties, sign a declaration pledging himself to observe strict secrecy respecting all transactions and affairs of the Company with the customers and the state of accounts with individuals and in matters relating thereto, and shall by such declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his duties except when required so to do by the Directors or by law or by the person to whom such matters relate and except and so far as may be necessary in order to comply with any of the provisions in these presents contained.

Article 96

No members shall be entitled to visit or inspect any works of the Company without the permission of the Directors or to require discovery of or any information respecting any details of the Company's trading, or any matter which is or may be in the nature of a trade secret, mystery of trade, secret process of any other matter which may relate to the conduct of the business of the Company and which in the opinion of the Directors, it would be inexpedient in the interest of the Company to disclose.

GENERAL POWER

Article 97 Wherever in the Companies Act 1956, it has been provided that the Company shall have right, privilege or authority or that the Company could carry out any transaction only if the Company is so authorised by its articles, then and in that case this regulation hereto authorises and empowers the Company to have such rights, privilege or authority and to carry such transactions as have been permitted by the Act, without there being any specific regulation in that behalf herein provided

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SECTION IX: OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following Contracts (not being contracts entered into in the ordinary course of business carried on by our Company or entered into more than two years before the date of this Draft Red Herring Prospectus) which are or may be deemed material have been entered or to be entered into by our Company. These contracts, copies of which have been attached to the copy of this Draft Red Herring Prospectus, delivered to the Registrar of Companies Maharashtra, Mumbai for registration and also the documents for inspection referred to hereunder, may be inspected at the registered office of our Company from 10.00 am to 4.00 pm on working days from the date of the Draft Red Herring Prospectus until the Bid/Issue Closing Date. Material Contracts to the Issue

1. Engagement Letter dated March 19, 2010 for appointment of Edelweiss Capital Limited as the

BRLM. 2. Issue Agreement between our Company and the BRLM dated March 30, 2010. 3. Memorandum of Agreement between our Company and Registrar to the Issue, dated March 22,

2010. 4. Escrow Agreement dated [●], between our Company, the BRLM, the Syndicate Members, the

Escrow Banks and the Registrar to the Issue. 5. Syndicate Agreement dated [●], between our Company, the BRLM and the Syndicate Members. 6. Underwriting Agreement dated [●], between our Company, the BRLM and the Syndicate

Members. Material Documents

1. Our Company’s Memorandum and Articles of Association, as amended. 2. Our Company’s certification of incorporation. 3. Board resolutions dated February 12, 2010 in relation to the Issue. 4. Shareholders’ resolutions dated February 16, 2010 in relation to the Issue. 5. Scheme of Capital Reduction approved by the Hon’ble High Court of Bombay vide its order dated

December 18, 2009 and supplementary order dated January 28, 2010. 6. Scheme of Amalgamation approved by Hon’ble High Court of Bombay vide its Order dated April

11, 2007 7. Joint Venture Agreement dated February 12, 2008 between The Red Snapper (M) Sdn Bhd, our

Company and Red Snapper Wireless India Private Limited 8. Share Subscription and Purchase Agreement dated March 30, 2010 entered into between Mrs.

Rambhaben Ukabhai, Mrs. Gita T. Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti through their representative Mr Jitendra R Tanti and our Company

9. Report dated March 26, 2010 in connection with the valuation carried out by SSPA & Company,

Chartered Accountants in relation to the proposed DOPL Acquisition

10. Deed of Termination dated March 30, 2010 between Mrs. Rambhaben Ukabhai, Mrs. Gita T.

Tanti, Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti through their representative Mr Jitendra R Tanti, our Company and Digital Outsourcing Private Limited

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11. Escrow Agreement dated March 30, 2010 between Mrs. Rambhaben Ukabhai, Mrs. Gita T. Tanti,

Mrs. Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti through their representative Mr Jitendra R Tanti, our Company and YES Bank Limited

12. Shareholder dated March 30, 2010 between Mrs. Rambhaben Ukabhai, Mrs. Gita T. Tanti, Mrs.

Sangita V. Tanti, Mrs. Lina J. Tanti and Radha Girish Tanti through their representative Mr Jitendra R Tanti, our Company, and Digital Outsourcing Private Limited

13. Option Agreement dated March 22, 2010 entered into between YOU Telecom (Mauritius) Limited

and Sean George Cronin Sutcliffe 14. Advertising agreement dated February 3, 2007 between Bennet, Coleman & Company Limited and

our Company 15. Business Transfer Agreement dated April 05, 2007 between Icenet.Net Limited and our Company 16. Option Agreement dated March 23, 2010 entered into between YOU Employee Welfare Trust and

Girish Kasthuri Rangan 17. Restated financial statements of You Broadband & Cable India Limited as of and for the years

ended March 31, 2005, 2006, 2007, 2008 and 2009 and as of and for the six months ended September 30, 2009, and the report thereon of B S R & Associates, Chartered Accountants.

18. Restated standalone and consolidated financial statements of Digital Outsourcing Private Limited

as of and for the years ended March 31, 2008 and 2009 and as of and for the six months ended September 30, 2009, and the report thereon of B S R & Company, Chartered Accountants.

19. Statement of Tax Benefits from B S R & Associates, Chartered Accountants dated March 22, 2010

– Auditor’s Report on possible Income-tax benefits available to our Company and its shareholders. 20. Copies of annual reports of our Company for the years ended March 31, 2005, 2006, 2007, 2008

and 2009. 21. Consent of B S R & Associates, Chartered Accountants, for inclusion of their name in the Draft

Red Herring Prospectus. 22. Consent of B S R & Company, Chartered Accountants, for inclusion of their name in the Draft Red

Herring Prospectus. 23. Consents of BRLM, Syndicate Members, Registrar to the Issue, Escrow Collection Bank(s),

Bankers to the Issue, Domestic Legal Counsel to the Issuer, International Legal Counsel to the BRLM, Directors of our Company, Company Secretary and Compliance Officer, as referred to, in their respective capacities.

24. IPO Grading Report dated [●] by [●] 25. Listing Agreement dated [●] with [●]. 26. Initial listing applications, dated [●] and [●] filed with the BSE and the NSE, respectively. 27. In-principle listing approval dated [●] and [●] from the BSE and the NSE, respectively. 28. Tripartite Agreement among NSDL, our Company and the Registrar to the Issue dated [●]. 29. Tripartite Agreement among CDSL, our Company and the Registrar to the Issue dated [●]. 30. Due diligence certificate dated March 30, 2010 from the BRLM to SEBI.

31. SEBI observation letter No. [●] dated [●].

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Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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APPENDIX A – IPO GRADING REPORT

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