Greetings ladies and gentlemen. Good morning and welcome to the Sify Limited conference call for the earnings results for the first quarter ending June 30, 2007. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to introduce you to your host for the conference Ms. Truc N. Nguyen, Investor Relations for Sify Limited. Thank you, you may begin.

Thank you Diego. I would like to extend a warm welcome to all our participants today on behalf of Sify Limited. I'm joined on the call by Raju Vegesna, Chairman and CEO, Sify Limited, Suri Venkat, Chief Operating Office and Pijush Das Chief Financial Officer of Sify Limited. Following our comments on the results there will be an opportunity for questions. If you do not have a copy of our press release please call the Global Consulting Group at 646 284 9407 and we will have one sent to you. Alternatively you can obtain a copy of the release at the investor information section of the company's corporate website at www.sifycorp.com. A replay of today's call may be accessed by dialing in on the numbers provided in the press release or by accessing the webcast in the investor information section of the Sify website. Some of the financial measures referred during this call and in the earnings release may include non-GAAP measures. A presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of such non-GAAP measures other differences between such non-GAAP measures and the most comparable financial measures calculated and presented in accordance with GAAP are also available at Sify's website. Before we continue I would like to point out that certain statements contained in the earnings release and on this conference call are forward-looking statements rather than historical facts, that are subject risk and uncertainties that could cause actual results to differ materially from those described. With respect of such forward-looking statements the company seeks protection afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors including competitive developments and risk factors listed from time to time in the company's SEC reports and public releases. Those listed are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements but are not intended to represent a complete list of all risks and uncertainties inherent to the company's business. I would not like to introduce Mr. Raju Vegesna, Chairman and CEO of Sify. Raju.

Thank you Truc. I would like to welcome everyone on the call once again, thank you for joining us. I will now commence with the opening remarks on our performance in the last quarter. I believe we have set in place the people and processes to scale the businesses going forward over the next three quarters of the year. We continue to forego our alliances with global leaders such as Microsoft and NEC to offer solutions tailored to the needs of Indian market, to catalyze growth. And we also entered into an alliance with the large Indian infrastructure provider and benefits of this association will be felt going forward. During the last few quarters we focused on integrating our enterprise business with the strategy of offering end-to-end managed services for companies in India. In the last quarter we forged our consumer offerings into a single integrated solution to unlock the synergies across our portal, cyber cafés and the broadband to home. We also developed a new model for the iWays which shows a lot of promise. We intend to market our services aggressively once our strategies are in place to accelerate growth, and for a large share of the growing Indian market for the services we offer, I am confident that the results of all this initiatives will see growth and profitability as planned for the year. Now I request Pijush to take you through our financial performance for the last quarter.

Thank you Raju. Hello everyone, I shall now go into details of our financial performance for the quarter. Our revenues were $34.6 million for the quarter, 6.6% higher than the quarter ended June 30, 2006. Net loss for the quarter was $1.27 million, compared to a net profit of $1.54 million in the same quarter of the previous fiscal year. Our net profit for the quarter was impacted due to the following reasons. Provision of doubtful debts, overdue amounts carried on the books for a period of time amounted to $1.28 million during the quarter, considerably less than in previous quarters. Add an exchange loss of $0.4 million incurred on account of the stronger rupee against the dollar, compared to the exchange gain of $1.1 million in the same quarter of the previous fiscal year. We managed to minimize the impact of the strength of the rupee against the dollar, once again with some timely financial measures. Cash profit for the quarter in adjusted EBITDA terms was $1.66 million compared to $4.55 million the same quarter of the previous fiscal year. We continue to generate cash from operations and will continue to invest for growth going forwards. We ended the quarter with a cash balance of $46.7 million after capital expenditure of $6.71 million during the quarter. These investments were primarily in network expansion, new office space, equipment and expansion of the datacenter in Mumbai. The financial initiators taken over the last two quarters to manage receivables are now delivering results. Management of collections is under control with a continuing decrease in doubtful debts. We are investing in software and process across operations and customer care to continue to improve the reliability of our services, and the quality of response to our customers. These initiatives are based on our continued focus on efficiencies to drive up margins going forwards. The results of these investments over the next few quarters will be felt as we scale up our businesses. As the stage is set we will now invest in building the businesses through aggressive marketing and sales initiatives going forwards. I will now handover to Suri who will take you through some of the key initiatives during the quarter. Suri.

Thanks Pijush. Morning everyone. During the last quarter we want to synergize our enterprise offerings so that we could leverage these comprehensive services with new customers, as well expand engagements with existing customers. We continue to gain new customers as well as additional business from our existing customers based on our new approach. We believe our efforts going forwards will accelerate the planned aggressive marketing of the services in the future. Arvind Mathur's addition to the team also helped us to customize new offerings and services based on market segments and opportunities, helping us to become more competitive. Our partnership with Microsoft across businesses includes offering Microsoft Enterprise Messaging and business applications to the enterprise market in India. We have also entered into a partnership with O4 Corporation, Australia's leading provider of mobile field sales, marketing and merchandising solutions to provide business mobility applications. With this partnership O4 Corporation will provide a suite of field force solutions to enterprise customers in India through Sify's supply chain and mobility platform, or Forum, which is a registered product. We continue to grow our international business for both remote infrastructure management and corporate e-learning services. Both lines of business are seeing excellent customer attraction with several important events in the last quarter. We are also seeing the benefit of opening our London and Dubai offices with a potentially large engagement in the UK and new business opportunities in the Middle East. We have entered into an agreement with Spice Telecom in the States of Karnakata and Punjab where they have licensed circles to carry their wireless traffic on our network infrastructure. Spice therefore becomes a large customer who will utilize a large capacity of our network across the country and internationally. We are similarly exploring tie-ups with two other companies in this space.…

Thank you Suri. In conclusion, I would like to state that the task of realigning the company in terms of people, processes and strategies is well underway. We will see the full benefits of this going forward. We will aggressively promote our services in the coming quarters to drive growth, profitability now that we are confident our systems and processes are well set. I would like to reiterate that our goal remains the same, smart growth in every business so that we unlock the synergies across businesses and grow them fast and grow them profitably. Now I hand over to the operator for questions. Operator?

(Operator Instructions) Our first question comes from Sameet Sinha with Kaufman Brothers. Please state your question.

Yes, good morning; I have actually a few questions. You speak about new aggressive sales and marketing strategies going forward. Can you give us some sort of a timeline, does this begin this quarter or probably the next one? And could you give examples of how you plan to implement these aggressive strategies in your enterprise business and then in your consumer business?

Sameet, this is Raju. Basically, we cleaned up some of the strategies, some of the alignment processes. We integrated the solutions going forward for this and, for example, in the enterprise business our network expansion we are planning to go aggressively. That means we are going to reach more cities, more places. And similarly, on the datacenters we are planning to starting building more datacenters across the country. On the consumer side, again we combine our iWays operations and the broadband to home operations and we are trying to reach more iWays with, not only just as a browsing, as a value-add services across our consumers, not only the iWay consumers, also broadband consumers. We currently have a coherent story coming to Sify consumer either to the iWays and to the broadband.

Sure. Okay.

So we have started actually coming from last quarter and marketing and starting already from the end of this quarter and, here, and the next quarter.

Right.

Yes, Suri?

Hi, Sameet, Suri here. Just a couple of things I wanted to add on. Based on the 80/20 principle we have also segmented the Indian market from Sify's perspective into key accounts and non-key accounts. And we have taken on senior people from industry to drive the key account clients where each of the key accounts have been mapped to individual sales persons and the mid-level and senior people, which is where we talk about going forward aggressively.

Right, so you now have account managers specifically targeting these larger. How about the consumer services, what sort of marketing do you…?

To answer that thing, Sameet is at this point I think our strategies for the enterprise is very clear and it's a question of the scaling and opportunities. On the consumer side, we just started this quarter. Probably it's going to take one or two quarters to clean up complete plans, but we started integrating and the direction is clear.

Okay, excellent. The new format for these iWays, you spoke about the various sizes of these cafes, now who incur the capital expenditure? That would be the first question. And the second is, would you -- will these new formats be retrofitted into the existing iWays or these are only for the new ones?

Answer one is that the CapEx is incurred by the franchisee. And answer two, the second part of the question is, some of the new cafes that we signup will be based on the additional signup opportunities on these additional services. But where there are existing cafes in terms of location and size that are suitably located, some of these initiatives will be rolled out with the existing cafes, also.

Do you fear any disruption in the operations of these older cafes, or these are performing sub-par so that is why you decided to retrofit them?

No, it's neither of these two, it is to do with the location of the cafe because these new initiatives that we're talking about are relatively up-scale. So it's important for the cafe to be located in the right place. And we don't see any disruption because bringing in these new services will probably take about four to five days of work and nothing beyond that.

Okay. In terms of the, and you mention in your press release about how the broadband subscribers had dropped off and how you started a new initiative to get them back, can you talk about the seasonality in that business when summer vacation starts so you see a significant churn? Should we expect this to end by the end of summer vacation time?

So, in general, if you look at in the broadband to the home the churn what we are seeing is, Sameet, is the overall market of the broadband in India growth, it is basically people are turning between the operators. So the things we are facing is, the people, you know, the broadband is still new in this country, it's an emerging market and the important thing is bringing the proper quality levels into the business. So that is where we are focusing going forward. And on top of it, it's not just any more just the connectivity and the PC hardware and what kind of services you're going to, you add to make it an attractor for the broadband user. Those are the things we are focusing.

In terms of the new Microsoft IQ PC initiative, you are offering 100 free hours of service to whoever buys the IQ PC. Are you going to ship discs along with the PCs or is it like an icon on the desktop?

This will be an icon on the desktop.

Okay. Thank you very much.

Thank you.

Our next question comes from Trip Chowdhry with Global Equities Research. Please state your questions.

Thank you. A couple of questions, here. First regarding the sales and marketing increase that you'll be doing which you definitely require to bring numbers out. I was wondering, how many people are you thinking of hiring in India? And how many people are you thinking of hiring in the U.S. or U.K.?

In total we are looking at hiring in the next 12 months 300 to 400 people.

And they will all be based in India? Or they'll be based in…?

No, it's across, both India and internationally. We are formulating, Trip, our Indian strategies are very clear. Now, we are formulating the strategies for international markets.

Okay. And regarding the datacenters that you are trying to create, are they ISO70 certified?

Some of…

That's the standard for, if the reason I'm asking is, tomorrow or down the road if you have ISO70 certified datacenters then probably companies like Salesforce.com or new generation companies who are trying to provide software as a service they could host it on your datacenters, but that's…?

All our centers are already certified.

Perfect. Now, I was wondering, of course all the initiatives you guys are doing is entrusting, but, being just an outsider and being on the phone call, it's my impression, probably you can help us articulate it better. It seems like you're doing many things at the same time and it's probably going to dilute your impact. I was thinking, wouldn't it make sense like you have a say a six month initiative like this six months we are going to put forth and really win against Google or Yahoo when it comes to consumer or it’s sites. Then the next six months you are going to go and capture at least 10 major deals in infrastructure outsourcing, because after hearing your prepared remarks it seems you want to do many things at the same time and it's probably going to dilute it. Any cost you probably have that execution already in place somewhere; we couldn't hear it.

Trip, Suri here. Can you hear me?

Yes, I can. Go ahead.

Yeah. Are you referring to the consumer side, or enterprise?

I'm referring to the whole story. It seems like you are doing a lot of stuff, because from the size of your company you seem like you're acting like a very big company, that is good. But it seems like your efforts are getting diluted, like you want to enhance cyber cafes, in cyber cafes you have 10 different initiatives, on the enterprise side you have hosting services and then you have Microsoft deals. It seems you are in some shape or form you are like Yahoo, competing with Yahoo and Google, in other space you're competing with Telcos, in the third space you are competing with various data hosting companies. It seems in each and every segment you are fighting against a big competitor without having a lot of force behind it. I mean, that's a bystander's view. Maybe I'm interpreting it wrong? I was thinking, who do you intend to win in each and every category by putting 400 people, it's difficult, but there has to be one key thing that sticks with the customer and so far I haven't got it?

Okay. Let me try and answer that. The key to Sify's entire setup offerings is its basic infrastructure and that infrastructure is common to both the enterprise segment and the consumer segment across the country. The way we go out into the market is basically in Western quality infrastructure, and based on enterprise clients that we sign on we decide on the areas of expansion that we get into. So for rolling out broadband basic services or in the cyber cafe basic services, these ride piggyback on network infrastructure network expansion on the enterprise side. So there is no conflict in terms of strategy of expansion there. On the enterprise side, like we already said to you, we have gone into a focus on concentrating on key clients to get key wins and look at large numbers. And we already have a team put together which is scaling up in terms of numbers to get out into more areas. We have signed some very major deals during the quarter including something led by the Reserve Bank of India where the rollout is over more than 600 locations to start with and getting into a few thousand locations subsequently. So that's the route on the expansion side. Now Sify, which we already talked about again earlier, we don't want to depend purely on connectivity and infrastructure. We are looking at building value-added services on top of that. So what we then do is based on each client that we already work with and large market offerings that come up from time to time, we have put together this key theme to address those opportunities, deep dive into each of these accounts, work with the client in terms of what value-added services that the client requires on top of the basic infrastructure.…

Perfect, I think on this, all the best and again I would congratulate you at least, you are doing a very good job on the strategy for the time, let's see how it stalls out. Thank you very much.

Thank you.

Our next question comes from Joel Cameron with Norberg Capital. Please state your question.

Good morning or good afternoon. You've mentioned, I guess last week you made a very short announcement on this Microsoft and today you made reference to it. I'd like to know a little more about this, but maybe you don't have the opportunity to tell us additional information because you really haven't sat down with Microsoft and figure out what both of you are going to do. I can see Microsoft's side; they're lacking sales and they can't sell their PCs and they want to sell their office suite. So they looked at your cafes and thought, well that might be a good deal. Who's going to train the people that come in the cafes? Is this going to be Sify or is this going to be Microsoft? And number two, what's the revenue sharing going to be like? Can you add more color to this possible arrangement?

Yeah, three aspects about this, three immediate aspects about this alliance with Microsoft. One is about the office suite, two is about education content, and three is on the enterprise side about messaging and collaboration services. To address the messaging and collaboration services first, we are already out there in the market interacting on a day-to-day basis with CTOs and CIOs of various large and medium sized corporates. There is also a mid-level segment there in the country. Our objective is that these are the tools that are coming into India today in a big way; they have not been fully established. So this gives us the opportunity to take these messaging and collaboration tools into Indian enterprise across the country. That's one part. Second part in terms of the cyber cafes and the office suite product, at this point of time a very large anticipation of the users are those people who already know how to use the system. So which means they're already out there in their respective offices who know how to use the system or they're in colleges and they know how to use this system, but they don't have these PCs or access to the PC at home and consequently they use the cyber cafe to get about their business. So there is no specific or additional training that is required in this case…

Okay, sorry, go ahead.

Yeah. On the education front it's a very new initiative. There are a number of independent offerings on the education side across the country, various people have done that. What this initiative that we have got together with Microsoft does is it picks up the best of the content from across the country. And a program has been designed where each student, depending on what his or her curriculum is of study, has a pre-designed desktop which opens our to his or her classroom. And depending on the subjects whether you're eight years old or 15 years old, you have exactly what you need on your desktop and you get into that and use it. The advantage that Sify has today is Microsoft is rolling out this initiative on a pilot basis at this point of time. The advantage that we have today is that we can take this across the country being linked up with them.

Okay, is the incentive here to bring more people into the cafe or are you going to raise your tariff when they're getting, using more sophisticated software programs?

In terms of the office suite you're referring to?

You are offering office suite, Microsoft. That's going to encourage kids to come into your cafe, so are you trying, is this…?

This part of the initiative is about getting more people to come in.

Okay, are you going to increase your tariffs on when they start using the office suite or is it the same tariff?

No it's the same tariff, the people come in and the franchisee and Sify stands to gain with more people coming in and using the cafe. We charge them for browsing hours.

Okay. So the incentive is just to increase customers and not increase price?

Yeah and the average revenue per user goes up and the average revenue per computer goes up.

Okay, minutes of use, yeah. Okay. Thank you very much.

Thank you.

(Operator Instructions) Our next question comes from Sameet Sinha with Kaufman Brothers. Please state your question.

Yes just one follow-up. Can you talk about the CapEx that you expect to spend in the quarter? I mean obviously there are significant initiatives, you also spoke about expanding into enterprise services throughout the country, building out more datacenters, what should we expect in terms of capital expenditure this year?

Yes next quarter is about close to $10 million.

Do you have some sense of what the full year could look like?

Full year would be close to $50 million.

Okay, thank you.

Our next question comes from Ami Shah (ph) with Merrill Lynch. Please state your question.

I'm sorry, I just wanted to understand that in the last quarter conference call you had mentioned that this provision for doubtful debt provisions it would continue for a quarter or more with $1.28 million of provisions that you have done in this quarter. I just wanted to understand whether most of the write-offs are over or should we expect some more provisions going forward?

It would probably be, I mean the numbers would be coming down, but it will continue for one quarter more.

For just one more quarter? Approximately what is the number?

Yes, but I think we are going to come to the -- close to the normal business.

Okay, so for the next quarter you're expecting about $1 million of provisions or…?

That'll be for next.

$1 million?

Potentially, we don't know exactly how much it is.

Okay. Thanks.

Thank you.

There are no further questions at this time. I will turn the conference back to management to conclude.

Thank you everyone for joining us on the call and we look forward to interacting with you all through the quarter and around this time thereafter. Thank you and goodbye.

Thank you. This concludes today's conference, thank you for your participation. All parties may disconnect now.