Net 4 India

The Directors have pleasure in presenting their 21st Annual Report
 together with the Audited Accounts for the year ended March 31, 2007.
 
 Financial Results
 
                                                  (In Rs. Lacs)
                                             Year Ended March 31 2007
 Particulars                              Consolidated       Standalone
 
 Total Income                              10,340.31         6,619.66
 Expenditure                                7,518.46         5,180.90
 Depreciation &                             1,366.02           640.67
 Amortization
 Interest & Finance Charges                   362.84           221.11
 Net Profit before Tax                      1,119.12           720.59
 Provision for Taxation                       370.30           270.51
 (including Deferred Tax)
 Net Profit After Tax                         748.82           450.08
 
 
             2006
 Consolidated       Standalone
 
 7,405.57             5,313.17
 5,425.75             4,210.56
 843.79                 545.26
 242.60                 147.37
 903.37                 564.48
 472.76                 233.91
 430.61                 330.57
 
 Performance
 
 During the year under review, the Company has achieved its targets and
 its performance was reasonably good. The total Consolidated Income of
 the Company increased from Rs.7,405.57 lacs to Rs. 10,340.31 lacs, a
 growth rate of 39.63% and Consolidated Net Profit After Tax increased
 from Rs.430.61 lacs to Rs.748.82 lacs a growth rate of 73.9%.
 
 Operations
 
 Consolidated income for FY 06-07 increased by 39.63 % from Rs.7,405.57
 lacs to Rs.10,340.31 lacs clearly establishing Net 4 as a significant
 player in the market for IP Communications Services. The Company did
 not add many new services during this year as it felt that the service
 areas it currently provisions hold immense potential in terms of market
 size. Having said that, we have systems in place to continually improve
 on our infrastructure, quality of service, customer support and backend
 applications.  The decision to focus on our existing set of services
 has borne fruit this year and also led to better capacity utilization
 across our network/ bandwidth, storage, application and data center
 infrastructure.
 
 During the year, the Company in conjunction with its associate company
 (Trak Online Net India Pvt Ltd) launched the “One World” plan, which
 enables users to make calls to 44 countries at just Re.1 per minute.
 Once again the Company proved to be the leader in this space by passing
 on economies of scale benefits to its customers.
 
 The Directors feel that messaging infrastructure and solutions for
 businesses holds tremendous potential in India and worldwide, hence we
 have spent significant time and money on R&D and application
 enhancements to support multiples of the current customer base.
 
 Another key area in the future will be monetizing of the traffic on our
 network and systems. Being the largest web hosting and hosted email
 services company in the region and among the largest domain
 registration service providers, spanning a customer base of 2,50,000
 customers, the Company is ideally placed to inject a significant
 revenue stream with little incremental infrastructure or personnel.
 
 Dividend
 
 The Board of Directors of the Company have recommended dividend @ 10%
 (Rupee 1 per share) for the year 2006-2007 (previous year 10%) subject
 to approval of members in their ensuing Annual General Meeting.
 
 Directors
 
 Mr. Desi Subri Valli and Mr. Sandip K. Ghosh, Directors will retire by
 rotation at the forthcoming Annual General Meeting and being eligible,
 offer themselves for re-appointment.
 
 Directors’ Responsibility Statement
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956, with respect to Directors’
 
 Responsibility Statement, it is hereby confirmed :
 
 (i) That in the preparation of the Annual Accounts, the applicable
 Accounting Standards had been followed and wherever required, proper
 explanations relating to material departures offered.
 
 (ii) That the Directors had selected such accounting policies and
 applied them consistently and made judgments and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company at the end of the financial year and of the
 profit of the Company for that period.
 
 (iii) That proper and sufficient care has been taken for maintenance of
 adequate accounting records in accordance with the provisions of the
 Act for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities.
 
 (iv) That the accounts have been prepared on a going concern basis.
 
 Personal
 
 The Company builds with care a workplace that provides professional as
 well as personal growth. It acknowledges and appreciates the hard work
 and dedicated efforts put in by all the employees. There is freedom to
 learn, exploit and there are opportunities that inspire initiative. The
 management makes continual efforts to maintain cordial relationships
 with the employees and always encourages them to reach their full
 potential by availing opportunities that arise across the group.
 
 Fixed Deposit
 
 Your Company has not accepted any deposits within the meaning of
 Section 58 A of the Companies Act, 1956. As such, no amount of
 principal or interest was outstanding as of the Balance Sheet date.
 
 Corporate Governance
 
 Your Company is committed to maintain the highest standards of
 Corporate Governance. Your Directors adhere to the requirements set out
 by the Securities and Exchange Board of India’s Corporate Governance
 practices and have implemented all the stipulations prescribed. Report
 on Corporate Governance as stipulated under Clause 49 of the Listing
 Agreement with the Delhi Stock Exchange forms part of the Annual
 Report. Certificate from the Auditors of the Company, M/s. Sandy
 Associates, confirming compliance of conditions of Corporate Governance
 as stipulated under the aforesaid Clause 49, is annexed to this Report.
 
 Mangement Discussion and Analysis Statement
 
 The Company in its Board of Directors meeting held on 30th January,
 2006 has approved code of conduct applicable for all board members and
 senior managerial persons. As per requirement of Listing Agreement,
 provisions of code of conduct are available on Company’s website
 www.net4.in.
 
 Code of Conduct
 
 The Directors and senior managerial persons have been adhering to norms
 of good governance and code of conduct as applicable to them by virtue
 of Listing Agreement and SEBI (Prevention of Insider Trading
 Regulations) 2000. As per requirement of Listing Agreement, provisions
 of code of conduct are available on Company’s website www.net4.in.
 
 Listing
 
 The shares of your Company are listed at Delhi Stock Exchange. The
 Exchange has approved the pending listing of 85 lacs fully paid equity
 shares in December, 2006. The listing fee for the year 2006- 2007 has
 been paid. The Company is taking initiative to get its shares listed on
 Bombay Stock Exchange.
 
 Subsidiary Company
 
 During the year under review, M/s Net 4 Communications Ltd., wholly
 owned subsidiary having its head office at Kolkata has performed well
 and has also declared dividend at the rate of Rs. 2/- per share. This
 subsidiary Company has expanded its operations and now involved in the
 sales of Internet Protocol (IP) based networking and other products and
 services related to the communications and information technology
 industry that address a wide range of customers’ business needs,
 including improving productivity, reducing costs and gaining a
 competitive advantage.
 
 The Company has also promoted a new subsidiary in Singapore in the name
 and style of M/s Net 4 Singapore Pte. Ltd. in the month of December,
 2006. However, this subsidiary could not commence its activities during
 the financial year ended 31.3.2007 and expects to start its activities
 very soon.
 
 In terms of approval granted by the Central Government under Section
 212(8) of the Companies Act, 1956, copy of the Balance Sheet, Profit
 and Loss Account, Report of the Board of Directors and Auditors of the
 subsisting subsidiaries have not been attached with the Balance Sheet
 of the Company. These documents will be made available upon request by
 any Member of the Company interested in obtaining the same. However, as
 directed by the Central Government, the financial data of the
 subsidiaries have been furnished under Details of Subsidiaries forming
 part of the Annual Report. Further, pursuant to Accounting Standard
 AS-21 issued by the Institute of Chartered Accountants of India,
 Consolidated Financial Statements presented by the Company includes
 financial information of its subsidiaries.
 
 Consolidated Financial Statements
 
 In accordance with the Accounting Standard AS-21 on Consolidated
 Financial Statements read with Accounting Standard AS-23 on Accounting
 for Investments in Associates, your Directors provide the audited
 Consolidated Financial Statements in the Annual Report.
 
 Auditors and Auditors’ Report
 
 M/s Sandy Associates, Chartered Accountants, Statutory Auditors of the
 Company, hold office until the conclusion of the ensuing Annual General
 Meeting and are eligible for reappointment. The Company has received
 letters from them to the effect that their reappointment, if made,
 would be within the prescribed limits under Section 224(1B) of the
 Companies Act, 1956 and that they are not disqualified for such
 appointment / reappointment within the meaning of Section 226 of the
 said Act. The Notes on Accounts referred to in the Auditors’ Report are
 self-explanatory and therefore do not call for any further comments.
 
 Technology Absorption and Foreign Exchange Earnings & Outgo
 
 Information as required under the Companies (Disclosure of particulars
 in the report of Board of Directors) Rules, 1988 in respect of Energy
 Conservation, Technology Absorption and Foreign Exchange Earnings and
 Outgo is given in Annexure-I to this report.
 
 Particulars of the Employees
 
 In terms of the provisions of Section 217(2A) of the Companies Act,
 1956, read with the Companies (Particulars of Employees) Rules, 1975 as
 amended, the names and other particulars of the employees are required
 to be set out in the Annexure to the Directors’ Report. However, as per
 the provisions of Section 219(1)(b)(iv) of the said Act, the Annual
 Report excluding the aforesaid information is being sent to all the
 Members of the Company and others entitled thereto. Any member who is
 interested in obtaining such particulars may write to the Company
 Secretary at the Registered Office of the Company. Mr. Jasjit Singh
 Sawhney, Managing Director, Mr. Amarjit Singh Sawhney, Wholetime
 Director and Ms. Biba Sawhney, Director are relatives, particulars
 thereof are given in Corporate Governance Report. None of other
 employees is a relative of any of the Directors.
 
                           for and on behalf of the Board of Directors
 
 
                                                 Sd/-
 Place: New Delhi                          Sandip K. Ghosh
 Dated: 20 June, 2007                          Chairman