Your company, Spice Communications Ltd., which operates under the brand
 Spice Telecom in the circles of Punjab and Karnataka is celebrating its
 first of year of relationship with you. This is the first Annual Report
 after the listing of the equity shares on the Bombay Stock Exchange on
 July 19, 2007. I must congratulate and thank you all on the excellent
 support and response received by your company during the IPO.
 
 Your companys offering at the IPO was oversubscribed 37 times, raising
 Rs. 632.24 Crores. The money raised through the IPO was utilized in
 part payment of long term debt, payment of licenses fee for NLD and ILD
 operations, as well as some capital expenditure linked expenses and
 payment to vendors for network equipment.
 
 We are in a day and age when the world is becoming increasingly smaller
 by virtue of significant developments in Telecommunications - and
 specifically mobile communications.  India is at the forefront of this
 mobile renaissance and revolution, and your company is actively playing
 a role in catalyzing growth of the mobile society.
 
 India is today the worlds fastest growing mobile communications
 market, with teledensity levels of 24% and penetration exceeding 280
 million as per figures released by theTRAI in December 2007.
 
 As I look back over the year of CY2007,1 feel a great sense of
 
 satisfaction and pleasure at having been able to build better brand and
 financial value, improve business performance and deliver very
 satisfactory results.
 
 It is my pleasure to report a very strong financial performance by your
 company for the year ended December 31, 2007. We closed the year with
 Gross Revenues of Rs. 1473.88 Crores, EBIDTAof Rs. 739.62 Crores, PAT
 of Rs. 380.13 Crores, EPS at Rs. 6.15 and Net Worth at Rs. 857.93
 Crores.
 
 This year has been especially good for your company: we have been able
 to increase our subscriber base substantially to 3.8 million at the end
 of December 31, 2007. We have rationalized our operational costs, moved
 towards outsourced infrastructure capacity building and enhanced
 infrastructure utilization.
 
 Further, your company decapitalized Fixed Assets through the sale of
 Passive Infrastructure or Cell Sites amounting to a Written Down Value
 of Rs. 729 Crores booking a profit of over Rs. 439 Crores.
 
 During the year, we have also modified its existing arrangements for
 operating lease with an Infrastructure Service Provisioning Provider
 for Passive Infrastructure leasing.  Liabilities with respect to the
 earlier operating lease- arrangements on account of straight lining of
 expenses amounting to Rs 25 Crores has been written back in the current
 year Profit and Loss Account and included in other income.
 
 Like always, we aim to strengthen our position with Innovation as our
 key strength and corporate mantra. Your company has always sought to
 bring innovative services and products to its customers, acting as an
 industry pioneer in several areas of Value Added Services.
 
 Your company In terms of innovative market -first solutions and
 services, such as the 999 Spice Handset bundle, the Push Mail and
 E-Berry GPRS based email services on your phone, as well as other
 groundbreakers such as Smart Dial, Call Filter, Incoming Block, several
 thousand songs on Music Station, Mobile Radio etc. Importantly, Spice
 Telecom has increased its network coverage by adding more than 700
 towns across its two circles in 2007.
 
 The Future is bright and we are confident of a high growth trajectory.
 There have been some very positive moves by the Department of Telecom
 and the TRAI in opening up the mobile communications industry and
 encouraging several new players.
 
 It gives me great pleasure to say that your company has received
 licenses to operate in four new premium circles of Delhi, Haryana,
 Andhra Pradesh and Maharashtra in 2008.
 
 These new licenses allows your company a strategic advantage for
 geographic and demographic positioning in two triangular regional
 market- Punjab acting as the operating base and pivot for Delhi &
 Haryana, and likewise Karnataka would serve the same purpose with
 Maharashtra and Andhra Pradesh.
 
 Your company is very confident of getting more licenses as we lead the
 queue for more licenses in 12 circles and stand second in 3 circles, by
 virtue of the date of application. Should we get the desired licenses,
 it would eventually give your company pan-India market coverage.
 
 Spice Telecom has had phenomenal growth in the recent past, and we are
 confident of continuing the momentum going forward as well. We intend
 maintaining and sustaining this good momentum. We will continue to
 strengthen the brand - using the guidance of our brand values of Fun,
 Empathy, Speed of Response, Trust, Innovation and Vibrancy. These brand
 elements are intrinsic to the brand ethos & character of our company
 and stand out as the pillars of the business connecting with the youth
 and next generation.
 
 We will strive as a team to deliver more value as we go along, and your
 company needs your unstinted support in achieving greater heights. Only
 then, we will achieve our vision : To be the most preferred brand of
 energetic young minds by 2011.
 
 I wish you all a great future ahead with Spice  
 
                                                       Best regards
 
                                           Dr. Bhupendra Kumar Modi
                                                           Chairman