1.  Basis of preparation of financial statements
 
 The financial statements are prepared under the historical cost
 convention, on the accrual basis of accounting in accordance with the
 accounting principles generally accepted in India (''Indian GAAP'') and
 comply with the Companies (Accounting Standards) Rules, 2006 issued by
 the Central Government, in consultation with National Advisory
 Committee on Accounting Standards (''NACAS'') and relevant provisions of
 Companies Act, 1956 (''the Act'') to the extent applicable.
 
 2.  Use of estimates
 
 The preparation of the financial statements requires the management of
 the Company to make estimates and assumptions that affect the reported
 amount of assets and liabilities and disclosures relating to the
 contingent liabilities as at the date of financial statements and
 reported amounts of income and expenses during the period.  Examples of
 such estimates include provisions for doubtful debts and advances,
 employee benefits, provision for income taxes, impairment of assets and
 useful lives of fixed assets.
 
 3.  Fixed assets
 
 i. Fixed assets are stated at cost of acquisition or construction, less
 accumulated depreciation and impairment loss, if any. Cost includes
 inward freight, duties, taxes and all incidental expenses incurred to
 bring the assets to their present location and condition.
 
 ii. Fixed assets received as gifts from other Foreign Telecom Carriers
 / vendors are capitalised and credited to capital reserve on the basis
 of notional cost (cost assessed by customs authorities). Cost includes
 inward freight, insurance and customs duty.
 
 iii. Intangible assets in the nature of Indefeasible Rights of Use
 (IRUs) for international and domestic telecommunication circuits are
 classified under fixed assets. IRU agreements in respect of these
 intangibles transfer substantially all the risks and rewards of
 ownership.
 
 iv.  Jointly owned assets are capitalised in proportion to the
 Company''s ownership interest in such assets.
 
 v. Costs of borrowing related to the acquisition or construction of
 fixed assets that are attributable to the qualifying assets are
 capitalized as part of the cost of such asset. A qualifying asset is
 one which necessarily takes a substantial period to get ready for its
 intended use. All other borrowing costs are recognized as expenses in
 the periods in which they are incurred in accordance with the
 Accounting Standard on Borrowing Costs (AS-16) notified by the
 Companies (Accounting Standards) Rules, 2006.
 
 4.  Depreciation
 
 Depreciation is provided on the straight line method (SLM), at the
 rates and in the manner prescribed in Schedule XIV of the Companies
 Act, 1956 except as follows:
 
 Assets Rates of Depreciation /Period of amortisation
 
 i) Plant and Machinery
 
 a.  Land cables 6.33%
 
 b.  Earth station and switches 7.92%
 
 c.  Other Networking equipments 11.88%
 
 d.  Customer premises cables & equipments 19.00%
 
 ii) Indefeasible Rights of Use (IRU''s) Life of IRU or period of
 agreement,whichever is lower
 
 iii) Leasehold Land Over the lease period
 
 iv) Goodwill Over a period of 60 months These rates are not less than
 those prescribed under Schedule XIV to the Companies Act, 1956.
 
 5.  Impairment
 
 At each balance sheet date, the Company reviews the carrying amounts of
 its fixed assets to determine whether there is any indication that
 those assets suffered an impairment loss. If any such indication
 exists, the recoverable amount of the asset is estimated in order to
 determine the extent of the impairment loss. The recoverable amount is
 the higher of an asset''s net selling price and value in use. In
 assessing the value in use, the estimated future cash flows expected
 from the continuing use of the asset and from its ultimate disposal are
 discounted to their present values using a pre-determined discount rate
 that reflects the current market assessments of the time value of money
 and risks specific to the asset.
 
 6.  Operating Leases
 
 Lease arrangements where the risk and rewards incidental to ownership
 of an asset substantially vest with the lessor are classified as
 operating leases.
 
 Rental income and rental expenses on assets given or obtained under
 operating lease arrangements are recognised on a straight line basis
 over the term of the lease.
 
 7.  Investments
 
 Long-term investments are valued at cost less provision for other than
 temporary diminution in value.
 
 Current investments comprising investments in mutual funds are stated
 at the lower of cost or market value, determined on an individual
 investment basis.
 
 8.  Inventory
 
 Inventories are valued at the lower of cost or net realisable value.
 Cost includes all expenses incurred to bring the inventory to its
 present location and condition. Cost is determined on a weighted
 average basis.
 
 9.  Employee benefits
 
 i.  Short term employee benefits
 
 The undiscounted amount of short term employee benefits expected to be
 paid in exchange for services rendered by employees is recognized
 during the period when the employee renders the service. These benefits
 include compensated absences such as paid annual leave and performance
 incentives payable within twelve months.
 
 ii.  Post employment benefits
 
 Contributions to defined contribution retirement benefit schemes are
 recognized as expenses when employees have rendered services entitling
 them to the contributions.
 
 For defined benefit schemes, the cost of providing benefits is
 determined using the Projected Unit Credit Method, with actuarial
 valuations being carried out at each balance sheet date. Actuarial
 gains and losses are recognized in full in the profit and loss account
 for the period in which they occur. Past service cost is recognized
 immediately to the extent that the benefits are already vested, and
 otherwise is amortized on a straight-line basis over the average period
 until the benefits become vested.
 
 The retirement benefit obligation recognized in the balance sheet
 represents the present value of the defined benefit obligation as
 adjusted for unrecognized past service cost, and as reduced by the fair
 value of scheme assets. Any asset resulting from this calculation is
 limited to past service cost, plus the present value of available
 refunds and reductions in future contributions to the scheme.
 
 10.  Revenue recognition
 
 i.  Revenues from Telephony services are recognised at the end of each
 month based upon minutes of traffic completed in such month.
 
 ii.  Revenues from Global Data Managed Services (GDMS) are recognised
 over the period of the respective arrangements based on contracted fee
 schedules.
 
 iii. Revenues from right to use of fibre capacity provided based on IRU
 are recognised over the period of such arrangements.
 
 iv.  Revenues from Internet Telephony services are recognised based on
 usage.
 
 v. Revenue on account of subscription for providing internet access and
 broadband services is recognised on accrual basis in the year in which
 the access is provided. In cases where services are provided through a
 cable operator, revenue is shared between the cable operator, master
 distributor and the Company in terms of the agreement.
 
 vi. Revenue on account of registration fees for providing internet
 access is recognised in the year in which access is provided.
 
 vii. Transactions with providers of telecommunication services such as
 buying, selling, swapping and/or exchange of traffic are accounted for
 as non-monetary transactions depending on the terms of the agreements
 entered into with such telecommunication service providers.
 
 viii. Dividends from investments are recognized when the right to
 receive payment is established and no significant uncertainty as to
 measurability or collectability exists. Interest on bank deposits is
 recognised on accrual basis.
 
 11.  Taxation
 
 i. Current tax expense is determined in accordance with the provisions
 of the Income Tax Act, 1961. Deferred tax assets and liabilities are
 measured using the tax rates, which have been enacted or substantively
 enacted at the balance sheet date. Deferred tax expense or benefit is
 recognized on timing differences being the differences between taxable
 incomes and accounting incomes that originate in one period and are
 capable of reversing in one or more subsequent periods.
 
 ii. In the event of unabsorbed depreciation and carry forward of
 losses, deferred tax assets are recognised only to the extent that
 there is virtual certainty that sufficient taxable income will be
 available to realise these assets. In other situations, deferred tax
 assets are recognised only to the extent that there is reasonable
 certainty that sufficient future taxable income will be available to
 realise these assets.
 
 iii. Provision for current income taxes and advance taxes arising in
 the same jurisdiction are presented in the balance sheet after
 offsetting on an assessment year basis.
 
 12.  Foreign currency transactions
 
 i. Foreign currency transactions are converted into Indian Rupees at
 rates of exchange approximating those prevailing at the transaction
 date or at average exchange rate during the transaction month. Foreign
 currency monetary assets and liabilities are translated to Indian
 Rupees at the closing rate prevailing on the balance sheet date.
 Exchange differences on foreign currency transactions are recognized in
 the profit and loss account.
 
 ii. Premium or discount on forward contracts are amortised over the
 life of such contracts and recognised in the profit and loss account.
 Forward contracts outstanding as at the balance sheet date are stated
 at exchange rates prevailing at the reporting date and any gains or
 losses are recognised in the profit and loss account. Profit or loss
 arising on cancellation or enforcement/exercise of forward exchange is
 recognised in the profit and loss account in the period of such
 cancellation or enforcement/exercise.
 
 13.  Earnings per share
 
 Basic earnings per share are calculated by dividing the net profit or
 loss for the year attributable to equity shareholders (after deducting
 preference dividends and attributable taxes) by the weighted average
 number of equity shares outstanding during the year. The weighted
 average number of equity shares outstanding during the year is adjusted
 for events if any of bonus issue to existing shareholders and share
 split.
 
 14.  Contingent Liabilities and Provisions
 
 Provisions are recognised in respect of present probable obligations,
 the amount of which can be reliably estimated.  Contingent Liabilities
 are disclosed in respect of possible obligations that may arise from
 past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company.