Satyam Infoway Limited Form F-3
As filed with
the Securities and Exchange Commission on December 17, 2002
Registration
No. 333-
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Satyam Infoway Limited
(Exact name of Registrant as
specified in its charter)
Not Applicable
(Transaction
of Registrant’s name into English)
Republic of India
(State or other jurisdiction of
incorporation or organization)
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Not Applicable
(I.R.S. Employer
Identification Number)
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Tidel Park, 2nd Floor
No. 4, Canal Bank Road, Taramani
Chennai 600 113
India
(91) 44-254-0770
(Address,
including zip code, and telephone number, including area code, of the
Registrant’s principal executive offices)
CT Corporation System
111 8th Avenue, New York, New York 10011, (212) 894-8940
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Anthony J. Richmond, Esq.
Latham & Watkins
135 Commonwealth Drive
Menlo Park, California 94025
(650) 328-4600
Approximate date of commencement
of proposed sale to the public:
From time to time after the effective date
of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
o
If any of the securities being registered on
this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, check the following box.
x
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration
statement for the same offering.
o
If delivery of this prospectus is expected to
be made pursuant to Rule 434, please check the following box.
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CALCULATION OF
REGISTRATION FEE
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Title of Each
Class of
Securities to be Registered
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Amount to be
Registered (1)
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Proposed Maximum
Offering Price Per
Share (2)
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Proposed
Maximum
Aggregate Offering
Price(2)
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Amount
of
Registration
Fee
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Equity shares, par value Rs. 10 per share, each
represented by one American Depositary Share (3)
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7,558,140
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$2.55
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$19,273,257
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$1,774
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This registration
statement shall also cover any additional equity shares which become issuable by
reason of any stock dividend, stock split, recapitalization or similar transaction effected without
receipt of consideration which results in an increase in the number of equity shares.
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| (2)
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Estimated solely for the
purpose of computing the amount of the registration fee in accordance with Rule
457(c) promulgated under the Securities Act of 1933. The calculation of the registration
fee is based on $2.55 which was the average of the high and low sales prices of the American
Depositary Shares on the Nasdaq National Market on December 13, 2002.
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American Depositary Shares
evidenced by American Depositary Receipts issuable upon deposit of the equity shares
registered hereby are registered pursuant to a separate registration statement on
Form F-6 (Reg. No. 333-10982).
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The Registrant
hereby amends this registration statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall file a further amendment that specifically
states that this registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
| The information in this prospectus is not
complete and may be changed. The selling stockholder may not sell these securities
until the registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and the selling
stockholder is not soliciting offers to buy these securities in any state where the offer or
sale is not permitted.
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SUBJECT TO COMPLETION,
DATED DECEMBER 17, 2002
PROSPECTUS
Up To 7,558,140
American Depositary Shares
Satyam Infoway Limited
(Representing
Up To 7,558,140 Equity Shares)
The selling stockholder identified in this prospectus
may from time to time sell up to 7,558,140 of our American Depositary Shares, or ADSs, outside
India, including in the United States. We are not selling any equity shares under this prospectus
and will not receive any of the proceeds from the sale of the equity shares offered by the
selling stockholder. Please see “Selling Stockholder” and “Plan of Distribution” for
information about the selling stockholder and the manner of offering of the ADSs. Each ADS
represents one equity share.
Our ADSs are listed for trading on the Nasdaq National Market under
the symbol “SIFY.” On December 16,
2002, the last reported sale price of our ADSs was $2.59 per ADS.
Investing in the American Depositary Shares involves significant risks which are described in the Risk
Factors beginning on page 2.
The equity shares have not been approved by the Securities and Exchange Commission or any
state securities commission, nor have these organizations determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
, 2002.
TABLE OF CONTENTS
TABLE OF CONTENTS
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Page
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| About Satyam Infoway Limited
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1
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| Risk Factors
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2
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| Selected Financial Data
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15
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| Exchange Rates
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18
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| Where You Can Find Additional
Information
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18
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| Disclosure Regarding Forward-Looking
Statements
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| Selling Stockholder
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20
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| Plan of Distribution
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| Use of Proceeds
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| Legal Matters
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| Experts
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This prospectus incorporates important business
and financial information about Satyam Infoway Limited that is not included in
or delivered with this prospectus. You may obtain a copy of this information without
charge, upon written or oral request at the following address and telephone number:
Tidel Park, 2nd Floor, No. 4 Canal Bank Road, Taramani, Chennai 600 113, India,
(91) 44-254-0770. In order to obtain timely delivery, you must request this information
no later than 10 business days before the date you must make your investment
decision. Please see “Where You Can Find Additional Information.”
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ABOUT SATYAM INFOWAY LIMITED
Satyam Infoway
Limited was organized as a limited liability company under the laws of the Republic
of India pursuant to the provisions of the Companies Act on December 12, 1995.
Our company was formed as a separate business unit of Satyam Computer Services,
a leading Indian information technology services company traded on the New York
Stock Exchange and the principal Indian stock exchanges, to develop and offer connectivity-based
corporate services allowing businesses in India to exchange information, communicate
and transact business electronically. We conduct a significant majority of our
business in India. In December 2002, our stockholders ratified the change of our
name from Satyam Infoway Limited to Sify Limited. This change will be effective
upon the completion of required filings with the Government of India.
From December
1995 through 1997, we focused on the development and testing of our private data
network. In 1997, we began forming strategic partnerships with a number of leading
technology and electronic commerce companies in order to broaden our product and
service offerings to our corporate customers. In April 1998, we began offering
private network services to businesses in India. In October 1998, we initiated
our online content offerings and started development of www.sify.com, our
online portal, and other related content sites with the goal of offering a comprehensive
suite of websites offering content specifically tailored to Indian interests worldwide.
In November 1998, the Indian government opened the Internet service provider market
place to private competition and we launched our Internet service provider business,
SatyamOnline, becoming the first private national Internet service provider
in India. In 2000, we acquired IndiaWorld Communications and
IndiaPlaza.com and made a significant investment in CricInfo Limited.
In 2002, we
divested our software services business to Satyam Computer Services and acquired
the corporate connectivity customers of WIPRO Limited. Also in 2002, we sold approximately
7.6 million newly issued ADSs to an affiliate of SOFTBANK Asia Infrastructure Fund
for $13.0 million and approximately 2.0 million newly issued equity shares to VentureTech
Solutions Private Ltd., or VentureTech, for the Indian Rupee equivalent of $3.5
million. In addition, VentureTech is obligated to purchase from us an additional
approximately 2.0 million newly issued equity shares for the Indian Rupee equivalent
of $3.5 million prior to May 1, 2003.
Our executive
offices are located at Tidel Park, 2nd Floor, No. 4, Canal Bank Road, Taramani,
Chennai 600 113 India, and our telephone number is (91) 44-254-0770. Our corporate
website is located at www.sifycorp.com. Information contained on our website is
not incorporated by reference into, and does not form any part of, this prospectus.
Whenever we refer to the “company” or to “us” or use the terms
“we” or “our” in this prospectus, we are referring to Satyam
Infoway Limited and its subsidiaries.
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RISK FACTORS
Risks Related to Our Business
Any investment in our ADSs involves a high degree of risk. You should
consider carefully the following information about these risks, together with the
other information contained in this prospectus, before you decide to buy our ADSs.
If any of the following risks actually occurs, our company could be seriously harmed.
In any such case, the market price of our ADSs could decline, and you may lose all or
part of the money you paid to buy our ADSs.
Risks Related to Investments in Indian
Companies
We are incorporated
in India, and a significant majority of our assets and employees are located in
India. Consequently, our financial performance and the market price of our ADSs
will be affected by changes in exchange rates and controls, interest rates, Government
of India policies, including taxation policies, as well as political, social and
economic developments affecting India.
Political
instability in India and around the world could halt or delay the liberalization
of the Indian economy and adversely affect business and economic conditions in India
generally and our business in particular.
During the
past decade, the Government of India has pursued policies of economic liberalization,
including significantly relaxing restrictions on the private sector. Nevertheless,
the role of the Indian central and state governments in the Indian economy as producers,
consumers and regulators has remained significant. The Government of India has
changed five times since 1996. The rate of economic liberalization could change,
and specific laws and policies affecting technology companies, foreign investment,
currency exchange rates and other matters affecting investment in our securities
could change as well. A significant change in India’s economic liberalization
and deregulation policies could adversely affect business and economic conditions
in India generally and our business in particular.
Conflicts
in South Asia and terrorist attacks in the United States, South Asia and around
the world could adversely affect the economy and cause our business to suffer.
South Asia
has from time to time experienced instances of civil unrest and hostilities among
neighboring countries, including between India and Pakistan. In April 1999, India
and Pakistan conducted long-range missile tests. Since May 1999, military confrontations
between India and Pakistan have occurred in the Himalayan region of Kargil and other
border areas. In October 1999, the leadership of Pakistan changed as a result of
a coup led by the military. In September 2001, terrorist attacks were conducted
in the United States, which caused various adverse consequences, including adverse
economic consequences. In addition, in October 2001 the United States commenced
military operations against various targets located in Afghanistan. In December
2001, terrorist attacks were conducted on the Indian Parliament building resulting
in heightened diplomatic and military tension between India and Pakistan. Both
countries have amassed troops along their common border. These events are widely
believed to have provoked a significant slow-down in worldwide economic activity.
Events of this nature could influence the Indian and/or global economy and could
have a material adverse effect on the market for securities of Indian companies,
including our ADSs, and the market for our services.
We are
subject to foreign investment restrictions under Indian law that limit our ability
to attract foreign investors which, together with the lack of a public market for
our equity shares, may adversely impact the value of our ADSs.
Currently,
there is no public trading market for our equity shares in India or elsewhere nor
can we assure you that we will take steps to develop one. Our equity securities
are only traded on Nasdaq through the ADSs as described in this prospectus. Under
prior Indian laws and regulations our depositary could not accept deposits of outstanding
equity shares and issue ADRs evidencing ADSs representing such equity shares without
prior approval of the Government of India. The Reserve Bank of India has announced
fungibility regulations permitting, under limited circumstances, the conversion
of ADSs to equity shares and the reconversion of equity shares to ADSs provided
that the actual number of ADSs outstanding after such reconversion is not greater
than the original number of ADSs outstanding. If you elect to surrender your ADSs
and receive equity shares, you will not be able to trade those equity shares on
any securities market and, under present law, likely will not be permitted to reconvert
those equity shares to ADSs.
If in the
future a market for our equity shares is established in India or another market
outside of the United States, those shares may trade at a discount or premium to
the ADSs in part because of restrictions on foreign ownership of the underlying
shares. Under current Indian regulations and practice, the approval of the Reserve
Bank of India is required for the sale of equity shares underlying ADSs by a non-resident
of India to a resident of India as well as for renunciation of rights to a resident
of India, unless the sale of equity shares underlying the ADSs is through a recognized
stock exchange or in connection with the offer made under the regulations regarding
takeovers. Since exchange controls still exist in India, the Reserve Bank of India
will approve the price at which the equity shares are transferred based on a specified
formula, and a higher price per share may not be permitted. Holders who seek to
convert the rupee proceeds from a sale of equity shares in India into foreign currency
and repatriate that foreign
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currency from India will have to obtain Reserve Bank
of India approval for each transaction. We cannot assure you that any required
approval from the Reserve Bank of India or any other government agency can be obtained.
Because
we operate our business in India, exchange rate fluctuations may affect the value
of our ADSs independent of our operating results.
The exchange
rate between the rupee and the U.S. dollar has changed substantially in recent years
and may fluctuate substantially in the future. During the three-year period from
October 1, 1999 through September 30, 2002, the value of the rupee against the U.S.
dollar declined by approximately 11.2%. Devaluations of the rupee will result in
higher expenses to our company for the purchase of capital equipment, such as servers,
routers, modems and other telecommunications and computer equipment, which is generally
manufactured in the U.S. In addition, our market valuation could be materially
adversely affected by the devaluation of the rupee if U.S. investors analyze our
value based on the U.S. dollar equivalent of our financial condition and results
of operations.
The Government
of India may change its regulation of our business or the terms of our license to
provide Internet access services without our consent, and any such change could
decrease our revenues and/or increase our costs, which would adversely affect our
operating results.
Our business
is subject to government regulation under Indian law and to significant restrictions
under our Internet service provider license issued by the Government of India.
These regulations and restrictions include the following:
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Our Internet
service provider license has a term of 15 years and was originally issued in 1998.
Our Internet service provider license was reissued in 2002 enabling us to offer
telephony services over the Internet and increasing our maximum permitted level
of foreign equity investment to 74%. We have no assurance that the license will
be renewed in the future. If we are unable to renew our Internet service provider
license for any reason, we will be unable to operate as an Internet service provider
in India and will lose one of our primary sources of revenue.
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The Telecom
Regulatory Authority of India, or TRAI, a statutory authority constituted under
the Telecom Regulatory Authority of India Act, 1997, maintains the right to regulate
the prices we charge our subscribers. The success of our business model depends
on our ability to price our services at levels we believe are appropriate. If the
TRAI sets a price floor, we may not be able to attract and retain subscribers.
Likewise, if the TRAI sets a price ceiling, we may not be able to generate sufficient
revenues to fund our operations. Similarly, an action of the Indian Parliament
may impact our ability to set the prices for our services.
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The Government
of India maintains the right to take over our entire operations or revoke, terminate
or suspend our license for national security and similar reasons without compensation
to us. If the Government of India were to take any of these actions, we would be
prevented from conducting all or part of our business.
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The charges
for international gateways and other services presently being provided by VSNL were
the subject of a dispute before the Telecom Regulatory Authority of India, or TRAI
and the Telecom Disputes Settlement and Appellate Tribunal between VSNL and private
Internet service providers, including our company, represented by the Internet Service
Providers Association of India, or ISPAI. VSNL has priced these services at levels
which we believe are inconsistent with the terms and conditions on which VSNL has
secured the bandwidth for its international gateways. The Telecom Disputes Settlement
and Appellate Tribunal remanded the matter back to the TRAI, which decided against
the ISPAI. The ISPAI has not yet decided on a further course of action.
Changes
in Indian income taxes will increase our tax liability and decrease any profits
we might have in the future.
The statutory
corporate income tax rate in India is currently 35.0%. For fiscal 2002, this tax
rate was subject to a 2.0% surcharge resulting in an effective tax rate of 35.7%.
The tax surcharge for fiscal 2003 has been increased to 5.0% resulting in an effective
tax rate of 36.8%. We cannot assure you that the surcharge will be in effect for
a limited period of time or that additional surcharges will not be implemented by
the Government of India.
Risks
Related to the Internet Market in India
Our success
will depend in large part on the increased use of the Internet by consumers and
businesses in India. However, our ability to exploit the Internet service provider
and other data service markets in India is inhibited by a number of factors. If
India’s limited Internet usage does not grow substantially, our business may
not succeed.
The success
of our business depends on the acceptance of the Internet in India, which may be
slowed or halted by high bandwidth costs and other technical obstacles in India.
Bandwidth,
the measurement of the volume of data capable of being transported in a communications
system in a given amount of time, remains very expensive in India, especially when
compared to bandwidth costs in the United States. Bandwidth
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rates are commonly expressed in terms of
Kbps (kilobits per second, or thousands of bits of data per second) or Mbps (megabits
per second, or millions of bits of data per second). Although prices for bandwidth
in India have declined recently, they are high due to, among other things, capacity
constraints.
The limited
installed personal computer base in India limits our pool of potential customers
and restricts the amount of revenues that our consumer Internet access services
division may generate.
The market
penetration rates of personal computers and online access in India are far lower
than such rates in the United States. 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 Internet will develop and become widely available in India.
While the personal computer penetration level in India is relatively low, we are
addressing the demand for public Internet access through the establishment of a
retail chain of public Internet access centers, which we refer to
as “cybercafés,” under the “iway” brand name. Although
this service creates
a larger market, it also imposes on the operator of the cybercafé the considerable
costs of providing the consumer access to a personal computer and related hardware
and software.
The high cost
of accessing the Internet in India limits our pool of potential customers and restricts
the amount of revenues that our consumer Internet access services division may generate.
Our growth
is limited by the cost to Indian consumers of obtaining the hardware, software and
communications links necessary to connect to the Internet in India. If the costs
required to access the Internet do not significantly decrease, most of India’s
population will not be able to afford to use our services. The failure of a significant
number of additional Indian consumers to obtain affordable access to the Internet
would make it very difficult to execute our business plan.
The success
of our business depends on the acceptance and growth of electronic commerce in India,
which is uncertain, and, to a large extent, beyond our control.
Many of our
existing and proposed products and services are designed to facilitate electronic
commerce in India, although there is relatively little electronic commerce currently
being conducted in India. Demand and market acceptance for these products and services
by businesses and consumers, therefore, are highly uncertain. Many Indian businesses
have deferred purchasing Internet access and deploying electronic commerce initiatives
for a number of reasons, including the existence or perception of, among other things:
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inconsistent
quality of service;
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the need
to deal with multiple and frequently incompatible vendors;
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inadequate
legal infrastructure relating to electronic commerce in India;
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a lack
of security of commercial data, such as credit card numbers; and
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low number
of Indian companies accepting credit card numbers over the Internet.
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If usage of
the Internet in India does not increase substantially and the legal infrastructure
and network infrastructure in India are not developed further, we are not likely
to realize any benefits from our investment in the development of electronic commerce
products and services.
Risks Related to Satyam Infoway Limited
Our
limited operating history makes it difficult to evaluate our business.
We commenced
operation of our private data network business in April 1998 and launched our Internet
service provider operations and Internet portal website in November 1998. Accordingly,
we have a limited operating history to evaluate our business and during this period
our business has not been profitable. You must consider the risks and difficulties
frequently encountered by companies in the early stages of development, particularly
companies in the new and rapidly evolving Internet service markets. These risks
and difficulties include our ability to:
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continue
to develop and upgrade our technology, including our network infrastructure;
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maintain
and develop strategic relationships with business partners;
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offer compelling
online services and content; and
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promptly
address the challenges faced by early stage, rapidly growing companies, which do
not have an experience or performance base to draw on.
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Not only is
our operating history short, but we have determined to compete in three businesses
that we believe are complementary. These three businesses are corporate network/data
services, consumer Internet access services and online portal and content offerings.
On February 28, 2002, our stockholders approved the sale of a fourth business (software
services) to our majority stockholder, Satyam Computer Services. We do not yet know
whether our three remaining businesses will prove complementary. We cannot assure
you that we will successfully address the risks or difficulties described above.
Failure to do so could lead to an inability to attract and retain corporate customers
for our network services and subscribers for our consumer Internet services as well
as the loss of advertising revenues.
We have
a history of losses and negative cash flows and anticipate this to continue because
our business plan, which is unproven, calls for additional corporate customers and
subscribers to attain profitability.
Since our
founding, we have not been profitable and have incurred significant losses and negative
cash flows. As of September 30, 2002, we had an accumulated deficit of approximately
Rs.11,269 million ($232.8 million). We expect to continue to incur operating losses
as we expand our services, invest in expansion of our network/data and technology
infrastructure, and advertise and promote our brand. Our business plan assumes
that businesses in India will demand private network and related services. Our
business plan also assumes that consumers in India will be attracted to and use
Internet access services and content available on the Internet in increasing numbers.
This business model is not yet proven in India, and we cannot assure you that we
will ever achieve or sustain profitability or that our operating losses will not
increase in the future.
Our ability
to compete in the Internet service provider market is hindered by the fact that
our principal competitor was until recently a government-controlled provider of
international telecommunications services in India, which enjoys significant competitive
advantages over our company.
VSNL is a
provider of international telecommunications services in India that, until recently,
was controlled by the Government of India. In February 2002, the Government of
India sold a 25% stake in VSNL to the TATA group, reducing the Government of
India’s ownership of VSNL to 26%. VSNL had approximately 587,000 subscribers as
of March 31, 2002. VSNL enjoys significant competitive advantages over our company,
including the following:
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Longer
service history. VSNL started offering Internet service provider services from
August 1995, whereas we started offering Internet service provider services only
from November 1998.
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Access
to network infrastructure. Because VSNL was controlled by the Government of
India, it had direct access to network infrastructure, which was owned by the Indian
government. We believe that this access is continuing as a result of the Government
of India’s investment in VSNL.
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Greater
financial resources. VSNL has significantly greater total assets and annual
revenues than our company.
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In the past,
VSNL aggressively reduced consumer Internet access prices despite the lack of offsetting
reductions in prevailing bandwidth tariffs payable by private competitors, such
as our company. We believe that these practices constitute an improper cross-subsidy
funded by VSNL’s present monopoly in international long distance telephone
service. The charges for international gateways and other services presently being
provided by VSNL were the subject of a dispute before the TRAI and the Telecom Disputes
Settlement and Appellate Tribunal between VSNL and private Internet service providers,
including our company. The Telecom Disputes Settlement and Appellate Tribunal remanded
the matter back to the TRAI, which decided against the ISPAI. The ISPAI has not
yet decided on further course of action. Unless there is a change in government
policy or favorable resolution of this dispute, or until we are able to reduce our
bandwidth costs through other means, we will continue to face difficult market conditions
in the consumer Internet access services business. These competitive issues may
prevent us from attracting and retaining subscribers and generating advertising
revenue. This could result in loss of market share, price reductions, reduced margins
or negative cash flow for our operations.
We may
be required to further modify the rates we charge for our products and services
in response to new pricing models introduced by new and existing competition in
the Internet services market which would significantly affect our revenues.
Our corporate
network/data services business faces significant competition from well-established
companies, including Global E-Commerce Limited and Sprint-RPG Limited. Reliance
Infocom, a member of the Reliance Group, is building a nationwide fiber optic network
in India and has announced plans to provide a range of value-added services, including
corporate connectivity services.
A significant
number of competitors have entered India’s liberalized Internet service provider
market, and we expect additional competitors to emerge in the near future. As of
December 31, 2001, approximately 442 companies had obtained Internet service provider
licenses in India, including 79 companies which have obtained licenses to offer
Internet service provider services throughout India. New entrants into the national
Internet service provider market in India may enjoy significant competitive advantages
over our company, including greater financial resources, which could allow them
to charge Internet access fees that are
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lower than ours in order to attract subscribers.
Since May 2000, we have offered unlimited Internet access to consumers for a fixed
price. A number of our competitors, including VSNL, Dishnet and Mantra, also offer
unlimited Internet access for a fixed price. In addition, some competitors offer
free Internet service. These factors have resulted in significant reduction in
actual average selling prices for consumer ISP services. We expect the market for
consumer Internet access to remain extremely price competitive.
Our online
portal, www.sify.com, faces significant competition from well-established
Indian content providers, including rediff.com, which completed its initial public
offering in the United States in June 2000. Some of these sites currently have
greater traffic than our site and offer some features that we do not. Further,
the dominant Internet portals continue to be the online services and search engine
companies based in the United States, such as America Online, Yahoo!, Microsoft
Network and Lycos. These companies have been developing specially branded or co-branded
products designed for audiences in specific markets. We expect that these companies
will deploy services that are targeted at the Indian market. For example, Yahoo!
launched an Indian service in June 2000.
Increased
competition may result in reduced operating margins or operating losses, loss of
market share and diminished value in our services, as well as different pricing,
service or marketing decisions. We cannot assure you that we will be able to successfully
compete against current and future competitors.
Our marketing
campaign to establish brand recognition and loyalty for the
SatyamOnline, Sify and iway brands could be unsuccessful or,
if successful, may not benefit our company if in the future we are no longer permitted
to use the “Satyam” trademark that we license from Satyam Computer Services.
In order to
expand our customer base and increase traffic on our websites, we must establish,
maintain and strengthen the SatyamOnline, Sify and iway brands. We
plan to continue to incur significant marketing expenditures to establish brand
recognition and brand loyalty. If our marketing efforts do not produce a significant
increase in consumer traffic to offset our marketing expenditures, our losses will
increase or, to the extent that we are generating profits, our profits will decrease.
Furthermore, our Internet portal will be more attractive to advertisers if we have
a large audience of consumers with demographic characteristics that advertisers
perceive as favorable. Therefore, we intend to introduce additional and enhanced
content, interactive tools and other services and features in the future in an effort
to retain our current subscribers and users and attract new ones. Our reputation
and brand name could be adversely affected if we are unable to do so successfully.
“Satyam” is a trademark
owned by Satyam Computer Services, our parent company. We
have a license to use the “Satyam” trademark for so long as Satyam Computer
Services owns at least 51% of our company. At any time after its ownership is reduced
below 51%, however, Satyam Computer Services may terminate our license to use the
“Satyam” trademark upon two years’ prior written notice. The interest
of Satyam Computer Services in our company was reduced to approximately 37% in connection
with the financing transaction with SAIF Investment Company Limited, or SAIF, and
Venture Tech Solutions Pvt. Ltd, or VentureTech, that was completed in December
2002 and will be reduced further to approximately 35% in connection with the second
VentureTech closing in April 2003. In anticipation of the need to cease using the
Satyam brand name, we will change the name of our company from Satyam Infoway Limited
to Sify Limited in December 2002, subject to the approval of the Government of India.
In connection with our name change, our company will be promoted exclusively under
the Sify brand name. Our results of operations may be adversely affected
by decreased brand recognition and decreased customer loyalty resulting from this
name change.
A number of
large stockholders of our Company and us are party to an Investor Rights Agreement
which governs the composition of our Board of Directors and other important corporate
matters.
As of the
date of this prospectus, Satyam Computer Services beneficially owns approximately
37% of our equity shares, SAIF beneficially owns approximately 23% of our equity
shares and VentureTech beneficially owns 6% of our equity shares and has the
obligation to purchase additional shares. As a result, these stockholders, if they
elect to act together, are presently able to exercise significant influence over
many matters requiring approval by our stockholders, including the election of directors
and approval of significant corporate transactions, such as a sale of our company.
These stockholders are also party to an agreement with us relating to the composition
of our Board of Directors and other important corporate matters such as a right
of first refusal with respect to the transfer of shares by certain stockholders
and the issuance by our company of additional shares, tag along rights with respect
to the transfer of shares by certain stockholders and drag along rights. Under
Indian law, a simple majority is sufficient to control all stockholder action except
for those items, which require approval by a special resolution. If a special resolution
is required, the number of votes cast in favor of the resolution must not be less
than three times the number of votes cast against it. Examples of actions that
require a special resolution include:
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altering our
Articles of Association;
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issuing additional
shares of capital stock, except for pro rata issuances to existing stockholders;
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commencing
any new line of business; and
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commencing
a liquidation.
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6
Circumstances
may arise in which the interests of Satyam Computer Services, SAIF or VentureTech,
or a subsequent purchaser of the shares currently owned by any such
holder, could
conflict with the interests of our other stockholders or holders of our ADSs or
one or more of such stockholders could delay or prevent a change of control of our
company even if a transaction of that sort would be beneficial to our other stockholders,
including the holders of our ADSs.
If our
efforts to retain our subscribers through investment in network infrastructure,
online content offerings and customer and technical support are unsuccessful, our
revenues will decrease without a corresponding reduction in costs.
Our sales,
marketing and other costs of acquiring new subscribers are substantial, relative
to the fees actually derived from these subscribers. Accordingly, our long-term
success depends to a great extent on our ability to retain our existing subscribers,
while continuing to attract new subscribers. We invest significant resources in
our network infrastructure, online content offerings and in our customer and technical
support capabilities to provide high levels of customer service. We cannot be certain,
however, that these investments will maintain or improve subscriber retention.
We believe that intense competition from our competitors, some of whom offer free
hours of service or other enticements for new subscribers, has caused, and may continue
to cause, some of our subscribers to switch to our competitors’ services.
In addition, some new subscribers use the Internet only as a novelty and do not
become consistent users of Internet services, and therefore are more likely to discontinue
their service. Any decline in our subscriber retention rate would likely decrease
the revenues generated by our consumer Internet access services division. Therefore,
we may not be able to realize sufficient future revenues to offset our present investment
in network infrastructure, online content offerings and technical support or achieve
positive cash flow or profitability in the future.
Despite
cost-reduction measures, our future operating results could fluctuate in part because
our expenses are relatively fixed in the short-term while future revenues are uncertain,
and any adverse fluctuations could negatively impact the price of our ADSs.
Our revenues,
expenses and operating results have varied in the past and may fluctuate significantly
in the future due to a number of factors, many of which are outside our control.
Our business involves significant capital outlays and, thus, a significant portion
of our investment and cost base is relatively fixed in the short term. Our revenues
for the foreseeable future will depend on the following:
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the range of services
provided by us and our strategic partners and the usage thereof
by our customers determines the amount of revenues generated by our corporate network/data
services division;
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the number of
subscribers to our Internet service provider service and the prevailing
prices charged determine the amount of revenues generated by our consumer Internet
access services division; and
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advertising and
electronic commerce activity on www.sify.com and its related
sites determines the amount of revenues generated by our online portal and content
offerings division.
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Our future revenues are difficult to forecast
and, in addition to the foregoing, will depend on the following:
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the timing
and nature of any agreements we enter into with strategic partners will determine
the amount of revenues generated by our corporate network/data services division;
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new Internet
sites, services, products or pricing policies introduced by our competitors may
require us to introduce new offerings or reduce the prices we charge our customers
for Internet access;
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our capital
expenditures and other costs relating to the expansion of our operations could affect
the expansion of our network or could require us to generate additional revenue
in order to be profitable;
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the timing
and nature of our marketing efforts could affect the number of our subscribers and
the level of electronic commerce activity on our websites;
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our ability
to successfully integrate operations and technologies from any acquisitions, joint
ventures or other business combinations or investments, including our acquisitions
of IndiaWorld Communications, Indiaplaza.com and Kheladi.com and our investment
in CricInfo Limited;
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the introduction
of alternative technologies may require us to re-evaluate our business strategy
and/or to adapt our products and services to be compatible with such technologies;
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technical
difficulties or system failures affecting the telecommunication infrastructure in
India, the Internet generally or the operation of our websites.
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We plan to
continue to expand and develop content and enhance our technology and infrastructure.
Many of our expenses are relatively fixed in the short-term. We cannot assure
you that our revenues will increase in proportion to the increase in our
7
expenses. We may be unable to adjust spending
quickly enough to offset any unexpected revenues shortfall. This could lead to
a shortfall in revenues in relation to our expenses.
You should
not rely on yearly comparisons of our results of operations as indicators of future
performance. It is possible that in some future periods our operating results may
be below the expectations of public market analysts and investors. In this event,
the price of our ADSs will likely fall.
Because
we lack full redundancy for our computer systems, a systems failure could prevent
us from operating our business.
We rely on
the Internet and accordingly, depend upon the continuous, reliable and secure operation
of Internet servers, related hardware and software and network infrastructure such
as lines leased from telecom operators. We have a back-up data facility, but we
do not have full redundancy for all of our computer and telecommunications facilities.
As a result, failure of key primary or back-up systems to operate properly could
lead to a loss of customers, damage to our reputation and violations of our Internet
service provider license and contracts with corporate customers. These failures
could also lead to a decrease in value of our ADSs, significant negative publicity
and litigation. From time to time, a number of large Internet companies have suffered
highly publicized system failures resulting in adverse reactions to their stock
prices, significant negative publicity and, in some instances, litigation.
We have at
times suffered service outages. We guarantee to a number of our corporate customers
that our network will meet or exceed contractual reliability standards, and our
Internet service provider license requires that we provide an acceptable level of
service quality and that we remedy customer complaints within a specified time period.
Our computer and communications hardware are protected through physical and software
safeguards. However, they are still vulnerable to fire, storm, flood, power loss,
telecommunications failures, physical or software break-ins and similar events.
We do not carry business interruption insurance to protect us in the event of a
catastrophe even though such an event could lead to a significant negative impact
on our business. Any sustained disruption in Internet access provided by third
parties could also have a material adverse effect on our business.
Security
breaches could damage our reputation or result in liability to us.
Our facilities
and infrastructure must remain secure, and be perceived by our corporate and consumer
customers to be secure, because we retain confidential customer information in our
database. Despite the implementation of security measures, our infrastructure may
be vulnerable to physical break-ins, computer hacking, computer viruses, programming
errors or similar disruptive problems. If a person circumvents our security measures,
he or she could jeopardize the security of confidential information stored on our
systems, misappropriate proprietary information or cause interruptions in our operations.
We may be required to make significant additional investments and efforts to protect
against or remedy security breaches. A material security breach could damage our
reputation or result in liability to us, and we do not carry insurance that protects
us from this kind of loss.
The security
services that we offer in connection with our business customers’ networks
cannot assure complete protection from computer viruses, break-ins and other disruptive
problems. Although we attempt to limit contractually our liability in such instances,
the occurrence of these problems could result in claims against us or liability
on our part. These claims, regardless of their ultimate outcome, could result in
costly litigation and could damage our reputation and hinder our ability to attract
and retain customers for our service offerings.
If we are
unable to manage the rapid growth required by our business strategy, our results
of operations will be adversely affected.
We have experienced
and are currently experiencing a period of significant growth. This growth has
placed, and the future growth we anticipate in our operations will continue to place,
a significant strain on our managerial, operational, financial and information systems
resources. As part of this growth, we will have to implement new operational and
financial systems and procedures and controls, expand our office facilities, train
and manage our employee base and maintain close coordination among our technical,
accounting, finance, marketing, sales and editorial staffs. If we are unable to
manage our growth effectively, we will be unable to implement our growth strategy,
upon which the success of our business depends.
We face
a competitive labor market for skilled personnel and therefore are highly dependent
on our existing key personnel and on our ability to hire additional skilled employees.
Our success
depends upon the continued service of our key personnel, particularly Mr. Ramaraj,
our Chief Executive Officer, Mr. Zacharias, our President and Chief Operating Officer,
Mr. Santhanakrishnan, our Chief Financial Officer, and each other member of our
senior management. Substantially all of our employees are located in India. Each
of our employees may voluntarily terminate his or her employment with us. We do
not carry key person life insurance on any of our personnel. Our success also depends
on our ability to attract and retain additional highly qualified technical, marketing
and sales personnel. The
8
labor market for skilled employees in India
is extremely competitive, and the process of hiring employees with the necessary
skills is time consuming and requires the diversion of significant resources. While
we have not experienced difficulty in employee retention or integration to date,
we may not be able to continue to retain or integrate existing personnel or identify
and hire additional personnel in the future. The loss of the services of key personnel,
especially the unexpected death or disability of such personnel, or the inability
to attract additional qualified personnel, could disrupt the implementation of our
growth strategy, upon which the success of our business depends.
In February
2002, we entered into Executive Employment Agreements with each of Messrs. Ramaraj,
Zacharias and Santhanakrishnan. These agreements provide for base and bonus compensation
and additional benefits and require that we indemnify these officers for specified
expenses incurred by them in connection with their employment by our company. These
agreements also contain confidentiality and invention assignment provisions. In
addition, these agreements provide for specified payments in connection with a termination
of employment after a change of control of our company or in certain other circumstances.
Our agreement with Mr. Ramaraj has a term of approximately 13 months, and our agreements
with Messrs. Zacharias and Santhanakrishnan have a term of three years. The stockholders
have approved an extension of Mr. Ramraj’s tenure as Managing Directors for
an additional five years, effective April 1, 2003.
We are
highly dependent on our relationships with strategic partners to provide key products
and services to our customers.
We rely on
our arrangements with strategic partners to provide key network products and services
to our business clients. Some of these relationships, can be terminated by our partners
in some circumstances. We also rely on some of our strategic partners to provide
us with access to their customer base. We are a strategic partner of UUNet Technologies
in India and provide dial-up access to UUNet Technologies roaming international
clients in India. UUNet Technologies is a unit of WorldCom, Inc., which in July
2002 filed a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code. We do not know whether we will be able to maintain our strategic
partnership with UUNet Technologies. If our relationships with our strategic partners
do not continue, the ability of our corporate network/data services division to
generate revenues will be decreased significantly. We also provide access to a
co-branded version of the AOL Instant Messenger service to our portal customers,
and this proprietary service is an important feature of our website.
If there
is an adverse outcome in the class action litigation that has been filed against
us, our business may be harmed.
Our company
and certain of our officers and directors are named as defendants in a securities
class action lawsuit filed in the United States District Court for the Southern
District of New York. This action, which is captioned In re Satyam Infoway Ltd.
Initial Public Offering Securities Litigation, also names several of the underwriters
involved in our initial public offering of American Depositary Shares as defendants.
This class action is brought on behalf of a purported class of purchasers of our
ADSs from the time of our IPO in October 1999 through December 2000. The central
allegation in this action is that the underwriters in our IPO solicited and received
undisclosed commissions from, and entered into undisclosed arrangements with, certain
investors who purchased our ADSs in the IPO and the aftermarket. The complaint also
alleges that we violated the United States federal securities laws by failing to
disclose in the IPO prospectus that the underwriters had engaged in these allegedly
undisclosed arrangements. More than 300 issuers have been named in similar lawsuits.
In July 2002, an omnibus motion to dismiss all complaints against issuers and individual
defendants affiliated with issuers was filed by the entire group of issuer defendants
in these similar actions. That motion is now pending before the Court. Although
we do not know when the Court will decide the motion, and do not know what that
decision will be, we believe that we have meritorious defenses and intend to defend
this action vigorously. However, we could be forced to incur material expenses
in the litigation, and in the event there is an adverse outcome, our business could
be harmed.
9
We face
risks associated with our joint venture with Refco Sify Securities India Private
Limited, our strategic partnership with VeriSign and our co-branding agreement with
America Online, our acquisitions of Indiaplaza.com and IndiaWorld Communications,
our investment in CricInfo Limited and with other potential acquisitions, investments,
strategic partnerships or other ventures, including whether any such transactions
can be identified, completed and the other party integrated with our business on
favorable terms.
In November
1999, we acquired 24.5% of the outstanding shares of IndiaWorld Communications,
together with an option to acquire IndiaWorld Communications’ remaining outstanding
shares, which we exercised in June 2000. In May 2000, we entered into a strategic
partnership with VeriSign to provide managed digital certificate-based authentication
services in India. In June 2000, we acquired a 25% stake in CricInfo Limited, entered
into an agreement with America Online to distribute a co-branded version of the
AOL Instant Messenger and made an investment in Refco Sify Securities India Private
Limited. In July 2000, we completed our investment in CricInfo Limited and agreed
to acquire IndiaPlaza.com. In December 2000, we completed our acquisition of IndiaPlaza.com.
These alliances may not provide all or any portion of the anticipated benefits.
Due to a general decline in market valuations for technology companies during fiscal
2002, we reassessed, in accordance with our accounting policy, the goodwill to be
carried forward relating to these acquisitions. As a result, we recorded a Rs.4,127.7
million charge in fiscal 2002 relating to the impairment of goodwill. In addition,
during the quarter ended June 30, 2002, we recorded a non-cash charge of Rs.86.2
million ($1.8 million) relating to the investments.
We may acquire
or make investments in other complementary businesses, technologies, services or
products, or enter into additional strategic partnerships with parties who can provide
access to those assets, if appropriate opportunities arise in the future. From
time to time we have had discussions and negotiations with a number of companies
regarding our acquiring, investing in or partnering with their businesses, products,
services or technologies, and we regularly engage in such discussions and negotiations
in the ordinary course of our business. Some of those discussions also contemplate
the other party making an investment in our company. We may not identify suitable
acquisition, investment or strategic partnership candidates in the future, or if
we do identify suitable candidates, we may not complete those transactions on commercially
acceptable terms or at all. In addition, the key personnel of an acquired company
may decide not to work for us. If we make other types of acquisitions, we could
have difficulty in integrating the acquired products, services or technologies into
our operations. These difficulties could disrupt our ongoing business, distract
our management and employees and increase our expenses, which could adversely affect
our operating results and cause the price of our ADSs to decline. Furthermore,
we may incur indebtedness or issue additional equity securities to pay for any future
acquisitions. The issuance of additional equity securities would dilute the ownership
interests of the holders of our ADSs.
Our financial
results are impacted by the financial results of entities that we do not control.
We have a
significant, non-controlling minority interest in CricInfo Limited and Refco Sify
Securities India Private Limited that is accounted for under U.S. GAAP using the
equity method of accounting. Under this method, we are obligated to report as “Equity
in losses (gains) of affiliates” a pro rata portion of the financial
results of any such company in our statement of operations even though we do not
control the other company. Thus, our reported results of operations can be significantly
increased or decreased depending on the results of CricInfo Limited and Refco Sify
Securities India Private Limited or other companies in which we may make similar
investments even though we may have only a limited ability to influence these activities.
We must
continue to make capital expenditures in new network infrastructure, which, if not
offset by additional revenue, will adversely affect our operating results.
We must continue
to expand and adapt our network infrastructure as the number of users and the amount
of information they wish to transfer increases and as the requirements of our customers
change. The expansion of our Internet network infrastructure will require substantial
financial, operational and management resources. The development of private Internet
access and other data networks and related services in India is a new business,
and we may encounter cost overruns, technical difficulties or other project delays
in connection with any or all of the new facilities. We can give no assurance that
we will be able to expand or adapt our network infrastructure to meet the additional
demand or our customers’ changing requirements on a timely basis, or at a commercially
reasonable cost, or at all. A portion of our capital expenditures for network development
are fixed, and the success of our business depends on our ability to grow our business
to utilize this capacity. In addition, if demand for usage of our network were
to increase faster than projected, our network could experience capacity constraints,
which would adversely affect the performance of the system.
The legal
system in India does not protect intellectual property rights to the same extent
as those of the United States, and we may be unsuccessful in protecting our intellectual
property rights.
Our intellectual
property rights are important to our business. We rely on a combination of copyright
and trademark laws, trade secrets, confidentiality procedures and contractual provisions
to protect our intellectual property.
10
Our efforts
to protect our intellectual property may not be adequate. Our competitors may independently
develop similar technology or duplicate our products or services. Unauthorized
parties may infringe upon or misappropriate our products, services or proprietary
information. In addition, the laws of India do not protect proprietary rights to
the same extent as laws in the United States, and the global nature of the Internet
makes it difficult to control the ultimate destination of our products and services.
For example, the legal processes to protect service marks in India are not as effective
as those in place in the United States. The misappropriation or duplication of
our intellectual property could disrupt our ongoing business, distract our management
and employees, reduce our revenues and increase our expenses. In the future, litigation
may be necessary to enforce our intellectual property rights or to determine the
validity and scope of the proprietary rights of others. Any such litigation could
be time-consuming and costly.
We could be
subject to intellectual property infringement claims as the number of our competitors
grows and the content and functionality of our websites or other product or service
offerings overlap with competitive offerings. Defending against these claims, even
if not meritorious, could be expensive and divert management’s attention from
operating our company. If we become liable to third parties for infringing their
intellectual property rights, we could be required to pay a substantial damage award
and forced to develop non-infringing technology, obtain a license or cease selling
the applications that contain the infringing technology. We may be unable to develop
non-infringing technology or obtain a license on commercially reasonable terms,
or at all.
Our platform
infrastructure and its scalability are not proven, and our current systems may not
accommodate increased use while maintaining acceptable overall performance.
Currently,
only a relatively limited number of customers use our corporate network, our Internet
service provider services and our Internet portal. We must continue to expand and
adapt our network infrastructure to accommodate additional users, increasing transaction
volumes and changing customer requirements. We may not be able to project accurately
the rate or timing of increases, if any, in the use of our websites or expand and
upgrade our systems and infrastructure to accommodate such increases. Our systems
may not accommodate increased use while maintaining acceptable overall performance.
Service lapses could cause our users to use the online services of our competitors.
We do not
plan to pay dividends in the foreseeable future.
We do not
anticipate paying cash dividends to the holders of our ADSs in the foreseeable future.
Accordingly, investors must rely on sales of their ADSs after price appreciation,
which may never occur, as the only way to realize a positive return on their investment.
Investors seeking cash dividends should not purchase our ADSs.
Risks Related to the Internet
We may
be liable to third parties for information retrieved from the Internet.
Because users
of our Internet service provider service and visitors to our websites may distribute
our content to others, third parties may sue us for defamation, negligence, copyright
or trademark infringement, personal injury or other matters. We could also become
liable if confidential information is disclosed inappropriately. These types of
claims have been brought, sometimes successfully, against online services in the
United States and Europe. Others could also sue us for the content and services
that are accessible from our websites through links to other websites or through
content and materials that may be posted by our users in chat rooms or bulletin
boards. We do not carry insurance to protect us against these types of claims,
and there is no precedent on Internet service provider liability under Indian law.
Further, our business is based on establishing our network as a trustworthy and
dependable provider of information and services. Allegations of impropriety, even
if unfounded, could damage our reputation, disrupt our ongoing business, distract
our management and employees, reduce our revenues and increase our expenses.
The success
of our strategy depends on our ability to keep pace with technological changes.
Our future
success depends, in part, upon our ability to use leading technologies effectively,
to continue to develop our technical expertise, to enhance our existing services
and to develop new services that meet changing customer requirements. The markets
for our service are characterized by rapidly changing technology, evolving industry
standards, emerging competition and frequent new service introductions. We may
not successfully identify new opportunities and develop and bring new services to
market in a timely manner.
Our business
may not be compatible with delivery methods of Internet access services developed
in the future.
We face the
risk that fundamental changes may occur in the delivery of Internet access services.
Currently, Internet services are accessed primarily by computers and are delivered
by modems using telephone lines. As the Internet becomes accessible by cellular
telephones, personal data assistants, television set-top boxes and other consumer
electronic devices, and becomes deliverable through other means involving digital
subscriber lines, coaxial cable or wireless transmission mediums, we will have to
develop new technology or modify our existing technology to accommodate these developments.
Our pursuit of these technological advances,
11
whether directly through internal development
or by third party license, may require substantial time and expense. We may be
unable to adapt our Internet service business to alternate delivery means and new
technologies may not be available to us at all.
Our product
and service offerings may not be compatible with industry standards developed in
the future.
Our ability
to compete successfully depends upon the continued compatibility and interoperability
of our services with products and architectures offered by various vendors. Although
we intend to support emerging standards in the market for Internet access, industry
standards may not be established and, if they become established, we may not be
able to conform to these new standards in a timely fashion or maintain a competitive
position in the market. The announcement or introduction of new products or services
by us or our competitors and any change in industry standards could cause customers
to deter or cancel purchases of existing products or services.
Risk Related to the ADSs and Our Trading
Market
Holders
of ADSs are restricted in their ability to exercise preemptive rights under Indian
law and thereby may suffer future dilution of their ownership position.
Under the
Companies Act, 1956 of India, or Companies Act, a public company incorporated in
India must offer its holders of equity shares preemptive rights to subscribe and
pay for a proportionate number of shares to maintain their existing ownership percentages
prior to the issuance of any new equity shares, unless the preemptive rights have
been waived by adopting a special resolution by holders, whether on a show of hands
or on a poll, holding not less than three times the number of votes, if any, cast
against the resolution. At our 2000 Annual General Meeting, our stockholders approved
a special resolution permitting us to issue up to one million equity shares (currently
equivalent to one million ADSs) in connection with acquisitions. We issued virtually
all of these equity shares in connection with our acquisitions of IndiaWorld Communications,
Indiaplaza.com and Kheladi.com and our investment in CricInfo Limited. At our 2001
Annual General Meeting, our stockholders approved a special resolution permitting
us to issue up to four million additional equity shares (currently equivalent to
four million ADSs) in connection with acquisitions or capital raising transactions,
and our ADS holders are deemed to have waived their preemptive rights with respect
to these shares and our Board of Directors may approve the issuance of these shares
without further action of our stockholders. At our 2002 Extraordinary General Meeting,
our stockholders approved a special resolution permitting us to issue up to 12.5
million additional equity shares (equivalent to 12.5 million ADSs) in connection
with the sale of equity shares to SAIF and VentureTech, and our ADS holders are
deemed to have waived their preemptive rights with respect to these shares and our
Board of Directors may approve the issuance of these shares without further action
of our stockholders.
U.S. holders
of ADSs may be unable to exercise preemptive rights for equity shares underlying
ADSs unless approval of the Ministry of Finance of the Government of India is obtained
and a registration statement under the Securities Act of 1933, as amended, is effective
with respect to the rights or an exemption from the registration requirements of
the Securities Act is available. Our decision to file a registration statement
will depend on the costs and potential liabilities associated with any given registration
statement as well as the perceived benefits of enabling the holders of our ADSs
to exercise their preemptive rights and any other factors that we deem appropriate
to consider at the time the decision must be made. We may elect not to file a registration
statement related to preemptive rights otherwise available by law to our stockholders.
In the case of future issuances, the new securities may be issued to our depositary,
which may sell the securities for the benefit of the holders of the ADSs. The value,
if any, our depositary would receive upon the sale of such securities cannot be
predicted. To the extent that holders of ADSs are unable to exercise preemptive
rights granted in respect of the equity shares represented by their ADSs, their
proportional interests in our company would be reduced.
Holders
of ADSs may be restricted in their ability to exercise voting rights and the information
provided with respect to stockholder meetings.
As a holder
of ADSs, you generally have the right under the deposit agreement to instruct the
depositary bank to exercise the voting rights for the equity shares represented
by your ADSs. At our request, the depositary bank will mail to you any notice of
stockholders’ meeting received from us together with information explaining
how to instruct the depositary bank to exercise the voting rights of the securities
represented by ADSs. If the depositary bank timely receives voting instructions
from a holder of ADSs, it will endeavor to vote the securities represented by the
holder’s ADSs in accordance with such voting instructions. However, the ability
of the depositary bank to carry out voting instructions may be limited by practical
and legal limitations and the terms of the securities on deposit. We cannot assure
you that you will receive voting materials in time to enable you to return voting
instructions to the depositary bank in a timely manner.
Under Indian
law, subject to the presence in person at a stockholder meeting of persons holding
equity shares representing a quorum, all resolutions proposed to be approved at
that meeting are voted on by a show of hands unless a stockholder present in person
and holding at least 10% of the total voting power or on which an aggregate sum
of not less than Rs.50,000 has been paid-up, at the meeting demands that a poll
be taken. Equity shares not represented in person at the meeting, including equity
shares underlying ADSs for which a holder has provided voting instructions to the
depositary bank, are not counted in a vote by show of
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hands. As a result, only in the event that
a stockholder present at the meeting demands that a poll be taken will the votes
of ADS holders be counted. Securities for which no voting instructions have been
received will not be voted on a poll.
As a foreign
private issuer, we are not subject to the SEC’s proxy rules, which regulate
the form and content of solicitations by United States-based issuers of proxies
from their stockholders. To date, our practice has been to provide advance notice
to our ADS holders of all stockholder meetings and to solicit their vote on such
matters, through the depositary, and we expect to continue this practice. The form
of notice and proxy statement that we have been using does not include all of the
information that would be provided under the SEC’s proxy rules.
The market
price of our ADSs has been and may continue to be highly volatile.
The market
price of our ADSs has fluctuated widely and may continue to do so. For example,
since our initial public offering in October 1999 through November 30, 2002, the
trading price of our ADSs has ranged from a high of $452 per ADS to a low of $0.88
per ADS. Many factors could cause the market price of our ADSs to rise and fall.
Some of these factors include:
| •
|
|
our failure
to integrate successfully our operations with those of acquired companies;
|
|
|
|
|
| •
|
|
actual or
anticipated variations in our quarterly operating results, including charges to
write-off goodwill and other acquisition costs;
|
|
|
|
|
| •
|
|
announcement
of technological innovations;
|
|
|
|
|
| •
|
|
conditions
or trends in the corporate network/data services, Internet and electronic commerce
industries;
|
|
|
|
|
| •
|
|
the competitive
and pricing environment for corporate network/data services and consumer Internet
access services in India and the related cost and availability of bandwidth;
|
|
|
|
|
| •
|
|
the perceived
attractiveness of investment in Indian companies;
|
|
|
|
|
| •
|
|
acquisitions
and alliances by us or others in the industry;
|
|
|
|
|
| •
|
|
changes in
estimates of our performance or recommendations by financial analysts;
|
|
|
|
|
| •
|
|
market conditions
in the industry and the economy as a whole;
|
|
|
|
|
| •
|
|
introduction
of new services by us or our competitors;
|
|
|
|
|
| •
|
|
changes in
the market valuations of other Internet service companies;
|
|
|
|
|
| •
|
|
announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint
ventures or capital commitments;
|
|
|
|
|
| •
|
|
additions
or departures of key personnel; and
|
|
|
|
|
| •
|
|
other events
or factors, many of which are beyond our control.
|
The financial
markets in the United States and other countries have experienced significant price
and volume fluctuations, and the market prices of technology companies, particularly
Internet-related companies, have been and continue to be extremely volatile with
negative sentiment prevailing. Volatility in the price of our ADSs may be caused
by factors outside of our control and may be unrelated or disproportionate to our
operating results. In the past, following periods of volatility in the market price
of a public company’s securities, securities class action litigation has often
been instituted against that company. Such litigation could result in substantial
costs and a diversion of our management’s attention and resources.
We may
not be able to maintain our Nasdaq National Market listing.
In order to
maintain the listing of our ADSs on the Nasdaq National Market, we are required
to comply with the continuing listing requirements of Nasdaq, including the $1.00
minimum bid price requirement. The price of our ADSs on the Nasdaq National Market
recently closed below $1.00 for more than 30 consecutive days. Effective September
24, 2002, our equity share-to-ADS exchange ratio has been adjusted to one-to-one
in order to reestablish compliance with Nasdaq’s minimum bid price requirement.
There are also pending or expected material changes to the listing requirements
of the Nasdaq National Market relating to implementation of the Sarbanes-Oxley Act
of 2002 and other reforms that will impose significant additional substantive and
administrative requirements on all public companies listed on the Nasdaq National
Market, including foreign private issuers. We do not know whether we will be able
to maintain our Nasdaq National Market listing in the future.
13
An active
or liquid market for the ADSs is not assured, particularly in light of Indian legal
restrictions on equity share conversion and foreign ownership of an Internet service
provider.
We cannot
predict the extent to which an active, liquid public trading market for our ADSs
will exist. Active, liquid trading markets generally result in lower price volatility
and more efficient execution of buy and sell orders for investors. Liquidity of
a securities market is often a function of the volume of the underlying shares that
are publicly held by unrelated parties. Although ADS holders are entitled to withdraw
the equity shares underlying the ADSs from the depositary at any time, there is
no public market for our equity shares in India or the United States. Furthermore,
foreign ownership in our company, which includes all ADSs, is limited to 74% under
present Indian law. The previous policy limit was 49%. This limitation means that,
unless Indian law changes, at least 26% of our equity shares will never be available
to trade in the United States market.
The future
sales of securities by our company or existing stockholders may hurt the price of
our ADSs.
The market
price of our ADSs could decline as a result of sales of a large number of equity
shares or ADSs or the perception that such sales could occur. For example, in October
2001 our parent company, Satyam Computer Services, announced its intention to divest
its investment in our company. In December 2002, we sold an aggregate of 7.6 million
ADSs to SAIF and an aggregate of 2.0 million equity shares to
VentureTech. All of the SAIF shares are registered for resale under
the Securities Act in this prospectus and the related registration
statement. We have
also agreed to sell an aggregate of 2.0 million additional equity shares to VentureTech
no later than April 30, 2002. The resale of the ADSs sold to SAIF is covered by
this registration statement of which this prospectus forms a part, and such ADSs
are freely tradable. Any significant sales or our equity shares or ADSs might hurt
the price of our ADSs and make it more difficult for us to sell equity securities
in the future at a time and at a price that we deem appropriate. We may issue additional
equity shares and ADSs to raise capital and to fund acquisitions and investments,
and the parties to any such future transactions could also decide to sell them.
Forward-looking
statements contained in this prospectus may not be realized.
This prospectus
contains forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of the risks faced by us described above and elsewhere in
this prospectus. We do not intend to update any of the forward-looking statements
after the date of this prospectus to conform such statements to actual results.
14
SELECTED FINANCIAL DATA
You should
read the following selected consolidated historical financial data in conjunction
with our financial statements and the related notes incorporated by reference into
this prospectus. The statement of operations data for the fiscal years ended March
31, 1998, 1999, 2000, 2001 and 2002 and the balance sheet data as of March 31, 1998,
1999, 2000, 2001 and 2002 are derived from our consolidated audited
financial statements. The consolidated financial statements as of
March 31, 2002 and 2001, and for each of the years in the
three-year period ended March 31, 2002 and the report thereon,
are incorporated by reference. The statement of operations for the
six months ended September 30, 2001 and 2002 and the balance sheet data as of September
30, 2002 are derived from our unaudited consolidated financial statements. Our
financial statements are prepared in Indian rupees and presented in accordance with
U.S. GAAP for the fiscal years ended March 31, 1998, 1999, 2000, 2001 and 2002 and
for the six months ended September 30, 2001 and 2002. Financial statements for
the year ended March 31, 2002 and six months ended September 30, 2002 also have
been translated into U.S. dollars for your convenience.
The selected
financial data should be read in conjunction with “Operating and Financial
Review and Prospects” and our consolidated financial statements and the related
notes which are incorporated by reference.
In addition,
the selected consolidated historical financial data presented herein includes transitional
disclosures pertaining to adoption of SFAS 142, Goodwill and other Intangible Assets,
for the years ended March 31, 2000, 2001 and 2002 and for the six months ended September
30, 2001 and 2002.
15
|
|
Fiscal Year Ended March 31,
|
|
Six months ended September 30,
|
|
|
|
|
|
|
|
1998
|
|
1999
|
|
2000
|
|
2001
|
|
2002
|
|
2002
|
|
2001
|
|
2002
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indian
rupees
|
|
|
U.S. dollars
|
|
Indian
rupees
|
|
U.S. dollars
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands, except share and per share data)
|
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
Rs
|
6,805
|
|
|
Rs
|
103,344
|
|
|
Rs
|
622,725
|
|
|
Rs
|
1,225,481
|
|
|
Rs
|
1,577,488
|
|
|
$
|
32,593
|
|
|
Rs
|
759,294
|
|
|
Rs
|
868,552
|
|
|
$
|
17,945
|
|
Cost of revenues (excluding depreciation and amortization)
|
|
(19,498
|
)
|
|
|
(63,651
|
)
|
|
|
(281,431
|
)
|
|
|
(1,159,333
|
)
|
|
|
(1,187,684
|
)
|
|
|
(24,539
|
)
|
|
|
(596,168
|
)
|
|
|
(631,847
|
)
|
|
|
(13,054
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (excluding depreciation and amortization)
|
|
(12,693
|
)
|
|
|
39,693
|
|
|
|
341,294
|
|
|
|
66,148
|
|
|
|
389,804
|
|
|
|
8,054
|
|
|
|
163,126
|
|
|
|
236,705
|
|
|
|
4,891
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
80,394
|
|
|
|
200,213
|
|
|
|
650,222
|
|
|
|
1,855,962
|
|
|
|
1,962,219
|
|
|
|
40,542
|
|
|
|
971,592
|
|
|
|
1,094,403
|
|
|
|
22,612
|
|
Acquisition expenses
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,000
|
|
|
|
413
|
|
|
|
20,000
|
|
|
|
—
|
|
|
|
—
|
|
Amortization of goodwill
|
|
—
|
|
|
|
—
|
|
|
|
115,992
|
|
|
|
931,967
|
|
|
|
292,964
|
|
|
|
6,053
|
|
|
|
292,964
|
|
|
|
—
|
|
|
|
—
|
|
Impairment of goodwill
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,127,680
|
|
|
|
85,283
|
|
|
|
4,115,145
|
|
|
|
—
|
|
|
|
—
|
|
Amortization of deferred stock compensation expense
|
|
—
|
|
|
|
69
|
|
|
|
20,627
|
|
|
|
79,224
|
|
|
|
14,673
|
|
|
|
303
|
|
|
|
14,001
|
|
|
|
16,750
|
|
|
|
346
|
|
Foreign exchange (gain)/loss
|
|
6
|
|
|
|
(615
|
)
|
|
|
(5,414
|
)
|
|
|
(162,136
|
)
|
|
|
(44,520
|
)
|
|
|
(920
|
)
|
|
|
(34,552
|
)
|
|
|
(10,829
|
)
|
|
|
(224
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
80,400
|
|
|
|
199,667
|
|
|
|
781,427
|
|
|
|
2,705,017
|
|
|
|
6,373,016
|
|
|
|
131,674
|
|
|
|
5,379,150
|
|
|
|
1,100,324
|
|
|
|
22,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
(93,093
|
)
|
|
|
(159,974
|
)
|
|
|
(440,133
|
)
|
|
|
(2,638,869
|
)
|
|
|
(5,983,212
|
)
|
|
|
(123,620
|
)
|
|
|
(5,216,024
|
)
|
|
|
(863,619
|
)
|
|
|
(17,843
|
)
|
Other (expense)/income, net
|
|
(7,498
|
)
|
|
|
(27,402
|
)
|
|
|
71,852
|
|
|
|
242,368
|
|
|
|
32,711
|
|
|
|
676
|
|
|
|
34,044
|
|
|
|
15,985
|
|
|
|
330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before equity in losses of affiliates, income taxes and minority interest
|
|
(100,591
|
)
|
|
|
(187,376
|
)
|
|
|
(368,281
|
)
|
|
|
(2,396,501
|
)
|
|
|
(5,950,501
|
)
|
|
|
(122,944
|
)
|
|
|
(5,181,980
|
)
|
|
|
(847,634
|
)
|
|
|
(17,513
|
)
|
Equity in losses of affiliates
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(294,540
|
)
|
|
|
(1,225,692
|
)
|
|
|
(25,324
|
)
|
|
|
(1,184,414
|
)
|
|
|
(30,590
|
)
|
|
|
(632
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and minority interest
|
|
(100,591
|
)
|
|
|
(187,376
|
)
|
|
|
(368,281
|
)
|
|
|
(2,691,041
|
)
|
|
|
(7,176,193
|
)
|
|
|
(148,268
|
)
|
|
|
(6,366,394
|
)
|
|
|
(878,224
|
)
|
|
|
(18,145
|
)
|
Income taxes
|
|
—
|
|
|
|
—
|
|
|
|
1,478
|
|
|
|
(1,707
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(9,334
|
)
|
|
|
5,177
|
|
|
|
107
|
|
Minority interest
|
|
—
|
|
|
|
—
|
|
|
|
1,799
|
|
|
|
11,137
|
|
|
|
17,928
|
|
|
|
370
|
|
|
|
3,943
|
|
|
|
12,290
|
|
|
|
254
|
|
Losses before income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
(100,591
|
)
|
|
|
(187,376
|
)
|
|
|
(365,004
|
)
|
|
|
(2,681,611
|
)
|
|
|
(7,158,265
|
)
|
|
|
(147,898
|
)
|
|
|
(6,371,785
|
)
|
|
|
(860,757
|
)
|
|
|
(17,784
|
)
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income / (loss) from discontinued operations
|
|
—
|
|
|
|
—
|
|
|
|
(16,893
|
)
|
|
|
172,581
|
|
|
|
(125,373
|
)
|
|
|
(2,590
|
)
|
|
|
(25,769
|
)
|
|
|
—
|
|
|
|
—
|
|
Profit on sale of discontinued operations, net of direct costs
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
81,121
|
|
|
|
1,676
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
Rs
|
(100,591
|
)
|
|
Rs
|
(187,376
|
)
|
|
Rs
|
(381,897
|
)
|
|
Rs
|
(2,509,030
|
)
|
|
Rs
|
(7,202,517
|
)
|
|
$
|
(148,812
|
)
|
|
Rs
|
(6,397,554
|
)
|
|
Rs
|
(860,757
|
)
|
|
$
|
(17,784
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit/ (loss) per equity share - continuing operations
|
|
(121.66
|
)
|
|
|
(17.31
|
)
|
|
|
(19.68
|
)
|
|
|
(117.34
|
)
|
|
|
(308.59
|
)
|
|
|
(6.38
|
)
|
|
|
(274.76
|
)
|
|
|
(37.10
|
)
|
|
|
(0.77
|
)
|
- discontinuing operations
|
|
—
|
|
|
|
—
|
|
|
|
(0.91
|
)
|
|
|
7.55
|
|
|
|
(1.91
|
)
|
|
|
(0.04
|
)
|
|
|
(1.11
|
)
|
|
|
—
|
|
|
|
—
|
|
Net loss per share
|
|
(121.66
|
)
|
|
|
(17.31
|
)
|
|
|
(20.59
|
)
|
|
|
(109.79
|
)
|
|
|
(310.50
|
)
|
|
|
(6.42
|
)
|
|
|
(275.87
|
)
|
|
|
(37.10
|
)
|
|
|
(0.77
|
)
|
Weighted average equity shares used in computing net loss per equity share
|
|
826,805
|
|
|
|
10,824,826
|
|
|
|
18,545,399
|
|
|
|
22,852,600
|
|
|
|
23,196,428
|
|
|
|
23,196,428
|
|
|
|
23,190,711
|
|
|
|
23,202,176
|
|
|
|
23,202,176
|
|
16
|
|
Fiscal Year ended, and as of March 31,
|
Six months ended, and as of
September 30,
|
|
|
|
|
|
|
|
|
1998
|
|
|
1999
|
|
2000
|
|
|
2001
|
|
|
2002
|
|
|
2002
|
|
|
2001
|
|
|
2002
|
|
2002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indian
rupees
|
|
|
U.S. dollars
|
|
Indian
rupees
|
|
U.S. dollars
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands, except share and per share data)
|
| Transitional
disclosures pertaining to adoption of SFAS 142 Goodwill and other Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net loss from
continuing operations
|
|
—
|
|
|
|
—
|
|
Rs
|
(365,004
|
)
|
|
Rs
|
(2,681,611
|
)
|
|
Rs
|
(7,158,265
|
)
|
|
|
$
|
(147,898
|
)
|
|
Rs
|
(6,371,785
|
)
|
|
Rs
|
(860,757
|
)
|
|
$
|
(17,784
|
)
|
Add: Goodwill amortization
|
|
—
|
|
|
|
—
|
|
|
115,992
|
|
|
|
931,967
|
|
|
|
292,964
|
|
|
|
|
6,053
|
|
|
|
292,964
|
|
|
|
—
|
|
|
|
—
|
|
Add: APB 18 Goodwill
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
201,332
|
|
|
|
75,210
|
|
|
|
|
1,554
|
|
|
|
75,210
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss from
continuing operations
|
|
—
|
|
|
|
—
|
|
Rs
|
(249,012
|
)
|
|
Rs
|
(1,548,312
|
)
|
|
Rs
|
(6,790,091
|
)
|
|
|
$
|
(140,291
|
)
|
|
Rs
|
(6,003,611
|
)
|
|
Rs
|
(860,757
|
)
|
|
$
|
(17,784
|
)
|
Add: Discontinued operations, including profit on sale
|
|
|
|
|
|
|
|
|
(16,893
|
)
|
|
|
172,581
|
|
|
|
(44,252
|
)
|
|
|
|
(914
|
)
|
|
|
(25,769
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss
|
|
|
|
|
|
|
|
|
(265,905
|
)
|
|
|
(1,375,731
|
)
|
|
|
(6,834,343
|
)
|
|
|
|
(141,205
|
)
|
|
|
(6,029,380
|
)
|
|
|
(860,757
|
)
|
|
|
(17,784
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net loss per share from
continuing operations
|
|
—
|
|
|
|
—
|
|
|
(19.68
|
)
|
|
|
(117.34
|
)
|
|
|
(308.59
|
)
|
|
|
|
(6.38
|
)
|
|
|
(274.76
|
)
|
|
|
(37.10
|
)
|
|
|
(0.77
|
)
|
Add: Goodwill amortization
|
|
—
|
|
|
|
—
|
|
|
6.25
|
|
|
|
40.78
|
|
|
|
12.63
|
|
|
|
|
0.26
|
|
|
|
12.64
|
|
|
|
—
|
|
|
|
—
|
|
Add: APB 18 Goodwill
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
8.81
|
|
|
|
3.24
|
|
|
|
|
0.07
|
|
|
|
3.24
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss per
share from continuing operations
|
|
—
|
|
|
|
—
|
|
|
(13.43
|
)
|
|
|
(67.75
|
)
|
|
|
(292.72
|
)
|
|
|
|
(6.05
|
)
|
|
|
(258.88
|
)
|
|
|
(37.10
|
)
|
|
|
(0.77
|
)
|
Discontinued operations
|
|
|
|
|
|
|
|
|
(0.91
|
)
|
|
|
7.55
|
|
|
|
(1.91
|
)
|
|
|
|
(0.04
|
)
|
|
|
(1.11
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss per share
|
|
|
|
|
|
|
|
|
(14.34
|
)
|
|
|
(60.20
|
)
|
|
|
(294.63
|
)
|
|
|
|
(6.09
|
)
|
|
|
(259.99
|
)
|
|
|
(37.10
|
)
|
|
|
(0.77
|
)
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
Rs
|
9,729
|
|
|
Rs
|
103,403
|
|
Rs
|
7,284,568
|
|
|
Rs
|
1,414,205
|
|
|
Rs
|
658,111
|
|
|
|
$
|
13,597
|
|
|
Rs
|
816,966
|
|
|
Rs
|
273,835
|
|
|
$
|
5,658
|
|
Total assets
|
|
107,632
|
|
|
|
454,888
|
|
|
10,634,004
|
|
|
|
11,501,884
|
|
|
|
4,146,274
|
|
|
|
|
85,667
|
|
|
|
4,858,504
|
|
|
|
3,295,006
|
|
|
|
68,079
|
|
Long-term debt, including current installments
|
|
134,455
|
|
|
|
259,256
|
|
|
215,537
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity / (deficit)
|
|
(52,560
|
)
|
|
|
67,617
|
|
|
9,927,840
|
|
|
|
10,588,336
|
|
|
|
3,394,113
|
|
|
|
|
70,126
|
|
|
|
4,201,430
|
|
|
|
2,549,070
|
|
|
|
52,667
|
|
Note
1. Certain prior-year data has been reclassified to conform to the current year
presentation.
2. Convenience translation to US Dollars done at the exchange rate on September 30, 2002
of Rs 48.40 / dollar, which should not be construed as a
representation that those Indian rupee or U.S. dollar amounts
could have been, or could be, converted into U.S. dollars or
Indian rupees, as the case may be, at this rate or at all.
3. There is no goodwill associated with discontinued operations and no extraordinary items.
17
EXCHANGE RATES
The following
table sets forth, for each of the months indicated, information concerning the number
of Indian rupees for which one U.S. dollar could be exchanged based on the average
of the noon buying rate in the City of New York on the last day of each month during
each of such months for cable transfers in Indian rupees as certified for customs
purposes by the Federal Reserve Bank of New York:
| Month
|
|
High
|
|
Low
|
|
|
|
|
|
June 2002
|
|
Rs.
|
49.31
|
|
|
Rs.
|
48.54
|
|
July 2002
|
|
|
49.12
|
|
|
|
48.42
|
|
August 2002
|
|
|
48.94
|
|
|
|
48.20
|
|
September 2002
|
|
|
48.80
|
|
|
|
48.11
|
|
October 2002
|
|
|
48.66
|
|
|
|
48.05
|
|
November 2002
|
|
|
48.63
|
|
|
|
47.90
|
|
The
following table sets forth, for the fiscal years indicated, information
concerning the number of Indian rupees for which one U.S. dollar could be exchanged
based on the average of the noon buying rate in the City of New York on the last
day of each month during the period for cable transfers in Indian rupees as certified
for customs purposes by the Federal Reserve Bank of New York:
| Fiscal
Year Ended March 31,
|
|
Period End
|
|
Average
|
|
High
|
|
Low
|
|
|
|
|
|
|
|
|
|
1998
|
|
Rs.
|
39.50
|
|
|
Rs.
|
37.18
|
|
|
Rs.
|
40.40
|
|
|
Rs.
|
35.33
|
|
1999
|
|
|
42.44
|
|
|
|
42.08
|
|
|
|
43.68
|
|
|
|
39.25
|
|
2000
|
|
|
43.63
|
|
|
|
43.34
|
|
|
|
43.82
|
|
|
|
42.20
|
|
2001
|
|
|
46.85
|
|
|
|
45.70
|
|
|
|
46.91
|
|
|
|
43.56
|
|
2002
|
|
|
48.83
|
|
|
|
47.71
|
|
|
|
48.91
|
|
|
|
46.58
|
|
18
WHERE YOU CAN FIND ADDITIONAL
INFORMATION
We have
filed
with the United States Securities and Exchange Commission, or SEC, a registration
statement on Form F-3 and related exhibits, under the Securities Act of 1933, as
amended, and the rules and regulations of the SEC. We have not included in this
prospectus all of the information contained in the registration statement, and you
should refer to the registration statement and its exhibits for further information.
You may
review
and obtain copies of the registration statement, including exhibits and schedules
filed with it, at the Public Reference Room of the SEC, Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You
may also find the registration statement with exhibits, other than confidential
filings, at the SEC’s Website at www.sec.gov.
We file
with
the SEC annual reports on Form 20-F and other reports on Form 6-K. Our annual and
a number of our other reports include financial statements prepared in accordance
with generally accepted accounting principles, except as disclosed therein. Our
annual financial statements are examined by our independent accountants. A link
to these reports is provided at our corporate website,
www.sifycorp.com. No information on any of our websites is
incorporated by reference in this prospectus.
The
SEC’s
rules let us “incorporate by reference” information which we file with
the SEC, which means we can disclose important information to you by referring you
to those documents. The information we incorporate by reference is considered a part of this prospectus,
and later information we file with the SEC will automatically update and supercede
this information. This prospectus incorporates:
| •
|
|
our Annual
Report on Form 20-F for the year ended March 31, 2002 which we filed with the SEC
on July 1, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on April 25, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on May 14, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on June 13, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on July 17, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on August 12, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on October 10, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on October 25, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on November 15, 2002;
|
|
|
|
|
| •
|
|
our Current
Report on Form 6-K which we filed with the SEC on December 10, 2002;.
|
|
|
|
|
| •
|
|
the description
of our equity shares contained in our registration statement on Form F-1 (SEC File
No. 333-96111);
|
|
|
|
|
| •
|
|
the description
of our American Depositary Shares contained in our registration statement on Form
F-1 (SEC File No. 333-96111); and
|
|
|
|
|
| •
|
|
all documents
filed by us with the SEC on form 20-F, Form 40-F, and, to the extent specified therein,
Form 6-K pursuant to the Exchange Act after the date of this prospectus and before
the selling stockholder stops offering the securities under this prospectus (other
than those portions of such documents described in paragraphs (i), (k) and (l) of
Item 402 of Registration S-K promulgated by the Commission).
|
We will provide
to each person, including any beneficial owner, to whom a prospectus is delivered,
a copy of any or all of the information that has been incorporated by reference
in this prospectus but not delivered with this prospectus. We will provide this
information at no cost to you upon written or oral request directed to Satyam Infoway
Limited, Tidel Park, 2nd Floor, No. 4, Canal Bank Road, Taramani, Chennai 600 113,
India, Attn: Investor Relations, Telephone: (91) 44-254-0770.
19
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus,
including the documents that we incorporate by reference, contains forward-looking
statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act. Such statements relate to, among other things, expansion plans,
expected future results of operations, capital expenditures, integration of acquired
businesses, other possible acquisitions, cost reduction efforts, cash flow and operating
improvements, and are indicated by words or phrases such as “anticipate,”
“estimate,” “plans,” “projects,”
“continuing,” “ongoing,” “expects,” “management believes,”
“the company believes,” “the company intends,” “we believe,”
“we intend” and similar words or phrases. The following factors
are among the principal factors that could cause actual results to differ materially
from the forward-looking statements: general business and economic conditions in
India, including the rate of inflation, population, exchange rate
fluctuation, employment and job growth in India; pricing pressures and other
competitive factors, which could include pricing strategies; results of our programs
to control costs; results of our programs to increase revenues; results of our programs
to improve capital management; our ability to integrate any companies we acquire
and achieve operating improvements at those companies; increases in labor costs;
opportunities or acquisitions that we pursue; and the availability and terms of
financing. Consequently, actual events and results may vary significantly from those
included in or contemplated or implied by such statements.
In addition,
other factors that could cause results to differ materially from those estimated
by the forward-looking statements contained in this prospectus include, but are
not limited to, general economic and political conditions in India, Southeast Asia, and
other countries which have an impact on our business activities, changes in Indian
and foreign laws, regulations and taxes, changes in competition and other factors
beyond our control, including the factors described above in “Risk Factors.”
20
SELLING STOCKHOLDER
We are registering
these ADSs for resale by the selling stockholder identified below. The ADSs are
being registered to permit public secondary trading of the ADSs, and the selling
stockholder may offer the ADSs for resale from time to time. We agreed to register
these ADSs pursuant to the terms of a Registration Rights Agreement, dated as of
October 7, 2002, by and between the Company and SAIF. Please see “Plan of Distribution.”
We have filed
with the SEC, under the Securities Act, a registration statement on Form F-3, of
which this prospectus forms a part, with respect to the resale of the ADSs from
time to time on the Nasdaq National Market, in privately-negotiated transactions,
or otherwise. We intend to prepare and file such amendments and supplements to the
registration statement as may be necessary to keep the registration statement effective
for a period of three and one-half years (subject to extension) after the date of
issuance of the ADSs to the selling stockholder or such earlier time as may be permitted
under the Registration Rights Agreement, including such time as all ADSs covered
by the registration statement have been sold or may be resold in a 90-day period
under Rule 144 of the Securities Act without volume limitation or reliance on Rule
144(k).
The following
table sets forth the name of the selling stockholder, the number of ADSs known by
us to be beneficially owned by the selling stockholder as of December 17, 2002,
the number of ADSs that may be offered for resale for the account of the selling
stockholder pursuant to this prospectus and the number of ADSs to be held by the
selling stockholder after the sale of all of the ADSs by the selling stockholder.
Percentage ownership is based on 32,795,200 equity shares outstanding as of
December 17, 2002. The selling stockholder may sell all, some or none of the ADSs
being offered. This information is based upon information provided by the selling
stockholder.
|
|
ADSs Beneficially
|
|
|
|
ADSs Beneficially
|
|
|
Owned
|
|
|
|
Owned
|
|
|
Prior to the
|
|
ADSs Offered by
|
|
Subsequent to the
|
|
|
Offering(1)
|
|
This Prospectus
|
|
Offering(1)(2)
|
|
|
|
|
|
|
|
|
Name of Selling Stockholder
|
Shares
|
|
Percent
|
|
|
|
|
Shares
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAIF Investment Company Limited
|
7,558,140 |
|
23.0
|
%
|
|
7,558,140
|
|
0
|
|
*
|
|
| (1)
|
Beneficial
ownership is determined in accordance with the rules of the Commission and generally
includes voting or investment power with respect to securities. Equity shares subject
to options and warrants which are currently exercisable, or will become exercisable
within 60 days of December 17, 2002, are deemed outstanding for computing the percentage
of the person or entity holding such securities but are not deemed outstanding for
computing the percentage of any other person or entity. The address
of SAIF Investment
Company Limited is c/o SBAsia Infrastructure Fund, L.P. Suite 2115-2118, Two Pacific
Place, 88 Queensway, Hong Kong.
|
|
|
|
|
| (2)
|
Assumes
the sale of all ADSs offered hereby.
|
21
PLAN OF DISTRIBUTION
The selling
stockholder or, subject to applicable law, its pledgees, donees, distributees, transferees
or other successors in interest, may sell ADSs from time to time in public transactions,
on or off the Nasdaq National Market, or in private transactions, at prevailing
market prices or at privately negotiated prices, including but not limited to, one
or any combination of the following types of transactions:
| •
|
|
ordinary
brokers’ transactions;
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|
|
|
|
| •
|
|
transactions
involving cross or block trades or otherwise on the Nasdaq National Market;
|
|
|
|
|
| •
|
|
purchases
by brokers, dealers or underwriters as principal and resale by these purchasers
for their own accounts pursuant to this prospectus;
|
|
|
|
|
| •
|
|
“at the
market,” to or through market makers, or into an existing market for our ADSs
;
|
|
|
|
|
| •
|
|
in other ways
not involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents;
|
|
|
|
|
| •
|
|
through transactions
in options, swaps or other derivatives (whether exchange-listed or otherwise);
|
|
|
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|
| •
|
|
in privately
negotiated transactions; or
|
|
|
|
|
| •
|
|
to cover short
sales.
|
In effecting
sales, brokers or dealers engaged by the selling stockholder may arrange for other
brokers or dealers to participate in the resales. The selling stockholder may enter
into hedging transactions with broker-dealers, and in connection with those transactions,
broker-dealers may engage in short sales of the ADSs. The selling stockholder also
may sell ADSs short and deliver the ADSs to close out such short positions. The
selling stockholder also may enter into option or other transactions with broker-dealers
that require the delivery to the broker-dealer of the ADSs, which the broker-dealer
may resell pursuant to this prospectus. The selling stockholder also may pledge
the ADSs to a broker or dealer. Upon a default, the broker or dealer may effect
sales of the pledged ADSs pursuant to this prospectus.
Brokers, dealers
or agents may receive compensation in the form of commissions, discounts or concessions
from the selling stockholder in amounts to be negotiated in connection with the
sale. The selling stockholder and any participating brokers or dealers may be deemed
to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any commission, discount or concession
these “underwriters” receive may be deemed to be underwriting compensation.
To the extent
required, the following information will be set forth in a supplement to this prospectus:
| •
|
|
information
as to whether underwriters who the selling stockholder may select, or any other
broker-dealer, is acting as principal or agent for the selling stockholder;
|
|
|
|
|
| •
|
|
the compensation
to be received by underwriters that the selling stockholder may select or by any
broker-dealer acting as principal or agent for the selling stockholder; and
|
|
|
|
|
| •
|
|
the compensation
to be paid to other broker-dealers, in the event the compensation of such other
broker-dealers is in excess of usual and customary commissions.
|
Any dealer
or broker participating in any distribution of the ADSs may be required to deliver
a copy of this prospectus, including a prospectus supplement, if any, to any person
who purchases any of the ADSs from or through this dealer or broker.
We have advised
the selling stockholder that it is required to comply with Regulation M promulgated
under the Securities Exchange Act of 1934 during such time as they may be engaged
in a distribution of the ADSs. With some exceptions, Regulation M precludes the
selling stockholder, any affiliated purchasers and any broker-dealer or other person
who participates in such distribution from bidding for or purchasing, or attempting
to induce any person to bid for or purchase any security that is the subject of
the distribution until the entire distribution is complete. Regulation M also prohibits
any bids or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the marketability
of the ADSs.
22
USE OF PROCEEDS
We will not
receive any of the proceeds from the selling stockholder’s sales of our ADSs.
LEGAL MATTERS
The validity
of the ADSs offered hereby will be passed upon for Satyam Infoway Limited by Latham
& Watkins, Menlo Park, California, U.S. counsel for Satyam Infoway Limited.
The validity of the equity shares represented by the ADSs offered hereby will be
passed upon by M.G. Ramachandran, New Delhi, India, Indian counsel for Satyam Infoway
Limited. Latham & Watkins will rely upon M.G. Ramachandran with respect to
matters governed by Indian law.
EXPERTS
The U.S. GAAP
financial statements of Satyam Infoway Limited as of March 31, 2001 and 2002, and
for each of the years in the three-year period ended March 31, 2002, have been incorporated
by reference herein in reliance upon the report of KPMG, India, independent accountants,
and upon the authority of said firm as experts in auditing and accounting.
23
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification
of Directors and Officers
Our company
has obtained directors and officers insurance providing indemnification for our
directors, and certain officers, affiliates, partners or employees for specified
errors and omissions.
Item
9. Exhibits
| Number
|
Description
|
|
|
| 4.1
|
Share Subscription
and Stockholders’ Agreement, dated as of February 5, 1999, by and among Satyam
Infoway Limited, Satyam Computer Services Limited, South Asia Regional Fund and
Mr. B. Ramalinga Raju. (1)
|
|
|
|
| 4.2
|
Amendment
No. 1 to Share Subscription and Stockholders’ Agreement, dated as of September
14, 1999, by and among Satyam Infoway Limited, Satyam Computer Services Limited,
South Asia Regional Fund and Mr. B. Ramalinga Raju. (1)
|
|
|
|
| 4.3
|
Deposit Agreement
among Satyam Infoway Limited, Citibank, N.A. and holders from time to time of American
Depositary Shares evidenced by American Depositary Receipts issued thereunder (including
as an exhibit, the form of American Depositary Receipt). (3)
|
|
|
|
| 4.4
|
Amendment
No. 1 to the Deposit Agreement dated as of January 6, 2000. (3)
|
|
|
|
| 4.5
|
Amendment
No. 2 to the Deposit Agreement dated as of September 24, 2002. (5)
|
|
|
|
| 4.6
|
Satyam Infoway
Limited’s Specimen Certificate for equity shares. (2)
|
|
|
|
| 4.7
|
Letter Agreement,
dated as of September 14, 1999, by and between Satyam Infoway Limited and Sterling
Commerce, Inc. (1)
|
|
|
|
| 4.8
|
Stockholders
Agreement, dated as of September 14, 1999, by and among Satyam Infoway Limited,
Sterling Commerce, Inc. and Satyam Computer Services Limited. (1)
|
|
|
|
| 4.9
|
Registration
Rights Agreement, dated as of September 14, 1999, by and among Satyam Infoway Limited,
Sterling Commerce, Inc. and South Asia Regional Fund. (1)
|
|
|
|
| 4.10
|
Registration
Rights Agreement, dated as of October 7, 2002, by and among Satyam Infoway Limited,
and SAIF Investment Company Limited. (4)
|
|
|
|
| 4.11
|
Investor Rights
Agreement, dated as of October 7, 2002, by and among Satyam Infoway Limited, SAIF
Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (4)
|
|
|
|
| 5.1
|
Opinion of
M.G. Ramachandran.
|
|
|
|
| 23.1
|
Consent of
Latham & Watkins.
|
|
|
|
| 23.2
|
Consent of
M.G. Ramachandran (included in Exhibit 5.1).
|
|
|
|
| 23.3
|
Consent of
KPMG, India, Independent Auditors.
|
|
|
|
| 24.1
|
Power of Attorney
(included on page II-3).
|
| (1)
|
|
Previously
filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1
(File No. 333-10852) filed with the Commission on October 4, 1999 and incorporated
herein by reference.
|
|
|
|
|
| (2)
|
|
Previously
filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-1
(File No. 333-10852) filed with the Commission on October 13, 1999 and incorporated
herein by reference.
|
|
|
|
|
| (3)
|
|
Previously
filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with
the Commission on January 5, 2000 and incorporated herein by reference.
|
II-1
| (4)
|
|
Previously
filed as an exhibit to Form 6-K filed with the Commission on October 25, 2002 and
incorporated herein by reference.
|
|
|
|
|
| (5)
|
|
Previously
filed as an exhibit to the Registration Statement on Form S-8 (File No. 333-101322)
filed with the Commission on November 20, 2002 and incorporated herein by reference.
|
Item 10. Undertakings
(a) The undersigned
registrant hereby undertakes:
(1) to file,
during any period in which offers or sales are being made, a post-effective amendment
to this registration statement to include any material information with respect
to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(2) that,
for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof;
(3) to remove
from registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering; and
(4) to file
a post-effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any delayed offering
or throughout a continuous offering; provided, however, that this paragraph
does not apply if the financial statements required to be included in a post-effective
amendment by this paragraph are contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by
reference in this registration statement;
(b) The undersigned registrant hereby undertakes
that, for purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant’s annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of such registrant in the successful
defense of any action, suit or proceeding) is asserted by any such director, officer
or controlling person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the adjudication of such issue.
(d) The undersigned registrant hereby undertakes
that:
|
|
(1) For purposes
of determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
|
|
|
|
|
|
(2) For the
purpose of determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
|
II-2
SIGNATURES
Pursuant to
the requirements of the Securities Act of 1933, as amended, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of Chennai,
State of Tamil Nadu, Country of India, on this 17th day of December 2002.
|
|
SATYAM INFOWAY
LIMITED
|
|
|
|
|
|
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By
|
/s/ R. Ramaraj
|
|
|
|
|
|
|
|
Name: R.
Ramaraj
|
|
|
|
Title: Chief
Executive Officer
|
POWER OF ATTORNEY
KNOW ALL PERSONS
BY THESE PRESENT, that each person whose signature appears below constitutes and
appoints R. Ramaraj and T.R. Santhanakrishnan, and each of them, his attorneys-in-fact,
each with the power of substitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any registration statement
for the same Offering covered by this Registration Statement that is to be effective
upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933,
and all post-effective amendments thereto, and to file the same, with all exhibits
thereto in all documents in connection therewith, with the SEC, granting unto said
attorneys-in-fact and agents or any of them, or his or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to
the requirements of the Securities Act of 1933, as amended, this registration statement
has been signed by the following persons in the capacities indicated:
| Signature
|
|
Title
|
Date
|
|
|
|
|
| /s/ R. Ramaraj
|
|
Chief Executive
Officer and Director
(Principal Executive Officer)
|
December
17, 2002
|
|
|
|
| R. Ramaraj
|
|
|
|
| |
| /s/ T.R. Santhanakrishnan
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
December
17, 2002
|
|
|
|
| T.R. Santhanakrishnan
|
|
|
|
| |
| /s/ Donald Peck
|
|
Director
|
December
17, 2002
|
|
|
|
|
| Donald Peck
|
|
|
|
| |
| /s/ T.H. Chowdary
|
|
Director
|
December
17, 2002
|
|
|
|
|
| T.H. Chowdary
|
|
|
|
| |
| /s/ S. Srinivasan
|
|
Director
|
December
17, 2002
|
|
|
|
|
| S. Srinivasan
|
|
|
|
| |
| /s/ V. Srinivas
|
|
Director
|
December
17, 2002
|
|
|
|
|
| V. Srinivas
|
|
|
|
II-3
| Signature
|
|
Title
|
Date
|
|
|
|
|
| /s/ K. Thiagarajan
|
|
Director
|
December
17, 2002
|
|
|
|
| K. Thiagarajan
|
|
|
|
| |
| /s/ Sandeep
Reddy
|
|
Director
|
December 17, 2002
|
|
|
|
| Sandeep Reddy
|
|
|
|
| |
| /s/ Eric Hsia
|
|
Director
|
December 17, 2002
|
|
|
|
| Eric Hsia
|
|
|
|
| |
| /s/ Ravi Chandra Adusumalli
|
|
Director
|
December
17, 2002
|
|
|
|
| Ravi Chandra Adusumalli
|
|
|
|
II-4
EXHIBIT INDEX
| Number
|
Description
|
|
|
| 4.1
|
Share Subscription
and Stockholders’ Agreement, dated as of February 5, 1999, by and among Satyam
Infoway Limited, Satyam Computer Services Limited, South Asia Regional Fund and
Mr. B. Ramalinga Raju. (1)
|
|
|
|
| 4.2
|
Amendment
No. 1 to Share Subscription and Stockholders’ Agreement, dated as of September
14, 1999, by and among Satyam Infoway Limited, Satyam Computer Services Limited,
South Asia Regional Fund and Mr. B. Ramalinga Raju. (1)
|
|
|
|
| 4.3
|
Deposit Agreement
among Satyam Infoway Limited, Citibank, N.A. and holders from time to time of American
Depositary Shares evidenced by American Depositary Receipts issued thereunder (including
as an exhibit, the form of American Depositary Receipt). (3)
|
|
|
|
| 4.4
|
Amendment
No. 1 to the Deposit Agreement dated as of January 6, 2000. (3)
|
|
|
|
| 4.5
|
Amendment
No. 2 to the Deposit Agreement dated as of September 24, 2002. (5)
|
|
|
|
| 4.6
|
Satyam Infoway
Limited’s Specimen Certificate for equity shares. (2)
|
|
|
|
| 4.7
|
Letter Agreement,
dated as of September 14, 1999, by and between Satyam Infoway Limited and Sterling
Commerce, Inc. (1)
|
|
|
|
| 4.8
|
Stockholders
Agreement, dated as of September 14, 1999, by and among Satyam Infoway Limited,
Sterling Commerce, Inc. and Satyam Computer Services Limited. (1)
|
|
|
|
| 4.9
|
Registration
Rights Agreement, dated as of September 14, 1999, by and among Satyam Infoway Limited,
Sterling Commerce, Inc. and South Asia Regional Fund. (1)
|
|
|
|
| 4.10
|
Registration
Rights Agreement, dated as of October 7, 2002, by and among Satyam Infoway Limited,
and SAIF Investment Company Limited. (4)
|
|
|
|
| 4.11
|
Investor Rights
Agreement, dated as of October 7, 2002, by and among Satyam Infoway Limited, SAIF
Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (4)
|
|
|
|
| 5.1
|
Opinion of
M.G. Ramachandran.
|
|
|
|
| 23.1
|
Consent of
Latham & Watkins.
|
|
|
|
| 23.2
|
Consent of
M.G. Ramachandran (included in Exhibit 5.1).
|
|
|
|
| 23.3
|
Consent of
KPMG, India, Independent Auditors.
|
|
|
|
| 24.1
|
Power of Attorney
(included on page II-3).
|
| (1)
|
|
Previously
filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1
(File No. 333-10852) filed with the Commission on October 4, 1999 and incorporated
herein by reference.
|
|
|
|
|
| (2)
|
|
Previously
filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-1
(File No. 333-10852) filed with the Commission on October 13, 1999 and incorporated
herein by reference.
|
|
|
|
|
| (3)
|
|
Previously
filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with
the Commission on January 5, 2000 and incorporated herein by reference.
|
|
|
|
|
| (4)
|
|
Previously
filed as an exhibit to Form 6-K filed with the Commission on October 25, 2002 and
incorporated herein by reference.
|
|
|
|
|
| (5)
|
|
Previously
filed as an exhibit to the Registration Statement on Form S-8 (File No. 333-101322)
filed with the Commission on November 20, 2002 and incorporated herein by reference.
|
II-5