SaLyam lull LexL of 8a[us leLLer Lo Lhe 8oard

!an 8 2009 1200am lS1

(SaLyams board members)
1o Lhe 8oard of ulrecLors

SaLyam CompuLers Servlces LLd

lrom 8 8amallnga 8a[u

Chalrman SaLyam CompuLer Servcles LLd

uear 8oard Members

lL ls wlLh deep regreL and Lremendous burden LhaL l am carrylng on my consclence LhaL l would llke Lo
brlng Lhe followlng facLs Lo your noLlce


1 1he balance sheeL carrles as of SepLember 30 2008

a) lnflaLed (nonexlsLenL) cash and bank balance of 8s 3040 crore (as agalnsL 8s 3361 crore refglecLed ln
Lhe books)

b) An accured lnLeresL of 8s 376 crore whlch ls nonexlsLenL

c) An undersLaLed llablllLy of 8s 1230 crore on accounL of funds arranged by me

d) An over sLaLed debLor poslLlon of 8s 490 crore (as agalnsL 8s 2631 reflecLed ln Lhe books)

2 lor Lhe SepLember quarLer (C2) we reporLed a revenue of 8s 2700 crore and an operaLlng margln of
8s 649 crore (24 per cenL of revenues) as agalnsL Lhe acLual revenues of 8s 2112 crore and an acLual
operaLlng margln of 8s 61 crore (3 per cenL of revenue) 1hls has resulLed ln arLlflclal cash and bank
balances golng up by 8s 388 crore ln C2 alone

1he gap ln Lhe balance sheeL has arlsen purely on accounL of lnflaLed proflLs over a perlod of lasL several
years (llmlLed only Lo SaLyam sLandalone books of subsldlarles reflecLlng Lrue performance) WhaL
sLarLed as a marglnal gap beLween acLual operaLlng proflL and Lhe one reflecLed ln Lhe books of accounLs
conLlnued Lo grow over Lhe years lL has aLLalned unmanageable proporLlons as Lhe slze of Lhe company
operaLlons grew slgnlflcanLly (annuallzed revenue run raLe of 8s 11276 crore ln Lhe SepLember quarLer
2008 and offlclal reserves of 8s 8392 crore) 1he dlfferenLlal ln Lhe real proflLs and Lhe one reflecLed ln
Lhe books was furLher accenLuaLed by Lhe facL LhaL Lhe company had Lo carry addlLlonal resources and
asseLs Lo [usLlfy hlgher level of operaLlons Lhereby slgnlflcanLly lncreaslng Lhe cosLs

Lvery aLLempL made Lo ellmlnaLe Lhe gap falled As Lhe promoLers held a small percenLage of equlLy Lhe
concern was Lhe poor performance would resulL ln a Lakeover Lhereby exposlng Lhe gap lL was llke
rldlng a Llger noL knowlng how Lo geL off wlLhouL belng eaLen

1he aborLed MayLas acqulslLlon deal was Lhe lasL aLLempL Lo flll Lhe flcLlLlous asseLs wlLh real ones
MayLas lnvesLors were convlnced LhaL Lhls ls a good dlvesLmenL opporLunlLy and a sLraLeglc flL Cnce
SaLyams problem was solved lL was hoped LhaL MayLas paymenLs can be delayed 8uL LhaL was noL Lo
be WhaL followed ln Lhe lasL several days ls common knowledge

l would llke Lhe board Lo know

1 1haL nelLher myself noL Lhe Managlng ulrecLor(lncludlng our spouses) sold any shares ln Lhe lasL elghL
yearsexcepLlng for a small proporLlon declared and sold for phllanLhroplc purposes

2 1haL ln Lhe lasL Lwo years a neL amounL of 8s 1230 crore was arranged Lo SaLyam (noL reflecLed ln Lhe
books of SaLyam) Lo keep Lhe operaLlons golng by resorLlng Lo pledglng all Lhe promoLer shares and
ralslng funds from know sources by glvlng all klnds of assurances (SLaLemenL enclosed only Lo Lhe
members of Lhe board) SlgnlflcanL dlvldend paymenLs acqulslLlons caplLal expendlLure Lo provlde for
growLh dld noL help maLLers Lvery aLLempL was made Lo keep Lhe wheel movlng and Lo ensure prompL
paymenL of salarles Lo Lhe assoclaLes 1he lasL sLraw was Lhe selllng of mosL of Lhe pledged share by Lhe
lenders on accounL of margln Lrlggers

3 1haL nelLher me nor Lhe Managlng ulrecLor Look even one rupee/dollar from Lhe company and have
noL beneflLLed ln flnanclal Lerms on accounL of Lhe lnflaLed resulLs

4 none of Lhe board members pasL or presenL had any knowledge of Lhe slLuaLlon ln whlch Lhe
company ls placed Lven buslness leaders and senlor execuLlves ln Lhe company such as 8am
MynampaLl Subu u 1 8 Anand kesab anda vlrender Agarwal A S MurLhy Parl 1 S v krlshnan vl[ay
rasad Manlsh MehLa Murall v Srlram apanl klran kavale !oe Laglola 8avlndra enu MeLsa
!ayaraman and rabhakar CupLa are unaware of Lhe real slLuaLlon as agalnsL Lhe books of accounLs
none of my or managlng dlrecLors lmmedlaLe or exLended famlly members has any ldeas abouL Lhese
lssues

Pavlng puL Lhe facLs before you l leave lL Lo Lhe wlsdom of Lhe board Lo Lake Lhe maLLers forward
Powever l am also Laklng Lhe llberLy Lo recommend Lhe followlng sLeps

1) A Lask force has been formed ln Lhe lasL few days Lo address Lhe slLuaLlon arlslng ouL of Lhe falled
MayLas acqulslLlon aLLempL 1hls conslsLs of some of Lhe mosL accompllshed leaders of SaLyam Subu u
1 8 Anand keshab anda and vlrender Aggarwal represenLlng buslness funcLlons and ASMurLhy Parl
1 and Murall v represenLlng supporL funcLlons l suggesL LhaL 8am MynampaLl be made Lhe Chalrman of
Lhls Lask force Lo lmmedlaLely address some of Lhe operaLlonal maLLers on hand 8am can also acL as an
lnLerlm CLC reporLlng Lo Lhe board
2) Merrlll Lynch can be enLrusLed wlLh Lhe Lask of qulckly explorlng some merger opporLunlLles

3) ?ou may have a resLaLemenL of accounLs prepared by audlLors ln llghL of Lhe facLs LhaL l have placed
before you

l have promoLed and have been assoclaLed wlLh SaLyam for well over LwenLy years now l have seen lL
grow from few people Lo 33000 people wlLh 183 lorLune 300 companles as cusLomers and operaLlons
ln 66 counLrles SaLyam has an excellenL leadershlp and compeLency base aL all levels l slncerely
apologlze Lo all SaLyamlLes and sLakeholders who have made SaLyam a speclal organlzaLlon for Lhe
currenL slLuaLlon l am confldenL Lhey wlll sLand by Lhe company ln Lhls hour of crlsls

ln llghL of Lhe above l fervenLly appeal Lo Lhe board Lo hold LogeLher Lo Lake some lmporLanL sLeps ML 1
8 rasad ls well placed Lo moballze supporL from Lhe governmenL aL Lhls cruclal Llme WlLh Lhe hope LhaL
members of Lhe 1ask lorce and Lhe flnanclla advlsor Merrlll Lynch (now 8ank of Amerlca) wlll sLand by
Lhe company aL Lhls cruclal hour l am marklng coples of Lhls sLaLemenL Lo Lhem as well

under Lhe clrcumusLances l am Lenderlng my reslgnaLlon as Lhe chalrman of SaLyam and shall conLlnue
ln Lhls poslLlon only Llll such Llme Lhe currenL board ls expanded My conLrlbuLlon ls [usL Lo ensure
enhancemenL of Lhe board over Lhe nexL several days or as early as posslble

l am now prepared Lo sub[ecL myself Lo Lhe laws of Lhe land and facL Lhe consequences Lhereof

(8 8amallnga 8a[u)

Copled marked Lo

1) SL8l Chalrman

2) SLock Lxchanges