INDEX

ACKNOWLEDGEMENT

INTRODUCTION & BACKGROUND

ACCOUNTING POLICIES

FINANCIAL STATEMENTS
- Balance Sheet upto 2007
- Profit Loss Account Upto 2007
- Balance sheet as on 31st Mar,2008
- Profit loss Account as on 31st Mat,32008

RATIO ANALYSIS
- Trend Analysis for Various Ratios

RECOMMENDATIONS

About Satyam
Delivering What Business Demands
Satyam Computer Services Ltd. (NYSE: "SAY") is a leading global consulting and IT services company,
offering a wide array of solutions customized for a range of key verticals and horizontals. From strategy
consulting right through to implementing IT solutions for customers, Satyam straddles the entire IT space. It
has excellent domain competencies in verticals such as Automotive, Banking & Financial Service, Insurance
& Healthcare, Manufacturing, Telecom-Infrastructure-Media-Entertainment-Semiconductors (TIMES). As a
diverse end-to-end IT solutions provider, Satyam offers a range of expertise aimed at helping customers re-
engineer and re-invent their businesses to compete successfully in an ever-changing marketplace.
Satyam's network spans 55 countries, across 6 continents. Nearly 40,000* dedicated and highly skilled IT
professionals, work in development centers in India, the USA, the UK, the UAE, Canada, Hungary,
Singapore, Malaysia, China, Japan and Australia* and serve over 558* global companies, including over
163* Fortune 500 corporations.
We have strategic technology and marketing alliances with over 90* top-notch companies that help us
provide end-to-end services to our customers.
Satyam's need-driven deployment of domain and technology expertise brings to customers a range of
solutions and products that enhance performance and competitiveness.
Our unique RightSourcingTM delivery model allows us to leverage local competencies to offer global
competitiveness to our customers.
Our consulting and IT solutions have resulted in technology-intensive transformations that have met the
most stringent of international quality standards. We have developed a unique quality hallmark, called
eSCMSM (eSourcing Capability Model), for IT Enabled Services (ITES), in collaboration with Carnegie Mellon
University and Accenture.
We follow a specially developed Business Continuity Model (BCM), which allows us to continue mission
critical operations of our customers, even in the most challenging of times.
Core Purpose:
"To leverage information, knowledge and technology to enhance human endeavor."
Satyam develops and deploys intelligent applications in technology for diverse situations meeting varying
requirements. Satyam helps businesses and organizations push the limits of excellence, and helps optimize
their strengths.
Satyam's core values are expressed in the way teams are built and the manner in which they operate and
achieve results. These values have been identified based on internal strengths of the organization. They are
the guiding parameters for all organization-wide initiatives.
Belief in People:
Satyam believes its true strength lies in the potential of its Associates. Associates work in an atmosphere of
trust and confidence. Every individual Associate is a leader. This leadership is expressed in the way tasks
are assigned and taken up, the freedom with which workstyles are negotiated and high standards of quality
set independently by each and every Associate. A high degree of operational freedom helps Associates
exercise their creativity and expertise in approaching tasks and achieving Customer Delight.
Entrepreneurship:
At Satyam, it's ideas that drive people. A variety of programs help Associates create tangible value,
constantly encouraging Associates to convert ideas into market value, in the true spirit of entrepreneurship.
Customer Orientation:
As a customer-centric enterprise, we are very sharply focussed on delivering not only what the customer
demands but also providing them with the weapons to compete with. In other words we deliver business
competitiveness. All this eventually leads to Customer Intimacy.

Pursuit of Excellence:

Achieving excellence in anything we do is a part of our corporate DNA. It is not just lipservice. Rather a
process driven strategy that allows us to benchmark everything against the global best and then surpass it,
so that we set the benchmark for others to follow. In the process we are always a couple of steps ahead of
our nearest competitor. Satyam adheres to stringent Quality processes that meet and exceed international
standards that are continuously monitored.
Corporate Social Responsibility:
As a larger expression of its Mission and Core Values, Satyam is actively involved in a variety of public
service projects in Health, HIV/AIDS, Education, Environment, Livelihood, Street Children and Slum
Development.
Working through Satyam Foundation, an umbrella organization that brings together committed Satyam
associates and their spouses, the Company contributes to social causes and organizes initiatives for social
change, primarily in the areas of education, environment and healthcare.
Board Of Directors
• Executive Directors:
• Mr. B. Ramalinga Raju (Founder & Chairman)
• Mr. B. Rama Raju (Co-Founder & CEO)
• Mr. Ram Mynampati (Board Member, President – Commercial and Healthcare Businesses, Chairman –
Citisoft, Plc.)
• Non-Executive Directors:
• Professor M Rammohan Rao
• Dr. (Mrs.) Mangalam Srinivasan
• Prof. Krishna G. Palepu
• Mr. Vinod K Dham
Services Offered:
Application Development and Maintenance, Business Intelligence and Data Warehousing (BI&DW), Business
Process Outsourcing (BPO), Consulting and Enterprise Solutions, Embedded Services, Engineering Solutions,
Enterprise Storage Solutions, ERP, Infrastructure Management Services, Managed IT Services, Quality
Consulting, GIS Technology, High-Tech Solutions, MES and LIMS, Silicon Design Services, Six Sigma
Consulting
Development Centers: 25*
Bangalore, Basingstoke, Beijing, Bhubaneswar, Budapest, California, Chennai, Chicago, Dalian, Georgia,
Guangzhou, Hartford, Hyderabad, Kaula Lumpur, Melbourne, Munich, Mississauga, New Jersey, Ontario,
Pune, Sao Paulo, Shanghai, Singapore, Sydney, Tokyo, Wiesbaden.

Additional Information:
1. Subsidiaries:
• Nipuna Services Limited
• Satyam Technologies Inc.
• Satyam Computer Services ( Shanghai) Co Ltd
• Citisoft Plc.
2. Joint Ventures:
• Satyam Venture Engineering Services Pvt. Ltd.
• CA Satyam ASP Pvt. Ltd.
Financial Summary
Consolidated Indian GAAP Highlights for FY 2007:
• Revenue: Rs. 6,485 crore; a growth of 35.3% over fiscal 2006
• Total income: Rs. 6,668 crore; a growth of 35.8% over fiscal 2006
• Net Profit after Tax: Rs. 1,405 crore; a growth of 43.1% over fiscal 2006
Employee strength:
• Nearly 40,000*
(Include Subsidiaries and Joint Ventures)
Pioneering Effort
At Satyam, innovation and ideas-leadership are prized virtues. We encourage new ideas and an inventing
attitude. Little surprise, as an Organization we have been successful in playing a pioneering role ever since
our inception.

Some of our major contributions as pioneers have been:

1. Pioneers in Offshore Development
Satyam Computer Services Ltd., pioneered the Offshore Development Center model for software delivery.
Harnessing the wealth of skilled human resources in India, Satyam delivers solutions and customization
services to clients abroad, especially in the US, through this model.
2. Established India Development Centers
Satyam pioneered the concept of setting up exclusive development facilities for global players intending to
outsource IT initiatives with us. Located in various cities in India, Satyam has equipped these state-of-the-
art facilities with the best connectivity and infrastructure to provide IT solutions to clients. These IDCs now
operate from various locations in India, giving Satyam clients an added advantage.
3. eSCM: A Quality Model for ITES/BPO
Satyam worked with the Carnegie Mellon University, USA, (Accenture was the third partner) to create eSCM,
the only Quality model defining standards for the IT Enabled Services / Business Process Outsourcing space
in the world.
4. RightSourcing Model
Satyam introduced its unique delivery model - RightSourcing - providing customers the optimum
combination of onsite, offshore and offsite delivery.
Satyam Infoway
1. India's First Private ISP
Satyam's subsidiary, Satyam Infoway, became the first private Internet Service Provider (ISP) in India,
when it started operation in 1998.
2. First Indian Internet firm on NASDAQ
Satyam Infoway was listed on NASDAQ (NASDAQ:SIFY) in November 1999, making it the first Indian
Internet firm to trade on the premier US stock market. Infoway was oversubscribed by a factor of over 27,
the largest ever for any Indian ADR/ADS offering.
Company Background
Satyam Computer Services is India's fourth largest information technology (IT) services provider in sales as
well as in market capitalisation. Satyam was incorporated in 1987 as a private limited company. It floated
its initial public offer in 1992. Satyam had commenced its operations through an offshore software project,
initiated by its first Fortune 500 Client, Deere & Co. Satyam is a widely held company with institutions
having a shareholding of 59.9 per cent.
Satyam's operations span 55 countries. It has six subsidiaries. It has a pan--India presence through its 28
offices. In 2006--07, its consolidated employee base increased to 39,552. Exports account for almost 75.9
per cent of its total sales revenues. North America contributes around 65 per cent of the sales revenue
followed by Europe. Satyam serves over 558 global companies including over 163 Fortune 500 corporations.

It provides its services to various industries like automotive, banking, financial services & insurance (BFSI),
health care, manufacturing and telecom-infrastructure-media-entertainment-semiconductors (TIMES).
Satyam's range of expertise includes software development service, engineering service, ERP solution,
customer relationship management, supply chain management, consulting and IT outsourcing among
others. It operates in two segments namely IT and business process outsourcing (BPO) services. In the IT
segment, it offers a range of services which includes application development and maintenance (ADM),
consulting and enterprise business solutions (CEBS), extended engineering solutions (EES) and
infrastructure management services (IMS). A large portion of the revenues come from ADM and CEBS
services which together account for almost 89 per cent of its total sales revenues. Its BPO services are
provided through its subsidiary company, Satyam BPO. The software services account for a larger share of
the sales revenues as against the sales generated from the BPO segment. In 2006--07, software services
accounted for 97.2 per cent of Satyam's revenues. The company expanded largely through the organic
route. However, it has also made few acquisitions in the past. In 2005, Satyam acquired a 100 per cent
stake in Singapore based Knowledge Dynamics, a leading data warehousing and business intelligence
solutions provider. During the same year, it also acquired a 75 per cent stake in London based Citisoft Plc, a
highly specialized business and systems consulting firm, focused exclusively on the investment management
industry. In 2006--07, Satyam acquired the remaining 25 per cent stake in Citisoft Plc in an all cash deal
worth Rs.27.5 crore. The company is establishing a global delivery centre in Nanjing, China with a seating
capacity of 2,500 software professionals. It also plans to set up a subsidiary in Cairo, Egypt on the lines of
its Nanjing subsidiary which will cater to its customers in the Middle East. It has also set up a 2000 seater
development centre in Malaysia.
Accounting policies
Satyam Computer Services Ltd.

ACCOUNTING POLICIES FOR THE YEAR ENDED 31ST MARCH 2007.

Basis of presentation

The financial statements of the Company are prepared under historical cost convention in accordance with
the Generally Accepted Accounting Principles (GAAP) applicable in India and the provisions of the Indian
Companies Act, 1956.

Use of estimates

The preparation of the financial statements in conformity with the GAAP requires that the management
makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of the financial statements, and the reported amounts of revenue and
expenses during the reported year. Actual results could differ from those estimates.

Revenue recognition

Revenue from professional services consist primarily of revenue earned from services performed on a "time
and material" basis. The related revenue is recognized as and when the services are performed.

The Company also performs time bound fixed-price engagements, under which revenue is recognized using
the percentage of completion method of accounting. The cumulative impact of any revision in estimates of
the percentage of work completed is reflected in the year in which the change becomes known. Provisions
for estimated losses on such engagements are made during the year in which a loss becomes probable and
can be reasonably estimated.

Amounts received or billed in advance of services performed are recorded as advance from
customers/unearned revenue. Unbilled revenue, included in debtors, represents amounts recognized based
on services performed in advance of billing in accordance with contract terms.

Fixed assets

Fixed assets are stated at actual cost less accumulated depreciation. The actual cost capitalized includes
material cost, freight, installation cost, duties and taxes, finance charges and other incidental expenses
incurred during the construction/installation stage.

Gain/Loss arising on foreign exchange liabilities incurred for the purpose of acquiring fixed assets are
adjusted in the carrying amount of the respective fixed assets.

Depreciation on fixed assets is computed on the straight line method over their estimated useful lives at the
rates which are higher than the rates prescribed under Schedule XIV of the Companies Act, 1956. Individual
assets acquired for less than Rs.5,000 are entirely depreciated in the year of acquisition.

The cost of and the accumulated depreciation for fixed assets sold, retired or otherwise disposed off are
removed from the stated values and the resulting gains and losses are included in the profit and loss
account.

Costs of application software for internal use are generally charged to revenue as incurred due to its
estimated useful lives being relatively short, usually less than one year.

The estimated useful lives are as follows:

Estimated useful lives
Buildings 28 years
Computers 2 years
Plant and machinery (other than computers) 5 years
Software - used in development for projects 3 years
Office equipment 5 years
Furniture, Fixtures and Interiors 5 years
Vehicles 5 years

Capital work in progress

Assets under installation or under construction as at the Balance sheet date are shown as Capital work in
progress. Advances paid towards acquisition of assets are also included under Capital work in progress.

Goodwill

Goodwill represents the difference between the purchase price and the book value of assets and liabilities
acquired. Goodwill is amortized over the useful life of the asset. The goodwill is reviewed for impairment
whenever events or changes in business circumstances indicate the carrying amount of assets may not be
fully recoverable. If impairment is indicated, the asset is written down to its fair value.

Investments

Investments are classified into current investments and long-term investments. Current investments are
carried at the lower of cost or market value. Any reduction in carrying amount and any reversals of such
reductions are charged or credited to the profit and loss account. Long-term investments are carried at cost
less provision made to recognize any decline, other than temporary, in the value of such investments.

Foreign currency transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of transaction.
Monetary assets and liabilities denominated in foreign currency are translated at the rate of exchange at the
balance sheet date and resultant gain or loss is recognized in the profit and loss account.

Non-monetary assets and liabilities are translated at the rate prevailing on the date of transaction.

The operations of foreign branches of the company are of integral in nature and the financial statements of
these branches are translated using the same principles and procedures of head office.

In case of forward exchange contract or any other financial instruments that is in substance a forward
exchange contract to hedge the foreign currency risk which is on account of firm commitment and/or is a
highly probable forecast transaction, the premium or discount arising at the inception of the contract is
amortized as expense or income over the life of the contract.

Gain/Loss on settlement of transaction arising on cancellation or renewal of such a forward exchange

contract is recognized as income or as expense for the period.

In all other cases the gain or loss on contract is computed by multiplying the foreign currency amount of the
forward exchange contract by the difference between the forward rate available at the reporting date for the
remaining maturity of the contract and the contracted forward rate (or the forward rate last used to
measure a gain or loss on that contract for an earlier period), is recognized in the profit and loss account for
the period.

Employee benefits
Contributions to defined Schemes such as Provident Fund, Employee State Insurance Scheme and
Superannuation are charged as incurred on accrual basis. The Company also provides for gratuity and leave
encashment in accordance with the requirements of revised Accounting Standard - 15 "Employee Benefits".

i) Taxes on income
Tax expense for the year comprises of current tax and deferred tax. Current taxes are measured at the
amounts expected to be paid using the applicable tax rates and tax laws. Deferred tax assets and liabilities
are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance
sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
profit and loss account in the year of change. Deferred tax assets and deferred tax liabilities are recognized
for the future tax consequences attributable to differences between the financial statements carrying
amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.

j) Earnings Per Share

The earnings considered in ascertaining the Company's Earnings Per Share (EPS) comprises the net profit
after tax (and includes the post tax effect of any extra ordinary items). The number of shares used in
computing Basic EPS is the weighted average number of shares outstanding during the year. The number of
shares used in computing Diluted EPS comprises of weighted average shares considered for deriving Basic
EPS, and also the weighted average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of
the beginning of the year, unless they have been issued at a later date. The diluted potential equity shares
have been adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). The number of shares and potentially dilutive shares are
adjusted for share splits/reverse share splits and bonus shares, as appropriate.

k) Associate Stock Option scheme

Stock options granted to the associates under the stock option schemes established after June 19, 1999 are
evaluated as per the accounting treatment prescribed by Employee Stock Option Scheme and Employee
Stock Purchase Scheme Guidelines, 1999 issued by Securities and Exchange Board of India. Accordingly the
excess of market value of the stock options as on the date of grant over the exercise price of the options is
recognized as deferred employee compensation and is charged to profit and loss account on graded vesting
basis over the vesting period of the options. The un-amortized portion of the deferred employee
compensation is shown under Reserves and Surplus.

l) Research and Development

Revenue expenditure incurred on research and development is charged to revenue in the year/period in
which it is incurred. Assets used for research and development activities are included in fixed assets.

Financial Statement:-
Balance Sheet Statement
Profit & Loss Statement:-

Ratio Analysis :-
Ratio Analysis is an important tool for undertaking the financial statement analysis of any organization. The
performance of any organization can be explained on the basis of the four types of ratios:-
1) Liquidity Ratio
2) Solvency Ratio
3) Profitability Ratio
4) Market Based Returns
So in case of Ashok Leyland Ltd. following are the various ratios of the annual report of 2007-2008 by
analyzing the balance sheet and Profit & Loss Account.
Current Ratios & Quick Ratios

Current Ratio measure the ability of the enterprise to meet its current obligations & is the relationship
between Current Assets and Current Liabilities. In the operating cycle and by seeing the trend the ratio is
decreasing over period. So higher the Current Ratio, higher the short-term liquidity of the firm. A Current
Ratio of 2:1 is generally considered to be acceptable. If the Current Ratio is greater than 1, it implies that
some portions of the current assets is being funded by the long term funds and if it is decreasing over time
it means that the firm is losing its liquidity.

Interpretation
In the Current Trend Analysis it was found that Current Ratio was declining for the past five years which
shows a concern on Liquidity of the firm but been ideal ratio been 2:1 still favours the company about its
liquidity to pay of short term liabilities. It has also been analysed that the Company does not have an
Inventory in its closing stock so its Quick Ratio & Current Ratio is same

Profitability Ratio:
The profitability ratio consists of a group of ratios that indicates the ability of a firm to generate and
distribute profit. The higher is this ratio the better is this for the company. The profitability of a firm can be
analyzed by studying the following:

Gross Profit Margin

Gross profit Ratio shows the profits relative to sales after the direct production costs are deducted. It may
be used as an indicator of the efficiency of the production operation and the relation between production
costs and selling price.
Interpretation
If we see the graph the trend is slowing decreasing that means the efficiency of the firm is firmly declining
because of increase in cost without change in sale prices and hence management should take care of
Operational strategies.

Net Profit Ratio:

Net Profit Ratio shows the earning left for shareholders (both equity and preference) as a percentage of net
sales. It measures the overall efficiency of production, administration, selling, financing, pricing, and tax
management.

Interpretation
It sees that the company has increased its expenses in comparison to increase in sales which has effected
its Net Profitability.

Return On Equity
Return On Equity Helps to understand about the return been earned by the company on its investment and
helps in knowing the utilization of funds
Interpretation
Here, we find in the graph that there has been a slight decrease which shows that company might not be
earning good returns as compared to earlier years .

Return On Assets

Interpretation
The Company’s Return on Assets show that the Proper utilization of assets are been made by the company
in comparison to increase in sales in long run but in short run the company needs to work out strategies for
increasing its return which is decreasing.

Fixed Asset Turnover

Interpretation
If we see the trend of this graph we see that the graph is increasing in 2007-2008 & the trend is somewhat
increasing that means the asset base had started increasing. It could be because assets has been properly
capitalized by ther company and return on assets are good.

Leverage Ratios:-
Solvency ratios are the group of ratios which show the ability of a firm to meet its long term loans. It gives
an indication of how a business is financing its assets. It is one of the major financing decisions for the
company. It is also called the capital structure of a firm. Following are the ratios that are matters of concern
to any organization:-

Interest Coverage Ratio

Coverage ratios give the relationship between the financial charges of a firm and its ability to service them.
One measure of a firm’s ability to handle financial burdens is the interest coverage ratio, also referred to as
the times interest-coverage ratio. This ratio tells us how many times the firm can cover or meet the interest
payments associated with debts.

Interpretation
We have first an downward trend and now this trend is showing a upward shift in 2007-08 that means that
now the firms ability to pay its interest expense is increasing in this period.

Ownership Ratios:-
These ratio will help the stockholders to analyze their present and future investment in a firm. Stockholders
are interested to know how the value of their holdings is affected by certain variables. These ratios compare
the investment value with factors such as debt, earnings,dividends and the stock’s market price. By
understanding the liquidity and profitability ratios, one can gain insights into the soundness of the firm’s
business activities, whereas by analyzing the ownership ratios, the analyst can assess the likely future value
of the market.
Earnings Ratios:-
The earnings ratios are Earning per share, price-earning ratio(P/e Ratio) and capitalization ratio.
Earning Per Share( EPS):-
For calculating EPS we first calculate No. of Outstanding shares that is given by
Shareholders Capital
Face Value of Shares

Interpretation:
The Firm capability to pay its investors has been good and firm is doing well and during the year since there
is a positive increase in EPS & the investors stock value has increased in comparison .

Price Earning Ratios :-

This ratio gives the relationship between the market price of the stock and its earnings by revealing how
earnings affect the market price of the firm’s stock. It is the most popular financial ratio in the stock market
for secondary market investors. The main use of P/E ratio is it helps to determine the expected value of a
stock.

Interpretation
From the above trend it can be seen that the P/Ae ratio is decreasing – EPS is decreasing and market price
is continously decreasing- that simply means that the stock is not performing good on any index.

Capitalization Rate:-
The P/E ratio also may be used to calculate the rate of return investors expect before they purchase a stock.
The reciprocal of the P/e ratio gives this return.

From the above trend it is clear that the rate of return to the investor first decreased and now gradually it is
increasing. In the long run it will surely give return on its stock.

RECOMMENDATIONS:
To Management:
It has been analyzed that Solvency and Profitability has been steady for the company but an improvement
in Debtors Turnover Ratio’s can help company in boosting the profits.

To Creditors
Short Term Creditors: The Company’s financial strength is good and anytime during the year the company
can pay the amount as and when due.
Long Term Creditors: The Company is perfectly solvent and can pay debt and interest on it on proper time.

To Government
Been an FMCG Company, there has been a great progress by the company during the year and has large
scope to progress with greater service capability

To Financial Institutions
The Profit Earning Capacity and Long Term Solvency position shall not be a concern because of good
performance during the past years.
To Investors
It has been analyzed that the company is a Going Concern Entity with a Market Price of around Rs.1400,
EPS of around Rs. 80 which shows that the company has a bright future prospect which can lead to huge
Returns.

To Employees
The Performance of the Company has improved during the year which shows that if the company performs
in the same manner there are huge opportunities for the company to reach new heights.