6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

September 7, 2007

Commission File Number: 000-30735

Rediff.com India Limited

(Translation of registrant's name into English)

1st Floor, Mahalaxmi Engineering Estate, L.J. First Cross Road

Mahim (West), Mumbai 400 016

(Address of principal executive office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x          Form 40-F  o

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes o                     No x

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b) : 82-.)

This report on Form 6-K shall be deemed to be incorporated by reference in the Registration Statements on Form S-8 (File Nos. 333-143836 and 333-143837) filed with the Securities and Exchange Commission and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

Rediff.com India Limited has scheduled the Annual General Meeting of its shareholders for 10:00 a.m. (Indian Standard Time) on September 21, 2007, at its registered office at Mahalaxmi Engineering Estate, L.J. First Cross Road, Mahim (W), Mumbai 400 016, Maharashtra, India.  A copy of its Annual Report for the year 2006-07 prepared in accordance with the requirements of the Companies Act, 1956, is attached hereto as Exhibit 13.1.  A copy of the notice, attendance slip and proxy form issued by Rediff.com India Limited and sent to its members (including Citibank, N.A., in its capacity as depositary under the Deposit Agreement dated as of June 13, 2000) is attached hereto as Exhibit 99.1.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Rediff.com India Limited
Date:  September 7, 2007	(Registrant)
	By:	/s/ Joy Basu
		Name:	Joy Basu
		Title:	Chief Financial Officer

EXHIBIT NO.	DESCRIPTION
13.1	Annual Report for the year 2006-07 prepared in accordance with the requirements of the Companies Act, 1956.
99.1	Notice of Annual General Meeting of the Members of Rediff.com India Limited, attendance slip and proxy form.

EX-13.1

Exhibit 13.1

REDIFF.COM INDIA LIMITED

12^TH ANNUAL REPORT

2006-2007

(UNDER COMPANIES ACT, 1956)

(INDIAN LAWS)

Rediff.com India Ltd.

Board of Directors

Ajit Balakrishnan (Chairman & Managing Director)

Arun Nanda

Sunil Phatarphekar

Pulak Prasad

Ashok Narasimhan

Sridar Iyengar

Rashesh Shah

Statutory Auditors

M/s. Deloitte Haskins & Sells

Chartered Accountants

12, Dr. Annie Besant Road

Opp. Shiv Sagar Estate

Worli

Mumbai 400 018

Registered Office

First Floor,

Mahalaxmi Engineering Estate

L. J. First Cross Road

Mahim (West)

Mumbai 400 016

Contents

Sr. no.	Particulars	Page Nos.
	Documents as required under Companies Act, 1956 (Indian law)
1.	Notice of Annual General Meeting	1
2.	Directors Report of Rediff.com India Ltd.	2-4
3.	Auditors’ Report of Rediff.com India Ltd.	5-9
4.	Balance Sheet and P&L Account, Schedules thereto of Rediff.com India Ltd.	10-40
5.	Directors Report of Rediff Holdings Inc.	41
6.	Auditors’ Report of Rediff Holdings Inc.	42
7.	Balance Sheet and P&L Account, Schedules thereto of Rediff Holdings Inc.	43-54
8.	Directors Report of India Abroad Publications Inc.	55
9.	Auditors’ Report of India Abroad Publications Inc.	56
10.	Balance Sheet and P&L Account, Schedules thereto of India Abroad Publications Inc.	57-69
11.	Directors Report of India in New York Inc	70
12.	Auditors’ Report of India in New York Inc	71
13.	Balance Sheet and P&L Account, Schedules thereto of India in New York Inc	72-80
14.	Directors Report of India Abroad Publications (Canada) Inc.	81
15.	Auditors’ Report of India Abroad Publications (Canada) Inc.	82

16.	Balance Sheet and P&L Account, Schedules thereto of India Abroad Publications (Canada) Inc.	83-92
17.	Directors Report of Rediff.com Inc.	93
18.	Auditors’ Report of Rediff.com Inc.	94
19.	Balance Sheet and P&L Account, Schedules thereto of Rediff.com Inc.	95-104
20.	Directors Report of Value Communications Corporation	105
21.	Auditors’ Report of Value Communications Corporation	106
22.	Balance Sheet and P&L Account, Schedules thereto of Value Communications Corporation	107-114
23.	Proxy Form and Attendance Slip	115

NOTICE

Notice is hereby given that the Twelfth Annual General Meeting of the Members of Rediff.com India Limited will be held on Friday, 21^st September, 2007, at 10 a.m. (IST) at the Registered Office of the Company situated at First Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400016, to transact the following business:

ORDINARY BUSINESS

1.   To receive, consider and adopt the Audited Balance Sheet as at March 31, 2007 and Profit & Loss Account for the year ended as on that date and the reports of the Auditors and Directors’ thereon.

2.   To appoint a Director in place of Diwan Arun Nanda, Director retiring by rotation and being eligible, offers himself for reappointment.

3.   To appoint a Director in place of Mr. Sunil Phatarphekar, Director retiring by rotation and being eligible, offers himself for reappointment.

4.   To appoint Auditors and fix their remuneration by passing the following resolution as an Ordinary Resolution with or without modification(s);

“RESOLVED that M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai be and are hereby re-appointed as Statutory Auditors of Rediff.com India Limited and to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting at a remuneration to be decided by the Board of Directors/Audit Committee of the Directors of the Company.”

              By Order of the Board

     For Rediff.com India Limited

     sd/-

PLACE: MUMBAI                                                         Jyoti Dialani

DATE: 12^th July, 2007                                                                                 Company Secretary & Manager Legal

NOTES:

A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE ANNUAL GENERAL MEETING.

REDIFF.COM INDIA LIMITED

DIRECTORS’ REPORT

To,

The Members,

Rediff.com India Limited

Your Directors have pleasure in presenting to you the Twelfth Annual Report together with the Audited Annual Accounts for the year ended March 31, 2007.

1. REDIFF.COM INDIA LTD.’S FINANCIAL HIGHLIGHTS

(a)	Total Income:- Rs.1,117 million (previous year Rs.594 million).
(b)	Operating expenses:-  Rs.860 million (previous year Rs.537 million).
(c)	Operating Profits before depreciation, amortization, impairment of Investments and taxes:- Rs.399 million (previous year profit of Rs.124  million).
(d)	Net Profit/ Loss:- After providing for depreciation and amortization of Rs.142 million and taxes of Rs.4 million net profits for the year were Rs.253 million (previous year net profit Rs.55 million).

2. DIVIDEND

Your Board does not recommend any dividend.

3. CORPORATE GOVERNANCE

The various committees constituted by the Company including the Audit Committee and Compensation Committee have been functioning satisfactorily during the year. The present Board comprises of eminent professionals from various fields, in addition to Chairman and Managing Director who looks after the day to day affairs of the Company.

The composition of the Audit Committee of the Board is as follows:-

Name	Designation in the Committee
Sridar Iyengar	Chairman
Sunil Phatarphekar	Member
Rashesh Shah	Member
Ashok Narasimhan	Member (resigned with effect from 11th May, 2007)

The composition of the Compensation Committee of the Board is as follows:-

Name	Designation in the Committee
Ajit Balakrishnan	Chairman
Arun Nanda	Member
Sunil N Phatarphekar	Member

REDIFF.COM INDIA LIMITED

4. FIXED DEPOSITS

During the year under review, our Company had not accepted any Fixed Deposit from the Public.

5. DIRECTORS

In accordance with the provisions of the Companies Act, 1956, Arun Nanda and Sunil Phatarphekar, Directors retire by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

6. PARTICULARS OF EMPLOYEES

The Company had employees who were in receipt of remuneration of not less than Rs.24 lakhs during the year ended 31^st March, 2007 or not less than Rs.2 lakhs per month during any part of the said year. However, as per the provisions of section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report being sent to the shareholders does not include this Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company.

7. AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, the Statutory Auditors of Company and  who hold  the office till the conclusion of ensuing Annual General Meeting are eligible to be re-appointed as the Statutory Auditors of the Company till the conclusion of next Annual General Meeting. The Company has received from the Auditors undertaking their eligibility to accept the office, if reappointed. The members are requested to consider their re-appointment as set out in the Notice convening the Annual General Meeting.

The observations made by the Auditors’ in their report and notes to accounts are self- explanatory and do not call for any further comments.

8. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

a)	In the preparation of the annual accounts, the applicable accounting standards had been followed along-with proper explanation relating to material departures.
b)	The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year on March 31, 2007 and of the profit of the company for that period.
c)	The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting the frauds and other irregularities.

REDIFF.COM INDIA LIMITED

d) The directors had prepared the annual accounts on a going concern basis.

9. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is as under:

1.         Conservation of Energy:-

The operation of your Company is not energy intensive. Adequate measures have however been taken to reduce energy consumption by using energy efficient computer equipments incorporating latest technologies.

2.         Technologies Absorption

Since technology related to internet portal business is constantly evolving, continuous investments and improvements are being made to the content, community and commerce offerings made to the customers. The investments are classified as deferred revenue expenditure and amortized.

3.         Foreign Exchange Earnings and outgo

Foreign exchange earned by the Company in the fiscal year ended March 31, 2007 was Rs.49 million and the foreign exchange outgo in the same period was Rs. 92 million.

10. ACKNOWLEDGEMENTS

The Directors place on record their appreciation for the dedicated services rendered by the employees of our Company and acknowledge the cooperation extended by our Company’s bankers.

	On behalf of Board of Directors
Place :  Mumbai	Sd/-
Date :   July 12, 2007	Ajit Balakrishnan
	Chairman and Managing Director

(U.S.$1= Rs.45.35 for the year 2006-2007and Rs.44.34 for year 2005-2006)

AUDITORS' REPORT

TO THE MEMBERS OF REDIFF.COM INDIA LIMITED

1. We have audited the attached Balance Sheet of REDIFF.COM INDIA LIMITED as at March 31, 2007, the Profit and Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph 3 above:

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, proper  books of account as required by law have been kept by the Company so far as it appears from our examination of  those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

(e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts, give the information required by the Companies Act, 1956, in the manner so required, give a true and fair view in conformity with accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2007; and

(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

5. On the basis of written representations received from the directors, as on 31st March, 2007 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2007 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For Deloitte Haskins & Sells

Chartered   Accountants

P.R. Ramesh

Partner

 (Membership No.70928)

MUMBAI, July 12, 2007

ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date)

(i) The nature of the Company’s business/ activities during the year is such that clauses (ii), (viii), (xiii) and (xiv) of paragraph 4 of CARO are not applicable to the Company.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Some of the fixed assets have been physically verified by the Management in accordance with a programme of verification which in our opinion provides for physical verification of all the fixed assets at reasonable intervals having regard to the size of the Company and the nature of its assets. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the company.

(iii) According to the information and explanation given to us, the Company has not granted or taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of paragraph 4 (iii) (a) to (g) of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and sale of services. The nature of the Company’s business is such that it does not involve purchase of inventories and sale of goods. During the course of the audit we have not observed any major weaknesses in such internal control system.

(v) In respect of contracts or arrangements to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements referred to Section 301 that were needed to be entered into the register required to be maintained under the said section.

(vi) According to the information and explanations given to us, the Company has not accepted deposits in terms of provisions of Sections 58A and 58AA or other relevant provisions of the Companies Act, 1956.

(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the management have been commensurate with the size of the Company and the nature of its business.

      (viii) According to the information and explanations given to us in respect of statutory   and other dues:

(a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues with the appropriate authorities during the year. There were no undisputed amounts payable on account of the above dues, outstanding as at March 31, 2007 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there were no dues on account of Sales Tax, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service Tax and Cess which have not been deposited as at 31^st March, 2007 on account of disputes.

(ix) The Company’s accumulated losses as at March 31, 2007 is not in excess of fifty percent of its net worth. The Company has not incurred cash losses during the financial year covered by our audit and in the immediate preceding financial year.

(x) According to the information and explanations given to us, there were no dues payable by the Company to financial institutions, banks and debenture holders during the year. Therefore, the provisions of paragraph 4 (xi) of the Order are not applicable to the Company.

(xi) According to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of paragraph 4 (xii) of the Order are not applicable to the Company.

(xii) According to the information and explanations given to us, during the year the Company has not given any guarantee for loans taken by others from banks and financial institutions. Therefore, the provisions of paragraph 4 (xv) of the Order are not applicable to the Company.

(xiii) According to the information and explanations given to us, the Company has not availed any term loan. Therefore, the provisions of paragraph 4 (xvi) of the Order are not applicable to the Company.

(xiv) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds raised on short-term basis have prima facie not been used during the year for long term investment.

(xv) According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year. Therefore, the provisions of paragraph 4 (xviii) of the Order are not applicable to the Company.

(xvi) According to the information and explanations given to us, the Company has not issued any debentures during the year. Therefore, the provisions of paragraph 4 (xix) of the Order are not applicable to the Company.

(xvii) According to the information and explanations given to us, during the year the Company has not raised any money through public issue. Therefore, the provisions of paragraph 4 (xx) of the Order are not applicable to the Company.

(xviii) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was noticed or reported during the year.

For Deloitte Haskins & Sells

Chartered   Accountants

Sd/-

P. R. Ramesh

Partner

 (Membership No. 70928)

MUMBAI, July 12, 2007

REDIFF.COM INDIA LIMITED
Balance Sheet as at March 31, 2007
	Schedule #		As at 31.03.2007 Rupees			As at 31.03.2006 Rupees
SOURCES OF FUNDS
Shareholders' funds :
Share Capital		1		73,019,000			72,698,000
Stock Options Outstanding				-			78,150
Reserves and surplus		2		5,526,684,853			5,473,553,058
TOTAL				5,599,703,853			5,546,329,208
APPLICATION OF FUNDS
Fixed assets :		3
Gross Block				826,370,837			578,212,971
Less : Depreciation/ Amortisation				(487,522,537	)		(352,712,574	)
Net Block				338,848,300			225,500,397
Capital work-in-progress				84,157,236			12,079,037
				423,005,536			237,579,434
Investments		4		849,999,371			824,299,371
Current assets, loans and advances :
Sundry debtors		5		401,573,412			203,414,506
Cash and bank balances		6		2,263,748,897			2,336,803,209
Loans and advances		7		203,203,331			143,726,456
				2,868,525,640			2,683,944,171
Less :
Current liabilities and provisions :
Liabilities		8		389,184,298			315,553,946
Provisions		9		29,696,512			13,809,933
				418,880,810			329,363,879
Net current assets				2,449,644,830			2,354,580,292
Profit and loss account				1,877,054,116			2,129,870,111
TOTAL				5,599,703,853			5,546,329,208
Significant Accounting Policies and Notes to the Accounts		14

As per our attached report of even date.

For Deloitte Haskins & Sells	For and on behalf of the board
Chartered Accountants

Sd/-	Sd/-	Sd/-	Sd/-
P.R. Ramesh	A. Balakrishnan	Sunil Phatarphekar	Jyoti Dialani
Partner	Chairman & Managing Director	Director	Company Secretary

Mumbai, India	Mumbai, India
Dated: July 12, 2007	Dated: July 12, 2007

REDIFF.COM INDIA LIMITED
Profit & Loss Account for the year ended March 31, 2007
	Schedule #		2006-07 Rupees			2005-06 Rupees
INCOME
Operating revenues		10		941,442,096			540,147,913
Other income		11		175,928,915			54,331,498
Total				1,117,371,011			594,479,411
EXPENDITURE
Personnel cost		12		245,571,469			133,251,897
Administrative, Selling and Other expenses		13		472,716,515			337,717,428
Depreciation and Amortisation				142,106,391			65,607,312
				860,394,375			536,576,637
Profit before taxes				256,976,636			57,902,774
Provision for
- current tax				1,500,000			-
- fringe benefit tax				2,556,571			2,811,636
- wealth tax				104,070			44,070
Profit after tax				252,815,995			55,047,068
Deficit brought forward from previous year				(2,129,870,111	)		(2,184,917,179	)
Balance carried to balance sheet				(1,877,054,116	)		(2,129,870,111	)
Basic Earnings Per Share (Rs.)				17.38			4.08
Diluted Earnings Per Share (Rs.)				16.93			4.00
Significant Accounting Policies and Notes to the Accounts		14

As per our attached report of even date.

For Deloitte Haskins & Sells	For and on behalf of the board
Chartered Accountants

Sd/-	Sd/-	Sd/-	Sd/-
P.R. Ramesh	A. Balakrishnan	Sunil Phatarphekar	Jyoti Dialani
Partner	Chairman & Managing Director	Director	Company Secretary

Mumbai, India	Mumbai, India
Dated: July 12, 2007	Dated: July 12, 2007

REDIFF.COM INDIA LIMITED SCHEDULES FORMING PART OF BALANCE SHEET AS AT MARCH 31, 2007
SCHEDULE1 : SHARE CAPITAL
		As at 31.03.2007 Rupees	As at 31.03.2006 Rupees
Authorized :
24,000,000 (Previous year 24,000,000) Equity shares of Rs.5 each		120,000,000	120,000,000
Issued and subscribed :
14,603,800 (Previous year 14,539,600) Equity shares of Rs.5 each fully paid up		73,019,000	72,698,000
(Refer notes below)
	TOTAL	73,019,000	72,698,000
Note 1: Included in issued and subscribed capital are 4,453,600 (previous year 4,389,400) equity shares represented by 8,907,200 (Previous year 8,778,800) ADRs.
Note 2: During the year, 64,200 equity shares (previous year 146,310) of Rs. 5 each (representing 128,400 ADRs, previous year 292,620 ADRs ) were issued pursuant to the exercise of stock options under the ADR linked Employee Stock Option Plans.
SCHEDULE 2: RESERVES & SURPLUS
		As at 31.03.2007 Rupees	As at 31.03.2006 Rupees
Securities Premium Account:
As per last balance sheet		5,473,553,058	3,424,095,466
Add: Premium on exercise of stock options		53,131,795	46,799,927
Add: Premium on additional capital raised during the year		-	2,002,657,665
	TOTAL	5,526,684,853	5,473,553,058

REDIFF.COM INDIA LIMITED

SCHEDULE FORMING PART OF BALANCE SHEET AS AT MARCH 31, 2007

SCHEDULE 3: FIXED ASSETS

PARTICULARS	GROSS BLOCK				DEPRECIATION/ AMORTISATION				NET BLOCK
	COST AS	ADDITIONS	DELETION	COST AS	AS AT	FOR		AS AT	AS AT	AS AT
	AT			AT		THE PERIOD	DELETIONS
	01.04.2006			31.03.2007	01.04.2006			31.03.2007	31.03.2007	31.03.2006
	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.	Rs.
TANGIBLE ASSETS
FURNITURE AND FITTINGS	18,047,872	377,430	605,239	17,820 063	10,435,355	1,944,116	605,239	11,774,232	6,045,831	7,612,517
COMPUTERS	493,436,978	223,510,242	4,308,342	712,638,878	307,168,910	118,873,255	4,140,502	421,901,663	290,737,215	186,268,069
OFFICE EQUIPMENTS	12,586,928	1,064,104	495,807	13,155,725	6,340,112	1,348,250	239,675	7,448,687	5,706,538	6,246,816
VEHICLES	11,809,537	6,242,048	4,733,165	13,318,420	3,734,015	1,647,806	2,311,012	3,070,810	10,247,610	8,075,522
LEASE HOLD IMPROVEMENTS	12,189,342	514,971	-	12,704,313	8,403,351	1,070,427	-	9,473,778	3,230,535	3,785,991
INTANGIBLE ASSETS:
SOFTWARE CAPITALISATION	30,142,314	26,591,624	-	56,733,938	16,630,831	17,222,537	-	33,853,368	22,880,570	13,511,483
TOTAL	578,212,971	258,300,419	10,142,553	826,370,837	352,712,574	142,106,391	7,296,428	487,522,537	338,848,300	225,500,397
PREVIOUS YEAR	393,895,540	193,697,909	9,380,478	578,212,971	293,879,879	65,607,312	6,774,617	352,712,574	225,500,397	-

REDIFF.COM INDIA LIMITED SCHEDULES FORMING PART OF BALANCE SHEET AS AT MARCH 31, 2007
SCHEDULE 4 : Investments ( at cost less provision for diminuition in value )
		As at 31.03.2007 Rupees			As at 31.03.2006 Rupees
Long Term Investments
(Unquoted, Fully paid up)
In wholly owned subsidiary companies
Rediff Holdings Inc., U.S.A.			1,134,483,000			1,134,483,000
11,066,667 Equity shares
of USD 0.0001 per share
Less : Provision for dimunition in value			(310,183,629	)		(310,183,629	)
(Refer note B 9 in Schedule 14)			824,299,371			824,299,371
Value Communications Corporation, U.S.A .			340,609,949			340,609,949
12,000,000 Equity shares of no par value
Less : Provision for dimunition in value			(340,609,949	)		(340,609,949	)
			-			-
Trade Investment
Tachyon Technologies Limited
8,739 (Previous year Nil) Equity shares of Rs. 10 each
			25,700,000			-
Apna Loan.com India Private Limited
500 (Previous year 3,219,115) equity shares of Re.1 each			7,427			47,815,800
Traveljini.com Limited
88,350 (Previous year 88,350) equity shares of Rs. 10 each			60,300,253			60,300,253
Bill Junction Payments Limited
587,500 (Previous year 587,500) equity shares of Rs. 10 each			50,252,136			50,252,136
			136,259,816			158,368,189
Less : Provision for dimunition in value			(110,559,816	)		(158,368,189	)
	TOTAL		849,999,371			824,299,371
SCHEDULE 5 : SUNDRY DEBTORS
		As at 31.03.2007 Rupees			As at 31.03.2006 Rupees
Sundry debtors (unsecured) :
Outstanding over six months			136,640,864			75,006,374
Others			376,164,036			203,414,506
			512,804,900			278,420,880
Less : Provision for doubtful debts			(111,231,488	)		(75,006,374	)
	TOTAL		401,573,412			203,414,506
Note :
Considered good			401,573,412			203,414,506
Considered doubtful			111,231,488			75,006,374
			512,804,900			278,420,880

REDIFF.COM INDIA LIMITED SCHEDULES FORMING PART OF BALANCE SHEET AS AT MARCH 31, 2007
SCHEDULE 6 : CASH AND BANK BALANCES
	As at 31.03.2007 Rupees		As at 31.03.2006 Rupees
Cash on hand		56,870		12,451
Bank balances :
With Scheduled Banks :
In current accounts		39,628,116		44,548,163
In deposit accounts		2,223,617,531		2,286,816,672
		2,263,245,647		2,331,364,835
With others :
Wells Fargo, Arizona, U.S.A.
(Formerly Norwest Bank)
In current account		446,380		456,825
(maximum amount outstanding at any time during the
year Rs. 471,879 Previous year Rs. 460,307)
Citibank, Jersey
In deposit account		-		4,969,098
(maximum amount outstanding at any time during the year Rs.5,134,714 , Previous year Rs.45,948,917)
		446,380		5,425,923
TOTAL		2,263,748,897		2,336,803,209

REDIFF.COM INDIA LIMITED SCHEDULES FORMING PART OF BALANCE SHEET AS AT MARCH 31, 2007
SCHEDULE 7 : LOANS AND ADVANCES
(UNSECURED AND CONSIDERED GOOD)
	As at 31.03.2007 Rupees		As at 31.03.2006 Rupees
Due from subsidiary companies		53,517,807		50,086,501
Advances recoverable in cash or in kind or for value to be received
- deposits for premises		31,445,963		24,687,063
- others		41,324,102		24,362,873
Interest acccrued on fixed deposits		12,550,752		21,759,466
Tax deducted at source (net of provision)		64,364,707		22,830,553
TOTAL		203,203,331		143,726,456
Due from subsidiary companies comprise of the following :
(a) Rs. 49,894,025 (Previous year Rs. 46,921,556) due from India Abroad Publications, Inc.
(b) Rs.1,658,132 (Previous year Rs. 1,631,075) due from Value Communications Corporation.
(c) Rs. 81,811 (Previous year Rs.80,476 ) due from Rediff Holdings, Inc.
(d) Rs.1,883,839 (Previous year Rs.1,453,394 ) due from Rediff.Com, Inc.

REDIFF.COM INDIA LIMITED SCHEDULES FORMING PART OF BALANCE SHEET AS AT MARCH 31, 2007
SCHEDULE 8 : CURRENT LIABILITIES
		As at 31.03.2007 Rupees		As at 31.03.2006 Rupees
Sundry Creditors
- Other than small scale industrial undertakings.			218,332,410		197,219,438
Other liabilities			42,587,816		17,261,541
Deferred Income			44,372,513		26,582,476
Due to subsidiary companies			83,891,559		74,490,491
	TOTAL		389,184,298		315,553,946
SCHEDULE 9 : PROVISIONS
		As at 31.03.2007 Rupees		As at 31.03.2006 Rupees
Gratuity			10,489,838		4,714,320
Leave encashment			18,624,228		7,424,102
Income tax (net of advance tax)			453,050		1,602,115
Wealth tax (net of advance tax)			129,396		69,396
	TOTAL		29,696,512		13,809,933

REDIFF.COM INDIA LIMITED SCHEDULES FORMING PART OF PROFIT LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2007
SCHEDULE  10 : OPERATING REVENUE
	2006-07 Rupees		2005-06 Rupees
1. Online Advertising
- Advertising		733,611,709		371,810,914
- Website design		-		5,502,500
		733,611,709		377,313,414
2. Fee based services		207,830,387		162,834,499
TOTAL		941,442,096		540,147,913
SCHEDULE  11 : OTHER INCOME
	2006-07 Rupees		2005-06 Rupees
1. Interest on fixed deposits with banks		168,502,709		54,231,603
(Tax deducted at source Rs. 26,806,279
Previous year Rs. 3,792,692)
2. Profit on sale of long term investments		5,149,784		-
3. Miscellaneous income		192,005		99,895
4. Foreign exchange gain (net)		2,084,417		-
TOTAL		175,928,915		54,331,498
SCHEDULE  12 : PERSONNEL COST
	2006-07 Rupees		2005-06 Rupees
Salaries and allowances		195,657,591		116,573,696
Employee Stock-based compensation cost		27,543,441		-
Retainers expenses		3,921,505		5,911,505
Contribution to provident and other funds		7,546,611		5,479,140
Gratuity		6,863,797		1,521,168
Staff welfare		4,038,524		3,766,388
TOTAL		245,571,469		133,251,897
SCHEDULE 13: ADMINISTRATIVE SELLING AND OTHER EXPENSES
	2006-07 Rupees		2005-06 Rupees
Content costs		9,206,520		8,139,486
Merchandizing - direct costs		14,052,426		14,645,022
Subscription and SMS based costs		26,843,110		23,172,985
Bandwidth expenses		73,086,074		49,440,113
Software & product development expenses		57,014,177		29,542,537
Advertising, business promotion and market research expenses		110,801,039		37,130,561
Rent		24,305,429		18,184,705
Rates and Taxes		13,251,268		11,888,785
Electricity		4,437,628		4,021,572
Insurance		2,421,635		2,179,176
Travelling and conveyance expenses		18,279,429		8,142,237
Telecommunication charges		6,376,193		6,619,088
Repairs and maintenance - fixed assets and others		13,172,971		11,277,926
Legal & professional charges		20,707,361		23,069,927
Domain registration charges		10,060,764		6,511,049
Provision for doubtful debts		36,225,114		14,909,600
Loss on sale of fixed assets (net)		775,305		1,114,046
Foreign exchange loss (net)		-		43,857,210
Bank commission		4,750,179		3,840,555
Miscellaneous expenses		26,949,893		20,030,848
TOTAL		472,716,515		337,717,428

REDIFF.COM INDIA LIMITED
Cash Flow Statement for the year ended March 31, 2007
	2006-07 Rupees			2005-06 Rupees
Cash flows from operating activities
Net Profit after taxes		252,815,995			55,047,068
Adjustments for:
Provision for current and fringe benefit taxes		4,056,571			2,811,636
Wealth tax		104,070			44,070
Depreciation and amortization		142,106,391			65,607,312
Employee stock option expenses		27,543,441			-
Interest income		(168,502,709	)		(54,231,603	)
Provision for doubtful debts		36,225,114			14,909,600
Profit on sale of Investment		(5,149,784	)		-
Miscellaneous item written back		(78,150	)
Loss on sale of property, plant and equipment		775,305			1,114,046
Foreign exchange gain		(2,084,417	)		(9,833,176	)
Operating Profit before working capital changes		287,811,827			75,468,953
Changes in working capital:
Sundry debtors		(234,384,020	)		(113,815,106	)
Loans and advances		(71,366,403	)		(24,779,264	)
Trade payable and other liabilities		90,605,997			80,424,241
Cash generated from operating activities		72,667,401			17,298,824
Taxes Paid (including Fringe Benefit Taxes)		(484,476	)		(13,695,391	)
Net cash generated from operating activities		72,182,925			3,603,433
Cash flows from investing activities
Payments to acquire fixed assets		(330,378,618	)		(203,013,091	)
Proceeds from sale of property, plant and equipment		2,070,821			1,491,816
Proceeds from  sale of investments		5,149,784			-
Fixed deposit with Banks		(2,178,571,405	)		-
Payments for purchase of investment		(25,700,000	)		-
Interest Income Received		177,711,423			34,208,845
Net cash used in investing activities		(2,349,717,996	)		(167,312,430	)
Cash flows from financing activities
Net proceeds from issue of equity shares		25,909,354			2,085,080,525
Net cash provided by financing activities		25,909,354			2,085,080,525
Net (decrease) / increase in cash and cash equivalents		(2,251,625,717	)		1,921,371,528
Cash and cash equivalents at the beginning of the year		2,336,803,209			405,598,505
Cash and cash equivalents at the end of the year		85,177,492			2,326,970,033
Note : Cash & Cash Equivalents include
	2006-07 Rupees			2005-06 Rupees
Cash on hand		56,870			12,451
Bank balances in current accounts		39,628,116			44,548,163
Fixed deposits with banks (maturity less than 3 months)		45,492,506			2,292,242,595
Foreign exchange loss		-			(9,833,176	)
Total cash and cash equivalents as restated		85,177,492			2,326,970,033
Significant Accounting Policies and Notes to Accounts - Refer Schedule 14

As per our attached report of even date.

For Deloitte Haskins & Sells	For and on behalf of the board
Chartered Accountants

Sd/-	Sd/-	Sd/-	Sd/-
P.R. Ramesh	A. Balakrishnan	Sunil Phatarphekar	Jyoti Dialani
Partner	Chairman & Managing Director	Director	Company Secretary

Mumbai, India	Mumbai, India
Dated: July 12, 2007	Dated: July 12, 2007

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention in accordance with accounting principles generally accepted in India ("Indian GAAP") and as per the applicable accounting standards issued by the Institute of Chartered Accountants of India.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Differences between actual results and estimates are recognized in the periods in which the results materialize or are known.

3. Revenue recognition

Revenues comprise of revenues from online advertising and fee based services.  Online advertising includes advertisement, sponsorships, designing and managing customers’ websites. Fee based services include e-commerce, subscription services and wireless short messaging services. E-commerce revenues primarily comprise of commission earned on sale of items to customers who shop online while subscription services comprise of subscriptions received for using e-mail, matchmaker and other subscriber services.  Wireless short messaging services include revenues derived from mobile operators based on value added text messages received and sent by mobile subscribers over their mobile phones.

Online advertising

Advertisement and sponsorship income is derived from customers who advertise on the Company's website or to whom direct links from the Company's website to their own websites are provided, and, income earned from designing and managing customers' websites.

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

Revenue from advertisement and sponsorships is recognized ratably over the contractual period of the advertisement, commencing when the advertisement is placed on the website. Revenues are also derived from sponsor buttons placed in specific areas of the Company's website, which generally provide users with direct links to sponsor websites. These revenues are recognized ratably over the period in which the advertisement is displayed, provided that no significant Company obligations remain and collection of the resulting receivable is probable. Company obligations may include guarantees of a minimum number of impressions or clicks or leads or times, that an advertisement appears in pages viewed by users of the Company's website. To the extent that minimum guaranteed impressions are not met, the Company defers recognition of the corresponding revenues until the guaranteed impression levels are achieved.

Fee based services

Online shopping revenue primarily consists of commission from the sale of books, music, apparel, confectionery, gifts and other items to retail customers who shop at the Company's online store.

Customers directly place orders with vendors through the Company's website. When an order is placed, the Company informs the vendor through an intranet and also confirms whether payment has already been collected by the Company through credit card/ debit card or cheques, or whether the payment is to be made by the customer on C.O.D basis. The vendor then dispatches the products to the customers. The vendor sends a monthly summary of the transactions executed during the month for which the Company has collected payments on its behalf. The Company makes payment to the vendor after deduction of its share of margin and costs. The Company recognizes as revenues the commission earned on these transactions and shipping costs recovered from customers.

Revenues from E-commerce services also include fees charged to vendors for creating, designing and hosting the vendors' product information on the Company's website. Such fees are amortized over the hosting contract period.

Subscription service revenues primarily include income from various paid email, web hosting and other service products that cater to a cross section of the Company’s registered user base. The revenue for subscription based service products is recognized ratably over the period of subscription.

Subscription revenues are also derived from providing value added short messaging services such as e-mail and other related products to mobile phone users. The Company contracts with third party mobile operators for sharing revenues from these services. SMS based revenues are recognized when the service is performed.

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

4. Fixed assets, intangibles, depreciation and amortization

Tangible Assets

Tangible assets are stated at cost less depreciation.  The Company depreciates tangible assets using the straight-line method, over the estimated useful lives of assets.  The estimated useful lives of assets are as follows:

Furniture and Fixtures	10 years
Computer Equipment	3 to 5 years
Office equipment	10 years
Vehicles	8 years
Leasehold improvements	6 years

The effective rates of depreciation based on the estimated useful life of the tangible assets is higher than the rates as prescribed under Schedule XIV of the Companies Act, 1956.

Individual assets costing less than Rs.5,000 are depreciated in full in the year of acquisition.

Intangible Assets

Intangible Assets are stated at cost less amortization. Software includes costs incurred in the operations stage that provides additional functions or features to the Company's website. These are amortized over their estimated useful life of two years.  Maintenance expenses or costs that do not result in new features or functions are expensed as product development costs, when incurred.

5. Investments

Investments classified as long-term investments are stated at cost. Provision is made to recognize a decline, other than temporary, in the value of such investments. Cost of investments in wholly owned subsidiaries comprise of purchase cost as increased by legal fees, due diligence fees and other direct expenses connected with such acquisition.

6. Employee retirement benefits

Gratuity

The Company provides for gratuity, an unfunded defined benefit retirement plan covering all its employees, based on third-party actuarial valuations.  This plan provides for a lump-sum payment to be made to vested employees at retirement or termination of employment in an

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

amount equivalent to 15 days salary, payable for each completed year of service.  These gratuity benefits vest upon an employee’s completion of five years of service. The gratuity valuation is made at each year-end and the incremental liability over the previous year is provided for in the accounts.

Provident Fund

Employees and the Company each contribute at the rate of 12% of basic salary to a provident fund maintained by the Government of India for the benefit of employees.  The provident fund is a defined contribution plan. Accordingly, the Company expenses such contributions to operations as incurred.

Leave Encashment

Provision for leave encashment is computed on the basis of last drawn salary for the unavailed leave balance to the credit of the employees at the year-end and is charged to the Profit and Loss Account.

7. Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are effected.

Monetary items denominated in a foreign currency are translated using the exchange rates prevailing at the date of Balance Sheet. Exchange Gains / losses on account of exchange difference either on settlement or translation are recognized in Profit and Loss account except in case where it relates to the acquisition of a fixed asset from a country outside India in which case it is adjusted to the carrying cost of such asset.

Non-monetary items such as investments denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

8. Stock based compensation

The Company accounts for compensation expense  under the  Employee Stock Option schemes using the intrinsic value method as per the Guidance Note “Accounting for Employee Share-based Payments” issued by the Institute of Chartered Accountants of India.

9. Earnings per share

The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20 on Earnings Per Share. Basic earnings per share is computed by dividing the net

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

profit/loss for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit/loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all potential equity shares on account of stock options outstanding. For the purpose of Earnings Per Share calculations, ADRs are converted to equity shares (Refer Schedule 1)

10. Taxes

Income taxes are accounted for in accordance with Accounting Standard - 22, Accounting for Taxes on Income.  Income taxes comprise both current and deferred tax.

Current income tax and fringe benefit tax  are measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws. Deferred tax is accounted for by computing the tax effect of timing differences, which arise during the year and reverse in subsequent periods. Deferred tax assets on account of accumulated losses, unabsorbed depreciation and other items are recognized only to the extent that there is virtual certainty of realization of such assets in future.

11. Cash Flow Statement

Cash-flow statements are prepared in accordance with “Indirect Method” as explained in the Accounting Standard on Cash Flow Statements (AS-3) issued by the Institute of Chartered Accountants of India.

Cash and bank balances and current investments that have insignificant risk of change in value, which have durations up to three months, are included in the Company’s cash and cash equivalents in the Cash Flow Statement.

12. Leases

Leasing of assets whereby the lessor essentially remains the owner of the asset is classified as operating leases. The payments made by the Company as lessee in accordance with operational leasing contracts or rental agreements are expensed proportionally during the lease or rental period respectively. Any compensation, according to agreement, that the lessee is obliged to pay to the lessor if the leasing contract is terminated prematurely is expensed during the period in which the contract is terminated.

13. Provisions and Contingencies

A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

(excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement. A contingent asset is neither recognised nor disclosed.

 B.   NOTES TO ACCOUNTS

1. Capital Commitments:

	As at March 31, 2007 Rs.	As at March 31, 2006 Rs.
Estimated amount of contracts remaining to be executed on capital account and not provided for	2,321,454	5,031,900

2. Earnings in foreign currency (on accrual basis):  

		2006-07 Rs.	2005-06 Rs.
(i)	E-commerce services	5,536,174	5,282,836
(ii)	Media and Mobile services	7,334,768	2,866,022
(iii)	Interest received on deposits with banks	35,760,438	36,163,842
		48,631,380	44,312,700

3. Expenditure in foreign currency (on accrual basis):

		2006-07 Rs.	2005-06 Rs.
(i)	Professional Charges	16,639,763	8,439,315
(ii)	Product Development	24,314,021	4,505,956
(iii)	Dataline/ Internet Charges	17,904,565	14,508,866
(iv)	Listing Fees	3,724,883	813,950
(v)	Software Usage Charges	18,374,244	2,195,406
(vi)	Purchase of email domains	7,623,543	4,988,517
(vii)	Other matters	3,622,333	4,360,448
		92,203,352	39,812,458

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

4. Payment to auditors (net of service tax):

		2006-07 Rs.	2005-06 Rs.
(i)	Statutory audit fees	600,000	400,000
(ii)	As adviser, or in any other capacity in respect of: (a)Tax audit fees (b)Taxation matters (c)In any other manner            (US GAAP audit)	150,000 600,000 2,422,948	100,000 400,000 9,147,818
		3,772,948	10,048,818
(iii)	As expenses	30,870	17,455
		3,803,818	10,065,623

5. Employee Stock Option Scheme (ESOP)

(a) Employee Stock Option (1999 ESOP)  and  Associate Stock Option Plans (1999 ASOP)

On February 22, 1999, the Company approved the Employee Stock Option Plan 1999 (“1999 ESOP”) and the Associate Stock Option Plan 1999 (“1999 ASOP”) (collectively “Option Plans”) which cover present and future employees, retainers in full time service of the Company and certain associates of the Company.

The exercise price is determined by the Compensation committee, and is intended to be at least the fair value of the Company’s equity shares on the date of the grant.

Under the Option Plans, the Company reserved 280,000 equity shares for the 1999 ESOP and 198,000 equity shares for the 1999 ASOP, respectively.

		1999 ESOP		1999 ASOP
Number of options granted, exercised and forfeited during the		2007	2006	2007	2006
Options outstanding, beginning of period		46,000	92,150	35,000	35,000
Granted		-	-	-	-
Less:	Exercised	-	-	-	-
	Forfeited	-	(46,150)	-	-
Options outstanding, end of period		46,000	46,000	35,000	35,000

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

On January 16, 2006, the Compensation Committee terminated the 1999 ESOP and ASOP plan, without prejudice to the interest of participants and ASOP who have already been granted options under it.

(b) 2002 Stock Option Plan (2002 ESOP)

In January 2002, the Board of directors approved the  2002 Stock Option Plan (“2002 ESOP”) which provide for the grant of incentive stock options and non-statutory stock options to the Company’s employees. All options under these plans are exercisable for the ADRs of the Company. Unless terminated sooner, these plans will terminate automatically in January 2012.  A total of 280,000 of the Company’s equity shares are currently reserved for issuance pursuant to 2002 ESOP.

	2002 ESOP
Number of options granted, exercised and forfeited during the	2007	2006
Options outstanding, beginning of period	87,750	188,025
Granted	-	-
Less:Exercised	(17,250)	(94,400)
Forfeited	-	(5,875)
Options outstanding, end of period	70,500	87,750

(c) 2004 Stock Option Plan (2004 ESOP)

In June 2004, the Board of directors approved the 2004 Stock Option Plan (“2004 ESOP”) for grant of stock options to our employees. A total of 358,000 equity shares are currently reserved for issuance under the plan.

	2004 ESOP
Number of options granted, exercised and forfeited during the	2007	2006
Options outstanding, beginning of period	190,565	284,500
Granted	46,250	5,100
Less:  Exercised	(39,075)	(51,910)
Forfeited	(11,875)	(47,125)
Options outstanding, end of period	185,865	190,565

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

      (d) 2006 Stock Option Plan (2006 ESOP):

The 2006 Stock Option Plan (“2006 ESOP”) was adopted and approved by the Compensation committee on June 20, 2006 in accordance with the approval granted by shareholders on March 31, 2006. A total of 300,000 equity shares were approved for issuance under the plan.

	2006 ESOP
Number of options granted, exercised and forfeited during the	2007	2006
Options outstanding, beginning of period	-	-
Granted	263,750	-
Less:   Exercised		-
Forfeited		-
Options outstanding, end of period	263,750	-

(e) Method used for accounting for share based payment plan:

The   Company   has used the intrinsic value method to account for the compensation cost of stock option to employees of the company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option.

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

(f) Fair Value Methodology:

The fair value of options used to compute pro forma net income and earnings per equity share have been estimated on the date of grant using Black-Scholes model.

	(Indian Rupees)
	2006-07
Net Profit (as reported)	252,815,995
Add: Stock-based employee compensation	27,543,441
Less: Stock- based compensation expenses determined under fair value method (Proforma)	80,169,758
Net Profit (Proforma)	200,189,678
Earnings per Share – Rupees
Basic – as reported	17.38
– Proforma	13.76
Diluted – as reported	16.93
– Proforma	13.41

The key assumptions used in Black-Scholes model for calculating fair value are: risk-free interest rate ranging between 4.56% to 4.59%, expected life: 4 to 5 years, expected volatility of shares : 96.45% to 97.63% and expected growth life in dividend : 0 %.  The range variables detailed herein represent the highs and the lows of the assumptions during the pendency of the grant dates.

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

6.   Operating leases

The Company leases office space and residential apartments for employees under various operating leases. Operating lease expense that has been included in the determination of the net profit/loss is as follows:

Particulars	2006-07 Rs.	2005-06 Rs.
Office Premises	16,604,418	13,481,166
Residential flats for accommodation of employees	7,730,176	4,703,539
	24,334,594	18,184,705

These lease agreements are executed for a period ranging between 3 - 60 months with a renewable clause. These lease agreements also provide for termination at will by either party by giving a prior notice period between 1 – 3 months except in the case of agreement for office premises which can be terminated only by the Company.

The minimum annual rental commitments under operating leases that have initial or remaining terms in excess of one year are as follows:

Particulars	2006-07 Rs.	2005-06 Rs.
Not later than one year	26,630,090	17,457,027
Later than one year and not later than five years	15,991,000	10,691,596
Total payments	42,621,090	28,148,623

7.   Segment Reporting

The Company operates in a single business and geographical segment known as “India Online Business” and hence disclosure of segment information as per Accounting Standard 17 on Segment Reporting has not been presented.

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

8.   Related Parties Disclosures

I.      Names and relationships of related parties

a.	Subsidiary Companies:
	Rediff Holdings, Inc.
	Value Communications Corporation (“Valucom”)
	Rediff.com, Inc.
	India Abroad, Inc.

b.	Associate Companies:
	Rediffussion Holdings Private Limited
	RDY&R Private Limited (“RDY&R”)
	Everest Brand Solutions Private Limited
	OnMobile Asia Pacific Private Limited

c.	Key Management Personnel:
	Mr. Ajit Balakrishnan	Chairman and Managing Director

Transactions with Related Parties during the year:

Name of the Related party	Transactions	2006-07 Rupees	2005-06 Rupees
Value Communications Corporation	Loans and advances as at March 31, 2007 Payable as at March 31, 2007	1,658,132 8,000,148	1,631,075 7,869,605
India abroad Publications Inc	a)   Facility Management charges paid by Rediff.com India to India Abroad Publications, Inc. b)   Editorial salaries cost  charged by Rediff.com India Limited to India Abroad Publications, Inc. c)   General Travel and other reimbursements incurred by	Nil Nil 7,182,669	107,389 25,095,598 2,445,972

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

                              Rediff.com Inc                                 Rediff Holdings Inc       Rediff.com India Limited on behalf of India Abroad Publications, Inc.       Loans and advances as at March 31, 2007       Payable as at March 31, 2007       Bandwidth Charges paid by Rediff.com, Inc. on behalf of Rediff.com India Limited       Loans and advances as at March 31, 2007       Payable as at March 31, 2007           Loans and advances as at March 31, 2007       Payable as at March 31, 2007               49,894,025         37,995,636       11,430,442           1,883,839         31,488,183           81,811         6,407,592               46,921,556         30,142,888       14,989,464           1,453,394         30,174,962           80,476         6,303,036  

RDY&R                 OnMobile Asia Pacific       Advertising revenue through RDY&R       Receivable as at March 31, 2007       Mobile revenue through OnMobile       Receivable as at March 31, 2007       520,667         125,661       897,920         97,920       1,919,882         1,115,411       Nil         Nil  

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

9.   Investment in subsidiary

The Company had in earlier years provided for diminution in the value of long term investments in respect of its subsidiary companies on account of continuing losses from operations. Whilst, the subsidiary has since commenced reporting profits, the Company believes it is too early to merit a reversal of the provision for diminution at this stage and accordingly the investments are carried at the same value as at March 31, 2006.

10.   Deferred tax

The items that could have resulted in deferred tax assets mainly include the net operating loss and unabsorbed depreciation carry-forward, depreciation, retirement benefits and provisions for bad and doubtful debts.  Such deferred tax assets have not been recognized since there is no certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

11. Earning Per Share (EPS)

		2006-07	2005-06
A.	Net Profit attributable to equity shareholders (Rs.)	252,815,995	55,047,068
B.	Weighted average number of equity shares outstanding during the year	14,543,360	13,487,212
C.	Potentially dilutive equity share equivalents (stock options)	380,907	276,778
D.	Weighted average number of equity shares and potentially dilutive equity share equivalents outstanding	14,924,267	13,763,989
E.	Nominal value of Equity Shares (Rs.)	5.00	5.00
	Basic Earning per Share (Rs.) Diluted Earning per Share (Rs.)	17.38 16.93	4.08 4.00

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

12. Derivative transactions

The Company has not entered in to any derivative transaction during the year ended March 31, 2007.

Foreign exchange currency exposures not hedged by derivative instruments as at March 31, 2007:

    

		2006-07		2005-06
Sl. No.	Particulars	Amount (US dollars)	Amount (Rupees)	Amount (US dollars)	Amount (Rupees)
1	Amount receivable on account of sale of services	72,176	3,115,677	1,268,597	56,592,108
2	Creditors payable on account of foreign currency expenditure	232,243	10,437,146	1,824,714	81,400,484
3	Foreign currency bank balances	6,217,201	274,938,706	25,593,507	1,141,726,326
4.	Amount receivable from subsidiary companies	1,180,106	53,517,807	1,119,502	50,086,502
5.	Amount payable to subsidiary companies	1,849,869	83,891,559	1,664,964	74,490,491

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

13. Managerial Remuneration

During the year, the Company has not paid any managerial remuneration to its Chairman and other Directors.

14. Contingencies

The Income tax authorities in India have returned disallowances of certain expenses claimed by the Company for certain years and have also levied penalties on some of those disallowances. The amounts of the penalties are not quantifiable at present and the Company has lodged appropriate proceedings with the relevant income tax authorities. The Company expects to prevail in the appellate proceedings,

The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of its business. The Company is unable to quantify the monetary value of claims that may arise in future from such cases.

15. The Company does not owe any amount outstanding with small-scale industrial undertakings. Small-scale industrial undertakings have been determined to the extent such parties have been identified on the basis of information available with the Company.

The Company has not received any intimation from its vendors regarding their status under Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, required under the said act have not been made.

16. Comparatives

Comparative financial information (i.e., the amounts and disclosures for the preceding year) presented above, is included as an integral part of the current year’s financial statements, and is to be read in relation to the amounts and disclosures relating to the current year. Figures of the previous year are regrouped and reclassified wherever necessary to correspond to figures of the current year.

REDIFF.COM INDIA LIMITED

SCHEDULE TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007

SCHEDULE 14: SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

As per our attached report of even date.

For Deloitte Haskins & Sells	For and on behalf of the board
Chartered Accountants

P.R. Ramesh	Ajit Balakrishnan	Sunil Phatarphekar	Jyoti Dialani
Partner	Chairman & MD	Director	Company Secretary

Mumbai, India	Mumbai, India
Dated: July 12, 2007	Dated: July 12, 2007

REDIFF.COM INDIA LIMITED

ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI.

Balance Sheet Abstract and Company’s General Business Profile

(I)   Registration Details

Registration No.   96077 State Code   11

Balance Sheet Date	31/03/2007
(dd/mm/yy)

(II)   Capital raised during the year (Amount in Rs. Thousands)

Public Issue	Rights Issue
Nil	Nil

Bonus Issue	Private Placement
Nil	Nil

(III)     Position of Mobilization and Deployment of Funds (Amount in Rs.  Thousands)

Total Liabilities	Total Assets
5,599,704	5,599,704

Sources of Funds

Paid - up Capital	Reserves & Surplus
73,019	5,526,685

Secured Loans	Unsecured Loans
Nil	Nil

Application of Funds

Net Fixed Assets	Investments
423,006	849,999

Net Current Assets	Misc. Expenditure
2,449,645	NIL

Accumulated Losses 

1,877,054

REDIFF.COM INDIA LIMITED

ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI.

(IV)      Performance of Company (Amount in Rs. Thousands) for the year ended March 31, 2007.

Turnover	Total Expenditure
1,117,371	860,394

Profit / Loss Before Tax		Profit / Loss After Tax
+                      -	256,977	+                     -	252,816
o		o

Earnings (Loss) per share	Dividend @ %
Rs 17.38	Nil

(V) Generic Names of Three Principal Products / Services of Company (as per monetary terms)

Item Code No. ( ITC ) Product Description	N/A
	Online Advertising & Fee based services

For and on behalf of the board

Ajit Balakrishnan                                                                Sunil Phatarphekar                             Jyoti Dialani

Chairman & Managing Director                                              Director                                               Company Secretary

Mumbai, India

Dated: July 12, 2007

Statement pursuant to Section 212 of the Companies Act 1956 relating to the Subsidiary Companies
A.	Name of the Subsidiary	Rediff Holdings Inc.	Value  Communications Corporation
B.	Financial year of the subsidiary ended on	31-Mar-2007	31-Mar-2007
C.	The Company's interest in the subisidiary on the aforesaid date
	a)  Number of shares held	11,066,667	12,000,000
	b) Face Value per share in US dollars	0.0001	No par value
	c) extent of Holding	100%	100%
D.	The net aggregate of Profits/(losses) of the subsidiary so far it concerns the members of the company
	a) Not dealt with in the accounts of the     company amounted to	(44,936,363)	(19,410)
	1.  For the Subsidiary's financial year      ended as in "B" above
	Equivalent to INR*
	2.  For the previous financial years      of the Subsidiary since it became      the Company's Subsidiary
	Equivalent to INR*
	b) Dealt with in the accounts of the     company amounted to
	1.  For the Subsidiary's financial year      ended as in "B" above
	Equivalent to INR*
	2.  For the previous financial years      of the Subsidiary since it became      the Company's Subsidiary
	Equivalent to INR*
*Exchange rate used : 1 USD = Rs.45.35
Disclaimer:
We have translated the foreign currency amounts in the financial data derived from our Subsidiaries financial statements at the closing rate as on 31st March, 2007. The transactions should not be considered as a representation that such foreign currency amounts have been, could have been or could  be converted in to Rupees at any particular rate, the rate stated above, or at all
		For and on behalf of the Board
		Sd/-	Sd/-
Date: July 12, 2007		Ajit Balakrishnan Chairman & Managing Director	Sunil Phatarphekar Director
Place: Mumbai
		Sd/-
		Jyoti Dialani Company Secretary

Rediff Holdings Inc

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

Mr. Sridar Iyengar

Mr. Sunil Phatarphekar

SECRETARY

Mr. Joy Basu

AUDITORS

Patkar & Pendse

India

Directors’ Report

The Board of Directors presents Rediff Holdings Inc audited financial statements for the year ended 31^st March 2007.

PRINCIPAL ACTIVITIES

Rediff Holdings Inc is a cost center taking care of all corporate related expenditure for the Rediff Group in the USA, and does not generate any revenue. 

REVIEW OF BUSINESS

Gross Loss (before depreciation, amortisation, impairment write down and taxes) is US $ 941,622/-. After giving effect to other adjustments, the net loss of US $ 990,879/- was carried to Balance Sheet.

DIVIDENDS

Your Directors do not recommend any dividend.

DIRECTORS

During the year Mr. Sunil Phatarphekar was appointed as a director of the Company.

For and on behalf of the Board of Directors

Director

Date: July 12, 2007

REPORT OF THE AUDITORS

The Board of Directors,

Rediff Holdings Inc.

We  have  audited  the  attached  Balance Sheet of REDIFF HOLDINGS INC., a Company incorporated as a Delaware Corporation in February, 2001 in the United States, as at March 31, 2007 and also the  Profit & Loss Account  of the Company for the  year ended  on  that  date annexed thereto.  These financial statements are the responsibility of the Company’s Management.  Our responsibility is to express an opinion on these financial statements based on our audit and report that : 

We conducted our audit in accordance with auditing standards generally accepted in India.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

Further, we report that :

(a)   We have obtained all the information & explanations, which to the best of our knowledge & belief were necessary for the purposes of our audit.

(b)   The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

(c)   In our opinion, the Balance sheet and Profit and Loss Account comply with Accounting Standards referred to in Schedule 9 to the Accounts.

(d)   In our opinion and to the best of our information and according to the explanations given to us the said accounts read with the notes thereon, give a true and fair view in conformity with the accounting principles generally accepted in India:

i.              in the  case  of  the  Balance  Sheet  of the state of affairs  of the Company as at 31st March, 2007;

and

ii.             in the case of Profit and Loss Account, of the loss of the Company for the year ended on that date;

For Patkar & Pendse

Chartered Accountants

B.M. Pendse

Partner.

M.No. 32625

Place :  Mumbai

Date   :  July 12, 2007

Rediff Holdings Inc
Balance Sheet as at March 31, 2007
		Schedule	As at	As at
		No.	31.03.2007	31.03.2006
			US $	US $
I. SOURCES OF FUNDS
Shareholders' funds :
Share Capital		1	1,107	1,107
Reserves & surplus
Securities premium			23,998,893	23,998,893
	TOTAL		24,000,000	24,000,000
II. APPLICATION OF FUNDS
Fixed assets :		2
Gross Block			35,029	35,029
Less : Depreciation			35,029	35,029
Net Block			-	-
Investments		3	10,705,004	10,705,004
Current assets, loans and advances :
Current assets :
Cash and bank balances		4	20,948	130,515
Loans and advances		5	2,864,288	3,825,578
			2,885,236	3,956,094
Less : Current liabilities and provisions :
Liabilities		6	137,056	217,034
Net current assets			2,748,180	3,739,060
Profit and loss account			10,546,815	9,555,936
	TOTAL		24,000,000	24,000,000
Accounting policies and notes to balance sheet and profit and loss account		9
As per our attached report of even date
Patkar & Pendse			For and on behalf of the board
Chartered Accountants
B.M.Pendse			A.Balakrishnan
Partner			Director
M. No. 32625
Mumbai, India			Mumbai, India
Dated: July 12, 2007			Dated: July 12, 2007

Rediff Holdings Inc
Profit & Loss Account for the year ended March 31, 2007
	Schedule
	No.
		31.03.2007	31.03.2006
		US $	US $
INCOME
Operating revenues		-	-
		-	-
EXPENDITURE
Personnel expenses	7	420,390	355,306
Operating and other expenses	8	521,232	439,266
Provision for investment in subsidiary (Refer Note No. 5 in Schedule 9)			4,917,208
Depreciation		-	11,676
		941,622	5,723,456
Loss for the year before tax		941,622	5,723,456
Provision for tax / Taxes paid		49,257	16,443
Loss after tax		990,879	5,739,899
Deficit brought forward from previous year		9,555,936	3,816,037
Adj to retained earnings		-
Balance carried to balance sheet		10,546,815	9,555,936
Basic and Diluted Earnings Per Share (US$)		(0.09)	(0.52)
Accounting policies and notes  to balance sheet and profit and loss account	9
As per our attached report of even date
Patkar & Pendse		For and on behalf of the board
Chartered Accountants
B.M.Pendse		A.Balakrishnan
Partner		Director
M.No. 32625
Mumbai, India		Mumbai, India
Dated:  July 12, 2007		Dated:  July 12, 2007

Rediff Holdings Inc.
Schedules 1 to 9 forming part of the Balance Sheet and Profit and Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE  1 : CAPITAL
Authorized :
11,333,000 equity shares @ $ 0.0001		1,134	1,134
Issued and subscribed :
11,066,667 (P.Y. 11,066,667)  equity shares		1,107	1,107
@ $ 0.0001 par value
	TOTAL	1,107	1,107

Rediff Holdings Inc

Schedules 1 to 9 forming part of the Balance Sheet and Profit and Loss Account

for the year ended 31st March, 2007

SCHEDULE 2 : FIXED ASSETS

			3/31/2007
	Software	Computer Equipment	Total	As at March 31, 2006
Cost as at April 1, 2006	27,907	7,122	35,029	35,029
Additions	-	-	-
Deductions	-	-	-	-
Total as at March 31, 2007	27,907	7,122	35,029	35,029
Depreciation upto March 31, 2007	27,907	7,122	35,029	35,029
Net value as at March 31, 2007	-	-	-	-
Net value as at March 31, 2006	-	-	-	-
Depreciation for the year	-	-	-	-

Rediff Holdings Inc
Schedules 1 to 9 forming part of the Balance Sheet and Profit and Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE 3 : Investments (unquoted at cost)
Long Term Investments
In wholly owned subsidiary companies
(fully paid-up)
India Abroad Inc		14,751,366	14,751,366
3,198,080  (Previous year3,198,080) equity shares
of US$ 0.01per share
Less : Provision for dimunition in value		4,917,208	4,917,208
		9,834,158	9,834,158
Rediff.com Inc.		870,846	870,846
5,000 (Previous year 5,000) equity shares
of US$ 0.001per share
	TOTAL	10,705,004	10,705,004
SCHEDULE 4 : CASH AND BANK BALANCES
Bank balances :
In current accounts
Wells Fargo,  U.S.A.   (Formerly Norwest Bank)		9,578	9,578
Citibank, New York, U.S.A		11,370	120,937
	TOTAL	20,948	130,515
SCHEDULE 5 : LOANS AND ADVANCES
(Unsecured considered good)
Dues from  subsidiary companies (Net)		2,581,420	3,507,277
Advances recoverable in cash
or in kind or for value to be received		260,533	287,076
Deposit with TD Waterhouse (Broker)		1,048	1,048
Tax Deducted at Source and Advance Tax		21,287	30,177
	TOTAL	2,864,288	3,825,578

Rediff Holdings Inc
Schedules 1 to 9 forming part of the Balance Sheet and Profit and Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE 6 : LIABILITIES
Sundry Creditors
- Other than small scale industrial undertakings.		137,056	114,586
- Other liabilities		-	102,448
	TOTAL	137,056	217,034

Rediff Holdings Inc
Schedules 1 to 9 forming part of the Balance Sheet and Profit and Loss Account
for the year ended 31st March, 2007
	31.03.2007	31.03.2006
	US $	US $
SCHEDULE  7 : PERSONNEL EXPENSES
Salaries and allowances	366,900	336,637
Medical Insurance	22,593	(5,427)
Payroll Taxes	30,897	24,096
TOTAL	420,390	355,306
SCHEDULE  8 : OPERATING AND OTHER EXPENSES
Travelling expenses	50,685	14,805
Legal fees	2,432	3,299
Professional charges	63,081	4,525
Telephone expenses	1,610	5,255
Insurance charges	360,930	352,211
Office expenses	4,923	22,681
Payroll Processing Charges	2,369	2,328
Directors Fee	35,000	34,166
Bank Charges	202	(3)
TOTAL	521,232	439,266

REDIFF HOLDINGS, INC

SCHEDULE 9: ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

A.   ACCOUNTING POLICIES

    1.    Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention, in accordance with the accounting principles generally accepted in India ("Indian GAAP"), the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

    2.     Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

    3.     Revenue recognition

Rediff Holdings Inc is a cost center taking care of all corporate related expenditure for the Rediff Group in US, and does not generate any revenue.

    4.     Fixed assets and depreciation

Fixed assets are stated at historical cost. The Company depreciates fixed assets using the straight-line method, over the estimated useful lives of assets. The estimated useful lives of assets are as follows:

Computer equipment and software……	3 years
Office equipment………………………..	5 years

    5.     Investments

Cost of investments in wholly owned subsidiaries comprise of purchase cost as increased by legal fees, due diligence fees and other direct expenses connected with such acquisition. Additional consideration for the acquisition of equity shares payable in subsequent years on the resolution of certain contingencies is debited to the cost of the investments in the year in which the contingent payments crystalize.

Provision was made in 2005-06 to recognize a decline, other than temporary in the value of such investments.

(Contd…..2)

REDIFF HOLDINGS, INC.

(2)

    6.     Employee retirement benefits

The company has employee retirement benefit plan in which employer merely facilitates the plan administration. Employer does not contribute to the plan.

Leave Encashment

The company’s policies do not allow leave encashment and the employees are encouraged to avail the eligible leave. Unavailed leave lapses at the end of the period and hence no provision has been made in the books.

    7.     Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are effected.

Exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets are adjusted in the carrying amount of the respective fixed asset. The carrying amount of fixed assets is also adjusted at the end of each financial year for any change in the liability arising out of expressing the related outstanding foreign currency liabilities at the closing rates of exchange prevailing at the date of the Balance Sheet or at the rates specified in the related forward contract.

Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using the exchange rates prevailing at the date of Balance Sheet or rates specified in the related forward contract. Gains / losses arising on restatement and on settlement of such items are recognized in the Profit and Loss Account.

Non-monetary items such as investments denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

    8.     Leases

Operating Lease rentals are expensed with reference to lease terms and conditions.

    9.     Contingent Liabilities

These are disclosed by way of notes on the balance sheet. Provision is made in the accounts in respect of those liabilities, which are likely to materialize after the year-end, till the finalization of accounts and having a material effect on the position stated in the balance sheet.

(Contd…..3)

REDIFF HOLDINGS, INC.

(3)

    10.   Deferred Income Taxes

As of March 31, 2007, the components of the Company’s net deferred tax assets are as follows:

As of March 31,2007, the Company has net operating loss carry forwards of approx $ 5816000 for federal income tax purposes, which expire in the years 2020 to 2025. This includes the NOL from the fiscal 3/31/06 return of $7,545,695, adjusted by the estimated fiscal 3/31/07 taxable income of $1,730,000. The actual fiscal 3/31/07 taxable income may be further adjusted by various M-1 differences. Realization of the future tax benefits related to the deferred tax income tax asset is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carry forward period. Management has considered these factors and believes that no asset to be created in the books of accounts.

B.     NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

    1.     Organization and Business

Rediff Holdings Inc (“the Company") was incorporated as a Delaware Corporation in February 2001 by Rediff.Com India Limited to act as the holding company for some of the Parent’s investments in United States.

    2.     Additional information pursuant to the provisions of paragraph 4C and 4D of Schedule VI of the Companies Act., 1956 to the extent not applicable are

            not given.

    3.     Litigation

There are no pending litigations against the company.

    4.     Other contingencies

In connection with the Company’s acquisition of India Abroad in April 2001, the Company has been advised by a hold-out shareholder that he believes his shares in India Abroad are worth approximately US$1.2 million. The Company disputes this assertion and has offered the claimant approximately US$50,000 for his shares. The Company does not know if this offer will be acceptable to the shareholder or if the shareholder will file a legal action against the Company if the matter is not resolved.

(Contd…..4)

REDIFF HOLDINGS, INC.

(4)

    5.    Balance Sheet Abstract and Company’s General Business Profile

    (I)     Registration Details

Registration No.-TAX ID No N.A. State Code N.A.

Balance Sheet Date
(dd/mm/yy)   31/03/2007  

    (II)     Capital raised during the year (Amount in Rs. Thousands)

Public Issue	Rights Issue
Nil	Nil

Bonus Issue	Private Placement
Nil	Nil

    (III)     Position of Mobilisation and Deployment of Funds (Amount in US$)

Total Liabilities $	Total Assets $
24000000	24000000

                Sources of Funds

Paid - up Capital $	Reserves & Surplus
1,107	23998893

Secured Loans	Unsecured Loans
Nil	Nil

                Application of Funds

Net Fixed Assets $	Investments $
Nil	10,705,004

Net Current Assets $	Misc. Expenditure
2748180	Nil

 Accumulated Losses $

10546815

(Contd…..5)

REDIFF HOLDINGS, INC.

(5)

(IV)     Performance of Company (Amount in US$) for the year ended March 31, 2007.

Turnover $	Total Expenditure $
Nil	941622

Profit / Loss Before Tax $		Profit / Loss After Tax $
+ -	(941622)	+ -	(990879)
o		o

                         (Please tick Appropriate box + for Profit – for Loss)

Earning per Share	Dividend @ %
(0.09)	Nil

(V)     Generic Names of Three Principal Products / Services of Company ( as per monetary terms )

Item Code No. (ITC)	N/A
Product Description

6.     Previous years figures have been regrouped and reclassified wherever necessary to conform to current years classifications.

For and on behalf of the board

Ajit Balakrishnan

Director

Mumbai, India

Dated: July 12, 2007

                                                                                                                                        India Abroad Publications Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

SECRETARY

Mr. Joy Basu

AUDITORS

Patkar & Pendse

India

  Directors’ Report

The Board of Directors present India Abroad Publications Inc.’s audited financial statements for the year ended 31^st March 2007.

PRINCIPAL ACTIVITIES

India Abroad Publications Inc., a weekly newspaper-publishing Company is a subsidiary of Rediff Holdings Inc., (‘Rediff Holdings’) which in turn is a wholly owned subsidiary of Rediff.com India Limited. (‘Rediff.com’).

India Abroad’s revenues primarily include advertising and sponsorship and consumer subscription revenues earned from the publication of its weekly newspaper distributed primarily in the USA & Canada.  India Abroad was acquired by Rediff Holdings on April 28, 2001 by acquiring substantially all of the outstanding voting shares of India Abroad Publications, Inc.

REVIEW OF BUSINESS

The Profit & Loss account is set out along with this report and shows that during the year, the Company earned gross income of US $ 4,834,741/-.Gross Profit (before depreciation, amortisation, impairment write down and taxes) is US $ 913,268 /-.  After giving effect to other adjustments, the net profit of US $ 841,167/- was carried to Balance Sheet.

DIVIDENDS

Your Directors do not recommend any dividend.

For and on behalf of the Board of Directors

Director

Date: July 12, 2007

REPORT OF THE AUDITORS

The Board of Directors,

India Abroad Publications Inc.

We  have  audited  the  attached  Balance Sheet of INDIA ABROAD PUBLICATIONS INC., a wholly owned subsidiary of Rediff Holdings Inc. and incorporated in the United States, as at March 31, 2007 and also the  Profit & Loss Account  of the Company for the  year ended  on  that  date annexed thereto.  These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit and report that : 

We conducted our audit in accordance with auditing standards generally accepted in India.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

Further, we report that :

(a)    We have obtained all the information & explanations, which to the best of our knowledge & belief were necessary for the purposes of our audit.

(b)    The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

(c)    In our opinion, the Balance sheet and Profit and Loss Account comply with Accounting Standards referred to in Schedule 13 to the Accounts.

(d)    In our opinion and to the best of our information and according to the explanations given to us the said accounts read with the notes thereon, give a true and fair view in conformity with the accounting principles generally accepted in India:

i.    in the  case  of  the  Balance  Sheet  of the state of affairs  of the Company as at  31st March,  2007;

and

ii.   in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date;

                                                                                                                                              
60;                                                                                                          For Patkar & Pendse

                                                                                                                                              
60;                                                                                                     Chartered Accountants

                                                                                                                                                                                                    B.M. Pendse 

                                                                                                                                             & #160;                                                                                                                                    Partner.

                                                                                                                                                         & #160;                                                   M.No. 32625

Place:  Mumbai

Date :  July 12, 2007

India Abroad Publications, Inc
Balance Sheet as at March 31, 2007
		Schedule	As at	As at
		No.	31.03.2007	31.03.2006
			US $	US $
I. SOURCES OF FUNDS
Shareholders' funds :
Share capital		1	41,981	41,981
Reserves & Surplus
Securities premium			212,446	212,446
	TOTAL		254,427	254,427
II. APPLICATION OF FUNDS
Fixed assets :		2
Gross Block			393,934	748,005
Less : Depreciation			286,997	452,882
Net Block			106,937	295,123
Investments		3	129,793	129,793
Current assets, loans and advances :
Sundry debtors		4	728,929	383,887
Cash and bank balances		5	1,513,282	413,082
Loans and advances		6	395,114	1,105,553
			2,637,324	1,902,522
Less : Current liabilities and provisions :
Liabilities		7	3,067,360	3,361,910
Net current assets			(430,036)	(1,459,389)
Miscellaneous expenditure (to the		8	47,962	47,962
extent not written off or adjusted)
Profit and loss account			399,771	1,240,938
	TOTAL		254,427	254,427
Accounting policies and notes to
balance sheet and profit and loss account		13
As per our attached report of even date
For Patkar & Pendse			For and on behalf of the board
Chartered Accountants
B.M.Pendse			A.Balakrishnan
Partner			Director
M.No. 32625
Mumbai, India			Mumbai, India
Dated: July 12, 2007			Dated: July 12, 2007

India Abroad Publications, Inc
Profit & Loss Account for the year ended March 31, 2007
	Schedule
	No.
		31.03.2007	31.03.2006
		US $	US $
INCOME
Operating revenues	9	4,727,902	4,742,881
Other income	10	106,839	2,331
		4,834,741	4,745,212
EXPENDITURE
Personnel expenses	11	1,362,904	1,568,538
Operating and other expenses	12	2,558,569	3,010,542
Depreciation		70,952	62,318
		3,992,425	4,641,397
Profit / (Loss) for the year before tax		842,316	103,815
Provision for tax		1,148	1,160
Profit / (Loss) after tax		841,167	102,655
Surplus / (Deficit) b/f. from previous year		(1,240,938)	(1,343,593)
Balance carried to balance sheet		(399,771)	(1,240,938)
Basic and Diluted Earnings Per Share (US$)		0.26	0.03
Accounting policies and notes to
balance sheet and profit and loss account	13
As per our attached report of even date
For Patkar & Pendse		For and on behalf of the board
Chartered Accountants
B.M.Pendse		A.Balakrishnan
Partner		Director
M.No. 32625
Mumbai, India		Mumbai, India
Dated: July 12, 2007		Dated: July 12, 2007

India Abroad Publications, Inc
Schedules 1 to 13 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at		As at
			31.03.2007		31.03.2006
		US $		US $
SCHEDULE  1 : SHARE CAPITAL
Authorized :
6,000,000 shares of US$ 0.01			60,000		60,000
Issued and subscribed :
Capital
3198080 equity shares  @ $ 0.01 par value			31,981		31,981
Preferred Stock
100 - Class A @ $ 100 par value			10,000		10,000
	TOTAL		41,981		41,981

India Abroad Publications, Inc
Schedules 1 to 13 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
SCHEDULE 2 : FIXED ASSETS
	Gross Block				Depreciation				Net Block
Particulars	As at 31.3.06	Additions	Deletions	As at 31.3.07	Upto 31.3.06	Additions	Deletions	Upto 31.3.07	As at 31.3.07	As at 31.3.06
Premises (held for sale) (*)	152764	0	152764	0				0	0	152764
Total N.Y.	32186	0	6277	25909	26264	4488	6277	24475	1434	5922
Total Machinery & Equipmet	142586	43905	60536	125955	95669	28905	60537	64037	61918	46917
Total-Computer Software	189184	4987	159050	35121	190496		157116	33380	1741	-1312
Total Auto	10874		10874	0	10874		10874	0	0	0
Total Leasehold IMP	2033		2033	0	2033		2033	0	0	0
Total Office Improvement	129002			129002	80225	18428		98653	30349	48777
Total Telephone system	52705			52705	33686	7524		41210	11495	19019
Sun System	25242			25242	13635	11607		25242	0	11607
CWIP	11429		11429	0				0	0	11429
				0				0	0
	748,005	48,892	402,963	393,934	452,882	70,952	236,837	286,997	106,937	295,123
NOTE :
(*) Premises (held for sale ) includes office premises in New Delhi owned by the erstwhile owner of the Company pending transfer due to certain reasons.

India Abroad Publications, Inc
Schedules 1 to 13 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at		As at
			31.03.2007		31.03.2006
		US $		US $
SCHEDULE 3 : Investments (unquoted at cost)
Long Term Investments
In wholly owned subsidiary companies
(fully paid-up)
India Abroad Publications (Canada) Inc.			104,793		104,793
162974 Common shares of (Previous year 162974 shares)
India in New York Inc.			25,000		25,000
100 fully paid non-assessable shares (Previous year 100 shares)
	TOTAL		129,793		129,793
SCHEDULE 4 : SUNDRY DEBTORS
Sundry debtors (unsecured) :
Outstanding over six months			-		-
Others			799,578		438,431
			799,578		438,431
Less : Provision			70,649		54,544
			728,929		383,887
Note :
Considered good			728,929		383,887
Considered doubtful provided for			70,649		54,544
	TOTAL		799,578		438,431
SCHEDULE 5 : CASH AND BANK BALANCES
Cash on hand			397		3,232
Bank balances :
On Current Account with :
Bank of Baroda			3,205		3,505
Lloyd Bank			5,387		5,312
Citibank Saving Account			1,199,899		6,661
Citibank-India Investments			6,746		21,921
Cash-CIBC US $ Acct.			2,771		13,946
Cash-EAB # 2			94,080		140,429
CIBC-Sterling Pound Account			1,119		1,119
Cash-State Bank of LI # 2			199,677		216,957
	TOTAL		1,513,282		413,082

India Abroad Publications, Inc
Schedules 1 to 13 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE 6 : LOANS AND ADVANCES
(Unsecured considered good)
Dues from parent / group companies		112,617	805,991
Advances recoverable in cash
or in kind or for value to be received		282,497	299,561
	TOTAL	395,114	1,105,553
SCHEDULE 7 : CURRENT LIABILITIES
Sundry Creditors
- Other than small scale industrial undertakings.		688,245	665,577
Due to subsidiary / parent companies		1,878,264	2,138,563
Advance from customers		500,850	557,770
	TOTAL	3,067,360	3,361,910
SCHEDULE 8 : MISCELLANEOUS EXPENDITURE (to the extent not
written off or adjusted)
Goodwill for pur\chase of India Abroad Publications		47,962	47,962
(Canada) Inc.
	TOTAL	47,962	47,962

India Abroad Publications, Inc
Schedules 1 to 13 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		31.03.2007		31.03.2006
	US $		US $
SCHEDULE  9 : OPERATING REVENUE
Subscription Income		622,839		559,079
Classified Income		804,542		959,329
Display Income		3,296,767		3,219,956
Royalty		3,754		4,517
TOTAL		4,727,902		4,742,881
SCHEDULE  10 : OTHER INCOME
Interest on fixed deposits with banks		14,701		2,331
Profit on sale of fixed assets		92,138
TOTAL		106,839		2,331
SCHEDULE  11 : PERSONNEL EXPENSES
Salaries and allowances		1,274,608		1,459,920
Payroll Taxes		88,296		108,617
TOTAL		1,362,904		1,568,538
SCHEDULE  12 : OPERATING AND OTHER EXPENSES
Editorial expenses		180,778		507,035
Production expenses		861,474		797,849
Circulation expenses		638,399		641,203
Advertising and Promotion		267,485		312,138
Rent		139,326		139,954
Office expenses		96,984		53,846
Dues and subscriptions		7,368		5,488
Telephone and telegrams		51,662		64,009
Electricity expenses		27,770		28,979
Professional fees		40,788		107,571
Provsion for Bad debts and Bad Debts write off		21,798		39,326
Internet-bandwidth cost		14,777		25,722
IA Person Of  The Year expense		108,507		112,583
Miscellaneous expenses		7,200		74,123
Loss on sale of fixed assets		535		-
Bank Charges		93,718		100,715
TOTAL		2,558,569		3,010,542

INDIA ABROAD PUBLICATIONS INC.

SCHEDULE 13: ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

A. ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention, in accordance with the accounting principles generally accepted in India ("Indian GAAP"), the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

3. Revenue recognition

Revenues comprise of subscriptions to the India Abroad weekly newspaper publication and income from advertisements.

Revenue from advertisements are recognized upon publishing of the advertisements in the newspaper.

Subscription revenues are derived from the revenues received from newspaper subscribers and is recognized ratably over the period of subscription. Subscriptions received towards lifetime subscribers are shown as deferred revenue and recognized ratably over a 10 years period.

4. Fixed assets and depreciation

Fixed assets are stated at historical cost.  The Company depreciates fixed assets using the straight-line method, over the estimated useful lives of assets.  The estimated useful lives of assets are as follows:

Furniture and fixtures	7 years
Computer equipment and software	3 years
Office equipment	5 years

(Contd…..2)

INDIA ABROAD PUBLICATIONS INC.

(2)

5. Investments

Cost of investments in wholly owned subsidiaries comprise of purchase cost as increased by legal fees, due diligence fees and other direct expenses connected with such acquisition. Additional consideration for the acquisition of equity shares payable in subsequent years on the resolution of certain contingencies is debited to the cost of the investments in the year in which the contingent payments crystallize.

6. Employee retirement benefits

The company has employee retirement benefit plan in which employer merely facilitate the plan administration. Employer does not contribute to the plan.

Leave Encashment

The company’s policies does not allow leave encashment and the employees are encouraged to avail the eligible leave. Unavailed leave lapses at the end of the period and hence no provision has been made in the books.

7. Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are effected.

Exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets are adjusted in the carrying amount of the respective fixed asset. The carrying amount of fixed assets is also adjusted at the end of each financial year for any change in the liability arising out of expressing the related outstanding foreign currency liabilities at the closing rates of exchange prevailing at the date of the Balance Sheet or at the rates specified in the related forward contract.

Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using the exchange rates prevailing at the date of Balance Sheet or rates specified in the related forward contract. Gains / losses arising on restatement and on settlement of such items are recognized in the Profit and Loss Account.

Non-monetary items such as investments denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

8. Income taxes

Income taxes are accounted for in accordance with US tax laws on Income accrued.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws in US. Tax liabilities and provision is accounted for by the Holding company.

(Contd…..3)

INDIA ABROAD PUBLICATIONS INC.

(3)

9. Leases

  Operating Lease rentals are expensed with reference to lease terms and conditions.

10. Contingent Liabilities

These are disclosed by way of notes on the balance sheet.  Provision is made in the accounts in respect of those liabilities, which are likely to materialize after the year-end, till the finalization of accounts and having a material effect on the position stated in the balance sheet.

B.   NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1.  Organization and Business

India Abroad Publications Inc (“the Company") was incorporated as a New York Corporation on June 26^th, 1970.  On April 26, 2001, the Company was acquired by Rediff Holdings Inc, a wholly owned subsidiary of Rediff.Com India Limited.

The Company is one of the leading news publications catering to the Asian-American  community focusing on India and the global Indian community.

2. Additional information pursuant to the provisions of paragraph 4C and 4D of Schedule VI of the Companies Act., 1956 to the extent not applicable are not given.

3. The Company recognizes as revenues based on advertisements published and subscriptions ratably over the period of subscription.  Hence requirements as to quantitative information are not applicable.

4. Earnings in foreign exchange :

	US $ 2007	US$ 2006
Advertising Revenue	455866	824912

(Contd…..4)

INDIA ABROAD PUBLICATIONS INC.

(4)

5. Operating leases

The Company leases office space  under various operating leases. Operating lease expense that has been included in the determination of the net profit are as follows:

Particulars	2007	US$ 2006
Office Premises	139326	153345

6. Litigation

There are no pending litigations against the company.

7. Other contingencies

In connection with the Company’s acquisition of India Abroad in April 2001, the Company has been advised by a hold-out shareholder that he believes his shares in India Abroad are worth approximately US$1.2 million. The Company disputes this assertion and has offered the claimant approximately US$50,000 for his shares. The Company does not know if this offer will be acceptable to the shareholder or if the shareholder will file a legal action against the Company if the matter is not resolved.

8. The prior year figures  have been regrouped and reclassified to conform those of the current year.

9. Balance Sheet Abstract and Company’s General Business Profile

(I) Registration Details

Registration No.- TAX ID No N.A State Code N.A

Balance Sheet Date	31/03/2007
(dd/mm/yy)

(Contd…..6)

INDIA ABROAD PUBLICATIONS INC.

(6)

(II) Capital raised during the year (Amount in US$)

                                                                                                        &# 160;                                               

Public Issue	Rights Issue
Nil	Nil

                                                                                                        &# 160;                                             

Bonus Issue	Private Placement
Nil	Nil

(III) Position of Mobilisation and Deployment of Funds (Amount in US$)

                                                                                             
60;                                          

Total Liabilities  $	Total Assets $
254427	254427

 Sources of Funds

                                                                                              0;                                          

Paid - up Capital    $	Reserves & Surplus
41,981	212446

                                                                     &# 160;        

Secured Loans	Unsecured Loans
Nil	Nil

  Application of Funds

                                                                                             0;                                                  

Net Fixed Assets   $	Investments $
106937	129,793

                                                                                             0;                                              

Net Current Assets  $	Misc. Expenditure
(430036)	47962

Accumulated Losses $

399771

(IV) Performance of Company (Amount in US$) for the year ended March 31, 2007.

Turnover    $	Total Expenditure $
4834741	3992425

Profit / Loss Before Tax  $		Profit / Loss After Tax $
+                      -	842316	+                     -	841168
o		o

 (Please tick Appropriate box + for Profit – for Loss) 

                                                                         0;                                                             

Earning per Share	Dividend @ %
0.26	Nil

(Contd…..7)

INDIA ABROAD PUBLICATIONS INC.

(7)

(V) Generic Names of Three Principal Products / Services of Company ( as per monetary  terms )

Item Code No. ( ITC )                Product Description	N/A
	News Paper

For  and on behalf of the board

         Ajit Balakrishnan

         Director

Mumbai, India                                               

Dated: July 12, 2007

                                                                                                                                              India in New York Inc. 

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

SECRETARY

Mr. Joy Basu

AUDITORS

PATKAR & PENDSE

INDIA

Directors’ Report

The Board of Directors presents India in New York Inc. audited financial statements for the year ended 31^st March 2007.

PRINCIPAL ACTIVITIES

India in New York Inc. is a weekly newspaper-publishing unit, which is a wholly owned subsidiary of India Abroad Publications Inc.  The Company publishes is a free newspaper, distributed in the New York Metropolitan area.

REVIEW OF BUSINESS

The Profit & Loss account is set out along with this report and shows that during the year the Company earned gross income of US $ 223,127/-. Gross Profit (before depreciation, amortisation, impairment write down and taxes) is US $ 107,811/-. After giving effect to other adjustments, the net profit of US $ 107,811/- was carried to Balance Sheet.

DIVIDENDS

Your Directors do not recommend any dividend.

For and on behalf of the Board of Directors

Director

Date: July 12, 2007

REPORT OF THE AUDITORS

The Board of Directors,

India In New York Inc.

We  have  audited  the  attached  Balance Sheet of INDIA IN NEW YORK INC., a wholly owned subsidiary of India Abroad Publications Inc. incorporated in the United States, as at March 31, 2007 and also the  Profit & Loss Account  of the Company for the  year ended  on  that  date annexed thereto. These financial statements are the responsibility of the Company’s Management.  Our responsibility is to express an opinion on these financial statements based on our audit and report that :

We conducted our audit in accordance with auditing standards generally accepted in India.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

Further we report that :

(a)   We have obtained all the information & explanations, which to the best of our knowledge & belief were necessary for the purposes of our audit.

(b)   The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

(c)   In our opinion, the Balance sheet and Profit and Loss Account comply with Accounting Standards referred to in Schedule 9 to the Accounts.

(d)   In our opinion and to the best of our information and according to the explanations given to us the said accounts read with the notes thereon, give a true and fair view in conformity with the accounting principles generally accepted in India:

i.   in the  case  of  the  Balance  Sheet  of the state of affairs  of the Company as at 31st March, 2007;

and

ii.   in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date;

                                            For Patkar & Pendse

                                           Chartered Accountants

B.M. Pendse

                                            Partner.

M.No. 32625

Place :  Mumbai

Date   :  July 12, 2007

India In New York, Inc
Balance Sheet as at March 31, 2007
		Schedule	As at	As at
		No.	31.03.2007	31.03.2006
			US $	US $
I. SOURCES OF FUNDS
Shareholders' funds :
Share Capital		1	-	-
Reserves & Surplus		2	900,458	792,648
	TOTAL		900,458	792,648
II. APPLICATION OF FUNDS
Current assets, loans and advances :
Sundry debtors		3	28,837	36,955
Cash and bank balances		4	3,756	13,374
Loans and advances		5	879,906	753,645
			912,499	803,974
Less : Current liabilities and provisions :
Liabilities		6	12,041	11,326
Net current assets			900,458	792,648
	TOTAL		900,458	792,648
Accounting policies and notes to
balance sheet and profit and loss account		9
As per our attached report of even date
For Patkar & Pendse			For and on behalf of the board
Chartered Accountants
B.M.Pendse			A.Balakrishnan
Partner			Director
M.No. 32625
Mumbai, India			Mumbai, India
Dated: July 12, 2007			Dated: July 12, 2007

India In New York, Inc

Profit & Loss Account for the year ended March 31, 2007

	Schedule	As at	As at
	No.	31.03.07	31.03.06
		US $	US $
INCOME
Operating revenues	7	223,127	317,983
		223,127	317,983
EXPENDITURE
Operating and other expenses	8	115,316	114,308
		115,316	114,308
Profit for the year before tax		107,811	203,676
Provision for tax		-	-
Profit after tax		107,811	203,676
Surplus  brought forward from previous year		767,648	563,972
Balance carried to balance sheet		875,458	767,648
Accounting policies and notes to
balance sheet and profit and loss account	9
As per our attached report of even date
For Patkar & Pendse		For and on behalf of the board
Chartered Accountants
B.M.Pendse		A.Balakrishnan
Partner		Director
M.No. 32625
Mumbai, India		Mumbai, India
Dated: July 12, 2007		Dated: July 12, 2007

India In New York Inc.
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE  1 : SHARE CAPITAL
Authorized :
200 common shares with no par value		-	-
Issued and subscribed :
100 common shares with no par value		-	-
	TOTAL	-	-
SCHEDULE 2: RESERVES & SURPLUS
Securities Premium		25,000	25,000
Surplus in Profit & Loss Account		875,458	767,648
	TOTAL	900,458	792,648
SCHEDULE 3 : SUNDRY DEBTORS
Sundry debtors (unsecured considered good) :
Outstanding over six months		-	-
Other debts		28,837	36,955
	TOTAL	28,837	36,955
SCHEDULE 4 : CASH AND BANK BALANCES
Bank balances :
With European American Bank
On current account		3,756	13,374
	TOTAL	3,756	13,374
SCHEDULE 5 : LOANS AND ADVANCES
(Unsecured considered good )
Due from  parent  company - India Abroad Inc.		878,693	752,432
Advances recoverable in cash
or in kind or for value to be received		1,213	1,213
	TOTAL	879,906	753,645

India In New York Inc.

Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account

for the year ended 31st March, 2007

		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE 6 : LIABILITIES
Sundry Creditors
- Other than small scale industrial undertakings.		-	-
Advances from customers		12,041	11,326
	TOTAL	12,041	11,326

India In New York Inc.

Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account

for the year ended 31st March, 2007

	31.03.2007	31.03.2006
	US $	US $
SCHEDULE  7 : OPERATING REVENUES
Display Income	223,082	317,905
Royalty Income	45	78
TOTAL	223,127	317,983
SCHEDULE  8 : OPERATING AND OTHER EXPENSES
Printing & Stationery	104,767	102,114
Postage	160	150
Delivery & Freight	-	8,887
Office Expenses	-	9
Editorial Expenses	5,639	1,386
Travel & Entertainment Expenses	-	1,692
Bad Debts	4,750	70
TOTAL	115,316	114,308

INDIA IN NEW YORK, INC

SCHEDULE 9: ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

A. ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention, in accordance with the accounting principles generally accepted in India ("Indian GAAP"), the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

3. Revenue recognition

Revenues comprise of revenues from advertisements.

Revenue from advertisements are recognized upon publishing of the advertisements in the newspaper.

4. Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are effected.

Exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets are adjusted in the carrying amount of the respective fixed asset. The carrying amount of fixed assets is also adjusted at the end of each financial year for any change in the liability arising out of expressing the related outstanding foreign currency liabilities at the closing rates of exchange prevailing at the date of the Balance Sheet or at the rates specified in the related forward contract.

Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using the exchange rates prevailing at the date of Balance Sheet or rates specified in the related forward contract. Gains / losses arising on restatement and on settlement of such items are recognized in the Profit and Loss Account.

(Contd…..2)

INDIA IN NEW YORK, INC

(2)

5. Income taxes

 Income taxes are accounted for in accordance with US tax laws on Income accrued.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws in US. Tax liabilities and provision is accounted for by the Holding company.

B.  NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1. Organization and Business

India In New York Inc (“the Company") was incorporated as a New York Corporation on May 1^st 1997.  In February 2001, the Company was acquired by Rediff Holdings Inc, a wholly owned subsidiary of Rediff.Com India Limited.

The Company is one of the leading free news publication catering to the Asian-American  community focusing on India and the global Indian community.

2. Additional information pursuant to the provisions of paragraph 4C and 4D of Schedule VI of the Companies Act., 1956 to the extent not applicable are not given.

3. Litigation:

 There are no pending litigations against the company.

4. The prior year figures have been regrouped and reclassified to conform with those of current year.

5. Balance Sheet Abstract and Company’s General Business Profile

(I) Registration Details

Registration No.-TAX ID No N.A.            State Code N.A.

Balance Sheet Date	31/03/2007
(dd/mm/yy)

(Contd…..3)

INDIA IN NEW YORK, INC

(3)

(II) Capital raised during the year (Amount in US $)

                                                                               
60;                                                                                              

Public Issue	Rights Issue
Nil	Nil

                                                                       ;                                                                                                         

Bonus Issue	Private Placement
Nil	Nil

 

(III)       Position of Mobilisation and Deployment of Funds (Amount in US$)

Total Liabilities  $	Total Assets $
900458	900458

   Sources of Funds

                                                        & #160;                                                                                                      

Paid - up Capital    $	Reserves & Surplus
-	900458

                                                         ;                                                                                 

Secured Loans	Unsecured Loans
Nil	Nil

   Application of Funds

                                                        & #160;                                                                                                       

Net Fixed Assets     $	Investments $
-	-

                                                        & #160;                                                                                                   

Net Current Assets  $	Misc. Expenditure
900458	-

 Accumulated Losses $

-

(IV)      Performance of Company (Amount in US$) for the year ended March 31, 2007.

                                                                       & #160;                                                                          

Turnover    $	Total Expenditure $
223127	115316

                                                                               
60;                                                                                           

Profit / Loss Before Tax  $		Profit / Loss After Tax $
+                      -	107811	+                     -	107811
o		o

    (Please tick Appropriate box + for Profit – for Loss)

                                                                    0;                                                                                                               

Earning per Share	Dividend @ %
-	Nil

(Contd…..4)

INDIA IN NEW YORK, INC

(4)

(V) Generic Names of Three Principal Products / Services of Company ( as per monetary  terms )

Item Code No. ( ITC )                       Product Description	N/A
	News Paper

       For  and on behalf of the board

     Ajit Balakrishnan

Director

Mumbai, India                                               

Dated: July 12, 2007

India Abroad Publications (Canada), Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

SECRETARY

Mr. Joy Basu

AUDITORS

PATKAR & PENDSE

INDIA

Directors’ Report

The Board of Directors presents India Abroad Publications (Canada), Inc. audited financial statements for the year ended 31^st March 2007.

PRINCIPAL ACTIVITIES

India Abroad Publications (Canada), Inc. (“IA Canada), is a weekly newspaper-publishing unit, which is a wholly owned subsidiary of India Abroad Publications Inc. IA Canada sells advertising space and subscriptions for the India Abroad newspaper in the Canadian Market.

REVIEW OF BUSINESS

The Profit & Loss account is set out along with this report and shows that during the year the Company earned gross income of C$ 282,860/-. Gross Loss (before depreciation, amortisation, impairment write down and taxes) is C$ 18,336/-.

After giving effect to other adjustments, the net loss of C$19,697/- was carried to Balance Sheet.

DIVIDENDS

Your Directors do not recommend any dividend.

For and on behalf of the Board of Directors

Director

Date: July 12, 2007

REPORT OF THE AUDITORS

The Board of Directors,

India Abroad Publications (Canada) Inc.

We  have  audited  the  attached  Balance Sheet of INDIA ABROAD PUBLICATIONS (CANADA) INC., a Company incorporated in the United States, as at March 31, 2007 and also the  Profit & Loss Account  of the Company for the  year ended  on  that  date annexed thereto.   These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit and report that :

We conducted our audit in accordance with auditing standards generally accepted in India.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

Further, we report that :

(a) We have obtained all the information & explanations, which to the best of our knowledge & belief were necessary for the purposes of our audit.

(b) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

(c) In our opinion, the Balance sheet and Profit and Loss Account comply with Accounting Standards referred to in Schedule 9 to the Accounts.

(d) In our opinion and to the best of our information and according to the explanations given to us the said accounts read with the notes thereon, give a true and fair view in conformity with the accounting principles generally accepted in India:  

i. in the  case  of  the  Balance  Sheet  of the state of affairs  of the Company as at 31st March, 2007;

and

ii. in the case of Profit and Loss Account, of the loss of the Company for the year ended on that date;

For Patkar & Pendse

Chartered Accountants

B.M. Pendse

Partner.

M.No. 32625

Place :  Mumbai

Date   :  July 12, 2007

India Abroad Publications (Canada) Inc
Balance Sheet as at March 31, 2007
		Schedule	As at	As at
		No.	31.03.2007	31.03.2006
			C $	C $
I. SOURCES OF FUNDS
Shareholders' funds :
Capital		1	142,974	142,974
	TOTAL		142,974	142,974
II. APPLICATION OF FUNDS
Fixed assets :		2
Gross Block			15,119	15,119
Less : Depreciation			2,722	1,361
Net Block			12,397	13,758
Current assets, loans and advances :
Sundry debtors		3	19,806	31,711
Cash and bank balances		4	56,315	36,815
			76,121	68,526
Less :  Current liabilities and provisions :
Liabilities		5	68,032	42,101
Net current assets			8,090	26,425
Profit and loss account			122,487	102,791
	TOTAL		142,974	142,974
Accounting policies and notes to
balance sheet and profit and loss account		9
As per our attached report of even date
For Patkar & Pendse			For and on behalf of the board
Chartered Accountants
B.M.Pendse			A.Balakrishnan
Partner			Director
M.No. 32625
Mumbai, India			Mumbai, India
Dated: July 12, 2007			Dated: July 12, 2007

India Abroad Publications (Canada) Inc
Profit & Loss Account for the year ended March 31, 2007
	Schedule
	No.
		31.03.2007	31.03.2006
		C $	C $
INCOME
Operating revenues	6	282,860	292,357
Misc. Income		-	117
		282,860	292,474
EXPENDITURE
Personnel expenses	7	56,259	62,269
Operating and other expenses	8	244,937	267,422
Depreciation		1,361	1,361
		302,557	331,052
Profit / (Loss) for the year before tax		(19,697)	(38,578)
Provision for tax / Tax paid		-	-
Profit / (Loss ) after tax		(19,697)	(38,578)
Suplus / (Deficit) brought forward from previous year		(102,791)	(64,214)
Balance carried to balance sheet		(122,487)	(102,791)
Basic and Diluted Earnings Per Share (C$)		(0.12)	(0.24)
Accounting policies and notes to
balance sheet and profit and loss account	9
As per our attached report of even date
For Patkar & Pendse		For and on behalf of the board
Chartered Accountants
B.M.Pendse		A.Balakrishnan
Partner		Director
M.No. 32625
Mumbai, India		Mumbai, India
Dated: July 12, 2007		Dated: July 12, 2007

India Abroad Publications (Canada) Inc
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		C $	C $
SCHEDULE  1 : CAPITAL
Issued and subscribed :
162974 equity shares  fully paid		142,974	142,974
	TOTAL	142,974	142,974

India Abroad Publications (Canada) Inc
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
Schedule 2: Fixed Assets				(C$)
			3/31/2007
	Furniture & Fixtures	Office Equipment	Total	As at March 31, 2006
Cost as at April 1, 2006	1,500	13,619	15,119	15,119
Additions	-	-	-
Deductions	-	-	-
Total as at March 31, 2007	1,500	13,619	15,119	15,119
Depreciation upto March 31, 2007	428	2,294	2,722	1,361
Depreciation upto March 31, 2006	214	1,147	1,361
Net value as at March 31, 2007	1,072	11,325	12,397	13,758
Net value as at March 31, 2006	1,286	12,472	13,758
Depreciation for the year	214	1,147	1,361

India Abroad Publications (Canada) Inc
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		C $	C $
SCHEDULE 3 : SUNDRY DEBTORS
(Unsecured considered good)
Outstanding over six months		-	-
Other debts		19,806	31,711
	TOTAL	19,806	31,711
SCHEDULE 4 : CASH AND BANK BALANCES
Bank balances :
With Canadian Imperial Bank of Commerce
On current account		40,068	5,651
With Hongkong Bank
On current account		16,247	31,164
	TOTAL	56,315	36,815
SCHEDULE 5 : LIABILITIES
Sundry Creditors
- Other than small scale industrial undertakings.		34,636	35,140
Advances from customers		2,535	2,535
Dues to Parent Company		30,861	4,426
	TOTAL	68,032	42,101

India Abroad Publications (Canada) Inc
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
	31.03.2007	31.03.2006
	C $	C $
SCHEDULE  6 : OPERATING REVENUES
Subscription Income	32,045	32,289
Classified Income	11,503	12,888
Display Income	228,257	237,871
Retail Sale	11,055	9,309
TOTAL	282,860	292,357
SCHEDULE  7 : PERSONNEL EXPENSES
Salaries and allowances	50,825	58,680
Statutory dues	5,434	3,589
TOTAL	56,259	62,269
SCHEDULE  8 : OPERATING AND OTHER EXPENSES
Printing & Stationery	174,201	192,816
Mailing & Distribution	31,107	34,655
Office Expenses	6,391	8,155
Professional Fees for Tax Return	6,466	-
Editorial Expenses	14,768	19,279
Telephone Expenses	1,777	3,046
Travel & Entertainment Expenses	-	1,770
Repairs & Maintenance Expenses	1,000	-
Marketing Commission	7,086	6,897
Bank charges	2,142	805
TOTAL	244,937	267,422

INDIA ABROAD PUBLICATIONS (Canada) INC.

SCHEDULE 9:  ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

A. ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention, in accordance with the accounting principles generally accepted in India ("Indian GAAP"), the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

3. Revenue recognition

Revenues comprise from subscription to the India Abroad weekly news paper and income from advertisements. Revenue from advertisements are recognized upon publishing of the advertisements in the newspaper.

Subscription revenues are derived from the revenues received from the news paper subscribers and is recognized ratably over the period of subscription. Subscriptions received towards lifetime subscribers are shown as deferred revenue and recognized ratably over a 10 year period.

4. Fixed assets and depreciation

Fixed assets are stated at historical cost.  The Company depreciates fixed assets using the straight-line method, over the estimated useful lives of assets.  The estimated useful lives of assets are as follows:

Furniture and fixtures	7 years
Office equipment	5 years

5. Employee retirement benefits

The company does not have any employee retirement benefit plan.

Leave Encashment

The company’s policies does not allow leave encashment and the employees are encouraged to avail the eligible leave. Unavailed leave lapses at the end of the period and hence no provision has been made in the books.

(Contd…..2)

INDIA ABROAD PUBLICATIONS (Canada) INC.

(2)

6. Foreign currency transactions

Transactions in foreign currency are recorded at the original rates of exchange in force at the time transactions are effected.

Exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets are adjusted in the carrying amount of the respective fixed asset. The carrying amount of fixed assets is also adjusted at the end of each financial year for any change in the liability arising out of expressing the related outstanding foreign currency liabilities at the closing rates of exchange prevailing at the date of the Balance Sheet or at the rates specified in the related forward contract.

Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using the exchange rates prevailing at the date of Balance Sheet or rates specified in the related forward contract. Gains / losses arising on restatement and on settlement of such items are recognized in the Profit and Loss Account.

7. Income taxes

Income taxes are accounted for in accordance with Canadian  tax laws on Income accrued and form part of the Holding Company tax liabilities.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws in Canada. Tax liabilities and provision is accounted for by the Holding company.

B. NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1. Organization and Business

India Abroad Publications(Canada) Inc (“the Company") was incorporated in Canada on December  20^th, 1983.  In February 2001, the Company was acquired by Rediff Holdings Inc, a wholly owned subsidiary of Rediff.Com India Limited.

The Company is one of the leading news publications, catering to the Asian-American  community focusing on India and the global Indian community.

2. Additional information pursuant to the provisions of paragraph 4C and 4D of Schedule VI of the Companies Act., 1956 to the extent not applicable are not given.

3. The Company recognizes revenues based on advertisements published and subscriptions ratably over the period of subscription.  Hence requirements as to quantitative information are not applicable.

(Contd…..3)

INDIA ABROAD PUBLICATIONS (Canada) INC.

(3)

4. Litigation:

 There are no pending litigations against the company.

5. The prior year figures have been regrouped and reclassified to conform with those of the current year.

6. Balance Sheet Abstract and Company’s General Business Profile.

(I) Registration Details

   Registration No.-Business No N.A.      State Code N.A.

Balance Sheet Date	31/03/2007
(dd/mm/yy)

(II) Capital raised during the year (Amount in C$)

                                                                                    
60;                                                                      

Public Issue	Rights Issue
Nil	Nil

                                                                    ;                                                                                        

Bonus Issue	Private Placement
Nil	Nil

(III) Position of Mobilisation and Deployment of Funds (Amount in C$)

                                                                                              & #160;                           

Total Liabilities  C$	Total Assets C $
142,974	142,974

Sources of Funds

                                                                              
60;                                                          

Paid - up Capital    C$	Reserves & Surplus
142,974	Nil

                                                                              
60;                                                                    

Secured Loans	Unsecured Loans
Nil	Nil

(Contd…..4)

INDIA ABROAD PUBLICATIONS (Canada) INC.

(4)

Application of Funds

                                                                              
60;                                                      

Net Fixed Assets  C   $	Investments $
12397	Nil

                                                                              
60;                                                       

Net Current Assets  C $	Misc. Expenditure
8090	Nil

 Accumulated Losses C$

122487

(IV) Performance of Company (Amount in C$) for the year ended March 31, 2007.

                                                                      & #160;                                                              

Turnover  C  $	Total Expenditure  C$
282860	302557

Profit / Loss Before Tax  C$		Profit / Loss After Tax C$
+                                    -	(19697)	+                                       -	(19697)
o		o

            (Please tick Appropriate box + for Profit – for Loss)

Earning per Share	Dividend @ %
(0.12)	Nil

(V) Generic Names of Three Principal Products / Services of Company ( as per monetary  terms )

Item Code No. ( ITC ) Product Description	N/A
	News Paper

        For  and on behalf of the board

         Ajit Balakrishnan

         Director

Mumbai, India

Dated: July 12, 2007

 Rediff.com Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

SECRETARY

Mr. Joy Basu

AUDITORS

PATKAR & PENDSE

INDIA

Directors’ Report

The Board of Directors present Rediff.com Inc.’s audited financial statements of the year ended 31^st March 2007.

PRINCIPAL ACTIVITIES

Rediff.com Inc., is a wholly owned subsidiary of Rediff Holdings Inc. Rediff.com Inc. derives revenue from a website targeted at the Indian American community.

REVIEW OF BUSINESS

The Profit & Loss account is set out along with this report and shows that the Company earned gross income of US $ 2,723,807/-. Gross Profit (before depreciation, amortisation, impairment write down and taxes) is US $ 1,817,660 /-. After giving effect to other adjustments, the net profit of US $ 1,817,660/- was carried to Balance Sheet.

DIVIDENDS

Your Directors do not recommend any dividend.

For and on behalf of the Board of Directors

Director

Date: July 12, 2007

REPORT OF THE AUDITORS

The Board of Directors,

Rediff.Com Inc.

We  have  audited  the  attached  Balance Sheet of REDIFF.com INC., a wholly owned subsidiary of Rediff Holdings Inc. incorporated in the United States, as at March 31, 2007 and also the  Profit & Loss Account  of the Company for the  year ended  on  that  date annexed thereto.   These financial statements are the responsibility of the Company’s Management.  Our responsibility is to express an opinion on these financial statements based on our audit and report that :

We conducted our audit in accordance with auditing standards generally accepted in India.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

Further, we report that :

(a) We have obtained all the information & explanations, which to the best of our knowledge & belief were necessary for the purposes of our audit.

(b) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

(c) In our opinion, the Balance sheet and Profit and Loss Account comply with Accounting Standards referred to in Schedule 9 to the Accounts.

(d) In our opinion and to the best of our information and according to the explanations given to us the said accounts read with the notes thereon, give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the  case  of  the  Balance  Sheet  of the state of affairs  of the Company as at 31st March, 2007;

and

ii. in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date;

 For Patkar & Pendse

Chartered Accountants

B.M. Pendse

Partner.

M.No. 32625

Place :  Mumbai

Date   : July 12, 2007

Rediff.com Inc.
Balance Sheet as at March 31, 2007
		Schedule	As at	As at
		No.	31.3.2007	31.3.2006
			US $	US $
I. SOURCES OF FUNDS
Shareholders' funds :
Capital		1	5	5
Reserves & Surplus
Securities premium			3,332,145	3,332,145
	TOTAL		3,332,150	3,332,150
II. APPLICATION OF FUNDS
Fixed assets :		2
Gross Block			601,011	601,011
Less : Depreciation			601,011	601,011
Net Block			-	-
Current assets, loans and advances :
Sundry debtors		3	698,898	367,171
Cash and bank balances		4	15,036	67,634
Loans and advances		5	1,637,649	766,129
			2,351,582	1,200,934
Less : Current liabilities and provisions :
Liabilities		6	98,642	765,681
Provisions			407	382
			99,049	766,063
Net current assets			2,252,534	434,871
Profit and loss account			1,079,616	2,897,279
	TOTAL		3,332,150	3,332,150
			0
Accounting policies and notes to
balance sheet and profit and loss account		9
As per our attached report of even date
For Patkar & Pendse			For and on behalf of the board
Chartered Accountants
B.M.Pendse			A.Balakrishnan
Partner			Director
M.No. 32625
Mumbai, India			Mumbai, India
Dated: July 12, 2007			Dated: July 12, 2007

Rediff.com Inc
Profit & Loss Account for the year ended March 31, 2007
	Schedule
	No.
		31.3.07	31.3.06
		US $	US $
INCOME
Display income		2,723,807	1,214,361
Misc. income		0	25,000
		2,723,807	1,239,361
EXPENDITURE
Personnel expenses	7	828,280	725,966
Operating and other expenses	8	77,867	45,390
Depreciation		-	-
		906,146	771,357
Profit/ Loss for the year before tax		1,817,660	468,004
Provision for tax/ Taxes paid		-	-
		1,817,660	468,004
Deficit brought forward from previous year		(2,897,277)	(3,365,281)
Balance carried to balance sheet		(1,079,616)	(2,897,277)
Basic and Diluted Earnings Per Share (US$)		363.53	93.60
Accounting policies and notes to
balance sheet and profit and loss account	9
As per our attached report of even date
For Patkar & Pendse		For and on behalf of the board
Chartered Accountants
B.M.Pendse		A.Balakrishnan
Partner		Director
M.No. 32625
Mumbai, India		Mumbai, India
Dated: July 12, 2007		Dated: July 12, 2007

Rediff.com Inc.
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE  1 : CAPITAL
Authorized :
10000 shares @ $0.001 per share		10	10
Issued and subscribed :
5000 shares @ $0.001 per share; par value		5	5
	TOTAL	5	5

Rediff.com Inc.
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
Schedule 2: Fixed Assets
	(US$)

	Furniture & Fixtures	Computer Equipment	03-31-2007	As at March 31, 2006
Cost as at April 1, 2006	44,421	556,590	601,011	601,011
Additions	-	-	-	-
Deductions	-	-	-	-
Total as at March 31, 2007	44,421	556,590	601,011	601,011
Depreciation upto March 31, 2007	44,421	556,590	601,011	601,011
Net value as at March 31, 2007	-	-	-	-

Rediff.com Inc.
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE 3 : SUNDRY DEBTORS
Sundry debtors
(Unsecured considered good)
Outstanding over six months		49,575	19,969
Other debts		709,242	377,702
		758,817	397,671
Less : Provision for doubtful debts		59,919	30,500
		698,898	367,171
SCHEDULE 4 : CASH AND BANK BALANCES
Bank balances :
With Citibank
In current account		15,036	67,634
	TOTAL	15,036	67,634
SCHEDULE 5 : LOANS AND ADVANCES
(Unsecured )
Due from  group companies		1,637,649	766,088
Advances recoverable in cash
or in kind or for value to be received		-	41
	TOTAL	1,637,649	766,129
Notes :
1. (a) Considered good		1,637,649	766,129
(b) Considered doubtful		-	-
		1,637,649	766,129
SCHEDULE 6 : CURRENT LIABILITIES
Sundry Creditors
- Other than small scale industrial undertakings.		98,642	57,223
Due to parent / group companies		-	708,458
	TOTAL	98,642	765,681

Rediff.com Inc.
Schedules 1 to 9 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
	31.03.2007	31.03.2006
	US $	US $
SCHEDULE  7 : PERSONNEL EXPENSES
Salaries and allowances	771,678	676,704
Statutory dues	56,602	49,262
TOTAL	828,280	725,966
SCHEDULE  8 : OPERATING AND OTHER EXPENSES
Travelling expenses	7,699	696
Web hosting expenses	13,025	-
Payroll processing fee	2,995	3,196
Advertising	3,640	-
Office expenses	3,089	7,227
Bad debts	29,419	25,000
Professional fees	18,000	9,272
	77,867	45,390

Rediff.com Inc.

SCHEDULE 9: ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

A. ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention, in accordance with the accounting principles generally accepted in India ("Indian GAAP"), the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

3. Revenue recognition

Revenues comprise of revenues from online advertising.  Online advertising includes advertisement and sponsorships.

Online advertising

Advertisement and sponsorship income is derived from customers who advertise on the Company's website or to whom direct links from the Company's website to their own websites are provided .

Revenue from advertisement and sponsorships is recognized ratably over the contractual period of the advertisement, commencing when the advertisement is placed on the website. Revenues are also derived from sponsor buttons placed in specific areas of the Company's website, which generally provide users with direct links to sponsor websites. These revenues are recognized ratably over the period in which the advertisement is displayed, provided that no significant Company obligations remain and collection of the resulting receivable is probable. Company obligations may include guarantees of a minimum number of impressions, or times, that an advertisement appears in pages viewed by users of the Company's portal. To the extent that minimum guaranteed impressions are not met, the Company defers recognition of the corresponding revenues until the guaranteed impression levels are achieved.

(Contd…..2)

Rediff.com Inc.

(2)

4. Fixed assets and depreciation

Fixed assets are stated at historical cost.  The Company depreciates fixed assets using the straight-line method, over the estimated useful lives of assets.  The estimated useful lives of assets are as follows:

Furniture and fixtures	7 years
Computer equipment	3 to 5 years

5. Income taxes

Income taxes are accounted for in accordance with US tax laws on Income accrued and form part of the Parent company Income tax liability.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws in US. Tax liabilities  and provision is accounted for by the Holding Company.

B.  NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

1. Organization and Business

Rediff.com Inc (“the Company") was incorporated on July 30, 1999. On February 27, 2001, Rediff Holdings Inc. acquired thinkindia.com Inc (“thinkindia”) which was renamed as Rediff.Com Inc. Rediff.Com provides the Rediff Group  with technology, marketing and content support in the United States.

The Company is one of the leading Internet destinations, or portals, focusing on India and the global Indian community. Its websites consists of interest specific channels relevant to Indian interests such as cricket, astrology, matchmaker and movies, content on various matters like news and finance, search facilities, a range of community features such as e-mail, chat, messenger and e-commerce.

2. The Company recognizes as revenues from advertisements and online marketing and hence requirements as to quantitative information are not applicable.

3. Additional information pursuant to the provisions of paragraph 4C and 4D of Schedule VI of the Companies Act., 1956 to the extent not applicable are not given.

4. Litigation:

There are no pending litigations against the company.

(Contd…..3)

Rediff.com Inc.

(3)

5. Prior year figures have been regrouped and reclassified to conform those of the current year.

6. Balance Sheet Abstract and Company’s General Business Profile.

(I) Registration Details

Registration No./Tax ID No N.A.       State Code N.A.

Balance Sheet Date	31/03/2007
(dd/mm/yy)

(II) Capital raised during the year (Amount in US$)

                                                                                                                                          ;                                      

Public Issue	Rights Issue
Nil	Nil

                                                                                                                                          ;                           

Bonus Issue	Private Placement
Nil	Nil

(III) Position of Mobilisation and Deployment of Funds (Amount in US$)

Total Liabilities  US $	Total Assets US $
3,332,150	3,332,150

Sources of Funds

                                                                                                                                          ;         

Paid - up Capital      $	Reserves & Surplus
5	3,332,145

                                                                                                                                          ;                  

Secured Loans	Unsecured Loans
Nil	Nil

Application of Funds

                                                                                                                                          ;                  

Net Fixed Assets	Investments
0	0

                                                                                                                                          ;       

Net Current Assets   $	Misc. Expenditure
2252534	0

 Accumulated Losses

1079616

(Contd…..4)

Rediff.com Inc.

(4)

(IV) Performance of Company (Amount in US $) for the year ended March 31, 2007

Turnover  $	Total Expenditure $
2723807	906148

                                                                                                                                          ;     

Profit / Loss Before Tax		Profit / Loss After Tax
+                      -	1817660	+                     -	1817660
o		o

(Please tick Appropriate box + for Profit – for Loss)

Earning per Share	Dividend @ %
$363.53	Nil

(V) Generic Names of Three Principal Products / Services of Company ( as per monetary  terms )

Item Code No. ( ITC ) Product Description	N/A
	On line Advertising

For  and on behalf of the board

        Ajit Balakrishnan

           Director

Mumbai, India

Dated : July 12, 2007

Value Communications Corporation

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

SECRETARY

Mr. Joy Basu

AUDITORS

Patkar & Pendse

India

Directors’ Report

The Board presents Value Communication Corporation Inc’s audited financial statements for the year ended on 31^st March 2007.

REVIEW OF BUSINESS

Following the sale of its long distance phone card business in April 2004, the Company is currently not engaged in any business.

Gross Loss (before depreciation, amortisation, impairment write down and taxes) is US $ 428/-. After giving effect to other adjustments, the net loss of US $ 428/- was carried to Balance Sheet.

DIVIDENDS

Your Directors do not recommend any dividend.

For and on behalf of the Board of Directors

Director

Date: July 12, 2007

REPORT OF THE AUDITORS

The Board of Directors,

Value Communications Corporation

We  have  audited  the  attached  Balance Sheet of VALUE COMMUNICATIONS CORPORATION, a wholly owned subsidiary of Rediff.com India Limited incorporated in the United States, as at March 31, 2007 and also the  Profit & Loss Account  of the Company for the  year ended  on  that  date annexed thereto.   These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit and report that :

We conducted our audit in accordance with auditing standards generally accepted in India.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

Further, we report that :

(a)   We have obtained all the information & explanations, which to the best of our knowledge & belief were necessary for the purposes of our audit.

(b)   The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account.

(c)   In our opinion, the Balance sheet and Profit and Loss Account comply with Accounting Standards referred to in Schedule 6 to the Accounts.

(d)   Although the business of the Company was sold along with certain assets on 8^th April, 2004; (refer note no.1 to the accounts) these financial statements for the year have been prepared by the Management as if the Company continues to be a ‘going concern’.

(e)   In our opinion and to the best of our information and according to the explanations given to us the said accounts read with the notes thereon, give a true and fair view in conformity with the accounting principles generally accepted in India:

i.     in the  case  of  the  Balance  Sheet  of the state of affairs  of the Company as at  31st March, 2007;

and

ii.    in the case of Profit and Loss Account, of the loss of the Company for the year ended on that date;

                                            For Patkar & Pendse

                                           Chartered Accountants

Place :     Mumbai	B.M. Pendse
Date   :     July 12, 2007	Partner
	M.No. 32625

Value Communications Corporation
Balance Sheet as at March 31, 2007
		Schedule	As at	As at
		No.	31.03.2007	31.03.2006
			US $	US $
I. SOURCES OF FUNDS
Shareholders' funds :
Share Capital		1	7,146,432	7,146,432
	TOTAL		7,146,432	7,146,432
II. APPLICATION OF FUNDS
Current assets, loans and advances :
Cash and bank balances		2	12,933	55,574
Loans and advances		3	208,176	208,176
			221,109	263,750
Less : Current liabilities and provisions :
Liabilities		4	3,072,239	3,114,452
			3,072,239	3,114,452
Net current assets			(2,851,130)	(2,850,702)
Profit and loss account			9,997,562	9,997,134
	TOTAL		7,146,432	7,146,432
			-
Accounting policies and notes to
balance sheet and profit and loss account		6
As per our attached report of even date
For Patkar & Pendse			For and on behalf of the board
Chartered Accountants
B.M.Pendse			A.Balakrishnan
Partner			Director
M.No. 32625
Mumbai, India			Mumbai, India
Dated: July 12, 2007			Dated: July 12, 2007

Value Communications Corporation
Profit & Loss Account for the year ended March 31, 2007
	Schedule
	No.
		31.03.2007	31.03.2006
		US $	US $
INCOME		-	-
		-	-
EXPENDITURE
Operating and other expenses	5	428	-
Profit/ (Loss) for the year before tax		(428)	-
Less :Provision for tax		-	-
Loss after Tax		(428)	-
Deficit brought forward from previous year		(9,997,134)	(9,997,134)
Balance carried to balance sheet		(9,997,562)	(9,997,134)
Accounting policies and notes to
balance sheet and profit and loss account	6
As per our attached report of even date
For Patkar & Pendse		For and on behalf of the board
Chartered Accountants
B.M.Pendse		A.Balakrishnan
Partner		Director
M.No. 32625
Mumbai, India		Mumbai, India
Dated: July 12, 2007		Dated: July 12, 2007

Value Communications Corporation
Schedule 1 to 6 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE  1 : SHARE CAPITAL
Authorized :
20,000,000 shares common stock, no par value		-	-
Issued and subscribed :
12,000,000 shares common stock		7,146,432	7,146,432
	TOTAL	7,146,432	7,146,432

Value Communications Corporation
Schedule 1 to 6 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
		As at	As at
		31.03.2007	31.03.2006
		US $	US $
SCHEDULE 2 : CASH AND BANK BALANCES
Bank balances :
Citi Bank N.Y.
On current account		12,933	55,574
	TOTAL	12,933	55,574
SCHEDULE 3 : LOANS AND ADVANCES
ADVANCES (Unsecured  considered good)
Advances recoverable in cash
or in kind or for value to be received
From Parent Company		139,847	139,847
Others		68,329	68,329
	TOTAL	208,176	208,176
SCHEDULE 4 :  LIABILITIES
Sundry Creditors
- Other than small scale industrial undertakings.		14,369	14,892
- Dues to Parent / Group companies		3,057,870	3,099,560
	TOTAL	3,072,239	3,114,452

Value Communications Corporation
Schedule 1 to 6 forming part of the Balance Sheet and Profit & Loss Account
for the year ended 31st March, 2007
	31.03.2007	31.03.2006
	US $	US $
SCHEDULE  5 : OPERATING AND OTHER EXPENSES
Bank Charges	428	-
TOTAL	428	-

Value Communications Corporation

SCHEDULE 6: ACCOUNTING POLICIES AND NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

A. ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The accompanying financial statements have been prepared under the historical cost convention, in accordance with the accounting principles generally accepted in India ("Indian GAAP"), the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

3. Revenue recognition

Pursuant to the sale of business on 8^th April 2004, the Company does not have any revenues.

4. Fixed assets and depreciation

Pursuant to the sale of business on 8^th April 2004, the Company does not hold any fixed assets.

5. Income taxes

Income taxes are accounted for in accordance with the US tax laws.

Current tax is measured at the amount expected to be paid to / recovered from the revenue authorities, using applicable tax rates and laws.

6. Deferred Income Taxes

As of March 31, 2007, the components of the Company’s net deferred tax assets are as follows:

As of March 31,2006, the Company had net operating loss carry forwards of approx  US.$ 2,915,000 for federal income tax purposes, which expire in the years 2021 to 2025. Realization of the future tax benefits related to the deferred tax  income tax asset is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carry forward period. Management has considered these factors and believes that no asset to be created in the books of accounts.

Value Communications Corporation

 B.  NOTES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

Organization and Business

1. Value Communications Corporation (“ValuCom” or the “Company”) is a wholly-owned subsidiary of Rediff.com India, Ltd (“Rediff”). An event having significant impact on the Company, occurred on 8^th April, 2004, where the Company’s entire business was sold to World Quest Networks, Inc.

2. Additional information pursuant to the provisions of paragraph 4C and 4D of Schedule VI of the Companies Act., 1956 to the extent not applicable are not given.

.

3. Litigation:

There are no pending litigations against the Company.

4. Prior year figures have been regrouped and reclassified, wherever necessary, to conform with those of the current year.

5. Balance Sheet Abstract and Company’s General Business Profile

(I) Registration Details

Registration No. N.A.      State Code N.A.

Balance Sheet Date	31/03/2007
(dd/mm/yy)

(II) Capital raised during the year (Amount in US$)

Public Issue	Rights Issue
Nil	Nil

Bonus Issue	Private Placement
Nil	Nil

(III) Position of Mobilisation and Deployment of Funds (Amount in US$ )

Total Liabilities	Total Assets
7,146,432	7,146,432

Sources of Funds

Paid - up Capital	Reserves & Surplus
7,146,432	NIL

Secured Loans	Unsecured Loans
Nil	Nil

Application of Funds

Net Fixed Assets	Investments
Nil	Nil

Net Current Assets	Accumulated  Losses
(2,851130)	9997562

(IV) Performance of Company (Amount in US$) for the year ended March 31, 2007.

Turnover  $	Total Expenditure $
-	428

Profit / Loss Before Tax	Profit / Loss After Tax
(428)                        -	+                   (428)       -	-
o	o

(Please tick Appropriate box + for Profit – for Loss)

Earning per Share	Dividend @ %
	Nil

(V) Generic Names of Three Principal Products / Services of Company ( as per monetary  terms )

Item Code No. ( ITC ) Product Description	N/A
	Prepaid calling cards

 For  and on behalf of the board

         Ajit Balakrishnan

         Director

Mumbai, India                                               

Dated: July 12, 2007

REDIFF.COM INDIA LTD

Regd. Office: 1^st  Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400 016

ATTENDANCE SLIP

Folio No.

No. of Shares held

I hereby record my presence at the Twelfth Annual General Meeting of the Company being held at Registered Office at 1^st Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400 016 at 10.00 a.m. (IST) on Friday, 21^st September, 2007.

__________________________

Signature of attending Member/Proxy

Name: _____________________

Note: A member/proxy holder attending the meeting must bring the Attendance Slip to the meeting and hand it over at the entrance duly signed.

REDIFF.COM INDIA LTD

Regd. Office: 1^st Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400 016

PROXY

I/We, ___________________________________________________, of _______________________ in the district of ___________________________ being a member/members of the above Company hereby appoint ___________________________________________________ of _______________________ in the district of __________________________________________ or failing him ____________________ of __________________________________________ in the district of ___________________________ as my/our Proxy to attend and vote  for me/us and on my/our behalf at the Twelfth Annual General Meeting of the Company to be held on Friday, 21^st September, 2007 at 10a.m.(IST) and at any adjournment thereof.

Signed this _______________________ day of _________________ 2007

Folio No

.

No. of Shares held

Signature ___________              ___________

This form is to be used in favour of* / against* the resolution. Unless otherwise instructed, the proxy will act as he thinks fit.

* Strike out whichever is not applicable.

Note:  1.   The Proxy must be returned so as to reach the registered office of the Company not less than 48

                  hours before the time for holding of the aforesaid meeting.

           2.    A proxy need not be a member.

EX-99.1

Exhibit 99.1

NOTICE

Notice is hereby given that the Twelfth Annual General Meeting of the Members of Rediff.com India Limited will be held on Friday, 21^st September, 2007, at 10 a.m. (IST) at the Registered Office of the Company situated at First Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400016, to transact the following business:

ORDINARY BUSINESS

1.   To receive, consider and adopt the Audited Balance Sheet as at March 31, 2007 and Profit & Loss Account for the year ended as on that date and the reports of the Auditors and Directors’ thereon.

2.   To appoint a Director in place of Diwan Arun Nanda, Director retiring by rotation and being eligible, offers himself for reappointment.

3.   To appoint a Director in place of Mr. Sunil Phatarphekar, Director retiring by rotation and being eligible, offers himself for reappointment.

4.   To appoint Auditors and fix their remuneration by passing the following resolution as an Ordinary Resolution with or without modification(s);

“RESOLVED that M/s Deloitte Haskins & Sells, Chartered Accountants, Mumbai be and are hereby re-appointed as Statutory Auditors of Rediff.com India Limited and to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting at a remuneration to be decided by the Board of Directors/Audit Committee of the Directors of the Company.”

                                                 By Order of the Board

                                                 For Rediff.com India Limited

                                                         sd/-

PLACE: MUMBAI                                                                                                               Jyoti Dialani

DATE: 12^th July, 2007                                                                                            Company Secretary & Manager Legal

NOTES:

A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE ANNUAL GENERAL MEETING.

REDIFF.COM INDIA LTD

Regd. Office: 1^st  Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400 016

ATTENDANCE SLIP

Folio No.

No. of Shares held

I hereby record my presence at the Twelfth Annual General Meeting of the Company being held at Registered Office at 1^st Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400 016 at 10.00 a.m. (IST) on Friday, 21^st September, 2007.

__________________________

Signature of attending Member/Proxy

Name: _____________________

Note: A member/proxy holder attending the meeting must bring the Attendance Slip to the meeting and hand it over at the entrance duly signed.

REDIFF.COM INDIA LTD

Regd. Office: 1^st Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400 016

PROXY

I/We, ___________________________________________________, of _______________________ in the district of ___________________________ being a member/members of the above Company hereby appoint ___________________________________________________ of _______________________ in the district of __________________________________________ or failing him ____________________ of __________________________________________ in the district of ___________________________ as my/our Proxy to attend and vote  for me/us and on my/our behalf at the Twelfth Annual General Meeting of the Company to be held on Friday, 21^st September, 2007 at 10a.m.(IST) and at any adjournment thereof.

Signed this _______________________ day of _________________ 2007

Folio No.

No. of Shares held

Signature ___________                ___________

This form is to be used in favour of* / against* the resolution. Unless otherwise instructed, the proxy will act as he thinks fit.

* Strike out whichever is not applicable.

Note:  1.   The Proxy must be returned so as to reach the registered office of the Company not less than 48

                  hours before the time for holding of the aforesaid meeting.

           2.    A proxy need not be a member.