Dear Shareholders,

You will recall that in June 2001, with your support and consent, we had transformed our erstwhile Hinduja Finance Corporation Limited, a finance and equity trading company, into a technology company by merging it with one of our group IT companies and hiving off the financial activities. With this, we had repositioned ourselves as a convergence company, bringing under one umbrella, 'technology', 'media' and 'telecom' activities to form Hinduja TMT Limited. It was a timely move that gave our company excellent positioning for growth and stability. In the process, we incubated a number of fledgling subsidiaries in the media and entertainment sector as well as our holding in the telecom sector. In retrospect, our decision was right and timely and has benefited our shareholders greatly.

Having achieved the objectives of incubating and nurturing our holdings and the subsidiaries to maturity, last year, we felt that time was right to unlock the value we had created in them.

Accordingly, we disposed off our telecom holdings in Hutch at a very good valuation. This has generated substantial cash reserves to fuel further growth of our company.

At the same time, our IT/ITES business had reached a critical mass with a strong global footprint. It needed to be freed to pursue an independent growth trajectory. Accordingly, IT/ITES business was hived off as a separate company under the name and style of HTMT Global Solutions Limited ('HGSL'). The move has enabled its management to concentrate on strong organic and inorganic growth in the IT/ITES space without being diverted by the challenge of managing the media subsidiaries. Part of the resources generated from the sale of the telecom holdings have been transferred to HGSL to make BPO acquisitions overseas as well as to invest in significant organic growth, both domestically as well as overseas. HGSL is now positioned for rapid growth.

Post the de-merger of the IT/ITES part of your company, the media subsidiaries dealing in content, broadband internet and distribution have been merged into IndusInd Media & Communications Ltd (IMCL) for greater synergies and cost efficiencies. The opportunities in the media/entertainment space are growing tremendously as a result of better regulation as well as the advent of new digital technologies. There is keen investor interest, both from financial and strategic investors in media today. At the same time, competition is growing by the day. Our management is fully geared up to focus on the changing environment to take advantage of the new growth opportunities as well as to maintain our leading position and first-mover advantage. We plan to expand and grow our distribution, content as well as broadband activities during the coming years.

Finally, the financial resources available with our company from the sale of our telecom holding will be used to judiciously to invest in new growth opportunities, plans for which are in advanced stage of preparation. We will be soon announcing the launch of these new initiatives. We are confident your company will once again incubate and bring to maturity these new opportunities to greatly benefit our shareholders.

Business Environment: Media

With Indian economy growing at 9% in year 2006-07, the business scenario in the country could not have been better. Media and Entertainment (M&E) industry has shown tremendous growth with the rising purchasing power of the people. Adding to this positive outlook is the fact that the wallet share of average Indian is increasing for entertainment. The M & E industry is expected to grow at a cumulative growth of 18 per cent over the next five years.

The industry is also witnessing a major shift in terms of technology and a redefinition of the way media is delivered and consumed. The introduction of CAS has brought about much needed transparency through the advent of addressability. TRAI has also made public the plans for digitization through CAS for the next 55 cities. Your company has a strong presence in areas notified and are geared up to meet the demand.

The TV distribution market is also expected to grow at 26 percent CAGR with increase in both, number of pay TV homes and increased subscription rates. This will be a huge opportunity for tapping the market on the digitized platforms.

As a result of increased viewer-ship, the market will witness launch of several new channels, some focusing on specific genre and class of viewers. Even after having close to 300 channels already, industry believes that there is space for existence of more such channels. With the merger of media entities into IMCL, a multi-dimensional business strategy will be employed to exploit content through existing cable distribution and through other channels.

This has been a turnaround year as far as performance of our media subsidiary company is concerned. We produced better than expected results riding on the strength of overall business environment, introduction of CAS and divestment of telecom stake.

With a strong technology backbone, a world-class infrastructure and dedicated highly skilled people, your company is ready to rise on this curve and emerge as a leading enterprise in all the aspects.

With a vision to provide end-to-end solutions, your company completed the restructure of media business, providing opportunity to exploit value added services and triple play i.e. telephony, video and data. Incablenet', the distribution arm of IMCL, has the distinction of offering the highest number of channels, hi-speed internet over cable, voice over internet protocol and other value added services.

IMCL broadband business performance was better than last year and is expected to do much better in the coming years backed by a strong foundation of 6000 kms of fiber optics network and a national level ISP license.

With the strong equity of the Company and substantial capital resource available the Company is prepared to fund further growth in technology and installation of highly sophisticated digital technology. This will be needed in view of Government plans to digitize the top 55 cities in next four years.

I take this opportunity to thank all stakeholders and our customers for the trust reposed on us and to all the employees for their cooperation and commitment.