Report of Foreign Issuer (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 18, 2014

Commission File Number: 000-30735

Rediff.com India Limited

(Translation of registrant's name into English)

1^st 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 þ

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 þ

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

This report on Form 6-K shall be deemed to be incorporated by reference in the Registration Statements on Form S-8 (File Nos. 333-111432, 333-121773, 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and Exchange Commission and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.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 Indian Limited has scheduled the Annual General Meeting of its shareholders for 10:00 a.m. (Indian Standard Time) on September 29, 2014, at its registered office at 1^st Floor, Mahalaxmi Engineering Estate, L.J. First Cross Road, Mahim (W), Mumbai 400 016, Maharashtra, India. A copy of its Annual Report for the fiscal year 2013-2014 prepared in accordance with the requirements of the Companies Act, 1956, is attached hereto as Exhibit 13.1. A copy of the notice 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, as amended from time to time) 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.

Date: September 18, 2014	Rediff.com India Limited
	(Registrant)

	By:	/s/ Swasti Bhowmick
	Name: Swasti Bhowmick
	Title: Chief Financial Officer

[SIGNATURE PAGE TO FORM 6-K]

EXHIBIT NO.	DESCRIPTION

13.1	Annual Report for the fiscal year 2013-2014 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 and proxy form.

Exhibit 13.1

REDIFF.COM INDIA LIMITED

19^THANNUAL REPORT

2013-2014

(UNDER COMPANIES ACT, 1956)

(INDIAN LAWS)

Rediff.com India Ltd.

Board of Directors

Ajit Balakrishnan (Chairman & Managing Director)

Arun Nanda

Sunil Phatarphekar

Ashok Narasimhan

Sridar Iyengar

Rashesh Shah

M. Madhavan Nambiar

Statutory Auditors

M/s. Deloitte Haskins & Sells LLP

Chartered Accountants

Indiabulls Finance Centre, Tower 3,

27^th -32^nd Floor, Elphinstone Mill

Compound, Senapati Bapat Marg,

Elphinstone (West), Mumbai – 400013

India.

Registered Office

First Floor,

Mahalaxmi Engineering Estate

L. J. First Cross Road

Mahim (West)

Mumbai 400 016, India

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 Statement of Profit and Loss, Notes thereto of Rediff.com India Ltd.	10-38
5.	Statement pursuant to Section 212 of the Companies Act 1956	39
6.	Directors Report of Vubites India Pvt. Ltd.	40-42
7.	Auditors’ Report of Vubites India Pvt. Ltd.	43-44
8.	Balance Sheet and Statement of Profit and Loss, Notes thereto of Vubites India Pvt. Ltd.	45-60
9.	Directors Report of Rediff Holdings Inc.	61
10.	Auditors’ Report of Rediff Holdings Inc.	62-63
11.	Balance Sheet and Statement of Profit and Loss, Notes thereto of Rediff Holdings Inc.	64-72
12.	Directors Report of India Abroad Publications Inc.	73
13.	Auditors’ Report of India Abroad Publications Inc.	74-75
14.	Balance Sheet and Statement of Profit and Loss, Notes thereto of India Abroad Publications Inc.	76-86
15.	Directors Report of India in New York Inc	87
16.	Auditors’ Report of India in New York Inc	88-89
17.	Balance Sheet and Statement of Profit and Loss, Notes thereto of India in New York Inc	90-95
18.	Directors Report of India Abroad Publications (Canada) Inc.	96

19.	Auditors’ Report of India Abroad Publications (Canada) Inc.	97-98
20.	Balance Sheet and Statement of Profit and Loss, Notes thereto of India Abroad Publications (Canada) Inc.	99-107
21.	Directors Report of Rediff.com Inc.	108
22.	Auditors’ Report of Rediff.com Inc.	109-110
23.	Balance Sheet and Statement of Profit and Loss, Notes thereto of Rediff.com Inc.	111-118
24.	Directors Report of Value Communications Corporation	119
25.	Auditors’ Report of Value Communications Corporation	120-121
26.	Balance Sheet and Statement of Profit and Loss, Notes thereto of Value Communications Corporation	122-127
27.	Proxy Form and Attendance Slip	128-129

NOTICE

Notice is hereby given that the Nineteenth Annual General Meeting of the Members of Rediff.com India Limited will be held on Monday, September 29, 2014, at 10.00 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

To receive, consider and adopt the Audited financial Statements Balance Sheet as at March 31, 2014 and Profit & Loss Account for the year ended as on that date and the reports of the Auditors and Directors’ thereon.

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

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

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 (Reg. no. 117366W), 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

Place: Mumbai		/s/ Jyoti Ravi Sachdeva
Date: 4^th September, 2014		Company Secretary and
		Head Legal & Govt. affairs

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.

A PERSON CAN ACT AS A PROXY ON BEHALF OF MEMBERS NOT EXCEEDING FIFTY AND HOLDING IN THE AGGREGATE NOT MORE THAN TEN PERCENT OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYING VOTING RIGHTS. A MEMBER HOLDING MORE THAN TEN PERCENT OF THE TOTAL SHARE CAPITAL OF THE COMPANY CARRYING VOTING RIGHTS MAY APPOINT A SINGLE PERSON AS PROXY AND SUCH PERSON SHALL NOT ACT AS A PROXY FOR ANY OTHER PERSON OR MEMBER.

REDIFF.COM INDIA LIMITED

DIRECTORS’ REPORT

To,

The Members,

Rediff.com India Limited

Your Directors have pleasure in presenting to you the Nineteenth Annual Report together with the Audited Annual Accounts for the year ended March 31, 2014.

REDIFF.COM INDIA LTD.’S FINANCIAL HIGHLIGHTS

(a)

Total Revenue:-

909 million (previous year

856 million).

(b)

Net Profit/ Loss:- Total operating loss before exceptional item and tax is

305 million (previous year

273 million). Provision for diminution in Long term investment is

421 million (previous year

266 million). Total net loss for the year is

726 million (previous year net loss

540 million).

DIVIDEND

Your Board does not recommend any dividend.

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
	M. Madhavan Nambiar	Member

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

FIXED DEPOSITS

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

DIRECTORS

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

At the annual general meeting held on September 24, 2008, the members of the Company re-appointed Mr. Ajit Balakrishnan for a period of five (5) years w.e.f. 23^rd August, 2008. Accordingly, Mr. Balakrishnan held the office till 22^nd August, 2013. The Board of Directors at their meeting held on July 23, 2013 approved the re-appointment of Mr. Balakrishnan as the Managing Director of the Company for a period of five (5) years with effect from August 22, 2013, subject to the approval of the members.

PARTICULARS OF EMPLOYEES

The Company had employees who were in receipt of remuneration of not less than 60 lakhs during the year ended 31^st March, 2014 or not less than 5 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.

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants (Reg. no. 117366W), 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.

REDIFF.COM INDIA LIMITED

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, 2014 and of the loss 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.

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

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:

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.

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.

Foreign Exchange Earnings and outgo

Foreign exchange earned by the Company in the fiscal year ended March 31, 2014 was

83 million (Previous year

29 million) and the foreign exchange outgo in the same period was

73 million (Previous year

66 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, India
Date : September 4, 2014	/s/ Ajit Balakrishnan
	Chairman and Managing Director

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF

REDIFF.COM INDIA LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of REDIFF.COM INDIA LIMITED (“the Company”), which comprise the Balance Sheet as at 31^st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13^th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a)

in the case of the Balance Sheet, of the state of affairs of the Company as at 31^st March, 2014;

(b)

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

(c)

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

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

As required by Section 227(3) of the Act, we report that:

(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 Statement of Profit and Loss, 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 Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13^th September, 2013 of the Ministry of Corporate Affairs).

(e)

On the basis of the written representations received from the directors as on 31^st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

For Deloitte Haskins & Sells LLP

Chartered Accountants

(Firm Registration No. 117366W/W-100018)

	/s/Shyamak R Tata
	Partner
Mumbai, September 4, 2014	(Membership No.38320)

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

In our opinion and according to the information and explanations given to us the nature of the Company’s business/activities during the year, clauses (ii), (viii), (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the company.

(i)

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)

The fixed assets have not been physically verified by the Management during the year but the Company has a system of verifying the fixed assets once in every three years. In our opinion the frequency of verification is at reasonable intervals.

(c)

During the year, in our opinion, a substantial part of fixed asset has not been disposed off by the Company.

(ii)

The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(iii)

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

(iv)

To the best of our knowledge and belief and according to the information and explanations given to us, there are no contracts or arrangements that needed to be entered in the Register maintained pursuant to Section 301 of the Act.

(v)

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. Therefore, the provisions of paragraph 4 (vi) of the Order are not applicable to the Company.

(vi)

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

(vii)

According to the information and explanations given to us, in respect of statutory dues:

(a)

The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. There were no undisputed amounts payable in respect of income tax, sales tax, wealth tax, customs duty, excise duty, cess and other material statutory dues in arrears as at 31st March 2014 for a period of more than six months from the date they became payable.

In respect of Service tax, attention is invited to Note 32 relating to the unpaid service tax (including interest) amounting to Rs. 12,802,977; of which the amount payable for a period of more than six months from the date they become payable has not been ascertained.

(b)

Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess, as applicable, which have not been deposited as on 31^st March, 2014 on account of disputes are given below:

Name of Statute		Nature of Dues		Forum where Dispute is Pending		Period to which the Amount Relates		Amount Involved (Rs.)
Income-tax Act, 1961		Income Tax		Commissioner of Income Tax (Appeal)		2009-10 and 2010-11			4,484,908

(viii)

The accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth (determined before adjusting for accumulated losses) and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix)

In our opinion and according to the information and explanations given to us, there were no loans taken by the Company from financial institutions and banks and the company has not issued any debentures.

(x)

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.

(xi)

In our opinion and 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.

(xii)

According to the information and explanations given to us, the Company has not availed any term loan.

	(xiii)	In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

	(xiv)	During the year the Company has not made any preferential allotment of shares to the parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

	(xv)	According to the information and explanations given to us, the Company has not issued any debentures during the year.

	(xvi)	The Company has not raised any money by public issue during the year.

(xvii)

To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no significant fraud on the Company has been noticed or reported during the year.

For Deloitte Haskins & Sells LLP

Chartered Accountants

(Firm Registration No. 117366W/W-100018)

	/s/Shyamak R Tata
	Partner
Mumbai, September 4, 2014	(Membership No. 38320)

REDIFF.COM INDIA LIMITED

Balance Sheet as at March 31, 2014

	Note	As at March 31, 2014		As at March 31, 2013

I EQUITY AND LIABILITIES
1 Shareholders’ Funds
(a) Share Capital	3		74,050,890		74,050,890
(b) Reserves and Surplus	4		1,221,124,082		1,940,627,976
			1,295,174,972		2,014,678,866
2 Non - Current Liabilities
(a) Other Long Term Liabilities	5		19,188,361		11,803,771
(b) Long - Term Provisions	6		55,929,812		56,804,150
			75,118,173		68,607,921
3 Current Liabilities
(a) Trade Payables (refer Note 28)			185,936,378		197,396,399
(b) Other Current Liabilities	7		161,358,335		145,094,331
(c) Short - Term Provisions	8		8,206,839		7,444,602
			355,501,552		349,935,332
TOTAL			1,725,794,697		2,433,222,119
II ASSETS
1 Non - Current Assets
(a) Fixed Assets	9
(i) Tangible Assets			80,922,082		141,934,911
(ii) Intangible Assets			96,713,356		90,371,503
(iii) Intangible Assets under Development			36,639,725		46,761,840
			214,275,163		279,068,254
(b) Non - Current Investments	10		54,922,395		68,075,804
(c) Long - Term Loans and Advances	11		312,458,856		789,303,932
			367,381,251		857,379,736
2 Current Assets
(a) Trade Receivables	12		165,542,874		179,922,848
(b) Cash and Cash Equivalents	13		940,808,715		1,075,348,839
(c) Short-Term Loans and Advances	14		37,786,694		41,502,442
			1,144,138,283		1,296,774,129
TOTAL			1,725,794,697		2,433,222,119
III NOTES FORMING PART OF THE FINANCIAL STATEMENTS	1-35

In terms of our report attached.	For and on behalf of the Board of Directors
For Deloitte Haskins & Sells LLP
Chartered Accountants

/s/ Shyamak R Tata	/s/ Ajit Balakrishnan	/s/ Sunil Phatarphekar
Partner	Chairman & Managing Director	Director
	DIN: 00073814	DIN: 00005164

	/s/ Jyoti R Sachdeva
	Company Secretary
	Mumbai, India
	FCS 6794
Mumbai, September 4, 2014	Mumbai, September 4, 2014

REDIFF.COM INDIA LIMITED

Statement of Profit and Loss for the Year Ended March 31, 2014

	Note	For the year ended March 31, 2014			For the year ended March 31, 2013

I Revenue From Operations	15		784,380,935			673,034,071
II Other Income (Net)	16		124,533,664			183,250,707
TOTAL REVENUE			908,914,599			856,284,778
III Expenses:
(a) Employee Benefit Expenses	17		346,924,679			377,620,686
(b) Depreciation and Amortization Expense	9		139,709,101			153,416,360
(c) Operation and Other Expenses	18		727,496,674			599,119,716
TOTAL EXPENSES			1,214,130,454			1,130,156,762
IV LOSS BEFORE EXCEPTIONAL ITEMS AND TAX			(305,215,855	)		(273,871,984	)
V Exceptional Item:
Diminution in Long Term Investments, etc.	31		421,138,377			266,183,605
VI Provision for Tax			-			-
VII LOSS FOR THE YEAR			(726,354,232	)		(540,055,589	)
VIII Earnings Per Equity Share (Face Value of 5 each ) - Basic and Diluted			(49.04	)		(36.47	)
IX NOTES FORMING PART OF THE FINANCIAL STATEMENTS	1-35

In terms of our report attached.	For and on behalf of the Board of Directors
For Deloitte Haskins & Sells LLP
Chartered Accountants

/s/ Shyamak R Tata	/s/ Ajit Balakrishnan	/s/ Sunil Phatarphekar
Partner	Chairman & Managing Director	Director
	DIN: 00073814	DIN: 00005164

	/s/ Jyoti R Sachdeva
	Company Secretary
	Mumbai, India
	FCS 6794
Mumbai, September 4, 2014	Mumbai, September 4, 2014

REDIFF.COM INDIA LIMITED

Cash Flow Statement for the Year Ended March 31, 2014

		For the year ended March 31, 2014			For the year ended March 31, 2013

Cash Flow from Operating Activities
(Loss) Before Taxes			(726,354,232	)		(540,055,589	)
Adjustments for:
Depreciation and Amortisation Expense			139,709,101			153,416,360
Employee Stock Option Expenses			6,850,338			11,370,219
Provision for Diminution in Long Term Investment			421,138,377			266,183,605
Interest Income			(119,573,944	)		(110,446,324	)
(Write Back)/ Write Off of Provision of Doubtful Receivables			9,889,181			(5,199,050	)
(Profit) / Loss on Sale of Investment			-			(64,200,000	)
(Profit) / Loss on Sale of Fixed Assets			(28,326	)		(49,336	)
Unrealised Exchange Difference			8,855,392			837,604
Operating Loss Before Working Capital Changes			(259,514,113	)		(288,142,511	)
Changes in Working Capital:
Trade Receivables			3,687,933			107,143,361
Loans and Advances			17,116,279			(1,860,804	)
Trade Payables, Current Liabilities and Provisions			20,084,049			33,679,428
Cash used in Operating Activities			(218,625,852	)		(149,180,526	)
Taxes Refund, Net of (Paid)			134,729,394			(7,854,334	)
Net Cash used in Operating Activities (A)			(83,896,458	)		(157,034,860	)
Cash Flow From Investing Activities
Payments to Acquire Fixed Assets			(86,310,732	)		(94,775,793	)
Proceeds from Sale of Fixed Assets			469,511			413,962
Proceeds from Sale of long term Investment			-			79,200,000
Loan given to Vubites India Pvt Ltd			(96,317,552	)		(61,540,000	)
Loan given to India abroad publication Inc.			(34,487,128	)		(27,181,146	)
Repayment of Loan from India abroad publications Inc.			83,666,293			-
Interest Income Received			82,335,942			110,446,324
Net Cash (used in)/from Investing Activities (B)			(50,643,666	)		6,563,347
Net (Decrease) in Cash and Cash Equivalents (A+B)			(134,540,124	)		(150,471,513	)
Cash and Cash Equivalents at the Beginning of the Year			1,075,348,839			1,225,820,352
Cash and Cash Equivalents at the End of the Year			940,808,715			1,075,348,839
Note ;
Cash and Cash Equivalents Include:
Cash on Hand			5,211			5,211
Bank Balances			940,650,573			1,075,414,260
Cash and Cash Equivalents			940,655,784			1,075,419,471
Effect of Exchange Rate Changes			152,931			(70,632	)
Cash and Cash Equivalents Restated			940,808,715			1,075,348,839
NOTES FORMING PART OF THE FINANCIAL STATEMENTS	1-35

In terms of our report attached.	For and on behalf of the Board of Directors
For Deloitte Haskins & Sells LLP
Chartered Accountants

/s/ Shyamak R Tata	/s/ Ajit Balakrishnan	/s/ Sunil Phatarphekar
Partner	Chairman & Managing Director	Director
	DIN: 00073814	DIN: 00005164

	/s/ Jyoti R Sachdeva
	Company Secretary
	Mumbai, India
	FCS 6794
Mumbai, September 4, 2014	Mumbai, September 4, 2014

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

CORPORATE INFORMATION

Rediff.com India Limited (“Rediff” or “the Company”) is in the business of providing online internet based services, focusing on India and the global Indian community. Its websites consists of matters 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, e-commerce, broadband wireless content and mobile value-added services to mobile phone subscribers in India.

SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, on an accrual basis of accounting in accordance with the accounting principles generally accepted in India (‘Indian GAAP’). These financial statements have been prepared to comply with the accounting standards notified under Section 211(3C) (which continues to be applicable in terms of General circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013) and other relevant provisions of the Companies Act, 1956.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 recognised in the periods in which the results materialise or are known.

Revenue recognition

Revenues comprise of revenues from online advertising and fee based services. Online advertising includes advertisement and sponsorships. Fee based services include e-commerce, subscription services and mobile value-added 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. Mobile value-added 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.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

Revenue from display of advertisement and sponsorships is recognised ratably based on the delivery 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 recognised 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. The Company earn revenues from the sending of email messages to its users on behalf of advertisers and such revenues are recognized ratably over the contracted period.

Fee based services

Online shopping (E-commerce) 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. . The Company recognizes as revenues the commission earned on these transactions and shipping costs recovered from customers. The Company provides incentives to its customers in the form of coupons and promo codes. These incentives are treated as reductions in revenue and in cases where such incentives exceed the commission amount; the excess is recognized as cost of revenue.

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 deferred and recognised ratably over the period of subscription.

Subscription revenues are also derived from providing mobile value added services (MVAS) 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 recognised when the service is performed.

Tangible assets, intangibles, depreciation and amortisation

Tangible Assets

Tangible assets are stated at cost less accumulated 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 years
Office equipment	3 to 10 years
Vehicles	8 years
Leasehold improvements	6 years

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

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 to the Companies Act, 1956.

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

Intangible Assets

Intangible Assets are stated at cost less accumulated amortisation. Software includes costs incurred in the operations stage that provides additional functions or features to the Company's website, accounting and monitoring software. These are amortised over their estimated useful life of one to five years. Maintenance expenses or costs that do not result in new features or functions are expensed as product development costs, when incurred.

Impairment of assets

The carrying values of assets/cash-generating units at each balance sheet date are reviewed for impairment or more often if there is an indication of decline in value. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

Investments

Investments classified as long-term investments are stated at cost. Provision is made to recognise 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.

Employee benefits

(i) Short term

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(ii) Long term

The Company has both defined-contribution and defined-benefit plans.

Defined-contribution plans

These are plans in which the Company pays pre-defined amounts to separate funds. These comprise of contributions to the employees’ provident fund and family pension fund. The Company’s payments to the defined-contribution plans are reported as expenses during the period in which the employees perform the services that the payment covers.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

Defined-benefit plans

The obligation for the unfunded defined-benefit gratuity is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gain and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur.

(iii) Other employee benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method

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 of assets and liabilities 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 recognised in the Statement of Profit and Loss.

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

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.

Earnings per share

Basic earnings per equity share is computed by dividing the net profit/loss for the year attributable to equity shareholders 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 attributable to equity shareholders 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 (American Depository Receipts) are converted to equity shares.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

Taxes

Income taxes comprise both current and deferred tax.

Current income tax is 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 recognised only to the extent that there is virtual certainty of realisation of such assets in future.

Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and the Company intends to settle the asset and liability on a net basis.

Cash and cash equivalent

The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

Cash and cash equivalents consist of cash on hand, balances in current accounts, deposits with banks which are unrestricted as to withdrawal and use.

Research and development expenses

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product’s technological feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.

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.

Provisions and Contingencies

A provision is recognized when the Company has a present 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 (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 recognized but are disclosed in the notes to the financial statement. A contingent asset is neither recognized nor disclosed.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

SHARE CAPITAL

	As at March 31, 2014			As at March 31, 2013
	Number			Number
Authorised
Equity Shares of 5 each		24,000,000	120,000,000		24,000,000	120,000,000
Issued, Subscribed and Fully Paid up
Equity Shares of 5 each fully paid		14,810,178	74,050,890		14,810,178	74,050,890

Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at March 31, 2014			As at March 31, 2013
	Number			Number
At the beginning of the year		14,810,178	74,050,890		14,810,178	74,050,890
Shares issued during the year (on account of Stock Options exercised)		-	-		-	-
Outstanding at the end of the period		14,810,178	74,050,890		14,810,178	74,050,890

Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

As at March 31, 2014

As at March 31, 2013

Number

Details of shares held by each shareholder holding more than 5% shares:

	As at March 31, 2014					As at March 31, 2013
Name of shareholder	Number		% Holding			Number		% Holding
Rediffusion Holdings Private Limited		2,200,002		14.85	%		2,200,002		14.85	%
Draper International India LP		2,178,000		14.71	%		2,178,000		14.71	%
Edelwiess Finance & Investments Limited.		1,523,000		10.28	%		1,523,000		10.28	%
Diwan Arun Nanda		1,244,740		8.40	%		1,244,740		8.40	%
Ajit Balakrishnan		1,100,190		7.43	%		1,100,190		7.43	%
Rediff.com India Limited Employee Trust		1,015,000		6.85	%		1,015,000		6.85	%

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

Terms / rights attached to equity shares:

In respect of every ordinary share, voting right shall be in the same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the company.

Holders of ADRs are not entitled to attend or vote at shareholders meetings. Holders of ADRs may exercise voting rights with respect to ordinary shares represented by ADRs only in accordance with the provisions of the Company’s deposit agreement and Indian Law.

Each ADRs represents one half of an equity share.

RESERVES AND SURPLUS

Reserves and surplus consist of the following reserves:

	As at March 31, 2014			As at March 31, 2013

Securities premium account
Opening balance		3,430,862,460			3,430,862,460
Addition during the year (on account of Stock Options exercised)		-			-
Closing balance		3,430,862,460			3, 430,862,460
Stock option outstanding account
Opening balance		127,901,477			116,531,258
ESOP Compensation Cost		68,50,338			11,370,219
Closing balance		134,751,815			127,901,477
(Deficit) in the statement of profit and loss
Opening balance		(1,618,135,961	)		(1,078,080,372	)
Deficit during the year		(726,354,232	)		(540,055,589	)
Closing balance		(2,344,490,193	)		(1,618,135,961	)
Total		1,221,124,082			1,940,627,976

OTHER LONG-TERM LIABILITIES (UNSECURED)

Other long-term liabilities consist of the followings:

	As at March 31, 2014		As at March 31, 2013

Income received in advance		19,188,361		11,803,771
Total		19,188,361		11,803,771

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

LONG – TERM PROVISIONS

Long –term provisions consist of following:

	As at March 31, 2014		As at March 31, 2013

Provision for employee benefits:
Gratuity (unfunded)		28,551,561		27,054,202
Compensated absence (unfunded)		27,378,251		29,749,948
Total		55,929,812		56,804,150

OTHER CURRENT LIABILITIES

Other current liabilities consist of the followings:

	As at March 31, 2014		As at March 31, 2013

Capital creditors		177,000		11,130,238
Deposits from employees		3,849,887		3,849,887
Advance received from customers		14,810,399		9,659,003
Income received in advance		67,600,485		55,644,647
Other Liabilities		1,175,483		2,566,118
Statutory liabilities
Tax deducted at source Payable		8,292,895		9,682,865
Service Tax Payable		12,802,977		325,479
Others		2,623,519		2,725,134
Other payables to related parties (unsecured):
Rediff.com Inc.		37,815,555		36,051,903
Rediff Holding Inc.		3,805,388		6,492,621
Value Communication Corporation		8,404,747		6,966,436

Total		161,358,335		145,094,331

SHORT – TERM PROVISIONS

Short-term provisions consist of the followings:

	As at March 31, 2014		As at March 31, 2013

Provision for employee benefits:
Gratuity (unfunded)		2,614,680		2,438,962
Compensated absence (unfunded)		5,592,159		5,005,640
Total		8,206,839		7,444,602

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

FIXED ASSETS

Fixed assets consist of the followings: (Amount in )

Description	Gross Block as at April 1, 2013		Additions		Deletions			Gross Block as at March 31, 2014		Accumulated Depreciation as at April 1, 2013			Depreciation for the Year			Deletions		Accumulated Depreciation as at March 31, 2014			Net Block Value as at March 31, 2014		Net Block Value as at March 31, 2013
Tangible assets
Furniture and fixture		20,542,335		161,996		-			20,704,331		(18,542,998	)		(594,816	)		-		(19,137,814	)		1,566,517		1,999,337
Computer		1,241,817,920		23,998,845		(330,853,350	)		934,963,415		(1,124,616,248	)		(81,178,890	)		330,849,978		(874,945,160	)		60,018,255		117,201,672
Office equipment		17,387,912		803,488		(2,148,397	)		16,043,003		(12,275,082	)		(1,133,511	)		2,094,358		(11,314,235	)		4,728,768		5,112,830
Vehicle		15,284,459		12,55,869		(1,433,488	)		15,106,840		(6,275,260	)		(1,874,451	)		1,049,346		(7,100,365	)		8,006,475		9,009,199
Leasehold Improvement		24,990,385		-		-			24,990,385		(16,378,512	)		(2,009,806	)		-		(18,388,318	)		6,602,067		8,611,873
Total tangible assets		1,320,023,011		26,220,198		(334,435,235	)		1,011,807,974		(1,178,088,100	)		(86,791,474	)		333,993,682		(930,885,892	)		80,922,082		141,934,911
Previous year		1,443,776,115		50,410,014		(174,163,118	)		1,320,023,011		(1,253,952,354	)		(97,934,238	)		173,798,492		(1,178,088,100	)		141,934,911		-
Intangible assets
Software		228,439,244		59,259,480		-			287,698,724		(138,067,741	)		(52,917,627	)		-		(190,985,368	)		96,713,356		90,371,503
Total intangible assets		228,439,244		59,259,480		-			287,698,724		(138,067,741	)		(52,917,627	)		-		(190,985,368	)		96,713,356		90,371,503
Previous year		165,347,719		63,091,525		-			228,439,244		(82,585,619	)		(55,482,122	)		-		(138,067,741	)		90,371503		-
Intangible assets under development		-		-		-			-		-			-			-		-			36,639,725		46,761,840
Grand Total		1,548,462,255		85,479,678		(334,435,235	)		1,299,506,698		(1,316,155,841	)		(139,709,101	)		333,993,682		(1,121,871,260	)		214,275,163		279,068,254

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

10.

NON-CURRENT INVESTMENTS

Non – current investments consists of the following:

	Face Value		No		As at March 31, 2014		As at March 31, 2013

Trade investments
A- Others, Fully paid equity shares (unquoted)
Traveljini.com Limited		10		88,350		60,300,253		60,300,253
Tachyon Technologies Pvt. Ltd.		10		13,177		41,700,000		41,700,000
Vakow Technologies Pvt. Ltd.		10		500,000		5,000,000		5,000,000
BigSlick Infotech Pvt. Ltd.		1		59,230		4,000,000		4,000,000
						111,000,253		111,000,253
B – Wholly Owned Subsidiary Companies,
Fully paid equity shares (unquoted)
Rediff Holding Inc., USA		$0.0001		11,066,667		1,134,483,000		1,134,483,000
Value Communication Corporation, USA		No par value		12,000,000		340,609,949		340,609,949
Vubites India Pvt. Ltd.		1		1,000,000		13,153,409		13,153,409
						1,488,246,358		1,488,246,358
Total (A+B)						1,599,246,611		1,599,246,611
Less Provision for diminution in value of investments						1,544,324,216		1,531,170,807
Net investments						54,922,395		68,075,804

Book value of unquoted investments (net of provisions for diminution) – 54,922,395 (Previous Year 68,075,804)

Note : The provision for diminution in value of investment is as under (Amount in ) :

Name of the Company	2013-14		2012-13
Traveljini.com Limited		60,300,253		60,300,253
Tachyon Technologies Pvt. Ltd.		41,700,000		41,700,000
Vakow Technologies Pvt. Ltd.		5,000,000		5,000,000
BigSlick Infotech Pvt. Ltd.		4,000,000		4,000,000
Rediff Holding Inc., USA		1,079,560,605		1,079,560,605
Value Communication Corporation, USA		340,609,949		340,609,949
Vubites India Pvt. Ltd.		13,153,409		-

TOTAL (Provision for diminution in value of investments)		1,544,324,216		1,531,170,807

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

11.

LONG –TERM LOANS AND ADVANCES (Unsecured)

Long – term loans and advances consists of the following:

	As at March 31, 2014		As at March 31, 2013

Considered Good
Rent deposits		40,836,191		39,987,191
Loans to employees		2,856,976		1,736,658
Recoverable taxes (net of provision of 2,075,691 as at March 31, 2013 and 2014)		57,085,836		154,563,726
Prepaid expenses.		10,677,323		10,180,497
Loans and advances to related parties:
Rediff.com India Ltd. Employee Trust		201,002,530		201,002,530
India Abroad Publication Inc.		-		70,165,914
Considered Doubtful
Loans and advances to related parties:
Vubites India Pvt. Ltd. 407,984,968
Less: diminution 407,984,968		-		311,667,416
		312,458,856		789,303,932

12.

TRADE RECEVABLES (Unsecured)

Trade receivables consist of the following:

		As at March 31, 2014		As at March 31, 2013

(a)	Over six months from the date they were due for payments
	(i) Considered good
	(ii) Considered doubtful		-		1,903,991
			22,460,553		21,876,674
			22,460,553		23,780,665
(b)	Others
	(i) Considered good		165,542,873		178,018,857
	(ii) Considered doubtful		9,113,482		-
			174,656,355		178,018,857
	Total (a+b)		197,116,908		201,799,522
	Less: Provision for doubtful debts		31,574,034		21,876,674
			165,542,874		179,922,848

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

13.

CASH AND CASH EQUIVALENT

Cash and cash equivalent consist of the following:

		As at March 31, 2014		As at March 31, 2013

(a)	Cash and cash equivalents
	Balances with banks
	In current account		110,761,734		48,037,231
	In EEFC account		4,777,355		3,030,808
	Cash on hand		5,211		5,211
			115,544,300		51,073,250
(b)	Other
	In deposits account		825,264,415		1,024,275,589
			825,264,415		1,024,275,589
	Total (a+b)		940,808,715		1,075,348,839

14.

SHORT-TERM LOANS AND ADVANCES (Unsecured, considered good)

Short-term loans and advances consist of the following:

	As at March 31, 2014		As at March 31, 2013

Supplier advances		3,715,561		2,627,115
Rent deposits		2,070,000		3,470,000
Loan to employees		1,933,265		2,087,726
Prepaid expenses		30,017,868		33,067,008
Other loans and advances		50,000		250,593
Total		37,786,694		41,502,442

15.

REVENUE FROM OPERATIONS

Revenue from operations consists of the following:

	For the year ended March 31, 2014		For the year ended March 31, 2013

Online advertising		468,372,011		452,709,343
Fee based services		316,008,924		220,324,728
Total		784,380,935		673,034,071

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

16.

OTHER INCOME (NET)

Other income (net) consists of the following:

	For the year ended March 31, 2014		For the year ended March 31, 2013

Interest income:
Interest on fixed deposits		80,787,692		106,201,609
Interest on income-tax refund		37,251,504		2,427,292
Interest others		1,534,748		1,817,423
Profit on sale of long-term investments		-		64,200,000
(Loss)/Gain on Sale of Fixed Assets		28,326		92,698
Miscellaneous Income		4,931,394		3,312,635
Provision for doubtful debts written back		-		5,199,050
Total		124,533,664		183,250,707

17.

EMPLOYEE BENEFIT EXPENSES

Employee benefit expenses consist of the following:

	For the year ended March 31, 2014		For the year ended March 31, 2013

Salaries and wages		316,882,634		338,974,679
Contribution to provident fund		12,385,149		12,799,836
Gratuity		3,018,443		7,434,551
ESOP compensation costs		6,850,338		11,370,219
Staff welfare expenses		7,788,115		7,041,401
Total		346,924,679		377,620, 686

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

18.

OPERATION AND OTHER EXPENSES

Operation and other expenses consist of the following:

	For the year ended March 31, 2014			For the year ended March 31, 2013

Content Charges		16,571,389			18,804,385
Domain registration charges		24,664,923			21,716,779
Subscription and SMS based costs		14,340,124			30,392,528
E-Commerce – Courier, Freight & Forward		116,345,249			64,041,628
Bandwidth		129,566,079			148,522,495
Software Usage charges		34,821,938			28,675,109
Product development charges		21,432,364			24,514,738
Advertising		24,467,840			2,657,840
Market support		71,060,592			41,166,234
Rent and amenities		48,938,073			48,725,211
Electricity charges		9,315,670			8,270,517
Telecommunication		3,761,659			4,329,895
Repairs and maintenance:
Computers		35,477,938			39,024,484
Others		1,479,941			1,263,830
Insurance		14,905,967			19,094,062
Travel and conveyance		27,006,621			32,460,137
Rates and taxes		251,696			353,732
Foreign exchange (gain)/ loss		(4,432,741	)		495,334
Bank Charges		8,940,325			6,697,493
Provision for doubtful debts
Write off of provision		9,697,360
Bad debts written off		191,821			114,798,671
Write back of Provision					(114,798,671	)
Legal and professional fees		35,317,761			33,796,435
Service Tax/Reversal of input credit (Refer note no. 32)		60,596,163			-
Other Miscellaneous expenses		22,777,922			24,116,850
Total		727,496,674			599,119,716

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

19.

AUDITOR’S REMUNERATION

		2013-14		2012-13


(i)	For service as auditors		2,000,000		2,000,000
(ii)	For taxation matters		200,000		700,000
(iii)	For other services (US GAAP and SOX)		7,050,000		7,050,000
(iv)	For reimbursement of expenses		82,523		34,171
(v)	For service tax*		1,153,500		1,209,324
			10,486,023		10,993,495

Auditors’ remuneration includes fees of NIL (2013: 5 Lacs) payable/ paid for professional services to a firm of chartered accountants in which some partners of the firm of statutory auditors are partners.

* Service tax credit has been availed.

20.

RETIREMENT BENEFIT PLAN

Defined – Benefit Plans

The Company offers its employees unfunded defined-benefit plan in the form of gratuity. This plan provides for a lump-sum payment to be made to vested employees at retirement, death or termination of employment. Commitments are actuarially determined at year-end. Actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the Statement of Profit and Loss.

Defined benefit commitments:

	2013-14			2012-13
Benefit obligation at the beginning of the year		29,493,163			23,496,722
Actuarial loss/(gain)		(4,216,225	)		1,008,042
Current service cost		4,604,420			4,139,798
Interest cost		2,630,248			2,286,710
Benefits paid		(1,345,365	)		(1,438,109	)
Benefit obligation at the end of the year		31,166,241			29,493,163

Expense on defined benefit plan:

	2013-14			2012-13
Service cost		4,604,420			4,139,798
Interest cost		2,630,248			2,286,710
Recognised net actuarial loss/(gain)		(4,216,225	)		1,008,042
Net gratuity cost		3,018,443			7,434,550

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

The actuarial calculations used to estimate defined benefit commitments and expenses are based on the following assumptions which if changed, would affect the defined benefit commitment’s size and expense:

	2013-14	2012-13
Rate for discounting liabilities	9.00%	8.00%
Salary escalation rate	7.00%	7.00%
Expected rate of return on assets	0.00%	0.00%
Mortality rates	Indian Assured live mortality table (2006-08)	Indian Assured live mortality table (2006-08)

The estimate of future salary increase, considered in the actuarial valuation, take account of inflation, seniority, promotion, and other relevant factors. The above information is certified by the actuary.

Experience adjustment:

	2013-14			2012-13			2011-12			2010-11			2009-10

Defined benefit obligation		31,166,242			29,493,164			23,496,723			20,732,081			17,342,909
(Deficit)		(31,166,242	)		(29,493,164	)		(23,496,723	)		(20,732,081	)		(17,342,909	)
Experience adjustment on plan liabilities		(1,104,278	)		(544,577	)		(55,456	)		(1,058,058	)		(1,231,042	)

Defined-Contribution Plans

The Company makes contribution towards provident fund and family pension fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund and pension fund are administered by the Government of India. Under the schemes, the Company is required to contribute a specified percentage of salary to the retirement benefit schemes to fund the benefits. A sum of 12,385,149 (Previous Year 12,799,836) has been charged to the revenue account in this respect.

21.

EMPLOYEE STOCK OPTION PLANS (ESOP)

(a) 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. A total of 280,000 of the Company’s equity shares were reserved for issuance pursuant to 2002 ESOP.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

2002 ESOP

Number of options granted, exercised
and forfeited during the year ended
March 31,

Options

Weighted
average
exercise
price

Range of
exercise
price

Weighted
average
remaining
contractual
life

Options outstanding, beginning of period

16,500

Expired

(4,750

)

887

Options outstanding, end of period

11,750

110 to 980

5.3

Options exercisable as at March 31, 2014, were 8,000 (Weighted average exercise price 1,045).

(b) 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 the Company’s employees. A total of 358,000 equity shares were reserved for issuance under the plan.

2004 ESOP

Number of options granted,
exercised and forfeited during the
year ended March 31,

Options

Weighted
average
exercise
price

Range of
exercise
price

Weighted
average
remaining
contractual life

Options outstanding, beginning of period

135,112

Forfeited

(3,875

)

331

Options outstanding, end of period

131,237

251 to 1,279

2.5

Options exercisable as at March 31, 2014, were 131,237 (Weighted average exercise price 697).

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 670,000 equity shares were approved for issuance under the plan.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

	2006 ESOP
Number of options granted, exercised and forfeited during the year ended March 31,	Options			Weighted average exercise price		Range of exercise price		Weighted average remaining contractual life
Options outstanding, beginning of period		505,813
Granted		1500			286
Forfeited		(16,750	)		301
Options outstanding, end of period		490,563					10 to 1,279		4.9

Options exercisable as at March 31, 2014, were 442,938 (Weighted average exercise price 533).

(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. The Company’s equity shares are currently traded on the NASDAQ Global Market in the form of ADRs.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

(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.

	2013-14			2012-13
Net loss as reported		(726,354,232	)		(540,055,589	)
Add: Stock-based employee compensation		6,850,338			11,370,219
Less: Stock- based compensation expenses determined under fair value method (Proforma) #		29,230,896			41,214,467
Proforma net loss		(748,743,790	)		(569,899,837	)
Loss per share
Basic – as reported		(49.04	)		(36.47	)
–Proforma		(50.56	)		(38.48	)
Diluted – as reported		(49.04	)		(36.47	)
–Proforma		(50.56	)		(38.48	)

# includes stock based compensation cost in respect of stock options issued prior to implementation of Guidance Note on Accounting for Employee Share-based Payments adopted by the Company with effect from April 1, 2006.

The key assumptions used in Black-Scholes model for calculating fair value are: risk-free interest rate: 2.04% to 2.77%, expected life: 5.5 to 7 years, expected volatility of shares: 75.88% to 77.61% and expected growth life in dividend: 0 %.

22.

SEGMENT REPORTING

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

23.

RELATED PARTY DISCLOSURES

Names and relationships of related parties

Subsidiary Companies:

Rediff Holdings, Inc., USA

Value Communications Corporation (“Valucom”), USA

Vubites India Private Limited (“Vubites”)

Indirect subsidiaries:

Rediff.com, Inc., USA

India Abroad Publication, Inc.

India in New York Inc.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

Associate Companies:

Tachyon Technology Private Limited (“Tachyon”)

BigSlick Infotech Private Limited (“BigSlick”)

Key Management Personnel:

Mr. Ajit Balakrishnan Chairman and Managing Director

Enterprise over which key management personnel are able to exercise significant influence:

Rediff.com India Employee Trust (“ESOP Trust”)

Rediffussion Holdings Private Limited

RDY&R Private Limited (“RDY&R”)

Quintrol Technologies Private Limited

Ajit Balakrishnan Estate and Securities Private Limited

Transactions with Related Parties during the year and balances outstanding as at March 31, 2014:

Name of the Related party	Transactions	2013-14		2012-13
Value CommunicationsCorporation	Payable as at year end, net		8,404,747		6,966,436
India abroad Publications, Inc.	Expenses incurred and other reimbursements by India Abroad Publication Inc on behalf of the Company		27,029		190,628
	Expenses incurred and other reimbursements by the Company on behalf of India Abroad Publications, Inc.		6,677,099		11,675,892
	Loan given during the year		27,783,000		27,181,146
	Loan Repaid during the year		83,666,293		NIL
	Loans and advances payable as at year end, net		NIL		70,165,914
Rediff.com, Inc.	Payable as at year end		37,815,555		36,051,903
Rediff Holdings, Inc.	Provision for diminution in value of Long Term Investment		NIL		266,183,605

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

Name of the Related party	Transactions	2013-14		2012-13
	Payable as at year end, net		3,805,388		6,492,621
Vubites India Private Limited	Expenses incurred and other reimbursements by the Company on behalf of Vubites India Private Limited		4,917,552		3,247,815
	Loan given during the year (Interest free)		91,400,000		61,540,000
	Loan and advances as at year end		NIL		311,667,416
	Provision for diminution in value of Long Term Investment, etc		421,138,377		NIL
Tachyon Technologies Limited	Product development expenses capitalised		Nil		52,000,00
	Payable as at year end		Nil		800,000
Rediff.com India Ltd Employee Trust	Loan and advances as at year end (Interest free)		201,002,530		201,002,530

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

24.

OBLIGATION TOWARDS 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:

	2013-14		2012-13
Office Premises		44,002,682		43,298,367
Residential flats for accommodation of employees		4,935,391		5,426,844
Total		48,938,073		48,725,211

The minimum annual rental commitments under operating leases are as follows:

	2013-14		2012-13
Not later than one year		19,585,513		18,023,487
Later than one year and not later than five years		5,123,324		210,000
Total payments		24,708,837		18,233,487

25.

EARNING PER EQUITY SHARES

		2013-14			2012-13
A.	Net (loss) attributable to equity shareholders ()		(726,354,232	)		(540,055,589	)
B.	Weighted average number of equity shares outstanding during the year		14,810,178			14,810,178
C.	Potentially dilutive equity share equivalents (stock options)		-			-
D.	Weighted average number of equity shares and potentially dilutive equity share equivalents outstanding		14,810,178			14,810,178
E.	Nominal value of Equity Shares ()		5.00			5.00
	Basic Earnings per Share ()		(49.04	)		(36.47	)
	Diluted Earnings per Share ()		(49.04	)		(36.47	)

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

26.

CONTINGENCIES AND CAPITAL COMMITMENTS

Contingent liabilities:

During previous year 2012-13, Company had received a demand notice from Income Tax Authorities resulting in a contingent liability of interest u/s. 201 (1A) of 8,524,108. This was mainly on account of disallowance of payment made for purchase of bandwidth on which tax had not been deducted at source for the assessment years 2010-11 and 2011-12. The Company has paid 4,039,200 under protest and matter is pending with the Commissioner of Income Tax (Appeal).

The Income tax authorities in India have disallowed certain expenses claimed by the Company for certain years which if confirmed by the appellate authorities will be adjusted against the income tax carry forward losses claimed by the Company and not result in outflow of resources embodying economic benefits.

The Company has lodged appropriate proceedings with the relevant income tax authorities and expects to prevail in the appellate proceedings

The Company is also subject to other legal proceedings and claims, which have arisen in the ordinary course of its business. Those actions, when ultimately concluded and determined, will not, in the opinion of management, have a material effect on the results of operations, cash flows or the financial position of the Company.

The Company has not recognized any loss accrual for the litigation disputes as the Company believes that it is probable that it would be successful on resolution of the litigation. The maximum total loss relating to these disputes would be 2,251,040 (previous year 2,251,040) excluding any interest and penalty which amount cannot be reasonably estimated.

Capital Commitments :

		2013-14				2012-13
Estimated amount of contracts remaining to be executed on capital account and not provided for			46,561,582				36,738,160

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

27.

DERIVATIVE TRANSACTION

The Company has not entered in to any derivative transaction during the years ended March 31, 2014 and 2013.

Foreign exchange currency exposures not hedged by derivative instruments are:

		2013-14						2012-13
Sl. No.	Particulars	Amount $			Amount			Amount $			Amount
1	Amount receivable on account of sale of services		269,097			16,172,706			576,290			31,386,588
2	Creditors payable on account of foreign currency expenditure		(167,928	)		(10,092,464	)		(84,438	)		(4,592,508	)
3	Foreign currency bank balances		79,490			4,777,354			55,825			3,030,808
4	Amount (Payable) / Receivable (to)/from subsidiary companies		(832,374	)		(50,025,690	)		538,181			29,271,290

28.

MICRO AND SMALL ENTERPRISES

The information regarding Micro Enterprises and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

29.

INCOME IN FOREIGN CURRENCIES

		2013-14		2012-13
(i)	E-commerce services		1,505,454		1,424,585
(ii)	Media, mobile and others services		82,337,466		27,981,955

	Total		83,842,920		29,406,540

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

30.

EXPENDITURE IN FOREIGN CURRENCIES

Particulars		2013-14		2012-13
(i)	Professional charges		9,984,498		17,476,742
(ii)	Product development		5,535,833		4,808,619
(iii)	Dataline/ internet charges		4,014,196		8,604,741
(iv)	Listing fees		450,750		2,091,033
(v)	Software usage charges		29,931,999		14,005,397
(vi)	Purchase of email domains		22,293,725		16,926,127
(vii)	Advertising expenses		191,904		-
(viii)	Other matters		705,839		2,111,690

	Total		73,108,744		66,024,349

31.

PROVISION FOR DIMINUTION OF INVESTMENT AND LOAN

As at the year end 2014, the Company made provisions to recognise the other-than-temporary decline in the value of its long term investment and loan to its subsidiary company Vubites India Private Limited amounting to 13,153,409 and Rs. 407,984,968, respectively. During the previous year ended March 31, 2013, the Company had made an impairment provision to recognise the other-than-temporary decline in the value of its long term investment in its subsidiary company Rediff Holding Inc., USA amounting to 266,183,605.

32.

NOTE ON SERVICE TAX/REVERSAL OF INPUT CREDIT

The operating expenses (Note no. 18) includes an expense relating to service tax amounting to 60,596,163 (including resultant interest of 4,085,191) 26,379,570 pertaining to service tax of the previous year (including resultant interest of 1,642,122)] arising from an inadvertent excess availment of Cenvat credit against “selling of space or time slots for advertisements other than broadcast by radio or television” which were covered under negative list from July 2012. The company is in the process of determining and discharging its net unpaid obligations, as at 31 March 2014, of Rs. 12,802,977 in this regard.

REDIFF.COM INDIA LIMITED

Notes forming part of the Financial Statements

33.

DEFERRED TAX ASSET

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 recognised since there is no virtual/ reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

34.

US BRANCH OFFICE

During the fiscal year ended March 31, 2014, Rediff opened a branch office in the United States of America. Its prime objective is to facilitate and expand the online advertising business in USA.

35.

The previous year figures have been regrouped/ rearranged as necessary to make them comparable with those of the current year

	For and on behalf of the Board of Directors

	/s/ Ajit Balakrishnan	/s/ Sunil Phatarphekar
	Chairman & Managing Director	Director
	DIN: 00073814	DIN: 00005164

		/s/ Jyoti Ravi Sachdeva Company Secretary Mumbai, India FCS 6794 Date: September 4, 2014

Statement pursuant to Section 212 of the Companies Act 1956

relating to the Subsidiary Companies

Rediff Holdings Inc.

Value Communications
Corporation

Vubites India Private Ltd.

A. Name of the Subsidiary

B. Financial year of the subsidiary ended on

31-Mar-2014

C. The Company's interest in the subisidiary on the aforesaid date

a) Number of shares held

11,066,667

12,000,000

1,000,000

b) Face Value per share

0.0001

No par value

Rs. 1/-

c) extent of Holding

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

1. For the Subsidiary's financial year ended as in "B" above

Equivalent to INR*

141,188,163

Nil

(134,730,186

)

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. 60.1

Disclaimer:

We have translated the foreign currency amounts in the financial data derived from our Subsidiaries financial statements at the closing rate as on March 31, 2014. 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

Place: Mumbai, India	/s/ Ajit Balakrishnan	/s/ Sunil Phatarphekar
Date: September 4, 2014	Chairman & Managing Director	Director
	DIN: 00073814	DIN: 00005164

	/s/ Jyoti R Sachdeva
	Company Secretary
	FCS 6794

DIRECTORS’ REPORT

To,

The Members of Vubites India Private Limited

Your Directors are pleased to submit the Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31^st March 2014.

FINANCIAL AND OPERATING RESULTS

During the year under review, the Company had incurred a loss of 135 million (previous year 111 million) after providing for depreciation of 48 million (previous year 60 million) and the said loss is carried forward to the next year.

DIVIDEND

Your Directors do not recommend any dividend for the year ended on March 31, 2014.

DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 during the year under review.

DIRECTORS

No director of the Company has been disqualified to be a Director of the Company on account of non compliance with any of the provisions of the Companies Act, 1956.

COMPLIANCE CERTIFICATE

In accordance with Section 383A of the Companies Act, 1956 and Companies (Compliance Certificate) Rules, 2001, the Company has obtained a Certificate from a Secretary in whole time practice confirming that the Company has complied with all the provisions of the Companies Act, 1956 during the period under review and a copy of such certificate is annexed to this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, Directors of your Company wish to state that:

In the preparation of the annual accounts for the year ended on March 31, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii)

The directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the said financial year and of the loss of the Company for the year ended as on that date;

iii)

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 fraud and other irregularities;

iv)

The directors have prepared the annual accounts for the financial year ended 31^st March 2014 on a going concern basis.

INFORMATION PURSUANT TO SECTION 217(2B) OF THE COMPANIES ACT, 1956

There was no buy back of company’s shares during the financial year in terms of provisions of Section 77A (4) of the Companies Act, 1956.

INFORMATION PURSUANT TO SECTION 217(1)(d) OF THE COMPANIES ACT, 1956

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the balance sheet relates and the date of this report.

INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956

Information required to be provided 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 in relation to Conservation of Energy and Technology Absorption are currently not applicable to the Company. The details with respect to the Foreign Exchange Earnings and Outgo of the Company for the year ended on 31^st March 2014 are given below:

	Earnings	:	Nil
	Outgo	:	Nil

10.

PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956

There was no employee in the Company during the period under review that is in receipt of remuneration in excess of the limits specified in Section 217(2A) of the Companies Act, 1956.

11.

AUDITORS

M/s. Vivek Mestry and Associates, Chartered Accountants (Reg. no. 115553W), 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.

	For and on behalf of the Board of Directors
Place : Mumbai
Date : September 4, 2014
	/s/ Swasti Bhowmick	/s/ Ashish Mehrotra
	Director	Director
	Din – 02411091	Din - 02393919

Independent Auditors’ Report

TO THE MEMBERS OF VUBITES INDIA PRIVATE LIMITED

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Metaphor Communications Private Limited (the Company), which comprise the Balance Sheet as at March 31, 2014 and the Statement of Profit and Loss for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITY

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

(b) In the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

This report does not include a statement on the matters specified in paragraph 4 of the Companies (Auditors Report) Order, 2003 and amendment thereto by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Department of the Companies Affaires, in terms of Section 227(4A) of the Co. Act, 1956, since in our opinion and according to the information & explanations given to us, the said Order is not applicable to the Company.

As required by Section 227(3) of the Act, we report that:

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books.

c. The Balance Sheet and the Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

d. In our opinion, the Balance Sheet and the Statement of Profit and Loss comply with Accounting Standards notified under the Act read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

e. On the basis of the written representations received from the directors as on March 31, 2014, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of Section 274(1)(g) of the Act.

	For Vivek Mistry & Associates
	Chartered Accountants
	(Firm Registration No. 115553W)

	/s/ Vivek Mestry
	Proprietor
	Membership No: 49628

Place: Mumbai

Date: September 4, 2014

VUBITES INDIA PRIVATE LIMITED

Balance Sheet as at March 31, 2014

(in Rupees)

Particulars			Note No.		As at March 31, 2014			As at March 31, 2013

	A	EQUITY AND LIABILITIES

	1	Shareholders’ funds

		(a) Share capital		3		1,000,000			1,000,000
		(b) Reserves and surplus		4		(388,597,226	)		(253,867,040	)
						(387,597,226	)		(252,867,040	)
	2	Non-current liabilities
		Other Long Term Liabilities		5		407,984,968			311,667,416
		Long-term provisions		6		2,940,933			3,239,463
						410,925,901			314,906,879
	3	Current liabilities
		(a) Trade payables		7		10,217,492			9,157,596
		(b) Other current liabilities		8		7,070,937			2,789,685
		(c) Short-term provisions		9		460,773			528,605
						17,749,202			12,475,886

		TOTAL				41,077,877			74,515,725

	B	ASSETS

	1	Non-current assets
		(a) Fixed assets		10
		(i) Tangible assets				11,988,416			32,125,417
		(ii) Intangible assets				128,628			24,852,932
						12,117,044			56,978,349
		(b) Long-term loans and advances		11		11,696,507			6,798,229
						23,813,552			63,776,578
	2	Current assets
		(a) Trade receivables		12		1,848,684			1,235,357
		(b) Cash and cash equivalents		13		5,830,238			3,681,114
		(c) Short-term loans and advances		14		9,585,405			5,822,676
						17,264,327			10,739,147

		TOTAL				41,077,877			74,515,725

		Significant accounting policies & Notes on financial statements		1-27

In terms of our report attached.	For and on behalf of the Board of Directors
For Vivek Mestry & Associates	For Vubites India Pvt. Ltd
Chartered Accountants
Registeration no. 115553W

/s/Vivek Mestry
Proprietor	/s/Swasti Bhomick	/s/Ashish Mehrotra
Membership no. 49628	Director	Director
	DIN – 02411091	DIN No - 02393919

Mumbai, India	Mumbai, India
Dated: Sep 4,2014	Dated: Sep 4,2014

VUBITES INDIA PRIVATE LIMITED

Profit and loss statement for the year ended March 31, 2014

(in Rupees)

Particulars			Note No.		For the year ended March 31, 2014			For the year ended March 31, 2013

	1	Revenue from operations		15		27,059,217			9,837,966

	2	Other income (net)		16		175,087			1,513,670

		TOTAL REVENUE				27,234,304			11,351,636

	3	Expenses:
		(a) Employee benefit expenses		17		35,245,032			32,418,758
		(b) Depreciation and amortization expenses		10		47,542,290			59,810,277
		(c) Operation and other expenses		18		79,177,168			29,807,046

		TOTAL EXPENSES				161,964,490			122,036,081

	4	LOSS FOR BEFORE TAX				(134,730,186	)		(110,684,445	)

		Tax Expense
		Current tax expense for prior years				-			-

		LOSS FOR THE YEAR				(134,730,186	)		(110,684,445	)


	5	Earnings per equity share - Basic and Diluted		24		(134.73	)		(110.68	)


		Significant accounting policies & Notes on financial statements		1-27

In terms of our report attached.	For and on behalf of the Board of Directors
For Vivek Mestry & Associates	For Vubites India Pvt. Ltd
Chartered Accountants
Registeration no. 115553W

/s/Vivek Mestry
Proprietor	/s/Swasti Bhomick	/s/Ashish Mehrotra
Membership no. 49628	Director	Director
	DIN - 02411091	DIN No - 02393919

Mumbai, India	Mumbai, India
Dated: Sep 4,2014	Dated: Sep 4,2014

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

CORPORATE INFORMATION

Vubites India Private Limited (“Vubites” or “the Company”) is in the business of providing web-based tools that small merchants, who doesn’t have a media planner can create their media plan without any help and a technology and can use to create low cost TV advertisements of their own, which play on television directly at the local level.

SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation of financial statements

The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956, and the applicable Accounting Standards referred to in section 211(3C) of the Companies Act, 1956. All income and expenditure having material bearing on the financial statements are recognised on accrual basis.

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 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 recognised in the periods in which the results materialise or are known.

Revenue recognition

The Company offers web-based tools that small merchants can use to create low cost TV ads of their own and in mpeg 2 format, which, play on television directly, a tool where the small merchant who doesn’t have a media planner can create their media plan without any help and a technology to insert TV ads at the local level. Revenue is recognised 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.

Tangible assets, intangibles, depreciation and amortisation

Tangible Assets

Tangible assets are stated at cost less depreciation. Depreciation on fixed assets other than leasehold improvements is using the straight-line method and in the manner specified under Schedule-XVI of the Companies Act, 1956.

Expenditure on leasehold improvements is amortised equally over a period of lease.

Intangible Assets

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

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

Impairment of assets

The carrying values of assets of the Company’s cash-generating units are reviewed for impairment annually or more often if there is an indication of decline in value. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

Employee benefits

(i) Short term

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(ii) Long term

The Company has both defined-contribution and defined-benefit plans.

Defined-benefit plans

The obligation for the unfunded defined-benefit gratuity is calculated as at the balance sheet date by independent actuaries in a manner that distributes expenses over the employees’ working life and fully provided for. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees.

Defined-contribution plans

(iii) Other employee benefits

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

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 recognised in Profit and Loss Statement.

Stock based compensation

Earnings per share

Basic earnings per share is computed by dividing the net profit/loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

Taxes

Income taxes comprise both current and deferred tax.

Cash and cash equivalent

Cash and cash equivalents consist of cash on hand, balances in current accounts, deposits with banks which are unrestricted as to withdrawal and use.

Research and development expenses

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

Leases

Provisions and Contingencies

SHARE CAPITAL

	As at march 31, 2014			As at march 31, 2013
	Number			Number
Authorised
Equity Shares of Re.1 each		10,000,000	10,000,000		10,000,000	10,000,000

Issued, Subscribed and Fully Paid up		1,000,000	1,000,000		1,000,000	1,000,000
Equity Shares of Re.1 each fully paid		1,000,000	1,000,000		1,000,000	1,000,000

Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at march 31, 2014			As at march 31, 2013
	Number			Number
Shares outstanding at the beginning and end of the year		1,000,000	1,000,000		1,000,000	1,000,000

Shares outstanding at the end of the year		1,000,000	1,000,000		1,000,000	1,000,000

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

	As at march 31, 2014			As at march 31, 2013
	Number			Number
Rediff.com India Ltd. (Holding company)		1,000,000	1,000,000		1,000,000	1,000,000

Shares held by each shareholder holding more than 5% shares:

	As at march 31, 2014					As at march 31, 2013
	No of Shares Held		% of Holding			No of Shares Held		% of Holding
Rediff.com India Ltd.		1,000,000		100	%		1,000,000		100	%

RESERVES AND SURPLUS

Reserves and surplus consist of the following reserves:

	As at March 31, 2014			As at March 31, 2013

Statement of Profit & Loss
Opening balance		(253,867,040	)		(143,182,595	)
Deficit during the year		(134,730,186	)		(110,684,445	)
Closing balance		(388,597,226	)		(253,867,040	)
Total		(388,597,226	)		(253,867,040	)

OTHER LONG TERM LIABILITIES

Other Long Term Liabilities consist of following:

	As at March 31, 2014		As at March 31, 2013

Other payable to related party (Unsecured)
Rediff.com India Limited		407,984,968		311,667,416
Total		407,984,968		311,667,416

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

LONG – TERM PROVISIONS

Long – Term provisions consist of following:

	As at March 31, 2014		As at March 31, 2013

Provision for employee benefits:
Gratuity		1,209,726		1,254,182
Compensated absence		1,731,207		1,985,281
Total		2,940,933		3,239,463

TRADE PAYABLES

Trade Payables consist of following:

	As at March 31, 2014		As at March 31, 2013

Trade payables		1,02,17,492		9,157,596
Total		1,02,17,492		9,157,596

OTHER CURRENT LIABILITIES

Other Current Liabilities consist of the followings:

	As at March 31, 2014		As at March 31, 2013

a) Statutory liabilities
Tax deducted at source Payable		651,513		314,769
Provident Fund Payable		276,939		221,676
Others		7,424		15,350
b) Advances from customers		6,135,061		2,237,890
Total		7,070,937		2,789,685

SHORT – TERM PROVISIONS

Short-term provisions consist of the followings:

	As at March 31, 2014		As at March 31, 2013

Provision for employee benefits:
Gratuity		103,007		156,110
Compensated absence		357,766		372,495
Total		460,773		528,605

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

10.

FIXED ASSETS

Fixed assets consist of the followings: (Amount in )

	Gross Block								Accumulated Depreciation / Amortisation								Net Block
Description	As at 01/04/2013		Additions		Deletions		As at 31/03/2014		As at 01/04/2013		Additions		Deletions		As at 31/03/2014		As at 31/03/2014		As at 31/03/2013
Tangible Assets
Leasehold improvements		14,57,434		-		-		14,57,434		14,57,434				-		14,57,434		-		-
Furniture and fixtures		3,20,920		-		-		3,20,920		2,17,028		71,980		-		2,89,008		31,912		1,03,892
Electrical Fittings		2,64,670		-		-		2,64,670		1,65,622		99,048		-		2,64,670		-		99,048
Office Equipment		5,51,496		-		-		5,51,496		3,03,357		1,81,919		-		4,85,276		66,220		2,48,139
Computers		8,72,97,294		26,80,986		-		8,99,78,280		5,56,22,956		2,24,65,038		-		7,80,87,994		1,18,90,285		3,16,74,338

Total tangible Assets		8,98,91,814		26,80,986		-		9,25,72,800		5,77,66,397		2,28,17,987		-		8,05,84,383		1,19,88,416		3,21,25,417
Previous year		8,11,77,447		87,14,367		-		8,98,91,814		3,47,83,886		2,29,82,511		-		5,77,66,397		3,21,25,417		-
Intangible Assets
Software		11,05,42,454		-		-		11,05,42,454		8,56,89,522		2,47,24,304		-		11,04,13,825		1,28,628		2,48,52,932

Total intangible assets		11,05,42,454		-		-		11,05,42,454		8,56,89,522		2,47,24,304		-		11,04,13,825		1,28,628		2,48,52,932
Previous year		11,04,11,392		1,31,062		-		11,05,42,454		4,88,61,756		3,68,27,766		-		8,56,89,522		2,48,52,932		-
Grand Total		20,04,34,268		26,80,986		-		20,31,15,254		14,34,55,919		4,75,42,290		-		19,09,98,209		1,21,17,044		5,69,78,349
Previous year		19,15,88,839		88,45,428		-		20,04,34,268		8,36,45,642		5,98,10,277		-		14,34,55,919		5,69,78,349		-

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

11.

LONG –TERM LOANS AND ADVANCES (Unsecured)

Long – term loans and advances consists of the following:

	As at March 31, 2014		As at March 31, 2013

Unsecured Considered Good
Rent deposits		950,400		950,400
Employee Advances		269,954		827,750
Prepaid expenses		-		11,630
Recoverable taxes		10,476,153		5,008,449
Total		11,696,507		6,798,229

12.

TRADE RECEIVABLES (Unsecured)

Trade Receivables consists of the following:

	As at March 31, 2014			As at March 31, 2013

Unsecured:
a) Debts outstanding for more than six months from the date they are due for payment.
- Considered good		-			-
- Considered doubtful		1,663,877			-
		1,663,877			-
b) Other Debts
- Considered good		1,848,684			1,235,357
- Considered doubtful		607,405			-
		2,456,089
Less: Provision for Doubtful Debts		(2,271,282	)		-
Total		1,848,684			1,235,357

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

13.

CASH AND BANK BALANCES

Cash & Bank Balances consists of the following:

	As at March 31, 2014		As at March 31, 2013

(i) Balances with Banks :
In Current Accounts		5,693,642		3,562,423
In Fixed Deposit Accounts		123,244		113,866

(ii) Cash in Hand		13,352		4,825

Total		5,830,238		3,681,114

Note:

The deposits maintained by the Company with the bank comprise of time deposits, which can be withdrawn by the Company at any time without prior notice or penalty on the principal.

14.

SHORT TERM LOANS & ADVANCES

Short Term Loans & Advances consists of the following:

	As at March 31, 2014		As at March 31, 2013

Unsecured considered good :
a) Employee Advances		595,576		678,426
b) Capital advance		1,330,806		1,187,768
c) Advance to vendors		6,748,322		1,958,213
d) Security deposit to vendors		300,000		1,800,000
e) Prepaid expenses		610,700		198,269
Total		9,585,405		5,822,676

15.

REVENUE FROM OPERATIONS:

Revenue from Operation consists of the following:

	As at March 31, 2014		As at March 31, 2013

Advertising Receipts (Net of Service Tax)		2,70,59,217		9,837,966
Total		2,70,59,217		9,837,966

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

16.

OTHER INCOME

Other Income consists of the following:

	As at March 31, 2014		As at March 31, 2013

Interest Received		26,430		25,977
Miscellaneous Income		5,619
Foreign exchange gain		143,038
Total		175,087		1,513,670

17.

EMPLOYEE BENEFIT EXPENSES

Employee Benefit Expenses consists of the following:

	As at March 31, 2014		As at March 31, 2013

Salaries and wages		32,993,351		30,144,337
Gratuity		215,021		492,719
Contribution to PF		1,476,927		1,344,714
Staff welfare		5,59,733		436,988
Total		3,52,45,032		32,418,758

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

18.

OTHER EXPENSES

Other Income consists of the following:

	As at March 31, 2014		As at March 31, 2013

Advertisement insertion charges		4,84,49,081		15,215,432
MSO MG Charges		1,10,45,155		-
MSO Internet Charges		7,03,469		-
Bandwidth charges		7,68,239		792,450
Rent and amenities		1,903,502		2,161,001
Electricity charges		542,684		772,100
Telecommunication		393,765		146,588
Repairs and maintenance
Computer		3,77,658		359,111
Other		82,665		144,063
Insurance		5,10,460		65,950
Travel and conveyance		37,05,341		1,842,395
Rates and Taxes		3,75,033		39,064
Legal and Professional Fees		42,64,512		4,083,831
Commission & Brokerage		-		28,000
Office Expenses		55,007		102,060
Product Development Charges		-		100,000
Freight & Forwarding Charges		44,755		133,327
Security Service Charges		199,720		149,561
Consumables - Stores & Spares		3,39,878		662,699
Sundry balances written off		-
Virtual Storage / Servers		12,86,985		1,353,229
Office Maintenance		1,259,397		1,259,398
Foreign Exchange Loss		-		150,331
Provision for doubtful debts		22,71,282		-
Miscellaneous expenses		5,98,580		246,456

Total		79,177,168		29,807,046

19.

Expenditure In Foreign Currency (on accrual basis):

Particulars	2013-14		2012-13

Software cards		-		2,499,921
Total		-		2,499,921

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

20.

Payment to auditors (net of service tax):

Particulars	2013-14		2012-13

a) Statutory audit fees		100,000		100,000
b) Other Services		2,000		4,500
c) Tax Audit Fees		30,000		-
d) Service Tax (*)		16,315		12,916

(*) Service Tax credit has been availed.

21.

Employee Benefit Obligations

Defined – Benefit Plans

The Company offers its employees unfunded defined-benefit plan in the form of gratuity. This plan provides for a lump-sum payment to be made to vested employees at retirement, death or termination of employment. Commitments are actuarially determined at year-end. On adoption of the revised Accounting Standard, (AS)-15 on “Employee Benefits” notified under the Companies (Accounting Standards) Rules, 2006, actuarial valuation is done based on “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the Profit and Loss Statement.

Defined benefit commitments:

	2013-14			2012-13

Benefit obligation at the beginning of the year		14,10,292			917,573
Actuarial losses		(295,491	)		(119,765	)
Current service cost		374,012			275,385
Interest cost		136,500			97,569
Benefit obligation at the end of the year		13,12,733			14,10,292

Expenses on defined benefit plan:

	2013-14			2012-13

Service cost		374,102			275,385
Interest cost		136,500			97,569
Recognised net actuarial losses		(295,491	)		(119,765	)
Net gratuity cost		215,021			492,719

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

	2013-14	2012-13
Rate for discounting liabilities	9.00%	8.00%
Salary escalation rate	7.00%	7.00%
Expected rate of return on assets	0.00%	0.0%
Mortality rates	Indian Assured Lives Mortality (2006-08)	Indian Assured Lives Mortality (2006-08)

The estimate of future salary increase, considered in the actuarial valuation, take account of inflation, seniority, promotion, and other relevant facto The above information is certified by the actuary.

Experience adjustment:

	2013-14			2012-13

Defined benefit obligation		13,12,733			14,10,292
(Deficit)		(13,12,733	)		(14,10,292	)
Experience adjustment on plan liabilities		(132,679	)		(34,779	)

22.

Operating leases

	2013-14		2012-13
Particulars
Office Premises		1,903,502		2,161,001

These lease agreements are executed for a period ranging between 3 - 60 months with a renewable clause. These lease agreements also provide for termination by mutual consent by giving a prior notice period between 1 – 3 months.

The minimum annual rental commitments under operating leases are as follows:

	2013-14		2012-13
Particulars

Not later than one year		288,000		288,000

Total payments		288,000		288,000

VUBITES INDIA PRIVATE LIMITED

Notes forming part of the Financial Statements

23.

Related Parties Disclosures

I. Names and relationships of related parties

Holding Company:

Rediff.com India Limited

Transactions with Related Parties during the year and balances outstanding as at March 31, 2014:

Name of the		2013-14		2012-13
Related party	Transactions

Rediff.com India Limited	Reimbursement of expenses		4,917,552		3,247,815

	Loans received during the year		91,400,000		61,540,000
	Payable as at year end		407,984,968		311,667,416

24.

Deferred tax assets

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

25.

Earnings Per Share (EPS)

		2013-14			2012-13
A.	Net loss attributable to equity shareholders ()		134,730,186			110,684,445
B.	Weighted average number of equity shares outstanding during the year		10,00,000			10,00,000
C.	Nominal value of Equity Shares ()		1.00			1.00
	Basic Earning per Share ()		(134.73	)		(110.68	)
	Diluted Earning per Share ()		(134.73	)		(110.68	)

26.

Amount payable to Micro, Small and Medium Enterprises

The Company has requested its suppliers to confirm the status as to whether they are covered under the Micro, Small and Medium Enterprises Development Act, 2006. The Company has not received intimation from its suppliers under the said Act. In the absence of confirmation from all the suppliers disclosure, if any relating to amount unpaid as at year end together with interest paid / payable as required under the said Act have not been given.

27.

Comparatives

Previous year figures have been regrouped/ rearranged as necessary to make them comparable with those of the current year.

Rediff Holding Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

Mr. Sridhar Iyengar

Mr. Sunil Phatarphekar

Mr. M. Madhavan Nambiar

AUDITORS

PATKAR & PENDSE

INDIA

DIRECTORS’ REPORT

The Board of Directors present the audited financial statements of Rediff Holding Inc. for the year ended March 31, 2014.

PRINCIPAL ACTIVITIES

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

REVIEW OF BUSINESS

Profit for the Year is US $ 2,349,221/-. After giving effect taxes, net profit of US $ 2,339,370/- was carried to Balance Sheet.

DIVIDENDS

For the year ended March 31, 2014, your Directors do not recommend any dividend.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

/s/ Ajit Balakrishnan

Director

Date: September 4, 2014

AUDITORS’ REPORT

The Members,

Rediff Holdings Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of REDIFF HOLDINGS INC., a Company incorporated as a Delaware Corporation in February, 2001 in the United States, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss account for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in the notes to these financial statements. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014; and

in the case of the Statement of Profit and Loss of the profit for the year ended on that date;

Report on Other Legal and Regulatory Requirements

As required by section 227(3) of the Act, we report that:

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

in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

the Balance Sheet and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

in our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in the notes to these financial statements.

For Patkar & Pendse

Chartered Accountants

F.R.No. 107824W

/s/ B.M. Pendse

Partner.

M.No. 32625

Place	: Mumbai
Date	: September 4, 2014

Rediff Holdings Inc.

Balance Sheet as at 31st March, 2014

			2013-2014		2012-2013
Particulars	Note No		(USD)		(USD)
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share Capital		3		1,107		1,107
(b) Reserves and Surplus		4		5,372,632		3,033,261
(2) Non Current Liabilities
(a) Other Non Current Liabilities		5		4,906,905		6,898,690
(3) Current Liabilities
(a) Trade payables		6		84,500		100,000
(b) Short-term provisions		7		10,000		-
				10,375,143		10,033,058
II. ASSETS
(1) Non-current assets
(a) Non-current investments		8		5,390,536		6,795,522
(b) long-term loans and advances		9		3,170,613		3,225,711
(2) Current assets
(a) Cash and cash equivalents		10		1,200,058		11,825
(b) Other current assets		11		613,937
				10,375,143		10,033,058

Significant accounting policies		1 &2
Notes on financial statements		3 to 17

For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		Rediff Holdings Inc.
Registration no. 107824W

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

Rediff Holdings Inc.

Statement of Profit and Loss for the year ended 31st March, 2014

			2013-2014		2012-2013
Particulars	Note No		(USD)		(USD)
I. Revenue from operations				-		-
II. Other income		12		2,741,251
Total Revenue				2,741,251		-
III. Expenses:
Employee benefit expense		13		223,643		222,770
Other expenses		14		168,387		190,098
				392,030		412,868
IV Profit before exceptional Items & tax				2,349,221		(412,868	)
V. Exceptional Items
Impairment provision for promisory note				-		1,100,000
VI. Profit before tax				2,349,221		(1,512,868	)
VII. Tax expense:
Current tax				9,850		5,804
VIII. Profit/Loss for the period				2,339,370		(1,518,672	)
IX. Earning per equity share:
Basic				0.21		(0.14	)
Diluted				0.21		(0.14	)

Significant accounting policies		1 &2
Notes on financial statements		3 to 17

For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		Rediff Holdings Inc.
Registration no. 107824W

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

REDIFF HOLDINGS INC.

Notes to Financial Statements for the year ended 31.03.2014

NOTE 1: CORPORATE INFORMATION

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.

NOTE 2: ACCOUNTING POLICIES

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.

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.

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.

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

REDIFF HOLDINGS INC.

Notes to Financial Statements for the year ended 31.03.2014

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.

A provision for diminution in the value of investments is made in the books of accounts on a decline, other than temporary, in the value of such investments.

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 allow leave encashment. Provision has been made in the books for unavailed leave balance at the end of the year.

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.

Leases

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

REDIFF HOLDINGS INC.

Notes to Financial Statements for the year ended 31.03.2014

Deferred Income Taxes

Deferred Tax is recognized for all timing differences, subject to the consideration of prudence, applying the tax rates that have been subsequently enacted after the Balance Sheet date.

Rediff Holdings Inc.

Notes to Financial statements for the year ended March 31, 2014

NOTE 3: SHARE CAPITAL

	As at 31 March 2014				As at 31 March 2013
Particulars	Number		Value		Number		Value
Authorised
Equity Shares of $0.0001 each		11,333,000		1,133		11,333,000		1,133
Issued and Subscribed
Equity Shares of $0.0001 each		11,066,667		1,107		11,066,667		1,107
Total		11,066,667		1,107		11,066,667		1,107

3.1 Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at 31 March 2014				As at 31 March 2013
	Equity Shares				Equity Shares
Particulars	Number		Value		Number		Value
Shares outstanding at the beginning of the year		11,066,667		1,107		11,066,667		1,107
Shares issued during the year		-		-		-		-
Shares outstanding at the end of the year		11,066,667		1,107		11,066,667		1,107

3.2 Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

	As at 31 March 2014				As at 31 March 2013
Particulars	Number		Value		Number		Value
Rediff.com India Ltd. (Holding Company)		11,066,667		1,107		11,066,667		1,107
		11,066,667		1,107		11,066,667		1,107

3.3 Details of shares held by each shareholder holding more than 5% shares:

	As at 31 March 2014					As at 31 March 2013
Name of Shareholder	No. of Shares held		% of Holding			No. of Shares held		% of Holding
Rediff.com India Ltd. (Holding Company)		11,066,667		100	%		11,066,667		100	%
Total		11,066,667		100	%		11,066,667		100	%

3.4 Terms / rights attached to equity shares

In respect of every ordinary share, voting right shall be in the same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the company.

NOTE 4: RESERVES AND SURPLUS

	Current Year			Previous Year
Particulars	As at 31.03.2014			As at 31.03.2013
a. Securities Premium Account
Opening Balance		23,998,893			23,998,893
Add : Securities premium credited on Share issue		-			-
Less : Premium Utilised for various reasons		-			-
Closing Balance		23,998,893			23,998,893
b. Deficit
Opening balance		(20,965,632	)		(19,446,960	)
(+) Net profitFor the current year		2,339,370			(1,518,672	)
Closing Balance		(18,626,261	)		(20,965,632	)
Total		5,372,632			3,033,261

NOTE 5: OTHER NON CURRENT LIABILITES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Loans and advances from related parties
(Unsecured)
India Abroad Inc.		1,471,591		3,493,376
Rediff.com Inc.		3,435,313		3,405,314
Total		4,906,905		6,898,690

NOTE 6: TRADE PAYABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Trade payables		84,500		100,000
Total		84,500		100,000

NOTE 7: SHORT TERM PROVISIONS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Less: Advance tax and Tax deducted at source		-		-
Total		10,000		-

NOTE 8: NON-CURRENT INVESTMENTS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Trade Investments
Investment in Equity Instruments
In wholly Owned Subsidiary Companies (Fully Paid-up, Unquoted)
India Abroad Inc.		14,751,366		14,751,366
3,198,080 (Previous year 3,198,080) equity shares of $0.01per share
Less: Provision for diminution		10,231,676		10,231,676
		4,519,690		4,519,690
Rediff.com Inc.		870,846		870,846
Less: Provision for diminution		-		-
		870,846		870,846
In Other Companies (Fully Paid-up, Unquoted)
Runa Inc.		1,404,986		1,404,986
Less: Sale of investment		1,404,986		-
		-		1,404,986
Total		5,390,536		6,795,522

NOTE 9: LONG TERM LOANS AND ADVANCES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Loans and advances to related parties
Rediff.com India Ltd.		493,535		548,632
Value Communication Corporation		2,677,078		2,677,079
		3,170,613		3,225,711
Promissory notes		1,100,000		1,100,000
Less: Provision for dimination		1,100,000		1,100,000
		-		-
Total		3,170,613		3,225,711

NOTE 10: CASH AND CASH EQUIVALENTS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Balance with Banks - in Current Accounts
In Current accounts		1,199,083		10,849
In Deposit account		975		976
Total		1,200,058		11,825

NOTE 11: OTHER CURRENT ASSETS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Investment sale proceeds receivable		613,937		-
Total		613,937		-

NOTE 12: OTHER INCOME

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Profit on sale of investments		2,740,940		-
Excess Provisions Written Back		311		-
Total		2,741,251		-

NOTE 13: EMPLOYEE BENEFIT EXPENSE

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Salaries and Wages		210,517		209,895
Staff Welfare Expenses		13,127		12,875
Total		223,643		222,770

NOTE 14: OTHER EXPENSES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Travelling expenses		14,476		5,713
Professional charges		83,400		73,897
Telephone expenses		1,830		3,415
Insurance charges		-		32,431
Office expenses		-		5,444
Payroll Processing Charges		3,322		3,687
Misc Write off/back		-		-
Bank Charges		359		511
Total		168,387		190,098

NOTE 15: DIMINUTION IN THE VALUE OF INVESTMENTS

NOTE 16: DEFERRED TAX

As of March 31, 2014, the Company has net operating loss carry forwards of approx $ 4,014,000 for federal income tax purposes, which expire in the years 2020 to 2032. 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.

NOTE 17: PRIOR YEAR COMPARATIVES

Prior year figures have been regrouped / reclassified to confirm with the current year.

India Abroad Publications Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

AUDITORS

PATKAR & PENDSE

INDIA

DIRECTORS’ REPORT

The Board of Directors present the audited financial statements of India Abroad Publications Inc. for the year ended March 31, 2014.

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 $ 2,184,209/-. Gross Loss (before depreciation & amortization) is US $ 770,539 /-. After giving effect to other adjustments, net loss of US $ 779,504/- was carried to Balance Sheet.

DIVIDENDS

For the year ended March 31 2014, your Directors do not recommend any dividend.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

/s/ Ajit Balakrishnan

Director

Date: September 4, 2014

AUDITORS’ REPORT

The Board of Directors,

India Abroad Publications Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of INDIA ABROAD PUBLICATIONS INC., a wholly owned subsidiary of Rediff Holdings Inc. and incorporated in the United States, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss account for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Auditors’ Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

and

in the case of the Statement of Profit and Loss of the loss for the year ended on that date;

Report on Other Legal and Regulatory Requirements

As required by section 227(3) of the Act, we report that:

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

in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

the Balance Sheet and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

in our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in the notes to these financial statements.

For Patkar & Pendse

Chartered Accountants

F.R.No. 107824W

/s/ B.M. Pendse

Partner.

M.No. 32625

Place : Mumbai

Date : September 4, 2014

India Abroad Publications, Inc.

Balance Sheet as at March 31, 2014

Particulars	Note No	2013-2014 (USD)			2012-2013 (USD)

I. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share capital	3		31,981			31,981
(b) Reserves and surplus	4		(1,796,201	)		(1,016,697	)
(2) Non Current Liabilities
(a) Other non current liabilities	5		3,160,936			4,470,890
(3) Current Liabilities
(a) Trade payables	6		499,189			468,769
(b) Other current liabilities	7		306,267			270,149
Total			2,202,172			4,225,092
II. ASSETS
(1) Non-current assets
(a) Fixed assets	8
(i) Tangible assets			5,912			45,063
(b) Non-current investments	9		129,793			129,793
(2) Long Term Loans & Advances	10		1,537,005			3,499,212
(2) Current assets
(a) Trade receivables	11		248,484			311,577
(b) Cash and cash equivalents	12		113,664			77,243
(c) Short-term loans and advances	13		119,352			114,244
(d) Other current assets	14		47,962			47,962
Total			2,202,172			4,225,094
Significant accounting policies	1&2
Notes on financial statements	3 to 21

For Patkar & Pendse	For and on behalf of the board
Chartered Accountants	India Abroad Publications, Inc.

/s/ B.M. Pendse	/s/ Ajit Balakrishnan
Partner	Director

Mumbai, India	Mumbai, India
Date: September 4, 2014	Date: September 4, 2014

India Abroad Publications, Inc.

Statement of Profit and Loss for the year ended March 31, 2014

Particulars	Note No	2013-2014 (USD)			2012-2013 (USD)
		$			$
I. Revenue from operations	15		2,159,762			2,201,421
II. Other Income	16		24,447			13,302
			2,184,209			2,214,723
III. Expenses:
Employee benefit expense	17		951,173			890,063
Depreciation and amortization expense			6,096			12,560
Other expenses	18		2,003,575			2,206,862
			2,960,844			3,109,485
IV. Loss before tax			(776,635	)		(894,762	)

V. Tax expense
Current tax			2,869			-
VI. Loss for the year			(779,504	)		(894,762	)
VII. Earnings per equity share:
(1) Basic			(0.24	)		(0.28	)
(2) Diluted			(0.24	)		(0.28	)
Significant accounting policies	1&2
Notes on financial statements	3 to 21

For Patkar & Pendse	For and on behalf of the board
Chartered Accountants	India Abroad Publications, Inc.

/s/ B.M. Pendse	/s/ Ajit Balakrishnan
Partner	Director

Mumbai, India	Mumbai, India
Date: September 4, 2014	Date: September 4, 2014

INDIA ABROAD PUBLICATIONS INC.

Notes to Financial Statements for the year ended 31.03.2014

NOTE 1: CORPORATE INFORMATION

India Abroad Publications Inc (“the Company") was incorporated as a New York Corporation on June 26th, 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.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation of financial statements

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.

Revenue recognition

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

Revenue from advertisements is 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.

Fixed assets and depreciation

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

INDIA ABROAD PUBLICATIONS INC.

Notes to Financial Statements for the year ended 31.03.2014

Investments

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 allow leave encashment. Provision has been made in the books for unavailed leave balance at the end of the year.

Foreign currency transactions

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

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

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.

INDIA ABROAD PUBLICATIONS INC.

Notes to Financial Statements for the year ended 31.03.2014

Leases

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

Contingent Liabilities

These are disclosed by way of notes to 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.

India Abroad Publications, Inc.

Notes to Financial statements for the year ended March 31, 2014

(Amt. in USD)

	Current Year				Previous Year
	As at 31.03.2014				As at 31.03.2013
Particulars	Number		Value		Number		Value
NOTE 3: SHARE CAPITAL
Authorised
Equity Shares of $0.01 each		6,000,000		60,000		6,000,000		60,000
Issued, subscribed and paid up
Equity Shares of $0.01 each		3,198,080		31,981		3,198,080		31,981
Total		3,198,080		31,981		3,198,080		31,981

3.1 Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at 31 March 2014				As at 31 March 2013
	Equity Shares				Equity Shares
Particulars	Number		Value		Number		Value
Shares outstanding at the beginning and end of the year		3,198,080		31,981		3,198,080		31,981
Shares issued during the year		-		-		-		-
Shares outstanding at the end of the year		3,198,080		31,981		3,198,080		31,981

3.2 Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

	As at 31 March 2014				As at 31 March 2013
Particulars	Number		Value		Number		Value
Rediff Holding Inc. (Holding Company)		3,198,080		31,981		3,198,080		31,981
Total		3,198,080		31,981		3,198,080		31,981

3.3 Details of shares held by each shareholder holding more than 5% shares:

	As at 31 March 2014					As at 31 March 2013
Name of Shareholder	No. of Shares held		% of Holding			No. of Shares held		% of Holding
Rediff Holding Inc. (Holding Company)		3,198,080		100	%		3,198,080		100	%
Total		3,198,080		100	%		3,198,080		100	%

3.4 Terms / rights attached to equity shares

In respect of every ordinary share, voting right shall be in the same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the company.

NOTE 4: RESERVES AND SURPLUS

	Current Year			Previous Year
Particulars	As at 31.03.2014			As at 31.03.2013
a. Securities Premium Account
Opening Balance		212,446			212,446
Addition during the year		-			-
Closing Balance		212,446			212,446
b. Statement of profit and loss
Opening balance		(1,229,143	)		(334,381	)
Deficit for the year		(779,504	)		(894,762	)
Closing Balance		(2,008,647	)		(1,229,143	)
Total		(1,796,201	)		(1,016,697	)

NOTE 5: OTHER NON CURRENT LIABILITIES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Other payables to related parties: (Unsecured)
Rediff.com India Ltd.		1,363,823		2,789,692
Value Communication Corporation		68,329		68,328
India In New York Inc.		1,728,784		1,612,870
Total		3,160,936		4,470,890

NOTE 6: TRADE PAYABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Trade Payables		499,189		468,769
Total		499,189		468,769

NOTE 7: OTHER CURRENT LIABILITIES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Advances from customers		70,020		51,505
Income received in advance (Unearned revenue)		236,248		218,644
Total		306,267		270,149

India Abroad Publications, Inc.

Notes to Financial statements for the year ended March 31, 2014

(Amt. in USD)

NOTE 8: FIXED ASSETS

	Gross Block											Accumulated Depreciation								Net Block
Fixed Assets	Balance as at 1 April 2013		Additions		Acquired through business combinations			Deletions		Balance as at 31 March 2014		Balance as at 1 April 2013		Depreciation charge for the year		Deletions		Balance as at 31 March 2013		Balance as at 31 March 2014		Balance as at 31 March 2013
(i) Tangible Assets
Machinery and Equipment		192,983		6,325		-			73,560		125,748		192,839		3,518		73,560		122,797		2,951		144
Furniture and fixtures		43,607		-		-			25,910		17,697		38,068		2,578		25,910		14,736		2,961		5,539
Telephone System		75,564		-		-			75,564		-		75,564				75,564		-		-		-
Office Renovation		155,796		-		-			155,796		-		155,796				155,796		-		-		-
Subtotal		467,950		6,325		-			330,830		143,445		462,267		6,096		330,830		137,533		5,912		5,683
(ii) CWIP		39,380		-					39,380		-		-		-		-		-		-		39,380
Subtotal		39,380		-					39,380		-		-		-		-		-		-		39,380
Total		507,330		6,325					370,210		143,445		462,267		6,096		330,830		137,533		5,912		45,063
Previous year's figures		505,237		5,420		(3,327	)				507,330		449,928		12,339		-		462,267		45,061		-

India Abroad Publications, Inc.

Notes to Financial statements for the year ended March 31, 2014

NOTE 9: NON-CURRENT INVESTMENTS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Trade Investments (At Cost)
Investment in Equity Instruments
In wholly-owned Subsidiary Companies (Fully Paid-up, Unquoted)
India Abroad Publications (Canada) Inc.		104,793		104,793
162,974 (P.Y. 162,974) shares of no par value
India in New York Inc.		25,000		25,000
100 (P.Y. 100) shares of no par value
Total		129,793		129,793

NOTE 10: LONG TERM LOANS AND ADVANCES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Loans and advances to related parties
(Unsecured, Considered good)
Rediff Holding Inc.		745,319		2,717,526
India Abroad Publications (Canada) Inc.		791,686		781,686
Total		1,537,005		3,499,212

NOTE 11: TRADE RECEIVABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
(Unsecured, Considered good)
Debts outstanding over six months from the due date of payment		52,763		307,077
Less: Provision for doubtful debts		52,763		307,077
Others		248,484		311,577
Less: Provision for doubtful debts		-		-
		248,484		311,577
Total		248,484		311,577

NOTE 12: CASH AND CASH EQUIVALENTS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Balance with Banks - in Current Accounts
In Current accounts		113,664		77,243
Total		113,664		77,243

NOTE 13: SHORT TERM LOANS AND ADVANCES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Advances recoverable in cash or kind
(Unsecured, Considered good)
Advances and Deposits		87,387		87,387
Prepaid Expenses		25,115		22,007
Advance to Employees		6,850		4,850
Total		119,352		114,244

Interest free loans payable on demand

NOTE 14: OTHER CURRENT ASSETS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Unamortised Expenditure
(to the extent not written off or adjusted)
Goodwill for purchase of India Abroad Publications (Canada) Inc.		47,962		47,962
Total		47,962		47,962

NOTE 15: REVENUE FROM OPERATIONS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Subscription Income		197,878		236,278
Classified Income		290,461		370,175
Display Income		1,664,833		1,594,090
Retail Sale		6,590		878
Total		2,159,762		2,201,421

NOTE 16: OTHER INCOME

Particulars	Current Year		Previous Year
	As at 31.03.2014		As at 31.03.2013
Interest		2		188
Royalty		4,485		5,930
Misc Income		9,459		7,184
Excess Provisions Written Back		10,501		-
Total		24,447		13,302

NOTE 17: EMPLOYEE BENEFIT EXPENSE

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Salaries and Allowances		793,517		752,283
Staff Welfare Expenses		157,656		137,780
Total		951,173		890,063

NOTE 18: OTHER EXPENSES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Production Expenses		725,931		783,638
Editorial Expenses		105,468		131,267
Circulation Expenses		482,066		507,271
Advertising and Promotion		69,864		148,768
Rent		213,998		204,959
IA Person Of the Year Expenses		169,218		142,273
Office Expenses		55,420		53,679
Bank Charges		42,723		58,628
Telephone and Telegrams		18,043		23,683
Electricity Expenses		20,418		20,879
Professional fees		-		2,270
Provision for doubtful debts		-		22,702
Internet-bandwidth cost		7,774		7,980
Exchange loss		47,024		91,899
Dues and Subscriptions		6,248		6,966
Miscelleneous Expenses Written-Off		39,380		-
Total		2,003,575		2,206,862

NOTE 19: OPERATING LEASES

The Company leases office space and a Guest House for employees, under operating leases. Operating lease expense that has been included in the determination of the net profit is as follows:

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Leased Premises		213,998		204,959
Total		213,998		204,959

NOTE 20: EARNINGS IN FOREIGN CURRENCY

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Advertising Revenue		-		253,852
Total		-		253,852

NOTE 21: PRIOR YEAR COMPARATIVES

Prior year figures have been regrouped / reclassified to confirm with the current year.

India in New York Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

AUDITORS

PATKAR & PENDSE

INDIA

DIRECTORS’ REPORT

The Board of Directors present the audited financial statements of India in New York Inc. for the year ended March 31, 2014.

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 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$ 103,830/- and the net profit of US $ 103,830/- was carried to Balance Sheet.

DIVIDENDS

With a view to conserve resources, your Directors do not recommend any dividend.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

/s/ Ajit Balakrishnan

Director

Date: September 4, 2014 24, 2012

AUDITORS’ REPORT

The Members,

India In New York Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of INDIA IN NEW YORK INC., a wholly owned subsidiary of India Abroad Publications Inc. incorporated in the United States, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss account for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Auditors’ Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

and

in the case of the Statement of Profit and Loss of the profit for the year ended on that date;

Report on Other Legal and Regulatory Requirements

As required by section 227(3) of the Act, we report that:

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

in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

The Balance Sheet and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

In our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in the notes to these financial statements.

For Patkar & Pendse

Chartered Accountants

F.R.No. 107824W

/s/ B.M. Pendse

Partner.

M.No. 32625

Place : Mumbai

Date : September 4, 2014

India In New York, Inc.

Balance Sheet as at March 31, 2014

Particulars	Note No	2013-2014 (USD)		2012-2013 (USD)
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share capital	3		-		-
(b) Reserves and surplus	4		1,774,593		1,670,763
(2) Current Liabilities
(a) Other current liabilities	5		12,247		14,546
			1,786,840		1,685,309
II. ASSETS
(1) Non-Current assets
Long term loans & advances	6		1,728,783		1,612,868
(2) Current assets
(a) Trade receivables	7		31,783		64,704
(b) Cash and cash equivalents	8		26,274		7,737
			1,786,840		1,685,309

Significant accounting policies	1 & 2
Notes on financial statements	3 to 11

For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		India In New York, Inc.
Registration no. 107824W

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

India In New York, Inc.

Statement of Profit and Loss for the year ended March 31, 2014

Particulars	Note No	2013-2014 (USD)		2012-2013 (USD)
I. Revenue from operations	9		103,830		111,332
Total			103,830		111,332
II. Expenses:
Other expenses	10		-		67
Total Expenses			-		67
III. Profit for the period			103,830		111,265
IV. Earning per equity share:
(1) Basic			1,038		1,113
(2) Diluted			1,038		1,113

Significant accounting policies	1 & 2
Notes on financial statements	3 to 11

For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		India In New York, Inc.
Registration no. 107824W

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

INDIA IN NEW YORK, INC.

Notes to Financial Statements for the year ended 31.03.2014

NOTE 1: CORPORATE INFORMATION

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 publications catering to the Asian-American community focusing on India and the global Indian community.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation of financial statements

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.

Revenue recognition

Revenues comprise of revenues from advertisements.

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

Foreign currency transactions

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

INDIA IN NEW YORK, INC.

Notes to Financial Statements for the year ended 31.03.2014

Income taxes

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

India In New York, Inc.

Notes to Financial Statements for the year ended March 31, 2014

(Amt. in USD)

NOTE 3: SHARE CAPITAL

	As at 31 March 2014				As at 31 March 2013
Particulars	Number		Value		Number		Value
Authorised
Equity Shares of no par value		200		-		200		-
Issued and Subscribed
Equity Shares of no par value		100		-		100		-
		100		-		100		-

3.1 Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at 31 March 2014				As at 31 March 2013
	Equity Shares				Equity Shares
Particulars	Number		Value		Number		Value
Shares outstanding at the beginning of the year		100		-		100		-
Shares issued during the year		-		-		-		-
Shares outstanding at the end of the year		100		-		100		-

3.2 Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

	As at 31 March 2014				As at 31 March 2013
Particulars	Number		Value		Number		Value
India Abroad Inc. (Holding Company)		100		-		100		-
		100		-		100		-

3.3 Details of shares held by each shareholder holding more than 5% shares:

	As at 31 March 2014					As at 31 March 2013
Name of Shareholder	No. of Shares held		% of Holding			No. of Shares held		% of Holding
India Abroad Inc. (Holding Company)		100		100	%		100		100	%
		100		100	%		100		100	%

3.4 Terms / rights attached to equity shares

In respect of every ordinary share, voting right shall be in thes same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the Company.

NOTE 4: RESERVES AND SURPLUS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
a) Securities Premium Account		25,000		25,000
b) Surplus
Opening balance		1,645,763		1,534,498
(+) Net Profit for the current year		103,830		111,265
Closing Balance		1,749,593		1,645,763
		1,774,593		1,670,763

India In New York, Inc.

Notes to Financial Statements for the year ended March 31, 2014

(Amt. in USD)

NOTE 5: OTHER CURRENT LIABILITIES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Deposits received from customers		12,247		14,546
(Unsecured)
		12,247		14,546

NOTE 6: LONG TERM LOANS AND ADVANCES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Loans and advances to related parties
(Unsecured, Considered good)
India Abroad Inc. (Holding Company)		1,728,783		1,612,868
		1,728,783		1,612,868

NOTE 7: TRADE RECEIVABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
(Unsecured, Considered good)
Debts outstanding over six months from the due date of payment	-		-
Others		31,783		64,704
		31,783		64,704

NOTE 8: CASH AND CASH EQUIVALENTS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Balances with Banks - Current accounts
Citibank		26,274		7,737
		26,274		7,737

NOTE 9: REVENUE FROM OPERATIONS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Display income		103,830		111,332
		103,830		111,332

NOTE 10: OTHER EXPENSES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Paper and Printing Expenses		-		67
		-		67

NOTE 11: PRIOR YEAR COMPARATIVES

Prior year figures have been regrouped / reclassified to confirm with the current year.

India Abroad Publications (Canada), Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

AUDITORS

PATKAR & PENDSE

INDIA

DIRECTORS’ REPORT

The Board of Directors present the audited financial statements of India Abroad Publications (Canada), Inc. for the year ended March 31, 2014.

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 Net profit of C$ 50,428/- was carried to Balance Sheet.

DIVIDENDS

For the year ended March 31, 2014, your Directors do not recommend any dividend.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

/s/ Ajit Balakrishnan

Director

Date: September 4, 2014

AUDITORS’ REPORT

The Members,

India Abroad Publications (Canada) Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of INDIA ABROAD PUBLICATIONS (CANADA) INC., a Company incorporated in the United States, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss account for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Auditors’ Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

and

in the case of the Statement of Profit and Loss of the profit for the year ended on that date;

Report on Other Legal and Regulatory Requirements

As required by section 227(3) of the Act, we report that:

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

in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

the Balance Sheet and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

in our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in the notes to these financial statements.

For Patkar & Pendse

Chartered Accountants

F.R.No. 107824W

/s/ B.M. Pendse

Partner.

M.No. 32625

Place : Mumbai

Date : September 4, 2014

India Abroad Publications (Canada), Inc.

Balance Sheet as at March 31, 2014

Particulars	Note No		2013-2014 (C$)			2012-2013 (C$)
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share capital		3		-			-
(b) Reserves and surplus		4		(673,802	)		(724,230	)
(2) Non Current Liabilities
(a) Other non current liabilities		5		676,065			666,065
(3) Current Liabilities
(a) Trade payables		6		15,356			114,655
(b) Other current liabilities		7		(17,846	)		(17,465	)
				(227	)		39,025
II. ASSETS
(1) Non-current assets
(a) Fixed assets
Tangible assets		8		-			-
(1) Current assets
(a) Trade receivables		9		(1,134	)		7,525
(b) Cash and cash equivalents		10		908			31,500
				(227	)		39,025
Significant accounting policies		1 & 2
Notes on financial statements		3 to 15

For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		India Abroad Publications (Canada), Inc.

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

India Abroad Publications (Canada), Inc.

Statement of Profit and Loss for the year ended March 31, 2014

Particulars	Note No		2013-2014 (C$)		2012-2013 (C$)
I. Revenue from operations		11		-		68,685
II. Other Income		12		53,543		3,135
				53,543		71,820
II. Expenses:
Employee benefit expense		13		-		114,210
Other expenses		14		3,115		214,770
				3,115		328,980
III. Profit /(Loss) for the year				50,428		(257,160	)
IV. Earning per equity share:
(1) Basic				0.31		(1.58	)
(2) Diluted				0.31		(1.58	)

Significant accounting policies		1 & 2
Notes on financial statements		3 to 15

For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		India Abroad Publications (Canada), Inc.

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

100

INDIA ABROAD PUBLICATIONS (Canada) INC.

Notes to Financial Statements for the year ended 31.03.2014

NOTE 1: CORPORATE INFORMATION

India Abroad Publications (Canada) Inc (“the Company") was incorporated in Canada on December 20th, 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.

NOTE 2: ACCOUNTING POLICIES

Basis of preparation of financial statements

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.

Revenue recognition

Revenues comprise from subscription to the India Abroad weekly news paper and income from advertisements. Revenue from advertisements is 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.

Fixed assets and depreciation

101

INDIA ABROAD PUBLICATIONS (Canada) INC.

Notes to Financial Statements for the year ended 31.03.2014

Furniture and fixtures	7 years
Office equipment	5 years

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.

Foreign currency transactions

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

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.

102

India Abroad Publications (Canada), Inc.

Notes to Financial statements for the year ended March 31, 2014

(Amt. in C$)

NOTE 3: SHARE CAPITAL

	Current Year				Previous Year
Particulars	As at 31.03.2014				As at 31.03.2013
	Number		Value		Number		Value
Authorised
Equity Shares of no par value		-		-		-		-
Issued and Subscribed
Equity Shares of no par value		162,974		-		162,974		-
		162,974		-		162,974		-

3.1 Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at 31.03.2014				As at 31.03.2013
Particulars	Equity Shares				Equity Shares
	Number		Value		Number		Value
Shares outstanding at the beginning of the year		162,974		-		162,974		-
Shares issued during the year		-		-		-		-
Shares outstanding at the end of the year		162,974		-		162,974		-

3.2 Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

	As at 31.03.2014				As at 31.03.2013
Particulars	Number		Value		Number		Value
India Abroad Inc. (Holding Company)		162,974		-		162,974		-
		162,974		-		162,974		-

3.3 Details of shares held by each shareholder holding more than 5% shares:

	As at 31.03.2014					As at 31.03.2013
Name of Shareholder	No. of Shares held		% of Holding			No. of Shares held		% of Holding
India Abroad Inc. (Holding Company)		162,974		100	%		162,974		100	%
		162,974		100	%		162,974		100	%

3.4 Terms / rights attached to equity shares

In respect of every ordinary share, voting right shall be in the same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the company.

NOTE 4: RESERVES AND SURPLUS

	Current Year			Previous Year
Particulars	As at 31.03.2014			As at 31.03.2013
Particulars
a. Securities Premium Account
Opening Balance		142,974			142,974
Add : Securities premium credited on Share issue		-			-
Less : Premium Utilised for various reasons		-			-
Closing Balance		142,974			142,974
b. Deficit
Opening balance		(867,204	)		(610,044	)
(+) (Net Loss) For the current year		50,428			(257,160	)
Closing Balance		(816,776	)		(867,204	)
		(673,802	)		(724,230	)

103

NOTE 5: OTHER NON CURRENT LIABILITIES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Payable to related parties : (Unsecured)
India Abroad Publication inc.		676,065		666,065
		676,065		666,065

NOTE 6: TRADE PAYABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Trade Payables		15,356		114,655
		15,356		114,655

NOTE 7: OTHER CURRENT LIABILITIES

	Current Year			Previous Year
Particulars	As at 31.03.2014			As at 31.03.2013
Advances from customers		(17,846	)		(17,465	)
		(17,846	)		(17,465	)

104

India Abroad Publications (Canada), Inc.

Notes to Financial statements for the year ended March31, 2014

(Amt. in C$)

NOTE 8: FIXED ASSETS

Fixed Assets

Gross Block

Accumulated Depreciation

Net Block

Balance
as at 1
April
2013

Additions/
(Disposals)

Acquired
through
business
combinations

Revaluations/
(Impairments)

Balance
as at 31
March
2014

Balance
as at 1
April
2013

Depreciation
charge for
the year

Adjustment
due to
revaluations

On
disposals

Balance
as at 31
March
2014

Balance
as at 31
March
2013

Tangible Assets

Machinery and Equipment

Furniture and Fixtures

Total

Previous year figures

105

NOTE 9: TRADE RECEIVABLES

	Current Year			Previous Year
Particulars	As at 31.03.2014			As at 31.03.2013
(Unsecured, Considered good)
Debts outstanding over six months from the due date of payment		-			-
Others		(1,134	)		7,525
		(1,134	)		7,525

NOTE 10: CASH AND CASH EQUIVALENTS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Balances with Banks
In current accounts		908		31,500
		908		31,500

NOTE 11: REVENUE FROM OPERATIONS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Subscription Income		-		15,194
Classified Income		-		550
Display Income		-		52,583
Retail Sale		-		358
		-		68,685

NOTE 12: OTHER INCOME

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Excess provisions written back
i) Printing		28,000
ii) Marketing Commission		25,543		3135
		53,543		3,135

NOTE 13: EMPLOYEE BENEFIT EXPENSE

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Salaries and Wages		-		114,210
		-		114,210

106

NOTE 14: OTHER EXPENSES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Printing		-		124,904
Mailing & Distribution		-		65,476
Editorial Expenses		-		11,654
Office Expenses		1,207		8,061
Bank charges		-		25
Telephone Expenses		664		1,310
Professional Fees		1,243		2,500
Miscelleneous Expenses		-		840
		3,115		214,770

NOTE 15: PRIOR YEAR COMPARATIVES

Prior year figures have been regrouped / reclassified to confirm with the current year.

107

Rediff.com Inc.

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

AUDITORS

PATKAR & PENDSE

INDIA

DIRECTORS’ REPORT

The Board of Directors present the audited financial statements of Rediff.com Inc. for the year ended March 31, 2014.

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 $ 475,220/- Gross loss before taxes is US $ 86,875/-. After giving effect to other adjustments, the net loss of US $ 88,030/- was carried to Balance Sheet.

DIVIDENDS

With the view to conserve resources, your Directors do not recommend any dividend.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

/s/ Ajit Balakrishnan

Director

Date: September 4, 2014

108

AUDITORS’ REPORT

The Members,

Rediff.Com Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of REDIFF.COM INC., a wholly owned subsidiary of Rediff Holdings Inc. incorporated in the United States, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss account for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the Accounting Standards referred to in the notes to these financial statements.This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

109

Opinion

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

and

in the case of the Statement of Profit and Loss of the loss for the year ended on that date;

Report on Other Legal and Regulatory Requirements

As required by section 227(3) of the Act, we report that:

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

in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

the Balance Sheet and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

in our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in the notes to these financial statements.

For Patkar & Pendse

Chartered Accountants

F.R.No. 107824W

/s/ B.M. Pendse

Partner.

M.No. 32625

Place : Mumbai

Date : September 4, 2014

110

Rediff.com Inc.

Balance Sheet as at March 31, 2014

Particulars	Note No	2013-2014 (USD)	2012-2013 (USD)
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share Capital	3	5	5
(b) Reserves and Surplus	4	5,759,241	5,847,271
(2) Current Liabilities
(a) Trade payables	5	52,682	46,000
		5,811,928	5,893,276
II. ASSETS
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets	6	-	-
(b) Long-term loans and advances	7	5,724,402	5,743,981
(2) Current assets
(a) Trade receivables	8	72,749	137,256
(b) Cash and cash equivalents	9	14,777	12,039
		5,811,928	5,893,276

Significant accounting policies	1&2
Notes on financial statements	3 to 13


For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		Rediff.com Inc.
Registration no. 107824W

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

111

Rediff.com Inc.

Statement of Profit and Loss for the year ended March 31, 2014

	Note	2013-2014		2012-2013
Particulars	No	(USD)		(USD)
I. Revenue from operations	10	475,220		744,030
Total Revenue		475,220		744,030
II. Expenses:
Employee benefit expense	11	491,845		454,381
Other expenses	12	70,250		107,852
Total Expenses		562,095		562,233
III. Loss for the year		(86,875	)	181,797
IV. Tax expense:
(1) Current tax		1155		3,464
V. Loss for the year		(88,030	)	178,333
IV. Earning per equity share:
(1) Basic		(17.61	)	35.67
(2) Diluted		(17.37	)	36.36

Significant accounting policies	1&2
Notes on financial statements	3 to 13

For Patkar & Pendse		For and on behalf of the board
Chartered Accountants		Rediff.com Inc.
Registration no. 107824W

/s/ B.M. Pendse		/s/ Ajit Balakrishnan
Partner		Director
M. No. 32625

Mumbai, India		Mumbai, India
Date: September 4, 2014		Date: September 4, 2014

112

Rediff.com Inc.

Notes to Financial Statements for the year ended 31.03.2014

NOTE 1: CORPORATE INFORMATION

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.

NOTE 2: ACCOUNTING POLICIES

Basis of preparation of financial statements

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.

Revenue recognition

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

113

Rediff.com Inc.

Notes to Financial Statements for the year ended 31.03.2014

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.

Fixed assets and depreciation

Furniture and fixtures	7 years
Computer equipment	3 years

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.

114

Rediff.com Inc.

Notes to Financial statements for the year ended March 31, 2014

(Amt. in USD)

NOTE 3: SHARE CAPITAL

	Current Year				Previous Year
	As at 31.03.2014				As at 31.03.2013
Particulars	Number		Value		Number		Value
Authorised
Equity Shares of $0.001 each		10,000		10		10,000		10

Issued and Subscribed
Equity Shares of $0.001 each		5,000		5		5,000		5
		5,000		5		5,000		5

3.1 Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at 31.03.2014				As at 31.03.2013
	Equity Shares				Equity Shares
Particulars	Number		Value		Number		Value
Shares outstanding at the beginning of the year		5,000		5		5,000		5
Shares issued during the year		-		-		-		-
Shares outstanding at the end of the year		5,000		5		5,000		5

3.2 Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

	As at 31.03.2014				As at 31.03.2013
Particulars	Number		Value		Number		Value
Rediff Holding Inc. (Holding company)		5,000		5		5,000		5
		5,000		5		5,000		5

3.3 Details of shares held by each shareholder holding more than 5% shares:

	As at 31.03.2014					As at 31.03.2013
Name of Shareholder	No. of Shares held		% of Holding			No. of Shares held		% of Holding
Rediff Holding Inc. (Holding company)		5,000		100	%		5,000		100	%
		5,000		100	%		5,000		100	%

3.4 Terms / rights attached to equity shares

In respect of every ordinary share, voting right shall be in the same proportion as the capital paid upon such Ordinary share bears to the total paid up ordinary capital of the company.

115

Rediff.com Inc.

Notes to Financial statements for the year ended March 31, 2014

(Amt. in USD)

NOTE 4: RESERVES AND SURPLUS

	Current Year			Previous Year
Particulars	As at 31.03.2014			As at 31.03.2013
a. Securities Premium Account
Opening Balance		3,332,145			3,332,145
Add : Securities premium credited on Share issue		-			-
Less : Premium Utilised for various reasons		-			-
Closing Balance		3,332,145			3,332,145
b. Surplus
Opening balance		2,515,126			2,336,793
(-) Loss for the current year		(88,030	)		178,333
Closing Balance		2,427,096			2,515,126
Total		5,759,241			5,847,271

NOTE 5: TRADE PAYABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Micro, Small and Medium Enterprises	-		-
Others		52,682		46,000
		52,682		46,000

Rediff.com Inc.

Notes to Financial statements for the year ended 31.03.2014

(Amt. in USD)

NOTE 6: FIXED ASSETS

	Gross Block											Accumulated Depreciation											Net Block
Fixed Assets	Balance as at 1 April 2013		Additions/ (Disposals)			Acquired through business combinations		Revaluations/ (Impairments)		Balance as at 31 March 2014		Balance as at 1 April 2013		Depreciation charge for the year			Adjustment due to revaluations		On disposals		Balance as at 31 March 2014		Balance as at 1 April 2013		Balance as at 31 March 2014
Tangible Assets
Computer Equipment		556,590		(556,590	)		-		-		-		556,590		(556,590	)		-		-		-		-		-
Furniture and Fixtures		44,423		(44,423	)		-		-		-		44,423		(44,423	)		-		-		-		-		-
Total		601,013		(601,013	)		-		-		-		601,013		(601,013	)		-		-		-		-		-

116

Rediff.com Inc.

Notes to Financial statements for the year ended March 31, 2014

(Amt. in USD)

NOTE 7: LONG TERM LOANS AND ADVANCES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Loans and advances to related parties
(Unsecured, Considered good)
Rediff.com India Ltd.		1,562,818		1,562,818
Rediff Holding Inc.		3,435,314		3,405,314
India Abroad Publications Inc.		726,270		775,849
		5,724,402		5,743,981

NOTE 8: TRADE RECEIVABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
(Unsecured, Considered good)
Debts outstanding over six months from the due date of payment		2,142		167,004
Less: Provision for doubtful debts		2,142		167,004
		-		-
Others		72,749		137,256
Less: Provision for doubtful debts		-		-
		72,749		137,256
		72,749		137,256

NOTE 9: CASH AND CASH EQUIVALENTS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Balance with Banks - Current Account
Citibank		14,777		12,039
		14,777		12,039

NOTE 10: REVENUE FROM OPERATIONS

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Display Income		475,220		744,030
		475,220		744,030

NOTE 11: EMPLOYEE BENEFIT EXPENSE

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Salaries and Allowances		491,845		454,381
		491,845		454,381

117

Rediff.com Inc.

Notes to Financial statements for the year ended March 31, 2014

(Amt. in USD)

NOTE 12: OTHER EXPENSES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Travelling expenses		-		1,355
Payroll processing fee		3,691		3,976
Insurance charges		64,564		75,801
Office expenses		1,995		2,624
Provision for doubt ful debts		-		24,096
		70,250		107,852

NOTE 13: PRIOR YEAR COMPARATIVES

Prior year figures have been regrouped / reclassified to confirm with the current year.

118

Value Communications Corporation

BOARD OF DIRECTORS

Mr. Ajit Balakrishnan

AUDITORS

PATKAR & PENDSE

INDIA

DIRECTORS’ REPORT

The Board of Directors present the audited financial statements of Value Communication Corporation Inc. for the year ended on March 31, 2014.

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.

Since we have no business activity, we did not incur any expenses during the year.

DIVIDENDS

In view of the losses, your Directors do not recommend any dividend.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

/s/ Ajit Balakrishnan

Director

Date: September 4, 2014

119

AUDITORS’ REPORT

The Members,

Value Communications Corporation

Report on the Financial Statements

We have audited the accompanying financial statements of VALUE COMMUNICATIONS CORPORATION, a wholly owned subsidiary of Rediff.com India Limited incorporated in the United States, (“the Company”), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss account for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Auditors’ Responsibility

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

120

Opinion

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

and

in the case of the Statement of Profit and Loss of the status for the year ended on that date;

Report on Other Legal and Regulatory Requirements

As required by section 227(3) of the Act, we report that:

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

in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books

the Balance Sheet and Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

in our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in the notes to these financial statements.

For Patkar & Pendse

Chartered Accountants

F.R.No. 107824W

/s/ B.M. Pendse

Partner.

M.No. 32625

Place : Mumbai

Date : September 4, 2014

121

Value Communications Corporation

Balance Sheet as at 31st March, 2014

Particulars	Note No		2013-2014 (USD)			2012-2013 (USD)
I. EQUITY AND LIABILITIES
(1) Shareholder's Funds
(a) Share Capital		3		-			-
(b) Reserves and Surplus		4		(2,483,273	)		(2,483,273	)
(2) Non-Current Liabilities
Other non-current liabilities		5		2,677,079			2,677,079
(3) Current Liabilities
Trade payables		6		14,369			14,369
				208,175			208,175
II. ASSETS
(1) Non-Current assets
Long-term loans and advances		7		208,175			208,175
				208,175			208,175
Significant accounting policies		1 & 2
Notes on financial statements		3 to9

For Patkar & Pendse	For and on behalf of the board
Chartered Accountants	Value Communications Corporation
Registration no. 107824W

/s/ B.M. Pendse	/s/ Ajit Balakrishnan
Partner	Director
M. No. 32625

Mumbai, India	Mumbai, India
Date: September 4, 2014	Date: September 4, 2014

122

Value Communications Corporation

Profit and Loss Statement for the year ended 31st March, 2014

Particulars

Note
No

2013-2014
(USD)

2012-2013
(USD)

I. Revenue from operations

Total Revenue

II. Expenses:

Total Expenses

III. Profit for the period

IV. Earning per equity share:

(1) Basic

(2) Diluted

Significant accounting policies

1 & 2

Notes on financial statements

3 to9

	For and on behalf of the board
For Patkar & Pendse	Value Communications Corporation
Chartered Accountants
Registration no. 107824W

/s/ B.M. Pendse	/s/ Ajit Balakrishnan
Partner	Director
M. No. 32625

Mumbai, India	Mumbai, India
Date: September 4, 2014	Date: September 4, 2014

123

Value Communications Corporation

Notes to Financial Statements for the year ended 31.03.2014

NOTE 1: CORPORATE INFORMATION

Value Communications Corporation (“ValuCom” or the “Company”) is a wholly-owned subsidiary of Rediff.com India, Ltd (“Rediff”). ValuCom provides internet-based marketing of prepaid long-distance service to over 200 countries worldwide. The Company markets its services to consumers and small businesses by packaging long-distance service from large telecommunication companies into Prepaid Identification Numbers (“PINs”) and prepaid calling cards for sale on its Internet site or at its call-in center.

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.

NOTE 2: ACCOUNTING POLICIES

Basis of preparation of financial statements

Fixed assets and depreciation

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

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

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

124

Value Communications Corporation

Notes to Financial Statements for the year ended 31.03.2014

Foreign currency transactions

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

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

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.

Deferred Income Taxes

Deferred Tax is recognized for all timing differences, subject to the consideration of prudence, applying the tax rates that have been subsequently enacted after the Balance Sheet date.

Leases

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

125

Value Communications Corporation

Notes to Financial statements for the year ended 31.03.2014

(Amt. in USD)

NOTE 3: SHARE CAPITAL

	As at 31 March 2014				As at 31 March 2013
Particulars	Number		Value		Number		Value
Authorised
Equity Shares of no par value		20,000,000		-		20,000,000		-
Issued and Subscribed
Equity Shares of no par value		12,000,000		-		12,000,000		-
		12,000,000		-		12,000,000		-

3.1 Reconciliation of shares outstanding at the beginning and at the end of the reporting period:

	As at 31 March 2014				As at 31 March 2013
	Equity Shares				Equity Shares
Particulars	Number		Value		Number		Value
Shares outstanding at the beginning of the year		12,000,000		-		12,000,000		-
Shares issued during the year		-		-		-		-
Shares outstanding at the end of the year		12,000,000		-		12,000,000		-

3.2 Shares held by Holding/Ultimate Holding Company and/or its subsidiaries/associates:

	As at 31 March 2014				As at 31 March 2013
Particulars	Number		Value		Number		Value
Rediff.com India Ltd. (Holding Company)		12,000,000		-		12,000,000		-
		12,000,000		-		12,000,000		-

3.3 Details of shares held by each shareholder holding more than 5% shares:

	As at 31 March 2014					As at 31 March 2013
Name of Shareholder	No. of Shares held		% of Holding			No. of Shares held		% of Holding
Rediff.com India Ltd. (Holding Company)		12,000,000		100	%		12,000,000		100	%
		12,000,000		100	%		12,000,000		100	%

NOTE 4: RESERVES AND SURPLUS

	Current Year			Previous Year
Particulars	As at 31.03.2014			As at 31.03.2013
a. Securities Premium Account
Opening Balance		7,146,432			7,146,432
Add : Securities premium credited on Share issue		-			-
Less : Premium Utilised for various reasons		-			-
Closing Balance		7,146,432			7,146,432
b. Deficit
Opening balance		(9,629,705	)		(9,629,705	)
(+) Net Profit for the current year		-			-
Closing Balance		(9,629,705	)		(9,629,705	)
		(2,483,273	)		(2,483,273	)

126

Value Communications Corporation

Notes to Financial statements for the year ended 31.03.2014

(Amt. in USD)

NOTE 5: OTHER NON CURRENT LIABILITES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Loans and advances from related parties
(Unsecured)
Rediff Holdings Inc		2,677,079		2,677,079
		2,677,079		2,677,079

NOTE 6: TRADE PAYABLES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Micro, Small and Medium Enterprises	-		-
Others		14,369		14,369
		14,369		14,369

NOTE 7: LONG TERM LOANS AND ADVANCES

	Current Year		Previous Year
Particulars	As at 31.03.2014		As at 31.03.2013
Loans and advances to related parties
(Unsecured, Considered good)
Rediff.com India Ltd		139,846		139,846
India Abroad Inc.		68,329		68,329
		208,175		208,175

NOTE 8: DEFERRED INCOME TAX

As of March 31, 2014, the Company has net operating loss carry forwards of approx US$ 3,033,000 for federal income tax purposes, which expire in the years 2021 to 2031. 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.

NOTE 9: PRIOR YEAR COMPARATIVES

Prior year figures have been regrouped / reclassified to confirm with the current year.

127

Exhibit 99.1

NOTICE

ORDINARY BUSINESS

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

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

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

		By Order of the Board
		For Rediff.com India Limited

Place: Mumbai		/s/ Jyoti Ravi Sachdeva
Date: 4^th September, 2014		Company Secretary and
		Head Legal & Govt. affairs

NOTES:

Form No. MGT – 11

PROXY FORM

[Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies

(Management and Administration) rules, 2014]

CIN: U22100MH1996PLC096077

Name of Company: Rediff.com India Limited

Registered office: 1^st Floor Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (W),

Mumbai 400016

Name of the member(s):

Registered address:

E-mail Id:

Folio No/ / Client ID

DP ID:

I/We, being the member(s) of ……………..…………..shares of the above named company, hereby appoint

	1.	Name : …………………………………………………………
		Address:
		Email Id:
		Signature :……………………………………. Or failing him

	2.	Name : …………………………………………………………
		Address:
		Email Id:
		Signature :……………………………………. Or failing him

	3.	Name : …………………………………………………………
		Address:
		Email Id:
		Signature :……………………………………. Or failing him

as my/our proxy to attend and vote (on a poll) for me/us and my/our behalf at the 19^th Annual General Meeting of the company, to be held on the Monday of 29^th September, 2014 At 10 AM IST. at First Floor, Mahalaxmi Engineering Estate, L. J. First Cross Road, Mahim (West), Mumbai 400016 and at any adjournment thereof in respect of such resolutions as are indicated below:

I wish my proxy to attend in the following manner

Resolution no.	Description	For	Against
1.	To receive, consider and adopt the Audited financial Statements Balance Sheet as at March 31, 2014 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 Mr. Ashok Narasimhan, Director retiring by rotation and being eligible, offers himself for reappointment
3.	To appoint a Director in place of Mr. Rashesh Shah, 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)

Signed this …………..day of …………..20…….		Affix
Signature of Shareholder		Revenue
		Stamp

Signature of First Proxy holder

Signature of Second Proxy holder

Signature of third proxy holder

Note: 1. This Form of Proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours before the commencement of the Meeting.

2. A Proxy need not be a member of the Company.

3. A Person can act as a proxy on behalf of members not exceeding fifty and holding in the aggregate not more than 10% of the total share capital of the Company carrying voting rights. A member holding more than 10% of the total share capital of the Company carrying voting rights may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder.

4. This is only optional, please put a 'X' in the appropriate column against the resolutions indicated in the Box. If you leave the ‘For’ or ‘Against’ column blank against any or all the resolutions, your Proxy will be entitled to vote in the manner as he/she thinks appropriate.

5. Appointing a proxy does not prevent a member from attending the meeting in person if he/she so wishes.

6. In the case of jointholders, the signature of any one holder will be sufficient, but names of all the jointholders should be stated.

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