SIFY Reports U.S. GAAP Results for the First Quarter Ended 30th June 2006: Sify Q1 Net Profits Jump 200% to $ 1.36 Million; Revenues Grow by 29.1% over Same Quarter Last Year

Sify Limited (Nasdaq National Market: SIFY), a leader in consumerInternet and Enterprise Services in India with global deliverycapabilities, announced today its consolidated US GAAP results for thefirst quarter ended 30th June 2006, and further announced thatChairman of the Board Mr. Raju Vegesna has been named as Sify'sManaging Director & Chief Executive Officer, replacing Sify's ManagingDirector and Chief Executive Officer, Mr. R. Ramaraj, who has resignedfrom those posts to pursue other interests and opportunities. Mr.Ramaraj is in discussions with Sify and Mr. Vegesna to ensure a smoothtransition and has agreed to be available to work as a consultant.

Q1 2006-07 Performance Highlights:

-- Sify reported revenues of $ 28.74 million for the quarter ended 30th June 2006, 29.1% higher than the quarter ended 30th June 2005. The sequential growth in revenues over the previous quarter was 2.5%.

-- Sify's cash profit, in Adjusted EBITDA terms, for the quarter was $4.03 million, an increase of $3.71 million compared to the same quarter last year. See below for a reconciliation of Adjusted EBITDA to Sify's U.S. GAAP operating results.

-- Sify's net profit for the quarter under U.S. GAAP was $ 1.36 million compared to a net loss of $2.14 million in the first quarter of the previous fiscal year. The company reported net profits of $0.46 million in the previous quarter.

-- Sify ended the quarter with a cash balance of $ 55.27 million after capital expenditures of $6.7 million and the acquisition of Globe Travels, USA, during the fourth quarter.

Mr. Raju Vegesna, Board Chairman and newly appointed MD&CEO, SifyLimited, said, "We are pleased to report a net profit of $ 1.36million for the first quarter with revenues growing by 29.1% over theJune quarter 2005 to $28.74 million. We were also able to buildmomentum for the year by growing our revenues for the first quarterover the previous quarter. We continue to gain recognition for ourservices in India and internationally, and lead the market acrossbusinesses. We are well poised to continue growing them with newinitiatives, adequate cash reserves and our cutting edge IPexpertise."

Mr. Durgesh Mehta, Chief Financial Officer, Sify Limited, said,"During the last quarter we invested in a new Data Center in Bangaloreto meet growing demand. We also completed the acquisition of GlobeTravels, USA, to enhance revenue earning opportunities for our portalsand the iWay Cyber Cafe chain. We intend to continue our growthtrajectory by investing in such opportunities as well as in extendingour Network Infrastructure and reach to service growing demand fromboth the Enterprise and Consumer segments."
Summarized Results (In $ million,
all translated at $1 = Rs. 45.87)
Quarter Year
Description Quarter ended ended ended
30-June 31-Mar 31-Mar
-----------------------------------
2006 2005 2006 2006
-----------------------------------

Enterprise services 16.41 12.00 15.21 55.18
Access Media 10.15 9.01 10.49 39.55
Portals 1.44 0.73 1.23 3.90
Others 0.74 0.52 1.11 3.44
-----------------------------------
Sales revenue 28.74 22.26 28.03 102.07
Cost of Revenues (15.16) (12.69) (14.60) (55.26)
Selling, general and admin expenses (11.06) (9.69) (11.32) (42.55)
EBITDA share of affiliates 0.53 0.37 0.16 1.34
Other Expenses incl forex gain
(loss) 0.97 0.07 0.29 0.68
-----------------------------------
Adjusted EBITDA (1) 4.03 0.32 2.57 6.27

Reconciliation items:
Depreciation & amortization (3.22) (2.68) (2.69) (10.39)
Below EBITDA share for Affiliates (0.19) (0.14) (0.05) (0.46)
Profit - business / assets sold 0.00 0.00 0.00 0.00
Net interest 0.74 0.36 0.62 1.32
-----------------------------------
Net income / (loss) 1.36 (2.14) 0.46 (3.26)

Adjusted EBITDA(1) / loss $ /ADR 0.09 0.01 0.06 0.17
Net Income / (loss) $/ ADR 0.03 (0.06) 0.01 (0.09)

(1) Adjusted EBITDA represents net income (loss) before interest,
income tax, depreciation and amortization, impairment of
intangible assets, and results involving discontinued operations
or non- operating assets. Please see "Non-GAAP Financial
Information" below.
Note: the company reports the summarized results for every Quarter
based on the exchange rates prevailing on the last day of the
Quarter under review. The results presented above reflect results
in Indian Rupees translated at $1= Rs 45.87. At the end of the
last Quarter the rate at which the Rupee results were translated
was $1= Rs 44.48

The results for the quarter were impacted by an increased chargeof $ 0.62 million in ESOP accounting from intrinsic value method tofair value method, in compliance with SFAS 123 R.

Enterprise Services:

New Business wins: Key business wins in Network Services includedVPN services for Bombay Dyeing, Fanuc, Globus, ICICI Webtrade,Mitsubishi, Park Hotels, Suzlon, Yesbank, and repeat orders from GE,Vishal Retail and others. We have also won a large order from aninternational alliance partner for VPN services for a large FMCG majorin India.

New Level 4 Data Centre at Bangalore: The new Data Center inBangalore has been set up in response to the rising demand for hostingof primary and disaster recovery Data Centers. This is Sify's thirdData Center in the country after Mumbai and Chennai. Pantaloon awardedSify the contract to host and manage its Data Center operations, inaddition to the Network and Security services that Sify provides toPantaloon, further strengthening the relationship. Sify has also beencommissioned to host the core banking application of Andhra Bank forthe next five years.

SifyAssure: The second phase of the multi phase details riskassessment for a large carrier in the Middle East was concluded. Keywins included consulting engagement from FI Serv and Ismart andinfrastructure implementation orders from HDFC Standard Life, HSBC,Mahindra and Pantaloon. The relationship with a Middle East Bank wasstrengthened with projects won on VOIP, Data Center and ISO, BS7799consultancy.

Application Services: The Application Services team continued itsthrust on Customized Web Application, Document Management System,Messaging and Online Testing. The key wins included development ofcustomized web application for Transcontinental Eservice and DocumentManagement contracts from Unitech and Aviva Life.

Safescrypt - The surge in the Digital Certificate business inIndia is expected to continue to grow rapidly due to the launch of theMCA21 initiative by the Ministry of Company Affairs that mandates thesigning authorities of companies Chartered Accountants and Companysecretaries, to digitally sign the documents. Engagements for secureapplication were received from ICICI Lombard, IFFCO, Kotak Bank, KotakLife and Tata TeleServices.

Access Media:

iWay Cyber-Cafe Growth: The iWay chain grew to 3,400 cafes (ofwhich 34 are owned by Sify and the rest franchised). The company istaking a number of steps to capitalize on the distribution reach ofthe iWays to diversify the revenue streams and these are expected tofructify in the next few quarters.

This includes a new initiative that offers Internet learningclasses, for those who have never accessed the Internet, for a fee.This has been tested in Coimbatore and is being rolled out to othersuch non-metro centers. The other area of focus is in e-Ticketing,travel services and other eCommerce services through the iWays.Booking of railway tickets from iWays is already one of the fastestgrowing activities. Airline ticketing, hotel & holiday bookings etcwill follow with the launch of such online services by Sify's portal.

Intense competition from telcos created pressure on volumes andprices in the Internet telephony business, and this impacted therevenues. The division is expanding the Internet telephony businessinto the ITES sector and has signed up over 80 customers over the lastfew quarters.

Sify iWays Tie Up With Vijay TV: Sify iWays tied up with Vijay TVto enable auditions of Kalakka Povadhu Yaaru, the Tamil version of theGreat Indian Laughter Show. Following the tie-up, aspiring contestantsfrom all over Tamilnadu and Bangalore walked into Sify iWays to recordtheir audition capsules for the show.

Online Games: A3 - the MMORPG game increased its registered usercount to over 50,000 with continued promotion of online games throughthe Game Dromes and iWays. Sify is also working with a leading onlinegame publication to create awareness of online games to grow themarket in India.

Sify Broadband Growth: Subscribers to Sify's high speed Internetaccess to homes grew to over 191,000 subscribers. Increased focus onthe broadband business by Telcos has in turn resulted in decreasedmargins in this segment while also resulting in subscriber churn. Thedivision is now working on increasing the range of services that canbe offered to these subscribers like Internet telephony to increaseaverage revenues per user. There are now around 1700 Cable TV Operatorfranchisees in 96 cities & towns across the country.

Portals:

Revenues grew approximately 17% on a sequential basis and 96% overthe same quarter last year, driven by advertising, sponsorships andecommerce. This includes revenues from the Globe Travels acquisitionamounting to $ 0.13 million.

Acquisition of Globe Travels: Sify acquired Globe Travels, an Iowabased organization engaged in the business of online travel and travelrelated business in the US- India segment, in a deal that includescash of $ 2.5 Million, stock options and performance pay outs. Onlinetravel is the fastest growing and highest revenue generating categoryin the eCommerce space in India. Sify expects to leverage its largeNRI audience on samachar.com, and the distribution reach of its iWaysCyber Cafe chain, to grow the online travel business through thisacquisition on both the international and domestic fronts.

Highlights of the FIFA World Cup: Sifymax.com presented thehighlights of the FIFA World Cup 2006 in English, Hindi, Kannada,Tamil, Telugu and Malayalam. Extensive World Cup coverage included theMaradona column, videos, highlights, features, picture galleries,contests, blogs and more, with content available in text, images andvideo. Message boards allowed users to discuss World Cup-based topicswith other football fans.

Coverage of the French Open and Wimbledon was offered to userswith Sifymax being the Exclusive Broadband Partner for TWI/IG in IndiaSpecial sections on each event featured highlights, interviews, roundups and behind the scenes footage. A live scorecard and golden momentsof the 2005 tournament completed the experience for tennis fans.

Launch of www.Mumbailive.in: The city-centric broadband websitefor the city of Mumbai was launched , showcasing originalMumbai-centric video content created exclusively for an onlineaudience. The videos will focus on city news and events,entertainment, celebrities, lifestyle, commerce and politics, anchoredby Net Jockeys (NJs), a new concept successfully introduced in Indiaby Sify. The broadband website also features live video feeds from theSiddhivinayak temple and other locations so that devotees can have alive darshan.

Users can also message greetings through Short Message Service(SMS) to their friends who are using the site that will scroll acrossthe home page on a ticker. Information and news about Mumbai isavailable as it happens. Thousands of visitors logged on to watch thelatest updates on the serial blasts that ripped through Mumbai.

Tie up with Ananda Bazaar Patrika: The division has partnered withthe Kolkata based Ananda Bazaar Patrika (ABP) to power its onlinestore- www.thetelegraphstore.com. Following this tie-up, the first ofthe ABP Group's shopping portals, The Telegraph Store, went live onJune 6, 2006. Besides a wide range of products from electronics toclothes, gifts and books on display, The Telegraph Store will alsofeature exciting bargain offers on select products under the "Offer ofthe Day" and "Price Surprise" sections.

Launch of broadband websites for film stars: Sifymax.com launchedthe first ever official broadband website www.reemasen.sifymax.com forpopular Kollywood, Telugu and Bollywood actress, Reema Sen. Reema Senhas rapidly become a youth heartthrob and popular actress, and thisplatform will bring fans closer to their star. This is the first timethat a film star is launching an official broadband website. Morestars are expected to launch their sites on SifyMax with a number ofthem already initiated.

New advertisers: Sify signed on new advertisers including ClearTrip, GE Money, Malaysia Tourism, National Geographic, ThomsonLearning, Smash Hits, SP Jain Center of Management, Thums Up, TravelGuru, Wallet 365, X-Box and Yahoo.

In conjunction with the earning release, Sify Limited will host aconference call at 9:00 am EDT hosted by Mr. Raju Vegesna, Chairman ofthe Board and newly appointed Managing Director and Chief ExecutiveOfficer, and Mr. Durgesh Mehta, Chief Financial Officer. Interestedparties may participate in the conference call by dialing 877-407-8031(U.S. or Canada) or 201-689-8031 (international). The conference callwill simultaneously be broadcast live over the Internet atwww.sifycorp.com or www.vcall.com. Please allow extra time prior tothe call to visit the site and download the streaming media softwarerequired to listen to the Internet broadcast. The online archive ofthe Web cast will be available shortly after the conference call, orinvestors can listen to the replay by dialing 877-660-6853 or201-612-7415 and entering account number 286 and conference ID number206593. Please allow for some time post conference call to access thearchive of the Web cast.

About Sify Limited:

Sify is among the largest Internet, network and e-Commerceservices companies in India, offering end-to-end solutions with acomprehensive range of products delivered over a common Internetbackbone infrastructure. This Internet backbone reaches 171 cities andtowns in India. A significant part of the company's revenue is derivedfrom Corporate Services, which include corporate connectivity, networkand communications solutions, security, network management servicesand hosting. A host of blue chip customers use Sify's corporateservice offerings. Consumer services include broadband home access,dial up connectivity and the iWay cyber cafe chain across 154 citiesand towns. The company's network services, Data Center operations andcustomer relationship management are accredited ISO 9001:2000.

For more information about Sify, visit www.sifycorp.com.

Non-GAAP Financial Information

Our presentation of financial information above includes apresentation of Adjusted EBITDA. Adjusted EBITDA is neither an IndianGAAP measure nor a U.S. GAAP measure and should not be considered inisolation or as an alternative to net income as an indicator ofoperating performance or as an alternative to cash flow as a measureof liquidity. Our presentation above also includes a reconciliation ofAdjusted EBITDA to net income/(loss), which we believe to be the mostcomparable financial measure under U.S. GAAP. Adjusted EBITDA ispresented because it is a basis upon which our management assesses ourfinancial performance and because we believe some investors find it tobe a useful tool for measuring a company's financial performance andability to fund operating obligations and capital expenditures.Investors evaluating our financial performance or analyzing ourdiscounted cash flows based on Adjusted EBITDA should considerfinancing activities and non-recurring charges that are not includedin the calculation. While EBITDA or derivations thereof are frequentlyreported by many companies as a supplemental measure of operations, itis not necessarily comparable to other similarly titled captions ofother companies due to potential inconsistencies in the method ofcalculation.

Forward Looking Statements:

All statements included or incorporated by reference in thisrelease, other than statements or characterizations of historicalfact, are forward- looking statements within the meaning of Section27A of the Securities Act of 1933, as amended, and Section 21E of theSecurities Exchange Act of 1934, as amended. These forward-lookingstatements are based on our current expectations, estimates andprojections about our industry, management's beliefs, and certainassumptions made by us. Forward-looking statements can often beidentified by words such as "anticipates," "expects," "intends,""plans," "predicts," "believes," "seeks," "estimates," "may," "will,""should," "would," "potential," "continue," similar expressions, andvariations or negatives of these words. In addition, any statementsthat refer to expectations, projections or other characterizations offuture events or circumstances, including any underlying assumptions,are forward-looking statements. These forward-looking statements speakonly as of the date hereof, and are based upon the informationavailable to us at this time. Such information is subject to change,and we will not necessarily inform you of such changes. Thesestatements are not guarantees of future performance and are subject torisks, uncertainties and assumptions that are difficult to predict.

Therefore, our actual results could differ materially andadversely from those expressed in any forward-looking statements as aresult of various factors. Sify undertakes no duty to update anyforward-looking statements.

For a discussion of the risks associated with Sify's business,please see the discussion under the caption "Risks Related to OurBusiness" in the company's report on Form 20-F for the year endedMarch 31, 2006 which has been filed with the United States Securitiesand Exchange Commission and is available by accessing the databasemaintained by the SEC at www.sec.gov. We undertake no obligation torevise or update publicly any forward-looking statement for anyreason.