Q1 Results 2008-2009

Dear Investor,

During the first quarter of Fiscal 2009, Satyam achieved an annual revenue run rate of Rs. 10,000 crore. In Q1, we grew by 8.5% as per Indian GAAP. We were able to deliver this performance on the back of 3% volume growth, helped, in part, by rupee depreciation. This, along with sustained operational efficiency, led to an increase in operating margins in Q1, which we believe will bolster annual margin performance.

Our US GAAP revenue for the quarter was $637 million, a growth of 41 percent year over year, and a sequential growth of 4 percent. Our earnings per ADS was 38 cents.

In Q1, we hosted more than 200 customer executives from around the world at our Customer Summit. We were encouraged by their positive inclination towards Satyam's transformational capabilities and we are pleased to note that many of them are aligned to enter into long-term, sustainable partnerships.

Q1 also witnessed increased business activity in Asia Pacific and Middle East. Further, companies in Europe that were slow to embrace off-shoring are showing increasing interest to capitalize on our global delivery model. These regions continue to promise significant growth going forward.

Against the backdrop of a better margin performance and prevailing forex rates, we are revising our guidance for FY09. Consolidated Indian GAAP revenue is expected to grow between 32.0% and 34.1% and EPS is expected to grow by 26.1% to 28.2%.

We remain positive and confident about our ability to deliver the stated guidance, notwithstanding the operational environment. For instance, in Q1, we had a loss of animation business in BPO, which led to lower-than-expected growth. Despite this, we delivered 3% volume growth. We believe that this loss of business was transient, and is limited to Q1.

We are yet to see clear and consistent signals emanating from the banking and financial service sector, which continues to be fluid. Moreover, the U.S.economy has been impacted by high energy costs and rising inflation. This impacts sectors such as retail and transportation, where there is greater need for higher operational efficiency in the near term. This we believe provides a fertile ground for transformational opportunities. This is especially true when near-term benefits can be demonstrated-although such projects require longer cycle times due to the cautious nature of the market. We remain alert to these market dynamics and continue to focus on delivering high impact and significant benefits to our customers. We are pleased with our ability to respond to these opportunities with our extended capabilities due to our recent acquisitions, such as Bridge Strategy Group and Nitor Global Solutions. In Q1, these efforts helped Satyam win three large deals. We were also, in specific instances, able to garner a higher share of our customer spending, which is reflected in the increase in customers with a run rate of $1 million, $5 million and $10 million.

We are encouraged by the continued demand in Enterprise Applications market where we enjoy a dominant position. This, coupled with our investments in enhancing our global foot print and global delivery centers positions us better to deal with the current volatility in the market.

Finally, on the manpower front, attrition continues to trend downward; our annualized attrition for the first quarter was among the lowest in the industry at 10.95%. At the same time, our associate numbers have increased to 51,643, as of June 30th.

B. Ramalinga Raju
Founder & Chairman