private and confidential

February 2008, Quarter -1

the india proposition – select economic criteria

 4th largest economy in the world; 2 nd power parity) largest GDP among the developing countries (based on purchasing  over the past 15 years, has been the second fastest growing economy in the world, after China, with an average annual growth rate exceeding 6.5%      displaced the US as the second-most favoured destination for foreign direct investment (FDI) in the world after China. (source: AT Kearney's FDI Confidence Index) probably the most preferred country for future R&D investments, with slightly more than 40 percent of CEOs indicating they will likely make such investments over the next three years most mature and well developed capital markets amongst developing countries 3-4 years of unabated “bull-run” based on record corporate growth & earnings have provided Indian companies the necessary foundation for expansion with minimal leverage

key metrics Real GDP (% change) Nominal GDP (US$ bil.) Nominal GDP Per Capita (US$) Consumer Price Index (% change) Wholesale-Producer Price Index (% change) Policy Interest Rate (%) Short-term Interest Rate (%) Broad Money Supply (LCU bil.) Fiscal Balance (% of GDP) Unemployment Rate (%) Current Account Balance (US$ bil.) Current Account Balance (% of GDP) Trade Balance (US$ bil.) Trade Balance (% of GDP) Exchange Rate (LCU/US$, end of period) Exchange Rate (LCU/Euro, end of period)

modest inflation despite spiraling crude prices

2005

9.2

808.9

738 4.2

4.7

6 10.75

25291.9

-4.1

12.8

-9.2

-1.1

-40.2

-5 45.06

53.16

2006

8.6

897.8

808 5.8

4.9

6 10.94

29424.2

-3.7

12.2

-15.6

-1.7

-53.9

-6 44.24

58.27

2007

7.9

1035 918 5.7

5.4

7.25

10.82

37114.7

-3.6

11.9

-22.4

-2.2

-65.7

-6.3

45.12

62.26

private and confidential

2

the india proposition – availability of funds

FDI Inflows 19000 20000 15000 10000 5000 0 2167 4031 6125 5036 4322 5987 7661 1999 00 2000 01 2001 02 2002 03 2003 04 2004 05 2005 06 2006 07 Foreign Capital Inflow (net) 30000 25000 20000 15000 10000 5000 0 10184 8814 8551 10840 16736 28022 23400 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

private and confidential

3

the india proposition – availability of funds

Acquirer

Temasek Holdings Consort ium Consort ium ICICI Vent ure Funds Carlyle Group Avenue Capit al

USD 500 M n Plus PE Deals - India Target

Bhart i Airt el

Sector

Telecom GM R Inf rast ruct ure Bhart i Inf rat el Jaypee Inf rat ech HDFC SKIL Inf rast ruct ure Real Est at e & Inf ast ruct ure M gt Telecom Real Est at e & Inf ast ruct ure M gt Banking & Financial Services Real Est at e & Inf ast ruct ure M gt

% Stake

4.99% 9.00% 10.00% N.A.

5.60% 26.00%

Value - USD M n

1,906.74

1,000.00

1,000.00

800.00

650.00

500.00

Sect or W i se Break-up - Vol um e

160 120 80 40 60 0 Banking & Financial Services 67 31 35 61 151 IT & ITES Media, Entertainment & Publishing Pharma, Healthcare & Biotech Real Estate & Infrastructure Management Others

private and confidential

4

Sect or W i se Break-up - V al ue

17% 36% 4% 5% 2% 36% Banking & Financial Services IT & ITES Media, Ent ert ainment & Publishing Pharma, Healt hcare & Biot ech Real Est at e & Inf rast ruct ure Management Ot hers

the india proposition – the global indian: cross border acquisitions

Acquirer

Tat a St eel Vodaf one Hindalco Indust ries Suzlon Energy Essar St eel Holdings Unit ed Spirit s Tat a Pow er

Target

Corus Hut chison Essar

Billion Dollar Plus M &A Deals Sector

St eel Telecom Novelis Inc REpow er Algoma St eel Inc Whyt e & M ackay PT Kalt im Prima Coal Aluminium Pow er & Energy St eel Brew eries & Dist illeries Pow er & Energy

Value - USD M n

12,201.60

10,830.00

6,000.00

1,700.93

1,580.00

1,112.99

1,100.00

Deal Type

Acquisit ion M ajorit y Acquisit ion Cont rolling St akr Acquisit ion Acquisit ion Signif icant St ake

Target Nation

China Hong Kong India M alaysia

Any Involvement Asia M &A By Target Nation - CY 2006

Sout h Korea

Deal Value (US$ M il)

38,406.40

26,930.20

26,676.80

25,956.60

24,493.80

Number of Deals

1,913.00

765.00

1,141.00

873.00

255.00

Taiw an Singapore Philippines Thailand Indonesia

Industry Total

21,396.30

15,713.80

7,754.50

7,555.10

5,117.70

201,531.40

175.00

465.00

128.00

268.00

117.00

6,216.00

* list excludes the take-over of Arcelor by Mittal Steel (essentially Indian promoter and management team)

private and confidential

5

the india proposition – the global indian: cross border acquisitions

Amtek Auto Asian Paints Bharat Forge

Zelter GmbH, Germany, GWK Group, UK, Lloyds (Brierly Hill), UK, Midwest Mfg. Co., USA, Tiplex-Kelton Group, JL French’s (Witham) Limited Delmege Forsyth (Sri Lanka), Pacific Paints (Australia), Berger International, SCIB Chemical (Egypt), Taubmans Paints (Fiji) CDP Aluminiumtechnik, Germany, Federal Forge, USA, Imatra Forging Group, Sweden and Scotland SLI Sylvania lighting business, acquisition price USD 300 million

Havell’s India Ltd Indian Hotels

Hotels in Zambia and Australia

Marico MindTree Consulting Motherson Sumi

Sundari LLC, USA, consumer division of Enaleni Pharmaceuticals TES-PV Electronic Solutions

Reliance Communications Reliance Industries Reliance Life Science Sterlite

Reiner Präzision GmbH and G+S Kunststofftechnik GmbH in Germany, Empire Rubber Yipes Holding Inc, acquisition price USD 300 million Gulf Africa Petroleum Corporation (GAPCO) GeneMedix Plc, acquisition price USD 28.80 million for a 74% stake

Sundaram Fastners Tata Tea VSNL

Monte Cello Corporation, Netherlands, the holding company of copper mines in Australia Dana Spicer, UK, Peiner Umformtechnik GmbH, Germany, PUT Grundstucks GmbH Tetley, Good Earth, JEM_A, Glaceau Teleglobe International Holdings, Tyco Global Network

Wipro

Spectramind, GE’s healthcare software arm, global Energy practice of American Management Systems, Nervewire, US, Ericsson's Indian R&D arm, OkI Techno Centre Singapore private and confidential

6

the india proposition – Telecom and Media, Entertainment & Publishing

Ta r ge t

FunAsiA Lumiere

India n Cr oss Bor de r M e dia , Ent . & Publishing D e a ls - CY 2 0 0 7 (U SD M n) A cquir e r D e a l Size St a k e

Pyramid Saimira N.A.

100% Inf init y Film Complet ion N.A.

25% Carlisle Publishing Knibble.com

S4 Ind Sof t w are FX Labs St udio 3.50

3.00

100% 100%

Indian Cross Border Telecom Deals - CY 2007 (USD M n) Target

Til-Tex Ant enna Inc

Acquirer

Kavveri Telecom Product s

Deal Size

2.50

Yipes Holding Inc Voxmobili SA AEI Cables Reliance Communicat ion OnM obile Paramount Communicat ions 300.00

ADA Cellw orks IRP & pat ent s of Sigma Wireless GTL Int ernat ional Kavveri Telecom Product s N.A.

Stake

100% 100% 100% 100% 100% 100%

Indian PE Telecom Deals - CY 2007 (USD M n) Investee

Asianet Sat ellit e Communicat ions

Investors

Providence Ordyn Technologies Spice Telecom M icroqual Techno Pvt Lt d Aureos Capit al Consort ium Consort ium Bhart i Airt el Inf rast ruct ure unit of Reliance Communicat ions Ast er Tow er Tejas Net w orks Lt d Bhart i Inrat el Temasek Holdings Consort ium Consort ium Goldman Sachs Consort ium

Deal Size

66.67

30.00

10.00

35.00

22.09

Stake

N.A.

N.A.

20% N.A.

5% 5% N.A.

N.A.

10%

Indian PE M edia, Ent. & Publishing Deals Deals - CY 2007 (USD M n) Investee

M adhouse M edia

Investors

Angel Invest ors

Deal Size

0.23

Tat a Sky UFO M oviez B.A.G. Inf ot ainment B.A.G. Inf ot ainment Temasek Holdings 3i Group IDBI Bank of Baroda 55.56

22.00

0.45

0.45

B.A.G. Inf ot ainment Nimbus Communicat ions Eenadu Group NDTV Net w orks NDTV Net w orks Plc INX M edia INX M edia INX M edia Games2Win India TV Hat hw ay Cable Prana St udio Hat hw ay Cable Kreeda Games M indw orks Global M edia Digicable Net w ork Right Angle M edia Palador Pict ures B.A.G. Films & M edia Percept Holdings Hurix Syst ems Live M edia Gemini Indust ries mGinger mGinger Dish TV Sameer Gehlaut Consort ium Blackst one Group Consort ium Com Vent ures Temasek Holdings New Silk Rout e New Vernon Consort ium Fuse+M edia Chyrs Capit al Sherpalo Vent ures Chyrs Capit al Consort ium Helion Vent ure Ashmore Invest ment Amw al Al Khaleej Consort ium Fidelit y Fut ure Group Helion Vent ure Draper Fisher Jurvet son DE Shaw Draper Fisher Jurvet son NEA Indo-US Vent ures Indivision Capit al 1.50

0.50

58.14

5.70

125.00

275.00

120.00

20.00

N.A.

N.A.

N.A.

5.00

11.50

60.00

N.A.

60.00

N.A.

15.00

N.A.

35.35

6.00

14.42

46.51

5.10

N.A.

55.81

Stake

N.A.

10% N.A.

10% 10% N.A.

15% 10% 15% N.A.

N.A.

N.A.

25% N.A.

26% 24% N.A.

19% 20% 6% N.A.

19% 12% N.A.

15% N.A.

N.A.

49% N.A.

N.A.

5%

private and confidential

7

the Indian telecom market

 Indian mobile market to cross US$25 billion  According to Gartner, Cellular services market in India in 2011 is expected to be US$25.6billion. Total earnings of cellular services market in 2006 was US$8.95 billion and would reach US$25.617 billion by 2011 growing at a compounded annual growth rate (CAGR) of 18.4%. Cellular market penetration is also projected to increase from 12.7% in 2006 to 38.6% in 2011  The overall penetration will primarily be driven by an increased focus on rural market. By 2011, Gartner expects 58% of the rural population and 95% of the urban population to be covered with mobile connections. It is indicating that there was still scope for reducing mobile tariff, although call rates have reduced to about 2.6 cents per minute, it remained high compared with fixed-line rates at 0.9 cents per minute  Rural market presents immense growth opportunities as mobile penetration was just 2%.

Many firms are planning to tap this market by introducing handsets that would cost below Rs1,000 8

private and confidential

the Indian telecom market

Current Statistics

 The total number of telephone subscribers has reached 264 mn at the end of November 2007 of which 225 mn were mobile subscribers and 39 mn were fixed/landline subscribers. The overall tele-density improved further to 23% in November 2007 compared to 22% in October 2006.

 The Average Revenue per User (ARPU) for the GSM, CDMA and broadband services segment were at Rs275, Rs173 and Rs200 respectively.

private and confidential

9

the Indian telecom market

Wireless mobile segment

 Wireless segment has yet again witnessed a feverish growth with the total subscriber base touching 225m in November 2007 compared with 143m in November 2006 and adding up 60.3m subscribers during Apr-Nov 2007   Lower handset prices coupled with an increased urge to stay connected while on the move have been driving the growth in wireless segment Wireless penetration currently stands at 20.4% (up 69bps MoM)   The wireless-to-fixed penetration is at ~495% and wireless-to-total penetration is at ~85.6% Bharti, RCOM and Vodafone were major gainers in absolute terms on a MoM basis

private and confidential

10

the Indian telecom market

GSM mobile segment

 The GSM segment comprises 72% of the overall wireless market   The total number of subscribers in the metro region jumped by 41% to 54.1 mn during October November 2007 compared with same period of 2006 Subscriber base in Circle A touched the 90 mn mark during October-November 2007, growing by 29%    Circle B registered a decline of 6% in subscriber base during October-November 2007 compared with same period of 2006 Circle C has market share of just 14% in all India mobile users, with a subscriber base of 19.6 mn – this circle showed 80% growth during October-November 2007 compared with same period of 2006 GSM service providers are rapidly enhancing coverage and reach of service, which is getting reflected in the healthy subscriber growth

CDMA mobile segment

 The CDMA market is witnessing stiff competition with players like Reliance Communications and Bharti Airtel losing ground to Tata Teleservices over a period of time  Revenue from call charges comprised 62% and rental charges 18% of the revenues of the CDMA players 11

private and confidential

the Indian telecom market

private and confidential

12

the Indian telecom market

Wire-line segment

 The wire-line subscriber base declined yet again to 39.31 mn in November 2007 compared with 39.41 mn in October 2007   Although the private players witnessed growth in subscriber base, it was the public companies that lost the ground and dragged the growth The wire-line segment is still led by PSUs – BSNL dominance in the fixed line remained intact with a market share of 82%, followed by MTNL at 9%; Bharti Airtel remained the leader amongst the private players, garnering a share of 5%, BSNL commands 73% in the urban landscape and almost cent percent in the rural areas

Internet & broadband segment

       India currently has 72 broadband service providers, having a subscriber base of 2.87 mn as of November 2007 Out of the 72 broadband service providers, only 13 service providers are having subscriber base more than 10,000 and these providers share 98% of the total market There were 9.63 mn wire-line Internet subscribers at the end of September 2007 compared to 9.22 mn at the end of June 2007, registering a growth of nearly 4.37% The growth trend indicates a slight increase in the market share of PSU-owned internet service providers (ISPs) vis-à-vis private operators The growth in Broadband segment has not been satisfactory – it is still slow and below the expected levels As per the recent TRAI proposal, companies like BSNL and MTNL should be allowed to appoint franchisees and spectrum for 3G and WiMAX should be made available at the earliest to boost the deployment of broadband using these technologies The regulator has also laid down policies for hastening implementation of Internet protocol TV (IPTV) platform across the country 13

private and confidential

the Indian telecom market

private and confidential

14

the Indian telecom market

Operating strategy: Stay big; get bigger; expand world-wide

     All of the Indian telecom majors, both private, namely: Reliance Communications, Bharti Televentures, Tata, AV Birla Group, Aircel, Essar; and government owned namely: MTNL and BSNL – all have explicit intents to expand world-wide – with special emphasis on emerging markets such as Africa and Asia Reliance, Bharti, MTNL and other Indian companies have already made moves in acquiring licenses in various countries in Africa including those in Kenya, Gabon, Tanzania, etc VSNL (Tatas) and Flag (Reliance) already together rank as worlds second biggest ethernet backbone in the world Scale is a key competitive strength in this business segment and RCOM’s recent moves reflect an ambition to leverage this facet to drive growth. It recently announced the completion of FALCON, a 2.5Tbps sub-sea cable system which connects 11 countries in the Middle–East with the FLAG’s existing cable system. RCOM also intends to spend $1.5bn over the next three years to build an IP-overlay on FLAG’s sub-sea cable network. Though bandwidth sales and IRUs currently account for the largest portion of revenues, IP-based services are the fastest growing segment. RCOM faces significant competition from VSNL which is also gearing up to focus on this profitable market segment Bharti Airtel, which had earlier bagged the licence to become Sri Lanka’s fifth GSM-based service provider, will launch second and third generation mobile services in the island nation by the end of the current fiscal and invest about US$200m by 2012. Bharti will have to compete with the Telekom Malaysia-owned Dialog Telecom (the largest operator in the country), Celltel Lanka (owned by Luxembourg-based service provider Millicom International 15

private and confidential

the Indian media market

 The Indian entertainment and media industry is one of the fastest growing industries and has outperformed the Indian economy  According to FICCI PwC report, the television industry revenues are expected to grow from the present Rs 191 bn (USD 4.77 bn) to Rs 519 bn (USD 12.97 bn) by 2011, implying a 22% compounded annual growth rate  The radio industry recorded a growth of nearly 58% in 2006 – the share of radio in the total advertising industry increased from 2.4% to 3.1% during the year  According to PwC report, the print industry is expected to grow from Rs 128 bn (USD 3.2 bn) in 2006 to Rs 232 bn (USD 5.8 bn) by 2011, at 12.6% CAGR  Currently, the size of film industry is estimated to be around Rs 230 bn (USD 5.8bn), which is supposed to be the largest in the world  The Indian media and entertainment industry will grow at twice the rate of the country’s GDP in a few years, driven largely by the emergence of regional players, technology and digitisation 16

private and confidential

the Indian media market

private and confidential

17

the Indian media market

private and confidential

18

the Indian media market

     

Radio industry

The radio industry recorded a growth of nearly 58% in 2006 The share of radio in the total advertising industry increased from 2.4% to 3.1% during the same year This is further expected to increase to 5.5% by 2011 as per the FICCI-PwC report on the Indian entertainment and media industry The size of the radio industry is projected to increase at a CAGR of 28% from Rs 5 bn in 2006 to Rs 17 bn by 2011 The major advertisers on radio are the entertainment channels, real estate firms and retailers - all these industries are expected to witness robust growth in the years to come More than 90 channels across various languages and genres are being launched this year   

Film industry

The Indian film industry is the biggest film industry in the world in terms of number of viewers, with an audience of more than 3 billion compared with Hollywood’s 2.6 billion globally The size of the Indian domestic film industry is likely to double to Rs 400 bn (around USD 10 bn) in the next three years, creating employment opportunities for about 6m people by 2010 Currently, the size of film industry is estimated to be around Rs 230 bn (around USD 6 bn), which is supposed to be the largest in the world - it produces 800 films in different languages and earns nearly USD 100 mn of foreign exchange 19

private and confidential

the Indian media market

Print industry

 The structure of the Indian print media industry is highly fragmented with regional dominance    The Indian print media segment primarily comprises newspaper and magazine publishing According to PwC report, the print industry is expected to grow from Rs 128 bn in 2006 to Rs 232 bn by 2011, at 12.6% CAGR While the newspaper industry is estimated at Rs 112 bn, the magazine segment is valued at Rs 16 bn

Print media – revenues

     The primary source of revenues for a newspaper companies is advertising and subscription - the other sources include providing news to other agencies and sale of scrap paper The subscription revenues formed nearly 39% of the total print media revenues of Rs 128 bn in 2006 Print ads have the highest share of the ad pie in the media industry – dailies and magazines combined had a share of 48% of the total Rs 131 bn advertising revenues in 2005 Looking ahead, print media would continue to dominate other media in terms of revenues from advertising, with a market share of 46% of the total ad spend (Rs 293bn) by 2010 Advertising revenues formed 61% of the total print media revenues in 2006 and is expected to touch 66% of the total Rs 206 bn revenues in 2010 20

private and confidential

the Indian media market

Television

 The television industry in India has come a long way from the time when only a couple of Doordarshan channels were broadcast for a limited duration of the day   Today, there are 300 channels across various languages and genres catering to audiences 24 hours a day The size of the industry is estimated to be approximately Rs 191 bn - with 112 mn TV households, India is the third largest television market in the world, next only to China and the US

Regulations

   The Ministry of Information and Broadcasting is aiming for a further cut in entertainment tax to 25-30% - with technology and digitisation fuelling the 18% CAGR, a tax breather will only enhance the growth FDI Cap for FM Radio may be raised to 26% - retaining the current 20% FDI cap in radio companies, Government may allow an additional 6% for FIIs and others India to increase cable TV foreign investment cap - India is set to raise the foreign direct investment limit in cable television to 74% from 49% and allow 100% ownership in down linking general and entertainment channels 21

private and confidential

the Indian media market

Outlook

 The Indian media and entertainment industry will grow at twice the rate of the country’s GDP in a few years, driven largely by the emergence of regional players, technology and digitisation   Around 28% of the 100 mn pay TV households would be going digital by 2010, as a result of this trend In a digitised Indian media and entertainment environment, DTH would emerge leader over the next three years, while IPTV would gain close to 1m subscribers by 2010    A booming Indian economy, literate population on the rise, increasing consumerism, entry of global brands in the country and opening of the sector to foreign investors would drive the growth in print media Newspaper companies entering into newer regions and segments would lead to stronger growth - with the economy expected to be robust and increasing penetration of newspapers, the advertisement revenues are expected to remain strong The share of the print media in the total ad pie is expected to go down due to increasing competition from other forms of media like the Internet – the Internet has emerged as the most actively used medium for news, as it offers instant news just like television and has a long shelf-life like newspapers 22

private and confidential

the india proposition – Information Technology & ITeS

Ta r ge t

AdDynamix eSys Technologies Global Vant edge Thought Digit ial BPO Lason ICE Ent erprise Solut ions Valley US JadeLit e Technologies Links Group Int ernat ional Emacs Technologies Massif Technologies Seenet ix Dynat ex West Talk Corporat e New Begininings Finance Rubicon Group

India n Cr oss Bor de r IT & ITe S D e a ls - CY 2 0 0 7 (U SD M n) A cquir e r D e a l Size

Ybrant Technologies 10.00

Teledat a Inf ormat ics Aegis BPO 105.00

22.22

Zensar Technologies HOV Services Genpact Quint egra Solut ions Quint egra Solut ions Paradyne Inf ot ech Core Project s & Technologies Nihar Inf o Global Ybrant Technologies ISGN Trit on Corp Trit on Corp EMR Technology Vent ures 24.90

148.00

N.A.

9.50

1.00

4.75

3.00

0.03

N.A.

N.A.

N.A.

N.A.

20.00

TCS Brasil Com Creat ion Inc Cross Roads Det ailing DCI Digit al Communicat ions DGIT Solut ions Capco Capit al Market s BPM Inc Solt ius Pt e Syndesis Limit ed Dunn Solut ions Logan Orviss Ask n Learn FLovat e Technol Orion Technology US based company Benson Transcript ion Met rikus Bost on Communicat ions Group Philips Global Finance Tarat ec Development Corp TCS Cambridge Technology Moldt ex Technologies Kaveri Telecom Product s ORG Inf ormat ics i-Flex Solut ions First Source Solut ions Teledat a Inf ormat ics Subex Azure Cranes Sof t w are Pat ni Comput ers Educomp Solut ions WNS Holdings Rolt a Maples ESM Bhilw ara Scribe Persist ent Syst ems Megasof t Lt d Inf osys Technologies Pat ni Comput ers 33.40

3.50

1.30

2.20

N.A.

N.A.

N.A.

45.00

164.50

13.95

N.A.

3.88

N.A.

N.A.

N.A.

N.A.

N.A.

65.00

28.00

27.20

23 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 83% 100% 100%

St a k e

100% N.A.

100% 100% 100% 100% 100% 100% 100% 100% 51% 100% 100% 100% 80% 100% 49% 100% 100% 100% 100% 100%

private and confidential

the india proposition – Information Technology & ITeS

Indian Cross Border IT & ITeS Deals - CY 2007 (USD M n) Target

Clearorbit Consult ancy division of Logist ics Solut ions

Acquirer

Take Solut ions Kaashyap Technologies Vect or Insurance Services Reckon Up Pref ered Financial Group Inf ocrossing Inc M ast ek Logix M icrosyst ems Quat rro BPO Wipro Technologies TekSof t Inc M edAssist Holdings Four Lakes Colorgraphics Zavat a Inc Zero Oct a Telecom Service Cent re Converso Cont act Cent res Geomet ric Solut ions First Source Solut ions M urugappa Group Apollo Hospit als Kale Consult ant s Hero Group Usha M art in Group Apex Document Solut ions Savicca Host Depart ment Okl Techno Cent re Comnet Int ernat ional Azzurri Educat ion KC M anagement Group Hamlet Comput er Group LocaM oda Inc Kingdom Builders PA Corporat ion Indust ronics Berhad Cast ek Sof t w are J&B Sof t w are NINt ec B.V.

Nit or Global Solut ions Agadia Syst ems Tricom India Educomp Solut ions Net t linx LTD Wipro Technologies Inf init e Comput er Solut ions Core Project s & Technologies Core Project s & Technologies Core Project s & Technologies M ahindra & M ahindra & Reliance Port Terminals Allsec Technologies Quint egra Solut ions Ruia Group i-Flex Solut ions 3i Inf ot ech Gat ew ay Technolabs Sat yam Comput ers Prit hvi Inf ormat ion Solut ions Ohio based KPO TES-PV Solut ions Int ernat ional Innovat ions Inc Capit al M arket Solut ions Int egro Technologies Huron Graf f enst aden Oridian Upst ream & Travelport ISO Dalglen Inat ech Inf osolut ions Reps Resources M old Tek Technologies M ind Tree Consult ing Calif ornia Sof t w are Company Fort is Financial Services Aurionpro Solut ions Jyot i CNC Aut omat ion Ybrant Technologies Int elnet Global Services Hero Group Calif ornia Sof t w are Company CS Sof t w are Ent erprise

Deal Size

20.60

N.A.

600.00

N.A.

330.00

110.00

180.00

N.A.

80.00

N.A.

N.A.

N.A.

N.A.

N.A.

30.00

12.00

49.00

N.A.

N.A.

25.25

N.A.

N.A.

N.A.

55.81

13.00

75.00

74.42

N.A.

100% 100% 100% 76% 100% 100% 100% 100% 100% 49% 51%

St ake

100% 100% 90% 100% 100% 100% 18% 100% 100% 100% 100% 100% 100% 100% 70% 100% 100% 100% 100% 100% 100% N.A.

100% 100% 30% 49% 100% N.A.

100% 100% 24

private and confidential

the Indian information technology & ITeS market

 The services sector is one of the most significant sectors of the Indian economy, contributing nearly 55% to the GDP in 2006–07  The sector continues to be the key driver of economic activities holding a share of more than 44% of GDP. The contribution of the IT industry to the country’s economy is increasing - the industry’s contribution to the nation’s GDP has gone up to 5.4% in FY07 as against 4.8% in FY06  The Indian ITES-BPO segment continues to chart strong year-on-year growth, witnessing high levels of activity both onshore and offshore  The IT software services and BPO industries have had a mixed year (2007) – the rupee played spoil sport, but top players reacted quickly in tightening the slack in the system  The year 2008 promises to bring in newer growth opportunities, potentially billion dollar ones, for the Indian IT industry  The export-driven Indian IT/ITeS industry — which has been dominated by application development and maintenance (ADM), voice-based BPO services and BFSI vertical — could see new and niche areas scaling up rapidly  Growth of IT services market is primarily being driven by growth of the economy, small and midsize businesses, government projects and increased customer focus – Indian IT services market is pegged to grow to US$10.73 billion by 2011 with anticipation of more contracts from firms, grappling with high attrition of IT staff

private and confidential

25

the Indian information technology & ITeS market

ITeS-BPO Segment

 The Indian ITES-BPO segment continues to chart strong year-on-year growth, witnessing high levels of activity both onshore as well as offshore   The industry is moving up the value chain into KPO to raise profits BPO market prospered with year-on-year TCV (Total Contract Value) growth of 147% for 2007   The current hot spots in KPO industry are engineering and design, basic data search, integration and management and biotech and pharma These opportunities in the KPO will help the Indian market climb the global value and knowledge chain

private and confidential

26

the Indian information technology & ITeS market

private and confidential

27

the Indian information technology & ITeS market

Industry Trends

 BPO entities have been at the front position of large mergers and acquisitions (M&A) in the Indian IT space as compared to IT services firms  India's knowledge process back-office (KPOs) firms are venturing overseas for acquisitions as they scale up, struggle for talent, try to beat a rising rupee and face competition from big software firms   Indian firms are looking to partner with or acquire local firms in Germany in an effort to tap European market for offshore IT services which, apart from growing at a fast clip, is also emerging as a natural hedge against a slowdown in the US, which accounts for the bulk of their business BPO services that are moving into Tier 2 and 3 cities and it is now expected that IT services will follow suit, though at a slower pace

Outlook

 Indian domestic IT/ITES market revenue is likely to reach Rs1,100 billion in 2008, an increase of 24% growth   For the domestic IT/ITeS sector, 2008 would also mark the beginning of the second growth phase characterised by the opportunities arising out of leveraging the IT infrastructure built up With the slowdown in the US economy, a strong rupee and questions over extension of the STP scheme looming large, 2008 will be a crucial year for the Indian BPO industry  Global clients will turn to new countries as inflation and employee turnover in Indian cities like Bangalore and Pune will frustrate them – talent shortage will push them to Tier-II within India, and to Latin America, Eastern Europe and Asia. Canada, Brazil, Chile, Costa Rica and Mexico will be some of the new hot spots in providing sourcing solutions 28

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the Indian information technology & ITeS market

IT Software Services (ITSS) Segment

 The IT software services and BPO industries have had a mixed year (2007)   Large IT companies with robust margins suffered an impact on their bottom line, but were able to absorb or even counter the effect - however, the smaller ones, which had lower margins, were hard hit.

More and more global corporations are trying to improve their cost efficiency and thus outsourcing their technology requirements to low-cost countries like India

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the Indian information technology & ITeS market

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the Indian information technology & ITeS market

Industry Trends

 The Banking and Financial Services (BFS) vertical forms the largest contributor to the total IT services revenue in India, and has maintained its lead over other verticals for a considerable number of years, almost 38% of the US$24 billion IT services business  IT companies are looking for ways to extend their value chain and bolster bottom-line – the uncertainty and cutting costs are some of the aspects which the IT companies would have to keep in mind during 2008    After sustained focus on Western shores, China is now high on their charter for Indian IT services providers The year 2007 appears to have been a year of consolidation for the security industry with organisations demanding better performing and flexible security solutions with constrained budgets and vendors responding with consolidated offerings With the US slowdown and a depreciating dollar, US tech firms are likely to push for export-led growth for earnings - hence, the Indian market is emerging as a hot spot growth area

Outlook

 According to Gartner, Indian IT services market is pegged to grow to US$10.73 billion by 2011 with anticipation of more contracts from firms, which are grappling with high attrition of IT staff  The market segments that are expected to witness strongest growth are consulting, IT management and business process management services with five-year CAGR of 28.1%, 23.8% and 27.1% respectively   However, some risks pertain to this scenario including uncertainty over the future evolution of the tax regime governing computer manufacturers and importers, and rupee appreciation IT sector faces moderate threat through resource crunch, weakening dollar, sub-prime crisis and recession fears in the US 31

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key contact information

 Sanjay Krishnan London [email protected]

hand phone: +44 (0) 7738321449 facsimile: +44 (0) 208 711 3943  Vinay Shah Mumbai [email protected]

hand phone: +91 (0) 9967642785 facsimile: +44 (0) 20 66325631  Vikram Bihani Bangalore [email protected]

hand phone: +44 (0) 9886409387 facsimile: +44 (0) 80 25091532

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