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3i Infotech Prepared by – Siddharth Saini Brief Overview of the Company: 3i Infotech is a global Information Technology company which provides technology solutions to over 500 customers in more than 50 countries across 5 continents, spanning a range of verticals - Banking, Insurance, Manufacturing, Contracting, Retail & Distribution and Government. 3i Infotech offers a comprehensive range of software and IT solutions, including packaged applications for the Banking, Financial Services & Insurance (BFSI), Manufacturing, Contracting, and Retail & Distribution industries. In addition, it offers a broad range of software services such as Custom Software Development, IT Consulting, IS and IT Security Consulting, Enterprise Application Integration (EAI), Managed IT Services, and specialized services such as Product Re-engineering, Compliance Consultancy, Application Rehabilitation and e-Governance, among others. The Company has its Intellectual Property Rights (IPR) driven solutions for Banking, Insurance, Mutual Fund and Capital Markets. The Company also provides Business Process Outsourcing (BPO), Managed Services, Technology Services, Workflow and Document Imaging, Business Intelligence and Data Warehousing Services. The Company has established its sound presence in the developed markets of US and UK with about one-third of its total revenue coming from these markets. It has its presence world wide, with its offices across 10 countries and clients spread in more than 50 countries. The Company's quality certifications include SEI CMMI Level 5 for Software business and ISO 9001:2000 for Infrastructure Services and Business Process Outsourcing (BPO) operations.

Business Solutions: Solutions • • • •

Insurance - Enterprise-wide solution for Life, Non-Life, Islamic (Takaful) insurance businesses and Insurance Brokering Businesses Banking - Core Banking, Treasury, ALM, Risk Management, Factoring and Loan Management solutions ERP - For Retail, Distribution, Manufacturing and Contracting enterprises ERM - Customer Relationship Management (CRM), Supply Chain Management (SCM), Partner Relationship Management (PRM) and Vendor Relationship Management (VRM) Services

Services • • • •

IT Consulting - Security Consulting, Digital Certification, IS Consulting and System Integration Software Development - Bespoke development of conventional, web, e & m commerce applications Managed Services - System Maintenance, Network Management, Data Center, Disaster Recovery, Configuration and Operation

Products • • • • • • • • • • •

PREMIA - Insurance Management KASTLE - Secure Banking Solutions AMLOCK - Anti Money Laundering & Fraud Detection iBOSS - Integrated Broker Office Solutions Suite AWACS - Stock Exchange Surveillance MFund - Mutual Funds ORION - Enterprise Resource Planning (ERP) Xroadz - Enterprise Relationship Management (ERM) Armada - Fleet Management Solution Veda - Recruitment Automation Solution DataScan.Online - Document Management System

The Company continues to focus on technology related to the Banking and Financial Services Industry (BFSI) segment. The Company has achieved leadership in retail lending solutions, factoring solutions, end to end offerings in claim processing and Life Insurance Solutions in Asia. In Mutual Fund solutions, the Company is a leader in fund accounting and investors servicing in Malaysia. The Company is also a leader in India in providing Anti Money Laundering Solutions. The Company is gaining leadership in e-governance services in India.

Major Customers: The Company's list of customers worldwide includes Prudential Assurance, Finansa, AIG, Emirates Bank, RAK Bank, Hong Leong Bank, SBI Factors, Oriental Insurance Company Limited, National Health Insurance Fund, Solidarity Islamic Insurance & Assurance Co., Comercial America Insurance Company, National Takaful Insurance, Hirsch International Corporation, Pidilite Industries, among others.

Executive Management Hoshang Sinor, Chairman V. Srinivasan, MD& CEO Hariharan Padmanabhan, Managing Director

Amar Chintopanth, Executive Director & CFO Anirudh Prabhakaran, Head - South Asia Debneel Mukherjee, Head - Asia Pacific Kalpesh Desai, Head - Europe, Middle East & Africa

Major Events in the company (M&A etc.): 3i Infotech acquired US-based J&B Software and its subsidiaries for $25.25 million (around Rs 100 crore) (Oct 15th, 2007). It would enable penetration into the blue chip BFSI customer base in the US and enable taking J&B’s payment processing solutions to global markets, including high growth Asian markets. The acquisition will also provide 3i Infotech significant cross selling opportunities. J&B Software is engaged in the business of providing software products and services related to remittance processing in the US. It has an operating margin of $3.8 million (EBITDA) and revenues of around $25 million. 3i Infotech Ltd acquired 26% stake in Taxsmile.com India Pvt. Ltd. on September 11, 2007. 3i Infotech Ltd will acquire a majority stake over a period. 3i Infotech acquired a 51% stake in HCCA Business Services Pvt Ltd on August 29, 2007.

Financials: − − − − − −

The Company’s revenue grew at a rate of 58% compared to its previous year. Lower growth in costs as compared to the revenue resulted in improvement in margins, both at the operating level and at the net level. Operating profits (EBITA) grew to Rs 1.585 million, a growth of 85% compared to the previous year. The net profit grew to Rs 1,045 million, a growth of 81% compared to last year

Revenue trends

Historical stock prices (Oct 06-Oct 07)

Sources of Revenue: The Company derives its revenue from sale of software products and services. This year also we witnessed a balanced growth between products and services businesses. In the last five years, the company has de-risked its business model by reducing its dependency on services business from 94% to the current 49%. This de-risking has been made possible by working towards the strategy of having a 50:50 mix between products and services.

Overall the geographical operating revenue mix in 2006-07 was broad based and well distributed with India & other South Asian countries contributing about 35%, North America 28%, and Middle East Asia and Africa about 21% and the Far East region contributing about 10% of the revenues. The UK geography contributed 6% of the revenue in 2006-07.

Competitors: The major competitors are as below : 1. 2. 3. 4.

Geodesic Information Systems Ltd Hinduja TMT Ltd Infotech Enterprises Ltd Nucleus Software Exports Ltd 5. Onward Technologies Ltd Source: http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ca pId=9376063

Company Strategy: To balance diversification with maintenance of growth by product acquisition strategy. It has developed two pronged strategy for this: 1. To acquire products already launched and accepted in the market. 2. To add 3i-infotech driven value to them, to make them much stronger offerings.

Strategic decisions taken The Company has taken few strategic decisions that will contribute to its growth significantly in coming years. These include - Launch of PREMIA Insurance Broking Exchange (IBX), a first of its kind subscription based internet solution for Indian insurance industry - Entry of the Company in the Mutual Funds vertical, both in the products and services space - Commencement of BPO operations for the Mutual Funds Industry - Entry into UK market through acquisition and also making it its first Insurance product sale in that geography - Tie up with Government of Karnataka’s e-Governance project - Launch of Technology Center of Excellence together with Oracle

News about the company: 1. 3i Infotech Ltd. has been selected as the Service Centre Agency by the State of Gujarat for setting up of Common Service Centers in Zone-III (Rajkot region) and Zone IV (South Gujarat region). The Company is in

discussion with the State of Gujarat for finalization of Master Services Agreement. 2. It has been selected by the Haryana State Government for the establishment of e-Disha Ekal Seva Kendra Project. As a part of the project, 3i Infotech will set up over 322 Citizen Service Centers (eDisha Ekal Seva Kendras) in 7 districts. The centers will serve as a single window service delivery channel for Government Services and will greatly benefit the citizens of Haryana. 3. 3i Infotech will release a range of solutions for the Islamic financial sector at Gitex. The solutions and services provider will launch the new line, targeted at financial service providers who operate Islamic compliant services, along with a new business execution outsourcing service.

Awards and Recognitions - Rated as one of the top 4 Indian software products companies (Source: Dataquest, India) - Ranked 2nd in the lending segment in 2006, by the UK based International Banking System (IBS) (2006) - Asia Insurance Review “Service Provider of the Year” Award (2005 and 2006) - Frost & Sullivan Product Innovation Award for Insurance Solutions, (2006) - Oracle "Top Revenue for FSI Industry FY06 Award" for ISV category in Malaysia (2006) - AMLOCK (Anti Money Laundering software solution) won the Hyderbad Software Exporters Association (HYSEA) Award for the “ Best Software Product of 2005-2006” - IBM Best New ISV Partner Award (2006) - Oracle Partner Excellence Independent Software Vendor Award (2004 and 2005) - Winner of Dubai Quality Appreciation Program award (2005)

Summary - Take aways: Going forward, the company is expected to deliver superior performance backed by twin engines of products and services. This, it is believed, will be powered by strong growth in the company's products business, as well as renewed traction in the services business, following a few focused acquisitions in both these spaces. In the software products space, the insurance segment is expected to drive growth, while the ERP business is expected to clock stable growth. Lower SG&A will also provide a further margin boost. Major headwinds are in the form of high competition in the BFSI products space and, also employee attrition and wage cost inflation, given increasing competition for scarce talent in the industry.