Ranu Vohra, Managing Director and CEO, Avendus

M&A in 2009: Gazing Into The Crystal BallAvendus CapitalFebruary 13, 2008

Private & Confidential

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PE/Buyout Funds Have Played An Active Role In The Strategic Growth Of Indian IT/BPO Industry

IT/BPO Continues To Remain Favorite Sector For PE Investments

Crucial Access To Capital For Expansion & Growth

Key Value Add By PE Investor

+

Improved Customer Confidence+

Positive Impact On Company’s Brand Due To Strong Pedigree Of The Fund

+

Business Development By Leveraging Fund’s Sector Expertise & Networks

+

Long-term Stewardship Of The Company

+

Enhanced Corporate Governance Plans

+

Year Company PE/Buyout Fund

2008 CMS* Blackstone*

2008 cBaySystems Lehman & S.A.C. Private Capital

2007 Intelenet Global Blackstone

2005 Genpact General Atlantic, Oak Hill Capital

2002 WNS Warburg Pincus

Notable Buyout Transactions In The Past

Nu

mb

er o

f D

eals

PE Investments In India Across Key Sectors

Source: Venture Intelligence

* Closing in progress

Private & Confidential

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Year 2008, Though Challenging Saw Growth In M&A/PE Activity In Terms Of Value From Last Year

Comparison By Deal Type (By Value ) Comparison By Deal Type (By Volume)

Comparison By Geography (Cross Border M&A)

+18% - 23%

Source: Venture Intelligence, Merger Market

$3,640 MM$4,279 MM 207

159

Private & Confidential

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Valuations In Technology Sector Are At Historical Lows Which Could Potentially Slowdown M&A / PE Activity In Year 2009

With An Overall Weak Macro Environment, It Is No Surprise That Key Indicators For Indian IT Companies Are Also Pointing To A Shakeout And Slowdown In Near And Medium Term

Source: BSE Website

Valuations For Indian IT Companies Are At The Lowest Levels Seen In Last 7 Years

TTM P/E Multiple: BSE IT Index

Increasing Pressure on Billing Rates

Weak Revenue Growth

Pressure on EBITDA Margins

Pressure on PAT Margins

Offshore Advantage Reducing

Investments

Private & Confidential

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Current Environment Is Also Expected To Have A Bearing On M&A  Strategies For Mid & Large IT/BPO Companies

Focus On Non-Linear Growth+

Tap The High Growth Domestic Market+

Serious Focus On Geographical De-risking+

Focus On Vertical De-risking+

Consolidate To Increase Size, Scale, Service Offerings, Client Base And Leverage SG&A Synergies+

Expected M&A Strategies

Private & Confidential

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Avendus Capital

IL& FS Financial Center B Quadrant, 5th Floor,Bandra Kurla ComplexBandra East, Mumbai 400051Landline: +91 – 22 – 6648 0050Fax: +91 – 22 – 6648 0040

The Millenia Tower A, 10th FloorNo 1 & 2 Murphy Road, UlsoorBangalore 560008Landline: +91 – 80 – 6648 3600Fax: +91 – 80 – 6648 3636Website: www.avendus.com

Contact Details

Ranu Vohra

Email: ranu.vohra@avendus.com Cell: + 91 – 98200 97727Landline: + 91 - 22 – 6648 0000