Suchita Summer Final

8/4/2019 Suchita Summer Final

1/64

FUNDAMENTAL ANALYSIS OF I.T. SECTOR

CHAPTER 1 INTRODUCTION

1.1 India Infoline Company Profile

India Infoline is a one-stop financial services shop, most respected for quality of its advice,

personalised service and cutting-edge technology.

India Infoline Group:

The India Infoline group, comprising the holding company, India Infoline Limited and its

wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging

from Equity research, Equities and derivatives trading, Commodities trading, Portfolio

Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small

savings instruments to loan products and Investment banking. India Infoline also owns andmanages the websites www.indiainfoline.com and www.5paisa.com

The company has a network of 976 business locations (branches and sub-brokers) spread across

365 cities and towns. It has more than 800,000 customers.

India Infoline Ltd:

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock

Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both

the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and

Portfolio Management Services. It offers broking services in the Cash and Derivatives segments

of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL

as a depository participant, providing a one-stop solution for clients trading in the equities

market. It has recently launched its Investment banking and Institutional Broking business.

A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients. These

services are offered to clients as different schemes, which are based on differing investment

strategies made to reflect the varied risk-return preferences of clients.

1
http://www.indiainfoline.com/


2/64


India Infoline Media and Research Services Limited:

The content services represent a strong support that drives the broking, commodities, mutual

fund and portfolio management services businesses. Revenue generation is through the sale of

content to financial and media houses, Indian as well as global.

It undertakes equities research which is acknowledged by none other than Forbes as 'Best of the

Web' and 'a must read for investors in Asia'. India Infoline's research is available not just over

the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First

Call and Internet Securities where India Infoline is amongst the most read Indian brokers.

India Infoline Commodities Limited:

India Infoline Commodities Pvt Limited is engaged in the business of commodities broking. Our

experience in securities broking empowered us with the requisite skills and technologies to allow

us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoy

memberships with the MCX and NCDEX, two leading Indian commodities exchanges, and

recently acquired membership of DGCX. We have a multi-channel delivery model, making it

among the select few to offer online as well as offline trading facilities.

India Infoline Marketing & Services:

India Infoline Marketing and Services Limited is the holding company of India Infoline

Insurance Services Limited and India Infoline Insurance Brokers Limited.

(a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance

Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICI

Prudential Life Insurance Co Limited, which is India's largest private Life Insurance Company.

India Infoline was the first corporate agent to get licensed by IRDA in early 2001.

(b) India Infoline Insurance Brokers Limited India Infoline Insurance Brokers Limited is a newly

formed subsidiary which will carry out the business of Insurance broking. We have applied to

IRDA for the insurance broking licence and the clearance for the same is awaited. Post the grant

of license, we propose to also commence the general insurance distribution business.

2


3/64


India Infoline Investment Services Limited:

Consolidated shareholdings of all the subsidiary companies engaged in loans and financing

activities under one subsidiary. Recently, Orient Global, a Singapore-based investment

institution invested USD 76.7 million for a 22.5% stake in India Infoline Investment Services.

This will help focused expansion and capital raising in the said subsidiaries for various lending

businesses like loans against securities, SME financing, distribution of retail loan products,

consumer finance business and housing finance business. India Infoline Investment Services

Private Limited consists of the following step-down subsidiaries.

(a) India Infoline Distribution Company Limited (distribution of retail loan products)

(b) Moneyline Credit Limited (consumer finance)

(c) India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Pte Limited:

IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in Singapore to

pursue financial sector activities in other Asian markets. Further to obtaining the necessary

regulatory approvals, the company has been initially capitalized at 1 million Singapore dollars.

3


4/64


1.2 Management:

Chairman & Managing Director

Mr. Nirmal Jain (MBA, CA, Cost Accountant)-1995

Previously:1. Hindustan Levers commodity export business (1989)

2. Associated with Inquire-Indian Equity Research (1994)

Executive Director

Mr. R. Venkataraman (B- Tech& MBA)-1999

Previously:

1. Held senior managerial positions in ICICI Limited, including

ICICI Securities Limited,

2. Joint venture with J P Morgan of USA and with BZW and Taib Capital Corporation

Limited

3. Assistant Vice President with G E Capital Services India Limited

Vision:

To be the most respected company in the financial services space.

Key Features:

Membership on the Bombay Stock Exchange Limited and the National Stock Exchange

Registered with the NSDL as well as CDSL as a depository participant, providing a one-

stop solution for clients trading in the equities market

Broking services in cash and derivative segments, online as well as offline.

Presence across 350 cities and towns with a network of over 850 business locations

Equity client base of over 5,00,000 clients Provision of free and world-class research to all clients.

4
http://www.indiainfoline.com/aboutus/pandsequ.asp?lmn=0#%23http://www.indiainfoline.com/aboutus/pandsequ.asp?lmn=0#%23http://www.indiainfoline.com/http://www.indiainfoline.com/aboutus/pandsequ.asp?lmn=0#%23http://www.indiainfoline.com/aboutus/pandsequ.asp?lmn=0#%23


5/64


1.3 History of India Infoline Ltd:

Previous Name New Name

Probity Research and Probity Research and

Services Private-Limited Services Limited

Probity Research and India Infoline.com Limited

Services Limited

India Infoline.com Limited India Infoline Limited

Date of Change Reason for Change

April 28, 2000 Conversion from Private to

Public Limited Company

May 23, 2000 To focus on the retail financial

intermediary business through

an online set-up.

March 23, 2001 To focus on the retail financial

intermediary business through

offline as well as online set-up.

5


6/64


1.4 Product & Services:

Equity Trading

Derivative Trading

Commodity Trading

Mutual Funds Trading

Depository Services

Margin Financing

NRI Desk Management

Research & Technical Analysis

Portfolio Management Services

International Equity & Commodity

Institutional Business

Investing Banking

Internet Trading (TRADE TERMINAL ADVANCED SOFTWARE)

Trader Terminal (TTK - Advanced):Trader Terminal is almost a substitute for NSE NEAT terminal and VSAT. In fact, it has many

more powerful features that only a premium trader can appreciate. Target customer segments are

It is for dedicated day traders, who churn their portfolio on minor movements in the

market, sometimes several times a day. Their rapid and high volume trading requires a

powerful interface for lightening fast order execution.

High Net worth Individuals with large and active equities portfolio who need to monitor

and action swiftly.

Large corporate or trusts who have dedicated staff to monitor, analyze and shuffle their

portfolios.

6


7/64


7

TTK ADVANCED SOFTWARE


8/64


Few popular features of trader terminal are:

o Fast trade execution with instant trade confirmation.

o Live streaming quotes and price watch on any number of stocks.

o Intra day charts, updated live, tick-by-tick.

o Live margin, position, marked to market profit & loss report.

o Set any number of price alerts on any number of scrips.

o Flexibility to customize screen layout and setting.

o Facility to customize any number of portfolios & watch lists.

o Facility to cancel all pending orders at one click.

o Facility to square off all transactions at one click.

o Top Gainers, Top Losers, Most Active, updated live.

o Index information; index chart, index stock information live.

o Market depth, i.e. Best 5 bids and offers, updated live for all stocks.

o Online access to both accounts and DP to check live updated Order and Trade

Book.

o Facility to place after market orders.

o Online fund transfer facility from leading Banks including ICICI, HDFC, CITI

and UTI banks.

o Online intra-day technical calls.

o Historical charts and technical analysis tools.

o India Infoline's world - acclaimed news service and research.

o And many more.

8


9/64


Equities:

India Infoline provided the prospect of researched investing to its clients, which was hitherto

restricted only to the institutions. Research for the retail investor did not exist prior to India

InfolineIndia Infoline leveraged technology to bring the convenience of trading to the investors

location of preference (residence or office) through computerised access. India Infoline made it

possible for clients to view transaction costs and ledger updates in real time.

Over the last five years, India Infoline sharpened its competitive edge through the following

initiatives:

Multi-channel delivery model:

The Company is among the few financial intermediaries in India to offer a complement of online

and offline broking. The Companys network of branches also allows customers to place orders

on phone or visit our branches for trading.

Integrated middle and back office:

The customer can trade on the BSE and NSE, in the cash as well as the derivatives segment all

through the available multiple options of Internet, phone or branch presence.

Multiple-trading options:

The Company harnessed technology to offer services at among the lowest rates in the

business.Membership: The Company widened client reach in trading on the domestic and

international exchanges.

Technology:

The Company provides a prudent mix of proprietary and outsourced technologies, which

facilitate business growth without a corresponding increase in costs.

Content:

The Company has leveraged its research capability to provide regular updates and investment

picks across the short and long-term.

9


10/64


Service:

Clients can access the customer service team through various media like toll-free lines, emails

and Internet- messenger chat for instant query resolution. The Companys customer service

executives proactively contact customers to inform them of key changes and initiatives taken by

the Company. Business World rated the Companys customer service as Best in their survey of

online trading sites carried out in December 2003.

Key features:

Membership on the Bombay Stock Exchange Limited and the National Stock Exchange

Registered with the NSDL as well as CDSL as a depository participant, providing a one-

stop solution for clients trading in the equities market

Broking services in cash and derivative segments, online as well as offline.

Presence across 350 cities and towns with a network of over 850 business locations

Equity client base of over 500,000 clients

Provision of free and world-class research to all clients.

For the first time INDIAINFOLINE brings investing community the power to be associated with

the elite dealing rooms and freedom to execute trade on their own. That is, one may trade from

their branches or trade on your own over the net and with that expertise and assistance.

NOW AND ODIN as the name suggests is the perfect partner for savvy investors. Clients opting

for this service would be provided services managed by a team of dedicated relationship

managers and experienced trade dealers. They would not only assist the client in information

dissemination but would also take care of all post trade requirements.

The other one is TT ADVANCED gives the power of trading from home, office or while

traveling and trade in the market of equity and derivatives. One can log on and get started from

computers or mobile devices. These products have very exciting features like integrated DP, hot

key functions etc.

10


11/64


Depository Services:

INDIAINFOLINE is among the few major Depository Participants holding securities worth

more than Rs.6000 crore under its management. India Infoline provides depository services to

investors as a Depository Participant with NSDL and CDSL.

Commodity Trading:

Commodities as a word originated from the French word commdite meaning benefit, profit.

Indiainfoline Commodities Limited is a member of both the exchanges (MCX & NCDEX) that

allows to trade in all the commodities traded at both the exchanges. At present, trading in

commodities is restricted to futures contracts only.

India Infolines extension into commodities trading reconciles its strategic intent to emerge as a

one stop solutions financial intermediary. Its experience in securities broking has empowered it

with requisite skills and technologies. Increased offering: The Companys commodities business

provides a contra-cyclical alternative to equities broking. The Company was among the first to

offer the facility of commodities trading in Indias young commodities market (the MCX

commenced operations only in 2003). Average monthly turnover on the commodity exchanges

increased from Rs 0.34 bn to Rs 20.02 bn. The commodities market has several products with

different and non-correlated cycles. On the whole, the business is fairly insulated against cyclical

gyrations in the business.

Key Features:

Enjoys memberships with the MCX and NCDEX, two leading Indian commodities

exchanges

Recently acquired membership of the DGCX

Multi-channel delivery model, making it among the select few to offer online as well as

offline trading facilities

Extended commodity trading to retail investors, among the few Indian financial

intermediaries to do so

Online business at 80% of revenues dominates commodities trading revenues

11


12/64


Provides regular commodity updates pertaining to the Indian and international

environment

Mutual Funds Services:

Indiainfoline is also promoting mutual funds of all companies.

Corporate advisory group:

Corporate Advisory Group provides various solutions to corporate, banks and FIs on the

management of debt, equity and investments. The services extend from advising clients to earn

maximum profits by investing through selected papers/schemes like MF/PMS etc. The CAG can

help in:

Equity Management:

Placement of equity

Public offers and right issues

Promoter funding

Private placement of shares

Capital Restructuring

Debt Services:

Syndication of loans from Banks/FI and project financing

Bridging short term working capital

Other Debts like Inter Corporate Deposits etc

Placement of long/short term debt papers like debentures & bonds

Sourcing medium/short term papers

Investment Solutions:

Treasury operations

Non- SLR investments

Cash flow Management

Mutual Fund Investments

Portfolio Management Services

12


13/64


Group Insurance for your Staffs

General Insurance for your assets

Equity and commodity & on line trading

Portfolio Management System:

Portfolio Management Services manage clients wealth more efficiently, reduce risk by

diversifying across assets, sectors and funds, and maximizing returns. Expert Portfolio Managers

find best of avenues to achieve optimum returns at managed levels of risk. This service could

also be called as transparent collective investments.

Indiainfoline provides innovative, integrated and best-fit solutions to their corporate customers, it

is continuous endeavor to provide value enhancement through diverse financial solution on an

on-going basis, through products like corporate debt, private equity, IPO, ECB, FCCB,

GDR/ADR etc.

Corporate Finance:

They focus on finding partner for client, who not only help in adding value but also improve the

future valuation of the organization. They specialize in structured financing and providing

advisory services related to financial planning, modeling and advising on financial requirement.

13


14/64


1.5 Account Opening Guidelines:

1. Kindly fill account opening form after going through account opening instruction given

in the account opening form.2. Please submit your duly filled & signed account opening form with one photograph,

proof of identity and proof of address documents of account holder(s) as may be required.

3. Kindly sign agreement with DP (agreement will state rights & obligations of both parties)

and Schedule of Charges for Depository Services.Indiainfoline will send a copy of

agreement and schedule of charge along with Welcome kit for your records.

4. Indiainfoline would intimate "Client Id" (account no.) through a welcome letter once

your depository account is opened. This 'Client Id' number along with your 'DP Id'

number forms a unique combination. Both these numbers should be quoted in all your

future dealings with Indiainfoline Limited.

Indiainfoline will give you instruction slips for depository services viz., dematerialization,

delivery instruction for trades, etc. These instruction slips will bear pre-printed serial numbers

and your pre stamped client-id. Kindly preserve these carefully.

1.6 Communications:

The company has its disposal, an efficient network of advance communication system and

intends to install CRM facility; besides this it is implementing interactive client information

dissemination system which enables clients to view their latest client information on web. It has

an installed multiple WAN to interconnect the branches to communicate on real time basis.

The company is equipped with most advanced systems to facilitate smooth functioning of

operations. It has installed its major application on IBM machines and uses latest state of art

financial software.

14


15/64


CHAPTER 2 FUNDAMENTAL ANALYSIS

Fundamental analysis is used to find the value of a stock and technical analysis is used to find the

price of stock.

Fundamental analysis serves to answer questions, such as:

1 Is the companys revenue growing?

2 Is it actually making a profit?

3 Is it in a strong-enough position to beat out its competitors in the future?

4 Is it able to repay its debts?

5 Is management trying to "cook the books"?

15

FUNDAMENTAL ANALYSIS

ECONOMY ANALYSIS COMPANY ANALYSISINDUSTRY ANALYSIS

GLOBAL ECONOMY INDIAN ECONOMY


16/64


CHAPTER 3 GLOBAL ECONOMY OVERVIEW

The world economy is in the middle of most severe financial crisis since the Great Depression

after the end of World War II. There is a massive change at a global level. In December 2008,the World Bank projected slight global growth of 0.9 per cent. Just 3 months later, in their 30

March update, they had revised that figure down to a 1.7 per cent decline. Others say it could be

a 2 per cent plus decline.

Early responses to prevent the crisis from spreading from source of origin to rest of the world has

failed and now the crisis is spreading from developed countries to the developing nations also.

Even if effective and better coordinated measures are taken, it will take some time to show

appropriate response.

In the baseline scenario, income per capita for the whole world is expected to decline in 2009 as

shown in above figure. This will be the case not only in the developed economies but also in

many developing countries; where per capita income growth will be negative or well below what

is required according to estimates of economists.

16


17/64


3.1 Economic and Financial Market Outlook:

The global economy sagged in the first quarter of 2009 with many countries reporting record

quarterly declines in real output. The IMF updated its global economic forecast to show a 1.3%

contraction in world GDP 2009, the sharpest drop in the post-war period. Emerging economies

are expected to grow, but just barely, with an average 1.6% increase in GDP. The advanced

economies are forecast to contract by 3.8% on average.

The service sectors performance was less even, but its index level still rose to 43.5 in April/

May, higher than the first quarters 40.4 average. Even though these indicators point to continued

contraction in output, they also suggest that the pace of decline slowed from the dismal first-

quarter performance.

With the worst for the global economy looking as though it may have passed, investors risk

appetite increased and volatility in financial markets eased. Equity markets had an impressive

run, with the world market index up 44% from its March low, commodity prices rallying and

credit spreads narrowing all indicative of a change in attitude by investors.

The global economy posted a sharp decline in early 2009.

Leading indicators hint that the worst has passed for the global recession.

Recovery is still expected to take hold in late 2009, with momentum building in 2010.

Extraordinarily low interest rates and government stimulus to lift economic activity.

U.S. economy still staggering but showing some signs of life.

Housing market recession looks as though it is in the final stage.

Consumer confidence gets a lift from the stock market rally, lower energy costs and low

interest rates.

Moderate rebound in U.S. consumer spending ahead as households repair their balance

sheets.

U.S. recovery will be modest compared to history.

The extent to which the supply and demand side developments will weigh on the recovery

beyond 2010 depends on many factors.

17


18/64


3.2 Systemic Reforms Need to Focus on Four Core Areas:

a) The establishment of a credible and effective mechanism for international policy

coordination. To guide a more inclusive process, adequate participation and representation of

developing countries in the process of policy coordination and in the institutions of global

governance is required, implying the need for a fundamental revision of the governance

structure and functions of the IMF and the World Bank;

b) Fundamental reforms of existing systems of financial regulation and supervision leading

to a new internationally coordinated framework that can avoid the excesses of the past;

c) Reform of the present international reserve system, away from the almost exclusive

reliance on the United States dollar and towards a multilaterally backed multi-currency

system which, perhaps, over time could evolve into a single, world currency-backed system;

d) Reforms of liquidity provisioning and compensatory financing mechanismsbacked

through, among other things, better multilateral and regional pooling of national foreign-

exchange reserveswhich avoid the onerous policy conditionality attached to existing

mechanisms.

18


19/64


CHAPTER 4 INDIAN ECONOMY OVERVIEW

According to the World Fact Book, India is among the world's youngest nations with a median

age of 25 years as compared to 43 in Japan and 36 in USA. Of the BRICBrazil, Russia, Indiaand Chinacountries, India is projected to stay the youngest with its working-age population

estimated to rise to 70 per cent of the total demographic by 2030, the largest in the world. India

will see 70 million new entrants to its workforce over the next 5 years.

With the largest number of listed companies - 10,000 across 23 stock exchanges, India has the

third largest investor base in the world.

India's healthy banking system with a network of 70,000 branches is among the largest in the

world.

According to a study by the McKinsey Global Institute (MGI), India's consumer market will be

the world's fifth largest (from twelfth) in the world by 2025 and India's middle class will swell by

over ten times from its current size of 50 million to 583 million people by 2025.

Indian economy has been witnessing a phenomenal growth since the last decade. The country is

still holding its ground in the midst of the current global financial crisis.

Foreign institutional investors (FIIs) turned net buyers in the Indian market in 2009. Direct

investment inflows also remain strong, prompting official expectations that foreign direct

investment (FDI) inflows in 2009 would better the realized inflows of US$ 33 billion in 2008

and touch US$ 40 billion.

According to the Asian Development Bank's (ADB) 'Asia Capital Markets Monitor' report, the

Indian equity market has emerged as the third biggest after China and Hong Kong in the

emerging Asian region, with a market capitalization of nearly US$ 600 billion.

19


20/64


Despite the global financial crisis, inflow of foreign capital to the country has increased sharply

in 2008-09.

The shrinkage in the international markets has hit countrys total external trade.

However, exports from special economic zones (SEZs) rose 33 per cent during the year

to end-March 2009.

In April 2009 aggregate deposits were seen to increase by 2.4% as compared to 0.1%

recorded in the previous year. Investments in government and approved securities

stepped up by 6% in the month of April 2009 from 4% recorded in the previous year.

India's foreign exchange reserves increased by US$ 4.2 billion to US$ 255.9 billion for

the week ended May 8, 2009, according to figures released in the Reserve Bank of India's

(RBI) weekly statistical supplement.

FIIs have made investments of around US$ 2 billion as of May 14, 2009, including a

record single day net purchase of US$ 824.72 million on May 13, 2009, according to the

Securities and Exchange Board of India (SEBI).

The WPI based inflation has softened to below zero level. However, prices of items of

mass consumption (food articles) show not signs of softening and have risen substantially

due to supply side constraints.

Stock markets are still in the readjustment mode after the budget announcements and

fears over the rising deficits due to increased borrowings to aid the industry and to

support schemes in the social sector.

20


21/64


4.1 Development Indicators:

1. Industrial Growth:

The recent data released on the Industrial growth continues to show weakness .

The industry grew by 2.7% in May 2009 as compared to the growth of 4.4% posted in the

corresponding month of the previous year. The industry segments that continued to post negative growth even in the second month

of 2009-10 were food products, cotton textiles, wool, silk and manmade fibre textiles,

Jute products, leather products and metal products. Two more industry segments that

came in the negative category were beverages & tobacco and paper industry.

21


22/64


2. Infrastructure industries:

The data during the first two months of 2009-10 on infrastructure industry indicated

improvement in output. The main drivers of growth seen in the infrastructure industry

during the period were cement, power and coal posting growth of 11.7 % , 5.1% and

11.8% respectively in April- May 2009-10 compared to the growth of 5.4% , 1.7% and

9.5% respectively during the same period of previous fiscal. However, production of

crude petroleum and petroleum refinery were badly hit.

22


23/64


3. Inflation Trends:

Slowdown in the economy and rapid decline in global commodity prices toned down the

overall inflation to below 0 levels for the first time in 35 years. However, it was found

that prices of some of the items of mass consumption were still rising. While, the average

overall inflation numbers for the month of June 2009 turned negative however, food

articles falling within the category of primary commodities continue to rise by 8.6% in

June 2009 on YoY terms compared to 6% in the previous year. Furthers food articles was

also seen to get dearer (m-o-m basis) over May 2009.

In June 2009 prices of non food articles, fuel leather and basic metals dropped by

2%, 12.6%, 1% and 14% respectively from positive growth of 17%, 16%, 1.6% and

21% seen in the previous year.

4. Stock Market Trends:

The Indian stock market plunged below ( BSE Sensex) 10 K points in December

2008 from a high 20K in January 2008 and it took more than a quarter to get the index

back to above 10K level . The BSE index scaled to 15K points after the elections

23


24/64


however the budget announcements weakened the investment sentiments, only to

readjust.

5. Foreign Exchange Reserves

An expansion was seen in the countrys forex reserves as it crossed USD 260 billion from

USD 250 billion about a month back. This was on the back of foreign currency assets

which is expressed in US dollar terms and includes appreciation or depreciation of non-

US currencies and increase in the inflows of foreign institutional investments in the

country

6. GDP Growth Rate: 7. Interest Rate:

24


25/64


4.2 Sectoral Performance:

IT and ITES:

It was not business as usual for the big four IT players, although the first three quarters

proved profitable with revenues hitting all time high of 4 bn for companies like TCS and

star performer Infosys acquiring London based AXON, the SAP service and consultant.

The sub-prime mortgage crises in the US triggered the worst of liquidity crunch and the

25


26/64


bankruptcy of the huge financial units which fed business for the IT biggies along with initial

strengthening of the rupee to as much as 38 per dollar led to severe financial and business

losses in this famed sector. Ill effects were abrupt cost-cutting measures evident by lay-offs

and salary cuts especially in the top management. Despite all this, the sector is expected to keep

its upward journey on the back of growing domestically evolving banks, micro finances

and SMEs with a hope that downturn in developed markets will encourage more

institutions to take cost cutting measures and would create demand for the IT enablers.

Infrastructure:

Infrastructure, the very basic requirement for growth and sign of prosperity has

also been threatened by the downturn. But this sector which needs a huge pile of money to cater

to growing economy of India has seen a withdrawal of more than $13 bn by the foreign

investors. Several expansion plans in steel, auto, fertilizers, refineries and oil and gas

exploration are facing capital shortages creating an urge for the govt. to set up a Rs 1 trillion

revolving fund to help infrastructure funds weather global economic cycles.

Auto Industry:

The ceremonious launch of Tata Nano and the acquisition of UK based Jaguar and Landrover by

Tata motors exemplified the growing and diverse needs of the consumer and also the

ability of the industry to spurn such deals and invite huge companies to invest as FDIs. The

setting up of assembly plants by high end international companies like Audi, BMW kick-

started the growth of a well developed auto sector. Despite these highs, there has been an

overall demand slowdown across all the companies and across all the models in Auto industry.

Also due to credit crises, much hyped Tata takeovers are finding their business in trouble and

financing difficult with much hope riding on the Nano scheduled to launch shortly. All the major

companies have cut down production to avoid the rising inventories and cut costs.

BFS:

The global meltdown and the financial fiasco which lead to the disappearance of old

investment banks like Lehman, the acquisition of Merrill Lynch by BOA, and commercialization

of Goldman Sachs and Morgan Stanley had their own effects. Though most of Indian banks were

26


27/64


not over leveraged thanks to our bit more tight regulatory frameworks, but some of the major

banks like ICICI and SBI had to bear some losses. But Indian banking sector was able to

shed of the crises and especially nationalized banks saw an increase in savings and fixed

deposits as the stock market turned unviable for investments. The cycle of increasing

inflation and slowdown forced the RBI to implement monetary policy of decreased

interest rates, CRR and Repo rate to boost up investments and spending. But the stock

market investors ( better call speculators) who were busy investing in small and mid sized

financial companies last year with the stock prices progressing 2-3 % daily, have suffered

huge losses even to the tune of 90%, a horrifying figure by any standard.

Realty and Retail:

The realty sector had not seen many buyers as inflation lead to higher interest rates. This

reduced liquidity lead to lower demand and slowed down the in sector. The land value did not

depreciate and spending on land purchase was only burdensome. The retail sector had a similar

story as there was reduced consumer spending owing to high interest rates.

Some sectors like the evergreen telecom have seen boom while some have been hard-

hit. The meltdown in the US and its effects on the various sectors in India shows that the

economy is not decoupled from the world economy. At the same time its no-brainer that India is

on a high growth path given the pool of investments in Auto, Infrastructure and domestically

emerging institutions. Proper planning and resource management will help India race towards a

better position world-wide in the years to come.

CHAPTER 5 INTRODUCTION TO I.T. SECTOR:

Information Technology (IT) industry in India is one of the fastest growing industries. Indian IT

industry has built up valuable brand equity for itself in the global markets. The Indian

Information Technology sector can be classified into the following broad categories - IT

Services, Engineering Services, ITES-BPO Services and E Business.

27


28/64


IT Services can further be categorized into Information Services (IS) outsourcing, packaged

software support and installation, systems integration, processing services, hardware support and

installation and IT training and education.

Engineering Services include Industrial Design, Mechanical Design, Electronic System Design

(including Chip/Board and Embedded Software Design), Design Validation Testing,

Industrialization and Prototyping.

IT Enabled Services are services that use telecom networks or the Internet. For example, Remote

Maintenance, Back Office Operations, Data Processing, Call Centers, Business Process

Outsourcing, etc.

E Business (electronic business) is carrying out business on the Internet; it includes buying and

selling, serving customers and collaborating with business partners.

IT sector is attracting considerable interest not only as a vast market but also as potential

production base by international companies. Therefore India is considered as a pioneer in

software development and a favorite destination for IT-enabled services. The rapid growth in the

sector is a consequence of access to trained English speaking professionals, cost competitivenessand quality telecommunications infrastructure. Companies operating from India are able to

leverage the advantage of the Indian time zone to offer 24 x 7 services to their global customers.

Several world leaders including General Electric, British Airways, American Express, and

Citibank, have outsourced call centre operations to India.

28


29/64


The Indian IT industry has a prominent global presence today largely due to the software sector.

It has recorded a production of Rs. 68,850 crore during the year 2000-01, and has achieved a

production of Rs. 368,220 crore during the year 2008-09. Thus the industry has grown by a

factor over by five times during the last eight years. The software industry which was worth Rs.

37,750 crore in 2000-01 has achieved a production of Rs. 273,530 crore during the year 2008-09.

Software exports have become an important part of Indias exports, and Indias international

image. Indian Software exports have risen from Rs. 28,350 crore in 2000-01 towards figure of

Rs. 216,300 crore in 2008-09. This success in software has been built on the foundations of

public investments in human capital, outward orientation in policies, and a highly competitive

private sector industry. The Economic Planning Group maintains a database of production and

exports data relating to Electronics and IT-ITeS industry. This data is collected from different

manufacturing and service industry and industry associations. The data is released on as annual

basis through the Annual Report of DIT.

29


30/64


5.1 Electronics and I.T. Exports:

During the year 2008-09, electronics and IT exports are estimated to be Rs. 235,300 crore, as

compared to Rs. 177,600 crore in 2007-08, showing a growth of 32.5 per cent. The software and

services industry continues to show a robust growth and the total value of software and services

export are estimated at Rs. 216,300 crore (US $ 47 billion) in 2008-09, as compared to

Rs.164,400 crore (US $ 40.4 billion) in the year 2007-08, an increase of 31.6 per cent in rupee

terms and 16.3 per cent in dollar terms.

30


31/64


5.2 SWOT Analysis:

Strengths:

Highly skilled human resource;

Low wage structure;

Quality of work;

Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of e-

governance projects);

Many global players have set-up operations in India like Microsoft, Oracle, Adobe, etc.

Following Quality Standards such as ISO 9000, SEI CMM etc.;

English-speaking professionals;

Cost competitiveness;

Quality telecommunications infrastructure.

31


32/64


Weaknesses:

Absence of practical knowledge;

Dearth of suitable candidates;

Less Research and Development;

Contribution of IT sector to Indias GDP is still rather small;

IT development concentrated in a few cities only.

Opportunities:

High quality IT education market

Increasing number of working age people

India 's well developed soft infrastructure

Upcoming International Players in the market

Threats:

Lack of data security systems

Countries like China and Philippines with qualified workforce making efforts toovercome the English language barrier

IT development concentrated in a few cities only

32


33/64


5.3 Regulatory Regime and Laws relating to the IT sector:

Department of Information Technology (DIT):This department which is under the Ministry of Communications and Information Technology is

responsible for the formulation, implementation and review of national policies in the field of

Information Technology including hardware and software, standardization of procedures,

internet, e-commerce and information technology education and development of electronics.

Initiatives for development of Hardware/Software industry including knowledge based

enterprises; measures for promoting IT exports and competitiveness of the industry are looked

after by the Electronics Export and Computer Software Promotion Council (ESC) and National

Informatics Centre (NIC) along with DIT.

The Department of Information Technology undertakes the following functions:

Policy matters relating to Information Technology; Electronics; and Internet (all matters

other than licensing of Internet Service Provider).

Promotion of Internet, IT and IT enabled services.

Assistance to other departments in the promotion of E-Governance, ECommerce, E-

Medicine, E-Infrastructure, etc.

Promotion of Information Technology education and Information Technology-based

education.

Matters relating to Cyber Laws, administration of the Information Technology Act. 2000

(21 of 2000) and other IT related laws.

Matters relating to promotion and manufacturing of Semiconductor Devices in the

country; The Semiconductor Integrated Circuits Layout Design Act, 2000 (37 of 2000).

Interaction in IT related matters with International agencies and bodies e.g. Internet for

Business Limited (IFB), Institute for Education in Information Society (IBI) and

International Code Council - on line (ICC).

33


34/64


Initiative on bridging the Digital Divide: Matters relating to Media Lab Asia.

Promotion of Standardization, Testing and Quality in IT and standardization of procedure

for IT application and Tasks.

Initiatives for development of Hardware / Software industry including knowledge-based

enterprises, measures for promoting IT exports and competitiveness of the industry.

All matters relating to personnel under the control of the Department.

National Association of Software and Services Company (NASSCOM):

NASSCOM acts as an advisor, consultant and coordinating body for the IT-BPO industry in

India, and has played a key role in enabling the government in India to develop industry friendly

policies. NASSCOM was set up in 1988 to facilitate business and trade in software and services

and to encourage advancement of research in software technology. It is a not-for-profit

organization, registered under the Indian Societies Act, 1860. NASSCOM has been proactive in

pushing this cause for ensuring that the Indian Information Security environment benchmarks

with the best across the globe. As a part of its Trusted Sourcing initiative, NASSCOM is in the

process of setting up the Data Security Council of India (DSCI) as a Self Regulatory

Organization (SRO) to establish, popularize, monitor and enforce privacy and data protection

standards for Indias ITeS-BPO industry. DSCI shall function as an enabler to the IT and ITeS

industry to grow at a rapid pace by facilitating the adoption and enforcement of the prescribed

security standards and best practices.

34


35/64


Information Technology Act, 2000:

The legal enactment which governs the process and dissemination of information digitally in

India is the Information Technology Act, 2000. The Act along with its Rules legalizes the

acceptance of electronic records and digital signatures providing a legal backbone to e-

commerce.

The Indian Information Technology Act addresses the following issues:

Legal Recognition of Electronic Documents;

Legal Recognition of Digital Signatures;

Offenses and Contraventions;

Justice Dispensation System for Cybercrimes.

35


36/64


5.4 Government Initiatives

The Foreign Trade Policy 2004 - 2009 permits import of all kinds of computers (except second

hand computers) in India without any licenses. In order to promote domestic investment, foreigndirect investment, transfer of technology / process know-how, technical collaboration, joint

venture etc in India and export IT software products and services from India to the global

market, both Government of India and State Governments in India have been offering a series of

policy packages including tax breaks, import duty concessions etc under various schemes which

include:

Export Oriented Units (EOUs) Scheme:

The purpose of the scheme was basically to boost exports by creating additional production

capacity.

Electronics Hardware Technology Parks (EHTPs):

Electronics Hardware Technology Park (EHTP) complexes can be set up by the Central

Government, State Government, Public or Private Sector Undertakings or any combination

thereof, duly approved by theInter- MinisterialStanding Committee (IMSC) in the Ministry of

Communication and Information Technology (Department of Information Technology).

Software Technology Parks (STPs):

The Software Technology Parks of India (STPI) have been set up by the Ministry of Information

Technology, Government of India and the International Technology Park in a joint project by the

State Government.

Special Economic Zone (SEZ) Scheme:

SEZs are being set up to enable hassle free manufacturing and trading for export purposes. Sales

from Domestic Tariff Area (DTA) to SEZs are being treated as physical export. This entitles

domestic suppliers to Drawback/ DEPB benefits, CST exemption and Service Tax exemption.

Certain exemptions like Income Tax exemption on export profits is available to SEZ Units for 5

36


37/64


years, 50% for next 2 years and 50% of ploughed back profits for 3 years thereafter are available

for units in these designated areas/zones.

Export Promotion Capital Goods (EPCG) Scheme:

The EPCG Scheme allows import of capital goods for pre-production, production and

postproduction (including CKD/SKD thereof) at 5% customs duty subject to export obligations.

Units undertaking to export their entire production of goods and services may be set up under the

Export Oriented Unit (EOU) Scheme, Electronic Hardware Technology Park (EHTP) Scheme or

Software Technology Park (STP) Scheme. The Export Promotion Industrial Park, built near

International Technology Park, gives an exclusive 288 acres of area for export oriented business.

GE has its India Technology Center located at this park and employs hundreds of multi

disciplinary technology development activities. An industrial park, known as Electronic City was

set up in 1991 taking more than a hundred electronic industries including Motorola, Infosys,

Siemens, ITI, and Wipro, in an area of around 330 acres. The IT Corridor project, conceptualized

by Singapores Jurong Town Corporation Private Ltd, was initiated by the Department of IT and

the Bangalore Development Authority in order to develop state of the art facilities for the

development of knowledge based industries.

37


38/64


5.5 Government Initiatives for the ITes Sector:

The government of India has already set up a single-window facility for attracting foreign direct

investments in this sector. Recognizing the potential of this sector, the government has provided

many incentives including a tax holiday up to 2010 and competitive duty structures. In addition

to the central government incentives, respective state governments have also developed attractive

incentive packages to target investors. The government is also actively trying to reduce

international communication cost. The telecommunications ministry has already started phased

liberalization programme. In order to support IT-related services, the government is providing

some special incentives and is also providing infrastructure support through organizations such

as the Software Technology Parks (STP). Financial institutions and venture capitalists in the

country are willing to provide funds at competitive rates for expansion in ITes businesses. All

these factors collectively create a number of opportunities in the IT sector.

According to NASSCOM, Indian IT-BPO industry shows resilience; to grow by 4-7 percent in

FY09-10:

Industry revenues gross USD 58.8 billion in FY 08-09; export revenues US$46.3

billion; Domestic: USD 12.5 billion

Export revenues in FY 09-10 estimated at USD48-50 billion; domestic revenues to grow

by 15-18%

Industry rankings released for FY08-09

o

Genpact, WNS and TCS BPO lead the NASSCOM Top 15 BPO rankings

o TCS, Infosys and Wipro are Top 3 players in the NASSCOM Top 20 IT services

export rankings and NASSCOM Top 20 IT-BPO employers.

38


39/64


FY 08-09 highlights:

FY 08-09 export revenues aggregate USD 46.3 billion recording a growth of 16.3%

Domestic IT-BPO market clocks INR 570 billion; exhibits 21% growth

Offshore component to increase

Growth in emerging geographies, APAC, RoW 3X of US & UK

Domestic market drives growth - Large transformation deals in telecom, e-governance

NASSCOM announced the findings of its annual survey on the performance of the Indian IT-

BPO services sector for FY08-09 and outlook for FY09-10. According to the findings, the sector

reached USD 58.8 billion in FY08-09 up from USD 52 billion in FY07-08. Export revenues for

the Indian IT-BPO industry recorded growth of 16.3 percent and clocked revenues of USD 46.3

billion in FY08-09 up from USD 40.4 billion in FY07-08. The domestic segment grew by 21%

to register revenues of INR 570 billionin FY08-09 from INR 470 billion in FY07-08.

Within the export segment, IT services have grown by 14.7% to clock revenues of USD 26.5

billion; BPO exports are up by 16.5% registering revenues of USD 12.7 billion. Engineeringservices and product exports clocked revenues of USD 7.1 billion, growing at 11% in FY 08 -09.

The domestic market witnessed enhanced focus in FY 08-09, with large transformational deals in

telecom and e-governance and contract value of outsourcing deals growing by 32%. Domestic

BPO got a special boost with over 40 percent growth in this period.

39


40/64


FY 09-10 trends/estimates:

FY09-10 Export revenue projected to grow at ~4-7% to reach ~USD 48-50 billion

Domestic IT-BPO market to reach ~INR 650-670 billion growing at ~ 15 18 %

Core markets, North America and BFSI started to stabilize

Decision making starting to happen but buyers remain cautious; large deals missing

Analysts continue to downgrade IT spending for 2009

Q1 result of FY 09-10 demonstrate sustained focus with growth in operating margins and

high utilization

The last few weeks have witnessed some stabilization in the demand environment with

improvements in GDP growth rates, stock indices upswing that could indicate early signs of

recovery. However, worldwide IT spending growth is expected to decline in 2009 and 2010. The

environment continues to be challenging with global demand ecosystem being weak; absence of

large deals; vendor consolidation and pricing pressures.

The industry in its first quarter results has demonstrated sustained focus with increased

operating margins and enhanced utilization. The NASSCOM survey estimates that the IT-BPO

export revenues will grow by ~ 4-7% to reach ~ USD 48-50 billion in FY09-10. said Mr.

Bhasin. IT-BPO Domestic revenues are expected to grow by 15-18%, to reach INR 650-670

billion.

Global sourcing is today an essential component for organizational competitiveness. The

industry in India will continue to invest in offering transformational solutions and enhance its

value proposition in sync with client requirements.

40


41/64


Note:

Includes IT Services, Engg Services, Software Products and Offshore Product

Development revenues

Ranking is based on companies that have submitted the detailed form. It does not include

Mahindra Satyam whose revised audited revenues are not available

This list does not include some companies whose corporate headquarters are located

outside India, but have significant India-centric delivery capabilities, and have not shared

their India-centric revenue figures. Had they been ranked based on their India revenues,

companies such as Accenture, Cognizant, HP and IBM and would have also appeared in

this ranking.

41


42/64


5.6 Tech Pulse Index:

The Tech Pulse Index published by Federal Reserve Bank of San Francisco, which reflects

IT sector activity in the US, has shown consistent recovery since December 2008. Since

December the rate of decline has come down on month-to-month basis.

42


43/64


5.7 Key Factors for Growth of IT in India:

Some of the major factors which played a key role and will be growth driving factors in India'semergence as global IT player are:

Indian Education System:

The Indian education system places strong emphasis on mathematics and science, resulting in a

large number of science and engineering graduates. Mastery over quantitative concepts coupled

with English proficiency has resulted in a skill set that has enabled India to reap the benefits of

the current international demand for IT.

High Quality Human Resource:

Indian programmers are known for their strong technical and analytical skills and their

willingness to accommodate clients. India also has one of the largest pools of English-speaking

professionals.

Competitive Costs:

The cost of software development and other services in India is very competitive as compared to

the West.

Infrastructure Scenario:

Indian IT industry has also gained immensely from the availability of a robust infrastructure

(telecom, power and roads) in the country.

In the last few years Indian IT industry has seen tremendous growth. Destinations such as

Bangalore, Hyderabad and Gurgaon have evolved into global IT hubs. Several IT parks have

come up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc. These parks offer Silicon Valley

43


44/64


type infrastructure. In the light of all the factors that have added to the strength of Indian IT

industry, it seems that Indian success story is all set to continue.

According to a recent World Bank study, India is the preferred location for software vendors for

its quality and cost. India has strong UNIX base which provides opportunity for the development

of products for internet based applications. Further, India has global connectivity with

international dialing facility from over 13220 locations, Leased/switched high-speed data links

from major centers through STPs and VSNL for point-to-point communication are also

available.

Abundant investment opportunities exist in the following thrust areas in India:

Communication Infrastructure

Optic Fiber Cable

Gateways

Satellite based Communication Wireless

Software Development

IT-enables Services

IT-enabled education

Data Centers & Server Farms

Hence IT sector is attracting considerable interest not only as a vast market but also as potential

production base by international companies. And it is one of the fastest growing segments of the

Indian industry both in terms of production and exports.

44


45/64


CHAPTER 6 COMPANY ANALYSIS

6.1 Infosys Technologies Ltd.

Infosys Technologies Ltd. (NASDAQ: INFY) was started in 1981 by seven people with US$250. Today, we are a global leader in the "next generation" of IT and consulting with revenues of

over US$ 4 billion.

Infosys defines, designs and delivers technology-enabled business solutions that help Global

2000 companies win in a Flat World. Infosys also provides a complete range of services by

leveraging our domain and business expertise and strategic alliances with leading technology

providers.

Infosys' offerings spanbusiness and technology consulting,application services, systems

integration,product engineering,custom software development, maintenance, re-

engineering,independent testing and validation services,IT infrastructure services andbusiness

process outsourcing

Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the

industry leading to the rise of offshore outsourcing. The GDM is based on the principle of taking

work to the location where the best talent is available, where it makes the best economic sense,

with the least amount of acceptable risk.

Infosys has a global footprint with over 50 offices and development centers in India, China,

Australia, the Czech Republic, Poland, the UK, Canada and Japan. Infosys and its subsidiaries

have 103,905 employees as on June 30, 2009.

Infosys takes pride in building strategic long-term client relationships. Over 97% of our revenues

come from existing customers.

45
http://www.infosys.com/about/who-we-are/history.asphttp://www.infosys.com/about/who-we-are/history.asphttp://www.infosys.com/flat-world/business/default.asphttp://www.infosys.com/about/alliances/default.asphttp://www.infosys.com/offerings/default.asphttp://www.infosys.com/consulting-services/default.asphttp://www.infosys.com/IT-services/application-services/default.asphttp://www.infosys.com/IT-services/systems-integration/default.asphttp://www.infosys.com/IT-services/systems-integration/default.asphttp://www.infosys.com/engineering-services/product-engineering/default.asphttp://www.infosys.com/engineering-services/default.asphttp://www.infosys.com/engineering-services/default.asphttp://www.infosys.com/IT-services/independent-validation-services/default.asphttp://www.infosys.com/IT-services/infrastructure-services/default.asphttp://www.infosys.com/BPO-services/default.asphttp://www.infosys.com/BPO-services/default.asphttp://www.infosys.com/global-sourcing/global-delivery-model/default.asphttp://www.infosys.com/about/who-we-are/locations.asphttp://www.indiainfoline.com/http://www.infosys.com/about/who-we-are/history.asphttp://www.infosys.com/about/who-we-are/history.asphttp://www.infosys.com/flat-world/business/default.asphttp://www.infosys.com/about/alliances/default.asphttp://www.infosys.com/offerings/default.asphttp://www.infosys.com/consulting-services/default.asphttp://www.infosys.com/IT-services/application-services/default.asphttp://www.infosys.com/IT-services/systems-integration/default.asphttp://www.infosys.com/IT-services/systems-integration/default.asphttp://www.infosys.com/engineering-services/product-engineering/default.asphttp://www.infosys.com/engineering-services/default.asphttp://www.infosys.com/engineering-services/default.asphttp://www.infosys.com/IT-services/independent-validation-services/default.asphttp://www.infosys.com/IT-services/infrastructure-services/default.asphttp://www.infosys.com/BPO-services/default.asphttp://www.infosys.com/BPO-services/default.asphttp://www.infosys.com/global-sourcing/global-delivery-model/default.asphttp://www.infosys.com/about/who-we-are/locations.asp


46/64


Vision:

"To be a globally respected corporation that provides best-of-breed business solutions,

leveraging technology, delivered by best-in-class people."

Mission:

"To achieve our objectives in an environment of fairness, honesty, and courtesy towards our

clients, employees, vendors and society at large."

Values:

We believe that the softest pillow is a clear conscience. The values that drive us underscore our

commitment to:

Customer Delight: To surpass customer expectations consistently

Leadership by Example: To set standards in our business and transactions and be an

exemplar for the industry and ourselves

Integrity and Transparency: To be ethical, sincere and open in all our transactions

Fairness: To be objective and transaction-oriented, and thereby earn trust and respect

Pursuit of Excellence: To strive relentlessly, constantly improve ourselves, our teams,

our services and products to become the best

46


47/64


Management:

N. R. Narayana Murthy

Chairman of the Board and Chief Mentor, Infosys Technologies

Mr. N. R. Narayana Murthy is the Chairman of the Board and Chief Mentor of Infosys

Technologies Limited. He founded Infosys in 1981 along with six other software professionals

and served as the CEO of Infosys for 21 years till March 2002. Under his leadership, Infosys was

listed on NASDAQ in 1999. He served as the Executive Chairman of the Board and Chief

Mentor from 2002 to 2006.

S. Gopalakrishnan

Chief Executive Officer and Managing Director, Infosys

Technologies

Gopalakrishnan (Kris to his colleagues) is one of the founders of Infosys Technologies Limited.

As Chief Executive Officer, he plays a key role in defining the company strategy and using

technology and innovation continuously to maintain its leadership in the industry.

On June 22, 2007, Kris took over from Nandan M. Nilekani as the CEO and Managing Director

of Infosys Technologies Limited. Kris previously served as Chief Operating Officer (since April

2002), and as the President and Joint Managing Director (since August 2006). His

responsibilities included customer services, technology, investments and acquisitions.

47


48/64


48

STOCK DATA:

Market CapRs1,000bnBook Value

per shareRs311Eq Shares O/S (FV

Rs5)573.3mnFree Float82%Avg

Traded Value (6

mnths)Rs3600mn52 week

High/LowRs1,910 / 1,040

TOP SHAREHOLDERS:

Name% holdingLife Insurance

Corporation of

India3.8Oppenheimer Funds

Inc1.7Government of

Singapore1.6Abu Dhabi

Investment Authority1.1Fidelity

Mgmt & Research Company1

PERFORMANCE (%):

1M3M 12MAbsolute 13.536.5-

4.9Relative 11.8-15.4-1.2

RELATIVE

PERFORMANCE:

Increased exposure to India & ROWInfosys is eyeing potential business in India and other emerging markets.This will help the company to capture the untapped markets and result in ahigher new client addition. Geographies like APAC, EMEA presentlyaccount for 10% of its total revenues. The company expects to double thisover the next 3-5 years.Cash - Might be deployed for inorganic growthInfosys has a strong cash balance of USD2.08bn as on FY09 which can beutilized for acquisitions in the near term. The company is reported to beeyeing acquisitions in the emerging markets in the healthcare vertical.

Revision of guidanceInfosys has guided an EPS of Rs 98.8 for FY09, which is likely to berevised upwards if the global economic environment continues to showsigns of recovery.Pricing pressure to alleviateThe company believes that it will take time to win new contracts. Howeverthey notice a possibility of pricing becoming stable. The clients feel that theworst is behind them and there are chances of increased spending by themin the near term.RISKSAppreciating rupee, deterioration in the demand environment, absence oflarge business transformational deals and competition from the globalpeers could drag the earnings downwards.

VALUATIONS

KEY FINANCIALS

Rs mnFY07FY08FY09Net Sales138,930166,920216,930YoY Gr.

(%)45.920.130Op.Profits43,91052,38071,950OPM

(%)31.631.433.2Adjusted Net Profit38,56046,59059,880YoY Gr.

(%)56.720.828.5

KEY RATIOSFY07FY08FY09Dil. EPS (Rs)67.381.3104.5ROCE

(%)34.233.832.8ROE (%)343433PER (x)25.521.416.7EV/Net Sales

(x)6.85.64.2EV/EBIDTA (x)24.32014

INFOSYS TECHNOLOGIES LTD.


49/64


SWOT Analysis:

Strengths:

Excellent project and services execution

Excellent internal processes

Weaknesses:

Reliance on less experienced talent pool for lower costs and therefore better financial

results. This precludes certain types of work

Over reliance on India as delivery geography, has not diversified delivery capability to

other offshore locations

Opportunity:

Extend delivery and process strengths to other global locations apart from India

Massive demand for additional work in all areas of services spectrum with many existing

contracts now coming up for renewal - approx $100 billion in next few years. Infosys can

get a chunk of this if they are willing to take on additional delivery risk and become a

true global player

Threats:

Extremely high expectations from their investor community for growth and profitability.

Will be difficult to manage this as competition begins to undercut their pricing

MNCs have come of age in India and other offshore destinations. They can and do

compete with Infosys from a level playing field.

49


50/64


6.2 TCS:

TCS provides IT services, business solutions, and outsourcing of a level of certainty that no other

competitor can match. TCS meets the requirements of clients on-time, within budget, and with

high quality; greater efficiency and responsiveness to clients business; and the ability to shift

investment to strategic initiatives rather than tactical functions.

The TCS Difference:

TCS understands the needs of clients need and thus responds quickly to the needs of their

markets and get more strategic advantage from IT. TCS is uniquely able to help clients solve

these business challenges. Whether it's IT services, business solutions, or outsourcing, TCS

provides a level of certainty that others can't match.

TCS serves large and fast growing organizations who share a common set of objectives:

Increase profitability and efficiency by doing more with less

Rapidly and effectively respond to changing market demands, thereby improving

organizational agility

Leverage IT as a strategic driver for competitive advantage, not just as a business utility

50


51/64


Management:

Ratan N. Tata

(Chairman)

Ratan N. Tata has been the Chairman of Tata Sons, the holding company of the Tata Group,

since 1991. He is also the Chairman of the major Tata companies including Tata Motors, Tata

Steel, Tata Consultancy Services, Tata Power, Tata Tea, Tata Chemicals, Indian Hotels and Tata

Teleservices. During his tenure, the Groups revenues have grown over 13-fold to annualized

Group revenues of over $ 80 bn.

Mr. Tata joined the Tata Group in December 1962. After serving in various companies, he was

appointed the Director-in-Charge of The National Radio & Electronics Company Limited

(NELCO) in 1971. In 1981, he was named Chairman of Tata Industries, the Groups other

holding company, where he was responsible for transforming it into a Group strategy think-tank,

and a promoter of new ventures in high technology businesses. He is also the Chairman of two of

the largest private sector promoted philanthropic trusts in India.

S. Ramadorai

(Chief Executive Officer and Managing Director )

S. Ramadorai, Chief Executive Officer and Managing Director of Tata Consultancy Services

Limited, has been associated with the Company for the past 38 years. Joining as a trainee

engineer, Ramadorai took over as CEO in 1996 and has been instrumental in building TCS to a

$6 Billion global software and services company.

As an individual deeply committed to the House of Tatas, Ramadorai holds Chairmanships and

Directorships of other Group companies. He is also on the Board of Directors of premier

companies: Tata industries, Hindustan Unilever Limited, Nicholas Piramal Industries Limited

and the MIT Executive Board (EMSAB) to name a few.

51


52/64


52

STOCK DATA:

Market CapRs717 bnBook

Value per shareRs 136Eq

Shares O/S (FV Rs5)1957

mnFree Float25.2%Avg Traded

Value (6 mnths)Rs1344mn52

week High/LowRs 471 / 207

TOP SHAREHOLDERS:

Name% holdingLife Insurance

Corporation of India2.3

PERFORMANCE (%):

1M3M 12MAbsolute13.447.4(14.5)Relative

11.7(8.6)(11.1)

RELATIVE

PERFORMANCE:

Offshoring - the new growth engineTCS has shifted majority of its work offshore to save costs of the clients.The move towards off shoring is expected to benefit in the long run. Offshoring could dent the operating margins of the company due to lowerrealisations.Robust demand for IMSIn these times of uncertainty when all clients are cutting down ondiscretionary spend, work from the infrastructure management services isexpected to show robust growth. The clients will go slow on developing newIT infrastructure, however the demand for maintaining the existing ITinfrastructure will continue to be strong.

Acquisition of CGSL - Long term gainsThe acquisition of CGSL will continue to contribute to the increased growthrate in the long term. It will help in strengthening the client base in the BFSIvertical. Since BFSI has now shown signs of recovery this acquisition willhelp the company to reap benefits.Slow and steady increase in visibilityThe deal pipeline has witnessed improvement in the telecom,energy,government and utility verticals.The company had already factoredin the worsening situation due to the reduced spending by their top clients.With things improving globally, the positive sentiment would improve thecompany's visibility in terms of new deals.RISKSAppreciating rupee, deterioration in the demand environment, absence oflarge business transformational deals and competition from the globalpeers could have an adverse impact on the bottomline.

VALUATIONS:

KEY FINANCIALS


(%)412322Op.Profits46,44553,65166,014OPM (%)252324Adjusted

Net Profit41,31550,19151,708YoY Gr. (%)43213


(%)474040ROE (%)464032PER (x)8.77.16.9EV/Net Sales

(x)1.91.61.3EV/EBIDTA (x)7.16.24.9

TCS


53/64


SWOT Analysis:

Strengths:

Cost advantage

Loyal customers

Strong brand equity

Strong financial position

Pricing

Real estate

Reputation management

Weaknesses:

Diseconomies to scale

Over leveraged financial position

Not diversified

Ubiquitiouegory, products, services

Opportunity:

Acquisitions

Asset leverage

Financial markets (raise money through debt, etc)

Emerging markets and expansion abroad

Innovation

Online

Product and services expansion

Threats:

Competition

Cheaper technology

Economic slowdown

External changes (government, politics, taxes, etc)

Exchange rate fluctuations

Maturing categories, products, or services

Price wars

53


54/64


Product substitution

6.3 Wipro:

Wipro changed with the times and created history along the way. The #1 provider of integratedbusiness, technology and process solutions on a global delivery platform.

At Wipro, every initiative, every partnership and above all project execution levels are built

around being the best. Wipro has been achieving from the start - a beginning from where

continuous evolution has made Wipro, the technology partner of choice for growing, established

and nascent businesses.

Wipro is the first CMMi Level 5 certified software services company and the first outside USA

to receive the IEEE Software Process Award. The achievement speaks words for the 55+

Centers of Excellence that create customized solutions, no matter the domain involved.

The India and Middle East IT business unit of Wipro Limited is one of the fastest growing

companies in the Middle East. This unit offers a 360 degree service portfolio spanning the entire

IT life cycle. This includes Consulting, Business Solutions, System Integration, Infrastructure

and Application Management and Total Outsourcing services where we service all IT needs of a

customer, end-to-end.

The Quality Markers:

SEI-CMM Level 5, World's first IT Services company, 1998

Six Sigma, World's first IT Services company, 1999

PCMM Level 5, World's first software company, 2001

CMMi Level 5 ver 1.1, Worlds first company, 2002

ISO 9001, TL 9000

Wipros Quality Team:

54


55/64


15,000+ employees trained in Six Sigma methodologies

180+ certified Black Belts & 850+ live Six Sigma projects

Over 200 PMI certified consultants

55


56/64


Fact Sheet

Wipro becomes the first Indian IT Service Provider to be awarded Gold-Level Status in

the Microsoft Windows Embedded Partner Program

Wipro is the worlds largest independent R&D Services Provider

Worlds first PCMM Level 5 software company

Wipro one among the few companies in the world to be assessed at maturity Level 5 for

CMMI V1.2 across offshore and onsite development

Worlds first IT Services Company to use Six Sigma

The pioneers in applying Lean Manufacturing techniques to IT services

Worlds first SEI CMM/CMMI Level 5 IT services company

The first to get the BS15000 certification for its Global Command Center

Functional RFID Enabled Concept Store and Global Data Synchronization Laboratory

BS7799 and ISO 9000 certified

Among the top 3 offshore BPO service providers in the world

Wipro is a strategic partner to five of the top ten most innovative companies in the world

Technology Review Innovation Index 2005

Over 55 industry facing Centers of Excellence'

95000+ employees

54 development centers across globe

No. 2 in Indian Domestic IT Services Market

56


57/64


Management:

Azim H. Premji

Chairman, Wipro Limited

Azim Premji is a graduate in Electrical Engineering from Stanford University, USA. Azim

Premji has led Wipro since 1966. Then a $2 million hydrogenated cooking fat company, Wipro

Limited is today a $5 billion revenue IT, BPO and R&D Services organization with presence in

over 50 countries. Premji started at Wipro with one basic idea - to build an organization which

was deeply committed to Values, in the firm belief that success in business would be its

inevitable, eventual outcome. Unflinching commitment to Values continues to remain at the core

of Wipro.

Girish S. Paranjpe

Jt. CEO, IT Business

Member of the Board

Wipro Ltd.

Girish S Paranjpe is the new Jt. Chief Executive Officer of Wipros IT Business alongside

Suresh Vaswani and is an Executive Director in the Board of Wipro Limited. He jointly carries

the overall responsibility for the strategy and operations of Wipros IT Business. He takes over

this new role effective April 2008 and will report into the Chairman of the Company Mr. Azim

Premji.

Suresh Vaswani

Jt.- CEO, IT BusinessMember of the Board

Wipro LimitedSuresh Vaswani is the Jt. Chief Executive Officer of Wipros IT Business and is a Member of the

Board of Wipro Limited. He jointly carries the overall responsibility for the strategy and

operations of Wipros IT Business. Suresh has been with Wipro for 23 years in various

leadership positions and has been responsible for Wipros leadership position in differentiated

global practices and emerging markets.

57


58/64


58

STOCK DATA:

Market Cap (bn)Rs 553Book

Value per share (Rs)79Eq Shares

O/S (FV Rs5) (mn)1455Free

Float (%)25Avg Traded Value (6

mnths) (Rs mn)57652 week

High/Low (Rs)494/180

TOP SHAREHOLDERS:

Name% holdingHSBC Global

Investment Funds1.7Life

Insurance Corporation of

India1.3

PERFORMANCE (%):

1M3M 12MAbsolute

(1.2)64.0(22.5)Relative

(2.7)1.6(19.5)

RELATIVE

PERFORMANCE:

Unwavering new client additionThere is no significant fall in the new client addition in spite of the challengingenvironment in FY 09. This was an effect of the CGSL in the last financialyear. However the strong business model and significant uptake in largedeals have led to the steady new client addition.Hiring Freeze in FY09- Helps it emerge as a winner amongst its peersThe company had adopted a hiring freeze after observing the challengingglobal scenario. The utilisation rate stood at 75.8% and the company expectsit to improve further after the full impact of lower headcount will be witnessedin the next few quarters. With abundant supply of human resources in themarket, Wipro can hire according to their requirements and thus poised at abetter position than its peers who are opting for techniques like benching thestaff due to slowdown in the business.Large deals in the pipeline expected to provide volume growthThe company has witnessed a significant uptake in the large deals pipeline.These deal flows are mainly from verticals like telecom, energy & utilities.The Total Contract Value for the company has been a lot better in FY09 thanprevious years. The growth from EMEA & emerging markets has alsocontributed to this deal pipeline.RISKSAppreciating rupee, deterioration in the demand environment, absence oflarge business transformational deals and competition from the global peerscould drag the earnings downwards.

VALUATIONS:

KEY FINANCIALS


(%)40.832.128.9Op.Profits30,15333,56543,288OPM

(%)20.21717Adjusted Net Profit29,17032,24135,078YoY Gr.

(%)43.910.58.8


(%)29.222.924.3ROE (%)28.824.724.3PER (x)18.417.015.9EV/Net

Sales (x)3.52.72.0EV/EBIDTA (x)15.913.210.1

WIPRO LTD.


59/64


SWOT Analysis:

Strengths:

Cost advantage

Innovation

Strong management team

Strong brand equity

Strong financial position

Reputation management

Weaknesses:

Management Weaknesses

Low R&D

Weak, damaged brand

Opportunity:

Emerging markets and expansion abroad

Innovation

Online

Product and services expansion

Threats:

Competition

Economic slowdown

External changes (government, politics, taxes, etc)

Exchange rate fluctuations

Lower cost competitors or imports

Maturing categories, products, or services

59


60/64


6.4 HCL TECH:

HCL Technologies is a leading global IT services company, working with clients in the areas

that impact and redefine the core of their businesses. Since its inception into the global landscapeafter its IPO in 1999, HCL focuses on 'transformational outsourcing', underlined by innovation

and value creation, and offers integrated portfolio of services including software-led IT solutions,

remote infrastructure management, engineering and R&D services and BPO. HCL leverages its

extensive global offshore infrastructure and network of offices in 20 countries to provide holistic,

multi-service delivery in key industry verticals including Financial Services, Manufacturing,

Aerospace & Defense, Telecom, Retail & CPG, Life Sciences & Healthcare, Media &

Entertainment, Travel, Transportation & Logistics, Automotive, Government, Energy &

Utilities. HCL takes pride in its philosophy of 'Employee First' which empowers our 54,216

transformers to create a real valu