i-flex Solutions Limited BALANCE SHEET AS AT SEPTEMBER 30, 2005 (All amounts in thousands of Indian rupees, unless otherwise stated)

Transcription

1 BALANCE SHEET AS AT SEPTEMBER 30, 2005 September 30, 2005 March 31, 2005 SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share capital 379, ,398 Reserves and surplus 11,761,845 10,877,489 12,141,505 11,251,887 APPLICATION OF FUNDS FIXED ASSETS Cost 2,354,028 2,127,784 Less: Accumulated depreciation and amortisation 976, ,255 Net book value 1,377,162 1,321,529 Capital work-in-progress and advances 390,842 85,618 1,768,004 1,407,147 INVESTMENTS 423, ,414 DEFERRED TAX ASSET 11,392 1,208 CURRENT ASSETS, LOANS AND ADVANCES Sundry debtors 6,600,784 6,200,778 Cash and bank balances 4,822,502 5,393,856 Other current assets 183, ,947 Loans and advances 2,435,725 1,673,995 14,042,841 13,437,576 Less: CURRENT LIABILITIES AND PROVISIONS Current liabilities 4,053,511 3,558,597 Provisions 50, ,861 4,104,268 4,019,458 NET CURRENT ASSETS 9,938,573 9,418,118 12,141,505 11,251,887

2 PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED SEPTEMBER 30, 2005 Three month Three month Six month Six month period ended period ended period ended period ended September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004 Revenues 2,727,820 2,018,705 4,840,321 3,825,657 Cost of revenues (1,615,280) (1,195,229) (3,057,373) (2,189,462) Gross profit 1,112, ,476 1,782,948 1,636,195 Selling and marketing expenses (144,839) (106,021) (310,625) (223,666) General and administrative expenses (334,357) (233,214) (663,336) (457,229) Depreciation and amortisation (87,986) (65,059) (175,847) (111,063) INCOME FROM OPERATIONS 545, , , ,237 Reversal/(Provision) for dimunition in value of investment, net 5,528-5,528 (20,680) Profit/(Loss) on sale of investment (4,785) - (4,785) 16,804 Interest income 72,619 68, , ,881 Other income/(expense) (8,898) 5,866 (16,703) 21,837 INCOME BEFORE PROVISION FOR TAXES AND PRIOR PERIOD ITEM 609, , , ,079 Provision for taxes (78,545) (120,646) (113,088) (245,942) NET INCOME FOR THE PERIOD BEFORE PRIOR PERIOD ITEM 531, , , ,137 Prior period item, net of taxes of Rs 8, (39,549) - NET INCOME 531, , , ,137 Profit and loss account, beginning of the period 572, , , ,036 Amount available for appropriation 1,103,658 1,192,173 1,103,658 1,192,173 Dividend paid on ESOP allotment (1,140) (32) (1,140) (32) Corporate dividend tax (160) (4) (160) (4) Profit and loss account, end of the period 1,102,358 1,192,137 1,102,358 1,192,137 Earnings per share of Rs 5/- each (in Rs.) Basic Diluted Weighted average number of shares used in computing earnings per share Basic 75,202,807 74,764,303 75,066,219 74,755,302 Diluted 77,106,697 76,966,421 76,970,109 76,957,420

3 STATEMENT OF CASH FLOW FOR THE PERIOD ENDED SEPTEMBER 30, 2005 Six month period ended September 30, 2005 Six month period ended September 30, 2004 Cash flows from operating activities Income before provision for income taxes 763, ,079 Adjustments to reconcile income before provision for income taxes to cash provided by operating activities : Depreciation and amortisation 175, ,063 (Profit)/Loss on retirement/sale of fixed assets, net (125) 5,505 (Profit)/Loss on sale/conversion of investments 4,785 (16,804) Provision/(Reversal) for diminution in the value of investments, net (5,528) 20,680 Interest income (146,621) (132,881) Effect of exchange difference on cash and bank balances (6,034) (41,858) Finance charge on leased assets 1, Provision for doubtful debts (2,327) 21,120 - (53,636) 784, ,443 Changes in assets and liabilities Increase in sundry debtors and unbilled debtors (386,343) (1,647,017) Increase in loans and advances (504,066) (262,872) Increase in current liabilities and provisions 461,940 (428,469) 1,392,811 (517,078) Cash from operating activities 356, ,365 Receipt of refund of previous assessment years - 10,539 Payment of domestic and foreign income taxes (336,018) (215,140) Net cash from operating activities 20, ,764 Cash flows from investing activities Additions to fixed assets including capital work in progress (481,058) (198,069) Acquisition of Customer Contract from Trigyn Technologies Limited - (106,534) Acquisition of IPR from Capital Markets Company (38,555) - Proceeds from sale of fixed assets 4,495 2,012 Bank fixed deposits having maturity of more than 90 days matured during the 3,571,547 2,410,139 period Bank fixed deposits having maturity of more than 90 days booked during the (3,316,996) (3,997,447) period Proceeds from sale of investment 2,621 - Proceeds from maturity of JM High Liquidity Fund - 266,804 Interest received 120,135 86,354 Net cash used in investing activities (137,811) (1,536,741) Cash flows from financing activities Issue of shares against ESOP Scheme 273,208 8,626 Advance against options granted to IBM - 5,367 Advance against warrants granted to GE 40,441 - Advance against equity shares to be issued under ESOP Scheme 1,075 3,114 Repayment of loan from Employee Stock Purchase Scheme ('ESPS') Trust 65,000 22,000 Loan to subsidiaries (152,847) - Payment of dividend and tax thereon (428,207) (295,167) Payment for lease obligations (5,002) (5,020) Net cash used in financing activities (206,332) (261,080) Effect of exchange difference on cash and bank balances 6,034 41,858 Net decrease in cash and cash equivalents (317,675) (1,536,199) Cash and cash equivalents at beginning of the period 1,153,215 2,395,932 Cash and cash equivalents at end of the period (Note 1) 835, ,733

4 Note 1 : Cash in hand Funds in transit 38,964 - Balances with scheduled banks: -Current accounts in foreign currency 113, ,273 -Deposit accounts 3,614,278 3,822,374 -Deposit amount of unutilised IPO funds 798, ,432 -Margin money deposit 1, ,388 -Other current accounts 249,875 98,023 -Unclaimed dividend accounts 2,589 3,016 Balances with non-scheduled banks: - - -Current accounts in foreign currency 1, Deposit account in foreign currency Total Cash and Bank Balance 4,822,502 5,327,670 Less: Bank deposits having maturity of more than 90 days (3,984,373) (4,464,921) Unclaimed dividend accounts (2,589) (3,016) Cash and cash equivalents at the end of the period 835, ,733

5 September 30, 2005 March 31, 2005 SCHEDULE 1: SHARE CAPITAL Authorised : 100,000,000 equity shares of Rs 5/- each (March 31, ,000,000 equity shares) 500, ,000 Issued, subscribed and paid-up : 75,931,938 equity shares of Rs 5/- each, fully paid up (March 31, ,879,650 equity shares) 379, ,398 (a) Of the above, 62,121,800 equity shares of Rs 5/- each had been issued as fully paid up bonus shares by capitalising the securities premium account. (b) During the period ended September 30, 2005, the Company allotted 1,052,288 equity shares (March 31, ,500 shares) to its employees who exercised their options under the ESOP scheme [Refer Note 6(b) of Schedule 16]. (c) Refer Note 6(b) of Schedule 16 for options granted for unissued equity shares. (d) In Annual General Meeting of the Company held on August 19, 2004, the shareholders have approved a resolution to issue up to 98,000 options, representing 0.13% of paid up capital of the Company to IBM Global Services India Pvt. Ltd. (IBM). The Board of Directors of the Company at their meeting held on September 1, 2004, granted 91,347 options to IBM at a price of Rs determined in accordance with the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 ("the SEBI Guidelines"). These options are convertible at a future date into equal number of equity shares of face value of Rs 5/- each. IBM is entitled to subscribe to these options in two tranches over a period of 13 to 18 months from the date of issue of options subject to the completion of predetermined conditions. As required by SEBI guidelines, IBM has deposited Rs 5,367, an amount equivalent to 10% of total consideration. (e) In Annual General Meeting of the Company held on August 12, 2005, the shareholders have approved a resolution to issue warrants up to 0.5% of the fully diluted paid up capital of the company to GE Capital Mauritius Equity Investment, a designated affiliate of General Electric Capital Corporation (GE). The Board of Directors of the Company at their meeting held on August 23, 2005, alloted 395,529 warrants to GE at a price of Rs 1, determined in accordance with the SEBI Guidelines. These warrants are convertible at a future date into equal number of equity shares of face value of Rs 5/- each. GE is entitled to subscribe to these warrants in two tranches over a period of 13 to 18 months from the date of issue of options subject to the completion of predetermined conditions. As required by SEBI guidelines, GE has deposited Rs 40,441, an amount equivalent to 10% of total consideration. SCHEDULE 2: RESERVES AND SURPLUS Securities premium Balance, beginning of period 2,146,426 2,110,156 Received during the period 274,492 36,270 Balance, end of period 2,420,918 2,146,426 General Reserve Balance, beginning of period 8,238,569 6,738,569 Transferred from profit and loss account - 1,500,000 Balance, end of the period 8,238,569 8,238,569 Profit and loss account 1,102, ,494 11,761,845 10,877,489 (THIS SPACE IS INTENTIONALLY LEFT BLANK)

6 SCHEDULE 3: FIXED ASSETS Particulars Additions during the period Gross Block On Sale/deletions during the period Depreciation/amortization For the period On Sale/deletions during the period Net Book Value Tangible assets: Land 232, , , ,674 Improvement to leasehold premises 72,545 4,451-76,996 32,393 10,558-42,951 34,045 40,152 Buildings (See Note 1) 249,267 3, ,318 16,835 6,314-23, , ,432 Computer equipments 741, , , ,293 69, , , ,603 Electricals and office equipments 250,034 36, ,349 84,401 21, , , ,633 Furniture and fixtures 242,757 21, ,361 82,358 19, , , ,399 Leased vehicles 37,180 6,069 6,786 36,463 13,541 4,350 4,803 13,088 23,375 23,639 Intangible assets: Goodwill on acquisition 168,817 18, ,626 35,227 26,409-61, , ,590 Customer contract 21, ,290 16,350 5,571-21, ,448 Product IPR 110,816 27, ,619 8,857 12,472-21, , ,959 TOTAL 2,127, ,249 8,005 2,354, , ,847 5, ,866 1,377,162 1,321, ,579, , ,430 2,127, , , , ,255 Capital work-in-progress and advances 390,842 85,618 1,768,004 1,407,147 Notes: 1. Includes 10 (March 31, ) shares of Rs.50/- each in Takshila Building No.9, Co-op Housing Society Ltd., Mumbai.

7 SCHEDULE 4: INVESTMENTS September 30, 2005 March 31, 2005 a) Long term investments (i) Trade (unquoted) EBZ Online Private Limited (Note a) 45,000 45, ,240 equity shares of Rs.10/- each, fully paid-up (March 31, ,240) Less : Provision for diminution in value of investment (45,000) (45,000) - - Eastern Software Systems Limited (Note a) - 7, ,283 equity shares of Rs.10/- each, fully paid-up (March 31, ,283) Less : Provision for diminution in value of investment - (5,528) - 1,878 Flexcel International Private Limited (Note b) 20,680 20,680 2,068,000 equity shares of Rs 10/- each, fully paid-up (March 31, ,068,000) Less : Provision for diminution in value of investment (20,680) (20,680) - - Login SA (Note d) 6,593 6,593 33,000 equity shares of Euro 2/- each fully paid up (March 31, ,000) (ii) Other than trade investments (unquoted) 12.75% KEONICS Mahithi Bonds Series-1 (Note c) 20,000 20, Bonds of Rs. 50,000/- each, fully paid (March 31, ) National Savings Certificate - VIII issue (iii) Other than trade investments (quoted) 6.75% Tax Free US-64 Bonds (Note e) 33,123 33, ,225 Bonds of Rs 100/- each, fully paid (March 31, ,225) (iv) In subsidiaries (unquoted) i-flex solutions b.v. (Note f) 25,119 25,119 a wholly owned subsidiary company incorporated in The Netherlands 5,185 equity shares of Euro 100/- each, fully paid-up (March 31, ,185) i-flex solutions pte limited (Note g) 6,626 6,626 a wholly owned subsidiary company incorporated in Singapore 250,000 equity shares of Singapore $ 1/- each fully paid up (March 31, ,000) i-flex America inc. (Note h) 139, ,829 a wholly owned subsidiary company incorporated in the United States of America 1 equity share of US$ 0.01/- each fully paid up (March 31, ) ISP Internet Mauritius Company (Note i) 192, ,115 a wholly owned subsidiary company incorporated in the Republic of Mauritius 30,000 equity shares of US$ 1/- each fully paid up (March 31, ,000) 423, ,414 Aggregate cost of quoted investments 33,123 33,123 Aggregate market value of quoted investments 34,348 34,613 Aggregate amount of unquoted investments 390, ,291

8 Note a The Company s ownership interest in Eastern Software Systems Limited ('ESSL') was 6.62%. During the year the company has sold its stake in ESSL for Rs 2.62 million and booked a loss on sale of investment of Rs 4.79 million. The Company had earlier provided for Rs 5.52 million for diminution in value of its investment in ESSL. The Company also holds 19.5% shares in EBZ Online Private Limited ('EBZ'). EBZ is a strategic partnership between Brihans Technologies Private Limited ('BTPL') and i-flex to integrate the selected and adapted software provided under i-flex s products with BTPL s products for co-operative banking sector in India. 'EBZ' is an unlisted company. The Company's rights are limited to protecting its investment in EBZ and it does not exert significant influence on the operations of this company by way of representation on the board of directors, participation in policy making processes, material intercompany personnel or technological dependency. Accordingly, this investment is stated at cost less any decline in fair value below original cost when considered to be other than temporary. Management is of the view that the fair value of its investment in EBZ has declined permanently. Hence, management has made a provision of Rs. 45 million towards diminution in the value of its investment in EBZ. Note b Flexcel is a 40:40:20 joint venture between i-flex, HDFC Bank Limited and its group companies and Lord Krishna Bank, which provides the capability of FLEXCUBE through an Application Service Provider ( ASP ) model to various banks and financial institutions in India who may not wish to invest in creating and maintaining their own internal IT infrastructure. As per the unaudited financial statements as at September 30, 2005, Flexcel had incurred accumulated losses of Rs million. Management is of the view that the fair value of its investment in Flexcel has declined permanently. Hence, considering the uncertainty about the future profitability of Flexcel, management has made a provision of Rs million towards diminution in the value of its aggregate investment in Flexcel. Note c Investments in debt securities of 12.75% KEONICS Mahithi Bonds Series -1 allotted on February 1, 2001 are redeemable at par at the end of seven years from the date of allotment and have a put and call option at the end of five years from the date of allotment. Note d In January 2005, the Company acquired 33% equity stake in a France based treasury software specialists firm, Login SA from its existing shareholders for Euro 66,000. Login SA is a highly specialised front and mid office treasury solution provider with its product Login Acumen. As per the unaudited financial statements as at September 30, 2005 Login has incurred accumulated loss of Rs million. Note e On June 1, 2003 units in UTI US-64 were converted into 6.75 % Tax free US-64 bonds.the first 5,000 units were converted at the repurchase price of Rs 12/- each and the balance 3,306, units at Rs 10/- each. These bonds are redeemable at par on June 1, Note f i-flex b.v. was incorporated as a 100% subsidiary in The Netherlands to undertake marketing of the Company's software products and information technology services to clients in Europe and work on the business development efforts in the region. As per the unaudited financial statements, i-flex b.v. has a net profit of Euro 0.32 million (approximately Rs million) during the period ended September 30, 2005 and accumulated losses of Euro 0.88 million (approximately Rs million). Management considers that there is no permanent diminution in the value of its investment in i-flex b.v. and hence it is stated at cost. Note g i-flex pte. was incorporated as a 100% subsidiary in Singapore to undertake marketing of the Company's software products and provide software and related services to clients in Asia Pacific region and work on the business development efforts in the region. As per the unaudited financial statements as at September 30, 2005 i-flex pte. has a net profit of US$ 0.73 million (approximately Rs million) for the period ended September 30, 2005 and an accumulated profit of US$ 4.90 million (approximately Rs million) and it is stated at cost. Note h In December 2003, i-flex America inc., a Delaware based company, was incorporated as a 100% subsidiary in the United States of America to hold the investments of the Company in various ventures/companies in the United States of America. As per the unaudited consolidated financial statements, i-flex America inc. has a net loss of US$ 0.13 million (approximately Rs million) during the period ended September 30, The accumulated profits as per the unaudited financial statements as at September 30, 2005 is of US$ 2.49 million (approximately Rs million). Note i In December 2004, i-flex acquired all of the shares in ISP Internet Mauritius Company ('ISP'), a corporation organized under the laws of the Republic of Mauritius. ISP holds all the shares in Equinox Corporation, a Delaware corporation ( Equinox US ), and in Equinox Global Services Pvt. Limited, a corporation organized under the laws of India ( Equinox India ). Equinox India and Equinox US are engaged in providing knowledge process outsourcing services to the mortgage banking industry. The acquisition was carried out in two stages, where the Company acquired 84 per cent stake for a consideration of US$ 4.35 million, and also repaid a debt of ISP aggregating USD 0.95 million, through a loan to ISP. The Company also entered into separate agreements with the other three shareholders to acquire the balance 16 per cent stake. The consideration for this 16 per cent stake is linked to the profit of the ISP business over the next three fiscal years and is payable based on a pre-determined formula. As per the unaudited consolidated financial statements, ISP has a net loss of US$ 2.16 million (approximately Rs million) during the period ended September 30, The accumulated losses as per the unaudited financial statements as at September 30, 2005 is of US$ 6.86 million (approximately Rs million).

9 September 30, 2005 March 31, 2005 SCHEDULE 5: DEFERRED TAX ASSET Difference between book and tax depreciation 11,392 1,208 SCHEDULE 6: CURRENT ASSETS, LOANS AND ADVANCES (a) Sundry debtors (unsecured) Debts outstanding for a period exceeding six months: -Considered good 2,360,826 2,256,382 -Considered doubtful 29,674 31,735 2,390,500 2,288,117 Other debts - considered good 4,239,958 3,944,396 6,630,458 6,232,513 Less: Provision for doubtful debts (29,674) (31,735) 6,600,784 6,200,778 Amount due from subsidiaries 5,233,444 5,163,221 (b) Cash and bank balances Cash in hand Funds in transit 38,964 - Balances with scheduled banks: -Current accounts in foreign currency 113, ,754 -Deposit accounts 3,614,278 4,064,209 -Deposit amount of unutilised IPO funds 798, ,077 -Margin money deposit 1, ,388 -Other current accounts 249,875 49,830 -Unclaimed dividend accounts 2,589 2,101 Balances with non-scheduled banks: -Current accounts in foreign currency 1, Deposit account in foreign currency 384-4,822,502 5,393,856 Balances with non-scheduled banks Citibank, Dubai 1, Maximum balance held during the period: Citibank, Dubai 3,845 1,548 (c) Other current assets Interest accrued on : -Bank deposits 75,085 57,752 -Bonds 2,487 1,202 -Loan to subsidiary 19,926 12,059 Unbilled debtors 86,332 97, , ,947

10 September 30, 2005 March 31, 2005 (d) Loans and advances (unsecured, considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received: Loan to ESPS Trust 57, ,425 Loans to employees (secured) 1,833 1,922 Loan to subsidiaries 681, ,058 Premises and other deposits 1,032, ,594 Prepaid expenses 174, ,221 Advance tax, net of provision for taxes 329, ,067 Other advances 157, ,708 2,435,725 1,673,995 SCHEDULE 7: CURRENT LIABILITIES AND PROVISIONS (a) Current liabilities Amount due to subsidiaries 2,057,264 2,003,727 Accrued expenses 1,080, ,299 Deferred revenues 681, ,748 Accounts payable 49,889 73,421 Advances from customers 14,308 14,480 Finance lease obligations 25,136 25,202 Advance against options granted to IBM [Refer Note (d) of Schedule 1] 5,367 5,367 Advance against warrants granted to GE [Refer Note (e) of Schedule 1] 40,441 - Investor Education and Protection Fund to be credited by unclaimed dividends* 2,589 2,101 Advance against equity shares to be issued under the ESOP scheme 1,075 6,546 Deferred forward exchange contracts 23,840 37,831 Other current liabilities 71,917 68,875 4,053,511 3,558,597 Amounts due to Small Scale Industrial undertakings - - * There is no amount due and outstanding as at balance sheet date to be credited to the Investor Education and Protection Fund. (b) Provisions Proposed dividend - 374,398 Corporate dividend tax - 52,509 Provision for leave encashment 50,757 33,954 50, ,861

11 Three month Three month Six month Six month period ended period ended period ended Period ended September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004 SCHEDULE 8: REVENUES Product licenses and related activities 1,484,070 1,105,802 2,523,977 2,181,929 IT solutions and consulting services 1,243, ,903 2,316,344 1,643,728 2,727,820 2,018,705 4,840,321 3,825,657 SCHEDULE 9: COST OF REVENUES Employee costs 1,128, ,394 2,122,447 1,516,947 Travel related expenses (net of recoveries) 309, , , ,142 Application software 85,694 39, ,188 83,059 Professional fees 92,212 81, , ,314 1,615,280 1,195,229 3,057,373 2,189,462 SCHEDULE 10: SELLING AND MARKETING EXPENSES Employee costs 32,678 40,858 67,884 83,020 Travelling expenses 26,718 23,383 60,907 48,842 Professional fees 44,500 15, ,336 47,636 Advertising expenses 13,806 11,727 25,190 19,816 Communication expenses 2,930 2,729 5,031 4,768 Miscellaneous expenses 24,207 12,013 39,277 19, , , , ,666 SCHEDULE 11: GENERAL AND ADMINISTRATIVE EXPENSES Employee costs 124,572 90, , ,874 Rent 38,906 21,209 68,732 42,318 Communication expenses 24,885 22,406 50,673 44,023 Application software 10,456-21,859 - Professional fees 27,615 14,964 73,832 32,598 Power 23,432 12,623 48,555 28,859 Travelling expenses 15,903 10,299 32,968 20,512 Miscellaneous expenses 68,588 60, , , , , , ,229 SCHEDULE 12: INTEREST INCOME Interest on: -Bank deposits 67,363 64, , ,672 [includes tax deducted at source of Rs. 19,236 for three months ended September 30, 2005 (September 30, Rs. 14,235) and Rs 25,611 for six months ended September 30, 2005 (September 30, Rs.16,810) -Bonds 1,206 1,206 2,403 2,421 [includes tax deducted at source of Rs. Nil (September 30, Rs. Nil)] -Loans to employees Loan to subsidiaries 3,991 1,932 7,916 3,817 -Income tax refunds ,619 68, , ,881

12 Three month Three month Six month Six month period ended period ended period ended Period ended September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004 SCHEDULE 13: OTHER INCOME/(EXPENSE) Foreign exchange profit/(loss), net (9,314) 11,046 (16,968) 26,828 Profit/(Loss) on retirement/sale of fixed assets, net 276 (5,694) 125 (5,505) Miscellaneous income (8,898) 5,866 (16,703) 21,837 SCHEDULE 14: PROVISION FOR TAXATION Current taxes - Domestic taxes 55, ,300 83, ,300 - Foreign taxes 11,245 1,664 14,472 10,309 Deferred tax (3,000) 1,682 (10,184) 3,333 Fringe benefit taxes 15,300-25,300-78, , , ,942 Under the Indian Income-tax Act 1961, for the year ended March 31, 2006 the Company is, under Section 10A of the Income Tax Act, 1961, eligible to claim benefits with respect to 100% during the year, of the profits earned from export revenues from six of its seven units registered under the Software Technology Park ('STP'). Foreign taxes represents income taxes payable overseas by the Company in Singapore and Japan. SCHEDULE 15: RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNING PER SHARE No. of shares Three month Three month Six month Six month period ended period ended period ended Period ended September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004 Weighted average shares outstanding for Basic EPS 75,202,807 74,764,303 75,066,219 74,755,302 Add: Effect of dilutive stock options 1,903,890 2,202,118 1,903,890 2,202,118 Weighted average shares outstanding for Diluted EPS 77,106,697 76,966,421 76,970,109 76,957,420 (THIS SPACE IS INTENTIONALLY LEFT BLANK)

13 Schedules annexed to and forming part of the accounts for the period ended September 30, 2005 SEGMENT INFORMATION Business segments are defined as a distinguishable component of an enterprise that is engaged in providing a group of related products or services and that is subject to differing risks and returns and about which separate financial information is available. This information is reviewed and evaluated regularly by the management in deciding how to allocate resources and in assessing the performance. The Company is organised geographically and by business segment. For management purposes the Company is primarily organised on a worldwide basis into two business segments: a) Product licenses and related activities ('Products') and b) IT solutions and consulting services ('Services'). The business segments are the basis on which the Company reports its primary segment information to management. Product licenses and related activities segment deals with banking software products like the FLEXCUBE suite of products, Reveleus and Microbanker which cater to needs of corporate, retail and investment banking as well as treasury operations and data warehousing requirements. The related activities include enhancements, implementation and maintenance activities. IT solutions and consulting services comprise of bespoke software development, provision of computer software solutions and related consulting services arising from such activities. This segment is further sub-divided in the following sub-segments i.e. Business intelligence, Customer relationship management, Brokerage, e-commerce, Internet services and IT and Business consulting. The Company does not track assets and liabilities geographically. Six month period ended September 30, 2005 Particulars Products Services Corporate Total Revenues 2,523,977 2,316,344-4,840,321 Cost of Revenues (1,179,576) (1,877,797) - (3,057,373) Gross profit 1,344, ,547-1,782,948 Selling and marketing expenses (304,772) (5,853) - (310,625) General and administrative expenses (102,826) (144,270) (416,240) (663,336) Depreciation and amortisation (53,611) (63,186) (59,050) (175,847) Income from operations 883, ,238 (475,290) 633,140 Provision for dimunition in value of investment 5,528 Profit on sale/conversion of investment (4,785) Interest income 146,621 Other income/(expense) (16,703) Income before provision for income taxes and prior period item 763,801 Provision for income taxes (113,088) Net profit before prior period item 650,713 Prior period item, net of taxes of Rs 8,681 (Refer Note 10 in Schedule 16) (39,549) Net profit 611,164 Other information Segment assets 3,566,551 5,458,248 7,220,974 16,245,773 Segment liabilities 1,139, ,656 2,499,783 4,104,267 Share capital and reserves and surplus 12,141,505 12,141,505 Capital expenditure by segment 63, ,693 20, ,250 (THIS SPACE IS INTENTIONALLY LEFT BLANK)

14 Schedules annexed to and forming part of the accounts for the period ended September 30, 2005 Six month period ended September 30, 2004 Particulars Products Services Corporate Total Revenues 2,181,929 1,643,728-3,825,657 Cost of revenues (826,169) (1,363,293) - (2,189,462) Gross profit 1,355, ,435-1,636,195 Selling and marketing expenses (208,180) (15,486) - (223,666) General and administrative expenses (93,665) (105,493) (258,071) (457,229) Depreciation and amortisation (37,475) (64,989) (8,599) (111,063) Income from operations 1,016,440 94,467 (266,670) 844,237 Provision for dimunition in value of investment, net (20,680) Interest income 132,881 Other income/(expense) 38,641 Income before provision for income taxes 995,079 Provision for income taxes (245,942) Net profit 749,137 September 30, 2004 Segment assets 3,158,127 3,924,369 6,972,030 14,054,526 Segment liabilities 876, ,002 2,284,250 3,629,954 Share capital and reserves and surplus ,424,572 10,424,572 Capital expenditure by segment 44, , , ,177 Segment revenue and expense: Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are shown as corporate expenses. Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of debtors, deposits for premises and fixed assets, net of allowances. Segment liabilities primarily includes deferred revenues, finance lease obligation, advance from customer, accrued employee cost and other current liabilities. While most such assets and liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities used jointly by two or more segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of corporate assets. Geographical segments The following table shows the distribution of the Company's sales by geographical market : Regions Six month period ended Six month period ended September 30, 2005 September 30, 2004 Amount % Amount % United States of America 2,133,242 44% 1,757,936 47% Europe 1,032,735 22% 691,480 18% Asia Pacific 796,668 16% 614,060 16% Middle East and Africa 777,078 16% 679,234 17% Latin America and Carribean 100,598 2% 82,947 2% 4,840, % 3,825, % (THIS SPACE IS INTENTIONALLY LEFT BLANK)