FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY DRAFT LETTER OF OFFER

Transcription

1 DRAFT LETTER OF OFFER September 18, 2008 For Equity Shareholders of our Company only RAMCO SYSTEMS LIMITED (Our Company was incorporated on February 19, 1997 as a public limited company under the Companies Act, 1956 in the State of Tamil Nadu); Registered Office: 47, PSK Nagar, Rajapalayam ; Tel: ; Fax: Corporate Office: 64, Sardar Patel Road, Taramani, Chennai ; Tel: ; Fax: ; Website: rightsissue2008@rsi.ramco.com; Contact Person: Mr. Subramanian Narayan, Company Secretary FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY DRAFT LETTER OF OFFER ISSUE OF 15,357,986 EQUITY SHARES WITH A FACE VALUE OF RS. 10 EACH AT AN ISSUE PRICE OF RS. 85 PER EQUITY SHARE (INCLUDING A PREMIUM OF RS. 75 PER EQUITY SHARE, PAYABLE IN CASH) AGGREGATING RS. 1,305,428,810 ON RIGHTS BASIS IN THE RATIO OF 1 FULLY PAIDUP EQUITY SHARE FOR EVERY 1 FULLY PAIDUP EQUITY SHARE HELD BY EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY ON THE RECORD DATE i.e. [ ], 2008 ( ISSUE ). FOR EVERY 2 EQUITY SHARES BEING ALLOTTED ON RIGHTS BASIS, THE ALLOTTEE WILL RECEIVE 1 DETACHABLE WARRANT. THE ISSUE PRICE IS 8.5 TIMES OF THE FACE VALUE OF EQUITY SHARE. FOR MORE DETAILS, PLEASE REFER TO THE CHAPTER TITLED TERMS OF ISSUE BEGINNING ON PAGE [ ] OF THIS DRAFT LETTER OF OFFER. GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and Investors should not invest any funds in the Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in the Issue. For taking an investment decision, Investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to the section titled Risk Factors beginning on page [ ] of this Draft Letter of Offer before making an investment in this Issue. ISSUER S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of Offer is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of our Company are listed on Bombay Stock Exchange Limited ( BSE ) (the Designated Stock Exchange), National Stock Exchange of India Limited ( NSE ) and Madras Stock Exchange Limited ( MSE ). Our Company has received inprinciple approvals from BSE, NSE and MSE for listing the Equity Shares and Warrants arising from this Issue vide letters dated [ ], [ ] and [ ] respectively. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE / SHARE TRANSFER AGENT TO THE ISSUE CENTRUM CAPITAL LIMITED Centrum House, CST Road, Vidya Nagari Marg, Kalina, Santacruz (East), Mumbai Tel: ; Fax: Contact Person: Mr. Bhavyan Dalal / Mr. Alpesh Shah rslrights@centrum.co.in Website: SEBI Reg. No.: INM CAMEO CORPORATE SERVICES LIMITED Subramanian Building, No. 1, Club House Road, Chennai Tel : ; Fax : Contact Person : Mr. R. D. Ramasamy investor@cameoindia.com Website: SEBI Reg. No. : INR ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON [ ] [ ] [ ]

2 TABLE OF CONTENTS PARTICULARS PAGE NUMBER NO OFFER IN OTHER JURISDICTIONS... 3 PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA... 4 FORWARDLOOKING STATEMENTS... 5 SECTION I: DEFINITIONS AND ABBREVIATIONS... 6 SECTION II: RISK FACTORS INTERNAL RISK FACTORS EXTERNAL RISK FACTORS SECTION III: INTRODUCTION SUMMARY OF OUR INDUSTRY SUMMARY OF OUR BUSINESS THE ISSUE SUMMARY OF OUR FINANCIAL INFORMATION GENERAL INFORMATION CAPITAL STRUCTURE OBJECTS OF THE ISSUE BASIS FOR ISSUE PRICE STATEMENT OF TAX BENEFITS SECTION IV: ABOUT US OUR INDUSTRY OUR BUSINESS OUR HISTORY AND MAIN OBJECTS OUR SUBSIDIARIES OUR MANAGEMENT OUR PROMOTERS AND PROMOTER GROUP REGULATIONS AND POLICIES MATERIAL AGREEMENTS OF OUR COMPANY SECTION V: AUDITORS REPORT AND FINANCIAL INFORMATION UNCONSOLIDATED FINANCIAL STATEMENT AS PER THE AUDITED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENT AS PER THE AUDITED FINANCIAL STATEMENTS MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF THE OPERATIONS 173 SECTION VI: LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATIONS AND DEFAULTS GOVERNMENT APPROVALS AND LICENSES SECTION VII: OTHER REGULATORY AND STATUTORY DISCLOSURES TERMS OF ISSUE SECTION VIII: MAIN PROVISIONS OF OUR ARTICLES OF ASSOCIATION SECTION IX: OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION DECLARATION

3 NO OFFER IN OTHER JURISDICTIONS The rights entitlement and Equity Shares of our Company have not been and may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction outside of India. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Draft Letter of Offer must be treated as sent, for information only, and should not be copied or redistributed. No person receiving a copy of this Draft Letter of Offer in any territory other than in India may treat the same as constituting an invitation or offer to him/her, nor should he/she in any event use the CAF. Our Company will not accept any CAF where the address as indicated by the applicant is not an Indian address. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the Issue of Equity Shares or the rights entitlements, distribute or send the same in any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the rights entitlements referred to in this Draft Letter of Offer. 3

4 PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA Unless stated otherwise, the financial information used in this Draft Letter of Offer is derived from our Company s unconsolidated restated financial statements for the fiscal years ended 2008, 2007, 2006, 2005 and 2004 and are prepared in accordance with the Companies Act, 1956 and applicable SEBI (DIP) Guidelines, as stated in the audit report dated September 18, 2008 of our Statutory Auditors M/s. CNGSN & Associates, included in this Draft Letter of Offer. Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in million, though certain numbers are also expressed in Rs. lakh and in Rs. crores. References to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words lakh means 100 thousand and the word million or mn means 10 lakh and the word crore means 10 million or 100 lakh and the word billion means 1,000 million or 100 crores. Our fiscal year commences on April 1 and ends on March 31 of the next year. Unless stated otherwise, reference herein to FY/ fiscal / financial year (e.g. financial year 2008), is to the financial year ended March 31 of a particular year. Currency of Presentation All references to Rupees, INR or Rs. are to Indian Rupees, the official currency of the Republic of India. In this Draft Letter of Offer, any discrepancies in any table between the total and the sum of the amounts listed may be due to rounding off. Market and industry data used in this Draft Letter of Offer were obtained from governmental sources and industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable and that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe market data used in this Draft Letter of Offer is reliable, it has not been independently verified. 4

5 FORWARDLOOKING STATEMENTS We have included statements in this Draft Letter of Offer which contain words or phrases such as will, aim, is likely to result, believe, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project, should, will pursue and similar expressions or variations of such expressions, that are forward looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forwardlooking statement. Important factors that could cause actual results to differ materially from our expectations include but are not limited to: 1. General economic and business conditions in India and other countries; 2. Increasing competition in the industry segments in which our Company operates; 3. Changes in laws and regulations that apply IT industry; 4. Our ability to meet our capital expenditure requirements; 5. Fluctuations in our operating results; 6. Currency exchange risks; 7. Our ability to attract and retain qualified personnel; 8. Changes in technology; 9. Changes in political conditions, monetary policies in India or in countries that we may enter, inflation, deflation, unanticipated turbulence in interest rates, equity prices etc.; 10. The performance of the financial markets in India / abroad; and 11. Any adverse outcome in the legal proceedings in which we or our Subsidiaries are or may be involved. For a further discussion of factors that could cause our actual results to differ, please refer to the section titled Risk Factors and chapters titled Our Business and Management s Discussion and Analysis of Financial Condition and Results of Operation beginning on page 11, 66 and 173 respectively of this Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither our Company nor the Lead Manager nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI / Stock Exchanges requirement, our Company and the Lead Manager will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges. 5

6 SECTION I: DEFINITIONS AND ABBREVIATIONS In the Draft letter of Offer, the terms this Issue, the Issue, the Issuer, We, us, our, the Company, our Company or RSL, unless the context otherwise implies, refers to Ramco Systems Limited COMPANY RELATED TERMS AND ABBREVIATIONS. Terms Demerger Scheme Ramco Malaysia Ramco RSA Ramco Singapore Ramco Switzerland Ramco USA Ramco Australia Subsidiary or Subsidiaries Ramco Redlex / Associate Promoters Promoter Group Description By way of an order dated December 24, 1999, the Hon ble High Court of Judicature at Madras sanctioned a scheme of arrangement for the transfer of the software business undertaking of Ramco Industries Limited to us, with effect from April 1, 1999 Ramco Systems SDN BHD Malaysia RSL Enterprise Solutions (Pty) Limited, South Africa Ramco Systems Pte Limited, Singapore Ramco Systems Limited, Switzerland Ramco Systems Corporation, USA Ramco Systems Australia Pty Ltd, Australia Currently means (i) Ramco Australia, (ii) Ramco Malaysia, (iii) Ramco RSA, (iv) Ramco Singapore, (v) Ramco Switzerland and (vi) Ramco USA, and the word Subsidiary shall be construed accordingly Redlex 47 Pty Ltd., South Africa Mr. P R Ramasubrahmaneya Rajha and Mr. P R Venketrama Raja Unless the context otherwise requires, refers to entities mentioned in the chapter titled Our Promoters and Promoter Group beginning on page 114 of this Draft Letter of Offer. GENERAL TERMS AND ISSUE RELATED TERMS Term Description Act/ Companies Act The Companies Act, 1956 and the rules made thereunder, as amended from time to time Articles Articles of Association of our Company Auditor Statutory auditors of our Company being CNGSN & Associates, Chartered Accountants Applicant Any shareholder/investor/other person who makes an application in this Issue in accordance with this Draft Letter of Offer Application Money The aggregate of monies payable on application by the Applicant, being the aggregate money payable at Rs. 85 per share towards the entitlement of Equity Shares Bankers to this Issue [ ] Board or Board of Directors Board of Directors of our Company as constituted from time to time including any committee thereof Consolidated Certificate In case of multiple physical shares, our Company would issue one consolidated certificate for the Equity Shares allotted under one folio Collection Centre As defined in SEBI (DIP) Guidelines, 2000 and amended thereafter, and mentioned in the CAF. Designated Stock Exchange BSE DLOF Draft Letter of Offer dated September 18, 2008 Depositories NSDL and CDSL Depositories Act Depositories Act, 1996 as amended from time to time Equity Share Capital or Share capital of our Company as at a specific date Share Capital Equity Share(s) or Share(s) Equity Share(s) of our Company having a face value of Rs. 10, being fully paidup, unless specifically mentioned otherwise Equity Shareholder(s)/ The holder of Equity Share(s) Shareholders FY / Fiscal Financial Year ending March 31, unless otherwise specified. The financial year end of our Associate, Ramco Redlex is February 28 Indian GAAP Generally Accepted Accounting Principles in India 6

7 Investor(s) Issue / Rights Issue Issue Closing Date Issue Opening Date Issue Price I.T. Act Lead Manager or Lead Manager to the Issue Memorandum Net Issue proceeds Record Date Refund Bankers to the Issue Registrar to the Issue or Registrar Renouncees Rights Entitlement ROC / Registrar of Companies SEBI Act, 1992 SEBI DIP Guidelines /SEBI Guidelines Stock Exchanges SEBI (SAST) Regulations / SAST / SEBI Takeover Code / Takeover Code Warrant conversion date Warrant exercise period Warrant exercise price The holder(s) of Equity Shares of our Company as on the Record Date, i.e. [ ] and Renouncees, who are eligible to apply for and receive their Rights Entitlement, subject to applicable law Issue of 15,357,986 Equity Shares with a face value of Rs. 10 each at an Issue Price of Rs. 85 per Equity Share (including a premium of Rs. 75 per Equity Share, payable in cash) aggregating Rs. 1,305,428,810 on rights basis in the ratio of 1 fully paidup Equity Share for every 1 fully paidup Equity Share held by existing Equity Shareholders of our Company on the Record Date i.e. [ ], The Issue Price is 8.5 times of the face value of Equity Share. [ ] [ ] Rs. 85 per Equity Share, being 8.5 times the face value of each Equity Share The Income Tax Act, 1961 including the rules made thereunder, as amended from time to time Centrum Capital Limited / Centrum / Centrum Capital Memorandum of Association of our Company The proceeds of this Issue, after meeting Issue expenses The record date fixed by our Company for the purpose of this Issue, being [ ], 2008 [ ] Cameo Corporate Services Limited The persons who have acquired Rights Entitlements from Equity Shareholders The number of Equity Shares that a shareholder is entitled to, on the basis of the ratio decided, (in our case 1 Equity Share for every 1 Equity Share) in proportion to his / her shareholding in our Company and for every 2 Equity Share allotted on rights basis allottee will receive 1 detachable warrant as on the Record Date The Registrar of Company, Block 6, Second Floor, Shastri Bhavan, 26, Haddows Road, Chennai The Securities and Exchange Board of India Act, 1992, as amended from time to time The SEBI (Disclosure and Investor Protection) Guidelines, 2000, as amended from time to time BSE, NSE or MSE, individually or collectively as the context may require Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments made from time to time The Company in consultation with the designated Stock Exchange shall fix a record date for determining warrant holders entitled for conversion of warrants into equity shares of the Company. The Company will further fix a notice date (being the outermost date for conversion) after the record date but within the warrant exercise period i.e. 18 months from the date of allotment of warrants. The Warrant exercise period shall be the period commencing from the date of allotment and upto 18 months from the date of allotment of warrants Warrant exercise price shall be Rs.85 per Equity Share BUSINESS / INDUSTRY RELATED TERMS AND ABBREVATIONS. Term ASP BPI BSI BFSI BI BI&DW CEBIT Description Application service provider Business Process Improvement British Standards Institution Banking, Financial Services and Insurance Business Intelligence Business Intelligence and Data warehousing Centrum für Büro und Informationstechnik (Center for Office and Information Technology) 7

8 CIBA CIBA is a name of a company Gesellschaft für Chemische Industrie Basel (Company for Chemical Industry Basel) COTS Commercial of the shelf CPM Corporate Performance Management CRM Customer Relationship Management RDW Ramco DecisionWorks e.applications Ramco e.applications EIS Executive Information Systems ERP Enterprise Resource Planning ES Enterprise Solutions HCM Human Capital Management HRM Human Resource Management IDS Intrusion Detection System IDC International Data Corporation IT Information Technology ITCIBD ITCInternational Business Division J2EE Java 2 Enterprise Edition KPIs Key Performance Indicator LAN Local Area Network MRO Maintenance Repair and Overhaul OCEG Open Compliance and Ethics Group Products Software Development of our Enterprise Products, together with the repository of new business components, upon completion of the development phase, costs in relation to which have been classified and grouped as Product Software under Fixed Assets. R&D Research and Development ROI Return on Investment SDLC Software Development Life Cycle SEI CMM Level 5 US Dept. of Defense Software Engineering Institute Capability Maturity Model Integrated Level 5 SOA Service Oriented Architecture TCO Total Cost of Ownership TUV Technische Überwachungs Vereine (Technical Inspections Organizations) Technology Platform Development of technology platform framework, which enables us to provide standard and customised enterprise solutions, costs in relation to which have been classified and grouped as Technology Platform under Fixed Assets. VAT Value Added Tax VirtualWorks Ramco VirtualWorks VPN Virtual Private Network ABBREVIATIONS Term ADR AGM AS APAC APSEB BCG BIFR BSE CDSL CAGR CAF DP CEO CESTAT CFO CIN Description American Depository Receipts Annual General Meeting Accounting Standard, issued from time to time by the Institute of Chartered Accountants of India Asia Pacific Andhra Pradesh State Electricity Board Business Consulting Group Board of Industrial and Financial Reconstruction Bombay Stock Exchange Limited Central Depository Services (India) Limited Compounded Annual Growth Rate Composite Application Form Depository Participant Chief Executive Officer Central Excise and Service Tax Appellate Tribunal Chief Financial Officer Company Identification Number 8

9 CIT Commissioner of Income Tax CIT(A) Commissioner of Income Tax (Appeals) CrPC Code of Criminal Procedure, 1973 CST Act Central Sales Tax Act, 1956 COO Chief Operating Officer Demat Refers to Dematerialization of Equity Shares DIN Director s Identification Number EBITDA Earning Before Interest, Tax, Depreciation, and Amortisation ECS Electronic Clearing Service EGM Extraordinary General Meeting EPCG Export Promotion Capital Goods EPCG Scheme Export Promotion Capital Goods Scheme ESPP Employee Share Purchase Plan EPS Earnings Per Share ESOP 2000 The Employee Stock Option Plan, 2000 of the Company ESOS 2003 The Employee Stock Option Scheme, 2003 of the Company including the amendments made to the scheme from time to time ESOS 2004 The Employee Stock Option Scheme, 2004 of the Company including the amendments made to the scheme from time to time ESPS 2004 The Employee Stock Purchase Scheme, 2004 of the Company including the amendments made to the scheme from time to time EOU Export Oriented Unit EXIM Export Import Policy FCNR Foreign Currency Non Resident FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 FII(s) Foreign Institutional Investors registered with SEBI under applicable laws FIPB Foreign Investment Promotion Board, Ministry of Finance, Government of India GDP Gross Domestic Product GDR Global depository Receipts GIR General Index Number GoI Government of India HR Human Resources HUF Hindu Undivided Family ICAI Institute of Chartered Accountants of India IEC Importer Exporter Code ISO Indian Standard Organisation IDA Industrial Disputes Act IFSC Indian Financial System Code ITAT Income Tax Appellate Tribunal ITES Information technology enabled services KMP Key Managerial Personnel LOF Letter of Offer MD Managing Director MAT Minimum Alternate Tax MCL Madras Cements Limited MICR Magnetic Ink Character Recognition MSE Madras Stock Exchange Limited MSC Multimedia Super Corridor Mn / mn Million or 10 lakh MoU / MOU Memorandum of Understanding NAV Net Asset Value being paid up Equity Share capital plus free reserves (excluding reserves created out of revaluation) less deferred expenditure not written off (including miscellaneous expenses not written off) and debit balance of Profit & Loss account, divided by number of issued Equity Shares. NCD Non Convertible Debentures NEFT National Electronic Funds Transfer NOC No Objection Certificate NR Nonresident 9

10 NRE Account NRI(s) NRO Account NSDL NSE OCB OCEG P/E Ratio PAN POA RBI RIL RSCML RML RSL RTGS RONW Rs. or INR SEBI STPI SCN SIA TRIPS US / USA USD or $ or US $ Non Resident External Account Non Resident Indian(s) Non Resident Ordinary Account National Securities Depository Limited National Stock Exchange of India Limited Overseas Corporate Bodies Open Compliance and Ethics Group Price/Earnings Ratio Permanent Account Number Power of Attorney The Reserve Bank of India Ramco Industries limited Ramaraju Surgical Cotton Mills Limited Rajapalyam Mills Limited Ramco Systems Limited Real Time Gross Settlement Return on Net Worth Indian Rupees Securities and Exchange Board of India Software Technology Parks of India Secure Converged Networking Secretariat for Industrial Assistance Trade Related aspects of Intellectual Property Rights United States of America United States Dollar 10

11 SECTION II: RISK FACTORS An investment in Equity Shares involves a degree of risk. Prior to investing, investors should carefully consider the risks described below, in addition to the other information contained in this Draft Letter of Offer, before making any investment decisions relating to our Equity Shares. Investors should carefully consider all the information contained in the section titled Auditors Report and Financial Information beginning on page 148 of this Draft Letter of Offer, for the information related to the financial performance of our Company. The occurrence of any of the following events could have a material adverse effect on our business, results of operation, financial condition and prospects and cause the market price of our Equity Shares to fall significantly and you may lose all or part of your investment. These risks are not the only ones that we face. Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify or quantify the financial or other implications of any of the risks mentioned herein. Materiality: The Risk Factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality: 1. Some events may not be material individually but may be found material collectively. 2. Some events may have material impact qualitatively instead of quantitatively. 3. Some events may not be material at present but may be having material impacts in future INTERNAL RISK FACTORS 1. Our Company, Subsidiary and entities belonging to our Promoter Group are involved in certain legal proceedings in India Our Company, Subsidiary along with the entities belonging to our Promoter Group is involved in certain legal proceedings and claims in India in relation to certain civil, criminal, taxation and other matters. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. We have in the past and may in the future need to make provisions in our financial statements in relation to certain legal proceedings, which could increase our expenses and our current liabilities. We cannot assure you that these legal proceedings will be decided in our favour. Any adverse decision may have a significant effect on our business and results of operations. For more information regarding these legal proceedings, please refer to the chapter titled Outstanding Litigations and Defaults beginning on page 185 of this Draft Letter of Offer. 2. We have incurred losses in the past In fiscal 2008, 2007 and 2006, our loss before tax on a consolidated basis (excluding exceptional items) aggregated Rs million, Rs million and Rs million, respectively. In fiscal 2008, 2007 and 2006, our loss before tax on an unconsolidated basis (excluding exceptional items) aggregated Rs million, Rs million and Rs million respectively. These losses were on account of various reasons, particularly our significant expenditure on R&D, higher interests costs and incurring fixed operational costs like employee and administrative expenses. Our unconsolidated net worth was Rs. 1, million, Rs million and Rs million in fiscal 2008, 2007 and 2006 respectively. In fiscal 2008, 2007 and 2006, we had negative earnings per share (excluding exceptional items) of Rs , Rs and Rs respectively on an unconsolidated basis. In fiscal 2008, 2007 and 2006, we had negative returns on networth of 22.49%, 22.46% and 19.40% respectively on an unconsolidated basis. Further, in fiscal 2008, 2007 and 2006 our consolidated networth was Rs million, Rs million and Rs million respectively. In fiscal 2008, 2007 and 2006, we had negative earnings per share (excluding exceptional items) of Rs , Rs and Rs respectively on a consolidated basis. In fiscal 2008, 2007 and 2006, we had negative returns on networth of %, 24.75% and 12.30% respectively on a consolidated basis. We cannot assure you that we will be able to reverse this position in the future and this may continue to adversely affect our results of operations and financial conditions. 3. Our Subsidiaries have incurred losses on an unconsolidated basis in the past 11

12 In addition to our losses, our Subsidiaries have also incurred losses on a stand alone basis in the past. In fiscal 2008 alone, our Subsidiaries suffered losses aggregating Rs mn. These losses were on account of various reasons, particularly on account of fixed operational costs like employee and administrative expenses. As a result of their losses, these Subsidiaries have not been able to make payments inter alia in relation to receivables due to us. In the past pursuant to a scheme of arrangement approved by the High Court of Judicature of Madras on December 24, 1999 the amounts due to the Company from its overseas Subsidiaries and accumulated losses of our Company were written off against our share premium account. Though, we cannot provide any assurance that these Subsidiaries will be profitable or that our investments will be recovered, we propose to continue funding the capital expenditure and working capital requirement of these Subsidiaries, including by way of loans and/or equity infusion. The financial performance of these Subsidiaries adversely affects our results of operation and financial conditions. 4. Some of our Promoter Group entities have negative networth as a result of losses incurred by them in the past The following Promoter Group entities have incurred losses and have a negative networth: Rs. in million Negative Net worth as on March 31, Name of the company Nalina Agricultural Farms Private Limited (0.067) (0.037) (0.028) Nirmalashankar Farms and Estates Private Limited (0.025) (0.018) (0.010) Ramamandiram Agricultural Estate Private Limited (0.33) (0.04) Ramco Management Private Limited (1.07) (0.90) (1.04) Sri Nithyalakshmi Farms Private Limited (0.028) (0.019) (0.015) Sri Sandhya Farms (India) Private Limited (0.07) (0.04) (0.19) Sri Saradha Deepa Farms Private Limited (1.047) (1.037) (0.712) Rs. in million Loss for the year ended March 31, Name of the company Nalina Agricultural Farms Private Limited (0.03) (0.01) (0.003) Nirmalashankar Farms and Estates Private Limited (0.008) (0.009) (0.002) Ram Sandhya Farms Private Limited (0.009) (0.01) (0.004) Ramamandiram Agricultural Estate Private Limited (0.39) (0.006) Ramco Management Private Limited (0.43) Sri Nithyalakshmi Farms Private Limited (0.007) (0.008) (0.002) Sri Sandhya Farms (India) Private Limited (0.03) (0.02) Sri Saradha Deepa Farms Private Limited (0.02) (0.32) (0.09) For further details please refer to the chapter titled "Our Promoters and Promoter Group" beginning on page 114 of this Draft Letter of Offer. 5. Our revenues are highly dependent on the business operations of our Subsidiaries A substantial portion of our revenues arise on account of the business operations of our Subsidiaries. In fiscal 2008, 2007 and 2006, the revenues earned by our overseas Subsidiaries as a percentage of the total revenues earned on a consolidated basis was 68.93%, 64.26% and 66.60% respectively. Since our business and financial performance is highly dependent on the sales and the marketing effort of our Subsidiaries, any failure on the part of our Subsidiaries to meet such expectations may adversely affect our revenues and results of operations. For more details on our business model, please refer to the paragraph titled Business Model on page 75 of this Draft Letter of Offer. 6. We are in the process of complying with the provisions of Clause 49 of the Listing Agreement with respect to composition of independent directors on the Board of Directors of the Company In terms of the revised provisions of the Clause 49 of the Listing Agreement amended vide SEBI Circular SEBI/CFD/DIL/CG/1/2008/08/04 dated April 8, 2008 our Company is required to have four Independent Directors as against which the Company has three independent directors. Our Company is yet to comply with respect to the provisions of Clause 49 of the Listing Agreement relating to the requisite number of independent Directors on the Board as on date. However, our Company is in process of complying with the amended provisions. 12

13 7. High days of sales outstanding may increase our collection risk, which could adversely affect our results of operations Our Company has significant transactions with its Subsidiaries which are trade related. However the amount due in respect of trade related activities are unsecured, interest free and have no fixed terms of repayment. Further, we normally allow customers 15 to 60 days to pay amounts due from the invoice date. For fiscal 2008 and 2007, our days of sales outstanding (which is the ratio of sundry debtors to total sales in a particular period multiplied by the number of days in that period) was approximately 97 days and 117 days, respectively. Our inability in future to accelerate the realisation of receivables could adversely impact our operations. 8. We have taken many properties on rent / lease / license Currently we operate out of leased / rented facilities including our corporate office which can be terminated for cause by the lessor / owner. In case of such termination, we may encounter delay in finding suitable alternative properties in required timeframe or may not find alternatives at all. Because of the nature of our business, continuity of operations and access to facilities and systems is of critical importance. As a result, termination, or threat of termination, may have a disruptive effect on our ongoing business, distract our management and employees and may increase our expenses. In the event of premature/unforeseen termination of leases, we will need to make alternate arrangements, which may adversely affect our operations in the interim. Our main facilites which are located at our corporate office is leased out by our group company i.e.mcl and therefore we do not anticipate such risks. 9. Our revenues and expenses are difficult to predict and may vary significantly from period to period. Our revenues are difficult to predict and are likely to fluctuate due to a number of factors, many of which are outside of our control. These factors include: changes in our pricing policies or those of our competitors; the effect of high attrition rates due to salary pressure in the market and the time required to train and productively utilize new employees; unanticipated cancellations, contract terminations or deferrals of projects; unanticipated variations in the duration, size and scope of our projects; our ability to successfully anticipate and offer products and services that our customers will require in future; our ability to successfully complete projects on a timely basis; our ability to fund and sustain our R&D activities; the timing of introduction of our new products or our competitors new products or product enhancements ; and changes in customer budgets that could affect both the timing and size of transaction; Our operating expenses are budgeted based on our estimates of revenues. A high percentage of our expenses are fixed, particularly expenses related to our personnel and facilities, which are fixed in advance for specific periods. Any failure to accurately estimate the resources and time required for the performance of the contract or any failure to complete our contractual obligations within the performance levels committed could adversely affect our profitability. Any inaccuracy in estimating the resources required to complete ongoing projects may cause significant variations in our operating results in that particular period. 10. We have not declared any dividends in the past In the past, we have not declared any dividends to our Shareholders. The declaration and payment of dividends will be recommended by our Board of Directors and approved by our Shareholders, in their discretion, and will depend on a number of factors, including but not limited to our earnings, capital requirements and overall financial condition. 11. No significant tangible asset will be created from the proceeds of the Issue The proceeds of the Issue will be utilized primarily to repay our debts, R&D costs, marketing costs and general corporate purposes. We propose only to spend Rs. 250 million on capital expenditure and as such no significant tangible asset would be created out of the proceeds of the Issue. 12. We face competition from global and Indian enterprise solution companies We face competition from global and Indian enterprise solution companies who use their resources and experience in a competitive manner, including by making acquisitions and investing large amounts in R&D and pursuing aggressive marketing and sales initiatives. We may in the future not be able to provide similar or better technology solutions than our 13

14 competitors. As a result, we may experience a significant decline in demand of our offerings, which could negatively affect our revenues and results of operations. 13. Our revenues are dependant on our ability to innovate and develop unique offerings that meet customer expectations We operate in a market characterized by frequently changing customer requirements. Our success depends largely on the timely and successful introduction of high quality new products and upgrades, as well as cost reductions on current products to address the operational speed, efficiency and cost requirements of our customers. If we are unable to predict customer preferences or industry changes or if we are unable to modify our products and services on a timely basis, we may lose customers. Further, if we experience technical errors or delays in releasing new products or new versions of products, we could lose revenues. Flaws in our software could also subject us to liability and warranty claims, which could adversely affect our business and operating results. 14. We incur substantial R&D costs Our business strategy is based upon our ability to ensure that unique and competitive products and technologies are offered to customers on a regular basis. In order to develop and sell such products, we incur substantial R&D costs. In fiscal 2008, 2007 and 2006 our R&D costs on an unconsolidated basis was Rs million, Rs million and Rs million representing 41.03%, 29.20% and 26.47% of our total revenues respectively on an unconsolidated basis. If we are unable to sustain our R&D efforts, our results of operations may be adversely affected. We have incurred substantial expenditure to develop our current technology platform, VirtualWorks. We cannot assure you that the commercialization of this technology platform will be profitable or that our competitors will not develop a platform that is superior to VirtualWorks. We believe that we must continue to dedicate significant amount of resources to our R&D efforts to maintain our competitive position. However, we cannot assure you that our R&D efforts will yield significant revenues, if at all. 15. Our revenues are dependant on our ability to effectively market and implement our enterprise products and services We provide enterprise products and services. To market our offerings we are dependant on our partnerships, alliances and other marketing arrangements. The nature of our offerings is such that after they are deployed, we usually need to only provide maintenance services. Therefore, the quantum of repeat business for our offerings is low. Further, in view of the limited nature of the engagements and to ensure better revenues, we are highly dependant on our ability to effectively market our products and services to new customers on an ongoing basis. We cannot assure you that we will be appointed by customers to implement our offerings on a regular basis and this may adversely affect our financial performance and results of operations. We have also made significant investments in developing software products, which we believe are designed to meet the needs and expectations of our customers. Our current software products or any new software products that we develop may not be commercially successful. If we are unable to suitably market and implement our products to multiple customers, we may not be able to recoup the cost of such investments and this may adversely affect our results of operations. 16. If we are unable to successfully protect our computer systems from security risks, our business could suffer While we have implemented industrystandard security measures, our network may still be vulnerable to unauthorized access, computer viruses and other disruptive problems. A party that is able to circumvent security measures could misappropriate proprietary information and cause interruptions in our operations. We may be required to expend significant capital or other resources to protect against the threat of security breaches or to alleviate problems caused by such breaches. There can be no assurance that any measures implemented will not be circumvented in the future. Any disruption in our services or any misappropriation of data from our systems could hinder or affect our ability to complete client projects on time and lead to client dissatisfaction and have material adverse effect on our business, results of operations and financial condition. 17. Our products may contain flaws, which could result in damage to our reputation and loss of customers We provide our customers with products and services that are critical to the operations of their business. Our software solutions may contain undetected flaws, which could result in a claim against us for substantial damages, regardless of our responsibility for such a failure or defect. Although we attempt to contractually limit our liability for damages, including consequential damages, we cannot assure you that the limitations on liability will be enforceable in all cases. In respect of Ramco USA and Ramco Switzerland, we have taken certain coverage for errors and omission, while in respect of other areas we do not have any general liability insurance coverage. We cannot assure that the insurance covers taken by us will 14

15 be fully adequate and any such occurrence on account of errors and omission could result in damage to our reputation and loss of customers, which would adversely affect our business, results of operations and financial condition. 18. Our product sales cycle is long. We spend a considerable amount of time and money in order to effectively market our offerings, including by way of internal discussions with customers, presentations and pilot projects to convince them of its suitability for their purpose. These efforts may not necessarily result in our being engaged by such customers. In such cases, we may incur substantial expenses during the product sales cycle, which we may not be able to recoup. 19. Our international operations expose us to complex management, legal, tax and economic risks We have Subsidiaries, Associate and branch offices in 10 countries and a significant number of our IT services professionals are assigned to engagements outside India. As a result of our expanding international operations we are subject to risks inherent to establishing and conducting operations in international markets, including: Cost structures and cultural and language factors, associated with managing and coordinating our global operations; Compliance with a wide range of foreign laws, including immigration, labour and tax laws; Restrictions on repatriation of profits and capital; and Potential difficulties with respect to protection of our intellectual property rights in some countries. 20. The appreciation of the Rupee, particularly against the USD, Swiss Franc and South African Rand would have a material adverse effect on our results of operations We report our financial results in Rupees, but a significant portion of our income has been and may continue to be primarily denominated in USD, Swiss Franc and South African Rand, exposing us to foreign currency risks. The exchange rate between the Rupee and the USD, Swiss Franc and South African Rand has changed substantially in recent years and may continue to do so in future. We have currently not entered into any hedging arrangements to mitigate any foreign exchange fluctuation risk and cannot assure you that we will be able to mitigate the adverse impact of currency fluctuations on the results of our operations. 21. Any inability to manage our growth could impact our profitability We expect our growth to place significant demands on our management and other resources, including on our Subsidiaries and branch offices in various international jurisdictions. Continued expansion increases the challenges involved in: recruiting, training and retaining skilled technical, sales and management personnel, adhering to our high quality and process execution standards and maintaining high levels of customer satisfaction. Any inability to manage and integrate such growth may have an adverse effect on our business, results of operation and financial condition. 22. Our transfer pricing agreements with our Subsidiaries and other taxation matters may be challenged by regulators, which may subject us to higher taxes and adversely affect our earnings We are subject to direct and indirect taxes in India and various foreign jurisdictions, including income tax, sales tax, valueadded tax and service tax. In the ordinary course of our business, we have entered into several intercompany transactions across jurisdictions. We believe that we operate in compliance with all applicable transfer pricing laws in these jurisdictions. However, there can be no assurance that we will continue to be found to be operating in compliance with transfer pricing laws or that such laws will not be amended, which may require us to change our transfer pricing practices or operating procedures. Any amendment of transfer pricing laws may result in a higher overall tax liability to us and adversely affect our earnings and results of operations. 23. Our business is dependent on our intellectual property rights and any failure to protect such intellectual property rights will adversely affect our business We rely on a combination of patent, trademark and contractual commitments to protect our proprietary information. Despite our efforts, these measures can only provide limited protection. Unauthorized third parties may try to copy or reverse engineer portions of our products or otherwise obtain and use our intellectual property. Any intellectual property right owned by us may be invalidated, circumvented or challenged. Any of our pending or future intellectual property right applications, whether or not being currently challenged, may not be issued with the scope of the claims we seek, if at all. If we cannot protect our proprietary technology against unauthorized copying or use, we may not remain competitive. 15

16 The source code of our software applications is a critical asset of our operations. We will lose our competitive edge if any of our competitors appropriate such intellectual property rights. Under certain contracts we are required to keep our source code in escrow or enter into specific secrecy/confidentiality agreements with our customers. However, we cannot assure you that there will be no unauthorized disclosures of our source code pursuant to such escrow arrangements. Further, given the complex nature of the software development involving human intellect, we cannot rule out the replication of similar products by our existing or exemployees. 24. We may be infringing on intellectual property rights of third parties Claims of intellectual property infringement or trade secret misappropriation may be asserted against us or our customers in connection with their use of our products and the outcome of such claims may be uncertain. An unfavorable outcome in such a claim could require us to cease offering for sale the products that are the subject of such a claim or pay substantial monetary damages to a third party and/or make ongoing royalty payments to a third party. Certain of our customer contracts provide that in the event of a third party claim for intellectual property infringement, we shall either obtain permission from the third party to continue to use the offending intellectual property or find a substitute for the offending intellectual property. In the event that we are unable to provide either of these remedies to our customers, our customers contracts provide that we shall refund the license fee received, after deducting a reasonable charge for the time period during which the customers used the software. If we are not able to successfully challenge such claims, our business and results of operations could be materially affected. 25. Many of our customer contracts can be terminated without cause and with limited notice Many of our customer contracts provide for termination of the contract with or without cause by providing 15 to 60 days notice. In the case of license agreements, if a customer terminates the agreement before paying license fees, no license is granted to the customer. In case of service agreements, notwithstanding the reason for termination, our Company is entitled to all amounts due and payable by the customer (s) in respect of the work done by our Company prior to the date of termination. However, majority of our customer contracts do not provide for any penalty provisions for early termination by the customers. 26. We may not have sufficient insurance to mitigate our business risks We rely on insurance to mitigate some risks and if we are unable or choose not to maintain adequate insurance coverage, we may be exposed to potential claims. We have in the past and may in the future choose not to obtain insurance for certain risks facing our business. Certain customer contracts require us to maintain specific insurances such as workmen s compensation and comprehensive general liability insurance. We have obtained such insurance coverage as required by our customers. However, we cannot assure you that such insurance will cover all of our liability. If we are found liable for a significant claim in the future, our operating results could be negatively impacted. 27. We may not be able to hire and retain qualified technical and managerial personnel Our ability to execute projects, which meet the customer s expectations, depends largely on our ability to attract, train, motivate and retain qualified and experienced professionals. Competition for specialized technical personnel in the technology industry is strong. We also face competition for skilled professionals from international labour markets. Our attrition rates (attrition rate is calculated as the ratio of the number of employees that have left us during a defined period to the average of the total number of employees that are on our payroll at the beginning and end of such period) for fiscal 2008, fiscal 2007 and fiscal 2006 on an unconsolidated basis was 29%, 42%, and 35% respectively. Any increase in our attrition rates, particularly with respect to experienced software personnel will adversely affect our growth strategy and significantly impact our resource management. Apart from our employees, we also engage IT professionals provided by external agencies who are hired for particular projects. We may not be able to ensure that such external agencies continue to retain such personnel. 28. Entry barriers could limit our ability to expand our operations in international jurisdictions We derive a substantial portion of our revenues from onsite operations in the United States, Europe, Africa and Asia Pacific region. Immigration laws in these countries are subject to legislative change, political and economic conditions, particularly in relation to grant of work permits and business visas. Our ability to staff projects with software professionals who are not citizens of the country where the work is to be performed is constrained by such entry barriers, which could have a material impact on our business, financial condition and results of operations. 29. We face risks associated with investments, partnerships and alliances or other ventures. 16

17 In order to enhance our capabilities, technical expertise and geographic coverage, we have in the past and may in the future enter into joint ventures, partnerships and alliances, which may prove to be difficult to integrate and manage or may not be successful. These difficulties may disrupt our ongoing business, affect our management and employees and increase our expenses. Any divestments, disassociation, withdrawal from such alliances, partnerships, joint ventures in future could adversely affect us. 30. We require certain approvals or licenses in the ordinary course of business, and the failure to obtain them in a timely manner or at all may adversely affect our operations We require certain approvals, licenses, registrations and permissions for conducting our business in India and various foreign jurisdictions, which have currently been obtained for our business. However wherever applicable, if our approvals or licenses are not renewed on expiry or if the new approvals or licenses are not obtained in time, our business may be adversely affected. For more information, please refer to the chapter titled Government Approvals and Licenses beginning on page 191 of this Draft Letter of Offer. 31. We have availed of loans from banks, financial institutions and our Promoter Group entities Our working capital requirements have been and are expected to continue to be extensive. In order to finance our business, we have incurred significant levels of debt. For more details please refer to the paragraph titled Description of Certain Indebtedness on page 83 of this Draft Letter of Offer. We may need to obtain additional sources of funding, which may include equity, debt or convertible debt financing, in the future. Further, since most of the loans obtained by us have been secured or guaranteed by our Promoter Group entities i.e. MCL and RIL, we may not in the future, be able to raise any additional debt if our Promoter Group entities decline to provide such guarantees. A high level of debt, failure to meet the covenants in the loan agreement and poor business performance could materially affect our ability to fund the operations of our business. If operating cash flows are not sufficient to meet our expenses as they become due, we may be required to delay or reduce our capital expenditure programme or the development of new products or be forced to sell our assets or may have to forego potential business opportunities. 32. Our Promoters and Promoter Group entities will continue to control us As at June 30, 2008 our Promoters and Promoter Group entities hold 61.69% of preissue equity capital of our Company. They currently exercise substantial control over us and inter alia have the power to elect and remove a majority of our Directors and/or determine the outcome of certain important proposals, which require the specific approval of our Board of Directors or Shareholders. We cannot assure you that the interest of our Promoters and Promoter Group entities will not conflict with the interests of other Shareholders. 33. We may issue fresh shares, which may result in dilution of investor share holding in our Company Any future equity offerings by us, sale by significant shareholders and/or the issue of Equity Shares pursuant to exercise of stock options under the various employee stock option plans or by way of an induction of strategic investors, may lead to a dilution of investor shareholding in our Company and/or affect the market price of our Equity Shares. 34. Valuations in the software / information technology industry may not be sustained in future and current valuations may not be reflective of future valuations for the industry We are global providers of enterprise products and solutions. Though we believe that in India there are no directly comparable competitors, based on the current market capitalization and the industry in which they operate, we believe that Mphasis Limited, Oracle Financial Services Software Limited, Polaris Software Lab Limited and 3i Infotech Limited may be the closest comparable listed companies. Valuations in the software/information technology industry may not be sustained in future and current valuations may not be reflective of future valuations for the industry. EXTERNAL RISK FACTORS 1. The Competition Act, 2002, by regulating our Company s business and activities, may materially and adversely affect our Company s results of operations and financial condition The Indian Government enacted the Competition Act, 2002, for the purpose of preventing practices that could have an adverse effect on competition. Except for certain provisions, the Competition Act has not yet come into force. Under the Competition Act, any arrangement, understanding or action, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition is void and will be subject to substantial penalties. It is unclear how the Competition Act will affect industries in India and our Company s business. Consequently, our Company cannot assure 17

18 prospective investors that enforcement under the Competition Act will not have a material adverse effect on its results of operations and financial condition. 2. A third party could be prevented from acquiring control of our Company because of the takeover regulations under Indian law There are provisions in Indian law that may discourage a third party from attempting to take control of our Company, even if it would result in the purchase of our Equity Shares at a premium to the market price or would otherwise be beneficial to our Company s shareholders. Indian takeover regulations contain certain provisions that may delay, deter or prevent a future takeover or change in control so as to ensure that the interests of shareholders are protected. Any person acquiring either control or an interest (either on its own or together with parties acting in concert with it) in 15% or more of our Company s voting Equity Shares must make an open offer to acquire at least another 20% of our Company s outstanding voting Equity Shares. A takeover offer to acquire at least another 20% of our Company s outstanding voting Equity Shares also must be made if a person (either on its own or together with parties acting in concert with it) holding between 15% and 55% of our Company s voting Equity Shares has entered into an agreement to acquire or decided to acquire additional voting Equity Shares in any financial year that exceed 5% of our Company s voting Equity Shares. These and other applicable provisions may discourage or prevent certain types of transactions involving an actual or threatened change in control. 3. Fluctuations in operating results and other factors may result in decrease in Equity Share price Stock markets have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Equity Shares. There may be significant volatility in the market price of our Equity Shares. If our Company is unable to meet market or investor expectations in relation to our financial performance, investors could sell our Equity Shares when it becomes apparent that the expectations of the market may not be realised, resulting in a decrease in the market price of our Equity Shares. In addition to our Company s operating results, the operating results changes in financial estimates or recommendations by analysts, governmental investigations and litigation, speculation in the press or investment community, the possible effects of a war, terrorist and other hostilities, changes in general conditions in the economy or the financial markets, or other developments affecting the financial services industry, could cause the market price of Equity Shares to fluctuate substantially. 4. Political opposition to offshore outsourcing in the United States and other countries where we operate could adversely affect our business Offshore outsourcing has been the subject of intense political debate, and has come under increased government scrutiny within the United States due to its perceived association with loss of jobs in the United States. Several United States state governments have implemented or are actively considering implementing restrictions on outsourcing by United States state government entities to offshore IT services providers. Any changes in the United States, Europe or other countries to their existing laws or the enactment of new legislation restricting offshore outsourcing, particularly by private companies, may impact our business, financial condition and results of operations. 5. We are subject to various Indian and international income tax benefits We are currently a loss making entity and therefore cannot avail of the Indian tax benefits. However, if we are able to generate profits, we may avail of such tax benefits, if they are still available. However, we cannot assure you that we will continue to derive such tax benefits. For more details on the tax benefits available in India, please refer to the chapter titled Statement of Tax Benefits beginning on page 54 of this Draft Letter of Offer. 6. Applicability of certain labour laws may adversely affect our profitability India has stringent labour legislations that protect the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal and legislation that imposes certain financial obligations on employers upon retrenchment. Our employees may form unions in the future. If the labour laws become applicable to our workers or if our employees unionize, it may become difficult for us to maintain flexible labour policies, discharge employees or downsize, and our profitability may be adversely affected. With respect to our employees located at customer premises overseas, we may be exposed to risks arising from contract labour legislations in such jurisdictions. Further, we cannot assure you that there will be no adverse change in the relevant labour legislations in the respective jurisdictions. 7. Any disruption in the supply of power, IT infrastructure and telecom lines could disrupt our business process or subject us to additional costs 18

19 India s infrastructure, in particular its roads, airports and power sectors, needs to be upgraded to support the growth in the country. Infrastructure in the cities needs to be improved substantially to handle the expansion of industry in which we operate. Any disruption in basic infrastructure or the failure of the Government to improve the existing infrastructure facilities could negatively impact our business since we may not be able to provide timely or adequate services to our clients. We do not maintain business interruption insurance and may not be covered for any claims or damages if the supply of power, IT infrastructure or telecom lines is disrupted. This may result in the loss of a client, impose additional costs on us and have an adverse effect on our business, financial condition and results of operations. 8. Remunerative pressures in India may result in increased costs and we may lose our competitive advantage Remuneration for skilled professionals in India has historically been lower than remuneration costs in other jurisdictions, particularly the United States and Europe. However, remuneration in India is increasing at a faster rate than in the United States, which could result in increased costs for software professionals, particularly project managers and other midlevel professionals which may prevent us from sustaining competitive advantage in terms of personnel cost. We may be forced to increase the levels of remuneration paid to our employees to remain competitive and contain attrition. Compensation increases may result in a material adverse effect on our business, results of operation and financial condition. 9. Our ability to raise capital outside India and to enter into acquisition transactions with nonindian companies is subject to Indian laws Indian laws constrain our ability to raise capital outside India through the issuance of equity or convertible debt securities and restrict the ability of nonindian companies to acquire us. Generally, any foreign investment in, or an acquisition of, an Indian listed company requires approval from the relevant government authorities in India, including the Reserve Bank of India. However, there are certain exceptions to this approval requirement for information technology companies on which we are able to rely. Changes to such policies may create restrictions on our capital raising abilities. If the Government of India does not approve the investment or acquisition, or implements a limit on the foreign equity ownership of information technology companies, our ability to obtain investments, and/or enter into acquisitions with, foreign investors will be limited. In addition, making investments in and/or the strategic acquisition of a foreign company by us requires various approvals from the Government of India and the relevant foreign jurisdiction, and we may not be able to obtain such approvals. 10. Our operating results may be negatively impaired if there is an international economic slowdown A significant portion of our revenues are dependent on customers located in the United States, Europe and the Asia Pacific region. Economic slowdowns and other factors that affect the economic health of these regions may affect our business. If there is an economic downturn in these regions, our customers may reduce or postpone their contracts significantly, which may in turn lower the demand for our products and services and negatively affect our revenues and profitability. 11. Terrorist attacks and other acts of violence or war involving India and other countries could adversely affect the financial markets, result in loss of client confidence, and adversely affect our business, results of operations and financial condition Terrorist attacks, such as the ones that occurred in New York and Washington, D.C., on September 11, 2001, New Delhi on December 13, 2001, London July 7, 2005, Mumbai July 7, 2006 and other acts of violence or war, including those involving India, or other countries, may adversely affect Indian and worldwide financial markets. These acts may also result in a loss of business confidence and have other consequences that could adversely affect our business, results of operations and financial condition. More generally, an increased volatility in the financial markets can have an adverse impact on the economies of India and other countries, including economic recession. 12. Natural calamities could have a negative impact on the Indian economy and cause our business to suffer India has experienced natural calamities such as earthquakes, tsunami, floods, cyclones and drought in the past few years. The extent and severity of these natural disasters has an impact on the Indian economy. Any negative impact of natural disasters on the Indian economy could adversely affect our business and the market price of our Equity Shares 13. Our business may be disrupted by regional conflicts in South Asia South Asia has, from time to timeexperienced instances of civil unrest and hostilities among neighbouring countries, such as between India and Pakistan. In the past there have been military confrontations along the IndiaPakistan border. The potential for hostilities between the two countries is higher due to recent terrorist incidents in India, troop mobilisations along the border, and the aggravated geopolitical situation in the region. Military activity or terrorist attacks in the future could influence the Indian economy by disrupting communications and making travel more difficult. Such political 19

20 tensions could create a greater perception that investments in Indian companies involve a higher degree of risk. This, in turn, could have a material adverse effect on the market for securities of Indian companies, including the Equity Shares and on the market of our Company s products and services. 14. After the Issue, the price of our Equity Shares maybe highly volatile, or an active trading market for our Equity Shares may not develop or sustain The prices of our Equity Shares on the Indian stock exchanges may fluctuate after the Issue as a result of several factors, including: a. volatility in the Indian and global securities markets; b. our results of operations and financial condition; c. performance of our competitors, IT industry and the perception in the market about investments in the IT industry; d. adverse media reports on our Company or the Indian IT industry; e. changes in the estimates of our performance or recommendations by financial analysts; f. significant developments in India's economic liberalisation and deregulation policies; and g. significant developments in India's fiscal and environmental regulations. There can be no assurance that an active trading market for our Equity Shares will develop or be sustained after the Issue. 15. We may be adversely affected by economic, regulatory, political and military uncertainties in India and surrounding countries In the early 1990s, India experienced significant inflation, low growth in gross domestic product and shortages of foreign currency reserves. Since 1991, the Government of India has pursued policies of economic liberalisation, and has provided significant tax incentives and relaxed certain regulatory restrictions in order to encourage foreign investment in specified sectors of the economy, including in the IT sector. We cannot assure you that the liberalization policies will continue. Various factors, including a collapse of the present coalition government due to the withdrawal of support of coalition members, could trigger significant changes in India s economic liberalization and deregulation policies, disrupt business and economic conditions in India generally and our business in particular. Our financial performance and the market price of the Equity Shares may be adversely affected by changes in inflation, exchange rates and controls, interest rates, Government of India policies (including taxation policies), social stability or other political, economic or diplomatic developments affecting India in the future. Notes to Risk Factors 1. The net worth of our Company on an unconsolidated basis before the Issue (as of March 31, 2008) was Rs million and for the year ended March 31, 2007 was Rs million 2. The book value per Equity Share as on March 31, 2008 was Rs per Equity Share. 3. Except as disclosed in the chapter titled Capital Structure beginning on page 35 of this Draft Letter of Offer, we have not issued any shares for consideration other than cash. 4. The Issue is of 15,357,986 Equity Shares of Rs. 10 each for cash at a price of Rs. 85 per Equity Share (including a premium of Rs. 75 per Equity Share) aggregating upto Rs. 1, million on rights basis to the existing Equity Shareholders of our Company in the ratio of 1 Equity Share for every 1 Equity Share held on the Record Date [ ], and for every 2 Equity Share allotted on rights basis the allottee(s) will receive 1 detachable warrant in terms of this Draft Letter of Offer. 5. Average cost of acquisition of Equity Shares of our Company by our Promoters is as under: Mr. P R Ramasubrahmaneya Rajha Mr. P R Venketrama Raja Rs per Equity Share Rs per Equity Share 6. Refer to our financial information relating to related party transactions in the chapter titled "Our Promoters and Promoter Group" beginning on page 114 of this Draft Letter of Offer. 20

21 7. Except as mentioned below there have been no transactions in Equity Shares of our Company by our Promoters and Promoter Group entities and Directors of our Company in the last six months preceding the date of this Draft Letter of Offer. Name of the Promoter / Director Mr. P R Ramasubrahmaneya Rajha Date of acquisition Name of the No. of Equity Shares Means of acquisition transferor acquired** July 23, 2008 R Sethuramammal* 10,125 By means of transmission on succession / inheritance *mother of Mr. P R Ramasubrahmaneya Rajha **Acquired through transmission of shares, whereby 25,313 equity shares held by late Mrs. R Sethuramammal (who formed part of the Promoters and Promoters Group), were transmitted in favour of the claimants by means of succession/inheritance. Apart from above 10,125 equity shares, the remaining 15,188 equity shares were transmitted to her legal heir who do not form part of our Promoter and Promoter Group of our Company. 8. For details of interests of our Directors and KMP please refer to the chapter titled "Our Management" beginning on page 105 of this Draft Letter of Offer. 9. For details of the interests of our Promoters and Promoter Group entities, please refer to the chapter titled "Our Promoters and Promoter Group" beginning on page 114 of this Draft Letter of Offer. 10. Any clarification or information relating to the Issue shall be made available by the Lead Manager and our Company to the investors at large and no selective or additional information would be available for a section of investors in any manner whatsoever. Investors may contact the Lead Manager for any complaints, information or clarifications pertaining to the Issue. The Lead Manager is obliged to provide the same to Investors. 11. Before making an investment decision in respect of the Issue, Investors are advised to refer to the chapter titled "Basis for Issue Price" beginning on page 52 of this Draft Letter of Offer. 12. Please refer to the paragraph titled "Basis of Allotment" beginning on page 216 of this Draft Letter of Offer for details of the basis of allotment. We and the Lead Manager are obliged to keep this Draft Letter of Offer updated and inform the public of any material change/development till the listing and trading of the Equity Shares offered under the Issue commences. 21

22 SECTION III: INTRODUCTION SUMMARY OF OUR INDUSTRY IT Industry The Indian Information Technology sector has shown remarkable resilience in the year Industry performance was marked by sustained doubledigit revenue growth, steady expansion into newer servicelines and increased geographic penetration, and an unprecedented rise in investments by Multinational Corporations (MNCs) in spite of lingering concerns about gaps in talent and infrastructure impacting India's cost competitiveness. Underlying the sustained export growth is a combination of large untapped demand potential, rapidly growing adoption and widening scope of the global delivery model (in terms of geographies, vertical markets served as well as services offered), and India continuing to leverage its fundamental advantages of talent, cost, quality and early mover advantage/experience to garner a large share of the growth in global sourcing of ITBPO. The industry continues its drive to set global benchmarks in quality and information security through a combination of provider and industrylevel initiatives and at strengthening the overall frameworks, creating greater awareness and facilitating wider adoption of standards and best practices. High offshore component of delivery and superior execution in multilocation delivery continue to be key differentiators. Broadbased industry structure; IT led by large Indian firms, BPO by a mix of Indian and MNC thirdparty providers and captives, reflects the depth of the supplybase. While the larger players continue to lead growth, gradually increasing their share in the industry aggregate; several highperforming Small and Medium Enterprises (SMEs) also stand out. Enterprise resource planning (ERP) Enterprise resource planning (ERP) is the planning of how business resources (materials, employees, customers etc.) are acquired and moved from one state to another. An ERP system is a business support system that maintains in a single database the data needed for a variety of business functions such as Manufacturing, Supply Chain Management, Financials, Projects, Human Resources and CRM. In practice the ERP system may comprise a set of discrete applications, each maintaining a discrete data store within one physical database. For further details please refer to the chapter titled Our Industry beginning on page no 61 of this Draft Letter of Offer. 22

23 SUMMARY OF OUR BUSINESS Business Overview We are a part of the USD 759 mn Ramco group, a diversified industrial conglomerate. We commenced operations as a software business division of Ramco Industries in 1989 and incorporated Ramco Systems Limited as a public limited company in Pursuant to a scheme of arrangement sanctioned by the High Court of Judicature, at Madras on December 24, 1999, the software undertaking of Ramco Industries Limited was demerged and transferred to us with effect from April 1, 1999 (the Demerger Scheme). We have a 98% owned subsidiary in USA and 4 wholly owned subsidiaries located at Switzerland, Malaysia, Singapore, South Africa and one step down subsidiary in Australia and an associate in South Africa. We also have 4 branch offices at Germany, United Kingdom, United Arab Emirates and New Zealand. We are a global provider of ES and services in key industries such as manufacturing, aviation, logistics, banking and financial services. We offer rich functionality, cost effective seamless integration and fully webintegrated services, which helps our customers close the gap between business objectives and IT capabilities. Our offerings include consulting, ES and outsourcing. We have delivered our ES and services to over 1,000 customer installations across 40 countries serving over 100,000 users. We offer high quality and cost effective services to our customers through our mature delivery processes, scalable infrastructure and skilled global resource base. Our ability to develop adaptive solutions is powered by our technology platform, Ramco VirtualWorks. VirtualWorks is a virtual software factory which helps us deliver large, complex, webbased ES on any Technology Platform. VirtualWorks is an innovative Technology Platform, which transforms business processes into quality software applications in a considerably shorter time frame. It is an adaptive software platform, which facilitates easy modifications to align the software application with the changing business processes. VirtualWorks provides the following business benefits to our customers and partners: Flexible, powerful solutions; Advanced change management capabilities; Faster time to benefit; Better quality; and Optimal cost Leveraging on our strong domain expertise, sound business practices and customercentric focus, we have built significant global relationships with several multinational corporations and government entities thus demonstrating our ability to manage large customer relationships. Typically our engagements are project specific with continuous inputs from clients for maintenance and enhancements. Our senior executives continuously maintain and develop customer relationships through multiple contacts at different levels in the customer organization. Our notable engagements in specific industry domains such as egovernance and aviation are expected to strengthen our ES. With our sales and marketing team organized by industry service offerings and geography, we are able to effectively crosssell services to our existing customer base as well as successfully acquire new business. In addition, several of our senior executives based in customer geographies are focused on acquiring new / maintaining existing customer relationships. We are able to build a satisfied customer base over the past decade through our global growth strategy. Our customers include large global corporations like Swatch Group, Switzerland; Radisson, UK; Commerce Bank, USA; Petroleum Helicopters Inc, USA; Durban Municipality of South Africa; GHC, Qatar; Revertex, Malaysia; SingHealth of Singapore; HDB Corp, Singapore; and ICICI Bank, India. The year , has been eventful on multiple fronts. There were several marquee customer acquisitions, key partnerships and business realignment, all aimed at an aggressive and profitable growth. During the year the Company successfully launched the next version of its collaborative solution innovation platform Ramco VirtualWorks 3.0. This is the only platform today that provides complete and continuous alignment between business processes and applications along with the ability to change those applications on demand as business requirements shift. Another showcase of Ramco s pioneering technology initiatives was the launch of India s first fullfledged Softwareasa Service (SaaS) ERP Ramco OnDemand ERP. Ramco OnDemand ERP is a fullsuite web enabled ERP that is available for an affordable subscription and takes care of all IT infrastructure, maintenance and support. Companies can now benefit from shortened implementation time (from months to weeks) and hence faster time to benefit. Following a soft launch 23

24 earlier, Ramco OnDemand ERP has successfully won more than 1000 users across multiple verticals that include Auto Components, Discrete Manufacturing, Trading, Distilleries, Electronics, Textiles, Chemicals, Services and more. The year also marked Ramco India s maiden venture into the business process outsourcing space with a distinct value proposition compared to conventional Indian vendors. In spite of not being an early entrant, Ramco has successfully leveraged its technology advantage (Ramco VirtualWorks) to deliver value added payroll processing services. In the American market, Ramco has been stressing the need for flexible business processes and focused analytics for businesses to be competitive and continue adding value to their customers. These efforts got a significant shot in the arm when one of the world s top thinkers Mr. C K Prahalad wrote about Ramco s cocreation successes in the book The New Age of Innovation which he has coauthored with Mr. M S Krishnan. The authors clearly recognize Ramco s unique cocreation approach and how Ramco s solutions enable customers to harness change and drive continuous innovation with unparalleled speed and costefficiency. Ramco s inclusion in this important new book further validates our strategy of helping customers around the world and increasingly in North America to stop force fitting their business through rigid technology, because innovation really is no longer an option. With the objective of focusing completely on its core business of developing next generation enterprise applications, our Company divested its 100% stake in its then wholly owned subsidiary Ramco Infotech Solutions Limited to TVS Interconnect Systems Limited. For further details please refer to the chapter titled Our Business beginning on page no 66 of this Draft Letter of Offer. 24

25 THE ISSUE Summary of the Terms of Issue Equity Shares to be Issued Issue Price 15,357,986 Equity Shares of face value Rs. 10/ each Rs.85 per share (including a premium of Rs.75 per equity share, payable in cash). The Issue Price is 8.5 times of the face value of Equity Share. Rights Entitlement One fully paid up Equity Share for every one fully paid up Equity Share (1:1) held by the existing equity shareholder of our Company on the Record Date, i.e. [ ], Issue Size Rs. 1,305,428,810 Record date [ ], 2008 Equity Shares outstanding prior to the 15,357,986 Issue Equity Shares outstanding after the 30,715,972 Issue Warrants entitlement For every 2 Equity Shares being allotted on rights basis, the allottee will receive 1 detachable warrant. Equity Shares outstanding after 38,394,965* conversion of warrants Warrant exercise period The warrant exercise period shall be the period commencing from the date of allotment and upto 18 months from the date of allotment of warrants Warrant conversion date The Company in consultation with the designated Stock Exchange shall fix a record date for determining warrant holders entitled for conversion of warrants into equity shares of the Company. The Company will further fix a notice date (being the outermost date for conversion) after the record date but within the warrant exercise period i.e. 18 months from the date of allotment of warrants. Warrant exercise price Warrant exercise price shall be Rs.85 per Equity Share Terms of Issue For details please refer to chapter titled Terms of Issue on page 203 of this Draft Letter of Offer. * Assuming that all the warrants issued are fully converted into Equity Shares of the Company. Terms of Payment Due Date Amount For Rights Issue of Equity Shares On Right Issue Entire Issue Price i.e., an amount of Rs. 85 per Equity Share, including the share premium of Rs 75 application per Equity Share, is to be paid at the time of application For Warrants Entitlement On exercise of Warrant exercise price shall be Rs.85 per Equity Share warrant 25

26 SUMMARY OF OUR FINANCIAL INFORMATION Selected Unconsolidated Financial Information of Ramco Systems Limited The following tables set forth our selected unconsolidated financial information derived from our restated financial statements for the years ended March 31, 2008, 2007, 2006, 2005 and The financial statements have been prepared in accordance with Indian GAAP, the Companies Act and SEBI DIP Guidelines and restated as described in the Auditors Report of CNGSN & Associates dated September 18, 2008 and included in the section titled Auditors Report and Financial Information beginning on page 148 of this Draft Letter of Offer, and this table should be read in conjunction with the financial statements mentioned therein and the notes thereto. STATEMENT OF PROFITS AND LOSSES (AS RESTATED) (Rupees in million) Year ended March 31, A. Income Sales , , Other Income Total 1, , , B. Expenditure Cost of Resale Material Employee Compensation & Benefits Sales & Marketing Expenses Administrative & Other Expenses Interest & Finance Charges Depreciation & Amortisation Total Expenditure 1, , , , , C. Profit/(Loss) before Tax & Exceptional Items (368.17) (317.23) (332.48) (128.62) (332.67) D. Exceptional Income / (Expense) (274.98) E. Profit/(Loss) before Tax (317.23) (332.48) (403.60) (332.67) F. Impact of material adjustment and prior period items (15.97) G. Provision for Taxation (5.88) (4.80) (8.20) H. Profit/(Loss) after Tax (322.03) (340.68) (403.60) (348.64) 26

27 RAMCO SYSTEMS LIMITED, INDIA STATEMENT OF ASSETS AND LIABILITIES (AS RESTATED) (Rupees in million) As at March 31, A. Fixed Assets Gross Block 2, , , , , Less : Depreciation Net Block 1, , , , , CWIP B. Deferred Tax Asset B. Investments 1, , , , C. Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Other Current Assets , D. Liabilities and Provisions Secured Loans Unsecured Loans , Current Liabilities and Provisions , , , , , E. Networth 1, , , , , F. Represented by 1. Share capital Net Reserves 1, , , , , Less : Misc. expenses not written off Less : Profit & Loss account (433.42) (662.71) (340.68) (704.07) G. Networth 1, , , , ,

28 Selected Consolidated Financial Information of Ramco Systems Limited The following tables set forth our selected consolidated financial information derived from our restated consolidated financial statements for the years ended March 31, 2008, 2007, 2006, 2005 and The financial statements have been prepared in accordance with Indian GAAP, the Companies Act and SEBI DIP Guidelines and restated as described in the Auditors Report of CNGSN & Associates dated September 18, 2008 included in the section titled Auditors Report and Financial Information beginning on page 148 of this Draft Letter of Offer, and this table should be read in conjunction with the financial statements mentioned therein and the notes thereto. RAMCO SYSTEMS LIMITED CONSOLIDATED STATEMENT OF PROFITS AND LOSSES (AS RESTATED) (Rupees in million) Year ended March 31, A. Income Sales 1, , , , , Other Income Total 2, , , , , B. Expenditure Cost of Resale Material Employee Compensation & Benefits 1, , , , , Sales & Marketing Expenses Administrative & Other Expenses Interest & Finance Charges Depreciation & Amortisation Total Expenditure 2, , , , , C. Profit/(Loss) before Tax & Exceptional Items (493.54) (356.83) (214.56) (326.07) (491.85) D. Exceptional Income / (Expense) (349.92) E. Profit/(Loss) before Tax (356.83) (214.56) (675.99) (491.85) F. Impact of material adjustment and prior period items (15.97) G. Provision for Taxation (6.45) (19.87) (32.28) (6.30) (0.27) H. Minority Interest 2.34 (0.17) (0.65) I. Equity in Earnings/(Losses) of Associates (0.81) J. Profit/(Loss) after Tax (376.84) (236.65) (679.26) (507.96) 28

29 RAMCO SYSTEMS LIMITED CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES (AS RESTATED) (Rupees in million) As at March 31, A. Fixed Assets Gross Block 3, , , , , Less : Depreciation 1, , Net Block 2, , , , , CWIP B. Deferred Tax Asset 1.44 C. Investments D. Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Other Current Assets , , , E. Liabilities and Provisions Secured Loans Unsecured Loans , Current Liabilities and Provisions , , , , , F. Networth 1, , , , G. Represented by 1. Share capital Net Reserves 1, , , , , Less : Misc. expenses not written off (4.08) (0.03) (0.12) (64.00) Less : Profit & Loss account (487.71) (598.24) (213.46) (2,344.00) 3. Minority Interest H. Networth 1, , , ,

30 GENERAL INFORMATION Dear Shareholder(s), Pursuant to the resolution passed by the Board of Directors of our Company at its meeting held on September 11, 2008, it has been decided to make the following offer to the Equity Shareholders of our Company, with a right to renounce: ISSUE OF 15,357,986 EQUITY SHARES WITH A FACE VALUE OF RS. 10 EACH AT AN ISSUE PRICE OF RS. 85 PER EQUITY SHARE (INCLUDING A PREMIUM OF RS. 75 PER EQUITY SHARE, PAYABLE IN CASH) AGGREGATING RS. 1,305,428,810 ON RIGHTS BASIS IN THE RATIO OF 1 FULLY PAIDUP EQUITY SHARE FOR EVERY 1 FULLY PAIDUP EQUITY SHARE HELD BY EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY ON THE RECORD DATE i.e. [ ], 2008 ( ISSUE ). FOR EVERY 2 EQUITY SHARES BEING ALLOTTED ON RIGHTS BASIS, THE ALLOTTEE(S) WILL RECEIVE 1 DETACHABLE WARRANT. THE ISSUE PRICE IS 8.5 TIMES OF THE FACE VALUE OF EQUITY SHARE. FOR MORE DETAILS, PLEASE REFER TO THE CHAPTER TITLED TERMS OF ISSUE BEGINNING ON PAGE 203 OF THIS DRAFT LETTER OF OFFER. IMPORTANT This offer is being made only to those Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity Shares held in the electronic form and in the Register of Members of our Company in respect of the Equity Shares held in physical form as on the Record Date i.e. [ ] fixed in consultation with the Designated Stock Exchange i.e. BSE. Your attention is drawn to the section titled Risk Factors beginning on page 11 of this Draft Letter of Offer. Please ensure that you have received the CAF with this Draft Letter of Offer. In case the original CAF is not received, lost or misplaced by the shareholder, the Registrar will issue a duplicate CAF on the request of the shareholder who should furnish the registered folio number/dp ID/client ID number and his/her full name and address to the Registrar. Please note that those applicants who are making the application in the duplicate CAF should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. In case the original and the duplicate CAFs are lodged for subscription, allotment will be made on the basis of the duplicate CAF and the original CAF will be ignored. Please read this Draft Letter of Offer and the instructions contained herein and in the CAF carefully, before filling in the CAF. The instructions contained in the CAF are an integral part of this Draft Letter of Offer and must be carefully followed. Applications are liable to be rejected if they are not in conformity with the terms of this Draft Letter of Offer or the CAF. All enquiries in connection with this Draft Letter of Offer or CAF should be addressed to the Registrars to the Issue, Cameo Corporate Services Limited quoting the Registered Folio Number/Depository Participant (DP) Number, Client ID Number and the CAF Number as mentioned in the CAF. The Issue will remain open for a minimum period of 15 days. If extended, it will be kept open for a maximum period of 30 days. The funds received against the Issue will be kept in separate bank account(s) and our Company will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by our Company. If our Company does not receive the minimum subscription of 90% of the Issue, the entire subscription shall be refunded to the applicants within 15 days from the date of closure of the Issue. Our Promoters and Promoter Group entities have confirmed that they would subscribe to their respective entitlements in this Rights Issue in full. Further, the following Promoters / Promoter Group entities i.e. Mr. P.R. Ramasubrahmaneya Rajha, Mr. P.R. Venketrama Raja, MCL and RIL have confirmed that they will also subscribe to such number of additional Equity Shares as may be required, beyond their entitlement to enable the completion of the Rights Issue, in accordance with the provisions of SEBI (Disclosure of Investor Protection) Guidelines, 2000 and other applicable laws. Subscription by the Promoters and Promoter Group entities to the extent of their entitlement in this Issue and acquisition of additional Equity Shares by, if any, by the Promoters / Promoter Group entities, will not result in change of control of the management of our Company and shall be exempted in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. In the event if the post Issue shareholding of public falls below 25% of the postissue capital of our Company, our Promoters / Promoter Group entities undertake to maintain the minimum level of public shareholding in accordance with clause 40A of the Listing Agreement. 30

31 Registered office of our Company 47, PSK Nagar, Rajapalayam Tel: Fax: Corporate office of our Company 64, Sardar Patel Road, Taramani, Chennai Tel: Fax: Web site: Company Identification Number (CIN): L72300TN1997PLC Registrar of Companies Our Company, bearing Registration Number , is registered with the Registrar of Companies, Tamil Nadu at Chennai, located at Block 6, Second Floor, Shastri Bhavan, 26, Haddows Road, Chennai Listing The Equity Shares of our Company are listed on the BSE, NSE and MSE. Board of Directors Our Board of Directors as on the date of the filing of this Draft Letter of Offer with SEBI comprises of: 1. Mr. P.R. Ramasubrahmaneya Rajha, Chairman 2. Mr. P.R. Venketrama Raja, Vice Chairman, Managing Director and CEO 3. Mr. S.S. Ramachandra Raja, Director 4. Mr. N.K. Shrikantan Raja, Director 5. Mr. M.M. Venkatachalam, Director 6. Mr. V. Jagadisan, Director 7. Mr. A.V. Dharmakrishnan, Director For more details regarding the profile of our Management please refer to the chapter titled Our Management beginning on page 105 of this Draft Letter of Offer. Company Secretary and Compliance Officer Mr. Subramanian Narayan No. 64, Sardar Patel Road, Taramani, Chennai Tel: Fax: Bankers to our Company Axis Bank Limited No.82, Radhakrishnan Salai, Mylapore, Chennai Tel: Fax: K.Ramasubramanian@axisbank.com 31

32 Contact Person: Mr. K S Ramasubramanian Federal Bank Limited Br: Rajaram Mehta Nagar, 25, Nelson Manickam Road, Chennai Tel: Fax: aprem@federalbank.co.in Contact Person: Mr.M.J.Aprem CITI Bank NA No.2, Club House Road, Chennai Tel: Fax: k.srinivasan@citi.com Contact Person: Mr. K Srinivasan Issue Management Team Lead Manager to the Issue Centrum Capital Limited Centrum House, Vidya Nagari Marg, CST Road, Kalina, Santacruz (East), Mumbai Maharashtra, India Tel: Fax: Contact Person: Mr. Bhavyan Dalal / Mr. Alpesh Shah for the Issue: rslrights@centrum.co.in Website: SEBI Reg. No.: INM Registrar to the Issue and Share Transfer Agents for our Company Cameo Corporate Services Limited Subramanian Building, No. 1, Club House Road, Chennai Tel: Fax: Contact Person: Mr. R. D. Ramasamy investor@cameoindia.com Website: SEBI Reg. No.: INR Note: Investors are advised to contact the Registrar to the Issue and/or Company Secretary / Compliance Officer, Mr. Subramanian Narayan in case of any preissue/postissue related grievances such as nonreceipt of the Draft Letter of Offer / Letter of Offer/Abridged Letter of Offer / Letter of allotment/ share certificate(s)/ refund orders/demat credit/electronic refund of funds. Legal Advisors for the Issue M/s S.R. Legal Advocates, 415, Rex Chambers, Walchand Hirachand Marg, Ballard Estate, Mumbai Tel: Fax: srlegals@gmail.com 32

33 Contact person: Mr. Annamaneni Rama Rao Bankers to the Issue The Bankers to the Issue shall be finalized prior to filing of the Letter of Offer with the Stock Exchanges. Refund Bankers to the Issue The Refund Bankers to the Issue shall be finalized prior to filing of the Letter of Offer with the Stock Exchanges. Statutory Auditors of our Company M/S CNGSN & Associates Chartered Accountants Agastyar Manor, No. 20, Raja Street, T.Nagar, Chennai Tel: Fax: Website: Contact Person: Mr. C N Gangadaran Statement of Allocation of Responsibilities Centrum Capital Limited is the sole Lead Manager to the Issue. The details of responsibility are as follows: Sr.No. Activities 1. Capital structuring with relative components and formalities such as type of instruments, etc. 2. Drafting and Design of the Draft Letter of Offer and of advertisement / publicity material including newspaper advertisements and brochure / memorandum containing salient features of the Draft Letter of Offer. Centrum Capital shall ensure compliance with the Guidelines for Disclosure and Investor Protection and other stipulated requirements and completion of prescribed formalities with Stock Exchange and SEBI. 3. Marketing of the Issue which will cover, inter alia, formulating marketing strategies, preparation of publicity budget, arrangements for selection of (i) admedia and (ii) bankers to the issue. 4. Selection of various agencies connected with the issue, namely Registrars to the Issue, printers, bankers and advertisement agencies. 5. The postissue activities will involve essential followup steps, which must include finalization of basis of allotment / weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as registrars to the issue, bankers to the issue, and bank handling refund business. Even if many of these postissue activities would be handled by other intermediaries, Centrum Capital shall be responsible for ensuring that these agencies fulfill their functions and enable him to discharge this responsibility through suitable agreements with the issuer company. Credit Rating This being an issue of Equity Shares, no credit rating is required. The details of the ratings received by our Company for other securities/ instruments in the last three years are as follows: Borrowing Programs Amount Rs. Rating Agency Rating Date of Rating Letter Short Term Non Convertible Debentures Rs. 950,000,000 ICRA Limited A1+(SO) December 17,2007 Rs. 750,000,000 ICRA Limited A1+(SO) February 27, 2007 Rs. 250,000,000 ICRA limited A1+(SO) August 1, 2005 Commercial Paper Rs. 100,000,000 ICRA Limited A1+ June 3, 2005 Note: ICRA Limited (formerly, Investment Information and Credit Rating Agency of India Limited) is an independent and professional company providing investment information and credit rating services. A is the highestcreditquality rating assigned by ICRA to shortterm debt instruments. Instruments rated in this category carry the lowest credit risk in the short term. Within this category, certain instruments are assigned the rating of A1+ to reflect their relatively stronger credit quality. 33

34 Grading This being a Rights Issue, no grading is required. Debenture Trustees This being a Rights Issue of Equity Shares, appointment of debenture trustees is not required. Monitoring Agency As the size of this Issue does not exceed Rs. 50,000 lakh, appointment of a monitoring agency under clause 8.17 of the SEBI DIP Guidelines is not required. Appraising Entity Not Applicable Impersonation Attention of the applicants is specifically drawn to the provisions of subsection (1) of section 68A of the Act which is reproduced below: Any person who makes in a fictitious name, an application to a company for acquiring, or subscribing for, any shares therein, or otherwise induces the Company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years. Underwriting / Standby arrangements The present Issue is not underwritten. Neither our Company, Promoters, Directors of our Company, nor the Lead Manager to the Issue have entered into any buyback, standby or similar arrangements for any of the securities being issued through this Draft Letter of Offer. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue on the date of the closure of the Issue, the entire subscription shall be refunded to the applicants within 15 days from the date of closure of the Issue. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e. 15 days after closure of the Issue), our Company will pay interest for the delayed period, at rates prescribed under subsections (2) and (2A) of section 73 of the Companies Act. Undersubscription of the Issue will be determined after considering the number of shares applied as per the entitlement plus additional shares applied for by the existing Shareholders and the renouncees. Our Promoters and Promoter Group entities have confirmed that they would subscribe to their respective entitlements in this Rights Issue in full. Further, the following Promoters / Promoter Group entities i.e. Mr. P.R. Ramasubrahmaneya Rajha, Mr. P.R. Venketrama Raja, MCL and RIL have confirmed that they will also subscribe to such number of additional Equity Shares as may be required, beyond their entitlement to enable the completion of the Rights Issue, in accordance with the provisions of SEBI (Disclosure of Investor Protection) Guidelines, 2000 and other applicable laws. Subscription by the Promoters / Promoter Group entities to the extent of their entitlement in this Issue and acquisition of additional Equity Shares by, if any, by the Promoters / Promoter Group entities, will not result in change of control of the management of our Company and shall be exempted in terms of proviso to Regulation 3(1) (b) (ii) of the Takeover Code. In the event if the postissue shareholding of public falls below 25% of the postissue capital of our Company, our Promoters / Promoter Group entities undertake to maintain the minimum level of public shareholding in accordance withclause 40A of the Listing Agreement. In case the permission to deal in and for an official quotation of the Equity Shares is not granted by the Stock Exchanges, the Issuer shall forthwith repay without interest, all monies received from the applicants in pursuance of the Draft Letter of Offer and if such money is not repaid within eight days after the day from which the Issuer is liable to repay it, the Issuer shall pay interest as prescribed under section 73 (2) / 73 (2A) of the Companies Act, Note: The funds received against the Issue will be transferred to a separate bank account other than the bank account referred to in subsection (3) of section 73 of the Act. 34

35 CAPITAL STRUCTURE Our share capital as at the date of filing of this Draft Letter of Offer with SEBI (before and after the Issue) is set forth below: Particulars A Authorised Capital Nominal / Aggregate value (Rs.) 50,000,000 Equity Shares of Rs. 10 each 500,000,000 B Issued and Subscribed Capital before the Issue 15,707,164 fully paidup Equity Shares of Rs. 10 each 157,071,640 C Paid up Capital Before the Issue 15,357,986 fully paidup Equity Shares of Rs. 10 each 153,579,860 D Present Issue of 15,357,986 fully paidup Equity Shares of Rs. 10 each being offered to the Equity Shareholders through the Draft 153,579,860 E Letter of Offer Paidup Equity Capital after the Issue but before conversion of warrants 30,715,972 fully paidup Equity Shares of Rs. 10 each 307,159,720 F Securities Premium Account Before the Issue 1,942,746,246 After the Issue but before conversion of warrants 3,094,595,196 G Paidup Equity Capital after conversion of warrants 38,394,965 fully paidup Equity Shares of Rs. 10 each* 383,949,650 H Securities Premium Account after conversion of warrants* 3,670,519,671 * Assuming that all the warrants issued are fully converted into Equity Shares of the Company. Notes to the Capital Structure 1. The details of changes in the authorized share capital of our Company after the date of incorporation till the filing of this Draft Letter of Offer have been set out below. Date of the Shareholders Changes Approval June 16, 1999 Change in the authorized share capital from Rs. 500,000 divided into 50,000 Equity Shares of Rs. 10 each to Rs. 150,000,000 divided into 15,000,000 Equity Shares of Rs. 10 each. July 22, 2005 Change in the authorized share capital from Rs. 150,000,000 divided into 15,000,000 Equity Shares of Rs. 10 each to Rs. 300,000,000 divided into 30,000,000 Equity Shares of Rs. 10 each. September 18, 2008 Change in the authorized share capital from Rs. 300,000,000 divided into 30,000,000 Equity Shares of Rs.10 each to Rs. 500,000,000 divided into 50,000,000 Equity Shares of Rs.10 each. 35

36 2. Build up of Equity Share Capital as at March 31, 2008: Date of Allotmen t March 10, 1997 March 25, 1999 June 16, 1999 June 23, 1999 August 4, 1999 August 21, 1999 January 12, 2000 January 12, 2000 March 9, 2000 March 27, 2000 April 28, 2003 Number of Equity Shares Issue price per Equity Share of face value Rs. 10 each (Rs.) Considerati on (cash, bonus, consideratio n other than cash) Reasons for Allotment / Forfeiture Cash To the subscribers to the Memorandum of Association 27, Cash Allotment to Ramco Industries Limited Cumulative Paid up Capital (In Rs.) Securities Premium (In Rs.) Cumulative Securities Premium (In Rs.) 7, , , Cash Various allottees 2,652, ,100,000 (a) 10 Cash Allotment of partly paid shares to RSL Employee Trust 13,652, , Cash Various allottees 13,694, , Cash Various allottees 13,714, ,376,719 (b) 303 Consideratio n other than cash Allotment to Ramco Industries Limited in relation to investments acquired in overseas Subsidiaries (850,000) 10 Forfeiture Forfeiture of shares by RSL Employee Trust 4,333,153 (c) 10 Demerger of Ramco Systems Limited from Ramco Industries Limited Issue of shares to the shareholders of Ramco Industries Limited pursuant to court sanctioned demerger order. 502,000 3,480 Cash Private Placement to various Foreign Institutional Investors and Mutual Funds allottees (Reissue of portion of forfeited shares) 3, Cash Exercise of options granted under ESOP ,481, ,378, ,378,667 28,981, ,378,667 72,312, ,378,667 77,332,720 1,711,405,3532,407,784,020 77,368, ,2002,408,650,220 36

37 Date of Allotmen t May 30,2003 June 23, 2003 January January 6, 2005 February 23, 2005 March 28, 2005 March 28, 2005 April 15, 2005 April 15, 2005 April 29, 2005 April 29, 2005 June 1, 2005 June 1, 2005 Number of Equity Shares Issue price per Equity Share of face value Rs. 10 each (Rs.) Considerati on (cash, bonus, consideratio n other than cash) Reasons for Allotment / Forfeiture 4, Cash Exercise of options granted under ESOP , Cash Exercise of options granted under ESOP ,872, Cash Allotment of shares pursuant to rights issue 611, Cash Preferential Allotment to Promoters/ Promoter group (1,228) Forfeiture Forfeiture of partly paid shares issued pursuant to rights issue 6, Cash Exercise of options granted under ESOP , Cash Exercise of options granted under ESOS , Cash Exercise of options granted under ESOP , Cash Exercise of options granted under ESOS , Cash Exercise of options granted under ESOP , Cash Exercise of options granted under ESOS Cash Exercise of options granted under ESOP , Cash Exercise of options granted under ESOS 2003 Cumulative Paid up Capital (In Rs.) Securities Premium (In Rs.) Cumulative Securities Premium (In Rs.) 77,412,470 1,079,7002,409,729,920 77,450, ,1002,410,651, ,175, ,316,1243,120,967, ,289, ,275,1293,317,242, ,277,540 (116,660)3,317,125, ,344,040 1,443,0503,318,568, ,481,540 3,767,5003,322,336, ,502, ,7003,322,791, ,557,540 1,507,0003,324,298, ,587, ,0003,324,949, ,606, ,4503,325,477, ,610,790 86,8003,325,564, ,658,540 1,308,3503,326,872,463 37

38 Date of Allotmen t June 13, 2005 June 13, 2005 June 22, 2005 June 22, 2005 July 20, 2005 July 20, 2005 October 29, 2005 February 5, 2006 February 22, 2006 February 22, 2006 May 27, 2006 Number of Equity Shares Issue price per Equity Share of face value Rs. 10 each (Rs.) Considerati on (cash, bonus, consideratio n other than cash) Reasons for Allotment / Forfeiture 3, Cash Exercise of options granted under ESOP Cash Exercise of options granted under ESOS Cash Exercise of options granted under ESOP , Cash Exercise of options granted under ESOS , Cash Exercise of options granted under ESOP , Cash Exercise of options granted under ESOS Cash Cancellation of forfeited partly paid Equity Shares (forfeited on February 23, 2005) Adjustments on March 31, 2005 as per Scheme of Arrangement (d) 3,070, Cash Allotment of shares pursuant to rights issue Cash Exercise of options granted under ESOP Cash Exercise of options granted under ESOS Cash Cancellation of forfeited partly paid Equity Shares (forfeited on February 23, 2005) Cumulative Paid up Capital (In Rs.) Securities Premium (In Rs.) Cumulative Securities Premium (In Rs.) 122,688, ,0003,327,523, ,694, ,7003,327,674, ,698,040 86,8003,327,760, ,713, ,7003,328,185, ,745, ,9503,328,912, ,830,040 2,274,2003,331,186, ,830,290 2,3753,331,189,188 (1,987,873,2141,343,315,974 ) 153,537, ,537,7471,941,853, ,548, ,6501,942,077, ,564, ,0001,942,493, ,564,860 2,3751,942,495,746 38

39 Date of Allotmen t February 6, 2008 Number of Equity Shares Issue price per Equity Share of face value Rs. 10 each (Rs.) Considerati on (cash, bonus, consideratio n other than cash) 39 Reasons for Allotment / Forfeiture Cash Exercise of options granted under ESOS 2004 Cumulative Paid up Capital (In Rs.) 153,579,860 (f) Securities Premium (In Rs.) Total 15,357,986 1,942,746,246 Cumulative Securities Premium (In Rs.) 250,5001,942,746,246 (e) (a) 1,100,000 partly paid Equity Shares were allotted to the RSL Employee Trust in relation to our Company s Employee Share Purchase Plan. 850,000 shares were forfeited by the RSL Employee Trust, since it was unable to make full payment on the Equity Shares, pursuant to a call made by our Company on them. Our Company reissued 502,000 of these forfeited Equity Shares on March 27, 2000 to certain FII s and domestic mutual funds. SEBI in its letter dated April 18, 2000 addressed to the Madras Stock Exchange, while approving the listing of the 502,000 Equity Shares has specifically restricted the reissuance of the remaining 348,000 Equity Shares, which therefore remain forfeited and unissued. The partly paid amount of Rs. 1 per Equity Share paidup earlier against such Equity Shares has been credited to the forfeited account and group under equity share capital. Expenses amounting to Rs million pertaining to reissue have been debited to the share premium account. (b) (c) 2,376,719 Equity Shares were allotted to Ramco Industries Limited at a premium of Rs. 293 per Equity Share, as consideration for the transfer of its entire investment in its overseas Subsidiaries. The allotment was approved by our Shareholders at the EGM held on November 10, 1999 and subsequently by the RBI. 4,333,153 Equity Shares were allotted to the shareholders of Ramco Industries Limited pursuant to the sanction of the High Court of Judicature at Madras vide its Order dated December 24, 1999, approving the Scheme of Arrangement providing for Demerger of the software business undertaking of Ramco Industries Limited to Ramco Systems Limited. (d) On August 4, 2005, the High Court of Judicature at Madras sanctioned the Scheme of Arrangement filed by our Company in relation to the adjustment of an amount not exceeding Rs. 2, million out of the balance standing in our share premium account as on the appointed date (viz. March 31, 2005), in respect of (i) trade receivables due from our Subsidiaries amounting to Rs million and (ii) accumulated losses as on the appointed date. (e) This includes an amount of Rs. 111,910 being securities premium amount paid on 1,178 Equity Shares allotted pursuant to the rights issue made by our Company in The shares were forfeited by our Company due to non payment of call money. These shares remain unissued till date. (f) This does not include an amount of Rs. 353,890, being partly paid amount of Rs. 1 per Equity Share paidup earlier against 348,000 Equity Shares and partly paid up amount of Rs. 5 per Equity Share paid up against 1178 Equity Shares. Both the amounts has been credited to the forfeited account and grouped under equity share capital of our Company, these Equity Shares remains unissued till date. 3. Shareholding pattern of our Company as on June 30, 2008: Category Code Category of Shareholder (A) Shareholding of Promoter & Promoter Group (1) Indian Total No. of Shares held pre Issue % of pre Issue capital No. of Equity Shares post Rights Issue % of post Rights Issue capital* No. of Equity Shares post exercise of warrants % of post Issue capital, post exercising warrants * (a) Individuals/HUF 2,432, ,864, ,080, (b) Central Govt./State Govt(s) (c) Bodies Corporate 6,958, ,916, ,395, (d) Financial Institutions/Banks (e) Any Other (Specify) Trusts 84, , , Sub Total (A) (1) 9,474, ,948, ,686,

40 (2) Foreign (a) Individuals(NRIs/Forei gn Individuals) (b) Bodies Corporate (c) Institutions (d) Any Other (Specify) Sub Total (A) (2) Total Promoters holding 9,474, ,948, ,686, (B) Public Shareholding (1) INSTITUTIONS (a) Mutual Funds/UTI (b) Financial 26, , , Institutions/Banks (c) Central Govt./State Govt(s) (d) Venture Capital Funds (e) Insurance Companies 351, , , (f) Foreign Institutional 672, ,344, ,681, Investors (g) Foreign Venture Capital Investors (h) Any Other (Specify) Sub Total (B) (1) 1,050, ,100, ,625, (2) NON INSTITUTIONS (a) Bodies Corporate 919, ,839, ,299, (b) Individuals (i) Individual 2,441, ,882, ,102, Shareholders holding nominal Share Capital upto Rs. 1 Lakh (ii) Individual 1,461, ,923, ,654, Shareholders holding nominal Share Capital in excess of Rs. 1 Lakh (c) Clearing Members 9, , , (d) Trust , , Sub Total (B) (2) 4,833, ,666, ,082, Total Public Shareholding 5,883, ,767, ,708, TOTAL (A) + (B) 15,357, ,715, ,394, (C) Shares held by Custodians & against which Depository Receipts have been issued GRAND TOTAL (A) + (B) + (C) 15,357, ,715, ,394,

41 * Assuming all shareholders apply for and are allotted Equity Shares in the Rights Issue and all the warrants allotted along with the rights shares are converted into Equity Shares in accordance with the Terms of Issue. As of the beneficial position as on September 12, 2008 there are 499,930 Equity Shares held by shareholders in physical form. Our Promoters and Promoter Group entities have confirmed that they would subscribe to their respective entitlements in this Rights Issue in full. Further, the following Promoters / Promoter Group entities i.e. Mr. P.R. Ramasubrahmaneya Rajha, Mr. P.R. Venketrama Raja, MCL and RIL have confirmed that they will also subscribe to such number of additional Equity Shares as may be required, beyond their entitlement to enable the completion of the Rights Issue, in accordance with the provisions of SEBI (Disclosure of Investor Protection) Guidelines, 2000 and other applicable laws. Subscription by the Promoters and Promoter Group entities to the extent of their entitlement in the Issue and acquisition of additional Equity Shares by, if any, by the Promoters / Promoter Group entities, will not result in change of control of the management of our Company and shall be exempted in terms of proviso to Regulation 3(1) (b) (ii) of the Takeover Code. In the event if the postissue shareholding of public falls below 25% of the postissue capital of our Company, our Promoters / Promoter Group entities undertake to maintain the minimum level of public shareholding in accordance with clause 40A of the Listing Agreement. 4. Details of the shareholding of the Promoters and Promoter Group as on the date of filing of the Draft Letter of Offer with SEBI is as follows: Name of entities Number of Equity Shares Percentage Mr. P R Ramasubrahmaneya Rajha 362, Mr. P R Venketrama Raja 1,289, Madras Cements Limited 2,117, Ramaraju Surgical Cotton Mills Limited 12, Ramco Industries Limited 4,822, Ms. Nalina Ramalakshmi 234, Ms. Sarada Deepa 232, Mr. Srirama Raja S R 16, Mr. N R K Ramkumar Raja 12, Mr. Harish Krishnakumar 3, Mr. Jayanth Ramachandra Raja 3, Ms. Nithya Lakshmi 3, Ms. Sudarsanam R 103, Ms. Nirmala P V 7, Mr. Abhinav Ramasubramaniya Raja 73, Ms Sri Sandhya 73, Ramco Agencies Pvt Ltd 1, Ramco Pvt Ltd 3, Ramco Management Pvt Ltd RSL Employee Trust 84, Total 9,459, Average cost of acquisition of Equity Shares by our Promoters is as under Sr. No. Promoters Average Cost of Acquisition of Equity Shares (Rs.) 1. Mr. P R Ramasubrahmaneya Rajha Mr. P R Venketrama Raja Details of Equity Shares bought back Our Company has not bought back any Equity Shares since inception. 7. Details of the transactions in Equity Shares by the Promoters and the Promoter Group during the last 6 months 41

42 Except as mentioned herein below the Promoters / Promoter Group and Directors of our Company have not purchased or sold the Equity Shares of our Company during the 6 months period preceding the date of filing the Draft Letter of Offer with SEBI. Name of the Promoter / Director Mr. P R Ramasubrahmaneya Rajha Date of acquisition Name of the No. of Equity Shares Means of acquisition transferor acquired** July 23, 2008 R Sethuramammal* 10,125 By means of transmission on succession / inheritance *mother of Mr. P R Ramasubrahmaneya Rajha ** Acquired through transmission of shares, whereby 25,313 equity shares held by late Mrs. R Sethuramammal (who formed part of the Promoters and Promoters Group), were transmitted in favour of the claimants by means of succession/inheritance. Apart from above 10,125 equity shares, the remaining 15,188 equity shares were transmitted to her legal heir who do not form part of our Promoter and Promoter Group of our Company 8. Top 10 shareholders a. As on date of filing of the Draft Letter of Offer with SEBI*: Sr. No. Particulars No. of Shares Percentage 1. Ramco Industries Limited 4,822, Madras Cements Ltd 2,117, Mr. P.R. Venketrama Raja 1,289, Platinum Investment Management Limited A/C Platinum Asia Fund 540, Mr. P R Ramasubrahmaneya Rajha 362, United India Insurance Company Limited 351, Sonata Investments Limited 335, Ms. Nalina Ramalakshmi 234, Ms. Saradha Deepa 232, Mr. Ravikumar Ramkishore Sanwalka 230, Total 10,515, * Beneficial position as on September 12, 2008 b. 10 days prior to date of filing of the Draft Letter of Offer with SEBI* : Sr. No. Particulars No. of Shares Percentage 1. Ramco Industries Limited 4,822, Madras Cements Ltd 2,117, Mr. P.R. Venketrama Raja 1,289, Platinum Investment Management Limited A/C Platinum Asia Fund 540, Mr. P R Ramasubrahmaneya Rajha 362, United India Insurance Company Limited 351, Sonata Investments Limited 335, Ms. Nalina Ramalakshmi 234, Ms. Saradha Deepa 232, Mr. Ravikumar Ramkishore Sanwalka 230, Total 10,515, *Beneficial position as on September 5, 2008 c. 2 years prior to the date of filing of the Draft Letter of Offer with SEBI *: Sr. Particulars No. of Shares Percentage No. 1. Ramco Industries Limited 4,822, Madras Cements Ltd 2,117, Rajapalayam Mills Limited 648, Mr. P.R. Venketrama Raja 637, Platinum Asset Management Limited A/C Platinum Asia Fund 586,

43 6. Mr. P R Ramasubrahmaneya Rajha 352, United India Insurance Company Limited 351, Sonata Investments Limited 335, Ms. Nalina Ramalakshmi 234, Ms. Saradha Deepa 232, Total 10,317, *Beneficial position as on September 15, The total number of members of our Company as on the date of filing of this Draft Letter of Offer i.e. beneficial position as on September 15, 2008 is 9, The present Issue being a Rights Issue, as per extant SEBI DIP Guidelines, the requirements of Promoters contribution and lockin are not applicable. 11. The present Issue is not underwritten. Neither our Company, Promoters, Directors of our Company, nor the Lead Manager to the Issue have entered into any buyback, standby or similar arrangements for any of the securities being issued through this Draft Letter of Offer. 12. During the year , our Company established the employee Share Purchase Plan (ESPP) which provided for the issuance of 11,00,000 shares to eligible employees (including certain employees of the subsidiaries). The share were issued to an employee welfare trust called the RSL Employee Trust ( Trust ) at Rs. 10/ each and Re. 1/ was paid up by the Trust as application money. Subsequently, the Trust expressed its inability to pay the remaining money due on all the 11,00,000 shares and offered to pay the balance amount (i.e., Rs. 9/ per share) only in respect of Rs. 2,50,000 shares. Accordingly, 8,50,000 shares were forfeited. The balance 2,50,000 shares have been allotted to employees at par (i.e., Rs. 10/each) as per their grade and number of years of services under an agreement of sale, and the employees would need to be in the employment of our Company over a four year period to get the shares on a progressive basis. We have instituted three employee stock option schemes, being the ESOP 2000, ESOS 2003 and ESOS 2004, and one employee stock purchase scheme, being the ESPS Our Shareholders have approved ESOP 2000, ESOS 2003 at the Shareholders Meeting held on August 28, 2000 and April 9, 2003 respectively and ESOS 2004 and ESPS 2004 at the Shareholders Meeting held on December 24, The amendments to the schemes including the increase in the aggregate number of options that may be granted under ESOS 2004, have been duly approved by the members from time to time. Each of ESOP 2000, ESOS 2003, ESOS 2004 and ESPS 2004 is compliant with the provisions of the SEBI (Employee Stock Option Plan and Employee Stock Purchase Plan) Guidelines, 2000, as amended. ESOP 2000, ESOS 2003, ESOS 2004 and ESPS 2004 are administered by our Compensation Committee. As on September 15, 2008, there are 49,900, 122,950 and 251,750 stock options outstanding against ESOP 2000, ESOS 2003 and ESOS 2004 respectively, thus aggregating to 424,600 stock options which can be granted by the Company. No Equity Shares have been allotted under ESPS As per the extant scheme in force, the options granted under ESOP 2000 and ESOS 2003 vests over a period of three years whereas the options granted under the ESOS 2004 vests over a period of four years. The exercise prices of the options granted are determined in accordance with the provisions of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, The details of the options granted and outstanding under ESOP 2000, ESOS 2003 and ESOS 2004 as of the date of this Draft Letter of Offer have been detailed in the table below: Particulars ESOP 2000 ESOS 2003 ESOS 2004 Total Options Approved 160, ,000 1,200,000 Options Vested 70, , ,838 Options Exercised till date 31,700 37, Options Lapsed 2,350 Total Number of Shares arising as a result of exercise of options 31,700 37, Unvested Options 16,687 99, ,412 Money realized by exercise of Options 7,508,950 10,755, ,500 43

44 Particulars ESOP 2000 ESOS 2003 ESOS 2004 Employee wise details of Options granted to 1. Key Managerial Personnel Refer Table below Refer Table below Refer Table below 2. Any other employee, who received a grant in one year of option amounting to 5% or more of NIL 15, ,000 option granted during the year. 3. Identified employees who were granted option, during one year equal to or exceeding 1% of the NIL NIL NIL Issued Capital (excluding outstanding warrants and conversions) of the Company at the time of grant. Vesting Schedule Over a period of three years Over a period of three years Over a period of four years Lock In NIL NIL NIL Details of options granted in various Financial Years are as follows: ESOP 2000 Particulars Option Granted till date (Net) Key Managerial Personnel Any other employee, who received a grant in one year of option amounting to 5% or more of options granted during the year. Financial Year Details Number of Option Granted Exercise Price (Rs) , (Adjusted grant Price for Rights Issues) , , (Adjusted grant price for Rights Issues) , (Adjusted grant price for Rights Issues) ESOS 2003 Particulars Option Granted (Net) Key Managerial Personnel Any other employee, who received a Financial Year 44 Details Number of Option Granted Exercise Price(Rs) , (Adjusted grant price for Rights Issues) , (Adjusted grant price for Rights Issues) , , , (Adjusted grant price for Rights Issues) , (Adjusted grant price for Rights Issues)

45 grant in one year of option amounting to 5% or more of option granted during the year , (Adjusted grant price for Rights Issues) , ESOS 2004 Particulars Option Granted (Net) Key Managerial Personnel Any other employee, who received a grant in one year of option amounting to 5% or more of option granted during the year. Financial Year Details Number of Option Granted Exercise Price(Rs) , ,000 Ranging from 156 to 165 under various lots , , ,500 Ranging from 156 to 165 under various lots , ,000 Ranging from 156 to 165 under various lots * 20, * Calculation of 5% or more of options granted during the year is based on options granted till September 15, 2008 Note 1: Our Company has obtained all the necessary approvals for the aforesaid allotment of Equity Shares issued under various ESOP / ESOS schemes. There were no identified employees who were granted option, during one year equal to or exceeding 1% of the Issued capital (excluding outstanding warrants and conversions) of our Company at the time of grant. Note 2: In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the Company has appointed M/s Indbank Merchant Banking Services Limited as the Merchant Bankers for the implementation of the said schemes i.e. ESOP 2000, ESOS 2003, ESOS 2004 and ESPS At any given time, there shall be only one denomination of the Equity Shares of our Company and our Company shall comply with such disclosure and accounting norms as specified by SEBI from time to time. The Equity Shareholders (except our employees to whom stock options has been granted) of our Company do not hold any warrants, options or convertible loans or debentures, which would entitle them to acquire further shares in our Company. 14. As on the date of this Draft Letter of Offer, there are no outstanding warrants, options or rights to convert debentures, loans or other instruments convertible into Equity Shares, apart from the outstanding options granted under ESOP 2000, ESOS 2003 and ESOS No further issue of capital by way of issue of bonus shares, preferential allotment, public issue, rights issue which will affect the Equity Share Capital of our Company, shall be made during the period commencing from the filing of this Draft Letter of Offer with SEBI and the date on which the Equity Shares issued under the Letter of Offer are listed or application moneys are refunded on account of the failure of the Issue. Further, presently our Company does not have any intention to alter the equity capital structure by way of split/consolidation of the denomination of the shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities within a period of 6 months from the date of opening of the Issue. However, if business needs of our Company so require, our Company may alter the capital structure by way of split / consolidation of the denomination of the Equity Shares / issue of Equity Shares on a preferential basis or issue of bonus or rights or any other securities during the period of 6 months from the date of opening of the Issue or from the date the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all the approvals which may be required for such alteration. 16. The Issue will remain open for a minimum of 15 days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. 45

46 17. Our Company has not availed of bridge loans to be repaid from the proceeds of the Issue for incurring expenditure on the Objects of the Issue. 18. We may grant stock options or issue Equity Shares arising from the exercise of options granted to our employees pursuant to our ESOP 2000, ESOS 2003, ESOS 2004 and/or ESPS 2004 or, if we enter into acquisition(s) or joint venture(s) or induct strategic investors/ partners for furthering our business, wherein we may consider raising additional capital to fund such activity or use Equity Shares as currency for such transactions. 19. We have not issued any Equity Shares out of revaluation reserves. 20. Our Company has not made a public offering of its Equity Shares in the immediately preceding 2 years from the date of filing of this Draft Letter of Offer. 21. The terms of issue to NonResident Equity Shareholders/Applicants have been presented under the chapter titled Terms of Issue beginning on page 203 of this Draft Letter of Offer. 22. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Issue on the date of closure of the Issue, the entire subscription shall be refunded to the applicants within 15 days from the date of closure of the Issue. If there is a delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e. 15 days after closure of the Issue), our Company shall pay interest for the delayed period, at rates prescribed under subsections (2) and (2A) of section 73 of the Companies Act Undersubscription of the issue will be determined after considering the number of shares applied as per the entitlement plus additional shares applied for by the existing shareholders and the renouncees. The undersubscribed portion can be applied for only after the close of the Issue. Our Promoters and Promoter Group entities have confirmed that they would subscribe to their respective entitlements in this Rights Issue in full. Further, the following Promoters / Promoter Group entities i.e. Mr. P.R. Ramasubrahmaneya Rajha, Mr. P.R. Venketrama Raja, MCL and RIL have confirmed that they will also subscribe to such number of additional Equity Shares as may be required, beyond their entitlement to enable the completion of the Rights Issue, in accordance with the provisions of SEBI (Disclosure of Investor Protection) Guidelines, 2000 and other applicable laws. Subscription by the Promoters / Promoter Group entities to the extent of their entitlement in the Issue and acquisition of additional Equity Shares by, if any, by the Promoters / Promoter Group entities, will not result in change of control of the management of our Company and shall be exempted in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. In the event if the postissue shareholding of public falls below 25% of the post Issue capital of our Company, our Promoters / Promoter Group entities undertake to maintain the minimum level of public shareholding in accordance with clause 40A of the Listing Agreement. In case the permission to deal in and for an official quotation of the Equity Shares is not granted by the Stock Exchanges, the Issuer shall forthwith repay without interest, all monies received from the applicants in pursuance of the Draft Letter of Offer and if such money is not repaid within eight days after the day from which the Issuer is liable to repay it, the Issuer shall pay interest as prescribed under section 73 (2) /73 (2A) of the Companies Act, Equity Shares offered through the Issue shall be fully paidup on allotment and the entire amount of Rs. 85 (face value of Rs. 10 each and a premium of Rs. 75 per Equity Share) is payable on application 24. The Equity Shares of our Company are fully paid up and there are no partly paid up shares as on the date of this Draft Letter of Offer. 25. No payment, direct or indirect in the nature of discount, commission, and allowance or otherwise shall be made either by us or our Promoters to the persons who receive allotments, if any, in this Issue. 46

47 OBJECTS OF THE ISSUE Our Company intends to utilize the proceeds of the Issue towards the following purposes: Repayment of existing debts Funding the ongoing R&D efforts Capital Expenditure Marketing Costs General Corporate Purposes Issue expenses The main objects clause of our Memorandum of Association enables us to undertake our existing activities and the activities for which funds are being raised by us through the Issue. Further, we confirm that the activities which we have been carrying out till date are in accordance with the objects clause of our Memorandum of Association. Brief details of the fund requirements We intend to utilise the funds raised from the Issue as follows: Objects Rs. in million as a % of the total Issue Size A. Repayment of existing debt on their respective due dates % B. R&D costs % C. Capital Expenditure % D. Marketing Costs % E. General Corporate Purposes, including working capital requirements % F. Issue expenses % Total 1, % Means of finance Sr. No. Particulars Amount in Rs. million 1. Rights Issue proceeds* 1, Total 1,305.42** *The maximum authority from the Board for the Issue is Rs. 1, million **excludes proceeds from conversion of warrants The entire requirements of the objects detailed above are intended to be funded from the Issue Proceeds. Therefore no other means of financing is envisaged. We also confirm that, as on date, no amount has been spent towards any of the purposes for which Net Issue Proceeds are intended to be deployed. The above fund requirements and deployment are based on the estimates of our management and have not been appraised by any bank or financial institution or independent third party. These fund requirements are based on the current business plan of our Company. We operate in a highly competitive and dynamic industry, and may have to revise our business plan from time to time on account of new projects that we may pursue or to formulate a response to revised market or economic circumstances. In case of any variations in the actual utilization of funds earmarked for the above activities, increased fund deployment for a particular activity may be met with by other funding sources, including surplus funds, if any, available. The details of the fund requirements are as follows: A. Repayment of existing debt on their respective due dates We have currently availed loans from various banks as detailed in the paragraph titled Description of Certain Indebtedness beginning on page 83 of the Draft Letter of Offer. Out of the total outstanding loans of Rs. 1, million as on September 18, 2008, we propose to repay loans of Rs million. This repayment will help us to reduce the interest burden and thereby improve our profitability. 47

48 The details of debts proposed to be repaid out of the Issue Proceeds in fiscal are as under Name of the Lender Amount sanctioned NonConvertible Debentures (NCDs) : Deutsche Trustee Services (India) Private Ltd Deutsche Trustee Services (India) Private Ltd Deutsche Trustee Services (India) Private Ltd Canara Robeco Asset Management Company Ltd a/c Canara Robeco Mutual Fund Canara Robeco Liquid Scheme Canara Robeco Asset Management Company Ltd a/c Canara Robeco Mutual Fund Canara Robeco Asset Management Company Ltd a/c Canara Robeco Mutual Fund Canara Robeco Asset Management Company Ltd a/c Canara Robeco Mutual Fund Canara Robeco Interval Fund SR2 Quarterly Plan 1 Canara Robeco Asset Management Company Ltd a/c Canara Robeco Mutual Fund Canara Robeco Interval Fund SR2 Quarterly Plan 1 Deutsche Trustee Services (India) Private Ltd Deutsche Trustee Services (India) Private Ltd Principal Amount Outstandin g as on September 18, 2008 Repayment during FY 2009 Amoun Date t 48 Amount Outstan ding as on March 31, 2009 Purpose as per the Sanction Letter Rs. in million Utilization Sep08 Working Capital / General Corporate purposes / R&D Nov08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Dec08 Working Capital / General Corporate

49 Deutsche Trustee Services (India) Private Ltd Other Loan The Federal Bank Ltd purposes / R&D Dec08 Working Capital / General Corporate purposes / R&D Oct Working Capital Requirem ents 49 Working Capital Requirements Total Note: 1. The above NCDs (which are rated by ICRA Limited) are backed by corporate guarantee from MCL. The loan is backed by certain movable and immovable assets of the Company. The Company normally rolls over these NCDs / loan, on due dates. 2. Since the due dates of these NCDs / loan fall before the expected date of realization of the proceeds of the proposed Rights Issue, the Company intends to roll over these NCDs / loans on the aforementioned due dates in such a manner that the rolled over NCDs / loan fall due around the expected date of realization of the proceeds of the proposed Rights Issue, so that the rolled over NCDs / loan can be liquidated with the proceeds of the proposed Rights Issue. The loan being repaid out of the proceeds of the Rights Issue was used for the purpose for which it was originally availed. The above mentioned detail of the loan / NCDs has been certified by Statutory Auditors M/s. CNGSN & Associates vide certificate dated September 18, The amounts raised through the Issue would be used to repay the loan installments either on their due date or will be prepaid where there are no prepayment penalties. In case of delay in receiving the Issue proceeds for any reasons whatsoever, we would meet our debt obligations by other funding sources, including surplus funds if any, available. In such an event we would update the Draft Letter of Offer and / or keep the investors informed about the details. B. R&D costs As part of our business strategy, we propose to continue to enhancing and enriching our technology offerings by continuing to invest in R&D efforts, based on our perceptions of customer needs and the industry in which they operate in. We expect our R&D efforts to benefit our business operations, target new customers and meet their requirements and to increase our intellectual property. To meet the expenses in relation to the above mentioned purpose, we propose to deploy Rs. 250 million towards our R&D activity. C. Capital Expenditure As part of our normal business and other operations, we incur capital expenditure on a regular basis towards our hardware and software requirements and other fixed assets. To meet the above mentioned expenses, we propose to deploy Rs. 100 million. D. Marketing costs We are making efforts to increase our market reach and customer acceptability in various jurisdictions, particularly in US, Europe, Middle East, South Africa and Asia Pacific. We are focusing on advertising, public relations and other marketing efforts, including increasing the size of our sales and marketing teams. To meet the above mentioned expenses, we propose to deploy Rs. 75 million. E. General Corporate Purposes The application of Issue proceeds for general corporate purposes would include but not be restricted to financing our working capital requirements, capital expenditure, investment in technology upgradation, repayment of borrowings, meeting exigencies etc. which our Company in the ordinary course of business may incur. Our Management, in accordance with the policies of our Board, will have flexibility in utilizing the proceeds earmarked for general corporate purposes. We intend to use Rs million for general corporate purposes. F. Issue Expenses

50 The total expenses of the Issue are estimated to be approximately Rs million. The Issue related expenses include, among others, issue management fees, registrar fees, printing and distribution expenses, auditor fees, legal fees, advertisement expenses, stamp duty, depository charges and listing fees to the stock exchanges. The total expenses for the Issue are estimated not to exceed 1% of the size of the Rights Issue. The following table provides a break up of estimated Issue expenses: Rs. in million Particulars Estimated amount As percentage of total Issue expense As percentage of total Issue size Statutory Advertisement [ ] [ ] [ ] Advisors fee [ ] [ ] [ ] SEBI filing and Stock Exchange Listing fees [ ] [ ] [ ] Postage, Printing and Stationery [ ] [ ] [ ] Others including Registrar fees, contingencies etc. [ ] [ ] [ ] Total [ ] % % Deployment of Net Issue proceeds towards objects of the Issue We confirm that no amount has been spent as on date towards any of the purposes where the Net Issue Proceeds are proposed to be deployed. However, in case we receive any advance share application money from our Promoter / Promoter Group entities we will deploy the same towards the objects stated. Deployment of Net Issue proceeds The year wise deployment Net Issue Proceeds is as follows: Rs. in million Sr. No. Particulars Already deployed FY 2009 a) Repayment of existing debt on their respective Nil due dates b) R&D costs Nil c) Capital Expenditure Nil d) Marketing Costs Nil e) Issue Expenses Nil 7.5 f) General Corporate Purposes Nil Total 1, Proceeds from conversion of warrants We, as approved by the Board from time to time, will utilize funds raised through conversion of detachable warrants for financing our working capital requirements, capital expenditure, investment in technology upgradation, repayment of borrowings, meeting exigencies etc. which our Company in the ordinary course of business may incur. The detachable warrants can be exercised during the Warrant exercise period. If all the detachable warrants are not exercised by the warrant holders during the Warrant exercise period then the proceeds from detachable warrant will reduce accordingly. In such an eventuality, the balance of amount required for the purpose specified above shall be either financed from internal accruals / external borrowing as approved by the management of the Company. Please refer to the chapter titled Terms of Issue on page 203 of this Draft Letter of Offer. Interim use of Issue proceeds In the event our Company receives at least the minimum subscription of 90% of the Issue size, and pending utilization of Issue proceeds for the purposes set forth in the Draft Letter of Offer, our management, in accordance with the policies set up by the Board, will have flexibility in deploying the proceeds received from the Issue. Depending on options available, we may also consider temporarily investing the funds in high quality interest bearing instruments / deposits with banks for the necessary duration and / or to temporarily deposit the funds in cash credit accounts with banks, for reducing overdraft, repaying other loans and save interest costs. The Issue proceeds will not be deployed in equity or in equity related instruments. Such investments would be in accordance with investment policies approved by the Board from time to time. Monitoring of utilization of Issue proceeds There is no requirement for appointment of a monitoring agency in terms of clause 8.17 of the SEBI DIP Guidelines. The Audit Committee of our Company will monitor the utilization of the proceeds of the Issue. Our Company will disclose the 50

51 utilization of Issue proceeds under a separate head in its financial statements along with details for FY 2009 clearly specifying the purpose for which such proceeds have been utilized. Our Company, in its financial statements for FY 2009, will provide details, if any, in relation to all such proceeds of the Issue that have not been utilized thereby also indicating investments, if any, of such unutilized proceeds of the Issue in our Company s financial statements for the relevant Financial Years commencing from FY Pursuant to clause 49 of the Listing Agreement, our Company shall on a quarterly basis disclose to the Audit Committee the uses and applications of the proceeds of the Issue. On an annual basis, our Company shall prepare a statement of funds utilised for purposes other than those stated in the Draft Letter of Offer and place it before the Audit Committee. Such disclosure shall be made only until such time that all the proceeds of the Issue have been utilised in full. The statement shall be certified by the statutory auditors of our Company. Furthermore, in accordance with clause 43A of the Listing Agreement we shall furnish to the Stock Exchanges on a quarterly basis, a statement including material deviations if any, in the utilisation of the process of the Issue from the objects of the Issue as stated above. This information will also be published newspapers simultaneously with the interim or annual financial results, after placing the same before the Audit Committee. No part of the Issue proceeds will be paid by our Company as consideration to Promoters, Directors, KMP, Subsidiaries, Associate, Affiliates or Promoter Group entities except otherwise in the ordinary course of business. 51

52 BASIS FOR ISSUE PRICE Investors should read the following summary along with the sections titled Risk Factors and Auditors Report and Financial Information beginning on pages 11 and 148 of this Draft Letter of Offer, respectively and other details about our Company, its Subsidiaries, Associate and Affiliate included in this Draft Letter of Offer. Qualitative Factors Provide customised solutions. We aim to provide customised offerings that meet our customer s expectations, taking into account that each of our customers business is different and that standard practices must be enhanced to meet specific industry needs. We are able to provide enterprise software and solutions that can deliver larger, complex, web based enterprise class solutions on any technology platform. VirtualWorks, developed ground up by us is a processtoapplication creation and delivery platform that confers strong advantages in the entire software development life cycle. Our offerings can be tailored to suit unique individual business requirements. Focus on R&D, expansion and innovation. Our emphasis on research and development has enabled us to devise our own process technologies and expand our service capabilities. We believe that continued focus on research and development will enable us to further develop new software s, solutions and novel applications, which we believe will help us to enter into new lines of business and broaden our intellectual property base. As on August 20, 2008 we have filed 16 nonprovisional patent applications in India, USA and Europe. For fiscal 2008, we have spent Rs million on R&D. Products and services that meet international standards. Our processes and methodologies are important elements of our mature global delivery model, which allows us to deliver high quality and costeffective IT services from multiple locations in a reduced timeframe. The processes and methodologies that we use conform to ISO 9001 standards. We have been currently assessed at SEI CMM Level 5. Large customer base. We have built significant relationships with several multinational corporations and government entities in the global arena, thus demonstrating our ability to manage large customer relationships. We are able to effectively respond to the demands of our customers by leveraging our industry experience with our high quality processes, project management capabilities and breadth of technical expertise across various customer geographies. Our senior executives and dedicated account managers continuously maintain these relationships through multiple contacts at different levels in the customer organisation. Experienced senior management. Our senior management team consists of experienced professionals with diverse skills and considerable experience in the ERP business, including in software, research and development, market research, international business and finance. Quantitative Factors Information presented in this section is derived from our unconsolidated restated financial statements, prepared in accordance with Indian GAAP. 1. Earning Per Share (EPS) (as adjusted for changes in capital) Year Rupees Weight Year ended March 31, 2006 (26.74) 1 Year ended March 31, 2007 (20.97) 2 Year ended March 31, 2008 (24.36) 3 Weighted Average (23.62) Notes: (1) The earning per share has been computed on the basis of adjusted profits and losses for the respective years/ periods after considering the impact of accounting policy changes, prior period adjustments/ regroupings pertaining to earlier years before extraordinary items (net of taxes) as per the Auditors Report. (2) The face value of each Equity Share is Rs Price/Earning (P/E) ratio in relation to the Issue Price of Rs. 85 a. Based on year ended March 31, 2008, EPS is Rs. (24.36) b. P/E based on twelve months ended March 31, 2008: Not applicable as the EPS on March 31, 2008 is negative. 52

53 c. P/E based on weighed average EPS: Not applicable as the weighted average EPS is negative. d. Industry P / E (1) i) Highest 22.2 ii) Lowest 10.3 iii) Industry Composite 18.7 (1) Source: Capital Market Vol. XXIII/13 dated September 8 September 21, 2008 Category: Computers Software Large 3. Return on Average Net Worth: Year RONW % Weight Year ended March 31, 2006 (19.40) 1 Year ended March 31, 2007 (22.46) 2 Year ended March 31, 2008 (22.49) 3 Weighted Average (21.97) 4. Minimum Return on Increased Net Worth required for maintaining preissue EPS: Not relevant as the preissue EPS is negative. 5. Net Asset Value Net Asset Value per Equity Share represents shareholders equity less miscellaneous expenses as divided by number of Equity Shares. Net Asset Value per Equity Share as at March 31, 2008 is Rs Net Asset Value per Equity Share after the Issue as at March 31, 2008 before conversion of warrants is Rs Net Asset Value per Equity Share after the Issue as at March 31, 2008 after conversion of warrants is Rs Issue Price per Equity Share: Rs Comparison of Accounting Ratios Based on the current market capitalization and the nature of services that they provide, the comparison of accounting ratios for the closest comparable listed competitors in India is given below. Comparable listed Indian company Face Value per share (Rs.) Basic EPS (Rs.) P/E RONW (%) Book Value/ Share (Rs.) Polaris Software Lab Ltd Mphasis Ltd Oracle Financial Services Software Ltd Industry Composite 18.7 Source: Capital Market Vol. XXIII/13 dated September 8 September 21, 2008 Category: Computers Software Large 7. The face value of each Equity Share is Rs. 10 per Equity Share and the Issue Price of Rs. 85 per Equity Share is 8.5 times of the face value of the Equity Share 53

54 STATEMENT OF TAX BENEFITS Statement of Possible Tax Benefits available to Ramco Systems Limited and its Shareholders Auditor s Report We hereby report that the enclosed annexure states the possible incometax benefits available to the Company and its shareholders under the current tax laws in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfil. The benefits discussed below are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether: the Company or its shareholders will continue to obtain these benefits in future; or the conditions prescribed for availing the benefits have been / would be met with. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. For CNGSN & Associates Chartered Accountants Per CN Gangadaran Partner Membership No.: Chennai Date: September 18,

55 STATEMENT OF POSSIBLE BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS A. Benefits available to the Company under the Incometax Act, 1961 ( Act ) 1. Deduction under section 10A of the Act: Under the provisions of section 10A of the Act, a company which is engaged in the business of export of articles or things or computer software and which satisfies the prescribed conditions is eligible to claim a deduction of ninety percent of the profits derived by its undertaking/s from the export of articles or things or computer software for a period of ten consecutive assessment years, beginning with the assessment year relevant to the previous year in which the undertaking/s begin to manufacture or produce such articles or things or computer software. The eligible deduction would be the amount which bears to the profits of the undertaking/s the same proportion as the export turnover of the undertaking/s bears to the total turnover of the undertaking/s. Profits on domestic turnover would get taxed. The benefit under this section is not available for the assessment year beginning on the 1st day of April 2011 and subsequent years. 2. Exemption in respect of dividend: Dividends (whether interim or final) declared, distributed or paid by a domestic company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of the Company, in its capacity as shareholder, as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 3. Taxation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. In accordance with the section 48 of the Act, capital gains arising out of sale of longterm capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. As per section 111A of the Act, short term capital gain arising from transfer of an equity shares in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15 percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising to the Company on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if the Company transfers or converts such specified assets into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified assets are transferred or converted into money. 4. Expenditure on Scientific Research In accordance with and subject to the provisions of section 35(1) and section 35(2), the Company would be entitled to 100% deduction in respect of revenue and capital expenditure (not being expenditure in the nature of cost of any land) incurred on Scientific Research related to the business. In accordance with and subject to the provisions of section 35(2AB), the Company would be entitled to deduction of one and one half times of the revenue and capital expenditure (not being expenditure in the nature of cost of any land or building) incurred on Scientific Research related to the business till 31 st March Such deduction is eligible either under section 35(1) and (2) or under section 35(2AB) and not cumulatively. B. Benefits available to 55

56 I. Resident shareholders 1. Dividends exempt under section 10(34) Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 2. Taxation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. In accordance with the section 48 of the Act, capital gains arising out of sale of longterm capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. As per section 111A of the Act, short term capital gain arising from transfer of an equity shares in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15 percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified assets are transferred or converted into money. Under section 54F of the Act, longterm capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to certain conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. II. Benefits available to NonResident Indian shareholders 1. Dividends exempt under section 10(34) Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 2. Taxation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. In accordance with the section 48 of the Act, capital gains arising out of sale of longterm capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. 56

57 As per section 111A of the Act, short term capital gain arising from transfer of an equity shares in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15 percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified assets are transferred or converted into money. Under section 54F of the Act, longterm capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to certain conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. Capital gains tax Options available under the Act (A) Where shares have been subscribed in convertible foreign exchange: Nonresident Indians investing in the equity of Indian companies are given concession to pay tax on long term capital 10% as per conditions specified and in which case, indexation of cost of acquisition and other deductions are not available in computing tax on long term capital gains. Under section 115I of the Act, the nonresident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the Income Tax Act, 1961 viz. Special Provisions Relating to Certain Incomes of NonResidents which are as follows: As per the provisions of section 115D read with section 115E of the Act and subject to the conditions specified therein, long term capital gains arising on transfer of an Indian company s shares, will be subject to tax at the rate of 10 percent (subject to surcharge and education cess as applicable), without indexation benefit. Under provisions of section 115F of the Act, longterm capital gains (in cases not covered under section 10(38) of the Act) arising to a nonresident Indian from the transfer of shares of the company subscribed to in convertible Foreign Exchange shall be exempt from Income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption shall be proportionately reduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition. As per the provisions of section 115G of the Act, NonResident Indians are not obliged to file a return of income under section 139(1) of the Act, if their only source of income is income from investments or long term capital gains or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVIIB of the Act. Under section 115H of the Act, where the NonResident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the Act to the effect that the provisions of the Chapter XIIA shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money. As per the provisions of section 115I of the Act, a NonResident Indian may elect not to be governed by the provisions of Chapter XIIA for any assessment year by furnishing his return of income for that assessment year under section 139 of the Act, declaring therein that the provisions of Chapter XIIA shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act. (B) Where the shares have been subscribed in Indian Rupees: 57

58 In accordance with the section 48 of the Act, capital gains arising out of sale of longterm capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. 3. Provisions of the Act visàvis provisions of the tax treaty As per section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the relevant tax treaty to the extent they are more beneficial to the nonresident. III. Benefits available to other NonResidents 1. Dividends exempt under section 10(34) of the Act Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. 2. Computation of capital gains Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. In accordance with the section 48 of the Act, capital gains arising out of sale of longterm capital assets shall be computed after indexing cost of acquisition / improvement. According to provisions of section 112(1) (b) of the Act, such gain shall be taxed at the rate of 20% (subject to surcharge and education cess as applicable). Further as per proviso to section 112(1), long term capital gains on transfer of any securities [as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956] computed without indexation of cost of acquisition, would be taxed at concessional rate of 10% (subject to surcharge and education cess as applicable) and in that case any excess tax payable computed according to section 48 / 112(1)(b) of the Act shall be ignored for the purpose of determining the tax payable by the assessee. As per section 111A of the Act, short term capital gain arising from transfer of an equity shares in a company listed on a recognized stock exchange or a unit of an equity oriented fund would be taxable at 15 percent (subject to surcharge and education cess as applicable), in cases where securities transaction tax has been paid as per Chapter VII of the Finance (No.2) Act, As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified assets are transferred or converted into money. Under section 54F of the Act, longterm capital gains (in cases not covered under section 10(38) of the Act) arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the company will be exempt from capital gain tax subject to certain conditions, if the net consideration from such shares are used for purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. 3. Provisions of the Act visàvis provisions of the treaty As per section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the relevant tax treaty to the extent they are more beneficial to the nonresident. IV. Benefits available to Foreign Institutional Investors ( FIIs ) 1. Taxability of capital gains 58

59 As per the provisions of section 115AD of the Act, FIIs will be taxed on the capital gains income at the following rates: Nature of income Long term capital gains Short term capital gains Rate of tax 10 percent 30 percent / 15 percent under section 111A The above tax rates would be increased by the applicable surcharge. The benefits of indexation and foreign currency fluctuation protection as provided by section 48 of the Act are not available to FIIs. As per section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the nonresident. Under section 10(38) of the Act, capital gain arising from the transfer of a long term capital asset, being equity shares in a company or unit of an equity oriented fund held for a period of more than 12 months is exempt from tax, provided such transaction is chargeable to securities transaction tax. As per the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain long term specified assets within six months from the date of transfer, provided that the investment in long term specified assets during any financial year does not exceed fifty lakh rupees. However, if such specified assets are converted into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified assets are transferred or converted into money. Dividends (whether interim or final) declared, distributed or paid by the Company for any assessment year commencing on or after April 1, 2003 are exempt in the hands of shareholders as per the provisions of section 10(34) of the Act, if the same is subject to dividend distribution tax under section 115O of the Act. V. Benefits available to Mutual Funds As per the provisions of section 10(23D) of the Act, any income (including dividend from and income from sale of shares of the company) of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorized by the Reserve Bank of India, would be exempt from income tax, subject to such conditions as may be prescribed in this behalf. VI. Benefits available to Venture Capital Companies / Funds As per section 10(23FB) of the Act, all Venture capital companies/funds registered with Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption from income tax on all their income, including dividend from and income from sale of shares of the company. VII. Benefits available to the Members of the Company under Wealth Tax Act, 1957 Shares of the Company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957 and hence in this respect, Wealth Tax Act will not be applicable. C. Benefits available to the Company under Indirect tax Laws The Company has one unit registered under the Software Technology Parks ( STP ) Scheme. The key benefits that could be available under indirect tax laws to a STP unit, subject to satisfaction of the specified conditions, are as under: Customs duty on Specified goods, which are in the nature of capital goods, office equipment, components etc., procured by a STP unit are exempt from customs duty. All goods, other than prohibited goods under the EXIM Policy are exempt from customs duty and Excise duty. Specified goods such as capital goods, office equipment and consumables etc procured from local manufacturers are exempt from excise duty. All goods procured from local manufacturers are exempt from excise duty. Further, in order to avail the above benefits, the unit will be required to meet prescribed export obligations. 59

60 Sales tax Concessions under the State Sales Tax legislations (depending upon the relevant State where the unit is setup) and under the Central Sales Tax Act could also be available in respect of goods procured by a STP unit. Further, export sales made by the Company would qualify as exempted sale for the purpose of Sales Tax Concessions under the State Sales Tax legislations (depending upon the relevant State where the unit is setup). No service tax will be leviable on the information technology services if the proceeds are received in convertible foreign exchange in India and the same are not repatriated outside India. Notes: All the above benefits are as per the current tax law as amended by the Finance Act, The stated benefits will be available only to the sole / first named holder in case the shares are held by joint holders. In respect of nonresidents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the Double Taxation Avoidance Agreements, if any, between India and the country in which the nonresident has fiscal domicile. In view of the individual nature of tax consequences, each investor is advised to consult his / her own tax advisor with respect to specific tax consequence of his / her participation in the scheme. 60

61 SECTION IV: ABOUT US Industry Overview OUR INDUSTRY IT Industry The Indian Information Technology sector has shown remarkable resilience in the year Industry performance was marked by sustained doubledigit revenue growth, steady expansion into newer servicelines and increased geographic penetration, and an unprecedented rise in investments by Multinational Corporations (MNCs) in spite of lingering concerns about gaps in talent and infrastructure impacting India's cost competitiveness. Underlying the sustained export growth is a combination of large untapped demand potential, rapidly growing adoption and widening scope of the global delivery model (in terms of geographies, vertical markets served as well as services offered), and India continuing to leverage its fundamental advantages of talent, cost, quality and early mover advantage/experience to garner a large share of the growth in global sourcing of ITBPO. The industry continues its drive to set global benchmarks in quality and information security through a combination of provider and industrylevel initiatives and at strengthening the overall frameworks, creating greater awareness and facilitating wider adoption of standards and best practices. High offshore component of delivery and superior execution in multilocation delivery continue to be key differentiators. Broadbased industry structure; IT led by large Indian firms, BPO by a mix of Indian and MNC thirdparty providers and captives, reflects the depth of the supplybase. While the larger players continue to lead growth, gradually increasing their share in the industry aggregate; several highperforming Small and Medium Enterprises (SMEs) also stand out. ITBPO Industry Sectorwise revenue breakup USD billion FY2004 FY2005 FY2006 FY2007 FY2008 IT Services Exports Domestic ITESBPO Exports Domestic Engineering Services and R&D, Software Products Exports Domestic Total Software and Services Revenues Of which, exports are Hardware Exports Domestic Total IT Industry (including Hardware) Source: NASSCOM The Indian ITBPO revenue aggregate is expected to grow by over 33 per cent and reach USD 64 billion by the end of FY2008. IT exports (including hardware exports) are expected to cross USD 40.3 billion in FY2008 as against USD 31.3 billion in FY2007, a growth of 28 per cent. Domestic IT market (including hardware) is estimated to reach 23.2 billion in FY2008 as against USD 16.2 billion in FY2007, a growth of 43 per cent The industry's contribution to the national GDP is estimated to increase from 5.2 per cent in to 5.5 per cent in

62 Knowledge Professionals employed in the Indian ITBPO sector IT Exp. 162, , , , , , , ,000 & Services Exports BPO 70, , , , , , , ,000 Exports Domestic 198, , , , , , , ,000 Market Total 430, , , ,000 1,058,000 1,293,000 1,621,000 2,010,000 *Figures do not include employees in the hardware sector Source: NASSCOM In , the ITBPO industry is estimated to provide direct employment to more than 2 million people. Global Markets While the US and the UK remains the largest export markets (accounting for about 61 per cent and 18 per cent respectively, in FY2007), the industry footprint is steadily expanding. Market FY04 FY05 FY06 FY07 Americas 69.40% 68.30% 67.18% 61.40% Europe 22.60% 23.10% 25.13% 30.10% (UK and Continental Europe) Rest of the World 8.00% 8.60% 7.69% 8.50% (APAC + ROW) Source: NASSCOM Exports to Continental Europe in particular have witnessed notable gains, growing at a CAGR of more than 55 per cent over FY Over 600 Multinational companies are known to be sourcing product development and engineering services from their centres in India. The growing nature of responsibilities and ownership assumed by these India based resources are helping India evolve into a strategic hub for R & D. Software and Services Exports FY 2008 Exports remain the mainstay of the sector and are estimated to reach USD 40.4 billion in FY2008, contributing nearly 64 per cent to the overall revenue aggregate IT services (excluding BPO, product development and engineering services), contributing to 57 per cent of the total software and services exports, remains the dominant segment and is expected to cross USD 23 billion, a growth of 28 per cent in FY2008. BPO services, accounting for over 27 per cent of the export aggregate, is the fastest growing segment across software and services exports driven by scale as well as scope. Export revenues for this segment are expected to cross USD 10.9 billion, a growth of 30 per cent in FY2008. The past few years have seen the scope of these services expanding to include increasingly more complex processes involving rulebased decision making and research/analytic services requiring informed individual judgment and domain/vertical knowledge. Export revenues from relatively highvalueadded services such as engineering and R&D, offshore product development and madeinindia software products is estimated to be growing at over 27 per cent, and are forecast to reach USD 6.3 billion in FY2008. (Source: NASSCOM, Information Technology Annual report ) Enterprise Resource Planning Enterprise resource planning (ERP) is the planning of how business resources (materials, employees, customers etc.) are acquired and moved from one state to another. An ERP system is a business support system that maintains in a single database the data needed for a variety of business functions such as manufacturing, supply chain management, financials, projects, human resources and CRM. In practice the ERP system may comprise a set of discrete applications, each maintaining a discrete data store within one physical database. 62

63 ERP software is viewed as an increasingly significant sector of the software industry in India. The ERP market is a part of the fast growing Indian Information Technology (IT) and Information Technology Enables Services (ITES) industry in India. The Indian market for ERP was estimated at, USD 83 million in 2004 and is projected to grow to about USD 250 million in 2009 according to ARC advisory group research report on ERP Software and Services Outlook for India." Gartner's estimate for the size of the 2008 global ERP market is USD 22.4 billion in total software revenue. The market is expected to grow to approximately USD 29.6 billion by 2012 at a compound annual growth rate of 8%. Forecasts and trends for the ERP industry Preliminary IT spending data collected from 500 organizations worldwide during the second and third quarters of 2007 shows an overall 2008 average IT spending increase of between 4.8% and 6.4% (see figure 1). In North America, among organizations with revenue of more than USD 500 million, 61% indicated 2008 budgets would increase from 2007, while only 10% said they would decrease. As in past years, the early findings suggest that the largest organizations expect the smallest increases in their IT budgets. For example, organizations with revenue of more than USD 1 billion plan increases of 5.5% on average, while those with revenue of less than USD 500 million expect to increase 2008 budgets by more than 9.6%. Thus the general trend is still "the bigger the organization, the smaller the increase in IT budget." This is partly because of scale. If an organization with a USD 1 billion IT budget increases IT spending by 5%, that's enormous growth in actual dollars spent. So, it's typical to see the largest organizations growing IT budgets at a slower rate than their smaller counterparts (see figure 2). Figure 1: Expected Levels of IT Spending for 2008 by Vertical Industry Source: Gartner Inc, 2008 IT Spending Key metrics, Michael Smith, Barbara Gomolski, Robert De Souza, John P. Roberts, Linda Tracy, February 20,

64 Figure 2: Expected IT Growth by IT Organisation Size Source: GartnerInc, 2008 IT Spending Key metrics, Michael Smith, Barbara Gomolski, Robert De Souza, John P. Roberts, Linda Tracy, November 8, 2007 Emergence of SaaS and GRC & MDM The combination of ever more abundant bandwidth, increasingly powerful processors, and inexpensive storage is broadening the choices for designing, deploying, and using software: in devices, in computers, on servers in corporate data centers, and on the internet. Business solutions can be delivered and consumed in all of these ways either singly or in combination to provide the best user experience and the most business value. Software as a Service (SaaS) is a model of software deployment where an application is hosted as a service provided to customers across the Internet. By eliminating the need to install and run the application on the customer's own computer, SaaS alleviates the customer's burden of software maintenance, ongoing operation, and support. Using SaaS also can conceivably reduce the upfront expense of software purchases, through less costly, ondemand pricing. From the software vendor's standpoint, SaaS has the attraction of providing stronger protection of its intellectual property and establishing an ongoing revenue stream. This way, end users may reduce their investment on server hardware too. SaaS is also often associated with a "pay as you go" subscription licensing model. In recent years, the number and range risks facing IT have exploded. From business malfeasance and insider risks, to new and more malicious classes of security attacks, enterprises are challenged as never before to contain threats to critical information resources. The introduction of numerous regulatory and industry compliance measures have raised the challenge to the level of mandate. The need to integrate the management of policy and process, coupled with the monitoring and validation of control throughout the environment, means that strategic IT risk management is giving rise to new classes of technologies and tools. These include not only business and financial risk management tools, but also to the emergence of new tools such as Governance Risk and Compliance and Master Data Management (GRC& MDM). Software as a Service (SaaS) aka OnDemand: SaaS solutions are becoming more mainstream and with more enterprises adopting them, the dynamic of how they are bought, sold and managed is changing. During the past few years, the primary acquirer of SaaS has been an enduser executive who has decided to go the SaaS route without much involvement of central IT. Softwareasaservice applications from Google, Yahoo, and Salesforce.com are driving change in architecture, appearance and business model of enterprise applications, turning the sector from a niche into a multibillion dollar market. One way of looking at SaaS, also referred to as OnDemand, is by seeing it as a distribution model in which Web applications are hosted by the vendor or service provider. The model is transitioning from a niche to multibillion dollar market, but analyst believes traditional software companies adding SaaS will find it more difficult to make the move. Key Findings by Gartner Inc, Predicts 2008: SaaS Gathers Momentum and Impact, Ben Pring, Alexa Bona, James Holincheck, Michele Cantara, Yefim V. Natis, January 3, 2008 By 2010, 15% of large companies will start projects to replace their ERP backbone (financials, human capital management and procurement) with new serviceoriented architecture (SOA) and SaaSbased solutions). By 2012, business process management suites (BPMSs) will be embedded in at least 40% of all new SaaS offerings, as providers strive to make business processes explicit and masscustomizable by their customers; 64

65 By 2012, more than 33% of independent software vendors (ISVs) will offer some of their applications optionally or exclusively as SaaS. By 2010, 85% of SaaS vendors will offer uptime service levels of 99.5% or beyond in standard contracts, as well as performance SLAs. By 2009, 100% of Tier 1 consulting firms will have a SaaS practice New IT spending outside the world s traditional technology centers is creating new innovation, competitors, use patterns and improved costbenefits for users, said Peter Sondergaard, senior vice president and global head of research at Gartner. Enduser spending will globally move toward software, services, and all aspects of mobility, Gartner states. These categories made up 57% of spending in 2006, will become 60% in 2008, and are forecasted to grow to 63% in GRC & MDM GRC involves the use of content management, compliance reporting, workflow, and control automation and monitoring technologies, as well as other software products to support audit, financial management, corporate and IT governance; operational risk management, including compliance risks; and reporting processes. MDM is becoming a business imperative as organizations combat the effects of application heterogeneity and siloed thinking. MDM is wideranging in impact and supports goals such as: increasing profits and revenue, easing mergers and acquisitions, increasing operational efficiency, reducing costs, improving risk management, meeting regulatory compliance, and improving business intelligence (BI) and performance management. 65

66 OUR BUSINESS I. Business Overview We are a part of the USD 759 mn Ramco Group, a diversified industrial conglomerate. We commenced operations as a software business division of Ramco Industries in 1989 and incorporated Ramco Systems Limited as a public limited company in Pursuant to a scheme of arrangement sanctioned by the High Court of Judicature, at Madras on December 24, 1999, the software undertaking of Ramco Industries Limited was demerged and transferred to us with effect from April 1, 1999 (the Demerger Scheme). We have a 98% owned subsidiary in USA and 4 wholly owned subsidiaries located at Switzerland, Malaysia, Singapore, South Africa and one step down subsidiary in Australia and an associate in South Africa. We also have 4 branch offices at Germany, United Kingdom, United Arab Emirates and New Zealand. We are a global provider of ES and services in key industries such as manufacturing, aviation, logistics, banking and financial services. We offer rich functionality, cost effective seamless integration and fully webintegrated services, which helps our customers close the gap between business objectives and IT capabilities. Our offerings include Enterprise Solutions, OnDemand ERP and BPO & Consulting. We have delivered our ES and services to over 1,000 customer installations across 40 countries serving over 100,000 users. We offer high quality and cost effective services to our customers through our mature delivery processes, scalable infrastructure and skilled global resource base. Our ability to develop adaptive solutions is powered by our technology platform, Ramco VirtualWorks. VirtualWorks is a virtual software factory which helps us deliver large, complex, webbased ES on any Technology Platform. VirtualWorks is an innovative technology platform, which transforms business processes into quality software applications in a considerably shorter time frame. It is an adaptive software platform, which facilitates easy modifications to align the software application with the changing business processes. VirtualWorks provides the following business benefits to our customers and partners: Flexible, powerful solutions; Advanced change management capabilities; Faster time to benefit; Better quality; and Optimal cost Leveraging on our strong domain expertise, sound business practices and customercentric focus, we have built significant global relationships with several multinational corporations and government entities thus demonstrating our ability to manage large customer relationships. Typically our engagements are project specific with continuous inputs from clients for maintenance and enhancements. Our senior executives continuously maintain and develop customer relationships through multiple contacts at different levels in the customer organization. Our notable engagements in specific industry domains such as egovernance and aviation are expected to strengthen our ES. With our sales and marketing team organized by industry service offerings and geography, we are able to effectively crosssell services to our existing customer base as well as successfully acquire new business. In addition, several of our senior executives based in customer geographies are focused on acquiring new / maintaining existing customer relationships. We are able to build a satisfied customer base over the past decade through our global growth strategy. Our customers include large global corporations like Swatch Group, Switzerland; Radisson, UK; Commerce Bank, USA; Petroleum Helicopters Inc, USA; Durban Municipality of South Africa; GHC, Qatar; Revertex, Malaysia; SingHealth of Singapore; HDB Corp, Singapore; and ICICI Bank, India. The year , has been eventful on multiple fronts. There were several marquee customer acquisitions, key partnerships and business realignment, all aimed at an aggressive and profitable growth. During the year the Company successfully launched the next version of its collaborative solution innovation platform Ramco VirtualWorks 3.0. This is the only platform today that provides complete and continuous alignment between business processes and applications along with the ability to change those applications on demand as business requirements shift. Another showcase of Ramco s pioneering technology initiatives was the launch of India s first fullfledged Softwareasa Service (SaaS) ERP Ramco OnDemand ERP. Ramco OnDemand ERP is a fullsuite web enabled ERP that is available for an affordable subscription and takes care of all IT infrastructure, maintenance and support fees. Companies can now benefit from shortened implementation time (from months to weeks) and hence faster time to benefit. Following a soft 66

67 launch earlier, Ramco OnDemand ERP has successfully won more than 1000 users across multiple verticals that include Auto Components, Discrete Manufacturing, Trading, Distilleries, Electronics, Textiles, Chemicals, Services and more. The year also marked Ramco India s maiden venture into the business process outsourcing space with a distinct value proposition compared to conventional Indian vendors. In spite of not being an early entrant, Ramco has successfully leveraged its technology advantage (Ramco VirtualWorks) to deliver value added payroll processing services. In the American market, Ramco has been stressing the need for flexible business processes and focused analytics for businesses to be competitive and continue adding value to their customers. These efforts got a significant shot in the arm when one of the world s top thinkers Mr. C K Prahalad wrote about Ramco s cocreation successes in the book The New Age of Innovation which he has coauthored with Mr. M S Krishnan. The authors clearly recognize Ramco s unique cocreation approach and how Ramco s solutions enable customers to harness change and drive continuous innovation with unparalleled speed and costefficiency. Ramco s inclusion in this important new book further validates our strategy of helping customers around the world and increasingly in North America to stop force fitting their business through rigid technology, because innovation really is no longer an option. With the objective of focusing completely on its core business of developing next generation enterprise applications, our Company divested its 100% stake in its then wholly owned subsidiary Ramco Infotech Solutions Limited to TVS Interconnect Systems Limited. II. Competitive Strengths Provide customised solutions. We aim to provide customised offerings that meet our customer s expectations, taking into account that each of our customers business is different and that standard practices must be enhanced to meet specific industry needs. We are able to provide enterprise software and solutions that can deliver larger, complex, web based enterprise class solutions on any Technology Platform. VirtualWorks, developed ground up by us is a processtoapplication creation and delivery platform that confers strong advantages in the entire SDLC. Our offerings can be tailored to suit unique individual business requirements. Focus on R&D, expansion and innovation. Our emphasis on R&D has enabled us to devise our own process technologies and expand our service capabilities. We believe that continued focus on R&D will enable us to further develop new software, solutions and novel applications, which we believe will help us to enter into new lines of business and broaden our intellectual property base. As on August 20, 2008 we have filed 16 nonprovisional patent applications in India, USA and Europe. As on March 31, 2008, we have spent Rs million on R&D. Products and services that meet international standards. Our processes and methodologies are important elements of our mature global delivery model, which allows us to deliver high quality and costeffective IT services from multiple locations in a reduced timeframe. The processes and methodologies that we use conform to ISO 9001 standards. We have been currently assessed at SEI CMM Level 5. Large customer base. We have built significant relationships with several multinational corporations and government entities in the global arena, thus demonstrating our ability to manage large customer relationships. We are able to effectively respond to the demands of our customers by leveraging our industry experience with our high quality processes, project management capabilities and breadth of technical expertise across various customer geographies. Our senior executives and dedicated account managers continuously maintain these relationships through multiple contacts at different levels in the customer organisation. Experienced senior management. Our senior management team consists of experienced professionals with diverse skills and considerable experience in the ERP business, including in software, R&D, market research, international business and finance. III. Our Strategy Increase reach and penetration through focus on market initiatives. We propose to increase our reach and expand our market share by effectively marketing our products and services to top tier customers. We plan to expand our customer base by constructively utilizing our extensive network of Subsidiaries, Associate and Branches located in 10 countries. We intend to exploit the power of our technology, by increasing the reach in terms of geographical spread and penetration and in terms of sales volumes of our products and services. We believe that we can achieve the same by strengthening our marketing efforts through streamlining of marketing activities, setting up of requisite infrastructure / processes and recruiting additional sales and marketing personnel. This coupled with appropriate branding and positioning of our offerings, will help us in expanding our reach globally and establish leadership position in the ES space. 67

68 Growth through partnerships. We believe that our success is dependent on an ecosystem of process consultants, business domain consultants and partners. We are actively pursuing various types of partnerships, including Partnerships, to jointly address a particular vertical or geography; Business partnerships, for sales cooperation; Implementation partnerships, for implementing solutions; Complementing solution partners in relation to other products to provide a better solution to the customer and Solution development partners to help support application development. We have currently entered into partnerships with industry leaders like Siebel, Nortel, Microsoft, Sabre, KPMG, IBM, NTL and others to draw on their domain strength and market presence. Maintain and expand offerings base. We are committed to develop our competencies in the ES and services space and build offerings to address various customer requirements through various partnerships. We are looking to extend our basket of solutions and services to our existing customers and will continue to assist them in enhancing their performance and profitability. Invest in R&D. We shall continue to lay emphasis on R&D to develop new products and provide innovative services. We believe that investing in R&D will ensure faster development and delivery of assembled solutions, add value to our customers / partners, effective management of engagements involving partners, better quality of solutions and improvement in our productivity. Our continued investment in R&D will enable us to manage change with agility. Brand building. We propose to invest significantly in the development of our brand name in the global market place. We have put in place an integrated marketing plan to enhance our visibility. Our efforts are focused primarily on sponsored corporate events, seminars, webinars, analyst briefings, advertising and other relevant activities. Effective utilization of resources: We aim to improve our productivity and efficiency of our operations through effective utilisation of our resources located in India and overseas. We believe that Ramco VirtualWorks allows us to manage and control projects with greater efficiency. IV. Description of our Business To keep pace with today s customerdriven business environment, companies must rethink their business processes. Enterprise applications now need to adapt to the business, and not the other way around. As companies face increasing competitive pressure and are inhibited by inefficient IT systems, it is clear that current enterprise applications are no longer meeting the business demands. Ramco delivers solutions that address this with flexible enterprise applications that can be delivered quickly and costeffectively into complex environments. It also gives companies the agility they need to stay competitive by enabling fast, flexible deployment and change on demand of business applications. Ramco VirtualWorks ensures maximum flexibility to execute a business process strategy so when business needs change, systems change automatically. We are a global provider of ES and services in key industries such as manufacturing, aviation, logistics, banking / financial services including insurance. 68

69 V. Our Technology Ramco VirtualWorks Ramco VirtualWorks is a new breed of enterprise software that facilitates flexible and robust business process and focused analytics. Ramco VirtualWorks provides complete and continuous alignment of business processes and applications. VirtualWorks is constituted by a model driven development environment; SOA based ES Architecture, a business services repository, implementation and configuration tools, enterprise information management platform and an enterprise event bus. Coupled with Ramco s modeldriven platform, the enterprise information management platform can provide business intelligence through the use of dashboards, key performance indicators and a balanced scorecard framework. The enterprise information management platform provides data consolidation services, business activity monitoring, performance management, enterprise decision management and conformance management. Leveraging prebuilt business services assets used in application assembly, Ramco VirtualWorks provides a readymade reporting and analytics capability for business applications. The platform can help the organization deliver the responsiveness it needs to stay ahead of the competition. Model driven development platform: Ramco VirtualWorks enables organizations to assemble globalclass applications rather than engineer them. Ramco VirtualWorks follows a model, develop, catalog and reuse metaphor. Ramco VirtualWorks delivers modeldriven applications that are composed, not coded, using existing or newly created business assets that adapt and scale with IT infrastructure. The platform enables process model blueprinting, user interface modeling, web services development, business process extraction language support, legacy modernization, coding automation and test automation. Capabilities have been built for business process modeling and business process execution. This has been done with an emphasis on interoperability to ensure that Ramco Applications can integrate and enhance existing IT assets in the organization. Business Services Repository (BSR): An integral part of Ramco VirtualWorks is the BSR that provides for the management and proper use of business services and data. It connects information and services from many sources, allows for robust reuse and extensive configuration for the security and lifecycle of data and services. Ramco VirtualWorks assembles preconfigured or custom business services into a complete business application for deployment. It features all of the capabilities needed to compose, deliver and maintain enterprise applications. It embraces an assemblefirst processoriented metaphorbased on SOA principles. Implementation and Configuration Tools: Implementation and configuration tools and Extension tools in Ramco VirtualWorks provide extensive flexibility and extendibility during the deployment and usage of ES onsite by the business users. The component interaction model allows for configuring the business component interaction and lends high level of configurability to the business process. Implementation tool kit allows easy customization of prebuilt business services. Extension development kit allows rapid creation of extensions to the ES. Standard infrastructure components such as workflow, audit trail, security and directory services are part of the toolset that enable swift and flexible implementation of the solution. 69

70 Enterprise Event Bus: The Enterprise Event Bus forms the backbone of Ramco VirtualWorks architecture. Application events of business significance are published in the Enterprise Event Bus. These events are used for business activity monitoring, performance management and conformance management in the GRC framework. Multiple Technology Support and Legacy Integration Support: The platform has the capability to deliver applications on multiple technologies i.e. different application servers such as IBM Web Sphere, Oracle, Weblogic and Microsoft.NET technology. The platform has been enhanced in order to ensure support for all popular open source technologies. Projects have also been executed during this year using this capability. Work has also been carried out on legacy integration capabilities. Extensive work has been carried out on support for portal technologies and for creating a portal development framework. VirtualWorks offers the following features to business analysts and applications developing fraternity Accurate and rapid capture of business needs using blue printing approach Assembletoorder rather than engineertoorder metaphor Most applications require only a small number of new components Development templates assure design standards More flexible than other methods All application components are 100% SOAcompliant for consistent framework Application changes are driven by process mapping, ensuring successful development Easily reuse existing assets from packaged, custom, mainframe, client/server apps Deploy on nearly any technology platform Less expensive to own Higher quality and consistent code standards minimize support requirements All technology built on open standards and will not need to be replaced Leverages a growing repository of business process assets for application assembly Reduced dependence on engineering results in consistent code and less overhead VirtualWorks offers the following features to its customers: A business process based approach Integrated software delivery process that defines the scope of the project and the requirements for the application Code generators that create the application using the various models created as part of the delivery process Application preview facility to visualize your applications and get user acceptance before they are assembled Architecture developed in a technologyneutral environment, and proven on Java 2 Enterprise Edition (J2EE) and.net platforms Can integrate with thirdparty or legacy systems Developing an application using VirtualWorks The conventional SDLC involves the following phases: requirement specification; high level design; low level design; coding; unit testing; system testing; acceptance testing; deployment; maintenance & enhancement. The above phases have been abstracted into four phases in development using Ramco VirtualWorks namely: solutioning; engineering; roll out & change on demand. Contrary to conventional SDLC, application development using Ramco VirtualWorks involves event driven process chains, which are captured in the form of a model (described in terms of processes, functions, activities, user interfaces and tasks). This data is then translated into a software application using code generators. By using VirtualWorks, we are able to provide the same model irrespective of the technology platform on which they operate, i.e. provide technology agnostic solutions. Customers are able to visualise the application before its development, and measure the impact of any change suggested. Some key differentiators in the VirtualWorks methodology as against the conventional software development process are given below: Conventional software development process VirtualWorks methodology Requirement Specification & High Level Design Solutioning Voluminous documentation Auto generated documentation Nonreusable prototype Auto generated user interface from the model 70

71 Conventional software development process Specifications in IT terminology Upfront technology decisions inter alia on platform, network, hardware, system software Low Level Design, Coding, Unit Testing, System Testing Development from scratch Does not support distributed development Technology related compatibility issues High occurrence of defects due to manual programming Development for Enterprise Application Integration (EAI) Acceptance Testing, Deployment Not designed for distributed development Effort involved for training and implementation is high Maintenance / Enhancement Manual impact analysis Obsolescence of application due to shifts in technology trends; becoming legacy VirtualWorks methodology Functional specifications by business user No technology decisions during solutioning stage Engineering Reusable model with presentation and gateway layer with major portion of the application being autogenerated Designed for distributed development; 100% internet architected Technology agnostic Autogenerated code for multiple technologies with only business logic to be coded in stored procedures Platform inherently provides web services (EAI built in) Rollout Deployment across physical locations and technology platforms; truly distributed 100% internet architected; less expensive offshore resources Changeondemand Automated impact analysis on the model Model is always current; application can be generated in any future platform of choice Using VirtualWorks, we can create highly configurable, scalable, extendable, multitier applications rich in functionality and which can change on demand. We have extensive experience in developing and supporting ebusiness applications using various technology platforms. Our application development process is backed by our rightshore methodology, where we help our customers select a model best suited for them, which could be either an onsite or onshoreoffsite or offshore model. We have considerable experience in developing enterprise applications, backed by our strong technical and functional domain knowledge. We believe that we are able to provide applications to our customers at competitive prices. Our production support involves usage of help desks for supporting the production environment. We enter into service level agreements with our customers for both our application maintenance and production support. The typical implementation methodology of VirtualWorks for a customer is diagrammatically represented below: Ramco Decision Works Ramco DecisionWorks (RDW) Suite provides a comprehensive, smart, easyto use and webarchitected Business Intelligence Solution for Enterprise Performance, Conformance Management (covering Strategic, Tactical and Operational Levels), Enterprise Information Management and Enterprise Data Management offering superior reporting, comprehensive query and analysis. For easy of implementation and faster ROI, RDW provides a structured maturity model for enhancing 71