Transcript TMT Opportunities - India1

February 2008, Quarter -1
private and confidential
the india proposition – select economic criteria

4th largest economy in the world; 2nd largest GDP among the developing countries (based on purchasing
power parity)

over the past 15 years, has been the second fastest growing economy in the world, after China, with an
average annual growth rate exceeding 6.5%

displaced the US as the second-most favoured destination for foreign direct investment (FDI) in the
world after China. (source: AT Kearney's FDI Confidence Index)

probably the most preferred country for
future R&D investments, with slightly
more than 40 percent of CEOs indicating
they will likely make such investments
over the next three years



most mature and well developed capital
markets amongst developing countries
3-4 years of unabated “bull-run” based on
record corporate growth & earnings have
provided Indian companies the necessary
foundation for expansion with minimal
leverage
modest inflation despite spiraling crude
prices
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key metrics
2005
Real GDP (% change)
Nominal GDP (US$ bil.)
2006
2007
9.2
8.6
7.9
808.9
897.8
1035
738
808
918
Consumer Price Index (% change)
4.2
5.8
5.7
Wholesale-Producer Price Index (% change)
4.7
4.9
5.4
6
6
7.25
10.75
10.94
10.82
Nominal GDP Per Capita (US$)
Policy Interest Rate (%)
Short-term Interest Rate (%)
25291.9
29424.2
37114.7
Fiscal Balance (% of GDP)
-4.1
-3.7
-3.6
Unemployment Rate (%)
12.8
12.2
11.9
Current Account Balance (US$ bil.)
-9.2
-15.6
-22.4
Broad Money Supply (LCU bil.)
Current Account Balance (% of GDP)
Trade Balance (US$ bil.)
-1.1
-1.7
-2.2
-40.2
-53.9
-65.7
-5
-6
-6.3
Exchange Rate (LCU/US$, end of period)
45.06
44.24
45.12
Exchange Rate (LCU/Euro, end of period)
53.16
58.27
62.26
Trade Balance (% of GDP)
2
the india proposition – availability of funds
FDI Inflows
Foreign Capital Inflow (net)
19000
15000
10000
5000
2167
4031
6125
5036
4322
5987
US$ M illion
US$ M illion
20000
7661
0
1999- 2000- 2001- 2002- 2003- 2004- 2005- 200600
01
02
03
04
05
06
07
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30000
25000
20000
15000
10000
5000
0
28022
23400
16736
10184
8814
8551
10840
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
3
the india proposition – availability of funds
Acquirer
Temasek Holdings
Consort ium
Consort ium
ICICI Vent ure Funds
Carlyle Group
Avenue Capit al
USD 500
Target
Bhart i Airt el
GM R Inf rast ruct ure
Bhart i Inf rat el
Jaypee Inf rat ech
HDFC
SKIL Inf rast ruct ure
M n Plus PE Deals - India
Sector
Telecom
Real Est at e & Inf ast ruct ure M gt
Telecom
Real Est at e & Inf ast ruct ure M gt
Banking & Financial Services
Real Est at e & Inf ast ruct ure M gt
Sect or W ise Break-up - Volume
Value - USD M n
1,906.74
1,000.00
1,000.00
800.00
650.00
500.00
Sect or W i se Break-up - V al ue
17%
151
160
N o . o f D eals
% Stake
4.99%
9.00%
10.00%
N.A.
5.60%
26.00%
36%
4%
5%
120
80
2%
60
67
36%
61
Banking & Financial Services
31
40
35
IT & ITES
Media, Ent ert ainment & Publishing
0
Banking &
Financial
Services
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IT & ITES
Media,
Entertainment &
Publishing
Pharma,
Healthcare &
Biotech
Real Estate &
Infrastructure
Management
Pharma, Healt hcare & Biot ech
Others
Real Est at e & Inf rast ruct ure Management
Ot hers
4
the india proposition – the global indian: cross border acquisitions
Acquirer
Tat a St eel
Vodaf one
Hindalco Indust ries
Suzlon Energy
Essar St eel Holdings
Unit ed Spirit s
Tat a Pow er
Billion Dollar Plus M &A Deals
Target
Sector
Corus
St eel
Hut chison Essar
Telecom
Novelis Inc
Aluminium
REpow er
Pow er & Energy
Algoma St eel Inc
St eel
Whyt e & M ackay
Brew eries & Dist illeries
PT Kalt im Prima Coal
Pow er & Energy
Value - USD M n
12,201.60
10,830.00
6,000.00
1,700.93
1,580.00
1,112.99
1,100.00
Any Involvement Asia M &A By Target Nation - CY 2006
Target Nation
Deal Value (US$ M il)
China
Hong Kong
India
M alaysia
Sout h Korea
Taiw an
Singapore
Philippines
Thailand
Indonesia
Industry Total
38,406.40
26,930.20
26,676.80
25,956.60
24,493.80
21,396.30
15,713.80
7,754.50
7,555.10
5,117.70
201,531.40
* list excludes the take-over of Arcelor by Mittal Steel (essentially Indian promoter and management team)
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Number of
Deals
1,913.00
765.00
1,141.00
873.00
255.00
175.00
465.00
128.00
268.00
117.00
6,216.00
Deal Type
Acquisit ion
M ajorit y
Acquisit ion
Cont rolling St akr
Acquisit ion
Acquisit ion
Signif icant St ake
the india proposition – the global indian: cross border acquisitions
Amtek Auto
Zelter GmbH, Germany, GWK Group, UK, Lloyds (Brierly Hill), UK,
Midwest Mfg. Co., USA, Tiplex-Kelton Group, JL French’s (Witham) Limited
Asian Paints
Delmege Forsyth (Sri Lanka), Pacific Paints (Australia), Berger International,
SCIB Chemical (Egypt), Taubmans Paints (Fiji)
Bharat Forge
CDP Aluminiumtechnik, Germany, Federal Forge, USA, Imatra Forging
Group,
Sweden and Scotland
Havell’s India
Ltd
SLI Sylvania lighting business, acquisition price USD 300 million
Indian Hotels
Hotels in Zambia and Australia
Marico
Sundari LLC, USA, consumer division of Enaleni Pharmaceuticals
MindTree
Consulting
TES-PV Electronic Solutions
Motherson Sumi
Reiner Präzision GmbH and G+S Kunststofftechnik GmbH in Germany,
Empire Rubber
Reliance
Communications
Yipes Holding Inc, acquisition price USD 300 million
Reliance
Industries
Gulf Africa Petroleum Corporation (GAPCO)
Reliance Life
Science
GeneMedix Plc, acquisition price USD 28.80 million for a 74% stake
Sterlite
Monte Cello Corporation, Netherlands, the holding company of copper mines
in Australia
Sundaram
Fastners
Dana Spicer, UK, Peiner Umformtechnik GmbH, Germany, PUT
Grundstucks GmbH
Tata Tea
Tetley, Good Earth, JEM_A, Glaceau
VSNL
Teleglobe International Holdings, Tyco Global Network
Wipro
Spectramind, GE’s healthcare software arm, global Energy practice of
American Management Systems, Nervewire, US, Ericsson's Indian R&D arm,
OkI Techno Centre Singapore
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the india proposition – Telecom and Media, Entertainment & Publishing
India n Cr oss Bor de r M e dia , Ent . & Publishing D e a ls - CY 2 0 0 7 (U SD M n)
Ta r ge t
A cquir e r D e a l Size St a k e
FunAsiA
Pyramid Saimira
N.A.
Lumiere
Inf init y Film Complet ion
N.A.
25%
S4 Ind Sof t w are
3.50
100%
FX Labs St udio
3.00
100%
Carlisle Publishing
Knibble.com
Indian Cross Border Telecom Deals - CY 2007 (USD M n)
Target
Acquirer Deal Size
Til-Tex Ant enna Inc
Kavveri Telecom Product s
2.50
Yipes Holding Inc
Reliance Communicat ion
300.00
Voxmobili SA
OnM obile
35.69
AEI Cables
Paramount Communicat ions
26.50
ADA Cellw orks
GTL Int ernat ional
25.00
IRP & pat ent s of Sigma Wireless
Kavveri Telecom Product s
N.A.
Indian PE Telecom Deals - CY 2007 (USD M n)
Investee
Investors
Asianet Sat ellit e Communicat ions
Providence
Ordyn Technologies
Aureos Capit al
Spice Telecom
Consort ium
M icroqual Techno Pvt Lt d
Consort ium
Bhart i Airt el
Temasek Holdings
Inf rast ruct ure unit of Reliance Communicat ions
Consort ium
Ast er Tow er
Consort ium
Tejas Net w orks Lt d
Goldman Sachs
Bhart i Inrat el
Consort ium
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Deal Size
66.67
9.30
30.00
10.00
1,906.74
337.50
35.00
22.09
1,000.00
100%
Stake
100%
100%
100%
100%
100%
100%
Stake
N.A.
N.A.
20%
N.A.
5%
5%
N.A.
N.A.
10%
Indian PE M edia, Ent. & Publishing Deals Deals - CY 2007 (USD M n)
Investee
Investors Deal Size Stake
Madhouse Media
Angel Investors
0.23
N.A.
Tata Sky
Temasek Holdings
55.56
10%
UFO Moviez
3i Group
22.00
N.A.
B.A.G. Infotainment
IDBI
0.45
10%
B.A.G. Infotainment
Bank of Baroda
0.45
10%
B.A.G. Infotainment
Sameer Gehlaut
5.70
25%
Nimbus Communications
Consortium
125.00
N.A.
Eenadu Group
Blackstone Group
275.00
26%
NDTV Networks
Consortium
120.00
24%
NDTV Networks Plc
Com Ventures
20.00
N.A.
INX Media
Temasek Holdings
N.A.
19%
INX Media
New Silk Route
N.A.
20%
INX Media
New Vernon
N.A.
6%
Games2Win
Consortium
5.00
N.A.
India TV
Fuse+Media
11.50
19%
Hathway Cable
Chyrs Capital
60.00
12%
Prana Studio
Sherpalo Ventures
N.A.
N.A.
Hathway Cable
Chyrs Capital
60.00
15%
Kreeda Games
Consortium
N.A.
N.A.
Mindworks Global Media
Helion Venture
15.00
N.A.
Digicable Network
Ashmore Investment
N.A.
49%
Right Angle Media
Amwal Al Khaleej
35.35
N.A.
Palador Pictures
Consortium
6.00
15%
B.A.G. Films & Media
Fidelity
14.42
10%
Percept Holdings
Future Group
46.51
15%
Hurix Systems
Helion Venture
5.10
N.A.
Live Media
Draper Fisher Jurvetson
N.A.
N.A.
Gemini Industries
DE Shaw
55.81
N.A.
mGinger
Draper Fisher Jurvetson
1.50
N.A.
mGinger
NEA Indo-US Ventures
0.50
N.A.
Dish TV
Indivision Capital
58.14
5%
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the Indian telecom market

Indian mobile market to cross US$25 billion

According to Gartner, Cellular services market in India in 2011 is expected to be
US$25.6billion. Total earnings of cellular services market in 2006 was US$8.95 billion and
would reach US$25.617 billion by 2011 growing at a compounded annual growth rate
(CAGR) of 18.4%. Cellular market penetration is also projected to increase from 12.7% in
2006 to 38.6% in 2011

The overall penetration will primarily be driven by an increased focus on rural market. By
2011, Gartner expects 58% of the rural population and 95% of the urban population to be
covered with mobile connections. It is indicating that there was still scope for reducing
mobile tariff, although call rates have reduced to about 2.6 cents per minute, it remained
high compared with fixed-line rates at 0.9 cents per minute

Rural market presents immense growth opportunities as mobile penetration was just 2%.
Many firms are planning to tap this market by introducing handsets that would cost below
Rs1,000
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the Indian telecom market
Current Statistics

The total number of telephone subscribers has reached 264 mn at the end of November 2007
of which 225 mn were mobile subscribers and 39 mn were fixed/landline subscribers. The
overall tele-density improved further to 23% in November 2007 compared to 22% in
October 2006.

The Average Revenue per User (ARPU) for the GSM, CDMA and broadband services
segment were at Rs275, Rs173 and Rs200 respectively.
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the Indian telecom market
Wireless mobile segment
 Wireless segment has yet again witnessed a feverish growth with the total subscriber base touching
225m in November 2007 compared with 143m in November 2006 and adding up 60.3m subscribers
during Apr-Nov 2007
 Lower handset prices coupled with an increased urge to stay connected while on the move have been
driving the growth in wireless segment
 Wireless penetration currently stands at 20.4% (up 69bps MoM)
 The wireless-to-fixed penetration is at ~495% and wireless-to-total penetration is at ~85.6%
 Bharti, RCOM and Vodafone were major gainers in absolute terms on a MoM basis
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the Indian telecom market
GSM mobile segment
 The GSM segment comprises 72% of the overall wireless market
 The total number of subscribers in the metro region jumped by 41% to 54.1 mn during October
November 2007 compared with same period of 2006
 Subscriber base in Circle A touched the 90 mn mark during October-November 2007, growing by 29%
 Circle B registered a decline of 6% in subscriber base during October-November 2007 compared with
same period of 2006
 Circle C has market share of just 14% in all India mobile users, with a subscriber base of 19.6 mn – this
circle showed 80% growth during October-November 2007 compared with same period of 2006
 GSM service providers are rapidly enhancing coverage and reach of service, which is getting reflected in
the healthy subscriber growth
CDMA mobile segment
 The CDMA market is witnessing stiff competition with players like Reliance Communications and
Bharti Airtel losing ground to Tata Teleservices over a period of time
 Revenue from call charges comprised 62% and rental charges 18% of the revenues of the CDMA players
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the Indian telecom market
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the Indian telecom market
Wire-line segment

The wire-line subscriber base declined yet again to 39.31 mn in November 2007 compared with 39.41 mn in October 2007

Although the private players witnessed growth in subscriber base, it was the public companies that lost the ground and
dragged the growth

The wire-line segment is still led by PSUs – BSNL dominance in the fixed line remained intact with a market share of 82%,
followed by MTNL at 9%; Bharti Airtel remained the leader amongst the private players, garnering a share of 5%, BSNL
commands 73% in the urban landscape and almost cent percent in the rural areas
Internet & broadband segment

India currently has 72 broadband service providers, having a subscriber base of 2.87 mn as of November 2007

Out of the 72 broadband service providers, only 13 service providers are having subscriber base more than 10,000 and
these providers share 98% of the total market

There were 9.63 mn wire-line Internet subscribers at the end of September 2007 compared to 9.22 mn at the end of June
2007, registering a growth of nearly 4.37%

The growth trend indicates a slight increase in the market share of PSU-owned internet service providers (ISPs) vis-à-vis
private operators

The growth in Broadband segment has not been satisfactory – it is still slow and below the expected levels

As per the recent TRAI proposal, companies like BSNL and MTNL should be allowed to appoint franchisees and
spectrum for 3G and WiMAX should be made available at the earliest to boost the deployment of broadband using these
technologies

The regulator has also laid down policies for hastening implementation of Internet protocol TV (IPTV) platform across the
country
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the Indian telecom market
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the Indian telecom market
Operating strategy: Stay big; get bigger; expand world-wide

All of the Indian telecom majors, both private, namely: Reliance Communications, Bharti Televentures,
Tata, AV Birla Group, Aircel, Essar; and government owned namely: MTNL and BSNL – all have explicit
intents to expand world-wide – with special emphasis on emerging markets such as Africa and Asia

Reliance, Bharti, MTNL and other Indian companies have already made moves in acquiring licenses in
various countries in Africa including those in Kenya, Gabon, Tanzania, etc

VSNL (Tatas) and Flag (Reliance) already together rank as worlds second biggest ethernet backbone in
the world

Scale is a key competitive strength in this business segment and RCOM’s recent moves reflect an
ambition to leverage this facet to drive growth. It recently announced the completion of FALCON, a
2.5Tbps sub-sea cable system which connects 11 countries in the Middle–East with the FLAG’s existing
cable system. RCOM also intends to spend $1.5bn over the next three years to build an IP-overlay on
FLAG’s sub-sea cable network. Though bandwidth sales and IRUs currently account for the largest
portion of revenues, IP-based services are the fastest growing segment. RCOM faces significant
competition from VSNL which is also gearing up to focus on this profitable market segment

Bharti Airtel, which had earlier bagged the licence to become Sri Lanka’s fifth GSM-based service
provider, will launch second and third generation mobile services in the island nation by the end of the
current fiscal and invest about US$200m by 2012. Bharti will have to compete with the Telekom
Malaysia-owned Dialog Telecom (the largest operator in the country), Celltel Lanka (owned by
Luxembourg-based service provider Millicom International
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the Indian media market

The Indian entertainment and media industry is one of the fastest growing industries and has
outperformed the Indian economy

According to FICCI PwC report, the television industry revenues are expected to grow from the present
Rs 191 bn (USD 4.77 bn) to Rs 519 bn (USD 12.97 bn) by 2011, implying a 22% compounded annual
growth rate

The radio industry recorded a growth of nearly 58% in 2006 – the share of radio in the total advertising
industry increased from 2.4% to 3.1% during the year

According to PwC report, the print industry is expected to grow from Rs 128 bn (USD 3.2 bn) in 2006 to
Rs 232 bn (USD 5.8 bn) by 2011, at 12.6% CAGR

Currently, the size of film industry is estimated to be around Rs 230
bn (USD 5.8bn), which is supposed to be the largest in the world

The Indian media and entertainment industry will grow at twice the
rate of the country’s GDP in a few years, driven largely by the
emergence of regional players, technology and digitisation
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the Indian media market
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the Indian media market
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the Indian media market
Radio industry

The radio industry recorded a growth of nearly 58% in 2006

The share of radio in the total advertising industry increased from 2.4% to 3.1% during the same year

This is further expected to increase to 5.5% by 2011 as per the FICCI-PwC report on the Indian entertainment and media
industry

The size of the radio industry is projected to increase at a CAGR of 28% from Rs 5 bn in 2006 to Rs 17 bn by 2011

The major advertisers on radio are the entertainment channels, real estate firms and retailers - all these industries are
expected to witness robust growth in the years to come

More than 90 channels across various languages and genres are being launched this year
Film industry

The Indian film industry is the biggest film industry in the world in terms of number of viewers, with an audience of more
than 3 billion compared with Hollywood’s 2.6 billion globally

The size of the Indian domestic film industry is likely to double to Rs 400 bn (around USD 10 bn) in the next three years,
creating employment opportunities for about 6m people by 2010

Currently, the size of film industry is estimated to be around Rs 230 bn (around USD 6 bn), which is supposed to be the
largest in the world - it produces 800 films in different languages and earns nearly USD 100 mn of foreign exchange
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the Indian media market
Print industry

The structure of the Indian print media industry is highly fragmented with regional dominance

The Indian print media segment primarily comprises newspaper and magazine publishing

According to PwC report, the print industry is expected to grow from Rs 128 bn in 2006 to Rs 232 bn by 2011, at 12.6%
CAGR

While the newspaper industry is estimated at Rs 112 bn, the magazine segment is valued at Rs 16 bn
Print media – revenues

The primary source of revenues for a newspaper companies is advertising and subscription - the other sources include
providing news to other agencies and sale of scrap paper

The subscription revenues formed nearly 39% of the total print media revenues of Rs 128 bn in 2006

Print ads have the highest share of the ad pie in the media industry – dailies and magazines combined had a share of 48%
of the total Rs 131 bn advertising revenues in 2005

Looking ahead, print media would continue to dominate other media in terms of revenues from advertising, with a
market share of 46% of the total ad spend (Rs 293bn) by 2010

Advertising revenues formed 61% of the total print media revenues in 2006 and is expected to touch 66% of the total Rs
206 bn revenues in 2010
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the Indian media market
Television
 The television industry in India has come a long way from the time when only a couple of
Doordarshan channels were broadcast for a limited duration of the day
 Today, there are 300 channels across various languages and genres catering to audiences 24
hours a day
 The size of the industry is estimated to be approximately Rs 191 bn - with 112 mn TV
households, India is the third largest television market in the world, next only to China and
the US
Regulations
 The Ministry of Information and Broadcasting is aiming for a further cut in entertainment
tax to 25-30% - with technology and digitisation fuelling the 18% CAGR, a tax breather will
only enhance the growth
 FDI Cap for FM Radio may be raised to 26% - retaining the current 20% FDI cap in radio
companies, Government may allow an additional 6% for FIIs and others
 India to increase cable TV foreign investment cap - India is set to raise the foreign direct
investment limit in cable television to 74% from 49% and allow 100% ownership in down
linking general and entertainment channels
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the Indian media market
Outlook
 The Indian media and entertainment industry will grow at twice the rate of the country’s GDP in a few
years, driven largely by the emergence of regional players, technology and digitisation
 Around 28% of the 100 mn pay TV households would be going digital by 2010, as a result of this trend
 In a digitised Indian media and entertainment environment, DTH would emerge leader over the next
three years, while IPTV would gain close to 1m subscribers by 2010
 A booming Indian economy, literate population on the rise, increasing consumerism, entry of global
brands in the country and opening of the sector to foreign investors would drive the growth in print
media
 Newspaper companies entering into newer regions and segments would lead to stronger growth - with
the economy expected to be robust and increasing penetration of newspapers, the advertisement
revenues are expected to remain strong
 The share of the print media in the total ad pie is expected to go down due to increasing competition
from other forms of media like the Internet – the Internet has emerged as the most actively used medium
for news, as it offers instant news just like television and has a long shelf-life like newspapers
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the india proposition – Information Technology & ITeS
India n Cr oss Bor de r IT & ITe S D e a ls - CY 2 0 0 7 (U SD M n)
Ta r ge t
A cquir e r D e a l Size
AdDynamix
Ybrant Technologies
10.00
eSys Technologies
Teledat a Inf ormat ics
105.00
Global Vant edge
Aegis BPO
22.22
Thought Digit ial
Zensar Technologies
24.90
BPO Lason
HOV Services
148.00
ICE Ent erprise Solut ions
Genpact
N.A.
Valley US
Quint egra Solut ions
9.50
JadeLit e Technologies
Quint egra Solut ions
1.00
Links Group Int ernat ional
Paradyne Inf ot ech
4.75
Emacs Technologies
Core Project s & Technologies
3.00
Massif Technologies
Nihar Inf o Global
0.03
Seenet ix
Ybrant Technologies
N.A.
Dynat ex
ISGN
N.A.
West Talk Corporat e
Trit on Corp
N.A.
New Begininings Finance
Trit on Corp
N.A.
Rubicon Group
EMR Technology Vent ures
20.00
TCS Brasil
TCS
33.40
Com Creat ion Inc
Cambridge Technology
3.50
Cross Roads Det ailing
Moldt ex Technologies
1.30
DCI Digit al Communicat ions
Kaveri Telecom Product s
2.20
DGIT Solut ions
ORG Inf ormat ics
N.A.
Capco Capit al Market s
i-Flex Solut ions
N.A.
BPM Inc
First Source Solut ions
N.A.
Solt ius Pt e
Teledat a Inf ormat ics
45.00
Syndesis Limit ed
Subex Azure
164.50
Dunn Solut ions
Cranes Sof t w are
13.95
Logan Orviss
Pat ni Comput ers
N.A.
Ask n Learn
Educomp Solut ions
3.88
FLovat e Technol
WNS Holdings
N.A.
Orion Technology
Rolt a
N.A.
US based company
Maples ESM
N.A.
Benson Transcript ion
Bhilw ara Scribe
N.A.
Met rikus
Persist ent Syst ems
N.A.
Bost on Communicat ions Group
Megasof t Lt d
65.00
Philips Global Finance
Inf osys Technologies
28.00
Tarat ec Development Corp
Pat ni Comput ers
27.20
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St a k e
100%
N.A.
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
100%
80%
100%
49%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
83%
100%
100%
the india proposition – Information Technology & ITeS
Indian Cross Border IT & ITeS Deals - CY 2007 (USD M n)
Target
Acquirer
Clearorbit
Take Solut ions
Consult ancy division of Logist ics Solut ions
Kaashyap Technologies
Vect or Insurance Services
M ast ek
Reckon Up
Logix M icrosyst ems
Pref ered Financial Group
Quat rro BPO
Inf ocrossing Inc
Wipro Technologies
TekSof t Inc
Geomet ric Solut ions
M edAssist Holdings
First Source Solut ions
Four Lakes Colorgraphics
M urugappa Group
Zavat a Inc
Apollo Hospit als
Zero Oct a
Kale Consult ant s
Telecom Service Cent re
Hero Group
Converso Cont act Cent res
Usha M art in Group
Apex Document Solut ions
Tricom India
Savicca
Educomp Solut ions
Host Depart ment
Net t linx LTD
Okl Techno Cent re
Wipro Technologies
Comnet Int ernat ional
Inf init e Comput er Solut ions
Azzurri Educat ion
Core Project s & Technologies
KC M anagement Group
Core Project s & Technologies
Hamlet Comput er Group
Core Project s & Technologies
LocaM oda Inc
M ahindra & M ahindra & Reliance Port Terminals
Kingdom Builders
Allsec Technologies
PA Corporat ion
Quint egra Solut ions
Indust ronics Berhad
Ruia Group
Cast ek Sof t w are
i-Flex Solut ions
J&B Sof t w are
3i Inf ot ech
NINt ec B.V.
Gat ew ay Technolabs
Nit or Global Solut ions
Sat yam Comput ers
Agadia Syst ems
Prit hvi Inf ormat ion Solut ions
Ohio based KPO
M old Tek Technologies
TES-PV Solut ions
M ind Tree Consult ing
Int ernat ional Innovat ions Inc
Calif ornia Sof t w are Company
Capit al M arket Solut ions
Fort is Financial Services
Int egro Technologies
Aurionpro Solut ions
Huron Graf f enst aden
Jyot i CNC Aut omat ion
Oridian
Ybrant Technologies
Upst ream & Travelport ISO
Int elnet Global Services
Dalglen
Hero Group
Inat ech Inf osolut ions
Calif ornia Sof t w are Company
Reps Resources
CS Sof t w are Ent erprise
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Deal Size
20.60
8.50
4.50
4.00
N.A.
600.00
N.A.
330.00
110.00
180.00
N.A.
80.00
N.A.
2.00
N.A.
N.A.
N.A.
N.A.
30.00
12.00
3.00
6.18
1.50
49.00
N.A.
N.A.
25.25
N.A.
5.50
4.50
2.00
6.55
1.32
N.A.
N.A.
55.81
13.00
75.00
74.42
6.17
N.A.
Stake
100%
100%
90%
100%
100%
100%
18%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
N.A.
100%
100%
30%
49%
100%
N.A.
100%
100%
100%
100%
100%
76%
100%
100%
100%
100%
100%
49%
51%
the Indian information technology & ITeS market

The services sector is one of the most significant sectors of the Indian economy, contributing nearly 55%
to the GDP in 2006–07

The sector continues to be the key driver of economic activities holding a share of more than 44% of
GDP. The contribution of the IT industry to the country’s economy is increasing - the industry’s
contribution to the nation’s GDP has gone up to 5.4% in FY07 as against 4.8% in FY06

The Indian ITES-BPO segment continues to chart strong year-on-year growth, witnessing high levels of
activity both onshore and offshore

The IT software services and BPO industries have had a mixed year (2007) – the rupee played spoil
sport, but top players reacted quickly in tightening the slack in the system

The year 2008 promises to bring in newer growth opportunities, potentially billion dollar ones, for the
Indian IT industry

The export-driven Indian IT/ITeS industry — which has been dominated by application development
and maintenance (ADM), voice-based BPO services and BFSI vertical — could see new and niche areas
scaling up rapidly

Growth of IT services market is primarily being driven by growth of the economy, small and midsize
businesses, government projects and increased customer focus – Indian IT services market is pegged to
grow to US$10.73 billion by 2011 with anticipation of more contracts from firms, grappling with high
attrition of IT staff
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the Indian information technology & ITeS market
ITeS-BPO Segment
 The Indian ITES-BPO segment continues to chart strong year-on-year growth, witnessing high levels of
activity both onshore as well as offshore
 The industry is moving up the value chain into KPO to raise profits
 BPO market prospered with year-on-year TCV (Total Contract Value) growth of 147% for 2007
 The current hot spots in KPO industry are engineering and design, basic data search, integration and
management and biotech and pharma
 These opportunities in the KPO will help the Indian market climb the global value and knowledge chain
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the Indian information technology & ITeS market
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the Indian information technology & ITeS market
Industry Trends
 BPO entities have been at the front position of large mergers and acquisitions (M&A) in the Indian IT
space as compared to IT services firms
 India's knowledge process back-office (KPOs) firms are venturing overseas for acquisitions as they scaleup, struggle for talent, try to beat a rising rupee and face competition from big software firms
 Indian firms are looking to partner with or acquire local firms in Germany in an effort to tap European
market for offshore IT services which, apart from growing at a fast clip, is also emerging as a natural
hedge against a slowdown in the US, which accounts for the bulk of their business
 BPO services that are moving into Tier 2 and 3 cities and it is now expected that IT services will follow
suit, though at a slower pace
Outlook
 Indian domestic IT/ITES market revenue is likely to reach Rs1,100 billion in 2008, an increase of 24%
growth
 For the domestic IT/ITeS sector, 2008 would also mark the beginning of the second growth phase
characterised by the opportunities arising out of leveraging the IT infrastructure built up
 With the slowdown in the US economy, a strong rupee and questions over extension of the STP scheme
looming large, 2008 will be a crucial year for the Indian BPO industry
 Global clients will turn to new countries as inflation and employee turnover in Indian cities like
Bangalore and Pune will frustrate them – talent shortage will push them to Tier-II within India, and to
Latin America, Eastern Europe and Asia. Canada, Brazil, Chile, Costa Rica and Mexico will be some of
the new hot spots in providing sourcing solutions
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the Indian information technology & ITeS market
IT Software Services (ITSS) Segment
 The IT software services and BPO industries have had a mixed year (2007)
 Large IT companies with robust margins suffered an impact on their bottom line, but were able to absorb
or even counter the effect - however, the smaller ones, which had lower margins, were hard hit.
 More and more global corporations are trying to improve their cost efficiency and thus outsourcing their
technology requirements to low-cost countries like India
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the Indian information technology & ITeS market
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the Indian information technology & ITeS market
Industry Trends
 The Banking and Financial Services (BFS) vertical forms the largest contributor to the total IT services
revenue in India, and has maintained its lead over other verticals for a considerable number of years,
almost 38% of the US$24 billion IT services business
 IT companies are looking for ways to extend their value chain and bolster bottom-line – the uncertainty
and cutting costs are some of the aspects which the IT companies would have to keep in mind during
2008
 After sustained focus on Western shores, China is now high on their charter for Indian IT services
providers
 The year 2007 appears to have been a year of consolidation for the security industry with organisations
demanding better performing and flexible security solutions with constrained budgets and vendors
responding with consolidated offerings
 With the US slowdown and a depreciating dollar, US tech firms are likely to push for export-led growth
for earnings - hence, the Indian market is emerging as a hot spot growth area
Outlook
 According to Gartner, Indian IT services market is pegged to grow to US$10.73 billion by 2011 with
anticipation of more contracts from firms, which are grappling with high attrition of IT staff
 The market segments that are expected to witness strongest growth are consulting, IT management and
business process management services with five-year CAGR of 28.1%, 23.8% and 27.1% respectively
 However, some risks pertain to this scenario including uncertainty over the future evolution of the tax
regime governing computer manufacturers and importers, and rupee appreciation
 IT sector faces moderate threat through resource crunch, weakening dollar, sub-prime crisis and
recession fears in the US
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key contact information

Sanjay Krishnan
London
[email protected]
hand phone: +44 (0) 7738321449
facsimile: +44 (0) 208 711 3943

Vinay Shah
Mumbai
[email protected]
hand phone: +91 (0) 9967642785
facsimile: +44 (0) 20 66325631

Vikram Bihani
Bangalore
[email protected]
hand phone: +44 (0) 9886409387
facsimile: +44 (0) 80 25091532
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