Corporate Finance Div.

- C
CASE STUDY
Working Capital Needs

P INFOMATICS LTD.
P INFOMATICS LTD. (PIL) is BSE listed company which was inactive until
August 2009 when 75% shareholding was taken over by Idhasoft. It is now a
Software Development Company and IT Business Consulting Service Provider. The
new owners / management of Idhasoft succeeded in raising Co’s turnover from
Rs. 40 Lacs to 854 Lacs in a span of 7 months from August 2009 to March 2010.

BACKGROUND OF HOLDING CO.

Idhasoft is a Mumbai-based global IT Services organization established 4 years ago and

consisting of leading National and International Board Members from the Technology,
Banking, Finance and Compliance backgrounds.

Idhasoft is primarily engaged in Business Consulting , Software Technology services and

IT enabled services. The Company provides multiple service offerings to its vertical and
horizontal clients across various industries comprising retail, manufacturing,
telecommunications, health care and services and technology service for Oracle, SAP and
other application areas. The various service offerings comprise business process
reengineers, system integration, third party product development, quality assurance,
remote application, management and project management. The company serves various
industry segments including Public Sector, Banking and financial services, Insurance,
Retail, Manufacturing, Services and Technologies, Healthcare and Telecommunications.

Idhasoft was established with the vision to be a global world-class organization that
provides best of –breed localized business and technology solution, with continuous
innovation and quality delivered by best-in-class people and a mission to achieve over
US$ 500 Million in revenues by 2013 . The company growth model started as a Roll
up , today all the companies acquired have been consolidated into its parent India
company , to become one giant of Conglomerate . All the acquisition it has done is
100% and idhasoft has complete hold . All the companies owners who were
acquired have become Employees of the company and they are the Strategic
Business Heads who are committed to the growth of the company .

This growth is through a combination of inorganic and organic mechanisms, with

both vertical and horizontal specialization.
The Company started its operations when the market conditions were at a peak. By 3 rd
Quarter 2008, the market had significantly declined and many established organizations
had either been wiped out or were on the brink of closure. However Idhasoft, with its
quality people, delivery capabilities and long term oriented customers, survived these
global economic conditions in good form. The Company reported a total of US$ 141.7
Million (INR 6,510,269,769) revenue in 2008-09 with an EBITDA of US$ 7.144 Million
(INR 328,013,531)EBITDA, as compared to previous year, was maintained at about the
same level. As mentioned earlier, what is important is that the company has survived the
storm and is still up on the growth curve.
The company over the last 4 years has reached considerable stability , it has its own
direct office in 6 cities of USA , 2 office in Europe, 2 offices in ASEAN and 4
offshore Global Development centers in India . Today it has over 1200 employees
and over 1200 International customers .

The company today has no dearth for business as it has ensured to cut down non
core areas and is focused in Business consulting , IP Development, Software
Technology services and Project Management .

P INFOMATICS LTD. is a subsidiary of IDHASOFT

Financial Performance Figure

Audited Rs. in Lacs

For the Year 31.03.2008 31.03.2009 31.03.2010
Ended (New Management)
Income - 40.8 829.97
PAT 2.48 2.16 51.66
The performance for the year ended 31.03.2010 reveals as under:-

Rs. in Lacs
Income 829.97
PBDT 68.59
Dep. 17.90
PBT 50.69 + 24.11 Other non-op. Income
Taxes 23.14
PAT 51.66
Paid-up Capital 63.00 + 1329.63 Convertible Pref. Shares
Res.+Surplus 77.46
Net Worth 1658.41
Current Assets 2361.68
Current Liabilities 471.96

Significant infusion of funds by New Management

i) By Way of 4% Non-Cumulative COMPULSORILY Convertible Preference Shares

Nos. 139633 of Rs. 100/- each
Amount Rs. 13.30 Crs. (as of 31.03.2010)
Nos. of Shareholders 11 (5 Foreign + 6 Indian)
ii) By Way of 10% COMPULSORILY Convertible Debentures of Rs. 100/- each
Nos. 415730 of Rs. 100/- each
Amount Rs. 4.15 Crs. (as of 31.03.2010)

Note :

1. Subsequent to Balance Sheet date, the co. has issued additional 162,699 CCD.
The present position is 578,429 CCD of Rs. 100/- each i.e. Rs. 5.78 Crs. held
by 15 Debenture holders (12Foreign + 3 Indian).

2. The Co. has made an issue of Compulsorily Convertible Preference Share of Rs.
1330 Lacs to; i.e. issue to result into 440000 Equity Shares of Rs. 10/- each at
premium of Rs. 292 app.

Thus Co. has successfully injected Rs. 17.45 Crs. by way of Quasi-Capital which are
compulsorily Convertible as Capital.

Directors

1. Mr. A. P. : Managing Director

M Tech, IIT Bombay, Gold Medalist for excellence in Academics and Winner of
Appreciation-Best IT Implementer in the organization.

2. Dr. N. J. :
Bachelor’s Degree in Engineering from I.I.T. Bombay, Master’s Degree in
Electrical Engineering from I.I.T. Delhi, and his Ph.D. in Computer Science from
Univ. of Hawaii. Dr. Jain attended the Advanced Management Program at
Harvard Business School.

3. Dr. A. S. :
A graduate of Electrical Engineering from Roorkee University, Dr. Sharma was
commissioned in the Indian Navy in 1960. He obtained his Ph. D. Degree from
London University in 1969 in Electrical Engineering.

Business Positioning

 P I is present in Germany, Switzerland, Thailand, Malaysia, Singapore, Srilanka,

Bangaladesh and India.
 Vertically focuses in Fashion Goods Retail, Construction and Infrastructure,
Financial Corporate Planning Management, Risk Management and Discrete
Industry.
 Market approach very European and ASEAN Centric.
 Horizontal Industry focus remains same, excepting newer areas like Cognos,
Hyperion, Outlook Space.
 Has its own dedicated set of Sales/Deliver, Project Management, Onsite and
offsite resources.
  Has its own set of Marquee customer base.
 Underlying principles, business model and growth strategy of its parent company.
 Has its own dedicated set of back office staff to manage and supervise as per the
norms of an Listed entity.
 Board, Sr and Mid Management is independent and take independent decision.
 Huge opportunity to consolidate still existing.

BUSINESS HIGHLIGHTS

Scalable Business Model

 P I's business model is based in part on its strategy of acquiring, integrating, and
growing niche IT companies with valuable customers, complementary and
proprietary products, and dedicated promoters.

 Supported by favorable conditions in the European and ASEAN IT services

market.

Experienced Promoters and Management Team

 Through its various acquisitions, ldhasoft has successfully built a team of leading
IT professionals that will drive future growth.

 The company's founders each have over 20 years of experience, and are supported
by executives with strong experience across all aspects of the business.

India Advantage

 India-centric back offices with over 200 employees with to support the onshore
teams whilst leveraging a lower cost base

 Addressing the rapidly growing IT requirements in India's domestic industry

servicing leading Indian clients including E-Mart India,
Reliance Capital, Telekom Malaysia International, and Tata Power Company

Proven in-house Product Development Capacity

 In addition to offering services related to licensed 3rd party products, Idhasoft

offers 26 proprietary products with another 15 currently under development

ACQUISITIONS (TO DATE)

 No. 1 is headquartered in India with turnover of USD 3m (approx.). The company

is an active SAP Channel Partner and solutions provider in countries like
Srilanka, Bangladesh, Singapore, Vietnam & Middle East
  No. 2 is based in Thailand with revenue USD 1.25M (approx.), The company has
strong presence in SAP consulting including SAP ERP, CRM, SCM and BI and
has excellent virtualized solution for "Automotive" and "Retail & Consumer
Products" segment with illustrious clients like BMW, Honda Kiddo Pacific

 No. 3 is a leading Corporate Performance Management solution provider,

delivering proven performance management, consulting and implementation
services on technologies including business intelligence, balanced score card,
enterprise planning and financial consolidation. Finasys has a strong team of
Cognos Certified consultants recognized by IBM.

 No. 4 3M (approx.) company based in Germany and Switzerland. It is into

software consultancy focused on services for IT Strategy and SAP services with
primary focus on retail.

PROFIT & LOSS ACCOUNT : Enclosed

What Co. is looking for

P I is sourcing Book-Debt Financing Facility as part of its working capital management.
Present Orders under execution aggregate to Rs. 20 Crs. As stated above, the Co. is
getting warm & rewarding response from its overseas & Indian clients. The overseas
Subsidiaries and offices are busy with the orders & their execution.

PI needs, to start with, C/C Book-Debts facility of additional Rs. 5 Crs. as under:-
Amount Rs. 10 Crs. (Existing 5 Crs – Additional 5 Crs.)
Margin 25% (in view of quality of clients)
Rate of Int. 13.5% p.a.
Tenure Receivables upto 120 days
No D/P Limit against book-debts of subsidiaries.
Security
Principal Hypo. of Book-Debts
(Quarterly statement to be certified by Auditors and Monthly statements to
be submitted by the Co. to arrive at Drawing Power.)

Collateral 1. Corporate Guarantee of holding Co. Idhasoft

2. Pledge of 400,000 Shares of PI (BSE Listed Co.)

Market Price Rs. 430/-

3. Guarantee of Promoter / Director

Encl: CMA Data

MP/February 2011