SEMANTICSPACE

DRAFT RED HERRING PROSPECTUS Dated November 12, 2010 Please read Section 60B of the Companies Act, 1956 (This Draft Red Herring Prospectus will be updated upon filing with the RoC) Book Built Issue

SEMANTIC SPACE TECHNOLOGIES LIMITED
Our Company was incorporated as ‘Infoquest Systems Private Limited’ on November 24, 1997 under the Companies Act, vide Certificate of Incorporation bearing registration No. 08/23062 of 1997 issued by the Registrar of Companies, Karnataka, Bangalore. Our Company was converted into a public limited company vide Fresh Certificate of Incorporation Consequent upon Conversion under section 31/ 44 of the Companies Act, dated April 10, 2000 and consequently the name of our Company was changed to ‘Infoquest Systems Limited’. Further the name of our Company was changed to its present name, that is, Semantic Space Technologies Limited vide Fresh Certificate of Incorporation Consequent on Change of Name, dated July 3, 2000. Our Company’s CIN is U72200AP1997PLC033030. (For details of change in our name and our Registered Office, refer to the chapter titled “History and Certain Corporate Matters” beginning on page 117 of this Draft Red Herring Prospectus).
Registered Office: Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033, Andhra Pradesh, India. Corporate Office: DHFLVC Silicon Towers, 5th Floor, Madhapur Road, Kondapur, Hyderabad – 500 032, Andhra Pradesh, India; Telephone: + 91 040 3999 1999; Facsimile: + 91 040 2311 4651 Contact Person and Compliance Officer: Mr. Venkatesh Ramachandran; Telephone: + 91 040 3999 1999; Facsimile: + 91 040 2311 4651; E-mail: sstipo@semanticspace.com; Website: www.semanticspace.com

PROMOTERS OF OUR COMPANY: MR. SATYANARAYANA BOLLI, MS. SRIDEVI BOLLI, MR. RAMA RAO BOLLI AND ICON INVESTMENTS LIMITED
PUBLIC ISSUE OF 4,500,000 EQUITY SHARES OF RS. 10/- EACH OF SEMANTIC SPACE TECHNOLOGIES LIMITED (THE “COMPANY”, OR “OUR COMPANY”, OR THE “ISSUER”) FOR CASH AT A PRICE OF RS. [ ]* PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF RS. [ ] PER EQUITY SHARE), CONSISTING OF A FRESH ISSUE OF 2,372,728 EQUITY SHARES BY THE COMPANY (“FRESH ISSUE”) AND AN OFFER FOR SALE OF 2,127,272 EQUITY SHARES (“OFFER FOR SALE”) BY UTI - INDIA TECHNOLOGY VENTURE UNIT SCHEME AND NEW VERNON PRIVATE EQUITY LIMITED (THE “SELLING SHAREHOLDERS”), AGGREGATING TO RS. [ ] MILLION (THE “ISSUE”). THE ISSUE COMPRISES OF A NET ISSUE TO THE PUBLIC OF 4,475,000 EQUITY SHARES OF RS. 10/- EACH (THE “NET ISSUE”) AND A RESERVATION OF UPTO 25,000 EQUITY SHARES OF RS. 10/EACH FOR THE ELIGIBLE EMPLOYEES (AS DEFINED HEREIN) ON A COMPETITIVE BASIS (THE “EMPLOYEE RESERVATION PORTION”). THE ISSUE WILL CONSTITUTE 31.25% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY AND THE NET ISSUE WILL CONSTITUTE 31.07% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. *Our Company in consultation with the Selling Shareholders and the Book Running Lead Manager (“BRLM”) may decide to offer a discount of Rs. [ ] to the Issue Price to the Eligible Employees (“Employee Discount”). The excess amount paid at the time of bidding shall be refunded to the Eligible Employees within 12 working days from the Bid/ Issue Closing Date. THE FACE VALUE OF THE EQUITY SHARES IS RS. 10/- EACH. THE PRICE BAND, EMPLOYEE DISCOUNT AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY IN CONSULTATION WITH THE SELLING SHAREHOLDERS AND THE BRLM, AND ADVERTISED AT LEAST TWO (2) WORKING DAYS PRIOR TO THE BID/ISSUE OPENING DATE. In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three additional working days after such revision of the Price Band, subject to the Bidding/Issue Period not exceeding 10 working days. Any revision in the Price Band, and the revised Bidding/Issue Period, if applicable, shall be widely disseminated by notification to the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”) and by issuing a press release and also by indicating the change on the website of the Book Running Lead Manager and at the terminals of the Syndicate Member(s). The Issue is being made under sub-regulation (1) of Regulation 26 of the SEBI ICDR Regulations and through a Book Building Process wherein not more than 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs” and such portion the “QIB Portion”). Our Company in consultation with the BRLM may consider participation by Anchor Investors in the Net Issue for upto 30% of the QIB Portion in accordance with the applicable SEBI ICDR Regulations (“Anchor Investor Portion”), out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the remaining QIB Portion (“Net QIB Portion”). Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to QIBs, subject to valid Bids being received from them at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the Net QIB Portion and be available for allocation on a proportionate basis to the QIBs, subject to valid Bids being received from them at or above the Issue Price. Further not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received from them at or above the Issue Price. Further, 25,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received from them at or above the Issue Price. Any Bidder (excluding Anchor Investors bidding in the Anchor Investor Portion) may participate in this Issue through an Application Supported by Blocked Amount process by providing the details of the respective bank accounts in which the corresponding Bid Amounts will be blocked by the Self Certified Syndicate Banks. Special attention of investors is invited to the section titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus.

IPO GRADING
Our Company has appointed and will obtain a grading of this Issue from Credit Analysis & Research Limited (“CARE”), a credit rating agency registered with the Securities and Exchange Board of India (‘SEBI’). The rationale furnished by the grading agency for its grading, will be available for inspection and will be provided to the Designated Stock Exchange and updated at the time of filing of the Red Herring Prospectus with the RoC. For further details, please refer to the chapter titled “General Information” beginning on page 9 of this Draft Red Herring Prospectus.

RISKS IN RELATION TO THE FIRST ISSUE
This being the first public issue of Equity Shares of our Company, there has been no formal market for the Equity Shares of our Company. The face value of the Equity Shares is Rs.10/- and the Issue Price is [ ] times of the face value at the lower end of the Price Band and [•] times of the face value at the higher end of the Price Band. The Issue Price (as determined and justified by our Company in consultation with the Selling Shareholders and the BRLM on the basis of assessment of market demand for the Equity Shares by way of the Book Building Process as stated in chapter titled “Basis for Issue Price” beginning on page 50 of this Draft Red Herring Prospectus) should not be taken to be indicative of the market price of our Equity Shares after our Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of our Company or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this 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 this Issue. For taking an investment decision, investors must rely on their own examination of our Company and the Issue including the risks involved. The Equity Shares offered in the Issue 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 Draft Red Herring Prospectus. Specific attention of the investors is invited to the chapter titled “Risk Factors” beginning on page xviii of this Draft Red Herring Prospectus.

THE COMPANY AND THE SELLING SHAREHOLDERS’ ABSOLUTE RESPONSIBILITY
Each of the Company and the Selling Shareholders, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to our Company, the Selling Shareholders and this Issue, which is material in the context of this Issue, that the information contained in this Draft Red Herring Prospectus 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 Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions, misleading, in any material respect.

LISTING
The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on BSE and NSE. The in-principle approvals from BSE and NSE for listing of the Equity Shares have been received pursuant to their letters dated [ ] and [ ], respectively. For the purposes of this Issue [ ] shall be the Designated Stock Exchange.

BOOK RUNNING LEAD MANAGER
INDIA INFOLINE LIMITED 10th Floor, One IBC, 841, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013, Maharashtra, India Telephone: +91 22 4646 4600; Facsimile: +91 22 2421 5600 E-mail: sstl.ipo@iiflcap.com; Website: www.iiflcap.com Investor grievance: ig.ib@iiflcap,com Contact Person: Mr. Satish Ganega SEBI Registration Number: INM 000010940 BID/ISSUE PROGRAMME FOR ALL BIDDERS FOR QIBs FOR RETAIL AND NON-INSTITUTIONAL BIDDERS (INCLUDING ELIGIBLE EMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION)
*

REGISTRAR TO THE ISSUE
KARVY COMPUTERSHARE PRIVATE LIMITED Plot No. 17 to 24, Vithalrao Nagar, Madhapur, Hyderabad - 500 081, Andhra Pradesh, India Telephone: + 91 40 4465 5000; Facsimile: + 91 40 2342 0814 E-mail: varghese@karvy.com; Website: www.karvy.com Contact Person: Mr. P. A. Varghese SEBI Registration Number: INR 000000221 BID/ISSUE OPENS ON*: BID/ISSUE CLOSES ON: BID/ISSUE CLOSES ON: [ ], 2010 [ ], 2010 [ ], 2010

Our Company may consider participation by Anchor Investors. The Anchor Investor Bid/Issue Period shall be one working day prior to the Bid/Issue Opening Date.

TABLE OF CONTENTS SECTION I – GENERAL ................................................................................................................................... II DEFINITIONS AND ABBREVIATIONS ..................................................................................................... II CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA ......................................................................................................................................... XV FORWARD LOOKING STATEMENTS ................................................................................................. XVII SECTION II - RISK FACTORS .................................................................................................................. XVIII SECTION III – INTRODUCTION ...................................................................................................................... 1 SUMMARY OF OUR BUSINESS, STRENGTHS AND STRATEGIES ....................................................... 1 SUMMARY OF FINANCIAL INFORMATION ........................................................................................... 4 THE ISSUE ..................................................................................................................................................... 7 GENERAL INFORMATION ......................................................................................................................... 9 CAPITAL STRUCTURE .............................................................................................................................. 20 OBJECTS OF THE ISSUE ........................................................................................................................... 38 BASIS FOR ISSUE PRICE........................................................................................................................... 50 STATEMENT OF TAX BENEFITS............................................................................................................. 53 SECTION IV –ABOUT THE COMPANY ........................................................................................................ 65 INDUSTRY OVERVIEW ............................................................................................................................. 65 OUR BUSINESS............................................................................................................................................ 76 KEY INDUSTRY REGULATIONS AND POLICIES ............................................................................... 110 HISTORY AND CERTAIN CORPORATE MATTERS ........................................................................... 117 OUR MANAGEMENT ............................................................................................................................... 132 OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES ............................................. 151 DIVIDEND POLICY .................................................................................................................................. 158 SECTION V – FINANCIAL INFORMATION ............................................................................................... 159 FINANCIAL STATEMENTS ..................................................................................................................... 159 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................................................................................... 221 FINANCIAL INDEBTEDNESS.................................................................................................................. 244 SECTION VI – LEGAL AND OTHER INFORMATION .............................................................................. 250 OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS ............................................... 250 GOVERNMENT AND OTHER APPROVALS ......................................................................................... 259 OTHER REGULATORY AND STATUTORY DISCLOSURES .............................................................. 263 SECTION VII – ISSUE RELATED INFORMATION ................................................................................... 277 TERMS OF THE ISSUE............................................................................................................................. 277 ISSUE STRUCTURE .................................................................................................................................. 283 ISSUE PROCEDURE ................................................................................................................................. 290 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES .......................................... 328 SECTION VIII – MAIN PROVISIONS OF OUR ARTICLES OF ASSOCIATION..................................... 329 SECTION IX – OTHER INFORMATION ..................................................................................................... 365 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ................................................... 365 DECLARATION ......................................................................................................................................... 367

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SECTION I – GENERAL DEFINITIONS AND ABBREVIATIONS In this Draft Red Herring Prospectus, unless the context otherwise requires, the terms defined and abbreviations expanded hereunder shall have the meanings as assigned therewith. Company Related Terms Term “Semantic Space Technologies Limited” or “Semantic” or “Semantic Space” or “Semantic Technologies” or “the Company” or “our Company” or the “Issuer” or “Issuer Company” “we” or “us” or “our” or “Our Group” Subsidiary/ies or our Subsidiary/ies Description Unless the context otherwise requires, refers to Semantic Space Technologies Limited, a public limited company incorporated under the Companies Act, 1956, having its registered office at Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033, Andhra Pradesh, India.

Arsin / Arsin Corp. SSTNA JYACC Prolifics Germany Prolifics SSTAC SST ASPL Registered Office Our Promoter(s)

Our Promoter Group

Our Group Companies

Unless the context otherwise requires, refers to Semantic Space Technologies Limited and its subsidiaries. The subsidiary/ies of our Company (jointly or singly as the context may require), as described in the paragraph titled “Our Subsidiaries” in the chapter titled “History and Certain Corporate Matters” beginning on page 117 of this Draft Red Herring Prospectus. Arsin Corporation, a SBU under which we conduct our Independent Verification and Validation Services business. SST North America, Inc. JYACC Inc. doing business as Prolifics. Prolifics Deutschland GmbH. JYACC and Prolifics Germany collectively a SBU under which we conduct our System Integration Solutions business. SST Acquisition Corporation. A SBU under which we conduct our Application Services business. Arsin Systems Private Limited. The Registered Office of our Company situated at Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033, Andhra Pradesh, India. The Promoters of our Company namely, Mr. Satyanarayana Bolli, Ms. Sridevi Bolli and Mr. Rama Rao Bolli (Individual Promoters) and Icon Investments Limited (Corporate Promoter). Companies, individuals and entities (other than companies) as defined under Regulation 2 sub-regulation (1)(zb) of the SEBI ICDR Regulations and disclosed in chapter titled “Our Promoters, Promoter Group and Group Companies” beginning on page 151 of this Draft Red Herring Prospectus. Companies, firms and ventures etc. promoted by our Promoters, irrespective of whether such entities are covered under Section 370(1)(B) of the Companies Act or not and disclosed in chapter titled “Our Promoters, Promoter Group and Group Companies” beginning on page 151 of this Draft Red Herring Prospectus.

Conventional / General Terms Term Articles or Articles of Association or AoA Companies Act Description The Articles of Association of our Company, as amended from time to time. The Companies Act, 1956, as amended from time to time.

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Term Depositories Act Depository Depository Participant Director(s) FEMA FII / Foreign Institutional Investor Financial Year / Fiscal / Fiscal Year / FY I.T. Act / IT Act I.T. Rules Indian GAAP Key Managerial Personnel / KMP

The Board of Directors of our Company or a committee duly constituted from time to time. The Reserve Bank of India Act, 1934, as amended from time to time. The Registrar of Companies situated at 2nd Floor, CPWD Building, Kendriya Sadan, Sultan Bazar, Koti, Hyderabad – 500 195, Andhra Pradesh, India. Securities Contracts (Regulation) Act, 1956, read with rules and regulations thereunder and amendments thereto, as amended from time to time. SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time. SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992. SEBI Act Securities and Exchange Board of India Act, 1992, read with rules and regulations thereunder and amendments thereto and as amended from time to time. SEBI ESOP Guidelines SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time SEBI ICDR Regulations / SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended ICDR Regulations from time to time, including instructions and clarifications issued by SEBI from time to time. SEBI Insider Trading SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended from time to Regulations time, including instructions and clarifications issued by SEBI from time to time. SEBI Rules and Regulations SEBI ICDR Regulations, SEBI (Underwriters) Regulations, 1993, as amended, the SEBI (Merchant Bankers) Regulations, 1992, as amended, and any and all other relevant rules, regulations, guidelines, which SEBI may issue from time to time, including instructions and clarifications issued by SEBI from time to time. SEBI Takeover Regulations SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, as amended from time to time. Statutory Auditor The statutory auditor of our Company, being B S R & Company, Chartered Accountants. VCF Regulations SEBI (Venture Capital Fund) Regulations, 1996, as amended from time to time. VCFs / Venture Capital Venture Capital Fund(s) as defined in and registered with SEBI under the SEBI Fund (Venture Capital Funds) Regulations, 1996.

Memorandum / Memorandum of Association / MoA Our Board / Board of Directors / Board RBI Act RoC / Registrar of Companies SCRA

Description The Depositories Act, 1996, as amended from time to time. A body corporate registered under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time in this case being CDSL and NSDL A depository participant as defined under the Depositories Act. Director(s) of Semantic Space Technologies Limited unless otherwise specified. Foreign Exchange Management Act, 1999, as amended from time to time, and the regulations framed there under. Foreign Institutional Investor (as defined under Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000) registered with SEBI under the applicable laws in India. Period of twelve months ended March 31 of that particular year, unless specifically stated otherwise. The Income Tax Act, 1961, as amended from time to time. Income Tax Rules, 1962, as amended from time to time. Generally Accepted Accounting Principles in India. The officers vested with executive powers and the officers at the level immediately below the Board of Directors of the Issuer and other persons whom the Issuer has declared as a Key Managerial Personnel and as mentioned in the chapter titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus. The Memorandum of Association of our Company, unless the context otherwise specifies.

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Issue Related Terms Term Allocation / Allocation of Equity Shares Allot / Allotted / Allotment / Allotment of Equity Shares Allottee Allotment Advice Description Unless the context otherwise requires, the allocation of Equity Shares pursuant to this Issue to the successful Bidders. Unless the context otherwise requires, the allotment of Equity Shares pursuant to this Issue to the successful Bidders. The successful Bidder to whom the Equity Shares are / have been Allotted. In relation to Bidders other than Anchor Investors, the note or advice or intimation of Allotment, sent to each successful Bidder who has been or is to be Allotted the Equity Shares after discovery of the Issue Price in accordance with the Book Building Process, including any revisions thereof. Notice or intimation of allocation of Equity Shares sent to Anchor Investors who have been allocated Equity Shares after discovery of the Issue Price if the Issue Price is higher than the Anchor Investor Issue Price The date one Working Day prior to the Bid/Issue Opening Date prior to or after which the Syndicate will not accept any Bids from the Anchor Investors. Not more than 30% (which includes one third reserved for domestic Mutual Funds) of the QIB Portion, available for allocation to Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations. The price at which Allotment is made to Anchor Investors in terms of this Draft Red Herring Prospectus, which shall be higher than or equal to the Issue Price, but not higher than the Cap Price. A Qualified Institutional Buyer, applying under the Anchor Investor Portion, who has Bid for an amount of at least Rs. 100 million Application Supported by Blocked Amount (whether physical or electronic) used by a Bidder to make a Bid authorizing the SCSB to block the Bid Amount in their specified bank account maintained with SCSB. Pursuant to SEBI circular number CIR/CFD/DIL/7/2010 dated July 13, 2010, ASBA Bid cum Application Forms are available for download from the websites of the Stock Exchanges. Account maintained by an ASBA Bidder with a SCSB which shall be blocked by such SCSB to the extent of the Bid Amount of the ASBA Bidder, as specified in the ASBA Bid cum Application Form. The application form, whether physical or electronic, in terms of which an ASBA Bidder shall make a Bid pursuant to the terms of this Draft Red Herring Prospectus and which contains an authorisation to block the Bid Amount in an ASBA Account. An investor who intends to apply through ASBA (except Anchor Investors) in the Issue. The form used by the ASBA Bidders to modify the quantity of Equity Shares or the Bid Amount in any of their ASBA Bid cum Application Forms or any previous ASBA Revision Form(s) The bank(s) which is / are clearing members and registered with the SEBI as bankers to the Issue with whom the Escrow Account will be opened, being [●] Bankers to our Company, being ICICI Bank Limited, State Bank of India and Citibank N. A. The basis on which the Equity Shares will be allotted / allocated to Bidders under the Issue and which is described under the chapter titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus. Except in relation to Anchor Investors, the date after which the member(s) of the Syndicate / SCSB will not accept any Bids for this Issue, which shall be notified in a widely circulated English national newspaper and a Hindi national newspaper and a regional language newspaper and in case of any revision, the extended Bid / Issue Closing Date also to be notified on the website and terminals of the Syndicate and SCSBs, as required under the SEBI Regulations. The Company may decide to close the Bidding Period for QIBs one day prior to the

Anchor Investor Allocation Notice Anchor Investor Bidding Date Anchor Investor Portion

Anchor Investor Price

Anchor Investor(s) Application Supported by Blocked Amount / ASBA

ASBA Account

ASBA Bid cum Application Form ASBA Investor(s) / ASBA Bidder(s) ASBA Revision Form

Banker(s) to this Issue / Escrow collection banks Bankers to our Company Basis of Allotment / Basis of Allocation Bid / Issue Closing Date

QIB Bid / Issue Closing

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Term Date Bid / Issue Opening Date

Bid Amount

Description Bid/Issue Closing Date in accordance with the SEBI ICDR Regulations. Except in relation to Anchor Investors, the date on which the member(s) of the Syndicate/SCSB shall start accepting Bids for this Issue, which shall be the date notified in a widely circulated English national newspaper, a Hindi national newspaper and a regional language newspaper, each with wide circulation and in case of any revision, the extended Bid/Issue Opening Date also to be notified on the website and terminals of the Syndicate and SCSBs, as required under the SEBI ICDR Regulations. The highest value of the optional Bids indicated in the Bid cum Application Form and payable by the Bidder on submission of the Bid in the Issue. In case of ASBA Bidders the highest value of the optional Bids indicated in the ASBA Bid cum Application Form. The form in terms of which the Bidder shall make an offer to subscribe to the Equity Shares of our Company and which will be considered as the application for Allotment in terms of this Draft Red Herring Prospectus and Prospectus. Unless the context otherwise states in this Draft Red Herring Prospectus, Bid Cum Application Form includes ASBA Form. An indication to make an offer during the Bidding/Issue Period by a prospective investor to subscribe to Equity Shares at a price within the Price Band, including all revisions and modifications thereto. For an ASBA Bidder(s), it means an indication to make an offer during the Bidding Period by any Bidder pursuant to the submission of an ASBA Bid cum Application Form to subscribe to the Equity Shares, including all revisions and modifications thereto. Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form or the ASBA Bid cum Application Form. A centre for acceptance of the Bid cum Application Form. The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders (except Anchor Investors) and the ASBA Bidders can submit their Bids. The Company may decide to close the Bidding Period for QIBs one day prior to the Bid/Issue Closing Date in accordance with the SEBI ICDR Regulations and for QIBs, this date shall be the Bid/Issue Closing Date. Book building mechanism as provided under Schedule XI of the SEBI ICDR Regulations, in terms of which the Issue is made. Book Running Lead Manager to the Issue, in this case being India Infoline Limited. Brokers registered with any recognized Stock Exchange, appointed by the Members of the Syndicate In relation to Anchor Investors, the note or advice or intimation sent to the each successful Anchor Investors who have been allocated Equity Shares after discovery of the Anchor Investor Price, including any revisions thereof. The higher end of the Price Band, above which the Issue Price will not be finalised and above which no Bids will be accepted. Such branches of the SCSBs which coordinate Bids under the Issue by the ASBA Bidders with the Registrar to the Issue and the Stock Exchanges and a list of which is available at http://www.sebi.gov.in or at such other website as may be prescribed by SEBI from time to time. Any price within the Price Band finalised by us in consultation with the Selling Shareholders and BRLM. A Bid submitted at the Cut-off Price by a Retail Individual

Bid cum Application Form / Bid-cum-Application Form

Bid(s)

Bidder(s)

Bidding Centre Bidding Period or Bidding/ Issue Period or Issue/ Bidding Period or Bid / Issue Period.

Book Building Process BRLM / Book Running Lead Manager Brokers to this Issue CAN / Confirmation of Allocation Note Cap Price Controlling Branches of the SCSBs

Cut-off Price / Cut-off

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Term

Demographic Details Depositories Designated Branches

Designated Date

Designated Stock Exchange / DSE Draft Red Herring Prospectus / DRHP Eligible Employee(s)

Description Bidder (including ASBA Bidders) and an Eligible Employee who has Bid for Equity Shares for an amount less than or equal to Rs. 100,000 and is a valid Bid at all price levels within the Price Band. QIBs and Non-Institutional Bidders are not entitled to Bid at the Cut-off Price. The demographic details of the Bidders such as their address, PAN, occupation and bank account details. NSDL and CDSL Such branches of the SCSBs which shall collect the ASBA Bid cum Application Form from the ASBA Bidders and a list of which is available on http://www.sebi.gov.in, or at such other website as may be prescribed by SEBI from time to time. The date on which funds are transferred from the Escrow Account to the Public Issue Account and the amount blocked by the SCSBs are transferred from the bank account of the ASBA Investors to the Public Issue Account, as the case may be, after the Prospectus is filed with the Registrar of Companies following which the Board of Directors shall allot Equity Shares to successful Bidders. [●] is the designated stock exchange for the purpose of this Issue

This Draft Red Herring Prospectus dated November 12, 2010 filed with SEBI and issued in accordance with the SEBI ICDR Regulations. An Eligible Employee being a permanent and full-time employee, working in India or abroad, of the issuer or of the holding company or subsidiary company or of that material associate(s) of the issuer whose financial statements are consolidated with the issuer’s financial statements as per Accounting Standard 21, or a director of the issuer, whether whole time or part time and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of that person or of the spouse) and who continues to be in the employment of our Company until submission of the Bid cum Application Form / ASBA Bid cum Application Form Eligible NRI NRIs from such jurisdiction outside India where it is not unlawful for our Company to make this Issue or an invitation under this Issue and in relation to whom the Red Herring Prospectus constitutes an invitation to subscribe to the Equity Shares issued herein. Employee Discount The difference of Rs. [●] between the Issue Price and the differential lower price at which our Company has decided to allot the Equity Shares to an Eligible Employee. Employee Reservation The portion of the Issue, being up to 25,000 Equity Shares, available for Allocation to Portion an Eligible Employee on a proportionate basis, subject to such reservation not exceeding 5% of the Post Issue capital of our Company. Equity Shares Equity shares of our Company having a face value of Rs. 10 each fully paid up unless otherwise specified in the context thereof. Escrow Account(s) Account opened with Escrow Collection Bank(s) and in whose favour the Bidders (except ASBA bidders) will issue cheque(s) or draft(s) in respect of the Bid Amount when submitting a Bid(s). Escrow Agreement Agreement to be entered into among our Company, the Registrar to the Issue, the Escrow Collection Bank(s), the Refund Bank(s), the Selling Shareholders and the BRLM in relation to the collection of the Bid Amounts and dispatch of the refunds (if any) of the amounts collected, to the Bidders (except ASBA Bidders) on the terms and conditions thereof. Escrow Collection Bank(s) / The banks, which are registered with SEBI as Banker(s) to the Issue with whom the Escrow Account for the Issue will be opened First Bidder The Bidder whose name appears first in the Bid cum Application Form or Revision Form or ASBA Bid cum Application Form. Floor Price The lower end of the Price Band, below which the Issue Price will not be finalised and below which no Bids will be accepted.

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Term Fresh Issue IPO Grading Agency / Grading Agency Issue

Issue Agreement

Issue Price

Issue Proceeds Listing Agreement Mutual Fund Portion Mutual Funds Net Issue Net Proceeds

Net QIB Portion

New Vernon

NIF Non-Institutional Bidders

Non-Institutional Portion/ Non Institutional Portion NR / Non-Resident NRI(s) / Non-Resident Indian OCB(s) / Overseas Corporate Body

Description Fresh issue of 2,372,728 Equity Shares by our Company Credit Analysis & Research Limited, the grading agency appointed by our Company for grading the Issue. Public Issue of 4,500,000 Equity Shares of face value of Rs. 10/- each for cash at a price of Rs. [●] per Equity Share (including share premium of Rs. [●] per Equity Share), comprising of a Fresh Issue of 2,372,728 Equity Shares by the Company and an Offer for Sale of 2,127,272 Equity Shares by the Selling Shareholders, aggregating [●] million. The Issue comprises of a Net Issue of 4,475,000 Equity Shares of Rs. 10/- each to the public and an Employee Reservation Portion of upto 25,000 Equity Shares of Rs. 10/- each for subscription by Eligible Employees on a competitive basis. The agreement dated November 10, 2010 entered into among our Company, the Selling Shareholders and the BRLM, pursuant to which certain arrangements are agreed to in relation to the Issue. The final price at which Equity Shares will be issued and Allotted in terms of the Prospectus, as determined by our Company in consultation with the Selling Shareholders and the BRLM, on the Pricing Date. Proceeds from the Issue that will be available to our Company being Rs. [●] million and the Selling Shareholders being Rs. [●] million The Listing Agreement to be entered into with the Stock Exchange(s) by the Company. The portion of the Net Issue, being 5% of the Net QIB Portion available for Allocation on a proportionate basis to Mutual Funds only. Mutual Funds registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996, as amended from time to time. Issue less the Employee Reservation Portion, consisting of 4,475,000 Equity Shares to be Allotted pursuant to this Issue. Proceeds from the Fresh Issue available to our Company, after deducting the Company’s share of the underwriting and issue management fees, selling commissions and other expenses related with the Issue. The portion of the QIB Portion less the number of Equity Shares allocated to the Anchor Investors, if any, to be decided by our Company in consultation with the Selling Shareholders and the BRLM. New Vernon Private Equity Limited, a company incorporated under the provisions of the Mauritius Companies Act, 2000 having its registered office at 10, Frere Felix De Valois Street – Port Louis – Mauritius. National Investment Fund set up by resolution F. No. 2/3/2005-DD-II dated November 23, 2005 of Government of India published in the Gazette of India. All Bidders (including sub-accounts which are foreign corporates or foreign individuals) who are not Qualified Institutional Buyers or Retail Individual Bidders or Eligible Employees bidding under the Employee Reservation Portion. The portion of the Net Issue being not less than 15% of the Net Issue, consisting of 671,250 Equity Shares, available for Allocation to Non Institutional Bidders on a proportionate basis, subject to receipt of valid Bids at or above the Issue Price. A “person resident outside India”, as defined under FEMA including eligible NRIs and FIIs. A “person resident outside India”, as defined under FEMA and who is a citizen of India or is a person of Indian origin (as defined under the Foreign Exchange Management (Deposit) Regulations, 2000, as amended). A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs, including overseas trust in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under Foreign Exchange Management (Deposit) Regulations, 2000. OCBs are not allowed to invest in this Issue.

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Term Offer for Sale Payment through electronic transfer of funds Price Band

Description The offer for sale of 2,127,272 Equity Shares by the Selling Shareholders at the Issue Price. Payment through NECS, Direct Credit, RTGS or NEFT, as applicable. The Price Band of a minimum price of Rs. [●] (Floor Price) and the maximum price of Rs. [●] (Cap Price) and include revisions thereof. The Price Band and the minimum bid lot size for the Issue will be decided by the Company in consultation with the Selling Shareholders and the BRLM and advertised, two working days prior to the Bid / Issue Opening Date, in one English national newspaper, one Hindi national newspaper and a regional language newspaper with wide circulation. The date on which our Company in consultation with the Selling Shareholders and the BRLM finalises the Issue Price. The Prospectus, to be filed with the RoC in accordance with the provisions of the Companies Act and the SEBI ICDR Regulations containing, inter alia, the Issue Price that is determined at the end of the Book Building Process, the size of this Issue and certain other information. Account opened with the Banker(s) to this Issue to receive monies from the Escrow Account for this Issue on the Designated Date and from the SCSBs from the ASBA Accounts on the Designated Date. The portion of the Net Issue being not more than 50% of the Net Issue, consisting of not more than 2,237,500 Equity Shares, available for Allocation to QIBs, including the Anchor Investor Portion on a proportionate basis, subject to valid Bids being received at or above the Issue Price. Public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FII and sub-account registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, multilateral and bilateral development financial institution, venture capital fund registered with SEBI, foreign venture capital investor registered with SEBI, state industrial development corporation, insurance company registered with IRDA, provident fund with minimum corpus of Rs. 250 million, pension fund with minimum corpus of Rs. 250 million and National Investment Fund set up by Government of India, insurance funds set up and managed by the army, navy or air force of the Union of India. The Red Herring Prospectus issued in accordance with Section 60B of the Companies Act and the SEBI ICDR Regulations, which does not have complete particulars on the price at which the Equity Shares are offered and the size of the Issue. The Red Herring Prospectus will be filed with the RoC at least three (3) days before the Bid/Issue Opening Date and will become a Prospectus upon filing with the RoC the copy that includes the details of the pricing, Allocation and final size of the Issue. No-lien account maintained by the Refund Bank(s) to which the surplus money shall be transferred on the Designated Date and from which refunds of the whole or part of the Bid Amount (excluding the ASBA Bidders), if any, shall be made. The bank(s) which have been appointed / designated for the purpose of refunding the amount to investors either through the electronic mode as prescribed by SEBI and / or physical mode in accordance with the procedure contained in the chapter titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus. Refunds through electronic transfer of funds means refunds through NECS, Direct Credit, NEFT, RTGS or the ASBA process, as applicable Registrar to the Issue, in this case being Karvy Computershare Private Limited A Retail Individual Bidder who is a “person resident in India” (as defined in FEMA).

Pricing Date Prospectus

Public Issue Account

QIB Portion

Qualified Institutional Buyers / QIB(s)

Red Herring Prospectus / RHP

Refund Account(s)

Refund Bank(s) / Refund Banker(s)

Refunds through electronic transfer of funds Registrar /Registrar to the Issue Resident Retail Individual Bidder / Resident Retail Individual Investor Retail Individual Bidders

Persons, including HUFs (applying through their Karta), NRIs and ASBA Bidders,

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Term Retail Portion

Revision Form

SCSB Agreement

Self Certified Syndicate Banks / SCSBs

Selling Shareholders Stock Exchanges Syndicate Syndicate Agreement

Syndicate Member(s)/ Member(s) of Syndicate TRS / Transaction Registration Slip U.S. GAAP Underwriters Underwriting Agreement UTI ITVUS Working Day(s) / Business Day(s)

Description who have Bid for an amount less than or equal to Rs. 100,000. The portion of the Net Issue being not less than 35% of the Net Issue, consisting of 1,566,250 Equity Shares, available for Allocation to Retail Individual Bidders on a proportionate basis. The form used by the Bidders (except ASBA Bidders) to modify the number of Equity Shares or the Bid Price in any of their Bid-cum-Application Forms or any previous Revision Form(s). The deemed agreement between the SCSBs, the BRLM, the Registrar to the Issue, our Company, in relation to the collection of Bids from the ASBA Bidders and payment of funds by the SCSBs to the ASBA Public Issue Account. Shall mean a Banker to an Issue registered under SEBI (Bankers to an Issue) Regulations, 1994 and which offers the service of making Application/s Supported by Blocked Amount including blocking of bank account and a list of which is available on www.sebi.gov.in, or at such other website as may be prescribed by SEBI from time to time. UTI ITVUS and New Vernon Bombay Stock Exchange Limited and National Stock Exchange of India Limited The BRLM and the Syndicate Members. The agreement to be entered into among our Company, the Selling Shareholders and the members of the Syndicate, in relation to the collection of Bids (excluding Bids by ASBA Bidders) in the Issue An intermediary registered with SEBI to act as a syndicate member and who is permitted to carry on the activities as an underwriter. The slip or document issued by any of the members of the Syndicate to the Bidders and by SCSBs to ASBA Investors as proof of registration of the Bid. Generally Accepted Accounting Principles in the United States of America. The BRLM and the Syndicate Members. The Agreement to be entered into among our Company, the Selling Shareholders and the Underwriters on or after the Pricing Date. UTI- India Technology Venture Unit Scheme, a venture capital fund registered under section 12(1) of the SEBI Act and having registration number IN/VC/99-00/021. All days, other than a Sunday or a public holiday (except in reference to the Anchor Investor Bidding Date and Bid / Issue Period where a working day means all days other than a Saturday, Sunday or a public holiday), on which commercial banks in Mumbai are open for business.

Industry Related Terms / Business Related Terms Term ADM AIM/ AI&M ALM APAC API AS BFSI BI BPM BPO CAGR CBT Description Application Development & Maintenance Application Infrastructure and Middleware Solutions Application Life-Cycle Management Asia-Pacific Application Programming Interface Application Services Banking & Finance Service Industry Business Intelligence Business Process Management Business Process Outsourcing Compounded Annual Growth Rate Computer Based Training

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Term CMMi

CMS CoE CRM EBS ER&D ERP

ESB FTE GRC GTM GUI IAM IBM IIFL IP IS ISO IT IVV/ IV&V JMS MOM MS-Office MSOutlook ODC OLA PKMS QA R&D ROI SAP SBU SCM SD SDLC

Description Capability Maturity Model integration is a process improvement approach that helps organizations improve their performance. CMMi can be used to guide process improvement across a project, a division, or an entire organization. Content Management Solution Centers of Excellence Customer Relationship Management Oracle E-Business Suite is a comprehensive suite of integrated global business applications Engineering Research & Development Enterprise Resource Planning is an integrated computer-based system used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise-wide system environment. Enterprise Service Bus Full-Time Equivalent Governance, Risk Management and Compliance Go To Market Graphical User Interface Identity and Access Management International Business Machines India Infoline Limited Intellectual Property Infrastructure Services ISO is an international-standard-setting body composed of representatives from various national standards organizations. Information Technology Independent Verification and Validation Java Message System Message Oriented Middleware Microsoft Office Microsoft Outlook Offshore Delivery Centre Operating Level Agreement Pick Ticket Management System Quality Assurance Research and Development Return on Investments SAP is a corporation that is a leader in providing comprehensive business software through enterprise applications Strategic Business Unit Supply Chain Management Sales and Distribution (SAP module) Systems Development Life Cycle or Software Development Life Cycle in systems engineering, information systems and software engineering, is the process of creating or altering systems, and the models and methodologies that people use to develop these systems.

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Term SEI-CMMi SEO SEZ SI SLA SMB SOA

SRM STPI SVN T&M TAO TCO TPM UCM

UI UK UPS URL US USP WCM WESB WMB WPS XML

Description Software Engineering Institutes- Capability Maturity Model Integration Search Engine Optimization Special Economic Zone System Integration Solutions Service Level Agreement Small and Medium Business Service-Oriented Architecture is a flexible set of design principles used during the phases of systems development and integration in computing. A deployed SOA-based architecture will provide a loosely-integrated suite of services that can be used within multiple business domains. Supplier Relationship Management Software Technology Parks in India Software Subversion Time & Material Test Acceleration and Optimizer Total Cost of Ownership Transaction Processing Monitors Universal Customer Master (Oracle | Siebel Universal Customer Master is a comprehensive customer data hub that unifies customer data across multiple business units and functionally disparate systems to provide a trusted authoritative source of customer information across the enterprise) User Interface United Kingdom Uninterrupted Power Supply Abbreviation of Uniform Resource Locator, the global address of documents and other resources on the World Wide Web. United States of America Unique selling proposition Web Content Management IBM WebSphere Enterprise Service Bus is an SOA product by IBM used as an integration hub. IBM WebSphere Message Broker is technology by IBM used for integration and event management. IBM WebSphere Process Server is an SOA product by IBM utilized for business process choreography. Extensible Markup Language (XML) is a set of rules for encoding documents in machine-readable form.

Abbreviations Abbreviation A/c AGM AS ASBA AY/A.Y. BSE Bn/bn BOD CAN CAGR CB CDSL CEO Full Form Account Annual General Meeting Accounting Standards as issued by the Institute of Chartered Accountants of India Applications Supported by Blocked Amount Assessment Year Bombay Stock Exchange Limited Billion Board of Directors Confirmation of Allocation Note Compounded Annual Growth Rate Controlling Branch Central Depository Services (India) Limited Chief Executive Officer

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Abbreviation CFO CIN COO CST Act CWIP DB Dept. DIN DP ID DP DRHP EBITDA ECB ECS EEFC EGM EOU EPCG EPS ESOP ESOS EU FCNR Account FDI FEMA FIs FII FII Regulations FIPB FY FVCI FVCI Regulations GDP GIR Number GoI HNI HUF ICAI ICICI ICSI ICWAI IEC IP IPO IT I.T. Act I.T. Rules

Full Form Chief Financial Officer Corporate Identity Number Cheif Operating Officer Central Sales Tax Act 1956 Capital Work in Progress Designated Branch Department Director Identification Number Depository Participant’s Identification Number Depository Participant Draft Red Herring Prospectus Earnings before Interest, Tax, Depreciation, Amortisation and extraordinary items External Commercial Borrowings Electronic Clearing System Exchange Earners Foreign Currency Extra Ordinary General Meeting Export Oriented Unit Export Promotion Capital Goods Scheme Earnings per share i.e., profit after tax for a fiscal year divided by the weighted average outstanding number of equity shares at the end of that fiscal year Employee Stock Option Plan Employee Stock Option Scheme European Union Foreign Currency Non Resident Account Foreign Direct Investment Foreign Exchange Management Act, 1999 together with rules and regulations framed thereunder, as amended Financial Institutions Foreign Institutional Investor, as defined under the FII Regulations and registered with the SEBI under applicable laws in India Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended Foreign Investment Promotion Board Financial Year Foreign Venture Capital Investor as defined in and registered under the FVCI Regulations Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, as amended Gross Domestic Product General Index Registry Number Government of India High Net worth Individual Hindu Undivided Family Institute of Chartered Accountants of India ICICI Bank Limited Institute of Company Secretaries of India Institute of Cost and Works Accountants of India Importer Exporter Code Intellectual Property Initial Public Offer Information Technology The Income Tax Act, 1961, as amended from time to time The Income Tax Rules, 1962, as amended from time to time

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Abbreviation KMP Kg/Kgs. Ltd. Merchant Banker MICR Mn / mn MNC Mutual Funds MoA MoU MODVAT MVAT Act NA NAV

NECS NEFT Net Worth NOC NR NRE Account NRI NRO Account NSDL NSE NTA p.a. PAN PAT PBT PIO PLR P/E Ratio Pvt./(P) QA QC QS Qty RBI RBI Act RHP RoNW Rs./Rupees /INR RTGS SBI SCRA SCRR Securities Act

Full Form Key Managerial Personnel Kilogram(s) Limited Merchant banker as defined under the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 as amended Magnetic Ink Character Recognition Million / million / millions Multi National Company Mutual Funds registered with SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended Memorandum of Association Memorandum of Understanding Modified Value Added Tax Maharashtra Value Added Tax Act, 2002 Not Applicable 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 and Loss account, divided by number of issued equity shares National Electronic Clearing System National Electronic Fund Transfer The aggregate of share capital, reserve and surplus, surplus/deficit in profit and loss account No Objection Certificate Non-Resident Non Resident External Account Non-Resident Indian Non Resident Ordinary Account National Securities Depository Limited National Stock Exchange of India Limited Net Tangible Assets Per annum Permanent Account Number allotted under the Income Tax Act, 1961 Profit After Tax Profit Before Tax Persons of Indian Origin Prime Lending Rate Price/Earnings Ratio Private Quality Assurance Quality Control Quality Standard Quantity The Reserve Bank of India Reserve Bank of India Act, 1934, as amended from time to time Red Herring Prospectus Return on Net Worth Indian Rupees, the currency of the Republic of India Real Time Gross Settlement State Bank of India The Securities Contracts (Regulation) Act, 1956, as amended from time to time. The Securities Contracts (Regulation) Rules, 1957, as amended from time to time. The US Securities Act of 1933, as amended

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Abbreviation SICA SOA Sq. Mts. Sq. Ft./sq. ft./SFT STC TAN TIN TDS TDER TRS UIN / Unique Identification Number UoI USA/US USD/U.S.$/US Dollar UV VAT VCFs VCF Regulations

Full Form Sick Industrial Companies (Special Provisions) Act, 1985, as amended from time to time. Service Oriented Architecture Square Meters Square Feet Service Tax Code Tax Deduction Account Number Taxpayers Identification Number Tax Deducted at Source Total Debt Equity Ratio Transaction Registration Slip Unique Identification Number issued in terms of SEBI (Central Database of Market Participants) Regulations, 2003, as amended from time to time. Union of India United States of America United States Dollars, currency of the United States of America. Ultra Violet Value Added Tax Venture Capital Funds as defined in and registered with SEBI under the VCF Regulations Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996, as amended

Notwithstanding the foregoing, a. In the chapter titled “Main Provisions of our Articles of Association” beginning on page 329 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section; In the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in that section; In the paragraphs titled “Disclaimer Clause of the Bombay Stock Exchange Limited” and “Disclaimer Clause of the National Stock Exchange of India Limited”in the chapter titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus, defined terms shall have the meaning given to such terms in those paragraphs. In the chapter titled “Statement of Tax Benefits” beginning on page 53 of this Draft Red Herring Prospectus, defined terms have the meaning given to such terms in that chapter.

b.

c.

d.

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CERTAIN CONVENTIONS, PRESENTATION OF FINANCIAL, INDUSTRY AND MARKET DATA

In this Draft Red Herring Prospectus, unless the context otherwise requires, all references to gender also refer to the other gender Certain Conventions In this Draft Red Herring Prospectus, unless otherwise specified or the context otherwise indicates or implies the terms all references to “Company”, “our Company” are to Semantic Space Technologies Limited and all references to “we”, “us”, “our ”, “our Group” are to our Company and our Subsidiaries. All references to “India” are to the Republic of India and all references to the “Government” are to the Government of India. All references in this Draft Red Herring Prospectus to the “US”, “USA” or “United States” are to the United States of America. Financial Data Unless stated otherwise, the financial information used in this Draft Red Herring Prospectus is derived from our Company’s restated consolidated financial statements as of and for the Financial Years ended March 31, 2007, 2008, 2009 and 2010 and for the quarter ended June 30, 2010, and our Company’s restated unconsolidated financial statements as of and for the Financial Years ended March 31, 2006, 2007, 2008, 2009 and 2010 and for the quarter ended June 30, 2010, prepared in accordance with Indian GAAP and the Companies Act and restated in accordance with SEBI ICDR Regulations, as stated in the report of our Auditor, B S R & Company, Chartered Accountants, in the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. Our Fiscal Year commences on April 01 and ends on March 31 of a particular year. Unless stated otherwise, references herein to a Fiscal Year (e.g., Fiscal 2010), are to Fiscal Year ended March 31 of that particular year. In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off. There are significant differences between Indian GAAP, IFRS and US GAAP. The Company has not attempted to quantify their impact on the financial data included herein and urges you to consult your own advisors regarding such differences and their impact on the Company’s financial data. Accordingly to what extent, the financial statements included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices / Indian GAAP. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. Any percentage amounts, as set forth in “Risk Factors”, “Our Business”, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and elsewhere in this Draft Red Herring Prospectus unless otherwise indicated, have been calculated on the basis of the Company’s restated consolidated and unconsolidated financial statements prepared in accordance with Indian GAAP. Currency and units of Presentation In this Draft Red Herring Prospectus, all references to ‘Rupees’/ ‘Rs.’ / ‘INR’ are to Indian Rupees, the official currency of the Republic of India. All references to ‘$’/ ‘US$’ / ‘USD’ / ‘U.S. Dollar(s)’ / ‘US Dollar(s)’ are to the United States Dollars, the official currency of the United States of America. All references to ‘million’ / ‘Million’ / ‘Mn’ refer to one million, which is equivalent to ‘ten lakhs’ or ‘ten lacs’, the word ‘Lakhs / Lacs / Lac’ means ‘one hundred thousand’ and ‘Crore’ means ‘ten million’ and ‘billion / bn. / Billion’ means ‘one hundred crores’. Further, any discrepancies in any table between the total and the sum of the amounts are due to rounding-off. Throughout this Draft Red Herring Prospectus, currency figures have been expressed in “million / Mn. / Millions” except those, which have been reproduced/ extracted from sources as specified at the respective places.

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Exchange Rates This Draft Red Herring Prospectus contains translations of certain US Dollar and other currency amounts into Indian Rupees that have been presented solely to comply with the requirements of Item (VIII) (G) of Part A of Schedule VIII to the SEBI Regulations. These translations should not be construed as a representation that those US Dollar or other currency amounts could have been, or can be converted into Indian Rupees, at any particular rate. Unless, otherwise stated, the Company has in this Draft Red Herring Prospectus used a conversion rate as mentioned below. Such translations should not be considered as a representation that such U.S Dollar amounts have been, could have been or could be converted into Rupees at any particular rate, the rates stated above or at all. The US Dollar to Indian Rupee exchange rate data: For the previous five financial years ending on March 31, was as under: 1 USD = Rs.44.62 as on March 31, 2006 1 USD = Rs.43.59 as on March 30, 2007 1 USD = Rs.39.97 as on March 31, 2008 1 USD = Rs.50.95 as on March 31, 2009 1 USD = Rs.45.14 as on March 31, 2010 And as on June 30, 2010 was 1 USD = Rs. 46.60 Source: www.rbi.org.in In the Chapter titled “Objects of the Issue” exchange rate used for the purpose of converting US$ into Indian Rupees in this Draft Red Herring Prospectus is US$ 1 = Rs. 44.54 as per the reference rate posted on the website of the Reserve Bank of India being www.rbi.org.in on October 29, 2010. In the Chapter titled “Financial Indebtedness” exchange rate used for the purpose of converting US$ into Indian Rupees in this Draft Red Herring Prospectus is US$ 1 = Rs. 44.92 as per the reference rate posted on the website of the Reserve Bank of India being www.rbi.org.in on September 30, 2010. Industry and Market Data Unless stated otherwise, industry data/ market data used throughout this Draft Red Herring Prospectus has been obtained from industry publications and publicly available government documents. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Similarly while information contained in the publicly available government documents that is relied upon for the purposes of this Draft Red Herring Prospectus is believed to be complete and reliable, there can be no assurance of the same. Although we believe that the industry data/ market data used in this Draft Red Herring Prospectus is reliable, it has not been verified by any independent source. Similarly, internal Company reports and data, while believed by us to be reliable, have not been verified by any independent source. There are no standard data gathering methodologies in the industry in which we conduct our business, and methodologies and assumptions may vary widely among different industry sources. Accordingly, no investment decisions should be made based on such information. The extent to which the market and industry data presented in this Draft Red Herring Prospectus is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.

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FORWARD LOOKING STATEMENTS All statements contained in this Draft Red Herring Prospectus that are not statements of historical fact constitute “forward-looking statements”. All statements regarding our expected financial condition and results of operations, business, plans and prospects are forward-looking statements. These forward-looking statements include statements as to our business strategy, our revenue and profitability, planned projects and other matters discussed in this Draft Red Herring Prospectus regarding matters that are not historical facts. These forward looking statements and any other projections contained in this Draft Red Herring Prospectus (whether made by us or any third party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. These forward-looking statements generally can be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also 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 forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, among others:           Disruptions in our Company; General economic and business conditions in the markets in which we operate and in the local, regional and national economies; Significant changes in the exchange rate Changes in laws and regulations relating to the industry in which we operate; Increased competition in the IT industry; Our ability to successfully implement our growth strategy and expansion plans through the Issue; Our ability to meet our capital expenditure requirements; Competition from existing players; Changes in technology; Changes in political and social conditions in India or in countries that we may enter, the monetary and interest rate policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices; Potential mergers, acquisitions or restructurings; Our ability to attract and retain qualified personnel; The performance of the financial markets in India and globally; Market fluctuations and industry dynamics beyond our control; Occurrence of natural disasters or calamities affecting the areas in which we have operations; and Any adverse outcome in the legal proceedings in which we are involved.

    

For a further discussion of factors that could cause our actual results to differ, please refer chapter titled “Risk Factors” beginning on page XVIII of this Draft Red Herring Prospectus, and chapters titled “Industry Overview” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 65 and 221 respectively of this Draft Red Herring Prospectus. 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 or the Selling Shareholders or the BRLM, or any of its 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 requirements, our Company, the Selling Shareholders and the BRLM will ensure that investors in India are informed of material developments until the time of grant of listing and trading permissions by the Stock Exchanges.

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SECTION II - RISK FACTORS

An investment in the Equity Shares involves a high degree of risk. You should carefully consider all the information in this Draft Red Herring Prospectus, including the risks and uncertainties summarized below, before making an investment in our Equity Shares. The risks described below are relevant to the countries in which we conduct business, the industries our customers are engaged in, our Company and the Equity Shares. There may also be other risks, presently unknown to us or which we currently deem immaterial, which could also materially impair our business, operations or prospects. To obtain a complete understanding of our Company, you should read this section in conjunction with the chapter titled “Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 76 and 221 of this Draft Red Herring Prospectus as well as the other financial and statistical information contained in this Draft Red Herring Prospectus. Prior to making an investment decision, prospective investors should carefully consider all of the information contained in the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. Unless stated otherwise, the financial data in this section is as per our financial statements prepared in accordance with Indian GAAP. If any one or more of the following risks as well as other risks and uncertainties discussed in this Draft Red Herring Prospectus were to occur, our business, financial condition and results of our operation could suffer material adverse effects, and could cause the trading price of our Equity Shares and the value of investment in the Equity Shares to materially decline which could result in the loss of all or part of investment. Prospective investors should pay particular attention to the fact that our Company is incorporated under the laws of India, and is therefore subject to a legal and regulatory environment that may differ in certain respects from that of other countries. This Draft Red Herring Prospectus also contains forward looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including the considerations described below and elsewhere in this Draft Red Herring Prospectus. 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 specified or quantified in the relevant risk factors below, we are not in a position to quantify financial or other implication of any 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 Risks related to Our Company and Our Business 1. There are legal proceedings outstanding involving our Company, certain of our Subsidiaries and Directors. Any adverse decision may render us liable to liabilities/penalties and may adversely affect our business, results of operations and profitability. Our Company, certain of our Subsidiaries and Directors are currently involved in certain legal proceedings in India and abroad. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. We cannot assure you that these legal proceedings will be decided in our favour. Furthermore, should there be a change in Indian law or in the laws of any such jurisdiction applicable to any of our

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Subsidiaries, against our interest or an adverse outcome in one or more of the outstanding legal proceedings, we may need to make appropriate provisions in our financial statements, which could adversely impact our business results. A summary of these legal and other proceedings involving our Company, our Subsidiaries and our Directors is given in the following table: (Amount in Rupees million) Amount to the extent quantifiable 0.36 Not Quantifiable Not Quantifiable 37.39 37.39 Not Quantifiable Not Quantifiable 3.28* 3.28* 12.99* 12.99*

Type of Proceedings Cases filed against our Company Money Recovery and other Civil Suit Tax Proceedings Total Cases filed by our Company Tax Proceedings Total Cases filed against our Directors Tax Proceedings Total Cases filed against our Subsidiaries Potential Litigations Total Cases filed by our Subsidiaries Money Recovery and other Civil Suit Total

Number of cases 1 2 3 2 2 2 2 1 1 1 1

* converted using exchange rate 1 US$ = Rs. 44.54 as at October 29, 2010 (source: www.rbi.org.in.)

For details on the above litigations, please refer the chapter titled “Outstanding Litigation and Material Developments” beginning on page 250 of this Draft Red Herring Prospectus. 2. Our Contingent Liabilities could adversely affect our financial condition. We have not provided for certain Contingent Liabilities as on June 30, 2010, on consolidated basis. In case any of these liabilities materialize they may adversely affect our financial position. Our Contingent Liabilities as on June 30, 2010, on consolidated basis, are as follows: (Amount in Rupees million) As at Particulars 30 June 2010 Income tax matters under dispute 37.39 Bank guarantees issued to the custom authorities 0.58 Bond to the Government of India for exemption of customs duty on imports 11.58 Contingent purchase consideration payable to ex-share holders of Watson SCS by 10.62 JYACC, Inc Total 60.17 For further details please refer the chapter titled “Outstanding Litigations, Material Developments and Other Disclosures” beginning on page number 250 of this Draft Red Herring Prospectus. Also please refer to “Annexure XIII – Details of Contingent Liabilities, as restated” forming part of the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. 3. Our Company had negative cash flows in recent fiscals. Our Company (on consolidated basis) had negative cash flows in Investing activities and Financing activities in the past three fiscals. The details of which is summarized below:

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Particulars

Net cash from /(used in) Operating Activities Net cash from /(used in) Investing Activities Net cash from /(used in) Financing Activities Net increase in Cash & Cash Equivalents

Year Ended March 31, 2008 178.47 33.73 (3.52) 208.68

Year Ended March 31, 2009 118.43 (840.50) 288.51 (433.56)

(Amount in Rupees million) Year Quarter Ended Ended March 31, June 30, 2010 2010 362.22 56.32 (230.45) (7.37) (125.68) (61.15) 6.09 (12.20)

We had negative cash flows from investing activities for Fiscal 2009 as there was a significant outflow on account of our acquisition of JYACC. On June 26, 2008, we acquired JYACC for which we made a payment towards initial consideration of US$ 25.63 million and the involved transaction cost of US$ 0.68 million. We also made a final payment towards Arsin’s acquisition due in December 2007 of US$ 0.98 million. The investments in Subsidiaries during Fiscal 2009 was of Rs.955.5 million. During Fiscal 2010, we made payments due towards our acquisition of JYACC of US$ 3.84 million and a final payment towards Arsin’s acquisition due in December 2008 of US$ 0.64 million. The investments in Subsidiaries during this fiscal aggregated to Rs.211.78 million. Our purchases of fixed assets during fiscals 2009, 2010 and for the quarter ended June 30, 2010 were of Rs.44.49 million, Rs.20.49 million and Rs. 6.78 million respectively. Our negative cash flows in financing activities during fiscal 2010 and for the quarter ended June 30, 2010 was on account of repayment of term loans. The term loan from ICICI Bank PLC, UK of US$10 million after deducting US$ 0.2 million as upfront interest payment i.e. Rs.404.30 million was drawn during Fiscal 2009. The two installments due on June 24, 2009 and December 24, 2009 of US$ 4 million (i.e. Rs.189.68 million) were paid during Fiscal 2010. Our third installment of US$ 2 million was due on June 24, 2010, i.e. Rs. 91.34 million which was paid during the quarter ended June 30, 2010. There were interests paid towards outstanding loan of Rs.20.48 million, Rs.31.78 million and Rs.7.93 million during fiscals 2009, 2010 and for the quarter ended June 30, 2010 respectively. For further details please refer to “Annexure III – Statement of Consolidated Cash Flows, as restated” forming part of the chapter titled “Financial Statements” and chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on pages 159 and 221 respectively of this Draft Red Herring Prospectus. 4. We have in the past entered into related party transactions and may continue to do so in the future. We have, in the course of our business, entered into transactions with related parties that include entities forming part of our Promoter Group and Group Companies. The cumulative figure of related party transactions for the last three financial years ended March 31, 2008, 2009, 2010 and for the quarter ended June 30, 2010 is as follows: (Amount in Rupees million) Year Quarter Ended Ended March 31, June 30, 2010 2010 5.19 1.54 (1.64) 22.57 0.33 0.29

Nature of transaction

Remuneration and allowances to Directors / KMPs Loans and advances-repaid Loan from Key Management Personnel Interest on loan from Key Management Personnel

Year Ended March 31, 2008 4.55 -

Year Ended March 31, 2009 5.17 (0.83) -

While we believe that all such transactions have been conducted on an arms-length basis and contain commercial terms, there can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with related parties. Furthermore, it is likely that we will continue to enter into related party transactions in the future. There can be no assurance that such transactions, individually or in

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the aggregate, will not have an adverse effect on our financial condition and results of operations. For more information regarding our related party transactions, see the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. Further, our business is expected to involve transactions with such related parties in the future. 5. Our Corporate Promoter had negative net worth and has incurred losses in the past. Our Corporate Promoter, Icon Investments Limited, had negative net worth and has incurred losses in the immediately preceding three fiscals. (Amount in Rupees million) For the year ended For the year ended December 31, 2008 December 31, 2009 (0.18) (0.34) (0.48) (0.78)

Particulars Profit / (Loss) after tax Net Worth

For the year ended December 31, 2007 (0.65) (0.23)

There can be no assurance that Icon Investments Limited will not incur further losses or have a negative net worth in the future. For further details of the financials of Icon Investments Limited please refer to the chapter titled “Our Promoters, Promoter Group and Group Companies” on page 151 of this Draft Red Herring Prospectus. 6. Our revenues are highly dependent on clients located in the United States. Economic slowdowns and other factors that affect the economic health of the United States may affect our business. The majority of our revenues are derived from clients located in the United States. For the quarter ended June 30, 2010, and for the Fiscal 2010 and Fiscal 2009, 87.6%, 77.0% and 78.3%, respectively, of our aggregate revenues were derived from the clients located in the United States. Consequently, in the event of any economic slowdown in the United States, our clients may reduce or postpone their IT or software spending significantly, which may in turn, reduces the demand for our services and negatively affects our business, financial condition and results of operations. Our revenues from Application Services and IVV have always been from the United States. However, since Fiscal 2010 Application Services is deriving more revenues from the APAC region than that from the United States. Prolifics’ majority revenues had been from the United States. However, through Prolifics, since Fiscal 2009 we have been generating revenues from both UK and Germany markets also. We intend to replicate our service delivery model in the potential markets outside the United States as one of our growth strategies viz. ‘Globalisation’ is to take our existing services to newer markets, which holds significant opportunities and synergies for a business model like ours. For further details please refer to the paragraph ‘Revenue Segmentation’ under the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 221 of this Draft Red Herring Prospectus. 7. Our clients operate in a limited number of industries. Factors that adversely affect these industries or product spending by companies within these industries may adversely affect our business. We derive a large proportion of our revenues from clients that operate in a limited number of industries. For the quarter ended June 30, 2010, and for the Fiscal 2010 and Fiscal 2009, we derived 37.5%, 38.2% and 41.2%, respectively, of our aggregate revenues from clients operating in BFSI. BFSI remains the key vertical where we deliver majority of our revenues followed by Hi-tech, Healthcare and Retail. However, as one of our growth strategy of ‘Verticalisation’ we are broadening our industry-specific service offerings which would significantly expand our market out-reach as well as strengthen our brand identity. Any significant decrease in IT or software spending or outsourcing by clients in this industry or other industries from which we derive significant revenues in the future may reduce the demand for our services. Further, any significant decrease in the growth of these industries, or any significant consolidation in these industries, or any decrease in growth or consolidation in other industry segments in which we operate, may significantly reduce the demand for our services, and adversely affect our business and profitability.

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For further details please refer to the paragraph ‘Revenue Segmentation’ under the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 221 of this Draft Red Herring Prospectus. 8. We derive a significant portion of our revenues from a limited number of clients. The loss of, or a significant reduction in the revenues we receive from, one or more of these clients, may adversely affect our business. We derive a significant portion of our revenues from a limited number of large corporate clients. For the quarter ended June 30, 2010, and for Fiscal 2010 and Fiscal 2009, our top ten clients accounted for 62.1%, 53.0% and 50.5%, respectively, of our revenues. Likewise, for the quarter ended June 30, 2010, and for the Fiscal 2010 and Fiscal 2009, our top client accounted for 23.6%, 14.5% and 18.0%, respectively, of our revenues. Though these clients appear as one of our top 10 clients we either have continued business from them over the years or have multiple projects undertaken at any point of time. Nevertheless, our clientele is broad-based, for instance we served over 400 client accounts in the Fiscal 2010, and we continue to enhance our synergies exploring cross-selling opportunities available to us through both Arsin and Prolifics. Further, though our revenues appear concentrated amongst our top ten clients, these top ten clients have been varying each year depending on the volume of potential business with them. Further, since there is significant competition for the services we provide, and we are not an exclusive service provider to our major clients, the level of revenues from our major clients could vary from period to period. Our major clients typically retain us under master services agreements that do not provide for specific amounts of guaranteed business. These agreements, as well as the project assignments received under these master services agreements, are typically terminable by our clients upon short notice and without significant penalties. The loss of one or more major clients, or a significant reduction in the revenues that we receive from one or more of our major clients, may adversely affect our business and profitability. For further details please refer to the paragraph ‘Revenue Segmentation’ under the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 221 of this Draft Red Herring Prospectus. 9. We are dependent upon our business relationship with IBM, which could be terminated on short notice. A significant portion of our revenues are derived directly or indirectly from our business relationship with IBM. In addition, many of our major customer relationships are directly or indirectly attributable to our involvement in transactions involving that customer and IBM. Our agreements with IBM, including the agreements permitting us to act as subcontractor and to remarket IBM software, are generally terminable on 90 days’ prior notice or less. If IBM were to terminate or materially curtail its business with us, we would likely experience a significant reduction in revenues, which would materially and adversely affect our business and profitability. 10. We are subject to risks arising from foreign exchange rate movements. Our exchange rate risk primarily arises from our foreign currency revenues, receivables, payables and other foreign currency assets and liabilities. On consolidated basis, we have significant revenues and expenditures in foreign currencies especially US$. The foreign exchange fluctuation affects both the revenues and expenditures in absolute terms when converted into Indian rupees. To this extent, the revenues and expenditures will be higher or lower depending on the depreciation or appreciation of Indian Rupee in foreign currency terms. We expect that a majority of our revenues will continue to be generated in US$ for the foreseeable future. Foreign Exchange gain / (loss), credited / (debited) to Profit and Loss Account for the Fiscal 2008, 2009 and 2010 and for the quarter ended June 30, 2010 were loss of Rs.41.67 million, gain of Rs.78.65 million, loss of Rs.14.79 million and gain of Rs.0.49 million respectively, which represented 4.5%, 3.1%, 0.4% and 0.02% of our total revenues, respectively. Foreign Currency Translation Reserve Account balances as on March 31, 2008, 2009 and 2010 and as on June 30, 2010 were Rs.10.29 million (debit), Rs.124.42 million, Rs.19.50 million (debit) and Rs.25.11 million, respectively.

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The exchange rate between the Indian Rupee and the United States Dollar has been volatile in recent years and may fluctuate in the future. Therefore, changes in the exchange rate between the Indian Rupee and the US$ may have a material adverse effect on our revenues, other income, cost of services, operating costs and net income, which may in turn have a negative impact on our business, operating results and financial condition. For further details please refer to the paragraph ‘Foreign Exchange Risk’ under the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 221 of this Draft Red Herring Prospectus. 11. Our indebtedness and the conditions and restrictions imposed by our financing agreements could adversely affect our ability to conduct our business and operations. Our financing arrangements are secured by our assets. There are certain restrictive covenants in the financing agreements we have entered into with banks and financial institutions for loans and advances. These restrictive covenants inter alia require us to obtain either the prior permission of such banks or financial institutions or require us to inform them of various activities, including, among others, alteration of our capital structure, raising of additional equity or debt capital, incurrence of indebtedness, payment of dividends, undertaking any merger, amalgamation, restructuring or changes in management. Our ability to execute expansion plans, including our ability to obtain additional financing on terms and conditions acceptable to us, could be negatively impacted as a result of these restrictions and limitations. In the event that we breach a restrictive covenant, our lenders could deem us to be in default and seek early repayment of loans. An event of default would also affect our ability to raise new funds or renew maturing borrowings as needed to conduct our operations and pursue our growth initiatives. Although we have received consents from our lenders for the Fresh Issue, these restrictive covenants may affect some of the rights of our shareholders. For further details please refer to the chapter titled “Financial Indebtedness” beginning on page 244 of this Draft Red Herring Prospectus. 12. Any inability to manage our growth could disrupt our business and reduce our profitability. We have experienced significant growth in recent years. Our consolidated revenues have grown from Rs. 935 million for the Fiscal 2008, to Rs.2,523 million for the Fiscal 2009, to Rs.3,608 million for the Fiscal 2010, in large part due to strategic acquisitions in the recent past. These strategic moves have benefitted us in our financial performance and have enabled us to grow at 5 year CAGR (ending Fiscal 2010) of over 70% in our revenues and about 37% and 26% in our EBITDA and Profits After Tax respectively. These acquisitions, as well as any future organic growth and other acquisitions, place significant demands on our operational, financial and internal controls across the organization. In particular, continued expansion increases the challenges we face in recruiting, training and retaining sufficient skilled, technical, sales and management personnel; adhering to our high quality and process execution standards; maintaining high levels of client satisfaction; managing a larger number of clients in a greater number of industry sectors; integrating expanded operations while preserving our culture, values and entrepreneurial environment; and developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, and other internal systems. If we are unable to properly manage our growth, it could have an adverse effect on our business, results of operations and financial condition. For further details on our financial performance please refer to the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 221 of this Draft Red Herring Prospectus. 13. We have capital commitments to our Subsidiaries and any failure in performance, financial or otherwise, of our Subsidiaries in which we have made investment could have a material adverse effect on our reputation, business, prospects, financial condition and results of operations of our Company. Our Company has made and continues to incur capital investments and other commitments either at the company level or directly in its Subsidiaries for augmenting their respective businesses. These investments and

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commitments may include capital contributions to enhance the financial condition or liquidity position of our Subsidiaries. Our Company has made acquisitions and may make further capital investments in the future, which may be financed through additional debt, including through debt of our Subsidiaries. If the business and operations of these Subsidiaries deteriorate, our Company’s investments may be required to be written down or written off. Additionally, certain advances may not be repaid or may need to be restructured or receivables may not be collected or our Company may be required to outlay further capital under its commitments to support such companies. The details of our investments, outstanding advances to and receivables from our Subsidiaries as on June 30, 2010 is as follows: (Amount in Rupees million) Subsidiaries Nature of Transactions Amount Arsin Corp. Investments 139.03 Sundry debtors 44.57 JYACC Sundry debtors 4.60 SSTNA Loans and advances 421.63 Investments 688.64 Total 1,298.47 14. We may be subject to third party claims of intellectual property infringement. There has been a substantial amount of litigation in the software industry regarding intellectual property rights, and it is possible that in the future, third parties may claim that the software solutions we develop infringe their intellectual property rights. Although we generally include contractual limitations on our liability to our customers, these limitations may not be sufficient to fully protect us against any such claim. We may be more vulnerable to patent claims, since we do not have any issued patents that we can assert defensively against a patent infringement claim. Any claims, with or without merit, could be time consuming, result in costly litigation or require us to enter into burdensome royalty or license agreements. For further details please refer to the chapters titled “Government and Other Approvals” beginning on page 259 of this Draft Red Herring Prospectus. 15. We have applied for registration of certain trademarks which are pending before the Trade Marks Registry, Chennai. If any of our applications for registration are not accepted or if any order against us is passed in the oppositions filed, we may lose the statutory protection available to us under the Trade Marks Act, 1999 for such trademarks. JYACC has also made an application for registering it’s trademark, ‘Panther’. Since its inception, our Company has invested considerable resources in building and providing services through proprietary service accelerators. We have invested in building proprietary tools including PPM Studio and Effecta Framework. We leverage high quality processes and project management capabilities through these pre-built toolsets. These toolsets enhance our ability to rapidly service client requirements, provide the right and committed resources both onsite and offshore. Access to an available array of toolsets enables us to dramatically reduce the cycle time for service delivery while significantly improving quality, and serves as a critical competitive differentiator. We are uniquely differentiated in our ability to provide transparency and visibility to our customers on project execution. We have filed applications for registering trademarks, namely ‘Arsin’, ‘Code Immunizer’, ‘eRecruiter’, ‘Job ‘a’ Fair’, ‘Prolifics’, ‘SemanticSpace’, ‘SST’, ‘PPM Studio’ and ‘Effecta’. These applications are pending with the Trade Marks Registry, Chennai. There can be no assurance that our trade mark applications will be accepted and the trade marks will be registered. Further, our applications for the registration of the trade marks may be opposed by third parties and we may have to incur significant cost and spend time in litigations in relation to these oppositions. In the event we are not able to obtain the trade marks registration of our Company, we may not be able to avail the legal protection and legal remedies (in case of infringement) available as a proprietor of registered trademarks. For further details regarding the same, please refer chapter titled “Government and Other Approvals” beginning on page number 259 of this Draft Red Herring Prospectus.

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JYACC had registered its trademark for its product “Panther” which was valid till June 2010 and an application dated October 13, 2010 has been made for registering it with the United States Patent and Trademark Office. In the event we are held liable for infringing on any third party’s intellectual property rights, we could be required to refund payments to customers, pay substantial damages, develop non-infringing technology, obtain licenses, or cease utilizing the applications that contain the infringing technology. We may be unable to develop noninfringing technology or to obtain licenses on commercially reasonable terms, or at all. Thus, we have a limited ability to protect our intellectual property rights, and unauthorized parties could infringe upon or misappropriate our intellectual property. For further details please refer to the chapters titled “Our Business” and “Government and Other Approvals” beginning on pages 76 and 259 respectively of this Draft Red Herring Prospectus. 16. We operate on leased and licensed premises and therefore our operations and in turn our profitability will be adversely affected if the leases and licenses are not renewed, or there is any disruption in business activities due to deficiency of title of the leased properties. All the offices through which we operate our business are taken by us on lease through various lease and license agreements with third parties. We may in the future enter into further such arrangements with third parties. Any adverse impact on the title, ownership rights and/or development rights of our landlords from whose premises we operate, or breaches of the contractual terms of such leave and license agreements, may impede our operations. The premise which acts as our Registered Office is also on lease basis. In the event such leases or licenses are not renewed, or there is any disruption in our business activities due to deficiency of title, our operations and in turn profitability will be adversely impacted. For further details on all of our leased premises please refer to chapter titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus. 17. Our success depends significantly upon our senior management team and in an event of their leaving us would adversely impact our business, revenues and profitability. In the recent past, we have made a couple of strategic acquisitions which as our foreign Subsidiaries contribute to the majority of our business and our revenues. We are highly dependent on the senior management of these foreign Subsidiaries and the team of highly qualified professionals working with them who have significant influence on our client relationships and business. Our business model is reliant on the efforts and initiatives of our senior level management and our key managerial personnel, few of whom have been with these foreign Subsidiaries for a significant number of years. Attracting and retaining talented professionals is the key to our business growth. If one or more members of our senior management team were to leave their present positions, it may be difficult to find adequate replacements and our business could be adversely affected. In this regard, we cannot assure you that we will be able to retain our skilled senior management or managerial personnel or to replace them in the event of their leaving us. For further details on all of our key managerial personnel please refer to paragraph titled “Our Key Managerial Personnel” in the chapter titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus. 18. Some of our Key Managerial Personnel have interests in the Company beyond the remuneration and other benefits payable to them as employees of our subsidiary, JYACC. Our Key Managerial Personnel, Mr. Nicolas Jabbour and Mr. Michael Chadwick are employees of our subsidiary, JYACC, appointed vide an employment agreement dated June 26, 2008. Apart from receiving basic remuneration and other benefits linked with employment, they are also entitled to receipt of an amount towards deferred sale consideration, due to them, pursuant to our acquisition of JYACC. Both Mr. Jabbour and Mr. Chadwick were the erstwhile shareholders of JYACC and had received an initial payment of US$ 11.05 million towards the Class A Preferred shares held by them in the year 2009. Subsequently they received US$ 0.36 million as further payment due to them towards the acquisition in the year 2010 and are due to receive a further payment in the year 2011. As such, Mr. Jabbour and Mr. Chadwick are deemed to be interested towards the

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aforesaid amount over and above their employment benefits. Non-receipt of the aforementioned amount could adversely affect their performance thereby affecting our business and results of operations. For further information with regards to the acquisition of JYACC and the earn outs payable to Mr. Jabbour and Mr. Chadwick, kindly refer to the chapters titled “History and Certain Corporate Matters” and the paragraph titled “Payment of Benefits to Officers of our Company (non-salary related)” in the chapter titled “Our Management’ beginning on pages 117 and 132 respectively of this Draft Red Herring Prospectus. 19. We face significant competition for highly skilled professionals, and our success depends in large part upon our ability to attract and retain these personnel. Any inability on our part to attract and retain our key managerial personnel and/or talented professionals may adversely affect our business and results of operations. Our ability to execute projects and to obtain new clients depends largely on our ability to attract, train, motivate and retain highly skilled software professionals. The attrition rates in the industry in which we operate have been high due to a highly competitive skilled labor market. For the quarter ended June 30, 2010 and for our fiscal year ended March 31, 2010, our unmanaged attrition rates were 16.7% and 17.7%, respectively. We invest significant time and money in training the professionals that we hire to perform the services we provide. These professionals are often targeted by the lateral recruitment efforts of our competitors, and in some cases by our customers. We believe that there is also a significant competition in our industry among employers to attract software professionals with the skills necessary to perform the services we offer. In addition, we may have difficulty redeploying and retraining our software professionals to keep pace with continuing changes in technology, evolving standards and changing client preferences. If we cannot hire and retain additional qualified personnel, our ability to bid on and obtain new projects may be impaired and our revenues could decline. In addition, we may not be able to expand our business effectively thereby affecting our revenues and profitability. For further details on all of our key managerial personnel please refer to paragraph titled “Our Key Managerial Personnel” in the chapter titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus. 20. We operate in a highly competitive environment. Any failure to compete effectively may have a material adverse effect on our business and operations. The markets for IT services are rapidly evolving and highly competitive. We face competitive pressure from a broad spectrum of Indian and international IT services companies. We expect that competition will continue to intensify both through the entry of new players and consolidation of existing players. Some of our competitors may have greater financial resources, technical and marketing resources and generate greater revenues, and therefore may be able to respond better to market changes than we can. We believe that our ability to compete depends on a number of factors beyond our control, including the ability of our competitors to attract, train, motivate and retain highly skilled technical employees, the price at which our competitors offer comparable services and the extent of our competitors’ responsiveness to client needs. Our inability to adequately address competitive pressures may have a material adverse effect on our business, prospects, financial condition and results of operations. Our business model, however, is quite unique as compare to several of our peers who rely on scale and labour cost arbitrage. The distinctiveness of our business model is reflected in the quality of competition we face while bidding for new business. Our analysis of the marketplace is that there is a unique opportunity for innovative technology providers who can artfully combine application frameworks, interchangeable components, custom development and smart governance to assemble solutions. We believe the marketplace will increasingly demand specialized skill-sets and reward flexibility and creative problem solving. Hence, our business model of focusing on pre-built value could prove to be game-changer in a global economy leaning strongly in favor of cost and time efficiency as well as risk mitigation.

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21. Our business is built on and around certain technologies and is highly driven by changes and developments in these technologies. Failure to keep pace with changes in technology could negatively impact our business and our revenues. Our Subsidiary, Prolifics, is a premier-level IBM partner and one of the system integrators specialising exclusively in IBM technologies. The Prolifics business is dedicated to design, build and manage enterprise applications that utilize the IBM software portfolio and concentrates on IBM technologies environment. IT services markets are characterised by rapid technological changes, evolving industry standards, changing client preferences and new service introductions. Our future success will depend on our ability to anticipate these technological changes / advances. We may not be successful in anticipating or responding to these advances on a timely basis or, if we do respond, the services or technologies we develop may not be successful in the marketplace. Furthermore, services or technologies that are developed by our competitors may render our services uncompetitive or obsolete. At the company level, however, we are uniquely positioned and well balanced from a technology skill concentration perspective. While Prolifics is exclusively focused on IBM technologies, our SST service line provides Microsoft and Open Source skills and our other Subsidiary Arsin is focused on testing related technologies. In future, we may explore acquisitions to give a fillip to our growth plans and we may bring up another tower of technology competence. 22. We have undertaken and intend to undertake acquisitions and / or other strategic initiatives, which may prove to be difficult to integrate and manage or may not be successful, and may result in increased expenses or write-offs. We completed our acquisitions of Arsin and Prolifics in the years 2006 and 2008 respectively. These acquired businesses contribute majority of our consolidated revenues. We are in the stage of ‘Consolidation’ and integrating these acquired businesses such that we can enjoy synergic benefits. This is intended to be achieved through account management program, exploring cross-selling opportunities or horizontal go-to-market campaigns. As part of our growth strategies of ‘Globalisation’ and ‘Verticalisation’ we intend to pursue further acquisitions and / or other strategic opportunities to enhance our capabilities and continue developing industry expertise, technical expertise and geographic coverage. We recently acquired JYACC, a company in the US which was sizeably larger than us. There is a business risk of us not being able to manage such acquisitions and about our inability to integrate their operations with our existing ones. Further, there is a possibility that such acquisitions and / or other strategic initiatives may eventually fail to obtain synergic benefits and / or tantamount to increased expenses, write-offs or other financial adverse impact on our business, revenues and thereby on our profitability. For further details please refer to the chapters titled “Our History and Certain Corporate Matters” and “Objects of the Issue” beginning on pages 117 and 38 respectively of this Draft Red Herring Prospectus. 23. We have several contractual obligations with our clients and if we are unable to meet our contractual obligations and / or our customers perceive any deficiency in service it will significantly impact our business and revenues and we may even face legal liabilities and damage to our professional reputation. The agreements that we enter into with our clients for the engagement of our services have several contractual obligations including confidentiality, protection against security breach, non-compete and insurance coverage. The engagements that we perform for our clients are often critical to our clients’ businesses. If our client’s proprietary rights are infringed by our employees in violation of any applicable confidentiality agreements and / or our customers perceive any deficiency in service, our customers may consider us liable for that act and seek damages from us. Our client contracts may require us to comply with certain security obligations including maintaining network security and back-up data, ensuring our network is virus free and verifying the integrity of employees that work with our clients by conducting background checks. Any failure in our client’s system or breach of security relating to the services we provide to the client could damage our reputation or result in a claim for substantial damages against us.

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A limited number of our existing service agreements and other agreements have non-compete clauses either restricting us or our employees from providing services to competitors of our existing clients or imposing “cooloff period” restrictions whereby our staff members who worked on a particular project for such a client are restricted from working on similar projects for their competitors for a prescribed period or our entering new markets where a business partner may already have a presence. Such clauses may restrict our ability to offer services to clients in a specific industry in which we have acquired expertise and may adversely affect our business and growth. Further, although we rotate our people to other unrelated assignments to negate the impact of the cool off period restrictions, we cannot assure you that such restrictions will not have an adverse effect on our business, financial condition and results of operations in the future. We face the risk of potential liabilities from lawsuits or claims by our clients. We cannot assure you that any limitations of liability or insurance coverage set forth in our service contracts is adequate, or will be enforceable in all instances, or will otherwise protect us from liability for damages in the event of a claim for breach of our obligations. Any additional insurance coverage may not be available in the future on reasonable terms or in amounts sufficient to cover large claims. Successful assertions of one or more large claims against us could have a significant adverse effect on our business, results of operations and financial condition. 24. Our insurance coverage may be inadequate to fully protect us from all losses. Our significant insurance policies consist of comprehensive coverage for risks relating to physical loss or damage as well as business interruption loss. For details on insurance coverage of our Company, please refer the chapter titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus. While we believe that the insurance coverage we maintain would reasonably be adequate to cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time. To the extent that actual losses incurred by us exceed the amount insured, we could have to bear substantial losses which may have a material adverse effect on our financial position. Further, though we maintain insurance in respect of our business, properties and employees in accordance with industry standards in India, there can be no assurance that such insurance will be sufficient to cover liabilities resulting from claims, losses or otherwise. 25. Our net income would decrease if the Government of India reduces or withdraws tax benefits and other incentives it currently provides us, or otherwise increases our effective tax rate. Our effective rate of tax was, 16.19% for quarter ended June 30, 2010 and 13.93%, 3.96% and 8%, for Fiscal 2010, Fiscal 2009 and Fiscal 2008 respectively. Currently, we benefit from certain tax incentives under Section 10 A of the Income Tax Act, 1961, for the IT services that we provide from specially designated “Software Technology Parks,” or STPs. The STP tax incentives currently include a ten year “tax holiday” from the payment of Indian corporate income tax for the operations of most of our Indian facilities. As a result of these incentives we enjoy partial exemption from Indian corporate income taxes in respect of profits derived from exported Information Technology Services and products. Pursuant to the Finance Act, 2009, this tax holiday will continue until March 31, 2011. A substantial portion of our profits is, therefore exempt from income tax. When our tax benefits expire or terminate, our tax expense is likely to materially increase, reducing our profitability after tax. Further, we would also be entitled to tax holiday for our proposed development centre situated at DLF Cyber City, Gachibowli, Hyderabad , in case of the entire income earned from export of software under Sec 10AA of the Income Tax Act, as a Special Economic Zone (SEZ) Unit. With effect from April 1, 2007, we are exposed to the Minimum Alternative Tax (MAT) on our book profits as per provisions of section 115JB of the Income Tax Act. However, we are entitled to claim set-off against future tax liability of an amount equal to the excess of MAT paid over actual income-tax liability for the year. Effective April 1, 2010, the rate of MAT has been enhanced from 15% to 18%.

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Any increases in our effective tax rate as a result of the expiration of tax benefits we currently enjoy, any changes in applicable tax laws or changes in the actions of applicable income tax or other regulatory authorities could materially reduce our profitability. 26. Salary pressures may prevent us from sustaining our competitive advantage and may reduce our profit margins. We seek to maintain salary levels in accordance with prevailing trends in our industry. Salary costs in India have historically been significantly lower than salary costs in the United States and Europe for comparably skilled professionals, which has been one of our competitive strengths. However, salary increases in India may prevent us from sustaining this competitive advantage and may negatively affect our profit margins. Salary in India are increasing at a faster rate than in the United States, which could result in increased costs for software professionals, particularly project managers and other mid-level professionals, thereby eroding one of our principal cost advantages over companies in US and other developed countries. We may need to continue to increase the levels of our employee compensation to remain competitive and manage attrition. For further details please refer to the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 221 of this Draft Red Herring Prospectus. 27. Our fixed-price contracts may expose us to risks beyond our control, which could reduce our profitability. We provide services either on a fixed price basis, where we provide our services for a fixed price and agree to complete the project within a fixed time, or on a time and materials basis, where we charge based on the number of people dedicated and the effort invested in the project. Although we use our past project experience and contractual provisions to reduce the risks associated with estimating, planning and performing fixed-price projects, we bear the risk of cost overruns and completion delays in connection with these projects. Many of these risks are beyond our control. Any failure to accurately estimate the effort including the number of people and time required for a project or any failure to complete our contractual obligations within the time frame committed could adversely affect our revenues and profitability. 28. We are at risk of termination of our contracts pursuant to a short notice period with no penalty. Our clients typically retain us through non-exclusive service contracts. These contracts are typically terminable by the client without cause on a short notice period. As a result, our contracts may be terminable due to circumstances beyond our control, such as changed strategic software requirements of the customer, financial constraints of the customer, a more competitive option offered by a competitor, a change in policy regarding outsourcing by the customer or a perceived failure to provide services and products as required by the customer. Additionally, our service agreements with clients are typically without any commitment to a specific volume of business or future work. There can therefore be no certainty that our revenue flow at a particular point of time will be sustained through a particular fiscal year or into the next fiscal year. 29. Delays or defaults in client payments could result in a reduction of our profits. We regularly commit resources to projects prior to receiving advances or other payments from clients in amounts sufficient to cover expenditures on projects as they are incurred. We may be subject to working capital shortages due to delays or defaults in client payments. If clients default in their payments on a project to which we have devoted significant resources or if a project in which we have invested significant resources is delayed, cancelled or does not proceed to completion, it could have a material adverse effect on our business, financial condition and results of operations. For the Fiscal 2010 and Fiscal 2009, the Company provided for/wrote off amounts of Rs. 9.74 million and Rs. 15.57 million, respectively, on account of bad and doubtful debts. 30. Significant security breaches in our computer systems and network infrastructure and fraud could adversely impact our business. We seek to protect our computer systems and network infrastructure from physical break-ins as well as security breaches and other disruptive problems. Computer break-ins and power disruptions could affect the security of

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information stored in and transmitted through these computer systems and networks. To address these issues and to minimize the risk of security breaches we employ security systems, including firewalls and intrusion detection systems, conduct periodic penetration testing for identification and assessment of potential vulnerabilities and, use encryption technology for transmitting and storing critical data such as passwords. However, these systems may not guarantee prevention of frauds, break-ins, damage and failure. A significant failure in security measures could have an adverse effect on our business. 31. Some of our agreements may be inadequately stamped and some of our immovable properties may have certain irregularities in title, as a result of which our operations may be impaired. As on the date of this Draft Red Herring Prospectus, our Company and our Subsidiaries utilize nineteen premises as our offices, for storage purposes and as guest houses on a lease / leave and license basis. The same are detailed in the paragraph titled “Our Properties” in the chapter titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus. Our ability to use these premises depends on continuation of the respective leases / licenses and their timely renewals. In the event of premature / unforeseen termination of any of the agreements, we will need to make alternate arrangements, which may adversely affect our operations in the interim. Further, though our Company or our Subsidiaries have previously not been subject to litigation with respect to irregularities in the title of properties owned / leased by our Company; we may not be able to assess or identify certain risks and liabilities associated with the irregularities of title such as inadequate stamping and/or non registration of deeds and agreements, non execution of lease deeds and non renewal of lease agreements. The un-registered documents / inadequately stamped documents cannot be received as evidence in legal proceedings under the Registration Act, 1908 and we may not be able to adequately protect our interest, unless the same are registered. In such a situation, the Company and / or our Subsidiaries may lose such premises if any eviction proceedings succeed against the Company and / or our Subsidiaries. Such eviction may adversely affect the business, operations and profits of the Company and / or our Subsidiaries. Risks related to Objects of Fresh Issue 32. Our funds requirements are based on internal management estimates and on the basis of quotations obtained, wherever possible, and have not been independently appraised by any bank or financial institution. Any increase in the actual deployment of funds may cause an additional burden on our finance plans. Further, we have not entered into any definitive agreements to utilize a portion of the proceeds of the Fresh Issue. Any failure to enter into arrangements on favorable terms and conditions, in a timely manner or at all, may have an adverse affect on our business and financial results. We intend to utilize part of the proceeds of the Fresh Issue, i.e. Rs. 454 million towards investments in proprietary toolsets / service accelerators, an additional Offshore Delivery Centre and acquisition and other strategic initiatives. These fund requirements are based on internal management estimates and on the basis of quotations obtained, wherever possible, and have not been appraised by any bank or financial institution. This is [●]% of our total objects funded through the proceeds of the Fresh Issue. These are based on current conditions and are subject to change in light of changes in external circumstances or costs or in other financial conditions, business strategy, etc. With increase in costs, our actual deployment of funds may exceed our estimates and may result in cost overrun and cause us an additional burden on our finance plans. Further, we have not entered into any definitive agreements to utilize portion of the proceeds of the Fresh Issue towards these objects. With regards to acquisition and other strategic initiatives for which we have estimated Rs. 300 million, we have not finalized any target acquisitions / strategic plans as of date. However, we have identified the areas of opportunities and are in the process of evaluating targets and investment options in this regards and intend to consummate this by end of Fiscal 2012. Further, we have estimated capital expenditures to the extent of Rs. 64.9 million for an additional Offshore Delivery Centre for which we are still in the process of identifying space and have not entered into definitive agreement / understanding. We have plans to invest Rs. 89.1 million in the proprietary toolsets / service accelerators which will enhance our service deliveries for which again we don’t have any definitive arrangements as on the date of filing this Draft Red Herring Prospectus.

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Pending use of the funds for these purposes, we intend to invest the funds in high quality, interest/dividend bearing liquid instruments, including deposits with banks. As on the date of this Draft Red Herring Prospectus, we have neither entered into any definitive agreements for these objects nor have we incurred any expenses towards the same. Any delay or failure to enter into arrangements on favorable terms and conditions, in a timely manner or at all, may have an adverse affect on our business and financial results. For further details please refer the chapter titled “Objects of the Issue” beginning on page 38 of this Draft Red Herring Prospectus. 33. Our Company may face risks of delays / non-receipt of the requisite regulatory approvals or licenses for any of our objects funded through the proceeds of the Fresh Issue. Of the proceeds of the Fresh Issue, we propose to use Rs.300 million for acquisitions and other strategic initiatives. We have not yet entered into any letter of intent or definitive/contractual commitment for any acquisition, investment or joint venture as on the date of this Draft Red Herring Prospectus. However, we have identified the areas of opportunities and are in the process of identifying such companies/ entities which are complementary to our requirement of further growth. In the event that our Company plans to acquire an overseas entity, our Company may be required to obtain the prior approval of the RBI, other regulators and/or the Government of India and there can be no assurance that such approvals will be obtained in a timely manner or at all. Any delay/non-receipt of licenses and or approvals that may be required for the proposed acquisition / strategic initiative could result in cost and time overrun, and could have an adverse impact on our operations. 34. There can be delay in the implementation schedule of the objects for which the funds are being raised in this Fresh Issue. This may affect our financial condition and results of operation. We intend to utilize part of the proceeds of the Fresh Issue, i.e. Rs.454 million towards investments in proprietary toolsets / service accelerators, an additional Offshore Delivery Centre and acquisition and other strategic initiatives. With regards to acquisition and other strategic initiatives for which we have estimated Rs.300 million, we have not finalized any target acquisitions / strategic plans as of date. Further, we have estimated capital expenditures to the extent of Rs.64.9 million for an additional Offshore Delivery Centre and plan to invest Rs.89 million in the proprietary toolsets / service accelerators for which again we don’t have any definitive arrangements as on the date of filing this Draft Red Herring Prospectus. There can be delay in the implementation schedule of the objects for which the funds are being raised in this Fresh Issue. This may affect our financial condition and results of operation. For further details please refer the chapter titled “Objects of the Issue” beginning on page 38 of this Draft Red Herring Prospectus. 35. Our Company may be unable to consummate strategic acquisition(s) and/or make investments. Our inability to manage such acquisition(s) timely could have an adverse effect on our business, financial condition and profitability. Of the proceeds of the Fresh Issue, we propose to earmark Rs.300 million for acquisitions and other strategic initiatives wherein we have not identified targets / strategic plans as on the date of filing of this Draft Red Herring Prospectus. Though we have successfully made such acquisitions in the recent past, there can be no assurance that we will be able to execute our strategies on time and within the estimated budget, or that we will meet the expectations of our targeted clients. We have mandated a Financial Advisor to identify suitable acquisition target(s), however, we cannot assure that we would be able to consummate acquisitions or conclude such definitive agreements on terms acceptable to us, or if at all. We cannot assure that our acquisitions, if any, would be at an optimum price, or that the same will not turn out to be overpriced or overvalued, which may adversely affect our projected returns in relation to such acquisition. Further, the inability to identify the right acquisition targets could lead to consequential difficulties like integration of business of both partners, including its operations, personnel, technology and software. In addition to the above, potential acquisitions could involve a number of specific risks, including diversion of management’s attention, higher costs, unanticipated events or circumstances, legal liabilities, failure of the business of the acquired company, fall in value of investments and amortization of acquired intangible assets, some or all of which could have a material adverse impact on our business, financial condition and results of

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operations. In the event of an overseas acquisition, our Company may be required to obtain the prior approval of the RBI, other regulators and/or the Government of India and there can be no assurance that such approvals will be obtained in a timely manner or at all. For further details please refer the chapter titled “Objects of the Issue” beginning on page 38 of this Draft Red Herring Prospectus. 36. The deployment of the proceeds of the Fresh Issue is entirely at our discretion and will not be subject to any monitoring by any external, independent or a Monitoring Agency but through our Board of Directors. There will be no external, independent or a Monitoring Agency which would monitor the utilization of the proceeds of the Fresh Issue. However, our Board will monitor the utilization of these proceeds. We will disclose the details of their utilization, including interim use, under a separate head in our financial statements specifying the purpose for which such proceeds have been utilized or otherwise disclose as per the disclosure requirements of our listing agreements with the Stock Exchanges and in particular clause 49 of the Listing Agreement.

Risks related to Our Equity Shareholders and Our Equity Shares 37. The Offer for Sale proceeds will not be available to us. This Issue includes an Offer for Sale of 2,127,272 Equity Shares aggregating to Rs. [●] million by the Selling Shareholders. The object of the Offer for Sale is to carry out the disinvestment of 2,127,272 Equity Shares by the Selling Shareholders. Therefore, the proceeds to the Offer for Sale shall be remitted to the Selling Shareholders and our Company will not benefit from such proceeds. 38. We have, in the past, relied on one of the Promoters to provide guarantee to our lender to assist us in funding our acquisition which may not necessarily be available in the future. We have been dependent on one of the Promoters’ guarantee provided to our lender for a recent acquisition. This assistance proved instrumental to our growth and in procuring debt facility from our banker. However, the Promoter may not commit to provide such forms of credit support on a going-forward basis. Although we expect that in the future such forms of credit support will be unnecessary in light of our improved liquidity due to the completion of this Fresh Issue, as well as increased revenues as our existing business matures on account of consolidation, we may be unable to obtain future funds from lenders on favourable terms or at all without such support, and without such support our strategic initiatives/ expansion plans may be curtailed. 39. We are likely to be controlled by our Promoters and Promoter Group so long as they control a significant percentage of our Equity Shares. After the completion of the Issue, subject to full subscription of the Issue, our Promoters and Promoter Group will collectively hold 50.36% of our issued subscribed and paid-up share capital of our Company. As a result, our Promoters and Promoter Group will have the ability to exercise significant control over our Company and all matters requiring shareholder approval, including election of directors, our business strategy, and policies and approval of significant corporate transactions such as mergers and business combinations. The extent of their shareholding in our Company may also delay, prevent or deter a change in control, even if such a transaction is beneficial to our other shareholders. The interests of our Promoters and Promoter Group as our controlling shareholders could also conflict with our interest or the interests of our other shareholders. 40. We have in the last 12 months, issued Equity Shares at a price that could be lower than the Issue Price. We issued 150,943 fully paid up Equity Shares of Rs.10/- each per share for cash at a premium of Rs.122.50 per share on preferential basis on January 1, 2010. Besides, this, we have in the last 12 months, not issued Equity Shares at a price that could be lower than the Issue Price. For details, refer to the chapter titled “Capital Structure” beginning on page 20 of this Draft Red Herring Prospectus.

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41. Any further issuance of Equity Shares by our Company or sales of Equity Shares by any of our significant shareholders may lead to dilution of investor’s shareholding in our Company and adversely affect the trading price of the Equity Shares. Any future issuance of Equity Shares by our Company could dilute existing shareholders ownership. Any such future issuance of Equity Shares or sales of Equity Shares by any of our significant shareholders may also adversely affect the trading price of the Equity Shares, and could impact our ability to raise further capital through an offering of our securities. After the completion of the Issue, our Promoters will own, directly and indirectly, approximately 48.82% of the issued subscribed and paid-up share capital of our Company. Sales of a large number of our Equity Shares by our Promoters could adversely affect the market price of our Equity Shares. There can be no assurance that we will not issue additional Equity Shares or that our significant shareholders will not dispose of, pledge or otherwise encumber their Equity Shares. We have also issued employee stock options to certain of our employees. To the extent such outstanding employee stock options are exercised, there will be further dilution to investors in this Issue. Any future equity issuances by us or issuances of stock options under an employee stock option plan may lead to the dilution of investor shareholding in our Company or affect the trading price of the Equity Shares of our Company. 42. Our revenues, expenses and profits may vary significantly from period to period, and could cause the market value of our Equity Shares to decline. Our operating results may vary significantly from period to period. A major portion of any period’s revenues is derived from existing customers, and revenue is therefore highly dependent upon project start-and-stops and customer-specific situations. In addition, revenue from new customers also varies from period to period. Factors that may cause our revenues, expenses or profits to fluctuate include variations in the duration, size, timing and scope of our projects; changes in the ratio of onsite and offshore services; pricing policies; unanticipated attrition and the time required to hire, train and productively utilize new employees; loss of clients; increases in compensation of our employees; size and timing of expansion of facilities or other capital expenditures; contract terminations or deferrals of projects; variations in foreign exchange rates and changes in our employee utilization ratios. Many of these factors cannot be predicted with any accuracy. There are also a number of other factors outside our control that could cause fluctuations in our operating results, including currency exchange rate movements, the outcome of any tax, legal or regulatory review, action or litigation, and other general economic factors. 43. Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditures. Our Company has paid dividends in the past out of our earnings to its shareholders. The amount of our future dividend payments, if any, will depend upon our future earnings, financial condition, cash flows, working capital requirements and capital expenditures. There can be no assurance that we will be able to paying dividends in future. 44. You may not be able to sell immediately on an Indian stock exchange any of the Equity Shares you purchase in the Issue until the Issue receives the appropriate trading approvals Under the SEBI ICDR Regulations, we are permitted to allot equity shares within 12 Working Days of the Bid/Issue Closing Date. You can start trading in the Equity Shares only after they have been credited to your demat account and listing and trading permissions are received from the Stock Exchanges. Our Equity Shares will be listed on the NSE and the BSE. Pursuant to Indian regulations, certain actions must be completed before the Equity Shares can be listed and trading may commence. Investors’ book entry, or “demat”, accounts with depository participants in India are expected to be credited within two Working Days of the date on which the basis of allotment is approved by Designated Stock Exchange. Thereafter trading in the Equity Shares is expected to commence within 12 Working Days of the Bid Closure date. Further, there can be no assurance that

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the Equity Shares allocated to you will be credited to your demat account, or that the trading in Equity Shares will commence within the specified time periods. 45. There is no existing market for the Equity Shares, the Issue Price of our Equity Shares may not bear any relationship to the market price of our Equity Shares after the Issue and the price of the Equity Shares may be volatile and fluctuate significantly in response to various factors. Prior to this Issue, there has been no public market for our Equity Shares, and an active trading market on the Stock Exchanges may not develop or be sustained after the Issue. The Issue Price of the Equity Shares may bear no relationship to the market price of the Equity Shares after the Issue. The market price of our Equity Shares after this Issue will be subject to significant fluctuations in response to, among other factors:  variations in our operating results and the performance of our business;  adverse media reports about us or the travel or vacation ownership industry;  regulatory developments in our target markets affecting us, our clients or our competitors;  changes in financial estimates by securities research analysts;  addition or loss of executive officers or key employees;  loss of one or more significant clients;  the performance of the Indian and global economy;  significant developments in India’s economic liberalization and deregulation policies, and the fiscal regime; and  volatility in the Indian and global securities markets. Many of these factors are beyond our control. There can be no assurance that an active trading market for our Equity Shares will develop or be sustained after this Issue, or that the price at which our Equity Shares are initially offered will correspond to the prices at which they will trade in the market subsequent to this Issue. There has been recent volatility in the Indian stock markets and our share price could fluctuate significantly as a result of such volatility in the future. As historically there has been no public market for our equity shares, we are not sure how the market would develop for our shares post listing and subsequent stock price movements going forward. 46. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time. Subsequent to listing, we will be subject to a daily circuit breaker imposed on listed companies by all stock exchanges in India which does not allow transactions beyond certain volatility in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The percentage limit on our circuit breaker is set by the stock exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The stock exchanges are not required to inform us of the percentage limit of the circuit breaker from time to time, and may change it without our knowledge. This circuit breaker would effectively limit the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, there can be no assurance regarding the ability of shareholders to sell the Equity Shares or the price at which shareholders may be able to sell their Equity Shares.

EXTERNAL RISK FACTORS 47. We are incorporated in India and therefore subject to the policies of the Government of India. We are incorporated in India and a substantial portion of our assets and our employees are located in India. Consequently, our financial performance and the market price of our Equity Shares will be affected by changes in exchange rates and controls, interest rates, Government of India policies, including taxation policies, as well as political, social and economic developments affecting India.

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48. Immigration restrictions could limit our ability to expand our operations in the United States. We derive a high proportion of our revenues from clients located in the United States, which may be affected materially by such restrictions. We have Indian nationals, as our employees, working in the United States, Europe and other countries and may depend on our ability to obtain necessary visas and work permits. Many of our software professionals in the United States hold L-1 visas, intra-company transfer visas allowing managers and executives or employees with specialized knowledge to stay in the United States temporarily, or H-1B visas, which are temporary visas that allow employees to remain in the United States while they are employee of the Company, and may be granted to certain categories of persons in several “specialty occupations”, including software professionals, so long as their compensation meets annually adjusted minimums. Those adjustments may force increases in the salaries we pay to our employees with H-1B visas, thus partially impacting our profit margins. Although there is currently no limit to new L-1 visas, amendments to existing laws or new laws enacted in the United States may impose certain restrictions in the visa processing and on the number of such visas granted. There is a limit to the aggregate number of new H-1B visas that may be approved by the United States government in any fiscal year. However, we believe that the high demand for H-1B visas will continue to remain. Immigration laws in the United States and in other countries are subject to legislative change, as well as to variations in standards of application and enforcement due to political forces and economic conditions. It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or monitoring work visas for our software professionals. Our reliance on work visas for a number of our software professionals makes us particularly vulnerable to such changes and variations. As a result, we may not be able to obtain a sufficient number of visas for our software professionals or may encounter delays or additional costs in obtaining or maintaining such visas which in course may restrict our ability to generate incremental revenues. 49. Clients may seek to reduce their dependence on India for outsourced IT services or take advantage of the services provided in countries with labor costs similar to or lower than India. Clients who presently outsource a significant proportion of their IT services to vendors in India may, for various reasons, including to diversify geographic risk, seek to reduce their dependence on one country. We expect that future competition will increasingly include firms with operations in other countries, especially those countries with labor costs similar to or lower than India, such as Philippines, Africa, China, Russia and countries in Eastern Europe. Since wage costs in our industry in India are increasing, our ability to compete effectively will become increasingly dependent on our reputation, the quality of our services and our expertise in specific industries. 50. Our revenues could be significantly affected if the governments in countries in which our customers are based restrict companies from outsourcing work to non-domestic corporations. The issue of companies outsourcing services to organizations operating in other countries has become a topic of political discussion in many countries especially in the US. In addition, there has been recent publicity about negative experiences associated with offshore outsourcing, such as theft and misappropriation of sensitive client data, particularly involving service providers in India. Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services from onshore to offshore providers to avoid negative perceptions that may be associated with using an offshore provider. Any slowdown or reversal of existing industry trends toward offshore outsourcing, or any legislation aimed at limiting or restricting offshore outsourcing, could seriously harm our ability to compete effectively with competitors that provide services from other countries. 51. The current economic downturn has impacted our industry, and uncertain conditions may continue. Negative trends in the general economy have in the past and may continue to cause a downturn in the market for our products and services. The financial disruption affecting the banking system, housing market and financial markets have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets and extreme volatility in credit and equity markets. This financial crisis has adversely affected our operating

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results and may continue to do so if it results, for example, in the insolvency of a key customer or the inability of our customers to obtain credit to finance their operations. Tight credit markets could also delay or prevent us from acquiring or making investments in other technologies, products or businesses that could enhance our technical capabilities, complement our current products and services, or expand the breadth of our markets. If we are unable to execute such acquisitions and/or strategic investments, our operating results and business prospects may suffer. 52. Our international operations expose us to complex management, foreign currency, legal, tax, and economic risks. We have offices in countries outside India and many of our professionals are based overseas. As a result of our existing and 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 international operations; compliance with a wide range of regulatory requirements and foreign laws, including immigration, labor and tax laws where we usually rely on the opinions of experts on such matters, including in relation to transfer pricing norms and applicability of the relevant provisions of double taxation avoidance agreements, but which often involve areas of uncertainty; difficulty in staffing and managing foreign operations; potential difficulties with respect to protection of our intellectual property rights in some countries; and exchange rate movement. The risks stated above and the constantly changing dynamics of international markets could have a material adverse effect on our business, financial condition and results of operations. 53. Foreign Investors may have difficulty enforcing foreign judgments against us or our management. Our Company is a limited liability company incorporated under the laws of India. As a result, it may not be possible for investors to effect service of process upon our Company, or to enforce against our Company judgments obtained in courts outside India based upon the liability provisions of foreign countries, including the civil liability provisions of the federal securities laws of the United States. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of The Code of Civil Procedure, 1908 of India (as amended) (the “Civil Code”). Section 13 of the Civil Code provides that a foreign judgment shall be conclusive as to any matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud; and (vi) where the judgment sustains a claim founded on a breach of any law in force in India. Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court in any country or territory outside India which the Central Government has by notification declared to be in a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty. 54. Any downgrading of India’s debt rating by an international rating agency could have a negative impact on our business. Any adverse revisions to India‘s credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing may be available. This could have an adverse effect on our business and future financial performance, our ability to obtain financing for capital expenditures and the trading price of our Equity Shares.

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55. Third party statistical and financial data in this Draft Red Herring Prospectus may be incomplete or unreliable We have not independently verified data from industry publications and other sources and therefore cannot assure you that they are complete or reliable. Discussions of matters relating to any economy or the IT industry in this Draft Red Herring Prospectus are subject to the caveat that the statistical and other data upon which such discussions are based may be incomplete or unreliable. 56. Our business could be adversely impacted by economic, political and social developments in India. Our performance and growth are to a large degree dependent on the health of the Indian economy. The Indian economy could be adversely affected by various factors, such as political and regulatory action, including adverse changes in liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the Indian economy, or prolonged continuation of the downturn that has affected the global economy since August 2007, could adversely impact our business, our results of operations and our financial condition. 57. Global economic, political and social conditions may harm our ability to do business, increase our costs and negatively affect our stock price External factors such as potential terrorist attacks, terror threats, pandemics, acts of war or geopolitical and social turmoil in many parts of the world could prevent or hinder our ability to do business, increase our costs and negatively affect our stock price. For example, increased instability may adversely impact investment in industrial infrastructure, our ability to obtain adequate insurance at reasonable rates or require us to incur increased costs for security measures for our domestic and international operations. These uncertainties make it difficult for us and our customers to accurately plan future activities. More generally, these geopolitical social and economic conditions could result in increased volatility in India and worldwide financial markets and economy. 58. Significant differences exist between Indian GAAP and other accounting principles with which investors may be more familiar. Our financial statements are prepared in conformity with Indian GAAP, consistently applied during the periods stated and no attempt has been made to reconcile any of the information given in the Offering Circular to any other principles or to base it on any other standards. Indian GAAP and Indian auditing standards may differ from accounting principles and auditing standards with which prospective investors may be familiar in other countries. Significant differences exist between Indian GAAP and IFRS which may be material to the financial information contained in the Offering Circular. We have made no attempt to quantify the effect of any of these differences and Indian GAAP does not require such quantification. In making an investment decision, investors must rely upon their own examination of us, the terms of the offering and the financial information contained in the Offering Circular. 59. The complexity of transfer pricing regulations across countries may result in substantial tax liabilities to us. Each country’s transfer pricing regulations require that international transactions involving associated enterprises be at an arm’s-length price. Transactions between our Company and our Subsidiaries in other countries fall into this classification, at least for purposes of Indian tax laws and regulations. Accordingly, we will determine the pricing among our associated enterprises on the basis of detailed functional and economic analysis involving benchmarking against transactions with entities that are not under common control. If the applicable income tax authorities, on review of our tax returns, determine that the transfer price we applied was not appropriate, we may incur increased tax liability, including accrued interest and penalties. These penalties could be substantial and have an adverse effect on our business.

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Prominent Notes 1. Issue of 4,500,000 Equity Shares of face value of Rs. 10/- each for cash at a price of Rs. [●] per Equity Share (including share premium of Rs. [●] per Equity Share), comprising of a Fresh Issue of 2,372,728 Equity Shares by the Company and an Offer for Sale of 2,127,272 Equity Shares by the Selling Shareholders, aggregating Rs.[●] million. The Issue comprises of a Net Issue of 4,475,000 Equity Shares of Rs. 10/- each to the public and an Employee Reservation Portion of upto 25,000 Equity Shares of Rs. 10/- each for subscription by Eligible Employees on a competitive basis. The Issue will constitute 31.25% of the fully diluted post Issue paid-up capital of our Company and the Net Issue will constitute 31.07% of the fully diluted post Issue paid-up capital of our Company. The Issue is being made under sub-regulation (1) of Regulation 26 of the SEBI ICDR Regulations and through a Book Building Process wherein not more than 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs” and such portion the “QIB Portion”). Our Company in consultation with the BRLM may consider participation by Anchor Investors in the Net Issue for upto 30% of the QIB Portion in accordance with the applicable SEBI ICDR Regulations (“Anchor Investor Portion”), out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of undersubscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the remaining QIB Portion (“Net QIB Portion”). Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to QIBs, subject to valid Bids being received from them at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the Net QIB Portion and be available for allocation on a proportionate basis to the QIBs, subject to valid Bids being received from them at or above the Issue Price. Further not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received from them at or above the Issue Price. Further, 25,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received from them at or above the Issue Price. Under-subscription, if any, in any category would be allowed to be met with spill over from any of the other categories at the discretion of our Company in consultation with the Selling Shareholders, the BRLM and the Designated Stock Exchange and in accordance with applicable laws, rules, regulations and guidelines, subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in the Employee Reservation Portion, will be added back to the Net Issue. In case of under-subscription in the Net Issue, spill-over to the extent of under-subscription shall be permitted from the Employee Reservation Portion. In the event that the aggregate demand in the Net QIB Portion and/or Non-Institutional Portion and/or Retail Portion has not been met, under-subscription, if any, would be allowed to be met with spill-over from any other category or combination of categories at the discretion of our Company, in consultation with the Selling Shareholders, BRLM and the Designated Stock Exchange and in accordance with applicable laws, rules, regulations and guidelines, subject to valid bids being received at or above the Issue Price. Investors may note that in case of over-subscription, if any, in the Issue, allotment shall be made on a proportionate basis to QIB Bidders, Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees bidding under Employee Reservation Portion and will be finalised by our Company in consultation with the Selling Shareholders, the BRLM and the Designated Stock Exchange; and in accordance with applicable laws, rules, regulations and guidelines, subject to valid Bids being received at or above the Issue Price. It is to be distinctly understood that the requirement for minimum subscription is not applicable to the Offer for Sale. On receipt of minimum subscription i.e. 90% of the Fresh Issue and in case of under-

2.

3.

4.

5.

6.

7.

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subscription in the Issue, the entire subscription amount would first be adjusted towards the Fresh Issue and thereafter towards the Offer for Sale. 8. If our Company does not receive the minimum subscription i.e. 90% of the Fresh Issue including devolvement of the Underwriters/Members of the Syndicate, if any, within 60 days from the date of Bid/ Issue Closing Date, our Company and the Selling Shareholders shall forthwith refund the entire subscription amount received not later than 70 days from the Bid/ Issue Closing Date. If there is a delay beyond 8 days after our Company and the Selling Shareholders become liable to pay the amount, our Company and the Selling Shareholders shall pay interest as prescribed under Section 73 of the Companies Act. The Net Worth of our Company was (a) Rs.1,613.97 million as on June 30, 2010 and Rs.1,500.47 million as on March 31, 2010, as per the restated consolidated financial statements; and (b) Rs.1,371.69 million as on June 30, 2010 and Rs.1,321.11 million as on March 31, 2010, as per the restated unconsolidated financial statements of the Company prepared in accordance with Indian GAAP and the Companies Act and restated in accordance with the SEBI Regulations. For more information, please refer the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus.

9.

10. The Net Asset Value per Equity Share was (a) Rs.134.18 as on June 30, 2010 and Rs.124.75 as on March 31, 2010, as per the restated consolidated financial statements; and (b) Rs.114.04 as on June 30, 2010 and Rs.109.83 as on March 31, 2010 as per the restated unconsolidated financial statements of the Company prepared in accordance with Indian GAAP and the Companies Act and restated in accordance with the SEBI Regulations. For more information, please refer the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. 11. The following table represents average cost of acquisition of Equity Shares by our Promoters and Selling Shareholders as on date of this Draft Red Herring Prospectus. For details please refer to the table titled “Buildup of Promoters’ Shareholding, Promoters Contribution and lock-in” beginning on page 23 under the chapter titled “Capital Structure” beginning on page 20 of this Draft Red Herring Prospectus. Sr. Particulars No. Promoters 1. Mr. Satyanarayana Bolli 2. Ms. Sridevi Bolli 3. Mr. Rama Rao Bolli 4. Icon Investments Limited Selling Shareholders 1. UTI ITVUS 2. New Vernon Number of Equity Shares 1,988,784 2,345,626 104,901 2,591,120 1,263,636 863,636 Average Cost of Acquisition (Rs.) 10 10 10 10 132.15 100.73

Note: The average cost of acquisition of Equity Shares by our Promoters and the Selling Shareholders has been computed by taking the weighted average cost of the total number of Equity Shares held by them.

12. Except as stated below, neither our Promoters nor the members of our Promoter Group nor the directors of our Corporate Promoter nor our Directors and their immediate relatives as defined under the SEBI ICDR Regulations have purchased or sold or financed the purchase or sale of any Equity Shares during the period of six months immediately preceding the date of this Draft Red Herring Prospectus with SEBI. (Face Value of Equity Shares of Rs.10/- each) Transfer/ Date of Price per Allotment Transfer / Share Rs.) Allotment Transfer* July 13, 2010 120.00

Name of the Person

Mr. P.V.S. Raju

Promoter / Director / Promoter Group /Director of Promoter Group Director

Number of Equity Shares 100,000

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Mr. P.V.S. Raju Mr. P.V.S. Raju

Director Director

16,000 5,000

Transfer** Transfer***

August 13, 2010 October 8, 2010

110.00 120.00

*Transfer from Mr. Kadayam Ramanathan Bharat (50,000 Equity Shares) and Mr. Sanjay Jagdish Poddar (50,000 Equity Shares); **Transfer from Mr. Vijay Raj Busani (2,000 Equity Shares); Mr.Pankaj Kumar (3,000 Equity Shares); Mr. C Rajasekhar Reddy (5,000 Equity Shares) and Mr. Raghu Ramchandran (6,000 Equity Shares); *** Transfer from Ms. Ranjana Siva Shankar

13. Our Company has not issued any Equity Shares out of revaluation reserves. Our Company has not revalued its assets since inception. 14. Except as stated below, there has been no allotment of Equity Shares that may be at a price lower than the Issue Price within the last twelve (12) months from the date of this Draft Red Herring Prospectus. Date of Allotment of Equity Shares January 1, 2010 Number of Equity Shares 150,943 Allotment Details Face Value (Rs.) 10 Issue Price (Rs.) 132.50

Preferential Allotment to Mr. P.V.S. Raju

15. Our Company has not issued any Equity Shares for consideration other than cash. 16. For the summarized details of transactions by our Company with our Subsidiaries, Promoter Group, Group Companies during the last five financial years ending March 31, 2006, 2007, 2008, 2009 and 2010 and for the quarter ended June 30, 2010, please refer to “Annexure XV - Related Party Transactions” in the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. 17. For interests of our Promoters, Directors and Key Managerial Personnel, please refer to chapters titled “Our Promoter, Promoter Group and Group Companies” and “Our Management” beginning on pages 151 and 132 respectively of this Draft Red Herring Prospectus. 18. No part of the Issue proceeds will be paid as consideration to our Promoters, our Directors, our Key Managerial Employees, our Promoter Group or our Group Companies or ventures. 19. Investors are advised to refer to the chapter titled “Basis for Issue Price” beginning on page 50 of this Draft Red Herring Prospectus before making an investment in this Issue. 20. The notes on Significant Accounting Policies have been included in the report of our Auditors in the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. 21. For details pertaining to change in name of our Company and changes in Memorandum of Association of our Company please refer to the chapter titled “History and Other Corporate Matters” beginning on page 117 of this Draft Red Herring Prospectus. 22. Trading in Equity Shares of our Company for all the investors shall be in dematerialized form only. 23. None of our Promoters, Directors and their relatives, Promoter Group, Group Companies has entered into any financing arrangement or has financed the purchase of securities of our Company during the last six months prior to the date of filing of this Draft Red Herring Prospectus with SEBI. 24. Our Company, the Selling Shareholders and the BRLM are obliged to keep this Draft Red Herring Prospectus updated and inform the public of any material change/development until the listing and trading of the Equity Shares offered under the Issue commences. 25. Any clarification or information relating to the Issue shall be made available by the BRLM and our Company to the public and investors at large and no selective or additional information would be made available only to a section of the investors in any manner. For contact details please refer to the chapter titled “General

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Information” beginning on page 9 of this Draft Red Herring Prospectus. All grievances relating to ASBA process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSBs, giving full details such as name, address of the applicants, number of Equity Shares applied for, Bid Amounts blocked, ASBA Account number and the Designated Branch of the SCSBs where the ASBA Form has been submitted by the ASBA Bidder.

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SECTION III – INTRODUCTION SUMMARY OF OUR BUSINESS, STRENGTHS AND STRATEGIES This is only a summary and does not contain all information that you should consider before investing in our Equity Shares. You should read the entire Draft Red Herring Prospectus, including the information on “Risk Factors” and “Financial Statements” and related notes, beginning on pages XVIII and 159 respectively of this Draft Red Herring Prospectus, before deciding to invest in our Equity Shares. Industry Overview The IT Services Industry has been purposefully adapting to a tumultuous economic environment, equipping global businesses to continue leveraging technology in order to optimize costs, enhance operating efficiencies and service heightened customer expectations. While the last couple of years have been particularly difficult for our industry, 2010’s early resurgence, albeit tempered, has brought into focus benefits of working toward simplified, global operating platforms arising out of application, technology and process consolidation. Global Sourcing of IT services continues to drive cost arbitrage opportunities with greater vigor in the near to medium term even as service recipients seek transformational outcomes through newer business and operating models. India Inc continues to be at the forefront of global IT-BPO sourcing and off-shoring, playing both thought and execution leadership roles, shaping the overall relationship with business for long term sustenance. Key industry insights that we have extracted from NASSCOM’s Strategic Review Report 2010 fortify the mainstream character of IT global sourcing along with its compelling cost-value proposition rendered by the dimensions of outsourcing & offshoring. Business Overview Semantic Space Technologies Limited was founded in 1997 with an engaging vision of providing solutions and services that would help simplify the enablement, implementation and upgrade of Information Technology for business enterprise and provide value realisation for not only our immediate customers, but to their end customers as well. We have thereby evolved to emerge as a specialized solutions provider offering a variety of solutions and services in mainly three areas: Application Services, Independent Verification and Validation Services (IVV) and Systems Integration (SI) Solutions in the Application Infrastructure and Middleware space. We leverage a differentiated business model through investments in pre-fabricated software components and frameworks to build enduring value for our customers. We have expanded our service portfolio with strategic acquisitions to emerge as a well-balanced player in the IT services segment. We offer our services under three SBUs viz. Application Services, IVV and SI - each of which possesses a set of unique attributes and delivers value that strengthen the overall business proposition from our organization. Application Services is an encompassing portfolio of general IT services around Application Development, Maintenance, Modernization and Support. Systems Integration in the AI&M space underscores our focus and attention to the growing market space of middleware and application infrastructure layer. Our premium services and solutions of Systems Integration in this space give us the advantage of spreading our offerings for the same clients into the Application Services arena. In addition, the IVV services and solutions that focus on testing and quality assurance have a presence in everything that we build, maintain, migrate, support, configure and implement – be it in SI or in Application Services space. Application Services, IVV and SI complement each other effectively and operate with a common strategy of relying on pre-built tools, utilities, reusable components and application frameworks to provide increased value to our customers. We build our competencies around key technologies and domains that develop our expertise and continue to differentiate us. Our growth and current business positioning is attributable to our recent past where we have proved the success of our inorganic strategies and our capabilities to manage growth. Through our acquisitions in the years 2006 and 2008 we stepped into the specialized service delivery areas of IVV and SI.These initiatives have largely driven us towards 1

diversifying and integrating our value proposition. These strategic moves have benefitted us in our financial performance to grow at 5 year CAGR (ending Fiscal 2010) of over 70% in our revenues and about 37% and 26% in our EBITDA and Profits After Tax respectively. We serve a client base of 400+ marquee customers, 40 of whom belong to the Fortune 500 category. Powered by a diverse workforce of over 850 associates operating across North America, Europe and APAC, we have successfully delivered over 1,000 projects till date. We have three well equipped offshore delivery centres in Hyderabad, India which are designed to support our onsite business and enhance our productivity and efficiencies. We have presence in the US through our offices in New York, California, Florida and Pennsylvania. In Europe, we have our presence in London, UK and in Hamburg, Germany. Competitive Strengths  Client – Relationship Capital With an unflinching commitment to ‘value based growth’ which has been the corner-stone of our existence, we serve a client base of 400+ marquee customers, 40 of whom belong to the Fortune 500 category. We have demonstrated our ability to manage large client relationships and outsourcing engagements over a sustained period. We are constantly building and expanding on such long-term, strategic associations. This relationship capital that we have built over the years translates to a competitive strength as we are in a position to leverage these relationships to build scale. A key strategic focus as an integrated enterprise would be to cross-sell and upsell the broader set of services we offer to our accounts.  Process Maturity – Proprietary Service Delivery Accelerators We leverage high quality processes and project management capabilities. Our philosophy since inception has been in building and providing services through proprietary service delivery accelerators. We have invested in building proprietary tools including PPM Studio, Effecta Framework, Code Immunizer and a set of reusable software components. These tools and components enhance our ability to rapidly service client requirements, provide the right and committed resources both onsite and offshore. We believe that intellectual property is a multiplier of efficiency in the software service delivery business. Access to an available array of toolsets enables us to dramatically reduce the cycle time for service delivery while significantly improving quality, and serves as a critical competitive differentiator. We are uniquely differentiated in our ability to provide unmatched transparency and visibility to our customers on project execution.  Enduring Alliance Partnerships We have a strong and growing partnership with technology vendors, particularly with IBM. This alliance enables us to combine our expertise and long history of delivery success with IBM’s market leadership. We are a premier-level IBM Business Partner and Systems Integrator with domain expertise exclusive to the IBM software business and have garnered awards for technical excellence across IBM’s entire software portfolio. Our Subsidiary, Prolifics has a Level 5 ranking—IBM’s highest on its technical expertise scale—and has twice been the recipient of the IBM Award for Overall Technical Excellence. This provides us a platform for our integrated enterprise to leverage cross-selling opportunities through breadth and diversity of customer relationships.  Global Delivery Model Our hybrid, blended-shore delivery model offers a smart balance of quality, cost savings and localizations. It is reflective of our global corporate culture, and recognizes that technology services firms cannot deliver quality solutions, without being close to our clients. Our blended-shore delivery model enables us to achieve consistently high standards of quality in our delivery organization while optimizing the costs for our clients.  Track Record and Competence in Delivery

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Powered by a diverse workforce of over 850 associates operating across North America, Europe and APAC, we have successfully delivered over 1,000 projects till date. With a track record of over a decade in offshore services, we not only offer the breadth and depth of tier one vendors but the care and attention of mid-size service providers.  Quality Talent and Experienced Leadership Team We recruit talent from universities and institutes in India and the US, as well as laterally from leading IT companies. We have an inclusive approach to people, and focus on providing a work environment with transparent evaluation criteria. We are also well positioned through our international management team. Our leadership is balanced across India and the US. This provides a rich and diverse management outlook. Business Growth Strategy Building end to end competencies across the IT Services Food Chain

A critical factor in the Indian IT Industry’s growth story has been its resolute commitment to broadening and deepening service offering competence, span and maturity. Engaging the customer at different levels of the ‘IT Services Food Chain’, through an integrated delivery approach has powered the paradigm shift from ‘relationships’ to ‘partnerships’ for service providers. 3-dimensional Growth Strategies We visualize three broad avenues for our business growth:

For further details, refer chapter titled “Industry Overview” and “Our Business” beginning on pages 65 and 76 respectively of this Draft Red Herring Prospectus.

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SUMMARY OF FINANCIAL INFORMATION

STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES, AS RESTATED (Amount in Rupees Millions except share and per share data) As at 31 March As at 2007 2008 2009 2010 30 June 2010

Particulars 1. FIXED ASSETS : i) Gross block Less : Accumulated depreciation / amortisation Net block ii) Capital work-in-progress Total 2. INVESTMENTS 3. GOODWILL 4. CURRENT ASSETS, LOANS AND ADVANCES : a) Unbilled revenue b) Sundry debtors c) Cash and bank balances d) Loans and advances Total 5. DEFERRED TAX ASSET 6. LIABILITIES AND PROVISIONS : a) Secured loans b) Unsecured loans c) Current liabilities and provisions Total 7. DEFERRED TAX LIABILITY SHARE HOLDERS' FUNDS (1+2+3+4+5-6-7) REPRESENTED BY 8. SHARE CAPITAL a) Equity share capital

84.29 (27.35) 56.94 10.55 67.49 245.39 78.21

116.53 (37.90) 78.63 52.23 130.86 153.62 110.86

335.61 (128.28) 207.33 207.33 1,325.35

318.54 (148.05) 170.49 170.49 1,287.81

319.51 (152.27) 167.24 167.24 1,461.16

131.47 435.34 22.89 589.70 -

2.32 138.01 610.56 47.60 798.49 -

83.08 686.37 128.76 93.18 991.39 0.08

78.49 528.49 95.95 107.93 810.86 0.08

70.15 717.32 87.22 112.64 987.33 3.03

5.56 92.09 97.65 9.79 873.35

18.10 129.62 147.72 6.49 1,039.62

544.15 620.46 1,164.61 6.40 1,353.14

353.85 22.57 385.94 762.36 6.41 1,500.47

306.67 23.30 668.90 998.87 5.92 1,613.97

118.77

118.77

118.77

120.28

120.28

754.58 920.85 1,234.37 1,380.19 1,493.69 9. RESERVES AND SURPLUS SHARE HOLDERS' FUNDS (8+9) 873.35 1,039.62 1,353.14 1,500.47 1,613.97 Note: The above statement should be read with the significant accounting policies and notes to restated summary statements as appearing in Annexure V.

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STATEMENT OF CONSOLIDATED PROFITS AND LOSSES, AS RESTATED (Amount in Rupees Millions except share and per share data) For the quarter For the year ended 31 March ended 2007 2008 2009 2010 30 June 2010

Particulars

I. INCOME Income from software development services Income from product sales Other income TOTAL II. EXPENDITURE Product cost Personnel expenses Operating and other expenses Depreciation and amortisation Interest and finance cost TOTAL

813.82 15.38 829.20

935.08 18.43 953.51

1,859.21 663.53 88.03 2,610.77

2,349.35 1,258.92 3.16 3,611.43

632.87 533.49 1.01 1,167.37

360.85 146.47 5.07 0.47 512.86

492.01 257.74 10.63 3.16 763.54

515.36 1,418.07 418.03 38.48 34.69 2,424.63

1,075.33 1,584.36 544.89 47.37 44.32 3,296.27

480.51 408.55 178.38 10.60 7.25 1,085.29

316.34 189.97 186.14 315.16 82.08 Profit before tax Less: Provision for tax a) Current tax- domestic 5.36 20.58 22.93 35.57 8.90 b) Current tax- foreign 2.83 5.59 3.96 7.41 c) Fringe benefit tax 0.93 0.98 1.06 d) Deferred tax-domestic 0.66 (0.52) 4.53 0.01 (0.49) e) Deferred tax-foreign 7.87 (2.19) (4.70) (2.95) f) MAT credit (entitlement)/utilisation (5.50) (20.97) 4.36 0.42 Net profit after tax, as restated 301.52 173.79 177.70 271.26 68.79 Add: Balance in profit and loss account brought forward, 281.34 568.96 735.81 920.45 1,191.71 as restated Amount available for appropriation 582.86 742.75 913.51 1,191.71 1,260.50 Appropriations: a) Proposed dividend 11.88 5.93 (5.93) b) Provision for corporate dividend tax 2.02 1.01 (1.01) Balance carried forward to balance sheet, as restated 568.96 735.81 920.45 1,191.71 1,260.50 Note: The above statement should be read with the significant accounting policies and notes to restated summary statements as appearing in Annexure V.

5

STATEMENT OF CONSOLIDATED CASH FLOWS, AS RESTATED (Amount in Rupees Millions except share and per share data) For the quarter For the year ended 31 March Particulars ended 2007 2008 2009 2010 30 June 2010 A) Cash flow from operating activities Net profit before tax, as restated 316.34 189.97 186.14 315.16 82.08 Adjustments for: Depreciation and amortisation 5.07 10.63 38.48 47.37 10.60 Interest and finance charges 0.47 2.71 33.86 40.59 6.57 Interest income (0.16) (1.65) (0.23) (0.34) (0.17) Dividend income (13.34) (14.98) (4.88) Unrealised foreign exchange (gain) / loss (0.17) 34.90 (3.02) 0.77 (2.16) Employee stock compensation cost 1.12 Bad debts 2.92 15.57 9.74 (0.17) Operating profit before changes in working capital 308.21 224.50 267.04 413.29 96.75 Adjustments for: (Increase) / decrease in unbilled revenue (2.32) (17.76) 5.36 8.22 (Increase) / decrease in sundry debtors (12.23) (9.77) (162.98) 144.50 (184.14) (Increase) / decrease in loans and advances 62.08 (19.09) 17.30 (3.36) (8.76) Increase / (decrease) in current liabilities and (38.70) (4.60) 41.84 (119.17) 160.00 provisions Cash inflow from operating activities 319.36 188.72 145.44 440.62 72.07 Adjustments for: Income-tax paid net (4.76) (9.16) (25.61) (78.22) (15.75) Fringe benefit tax paid (0.86) (1.09) (1.40) (0.18) Net cash flow generated from operating activities 313.74 178.47 118.43 362.22 56.32 - (A) B) Cash flows from investing activities Purchase of fixed assets (46.94) (74.55) (44.49) (20.49) (6.78) Proceeds from sale of fixed assets 0.40 1.48 0.84 Payment towards acquisition of subsidiaries net (67.28) (955.50) (211.78) (1.60) of cash Investments in mutual funds (122.05) (115.39) Proceeds from sale of mutual funds 109.93 207.16 153.62 Interest received 0.14 1.36 0.59 0.34 0.17 Dividend received from mutual funds 13.17 15.15 4.88 Net cash flow generated from/(used in) investing (113.03) 33.73 (840.50) (230.45) (7.37) activities - (B) C) Cash flows from financing activities Proceeds from issue of share capital 20.00 Proceeds from secured loan 13.09 404.30 52.07 38.12 Repayment of secured loans (3.12) (95.31) (189.68) (91.34) Proceeds from unsecured loan 23.71 Interest paid (0.47) (2.71) (20.48) (31.78) (7.93) Dividend paid (including tax thereon) (6.32) (13.90) Net cash flow generated from/(used in) financing (9.91) (3.52) 288.51 (125.68) (61.15) activities - (C) Net increase / (decrease) in cash and cash 190.80 208.68 (433.56) 6.09 (12.20) equivalents (A+B+C) Exchange (loss)/gain on cash and cash equivalents (0.59) (33.46) (48.24) (38.90) 3.47 Cash and cash equivalents at the beginning of the 245.13 435.34 610.56 128.76 95.95 year / period Cash and cash equivalents at the end of the year / 435.34 610.56 128.76 95.95 87.22 period Note: The cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 on Cash Flow Statements as prescribed under by the Companies (Accounting Standards) Rules, 2006.

6

THE ISSUE

Issue in terms of this Draft Red Herring Prospectus of which Fresh Issue Offer for Sale of which UTI ITVUS New Vernon The Issue comprises of Employee Reservation Portion1 Net Issue of which 1. QIB Portion* of which Available for Allocation to Mutual Funds only Balance for all QIBs including Mutual Funds 2. Non Institutional Portion 3. Retail Portion Equity Shares outstanding prior to the Issue Equity Shares outstanding after the Issue

4,500,000 Equity Shares

2,372,728 Equity Shares 2,127,272 Equity Shares

1,263,636 Equity Shares 863,636 Equity Shares

25,000 Equity Shares 4,475,000 Equity Shares

2,237,500 Equity Shares constituting not more than 50% of the Net Issue to the Public (Allocation a proportionate basis).

[●] Equity Shares constituting 5% of the Net QIB Portion (Allocation on a proportionate basis). [●] Equity Shares (Allocation on a proportionate basis). 671,250 Equity Shares constituting not less than 15% of the Net Issue to the Public (Allocation on a proportionate basis). 1,566,250 Equity Shares constituting not less than 35% of the Net Issue to the Public (Allocation on a proportionate basis). 12,028,215 Equity Shares 14,400,943 Equity Shares

For information on the use of the Fresh Issue proceeds, please refer to chapter titled “Objects of the Issue” beginning on page 38 of this Draft Red Herring Prospectus.
1

Subject to such reservation not exceeding 5% of the post Issue Capital

*Our Company in consultation with the Selling Shareholders and the BRLM may allocate upto 30% of the QIB Portion to
Anchor Investors on a discretionary basis. One-third of the Anchor Investor Portion shall be reserved for domestic Mutual Funds, subject to valid Bids being received from domestic Mutual Funds at or above the price at which allocation is being done to Anchor Investors. For further details, refer chapter titled “Issue Structure” and “Issue Procedure” beginning on page 283 and 290 respectively of this Draft Red Herring Prospectus.

7

Allocation to all categories, except Anchor Investor Portion, if any, shall be made on a proportionate basis subject to valid Bids received at or above the Issue Price. Under-subscription, if any, in any category would be allowed to be met with spill over from any other category at the discretion of the Company, in consultation with the Selling Shareholders, the BRLM, and the Designated Stock Exchange and in accordance with applicable laws, rules, regulations and guidelines, subject to valid bids being received at or above the Issue Price. On receipt of minimum subscription i.e. 90% of the Fresh Issue and in case of under-subscription in the Issue, the entire subscription amount would first be adjusted towards the Fresh Issue and thereafter towards the Offer for Sale. Any under-subscription in the Employee Reservation Portion shall be added to the Net Issue.

8

GENERAL INFORMATION

Incorporation Our Company was incorporated as Infoquest Systems Private Limited on November 24, 1997 under the Companies Act, vide Certificate of Incorporation bearing registration No. 08/23062 of 1997 issued by the Registrar of Companies, Karnataka, Bangalore. In December, 1999, the registered office of our Company was shifted from Bangalore, Karnataka to Hyderabad, Andhra Pradesh. Our Company was converted into a public limited company vide fresh Certificate of Incorporation Consequent on the Conversion under section 31/44 of the Companies Act, dated April 10, 2000 and consequently the name of our Company was changed to ‘Infoquest Systems Limited’. Further the name of our Company was changed to its present name, that is, Semantic Space Technologies Limited vide Fresh Certificate of Incorporation consequent on change of name, dated July 3, 2000. The Corporate Identification Number of our Company is U72200AP1997PLC033030. Our Registered Office Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033, Andhra Pradesh, India. Tel: +91- 40 - 39991999 Fax: +91- 40 - 23114651 Website: www.semanticspace.com For details of change in our Registered Office, please refer to the chapter titled “History and Other Corporate Matters” beginning on page 117 of this Draft Red Herring Prospectus. Our Corporate Office DHFLVC Silicon Towers, 5th Floor, Madhapur Road, Kondapur, Hyderabad – 500 032, Andhra Pradesh, India Tel: +91- 40 - 39991999 Fax: +91- 40 – 23114651 Our Registrar of Companies Registrar of Companies, 2nd Floor, CPWD Building, Kendriya Sadan, Sultan Bazar, Koti, Hyderabad – 500 195. Andhra Pradesh, India Our Board of Directors The Board of Directors as on the date of this Draft Red Herring Prospectus is as follows: Sr. No 1. 2. Name and Designation Mr. Satyanarayana Bolli Chairman and Managing Director Ms. Sridevi Bolli Whole Time Director Age 56 44 DIN 00019739 00007122 Address 1355D, Road No. 45, Jubilee Hills, Hyderabad - 500 033, Andhra Pradesh, India 1355D, Road No. 45, Jubilee Hills, Hyderabad- 500 033, Andhra Pradesh, India

9

3. 4.

Mr. P.V.S. Raju Non – Executive Director Mr. Ajay Mittal Nominee Director

55 42

00028230 00084644

5.

Mr. Satish Deshpande Nominee Director Mr. Vivek Mundra Independent Director Dr. Nageshwar Reddy Independent Director Mr. Ravi Shankararamiah Independent Director Dr. Mohana Velagapudi Independent Director Mr. Bhasker Kondapally Independent Director

50

00023871

6.

50

00383479

7. 8. 9. 10.

54 55 53 50

00324725 00180746 01263282 00014291

Plot No. 372, Road No. 22, Jubilee Hills Hyderabad – 500033, Andhra Pradesh, India Flat No. 343, 4th Floor, III Block, Ranka Park Apartments, Opp. St. Joseph College, Lalbagh Road, Bangalore – 560027, Karnataka, India Flat No. 4, Shamala Apartments, Plot No. 54, Mahatma Nagar, Nashik, Maharashtra, India 1B, Sri Ram Garden 15, Belvedere Road, Alipore, Kolkata – 700027, West Bengal, India A-27, Journalist Colony, Jubilee Hills, Hyderabad – 500033, Andhra Pradesh, India 8-2-547/ B-2, Road No. 7, Banjara Hills Hyderabad –500034, Andhra Pradesh, India 6- Hickory Court, Moline Illinios, 61201, United States of America 404, Aditya Classic Apartments, 6-3-1099/ 1/3 and 4, Somajiguda Hyderabad – 500082, Andhra Pradesh, India

For detailed profile of our Directors, please refer to the chapters titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus. Company Secretary Mr. Kapardi Mudigonda Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033, Andhra Pradesh, India. Tel: +91- 40 - 39991999 Fax: +91- 40 – 23114651 Email: sstipo@semanticspace.com Compliance Officer Mr. Venkatesh Ramachandran Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033, Andhra Pradesh, India. Tel: +91- 40 - 39991999 Fax: +91- 40 – 23114651 Email: sstipo@semanticspace.com Investors can contact the Compliance Officer i.e. Mr. Venkatesh Ramachandran and / or the Registrar to the Issue, i.e., Karvy Computershare Private Limited and / or Book Running Lead Manager i.e. India Infoline Limited, in case of any pre-Issue or post-Issue related problems, such as non-receipt of letters of allocation, credit of allotted Equity Shares in the respective beneficiary account or refund orders, etc. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue i.e. Karvy Computershare Private Limited with a copy to the relevant SCSBs giving full details such as name, address of the applicant, number of Equity Shares applied for, Bid Amount blocked, ASBA Account number and the

10

Designated Branch or the collection centre of the relevant SCSBs where the ASBA Form was submitted by the ASBA Bidder. Book Running Lead Manager India Infoline Limited 10th Floor, One IBC, 841, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013 Maharashtra, India Tel: +91-22-4646 4600; Fax: +91-22-4646 4700 E-mail: sstl.ipo@iiflcap.com Investor grievance E-mail: ig.ib@iiflcap.com Website: www.iiflcap.com Contact Person: Mr. Satish Ganega SEBI Registration Number: INM 000010940 Legal Advisor to this Issue M/s. Crawford Bayley & Co. Advocates & Solicitors State Bank Buildings, 4th Floor, N.G.N. Vaidya Marg, Fort, Mumbai - 400 001 Maharashtra, India Tel: +91 22 2266 8000 Fax: +91 22 2266 3978 Email: sanjay.asher@crawfordbayley.com Registrar to this Issue Karvy Computershare Private Limited Plot no. 17 to 24, Vithalrao Nagar, Madhapur, Hyderabad - 500 081 Andhra Pradesh, India Tel. No.: +91 40 - 44655000 Fax No.: +91 40 - 23420814 Email: varghese@karvy.com Website: www.karvycomputershare.com Contact Person: Mr. P. A. Varghese, General Manager SEBI Registration Number: INR000000221 Bankers to our Company ICICI Bank Limited ICICI Bank Towers, Gachibowli, Hyderabad- 500 032 Andhra Pradesh, India Tel: + 91-40-8008104314 Fax: + 91-40-61064500 Email: vijay.chinta@icicibank.com Website: www.icicibank.com Contact Person: Mr. Vijay Chinta

State Bank of India Hi-Tec City Branch, 1st Floor, Q-1, Cyber Towers, Madhapur, Hyderabad – 500 081 Andhra Pradesh, India Tel: + 91- 40- 23110924 / 23110925 / 23110922 Fax: + 91 – 40- 23110924 Email: sbi.04187@sbi.co.in Website: www.statebankofindia.com Contact Person: Mr. G. Vijaya Kumar 11

Citibank N.A 1st Floor, Queens Plaza, S.P. Road, Begumpet, Hyderabad – 500 003 Andhra Pradesh, India Tel: +91 – 40- 40005722 Fax: +91 – 40- 40033240 Email: anil.jawar@citi.com Website: www.citibank.com Contact Person: Mr. Anil Jhawar Bankers to the Issue / Escrow Collection Banks The Bankers to the Issue / The Escrow Collection Bank(s) shall be appointed prior to filing of the Red Herring Prospectus with RoC. Refund Bank The Refund Banker(s) shall be appointed prior to filing of the Red Herring Prospectus with RoC in consultation with the Selling Shareholders and the BRLM. Syndicate Members The Syndicate Member(s) will be appointed prior to filing the Red Herring Prospectus with RoC in consultation with the Selling Shareholders and the BRLM. Brokers to this Issue All the members of the recognised stock exchanges would be eligible to act as brokers to the Issue in consultation with the Selling Shareholders and the BRLM. Self Certified Syndicate Banks The SCSB’s as per updated list available on SEBI’s website (www.sebi.gov.in). For details on Designated Branches of SCSBs collecting the ASBA Form, please refer the above mentioned SEBI link. Statutory Auditors to our Company B S R & Company 8-2-618/2, Reliance Humsafar, Fourth Floor, Road No. 11, Banjara Hills, Hyderabad - 500 034 Andhra Pradesh, India Tel: + 91 40 3046 5200 Fax: + 91 40 3046 5299 Contact Person: Sriram Mahalingam (Membership Number: 49642) Email: smahalingam@kpmg.com Firm Registration No.: 128032W Statement of Allocation of Responsibilities of the BRLM The following table sets forth the allocation of responsibilities for various activities of India Infoline Limited as BRLM for the Issue:

12

Sr. No. 1.

Activity Capital Structuring with relative components and formalities such as type of instruments, etc. Due diligence of Company's operations / management / business plans / legal etc. Drafting and design of the Offer Document including memorandum containing salient features of the Prospectus. The BRLM shall ensure compliance with stipulated requirements and completion of prescribed formalities with the Stock Exchanges, ROC and SEBI including finalisation of Prospectus and ROC filing. Drafting and approval of all statutory advertisement Drafting and approval of all publicity material other than statutory advertisement as mentioned in 3 above including corporate advertisement, brochure etc. Appointment of other intermediaries viz., Registrar's, Printers, Advertising Agency, Bankers to the Issue Preparation of Road show presentation and preparation of FAQs International Institutional Marketing strategy  Finalise the list and division of investors for one to one meetings, in consultation with the Company and the Selling Shareholders, and  Finalizing the International road show schedule and investor meeting schedules. Domestic institutions / banks / mutual funds marketing strategy  Finalise the list and division of investors for one to one meetings, institutional allocation in consultation with the Company and the Selling Shareholders.  Finalizing the list and division of investors for one to one meetings, and investor meeting schedules. Non-Institutional and Retail marketing of the Issue, which will cover, inter alia,  Formulating marketing strategies, preparation of publicity budget  Finalise Media and PR strategy;  Finalising centers for holding conferences for press and Brokers; Follow-up on distribution of publicity and Issuer material including form, prospectus and deciding on the quantum of the Issue material.  Finalise Collection Centers Co-ordination with Stock Exchanges for Book Building Software, bidding terminals and mock trading. Finalisation of Pricing, in consultation with the Company and the Selling Shareholders The post bidding activities including management of escrow accounts, co-ordination of non-institutional allocation, intimation of allocation and dispatch of refunds to bidders etc. The post Offer activities for the Offer involving essential follow up steps, which include the finalisation of trading and dealing of instruments and demat of delivery of shares, with the various agencies connected with the work such as the registrar’s to the Issue and Bankers to the Issue and the bank handling refund business. The merchant banker shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with the Company.

Responsibility IIFL

Coordination IIFL

2.

IIFL

IIFL

3. 4. 5. 6.

IIFL IIFL IIFL IIFL

IIFL IIFL IIFL IIFL

7.

IIFL

IIFL

8.

IIFL

IIFL

9.

IIFL

IIFL

10. 11.

IIFL IIFL IIFL

IIFL IIFL IIFL

12.

13

Even if many of these activities will be handled by other intermediaries, the BRLM shall be responsible for ensuring that these agencies fulfill their functions and enable it to discharge this responsibility through suitable agreements with our Company. Credit rating This being an issue of Equity Shares, there is no requirement of credit rating for the Issue. IPO Grading Agency Credit Analysis & Research Limited 401, 4th Floor, Ashok Schintilla, 3-6-520, Himayatnagar, Hyderabad – 500 029 Tel: +91 40-40102030 Fax: +91 40-40020131 Email: rahul.patni@careratings.com Contact Person: Mr. Rahul Patni, Senior Manager Website: www.careratings.com IPO Grading This Issue has been graded by Credit Analysis & Research Limited and has been assigned IPO Grade [●] indicating [●] fundamentals through its letter dated [●] and has been reaffirmed by the letter dated [●]. The IPO grading is assigned on a [●] scale from [●] with an “IPO Grade [●]” indicating [●] fundamentals and an “IPO Grade [●]” indicating [●] fundamentals. Attention is drawn to the disclaimer appearing under the paragraph titled “Disclaimer clause of the IPO Grading Agency” in the chapter titled “Other Regulatory and Statutory Disclosures” beginning on page 263 of this Draft Red Herring Prospectus. This grading expires within [●] from the date of the report. The rationale for the Grade assigned to our Company's IPO by [●], has been set out in its report. A summary of the rationale for the grading assigned by [●] in its report is reproduced below: Grading Rationale The rationale / description furnished by the IPO grading agency will be updated at the time of filing the Red Herring Prospectus with SEBI and will be made available for inspection at out Registered Office from 10.00 a.m. to 4.00 p.m. on Working Days during the Bid/ Issue Period. Expert Opinion Except for the report of Credit Analysis & Research Limited in respect of the IPO Grading of this Issue (a copy of which will be annexed to the Red Herring Prospectus as Annexure I), furnishing the rationale for its grading which will be provided to the Designated Stock Exchange included in this Draft Red Herring Prospectus, our Company has not obtained any expert opinions. Trustees As this is an Issue of Equity Shares, the appointment of Trustees is not required. Monitoring Agency A monitoring agency is not required to be appointed in terms of sub-regulation (1) of Regulation 16 of the SEBI ICDR Regulations. The Board of Directors of our Company will monitor the use of the proceeds of this Issue.

14

Project Appraisal The objects of the Issue have not been appraised by any appraising entity. The objects of this Issue and means of finance therefore are based on internal estimates of our Company. BOOK BUILDING PROCESS The Book Building Process refers to the process of collection of Bids from the investors on the basis of the Red Herring Prospectus within the Price Band. The Price Band and the minimum Bid lot size for the Issue will be decided by the Company and the Selling Shareholders in consultation with the BRLM and advertised in [●] edition of [●] and [●] edition of [●] (one in English, one in Hindi and one in the regional language newspaper) at least two Working Days prior to the Bid/Issue Opening Date. The Issue Price is finalised after the Bid/Issue Closing Date. The principal parties involved in the Book Building Process are:  Our Company;  Selling Shareholders;  BRLM in this case being India Infoline Limited;  Syndicate Member(s) which are intermediaries registered with SEBI or registered as brokers with BSE/NSE and eligible to act as Underwriters. The BRLM shall appoint the Syndicate Members.  Registrar to this Issue;  Escrow Collection Bank(s); and  Self Certified Syndicate Banks. The Issue is being made under sub-regulation (1) of Regulation 26 of the SEBI ICDR Regulations and through a Book Building Process wherein not more than 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs” and such portion the “QIB Portion”). Our Company in consultation with the BRLM may consider participation by Anchor Investors in the Net Issue for upto 30% of the QIB Portion in accordance with the applicable SEBI ICDR Regulations (“Anchor Investor Portion”), out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the remaining QIB Portion (“Net QIB Portion”). Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to QIBs, subject to valid Bids being received from them at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the Net QIB Portion and be available for allocation on a proportionate basis to the QIBs, subject to valid Bids being received from them at or above the Issue Price. Further not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received from them at or above the Issue Price. Further, 25,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received from them at or above the Issue Price. On receipt of minimum subscription i.e. 90% of the Fresh Issue and in case of under-subscription in the Issue, the entire subscription amount would first be adjusted towards the Fresh Issue and thereafter towards the Offer for Sale. Any unsubscribed portion in the Employee Reservation Portion shall be added to the Net Issue. In accordance with the SEBI ICDR Regulations, QIBs are not allowed to withdraw their Bids after the QIB Bid/Issue Closing Date. However, Anchor Investors are not allowed to withdraw their Bids after the Anchor Investor Bidding Date. Allocation to the Anchor Investors will be on a discretionary basis. For further details, please refer to chapter titled “Issue Structure” on page 283 of this Draft Red Herring Prospectus. Our Company and the Selling Shareholders will comply with the SEBI ICDR Regulations and any other ancillary directions issued by SEBI for this Issue. In this regard, we have appointed the BRLM to manage the Issue and procure subscriptions to the Issue. The Book Building Process under the SEBI ICDR Regulations is subject to change from time to time and the investors are advised to make their own judgment about investment through this process prior to making a Bid in the Issue. 15

Steps to be taken by the Bidders for making a Bid or application in this Issue: 1. Check eligibility for making a Bid. For further details, see the chapter titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus. 2. Ensure that you have a demat account and the demat account details are correctly mentioned in the Bid cum Application Form or the ASBA Form, as the case may be; 3. Ensure that the Bid cum Application Form or ASBA Form is duly completed as per the instructions given in this Draft Red Herring Prospectus and in the respective forms; 4. Ensure that you have mentioned your PAN in the Bid cum Application Form or ASBA Form (for further details, see the chapter titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus prior to making a Bid); 5. Except for bids on behalf of the Central or State Government and the officials appointed by the courts, for Bids of all values ensure that you have mentioned your PAN allotted under the I.T. Act in the Bid cum Application Form and the ASBA Form (see the chapter titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus). However, Bidders residing in the State of Sikkim are exempted from the mandatory requirement of PAN. The exemption is subject to the Depository Participants’ verifying the veracity of the claim of the investors that they are residents of Sikkim, by collecting sufficient documentary evidence in support of their address; 6. Ensure the correctness of your Demographic Details (as defined in the paragraph titled “Bidder’s Depository Account and Bank Account Details” in the chapter titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus), given in the Bid cum Application Form or ASBA Form, with the details recorded with your Depository Participant; 7. ASBA Bidders shall submit an ASBA Bid cum Application Form either in physical or electronic form to (a) the SCSB or the Designated Branches of the SCSBs authorising blocking of funds that are available in the bank account specified in the ASBA Bid cum Application Form; or (b) to the members of the Syndicate who shall further submit such ASBA Bid cum Application Form to the SCSBs. ASBA Bidders should ensure that their bank accounts have adequate credit balance at the time of submission to the SCSB to ensure that their ASBA Form is not rejected; and 8. Bids by QIBs (including Anchor Investors, but excluding ASBA Bidders) must be submitted to the BRLM and/or its affiliates Illustration of book building and price discovery process (Investors should note that the following is solely for the purpose of illustration and is not specific to this Issue and excludes information pertaining to Bidding by Anchor Investors) Bidders (excluding the Retail ASBA bidders who can only bid at cut-off price) can bid at any price within the Price Band. For instance, assume a price band of ‘20 to 24’ per equity share, issue size of 3,000 equity shares and receipt of five bids from bidders, details of which are shown in the table below. A graphical representation of the consolidated demand and price would be made available at the bidding centers during the bidding period. The illustrative book below shows the demand for the equity shares of the issuer company at various prices and is collated from bids received from various investors. Bid Quantity 500 1,000 1,500 2,000 2,500 Bid Amount (Rs.) 24 23 22 21 20 16 Cumulative Quantity 500 1,500 3,000 5,000 7,500 Subscription 16.67% 50.00% 100.00% 166.67% 250.00%

The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the desired number of shares is the price at which the book cuts off, i.e., ‘22’ in the above example. The Issuer, in consultation with the BRLM and the Selling Shareholders will finalise the issue price at or below such cut-off price, i.e., at or below ‘22’. All bids at or above this issue price are valid bids and are considered for allocation in the respective categories. Withdrawal of this Issue In accordance to SEBI Regulations, our Company in consultation with the Selling Shareholders and BRLM, reserve the right not to proceed with the Issue at anytime including after the Bid/Issue Opening Date but before allotment, without assigning reasons thereof. In the event of withdrawal of this Issue after the Bid/Issue Closing Date, the reasons therefore shall be disclosed in a public notice which shall be published within two Working Days of the Bid/Issue Closing Date in English and Hindi daily national newspapers and one regional daily newspaper, each with wide circulation. The notice of withdrawal shall be issued in the same newspapers where the pre-Issue advertisements have appeared and the Stock Exchanges shall be informed promptly. The BRLM, through the Registrar to the Issue, shall notify the SCSBs to unblock the bank accounts of the ASBA Bidders within one Working Day from the date of receipt of such notification. Further, in the event our Company, Selling Shareholders in consultation with the BRLM withdraw the Issue after the Bid/Issue Closing Date and subsequently we decided to proceed with the initial public offering of Equity Shares, a fresh draft red herring prospectus will be filed with SEBI. Notwithstanding the foregoing, this Issue is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment, and (ii) the final RoC approval of the Prospectus after it is filed with the RoC. In terms of the SEBI Regulations, QIBs bidding in the Net QIB Portion shall not be allowed to withdraw their Bids after the Bid/Issue Closing Date. Since, the Bidding Period for QIBs will close one Working Day prior to the Bid/Issue Closing Date, QIBs will not be able to withdraw their Bids after [●] i.e., one Working Day prior to the Bid/Issue Closing Date. Bid/Issue Program BID/ISSUE OPENS ON* BID/ISSUE CLOSES ON FOR ALL BIDDERS [●], 2010 FOR QIBs [●], 2010 FOR RETAIL AND NON-INSTITUTIONAL [●], 2010 BIDDERS (INCLUDING ELIGIBLE EMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION) *Our Company in consultation with the BRLM, may consider participation by Anchor Investors in terms of the SEBI ICDR Regulations. The Anchor Investor Bid/Issue Period shall be one Working Day prior to the Bid/ Issue Opening Date. Bids by Anchor Investors will be submitted to the BRLM. The number of Equity Shares allocated to each Anchor Investor and Anchor Investor Issue Price shall be made available in the public domain by the BRLM, before the Bid / Issue Opening Date. Bids and any revision in Bids shall be accepted only between 10.00 a.m. to 5.00 p.m. (Indian Standard Time) during the Bid/Issue Period at the Bidding Centers mentioned on the Bid cum Application Form or, in case of Bids submitted through ASBA, by the member of the syndicate or the Designated Branches of the SCSBs except that on the Bid/Issue Closing Date: For QIB Bidders  Bids shall be accepted only between 10.00 a.m. to 4.00 p.m. (Indian Standard Time) and uploaded until 5.00 pm (Indian Standard Time). QIB Bid / Issue Closing Date for the QIB Bidders will be a day prior to the Bid / Issue 17

Closing Date. For Non-Institutional Bidders  Bids shall be accepted only between 10.00 a.m. to 3.00 p.m. (Indian Standard Time) and uploaded until 4.00 pm (Indian Standard Time). For Retail Individual Investors  Bids shall be accepted only between 10.00 a.m. to 4.00 p.m. (Indian Standard Time) and uploaded until 5.00 pm (Indian Standard Time) which may be extended upto such time subject to permission from BSE and NSE. For Eligible Employees (under Employee Reservation Portion) Bids shall be accepted only between 10.00 a.m. to 4.00 p.m. (Indian Standard Time) and uploaded until 5.00 pm (Indian Standard Time) which may be extended upto such time subject to permission from BSE and NSE. Due to limitation of the time available for uploading the Bids on the Bid/Issue Closing Date, the Bidders are advised to submit their Bids one Working Day prior to the Bid/Issue Closing Date and, in any case, no later than 3.00 p.m. (Indian Standard Time) on the Bid/Issue Closing Date. Bidders are requested to note that due to clustering of last day applications, as is typically experienced in public offerings, some Bids may not get uploaded on the last date. Such Bids that cannot be uploaded will not be considered for allocation under the Issue. Bids not uploaded in the book would be rejected. If such Bids are not uploaded, our Company, the Selling Shareholders, BRLM, Syndicate Members, Sub-syndicate members and the SCSBs will not be responsible. Bids will be accepted only on Working Days. Bids by ASBA Bidders shall be uploaded by the SCSB in the electronic system to be provided by the NSE and the BSE. On the Bid/Issue Closing Date, extension of time may be granted by the Stock Exchanges only for uploading the Bids received by Retail Individual Bidders and Eligible Employees after taking into account the total number of Bids received up to the closure of timings for acceptance of Bid cum Application Forms and ASBA Form as stated herein and reported by the BRLM to the Stock Exchange within half an hour of such closure. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical Bid form, for a particular bidder, the details as per physical application form of that Bidder may be taken as the final data for the purpose of allotment. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical or electronic Bid cum Application Form, for a particular ASBA Bidder, the Registrar to the Issue shall ask for rectified data from the SCSB. Investors please note that as per letter no. List/smd/sm/2006 dated July 03, 2006 and letter no. NSE/IPO/25101-6 dated July 06, 2006 issued by BSE and NSE respectively, Bids and any revision in Bids shall not be accepted on Saturdays and Holidays as declared by the exchanges. Our Company in consultation with the Selling Shareholders and the BRLM reserve the right to revise the Price Band during the Bid/Issue Period in accordance with the SEBI ICDR Regulations provided that the revised cap of the price band should not be more than 20% of the revised floor of the band i.e. revised cap of the Price Band shall be less than or equal to 120% of the revised floor of the price band. The Floor Price can be revised up or down to a maximum of 20% of the original Floor Price and shall be advertised at least one Working Day before the Bid /Issue Opening Date. In the event of any revision in the Price Band, whether upwards or downwards, the minimum application size shall remain [●] Equity Shares irrespective of whether the Bid Amount payable on such minimum application is not in the range of Rs.5,000 to Rs.7,000. In case of revision of the Price Band, the Issue Period will be extended for three additional Working Days after revision of the Price Band subject to the total Bid /Issue Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Issue, if applicable, will be widely disseminated by notification to the BSE and the 18

NSE and the SCSBs, by issuing a press release and also by indicating the changes on the web sites of the BRLM and at the terminals of the Syndicate. UNDERWRITING AGREEMENT After the determination of the Issue Price but prior to the filing of the Prospectus with the RoC, our Company will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through the Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLM shall be responsible for bringing in the amount devolved in the event that the Syndicate Member does not fulfill their underwriting obligations. The Underwriting shall be to the extent of the bids uploaded by the Underwriter including through its syndicates / sub-syndicates. Pursuant to the terms of the Underwriting Agreement, the obligations of the Underwriter are several and are subject to certain conditions to closing, as specified therein. The Underwriting Agreement is dated [●] and has been approved by the Board of Director. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: This portion has been intentionally left blank and will be filled in before filing of the Prospectus with the RoC. (Amount in Rupees million) Indicative Number of Amount Equity Shares to be Underwritten Underwritten [●] [●] [●] [●] [●] [●] The above table has been intentionally left blank and will be filled in before filing of the Prospectus with the RoC. Details the Underwriters In the opinion of our Board of Directors (based on a certificate dated [●] given by the Underwriters), the resources of the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. The abovementioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with the Stock Exchange(s). Our Board of Directors, at its meeting held on [●] has accepted and entered into the Underwriting Agreement with the Underwriters. Allocation among the Underwriters may not necessarily be in proportion to their underwriting commitments set forth in the table above. Notwithstanding the above table, the BRLM and the Member(s) of Syndicate shall be responsible for ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of any default in payment, the Underwriter, in addition to other obligations defined in the Underwriting Agreement, will also be required to procure subscriptions for/subscribe to Equity Shares to the extent of the defaulted amount, as specified in the underwriting agreement. The underwriting arrangements mentioned above shall not apply to the subscriptions by the ASBA Bidders in this Issue.

19

CAPITAL STRUCTURE

The share capital of our Company as of the date of this Draft Red Herring Prospectus is set forth below. (Amount in Rupees) Aggregate Aggregate value at value at Issue nominal value Price A) AUTHORISED SHARE CAPITAL 25,000,000 Equity Shares of Rs. 10/- each ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL BEFORE THE ISSUE 12,028,215 Equity Shares of Rs. 10/- each 250,000,000

B)

120,282,150

PRESENT ISSUE IN TERMS OF THIS DRAFT RED HERRING PROSPECTUS Issue of 4,500,000 Equity Shares (1) The Issue comprises of: (a) Fresh Issue of 2,372,728 Equity Shares (b) Offer for Sale of 2,127,272 Equity Shares (2) The Issue comprises of: (a) Employee Reservation Portion of up to 25,000 Equity Shares (3) (b) Net Issue to Public of 4,475,000 Equity Shares Of which QIB Portion of not more than 2,237,500 Equity Shares; Non-Institutional Portion of not less than 671,250 Equity Shares Retail Portion of not less than 1,566,250 Equity Shares D) PAID-UP SHARE CAPITAL AFTER THE ISSUE 14,400,943 Equity Shares of Rs. 10/- each E) SECURITIES PREMIUM ACCOUNT Before the Issue After the Issue (4)

C)

45,000,000 23,727,280 21,272,720 250,000 44,750,000

[●] [●] [●] [●] [●]

144,009,430

204,935,506 [●]

1 2

3 4

The Issue has been authorized by the Board of Directors pursuant to a board resolution dated August 13, 2010 and by the shareholders of our Company pursuant to a special resolution dated September 20, 2010 passed at the AGM of shareholders under section 81(1A) of the Companies Act. The Offer for Sale comprises an offer for sale of 1,263,636 and 863,636 Equity Shares, by UTI ITVUS and New Vernon, respectively:  UTI ITVUS has vide a letter dated September 24, 2010 consented to the Offer for Sale of 1,263,636 Equity Shares.  New Vernon has authorized the Offer for Sale of 863,636 Equity Shares vide resolution of its board of directors dated September 30, 2010. The Equity Shares constituting the Offer for Sale have been held by the Selling Shareholders for a period of more than one year prior to the date of filing this Draft Red Herring Prospectus with SEBI. As on the date of this Draft Red Herring Prospectus, all Equity Shares held by the Selling Shareholders are in physical form. A discount of Rs. [●] to the Issue Price determined pursuant to completion of the Book Building Process has been offered to Eligible Employees bidding under the Employee Reservation Portion. The Securities Premium Account after the Issue shall be determined after the Book Building Process.

20

NOTES TO CAPITAL STRUCTURE

1.

Details of increase in Authorised Share Capital of Our Company since incorporation

Sr. No.

Particulars of Increase

Date of Shareholders’ Meeting To Incorporation

AGM/EGM

From 1. -

2.

3.

4.

5.

6.

2.

Rs. 5,000,000/- consisting of 500,000 Equity shares of Rs. 10/- each. Rs. 5,000,000/- consisting of Rs. 10,000,000/- consisting of 500,000 Equity shares of Rs. 1,000,000 Equity shares of Rs. 10/- each. 10/- each. Rs. 10,000,000/- consisting of Rs. 20,000,000/- consisting of 1,000,000 Equity shares of Rs. 2,000,000 Equity shares of Rs. 10/- each. 10/- each. Rs. 20,000,000/- consisting of Rs. 75,000,000/- consisting of 2,000,000 Equity shares of Rs. 7,500,000 Equity shares of Rs. 10/- each. 10/- each. Rs. 75,000,000/- consisting of Rs. 150,000,000/- consisting of 7,500,000 Equity shares of Rs. 15,000,000 Equity shares of Rs. 10/- each. 10/- each. Rs. 150,000,000/- consisting of Rs. 250,000,000/- consisting of 15,000,000 Equity shares of Rs. 25,000,000 Equity shares of Rs. 10/- each. 10/- each. Share Capital History of our Company

-

October 27, 1998 December 2, 1999 January 12, 2000 November 25, 2005 November 30, 2007

AGM

EGM

EGM

EGM

AGM

The following is the history of the Equity Share Capital of our Company:

Date of Allotment

No. of Equity Shares

Face Value (Rs.) 200 10 10 10 10 10 10 10 10 10 10 10

Issue Price (Rs.) 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00

Nature of Consideration

Nature of allotment

November 21, 1997 March 25, 1998 March 27, 1999 December 9, 1999 October 12, 2001 March 29, 2002 March 31, 2003 March 31, 2005 December 29, 2005 December 31, 2005 February

Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash Cash

9,800 990,000 1,000,000 1,928,800 115,390 193,500 226,800 2,848,034 299,000 1,488,476

Initial subscription (1) Preferential Allotment (2) Preferential Allotment (3) Preferential Allotment (4) Preferential Allotment (5) Preferential Allotment (6) Preferential Allotment (7) Rights Issue (8) Rights Issue (9) Preferential Allotment (10) Preferential

Cumulative No. of Equity Shares 200 10,000 1,000,000 2,000,000 3,928,800 4,044,190 4,237,690 4,464, 490 7,312,524 7,611,524 9,100,000

Cumulative Equity Share capital (Rs.) 2,000 100,000 10,000,000 20,000,000 39,288,000 40,441,900 42,376,900 44,644,900 73,125,240 76,115,240 91,000,000

Cumulative Equity Share Premium -

21

20, 2006 February 22, 2006 March 15, 2006 March 31, 2006 January 1, 2010
(1)

Allotment (11) 250,000 1,877,272 650,000 10 10 10 70.00 100.73 10.00 Cash Cash Cash Preferential Allotment (12) Preferential Allotment (13) Preferential Allotment (14) Preferential Allotment (15) 9,350,000 11,227,272 11,877,272 93,500,000 112,272,720 118,772,720 15,000,000 185,324,888.56 185,324,888.56

150,943

10

132.50

Cash

12,028,215

120,282,150

203,815,406.06
(16)

(2)

(3)

(4) (5)

(6)

(7) (8)

(9)

(10)

(11)

Initial allotment of 100 equity shares each to the subscribers to the MoA of the Company being Ms. Sridevi Bolli and Mr. P.V.S. Raju. Preferential allotment of 950 equity shares to Mr. Surya Bolli, 950 equity shares to Ms. Suryakantham Bolli and 7,900 equity shares to Mr. P.V.S. Raju. Preferential allotment of 728,800 equity shares to Mr. Satyanarayana Bolli, 107,400 equity shares to Mr. P.V.S. Raju and 153,800 equity shares to Mr. Narender Dev Mantena. Preferential allotment of 1,000,000 equity shares to Nagarjuna Holdings Private Limited. Preferential allotment of 1,838,800 equity shares to Mr. Satyanarayana Bolli, 40,000 equity shares to Mr. Venkata Rama Rao Bolli and 50,000 equity shares to Mr. Ratnaji Rao Bolli. Preferential allotment of 80,020 equity shares to Mr. Satyanarayana Bolli, 15,270 equity shares to Mr. Narender Dev Mantena, 20,000 equity shares to Ms. Sridevi Bolli, 50 equity shares to Mr. Surya Rao Bolli and 50 equity shares to Ms. Suryakantamma Bolli. Preferential allotment of 193,500 equity shares to Mr. Satyanarayana Bolli. The shareholders of our Company vide their resolution dated March 2, 2005 approved rights issue of 250,000 Equity Shares of Rs. 10/- in the proportion of one equity share for every seventeen equity shares held as on February 1, 2005. Rights allotment of 92,000 equity shares to Ms. Sridevi Bolli, 39,800 equity shares to Mr. Rama Rao Bolli and 95,000 equity shares to Ms. Radhika Bolli. The shareholders of our Company vide their resolution dated November 25, 2005 approved rights issue of 31,25,144 Equity Shares of Rs. 10/- in the proportion of seventy equity share for every one hundred equity shares held as on November 25, 2005. Rights allotment of 1,988,784 equity shares to Mr. Satyanarayana Bolli, 778,470 equity shares to Ms. Sridevi Bolli and 80,780 equity shares to Mr. P.V.S. Raju. Preferential allotment of 15,000 Equity Shares to Ms. Jas Padmaja, 15,000 Equity shares to Ms. Shilloi Sawang, 15,000 Equity Shares to Mr. C.V.S. Shashikala, 10,000 Equity Shares to Mr. Kanchrla Ravindranath, 20,000 Equity shares to Dr. Nageswara Reddy, 5,000 Equity Shares to Mr. A. Sita Ramaraju, 5,000 Equity Shares to Mr. A. Vijaya Kumar Raju, 5,000 Equity Shares to Ms. P. Rama Lakshmi, 20,000 Equity Shares to Mr. Vivek Mundra (HUF), 10,000 Equity Shares to Mr. Sanjay Kothari, 10,000 Equity Shares to Mr. K. R. Bharat, 5,000 Equity Shares Ms. Deepta Rangarajan, 10,000 Equity Shares to Ms. Sudha Sarada Vadlamudi, 10,000 Equity Shares to Mr. Nagoti Chandrashekhar Naidu, 10,000 Equity Shares to Mr. N. Bhuvaneswari, 5,000 Equity Shares to Ms. Uma Poornima Kosararju, 3,000 Equity Shares to Mr. K. Venkata Girish Chowdary, 5,000 Equity shares to Ms. Ranjana Siva Shankar, 5,000 Equity Shares to Ms. Amita Thakur, 5,000 Equity Shares to Mr. Nimmagadda Janardhana Rao, 5,000 Equity Shares to Ms. Seri Shobha Reddy, 5,000 Equity Shares to Mr. Keerti Kata, 1,000 Equity Shares to Mr. V. Kanaka Raju, 1,000 Equity Shares to Mr. A. Sunil, 1,000 Equity Shares to Mr. Narayanaswamy Rajesh, 500 Equity Shares to Mr. G. Ashok Kumar, 500 Equity Shares to Ms. B. Lakshmi, 500 Equity Shares to Mr. Khaisar Khan, 500 Equity Shares to Mr. Mohd. Moin, 1,000 Equity Shares to Ms. KanganBhalla, 5,000 Equity Shares to Ms. Jasti Lakshmi Narayana, 5,000 Equity Shares to Mr. N. Sivamala, 5,000 Equity Shares to Ms. K. Lakshmi, 5,000 Equity Shares to Ms. Mamatha A. Sharma, 5,000 Equity Shares to Mr. Garlapati Pallavi, 5,000 Equity Shares to Ms. Sunkara Padmavathi, 5,000 Equity Shares to Ms. Guneesha Bhalla, 5,000 Equity Shares to Ms. Asmita Singh, 5,000 Equity Shares to Mr. T.B.V.P. Chandra Mouli, 5,000 Equity Shares to Mr. L.V.N. Muralidhar, 10,000 Equity Shares to Mr. Gulzar Govewalla 10,000 Equity Shares to Mr. R. Kannan 5,000 Equity Shares to Mr. Chandra Kanth Chereddi 3,000 Equity Shares to Mr. T. Sitayamma 5,000 Equity Shares to Mr. V. Ramesh 5,000 Equity Shares to Mr. Kunal Avinash Kumthekar 1,000 Equity Shares to Mr. T. Satyanarayana Murthy, 1,000 Equity Shares to Mr. Y. Nageswara Rao and 5,000 Equity Shares to Mr. Rohidas Shenoy. Preferential allotment of 405,056 Equity Shares to Ms. Sridevi Bolli, 200 Equity Shares to Mr. Rama Rao Bolli, 50,000 Equity Shares to Mr. Ratnaji Rao Bolli, 557,220 Equity Shares to Ms. P. Rajya Lakshmi, 150,000 Equity Shares to SST Employee Welfare Trust, 10,000 Equity Shares to Mr. S. V. Rao, 5,000 Equity Shares to Mr. Srinivas Vallabhaneni, 5,000 Equity Shares to Ms. Sailaja Vallabhanenienei, 10,000 Equity Shares to Mr. Rama Krishna Veeramachaneni, 5,000 Equity Shares to Ms. T. Swarupa Rani, 2,000 Equity Shares to Mr. Nallamothu Subrahmanyam, 2,000 Equity Shares to Mr. M. Vineela, 5,000 Equity Shares to Mr. I. Varalakshmi, 10,000 Equity Shares to Ms. Vankina Chamundeswaranath, 25,000 Equity Shares to Ch. Surya Kumari, 25,000 Equity Shares to Mr. N. Veeranna Chowdary, 15,000 Equity Shares to Ms. Phalguni Ravi, 15,000 Equity Shares to Ms. P. V. Mahalakshmi, 5,000 Equity Shares to Ms. Vijaya Lakshmi Vallepalli, 5,000 Equity Shares to Mr. Alur Kusuma, 2,000 Equity Shares to Ms. P. Kedareswari, 5,000 Equity Shares to

22

(12)

(13)

(14) (15) (16)

Ms. I. Nagaratna Kumari, 5,000 Equity Shares to Ms. Atluri Sridevi, 3,000 Equity Shares to Mr. Y. Rama Krishna Rao, 2,000 Equity Shares to Mr. Maheswarapu Sydulu, 4,000 Equity Shares to Mr. Sravanthi Chowdary, 10,000 Equity Shares to Mr. G. Gangadhara Rao, 10,000 Equity Shares to Mr. S. Nageswara Rao, 10,000 Equity Shares to Ms. Pendurthi Annapurna, 4,000 Equity Shares to Ms. Chitturi Rajeswari, 5,000 Equity Shares to Mr. Kodidela Rajeswary, 2,000 Equity Shares to Mr. Rahul Gupta, 5,000 Equity Shares to Mr. Mathew Easow, 10,000 Equity Shares to Dr. Mohana R. Velagapudi 10,000 Equity Shares to Ms. C. Naga Rani, 5,000 Equity Shares to Mr. A. Mohana Krishna Reddy, 10,000 Equity Shares to Ms. K. Padma Priya, 5,000 Equity Shares to Ms. S. Salini, 10,000 Equity Shares to Ms. C. Uma Devi, 10,000 Equity Shares to Mr. Shivaji C. Mukthavaram, 10,000 Equity Shares to Mr. C. Raja Sekhar Reddy, 10,000 Equity Shares to Mr. Surya Rao Nanduri, 15,000 Equity Shares to Ms. Padmini Athuluru, 10,000 Equity Shares to Mr. R. K. Rama Chandra Raju and 10,000 Equity Shares to Mr. Anubama Atmanathan. Preferential allotment of 50,000 Equity Shares to Mr. Kadayam Ramanathan Bharat, 50,000 Equity Shares to Mr. Sanjay Jagadish Poddar, 40,000 Equity Shares to Mr. Adit G. Mehta, 40,000 Equity Shares to Mr. Vivek Mundra, 20,000 Shares to Ms. Valsa Mathew and 50,000 Equity Shares to Ms. Asha B. Preferential allotment of 863,636 Equity Shares each to UTI ITVUS and New Vernon in terms of the Share Subscription Agreement, Shareholders Agreement and Share Purchase Agreement and 150,000 Equity Shares to Cremax Convertors Private Limited. Preferential allotment of 650,000 Equity Shares to SST Employees Welfare Trust. Preferential allotment of 150,943 Equity Shares to Mr. P. V. S. Raju. The Securities Premium Account as appearing in our Balance Sheet as on June 30, 2010 includes a further amount of Rs.1,120,100 pursuant to the employee compensation cost accounted in the Fiscal 2009. As prescribed by the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India and related interpretations, the Company applies the intrinsic value method of accounting to account for stock options issued to the employees of the Company. The excess of the intrinsic value of shares, at the date of grant of options under the Employee stock option schemes, over the exercise price is treated as employee compensation and amortised over the vesting period. The intrinsic value determined by the Compensation Committee was Rs 14.60 per share and the exercise price per option was Rs. 10 each.

3.

Issue of Equity Shares in the last one year

Except as stated below our Company has not issued any Equity Shares in the preceding one year. The Equity Shares as below may have been issued at a price lower than the Issue Price. Date of Allotment of Equity Shares January 1, 2010 Number of Equity Shares 150,943 Nature of Allotment Preferential Allotment to Mr. P.V.S. Raju Face Value (Rs.) 10 Issue Price (Rs.) 132.50

4. 5.

Our Company has not issued any Equity Shares for consideration other than cash. Our Company has not issued any Equity Shares out of revaluation reserves or in terms of any scheme approved under Sections 391- 394 of the Companies Act. Build-up of Promoters’ Shareholding, Promoters Contribution and lock-in Details of the build up of our Promoters’ shareholding in our Company Nature of allotment / acquisition No. of Equity Shares* Face Value (Rs.) Issue/acquisition price per Equity Share (Rs.)

6. (a)

Date of Nature of allotment/ Consideration Transfer or when the Equity Shares were made fully paid up (A) Mr. Satyanarayana Bolli March 27, 1999 Cash October 12, Cash 2001 March 29, 2002 Cash

Preferential Allotment Preferential Allotment Preferential Allotment 23

728,800 1,838,800 80,020

10 10 10

10 10 10

Date of Nature of Nature of allotment / allotment/ Consideration acquisition Transfer or when the Equity Shares were made fully paid up March 31, 2003 Cash Preferential Allotment November 12, Cash Transferred to Icon 2004 Investments Limited December 29, Cash Rights Issue 2005 December 30, Cash Transferred to Icon 2005 Investments Limited Total (A) % of Pre Issue paid up equity share capital % of Post Issue paid up equity share capital (B) Ms. Sridevi Bolli November 21, Cash Subscription to the 1997 Memorandum of Association February 1, Cash Transfer from Nagarjuna 2000 Holdings Private Limited March 29, 2002 Cash Preferential Allotment March 31, 2005 Cash Rights Issue December 29, Cash Rights Issue 2005 December 30, Cash Transferred to Mr. Ratnaji 2005 Rao Bolli February 17, Cash Transferred from Mr. 2006 Ratnaji Rao Bolli February 20, Cash Preferential Allotment 2006 December 12, Cash Transferred from SST 2008 Employee Welfare Trust Total (B) % of Pre Issue paid up equity share capital % of Post Issue paid up equity share capital (C) Mr. Rama Rao Bolli February 1, Cash Transferred from Mr. 2000 Surya Rao Bolli October 12, Cash Preferential Allotment 2001 November 12, Cash Transferred to Ms. Radhika 2004 Bolli March 31, 2005 Cash Rights Issue February 20, Cash Preferential Allotment 2006 December 12, Cash Transferred from SST 2008 Employee Welfare Trust Total (C) % of Pre Issue paid up equity share capital % of Post Issue paid up equity share capital (D) Icon Investments Limited

No. of Equity Shares*

Face Value (Rs.)

Issue/acquisition price per Equity Share (Rs.)

193,500 (2,500,000) 1,988,784 (341,120) 1,988,784

10 10 10 10

10 10 10 10

16.53 13.81 100 10 10

1,000,000 20,000 92,000 778, 470 (83,880) 83,880 405,056 50,000 2,345,626

10 10 10 10 10 10 10 10

10 10 10 10 10 10 10 10

19.50 16.29 1 40,000 (100) 39,800 200 25,000 104,901 0.87 0.73 10 10 10 10 10 10 10 10 10 10 10 10

24

Date of Nature of Nature of allotment / allotment/ Consideration acquisition Transfer or when the Equity Shares were made fully paid up November 12, Cash Transfer from Mr. 2004 Satyanarayana Bolli December 30, Cash Transfer from Mr. 2005 Satyanarayana Bolli March 30, 2007 Cash Transfer to UTI ITVUS Total (D) % of Pre Issue paid up equity share capital % of Post Issue paid up equity share capital Total (A+B+C+D) % of Pre Issue paid up equity share capital % of Post Issue paid up equity share capital (b)

No. of Equity Shares*

Face Value (Rs.)

Issue/acquisition price per Equity Share (Rs.)

2,500,000 341,120 (250,000) 2,591,120

10 10 10

10 10 200 21.54 17.99

7,030,431 58.44 48.82

The details of the shareholding of the Promoters and the Promoter Group as on the date of filing of this Draft Red Herring Prospectus: (Face Value of Equity shares of Rs. 10/- each) Name of the Shareholders Pre-Issue Equity Capital Post – Issue Equity Capital Number of Equity % Number of Equity % Shares Shares (A) Promoters Mr. Satyanarayana Bolli 1,988,784 16.53 1,988,784 13.81 Ms. Sridevi Bolli 2,345,626 19.50 2,345,626 16.29 Mr. Rama Rao Bolli 104,901 0.87 104,901 0.73 Icon Investments Limited 2,591,120 21.54 2,591,120 17.99 Total (A) 7,030,431 58.44 7,030,431 48.82 Promoter Group Mr. Surya Rao Bolli 999 0.01 999 0.01 Ms. Suryakantham Bolli 1,000 0.01 1,000 0.01 Ms. Radhika Bolli 95,100 0.79 95,100 0.66 Mr. Ratnaji Rao Bolli 100,000 0.83 100,000 0.69 Mr. Veeranna Chowdary 25,000 0.21 25,000 0.17 Total (B) 222,099 1.85 222,099 1.54 Total (A) + (B) 7,252,530 60.29 7,252,530 50.36 (c) Details of Promoters Contribution locked-in for three years

Pursuant to the SEBI ICDR Regulations, an aggregate of 20% of the post-Issue Equity Share Capital of our Company shall be locked in by the Promoters for a period of three (3) years from the date of Allotment. All Equity Shares of our Company held by Mr. Satyanarayana Bolli, Ms. Sridevi Bolli, Mr. Ram Rao Bolli and Icon Investments Limited are eligible for Promoters contribution. All the shares of our Company held by Mr. Satyanarayana Bolli, Ms. Sridevi Bolli, Mr. Rama Rao Bolli and Icon Investments Limited, our Promoters, are held in physical form. As per clause (a) sub-regulation (1) regulation 32 of the SEBI ICDR Regulations, and in terms of the aforementioned table of Promoters share capital build- up, the below mentioned Equity Shares, held by our Promoters, shall be locked in for a period of three (3) years from the date of Allotment as per sub-regulation (a) of 25

regulation 36 of SEBI ICDR Regulations: Name Date of Allotment / Transfer / Acquisition December 29, 2005 February 1, 2000 November 12, 2004 No. of Equity Shares Face Value (Rs.) Issue / Acquisition Price Consideration (Cash/ bonus/ kind etc.) % of Per Issue equity share capital 7.12% 8.00% 8.83% 23.95% % of Post Issue equity share capital 5.95% 6.68% 7.37% 20.01

Mr. Satyanarayana Bolli Ms. Sridevi Bolli Icon Investments Limited TOTAL

857,000 962,000 1,062,000 2,881,000

10 10 10 -

10 10 10 -

Cash Cash Cash -

We confirm that specific written consent has been obtained from our Promoters, whose Equity Shares form part of Promoters’ contribution, to lock-in their Equity Shares for a period of three years to ensure minimum Promoter’s contribution to the extent of 20% of the post-Issue paid-up capital of our Company. The Promoters’ contribution has been brought in to the extent of not less than the specified minimum lot and from persons defined as promoters under the SEBI ICDR Regulations. All the Equity Shares which are being locked-in are not ineligible for computation of Promoters’ contribution under regulation 33 of the SEBI ICDR Regulations. We confirm that the minimum Promoters’ contribution of 20% which is subject to lock-in for three years does not consist of: (i) (ii) equity shares acquired in past three years for consideration other than cash and revaluation of assets or capitalisation of intangible assets is involved in such transaction; equity shares resulting from a bonus issue by utilisation of revaluation reserves or unrealised profits of the issuer or from bonus issue against equity shares which are ineligible for minimum promoters’ contribution during the period of last three years; equity shares acquired by Promoters during the preceding one year at a price lower than the price at which equity shares are being offered to public in the Issue; equity shares allotted to Promoters during the preceding one year at a price less than the issue price, against funds brought in by them during that period, post conversion of partnership firms; private placement made by solicitation of subscription from unrelated persons either directly or through any intermediary equity shares pledged with any creditor.

(iii) (iv) (v) (vi)

Further, our Company has not been formed by the conversion of a partnership firm into a company. Our Promoters have undertaken that the Equity Shares forming part of Promoter’s contribution subject to lock-in will not be disposed, sold or transferred by our Promoters during the period starting from the date of filing of this Draft Red Herring Prospectus with the SEBI till the date of commencement of lock-in period. The share certificate for Equity Shares in physical form, which is subject to lock-in, shall carry the inscription ‘non-transferable’ and the non-transferability details shall be informed to the depositories. The details of lock-in shall also be provided to the Stock Exchanges prior to listing of the Equity Shares (d) Details of Equity Shares locked in for one year

In terms of regulation 37 of the SEBI ICDR Regulations, other than the above Equity Shares that are locked in for a period of three (3) years, the entire pre-Issue Equity Share Capital of our Company would be locked-in for a period of one (1) year from the date of Allotment of Equity Shares in the Issue, excluding:  2,127,272 Equity Shares offered as part of Offer for Sale through the Issue; and 26

138,001 equity shares of the Company held by our employee pursuant to exercise of the options granted under the ESOP Scheme 2007 Lock-in of Equity Shares allotted to Anchor Investors

(e)

Further, if our Company in consultation with the BRLM decides to issue Equity Shares to Anchor Investors, these Equity Shares Allotted, in the Anchor Investor Portion shall be locked in for a period of 30 days from the date of Allotment of Equity Shares in the Issue. (f) Other requirements in respect of lock-in

As per regulation 39 read with regulation 36 (b) of the SEBI ICDR Regulations, the locked in Equity Shares held by our Promoters, as specified above, may be pledged only with banks or financial institutions as collateral security for loans granted by such banks or financial institutions, provided that the pledge of the Equity Shares is one of the terms of the sanction of the loan. Provided that if any Equity Shares are locked in as minimum Promoters’ contribution under regulation 39(a) of the SEBI ICDR Regulations, the same may be pledged, only if, in addition to fulfilling the above requirement, the loan has been granted by such banks or financial institutions for the purpose of financing one or more of the Objects of the Issue. In terms of regulation 40 of the SEBI ICDR Regulations, the Equity Shares held by the Promoters locked-in as per regulation 36 may be transferred to another Promoter or any person of the Promoter Group or to new promoter or a person in control of our Company subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with SEBI Takeover Regulations, as applicable. As per regulation 40 of the SEBI ICDR Regulations, the Equity Shares held by persons other than Promoters and locked-in as per regulation 37 of the SEBI ICDR Regulations may be transferred to any other person holding Equity Shares which are locked-in alongwith the Equity Shares proposed to be transferred, subject to the continuation of the lock-in in the hands of transferees for the remaining period and compliance with the SEBI Takeover Regulations. 7. Build-up of Selling Shareholders’ shareholding in our Company No. of Equity Shares* Face Value (Rs.) Issue/acquisition price per Equity Share (Rs.)

Date of Nature of Nature of allotment / allotment/ Consideration acquisition Transfer or when the Equity Shares were made fully paid up (A) New Vernon March 15, 2006 Cash Preferential Allotment Total (A) % of Pre Issue paid up equity share capital (B) UTI ITVUS March 15, 2006 Cash Preferential Allotment February 26, Cash Transfer from Cremax 2007 Convertors Private Limited February 26, Cash Transfer from P. V. S. Raju 2007 March 30, 2007 Cash Transfer from Icon Investments Limited Total (B) % of Pre Issue paid up equity share capital Total (A+B) % of Pre Issue paid up equity share capital

863,636 863,636

10

100.73 7.18

863,636 50,000 100,000 250,000 1,263,636

10 10 10 10

100.73 200.00 200.00 200.00

10.51 2,127,272 17.69

27

8.

Our Shareholding pattern as of the date of this Draft Red Herring Prospectus

The table below represents the shareholding pattern of our Company, before the proposed Issue and as adjusted for this Issue: A.
Category code

The following table presents the shareholding pattern of our Company as on October 29, 2010:
Category of Shareholder Number of Shareholders Total number of shares Number of shares held in dematerialized form Total shareholding as a percentage of total number of shares As a As a percentage percentage of(A+B)1 of (A+B+C)

(A) (A)(1) (a) (b) (c) (d) (e) (A)(2) A

B C D

(B) (B)(1) (a) (b) (c) (d) (e) (f) (g) (h) (B) (2) (a) (b)

I II

(c) (c-i) (c-ii)

Shareholding of Promoter and Promoter Group Indian Individuals/ Hindu Undivided Family Central Government/ State Government(s) Bodies Corporate Financial Institutions/ Banks Any Others(Specify) Sub Total(A)(1) Foreign Individuals (Non-Residents Individuals/ Foreign Individuals) Bodies Corporate Institutions Any Others(Specify) Sub Total(A)(2) Total Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2) Public shareholding Institutions Mutual Funds/ UTI Financial Institutions / Banks Central Government/ State Government(s) Venture Capital Funds Insurance Companies Foreign Institutional Investors Foreign Venture Capital Investors Any Other (specify) Sub-Total (B)(1) Non-institutions Bodies Corporate Individuals i. Individuals -i. Individual shareholders holding nominal share capital up to Rs 1 lakh ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh. Any Other (specify) Foreign Nationals Trust

8 0 0 0 0 8

4,661,410

0

38.75 0.00 0.00 0.00 0.00 38.75

38.75 0.00 0.00 0.00 0.00 38.75

4,661,410

0

0 1 0 0 1

2,591,120

2,591,120

0

0.00 21.54 0.00 0.00 21.54

0.00 21.54 0.00 0.00 21.54

9

7,252,530

0

60.30

60.30

0

0.00 0.00 0.00 10.51 0.00 7.18 0.00 0.00 17.69 0.33

0.00 0.00 0.00 10.51 0.00 7.18 0.00 0.00 17.69 0.33

1 0 1 0 2 1

1,263,636 863,636

2,127,272 40,000

0

70

401,001

3.33

3.33

19 1 3

1,462,343 169,070 575,999

12.16 1.41 4.79

12.16 1.41 4.79

28

(B) (C)

Sub-Total (B)(2) Total Public Shareholding (B)= (B)(1)+(B)(2) TOTAL (A)+(B) Shares held by Custodians and against which Depository Receipts have been issued GRAND TOTAL (A)+(B)+(C)

94 96 105

2,648,413 4,775,685 12,028,215

0 0 0

22.02 39.70 100

22.02 39.70 100

105

12,028,215

0

0.00 100

B.

Shareholding of our Promoters and Promoter Group

The table below presents the current shareholding pattern of our Promoters and Promoter Group as per clause 35 of the Equity Listing Agreement. Sr. No. Name of the shareholder Total shares held Number As a % of grand total (A)+(B)+(C) Shares pledged or otherwise encumbered Number As a As a % of percentage grand total (A)+(B)+(C) of sub-clause (I)(a) (V) (VI)=(V)/(III)X 100 (VII) -

(I) 1. 2. 3. 4. 5. 6. 7. 8. 9.

(II) Icon Investments Limited Ms. Sridevi Bolli Mr. Satyanarayana Bolli Mr. Rama Rao Bolli Ms. Radhika Bolli Mr. Ratnaji Rao Bolli Ms. Suryakantham Bolli Mr. Surya Rao Bolli Mr. Veeranna Chowdary TOTAL

(III) 2,591,120 2,345,626 1,988,784 104,901 95,100 100,000 1,000 999 25,000 7,252,530

(IV) 21.54 19.50 16.53 0.87 0.79 0.83 0.01 0.01 0.21 60.29

C.

Shareholding of persons belonging to the category ‘Public’ and holding more than 1% of our Equity Shares

The table below presents the current shareholding pattern of persons belonging to the category ‘Public’ and holding more than 1% of our Equity Shares, as per clause 35 of the Equity Listing Agreement. Sr. No. Name of the shareholder No. of Equity Shares Shares as a percentage of total number of shares (i.e. grand total (A)+(B)+(C) indicated in statement at para (8) (A) above) 5.58% 3.04% 1.41% 10.03%

1 2 3.

Ms. P. Rajya Lakshmi Mr. P.V.S. Raju Mr. Narender Dev Mantena Total

671,220 366,123 169,070 1,206,413

29

9.

The average cost of acquisition of or subscription to Equity Shares by our Promoters and the Selling Shareholders is set forth in the table below: Number of Equity Shares 1,988,784 2,345,626 104,901 2,591,120 1,263,636 863,636 Average Cost of Acquisition (Rs.) 10 10 10 10 132.15 100.73

Sr. Name of Promoter No. Promoters 1. Mr. Satyanarayana Bolli 2. Ms. Sridevi Bolli 3. Mr. Rama Rao Bolli 4. Icon Investments Limited Selling Shareholders 1. UTI ITVUS 2. New Vernon

Note: The average cost of acquisition of Equity Shares by our Promoters and the Selling Shareholders has been computed by taking the weighted average cost of the total number of Equity Shares held by them.

10.

None of our Directors , Key Managerial Personnel or Director of our Corporate Promoter hold any Equity Shares in the Company as on date of this Draft Red Herring Prospectus, except as stated below: No. of Equity Shares Pre Issue %

Sr. Shareholder No. Our Directors 1. Mr. Satyanarayana Bolli 2. Ms. Sridevi Bolli 3. Mr. P.V.S. Raju 4. Mr. Vivek Mundra 5. Vivek Mundra (HUF) 6. Dr. Nageshwar Reddy 7. Dr. Mohana R. Velagapudi Total Key Managerial Personnel 1. Mr. Rama Rao Bolli 2. Mr. Sudhakar Vadapalli 3. Mr. Venkatesh Ramachandran Total 11. (a) Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

1,988,784 2,345,626 366,123 40,000 20, 000 20,000 10,000 4,790,533 104,901 10,000 15,000 129,901

16.53 19.50 3.04 0.33 0.17 0.17 0.08 39.82 0.87 0.08 0.12 1.08

The list of our shareholders and the number of Equity Shares held by them is as under: Our top 10 shareholders as of the date of filing of this Draft Red Herring Prospectus are as follows: Shareholder Icon Investments Limited Ms. Sridevi Bolli Mr. Satyanarayana Bolli UTI ITVUS New Vernon Ms. P. Rajya Lakshmi SST Employees Welfare Trust Mr. P V S Raju Mr. Narender Dev Mantena Mr. Rama Rao Bolli Total No. of Equity Shares 2,591,120 2,345,626 1,988,784 1,263,636 863,636 671,220 570,999 366,123 169,070 104,901 10,935,115 Percentage of shareholding 21.54 19.50 16.53 10.51 7.18 5.58 4.75 3.04 1.41 0.87 90.91

30

(b) S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Our top 10 shareholders 10 days prior to the filing of this Draft Red Herring Prospectus are as follows: Shareholder Icon Investments Limited Ms. Sridevi Bolli Mr. Satyanarayana Bolli UTI ITVUS New Vernon Mr. P. Rajya Lakshmi SST Employees Welfare Trust Mr. P V S Raju Mr. Narender Dev Mantena Mr. RamaRao Bolli Total No. of Equity Shares 2,591,120 2,345,626 1,988,784 1,263,636 863,636 671,220 570,999 366,123 169,070 104,901 10,935,115 Percentage of shareholding 21.54 19.50 16.53 10.51 7.18 5.58 4.75 3.04 1.41 0.87 90.91

(c)

Our top 10 shareholders as of two years prior to the date of filing of this Draft Red Herring Prospectus were as follows: Shareholder Icon Investments Limited Ms. Sridevi Bolli Mr. Satyanarayana Bolli UTI ITVUS New Vernon SST Employees Welfare Trust Mr. P. Rajya Lakshmi Mr. Narender Dev Mantena Mr. Ratanji Rao Bolli Cremax Convertors Private Limited Total No. of Equity Shares 2,591,120 2,395,626 1,988,784 1,263,636 863,636 800,000 547,220 169,070 100,000 100,000 10,819,092 Percentage of shareholding 21.82% 19.33% 16.74% 10.64% 7.27% 6.74% 4.61% 1.42% 0.84% 0.84% 90.25

S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

12.

Employee Stock Option Plans / Schemes

Employee Stock Option Plan – I 2007 (“ESOP Plan 2007”) The Board of Directors of our Company pursuant to a resolution dated December 20, 2007 approved the grant of stock options pursuant to ESOP Plan 2007 to attract and retain talent in the organization and to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company. A total number of 310,000 Equity Shares were earmarked under the ESOP Plan 2007 as stock options.

The following table sets forth the particulars of the options granted and the Equity Shares allotted under the ESOP Plan 2007: Particulars Options Granted Date of Grant Exercise price of options (in Rs.) Total options vested Options Exercised 31 Details 310,000 On September 4, 2008 Rs. 10.00 310,000 243,500

Total number of Equity Shares that would arise as a result of full exercise of options already granted Options forfeited/lapsed/cancelled Variation in terms of options Money realized by exercise of options (in Rs.) Options outstanding (in force) Person wise details of options granted to: 1. Directors and key managerial personnel 2. Any other employee who received a grant in any one year of options amounting to 5% or more of the options granted during the year 3. Identified employees who are granted options, during any one year equal to exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Fully Diluted EPS on a pre-issue basis Difference between employee compensation cost using the intrinsic value method and the employee compensation cost that shall have been recognized if the Company has used fair value of options and impact of this difference on profits and EPS of the Company

NIL 14,999 NIL 2,435,000 NIL 1. 2. Mr. Rama Rao Bolli: 25,000 Ms. Sridevi Bolli: 50,000 NIL

None

Vesting Schedule Lock-In Impact on profits of the last three years (Rs.)

Intention of the holders of Equity Shares allotted on exercise of options to their Equity Shares within three months after the listing of Equity Shares pursuant to the Issue Intention to sell Equity Shares arising out of ESOP 2007 within three months after the listing of Equity Shares by Directors, senior managerial personnel and employees having Equity Shares amounting to more than 1% of the issued capital (excluding outstanding warrants and conversions). Employee Stock Option Plan 2009 (“ESOP Plan 2009”)

Rs. 12.96 as on March 31, 2009 The Securities Premium Account as appearing in our Balance Sheet as on June 30, 2010 includes a further amount of Rs. 1,120,100 pursuant to the employee compensation cost accounted in the Fiscal 2009. As prescribed by the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India and related interpretations, the Company applies the intrinsic value method of accounting to account for stock options issued to the employees of the Company. The excess of the intrinsic value of shares, at the date of grant of options under the Employee stock option schemes, over the exercise price is treated as employee compensation and amortised over the vesting period. The intrinsic value determined by the Compensation Committee was Rs 14.60 per share and the exercise price per option was Rs. 10 each. Immediately at the time of grant NIL The difference amounting to Rs. 1,120,100 had been accounted as Employee Compensation cost by the Company in the Financial Year 2008-2009 The holders of Equity Shares allotted on exercise of options pursuant to ESOP Plan 2007 may sell their Equity Shares within the three month period after the listing of the Equity Shares. None

The Board of Directors of our Company pursuant to a resolution dated August 26, 2009 and the shareholders at the AGM of the Company held on September 30, 2009 approved the grant of stock options in the form and style of an 32

ESOP Plan 2009. A scheme was to be drawn for the purpose of attracting and retaining talent in the organization and to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company. A total number of 310,000 Equity Shares were earmarked for the purpose of issuance as options under the ESOP Plan 2009. Vide resolution dated October 8, 2010, of the Board of Directors, the residual options available under the ESOP Scheme 2007 and the shares earmarked for the ESOP Plan 2009 have been clubbed with the ESOP Scheme 2010. Employee Stock Option Scheme 2010 (“ESOP Scheme 2010”) The Board of Directors of our Company pursuant to a resolution dated March 30, 2010 and the shareholders at the EGM of the Company held on October 1, 2010 approved the grant of stock options pursuant to ESOP Scheme 2010 to attract and retain talent in the organization and to reward the employees for their past association and performance as well as to motivate them to contribute to the growth and profitability of the Company. A total number of 1,580,999 Equity Shares may be issued under ESOP Scheme 2010 as stock options. The following table sets forth the particulars of the options granted and the Equity Shares proposed to be allotted under the ESOP Scheme 2010: Particulars Options Granted Date of Grant Exercise price of options (in Rs.) Total options vested Options Exercised Total number of Equity Shares that would arise as a result of full exercise of options already granted Grant I 685,000 options Grant II Grant III Grant IV 140,000 options 361,002 options 366,500 options October 8, 2010 132.50 132.50 132.50 132.50 NIL NIL NIL NIL NIL NIL NIL NIL The Employee Welfare Trust currently holds 570,999 Equity Shares. These shares will be a part of the total number of Equity Shares arising as a result of full exercise of options already granted. The Company will allot these shares as and when required pursuant to options being exercised by the employees. Threrefore the total number of shares arising as result of exercise of all options already granted is 1,552,502 comprising of 570,999 Equity Shares held by the Employee Welfare Trust. The balance Equity Shares will be created by the Company as and when the options are exercised. NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL 685,000 options 140,000 options 361,002 options 366,500 options

Options forfeited/lapsed/cancelled Variation in terms of options Money realized by exercise of options (in Rs.) Options outstanding (in force)

Person wise details of options granted to: Directors and key managerial Nicolas Jabbour personnel (250,000), Michael Chadwick (250,000) and Danis Yadegar (140,000) Any other employee who received a grant in any one year of options amounting to 5% or more of the options granted during the year Nicolas Jabbour (250,000), Michael Chadwick (250,000), Danis Yadegar (140,000) and

Nicolas Jabbour (70,000) and Michael Chadwick (70,000)

Danis Yadegar (140,000)

NIL

NIL

Yateendar Bollini (60,000), Sudhakar Vadapalli (50,000) and Venkatesh Ramachandran (35,000) NIL

33

Sarat Addanki (45,000) Identified employees who are granted options, during any one year equal to exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Fully Diluted EPS on a pre-issue basis Difference between employee compensation cost using the intrinsic value method and the employee compensation cost that shall have been recognized if the Company has used fair value of options and impact of this difference on profits and EPS of the Company Vesting Schedule NIL NIL NIL NIL

Rs.12.09 as on March 31, 2010 As prescribed by the Guidance Note on Accounting for Employee Sharebased Payments issued by Institute of Chartered Accountants of India and related interpretations, the Company applies the intrinsic value method of accounting to account for stock options issued to the employees of the Company. The excess of the intrinsic value of shares, at the date of grant of options under the Employee stock option schemes, over the exercise price is treated as employee compensation and amortised over the vesting period

100% Vesting after 1 year on or after 1st January 2012

Vesting is linked to continued association & future performance appraisal with the Company, if any. Annual vesting over 3 years (i.e. 0%, 50% and 50%)

Lock-In Impact on profits of the last three years (Rs.) Intention of the holders of Equity Shares allotted on exercise of options to their Equity Shares within three months after the listing of Equity Shares pursuant to the Issue Intention to sell Equity Shares arising out of ESOP 2010 within three months after the listing of Equity Shares by Directors, senior managerial personnel and employees having Equity Shares amounting to more than 1% of the issued capital (excluding outstanding warrants and conversions).

NIL NIL Not Applicable

NIL NIL Not Applicable

Vesting is linked to continued association & future performance appraisal with the Company, if any. Annual vesting spread over a 3 year period from date of grant (i.e. 34%, 33% and 33%) NIL NIL Not Applicable

Vesting is linked to continued association & future performance appraisal with the Company, if any. Annual vesting spread over a 4 year period from date of grant (i.e. 34%, 22%, 22% and 22%) NIL NIL Not Applicable

Not Applicable

Not Applicable

Not Applicable

Not Applicable

34

13.

Issue of 4,500,000 Equity Shares of face value of Rs. 10/- each for cash at a price of Rs. [●] per Equity Share (including share premium of Rs. [●] per Equity Share), comprising of a Fresh Issue of 2,372,728 Equity Shares by the Company and an Offer for Sale of 2,127,272 Equity Shares by the Selling Shareholders, aggregating Rs.[●] million. The Issue comprises of a Net Issue of 4,475,000 Equity Shares of Rs. 10/- each to the public and an Employee Reservation Portion of upto 25,000 Equity Shares of Rs. 10/each for subscription by Eligible Employees on a competitive basis. The Issue will constitute 31.25% of the fully diluted post Issue paid-up capital of our Company and the Net Issue will constitute 31.07% of the fully diluted post Issue paid-up capital of our Company. The Issue is being made under sub-regulation (1) of Regulation 26 of the SEBI ICDR Regulations and through a Book Building Process wherein not more than 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs” and such portion the “QIB Portion”). Our Company in consultation with the BRLM may consider participation by Anchor Investors in the Net Issue for upto 30% of the QIB Portion in accordance with the applicable SEBI ICDR Regulations (“Anchor Investor Portion”), out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the remaining QIB Portion (“Net QIB Portion”). Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to QIBs, subject to valid Bids being received from them at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the Net QIB Portion and be available for allocation on a proportionate basis to the QIBs, subject to valid Bids being received from them at or above the Issue Price. Further not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received from them at or above the Issue Price. Further, 25,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received from them at or above the Issue Price. Under-subscription, if any, in any category would be allowed to be met with spill over from any of the other categories at the discretion of our Company in consultation with the Selling Shareholders, the BRLM and the Designated Stock Exchange and in accordance with applicable laws, rules, regulations and guidelines, subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in the Employee Reservation Portion, will be added back to the Net Issue. In case of under-subscription in the Net Issue, spill-over to the extent of under-subscription shall be permitted from the Employee Reservation Portion. In the event that the aggregate demand in the Net QIB Portion and/or Non-Institutional Portion and/or Retail Portion has not been met, under-subscription, if any, would be allowed to be met with spillover from any other category or combination of categories at the discretion of our Company, in consultation with the Selling Shareholders, BRLM and the Designated Stock Exchange and in accordance with applicable laws, rules, regulations and guidelines, subject to valid bids being received at or above the Issue Price. It is to be distinctly understood that the requirement for minimum subscription is not applicable to the Offer for Sale. On receipt of minimum subscription i.e. 90% of the Fresh Issue and in case of undersubscription in the Issue, the entire subscription amount would first be adjusted towards the Fresh Issue and thereafter towards the Offer for Sale. Investors may note that in case of over-subscription, if any, in the Issue, allotment shall be made on a proportionate basis to QIB Bidders, Non-Institutional Bidders, Retail Individual Bidders and Eligible Employees bidding under Employee Reservation Portion and will be finalised by our Company in consultation with the Selling Shareholders, the BRLM and the Designated Stock Exchange; and in accordance with applicable laws, rules, regulations and guidelines, subject to valid Bids being received at or above the Issue Price. Oversubscription, if any, to the extent of 10% of this Issue can be retained for the purpose of rounding off and making allotments in minimum lots, while finalising the ‘Basis of Allotment’. Consequently, the actual Allotment may increase by a maximum of 10% of this Issue, as a result of which the post-Issue paid-up 35

14.

15.

16.

17.

capital would also increase by the excess amount of Allotment so made. In such an event, the Equity Shares to be locked-in towards the Promoter’s Contribution shall be suitably increased, so as to ensure that 20% of the post-Issue paid-up capital is locked in. 18. The Equity Shares are fully paid up and there are no partly paid up Equity Shares as on date. Further, since the entire money in respect of the Issue is being called on application, all the successful applicants will be issued fully paid-up Equity Shares. Except as stated below, neither our Promoters nor the members of our Promoter Group nor the directors of our Corporate Promoter nor our Directors and their immediate relatives as defined under the SEBI ICDR Regulations have purchased or sold or financed the purchase by any other person of securities of our Company during the period of six months immediately preceding the date of this Draft Red Herring Prospectus with SEBI. Name of the person / entity

19.

Sr. No

Promoter / Director / Number Transfer/ Date of Transfer / Price per Promoter Group of Equity Allotment Allotment share /Director of Promoter Shares Group Mr. P. V. S Raju Director 100,000 Transfer* July 13, 2010 120.00 1. Mr. P.V.S. Raju Director 16,000 Transfer** August 13, 2010 110.00 2. Mr. P.V.S. Raju Director 5,000 Transfer*** October 8, 2010 120.00 3. * Transfer from Mr. Kadayam Ramanathan Bharat (50,000 Equity Shares) and Mr. Sanjay Jagdish Poddar (50,000 Equity Shares); ** Transfer from Mr. Vijay Raj Busani (2,000 Equity Share); Mr.Pankaj Kumar (3,000 Equity Shares); Mr. C Rajasekhar Reddy (5,000 Equity Shares); Mr. Raghu Ramchandran (6,000 Equity Shares); *** Transfer from Ms. Ranjana Siva Shankar (5,000 Equity Shares) 20. We shall ensure that transactions in Equity Shares by the Promoters and members of the Promoter Group between the date of registering the Red Herring Prospectus with the RoC and the listing of our Equity Shares on the Stock Exchanges shall be reported to the Stock Exchanges within twenty four (24) hours of such transaction. As of the date of this Draft Red Herring Prospectus, the total number of shareholders of our Equity Shares is 105. All Equity Shares are held in physical form as on date of this Draft Red Herring Prospectus. Our Company has neither issued any Equity Shares out of revaluation reserves nor has it revalued its assets since incorporation. Our Company has not made any public issue of any kind or class of securities since its incorporation. On receipt of minimum subscription i.e. 90% of the Fresh Issue and in case of under-subscription in the Issue, the entire subscription amount would first be adjusted towards the Fresh Issue and thereafter towards the Offer for Sale. A Bidder cannot make a Bid for more than the number of Equity Shares offered to the public through the Issue, subject to the maximum limit of investment prescribed under relevant laws applicable to each category of Bidders. Our Company, the Selling Shareholders, our Promoters, our Directors and the BRLM have not entered into any buy-back and/or standby and/or any other similar arrangements for the purchase of Equity Shares from any person. No incentive, whether direct or indirect, in any manner, whether in cash or kind or services or otherwise, shall be made either by us or our Promoters to the persons who receives Allotments, if any, in the Issue for making an application for Allotment in this Issue.

21.

22.

23. 24.

25.

26.

27.

36

28.

Neither the BRLM nor its associates holds any Equity Shares as on the date of this Draft Red Herring Prospectus. Our Company will ensure that as on the date of filing of the Prospectus with the Registrar of Companies, apart from the options granted to employees under the ESOP Scheme 2010, there will be no outstanding warrants, options or rights to convert debentures, loans or other financial instrument that can be convertible into the Equity Shares or which would entitle any person any option to receive Equity Shares after the IPO. Further, none of the loans taken by our Company are convertible into Equity Shares. Our Company has not raised any bridge loans against the Net Proceeds from the Issue. As on the date of filing of this Draft Red Herring Prospectus none of the Equity Shares held by our Promoters have been pledged by our Promoters including banks / financial institutions. None of our sundry debtors is related to our Promoters or our Directors. As per the existing policies, OCBs are not permitted to participate in the Issue. Sub accounts of FIIs who are foreign corporates or foreign individuals are not QIBs, and hence cannot Bid in the QIB Portion in the Issue. We presently do not intend or propose any further issue of Equity Shares, whether by way of issue of bonus Equity Shares, preferential allotment and rights issue or in any other manner during the period commencing from submission of this Draft Red Herring Prospectus with SEBI until the Equity Shares proposed to be issued pursuant to the Issue have been listed on the Stock Exchanges. No payment, direct or indirect in the nature of discount, commission, and allowance or otherwise shall be made either by our Company or our Promoters or Directors to the persons who receive allotments, if any, in this Issue. We presently do not intend or propose or haven’t entered into any negotiations or considerations to alter our capital structure for a period of six months from the Bid/Issue Opening Date, by way of split or consolidation of the denomination of Equity Shares or further issue of Equity Shares (including issue of securities convertible into or exchangeable, directly or indirectly for Equity Shares) whether preferential or otherwise, except if we enter into acquisition(s), joint venture(s) or other arrangements, we may, subject to necessary approvals, consider raising additional capital to fund such activities or use Equity Shares as currency for acquisition or participation in such joint ventures or any other arrangements, as the case may be. There shall be only one denomination of the Equity Shares, unless otherwise permitted by law. We shall comply with such disclosure and accounting norms as may be specified/ prescribed by SEBI from time to time. Our Promoters and the members of the Promoter Group will not participate in this Issue. We have availed financial facilities from various banks and financial institutions and in respect of the agreements entered into by our Company with our lenders and sanction letters issued by our lenders to us, we are bound by certain restrictive covenants, including those in relation to our capital structure. For further details on the restrictive covenants contained in the financing documents, please refer to chapter titled “Financial Indebtedness” beginning on page 244 of this Draft Red Herring Prospectus.

29.

30. 31.

32. 33.

34.

35.

36.

37.

38. 39.

37

OBJECTS OF THE ISSUE

Semantic Space Technologies Limited has evolved to emerge as a specialized solutions provider offering Application Services, Independent Verification and Validation Services and System Integration Solutions. We leverage a differentiated business model through investments in pre-fabricated software toolsets to build enduring customer intimacy. We have expanded our service portfolio with strategic acquisitions of competencies to emerge as a well-balanced global player in the IT services segment. To excel in our growth initiatives we intend to increase our geographical presence and depth and breadth of presence. The Objects of the Fresh Issue are to provide funding for the following: (1) Repayment of Term Loan, (2) Investments in Proprietary Toolsets, (3) Establishment of Offshore Delivery Centre, (4) Acquisitions and Other Strategic Initiatives, (5) General Corporate Purposes and (6) Meeting Fresh Issue related Expenses. Our Company believes that the listing of our Equity Shares will enhance our Company’s brand name further and create a public market for its Equity Shares in India. The Main Objects clause of our Memorandum of Association and the objects incidental to the Main Objects enables us to undertake existing activities as well as the activities for which the funds are being raised through this Fresh Issue. The Issue consists of a Fresh Issue of 2,372,728 Equity Shares and an Offer for Sale of 2,127,272 Equity Shares by the Selling Shareholders. We will not receive any proceeds from the Offer for Sale. All expenses related to the Issue, including listing fees and issue management fee, will be borne entirely by our Company except for the underwriting fees and selling commissions which will be borne by our Company and the Selling Shareholders in proportion to the Equity Shares being issued / offered. We intend to utilize the proceeds of the Fresh Issue, after deducting the Company’s share of the underwriting fees, issue management fees, selling commissions and other expenses associated with the Issue (the “Net Proceeds”), to meet the aforementioned Objects. Requirement of Funds and Schedule of Deployment of Funds The details of the utilization of proceeds of the Fresh Issue are as per the table set forth below: (Amount in Rupees million) Estimated Estimated Deployment of Deployment of Funds in Funds in Fiscal 2011 Fiscal 2012 89.1 89.1 24.9 64.1 64.9 300.0 [●] [●] [●] [●] [●] [●]

Particulars

Total Fund Requirement

Repayment of Term Loan Investments in Proprietary Toolsets Establishment of Offshore Delivery Centre* Acquisitions and Other Strategic Initiatives General Corporate Purposes Meeting Fresh Issue related expenses** Total

178.2 89.0 64.9 300.0 [●] [●] [●]

*we have not accounted for contingencies and price escalations in calculating the fund requirements ** will be incorporated at the time of filing of Prospectus

Our fund requirements and deployment thereof are based on internal management estimates of our current business plans and have not been appraised by any bank or financial institution. These are based on current conditions and are subject to change in light of changes in external circumstances or costs or in other financial conditions, business strategy, as discussed further below.

38

Means of Finance The aforementioned fund requirement will be met entirely from the proceeds of this Fresh Issue. We shall recoup the expenses incurred up to the listing of the Equity Shares from the Fresh Issue Proceeds. In case of shortfall, if any, we may explore other sources of funds including internal accruals arising from our future operations and/or debt. In case of any variations in the actual utilization of funds earmarked for the objects mentioned above or in case of increased fund requirements for a particular object, the shortfall, if any, may be financed by surplus funds, if any, available for other objects and/or our Company’s internal accruals and/or working capital loans that may be availed from the banks/financial institutions, to the extent of such shortfall. Any surplus from the proceeds of the Issue after meeting the primary objects mentioned above, if any, will be used for our general corporate purposes. We operate in a highly competitive, dynamic market environment, and may have to revise our estimates from time to time on account of new initiatives that we may pursue including any potential acquisition opportunities. Consequently our fund requirements may also change, which may include rescheduling or re-working of our expansion/ investments. Any such change in our plans may require rescheduling of our expenditure programs, at the discretion of our management / Board. Our capital expenditure plans are subject to a number of variables, including possible cost overruns; construction/development delays; and changes in management’s views of the desirability of current plans, among others. Since the entire fund requirement will be met entirely from the proceeds of this Fresh Issue, there is no requirement for any other firm arrangements of finance. Thus we are in compliance with the Regulation 4(2)(g) of the SEBI Regulations for firm arrangements of finance through verifiable means towards 75% of the stated means of finance, excluding the amount to be raised through the proposed Fresh Issue, as the same does not apply to us. Details of Objects of the Fresh Issue 1. Repayment of Term Loan SSTNA, a wholly owned Subsidiary of our Company has pursuant to the Facility Agreement dated May 30, 2008 (“Facility Agreement”), entered into financing arrangements with ICICI Bank UK PLC, wherein they have availed a Bilateral Senior Term Loan facility of US$ 10.0 million for part finance of acquisition of shares of the JYACC Inc and to meet all the expenses in relation to this acquisition. Out of the total amount availed, till October 21, 2010, we have repaid US$ 6.0 million and our Company intends to pay off the balance US$ 4.0 million from the Net Proceeds in order to reduce the interest burden on the Company on a consolidated basis. Following are the details of this Bilateral Senior Term Loan availed from ICICI Bank UK PLC to whom we propose to repay from the Net Proceeds: ICICI Bank UK PLC Bilateral Senior Term Loan facility - Part–Finance of acquisition of shares of the JYACC - Expenses in relation to acquisition of the JYACC June 24, 2008 Date of disbursement of loan: Principal Loan Amount Sanctioned / 10.00 (in US$ million); drawn down: 4.00 (in US$ million); i.e. 186.40(in Rs. million)$ Outstanding Loan Amount as on June 30, 2010: 4.00 (in US$ million); i.e. 178.16(in Rs. Million) @ Outstanding Loan Amount as on Oct. 29, 2010: US$ Libor** + 500 bps Applicable Rate of Interest: Name of the Lender: Nature of Facility: Purpose of Facility: 39

Interest Payment Schedule: Loan Period: Loan Repayment Schedule:

Pre-Payment Penalty: Security*:

Payable on half yearly basis from drawdown 36 months 1. End of 12 months from drawdown: 20% 2. End of 18 months from drawdown: 20% 3. End of 24 months from drawdown: 20% 4. End of 30 months from drawdown: 20% 5. End of 36 months from drawdown: 20% Prepayment charge of 1% - Personal Guarantee of Mr. Satyanarayana Bolli dated June 3, 2008 - Corporate Guarantee dated May 30, 2008 by our Company - Undertakings from our Promoters dated May 30, 2008 - Negative lien Undertaking dated May 30, 2008 on all assets of our Company - Share Pledge Agreement between SSTL and Wells Fargo Bank N.A for ICICI Bank UK ,PLC dated May 30, 2008 - Share Pledge Agreement between SST North America and Wells Fargo Bank, N.A for ICICI Bank UK, PLC dated July 21, 2008 - First charge on all the assets of SSTNA both present and future

$

as per the Statement of consolidated Assets and Liabilities, as restated. converted using exchange rate 1 US$ = Rs. 44.54 as at October 29, 2010 (source: www.rbi.org.in.) **LIBOR as defined in the Facility Agreement will be determined by reference to the rates quoted on the Dow Jones Telerate screen page 3750 at 11.00 AM, London Time, two business days before the start of each Interest Period
@

Pursuant to the Facility Agreement and Promoter’s undertaking we were made subject to certain conditions. However, contemplating an initial public offering, we had approached ICICI Bank UK PLC for obtaining their no objection certificate, and in view of the said request ICICI Bank UK PLC vide its letter dated October 20, 2010 have issued a letter to SSTNA conveying their no objection for our proposed Issue, subject to the certain conditions which are summarized below: - At all times post IPO, the Promoter’s paid up Equity Shares shall be at least 40% of the total paid up Equity Share Capital of our Company. - With the proceeds of IPO, the Company shall comply with its prepayment terms (details given below) under the Facility Agreement. - Notwithstanding any provisions of the Facility Agreement, prepayment terms shall attract a charge @1% on the principal amount being prepaid. The same shall be applicable over and above the applicable break costs (as defined in the Facility Agreement to be the interest which ICICI Bank UK PLC should have received for the period from the date of receipt of all or part of a loan or unpaid sum to the last day of the current interest period in respect of that loan or unpaid sum, had the principal amount of that loan or unpaid sum received been paid on the last day of that interest period.) - The IPO must be open on or before February 28, 2011 and the relevant amount paid to ICICI Bank UK PLC within one month from the date of IPO or March 31, 2011, whichever is earlier, as mandatory prepayment. The key points under prepayment terms of the Facility Agreement are summarized below: SSTNA shall on the last day of every interest period, prepay or procure the prepayment of the whole or any part of any loan from: - any surplus cash received by it in addition to its usual and expected cash flows; - proceeds of any capital raised by it or any other member of the promoter group (including JYACC), whether through issuance of equity shares or preference shares or whether through conversion of any instrument or facility into equity shares or preference shares of SSTNA or convertible bond issuances 40

-

-

(domestic or foreign) or loan or bond issuance received during the interest period. This clause will not be applicable if the proposed issuance, done on such terms as may be approved by the ICICI Bank UK PLC, is to be utilised for repaying this loan; proceeds of any insurances received during that interest period by SSTNA or any other member of the promoter group exceeding US$ 0.5 million subject to re-investment rights and payment to any prior charge holders on the insured assets; and proceeds of any disposal of assets by a member of the promoter group, exceeding US$ 0.5 million, subject to re-investment rights and payment to any prior charge holders on the assets sold.

There could be a possibility that we may repay the above loan as and when due, before we obtain proceeds from the Fresh Issue, through other means and sources of financing, including bridge loan or other short term / long term financial arrangements, which then will be recouped from the proceeds of the Fresh Issue. We believe our pre-payment of interest bearing debt will help us to reduce our costs towards ‘Interest and Finance Charges’ and will improve our net earnings in the future on a consolidated basis. Further, it will help us to improve our ability to leverage equity for our future needs towards any of our existing operations and towards further expansion and / or strategic initiatives, as and when required. 2. Investments in Proprietary Toolsets / Service Delivery Accelerators Our philosophy since inception has been in building and providing services through proprietary toolsets/ service delivery accelerators. We believe that intellectual property is a multiplier of efficiency in the software service delivery business. We have developed proprietary toolsets which enhance our ability to rapidly service client requirements, and provide the right and committed resources both onsite and offshore. Access to an available array of toolsets enables us to dramatically reduce the cycle time for service delivery while significantly improving quality, and serves as a critical competitive differentiator. The business we are currently in is highly competitive and very dynamic.We believe that business pre-eminence can be achieved only through efficiency that gives you a competitive edge. The key to this dynamism is innovation and investment in the next generation of technology / framework of pre-fabricated software toolsets. As part of our growth strategy, we intend to continuously upgrade / augment our IT infrastructure facilities by investing in technologies/platform and toolsets based on future needs. These are some of the initiatives at productizing our solutions, in order to enhance our service delivery and also improve revenue streams by enhancing the overall marketability of our service offerings.  PPM Studio - Application Services: This program consists of the following specific sub-initiatives to expand our “PPM Studio” Solution –  Improve User Interface: The scope of this initiative includes designing the flow of functional modules in the application in an integrated fashion; and also to make the overall application appear light and simple.  Enhance Web Version: PPM Studio is currently available on both Windows and Web interface. Recent releases have improved the functionality of windows, but the web interface requires enhancement in both functional and UI segments. A blended offering in both Windows and Web versions will increase the overall marketability of the product.  Integration with Microsoft Office: PPM Studio has integration capabilities with the industry’s most-used business tools like MS-Office, MS-Project, MS-Outlook, MS-Sharepoint and ALM applications like QTP, code repositories (SVN, VSS, etc). This initiative is focused on updating integration with latest version of the tools; and also improving the scope of integration for better business benefits.  Enhance Agile Project Management Suite: PPM Studio currently supports Agile methodology at a high level; and has provided workarounds to map the existing product features. This initiative is focused on mapping of Agile project management as a methodology in PPM Studio that meets all functional and business expectations of Agile practitioners.  Effecta - Independent Verification and Validation Services: This program consists of the following specific sub-initiatives to expand our “Effecta” framework  Test Data Manager: This is to enhance capability of this tool to extract sets of data from production databases and populate test systems. Further it will add ability to define data selection criteria for each field of a test case data set, extract list of values from the test system and update data sets 41

 

Script Manager: This is to extend script-less automation to Oracle EBS, Custom windows and Web based applications. Enhancements to Effecta Validation Engine: Effecta Validation Engine for packaged applications significantly accelerates validation of test results. We intend for o Enhance User Interface o Integration with SAP Solution Manager o Integration with Quality Center o Integration with TAO Test Management Tool: Develop process flow to manage agile testing. Currently, Effecta promotes reusability and repeatability with the following features: o Ability to create Test Requirements and link them to Test Cases and development objects o Ability to create Test Cases and link them to Test Requirements for coverage analysis o Ability to create separate Test execution steps in the form of Test Procedures and link them to Test cases o Defect management o Dash board for reporting and metrics Pre-built Library: Develop Pre-Built library for Oracle EBS and Sterling. Currently, we have pre-built validation components for SAP FI-CO, MM, SD and PP modules.

 Software Toolsets - Systems Integration Solutions: This program consists of the following specific sub-initiatives –  Team-Build-Deploy- Test Solution is an accelerator for doing continuous builds with Rational Team Concert targeting WPS/WESB, WMB and Portal Server software development teams. In essence, targeting the BPM, SOA and User Experience domains.  Autonomic Monitoring Platform is a set of Tivoli ITCAM/ITM agents coupled with other custom scripting components and multiple knowledge bases to provide automated problem identification, diagnosis and correction.  Adapter for Microsoft Connectivity Suite is an adapter that will enable IBM products to native interface with MS suite of products.  SOA Runtime Governance - Visibility, Auditing and Reporting solution provides a consolidate view into runtime environments and provides an end to end view of activities with the IBM WebSphere platform. The total cost estimates made by the management for all of the above development activities are based on the resource time involved and the resource costs per hour derived on the blended averages across the resource mix in terms of skill level, onsite/offshore, etc. The break-up of these estimated costs* are detailed herewith:

No. Program Title Fiscal 2011 PPM Studio- Application Services 1 Improve User Interface 0.67 2 Enhance Web Version 1.56 3 Integration with MS Office 0.67 4 Agile Project Management Suite 0.67 Sub-Total (A) 3.56 Effecta- Independent Verification and Validation Services 1 Test Data Manager 2.00 2 Script Manager 1.78 3 Effecta Validation Engine Enhancements 3.56 4 Test Management Tool 1.78 5 Pre-built library 1.11 Sub-Total (B) 10.24

(Amount in Rupees million) Fiscal 2012 Total 4.34 7.01 3.68 3.68 18.71 4.01 1.78 0.45 3.56 2.23 12.03 5.01 8.57 4.35 4.35 22.27 6.01 3.56 4.01 5.34 3.34 22.27

42

Systems Integration Solutions 1 Team-Build-Deploy-Test 2 Autonomic Monitoring Platform 3 Adapter for Microsoft Connectivity Suite 4 SOA Runtime Governance Sub-Total (C) Grand Total (A+B+C)

2.23 4.45 2.23 2.23 11.14 24.94

4.45 17.82 6.68 4.45 33.40 64.14

6.68 22.27 8.91 6.68 44.54 89.08

*converted using exchange rate 1 US$ = Rs. 44.54 as at October 29, 2010 (source: www.rbi.org.in.)

3.

Establishment of Offshore Delivery Centre (“ODC”) We provide a range of blended-shore solutions i.e. onsite, offshore and a mix of onsite and offshore to benefit from our presence in India achieving cost efficiencies in our service offerings. As we continue synergizing our recent acquisitions and leverage offshore deliverability through our presence in India for Arsin and Prolifics we propose to have an additional Offshore Delivery Centre. Currently, we have three well equipped Offshore Delivery Centres i.e. at Kondapur, Jubilee Hills and Banjara Hills, in Hyderabad, India and the works are in progress at the one located at Gachibowli, Hyderabad. The details of the operating ODCs are as follows: Location Jubliee Hills ODC Kondapur ODC Banjara Hills ODC Total Gachibowli ODC: We have recently acquired on lease an office space admeasuring 17,821 sq. ft. area in DLF Cyber City, Gachibowli, Hyderabad. This ODC will house 220 workstations. This facility is pegged to be at an overall cost of Rs.40 million based on the cost estimates for IT infrastructure, fit outs, professional fees, security deposits and contingencies. Based on the proposal carrying the above details and cost estimates, ICICI Bank, Hyderabad has vide its letter dated July 30, 2010 sanctioned a term loan of Rs.30 million with the margin funding of 25%. The following benefits will be available to us for conducting business in SEZ: - 15 year corporate tax holiday on export profit- 100% for 5 years, 50% for the next five years and upto 50% for the balance 5 years equivalent to profits ploughed back for investment. - Allowed to carry forward losses - Exemption from minimum alternate tax under section 115JB of the Income Tax Act. - Exemption from custom duty on import of capital goods - Exemption from payment of Central Sales Tax on the services provided - Exemption from payment of Service Tax - The services that are provided outside the SEZ (i.e., in DTA) and which is purchased by the Unit (situated in the SEZ) is eligible for deduction and such services would be deemed to be exports - The SEZ unit is permitted to realise and repatriate to India the full export value of services or software within a period of twelve months from the date of export. - “Write- off” of unrealised export bills is permitted up to an annual limit of 5% of their average annual realization. Proposed ODC: With a view of making further inroads to newer markets and leveraging cross selling opportunities available to us through our recent acquisition of Prolifics, we propose to take on lease approx.25,000 sq. ft. area for setting up an additional ODC with a seating capacity of 250 resources. For this we are in discussions with SEZs 43 Area (in Sq. ft.) 12,468 24,785 5,462 42,715 Seating Capacity 143 232 53 428

primarily in Chennai and Bangalore. The proposed facility will strategically bring in economies of expansion as well as tax benefits and de-risk our presence. We are in negotiations with SEZ developers and upon finalization, would be entering into a Memorandum of Understanding with the said SEZ for a long term lease and there after initiate action for obtaining necessary licenses / approvals from the competent authorities for setting up this ODC. Based on our prior experience and quotations received from architects the estimated costs involved in setting up this 250 seater ODC is as follows: (Amount in Rupees million) Sl. No. A 1 2 3 4 5 6 7 8 9 B Description Infrastructure Layout Interior Works : Modular Furniture and Chairs: Internal Electrification Works : Air Conditioning Works: Fire and Security Systems: Structured Cabling: UPS and Ancillary Works: Audio Visual Setup: IT infrastructure and Equipments: Sub Total (A) Professional Fees and Security Deposits: Grand Total (A+B) Amount 9.3 6.5 4.2 2.5 1.9 1.6 1.5 1.1 25.2 53.7 11.3 64.9

A. Infrastructure Lay out Cost: We estimate to expend an aggregate amount of Rs.53.65 million towards infrastructure cost which includes the following: Interior Works: which includes partitions & doors, paneling and wallpapers, false ceiling & painting, customized furniture & storages, hard flooring (granite for reception and tiling for café, pantry and washrooms), Soft Flooring including carpet for office and anti-static vinyl flooring for electrical rooms, Civil Works (masonry works, screening, plastering & waterproofing), and Miscellaneous Works such as raised access floor for server room, blinds, frosted film, signage & others) Modular Furniture and Chairs: which includes modular stations for open office, meeting tables and conference tables, VP and Manager room tables and medium back office chairs Internal Electrification Works: which includes Sub Panel and MCB Distribution Boards, LT Cables & Terminations, Wire Ways, Conducting & Raceways, Point & Power Wiring, MCBs ELCBs and RCBOs, Switches and Sockets, Light fixtures, Miscellaneous (earthling and other provisions), Installation Commissioning and Testing Air Conditioning Works: which includes Equipment (DX type) to support 24/7 operation in Server and UPS rooms, Distribution System consisting of Ducting, Mixing Boxers, Diffusers and Grills; Regulatory devices consisting of VAVs and VFDs, Thermal and Acoustics Insulation, Refrigerant Piping, PVC Piping & Control Cabling for DX units, Installation Commissioning and Testing. Fire and Security Systems: which includes Intelligent Analog addressable Fire Alarm System, Panic Bars and Manual Extinguishers, FM 200 fire suppression for server, Access Control with Biometric and Proximity Readers for General Office and Server, Sprinkler System, CCTV System, Installation Commissioning and Testing. Structured Cabling: which includes Cat 6 UTP Cabling and Components for 400 nodes from Single Network Room, Racks & Accessories, Installation Commissioning and Testing. 44

UPS and Ancillary Works: which includes 100% back up for all work areas consisting of 2 x 40KVA online UPS system, Additional 1 x 10 KVA as a dedicated resource for server, Accessories & Battery Banks, 5KVA Inverter for emergency lighting. Audio Visual Setup: which includes LCD screens for Meeting Rooms, Conference & Reception, Portable Projectors, Pull Down Screens, Set Top Boxes & Splitters, Polycom and Associated Video Conferencing Equipments, Cabling & Installation. IT infrastructure and Equipments: which includes Servers, Desktops, Laptops, Printers, Scanners, Photocopiers, Switches and Routers, Firewalls and Cash Engine, Software and Storage Solution. These estimates are based on quotations obtained from architects including those with whom we regularly deal with. B. Professional Fees and Security Deposits: Based on our past experience and prevailing market rates, we have estimated a Security Deposit of approx. Rs.400/- per sq. ft. and an Architect fee of Rs.50/- per sq. ft. amounting to Rs.10 million and Rs.1.25 million respectively. Based on the above estimates the total cost involved in setting up of this ODC is Rs.64.90 million which will be met out of Net Proceeds. All the costs to be incurred and material required to be purchased pursuant to this Object may be sourced either through domestic market or be imported. No second hand material is intended to be purchased from the Net Proceeds. For the above estimates, we have relied upon quotations received from architects and managements estimates banked on prior experience. Since more than one quotation has been sought, we have indicated the lowest of such quotations. We may negotiate further and / or costs may escalate in due course, thus, the actual costs may vary from those mentioned above. 4. Acquisitions and Other Strategic Initiatives Our overall strategy for business growth is envisioned around a three-dimensional model – Consolidation, Globalization and Verticalization. We have acquired Arsin and Prolifics in the recent past which presently contribute majority of our consolidated revenues. We are in the stage of ‘Consolidation’ and integrating these acquired businesses such that we can enjoy synergic benefits. As part of our growth strategies of ‘Globalisation’ and ‘Verticalization’ we intend to enhance our capabilities and continue developing industry expertise, technical expertise and geographic coverage. We intend to execute on this strategy both through organic as well as inorganic route. However, we strongly believe that strategic investments and acquisitions at a right valuation may act as an enabler to growing business and consolidate our position and accelerate our drive to establish ourselves as a prominent IT solutions provider. We continuously monitor, to identify strategic opportunities that would fit with our business. The recent acquisitions will enhance our presence and deliverance capabilities across broader domain and we further seek to enhance our position as a specialized player in IT solution and services industry. In pursuit of which we continuously evaluate inorganic opportunities based on several factors including: - foray into certain geographies / access newer markets with potential to enhance our global positioning, - augment our service offerings, etc Towards this end, we propose to target companies that: - have expertise in the domain we operate in - offer strong strategic fit to our existing business(es) or serving connected extensions - have new customers that we can serve with our existing capabilities - newer technological platform synergies with our domain - have new capabilities to serve existing customers - have a good client base - enhancing our geographical reach 45

- has strong management team Currently, we are exploring possible acquisition candidates along two broad lines:  Consolidation of our presence in North America Acquisition Profile Small to mid-size company (or companies) with niche competencies and little or no offshore delivery capability Business Segment Solutions and service offerings around the IBM product suite; niche competencies that augment our service portfolio Location North America Market Addressed Expanded service portfolio to existing client and new (acquired company’s) client base in the North American marketplace

We would like to explore the possibility of acquiring small to mid-size organizations within North America. We will be seeking out businesses with niche competencies on and around the suite of IBM products. Our objective is to scale our expertise on IBM technology through a lateral expansion into new but related service offerings. An ideal candidate would have deep skills in a specific technology segment with accompanying solution assets. Such an acquisition will help to enrich and expand our service portfolio on IBM technology. This will in turn, provide much better leverage of our existing customer relationships as well as the alliance with IBM.  Globalization of our presence through entry into new markets such as Asia Pacific Acquisition Profile Small to mid-size company (or companies) within the IBM partner eco-system with strong local relationships and distributed client base Business Segment Solutions and service offerings around the IBM product suite; local alliance and customer relationships that expand our market access Location Asia Pacific and Europe Market Addressed Expanded market access in the Asia Pacific and/or European marketplaces will provide a valuable channel to market our established service offerings

We would like to take the acquisition route for expanding our presence to new geographies – particularly in the rapidly growing economies of the Asia Pacific region. An ideal candidate would be an existing member of the IBM partner ecosystem with limited or no offshore service delivery. Our objective would be to penetrate the new market with our core horizontal service offerings around IBM technology. These solution offerings have already gained acceptance within the North American market-place. Hence, a local partner of IBM with strong alliance relationships and distributed customer presence would provide an extremely effective channel for us to market our established service offerings. Additionally, we will be able to offer unique value through our offshore delivery capability. We aim to expand our geography by synergizing with such global entities and further enhance our position as a prominent player. We, thus, intend to utilise Rs.300 million from the proceeds of the Fresh Issue towards such acquisitions and strategic initiatives. The above amount is based on the management’s current estimates of the amounts to be utilised towards these objects considering the specifics of our recent acquisitions. The actual deployment of funds would, of course, depend on a number of factors, including the timing of acquisitions, number of acquisitions, the size of the target companies and the nature of strategic initiative. These factors will also determine the form of investment for these acquisition(s) / strategic initiatives, i.e. whether equity, debt or any other instrument, which, as on the date of this Draft Red Herring Prospectus, has not been decided. Any specific acquisition opportunity will be considered based on actual value estimates at that time. The proceeds allocated towards acquisition may not be the total value of the acquisition or cost toward strategic initiative, but may provide us with enough leverage to enter into binding agreements or contract and we may need further approval from our shareholders for additional funding if required. In the event that there is a shortfall of funds required for such acquisitions and / or strategic initiatives then, such shortfall shall be met out of the amounts allocated for general corporate purposes and/or through internal accruals. In case the shortfall cannot be met through internal accruals or out of the amounts allocated for general corporate purposes then we shall borrow from the domestic/international market and, 46

if required, the promoters may, at their sole discretion, provide such credit enhancement to the lenders as may be mutually agreed with the lenders. In the event that there is a surplus, such amounts shall be utilised towards other objects or general corporate purposes. We typically enter into non-binding letters of intent once the potential target company has been identified, evaluate the risks associated with such an acquisition and then either enter into a binding agreement with the target company or terminate the non-binding letter of intent. Presently we do not have any legally binding commitments to enter into any such arrangements. We have not yet entered into any letter of intent or definitive/contractual commitment for any acquisition, investment or joint venture. However, we have identified the areas of opportunities and are in the process of identifying such companies / entities which are complementary to our requirement. In this regard, we have appointed O3 Capital as financial advisor, in identifying potential targets for acquisition. At this stage, we are exploring acquisition options to accelerate our growth plans. We retain the flexibility of electing whether or not to proceed with acquisitions in the short term, based on the prevailing business environment and suitability of identified candidates. 5. General Corporate Purposes 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 deploy the balance Fresh Issue proceeds aggregating Rs. [●] million, towards the general corporate purposes to drive our business growth. In accordance with the policies set up by our Board, we have flexibility in applying the remaining Net Proceeds, for general corporate purpose including but not restricted to, meeting operating expenses, initial development costs for projects other than the identified projects, partnerships, joint ventures, strategic initiatives and acquisitions and the strengthening of our business development and marketing capabilities, meeting exigencies, which the Company in the ordinary course of business may not foresee or any other purposes as approved by our Board of Directors, subject to compliance with the necessary provisions of the Companies Act. 6. Meeting Fresh Issue related Expenses The Issue related expenses includes, amongst others, lead management fees, underwriting fees, selling commission, printing and distribution expenses, legal fees, advertisement expenses, registrar and depositories expenses, SCSB’s commission/ fees, fees and expenses of the SEBI registered rating agency for IPO grading and listing fees. The total expenses of the Fresh Issue shall be made out of the proceeds of this Fresh Issue and is estimated to be approximately Rs. [●] million. The break-up of the estimated expenses of this Issue is as follows: (Amount in Rupees million) Activity Total As a % of As a % of Expenses* Total Issue Total Issue Expenses* Size* Issue Management Fees [●] [●] [●] (Lead Management, Underwriting and Selling Commission) Advertisement and Marketing Expenses [●] [●] [●] Printing, Stationery and Distribution Expenses [●] [●] [●] Others (including Legal Advisors Fee, Auditors Fee, [●] [●] [●] Registrars Fee, SCSB commission, Regulatory Fees including filing fees paid to SEBI and Stock Exchanges) [●] [●] [●] Total estimated Issue expenses * will be completed after finalization of the Issue Price Pursuant to Regulation 26(7) of the SEBI Regulations our Company needs to obtain grading for this IPO from at least one credit rating agency. In this regard we have appointed Credit Analysis and Research Limited

47

(‘CARE’). The total expenses for IPO Grading are estimated to be Rs. [●] million, which is [●]% of the Issue size. All expenses related to the Issue, including listing fees and issue management fee, will be borne entirely by our Company except for the underwriting fees and selling commissions which will be borne by our Company and the Selling Shareholders in proportion to the Equity Shares being issued / offered. Working Capital Requirement The proceeds of the Issue will not be used to meet our working capital requirements as we expect to have internal accruals, avail debt and/or draw down from our existing or new lines of credit to meet our existing working capital requirements. Deployment of Funds Funds Deployed As on the date of this Draft Red Herring Prospectus, we have incurred an amount of Rs. 464,198 towards Issue Expenses which has been certified by Pawan Agarwal & Co., Chartered Accountants vide their certificate dated November 01, 2010. The said amount has been financed through internal accruals of our Company. We have not received any funds from the promoters by way of promoter’s contribution which have been deployed by us prior to the Issue Proposed Deployment of Funds We may make payments toward our Objects of the Fresh Issue, before we obtain proceeds from the Fresh Issue, through other means and source of financing, including bridge loan or other financial arrangements, which then will be repaid from the proceeds of the Fresh Issue. Appraisal The funds requirement and funding plans are our own estimates and have not been appraised by any bank/ financial institution or appraising agency. Interim Use of Proceeds Pending utilization of the Fresh Issue proceeds for the `Objects of the Issue’, we intend to temporarily invest the Fresh Issue proceeds in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks, for the necessary duration as permitted under the SEBI Regulations or we may temporarily utilize the proceeds for reducing our outstanding overdrafts. Such investments and other utilizations would be in accordance with investment policies approved by our Board or any committee thereof duly empowered, from time to time. Our Company confirms that pending utilization of the Issue proceeds; it shall not use the funds for any investments in the equity markets Monitoring of Utilisation of Funds Our Board will monitor the utilization of the proceeds of the Issue. No part of the proceeds from this Issue will be paid by us as consideration to our Promoters, our Directors or Key Managerial Personnel, except in the usual course of business. We will disclose the details of the utilisation of the proceeds, including interim use, under a separate head in our financial statements specifying the purpose for which such proceeds have been utilized or otherwise disclosed as per the disclosure requirements of our listing agreements with the Stock Exchanges and in particular Clause 49 of the listing agreement. Furthermore, pursuant to clause 49 of the listing agreements with the Stock Exchanges, we shall disclose to the Audit Committee, the uses and application of funds under the heads as specified above, on a quarterly basis as a part 48

of the quarterly declaration of financial results. Further, on an annual basis, the Company shall prepare a statement of funds utilized for purposes other than those stated in the Prospectus, if any, and place it before the Audit Committee. Such disclosure shall be made only till such time that the full money raised through this Issue has not been fully spent. This statement shall be certified by the statutory auditors of the Company. The Audit Committee shall make appropriate recommendations to the Board to take up steps in this matter. Our Company shall inform material deviations in the utilization of Issue proceeds to the Stock Exchanges and shall also simultaneously make the material deviations/adverse comments of the Audit Committee public through advertisement in newspapers.

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BASIS FOR ISSUE PRICE

Investors should read the following summary along with the chapter titled “Risk Factors” and “Financial Statements” beginning on pages XVIII and 159 respectively, of this Draft Red Herring Prospectus, to get a more informed view before making the investment decision. The trading price of the Equity Shares of our Company could decline due to these risks and you may lose all or part of your investments. Qualitative Factors:       Client – relationship capital Process Maturity – Proprietary Service Delivery Accelerators Enduring Alliance Partnerships Global Delivery Model Track Record and Competence in Delivery Quality Talent and Experienced Leadership Team

For detailed discussion on the qualitative factors which form the basis for computing the price, please refer the chapter titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus. Quantitative Factors The information presented in this section for the years ended March 31, 2008, 2009, 2010 and quarter ended June 30, 2010, is derived from our unconsolidated and consolidated audited restated financial statements prepared in accordance with Indian GAAP and the Companies Act and restated in accordance with the SEBI Regulations. For details, please refer chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. As of date of this Draft Red Herring Prospectus, the face value of the Equity Shares of our Company is Rs. 10 per equity share. Investors should evaluate the Company taking into consideration its earnings and based on its consolidated growth strategy. Some of the quantitative factors which may form the basis for computing the price are as follows: 1. Basic and Diluted Earnings Per Share (“EPS”) EPS of face value of Rs. 10/Unconsolidated Basic EPS Diluted EPS (Rs.) (Rs.) 12.36 12.36 12.96 12.96 12.09 12.09 12.43 12.43 3.35 3.35 Consolidated Basic EPS Diluted EPS (Rs.) (Rs.) 14.63 14.63 14.96 14.96 22.77 22.77 18.81 18.81 5.72 5.72

Financial Period Year ended March 31, 2008 Year ended March 31, 2009 Year ended March 31, 2010 Weighted Average Quarter ended June 30, 2010

Weight 1 2 3

Note: a) Earnings per share calculations are in accordance with Accounting Standard – 20 ‘Earnings per Share’. b) The face value of each Equity Share is Rs. 10/-. c) The Basic earnings per share (Rs.) are calculated by dividing the net profit after tax for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. d) The Diluted earnings per share (Rs.) has been computed by dividing net profit after tax, as restated, attributable to equity shareholders by weighted average number of dilutive potential equity shares outstanding during the period.

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2.

Price Earnings Ratio (‘P/E Ratio’) in relation to the Issue Price of Rs. [●] per share of Rs. 10/- each Particulars Unconsolidated Basis  Based on weighted average (basic EPS)  Based on weighted average (diluted EPS)  Based on EPS as on March 31, 2010 Consolidated Basis  Based on weighted average (basic EPS)  Based on weighted average (diluted EPS)  Based on EPS as on March 31, 2010 At the Floor Price of Rs. [●] [●] [●] [●] [●] [●] [●] At the Cap Price of Rs. [●] [●] [●] [●] [●] [●] [●]

3.

Industry Price Earnings Ratio (‘P/E Ratio’) Industry PE Multiple Highest 100.4 Lowest 4.5 Average 14.2 Source: Capital Market, Volume XXV/17, October 18-31, 2010. (Industry – Computers – Software – Medium / Small)

4.

Return on Net Worth ( ‘RoNW’ ) Financial Period Weight Unconsolidated basis RoNW (%) 14.54 13.09 10.90 Consolidated basis RoNW (%) 16.72 13.13 18.08

Year ended March 31, 2008 1 Year ended March 31, 2009 2 Year ended March 31, 2010 3 Weighted Average 12.24 16.20 Three Month period ended June 30, 2010 2.94 4.26 Note: The RoNW has been computed by dividing net profit before extraordinary items and after tax as restated by net worth including share application money and excluding revaluation reserve, if any, at the end of the year. 5. Minimum Return on Increased Net Worth required to maintain Pre-Issue annualised diluted EPS for the year ended March 31, 2010 Basis On Unconsolidated Basis On Consolidated Basis Note: Net Worth means Equity Share Capital + Reserves and Surplus 6. Net Asset Value (‘NAV’) per Equity Share NAV after the Issue (Unconsolidated) : Rs. [●] per Equity Share NAV after the Issue (consolidated) : Rs. [●] per Equity Share Issue Price* : Rs. [●] per Equity Share * Issue Price per share will be determined on conclusion of book building process. NAV per Equity Share as on March 31, 2008, 2009 and 2010 is as follows: % [●] [●]

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Unconsolidated basis Net Consolidated basis Asset Value per Equity Net Asset Value per Share (Rs.) Equity Share (Rs.) As on March 31, 2008 1 85.00 87.53 As on March 31, 2009 2 99.01 113.93 As on March 31, 2010 3 109.83 124.75 Weighted Average 102.09 114.94 Quarter ended June 30, 2010 114.04 134.18 Note: The NAV per share has been computed by dividing net worth, as restated, including share application money and excluding revaluation reserve, if any, at the end of the year/period by weighted average number of equity shares outstanding at the end of the year/period 7. Comparison with Industry Peers The Company cannot be compared with the other listed companies, as the company doesn’t have apparent listed competitor in the segment, in which it is operating. The comparable ratios of the companies which are to some extent similar in business and could be relevant to a limited extent are as given below: Year/ Sales Face EPS P/E RoNW NAV Period (Rs. Value (Rs.) Ratio (%) (Rs.) Ended million) (Rs.) Hexaware Technologies Ltd. December 4,863 2 8.3 14.8 18.5 52.6 2009 Infinite Computer Solutions March 1,820 10 11.1 16.0 22.8 58.8 (India) Ltd. 2010 Mindtree Ltd. March 12,333 10 51.6 10.5 35.4 162.5 2010 Source: Capital Market, Volume XXV/17, October 18-31, 2010. (Industry – Computers – Software – Medium / Small) Note: EPS, RONW and NAV figures are based on the latest audited results and P/E is based on trailing twelve months (TTM). The Issue Price will be determined by the Company, in consultation with the Selling Shareholders and BRLM, on the basis of assessment of market demand from the potential investors for the Equity Shares through the Book Building Process. The face value of the Equity Shares is Rs.10/- each and the Issue Price is [●] times the face value at the lower end of the Price Band and [●] times the face value at the higher end of the Price Band. The BRLM believe that the Issue Price of Rs. [●]/- per Equity Share is justified in view of the above qualitative and quantitative parameters. For further details and to have a more informed view, please refer to the chapter titled “Risk Factors” and “Financial Statements” beginning on pages XVIII and 159 respectively of this Draft Red Herring Prospectus and the financials of the Company including important profitability and return ratios, as set out in the Auditor’s Report stated in this Draft Red Herring Prospectus to have a more informed view about the investment proposition. Name of the Company

Financial Period

Weight

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STATEMENT OF TAX BENEFITS

The Board of Directors Semantic Space Technologies Limited Plot No. 226, Road No. 17, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India. Re: Statement of possible tax benefits available to Semantic Space Technologies Limited and its Shareholders. We hereby certify that the enclosed annexure, prepared by the Company, details the possible tax benefits/consequences available to Semantic Space Technologies Limited (‘the Company’) and its Shareholders under the applicable provisions of the Income Tax Act, 1961 and other direct and indirect tax laws presently in force in India. Several of these tax benefits/consequences are dependent on the Company or the Shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or the Shareholders to derive 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. No assurance is given that the revenue authorities will concur with the views expressed herein. The benefits disclosed in the enclosed annexure are not exhaustive in nature. The enclosed annexure is only intended to provide general information to the Company 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; and the conditions prescribed for availing the benefits, where applicable have been/would be met with.

The contents of the enclosed annexure are based on information, explanations and representations obtained from the management of the Company which are based on their understanding of the business activities and operations of the Company and our views are based on an interpretation of the current tax laws in force in India which are subject to change from time to time. We do not assume any responsibility to update the views consequent to these changes after the date of this certificate. The enclosed annexure is intended solely for your information and for inclusion in the Draft Red Herring Prospectus in connection with the proposed issue and is not to be used, referred to or distributed for any other purpose without our prior written consent. for B S R & Company Chartered Accountants Firm Registration No: 128032W Sriram Mahalingam Partner Membership No: 49642 Place : Hyderabad Date : November 10, 2010

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ANNEXURE TO STATEMENT OF TAX BENEFITS

A. Special tax benefits: Special tax benefits available to the Company and the shareholders of the Company under the Income Tax Act, 1961 (‘the Act’) There are no specific special tax benefits available to the Company or the shareholders of the Company. Tax benefits mentioned in section B below are available to the Company and its shareholders subject to fulfilment of specified conditions. B. Other tax benefits: 1. Benefits available to the Company under the Act: (i) Deduction for unit registered in Software Technology Park of India (‘STPI’) under the Act In accordance with and subject to the conditions specified in Section 10A of the Act, a deduction of such profits and gains derived by an undertaking from the export of computer software for a period of ten consecutive assessment years beginning from the previous year in which the undertaking begins to manufacture or produce such computer software shall be allowed from the total income of the Company. This deduction is available to the undertaking if it satisfies certain conditions which inter alia include the following: i) It is registered under STPI and commenced its operations on or after 01st April 1994. ii) It is not formed by the splitting up, or the reconstruction , of a business already in existence; iii) It is not formed by the transfer to a new business of machinery or plant previously used for any purpose. For the purpose of this section, “computer software” means: a) Any computer programme recorded on any disc, tape, perforated media or other information storage device; or

b) Any customized electronic data or any product or service of similar nature, as may be notified by the Board, which is transmitted or exported from India to any place outside India by any means. (ii) Deduction for unit registered in Special Economic Zone (‘SEZ’) under the Act: A company will be eligible for deduction from the profits derived by a unit registered in SEZ on fulfilment of certain conditions specified under section 10AA of the Act. In accordance with the provisions of section 10AA, the unit registered in SEZ is eligible for deduction from profits, if it manufactures or produces articles or things or provides any services during the previous year relevant to any assessment year commencing on or after 1st day of April 2005.

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The deduction under section 10AA is as under – (i) 100% of the profits and gains derived from the export of articles or things or from services for a period of 5 consecutive assessment years beginning with the assessment year relevant to the previous year in which the unit begins to manufacture or produce such articles or things, as the case may be and 50% of such profits and gains for further 5 assessment years and thereafter; (ii) for the next 5 consecutive assessment years, so much of the profit not exceeding 50% of the amount debited to the profit and loss account and credited to the reserve account (to be called as “Special Economic Zone Re-investment Reserve Account”) and utilised for the purpose of business of the Company in the manner laid down in the Section 10AA of the Act. (iii) Under section 10(34) of the Act, any income by way of dividends referred to in section 115-O received by the Company is exempt from income-tax. However, in view of the provisions of section 14A of Act, no deduction is allowed in respect of any expenditure incurred in relation to earning such dividend income. The quantum of such expenditure liable for disallowance is to be computed in accordance with the provisions contained therein. Also, section 94(7) of the Act provides that losses arising from the sale/ transfer of shares or units purchased within a period of three months prior to the record date and sold/ transferred within three months (in case of shares) or nine months (in case of units) respectively after such date, will be ignored to the extent dividend income on such shares or units is claimed as tax exempt. (iv) By virtue of section 10(35) of the Act, the following income shall be exempt in the hands of the company – (a) Income received in respect of the units of a Mutual Fund specified under clause (23D) of section 10; or (b) Income received is respect of units from the Administrator of the specified undertaking ; or (c) Income received in respect of units from the specified company. Provided that this exemption does not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified company or of a mutual fund, as the case may be. For this purpose: i. “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002. “Specified Company” means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002;

ii.

(v)

As per the provisions of section 10 (38) of the Act, the long term capital gains (gain arising on transfer of long term capital asset) arising from the transfer of shares or a unit of a equity oriented fund, where the transaction of sale of such share or unit is entered into in a recognized stock exchange in India on or after October 1, 2004 and chargeable to Securities Transaction Tax, will be exempt from tax. Provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB from the assessment year 2007-08. For this purpose ‘Equity Oriented Fund’ means a fund: (i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty-five per cent of the total proceeds of such fund; and which has been set up under a scheme of Mutual Fund specified under clause (23D) of section 10.

(ii)

Provided that percentage of equity share holding shall be computed with reference to the annual average of the monthly averages of the opening and closing figures.

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As per the provisions of section 2(29A) and section 2(42A), shares and units would be considered as long term if they are held for more than 12 months. (vi) Under section 48 of the Act, if the investments in shares are sold after being held for not less than twelve months, the gains, if any, will be treated as long-term capital gains and the gains will be calculated by deducting from the gross consideration, the indexed cost of acquisition and indexed cost of improvement. The indexed cost of acquisition / improvement adjusts the cost of acquisition / improvement by the cost of inflation index, as prescribed from time to time. (vii) Under section 54EC of the Act, subject to the conditions and to the extent specified therein, long-term capital gains (in cases not covered Section 10(38) of the Act) arising on transfer of long term capital assets are exempt from tax if the gains are invested within six months from the date of transfer in certain long term specified assets being bonds issued on or after April 1, 2007 by and redeemable after three years by: a) National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988;

b) Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956. If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. If the long-term specified asset is transferred or converted into money (otherwise than by transfer, which includes taking loan/ advance on the security of the long term specified asset) at any time within a period of three years from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified asset is transferred or converted into money. However, the maximum amount of investment in the long-term specified asset, which is considered as eligible for claiming exemption by an assessee during any financial year does not exceed fifty lakh rupees. (viii) As per the provisions of section 111A of the Act the short term capital gains arising from the transfer of equity shares or unit of an equity oriented fund, where the transaction of sale of such share/ unit is entered into in a recognized stock exchange in India on or after October 1, 2004 and chargeable to Securities Transaction Tax will be chargeable to tax @ 15% (Plus applicable surcharge) Where the gross total income includes short term capital gains referred to above, the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such short term capital gains. For the purpose of this section, ‘equity oriented fund’ shall have meaning as assigned to it in explanation to section 10(38). (ix) Under section 112 of the Act, and other relevant provisions of the Act, long term capital gains (In case not covered under section 10(38) of the Act), arising on transfer of shares/ units, shall be taxed at a rate of 20% (plus applicable surcharge). The tax shall however, not exceed 10% (plus applicable surcharge) without indexation, if the transfer is made of a listed security. In case short term capital gain is earned which is not covered by section 111A of the Act, then the income is taxable at the normal corporate rate of 30% (plus applicable surcharge). Where the gross total income includes long term capital gains referred to above, the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains. (x) According to section 115JB of the Act, MAT is applicable to a company if the tax payable by a company on its total income, as computed under the normal provision is less than 18% of its book profits. In computing book profits for MAT purposes, certain positive and negative adjustments must be made to the net profits of the Company. As per section 115 JAA (1A) of the Act, a company is eligible to claim credit for any taxes paid 56

under section 115 JB of the Act against tax liabilities computed under the normal provisions incurred in subsequent years. MAT credit eligible for carry forward to subsequent years is the difference between MAT paid and the tax computed as per normal provisions of the Act for a financial year. Such MAT credit is allowed to be carried forward for set off up to 10 years succeeding the year in which the MAT credit becomes available.

(xi) Education Cess of 2% and Secondary and higher education cess of 1% on Income tax payable including surcharge. The rate of tax would therefore increase accordingly. (xii) As per section 74 of the Act, Short term capital loss suffered during the year is allowed to be set-off against short term as well as long term capital gain of the said year. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years’ short term as well as long-term capital gains. Long term capital loss suffered during the year is allowed to be set-off against long term capital gains only. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years’ long term capital gains only. 2. (i) Benefits available to the resident shareholders of the Company under the Act: Under section 10(34) of the Act, any income by way of dividends referred to in section 115-O received from a domestic company is exempt from income tax. However, in view of the provisions of section 14A of Act, no deduction is allowed in respect of any expenditure incurred in relation to earning such dividend income. The quantum of such expenditure liable for disallowance is to be computed in accordance with the provisions contained therein. Also, section 94(7) of the Act provides that losses arising from the sale/ transfer of shares purchases within a period of three months prior to the record date and sold/ transferred within three months after such date, will be ignored to the extent dividend income on such shares is claimed as tax exempt. As per the provisions of section 10 (38) of the Act any long term capital gains arising from the transfer of shares, where the transaction of sale of such shares is entered into in a recognized stock exchange in India on or after October 1, 2004 and chargeable to Securities Transaction Tax, will be exempt from tax. Provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB from the assessment year 2007-08. As per the provisions of section 2(29A) and section 2(42A), shares would be considered as long term if they are held for more than 12 months. (iii) Under section 48 of the Act, if the investments in shares are sold after being held for not less than twelve months, the gains, if any, will be treated as long-term capital gains and the gains will be calculated by deducting from the gross consideration, the indexed cost of acquisition and indexed cost of improvement. The indexed cost of acquisition / improvement adjusts the cost of acquisition / improvement by the cost of inflation index, as prescribed from time to time. (iv) Under section 112 of the Act, and other relevant provisions of the Act, long term capital gains (in case not covered Section 10(38) of the Act ), arising on transfer of shares in the Company, shall be taxed at a rate of 20% (plus applicable surcharge) after indexation as provided in the second proviso to section 48. The amount of such tax shall however, not exceed 10% (plus applicable surcharge) without indexation.. As per section 112(2) of the Act, where the gross total income includes long term capital gains referred to above, the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains. (v) Under section 54EC of the Act, subject to the conditions and to the extent specified therein, long-term capital gains (in case not covered under Section 10(38) of the Act) arising on transfer of the shares of the Company are exempt from tax if the gains are invested within six months from the date of transfer in certain long term specified assets being bonds issued on or after April 1, 2007 by and redeemable after three years by:

(ii)

57

a.

National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988;

b) Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956 If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain.. If the long-term specified asset is transferred or converted into money (otherwise than by transfer which includes taking loan/ advance on the security of long term specified assets) at any time within a period of three years from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified asset is transferred or converted into money. However, the maximum amount of investment in the long-term specified asset, which is considered as eligible for claiming exemption by an assessee during any financial year does not exceed fifty lakh rupees. (vi) Under section 54F of the Act, long term capital gains (in case not covered 10(38) of the Act) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family (HUF) are exempt from capital gains tax if the net consideration is utilize, within a period of one year before, or within two years after the date of transfer , in the purchase of a residential house, or for construction of a residential house within three years. Such benefit will not be available: a) if the individual or Hindu Undivided Familyi. Owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or Purchases another residential house within a period of one year after the date of transfer of the shares; or Constructs another residential house other than the new house within a period of three years after the date of transfer of the shares; and

ii.

iii.

b) The income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property” If only a part of the net consideration is so invested, so much of the capital gains as bears to the whole of the capital gain the same proportion as the cost of the residential house bears to the net consideration shall be exempt. If the residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the residential house is transferred. (vii) As per the provisions of section 111A of the Act, the short term capital gains arising from the transfer of equity shares, where the transaction of sale of such shares is entered into in a recognized stock exchange in India on or after 1st Day of October, 2004 and such transaction is chargeable to securities transaction tax will be chargeable to tax @ 15% (plus surcharge). Where the gross total income includes short term capital gains referred to above, the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains. (viii) Education Cess of 2% and Secondary and higher education cess of 1% on Income tax payable including surcharge. The rate of tax would therefore increase accordingly. (ix) As per section 74 of the Act, short term capital loss suffered during the year is allowed to be set-off against short term as well as long term capital gain of the said year. Balance loss, if any, could be carried forward for 58

eight years for claiming set-off against subsequent years’ short term as well as long-term capital gains. Long term capital loss suffered during the year is allowed to be set-off against long term capital gains only. Balance loss, if any, could be carried forward for eight years for claiming set-off against subsequent years’ long term capital gains only. 3. (i) Benefits to Non-resident Indians / Non- residents shareholders (Other than FIIs)under the Act: Under section 10(34) of the Act, any income by way of dividends referred to in section 115-O received from a domestic company is exempt from income tax. However, in view of the provisions of section 14A of Act, no deduction is allowed in respect of any expenditure incurred in relation to earning such dividend income. The quantum of such expenditure liable for disallowance is to be computed in accordance with the provisions contained therein. Also, section 94(7) of the Act provides that losses arising from the sale/ transfer of shares purchases within a period of three months prior to the record date and sold/ transferred within three months after such date, will be ignored to the extent dividend income on such shares is claimed as tax exempt. (ii) As per the provisions of section 10 (38) of the Act that the long term capital gains arising from the transfer of shares, where the transaction of sale of such shares is entered into in a recognized stock exchange in India on or after October 1, 2004 and chargeable to Securities Transaction Tax, will be exempt from tax. Provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB from the assessment year 2007-08. As per the provisions of section 2(29A) and section 2(42A) , shares would be considered as long term if they are held for more than 12 months. (iii) Under the first proviso to section 48 of the Act, in case of a non-resident, in computing the capital gains arising from transfer of shares of the Indian Company acquired in convertible foreign exchange, cost indexation will not be available. The capital gains/loss in such a case will be computed by converting the cost of acquisition, consideration for transfer and expenditure incurred wholly and exclusively in connection with such transfer into the same foreign currency which was utilized in the purchase of the shares and the capital gains computed in such foreign currency shall be reconverted into Indian currency. (iv) Under Section 54EC of the Act, subject to the conditions and to the extent specified therein, long-term capital gains (in case not covered under section 10(38) of the Act) arising on transfer of long term capital asset are exempt from tax if the gains are invested within six months from the date of transfer in certain long term specified assets being bonds issued on or after April 1, 2007 by and redeemable after three years by: a. National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988; Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

b.

If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. If the long-term specified asset is transferred or converted into money (otherwise than by transfer which includes taking loan/ advance on the security of long term specified assets) at any time within a period of three years from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified asset is transferred or converted into money. However, the maximum amount of investment in the long-term specified asset, which is considered as eligible for claiming exemption by an assessee during any financial year does not exceed fifty lakh rupees. (v) Under section 54F of the Act, long term capital gains (in case not covered Section 10(38) of the Act) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family (HUF) are exempt 59

from capital gains tax if the net consideration is utilized, within a period of one year before, or within two years after the date of transfer, in the purchase of a residential house, or for construction of a residential house within three years. Such benefit will not be available: a) If the individual or Hindu Undivided Familyi. owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or Purchases another residential house within a period of one year after the date of transfer of the shares; or Constructs another residential house within a period of three years after the date of transfer of the shares; and

ii.

iii.

b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property” If only a part of the net consideration is so invested, so much of the capital gains as bears to the whole of the capital gain the same proportion as the cost of the new residential house bears to the net consideration shall be exempt. If the new residential house is transferred within a period of three years from the date of purchase of construction, the amount of capital gains on which tax was not charged earlier, shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the residential house is transferred. (vi) As per the provisions of section 111A of the Act, the short term capital gains arising from the transfer of equity shares, where the transaction of sale of such shares is entered into in a recognized stock exchange in India on or after 1st day of October, 2004 and chargeable to Securities Transaction Tax will be chargeable to tax @ 15% (plus surcharge). Where the gross total income includes short term capital gains referred to above, the deduction under Chapter VI-A and shall be allowed from the gross total income as reduced by such capital gains. (vii) Under section 112 of the Act, and other relevant provisions of the Act, long term capital gains.(i.e., if shares are held for a period exceeding 12 months) (In case not covered under section 10(38) of the Act), arising on transfer of shares in the Company, shall be taxed at a rate of 20% (plus applicable surcharge). The tax shall however, not exceed 10% (plus applicable surcharge) without indexation. As per section 112(2) of the Act, where the gross total income includes long term capital gains referred to above, the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains. (viii) Education Cess of 2% and Secondary and higher education cess of 1% on Income tax payable including surcharge. The rate of tax would therefore increase accordingly. (ix) A non-resident Indian (i.e. an individual being a citizen of India or person of Indian origin who is not a resident) has an option to be governed by the provisions of Chapter XIIA of the Act, viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows: a. According to 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 shares in an Indian Company not exempt under section 10 (38), will be subject to tax at the rate of 10 percent (plus applicable education cess and secondary higher education cess) without indexation benefit.

60

b.

Under section 115F of the Act, long term capital gains (in case not covered under section 10(38) of the Act) arising to a non-resident Indian from the transfer of shares of the company subscribed to in convertible foreign exchange is exempt from Income tax, if the net consideration is reinvested in specified assets within six months from the date of transfer. If only a part of the net consideration is so invested, the exemption shall be proportionately reduced. If the specified asset is transferred or converted into money within a period of three years from the date of its acquisition, the amount of capital gains on which tax was not charged earlier, shall be deemed to be income chargeable under the head “Capital gains” of the year in which the specified asset is transferred or converted.

c.

Under Section 115G of the Act, it shall not be necessary for a Non-resident Indian to furnish his return of income if his income chargeable under the act consists on only investment income or long term capital gains or both arising out of specified assets acquired, purchased or subscribed in convertible foreign exchange and tax deductible at source has been deducted there from. Under section 115H of the Act, where the Non-resident 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 mentioned in sub clauses (ii), (iii), (iv) and (v) of clause (f) of Sec 115C for that year and subsequent assessment years until such assets are converted into money. Under section 115I of the Act, a Non-Resident Indian may elect not 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 XII-A 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.

d.

e.

(x)

Under section 90(2) of the Act, where the Central Government has entered into an agreement with the Government of any country outside India for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of the Act shall apply to the extent they are more beneficial to that assessee. Benefits to Foreign Institutional Investors (FIIs) under the Act: Under section 10(34) of the Act, any income by way of dividends referred to in section 115-O received from a domestic company is exempt from income tax. However, in view of the provisions of section 14A of Act, no deduction is allowed in respect of any expenditure incurred in relation to earning such dividend income. The quantum of such expenditure liable for disallowance is to be computed in accordance with the provisions contained therein. Also, section 94(7) of the Act provides that losses arising from the sale/ transfer of shares purchases within a period of three months prior to the record date and sold/ transferred within three months after such date, will be ignored to the extent dividend income on such shares is claimed as tax exempt.

4. i.

. ii.

As per the provisions of section 10 (38) of the Act that the long term capital gains arising from the transfer of shares, where the transaction of sale of such shares is entered into in a recognized stock exchange in India on or after October 1, 2004 and chargeable to Securities Transaction Tax, will be exempt from tax. Provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115JB from the assessment year 2007-08. As per the provisions of section 2(29A) and section 2(42A) shares would be considered as long term if they are held for more than 12 months.

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iii.

As per the provisions of Section 115AD of the Income Tax Act, income ( other than income by way of dividends referred to in Section 115 O of the IT Act) of FIIs arising from securities (other than the units purchased in foreign currency referred to Section 115AB of the Income Tax Act) would be taxed at concessional rates , as follows: Nature of Income Income in respect of securities Long Term Capital Gains (other than the one covered u/s 10(38) Short Term Capital Gains (other than short term capital gain referred to in Section 111A, in which case the rate is 15%) Rate of Tax (%) 20 10 30

The benefits of indexation and foreign currency fluctuation protection as provided under Section 48 of the Income Tax Act are not available. iv. As per the provisions of section 111A of the Act, the short term capital gains arising from the transfer of equity shares, where the transaction of sale of such shares is entered into in a recognized stock exchange in India on or after 1st day of October, 2004 and chargeable to Securities Transaction Tax will be chargeable to tax @ 15% (plus surcharge). Where the gross total income includes short term capital gains referred to above, the deduction under Chapter VI-A and shall be allowed from the gross total income as reduced by such capital gains. v. Under Section 54EC of the Act, subject to the conditions and to the extent specified therein, long-term capital gains (in case not covered section 10(38) of the Act) arising on transfer of a long term capital asset are exempt from tax if the gains are invested within six months from the date of transfer in certain long term specified assets being bonds issued on or after April 1, 2007 and redeemable after three years by: a. National Highway Authority of India constituted under section 3 of The National Highway Authority of India Act, 1988; Rural Electrification Corporation Limited, the company formed and registered under the Companies Act, 1956.

b.

If only part of the capital gain is so reinvested, exemption available shall be in the same proportion as the cost of long term specified assets bears to the whole of the capital gain. If the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of acquisition, the amount of capital gains on which tax was not charged earlier shall be deemed to be income chargeable under the head “Capital Gains” of the year in which the specified asset is transferred or converted into money. However, the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees. vi. Education Cess of 2% and Secondary and higher education cess of 1% on Income tax payable including surcharge. The rate of tax would therefore increase accordingly. Under section 90(2) of the Act, where the Central Government has entered into an agreement with the Government of any country outside India for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this act shall apply to the extent they are more beneficial to that assessee. Benefits to Mutual Funds under the Act:

vii.

5.

62

(i)

Under section 10(34) of the Act, any income by way of dividends referred to in section 115-O received from a domestic company is exempt from income tax. However, in view of the provisions of section 14A of Act, no deduction is allowed in respect of any expenditure incurred in relation to earning such dividend income. The quantum of such expenditure liable for disallowance is to be computed in accordance with the provisions contained therein. Also, section 94(7) of the Act provides that losses arising from the sale/ transfer of shares purchases within a period of three months prior to the record date and sold/ transferred within three months after such date, will be ignored to the extent dividend income on such shares is claimed as tax exempt Under section 10(23D) of the Act, any income of: a) A Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 or regulations made there under; b) Such other Mutual Fund set up by a public sector bank or a public financial institution or authorized by the Reserve Bank of India and subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf will be exempt from income-tax.

(ii)

6. (i)

Benefits available to Venture Capital Companies / Funds under the Act: Under section 10(34) of the Act, any income by way of dividends referred to in section 115-O received from a domestic company is exempt from income tax. However, in view of the provisions of section 14A of Act, no deduction is allowed in respect of any expenditure incurred in relation to earning such dividend income. The quantum of such expenditure liable for disallowance is to be computed in accordance with the provisions contained therein. Also, section 94(7) of the Act provides that losses arising from the sale/ transfer of shares purchases within a period of three months prior to the record date and sold/ transferred within three months after such date, will be ignored to the extent dividend income on such shares is claimed as tax exempt The taxation of the gains on the sale of shares is same as those applicable to non-resident.

7. (i)

Benefits available to the shareholders of the Company under the Wealth Tax Act, 1957: Shares of the company held by the shareholders will not be treated as an asset within the meaning of section 2 (ea) of the Wealth Tax Act, 1957. Hence, shares are not liable to wealth tax. Benefits available to the shareholders of the Company under the Gift Tax Act, 1958: Gift made on or after 1st October, 1998 is not liable for any gift tax, and hence, gift of shares of the Company would not be liable for any gift tax. However, from 01 October 2009 the same will be taxed in the hands of the donee if it fulfils the conditions entailed in Clause (vii) of subsection (2) of section 56 of the Income Tax Act, 1961

8. (i)

Notes: 1. The above statement of Possible Direct Tax Benefits sets out the possible tax benefits available to the Company and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. The above Statement of possible tax benefits sets out the provisions of law in a summary manner only and is not a complete analysis or list of all potential tax consequences. 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 non-residents, 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 non-resident has fiscal domicile.

2. 3. 4.

63

5. 6.

In view of the individual nature of tax consequences, each investor is advised to consult his/her/its own tax advisor with respect to specific tax consequences of his/her/its participation in the scheme. The tax benefits listed above are not exhaustive.

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SECTION IV –ABOUT THE COMPANY INDUSTRY OVERVIEW

Data in this section has been sourced from the following:  NASSCOM Strategic Review 2007  NASSCOM Strategic Review 2010  Website of Department of Information Technology, Ministry of Communications & Information Technology (Govt. of India) The information presented in this section has been derived from publicly available publications/documents from various sources, including officially prepared materials from Government bodies and industry websites/ publications. In particular, we have relied on the report “NASSCOM Strategic Review 2007” and “NASSCOM Strategic Review 2010” issued by NASSCOM in February 2007 and February 2010 respectively. Industry sources and publications generally state that the information contained therein has been obtained from sources believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and, accordingly, investment decisions should not be based on such information. Industry and government publications are also prepared based on information as of specific dates and may no longer be current or reflect current trends. Although we believe industry, market and government data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified by us or any person connected with this Issue. Similarly, internal Company estimates, while believed by us to be reliable, have not been verified by any independent agencies The IT Services Industry has been purposefully adapting to a tumultuous economic environment, equipping global businesses to continue leveraging technology in order to optimize costs, enhance operating efficiencies and service heightened customer expectations. While the last couple of years have been particularly difficult for our industry, 2010’s early resurgence, albeit tempered, has brought into focus benefits of working toward simplified, global operating platforms arising out of application, technology and process consolidation. Global Sourcing of IT services continues to drive cost arbitrage opportunities with greater vigor in the near to medium term even as service recipients seek transformational outcomes through newer business and operating models. India Inc continues to be at the forefront of global IT-BPO sourcing and off-shoring, playing both thought and execution leadership roles, shaping the overall relationship with business for long term sustenance. Key industry insights that we have extracted from NASSCOM’s Strategic Review Report 2010 fortify the mainstream character of IT global sourcing along with its compelling cost-value proposition rendered by the dimensions of outsourcing & offshoring. Key Industry Insights Insight1: Global sourcing continues to be vastly under-penetrated

65

Source: NASSCOM Strategic Review Report 2010

According to NASCCOM’s Strategic Review Report 2010, world-wide IT spending on a year on year basis remained largely flat in 2009 even as discretionary spend covering consulting, custom application development and systems integration witnessed marginal negative growth. With steady recovery in global markets, early trends in the current fiscal years’ first two quarters point to momentum in IT spending as well. From a standpoint of medium & long term viability, above data extract suggests that global sourcing forms a small portion of addressable technology spend with significant room for expansion. Emerging service offerings are likely to experience non-linear growth while mature service offerings would continue to build on the scale factor.

Insight 2: Off-shoring to continue outpacing Global Spend in foreseeable future

66

Source: NASSCOM Strategic Review Report 2010

While global IT spending declined year on year in 2009 by 2.9%, outsourcing was the only segment to exhibit growth, reaffirming its potential to support cost savings and provide sustainable advantage in terms of increased competitiveness, efficiencies and access to emerging markets. While the past year has seen increased price competition for outsourcing deals driven by the need for near term financial gains, business outcome focused outsourcing is expected to drive the market Though growth in outsourcing is expected to continue in the future, it would be outpaced by growth in offshoring. Over the years, offshore-based service providers, leveraging location advantage, have worked relentlessly to firmly establish the offshore centric global delivery model. On the other hand, existing global players have ramped up their delivery bases in offshore locations to provide enhanced and blended services that offer better value to their customers and in the process subscribe to the global delivery model as well. Continued momentum around these factors will catalyze higher growth rates for offshoring. This NASSCOM report further opines that clients will continue looking at leading offshore locations including India and Philippines along with emerging ones in Africa, Central and South America in efforts to broaden offshore location landscape. Insight 3: Customer Expectations have moved well beyond cost savings

67

Source: NASSCOM Strategic Review Report 2010

According to NASSCOM’s Strategic Review Report 2010, cost savings once known to be the principal driver for outsourcing & offshoring in the early years is now a given. Increasingly, offshoring is viewed as an integral part of company strategy to access quality talent, improve speed to market, and enhance efficiencies. Insight 4: Continuing evolution of India based players as ‘End to End’ IT Services’ Partners

Source: NASSCOM Strategic Review Report 2010

68

Indian players’ traditional strengths were built and leveraged around developing and maintaining custom applications for a cross section of vertical industry segments. In quest of broader and deeper customer relationships, the players started expanding scope of services offered by investing in technology and domain capabilities. Independent Validation and Verification (IVV) services also emerged as a major offshoring wave after custom application development. Service offerings around Consulting, Remote Infrastructure Management and Systems Integration are evolving rapidly and expected to drive overall services growth in the coming years. Insight 5: A new Paradigm for today’s Global IT Service Provider

Source: NASSCOM Strategic Review Report 2010

Heightened customer expectations in terms of value delivered/received from outsourcing relationships is causing a paradigm shift in the IT services eco-system. NASSCOM avers that there will be increased acceptance of pricing models that incorporate outcome based and gain-sharing principles, along with pay per use model. Service delivery will continue its global trajectory with India as the hub and different emerging and developed countries as spokes. Industry is expected to generate an increasing share of revenues from the untapped Small and Medium Business (SMB) segment through improved pay per use business models and platform solutions. Global talent pools are increasingly becoming the norm in servicing large multi year strategic customer relationships to infuse requisite domain maturity as well as near-shore capabilities. Region-wise IT Spend The worldwide IT outsourcing market is estimated to be USD 234 billion in 2009. Of this, developed economies such as North America and Western Europe account for around 78 per cent of total worldwide IT services spend. North America continues to be the significant spender with the US alone accounting for almost 43 per cent of the spend on IT services. IT spending in the US has grown by 3.5 per cent in 2009 (though there is a decline in growth rate when compared to previous years).

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16%

42%

42%
North America Europe, Middle East and Africa (EMEA) Asia Pacific (APAC)

Source: NASSCOM, Region-wise IT Spend in 2009 Indian IT Services Industry (Source: NASSCOM Strategic Review Report 2010) The Indian Software & Services industry has grown at a remarkable pace since 2001-02. The overall Indian Software & Services industry revenue is estimated to have grown from USD 10.2 billion in 2001-02 to reach USD 58.7 billion in 2008-09- translating to a CAGR of about 26.9 per cent. Despite the severe global recession, the industry experienced a growth rate of 12.9 % in 2008-09 over the previous year. The Indian Software & Services industry has improved its share in global technology services from 52 per cent in 2005 to 62 per cent in 2009. India has managed to retain this majority share even with the emergence of multiple new low-cost locations across geographies. Indian Software & Services industry is diversified across three major segments – IT Services, Engineering, Research & Development (ER&D) and Business Process Outsourcing (BPO). The three major components of the IT Services sector are custom application development, application management and support and training. Other significant components are IT consulting, systems integration, Infrastructure Services (IS) outsourcing, network consulting & integration and software testing. Among the verticals serviced by India’s IT-BPO industry those that account for the largest share of revenue include banking, financial services and insurance (BFSI-41%), Hi-Tech/Telecom(20%), manufacturing(17%), retail(8%), with smaller contributions coming from media, publishing and entertainment, construction and utilities, healthcare and airlines and transportation. There is tremendous headroom for growth as the current offshoring market is still a small part of the outsourcing industry. Significant opportunities exist in core vertical and geographic segments of BFSI and US, and emerging geographies and vertical markets such as Asia Pacific, retail, healthcare and government respectively. Development of these new opportunities can triple the current addressable market, and can lead to Indian IT-BPO revenues of USD 225 billion by 2020. Indian IT Services Value Proposition (with selected excerpts from NASSCOM Strategic Review Report 2010) Availability of quality talent at cost effective rates, rapidly developing infrastructure, an enabling innovation environment, supportive regulatory policies, and a positive overall business environment — are all central pillars of India’s value proposition  Low cost of delivery- India offers the lowest cost of delivery as compared to other offshore locations, with TierI locations offering savings of ~70 per cent over source locations, Tier-II/III cities in India offer a still larger benefit. High calibre talent pool - Availability of skilled talent has been India’s foremost attraction as a global sourcing country. India’s graduate outturn has more than doubled in the past decade, with addition of 3.7 million graduates in FY2010, a scale unmatched by any other country. While some gaps in talent suitability exist, they are being addressed through strong provider-level initiatives and industry-led programmes.

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Robust process delivery - The industry has been extremely quality focused, with India based centres accounting for the largest number of quality certifications achieved by any country. The industry has also set standards in the establishment and maintenance of best practices in corporate governance, and leads in customer satisfaction. Business environment and infrastructure - Timely government policies and increased public private participation have played a key role in developing an enabling business environment for the Indian IT-BPO sector. India’s strong education framework ensured ample supply of technical and non technical talent, while the establishment of Software Technology Parks of India (STPI) and later SEZs provided an enabling ecosystem for the industry to flourish. Infrastructure development has been addressed by both public and private sector, leading to the development of world class facilities in select cities. Transformational capabilities - The industry has been enhancing its abilities to transform client businesses through increased R&D spend, focus on IP creation, and development of new technologies incorporating process and business model innovation and increased domain expertise. Global footprint - Increased focus on global delivery has required the industry to enhance its global footprint, which has in turn helped the industry reach out to new customer segments and offer new services.

Significance of Application Services for Enterprises Application Development helps organizations build IT systems to automate their business processes and increase efficiency, improve security and enable better capture and storage of data. IT systems are typically complex and all the possible errors in IT applications cannot be captured at the application testing phase in the software development life cycle. Application Maintenance covers the lifecycle of rectifying errors that occur in IT applications after they are deployed for use in the organization along with enhancement needs from business seeking minor improvements in functionality. Application Services Market As discussed in the macro trends section around progressive evolution of India based players as ‘End to End’ Service Partners, Application Services has been the mainstay of the IT Services market. Traditionally, it was the first area within an IT setup that an organization outsourced to third party vendors. Most IT Services companies have grown initially in the Application Services area, matured as service providers before foraying into other segments. Currently, this segment is growing relatively slower as compared to newer areas within outsourcing like testing (IVV) or systems integration. However, it continues to be the bedrock of the overall IT services food chain and makes up a large constituent of the work outsourced by organizations. Enterprises today are looking at trend setting and path breaking initiatives beyond the traditional Application Services area to concentrate in newer areas as well. This has led to aggressive exploratory efforts in a bid to be identified as specialized and premium technology service providers across areas such as Systems Integration, Testing Solutions, Product Development and Industry-specific Verticalized IT Solutions. An offshored/outsourced model in these specialized areas is attractive to customers who are increasingly driving greater value for the same spend. Premium Systems Integration capabilities in certain focused areas such as the Application Infrastructure & Middleware (AI &M) market segment, and Specialized Testing Solutions around custom & packaged application environments are but a couple of areas that deserve special mention in the current context. Significance of the Application Infrastructure and Middleware for Enterprises For the majority of business organizations operating in the current competitive environment, efficient application integration has become a "mandatory" strategy rather than being just another infrastructure development option. Evolution and growth of this segment has been fueled by a spate of M&A activities across different industry segments, accelerated time to market for new products & services and the impact of the web in accessing new markets.

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Given that majority of companies are now seeking to link their legacy applications with newer ones in order to develop internal processes and work more cohesively with business partners, application integration & middleware has become a highly visible and engaged segment within the IT industry. Business enterprises over the years have invested heavily in IT to keep up with the evolving trends of Information Technology and to stay ahead of competition in their own domains of businesses. In course of time, protection of these investments and more often than not, the sheer complexity involved in managing & maintaining disparate application environments within the same enterprise fuelled the growth of innovative solutions around multi-tiered architecture models, creating & sustaining the right application infrastructure within the layered architecture and carrying out systems & application integration. Over time, business enterprises that wanted to prepare their IT environment for growth and economies of scale started moving towards federated IT architecture models. In due course, investments in Middleware technology platforms started becoming the most sought after architectural choice that many businesses started making. Application Infrastructure & Middleware market space started gaining momentum – growing from an early start around simple application servers that contain the application business logic and connected the user interface with the databases, to a distinct and ever growing enterprise architecture layer of a suite of middleware and application integration alternatives. Along with the product offerings from some pioneering companies, came a host of focused systems integration service offerings in this space. Application Infrastructure and Middleware Services Market Segments The broad segments of Application Infrastructure and Middleware (AIM) include: Application Servers - An application server is a software framework dedicated to the efficient execution of procedures (programs, routines, scripts) for supporting the construction of applications. Portals – Portals are a framework for integrating information, people and processes within an organization in the case of internal facing portals or with customers of any enterprise in the case of external facing portal. Portals can be horizontal portals which cut across various departments in an organization and provide a cross-functional view of information. Alternatively, they can be vertical portals which are focused on specific business areas in an organization. A key feature of portals is the de-centralized content contribution and content management, which keeps the information always updated. Business Process Management (BPM) – BPM tools give users a framework and means of capturing and modeling existing business processes, making improvements and maintaining business rules intrinsic to organizational processes. BPM tools aim at increasing process efficiencies and reducing cost or time involved in business processes. Transaction Processing Monitors (TPM) – Transaction Processing System or Transaction Processing Monitor is a set of information which processes a data transaction in a database system that monitors transaction programs (a special kind of program). The essence of a transaction program is that it manages data that must be left in a consistent state. E.g. if an electronic payment is made, the amount must be both withdrawn from one account and added to the other; it cannot complete only one of those steps. Message Oriented Middleware (MOM) – Message-oriented middleware (MOM) is software infrastructure focused on sending and receiving messages between disparate systems. MOM allows application modules to be distributed over heterogeneous platforms, and reduces the complexity of developing applications that span multiple operating systems and network protocols by insulating the application developer from the details of the various operating system and network interfaces. Enterprise Services Bus (ESB) – An ESB acts as a shared messaging layer for connecting applications and other services throughout an enterprise computing infrastructure. It supplements its core asynchronous messaging backbone with intelligent transformation and routing to ensure messages are passed reliably. Services participate in the ESB using either web services messaging standards or the Java Message System (JMS). Originally defined by analysts at Gartner, ESB is increasingly seen as a core component in a service-oriented infrastructure.

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Application Infrastructure and Middleware Software Service Providers Any enterprise that undertakes AIM work within its IT ecosystem needs consulting or implementation advice for which they engage services vendors with expertise in AIM products. The depth of the engagement needed depends on the maturity in IT architecture and the relative complexity of processes in the organization. Significance of Identity & Access Management for Enterprises Identity & Access Management (IAM) has come to play an increasingly critical role in enterprise efforts toward management control, regulatory compliance, cost optimization, operational efficiency and overall governance. Widespread adoption of regulatory standards such as Sarbanes-Oxley, Basel II, etc. have driven enterprises to incorporate broad-based security protocol calibrating access of data and information appropriately. Consequently IAM as a process encapsulates people, processes and products to identify and manage the data used in an information system to authenticate users and grant or deny access rights to data and system resources. It provides the ability to open up only select subsets of the organization’s information sites to customers, vendors, partners providing effective information exchange that can be adapted to a particular user group. IAM can enable new users, employees or contractors to gain necessary information from applications so that they can be productive and at the same time allow the organization to keep a check on the access rights as their roles require. Significance of Independent Verification and Validation (IV&V) for Enterprises Verification and validation is the process of checking that a software system meets specifications and that it fulfils its intended purpose. These are critical components of a quality management system such as ISO 9000. Validation ensures that the product actually meets the user's needs, and that the specifications were correct in the first place, while verification is ensuring that the product has been built according to the requirements and design specifications. In the current IT services eco-system, preceded with the term "Independent" IV&V is the most mature phase of testing services that is performed by a ‘disconnected’ third party with no stake in the software development process. With a USP of unbiased evaluation, IVV has gained rapid mainstream stature within the software development life-cycle of organizations and co-exists as a distinct process with appdev testing services which is an integral part of the development life-cycle. IV&V Services Market Outlook Software testing services are emerging as a key growth area for Indian vendors in IT services. This segment has seen a healthy 14% CAGR revenue growth over the last 4 years.

Source: Nasscom Over the years, India has grown to be the epicentre of off-shore testing with both Indian and MNC vendors increasing testing capabilities in India. Most of the current testing that is outsourced is concerned with conventional elements of functional testing, primarily systems testing, regression testing, and integration testing. The market for outsourced testing services is in a state of rapid evolution, with emerging categories of service as well as adaptation to the changing nature of software development. Basic functional testing services are already commoditized, but emerging categories of service targeted at higher value realization are evolving rapidly. Increasingly, providers offer testing services in the context of specific domains, whether vertical or horizontal in nature. For example, suppliers 73

package testing services around the needs of specific vertical areas such as capital markets or claims processing. Additionally, specialized testing is also getting increasingly important with activities such as performance testing, stress and load testing. Key benefits from outsourced testing relationships include the ready, on demand availability of testing personnel with domain expertise, reduced time-to-market because of availability of suitable tools and frameworks, increased accountability and auditability of tests from third-party vendors, and significant improvements in efficiency and quality through adoption of global standards. Significance of Enterprise Software Package Testing Specialized testing around Enterprise Software Packages which include Enterprise Resource Planning (ERP) packages is emerging as a niche service offering. Today, it is imperative for organizations to achieve a unified view and greater control of their business processes. ERP packages play an important role in this regard. They typically consist of a package of pre-built modules covering various functional areas that are present in most industries. They cannot be deployed off-the-shelf. Instead, they require deep study of an organization’s business processes and relevant customization to mold the package to the specific organization’s requirements. Organizations may take more than a year for rollouts of ERP packages and delays might mean hampered operations and cost overruns. In this context, Enterprise Software Package testing is critical in ensuring that there is effective implementation within prescribed budgets. Engagement models in testing services

Source: NASSCOM Strategic Review Report 2010 The figure above shows the different engagement models in testing services. FTE-Based: Customers acquire testing expertise on a full time employee basis, provides the ability to manage the inbuilt ‘lumpiness’ in testing, where there is seasonality in manpower requirement - dependent on project flows. Managed Outcome Services: A number of new testing assignments are being engaged on a managed outcome basis, where service providers are to deliver defined outcome, on a fixed price basis. Outcomes can be timeliness, quality or productivity linked. Consulting Services: As a part of overall project consulting complementing other services, test consulting services can assess customers’ existing test processes and suggest or implement improvements to them. Testing Centres of Excellence: In a bid to project themselves as full-fledged testing services providers, Indian vendors are creating Testing Centres of Excellence (CoE). A managed test CoE refers to a distinct unit tasked with testing, potentially across diff erent project requirements or even lines of business. The CoE creates a group of testing specialists and technical testing components that can be used to leverage testing knowledge, technology, methodology and resources across suitable engagements. The testing specialists will educate and supplement the testing resources that exist within each project team. This will allow for maximum project penetration with a minimum number of human resources. This group will maintain the deliverables as they are created and provide them as a framework and samples for future efforts.

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IT Services Eco-system: The way forward We have seen that the increasingly commoditized character of mainstream service offerings triggered aggressive pursuit of differentiation by service providers. In turn this has brought about unrelenting focus around creating specific, niche offerings across an intersect of vertical segments and horizontal competencies. Integrating all of these efforts with a customer experience dimension that offers flexible relationship management, competitive pricing packages and mature engagement models will determine the extent of success for service providers in their quest to transform customer relationships to partnerships.

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OUR BUSINESS

Overview Semantic Space Technologies Limited was founded in 1997 with an engaging vision of providing solutions and services that would help simplify the enablement, implementation and upgrade of Information Technology for business enterprise and provide value realisation for not only our immediate customers, but to their end customers as well. We have thereby evolved to emerge as a specialized solutions provider offering a variety of solutions and services in mainly three areas: Application Services, Independent Verification and Validation Services (IVV) and Systems Integration (SI) Solutions in the Application Infrastructure and Middleware space. We leverage a differentiated business model through investments in pre-fabricated software components and frameworks to build enduring value for our customers. We have expanded our service portfolio with strategic acquisitions to emerge as a well-balanced player in the IT services segment. We offer our services under three SBUs viz. Application Services, IVV and SI - each of which possesses a set of unique attributes and delivers value that strengthen the overall business proposition from our organization. Application Services is an encompassing portfolio of general IT services around Application Development, Maintenance, Modernization and Support. Systems Integration in the AI&M space underscores our focus and attention to the growing market space of middleware and application infrastructure layer. Our premium services and solutions of Systems Integration in this space give us the advantage of spreading our offerings for the same clients into the Application Services arena. In addition, the IVV services and solutions that focus on testing and quality assurance have a presence in everything that we build, maintain, migrate, support, configure and implement – be it in SI or in Application Services space. Application Services, IVV and SI complement each other effectively and operate with a common strategy of relying on pre-built tools, utilities, reusable components and application frameworks to provide increased value to our customers. We build our competencies around key technologies and domains that develop our expertise and continue to differentiate us. Our growth and current business positioning is attributable to our recent past where we have proved the success of our inorganic strategies and our capabilities to manage growth. Through our acquisitions in the years 2006 and 2008 we stepped into the specialized service delivery areas of IVV and SI.These initiatives have largely driven us towards diversifying and integrating our value proposition. These strategic moves have benefitted us in our financial performance to grow at 5 year CAGR (ending Fiscal 2010) of over 70% in our revenues and about 37% and 26% in our EBITDA and Profits After Tax respectively. We serve a client base of 400+ marquee customers, 40 of whom belong to the Fortune 500 category. Powered by a diverse workforce of over 850 associates operating across North America, Europe and APAC, we have successfully delivered over 1,000 projects till date. We have three well equipped offshore delivery centers in Hyderabad, India which are designed to support our onsite business and enhance our productivity and efficiencies. We have presence in the US through our offices in New York, California, Florida and Pennsylvania. In Europe, we have our presence in London, UK and in Hamburg, Germany. Competitive Strengths  Client – Relationship Capital With an unflinching commitment to ‘value based growth’ which has been the corner-stone of our existence, we serve a client base of 400+ marquee customers, 40 of whom belong to the Fortune 500 category. We have demonstrated our ability to manage large client relationships and outsourcing engagements over a sustained period. We are constantly building and expanding on such long-term, strategic associations. This relationship capital that we have built over the years translates to a competitive strength as we are in a position to leverage these relationships to build scale. A key strategic focus as an integrated enterprise would be to cross-sell and upsell the broader set of services we offer to our accounts.

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Process Maturity – Proprietary Service Delivery Accelerators We leverage high quality processes and project management capabilities. Our philosophy since inception has been in building and providing services through proprietary service delivery accelerators. We have invested in building proprietary tools including PPM Studio, Effecta Framework, Code Immunizer and a set of reusable software components. These tools and components enhance our ability to rapidly service client requirements, provide the right and committed resources both onsite and offshore. We believe that intellectual property is a multiplier of efficiency in the software service delivery business. Access to an available array of toolsets enables us to dramatically reduce the cycle time for service delivery while significantly improving quality, and serves as a critical competitive differentiator. We are uniquely differentiated in our ability to provide unmatched transparency and visibility to our customers on project execution.

Enduring Alliance Partnerships We have a strong and growing partnership with technology vendors, particularly with IBM. This alliance enables us to combine our expertise and long history of delivery success with IBM’s market leadership. We are a premier-level IBM Business Partner and Systems Integrator with domain expertise exclusive to the IBM software business and have garnered awards for technical excellence across IBM’s entire software portfolio. Our Subsidiary, Prolifics has a Level 5 ranking—IBM’s highest on its technical expertise scale—and has twice been the recipient of the IBM Award for Overall Technical Excellence. This provides us a platform for our integrated enterprise to leverage cross-selling opportunities through breadth and diversity of customer relationships.

Global Delivery Model Our hybrid, blended-shore delivery model offers a smart balance of quality, cost savings and localizations. It is reflective of our global corporate culture, and recognizes that technology services firms cannot deliver quality solutions, without being close to our clients. Our blended-shore delivery model enables us to achieve consistently high standards of quality in our delivery organization while optimizing the costs for our clients.

Track Record and Competence in Delivery Powered by a diverse workforce of over 850 associates operating across North America, Europe and APAC, we have successfully delivered over 1,000 projects till date. With a track record of over a decade in offshore services, we not only offer the breadth and depth of tier one vendors but the care and attention of mid-size service providers.

Quality Talent and Experienced Leadership Team We recruit talent from universities and institutes in India and the US, as well as laterally from leading IT companies. We have an inclusive approach to people, and focus on providing a work environment with transparent evaluation criteria. We are also well positioned through our international management team. Our leadership is balanced across India and the US. This provides a rich and diverse management outlook.

Business Growth Strategy Building end to end competencies across the IT Services Food Chain A critical factor in the Indian IT Industry’s growth story has been its resolute commitment to broadening and deepening service offering competence, span and maturity. Engaging the customer at different levels of the ‘IT Services Food Chain’, through an integrated delivery approach has powered the shift from ‘relationships’ to ‘partnerships’ for service providers. According to NASSCOM’s Strategic Review Report 2007, even as revenues from project oriented engagements continue to account for a large share, India Inc. has been consistently bidding and winning larger deals typified by annuity based multiyear contracts, thanks to the evolution of this partnership model. 77

This is further corroborated by NASSCOM’s commentary around service line expansion in the same report stating that vendors are increasingly taking on larger and more complex deals involving a broad service portfolio. Also evidenced by CADM’s (Custom Application Development and Maintenance) shrinking pie from 80% in 2000-01 to 49% in 2006-07 in favor of other services (20% in 2000-01 to 49% in 2006-07).

Application Management, Infrastructure Management Outsourcing, Systems Integration, Software Testing (Independent Verification and Validation) and Consulting are rapidly emerging as the mainstay of new/evolving service offerings. Keeping pace with this progressive shift in market dynamics, we have been systematically building and acquiring broad based competencies across the IT services food chain. Bolstered by a solid, organic foundation of mature offerings in application development and maintenance across Microsoft, J2EE and other Open source technologies, we were quick to expand our capabilities into IVV (Testing and QA) space with the acquisition of Arsin. Thus we could effectively address the entire gamut of full life cycle development and post implementation services. When engaging our customers and prospects, we often deal with complex problems and situations in enterprise architecture space. Many a time, of the variety of the multiple technology platforms, legacy application environments and disparate systems are seen to contribute to sub-optimal workflows downstream. This experience hastened our resolve to expand into ushering in value that we can deliver ourselves in the application infrastructure space – the middleware and enterprise integration segment - the layers where the enterprise architecture blueprint starts becoming a reality. Consequently this brought forth the Prolifics acquisition. Prolifics, our Systems Integration practice in the AI&M segment enhanced our overall ‘solutioning’ competence while establishing our SI capability credentials on the IBM Websphere platform. Adopting an aggressive, non-linear approach to ‘rapid scale and diversity of competency enhancement’ we stand today as an end to end Systems Integration and Application Management player across the IBM, Microsoft and Open Source platforms. We would like to drive transformational value at the top end, while influencing downstream opportunities that could be effectively serviced by our current capabilities 3-dimensional Growth Strategies We visualize three broad avenues for our business growth: 78

#1 CONSOLIDATION

Our first priority is to strengthen our current market initiatives and build on the value of our integrated offerings

Account Growth: We are currently focusing on an Account Management Program (AMP) to successfully mine and grow these strategic accounts.  As part of the AMP, we will have on-board top talent as Client Partners and Engagement Managers to expand our market share within these existing accounts  The AMP would also involve launching multiple Customer Intimacy Programs Cross-Selling: There are three focus areas within ‘Cross-Selling’:  An expanded set of offshored service offerings on IBM technology platform to the clients of our Prolifics division that hitherto not offered  Testing (IVV) services to Prolifics clients  Offshore-based Application Services on Microsoft, Java and other Opensource technology platforms to the clients of our SI and IVV divisions We are having a comprehensive Cross-Selling campaign that will involve:  Providing training inputs to the sales team enabling them to position other services  Co-branded collateral on joint value proposition  Dedicated resource center (with solution support)  Road-shows to highlight expanded offerings to clients Horizontal GTM:

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Currently, all three group companies are running horizontal GTM campaigns; these include:  Direct marketing programs for lead generation  Technology alliance programs for collaborative marketing Both programs are yielding encouraging results; and there is tremendous scope to expand # 2 GLOBALISATION We would like to grow our business outside North America

# 3 VERTICALISATION

Embarking on a program of industry-specific service offerings we would significantly expand our market out-reach as well as strengthen our brand identity

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Our Business and Business Model As a provider of specialized IT services, we have a differentiated business model that is built around niche competencies and specialization in micro-verticals. In line with this model, we have been gradually investing in home grown software toolsets, platforms and re-usable components. We believe that intellectual property is a multiplier of efficiency in the software service delivery business. Access to an available array of toolsets enables us to dramatically reduce the cycle time for service delivery while significantly improving quality, and serves as a critical competitive differentiator. This unique business model is built on a strong foundation. Taking a ‘product’ and ‘solution’ mindset to the services business, has led to very robust engineering practices. Our delivery ecosystem is driven by a strong, tool-driven project management routine. Through Arsin and Prolifics we have expanded our spectrum of niche competencies and intelligent solutions. Arsin, which represents our IVV business, is the leading supplier of automated enterprise software testing solutions while Prolifics focuses on delivering secure, end-to-end SOA and portal solutions. Prolifics is one of the systems integration partner for IBM specializing on the IBM Application Infrastructure and Middleware technology platform. SST, Prolifics and Arsin complement each other effectively and operate with a common strategy of relying on prebuilt tools, utilities, reusable components and application frameworks to provide increased value to our customers. Our business model is thus quite differentiated relative to several of our peers who rely on scale and labor cost arbitrage. The distinctiveness of our business model is reflected in the quality of competition we face while bidding for new business. We often compete with the Big 5, India Tier 1 or local players based in North America and Europe. Our analysis of the marketplace is that there is a unique opportunity for innovative technology providers who can artfully combine application frameworks, interchangeable components, custom development and smart governance to assemble solutions. We believe the marketplace will increasingly demand specialized skill-sets and reward flexibility and creative problem solving. Hence, our business model of focusing on pre-built value could prove to be game-changer in a global economy leaning strongly in favor of cost and time efficiency as well as risk mitigation. Product and Service Offerings We have evolved in line with our business model of specialization and positioning around niche competencies. We offer a variety of solutions and services in mainly three areas: Application Services, Independent Verification and Validation Services (IVV) and Systems Integration (SI) Solutions in the Application Infrastructure and Middleware space - each of which operates within the integrated enterprise and delivers a set of unique attributes that strengthen the overall value proposition. We offer the following services to our clients: I. Application Services II. Independent Verification and Validation Services III. Systems Integration Solutions I. Application Services Today, enterprises face the need to rapidly respond to customer requirements. Enterprise applications come under tremendous pressure to support the business, do more for less, and deliver business value. Increasingly complex and integrated application portfolios, high maintenance costs, and scarce applications support skills can significantly distract attention from enterprises’ core business and competitive issues. Our Application Services division has a decade long experience in meeting the demands of our customers in providing end-to-end business solutions. Over the years this division has mastered the offshore delivery model that provides high value without any compromise on quality and time.

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Our service line competencies are built around Microsoft and Open-source technologies. We drive high degree of offshore leverage across engagements and offer higher productivity driven through a repertoire of pre-built and reusable components and frameworks. We have developed PPM governance solution for ALC (Application Life Cycle) management which has emerged a key service delivery differentiator for us. Service Offerings: Our Application Services include:  Custom Application Development: Today’s companies face a broad array of challenges – increasing competition, highly demanding customers and rapidly changing market trends. Companies are under tremendous strain trying to cope with shrinking budgets, demanding business requirements and stringent timelines. Changing business landscape drives the change in enterprises’ way of conducting business. The continuing shifts in application and technology platforms forces them to keep their applications at their peak performance with minimum downtime being critical for sustaining and growing. We provide our clients end-to-end application development services that address their changing business needs with higher levels of quality and performance. For over a decade, we have been at the forefront in creating powerful solutions that are SAFE (scalable, adaptable, flexible and extendible) with a focus on quickly delivering value. Leveraging our extensive technical expertise, we architect, design, build, deploy and support the software solutions one needs to successfully grow and manage their business. Developing an effective application is a complex process. We have significant strength and experience in the entire SDLC adhering to proven quality processes such as SEI-CMMi and ISO 9001:2008 and integrating these business applications with any custom applications that may already exist. We put every custom application through stringent test for quality in order to ensure the application delivered are ‘bug free’ and perform as desired. Our dedicated team focuses on business processes of clients and captures the requirements accurately. We help build desktop, Web-based and Web 2.0 applications using a range of technologies such as ASP .NET, J2EE and LAMP (Linux, Apache, MySQL and PHP).  Application Maintenance and Support: The complex IT environment constantly changes, and customers are often confronted with upgrades and expansions. In such a scenario, it becomes a herculean task to manage IT applications to power one’s business. It is critical for enterprises to improve their operational efficiency in order to keep pace with the constant industry changes. We understand the challenges of IT Managers. It can be difficult to deliver operational excellence and leverage efficiencies when relying on technical specialists, working in small teams, to deliver day-to-day service. Moreover, maintaining applications is a resource intensive task that demands a lot of resources for routine activities. Outsourcing all IT application maintenance and support will allow our client to concentrate on their core business goals and strategic areas of revenue generation. We have a strong history of managing mission-critical applications and have demonstrated success in reducing day-to-day support costs and in meeting and surpassing service level agreements. We provide a comprehensive and flexible array of support agreements tailor made to our client’s requirements. We combine our unmatched experience of over a decade in maintaining mission critical applications for our customers, our unique real time application lifecycle management suite (PPM Studio) for effectively managing the entire engagement. We follow a systematically phased approach resulting in rapid problem identification and solutions. This also helps in preventing future problems and improving the functionality and further assists with application enhancement. Our blended-shore engagement models ensure a smooth transition with the benefit of having a trusted and capable partner constantly managing requirements effectively. Our SLAs are tailor made, welldefined, enabling optimal operational performance. With a seamless interface between service desk and application support services, our professionals remain highly disciplined and responsive to client needs. We provide end-to-end maintenance services as part of our standard support service packages as outlined below; 82

however, we do recognize unique needs and also offer customized support service program apart from the standard package. Case Studies: Case Study #1: Delivery of end-to-end Loan Origination Process

We catered to a Fortune 25 financial services conglomerate offering core banking, mortgage banking, investment management, asset management and risk management products and services serving a broad span of customer classes across several countries. Automated underwriting and credit scoring emerged as key technology drivers in the mortgage industry’s rapid progress during the last decade. Thereafter, a well orchestrated, end-to-end loan origination process became the basis for competitive advantage fueling the next wave of technology innovations. Synchronizing movement of documents, data and decision making from point of sale through origination lifecycle presented mortgage lenders the opportunity to reduce overall loan processing costs and elevate consumer experience. Our customer was grappling with multiple legacy origination systems across different business units and acquired entities covering fragmented and often duplicated processes. Consequently, sub-optimal work flows adversely impacted overall origination cycle-times besides posing severe integration challenges with other external and participating systems within the eco-structure, arising from their heterogeneous evolution. We were to re-engineer and deliver a next generation end-to-end loan origination system that would eliminate existing system redundancies as well as constraints around scalability, workflow and performance. Viability of this strategic re-engineering program was entirely contingent on the vendor partner’s technology prowess in delivering a framework for rapid development of highly scalable applications. We set a benchmark in collaborative development of this proprietary framework replete with multifold features having benefits of re-use and extensibility, consistent programming model and specific programming solutions. Original platform was reengineered using SOA paving the way for adoption of new technologies yet leveraging investments made in VB, VC++, ASP and FoxPro. The application was built to be light weight enabling remote connectivity even through low bandwidth. Key features include:  Account history and activity management  Loan pipeline forecast and opportunity review  Flexible tracking and reporting module  Sales Lifecycle management covering lead initiation through closure  Real time, online interaction  Credit card and insurance products as cross-selling offerings  Line protection and borrower protection plans Business Benefits:  Significant reduction in end-to-end loan origination cycle time  Improvement in platform scalability  Reduction in operating costs (maintenance)  Multifold increase in portfolio offering for consumers/customers Case Study #2: Delivery of Content Monetization Model

This transaction was for an interactive media services player, offering online experiences through digital publishing and web properties and part of a diversified Fortune 100 Media and Entertainment group that operates across all market segments including advertising, broadcasting and cable TV, movies and entertainment and publishing. Sports Programming has undergone a paradigm shift in recent years, brought about by the revolutionary impact of digital media even as it catalyzes the rapid emergence of reliable content monetization as a mainstream business model. Viewers have come to expect a comprehensive portfolio of on-demand news, exclusive analysis, video and event based programming delivered online through an experience that is rich, high quality and uninterrupted.

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Our customer sought to consolidate their position as market leader in digital sports programming with the acquisition of a niche player that operated the largest network of independent, localized team micro sites on the internet. Delivering exclusive content on school, college and professional team sports from seasoned freelance reporters, this outfit earned a reputation as a trusted source of profiling, scouting, recruitment and fitness coverage. We were given to merge the acquirer, acquire web sites and create an integrated web property that will deliver the online sports coverage yet, with a new subscription model. We had replaced a Tier 1 vendor in the customer’s Digital Publishing Group (DPG) to transform their CMS (Content Management System) as a platform offering IAAS (Infrastructure As A Service). Flawless execution of this DPG engagement which also provided a strong understanding of the existing CMS resulted in our selection for this engagement. We developed generic frameworks for application scalability and flexibility to accommodate dynamic business requirements. An integrated website was delivered and features of this integrated website include:  Platform agnostic single sign on module  Generic premium subscription valuator for diverse assets  Integrated Akamai ESI for premium content  Integrated platform for CSR  Customized e-commerce solution (for reduced TCO and data threat) Business Benefits:  Increase in subscription base and advertisement revenues  Increase in site hits  Bouquet of subscription offerings addressing a dispersed consumer profile as opposed to the earlier one size fits all model Case Study #3: Delivery of Web Property

We serviced a Hi-Technology start up, with a unique business model delivering premium web based real estate, addressing the needs of high caliber users across rapidly growing global market segments. Online networking initially emerged as a medium that enables individuals with like minded interests to interact at a social level. It has since evolved rapidly as a platform that catalyzes collaborative connectivity and growth for professionals and businesses. Our customer identified a couple of under-serviced market segments within the realm of mainstream virtual communities. These market segments cover a) creative class individuals who are looking to maintain an integrated eco-system with independent facets of personal, professional and social networks and b) micro-businesses and groups that serve lifestyle and leisure sports products. To execute this business model, mandate was given to build a next generation digital new media community compatible with our customer’s patent pending enterprise technology framework. During the proposal stage, a quick fire response was sought in making a recommendation around content management solution compatible with their proprietary, patent pending enterprise technology framework. We assessed, customized and prototyped an opensource content management solution in 10 days with functionalities that went beyond original specifications resulting to be engaged for this transaction. Typo 3 framework was selected as the CMS solution for enterprise on the web and customized to meet our customer’s proprietary publishing standards. Leveraging open source technologies, this CMS solution offers full flexibility and extensibility while featuring a broad set of custom interfaces, functions and modules. System features include:  CMS with multi-language and internationalization  SOA based framework for clustered environment  Profile personalization, iPhone module, user management  Intuitive multi level configurable UI framework, web 2.0 widgets  Multiple page editing with internal search engine  Governance using audit trail and workflow tracking and approvals Business Benefits:  Successful venture capital funding  Recipient of ‘The American Business Awards’ 84

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Achieved targets in user registrations and number of site hits during first year Reduced operating costs for beta sites in UK, Ireland and Germany Delivery of Mobile Capability

Case Study #4:

We delivered mobile capability to a niche innovator offering professional services automation (PSA) solutions. Leveraging sophisticated data management and real time coverage, their easy to use tools deliver operational insights through analytical reporting, project and performance management, scheduling, expense, time and billing management modules. Remote working has rapidly evolved as a mainstream employment and business place practice for service organizations globally. Challenged not only to preserve but also boost operating productivity of its remote workforce, these organizations constantly deploy tools to ensure real time access and seamless connectivity within their eco-system. Grappling with fierce competition, stagnating sales and moderate loyalty of its user base across North America and European continents, our customer was quick to grasp the transformational impact of mobile platform on their PSA solution. Equipping a remote, field, travel bound workforce with precise and reliable mobile/offline access meant billing and expense details could be aggregated at a fraction of turnaround times. This possibility offered a huge upside for end-users in accelerated closures/timely reviews of monthly P&L reports. We were given the mandate of bringing the time and expense management modules onto the mobile platform in rapid time to market to provide the early mover advantage for our customer. Working on an aggressive timeline to infuse the mobile capability, our customer decided to rely on strong industry references for the shortlisted vendor partner to award this strategic engagement. We won on the basis of two industry references for development work delivered to customers in the Hi-Tech and Financial Services segments. Solution was designed adopting global standards for mobile detection technology WURFL (Wireless Universal Resource File) a mobile web application was developed to facilitate anytime, anywhere updates of time and expense details. Features of this solution include:  Rich internet application for mobile using web 2.0 and mobile UI standards  Compatibility with Apple’s iPhone, RIM’s Blackberry, Nokia and Samsung mobile phone models  Simplified and W3C compatible XML rendering on mobile browser(s) using XML templates as page rendering technology Business Benefits:  Increase in monthly new order bookings  Stronger existing user affinity  Continued momentum for solution’s evolution in line with market trends Key Differentiators: We believe that we are guided by the following set of differentiators that puts us apart from the rest:  Our approach is customer centric and the focus is to meet their stated needs.  We strive to provide enhanced value through our proprietary toolsets and continuous R&D.  We are agile and adaptable to the changing customer requirements.  We confer to proven processes and methodologies recommended by quality systems such as SEI-CMMi / ISO 9001:2008.  We are a one-stop-shop for all phases of SDLC with in-depth knowledge. II. Independent Verification and Validation Services: Our IVV business unit has been providing specialized testing solutions for over 15 years since its founding as Arsin Corporation. Through our IVV business unit we provide testing services to help organizations enhance their productivity, quality, and hence reduce the overall cost of all software development activities. As a supplier of automated enterprise software testing solutions, we are backed by a service framework that has been field tested and refined over years. We have a deep practice in packaged application testing such as SAP, Oracle EBS, Sterling, 85

PKMS, etc and have also developed in-house testing tools and solutions. We adopt a holistic approach to application reliability starting with feature, function and transaction-level tests out to security, capacity / performance, load balancing, and fault tolerance validation. Our proprietary toolsets offers accelerated testing services that benefit our clients substantially. We have built industry-aligned service competence developed strategic relationships with global majors like IBM (Premier-level IBM Business Partner). Compliance mandates, application complexity, global delivery models are driving the need of an Independent Verification and Validation Service. The present economic condition demands for high quality, innovative products and services with quick go-to-market strategies. Repeated application failures from software defects become a major business risk and a high percentage of system outages are a result of ineffective and inefficient quality programs and processes. These application failures can place an organization at risk and hamper growth. It is very important for an organization to ensure that software implementations meet business needs to enhance brand value, improve customer service, create competitive differentiators and generate quality data for critical decisions. With convergence of technologies paving way to create products with footprints on diverse devices and platforms, testing is even more significant and challenging. Service Offerings: Our Independent Verification and Validation Services include:  Functional Testing Services Functional Testing is a key element for enhancing the quality of the developed software. The risks of releasing a new product without rigorous QA have greater implications now than ever before because of the change in expectations and demands of the end users. Finding an autonomous QA partner who is not biased by the development unit is crucial to the success of a quality product. We value this and, being an autonomous body, we are able to report the transparent view. Our objective is to measure the performance quality of the functional components. We practice a thorough framework based methodology when conducting Functional, GUI, Database and Regression testing for Client Server, Web Applications, SOA, Middleware, BI and Packaged Applications. Performing Functional Testing at the user interface level is crucial as it can reveal a number of deficiencies not immediately apparent when conducting a source code review. First priority is given to testing the application's usability rather than the complexity of the application's internal workings. Regardless of the quality of the underlying code, if the user interface doesn't work, the result is an inefficient and frustrating experience for the user. Our Centers of Excellence have helped multiple enterprises to implement an organized approach in automating testing solutions. We have leveraged our internal framework with the right mix of automation tools and our home-grown methodologies. Our testing team is also cross-trained and exposed to various verticals that we support. Our focus has always been to improve the quality of the product while ensuring a cost-effective test cycle.  Test Automation Services We provide Test Automation Services through established standard test automation methodology and leveraging our automation framework. Our automated testing services are performed with the functional testing tools from the leading vendors. We have built complex Test Automation Frameworks from its experience in this field for over two decades and has solutions that could cater to wide variety of applications like ERP, Web Applications, SOA, Middleware, SAP, Oracle EBS, SFDC, Siebel, Sterling, PKMS and BI, etc. Our solutions can be leveraged to help solve common industry problems, such as more frequent product cycles, less preparation time, reduced testing time, more platform choices, more programming language choices, and increased national language requirements.  Performance Testing Services Performance is the key to the success of any organization involved in the IT industry. However, it is often difficult to judge before newly installed systems are actually operational thus making these problems difficult to 86

resolve. Our Performance Testing experts, with their long experience in performance testing tools can help detect and avoid these problems at the earliest stage possible. Our Performance Testing policy is to implement an estimation and assessment of a meticulously guided procedure. Our objective is to demonstrate that the system meets the performance criteria and if not, work with the development team to look for architectural changes, performance tuning to be done to meet the performance criteria. We help in determining the scope, complexity and size of the load, and the test architecture used for test execution. We also serve to validate and verify other quality attributes of the system, such as scalability, reliability and resource usage. Our aim is not only to find bugs but to ensure that we identify the root cause of the problem as well. Our remote load testing infrastructure allows us to present the client with a choice of implementation strategies and have an additional check to corroborate changes prior to implementation. Our expert test engineers use hardware and software to simulate up browsers requesting pages from the application, exposing system performance issues before they occur. We determine the overall reliability as well as server and database scalability of the application, helping our client meet the requirements. Our performance and monitoring solution helps organizations to avoid the catastrophic effects of application performance failures. We focus on the proper functioning of applications under load and on the response time and meeting the performance requirements with confidence and with the maximum possible reduction in the effective total cost of ownership.  Enterprise Security Solutions Security Testing Service has been implemented with the goal of finding any vulnerability that can affect the application under test. Our services provide a rigorous analysis of potential vulnerabilities in applications to minimize the potential for exploitation by all forms of malicious attack. We use a risk-based approach, grounded in both the system’s architectural reality and the attacker’s mindset, to adequately gauge software security. With our proven testing methodologies and approach, we provide a higher level of software security assurance to identify risks in the application. We perform security tests driven by those risks and focus on those areas of code in which an attack can succeed. We implement security audits on the application infrastructure, on an application-by-application basis. We provide a detailed description of application vulnerabilities; we also provide remediation strategies to harden the application. With the use of leading application security testing tools, our experts and management team provide security testing service to protect the application. Our security testing experts inject different viewpoints and specialist knowledge into the testing process. We provide complete security testing service to support all the software testing needs of an organization or business unit. To determine how well the application stands upto a concentrated attack, we offer Penetration Testing, Network Access Controls and Firewalls Security Assessments. Our Security Testing experts in partnership with domain experts work on critical security challenges faced by our clients. We have also developed a framework on the similar lines called Code Immunizer that complements IBM Rational Appscan.  Compliance Testing Services Our IVV Governance and Regulatory Compliance (GRC) practice since its inception has been providing advisory and implementation services that enable our customers to meet their governance, risk management, and compliance goals. These services are applicable to a variety of industry verticals. Compliance Testing Services offers a specialized testing services portfolio that addresses both specific / non-specific to geography compliance and regulatory requirements of our clients. Our proven framework has been successfully deployed in various GRC engagements, which help in: - Gathering control documents and harmonizing their control requirements - Defining and categorizing information systems - Selecting control and refining control architecture - Documenting controls - Implementing controls - Assess control and verifying, validating the system - Monitoring control and reporting deviations

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Test Strategy Management Our consultants visit customer sites and do thorough reviews of the QA function to assess the customer’s Testing Process, Knowledge Management and Test Automation and compare it with the industry standards and suggest a road map to improve their maturity to the next desired level and help customers to improve quality, through put and reduce total cost of testing

Case Studies: Our service offerings under IVV has proven to result in identified savings for some of our clients viz. a Hi-tech company, a Healthcare company and a Retail company from automated testing and defects found. Case Study #1: A Hi-Tech Company

Our customer is a global leader in cloud infrastructure, delivers customer-proven virtualization solutions that significantly reduce IT complexity. We are working on their IT QA on manual, automation, performance, security, web services, resiliency, ERP and CRM functional testing which are significant in terms of revenue, growth and customer satisfaction. We have fulfilled the anticipation by providing the End-to-End Testing Solutions in a timely manner and increased the usage of the customer’s products. Our QA team efficiently verified and validated the system on architectural changes to achieve the higher availability, stability, rapid changes to the portals application and overall performance of the front office portals. We provided complete Bug free launches of various products into production and were involved in automating diverse applications which include Oracle-Apps, Siebel, UCM, SFDC, Web and Window-based applications. Performance Testing is performed on almost all the major releases to evaluate the risk, determine the system capabilities and fulfillment. Performance Testing is also being performed on the Oracle E-Business Suite to identify the Business Operation Response in each release and provided the comparative analysis to know the performance of the newly introduced Projects. Our customer’s business today is entirely dynamic with multiple products being released into the market. Our Test Service Offering helps them to deliver the IT component of these products (Portals, Middleware, Backend, etc.) bug free to their end customers. Case Study #2: A Healthcare Company

Our customer is dedicated to delivering the vital medicines, supplies and information technologies that enable the health care industry to provide patients better, safer care. We are designated as sole Partner for providing quality services for more than 15 years of association certifying many of their IT implementations. We were scalable and supported multiple projects simultaneously with a lean onsite team and our focus on test automation shortened testing time lines and accelerated time to market the solution. These are some of the highlights of our engagement: 1. Demonstrable results: cost and effort savings and defect removal effectiveness. 2. Total cost of ownership significantly reduced through automated test execution and validation and an onsiteoffshore engagement model amounting to significant savings in the last 3 years. 3. Customizable and reusable validation library built for most critical business processes. 4. Implemented a robust ERP testing framework and best practices to meet customer specific needs. 5. Our Effecta test automation framework helped jumpstart test automation enterprise wide with re-usable, repeatable and easy to maintain artifacts. 6. Empowered a strong team of quality professionals (lean onsite and large offshore) with in-depth knowledge of health care business processes and systems such as SAP ECC6.0, CRM, SRM, SCM, BI/BW, Data stage, Vistex, MDM ,etc., and legacy systems. 7. Developed knowledge repository for many critical business processes and automated a regression library covering the key business processes across SAP and non-SAP systems. 8. Developed and deployed custom utilities, accelerators templates and strategies that increased quality and through putt, while lowering TCO. 88

9.

Continue to actively engage in providing support to a gamut of testing services including production support, project testing, performance, security testing, etc. A Retail Company

Case Study #3:

Our customer is the premier specialty retailer of home furnishings and gourmet cookware. Their brands are among the best known and most-respected in the industry. They offer high-quality, stylish products for every room in the house: from the kitchen to the living room, bedroom, home office and even the hall closet. We were selected as an independent verification and validation company for various projects executed by multiple system integrators. Our integrated and innovative test approach helped to deliver a quality solution while addressing people process and technology challenges through: 1. A robust ERP testing frameworks and processes. 2. A customized ERP test automation framework covering 90% of critical business processes for regression testing. 3. Introduced component and string testing to uncover defects early in the development life cycle, thereby saving cost and time. 4. A strong pool of offshore quality professionals with in-depth knowledge in retail business processes and applications such as Retek, Sterling and PKMS 5. Increased transparency by collecting and publishing metrics around cost, quality and productivity These are some of the highlights of our engagement: 1. 42 projects executed successfully in a span of two years using an onsite and offshore engagement model. 2. Demonstrable results: cost and effort savings and defect removal effectiveness. 3. Increased test coverage while reducing regression test cycle time and effort. 4. Improved knowledge management through reusable test artifacts 5. Increased scope of testing in shorter testing windows is now possible. 6. Savings through test automation, and engagement models Key Differentiators: Following are the some of our key differentiators which enabled us to deliver a high quality IVV Services to our customers: Business Process Knowledge Our Testing Center of Excellence can deliver superior value to its customers due to their strong domain expertise in the Hi-Tech, Pharmaceutical distribution, Retail, Financial and Manufacturing business process. We have a track record of serving customers in the above industry verticals and have consultants with in-depth expertise in the business processes, packaged applications, various technologies and testing techniques. Testing in Heterogeneous Landscape Testing applications in a heterogeneous landscape requires a good synthesis of product knowledge, business process knowledge and testing expertise with an in-depth expertise in managing end-to-end business process testing. Our core competency is in testing and we have been forerunners at offering independent testing for complex landscapes even when the Industry was not mature in recognizing the value of independent testing. Because our core business is in offering testing services, we bring significant strength in managing the test engagement delivering superior value and outcomes. Risk Assessment and Risk Based Testing We see testing primarily as risk mitigating activity and as such we place significant emphasis on integrating risk assessments in adjusting our testing approach throughout the project lifecycle to achieve the most effective test coverage possible balancing cost, quality and risk. Our experience in handling multiple large test engagements similar to the medical transformation project means that one will have a high certainty of the outcome. Our in89

point risk assessment and comprehensive pre-go live risk assessment will provide a wealth of valuable information that will be critical for judicious decision making. Test Methodology and Test Strategy Through our experiences, we have developed a rapidly adaptable test methodology (STEM - Specific Test Engagement Model) with a library of generic test frameworks that can be quickly adapted to customer’s specific needs. The adaptation considers several vital factors that are essential for the successful execution of the strategy. Ignoring customer’s specific environmental, cultural and project factors imperils even the best of the strategies. Success is realized when customers have a partner that has strong culture of providing solutions specific to their problems. Implementer Integration and Collaborative Independence Independent test verification and validation in a context where customers select an implementation partner requires a testing partner that understands the dynamics of how to operate in such engagements. It requires a strong ability to integrate and establish a strong partnership with the implementation partner to achieve shared outcomes. It also requires that the testing partner can provide an independent perspective while maintaining collaboration with the implementation partner. Our track record of executing multiple engagements enables us to excel in implementer integration and in providing collaborative independence ensuring that the testing process is not seen in conflict by the implementer. We have a strong process oriented approach to manage the entire testing engagement which treats the implementer as a vital partner and at the same time protects the client’s vital interests by providing an independent assessment and constructive approach to resolving issues. Knowledge Institutionalization While we pride ourselves on having customers with repeat business over a long period of time, we always ensure that the client is always in a position to realize the value at any point of time. We always have the clients’ interests at the forefront and we believe that acting in the client’s best interest is in our own interests. We capture the knowledge associated with business process, test requirements and other vital test artifacts through our rigorous knowledge management framework and work with in-house teams or other testing partners to cross train them in ensuring a seamless transition. Critical Path Reduction Our methodology for testing ensures the shortest of the critical path possible for test activities. This is achieved through an iterative approach that divides the test engagement into several logical phases aligned with the software development methodology that the project uses. Each of these logical phases has several test activities and deliverables that are realized before the solution is ready for testing. The critical path is shortened to only test execution activities and even this is reduced to the shortest possible duration by applying iterative test approach. This results in significant savings in terms of the reduced downtime for the implementation team as well as in the overall schedule between solution development and go live. Integrated Test Approach We use an Integrated Test Approach to execute large testing engagements where the responsibility of executing the different test levels (Unit, Component, String, Integration, Acceptance and Performance, etc) falls under different parties. The integrated test approach ensures that test activities across the different levels are coordinated and optimized such that redundant testing is eliminated resulting in significant cost savings. As an expert in large test engagements, we will work with the different parties and ensure seamless integration and transition from one test level to the other. Our Value Pillars Test Lifecycle Cost Optimization

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Evaluating software costs should not only consider the implementation costs but also the total cost of ownership which takes into account the costs incurred through the entire lifecycle like warranty support, maintenance, enhancements, etc. Similarly, when evaluating testing costs, one has to take into account not only the cost incurred for testing the project but also the testing cost associated with the full lifecycle of the solution. Our value philosophy is oriented towards providing you the best value from an overall solution lifecycle. This value is enabled through a continuous focus on cost optimization through our rigorous framework which ensures knowledge institutionalization, cross-training, test automation, re-usable regression libraries, hybrid sourcing strategies, etc. While several vendors offer testing services, not everyone is focused around IVV like us and have the ability to look at testing costs from a holistic perspective. Customer-driven Performance Measurement We place great emphasis on ensuring a customer centric workforce and uses a performance measurement strategy for its workforce that places significant emphasis on capturing specific feedback from its customers. This feedback is significantly weighted in terms of the final evaluation of its workforce providing a direct integration between the outcomes that the customer desires and the performance objectives that is established for the workforce. As a mid-size company focused around testing, we pride ourselves in providing great service and responsiveness to the customer’s needs and this is a key element in how we measure and reward our workforce. Value Measurement and Transparency We emphasize on providing a measurement strategy that emphasizes value drivers’ specific to our customers. We capture data and periodically review quantitative and qualitative aspects of our service delivery which ensures that our customers have transparency in terms of the value being created both in terms of specific engagements and from a continuous process improvement perspective. We believe that we are guided by the following set of differentiators that puts us apart from the rest:      Over 15 years of experience in delivering Testing Services. Successfully tested wide range of projects such as large business transformations, upgrades, support packs, rollouts and production support Our robust training programs, knowledge repository and buffer capacity makes us highly scalable. Automated test cases in many heterogonous landscapes which resulted in high quality IT implementations and resulted in savings SLAs exceeding industry standards – defect removal effectiveness, requirements coverage and institutionalizing knowledge.

III. Systems Integration Solutions: We provide Systems Integration Solutions in Application Infrastructure and Middleware space. As a full service provider, we provide expert services including architectural advisement, design, development, and deployment of end-to-end SOA, Portal and Security solutions. Our SI business forms significant part of our consolidated revenues which we provide through Prolifics. Prolifics, a small to medium sized business on its own, has gained the unmatched breadth and depth of skills that allow it to compete with far larger competitors. Prolifics is a premier-level IBM Business Partner and one of the System Integrators specializing in IBM technologies, having garnered awards for technical excellence across IBM’s entire software portfolio. We are dedicated to designing, building and managing enterprise applications that utilize the IBM software portfolio. In fact, for its consulting excellence Prolifics has a Level 5 ranking—IBM’s highest on its technical expertise scale— and is the two-time recipient of the IBM Award for Overall Technical Excellence as well as awards for its SOA and Portal solutions. With its deep skills and proven expertise, Prolifics has gained visibility and a reputation within IBM as a high-quality provider of IT services. This visibility within IBM and their backing of Prolifics through referrals and recommendations has helped us to gain access to opportunities as well as penetrate the larger accounts.

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Often as the liaison between IBM and the customer, Prolifics is able to architect the most suitable solution, recommending the best fit IBM technologies as well as keep them abreast of IBM’s product roadmaps. We are on the forefront of getting enabled with IBM’s new product acquisitions and being able to assist the customer with expert services and next steps. From a marketing perspective we can benefit from IBM’s significant investment in promoting these new technologies and Prolifics’ unique role of being part of a select and elite group that is skilled in the technology. By being able to sell the IBM software as part of the solution we are also able to strengthen our relationship with our IBM partner sellers who in turn will then witness our value and bring us into even more accounts. Selling the IBM software as part of a solution sale also allows Prolifics to be more competitive with pricing, gets Prolifics onto vendor lists, and provides customers with full end-to-end services especially beneficial for those who are looking for a sole source vendor. We benefit from this as follows:  Support and credibility from one of the world’s largest IT player  Alignment between Prolifics and IBM sales allowing Prolifics to penetrate more markets  Access to IBM labs to help Prolifics build advanced skill  Natural growth opportunities and new revenue streams in tandem with IBM acquisitions We perceive reciprocated benefits to IBM as follows:  Creating an ecosystem of partners that help promote IBM and their offerings  Ensuring customer satisfaction with Prolifics’ trusted services and proven track record for success  Financial benefits through Prolifics selling and/or influencing IBM software into Prolifics-owned deals and competitive accounts Prolifics has succeeded to achieve commendable status with IBM as:  One of the System Integrators with over 1,000 IBM software-related projects  IBM Premier-level Business Partner with several awards and accreditations  One of the value-based IBM software resellers  Provider of Portal and collaborative solutions including portal, mashup and content management solutions  One of the BPM providers with several references  IBM security software and services provider participating in IBM’s program for Tivoli Security With the combination of its skills, portfolio of over 350 customer references, strategic relationship with and endorsements from IBM, Prolifics can compete and win against any small to medium –sized competitor. Add to that a flexible pricing model that is competitive in the marketplace, can be Fixed Price as well as Time & Material, and can blend in offshore resources, as well as a specialization that is 100% focused on being “the best” with IBM technologies, and Prolifics can also compete and win against the large Systems Integrator. Prolifics, unique against competitors, also places a heavy investment on the enablement and career growth of its resources, all of whom are full time on staff employees, as well as building technology accelerators that will jump start significant projects. Prolifics has a very agile business model that targets a large audience, organizations using IBM software, with a deep and wide portfolio of offerings. With strong sales and marketing capabilities, Prolifics is able to promote and support the IBM software independently, driving software and services business. In fact Prolifics architects solutions that are really technology-agnostic to start (e.g. SOA solution, Portal solution) and then recommends and customizes the solution to use best of breed technology from IBM. These solutions leverage technologies that are based on industry standards so are therefore flexible and extensible as market demands evolve. The IBM customer ecosystem continues to grow in market share and will need ongoing support from system integrators that can implement and maintain the software solutions. IBM’s portfolio also continues to increase as it acquires new products therefore expanding Prolifics’ skill sets. Having built a flexible business, Prolifics’ model is repeatable when we look to diversify our offerings. Service Offerings: Under this business we provide the following set of services: 92

BPM, SOA and Integration Services: Prolifics provides expert SOA services, helping customers architect, develop and deploy an IT infrastructure designed for integrating enterprise systems, and re-engineering existing business processes. Winning IBM’s Outstanding Business Process Management Award and several SOA awards, Prolifics brings technology leadership to SOA initiatives for BPM and Integration through deep skills and a proven BPM methodology.

Portals and User Experience: Prolifics specializes in delivering high-performing, scalable portals including Employee Portals, Extranets, eGovernment Portals, Performance Dashboards, and Collaborative Social Networking Sites. Recognized for its award winning Portal solutions, Prolifics’ portal and user experience services include architecture, design, development, administration, performance tuning, migrations and mentoring.

Security Services: Prolifics helps organizations to implement their IT security initiatives for identity and access management, vulnerability management, and application security. Prolifics’ security services satisfy requirements to authenticate users, audit user access, enable single sign-on, manage identities and protect from breaches at the firewall.

Others including Application Monitoring and Information Management: Prolifics enhances custom SOA and Portal applications through extended services for application monitoring and information management. By putting in place a monitoring platform Prolifics helps organizations to identify and diagnose the source of a problem, and make the appropriate changes to improve bottlenecks. Prolifics’ Information Management Services for business intelligence, enterprise content management and data cleansing enable clients to better leverage vital internal information.

Software – IBM Software and Prolifics Technology Enablers: As an authorized IBM Software Reseller, Prolifics provides customers with the latest in IBM technology products at the best prices, reducing overall cost of ownership. By bundling software, services, and technology enablers, Prolifics becomes a one-stop shop and arms customers with a successful jump start and roadmap for even the most complex initiatives.

Market Strategy and Target Client Choosing the right Market:  Market Reach: determining where Prolifics can best service its customers based on Prolifics office locations and consulting distribution  Market Potential: adapting to growth industries such as focusing Healthcare in 2010  Market Adaptability: Banking, Financial Services and Insurance are typical customers that require the highly specialized skills that we cover well Target Audience:    Mid to large enterprise with complex needs to use technology as a business differentiator Customers with custom requirements Customers with complex requirements such as different locations, complex processes, unique business models, etc.

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Value Proposition Prolifics provides value to clients by:  Helping our customers succeed with their business and IT transformation by adopting cutting edge technologies to benefit their business  Transforming their business vision and technical requirements to designs and plans and helping them execute on them fully or partially  Becoming a select group of or sole source provider of IT software and services for our customers; becoming their technology advisors and partners  Offering specialization from the start of a project; traditional Sis often don’t have the deep skills required in aspects of the project and will have to train them on the fly  Being a liaison between IBM and the customer while maintaining a strategic relationship with IBM that grants special access to resources and software Business Delivery Model Go To Market Model:  Consultative Selling: We are unique to IBM sales teams and in fact have an advantage because we do not sell based on product features and benefits. Instead we first understand the customers’ current IT landscape in addition to their business and technical objectives. Based on this information gathering effort we then advise as to the overall solution and next steps toward achieving their business needs. As part of that we recommend the software to be used within the overall solution.  Best Value to Money: Prolifics and SST have the ideal balance of value to money. Large System Integrators cost more for less value; while small, regional or traditional offshore firms will cost less for less value.  Proprietary toolsets based services: Prolifics has many pre-built toolsets – frameworks, components and scripts – that help to close new deals.  We sell using both our business and technical background to close on a project. Pricing Model:   We provide both Fixed Price and Time & Material models and propose according to the makeup of the customer and project requirements. All projects are based on published rates cards. Final project pricing can go for an exception process if other conditions needed to win the deal are met.

Case Studies: Case Study #1: SOA Solutions

A large municipal government agency servicing over 8 million residents with various programs ranging from infectious disease control to food safety, had data and communication needs that are intense and diverse. Their recent SOA foundation built by Prolifics was awarded an IBM 2008 Award for Best SOA Solution. Prolifics was also engaged to expand their infrastructure with three portals: a Health Registry, a highly personalized employee portal and an external medical resource website to allow either trading partners like providers (hospitals) to gain access to tools/data in a secure way or allow employees to gain access to internal resources from home or in the field. Looking to improve their existing architecture in order to accurately and securely receive and parse data from hundreds of sources including hospitals and laboratories before releasing the information in a usable format to these programs, Prolifics consultants handled the first phase of the SOA implementation quickly and efficiently, and exceeded customer expectations by deploying in two and half months. Previously relying on two legacy systems, they removed the dependency on unsupported software and adopted open standards with a more extensible platform which could instantly connect to variety of different data sources without requiring custom code. The new architecture also offered efficiency in parsing data variations in the HL7 healthcare format, improved overall performance and scalability, and reduced downtime and system failures. The architecture utilized IBM WebSphere 94

Process Server, IBM WebSphere Enterprise Service Bus, IBM WebSphere Message Broker, and IBM WebSphere Transformation Extender. The SOA solution is better able to handle the volume of data while providing a faster and more stable environment which has little to no “down time” boasting an improvement in file handling. It was able to leverage the architecture with even their call center integration project. The medical resource portal implemented by Prolifics using IBM WebSphere Portal and IBM Web Content Management went live in December 2008 and is instrumental for publishing health alerts and other important news directly to the appropriate recipients. The portal is the single point of entry for providers to access all agency on-line applications and is already providing such information as the health alert network, citywide immunization registry, universal reporting forms, continuing education information and access to the medical reserve corp. registration website. Case Study #2: Portal Solutions

In an effort to maintain their market leadership as the #1 life insurer with more than 70 million customers around the world, this global, multi-billion dollar corporation and provider of group insurance, personal insurance, pensions and investments, recognized a need to evolve and target a new generation of customers beginning to consider retirement. With this in mind, the insurance giant embarked on a strategic initiative to capture revenue by rebranding their media website. The organization sought to take advantage of the increasing number of individuals who leverage the internet as their main resource for information. By enhancing content, navigation and search functionality, the new site aimed to provide a more captivating user experience for all visitors. In addition, the company had a fragmented technology base with inconsistent security and content management controls. They had multiple franchises performing redundant processes and lacked standards across these franchises. Prolifics was this corporation’s portal technology partner since 2003. Previous projects included an Integrated Business Producer Portal, which provides a unified framework to integrate 3 unique and independent business franchises, and applies overall search capabilities, bulletin boards, market news feeds, and vignette content management. The Portal was implemented with and is currently in production using IBM WebSphere Portal. With their proven track record Prolifics was selected for the web site portal project, and was able to bring the necessary architectural, development and project management skills required to augment the customer’s team with this vital IBM WebSphere Portal project. Prolifics handled critical tasks ranging from scoping and managing deliverables to Web services and security. Of significant concern was a SEO and marketing requirement which called for Portal to generate static, human-readable URLs for content pages. The Prolifics team wrote modules mapping Portal’s native URLs to unique addresses that were marketing friendly and would produce higher search engine ratings. The newly launched web site introduces targeted homepages aimed at the company’s main constituents and each group has access to content directly related to their needs through three top-of-the-page navigation tabs and ensures that visitors will find what they are looking for more quickly and easily. In addition to enhancing the user experience, the redesigned site is better equipped to support the company’s operational business goals and reduce costs. SEO has helped the Company increase the number of visitors driven to the site. Launched in January 2009, future iterations of the site will include functionality like click-to-chat, single sign-on, personalization, profiling capabilities, and security. The scope of portal services included:  Project management of the overall design, development, test and deployment project cycle  Project management of both onshore and offshore teams from the Company, Prolifics and other partners  Installation and configuration of IBM WebSphere Portal for the development, QA and production environments  Analysis and design of the overall portal including single sign-on, sitemap, themes, navigation, search and content management  Modeling the design of the overall portal architecture for review with internal customer teams  Full implementation of the portals and integration with 3rd party systems  Design and implementation of software and scripts for controlling operational monitoring, usage tracking, data archiving and data purging functionality

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Creation of unit functional, integration and intersystem tests and test scripts to promote from Development to QA to Production. Assistance with creation of stress and performance test plans. Bug fixing and incorporation of user feedback Assistance with the deployment migration plan SOA and Portal Solutions

Case Study #3:

Prolifics helped a large, global mobile communications company with its multi-year program to replace their homegrown business support systems for billing and order management, create a better software development process, and implement a robust SOA model. Providing expertise for building the SOA infrastructure using IBM WebSphere Process Server and adopting industry-standard design patterns, Prolifics also created a Portal interface that integrated business objects, 3rd party systems, and process server workflows. With the new architecture the company gains reusable services, a better integration platform for growth, and efficiencies as they move from spreadsheets to automation. The more predictable architecture improves reliability of business processes – key to eliminating fines/customer satisfaction concerns in a highly regulated industry. Prolifics also provided guidance/mentoring for a structured development process with tooling across the lifecycle. With the AgileSOA development methodology, blueprint and assets, Prolifics streamlined coordination of activities across various suppliers involved in the process, enabling everyone to understand roles, milestones, and see deliverables. Prolifics deployed a suite of tools including IBM Rational Requisite Pro, Rational Software Architect and WebSphere Business Modeler to help establish project management and Agile development methodologies for the project. A key part of Prolifics’ contribution was to create ‘design patterns’ – rules, structures and documentation to ensure that all development work followed standardized best-practice models. Using the Rational toolset to manage the requirements and documentation made it easier for the development teams to create a governance framework and ensure a unified process for both front and back-end design. Prolifics implemented IBM WebSphere Process Server to capture a number of key business processes, creating automated workflows to orchestrate the various services involved. This has helped to reduce the need for human intervention in moving data between the billing, accounting and reporting systems – increasing speed and reducing manual workload, and allowing employees to focus on higher-value tasks. Previously, many of the company’s billing processes involved exporting data from the operational support systems into spreadsheets and running SQL scripts to import it into the accounting software. This was very time-consuming, and monthly billing could take up to ten days to complete. With WebSphere Process Server, the billing processes are almost fully automated – so they can perform a full billing run within just 36 hours. Prolifics also deployed IBM WebSphere Portal Server as a front-end for the new architecture, providing user-friendly access to the billing, reporting and accounting systems via a simple Web browser. The portal provides a common look and feel for all the services in their architecture, helping users view data and complete tasks quickly and effectively. Prolifics has helped the company design and deploy a new architecture that is meeting or exceeding expectations across the board. Service orientation gives a standardized, flexible platform that can quickly and easily be extended when they need to work with a new carrier or expand into a new market. Interfaces that used to take ten days to build with the old platform can now be assembled from existing components within half a day – helping get to market ahead of the competition. At the same time, by increasing business process automation, the company has been able to reduce operational costs and boost the speed of billing significantly. This is the largest strategic program that the company has ever undertaken, and it was crucial to realize the benefits within a very aggressive timescale. They expect to see a full return on investment in the near future. Key Differentiators: Our Competitors:  Value-based IBM Software Business Partners  Large System Integrators  Traditional Offshore Firms

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Our Strengths:  Reference database with over 350 entries  Breadth and depth of skills  Approach to project and consultative selling  Strategic relationship and support from IBM  Exclusive focus on IBM technologies with specialized skills in complex areas  Flexible and competitive pricing model  Proprietary toolsets to jump start projects Our Differentiators:     Approach to project and consultative selling Investment in skills to maintain the high-caliber Prolifics brand of skills and professionalism that our consultants are known for; team of pre-sales non-billable resources that do advanced skills development All Prolifics resources are full time on-staff resources that get a personalized career development plan for skills development, and personal growth and advancement within the organization With offices and consultants across the US and Europe, Prolifics can provide closer proximity to customers as compared to other partners that may be involved in the solution such as traditional offshore vendors; this suits the blended onshore/offshore model well A more balanced onshore/offshore deployment model that better fits highly critical and visible projects

Our Competitive Edge:    Most competitors do not and cannot maintain the 100% IBM focus We have built our reputation, skills and references over time through significant effort and investment Different business, sales and technical model; less focus on software; less focus on pre-sales resources.

Engagement Model Onsite- Offshore Mix Risk – Value Profiling

Our engagement model is flexible to customer objectives or project requirements. We provide a range of blended-shore solutions:  On-site only: Project is completely executed from client’s offices. Appropriate model for projects requiring very high levels of communication or where it is difficult to replicate the project environment at offshore.  On-site and Off-shore Mix: Project is staffed with a mix of onsite and offshore resources. Small onsite team either during early/critical project phases or on an on-going basis for the duration of the project.  Off-shore only: Project is completely executed from our delivery centers in India. This is an appropriate model for projects that have well-defined requirements and low to moderate levels of on-going interaction.

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We provide flexible engagement options to fit project needs:  Fixed Price: - End-to-end project execution for a not-to-exceed/fixed price and within a specified time-line - Maintain stringent SLAs - Full control on project resources  Time & Material: - Faster ramp up/down based on customer requirements charged on monthly basis - Retention of key resources - Project management services provided by us and managed by client Hybrid: - Hybrid model of Fixed Price and regular T&M model - We manage the project on behalf of the client - Illustration: Prototyping Phase (T&M), rest of the project (Fixed)

Our Application Services engagement model is predominantly offshore centric. Most of our IVV service deliveries are a mix of both onsite and offshore resources. A number of new testing assignments are being engaged on a managed outcome basis, where service providers are to deliver defined outcome, on a fixed price basis. Outcomes can be linked to timeliness, quality or productivity. We are involved with such managed service contracts with predefined SLAs in all aspects of delivery and ensuring the pre-defined outcome at the time of closing the contract. Our SI engagement model is largely onsite centric. Onsite or Offshore, our model provides single point accountability. We have standard operating procedures for seamless coordination between onsite and offshore teams. Onsite and Offshore resources operate as one team and have integrated resource management and competence development. Service Delivery Accelerators / Catalysts For Application Services: Our philosophy since inception has been in building and providing services through proprietary toolsets. As part of creating proprietary toolsets we have built service delivery accelerators / catalysts for our Application Services. The key catalyst for Application Services is Project and Portfolio Management – PPM Studio Suite (PPM Studio). PPM Studio is a means of maximizing returns and reducing costs in project portfolios. PPM Studio looks at entire organization’s investments in various projects with one common objective: achieving the business goals. PPM Studio is a collaborative, end-to-end, scalable, enterprise solution that helps organizations in managing projects from inception to delivery. It has the following building blocks to manage the entire spectrum of the SDLC:

With the industry’s first integrated PPM solution for ALM, PPM Studio provides automated reporting of project status, from the initial idea or request, through prioritization and execution, to completion and release, and finally to benefits analysis. PPM Studio provides complete visibility of critical project metrics throughout the application 98

lifecycle. PPM Studio allows organizations to effectively manage the change, gain visibility into internal processes and metrics, increase the operational efficiencies and develop intelligence for better decision-making. It is a customizable framework that facilitates an enterprise to model, broker, deliver and manage its business processes in a unified environment. Benefits of PPM Studio:  Efficient management of complex systems development and maintenance  Intuitive requirements management, versioning and base lining  Significantly increases ROI by optimum resources utilization and business transparency  Drastic reduction in total cost of ownership by implementing organization’s customized processes  Real time documentation of project management artifacts, software requirements, system specifications, test cases and defects  Real time visibility of project progress  Role-based security and auditability Apart from PPM Studio we have other service delivery accelerators viz. IPexpress, Recruitment Management Solution (eRecruiter), which is the de facto solution for the complete recruitment needs and Collaborative Virtual Recruiting Platform (Job A Fair). For IVV Our Service Delivery Accelerators for IVV include - Effecta Test Suite - Packaged applications provide businesses the ability to rapidly configure and customize business processes as the environment changes. It is critical to have a complete testing solution that can execute and validate business processes automatically as the ERP landscape changes. Our Effecta Test Suite helps customers to deploy a robust Quality Program with a sophisticated framework for testing and test automation. This suite includes Effecta Test Data Manager, Effecta Script Manager, Effecta Validation engines for ERP, BI and Middleware. - Effecta for QC – This integration allows the customer to manage, create and execute all their JUnit and SilkTest scripts from within HP Quality Center. It also allows them to import existing JUnit and SilkTest scripts into Quality Center. - Code Immunizer - A compiler-independent remediation solution that immunizes web applications at the source against high risk vulnerabilities. - Pre-Built automated test library for SAP and Oracle EBS – The Pre-built automated test library is designed for rapid deployment of test assets and accelerated testing of SAP ERP Suite and Oracle EBS applications. This pre-built library is evolved out of our wide experience in testing complex implementations. These library components are configurable and extendable for unique implementations. This is accomplished through metadata based test component configuration. Additionally, validation components are built using the Effecta Validation engine's built-in intelligence and the knowledge base for advanced validation beyond static data validation. Advanced validation includes business rule based validation and configuration based validation. - QMWare - A comprehensive test planning, execution and management tool that addresses the entire testing life cycle). - GUI Automation Test (GAT) Framework - Test Automation Framework is a collection of code libraries that separate routine calls from designed tests. It is a clearly defined process to deliver high productivity. Our GAT provides robust, maintainable and cost-effective functional test automation, ensuring reduced business costs and increased application quality. Our test automation framework helps our customers accelerate software releases and version upgrades. The framework is designed to be comprehensive in nature to ensure all potential gaps in the application are properly judged. For SI Our Service Delivery Accelerators for SI include: - JAM and Panther Tool Suite - cross-platform tools for building client/server and component-based applications, allowing customers to develop complex applications with small amounts of custom coding

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XMLink and XMLink Universal Gateway – JCA-compliant, bi-directional connector designed for integration between Oracle/BEA Tuxedo and J2EE application servers such as IBM WebSphere Application Server Progressions – a migration platform to transform the middleware platform from Oracle/BEA Tuxedo to IBM WebSphere Application Server, while preserving the application code 7irene Archetype and AgileSOA – a blueprint for the software development lifecycle that creates a standardized process, process templates and a methodology portal

Integrated Operations and Cross-Selling Opportunities Our three SBUs Application Services, IVV and SI have built and nurtured their specialization areas and are in a position to leverage the benefits of the integrated organization and the associated cross-selling opportunities that arise with each others’ client accounts. Prolifics is decidedly an IBM technologies centric business operation – a choice of alignment that they had made during the early days of the middleware and application services evolution. IBM has taken significant strides in broadening the market space around Application Infrastructure and Middleware space that started out as an application server built on multi-tiered J2EE technology architecture. IBM has steadily expanded their offerings within the Middleware space through product enhancements and add-ons, application/industry accelerators, and new products, developed internally or through acquisition. By aligning with this growing business segment and focusing on building deep technology competence, Prolifics is today poised as a key Systems Integration partner for IBM in AIM and is able to provide specialized solutions and services. Within an integrated business operations setup that comes with SST and Arsin, Prolifics is able to seize the advantages that were hitherto not available to it. One, an offshore extension to their business through the SST division – that brings efficiencies of global time zone coverage, productivity leverage, lower costs of operations and access to a large talent pool that strengthens the resilience of the business. Second, access to a bouquet of specialized testing solutions offerings through Arsin that were not offered earlier to the clients. This significantly increases the scope of what the Prolifics division as a business can address today.

Arsin provides specialized IVV, the offerings of which are driven and backed by the proprietary toolsets paradigm – an approach that is distinctive, progressive in the field of testing, highly value additive to clients and with a great potential for additional business growth. Through the integrated business operations model, Arsin benefits with the efficiencies of offshore execution, an increased client base to work on, newer service offerings in the AIM market segment, lower costs and a sustained access to a large talent pool offshore. SST focuses on offshore specialization for its Application Services business around Application Development, Maintenance and Support and Modernization – a full life cycle broad based service competence built on the fundamentals of value additions through growth oriented relationships with clients. SST reserves great potential for 100

growth in its business and provides high productivity offshore centric solutions to clients. It brings to bear better value realization for the clients by virtue of its productivity driven offshore offerings. Through the integrated business operations model, SST gains access to key clients of both Prolifics and Arsin and can offer a wider spectrum of services from offshore in an outsourced engagement model – providing the advantages of offshore leverage that were hitherto not offered. This helps SST to broaden its client footprint as well as facilitating both Arsin and Prolifics to provide to their clients services in other areas that have traditionally been outside their scope. From the technology skill concentration perspective, we are uniquely positioned and present a scalable model. Prolifics concentrates on IBM technologies environment. SST on the other hand has focus on the Microsoft .NET technologies and J2EE and other open source platforms. Running like a foundation underneath is the common denominator in Arsin, providing IVV. So as to say, anything that is built, configured, run, deployed, maintained and supported must be tested (verified and validated) and Arsin brings forth these capabilities.

Future Outlook Our organization model has been designed to facilitate future growth and concentration on bringing up other technology platforms to achieve breadth and scale. As the market dynamics demand, with the emergence of opportunities around newer technology environments, or consolidation of existing ones, we plan to bring up additional towers of technology competence while ensuring the IVV capabilities are extended for completeness. SST and Prolifics are two key business divisions that will concentrate upstream activities of the SDLC and while maintaining technology depth, constantly look for broadening the foot print by creating newer competencies. Arsin, on the other hand, will be easily able to adapt its service and solution offerings to expand its presence in all those areas where SST and Prolifics carry out upstream activities. In future, we may explore acquisitions to give a fillip to our growth plans and we may bring up another tower of technology competence. The model from this perspective is as robust and future proofed as it is from an integrated operations angle. When competing against other offshore/outsource vendors Prolifics, Arsin and SST have a unique model. The enterprise application systems market we are in is complex by nature, highly visible, and in very high demand, where many competitors are likely to have difficulty in meeting the requirements. Our model focuses on deep acting technology driven solutions that provide clear value to clients, productivity leverage that keeps total costs of ownership low, and a magnitude of scale that can still remain specialized. The demand is growing for value through specialized skills more than the generic commodity skills that are largely number driven, partially utilized and sometimes with less than optimal productivity and technical competence. The commoditized offshore service provider market space is already saturated and has very little scope for distinction by sheer volume or size – like any other commodity business. We are bucking this trend and offer value proposition that is quite pronounced and distinct – whether presented from onsite or offshore. Prolifics, Arsin and SST divisions are currently restructuring internally in order to promote better collaboration, including changing sales plans and creating incentives for cross-selling. Over the past two years the economic downturn had an impact on the accelerated development and growth of this business. Prolifics and Arsin continue to maintain the premium on technology branding in the market; in order to maintain the brand premium, the onboarding of consultants has been to very exacting standards following multi-layered recruitment strategies and 101

stringent selection processes. Over time, this process has become repeatable and well sustained. The potential for growth and the opportunities that the markets present are tremendous. We and our three business units are very well poised to leverage this and scale up the business. The cross selling traction is beginning to show its effect where we have been able to close some key business opportunities by working closely and collaborating amongst these three business units. This is further expected to grow as we restructure and focus on leveraging the market opportunities. The overall strategies are future-proofed and will continue to fetch benefits as each business unit explores respective client accounts for breadth of relationship, powered by offerings from the other divisions. Geographic Spread

We have three well equipped offshore delivery centers in Hyderabad, India which are designed to support our onsite business and enhance our productivity and efficiencies. We have presence in the US through our offices in New York, California, Florida and Pennsylvania. In Europe, we have our presence in London, UK and in Hamburg, Germany. Sales and Marketing Strategy We take a proactive approach to the market-place. We have a mature client-facing organization comprising sales and inside sales representatives, technical and pre-sales consultants and marketing staff. Our market strategy involves – direct selling, selling with and through technology alliance partners; and channel sales. In the direct selling model, we independently identify and pursue business opportunities with targeted clients. In the alliance model, we work in close partnership with our technology alliance partners to jointly discover, pursue and win opportunities based on a joint value proposition. The channel sales model is a recent initiative. The objective is to penetrate new markets by building an ecosystem of local partners. Our marketing organization is responsible for gathering industry-level intelligence and maintaining the alliance network. The team works closely with technology practice leads in crafting and running go-to-market campaigns. Based on the nature of the solution or service offering to be marketed, we identify the target audience as well as message themes. Since we have a fairly wide range of service offerings and associated price points, our marketing approach is heterogeneous. We also leverage multiple market entry mechanisms ranging from event-related networking, cold calling, e-mail campaigns to hosting a series of webinars. Our sales team focuses exclusively on direct sales and allied sales. The sales team operates in the markets of USA, UK and Germany; and is organized with territorial responsibilities. Within an assigned territory, our sales representative is responsible for drawing up a local level business plan. This includes growing business with existing clients as well as identifying and pursuing opportunities with targeted accounts. Presently, our sales team includes sales generalists and sales specialists. Sales generalists market the broad range of our services within selected accounts. Sales specialists are focused on marketing specific service offerings across a broader geography. Fieldlevel sales representatives are supported by a group of technical and pre-sales consultants who provide the necessary 102

expertise in demonstrating and explaining our technology solutions. The sales representatives and pre-sales consultants work together in putting together suitable client solutions. Major Clientele/ Customers Our clientele is broad-based, for instance we served over 400 client accounts in the Fiscal 2010, of whom 40 belong to the Fortune 500 category. We continue to enhance our synergies exploring cross-selling opportunities available to us through both Arsin and Prolifics and further deepen our client relationships. Our top client is a Fortune 25 Financial Services Conglomerate to whom we cater in the US, UK and the APAC. Through Prolifics we serve over 350 client accounts from various verticals including BFSI, Retail, Government, Telecom and Hi-tech. Arsin has a few large client accounts including a leading player in virtualization and cloud infrastructure solutions with which we have undertaken several projects. Arsin also caters to a Fortune 15 Healthcare player and a premier specialty retailer from the US. With majority of such of our clients we either have continued business from them over the years or have multiple projects undertaken at any point of time. Competitive Conditions Our business model is quite differentiated relative to several of our peers who rely on scale and labor cost arbitrage. The distinctiveness of our business model is reflected in the quality of competition we face while bidding for new business. We often compete with the Big 5, India Tier 1 or local players based in North America and Europe. With the combination of its skills, portfolio of over 350 customer references, strategic relationship with and endorsements from IBM, we can compete and win against any small to medium –sized competitor. And with continued emphasis on deepening client relationships with our cross-selling opportunities available to us, we are in a position to benefit further from this in our competitive abilities. Our analysis of the marketplace is that there is a unique opportunity for innovative technology providers who can artfully combine application frameworks, interchangeable components, custom development and smart governance to assemble solutions. We believe the marketplace will increasingly demand specialized skill-sets and reward flexibility and creative problem solving. Hence, our business model of focusing on pre-built value could prove to be game-changer in a global economy leaning strongly in favor of cost and time efficiency as well as risk mitigation. Human Resources Our business revolves and relies around our people. We rely on our people to deliver excellence to our customers. Our organization maintains an open work culture that promotes insightful innovations. At a business level, one of our key differentiators has been to build proprietary service delivery accelerators. This approach fosters innovation and creativity in our people. Almost every technically skilled employee is encouraged to understand the organization’s competences and explore ways to augment it with re-usable solution toolsets. Human Resource Philosophy Our Human Resource philosophy is centered on empowerment with a strong sense of respect for individuals and their potential. In this direction, our organization constantly encourages and supports freedom of ideas and enterprise. We encourage employees to  Develop relationships that celebrate diverse ideas, and perspectives.  Have a sense of enterprise with rewards for results  Celebrate achievements and reward for superior performance  Provide appropriate working conditions and resources to enable people to do their work.  Respect co-workers irrespective of nature of work and responsibilities Our HR processes are designed to create enduring value for our clients. They revolve around what we believe are “VITAL” – Value creation, Innovation, Teamwork, Attracting and retaining best talent and Leadership.

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Talent Acquisition As of September 30, 2010 we along with our Subsidiaries, has a global headcount of 894 employees (including 70 under contractual employment) across technology skills and experience profiles. The talent acquisition process is preceded by a forecast and planning exercise for estimating resource requirements based on business pipeline, internal availability of skills and the time to hire from the market. Our talent acquisition philosophy for entry-level hiring is to recruit for attitude, skill and leadership. We recruit from colleges and institutes across India through campus hiring as well as off-campus hiring. Our rigorous selection process includes multi-level screening, technical tests, programming tasks and interviews. For lateral hiring, we focus on the candidate’s competence, ability to create value, quality of experience, education, attitude and culture fit. Each prospective employee goes through a rigorous selection process including assessments by a global pool of assessors. Talent acquisition is followed by an induction process, which includes an initial evaluation of competence mapping and assignment to either further training (to mitigate skill gaps) or to a work assignment. Training Training inputs are provided on both technology and soft skills such as leadership development, team work and communication. Each employee has a training record and is required to target a minimum number of annual days for training. As part of the performance planning exercise that is carried out periodically, each employee is assigned goals and the associated skill gap is estimated. Based on the skill gap, learning interventions are planned and executed in the form of self taught programs, class room instructions or sometimes as shadow orientation on real time situations. These training interventions equip our employees to perform at higher levels and thereby help improve organizational productivity. Retention Our human resources and compensation practices proactively address factors that impact retention. These practices include regular compensation reviews, skill and performance related bonuses, established procedures, movement into growth opportunities, and the adoption of employee stock option plans. We believe that our comprehensive rewards and recognitions programs and opportunities for job rotation across technologies and roles helps to ensure that our employees remain motivated and performance oriented. Performance Management We focus on comprehensive performance management. This involves taking the employee through a performance planning and goal setting exercise, assessing performance at the end of a review period and providing feedback and setting new goals/planning performance for the next review period. Based on skill gaps, appropriate learning interventions are planned. Non-performing employees who do not respond adequately to improvement interventions are counseled in order to maintain the minimum performance baseline standard of the organization. This helps to maintain a performance-oriented culture and retains focus on high performance. Our performance management system relies on a broad based multi-dimensional competence management framework. Our objective is to provide challenging work profiles for our employees and to align their aspirations with those of the Company. Compensation Our software professionals currently receive salaries and benefits, which we believe are competitive in the industry. Additionally, consistent with our corporate culture of collective ownership, we grant Stock Options to our employees. Technology We have well equipped IT infrastructure and facilities built for scale and seamless inter-operability in operations. Housing world-class computing environment, our IT network and infrastructure is built to remain available for our employees and clients on a 24x7 basis.

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Mindful of the organization’s service offerings and client expectations, we ensure high availability with minimal disruption to services. The internal IT and network infrastructure worldwide runs with commitments of SLAs with our internal customers – our project teams and the rest of our workforce. In order to ensure that our internal SLAs are met, we set up stringent back-to-back OLAs with our service providers and partners. Our environment management includes the setting up and maintenance of development, test and production-ready deployment environments. These are applicable both for hosting our own internal applications and systems as well as our customers’ projects that undergo various stages of development through to testing. The environment also facilitates the set up and availability of test beds, pilot development and test set up at short notice. All IT and networking infrastructure is continuously monitored for safety, security protection against intrusion, virus protection, version and configuration currency as per available upgrades and updates. There are mature processes in place for carrying our remote administration of the connectible assets of networks and IT infrastructure for our globally distributed environment.

The offsite development environment, which is predominantly in our offshore locations in Hyderabad, India are certified for ISO 9001, ISO 27001 and assessed at CMMi Level 3. We are scheduled for assessment of CMMi Level 5 v1.3 in the near future. The offshore operations have a failsafe internet connection bandwidth of 20 Mbps dual homing connections from Airtel and Reliance. All the development centers are connected to each other via DS3 links. The internet connections are designed for 100% redundancy of bandwidth, 24x7 operations, and equipped with superior Voice, Video and Data communication facilities using apt equipment from Cisco, Checkpoint, Sonicwall and Siemens Digital Communication Systems. Our offshore has its primary data center located at our corporate office in Hyderabad, with 25 Dell and HP Rack Servers, running ESX 4.0 hosting 50 virtually connected machines). There is an internet load

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balancer with 20 Mbps using Checkpoint and CISCO ASA security device. All backup is redundantly stored on removable media for easy recoverability and in secondary locations to prevent loss of data due to force majeure conditions. All the network and hardware infrastructure as well as the physical facilities have adequate power back up against outages and in some case with captive power generation capabilities to safeguard against extended outages. The operations in US and elsewhere globally are driven primarily through our carrier grade data center in Westbury, New York. The data center and the offices are connected via the internet. The backbone server and desktop HW environment boasts of an IBM Blade center HS21 with 12 blades running VMware ESX3.5 hosting 225 virtually connected machines over a 20 Gb fiber optic backbone. There is an internet load balancer with 5Mb T1 pipe using Cisco ASA security devices connected in a failover mode. In addition to the operating platforms, the application infrastructure comprises of office productivity software, mail and exchange capabilities. There is a 12 rack server just to run the file and print servers and provide the development and operational environment backup. All backup is redundantly stored on removable media for easy recoverability and in secondary locations to prevent loss of data due to force majeure conditions. In addition to the necessary and critical hardware and network infrastructure to ensure high availability of our operations, all our key global operating facilities are equipped with power redundancy, and our data centers secured with motion detection cameras and controlled security access. Our internal operations are made efficient and productive by extensive internal automation. Most of our operations are automated with the implementation of either commercial best of breed applications that we have deployed internally or by means of internally built and home grown products. While several of the detailed operations are outsourced to service providers for our non-India locations and employees, in our India location, we have used an effective mix of commercial products and internal systems. We use commercial software for our payroll, financial accounting, and fund management. We use internally built tools for our project and portfolio management and resource management, recruitment and hiring test management, performance management, HR information system, rewards and recognition and several of these application environments are serviced through our employee portal. We are continuously on the lookout for developing and deploying new productivity enhancement applications to make out operations much more efficient. This helps us to strengthen our abilities and ensure quality delivery to our clients. Intellectual Property For details relating to the intellectual property owned by our Company (including our Subsidiaries) please refer in the paragraph titled “Intellectual Property Rights” in the chapter titled “Government and other Approvals”, on page 259 of this Draft Red Herring Prospectus. Our Properties Our Company and our Subsidiaries conduct their operations from the following properties: I. Sr. No. 1. Our Company Details of Deed / Agreement Indenture of Lease Deed dated July 07, 2006 Lessor - JST Reality Private Limited Lease Deed and Agreement for Amenities dated October 10, 2009 Lessor - Ms. K. Meenakshi Devi Nature of right granted Lease Particulars of the premises 5th floor, Jayabheri Silicon Towers, Survey No.14, Kondapur Village, Serilingampally Mandal, Rangareddy District, Hyderabad, India 1st Floor, Plot No. 226, Road No.17, Jubilee Hills, Hyderabad, India Tenure/Term 5 years from April 1, 2006 to March 31, 2011

2.

Lease

3 years from October 1, 2009 to September 30, 2012.

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Sr. No. 3.

Details of Deed / Agreement Lease Deed and Agreement for Amenities dated October 10, 2009 Lessor - Mr. Gangadhar Rao

Nature of right granted Lease

Particulars of the premises 2nd Floor and Staircase Room on Ground Floor Plot No. 226, Road No.17, Jubilee Hills, Hyderabad, India 3rd Floor, Plot No. 226, Road No.17, Jubilee Hills, Hyderabad, India 8th Floor in Block 3, DLF Cyber City, Plot No. 129-132, APHB Colony, Gachibowli, Hyderabad – 500 019, India 100 Pacifica, Suite 270, Irvine, CA 92618, United States of America

Tenure/Term 3 years from October 1, 2009 to September 30, 2012

4.

Lease Deed dated October 10, 2009 Lessor -Mr. Gangadhar Rao

Lease

3 years from October 1, 2009 to September 30, 2012 5 years from June 18, 2010 to June 17, 2015

5.

Lease Deed dated July 21, 2010 Lessor -DLF Assets Private Limited Lease Deed dated December 31, 2002 and First Amendment to lease dated October 23, 2003, Second Amendment to Lease dated March 10, 2006 and Third Amendment dated March 31, 2009 Lessor - Dolphinshire L.P. Rental Agreement dated March 18, 2009 Lessor - Mr. P. V. Raj and Mr. P. S. Raj

Lease

6.

Lease

2 years beginning from May 01, 2009 to April 30, 2011

7.

Rental

First and Second Floor i.e. 101, 102, 201 and 202 of “PVR Chambers”, 6-3-249/2/A, Road No. 1, Banjara Hills, Hyderabad – 500 034, India

36 months and two days beginning from March 30, 2009 to March 31, 2012

II. Sr. No. 1.

JYACC Details of Deed / Agreement Sub-lease Agreement dated August 3, 2009 Lessor- Sterling Johnson Capital Management Agreement of Sublease, dated March 24, 2010 Lessor -Bank of America National Association Agreement of Lease dated May 10, 2010 Lessor - Merrick Partners and Prolifics Nature of right granted Lease Particulars of the Property, Description and Area Suite No. 3315, 33rd Floor, 50, California Street, San Francisco, California, United States of America 114 West, 47th Street, New York, New York, United States of America Tenure/Term 36 months beginning from August 3, 2009

2.

Lease

From March 24 to November 29, 2014

3.

Lease

44, Block 78, Lot 22, Westbury, Town of Hempstead, Nassau County, New York, United States of America

5 years and 3 months from August 9, 2010 to October 31, 2015

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Sr. No. 4.

Details of Deed / Agreement Agreement of Lease dated April 30, 2010 Lessor - Cabot North Orange Lease Co. LLC Agreement of Lease dated February 1, 2008 Lessor - Jeffrey S. Harris and Michele Misher Harris Agreement of Lease dated April 20, 2006 Lessor - Weisman and Associates, Inc. Agreement of Sub-Lease dated March 24, 2010 Lessor - Bank of America, National Association

Nature of right granted Lease

Particulars of the Property, Description and Area Suite 1211, 20 North Orange Avenue, Orlando, Florida 32801, United States of America

Tenure/Term 62 months commencing from July 1st 2010

5.

Lease

Condominium Unit No. 132 at the Commons Court, Delaware County, Chadds Fort, Penna , United States of America 8305, Gunn Highway, Hillsborough County, Tampa, Florida 33626, United States of America 114, West 47th Street, New York, NY, United States of America

From February 1, 2008 till December 31, 2010

6.

Lease

For a term of 5 years commencing from June 1, 2006

7.

Lease

For 12 months commencing from July 1, 2010 to June 30, 2011

8.

License Agreement Licensor - Avanta

License

Avanta Orange Street, 2 Orange Street, London, WC2H 7DF, United Kingdom 789 S Broadway, Hicksville, NY 11801, United States of America

Renewed on a monthly basis

9.

Lease Agreement dated March 9, 2010 Lessor - Extra Space Management Inc.

Lease

Valid until terminated by either party upon giving advance notice of 30 days Valid until terminated by either party upon giving advance notice of 30 days Renewed on a monthly basis

10.

Lease Agreement dated October 1, 2007 Lessor - Frank Vafier

Lease

Condominium unit 2C, 1023 Clinton Street, Hoboken, New Jersey, 07030, United State of America Prolifics Deutschland GmbH Notkestr. 3 22607 Hamburg, Germany

11.

Lease Agreement dated November 12, 2002 Lessor – Bundesrepublik Deutschland

Lease

III. Arsin Corp. Sr. No. 1. Details of Deed / Agreement Seventh Amendment to Lease dated April 17,2009 Lessor - GAP Associates, LLC Nature of right granted Lease Particulars of the Property, Description and Area 4800 Great America Parkway, Suite 425, Santa Clara, California, United States of America Tenure/Term Till June 30, 2011

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Insurance Policies of our Company and its Subsidiaries Our Company has insurance coverage which we consider reasonably sufficient to cover all normal risks associated with our operations and which we believe is in accordance with the industry standards. Further, our contractual obligations also require us to obtain specific insurance policies We have taken insurance policies with various insurance companies covering certain risks in relation to our business and our people. We have taken group personal accident and group medical insurance policies for the benefit of our people covering risks against bodily injuries. Our employees are covered by a group life insurance policy. We have also taken commercial general liability insurance to cover against risks of damage to our property, including fire damage and loss of profits.

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KEY INDUSTRY REGULATIONS AND POLICIES

Our Company is engaged in the business of providing application services, independent verification and validation services and systems integration solutions. The following description is an overview of certain laws and regulations in India and abroad, which are relevant to our Company and its Subsidiaries. Information detailed in this chapter has been obtained from publications available in the public domain.The regulations set out below are not exhaustive, and are only intended to provide general information to Bidders and is neither designed nor intended to be a substitute for professional legal advice. Taxation statutes such as the Income Tax Act, 1961, Central Sales Tax Act, 1956 and applicable local sales tax statutes, and other miscellaneous regulations and statutes such as labour laws apply to us as they do to any other Indian company. The statements below are based on the current provisions of laws, and the judicial and administrative interpretations thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions. For details of government approvals obtained by us, see the chapter titled “Government and Other Approvals” beginning on page 259 of this Draft Red Herring Prospectus. THE PATENTS ACT, 1970 The Patents Act, 1970 (‘Patents Act’) is the primary legislation governing patent protection in India. In addition to broadly requiring that an invention satisfy the requirements of novelty, utility and non obviousness in order for it to avail patent protection, the Patents Act further provides that patent protection may not be granted to certain specified types of inventions and materials even if they satisfy the above criteria. The term of a patent granted under the Patents Act is for a period of twenty years from the date of filing of application for the patent. The Patents Act deems that computer programs per se are not ‘inventions’ and are therefore, not entitled to patent protection. This position was diluted by The Patents Amendment Ordinance, 2004, which included as patentable subject matter: 1. Technical applications of computer programs to industry; and 2. Combinations of computer programs with the hardware. However, the Patents Amendment Act, 2005, does not include this specific amendment and consequently, the Patents Act, as it currently stands, disentitles computer programs per se from patent protection. The public use or publication of an invention prior to the making of an application for a patent, may disentitle the said invention to patent protection on grounds of lack of novelty. Under the Patents Act, an invention will be regarded as having ceased to be novel (and hence not patentable), inter alia, by the existence of: 1. any earlier patent on such invention in any country; 2. prior publication of information relating to such invention; 3. an earlier product showing the same invention; or 4. a prior disclosure or use of the invention that is sought to be patented. Following its amendment by the Patents Amendment Act, 2005, the Patents Act permits opposition to grant of a patent to be made, both pre-grant and post-grant. The grounds for such patent opposition proceedings, inter alia, include lack of novelty, inventiveness and industrial applicability, non-disclosure or incorrect mention of source and geographical origin of biological material used in the invention and anticipation of invention by knowledge (oral or otherwise) available within any local or indigenous community in India or elsewhere. The Patents Act also prohibits any person resident in India from applying for patent for an invention outside India without making an application for the invention in India. Following a patent application in India, a resident must wait for six weeks prior to making a foreign application or may obtain the written permission of the Controller of Patents to make foreign applications prior to this six week period. The Controller of Patents is required to obtain the prior consent of the Central Government before granting any such permission in respect of inventions relevant for defense purpose or atomic energy. This prohibition on foreign applications does not apply, however, to an invention for which a patent application has first been filed in a country outside India by a person resident outside India. 110

International patent protection mechanisms The extent of patent protection granted by any national patent law is limited to the jurisdiction of the country of registration of the said patent. Therefore, the protection of patents on an international scale ordinarily requires that patent applications be filed and granted in multiple jurisdictions. In order to avoid multiplicity of applications, mechanisms under various international treaties have evolved providing for the effective filing of simultaneous patent applications in multiple jurisdictions by filing of a single international application. The Patent Co-operation Treaty, 1970, ("PCT") creates one such mechanism whereby filing an application under the PCT results in the effective filing of a separate application in each of several designated countries under the PCT. An application under the PCT procedure is processed in two phases, i.e.: 1. An international phase wherein an international application is filed in the International Bureau; and 2. A national phase consisting of the conversion of the application into national patent applications in designated countries. A PCT application may be filed by a national or resident of a state which is a signatory to the PCT at the patent office of such state at the WIPO International Bureau. At the filing stage, the applicant indicates those contracting states in which he wishes his application to form an effective filing. Upon filing, the invention, which is claimed under the application, is subjected to an “international search” which is carried out by an International Searching Authority identified by the patent filing office. In the event that the international search results in any evidence of prior art, which resembles the claim being searched for, the applicant has the option to either withdraw his application, or defend the claim at the national level with each national patent office. If the application is not withdrawn, it is published in the International Bureau along with the international search report and communicated to the patent office in each designated country. Subsequently, upon the applicant electing to do so, patent applications are submitted to the national phase wherein the claimed invention is examined by the national patent offices of the designated countries for grant of the patent. Another international treaty governing international patent protection is the Paris Convention for the Protection of Industrial Property, 1883 (the ‘Paris Convention’). The Paris Convention requires its member countries to guarantee to the citizens of the other countries the same rights in patent and trademark matters that it gives to its own citizens. Further, in case of patent filings in multiple jurisdictions, this treaty grants a right of priority to the applicant which means that the applicant who has filed an application in any contracting states, may apply for protection in any other contracting states within 12 months and claim priority over other applications which have been filed by other applicants during the said 12 months period. COPYRIGHT ACT, 1957 The Copyright Act, 1957 (“Copyright Act”) protects original literary, dramatic, musical and artistic works, Cinematographic films and sound recordings from unauthorized use of such works. Unlike the case with patents, copyright protects the expressions and not the ideas. There is no copyright in an idea. The object of copyright law is to encourage authors, artists and composers to create original works by rewarding them with exclusive right for a fixed period to reproduce the works for commercial exploitation. Copyrights subsist in following class of works: a) Original literary, musical, dramatic and artistic works b) Cinematograph films c) Sound recordings Under the copyright law the creator of the original expression in a work is its author who is vested with a set of exclusive rights with respect to the use and exploitation of the work. The author is also the owner of the copyright, unless there is a written agreement by which the author assigns the copyright to another person or entity, such as a publisher. Where work is done under a ‘work for hire’ agreement, the copyright vests with the hirer, i.e., the person providing the work. The owner of copyright in a work can assign or license his copyright to any person, such as publisher, under a written agreement. Copyright subsists in a work since the time it comes into being. Therefore, registration of copyright neither creates any rights nor precludes enforcement of the existing ones. However, owing to its evidentiary value, a registered copyright is easier to establish in the court of law. The term of copyright varies across different types of works. In the case of broadcasts, the Act grants “broadcast reproduction rights” to broadcasting organizations which subsist for 25 years. 111

International treaties for copyright protection India is a signatory to the Convention of International Union for the Protection of Literary and Artistic Works (the ‘Berne Convention’), the Universal Copyright Convention, 1952, (the ‘UCC’) the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, 1961 and as a member of the World Trade Organisation is a signatory to the Agreement on Trade Related aspects of Intellectual Property Rights (the ‘TRIPS Agreement’). The TRIPS Agreement embodies a set of minimum standards that all signatories have to adhere to in respect of all forms of intellectual property protection, including copyright. The Berne Convention requires that the signatory countries provide the same rights to foreigners from other member countries as to their own nationals and mandates automatic protection not subject to procedural formalities. It also provides for minimum substantive standards of protection, dealing with the duration of copyright and the exclusive rights which the author shall hold. While the Berne Convention does not prescribe what works are required to be protected under it, computer software has been brought under its purview by means of Article 10 of the TRIPS Agreement. The UCC provides for similar protection, including national treatment and minimum substantive rights to be granted to copyright holders. The substantive provisions include the right of foreign national of a signatory country whose work was first published outside a signatory state to claim copyright protection in that signatory state under the UCC upon the printing of a copyright symbol and certain other information. TRADE MARKS ACT, 1999 The Indian law of trademarks is enshrined in the Trade Marks Act, 1999. The Act seeks to provide for the registration of trademarks relating to goods and services in India. A trade mark means a mark used in relation to goods for the purpose of indicating a connection in the course of trade between the goods and the proprietor. While registration of a trademark is not compulsory it offers better legal protection. Any person can apply for registration of a trademark to the Trademark Registry under whose jurisdiction the principal place of the business of the applicant in India falls. The term of a trademark registration is for a period of ten years. The renewal is possible for further period of 10 years each. There is no system as yet wherein a single trademark application is sufficient to protect the trademark right internationally. However, Paris convention to which India is a party provides certain privileges to member countries in trademark registration. A party that files their first trademark application in a member state of the Convention, such as India, can within six months of that filing date file applications in other member countries claiming the priority of the first application. If such a trademark is accepted for registration it will be deemed to have registered from the same date on which the application is made in the home country. FEMA REGULATIONS Foreign investment in India is governed primarily by the provisions of FEMA which relates to regulation primarily by RBI and the rules, regulations and notifications thereunder, and the policy prescribed by the Department of Industrial Policy and Promotion, GoI, ("FDI Policy") and the FDI Policy issued by the DIPP (Circular 2 of 2010, with effect from October 1, 2010). The RBI, in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended ("FEMA Regulations") to prohibit, restrict or regulate, transfer by or issue of security to a person resident outside India. As specified by the FEMA Regulations, no prior consent and approval is required from the FIPB or the RBI, for FDI under the "automatic route" within the specified sectoral caps. In respect of all industries not specified as FDI under the automatic route, and in respect of investment in excess of the specified sectoral limits under the automatic route, approval may be required from the FIPB and/or the RBI. FOREIGN EXCHANGE MANAGEMENT (TRANSFER OR ISSUE OF ANY FOREIGN SECURITY) REGULATIONS, 2004 A person resident in India may purchase a foreign security out of funds held in Resident Foreign Currency (RFC) account maintained in accordance with the Foreign Exchange Management (Foreign Currency Accounts) Regulations, 2000. An Indian Company may make direct investment in a Joint Venture or Wholly Owned 112

Subsidiary outside India provided that the total financial commitment of the Indian Company in the Joint Ventures/Wholly Owned Subsidiaries shall not exceed 400% of the net worth of the Indian Party as on the date of the last audited balance sheet. Application for direct investment in a Wholly Owned Subsidiary outside India, or by way of exchange for shares of a foreign company, shall be made in Part I of the Form ODI. Reserve Bank will allot a unique Identification Number for each Joint Venture or Wholly Owned Subsidiary outside India and the Indian Party shall quote such number in all its communications and reports to the Reserve Bank and the authorised dealer. A Joint Venture/Wholly Owned Subsidiary set up by the Indian party as per the Regulations may diversify its activities /set up step down subsidiary/ alter the shareholding pattern in the overseas entity. Provided the Indian party reports to the Reserve Bank, the details of such decisions taken by the Joint Venture/Wholly Owned Subsidiary within 30 days of the approval of those decisions by the competent authority concerned of such Joint Venture/Wholly Owned Subsidiary in terms of local laws of the host country, and, include the same in the Annual Performance Report required to be forwarded annually to the Reserve Bank. REGULATIONS REGARDING FOREIGN INVESTMENT Foreign investment in Indian securities is governed by the provisions of the FEMA read with the applicable FEMA Regulations. The DIPP has issued ‘Circular 2 of 2010’ (the “FDI Circular”) which consolidates the policy framework on FDI, with effect from October 1, 2010. The FDI Circular consolidates and subsumes all the press notes, press releases, clarifications on FDI issued by DIPP till September 30, 2010. All the press notes, press releases, clarifications on FDI issued by DIPP till September 30, 2010 stand rescinded as on October 1, 2010. Foreign investment is permitted (except in the prohibited sectors) in Indian companies either through the automatic route or the approval route, depending upon the sector in which foreign investment is sought to be made. Under the approval route, prior approval of the GoI through FIPB is required. FDI for the items or activities that cannot be brought in under the automatic route may be brought in through the approval route. Where FDI is allowed on an automatic basis without the approval of the FIPB, the RBI would continue to be the primary agency for the purposes of monitoring and regulating foreign investment. In cases where FIPB approval is obtained, no approval of the RBI is required except with respect to fixing the issuance price, although a declaration in the prescribed form, detailing the foreign investment, must be filed with the RBI once the foreign investment is made in the Indian company. Investment by FIIs FIIs including institutions such as pension funds, mutual funds, investment trusts, insurance and reinsurance companies, international or multilateral organizations or their agencies, foreign governmental agencies, sovereign wealth funds, foreign central banks, asset management companies, investment managers or advisors, banks, trustees, endowment funds, university funds, foundation or charitable trusts or societies and institutional portfolio managers can invest in all the securities traded on the primary and secondary markets in India. FIIs are required to obtain an initial registration from the SEBI and a general permission from the RBI to engage in transactions regulated under the FEMA. FIIs must also comply with the provisions of the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended from time to time (“FII Regulations”). The initial registration and the RBI’s general permission together enable the registered FII to buy (subject to the ownership restrictions discussed below) and sell freely, securities issued by Indian companies, to realize capital gains or investments made through the initial amount invested in India, to subscribe or renounce rights issues for shares, to appoint a domestic custodian for custody of investments held and to repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received towards sale or renunciation of rights issues of shares. FIIs are permitted to purchase shares of an Indian company through public/private placement under:   Regulation 5 (1) of the FEMA Regulations, subject to terms and conditions specified under Schedule 1 of the FEMA Regulations (“FDI Route”). Regulation 5 (2) of the FEMA Regulations subject to terms and conditions specified under Schedule 2 of the FEMA Regulations (“PIS Route”).

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In case of investments under FDI Route, investments are made either directly to the company account, or through a foreign currency denominated account maintained by the FII with an authorised dealer, wherein Form FC-GPR is required to be filed by the company. Form FC-GPR is a filing requirement essentially for investments made by nonresidents under the ‘automatic route’ or ‘approval route’ falling under Schedule 1 of the FEMA Regulations. In case of investments under the PIS Route, investments are made through special non-resident rupee account, wherein Form LEC (FII) is required to be filed by the designated bank of the FII concerned. Form LEC (FII) is essentially a filing requirement for FII investment (both in the primary as well as the secondary market) made through the PIS Route. Foreign investment under the FDI Route is restricted/ prohibited in sectors provided in part A and part B of Annexure A to Schedule 1 of the FEMA Regulations. Ownership Restrictions of FIIs The issue of securities to a single FII under the PIS Route should not exceed 10% of the issued and paid-up capital of the company. In respect of an FII investing in securities on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued and paid-up capital. The aggregate FII holding in a company cannot exceed 24% of its total paid-up capital. The said 24% limit can be increased up to 100% by passing a resolution by the board of directors followed by passing a special resolution to that effect by the shareholders of the company. Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in terms of Regulation 15A(1) of the FII Regulations, an FII may issue, deal or hold, offshore derivative instruments such as “Participatory Notes”, equity-linked notes or any other similar instruments against underlying securities listed or proposed to be listed on any stock exchange in India only in favour of those entities which are regulated by any relevant regulatory authorities in the countries of their incorporation or establishment subject to compliance of “know your client” requirements. An FII or their Sub-Account shall also ensure that no further downstream issue or transfer of any instrument referred to hereinabove is made to any person other than a regulated entity. FIIs and their Sub-Accounts are not allowed to issue offshore derivative instruments with underlying as derivatives. LAWS RELATING TO EMPLOYMENT The Minimum Wages Act, 1948 State governments may stipulate the minimum wages applicable to a particular industry. The minimum wages may consist of a basic rate of wages and a special allowance, or a basic rate of wages and the cash value of the concessions in respect of supplies of essential commodities, or an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any. State specific Shops and Commercial Establishments Acts as applicable Under various state laws dealing with shops and establishments, any shop or commercial establishment has to obtain a certificate of registration from the supervising inspector and has to comply with certain rules laid down therein. These statutes and rules and regulations framed thereunder regulate the opening and closing hours of shops and commercial establishments, daily and weekly work hours, closing dates and holidays, health and safety of persons working in shops and commercial establishments, payment of wages, maintenance of records and registers by the employers, among others. The Payment of Gratuity Act, 1972 (the “Gratuity Act”) Under the Gratuity Act, an employee who has been in continuous service for a period of five years will be eligible for gratuity upon his retirement or resignation, superannuation or death or disablement due to accident or disease.

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Employees Provident Fund and Miscellaneous Provisions Act, 1952 (the “EPF Act”) The EPF Act provides for the institution of compulsory provident fund, pension fund and deposit linked insurance funds for the benefit of employees in factories and other establishments. A liability is placed both on the employer and the employee to make certain contributions to the funds mentioned above. Payment of Bonus Act, 1965 (the “Bonus Act”) Pursuant to the Bonus Act an employee in a factory or in any establishment where 20 or more persons are employed on any day during an accounting year, who has worked for at least 30 working days in a year is eligible to be paid a bonus. Employees State Insurance Act, 1948 (the “ESI Act”) The ESI Act provides for certain benefits to employees in case of sickness, maternity and employment injury. All employees in establishments covered by the ESI Act are required to be insured, with an obligation imposed on the employer to make certain contributions in relation thereto. Equal Remuneration Act, 1979 (“ER Act”) The ER Act provides for payment of equal wages for equal work of equal nature to male or female workers and for not making discrimination against female employees in the matters of transfers, training and promotions etc. Inter-State Migrant Workmen’s (Regulation of Employment and Conditions of Service) Act, 1979 The Inter-State Migrant Workmen’s (Regulation of Employment and Conditions of Service) Act, 1979 is applicable to an establishment, which employs five or more inter-state migrant workmen through an intermediary (who has recruited workmen from one State for employment in an establishment situated in another State). The inter State migrant workmen, in an establishment to which this Act becomes applicable, are required to be provided certain facilities such as housing, medical aid, travel expenses etc. UNITED STATES FEDERAL LEGISLATION U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) embargo regulations. Our Company’s Subsidiaries presence in the United States are subject to the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) embargo regulations, which impose partial or total trade embargoes against certain designated countries, groups and individuals. The OFAC regulations are also subject to changes and additions from time to time in furtherance of U.S. government policy, and there can be no assurance that such regulations will not in the future limit or, in some cases, prohibit our Company’s U.S. business unit from conducting some business unless licensed or approved by OFAC. There can be no assurance that our Company will be able to obtain any such licenses or approvals required by the OFAC regulations. The Fair Labor Standards Act of 1938 (“FLSA”) FLSA is a U.S. federal law that sets forth detailed requirements for minimum wages and overtime pay for certain categories of employees, and regulates the terms of child labor. As a general rule, FLSA applies to any employer “engaged in interstate commerce or in the production of goods for interstate commerce”. Although the FLSA applies to “any individual employed by an employer” independent contractors and volunteers are excluded from the definition of employer, and “white collar” workers such as professional, administrative and executive employees are exempt so long as salary and duty tests are met. FLSA is supplemented by various federal and state laws, which may supersede the minimum requirements set forth in FLSA. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”)

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HIPAA is a U.S. federal law that regulates the availability and breadth of group health insurance plans by setting forth health care portability, access, and renewability requirements. Among other things, HIPAA limits preexisting condition exclusions, prohibits discrimination against individual participants and beneficiaries based on health status, and guarantees renewability in multi-employer plans. HIPAA also sets forth regulations designed to help individuals keep their health information private. Under the federal Health Information Technology for Economic and Clinical Health Act (“HITECH”), which amended HIPAA, health plans, health care providers and health care clearinghouses (i.e., covered entities), among other things, must review and update their business associate agreements, as well as their privacy and security policies and procedures, regarding (i) marketing, (ii) sale of protected health information, (iii) minimum necessary standards, (iv) accounting of disclosures, and (v) restrictions on disclosure of services paid out-of-pocket. Business associates (those who perform functions on behalf of, or provide services to, covered entities that involve the use of protected health information) will be directly regulated under the HIPAA privacy and security rules, and must comply for the first time with those rules, including, among other things, a requirement to perform security risk assessments and develop security policies and procedures to address HIPAA security standards. The Occupational Safety and Health Act of 1970 (“OSHA”) OSHA is the primary U.S. federal law governing occupational health and safety in the private and public workforce, and was enacted to “assure safe and healthful working conditions for working men and women”. OSHA created the federal Occupational Safety and Health Administration (“Federal OSHA”), to which it assigned two regulatory functions: (1) set standards regarding certain minimum occupational safety and health requirements; and (2) conduct workplace inspections and investigations, and issue citations, fines and penalties for violations of OSHA standards. Several states have developed and operate their own occupational safety and health programs, which are approved and monitored at the federal level. These state plans are required to set standards which are “at least as effective as” comparable federal standards. Under OSHA, employers subject to the law are required to provide safe and healthful working conditions for employees in accordance with general duty requirements and specific standards particular to the work. OSHA is enforced by the Federal OSHA, or by state agencies that have been delegated authority under the Federal law, through inspections, response to complaints, accident reporting and voluntary compliance programs. OSHA regulations require reporting and annual summaries of work place injuries, and OSHA requirements may require capital expenditures to meet applicable health and safety standards. United States Federal Legislation the Foreign Corrupt Practices Act of 1977 (“FCPA”) FCPA is a U.S. federal law that prohibits companies engaged in business in foreign jurisdictions from making corrupt payments to government representatives. The two principal provisions of FCPA (1) prohibit all U.S. companies, U.S. persons and anyone who is in the United States from making corrupt payments to foreign governments or party officials to obtain or retain business; and (2) impose accounting, record keeping and management structuring requirements on companies listed on U.S. securities exchanges to facilitate disclosure designed to reveal accurately how funds are spent. FCPA also prohibits corrupt payments through intermediaries. FCPA specifically exempts payments to facilitate “routine government action” and provides affirmative defenses which can be used to defend against alleged violations. These defenses include that the payment was (1) lawful under the written laws of the foreign country, or (2) a reasonable and bona fide expenditure related to demonstrating a product or performing a contractual obligation.

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HISTORY AND CERTAIN CORPORATE MATTERS

OUR HISTORY Our Company was set up in 1997 with a vision of simplifying Information Technology for business. Our Company has since than evolved to emerge as a specialized solutions provider offering Application Services, Independent Verification and Validation Services (IVV) and Systems Integration (SI) Solutions. Through our acquisitions in the years 2006 and 2008 we stepped into the specialized service delivery areas of IVV and SI thereby expanding inorganically. All of our services namely Application Services, IVV and SI each of which operates under our integrated enterprise and delivers a set of unique attributes that strengthen the overall value proposition. Application Services, IVV and SI complement each other effectively and operate with a common strategy of relying on pre-built tools, utilities, reusable components and application frameworks to provide increased value to our customers. Currently we serve a client base of 400+ marquee customers, 40 of whom belong to the Fortune 500 category. Powered by a diverse workforce of over 850 associates operating across North America, Europe and APAC, we have successfully delivered over 1,000 projects till date. We have three well equipped offshore delivery centres in Hyderabad, India which are designed to support our onsite business and enhance our productivity and efficiencies. We have presence in the US through our offices in New York, California, Florida and Pennsylvania. In Europe, we have our presence in London, UK and in Hamburg, Germany. CORPORATE PROFILE Our Company was incorporated as Infoquest Systems Private Limited on November 24, 1997 under the Companies Act, vide Certificate of Incorporation bearing registration No. 08/23062 of 1997 issued by the Registrar of Companies, Karnataka, Bangalore. Our Company was converted into a public limited company vide Fresh Certificate of Incorporation Consequent upon Conversion under section 31/44 of the Companies Act, dated April 10, 2000 and consequently the name of our Company was changed to ‘Infoquest Systems Limited’. Further the name of our Company was changed to its present name, that is, Semantic Space Technologies Limited vide Fresh Certificate of Incorporation Consequent on Change of Name, dated July 3, 2000. Our Company’s CIN is U72200AP1997PLC033030. CHANGES IN REGISTERED OFFICE OF OUR COMPANY Effective date Address 304-A, HVS Court, 21, Cunningham Road, Bangalore 560 052, Karnataka 205, 2nd Floor, Centre Point, 56, Residency Road, Bangalore – 560 025 6-3-709/1, Ground Floor, Navbharat Chambers, Rajbhavan Road, Somajiguda, Hyderabad – 500 082 Reason for Change Registered office at the time of Incorporation

April 1, 1998

Administrative convenience

November 11, 1999

February 22, 2000

Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033

Our registered office was shifted from Bangalore, Karnataka to Hyderabad, Andhra Pradesh. Our Company registered itself with the Director, Software Technology Park of India, Department of Electronics, Government of India, Hyderabad as a 100% EOU for the Development of Computer Software and the CPBW license was granted to the Company the Assistant Commissioner of Customs & Central Excise Division IX, Hyderabad to carry on activities. Further, the management of our Company was based in Hyderabad. Administrative convenience

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MAIN OBJECT OF OUR COMPANY The main object of our Company, as contained in our Memorandum of Association, is as set forth below: 1. “To render consultancy and other services in the field of computers and software development, to develop programmes and systems, to undertake turnkey software projects and operation research, to offer complete hardware and software solutions and technical services and to subject the same to commercial exploitation, export, import and to act as dealers and authorised representatives of the same and to conduct sponsor or otherwise participate in training programmes, courses, seminars and conferences in respect of any of the objects of the company and for spreading or imparting the knowledge and use of the computer programming language including the publication of books, journals, bulletins, study/ course material, circulars and newsletters 2. To establish, maintain, conduct, provide, manufacture, procure, export, Import, develop, deal trade, buy, sell or in any other way make available services of every kind including electronic data processing, software development, imaging services, data conversion and data translation services including generation of operating and commercial Layouts and blue prints useful for design, erection and operation of any plant or process, mining and or buildings, systems design and development including management information systems development, consultancy services including feasibility studies, communication services, including telecommunications services, transmission services, whether for commercial, social, statistical, financial, accountancy, advertisement. medical, legal, management, educational, entertainment and other technological purposes and to impart training in the said fields. 3. To undertake the designing, development and programming of systems and application software either for its own use or for sale in India or abroad and to design and develop such systems and application software for or on behalf of manufacturers, owners and users of computer systems and analogue / digital / electronic / optical / laser / photographic equipment in India or elsewhere in the world. 4. To set up and run electronic data processing centers and to carry on the business of data processing, software development, programming and consultancy, system studies, management consultancy, technoeconomic feasibility studies of project, design and development of management information systems technical analysis of data, data storage and retrieval services and services of all kinds and description in connection with commerce, finance, accounts, medicine, engineering, communication and other technological fields. 5. To carry on the business as importers, exporters, buyers, sellers, developers, manufacturers, assemblers, agents of and dealers in all types of computer and communication systems including micro computers, mini computers workstations, software and hardware of all description, floppies, hard disks, diskettes, ribbons, printers, tapes, cassettes, electrical devices required for the same like UPS and stabilizers, telephones, modems and other data transmission and data processing devices, whether present or future.” The main objects as contained in our Memorandum of Association enable us to carry on the business that is being presently carried out. AMENDMENTS TO OUR MEMORANDUM OF ASSOCIATION SINCE INCORPORATION EGM/ AGM AGM Date of shareholder’s resolution October 27, 1998 December 02, Nature of Amendment

EGM

Change in Capital Clause The Authorised Share Capital of our Company was increased from 500,000 Equity Shares aggregating to Rs. 5,000,000 to 1,000,000 Equity Shares aggregating to Rs. 10,000,000. Change in Capital Clause 118

1999

EGM

January 12, 2000 June 19, 2000

AGM

EGM

January 12, 2000

EGM

November 25, 2005

AGM

November 30, 2007

The Authorised Share Capital of our Company was increased from 1,000,000 Equity Shares aggregating to Rs. 10,000,000 to 2,000,000 Equity Shares aggregating to Rs. 20,000,000. Change in Name Clause Name of our Company was changed from Infoquest Systems Private Limited to Infoquest Systems Limited. Change in Name Clause Name of our Company was changed from Infoquest Systems Limited to Semantic Space Technologies Limited. Change in Capital Clause The Authorised Share Capital of our Company was increased from 2,000,000 Equity Shares aggregating to Rs. 20,000,000 to 7,500,000 Equity Shares aggregating to Rs. 75,000,000. Change in Capital Clause The Authorised Share Capital of our Company was increased from 7,500,000 Equity Shares aggregating to Rs. 75,000,000 to 15,000,000 Equity Shares aggregating to Rs. 150,000,000. Change in Capital Clause The Authorised Share Capital of our Company was increased from 15,000,000 Equity Shares aggregating to Rs. 150,000,000 to 25,000,000 Equity Shares aggregating to Rs. 250,000,000.

MAJOR EVENTS Year 2001 2005 2006 Key events, milestones and achievements Launch of PPM Studio, a differentiating governance solution First round of Private Equity Investment by UTI ITVUS Private Equity Investment by New Vernon Incorporated SSTAC, in California, USA, as a wholly owned subsidiary of our Company Acquisition of Arsin Corp., a California-based company, including its 100% subsidiary ASPL by SSTAC SSTAC merged into Arsin Corp., with Arsin Corp. being the surviving entity. Awarded the Second Top SME Exporter in JJ Sector, State of Andhra Pradesh Second round of Private Equity Investment by UTI ITVUS Received ISO 9001:2008 in respect of Design, Development, Maintenance, Customization and Testing of Software Solutions using Web and Enterprise Technologies Incorporation of SSTNA, in Delaware, USA, as a wholly owned subsidiary of our Company. Acquisition of JYACC, New York, USA, by SSTNA Received ISO 27001:2005 for Management for Information Security Provision of Software Development and Software Testing Services Amalgamation of ASPL into our Company.

2007

2008 2009 2010

For details on the description of our Company’s activities, products, technology, capacity utilization and exports, please refer to chapters titled “Industry Overview”, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and “Basis for Issue Price” beginning on pages 65, 221 and 50 of this Draft Red Herring Prospectus Investments in our Company In the year 2005 UTI ITVUS and New Vernon agreed to invest a sum of Rs. 87.00 million each in our Company by subscribing to 863,636 Equity Shares each through a Share Subscription and Shareholders Agreement dated December 10, 2005.

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ACQUISITIONS Arsin Corp. In the year 2006 we incorporated a wholly owned subsidiary, namely SSTAC in California in United States of America with the objective of making an acquisition and broadening the portfolio of services being offered by our Company. Arsin Corp., through Mr. Danis Yadegar, its founder and majority shareholder, merged with SSTAC, vide an Agreement of Merger dated December 29, 2006 (the “Merger Agreement”), whereby Arsin Corp. was the surviving entity. By virtue of the Merger Agreement, Arsin Corp. became the wholly owned subsidiary of our Company. The consideration for the merger was pegged at the maximum of US$ 1.5 million over the liabilities of Arsin Corp. as per its balance sheet and other applicable costs and expenses. Further additional payments not exceeding US$ 4.00 million and US$ 6.00 million were payable on December 31, 2007 and on December 31, 2008 respectively; as a part of the consideration, such that the aggregate consideration would not exceed a maximum of US$ 11.50 million. At the time of merger the authorized Capital Stock of Arsin Corp. comprised of 13,285,000 Shares of Common Stock of which 6,819,112 shares had been issued and outstanding; and 600,000 shares of Preferred Stock, had been designated as Series A Preferred Stock and were issued and outstanding. As per the terms of the Merger Agreement, Mr. Yadegar was entitled to fully vested options or a right for the purchase of 15,000 Equity Shares of our Company at a price of Rs. 200/- per share prior to the initial public offer of our Company, which he may freely designate to a third party. All unexercised options and rights to acquire our Company’s shares would stand terminated or cancelled upon our Company filing its draft red herring prospectus. A Preferred Stock Settlement Agreement (‘Settlement Agreement’), dated December 20, 2006, was entered into by and between Arsin Corp. and its Series A Convertible Preferred Stock holders. The Settlement Agreement contained the understanding reached by and between them to waive off the liquidation preferences, which these shares were entitled to upon the closing of the merger. Arsin Corp. paid USD $100,000 as an initial payment to the investors, under the Preferred Stock Agreement. Additionally the investors were entitled to receive certain specified percentages of the payable consideration (net of expenses, liabilities and offsets) received by Arsin Corp., to be shared pro rata amongst them, based on their ownership of the shares, as and when paid. An Employment Agreement, dated January 1, 2007, was entered into by and between Arsin Corp. and Mr. Yadegar wherein he was entitled to subscribe to 135,000 Equity Shares of our Company at a price of Rs. 200/- per share or employee stock options at an exercise price of Rs. 200/- per option or such other alternative equivalents as shall be mutually agreed upon within a period of 12 months, from the closing date as per the Merger Agreement or prior to the initial public offer of our Company, whichever is earlier. Against the Merger Agreement we made an initial payment of US$ 1.51 million in the year 2007, followed by a payment of US$ 0.98 million as the first amount due on the closure of the twelve month period ending December 2007 and a further payment of US$ 0.64 million as the final amount due on the closure of the twelve month period ending December 2008. Acquisition and Amalgamation of ASPL with our Company ASPL was acquired vide an Agreement for Purchase of Shares (“Agreement”) dated April 01, 2010, between Arsin Corp. and our Company. By virtue of this Agreement, our Company purchased 855,680 fully paid up equity shares of face value of Rs. 10/- each, at the rate of Rs. 60.98 per equity share, amounting to a consideration of Rs. 52,179,366. Subsequently our Company filed a petition in the High Court of Andhra Pradesh to obtain its sanction and approval to the scheme of amalgamation, whereby all the properties, assets, rights, registrations, licenses, permissions, approvals and powers along with all the debts, liabilities, duties, charges, encumbrances and obligations of ASPL were transferred to our Company. Effective date of amalgamation for accounting purposes is 1 April 2010. The High Court of Andhra Pradesh vide its order dated September 15, 2010 sanctioned the scheme of amalgamation and discharged the requirement of our Company filing a separate application. Our Company has filed the requisite form 21 with the RoC to intimate them with regards to closure of the amalgamation process.

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JYACC In the year 2008 we incorporated a wholly owned subsidiary, namely SSTNA in the US for acquiring JYACC, a New York based corporation, doing business as Prolifics. JYACC was formed in 1978, and provided consulting services and proprietary software for multiple platforms for more than 20 years. In 2000, JYACC’s strategy was refocused on IBM technologies, specifically IBM’s WebSphere application server products. In 2006, JYACC acquired substantially all the assets of Prominex, Inc., a Pennsylvania-based systems integrator specializing in SOA and EAI implementations for a consideration of US$ 35,000. In 2007, JYACC acquired substantially all the assets of 7 Irene Limited, a UK-based systems integration and consulting company, for a price based upon subsequent financial performance of the acquired units. On June 26, 2008 and pursuant to the Stock Purchase Agreement dated April 23, 2008, SSTNA agreed to purchase all the outstanding stock of JYACC from Mr. Robert Ismach, Mr. Frank Vafier, Mr. Nicolas Jabbour and Mr. Michael Chadwick. Vide Stock Purchase Agreement dated June 19, 2008, JYACC, holding 91.8% of Prolifics Deutschland GmbH, acquired the balance 8.2% from Ulrich Frotscher for an aggregate consideration of US$ 0.14 million. Mr. Robert Ismach and Mr. Frank Vafier collectively sold 18,426,649 Common Stock of JYACC whereas Mr. Nicolas Jabbour and Mr. Michael Chadwick collectively sold 1,000 Class A Preferred shares. The upfront cash purchase price was US$ 25.63 million of which US$ 14.58 million was towards the sale of Common Stock and US$ 11.05 million towards Class A Preferred Shares. There was also a deferred purchase price, to be paid to Mr. Robert Ismach and Mr. Frank Vafier up to a maximum of US$ 13.34 million, based on EBIT for the two twelve-month periods following the closing. Pursuant to a Letter Agreement dated April 23, 2008 amended by Letter Agreement dated June 26, 2008, JYACC agreed to compensate Mr. Nicolas Jabbour and Mr. Michael Chadwick for additional expenses incurred in respect of the issuance of Class A Preferred shares. There has been a payment of US$ 3.84 million till date and a provision of US$ 2.69 million has been made for the further payment which is due towards this acquisition. In 2010, JYACC purchased substantially all the assets of Watson SCS, Inc., a Florida-based consulting firm specializing in information security, for an aggregate cash price of $85,000 plus further amounts which are to be calculated based upon the financial performance of the acquired units. Awards and Certifications Year Certifications OUR COMPANY 2007 Award for the Second Top SME Exporter in JJ Sector, State of Andhra Pradesh for the year 2005-2006 2007 ISO 9001 : 2008 for Design, Development, Maintenance, Customization and Testing of Software Solutions using Web and Enterprise Technologies 2008 Appraisal by Software Engineering Institute. Semantic Space Technologies Limited is staged at Maturity Level (ML) 3 2009 ISO 27001 : 2005 for Management for Information Security Provision of Software Development and Software Testing Services PROLIFICS 2010 Winner of IBM Impact Business Process Management Award IBM Beacon Award Finalist for Outstanding Business Agility Solution in the WebSphere category IBM Beacon Award Finalist for Outstanding Service Management Solution in the Tivoli category Winner of IBM Lotus Award for Best Industry Solution Winner of IBM Lotus Award for Best End-User Solution IBM Tivoli Deployment Accreditation for:  AAA-level for Application Dependancy Discovery Manager  AAA-level for Monitoring  AA-level for Composite Application Manager for Transactions  AA-level for Access Manager for Enterprise Single Sign-on  AAA-level for Access Manager for e-Business  AA-level for Compliance Insight Manager  AAA-level for Access Manager for Enterprise Single Sign-on 121

2009

2008

2007

2006 2005

2004

2003

 A-level for Monitoring IBM Tivoli Deployment Accreditation for:  A-level for Monitoring  A-level for Application Dependency Discovery Manager IBM Information Management Software Award Finalist for Most Distinguished Achievement Winner of IBM Rational Award for Outstanding Customer Solution with IBM Rational Software by a VAR IBM Beacon Award Finalist for Outstanding WebSphere® Service Oriented Architecture (SOA) Solution IBM Beacon Award Finalist for Overall Technical Vitality IBM Impact Award Finalist for SOA Cost Optimization IBM Impact Award Finalist for Impact Comes to You IBM AAA-level Rating for Tivoli Deployment Accreditation Winner of IBM 2H Software Leadership Award Winner of IBM Beacon Award for Overall Technical Excellence Winner of IBM Beacon Award for Outstanding Websphere SOA Solution Avnet Eagle Award for Top SMB Performer. IBM Software Platinum Achievement Award Winner of IMPACT Award for SOA Process Solution Winner of IBM Beacon Award for Overall Technical Excellence IBM Beacon Award Finalist for Best SOA Solution Winner of IBM Lotus Award for Best Portal Solution IBM Beacon Award Finalist for Best SOA Solution Winner of IBM 5 Star Value Add Partner Award IBM Beacon Award Finalist for Best IBM WebSphere On Demand Solution IBM Lotus Award Finalist for Best Portal Solution IBM Beacon Award Finalist for Best IBM WebSphere e-Business Solution IBM Beacon Award Finalist for Best Mid-Sized/Regional Consultants and Integrators IBM e-Business Solution Implementation Winner of IBM Business Partnership Leadership Award

RAISING OF CAPITAL IN THE FORM OF EQUITY OR DEBT Other than as disclosed in “Capital Structure” and “Financial Indebtedness” beginning on page 20 and 244 respectively of this Draft Red Herring Prospectus, our Company has not issued any capital in the form of equity or debt. REVALUATION OF ASSETS Our Company has not re-valued its assets since incorporation. CHANGES IN THE ACTIVITIES OF OUR COMPANY DURING THE PRECEDING FIVE YEARS There has been no change in the activities of our Company during the preceding five years. INJUNCTIONS OR RESTRAINING ORDERS Our Company is not operating under any injunction or restraining order. MEMBERS As on the date of this Draft Red Herring Prospectus our Company has 105 members / shareholders.

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SHAREHOLDERS AGREEMENT 1. Our Promoters namely Mr. Satyanarayana Bolli, Ms. Sridevi Bolli (“Promoters”) and our Company have entered into a Share Subscription and Shareholders Agreement dated December 10, 2005 with UTI – India Technology Venture Unit Scheme (“UTI ITVUS”) and UTI Venture Funds Management Company Limited (“UTI Investment Manager”) and New Vernon Private Equity Limited (“New Vernon”). The key covenants of the Agreement inter alia are as follows: 1. All Shares, including the new ITVUS Shares and New Vernon Shares, shall carry uniform rights, and that their shares shall rank pari passu with the existing Shares or any future issue of equity shares of our Company. Any rights, privileges or protections attaching to any shares on terms more favorable than those herein afforded to their terms shall be deemed to be automatically vest in these shares, and they shall be entitled to the benefits of such more favorable terms. The Board of Directors shall consist of 9 directors of which the Investor shall, as long as they continue to be shareholders, be entitled to nominate and appoint one non-retiring director (“Investor Directors”). 3. Additional Directors of the Company may be appointed to the Board with the consent of the Investors and the Promoters. The Company and each subsidiary shall ensure that consent of the investors is obtained, till such time the Company successfully completes an IPO, unless such matters shall have been approved by an affirmative vote of a majority of the Board which shall include the affirmative vote of the Director nominated by UTI ITVUS and New Vernon. The Company shall obtain the consent in the manner provided above for the following matters: (a) Any amendment or change of the rights, preferences, priveleges or powers of, or the restrictions provided for the benefit of; (b) Acquisition of shares or assets of other businesses, creation of joint ventures, entering into partnerships as contemplated under the law of partnership, mergers, de-mergers and consolidations; (c) Appointment/termination of Key Managerial Personnel; Setting or revising the terms of employment of the Key Employees; (d) Divestment of shares of any subsidiary; (e) Recommend, giving or renewing of security for or the guaranteeing of debts or obligations of the Company or any subsidiary company and/or affiliates in excess of Rs, 2,500,000; (f) Declaration or payment of any dividend or the redemption or repurchase of any securities; (g) Modifications to the capital structure, issue of any new shares, creation of options or warrants, creating new classes of shares, buy backs, splits, issuance of convertible debt, bonuses, debt restructuring involving conversion into equity; (h) Appointment/reappointment/removal of statutory and internal auditors; (i) Issue of ESOP/MSOP securities; (j) Increase in Debt: Equity ratio beyond 1:2. Debt shall mean long-term borrowings and shall exclude any working capital facilities availed by the Company. 4. The Company undertakes that any transactions, after the date of allotment of the Investor shares, with related parties shall be conducted at commercially justifiable terms and relationship will be conducted at arms length basis and any transaction or series of transaction with aggregate contract value in excess of Rs. 2,500,000 shall be entered into only with the prior approval of the Investor. Other than grants of stock or options or warrants to employees, and the issuance of securities in an IPO, in the event the Company proposes to make a fresh issue of Shares (other than a rights or bonus issue) UTI ITVUS and New Vernon will have the first right to subscribe to the pro-rata percentage of the entire issue of such shares on the basis of their then existing shareholding in the Company so that the percentage of its shareholding in the Company is not reduced.

2.

3.

5.

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6.

At any time prior to the completion of the IPO, if the Company desires to issue any shares at a price lower than either the subscription price paid by UTI ITVUS and New Vernon, they shall be issued such number of shares to maintain their shareholding percentage in the Company free of cost, if permitted by applicable law, or failing that at such price per share which when taken together with the price per share originally paid by UTI ITVUS and New Vernon would result in the average price per share of UTI ITVUS and New Vernon’s respective shareholding post such new issue to be equal to the price per share of the proposed new issue of shares. Tag along rights – If at any time after Closing, the Promoter proposes to transfer any Equity Shares that are held by the Promoter (“Co-Sale Shares”), then at least 30 days prior to such proposed transfer, the Promoter shall deliver a written notice (the “Sale Notice”) to the Investors offering the Investors an option to participate in such proposed transfer. The investors shall be entitled to respond to the Sale Notice by serving a written notice, Tag-Along Notice, on the Promoters prior to the expiry of 30 business days from the date of receipt of the Sale Notice, requiring the Promoter to ensure that the proposed transferee of the Co-Sale Shares is willing to purchase from the Investor, all of the Investor Shares as mentioned in the TagAlong Notice, at the same price and on the same terms as are mentioned in the Sale Notice. Drag along rights – If Listing is not achieved before September 30, 2008, the Investors shall have the right, referred to as “Drag along right”, to transfer all or some of their Shares to any third party. The Investor may send a drag along notice to the Promoter requiring the Promoter to transfer such proportion of the Promoter Shares as mandated by the Investors to the third party purchaser, which has been identified by the Investors at a price and as per terms and conditions to be determined by the Investors. If the proposed third party purchaser is reluctant or unable to acquire all of the Offer Shares, and the Promoter Shares mentioned in the Drag Along Notice, upon such terms, then the Investors may elect either to cancel the proposed transfer or to allocate the maximum number of Shares of the Company, which the proposed third party purchaser is willing to purchase among the Offer Shares and the Shares mentioned in the Drag Along Notice in such ratio as the Promoter deems fit in its absolute and sole discretion.

7.

8.

9.

10. Termination and Breach of Contract – This Agreement became effective from February 3, 2006, and shall remain in full force and effect until Investor ceases to be a Shareholder in the Company. For any breach or default, the Investors shall have the right to seek specific performance and if such specific performance is not enforceable or available under any provision of law, they can seek damages for the breach committed by the Promoter. 11. Initial Public Offering – The Company shall make an IPO on or before September 30, 2008. If the Investor continues to be a shareholder any time after September 30, 2008 and if the Company has defaulted in completing an IPO under this Section, the Investor's shall thereafter, have the right to require the Company to undertake an IPO and the Company shall make best efforts to undertake such IPO or undertake an IPO through an offer for sale of the shareholding of the Investors in the Company at a price to be determined by an independent merchant banker to be determined by the Investors. The Investors may provide a demand notice to the Company, requiring it to take necessary steps to undertake and may require the Company and the Promoter, within a period of 3 months from the date of the Demand Notice, initiate the process of undertaking an IPO. 2. UTI ITVUS further invested a sum of Rs. 70 million in our Company by subscribing to 100,000 Equity Shares - sold by Mr. P.V.S. Raju; and 250,000 Equity Shares - sold by Icon Investments Limited, vide Share Purchase Agreements dated January 04, 2007 and January 27, 2007, respectively (collectively referred to as the “Agreements”) at a price of Rs. 200 per Equity Share. The key terms of the Agreements are as under:  All shares shall carry uniform rights, and that shall rank pari passu with the existing Equity Shares owned by UTI ITVUS. Any rights, privileges or protections attaching to any shares on terms more favorable than those herein afforded UTI ITVUS shall be deemed to be automatically vest in the UTI ITVUS shares;

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UTI ITVUS shall not be required to pledge any of its shares or provide other support to any third party, including without limitation to the creditors of our Company. Our Company shall keep the shares held by UTI ITVUS shares unencumbered at all times; Our Company shall register the shares subscribed to by UTI ITVUS within fifteen days from the closing date and in the event that our Company fails to do so, UTI ITVUS shall have the right to rescind and recall the purchase price paid by UTI ITVUS with interest thereon calculated at the rate of 30% per annum compounded monthly; and For any breach or default, without any prejudice to its other rights and remedies, UTI ITVUS shall have the right to seek specific performance and damages on account of the breach committed.

3.

Amendment to Shareholders Agreement (“Amendment Agreement”) dated September 20, 2010 by and between Semantic Space Technologies Limited (“our Company”) and UTI- India Technology Venture Unit Scheme (“UTI ITVUS”); New Vernon Private Equity Limited (“New Vernon”) (collectively known as “Investors”) and Mr. Satyanarayana Bolli; Ms. Sridevi Bolli (collectively known as the “Promoters”) The aforementioned parties to this Amendment Agreement had entered into a ‘Share Subscription & Shareholders Agreement’ dated December 10, 2005 and subsequent Share Purchase Agreements dated January 4, 2007 and January 27, 2007 (collectively referred to as the “Agreements”). In lieu of the proposal of SSTL to issue/offer its securities to the public through an initial public offer, which shall also include an offer for sale by the Investors , i.e., 1,263,636 shares by UTI ITVUS; and 863,636 shares by New Vernon. Key Terms of the Amendment Agreement 1. The Promoters and our Company have agreed to undertake the IPO on or before March 31, 2011, unless such period is extended by consent of the Investors in writing, failing which the previous Articles of Association of our Company shall be reinstated with all Investor rights as per the Agreements with full force and effect, which was prevalent in the Articles of Association before the amendment pursuant to this Amendment Agreement. The Promoters, other shareholders and our Company undertake to take all necessary steps and confirm reinstatement of the Articles to the Investors within 30 (thirty) days from the date of such period expiring. The parties to the Amendment Agreement have agreed that on and from the date when our Company receives the final trading approval / notification from the relevant stock exchanges in India, all the rights given to the Investors under the Agreements shall automatically stand terminated without any Investors being required to take any further action or furnish any notice. All other terms and conditions of the Agreements, not modified, altered or amended hereinabove shall remain same and applicable to all the Parties to the Agreements and the Parties agree that till the Company is able to list its equity shares, the rights of the Investors in the Agreements shall continue to subsist in full.

2.

3.

OTHER AGREEMENTS We are not a party to nor have we entered into any other material contract not being a contract: a. Entered into in the normal course of business carried on, or intended to be carried on, by our company; or b. Entered into more than two years before the date of this Draft Red Herring Prospectus. STRATEGIC PARTNERS Our Company does not have any strategic partners as on date of this Draft Red Herring Prospectus. FINANCIAL PARTNERS Our Company does not have any financial partners as on date of this Draft Red Herring Prospectus.

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OUR SUBSIDIARIES As on the date of this Draft Red Herring Prospectus, our Company has four subsidiaries, namely: 1. 2. 3. 4. Arsin Corporation; SST North America, Inc.; JYACC, Inc; and Prolifics Deutschland GmbH

Corporate Structure

1. ARSIN CORPORATION (“Arsin Corp.”) Corporate Information Arsin Corp. was incorporated on July 01, 1989, under the laws of the State of California. Further Arsin Corp. through its founder and majority shareholder, merged with SSTAC, a wholly owned Subsidiary of our Company vide an Agreement of Merger dated December 29, 2006, whereby Arsin Corp. was the surviving entity. Registered Office 4800 Great American Parkway, Suite 425, Santa Clara, California 95054-1228. Business Arsin Corp. supplies automated enterprise software testing solutions delivered by a team of software test professionals backed by a service framework that has been field tested and refined. Board of Directors As on date of this Draft Red Herring Prospectus, Arsin Corp. has four directors, as detailed herein below:

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Names of Directors Mr. Satyanarayana Bolli Mr. P.V.S. Raju Mr. Ajay Mittal Mr. Danis Yadegar Shareholding Pattern

Designation Director Director Director Director

The shareholding pattern of Arsin Corp. as on date of this Draft Red Herring Prospectus is as follows:

Name of the Shareholders Semantic Space Technologies Limited Total Financial Performance

No of Shares 10,000 10,000

Percentage of share capital

100 100

The summary of the audited consolidated financials of Arsin Corp. is as follows: (Amounts in Rupees million, except per share data) For the 12 months period ending December December 31, March 31, March 31, 31, 2007 2008 2009 2010 201.10 260.53 268.42 391.04 20.48 20.89 20.59 72.91 0.39 0.48 0.51 0.45 10.41 31.32 40.82 108.26 2,048.31 2,048.31 1,080.89 2,089.48 2,089.48 3,180.42 2,058.90 2,058.90 4,132.71 7,291.40 7,291.40 10,870.77

Particulars Income/Sales Profit/(Loss) after Tax Equity share capital Reserves and surplus (excluding revaluation reserves)(1) Earnings per share (Rs.) (2) Diluted Earnings per share (Rs.) (2) Net asset value or book value per share (Rs.) (2)
(1) (2)

Net of miscellaneous expenditure not written off. Face value of each equity share is US$ 1 each. Note: 1. The Delaware Corporation Code does not have requirement of the audit for privately held corporation. 2. To comply with the SEBI ICDR Regulations, figures in US$ have been converted into Indian Rupees applying an average rate of Rs.41.29, Rs.43.42, Rs.45.91 and Rs.47.42 for US$ 1 for profit and loss items for the fiscal years ended December 31, 2007, December 31, 2008, March 31, 2009 and March 31, 2010, respectively, and closing rate of Rs.39.41, Rs.48.45, Rs.50.95 and Rs.45.14 for US$1 for balance sheet items for the fiscal years ended December 31, 2007, December 31, 2008, March 31, 2009 and March 2010, respectively. (Source: www.rbi.org.in)

Arsin Corp. is an unlisted company and has not made any public or rights issue in the immediately preceding three years. Further, no action has been taken against Arsin Corp. by any stock exchange or regulatory authority. Arsin Corp. is not a sick company nor is it under winding up. 2. SST NORTH AMERICA Inc. (“SSTNA”)

Corporate Information SSTNA was incorporated on April 03, 2008 vide Certificate of Incorporation organised under the General Corporation Law of the State of Delaware. Registered Office One Commerce Center, 1201 Orange Street, #600, Wilmington, Delaware, New Castel County, USA

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Business SSTNA is a holding company formed for the purpose of effecting the Prolifics acquisition. Board of Directors As on date of this Draft Red Herring Prospectus, SSTNA has two directors, as detailed herein below: Names of Directors Mr. Satyanarayana Bolli Mr. P.V.S Raju Shareholding Pattern The shareholding pattern of SSTNA as on date of this Draft Red Herring Prospectus is as follows: Name of the Shareholders Semantic Space Technologies Limited Total Financial Performance The summary of the audited financials of SSTNA is as follows: (Amount in Rupees million, except per share data) For the period ending 12 months March 31, 2009 March 31, 2010 1.85 2,612.17 (14.24) 51.64 5.10 4.51 792.74 742.25 (142.39) 516.44 (142.39) 516.44 7,978.31 7,467.62 No of Shares 100,000 100,000
Percentage of share capital

Designation Director Director

100 100

Particulars Income/Sales Profit (Loss) after Tax Equity share capital Reserves and surplus (excluding revaluation reserves)(1) Earnings per share (Rs.) (2) Diluted Earnings per share (Rs.) (2) Net asset value or book value per share (Rs.) (2)
(1) (2)

Net of miscellaneous expenditure not written off. Face value of each equity share is US$ 1 each. Notes: 1. The Delaware Corporation Code does not have requirement of the audit for privately held corporation. 2. To comply with the SEBI ICDR Regulations, figures in US$ have been converted into Indian Rupees applying an average rate of Rs.47.32 and Rs.47.42 for US$ 1 for profit and loss items for the fiscal years ended March 31, 2009, and March 31, 2010, respectively, and closing rate of Rs.50.95 and Rs.45.14 for US$1 for balance sheet items for the fiscal years ended March 31, 2009 and March 2010, respectively. (Source: www.rbi.org.in) 3. The financials of SSTNA for the year ended March 31, 2008 has not been given as it was incorporated on April 3, 2008 and the figures relating to March 31, 2010 include the audited financials of JYACC.

SSTNA is an unlisted company and has not made any public or rights issue in the immediately preceding three years. Further, no action has been taken against SSTNA by any stock exchanges or regulatory authority. SSTNA is not a sick company nor is it under winding up. 3. JYACC, Inc. (“JYACC”)

Corporate Information JYACC was incorporated on June 30, 1978 vide Certificate of Incorporation under the Business Corporation Law of the State of New York. Further, SSTNA, the wholly owned subsidiary of our Company, acquired all outstanding 128

stock of JYACC through Stock Purchase Agreement dated April 23, 2008 and Amendment Agreement dated June 25, 2008. JYACC carries out its business under the name Prolifics. Registered Office 114 West, 47th Street, 20th Floor, New York, NY 10036 Business JYACC is currently in the business of IT services, IT solutions, products and resale of IBM software products Board of Directors As on date of this Draft Red Herring Prospectus, JYACC has four directors, as detailed herein below: Names of Directors Mr. Satyanarayana Bolli Mr. P.V.S. Raju Mr. Ajay Mittal Mr. Nicolas Jabbour Designation Director Director Director Director

Shareholding Pattern The shareholding pattern of JYACC as on date of this Draft Red Herring Prospectus is as follows: Name of the Shareholders SST North America, Inc No of Shares Common Stock - 18,426,649 shares and Class A Preferred Stock - 1,000 shares
Percentage of share capital

100

Financial Performance The summary of the audited consolidated financials of JYACC is as follows: (Amount in Rupees million, except per share data) For 6 months period ended For 12 months period ended Particulars* June 30, 2008 June 30, 2009 March 31, 2010 Income/Sales 1,340.01 2,569.62 2,612.17 Profit (Loss) after Tax (275.99) 49.04 69.73 Equity share capital 0.95 1.06 1.00 Reserves and surplus (excluding revaluation 416.08 484.76 402.56 reserves)(1) Earnings per share (Rs.) (2) (12.48) 2.22 3.15 Diluted Earnings per share (Rs.) (2) (12.48) 2.22 3.15 Net asset value or book value per share (Rs.) (2) 18.86 21.97 18.25
(1) (2)

Net of miscellaneous expenditure not written off. Face value of each equity share is US$ 0.001 Notes: 1. The New York Corporation Code does not have requirement of the audit for privately held corporation. 2. To comply with the SEBI ICDR Regulations, figures in US$ have been converted into Indian Rupees applying an average rate of Rs.40.36, Rs.47.65 and Rs.47.42 for US$ 1 for profit and loss items for the fiscal years ended June 30, 2008, June 30, 2009 and March 31, 2010, respectively, and closing rate of Rs.42.95, Rs.47.87 and Rs.45.14 for US$1 for balance sheet items for the fiscal years ended June 30, 2008, June 30, 2009 and March 31, 2010, respectively. (Source: www.rbi.org.in)

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JYACC is an unlisted company and has not made any public or rights issue in the immediately preceding three years. Further, no action has been taken against JYACC by any stock exchanges or regulatory authority. JYACC is not a sick company nor is it under winding up. 4. PROLIFICS DEUTSCHLAND GmbH (“Prolifics Germany”)

Corporate Information Prolifics Germany was formed in 2001 under the name Baurer Prolifics GmbH as a joint venture with Baurer Aktiengesellschaft, a German corporation (“Baurer”). Baurer Prolifics GmbH was owned 51% by Baurer, 45% by Prolifics and 4% by a local manager. In 2003, as a consequence of the filing of insolvency proceedings by Baurer, the joint venture repurchased and cancelled the shares owned by Baurer, resulting in Prolifics becoming the owner of 91.8% of the stock of the joint venture and the local manager owning 8.2%. The joint venture was then renamed to Prolifics Deutschland GmbH. In 2008, Prolifics acquired the remaining shares in the joint venture from the local manager, and Prolifics Germany thereby became a wholly-owned subsidiary of Prolifics. Registered Office Notkestrasse. 3, 22607 Hamburg, Germany. Business Prolifics Germany is currently in the business of IT services, IT solutions, products and resale of IBM software products. Board of Directors As on date of this Draft Red Herring Prospectus, Prolifics Germany has three directors, as detailed herein below: Names of Directors Mr. Nicolas Jabbour Mr. Nitesh Thakrar Mr. David Mogel Shareholding Pattern The shareholding pattern of Prolifics Germany as on date of this Draft Red Herring Prospectus is as follows: Name of the Shareholders JYACC, Inc Total Financial Performance As Prolifics Germany is a wholly owned subsidiary of JYACC, the account of Prolifics Germany have been consolidated with the financial statements of JYACC in accordance with the US GAAP. Prolifics Germany is an unlisted company and has not made any public or rights issue in the immediately preceding three years. Further, no action has been taken against Prolifics Germany by any stock exchanges or regulatory authority. Prolifics Germany is not a sick company nor is it under winding up. None of our Subsidiaries have had negative networth in the past five years. Number of Shares 1 1
Percentage of share capital

Designation Director Director Director

100 100

130

Other than as stated above, our Company does not have any holding company, joint ventures or associate companies. Interest of the Subsidiaries in our Company None of our Subsidiaries hold any Equity Shares in our Company. We have entered into certain business contracts with our Subsidiaries. For details, please see “Annexure XV - Related Party Transactions” in the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus.

131

OUR MANAGEMENT

Under our Articles, our Company is required to have not less than three directors and not more than twelve directors. Our Company currently has ten Directors on its Board. The Chairman of our Board is an executive Director and in compliance with the requirement of clause 49 of the Listing Agreement, our Company has one whole time director, one non executive director, two nominee directors and five independent Directors. Our Board Sr. No Name, Designation, Address, Nationality, Occupation and DIN Age Date of Appointment as Director and Term Date of appointment: November 24, 1997 Term: October 01, 2010 to September 30, 2015 Details of other directorships / partnership / trusteeship / proprietorship Foreign Companies 1. 2. 3. Arsin Corporation SST North America, Inc JYACC, Inc

1.

Mr. Satyanarayana Bolli Designation: Chairman and Managing Director Residential Address: 1355D, Road No. 45, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India Nationality: Indian Occupation: Business DIN: 00019739

56

2.

Ms. Sridevi Bolli Designation: Whole - time Director Residential Address: 1355D, Road No. 45, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India Nationality: Indian Occupation: Business DIN: 00007122

44

Date of appointment: January 05, 1998 Term: January 1, 2006 to December 31, 2010

-

3.

Mr. P .V. S. Raju Designation: Non – Executive Director Residential Address: Plot No. 372, Road No. 22, Jubilee Hills, Hyderabad – 500 033, Andhra Pradesh, India Nationality: Indian Occupation: Business

55

Date of appointment: November 24, 1997. Term: Liable to retire by rotation

Indian Companies 1. 2. 3. 4. 5. 6. Asian Institute of Gastroenterology Private Limited Regal Corporate Advisors Private Limited Crystal Digimedia Private Limited BSR Advent Advisors Limited Ravindranath Medical Foundation Sarvejana Healthcare Private Limited

Foreign companies

132

Sr. No

Name, Designation, Address, Nationality, Occupation and DIN

Age

Date of Appointment as Director and Term 1. 2. 3. 4. 5.

Details of other directorships / partnership / trusteeship / proprietorship Arsin Corporation SST North America, Inc JYACC, Inc Illios Breweries Private Limited B. E. Investment & Finance Private Limited

DIN: 00028230

4.

Mr. Ajay Mittal Designation: Nominee Director Residential Address: Flat No. 343, 4th Floor, III Block, Ranka Park Apartments, Opp. St. Joseph College, Lalbagh Road Bangalore – 560 027 Nationality: Indian Occupation: Professional DIN: 00084644

42

Date of appointment: April 01, 2006 Term: Non-retiring Director

Indian Companies 1. 2. 3. 4. 5. 6. Laqshya Media Private Limited Laqshya Digital Media Private Limited Laqshya Hyderabad Airport Media Private Limited Laqshya Airport Media Private Limited Primus Retail Private Limited Altius Capital India Private Limited

Foreign Companies 1. 2. 3. 4. 5. 6. 7. Arsin Corporation JYACC, Inc Right Angle Media FZ LLC Laqshya Media International (Mauritius ) Airport Media Holding (Mauritius) Vertigo Lanka Private Limited Gulf Media Holding

5.

Mr. Satish Deshpande Designation: Nominee Director Residential Address: Flat No. 4, Shamala Apartments, Plot No. 54, Mahatma Nagar, Nashik, India Nationality: Indian Occupation: Professional DIN: 00023871

50

Date of appointment: November 30, 2007 Term: Non - retiring Director

Indian Companies 1. 2. 3. 4. Setco Automotive Limited Spray Engineering Devices Limited Eastern Condiments Private Limited Epsilon Polymers Private Limited

6.

Mr. Vivek Mundra Designation: Independent Director Residential Address: 1B, Sri Ram Garden, 15, Belvedere Road, Alipore, Kolkata – 7000027, West Bengal, India

50

Date of appointment: September 30, 2008. Term: Liable to retire by rotation

Indian Companies 1. 2. 3. 4. 5. 6. Jet Age Securities Private Limited Jet Age Finance Private Limited Avro Commercial Co. Limited Neelkantha Steels Limited Narayani Marketing Private Limited Deccan Textiles Private Limited

133

Sr. No

Name, Designation, Address, Nationality, Occupation and DIN

Age

Date of Appointment as Director and Term 7. 8.

Details of other directorships / partnership / trusteeship / proprietorship Crystal Digimedia Private Limited Sarvejana Healthcare Private Limited 9. Merlin Holdings Private Limited 10. HBL Power Systems Limited Partnership Firms 1. Majestic Ventures LLP Asian Institute of Gastroenterology Private Limited Regal Corporate Advisors Private Limited

Nationality: Indian Occupation: Business DIN: 00383479

7.

Dr. Nageshwar Reddy Designation: Independent Director Residential Address: A-27, Journalist Colony, Jubilee Hills, Hyderabad – 500033, Andhra Pradesh, India Nationality: Indian Occupation: Doctor DIN: 00324725

54

Date of appointment: September 30, 2008. Term: Liable to retire by rotation

Indian Companies 1. 2.

8.

Mr. Ravi Shankararamiah Designation: Independent Director Residential Address: 8-2-547/ B-2, Road No. 7, Banjara Hills, Hyderabad – 5000034, Andhra Pradesh, India Nationality: Indian Occupation: Lawyer DIN: 00180746

55

Date of appointment: September 30, 2009 Term: Liable to retire by rotation

-

9.

Dr. Mohana Velagapudi Designation: Independent Director Residential Address: 6- Hickory Court, Moline Illinios – 61201, United States of America Nationality: U.S. Citizen Occupation: Doctor DIN: 01263282

53

Date of appointment: October 08, 2010 Term: Till the ensuing AGM

Indian Companies 1. 2. 3. 4. 5. 6. 7. 8. Sarvejana Healthcare Private Limited Veen Promoters Private Limited Veen Realtors Private Limited Indu Projects Limited Creamline Dairy Products Limited Cavera Systems (India) Private Limited G2 Corporate Services Limited Asian Institute of Gastroenterology Private Limited

134

Sr. No

Name, Designation, Address, Nationality, Occupation and DIN

Age

Date of Appointment as Director and Term Date of appointment: October 08, 2010 Term: Till the ensuing AGM

Details of other directorships / partnership / trusteeship / proprietorship Indian Companies 1. Creamline Dairy Products Limited

10.

Mr. Bhasker Kondapally Designation: Independent Director Residential Address: 404, Aditya Classic Apartments, 6-3-1099/ 1/ 3 and 4, Somajiguda Hyderabad 500082 Nationality: Indian Occupation: Business DIN: 00014291

50

Brief Biographies of our Directors Mr. Satyanarayana Bolli, Chairman and Managing Director Mr. Satyanarayana Bolli, the Chairman and Managing Director of our Company, is a career entrepreneur with over 30 years of experience in the Information Technology industry. Prior to the formation of our Company, he was the co-founder of Sriven Computer Solutions – an organization providing offshore computing services. Earlier in his career, he lived and worked extensively across Europe & United States consulting for multinationals such as Ericsson, GTE, CSX, Sea-Land and Countrywide. Has completed his Bachelor’s in Technology (Electrical & Electronics) from Regional Engineering College (REC), Warangal and Master’s in Technology (Computer Science) from Indian Institute of Technology (IIT), Chennai. He currently spearheads the global operations of our Company and is responsible for defining the strategic direction and ensuring operational excellence of our Company. He focuses on enabling the organization to achieve scale and synergy. He was one of the first Directors of our Company and was appointed as a Director on November 24, 1997 Ms. Sridevi Bolli, Whole-time Director Ms. Sridevi Bolli has 15 years of experience in General Administration and is currently incharge of the General Administration of our Company. She is instrumental in establishing the two business units of our Company in Hyderabad. Prior to the formation of our Company she was the co-founder of Sriven Computer Solutions – an organization providing offshore computing services. She was appointed as a Director in our Company on January 05, 1998. Mr. P.V.S. Raju, Non- Executive Director Mr. P.V.S Raju is the Non- Executive Director of our Company and was one of the first Directors of our Company. He was appointed as a Director of our Company on November 24, 1997. He holds a Post Graduate Degree in Physics and Business Administration from Institute of Public Enterprise, Osmania University. He has over 20 years of experience in the areas of Commercial and Investment Banking. He currently advises corporates on aspects relating to Corporate Governance and Financial Restructuring. Mr. Ajay Mittal, Nominee Director Mr. Ajay Mittal has been a Nominee Director of our Company since April 1, 2006. He holds a Degree in B. Com (Hons) from Sri Ram College of Commerce, Delhi. He is a Chartered Accountant (Rank holder) from ICAI and Cost Accountant from ICWAI. He has over 17 years of experience in funds management, taxation and finance. He has been associated with UTI Venture Funds since its inception and has played an active role in identification and 135

evaluation of investment opportunities and monitoring the investments made. Mr. Satish Deshpande, Nominee Director Mr. Satish Deshpande is a Nominee Director of our Company since November 30, 2007. He holds a Degree in Metallurgical Engineering from BHU-IT, Varanasi and is a Masters in Business Administration from Indian Institute of Management, Ahmedabad. He has also completed his second MBA from Indian School of Business, Hyderabad. He has received training from GE power systems as Green Belt-Six Sigma. He has over 20 years of working experience with various companies in the manufacturing sector. Prior to joining New Vernon, he was responsible for handling Indian operations for Sigma Electric (NC, USA), a leading distributor of electrical hardware in US. He was also the CEO of Insulation Division of Sahney Kirkwood, a manufacturer of high voltage mica based electrical insulation. Mr. Vivek Mundra, Independent Director Mr. Vivek Mundra is an Independent Director of our Company since September 30, 2008. He holds an MBA Degree from Indian Institute of Management, Ahmedabad. He has over two decades of experience in Indian Financial Markets. He is the promoter- director of Jet Age Securities Private Limited, a company that provides brokerage services and research support to financial institutions, mutual funds, HNIs and corporates. He advises many corporates on aspects relating to corporate governance, financial restructuring etc. He is one of the active alumini of IIM, Ahmedabad. He has also instituted “Smt. Lakshmi Devi Mundra Scholarship” for students at the Aravali Institute of Management, Rajasthan. Dr. Nageshwar Reddy, Independent Director Dr. Nageshwar Reddy is an Independent Director of our Company since September 30, 2008. He holds a Degree in MD in General Medicine from Madras University and a Degree in DM in Gastroenterology from Post Graduate Institute of Medical Education and Research, Chandigarh. He has also received an Honorary Doctorate D.Sc (Hon) from Nagarjuna University in 2005. During his academics, he has won nine gold medals and was awarded the “best outgoing student award” at the Kurnool Medical College, Andhra Pradesh, Japanese Endoscopic Research Award (1991); Indian Society of Gastroenterology Award (1992); B C Roy Award from Indian Medical Council (1995); American Biographical Award for outstanding Gastroenterologist with contribution to world literature and Padma Shri by Government of India (2001), Francisco Roman Award for lifetime achievement in medicine from Philippines Society of Gastroenterology in Manila, Master Endoscopists Award by the American Society for Gastrointestinal Endoscopy (2009) and several others. He was elected as the First Endoscopic Grandmaster by Asian Endoscopy Master’s Forum in Singapore; He has established the hospital “Asian Institute of Gastroenterology Private Limited”, catering exclusively to GI patients. It also serves as a training arena for aspiring doctors across the world. The Governments of India and Sri Lanka have a tie up with this hospital for training their post graduates. He has been an Honorary member of the American Society for Gastrointestinal Endoscopy since 2004. Mr. Ravi Shankararamiah, Independent Director Mr. Ravi Shankararamiah is an Independent Director of our Company since September 30, 2009. He holds a Master’s Degree in Science from University of California and also a LLB Degree from Bangalore University. He has more than two decades of experience in areas of corporate legal matters including arbitration, due diligence, foreign exchange, securities market, mergers and acquisitions, foreign collaborations, joint venture agreements, intellectual property and cyber laws. He is currently an advisor to many corporates, both in private and public sector. Dr. Mohana Velagapudi, Independent Director Dr. Mohana Velagapudi is an Independent Director of our Company and was appointed as an Additional Director of our Company on October 08, 2010. He holds a Degree in MBBS from Guntur Medical College, Nagarjuna University. He has also completed Residency and Fellowship in Allergy and Clinical Immunology in Chicago. He specialized in the field of allergy and asthma for a period of 21 years before giving up his private practice in July 2008 for exploring other opportunities. He was one of the founding Directors of Matrix Laboratories Limited.

136

Mr. Bhasker Kondapally, Independent Director Mr. Bhasker Kondapally is an Independent Director of our Company and was appointed as an Additional Director of our Company on October 08, 2010. He holds a degree in Dairy Technology from College of Arts and Science, Kamareddy, from Osmania University and has also done a Food and Agriculture Business Management Program on trends, integration, strategy and regulations from Cornell University, New York. He is currently the Managing Director of Creamline Dairy Products Limited, which is an ISO 22000 accredited leading manufacturer of milk products. He has received the “Entrepreneur of the Year - 2001” award from Hyderabad Management Association for his outstanding entrepreneurship, innovativeness and strategies. (i) Ms. Sridevi Bolli is the spouse of Mr. Satyanarayana Bolli. Hence, they are “relatives” within the meaning of Section 6 of the Companies Act. As on the date of this Draft Red Herring Prospectus, there is no arrangement or understanding with major, customers, suppliers or others, pursuant to which any of our Directors was selected as a director or a member of our senior management. Notwithstanding anything contained herein pursuant to Subscription and Shareholder’s Agreement dated December 10, 2005 executed by and between our Promoters, namely, Mr. Satyanarayana Bolli and Ms. Sridevi Bolli, our Company and UTI ITVUS: We have given a right to appoint one Director on the Board of our Company to UTI ITVUS and to New Vernon. (iii) As on the date of this Draft Red Herring Prospectus, there are no service contracts entered into by and between our Directors and our Company whereby benefits would be provided upon termination of employment. Borrowing powers of our Board of Directors Our Articles of Association, subject to Sections 58A, 292 and 293 of the Companies Act, authorize our Board, to raise or borrow or secure the payment of any sum or sums of money for the purposes of conducting the business of our Company. Pursuant to a resolution passed at the AGM held on November 30, 2007, our shareholders have authorized our Board to borrow monies (apart from temporary loans obtained from banks in the ordinary course of business) up to a limit not exceeding Rs. 1,000 million. For further details of the provisions of our Articles of Association regarding borrowing powers of our Board, please refer to the chapter titled “Main Provisions of the Articles of Association” beginning on page 329 of this Draft Red Herring Prospectus. Remuneration/Compensation of our Directors Chairman and Managing Director Mr. Satyanarayana Bolli, is our Chairman and Managing Director and was one of the first directors of our Company. He was currently re-appointed as the Chairman and Managing Director of our Company pursuant to the Shareholders approval, in the AGM held on September 20, 2010, for a period of 5 years. Following are the significant terms of his employment: Particulars Gross Salary Remuneration Upto Rs. 500,000 per month Upto 100% of salary to be paid either by way of cash or otherwise at the discretion of the Board of Directors, based on certain performance criteria Perquisites as included in Upto 50 % of salary, in addition to salary, incentive remuneration, if any, and commission, to be paid as perquisites and allowances such as : 137

(ii)

Particulars the gross salary

Remuneration Accommodation or house rent and maintenance allowances, in lieu thereof; together with the reimbursement of expenses or allowances for utilities such as gas, electricity, water, furnishings, repairs, servants’ salaries; medical reimbursement/ allowance, club fee and leave travel concession/ allowance for himself and his family; medical/ accident insurance and such other perquisites and allowances will be subject to such overall ceiling as may be fixed by the Board of Directors from time to time. Company maintained car with driver for official and personal use. Telecommunication facilities at his residence. Contribution to Provident Fund, Superannuation Fund or Annuity Fund and Gratuity as per the rules of the Company. Leave and encashment of unavailed leave as per the rules of the Company. Such remuneration by way of commission, in addition to the salary, incentive remuneration, if any, and benefits, perquisites and allowances payable, calculated with reference to the net profits of the company in a particular financial year, as may be determined by the Board of Directors of the Company at the end of the financial year, subject to the overall ceilings stipulated in Sections 198 and 309 of the Companies Act. The specific amounts payable to Mr. Bolli will be based on certain performance criteria to be laid down by the Board and will be payable annually after the annual accounts have been approved by the Board of Directors and adopted by the Members.

Ms. Sridevi Bolli, Whole Time Director Ms. Sridevi Bolli was appointed as a Director of our Company on January 5, 1998. She was re-appointed as the Whole-time Director of our Company pursuant to the Shareholders approval in the AGM held on September 20, 2010 for a period of 5 years with effect from January 1, 2011 on a consolidated remuneration not exceeding Rs. 100,000 per month. Independent and Nominee Directors Our Independent and Nominee Directors are entitled to sitting fees for attending meetings of the Board, or of any Committee of the Board. Currently, the sitting fees paid to our Directors is Rs. 5,000 for every meeting of the Board attended by them and Rs. 2,500 for every meeting of the Committee of the Board attended by them. Benefits Paid The details of all the cash benefits paid, whether in nature of remuneration or allowances or perquisites or otherwise, to all the Directors in the last financial year ending March 31, 2010 are as under: Particulars Mr. Satyanarayana Bolli Ms. Sridevi Bolli Shareholding of our Directors As per the Articles of Association of our Company, our Directors are not required to hold any Equity Shares of our Company. Save and except as below, our Directors do not hold any Equity Shares of our Company as on the date of this Draft Red Herring Prospectus: Amount in Rupees million 2.32 1.20

138

Sr. No. 1. 2. 3. 4. 5. 6. 7.

Name of the Directors

Number of Equity Shares

Mr. Satyanarayana Bolli Ms. Sridevi Bolli Mr. P.V. S Raju Mr. Vivek Mundra Vivek Mundra (HUF) Dr. Nageshwar Reddy Dr. Mohana Velagapudi TOTAL

1,988,784 2,345,626 366,123 40,000 20,000 20,000 10,000 4,790,533

% of Pre Issue Paid-up Capital 16.53 19.50 3.04 0.33 0.17 0-17 0.08 39.82

Interest of Directors Except for Mr. Satyanarayana Bolli and Ms. Sridevi Bolli, who are Promoter-Directors, none of our Directors are interested in the promotion of our Company. All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board or a Committee thereof as well as to the extent of remuneration payable to them for their services as Whole-time Director of our Company and reimbursement of expenses as well as to the extent of commission and other remuneration, if any, payable to them under our Articles of Association. Some of the Directors may be deemed to be interested to the extent of consideration received/paid or any loan or advances provided to any body corporate including companies and firms, and trusts, in which they are interested as directors, members, partners or trustees. All our Directors may also be deemed to be interested to the extent of Equity Shares, if any, already held by them or their relatives in our Company, or that may be subscribed for and allotted to our non-promoter Directors, out of the present Issue and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. All our Directors may be deemed to be interested in the contracts, agreements/ arrangements entered into or to be entered into by the Company with any either the Director himself, other company in which they hold directorships or any partnership firm in which they are partners, as declared in their respective declarations. Our Directors may also be regarded interested to the extent of dividend payable to them and other distributions in respect of the Equity Shares, if any, held by them or by the companies / firms / ventures promoted by them or that may be subscribed by or allotted to them and the companies, firms, in which they are interested as Directors, members, partners and Promoters, pursuant to this Issue. Our Directors do not have any interest in any property acquired by our Company in a period of two years before the date of this Draft Red Herring Prospectus or proposed to be acquired by us as on the date of this Draft Red Herring Prospectus. For further details please refer to paragraph titled “Our Property” in the chapter titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus. Further, save and except as stated otherwise under the paragraph titled “Shareholding of our Directors” in this chapter; in “Annexure XV - Related Party Transactions” in the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus and under the paragraphs titled “Interest of Promoters in our Company” and “Common Pursuits” in the chapter titled “Our Promoters, Promoter Group and Group Companies’ beginning on page 151 of this Draft Red Herring Prospectus, our Directors do not have any other interests in our Company as on the date of this Draft Red Herring Prospectus. Our Directors are not interested in the appointment of or acting as Underwriters, Registrar and Bankers to the Issue or any such intermediaries registered with SEBI.

139

Changes in our Board of Directors during the last three years Save and except as mentioned below, there has been no change in our Board of Directors during the last three years: Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. Name and Designation of the Director Mr. Rama Rao Bolli Mr. Ravi Shankararamiah Mr. Satish Deshpande Mr. Vivek Mundra Dr. Nageshwar Reddy Mr. Ravi Shankararamiah Dr. Mohana Velagapudi Mr. Bhasker Kondapally Date of Appointment February 01, 2000 October 27, 2000 November 30, 2007 September 30, 2008 September 30, 2008 September 30, 2009 October 08, 2010 October 08, 2010 Date of Resignation January 01, 2009 September 04, 2008 Reasons Resignation Resignation Appointment Appointment Appointment Appointment Appointment Appointment

Corporate Governance The provisions of the Listing Agreement to be entered into with the Stock Exchanges with respect to corporate governance and SEBI Regulations in respect of corporate governance will be applicable to our Company immediately upon the listing of its Equity Shares on the Stock Exchanges. Our Company has complied with the corporate governance code in accordance with Clause 49 of such Listing Agreement, particularly, in relation to appointment of Independent Directors to our Board and constitution of the Audit Committee and the Remuneration Committee. Our Board functions either as a full Board or through various committees constituted to oversee specific operational areas. Our Company undertakes to take all necessary steps to continue to comply with all the requirements of Clause 49 of the Listing Agreement to be entered into with the Stock Exchanges. Currently, our Company has 10 Directors on its Board. The Chairman of our Board is an executive Director and in compliance with the requirement of Clause 49 of the Listing Agreement, our Company has 2 Executive Directors, 1 Non-Executive Directors, 2 Nominee Directors and 5 Independent Directors. Committees of the Board Our Company has constituted the following committees of the Board for compliance with corporate governance requirements: In terms of the Clause 49 of the Listing Agreement, our Company has constituted the following Committees a. b. Audit Committee; Shareholders, Share Transfers and Investors’ Grievance Committee;

To enable efficient functioning with regards to the activities being carried out by our Company as well as activities relating to this Issue we have constituted the following Committees: c. d. e. a. Remuneration Committee; Compensation / Selection Committee; and IPO Committee. Audit Committee

The Audit Committee was constituted by our Directors at their Board meeting held on March 15, 2006 persuant to section 292(A) of the Companies Act, 1956. The Audit Committee was re-constituted vide Board Resolution dated October 08, 2010. The present Audit Committee consists of the following members:

140

Sr. No. 1. 2. 3. 4.

Name Mr. Vivek Mundra Mr. Bhasker Kondapally Mr. Satyanarayana Bolli Mr. Mohana Velagapudi

Designation in the Committee Chairman Member Member Member

Nature of Directorship Independent Director Independent Director Chairman and Managing Director Independent Director

The terms of reference of the Audit Committee are as under: Powers of the Audit Committee 1. To invite such of the executives, as it considers appropriate (and particularly the head of finance function) to be present at the meetings of the Committee, 2. To investigate any activity within its terms of reference, 3. To seek information from any employee, 4. To obtain outside legal or other professional advice, 5. To secure attendance of outsiders with relevant expertise, if it considers necessary. Role of Audit Committee The scope of the Audit Committee shall include but shall not be restricted to the following: 1. 2. 3. 4. 5. Oversight of our Company’s financial reporting processes and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible; Recommending to the Board, the appointment, re-appointment and; if required, the replacement or removal of the statutory auditor and the fixation of audit fees; Approval of payment to the statutory auditor for any other services rendered by the statutory auditor; Appointment, removal and terms of remuneration of internal auditor; Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956 b. Changes, if any, in the accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Significant adjustments made in the financial statements arising out of audit findings e. Compliance with listing and other legal requirements relating to financial statements f. Disclosure of any related party transactions; and g. Qualifications in the draft audit report. 6. 7. Reviewing, with the management, the quarterly financial statements before submission to the Board of Directors for their approval; Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; 141

8. 9.

Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

10. Reviewing management letters / letters of internal control weaknesses issued by the statutory auditors; 11. Discussion with internal auditors on any significant findings and follow up there on; 12. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board; 13. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; 14. To look into the reasons for substantial defaults in payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 15. To review the functioning of the Whistle Blower mechanism, when the same is adopted by our Company and is existing; 16. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate; and 17. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee or as may be statutorily required to be carried out by the Audit Committee. Review of information by Audit Committee The Audit Committee shall mandatorily review the following information: 1. Management’s discussion and analysis of financial condition and results of operations; 2. Statement of significant related party transactions (as defined by the audit committee), submitted by management; 3. Management letters / letters of internal control weaknesses issued by the statutory auditors; 4. Internal audit reports relating to internal control weaknesses; and 5. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee. The recommendations of the Audit Committee on any matter relating to financial management, including the audit report, are binding on the Board. If the Board is not in agreement with the recommendations of the Committee, reasons for disagreement shall have to be recorded in the Board Meeting and the same has to be communicated to the shareholders. The Chairman of the committee has to attend the Annual General Meetings of our Company to provide clarifications on matters relating to the audit. Meeting of the Audit Committee The audit committee shall meet at least four times in a year and not more than four months shall elapse between two meetings. The quorum shall be either two members or one third of the members of the audit committee whichever is greater, but there shall be a minimum of two Independent Directors present. b. Shareholders, Share Transfers and Investors’ Grievance Committee:

For redressing the Shareholders/ Investors complaints, the Company has constituted a Shareholders, Share Transfer and Investors’ Grievance Committee vide resolution dated October 08, 2010 as per the requirements of the Clause 49 of the Listing Agreement. The present Committee consists of the following members:

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Sr. No. 1. 2. 3.

Name Mr. Ravi Shankararamiah Mr. Satyanarayana Bolli Mr. Vivek Mundra

Designation in the Committee Chairman Member Member

Nature of Directorship Independent Director Chairman and Managing Director Independent Director

This committee will address all grievances of Shareholders / Investors in compliance of the provisions of clause 49 of the Listing agreements with the Stock Exchanges and its terms of reference include the following: 1. 2. 3. Efficient transfer of shares; including review of cases for refusal of transfer / transmission of shares and debentures; Redressing of shareholders and investor complaints such as non-receipt of declared dividend, annual report, transfer of Equity Shares and issue of duplicate/split/consolidated share certificates; Monitoring transfers, transmissions, dematerialization, re-materialization, splitting and consolidation of Equity Shares and other securities issued by our Company, including review of cases for refusal of transfer/ transmission of shares and debentures; Allotment and listing of shares in future; Review of cases for refusal of transfer / transmission of shares and debentures; Reference to statutory and regulatory authorities regarding investor grievances; Ensure proper and timely attendance and redressal of investor queries and grievances; and To do all such acts, things or deeds as may be necessary or incidental to the exercise of the above powers. Remuneration Committee

4. 5. 6. 7. 8. c.

The Remuneration Committee was constituted pursuant to the Board meeting held on October 08, 2010 as per the requirements of Clause 49 of the Listing Agreement. The Remuneration Committee is responsible for the reviewing, assessing and recommending the appointment, terms of appointment and re-appointment including remuneration etc of Executive and/or Non-Executive Directors and senior employees. The present Remuneration Committee consists of the following members: Sr. No. 1. 2. 3. 4. Name Mr. Bhasker Kondapally Mr. Mohana Velagapudi Mr. P.V.S. Raju Dr. Nageshwar Reddy Designation in the Committee Chairman Member Member Member Nature of Directorship Independent Director Independent Director Non- Executive Director Independent Director

The scope of Remuneration Committee shall include but shall not be restricted to the following: 1. 2. 3. to ensure that our Company has formal and transparent procedures for the selection and appointment of new directors to the board and succession plans; to develop and implement a plan for identifying and assessing competencies of directors; to identify individuals who are qualified to become board members, taking into account a variety of factors, including, but not limited to:    4. 5. the range of skills currently represented on the board; the skills, expertise, experience (including commercial and/or industry experience) and particular qualities that make individuals suitable to be a director of our Company; and/or the individual’s understanding of technical, accounting, finance and legal matters;

to make recommendations for the appointment and removal of directors; ensure that our Company has in place a programme for the effective induction of new directors; 143

6. 7.

to review, on an ongoing basis, the structure of the board, its committees and their inter relationship; To recommend to the Board, the remuneration packages of our Company’s Managing/Joint Managing/ Deputy Managing/ Whole-time / Executive Directors, including all elements of remuneration package (i.e. salary, benefits, bonuses, perquisites, commission, incentives, stock options, pension, retirement benefits, details of fixed component and performance linked incentives along with the performance criteria, service contracts, notice period, severance fees etc.); To be authorised at its duly constituted meeting to determine on behalf of the Board of Directors and on behalf of the shareholders with agreed terms of reference, our Company’s policy on specific remuneration packages for Company’s Managing/Joint Managing/ Deputy Managing/ Whole-time / Executive Directors, including pension rights and any compensation payment; To implement, supervise and administer any share or stock option scheme of our Company

8.

9.

10. To attend to any other responsibility as may be entrusted by the Board within the terms of reference. Meeting of the Remuneration Committee The Committee is required to meet at least once a year. d. Compensation/ Selection Committee

The Compensation / Selection Committee was reconstituted pursuant to the Board meeting held on October 08, 2010. The Compensation/Selection Committee is responsible for overseeing the implementation of ESOP Scheme 2010. Sr. No. 1. 2. 3. 4. Name Mr. Mohana Velagapudi Mr. Satyanarayana Bolli Mr. Vivek Mundra Mr. Bhasker Kondapally Designation in the Committee Chairman Member Member Member Nature of Directorship Independent Director Chairman and Managing Director Independent Director Independent Director

The terms of reference of this committee include the following: a) The quantum of options to be granted under the Scheme per employee and in aggregate; b) The conditions under which option vested in employees may lapse in case of termination of employment for misconduct; c) The exercise period within which the employee should exercise the option and that option would lapse on failure to exercise the option within the exercise period; d) The specified time period within which the employee shall exercise the vested options in the event of termination or resignation of an employee; e) The right of an employee to exercise all the options vested in him at one time or at various points of time within the exercise period; f) The procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of corporate actions such as rights issues, bonus issues, merger, sale of division and others. In this regards, the following be taken into consideration by the compensation committee; g) The number and the price of ESOS shall be adjusted in a manner such that total value of the ESOS remains the same after the corporate action; h) Global best practices in this area including the procedures followed by the derivative markets in India and abroad shall be considered; i) The vesting period and the life of the options shall be left unaltered as far as possible to protect the rights of the option holders; j) The grant, vest and exercise of option in case of employees who are on long leave; k) Fringe benefit tax on issue of options or the shares upon exercise of the options; l) To observe and adopt compliance of section 314 (1B) read with Director’s Relatives (Office or Place of Profit) Rules, 2003.

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e.

IPO Committee

An IPO Committee was constituted vide Board Resolution dated October 08, 2010 to assist the Audit Committee in overseeing and will inform the Audit Committee when money is raised through this Issue. They shall further apprise the Audit Committee of funds received, utilized, pending for project implementation etc. for the information of the Stock Exchanges and Investors and shall keep the information updated through our Company’s website. The composition of the IPO Committee is as follows: Sr. No. 1. 2. 3. 4. 5. Name Mr. Satyanarayana Bolli Ms. Sridevi Bolli Mr. P.V.S. Raju Mr. Ajay Mittal Mr. Satish Deshpande Designation in the Committee Chairman Member Member Member Member Nature of Directorship Chairman and Managing Director Whole Time Director Non-Executive Director Nominee Director Nominee Director

The terms of reference of the IPO Committee of our Company includes: 1. to decide the actual size of the Issue, including any offer for sale by promoters/shareholders and/or any reservations on a firm or competitive basis as may be permitted, timing, pricing and all the terms and conditions of the Issue of the shares, including the price, and to accept any amendments, modifications, variations or alterations thereto; to appoint and enter into arrangements with book running lead manager(s), co-managers to the Issue, Underwriters to the Issue, Syndicate Members to the Issue, avisors to the Issue, Stabilizing Agent, Brokers to the Issue, Escrow Collection Bankers to the Issue, Registrars, legal advisors in relation to the Issue, advertising and/or promotion or public relations agencies and any other agencies, intermediaries or persons; to finalize, settle, to execute and deliver or arrange the delivery of the offering documents (this Draft Red Herring Prospectus, the Red Herring Prospectus, Final Prospectus - including the international wrap and final international wrap, if required, for marketing the Issue in jurisdictions outside India), memorandum of understanding with the book running lead manager(s), memorandum of understanding with the registrar, syndicate agreement, underwriting agreement, escrow agreement, stabilization agreement and all other documents, deeds, agreements and instruments as may be required or desirable in connection with the Issue of shares or the Issue by our Company; to open one or more separate current account(s)with a scheduled bank to receive applications along with application monies in respect of the Issue or any other account with any name and style as required during or after the process of the forthcoming Initial Public Offering (IPO) of our Company in such name and style as may be decided; to open one or more bank account of our Company in the name and style of “[●]” and “[●]” for the handling of refunds for the Issue; to approve/issue all notices, including any advertisement(s) in such newspapers as it may deem fit and proper about the future prospects of our Company and the proposed issue conforming to the guidelines/ regulations issued by SEBI and such other applicable authorities; to make any applications to RBI, FIPB and such other authorities, as may be required, for the purpose of Issue of shares by our Company to non-resident investors including but not limited to NRIs, FIIs, FVCI’s and other non-residents; to take necessary actions and steps for obtaining relevant approvals, consents from FIPB, SEBI, Stock Exchanges, RBI and such other authorities as may be necessary in relation to the IPO; to make applications for listing of the equity shares of our Company on one or more stock exchange(s) and to execute and to deliver or arrange the delivery of the listing agreement(s) or equivalent documentation to the concerned stock exchange(s); 145

2.

3.

4.

5. 6.

7.

8. 9.

10. to finalise the basis of allocation in consultation with the Selling Shareholders, the BRLM and the designated stock exchange and to allot the shares to the successful Allottees; 11. to enter the names of the Allottees in the Register of Members of our Company; 12. to settle any question, difficulty or doubt that may arise in connection with the IPO including the issue and allotment of the Equity Shares attached thereto, as aforesaid and to do all such acts, deeds and things as the Board may in its absolute discretion consider necessary, proper, desirable or appropriate for settling such question, difficulty or doubt; 13. to do all acts and deeds, and execute all documents, agreements, forms, certificates, undertakings, letters and instruments as may be necessary for the purpose of or in connection with the Issue; 14. to authorise and approve the incurring of expenditure and payment of fees in connection with the initial public offer of our Company; 15. to approve and adopt the preliminary offering memorandum, and offering memorandum, and any other offering document for the public issue as required under Section 60, Section 60B and other relevant provisions of the Companies Act, 1956 and to file the same with the Registrar of Companies (“ROC”) and SEBI, as the case may be, and to make any corrections or alterations therein; 16. to affix the common seal of our Company on all documents as may be required by law, in relation to the Issue, and in terms of the articles of association of our Company; 17. to do all such acts, deeds and things as may be required to dematerialise the equity shares of our Company and to sign agreements and/or such other documents as may be required with the National Securities Depository Limited, the Central Depository Services (India) limited and such other agencies, authorities or bodies as may be required in this connection; and 18. to do all such acts, deeds, matters and things as it may, in its absolute discretion, deem necessary or desirable for such purpose, or otherwise in relation to the Issue or any matter incidental or ancillary in relation to the Issue, including without limitation, allocation and allotment of the shares as permissible in law, issue of share certificates in accordance with the relevant rules. Policy on Disclosures and Internal Procedure for Prevention of Insider Trading Our Company undertakes to comply with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992 after listing of our Company’s shares on the Stock Exchanges. Our Compliance Officer, Mr. Venkatesh Ramachandran is responsible for setting forth policies, procedures, monitoring and adhering to the rules for the prevention of dissemination of price sensitive information and the implementation of the code of conduct under the overall supervision of the Board.

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Organization Structure

Our Key Managerial Personnel Our Company is managed by its Board of Directors, assisted by qualified professionals, who are permanent employees of our Company, except Mr. Nicolas Jabbour, Mr. Danis Yadegar, Mr. Michael Chadwick, and Mr. David Mogel, who are permanent employees of our Subsidiaries, having vast experience in their respective fields, including but not limited to finance, compliance and marketing. None of our Key Managerial Personnel were appointed pursuant to any arrangement or understanding with major shareholders, customers and/or suppliers. Mr. Nicolas Jabbour, Head – Systems Integration Mr. Nicolas Jabbour, aged 44 years, is the Head-Systems Integration. He holds an Engineering Degree in Telecommunications and Information Systems, with Honors and a Degree in B.S. in Math and Physics (Maths Supérueures et Maths Spéciales) from Ecole Supérieure d'Ingénieurs de Beyrouth - Université Saint Joseph, twin program with Ecole Centrale de Lyon, France. He has been associated with Prolifics since the last 16 years and has more than 20 years of experience in the field of information technology. He has held a variety of enterprise leadership roles spanning the web sphere consulting division, technology and solutioning group for strategic customers working closely with IBM. Prior to joining Prolifics, in his role as Product Manager, he built international sales and management skills for a French telecommunication and postal services provider. In this role, he ran the product design, development and marketing strategy of a suite of products that intend to automate financial and postal services. He also held various other positions in Telecommunications and IT research at Olivetti and Sharp. The annual compensation paid to him in the calendar year 2009 – 2010 was US$ 438,571 inclusive of perquisites and other benefits. Mr. Michael Chadwick, Head - Sales & Marketing Mr. Michael Chadwick, aged 49 years, is the Head-Sales & Marketing. He is responsible for Global Sales & Marketing and Business Development of JYACC. He is a Bachelors of Science in Industrial Engineering from University of Illinois, Champaign, Illinois. He plays a vital role in the division’s growth and financial success by developing new business initiatives and key strategic alliances with partners and customers. He has been with Prolifics for several years and has over 20 years of sales experience in selling enterprise software and solutions across a wide variety of industries and vertical markets and he has also helped build an extensive network of partners enabling the AI&M practice to increase its capabilities and market reach. The remuneration paid to him in the calendar year 2009 – 2010 was US$ 446,951 inclusive of perquisites and other benefits. 147

Mr. Danis Yadegar, Head – Independent Verification & Validation Mr. Danis Yadegar, aged 55 years, is the founder of Arsin Corp. and is currently the Head-Independent Verification & Validation. He is responsible for the day-to-day operations of Arsin Corp. He holds a Bachelor's Degree in Computer Science and attended graduate school at the University of Illinois, Urbana-Champaign. He has more than 25 years of experience in all aspects of software design, development and testing with special emphasis on integration testing, scalability testing, database and user interface development. Prior to the formation of Arsin Corp., he held management positions at Hewlett Packard, Tandem Computer and Micro Focus. The remuneration paid to him in the calendar year 2009 – 2010 was US$ 217,220.33 inclusive of perquisites and other benefits. Mr. Sudhakar Vadapalli – Chief Operating Officer, Head – Application Services Mr. Sudhakar Vadapalli, aged 45 years, is the Chief Operating Officer and Head-Application Services. Having joined our Company on July 30, 2008, he is responsible for software delivery and general operations of our Company’s Application Services Practice. He holds a Post Graduate Degree in Management from XLRI (Jamshedpur) and a Degree in Engineering in Electronics & Communications from NIT (formerly REC) Warangal, India. He has over 20 years of experience in building, delivering, managing and overseeing a variety of complex software applications and products through all aspects of the end to end lifecycle phases. Prior to his association with our Company, he has held management positions in Virtusa and Accenture Services Private Limited. He was the founding member of the management team of a hi-tech start up organization that had sales & operations in UK, parts of Europe and India. In the past, he has worked on several enriching assignments in technology and management in companies like Sierra Atlantic, Sun Microsystems, Seagate and CMC Limited. The remuneration paid to him in the financial year 2009 – 2010 was Rs. 3,530,756 inclusive of perquisites and other benefits. Mr. Venkatesh Ramachandran – Chief Financial Officer Mr. Venkatesh Ramchandran, aged 35 years, is the Chief Financial Officer of our Company. Having joined our Company on March 01, 2007 he is in charge of the finance and accounts of our Company. He holds a Degree in Bachelor of Commerce from University of Madras. He is also a qualified Chartered Accountant from ICAI, Cost Accountant from the ICWAI and a Company Secretary from ICSI. He has more than 12 years of experience in finance, accounting and compliance functions. Prior to his association with our Company, he held senior positions with various companies like Spencer’s Retail, Hutch and Infrastructure Leasing & Financial Services Limited and has work experience in financial services, telecom and retail sectors. In the past, he has also worked on assignments pertaining to business acquisition, term financing, commercial, risk management, audit and taxation. The remuneration paid to him in the financial year 2009 – 2010 was Rs. 2,445,042 inclusive of perquisites and other benefits. Mr. Rama Rao Bolli – Head - Human Resource Mr. Rama Rao Bolli, aged 61 years, is also one of our Promoters. As our Head - Human Resource he is responsible for heading our human resources department and is responsible for human resources strategies related to framing human resource and personnel policies, recruitment, escalation and management of grievances and employee communication. Mr. Bolli has over 30 years of experience in Operations, Support Services and Customer Relationships in Computer Industry. He is further responsible for enriching human resource talent and to understand consumer behaviour and their preferences. Prior to joining our Company, he was a General Manager – Enterprise at Metamor Worldwide Inc from 1998 to 2001 and he has worked with Electronics Corporation of India Limited from 1972 to 1997 at various positions such as Senior Technical Manager and Senior Manager. He completed Bachelors in Engineering (Electronics & Communications) from Andhra University. The remuneration paid to him as an employee of the Company for the financial year 2009 – 2010 was Rs. 1,674,622. Mr. David Mogel – Legal Advisor Mr. David Mogel aged 52 years, is Head-Legal of our Group. He is responsible for handling the legal aspects of our Company as well as our Subsidiaries, including contracts, technology licensing, trademark and copyright matters, litigation management, mergers and acquisitions, corporate finance, information systems, compliance, real estate, 148

human resource and system administration. He holds a Bachelor’s Degree in Arts (Psychology) from Hofstra University, Hampstead, New York and a Juris Doctorate from St. John’s University School of Law, Jamaica, New York. He has 26 years of experience in the legal field. The remuneration paid to him in the calendar year 2009 – 2010 was US$ 199,536.08 inclusive of perquisites and other benefits. Relation of Key Management Personnel and Directors None of the Key Managerial Personnel are related to each other. Apart from Mr. Rama Rao Bolli who is the brother of our Chairman and Managing Director Mr. Satyanarayana Bolli and the brother-in-law of Ms. Sridevi Bolli, none of our other Key Managerial Personnel are related to our Directors. Shareholding of our Key Managerial Personnel Except as stated below, none of our Key Managerial Personnel hold any Equity Shares in our Company as on the date of this Draft Red Herring Prospectus: Sr. No 1. 2. 3. Name and Designation Mr. Sudhakar Vadapalli Mr. Venkatesh Ramachandran Mr. Rama Rao Bolli Total Number of Equity Shares 10,000 15,000 104,901 129,901

Bonus and/or Profit Sharing Plan for the Key Managerial Personnel Our Company does not have any bonus or profit-sharing plan for its Key Managerial Personnel save and except the bonus paid including under the Payment of Bonus Act to our Key Managerial Personnel. Except as stated otherwise in this Draft Red Herring Prospectus, no amount or benefit has been paid or given within the two preceding years or are intended to be given to any of our Key Managerial Personnel except the normal remuneration for services rendered as directors, officers or employees. Contingent and Deferred Compensation No contingent or deferred compensation has accrued in favour of our Key Managerial Personnel. Loans given to our Key Managerial Personnel Our Company has not advanced any loans to our Key Managerial Personnel. Changes in our Key Managerial Personnel during the past three years Except for Mr. Sudhakar Vadapalli, who joined us on July 30 2008, there have been no changes in the Key Managerial Personnel of our Company that are not in the normal course of employment, during the last three (3) years. Mr. Nicolas Jabbour, Mr. Michael Chadwick, Mr. Danis Yadegar and Mr. David Mogel were the employees of the companies acquired by us and have continued to be in employment subsequent to our acquisitions. Interest of Key Managerial Personnel Our Key Managerial Personnel, Mr. Nicolas Jabbour and Mr. Michael Chadwick are employees of our subsidiary, JYACC, appointed vide an employment agreement dated June 26, 2008. Apart from receiving basic remuneration and other benefits linked with employment, they are also entitled to receipt of an amount towards deferred sale consideration, due to them, pursuant to our acquisition of JYACC. Both Mr. Jabbour and Mr. Chadwick were the erstwhile shareholders of JYACC and had received an initial payment of US$ 11.05 million towards the Class A

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Preferred shares held by them in the year 2009. Subsequently they received US$ 0.36 million as further payment due to them towards the acquisition in the year 2010 and are due to receive a further payment in the year 2011. As such, Mr. Jabbour and Mr. Chadwick are deemed to be interested towards the aforesaid amount over and above their employment benefits. Apart from above, all our Key Managerial Personnel may be deemed to be interested to the extent of the remuneration and other benefits in accordance with their terms of employment for services rendered and reimbursement of expenses incurred by them during the ordinary course of business as officers or employees to our Company. The Key Managerial Personnel will be regarded as interested in the Equity Shares that may be allotted to them under the Employee Reservation Portion and or dividends paid or payable on the same. Furthermore, no amount or benefit has been paid or given during the preceding year to any of our key managerial personnel. Employees We believe that a motivated and empowered employee base is integral to our competitive advantage. As on September 30, 2010, we have 894 employees (including 70 under contractual employment). Employees Stock Option Scheme Our Company has formulated an Employee Stock Option Scheme, known as the “ESOP Scheme 2010” for the benefit of its employees. For further details kindly refer to the chapter titled ‘Capital Structure’ beginning on page 20 of this Draft Red Herring Prospectus. Payment of Benefits to Officers of our Company (non-salary related) Except as stated above and the payment of salaries, perquisites and reimbursement of expenses incurred in the ordinary course of business, and the transactions as enumerated in the chapter titled “Financial Statements” and the chapter titled “Our Business” beginning on pages 159 and 76 of this Draft Red Herring Prospectus, we have not paid / given any amount or benefit to the officers of our Company, within the two preceding years nor do we intend to make such payment/give such benefit to any officer as on the date of this Draft Red Herring Prospectus. Retirement Benefits Except statutory benefits upon termination of their employment in our Company or superannuation, no officer of our Company is entitled to any benefit upon termination of his employment in our Company.

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OUR PROMOTERS, PROMOTER GROUP AND GROUP COMPANIES

Our Company is promoted by Mr. Satyanarayana Bolli, Ms. Sridevi Bolli and Mr. Rama Rao Bolli (“Individual Promoters”) and Icon Investments Limited (“Corporate Promoter”). OUR INDIVIDUAL PROMOTERS Mr. Satyanarayana Bolli, Chairman and Managing Director

Voter Id No.: Not applied. Driving License No.: 315119960D

Shareholding: 16.53 % Pre-issue Equity Share holding in our Company

Ms. Sridevi Bolli, Whole-time Director Voter Id No.: FZZ4430799 Driving License No.: 2766131984

Shareholding: 19.50 % Pre-issue equity share holding in our Company.

Mr. Rama Rao Bolli Voter Id No.: AP/31/210/420441 Driving License Number: DLRA010209422006

Shareholding: 0.87 % Pre-issue equity share holding in our Company

For detailed profile and other details please refer to the chapter titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus.

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We confirm that the personal details of our Individual Promoters viz., Permanent Account Numbers, bank account numbers and passport numbers will be submitted to BSE and NSE on which our securities are proposed to be listed, at the time of filing this Draft Red Herring Prospectus with such Stock Exchanges. Our Corporate Promoter Icon Investments Limited (“Icon”) Icon Investments Limited was incorporated under the Mauritius Companies Act, 2001 on February 3, 2004. Icon is registered with the Registrar of Companies, Mauritius. There has been no change in the name of Icon subsequent to its incorporation. Upon incorporation, the company was granted a Global Business License Category 2 (“GBL 2”) by the Financial Services Commission, Mauritius and this GLB 2 was changed to a Global Business License Category 1 (“GBL 1”) on January 23, 2007. The license is valid unless suspended or revoked. Registered Office: First Island Trust Company Ltd., Suite 308, St. James Court, St. Dennis Street Port Louis, Republic of Mauritius. Business: As per the Constitution of the company the main objects of Icon are as follows: a. To engage in qualified global business as permitted under the Financial Services Development Act, 2001, the Act 2001, the Act and any other for the time being in force in the Republic of Mauritius; and b. to do all such other things as are incidental to, or the company may think conducive to the conduct, promotion or attainment of the objects of the company. The present business activity of Icon Investments Limited is as per its main objectives. Shareholding: Icon currently holds 21.54% Pre-issue equity share in our Company Shareholding Pattern: Name of Shareholder Sigma Investments Total No. of equity shares held 10,000 10,000 Shareholding (%) 100 100

Icon Investments Limited is wholly owned by Sigma Investments Limited. Sigma Investments Limited was incorporated on December 14, 2006 as a Private Company limited by shares in Port Louis, Mauritius and registered with the registrar of companies, Mauritius. The promoters of Sigma Investments Limited are Mr. Satyanarayana Bolli, Ms. Sridevi Bolli, Mr. Rama Rao Bolli and Mr. Ratnaji Bolli. Board of Directors: The board of directors of Icon Investments Limited comprise of: Name Mr. Denis Sek Sum Mr. Fung Kong Yune Kim Mr. Rama Rao Bolli Financial Information: The audited financial summary of Icon is as follows: 152 Designation Director Director Director

Particulars Income/Sales Profit / (Loss) after tax Equity Capital Reserves and surplus (excluding revaluation reserves, if any)(1) Earnings per share (Rs.) (2) Diluted Earnings per share (Rs.) (2) Net asset value or book value per share (Rs.) (2)
(1) (2)

(Amounts in Rupees million, except per share data) Fiscal Year Fiscal Year Fiscal Year ended Dec. 31, ended Dec. 31, ended Dec. 31, 2007 2008 2009 (0.65) (0.18) (0.34) 0.39 0.48 0.47 (0.62) (64.97) (64.97) (22.60) (0.96) (17.85) (17.85) (47.70) (1.25) (33.74) (33.74) (78.53)

Net of miscellaneous expenditure not written off. Face value of each equity share is US$ 1 each. Note: 1. The Delaware Corporation Code does not have requirement of the audit for privately held corporation. 2. To comply with the SEBI ICDR Regulations, figures in US$ have been converted into Indian Rupees applying an average rate of Rs.41.29, Rs.43.42, and Rs.48.35 for US$ 1 for profit and loss items for the fiscal years ended December 31, 2007, December 31, 2008 and December 31, 2009, respectively, and closing rate of Rs.39.41, Rs.48.45 and Rs.46.68 for US$1 for balance sheet items for the fiscal years ended December 31, 2007, December 31, 2008 and December 31, 2009, respectively. (Source: www.rbi.org.in)

Icon is a private company limited by shares and it has not made any public or rights issue in the preceding three years. Further, no action has been taken against Icon by any stock exchange or regulatory authority. Icon is not a sick company nor is it under winding up. We confirm that the personal details of our Corporate Promoter viz., Tax Residency Certificate, bank account number, registration number and the addresses of the Registrars of Companies will be submitted to BSE and NSE on which our securities are proposed to be listed, at the time of filing this Draft Red Herring Prospectus with such Stock Exchanges. Declaration We further confirm that, our Promoters have not been declared as willful defaulters by RBI or any other government authority and there are no violations of securities laws committed by our Promoters in the past nor any such proceedings are pending against our Promoters. Relationship of Promoters with each other and with our Directors Ms. Sridevi Bolli is the spouse of Mr. Satyanarayana Bolli; and Mr. Rama Rao Bolli is the brother of Mr. Satyanarayana Bolli. Experience of the Promoters in the business of our Company Our Promoters have an experience of over 15 years in our current lines of business. Our Promoters are further assisted by a team of qualified professionals to manage the operations of our Company. Interest of Promoters All our Promoters are interested in the promotion of our Company and are also interested to the extent of their shareholding in our Company. In case of our Individual Promoters, to the extent of shares held by their relatives from time to time, for which they are entitled to receive the dividend declared, if any, by our Company. Our Individual Promoters may also benefit from holding directorships in our Company. Our Individual Promoter may also be deemed to be interested to the extent of remuneration and/or reimbursement of expenses payable to them under the Articles/his terms of appointment. As on the date of this Draft Red Herring Prospectus, our Promoters

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together hold 7,030,431 Equity Shares of our Company. For further details please refer to the Chapter titled “Capital Structure” beginning on page 20 of this Draft Red Herring Prospectus. Except as stated hereinabove and as stated in “Annexure XV - Related Party Transactions”, in the chapter titled “Financial Statemetns” beginning on page 159 of this Draft Red Herring Prospectus, we have not entered into any contract, agreements or arrangements during the preceding two years from the date of this Draft Red Herring Prospectus in which the Promoters are directly or indirectly interested and no payments have been made to them in respect of these contracts, agreements or arrangements which are proposed to be made to them. Further, except as stated above and as stated otherwise under the paragraph titled “Shareholding of our Directors” in the chapter titled “Our Management” beginning on page 132; in “Annexure XV - Related Party Transactions” in the chapter titled “Financial Statements” beginning on page 159, and under the paragraph titled “Interest of Directors” in the chapter titled “Our Management” beginning on page 132, paragraph titled “Our Properties” in the chapter titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus, our Promoters do not have any other interests in our Company as on the date of this Draft Red Herring Prospectus. Common Pursuits There are no common pursuits between our Company and our Group Companies except as disclosed in the paragraph titled “Our Group Companies” under the chapter titled “Our Promoters, Promoter Group and Group Companies” beginning on page 151 of this Draft Red Herring Prospectus. We shall adopt the necessary procedures and practices as permitted by law to address any conflict situations, if at all and as and when they may arise. Except as stated in this section, none of our Promoters or Directors are involved with one or more ventures which are in the same line of activity or business as that of our Company. Payment or Benefit to our Promoters, Promoter Group and Group Companies No payment has been made or benefit given to our Promoters, Promoter Group or Group Companies in the two years preceding the date of this Draft Red Herring Prospectus except as mentioned / referred to in this chapter and in the chapter titled “Our Management” and in the chapter titled ‘Financial Statements’ beginning on pages 132 and 159 respectively, of this Draft Red Herring Prospectus. Further, as on the date of this Draft Red Herring Prospectus, there is no bonus or profit sharing plan for our Promoters. Related Party Transactions For details pertaining to our Related Party Transactions please refer to “Annexure XV - Related Party Transactions” under the chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus. Other Confirmations Our Company has neither made any payments in cash or otherwise to the Promoters or to firms or companies or entities in which our Promoters are interested as members, directors or promoters nor have our Promoters been offered any inducements to become directors or otherwise to become interested in any firm or company, in connection with the promotion or formation of Our Company. No interest has been charged by our Company and the members of the Group Companies. Our Promoters and Promoter Group, including relatives of the Promoters have confirmed that they have not been detained as willful defaulters by the RBI or any other governmental authority. Further, there are no violations of securities laws committed by our Promoters and Promoter Group in the past or are pending against them. Details of Companies / Entities/ Firms from which our Promoters have disassociated themselves in last 3 (three) years

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None of our Promoters have disassociated himself / herself / itself from any of the companies, firms, or other entities during the last three years preceding the date of this Draft Red Herring Prospectus. OUR PROMOTER GROUP In terms of Regulation 2(1) (za) and 2(1) (zb) of the SEBI ICDR Regulations, the following persons form a part of our Promoter Group. Individuals related to our Promoters: Relationship Father Mother Spouse Brother Sister Son Daughter Spouse’s Father Spouse’s Mother Spouse’s Brother Spouse’s Sister Mr. Satyanarayana Bolli Mr. Surya Rao Bolli Ms. Suryakantham Bolli Ms. Sridevi Bolli Mr. Ramarao Bolli, Mr. Ratnaji Rao Ms. Suryakumari Mr. Chetan Bolli Ms. Sneha Bolli Mr. N. Sambasiva Rao Ms. Narayanmma Neerukonda Mr. N. Veeranachowdary – Ms. Sridevi Bolli Mr. N. Sambasiva Rao Ms. Narayanmma Neerukonda Mr. Satyanarayana Bolli Mr. N. Veeranachowdary Mr. Chetan Bolli Ms. Sneha Bolli Mr. Surya Rao Bolli Ms. Suryakantham Bolli Mr. Rama Rao Bolli Mr. Ratnaji Rao Ms. Suryakumari Mr. Rama Rao Bolli Mr. Surya Rao Bolli Ms. Suryakantham Bolli Ms. Radhika Bolli Mr. Satyanarayana Bolli Mr. Ratnaji Rao Ms. Suryakumari Mr. Suresh Babu Bolli Ms. A. Sudha Rani Ms. G. Arunapriya Mr. D. Chella Rao Ms. D. Narayamma -

Companies, partnership firms, proprietary concerns, trusts, HUF’s related to our Individual Promoters: Nature of Relationship Any body corporate in which 10% or more of the equity share capital is held by the Promoter or an immediate relative of the promoter or a firm or Hindu Undivided Family in which the Promoter or any one or more of his immediate relative is a member Any body corporate in which a body corporate as mentioned above holds 10% or more, of the equity share capital Any HUF or firm in which the aggregate shareholding of the promoter and his immediate relatives is equal to or more than 10% Entity Sigma Investments Limited

Icon Investments Limited Nil

Companies, partnership firms, proprietary concerns, trusts, HUF’s related to our Corporate Promoter: Nature of Relationship A subsidiary or holding company of such body corporate Any body corporate which holds ten per cent or more of the equity share capital of the promoter Any body corporate in which a group of individuals or companies or combinations thereof which hold twenty percent or more of the equity share capital in that body corporate also holds twenty percent or more of the equity share capital of the issuer Entity Sigma Investments Limited Sigma Investments Limited Nil

All persons whose shareholding is aggregated for the purpose of disclosing under the heading "shareholding of the promoter group": NIL OUR GROUP COMPANIES

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As specified in the SEBI ICDR Regulations, the companies, firms and other ventures, promoted by our Promoters, other than our Promoter Company and our Subsidiaries, which form part of our Group Companies are as follows: Sigma Investments Limited (“Sigma”) Sigma was incorporated on December 14, 2006 as a Private Company limited by shares in Port Louis, Mauritius and registered with the Registrar of Companies, Mauritius, under the Mauritius Companies Act, 2001. The Registered Office Sigma is located at First Island Trust Company Limited, St. James Court, Suite 308, St. Denis Street, Port Louis, Republic of Mauritius. Sigma is currently engaged in qualified global business as permitted under the Financial Services Development Act 2001, the Companies Act and other laws for the time being in force in the Republic of Mauritius. The Registered Agent of Sigma is First Island Trust Company Limited. The Registered Office of the Registered Agent is located at First Island Trust Company Limited, St. James Court, Suite 308, St. Denis Street, Port Louis, Republic of Mauritius. The objects for which the Sigma is established are: (a) To engage in qualified global business as permitted under the Financial Services Development Act 2001 and other laws for the time being in force in the Republic of Mauritius; (b) To do all such other things as are incidental to or Sigma may think conductive the conduct, promotion or attainment of the objects of the Company. Shareholding Pattern The shareholding pattern of Sigma as on the date of this Draft Red Herring Prospectus is as mentioned below: Name of the Shareholder Mr. Satyanarayana Bolli Ms. Sridevi Bolli Mr. Rama Rao Bolli Mr. Ratnaji Rao Bolli Total Board of Directors As on the date of this Draft Red Herring Prospectus Mr. Rama Rao Bolli is the sole director on the Board of Directors of Sigma. Interest of our Promoters As on the date of this Draft Red Herring Prospectus, our Promoters jointly hold 70.0% of the issued and paid up capital of Sigma. Except to the extent of their shareholding our Promoters have no other interest in Sigma. Financial Information As per the Mauritius Financial Services Development Act, 2001 a private company limited by shares holding a Global Business License Category 2 license is required to reflect its financial position with the Registered Agent but is not required to file accounts with the authorities. Sigma is an unlisted company and has not made any public or rights issue in the immediately preceding three years. Further, no action has been taken against Sigma by any stock exchange or regulatory authority. Sigma is not a sick company nor is it under winding up. Defunct / Struck-off Companies None of our Promoters or Promoter Group or Group Companies has become defunct in the five years preceding the filing of this Draft Red Herring Prospectus. Sales between Group Companies, Subsidiaries 156 Number of Shares 20 20 30 30 100 Percentage of Shareholding 20 20 30 30 100

There have been no sales and purchases between Group Companies and Subsidiaries, when such sales or purchases exceed in value in the aggregate 10% of the total sales or purchases of our Company except as disclosed in “Annexure XV - Related Party Transactions” under chapter titled “Financial Statements” beginning on pages 159 of this Draft Red Herring Prospectus. Interests of our Promoters and Group Companies All our Promoters and Group Companies are interested to the extent of their shareholding of Equity Shares from time to time, and in case of our Individual Promoters, also to the extent of shares held by their relatives from time to time, for which they are entitled to receive the dividend declared, if any, by our Company. Our Individual Promoters may also benefit from holding directorship in our Company. Our Individual Promoter may also be deemed to be interested to the extent of remuneration and/or reimbursement of expenses payable to them under the Articles/ terms of appointment. As on the date of this Draft Red Herring Prospectus, our Promoters together hold 7,030,431 Equity Shares of our Company. Except as stated hereinabove and as stated in “Annexure XV - Related Party Transactions” under chapter titled “Financial Statements” beginning on pages 159 of this Draft Red Herring Prospectus, we have not entered into any contract, agreements or arrangements during the preceding two years from the date of this Draft Red Herring Prospectus in which the Promoters are directly or indirectly interested and no payments have been made to them in respect of these contracts, agreements or arrangements which are proposed to be made to them. Further, except as stated above and as stated otherwise under the paragraph titled “Shareholding of our Directors” in the chapter titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus; in “Annexure XV - Related Party Transactions” under chapter titled “Financial Statements” beginning on pages 159 of this Draft Red Herring Prospectus, and under the paragraph titled “Interest of Directors” in the chapter titled “Our Management” beginning on page 132, paragraph titled “Our Properties” in the chapter titled “Our Business” beginning on page 76, our Promoters do not have any other interests in our Company as on the date of this Draft Red Herring Prospectus. Further, except as disclosed above and in the audited restated consolidated and unconsolidated financial statements of our Company under “Annexure XV - Related Party Transactions” under chapter titled “Financial Statements” beginning on pages 159 of this Draft Red Herring Prospectus, our Group Companies and associates have no business interest in our Company. Related Party Transactions For details on our related party transactions please refer to the paragraph titled “Our Properties” in chapter titled “Our Business” beginning on page 76 of this Draft Red Herring Prospectus, paragraph titled “Interest of Directors” in the chapter titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus and “Annexure XV - Related Party Transactions” in chapter titled “Financial Statements” beginning on pages 159 of this Draft Red Herring Prospectus and paragraph titled “Interest of Promoters” under this chapter beginning on page 151 of this Draft Red Herring Prospectus and under “Annexure XV - Related Party Transactions” under chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus . Common Pursuits There exists no conflict of interest arising out of common pursuits between our Group Companies and our Company. Litigation For details relating to legal proceedings involving our Promoters and our Group Companies, please refer to the chapter titled “Outstanding Litigation and Material Developments” beginning on page 250 of this Draft Red Herring Prospectus.

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DIVIDEND POLICY

The declaration and payment of dividends will be recommended by our Board and approved by our shareholders, at their discretion and will depend on a number of factors, including but not limited to our profits, capital requirements and overall financial condition. The Board may also from time to time pay interim dividends. All dividend payments are made in cash/cheque/demand draft to the shareholders of our Company. The dividends declared by our Company during the last five fiscal years have been presented below: (Amounts in Rupees Millions, except share and per share data) As at 31 March Particulars Equity share capital Face value (Rs.) Rate of dividend % Amount of dividend* 2006 118.77 10.00 10.00% 5.54 2007 118.77 10.00 10.00% 11.88 2008 118.77 10.00 0.00% 2009 118.77 10.00 0.00% 2010 120.28 10.00 0.00% As at 30 June 2010 120.28 10.00 0.00% -

* Payment of dividend is at the rate of 10% on the amount paid up at prorata from the date of allotment. Note 1: The figures disclosed above are based on the restated financial information of Semantic Space Technologies Limited. Note 2: The Board of directors of the Company in their meeting dated 4 September 2008 had proposed for dividend of Rs.5.93 Million for the year 2008. However, the same was not approved by the shareholders in Annual General Meeting for that year and accordingly, the provision for the same in the financial statement was reversed in the subsequent year. The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividend amounts, if any, in the future.

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SECTION V – FINANCIAL INFORMATION
FINANCIAL STATEMENTS Auditors’ Report

The Board of Directors Semantic Space Technologies Limited 1 We have examined the attached restated consolidated financial information of Semantic Space Technologies Limited (‘the Company’) and its subsidiaries (Collective referred to as the ‘Group’), as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II to the Companies Act, 1956, as amended (‘the Act’) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, issued by Securities and Exchange Board of India (“SEBI”) in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992 (the ‘SEBI Regulations’), and in terms of our engagement agreed upon with you in accordance with our engagement letter dated 16 September 2010 in connection with the proposed issue of equity shares of the Company. These information have been extracted by the Management from the consolidated financial statements for the years ended 31 March 2007, 2008, 2009, 2010 and for the quarter ended 30 June 2010 which have been audited by us. In accordance with the requirements of Paragraph B, Part II of Schedule II of the Act, the SEBI Regulations, the Guidance note on ‘Reports in Company’s Prospectus (Revised)’ issued by the Institute of Chartered Accountants of India (‘ICAI’) to the extent applicable, and the terms of our engagement agreed with you, we further report that: (a) The Restated Consolidated Summary Statement of Assets and Liabilities of the Company as at 31 March 2007, 2008, 2009, 2010 and as at 30 June 2010 examined by us, as set out in Annexure I to this report read with the significant accounting policies and related notes in Annexure V are after making such adjustments and regroupings as in our opinion are appropriate and more fully described in Notes to the Restated Consolidated Summary Statements enclosed as Annexure IV to this report. (b) The Restated Consolidated Summary Statement of Profits or Losses of the Company for the years ended 31 March 2007, 2008, 2009, 2010 and for the quarter ended 30 June 2010 are as set out in Annexure II to this report read with the significant accounting policies and related notes in Annexure V are after making such adjustments and regroupings as in our opinion are appropriate and more fully described in Notes to the Restated Consolidated Summary Statements enclosed as Annexure IV to this report. (c) Based on the above, we are of the opinion that the restated consolidated financial information have been made after incorporating: i. Adjustments for the changes in accounting policies retrospectively in respective financial years / period to reflect the same accounting treatment as per the changed accounting policy for all the reporting periods. ii. Adjustments for the material amounts in the respective financial years / period to which they relate. iii. And there are no extra-ordinary items that need to be disclosed separately in the accounts and qualification requiring adjustments. (d) We have also examined the following consolidated financial information as set out in Annexures prepared by the Management and approved by the Board of Directors relating to the Company and its subsidiaries for the years ended 31 March 2007, 2008, 2009, 2010 and for the quarter ended 30 June 2010: i. Annexure III containing statement of consolidated cash flows, as restated;

2

3

159

ii. Annexure VI containing statement of accounting ratios, as restated; iii. Annexure VII containing details of other income, as restated; iv. Annexures VIII and VIIIA containing details of secured loans, as restated; v. Annexure IX containing details of unsecured loans, as restated; vi. Annexure X containing details of investments, as restated; vii. Annexure XI containing statement of sundry debtors, as restated; viii. Annexure XII containing statement of loans and advances, as restated; ix. Annexure XIII containing details of contingent liabilities, as restated; x. Annexure XIV containing capitalisation statement as at 30 June 2010;

xi. Annexure XV containing details of list of related parties, significant transactions and balances outstanding with them; and xii. Annexure XVI containing details of dividend.

In our opinion, the above financial information contained in Annexure I to XVI of this report read along with the significant accounting policies and related notes (refer Annexure V) and Notes to the Restated Consolidated Summary Statements (refer Annexure IV) are prepared after making adjustments and regrouping as considered appropriate and have been prepared in accordance with Paragraph B, Part II of Schedule II of the Act, the SEBI Regulations and the Guidance note on ‘Reports in Company’s Prospectus (Revised)’ issued by the ICAI to the extent applicable, as amended from time to time, and in terms of our engagement as agreed with you. Our report is intended solely for use of the Management and for inclusion in the Draft Red Herring Prospectus in connection with the proposed issue of equity shares of the Company. Our report should not to be used, referred to or distributed for any other purpose without our written consent.

for B S R & Company Chartered Accountants Firm Registration Number: 128032W

Sriram Mahalingam Partner Membership No: 49642

Place :Hyderabad Date : 10 November 2010

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ANNEXURE - I STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES, AS RESTATED (Amount in Rupees Millions except share and per share data) As at 31 March As at 2007 2008 2009 2010 30 June 2010

Particulars 1. FIXED ASSETS : i) Gross block Less : Accumulated depreciation / amortisation Net block ii) Capital work-in-progress Total 2. INVESTMENTS 3. GOODWILL 4. CURRENT ASSETS, LOANS AND ADVANCES : a) Unbilled revenue b) Sundry debtors c) Cash and bank balances d) Loans and advances Total 5. DEFERRED TAX ASSET 6. LIABILITIES AND PROVISIONS : a) Secured loans b) Unsecured loans c) Current liabilities and provisions Total 7. DEFERRED TAX LIABILITY SHARE HOLDERS' FUNDS (1+2+3+4+5-6-7) REPRESENTED BY 8. SHARE CAPITAL a) Equity share capital

84.29 (27.35) 56.94 10.55 67.49 245.39 78.21

116.53 (37.90) 78.63 52.23 130.86 153.62 110.86

335.61 (128.28) 207.33 207.33 1,325.35

318.54 (148.05) 170.49 170.49 1,287.81

319.51 (152.27) 167.24 167.24 1,461.16

131.47 435.34 22.89 589.70 -

2.32 138.01 610.56 47.60 798.49 -

83.08 686.37 128.76 93.18 991.39 0.08

78.49 528.49 95.95 107.93 810.86 0.08

70.15 717.32 87.22 112.64 987.33 3.03

5.56 92.09 97.65 9.79 873.35

18.10 129.62 147.72 6.49 1,039.62

544.15 620.46 1,164.61 6.40 1,353.14

353.85 22.57 385.94 762.36 6.41 1,500.47

306.67 23.30 668.90 998.87 5.92 1,613.97

118.77

118.77

118.77

120.28

120.28

754.58 920.85 1,234.37 1,380.19 1,493.69 9. RESERVES AND SURPLUS SHARE HOLDERS' FUNDS (8+9) 873.35 1,039.62 1,353.14 1,500.47 1,613.97 Note: The above statement should be read with the significant accounting policies and notes to restated summary statements as appearing in Annexure V.

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ANNEXURE – II STATEMENT OF CONSOLIDATED PROFITS AND LOSSES, AS RESTATED (Amount in Rupees Millions except share and per share data) For the quarter For the year ended 31 March ended 2007 2008 2009 2010 30 June 2010

Particulars

I. INCOME Income from software development services Income from product sales Other income TOTAL II. EXPENDITURE Product cost Personnel expenses Operating and other expenses Depreciation and amortisation Interest and finance cost TOTAL

813.82 15.38 829.20

935.08 18.43 953.51

1,859.21 663.53 88.03 2,610.77

2,349.35 1,258.92 3.16 3,611.43

632.87 533.49 1.01 1,167.37

360.85 146.47 5.07 0.47 512.86

492.01 257.74 10.63 3.16 763.54

515.36 1,418.07 418.03 38.48 34.69 2,424.63

1,075.33 1,584.36 544.89 47.37 44.32 3,296.27

480.51 408.55 178.38 10.60 7.25 1,085.29

316.34 189.97 186.14 315.16 82.08 Profit before tax Less: Provision for tax a) Current tax- domestic 5.36 20.58 22.93 35.57 8.90 b) Current tax- foreign 2.83 5.59 3.96 7.41 c) Fringe benefit tax 0.93 0.98 1.06 d) Deferred tax-domestic 0.66 (0.52) 4.53 0.01 (0.49) e) Deferred tax-foreign 7.87 (2.19) (4.70) (2.95) f) MAT credit (entitlement)/utilisation (5.50) (20.97) 4.36 0.42 Net profit after tax, as restated 301.52 173.79 177.70 271.26 68.79 Add: Balance in profit and loss account brought forward, 281.34 568.96 735.81 920.45 1,191.71 as restated Amount available for appropriation 582.86 742.75 913.51 1,191.71 1,260.50 Appropriations: a) Proposed dividend 11.88 5.93 (5.93) b) Provision for corporate dividend tax 2.02 1.01 (1.01) Balance carried forward to balance sheet, as restated 568.96 735.81 920.45 1,191.71 1,260.50 Note: The above statement should be read with the significant accounting policies and notes to restated summary statements as appearing in Annexure V.

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ANNEXURE – III STATEMENT OF CONSOLIDATED CASH FLOWS, AS RESTATED (Amount in Rupees Millions except share and per share data) For the quarter For the year ended 31 March Particulars ended 2007 2008 2009 2010 30 June 2010 A) Cash flow from operating activities Net profit before tax, as restated 316.34 189.97 186.14 315.16 82.08 Adjustments for: Depreciation and amortisation 5.07 10.63 38.48 47.37 10.60 Interest and finance charges 0.47 2.71 33.86 40.59 6.57 Interest income (0.16) (1.65) (0.23) (0.34) (0.17) Dividend income (13.34) (14.98) (4.88) Unrealised foreign exchange (gain) / loss (0.17) 34.90 (3.02) 0.77 (2.16) Employee stock compensation cost 1.12 Bad debts 2.92 15.57 9.74 (0.17) Operating profit before changes in working capital 308.21 224.50 267.04 413.29 96.75 Adjustments for: (Increase) / decrease in unbilled revenue (2.32) (17.76) 5.36 8.22 (Increase) / decrease in sundry debtors (12.23) (9.77) (162.98) 144.50 (184.14) (Increase) / decrease in loans and advances 62.08 (19.09) 17.30 (3.36) (8.76) Increase / (decrease) in current liabilities and (38.70) (4.60) 41.84 (119.17) 160.00 provisions Cash inflow from operating activities 319.36 188.72 145.44 440.62 72.07 Adjustments for: Income-tax paid net (4.76) (9.16) (25.61) (78.22) (15.75) Fringe benefit tax paid (0.86) (1.09) (1.40) (0.18) Net cash flow generated from operating activities 313.74 178.47 118.43 362.22 56.32 - (A) B) Cash flows from investing activities Purchase of fixed assets (46.94) (74.55) (44.49) (20.49) (6.78) Proceeds from sale of fixed assets 0.40 1.48 0.84 Payment towards acquisition of subsidiaries net of (67.28) (955.50) (211.78) (1.60) cash Investments in mutual funds (122.05) (115.39) Proceeds from sale of mutual funds 109.93 207.16 153.62 Interest received 0.14 1.36 0.59 0.34 0.17 Dividend received from mutual funds 13.17 15.15 4.88 Net cash flow generated from/(used in) investing (113.03) 33.73 (840.50) (230.45) (7.37) activities - (B) C) Cash flows from financing activities Proceeds from issue of share capital 20.00 Proceeds from secured loan 13.09 404.30 52.07 38.12 Repayment of secured loans (3.12) (95.31) (189.68) (91.34) Proceeds from unsecured loan 23.71 Interest paid (0.47) (2.71) (20.48) (31.78) (7.93) Dividend paid (including tax thereon) (6.32) (13.90) Net cash flow generated from/(used in) financing (9.91) (3.52) 288.51 (125.68) (61.15) activities - (C) Net increase / (decrease) in cash and cash 190.80 208.68 (433.56) 6.09 (12.20) equivalents (A+B+C) Exchange (loss)/gain on cash and cash equivalents (0.59) (33.46) (48.24) (38.90) 3.47 Cash and cash equivalents at the beginning of the 245.13 435.34 610.56 128.76 95.95 year / period Cash and cash equivalents at the end of the year / 435.34 610.56 128.76 95.95 87.22 period Note: The cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 on Cash Flow Statements as prescribed under by the Companies (Accounting Standards) Rules, 2006.

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ANNEXURE – IV STATEMENT OF ADJUSTMENTS FOR RESTATED FINANCIAL STATEMENTS (Amount in Rupees Millions except share and per share data) For the quarter For the year ended 31 March ended 2007 2008 2009 2010 30 June 2010 305.72 174.18 176.69 270.89 64.42

Particulars Profit after tax as per audited consolidated profit and loss account Adjustments on account of: 1) (Short)/ excess tax provision adjusted 2) Transition effect of revised AS-15 3) Deferred tax impact Profit after tax, as restated

(5.36) 1.75 (0.59) 301.52

(0.39) 173.79

1.01 177.70

0.37 271.26

4.37 68.79

Notes: 1) (Short)/ excess tax provision adjusted The Company during the quarter ended 30 June 2010 provided for an amount of Rs.4.37 Mn as income tax provision with respect to earlier years. Accordingly, in the preparation of the Restated Summary Statements, the effect of these items has been appropriately adjusted to the results of the respective year/ period to which these items pertain to with a corresponding adjustment to the respective asset / liability balances.

2) Transitional adjustment pursuant to AS-15 (revised) Effective 1 April 2007, the Company adopted the revised accounting standard on employee benefits. Pursuant to the adoption, the transitional obligations of the Company amounted to Rs 1.75 Mn which was adjusted against the opening balance of the profit and loss account for the year ended 31 March 2008. This obligation has now been adjusted against the profit for the year ended 31 March 2007.

3) Deferred tax Deferred tax represents the tax impact on the transitional provision for AS-15(revised)

164

ANNEXURE V SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (All amounts in Rupees Millions except share and per share data) 1. Significant accounting policies

(a) Basis of preparation The Restated Consolidated Summary Statement of assets and liabilities of Semantic Space Technologies Limited (‘SSTL’ or ‘the Company’), the parent company and all of its subsidiaries (collectively referred to as “Group”) as at 30 June 2010, 31 March 2010, 31 March 2009, 31 March 2008 and 31 March 2007 and the related restated consolidated summary statement of profits and losses and cash flows for years/period ended on that date (hereinafter collectively referred to as “Restated Consolidated Summary Statements”) relate to Semantic Space Technologies Limited (“the Company”) and have been prepared specifically for inclusion in the offer document to be filed by the Company with the Securities and Exchange Board of India (“SEBI”) in connection with its proposed Initial Public Offering. These Restated Consolidated Summary Statements have been prepared to comply in all material respects with the requirements of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the “ SEBI Regulations”). The Restated Consolidated Summary Statements have been prepared based on the consolidated financial statements of the Group prepared and presented in accordance with the Indian Generally Accepted Accounting Principles (“GAAP”) under the historical cost convention on the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 211 (3C) of the Companies Act, 1956, other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 1956, to the extent applicable. The financial statements are presented in Indian Rupees (Millions) except share and per share data. (b) Use of estimates The preparation of the Restated Consolidated Summary Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the Restated Consolidated Summary Statements and reported amounts of revenues and expenses for the year/ period. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. (c) Principles of consolidation The consolidated financial statements include the financial statements of Semantic Space Technologies Limited, the parent company and all of its subsidiaries (collectively referred to as “the Group” or “Semantic Space Group”), in which SSTL has more than one-half of the voting power of an enterprise or where it controls the composition of the Board of Directors. The Restated Consolidated Summary Statements have been prepared on the following basis:  The financial statements of the parent company and the subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances/ transactions and resulting unrealised profits in full. Unrealised losses resulting from intra-group transactions have also been eliminated except to the extent that recoverable value of related assets is lower than their cost to the Group. The amounts shown in respect of reserves comprise the amount of the relevant reserves as per the balance sheet of the parent company and its share in the post-acquisition increase in the relevant reserves of the subsidiaries.

165

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) (c) Principles of consolidation (continued)

The excess / deficit of cost to the parent company of its investment in the subsidiaries and associates over its portion of equity at the respective dates on which investment in such entities were made is recognised in the financial statements as goodwill / capital reserve. The parent company’s portion of equity in such entities is determined on the basis of the book values of assets and liabilities as per the financial statements of such entities as on the date of investment and if not available, the financial statements for the immediately preceding period are adjusted for the effects of significant transactions, up to the date of investment. Minority interest in the net assets of consolidated subsidiaries consists of: (a) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and (b) the minorities’ share of movements in equity since the date the parent subsidiary relationship came into existence. The Restated Consolidated Summary Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

(d) Fixed assets and depreciation Fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. Advances paid towards the acquisition of the fixed assets outstanding at each balance sheet date and the cost of fixed assets not ready for their intended use before such date are disclosed under capital work-in-progress. Depreciation on fixed assets is provided using the straight-line method over the estimated useful lives of assets as determined by management. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956, are considered as minimum rates. Pursuant to this policy, the depreciation on fixed assets of the Company have been provided at the rates prescribed in Schedule XIV of the Companies Act, 1956, except for assets at the branch office in California, USA and the US subsidiaries, for which the management has estimated to be lower than that envisaged by the aforesaid Schedule XIV. The Management’s estimates of the useful lives for various categories of fixed assets are given below: For SSTL Asset Data processing equipment Furniture and fixtures Leasehold improvement Computer software and licenses Plant & machinery/ electrical installations/ office equipment Vehicles For Subsidiaries and US Branch office Asset Estimated useful life (in years) Data processing equipment 3-5 Furniture and fixtures 5-7 Leasehold improvement 5-7 Computer software and licenses 3-5 Plant & machinery/ electrical 20-22 installations/ office equipment

Estimated useful life (in years) 6-7 15-16 5 5-8 20-22 9-11

166

ANNEXURE V (continued)

SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) (d) Fixed assets and depreciation (continued) Leasehold improvements are amortised over the primary period of the lease or the useful life of assets, whichever is shorter. Depreciation is calculated on a pro-rata basis from the date of installation till the assets are sold or disposed. Individual assets costing less than Rs 5,000 are depreciated in full in the year/ period of purchase. (e) Intangible assets and amortisation Internally generated intangible assets are stated at cost and are capitalised if it can be measured reliably during the development phase and when it is probable that future economic benefits that are attributable to the assets will flow to the company. Intangible assets are amortised over their estimated useful life (5 – 10 years) on a straight line basis. (f) Investments Long-term investments are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment. Current investments are carried at the lower of cost or market value. The comparison of cost and market value is done separately in respect of each category of investment. (g) Employee benefits Contribution payable to the recognised provident fund in India and 401K plan in United Sates of America, which are defined contribution schemes are made on a monthly basis at a predetermined rates to the appropriate authorities and are charged to the profit and loss account. Provision for gratuity and leave encashment, which are defined benefit schemes, are charged to the profit and loss account based on actuarial valuations at the balance sheet date, carried out by an independent actuary. (h) Revenue recognition Revenue is primarily derived from software development and related technical services. Arrangements with customers for software development and related technical services are either fixed-price or on a time-and-material basis. Revenue on time-and-material contracts are recognised as the related services that are performed and revenue from the end of the last billing to the balance sheet date is recognised as unbilled revenues. Revenue from fixed-price contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognised based upon the percentage of completion. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Earnings in excess of billings are classified as Unbilled Revenue while billings in excess of earnings are classified as Unearned Revenue. Revenue from sale of licenses for software applications is recognised on the transfer of the title in the user license to the customer. Dividend income is recognised when the unconditional right to receive the income is established. Interest income is recognised on time proportion method based on the underlying rates of interest.

167

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) (i) Foreign currency transactions, balances and translation of financial statements of foreign subsidiaries Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions or at an average monthly rate that approximates the actual rate at the date of transaction. Exchange differences arising on foreign currency transactions settled during the year/ period are recognized in the profit and loss account. Monetary assets and liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resultant exchange differences are recognized in the profit and loss account. Non-monetary assets are recorded at the rates prevailing on the date of the transaction. Exchange differences arising on a monetary item that, in substance, forms part of the enterprise’s net investment in a nonintegral operation are accumulated in a foreign currency translation reserve in the enterprise’s financial statements until the disposal of the net investment, at which time they will be recognised as income or expense. The Company’s foreign branch in US has been identified as integral operation in accordance with the requirements of AS-11 “The Effect of Changes in Foreign Exchange Rates”. The financial statements of foreign integral operation are translated into Indian Rupees as follows:      Revenue items, except depreciation are translated at the respective monthly average rates. Depreciation is translated at the rates used for the translation of the values of the assets on which depreciation is calculated. Monetary items are translated using the closing rate. Non-monetary items are translated using the exchange rate at the date of transaction i.e., the date when they were acquired. The net exchange difference resulting from the translation of items in the financial statements of foreign integral operations is recognised as income or as expense for the year/ period. Contingent liabilities are translated at the closing rate.

The Company’s foreign subsidiaries have been identified as non- integral foreign operations in accordance with the requirements of AS-11 “The Effect of Changes in Foreign Exchange Rates”. The financial statements of non integral foreign operations are translated into Indian Rupees as follows:    All assets and liabilities, both monetary and non-monetary, are translated using the closing rate. Income and Expense items are translated at the average rate for the year/ period; and All resulting net exchange differences are accumulated in a foreign currency translation reserve in the enterprise financial statements until the disposal of the net investment, at which time they should be recognised as income or as expenses. Contingent liabilities are translated at the closing rate.

 (j)

Income-tax expense Income tax expense comprises of current, deferred and fringe benefit tax. Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the entities in the Group.

168

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) (j) Income-tax expense (continued) Deferred tax Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period which originate during the year/ period but reverse after the tax holiday period. The deferred tax charge or benefit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date and written-down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised. Deferred tax consequences of timing differences which originate during the tax holiday period and reverse after the tax holiday period are recognised in the year/ period in which the timing differences originate. The break-up of the major components of the deferred tax assets and liabilities as at the balance sheet date have been arrived at after setting off deferred tax assets and liabilities where the group has a legally enforceable right to set-off assets against liabilities, and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws. Minimum Alternate Tax (MAT) Credit entitlement MAT credit entitlement represents amounts paid in a year/ period under Section 115 JA/JB of the Indian Income Tax Act, 1961 (‘IT Act’), in excess of the tax payable, computed on the basis of normal provisions of the IT Act. Such excess amount can be carried forward for set off against future tax payments for ten succeeding years in accordance with the relevant provisions of the IT Act. Since such credit represents a resource controlled by the Group as a result of past events and there is evidence as at the reporting date that the Group will pay normal income tax during the specified period, when such credit would be adjusted, the same has been disclosed as “MAT Credit entitlement”, under “Loans and Advances” in balance sheet with a corresponding credit to the profit and loss account, as a separate line item. Such assets are reviewed as at each balance sheet date and written down to reflect the amount that will not be available as a credit to be set off in future, based on convincing evidence and on the applicable taxation law then in force. Fringe benefit tax Consequent to the introduction of Fringe Benefit Tax (“FBT”) effective 1 April 2005, the Company provides for and discloses FBT in accordance with the provisions of Section 115 WC of the Income-tax Act, 1961 and the guidance note on FBT issued by the ICAI. Fringe benefit tax was abolished with effect from 1 April 2010. (k) Borrowing cost Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of such asset. A qualifying asset is one that necessarily takes substantial period of time i.e., more than 12 months to get ready for its intended use. All other borrowing costs are charged to profit and loss account.

169

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) (l) Earnings per share The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the year/ period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year/ period. For the purpose of calculating diluted earnings per share, net profit after tax for the year/ period and the weighted average number of shares outstanding during the year/ period are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. The diluted potential equity shares have been adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). (m) Provisions and contingent liabilities The Group creates a provision when there is a present obligation as a result of a past or obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation. (n) Impairment of assets The Group assesses at each balance sheet date whether there is any indication that an asset including goodwill may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. (o) Leases Leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight line basis over the lease term. (p) Stock based compensation As prescribed by the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India and related interpretations, the Company applies the intrinsic value method of accounting to account for stock options issued to the employees of the Company. The excess of the intrinsic value of shares, at the date of grant of options under the Employee stock option schemes, over the exercise price is treated as employee compensation and amortised over the vesting period.

170

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 2. Note on acquisition of subsidiaries The balance sheet includes Goodwill arising on consolidation amounting to Rs.1,461.16 million as of 30 June 2010. The details of movement of goodwill on consolidation during the 4 years ended 31 March 2010 and during the quarter ended 30 June 2010 are as follows: Year/period ended 31-Mar-07 Particulars Goodwill on acquisition (Refer note 1) Translation adjustment Balance as at 31 March 2007 Earn-out consideration Translation adjustment Balance as at 31 March 2008 Earn-out consideration Goodwill on acquisition (Refer note 2) Translation adjustment Goodwill on business purchase Balance as at 31 March 2009 Earn-out consideration Translation adjustment Amortisation of goodwill on business purchase Balance as at 31 March 2010 Earn-out consideration Translation adjustment Goodwill on business purchase Balance as at 30 June 2010 Arsin 79.85 (1.64) 78.21 39.14 (6.50) 110.86 32.61 30.45 173.92 (19.83) 154.09 4.98 159.07 Prolifics 963.92 185.44 2.07 1,151.43 115.43 (131.06) (2.07) 1,133.72 125.36 36.67 6.34 1,302.09 Cumulative total 78.21 110.86 1,325.35 1,287.81 1,461.16

31-Mar-08

31-Mar-09

31-Mar-10

30-Jun-10

Note 1 On 29 December 2006, the Group acquired 100% of equity interest in the share capital of Arsin Corporation and thereby acquired control over Arsin Corporation. The assets and liabilities on the date of acquisition are as follows: Particulars Fixed assets, net Current assets, loans and advances Total assets Less: Current liabilities and provisions Net liabilities acquired Discharged by way of: Payment in cash Goodwill on acquisition Amount 7.02 72.93 79.95 92.53 (12.57) 67.28 79.85

171

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 2. Note on acquisition of subsidiaries (continued) Note 2 On 26 June 2008, the Group acquired 100% of equity interest in the share capital of JYACC, Inc d/b/a Prolifics and thereby acquired control over JYACC, Inc. The assets and liabilities as on the date of acquisition are as follows: Particulars Fixed assets, net Current assets, loans and advances Total assets Less: Current liabilities and provisions Net assets acquired Discharged by way of: Payment in cash Goodwill on acquisition 3. Stock option plan SST Employee Stock Option Plan - I 2007 The employee stock option plan of the Company was named as the “Semantic Space Employee Stock Option Plan – I 2007” (“the Plan – I 2007”). The Board of directors of the Company have accorded approval to the plan on 20 December 2007. The Company formed an employee trust on 11 October 2000 in the name of “SST Employees Welfare Trust (The Trust)” for holding the shares for the benefit of the eligible employees in accordance with the terms and conditions of the Plan - I 2007. The Compensation Committee administers the Plan - I 2007. The Plan - I 2007 is effective from 3 November 2008 and was to terminate on or after 31 March 2009 or such other date as may be decided by the Board of the Directors of the Company. Total number of shares issued under the plan shall not exceed an aggregate of 310,000 shares of common stock of the Company. During the year ended 31 March 2009, the Trust issued 243,500 equity shares to the eligible employees. All initial grants made to any employee vested immediately at the time of grant and have been exercised by the employees. There are no outstanding options as of 30 June 2010. 4. Share investments in the Company During the year ended 31 March 2006, the Company entered into share subscription and shareholders agreement with UTI India Technology Venture Unit Scheme and New Vernon Private Equity Limited (hereinafter collectively referred to as “Investors”), for the subscription and allotment of equity shares (face value of Rs. 10 each). The below mentioned table depicts the total equity shares that have been issued to the investors: Equity capital Investors UTI India Technology Venture Unit Scheme New Vernon Private Equity Limited Number of shares 863,636 863,636 Amount 87 87 Amount 33.24 595.29 628.53 413.63 214.90 1,178.82 963.92

172

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 4. Share investments in the Company (continued) In addition to the above, UTI India Technology Venture Unit Scheme has purchased additional 400,000 shares from existing shareholders, increasing its shareholding in the Company to 1,263,636 shares. Further, the agreement with the above shareholders also mentions that the Company shall issue shares to the public on or before 30 September 2008 else the investors have a put option on the shares held by them for purchase by the promoter or any of his nominees at a price which will give them an effective compound annualized return 25% per annum on their investment. As of 30 June 2010, the investors have not exercised their put option. The above agreement was amended on 20 September 2010, pursuant to which the timeline to undertake an IPO was extended till 31 March 2011. 5. Merger of Arsin Systems Private Limited (‘Arsin’) with the Company With a view to bring better synergies and to reduce the overall cost of operations and for the purpose of optimum utilisation of financial and human resources and other allied objects, a scheme of amalgamation (‘the Scheme’) was proposed to amalgamate Arsin Systems Private Limited, a step-down subsidiary (“the Transferor company”) with its ultimate parent Company, Semantic Space Technologies Limited (“the Transferee company”). Effective date of amalgamation for accounting purposes is 1 April 2010. On filing an application, High Court of Andhra Pradesh has accorded the approval for the scheme of Merger on 15 September 2010 with effect from 1 April 2010. The Company has filed the requisite form with the Registrar of Companies. This merger did not have any impact on the consolidated financial statements of the Company. 6. Segment reporting The Group’s operations predominantly relate to software application development and allied activities. The primary business segments of the Group are: Segment Application services Independent verification and validation services Principal activities Includes application development, maintenance, re-engineering, technology migration Includes business process testing and markets SAP regression test library and various other SAP testing solutions End-to-end systems integrator specialising in IBM technologies

System integration solutions

The Group has operations in USA, Europe and India. A) Segments The primary and secondary reportable segments are business segments and geographic segments respectively. Business segments Based on the analysis of the Group’s internal organisation and management structure, Management has classified its business activities as Application services, Independent verification and validation services and System integration solutions services. Geographic segments The Group’s business is organised primarily into three geographic segments, United States of America, Europe and India. Revenues are attributable to individual geographic segments based on the location of the customer.

173

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 6. Segment reporting (continued) B) Segment accounting policies Segment revenues and expenses: Revenues and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while costs, wherever allocable, are allocated to segments on an appropriate basis. Certain expenses are not specifically allocable to individual segments as the underlying services are used interchangeably. The Company believes that it is not practicable to provide segment disclosures relating to such expenses, and accordingly such expenses are separately disclosed as ‘unallocated’ and are directly charged against total income. Segment assets and liabilities: Segment assets for primary segments include all operating assets used by a segment and comprise primarily of trade receivables and fixed assets, net of allowances and provisions, which are reported as direct offsets in the balance sheet. Segment liabilities include all operating liabilities and comprise primarily of creditors and accrued liabilities. Accounting policies: The accounting policies consistently used in the preparation of the consolidated financial statements are also applied to revenues and expenditure in individual segments. C) Primary and secondary segment disclosures

Primary segment information: As at and for the year ended 31 March 2007 Independent Verification and Validation Services 36.26 36.26 1.67 112.99 39.16 3.14 0.49 System Integration Solutions -

Particulars External sales Intersegment sales Total Revenue Segment result Unallocated corporate expenses net of unallocated income Interest expense Other income Profit before tax Taxation Profit after tax Other information Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure Depreciation and amortisation

Application Services 777.56 1.57 779.13 299.76 615.26 53.15 43.79 4.58

Eliminations (1.57) (1.57) (1.08) (1.08) -

Consolidated total 813.82 813.82 301.43 (0.47) 15.38 316.34 14.82 301.52 727.17 253.63 980.79 91.23 16.21 107.44 46.93 5.07

174

ANNEXURE V (continued)

SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 6. Segment reporting (continued) As at and for the year ended 31 March 2008 Independent Verification and Validation Services 225.66 225.66 29.41 220.77 61.71 20.51 3.77 System Integration Solutions -

Particulars External sales Intersegment sales Total Revenue Segment result Unallocated corporate expenses net of unallocated income Interest expense Other income Profit before tax Taxation Profit after tax Other information Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure Depreciation and amortisation

Application Services 709.42 3.43 712.85 145.29 825.37 78.21 54.03 6.86

Eliminations (3.43) (3.43) (14.28) (14.28) -

Consolidated total 935.08 935.08 174.70 (3.16) 18.43 189.97 16.18 173.79 1,031.86 161.97 1,193.83 125.64 28.57 154.21 74.54 10.63

175

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 6. Segment reporting (continued) As at and for the year ended 31 March 2009 Independent Verification and Validation Services 265.93 265.93 8.18 292.54 32.71 20.48 6.55 System Integration Solutions 1,619.22 1,619.22 38.46 1,880.48 434.50 2.21 20.99

Particulars External sales Intersegment sales Total Revenue Segment result Unallocated corporate expenses net of unallocated income Interest expense Other income Profit before tax Taxation Profit after tax Other information Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure Depreciation and amortisation

Application Services 637.59 14.76 652.35 86.16 330.86 82.61 24.23 10.94

Eliminations (14.76) (14.76) (8.64) (8.64) -

Consolidated Total 2,522.74 2,522.74 132.80 (34.69) 88.03 186.14 8.44 177.70 2,495.24 28.91 2,524.15 541.18 629.83 1,171.01 46.92 38.48

176

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 6. Segment reporting (continued) As at and for the year ended 31 March 2010 Independent Verification and Validation Services 390.97 390.97 45.63 292.80 38.18 5.13 7.29 System Integration Solutions 2,547.71 2,547.71 123.61 1,706.38 308.55 13.21 19.96 Consolidated Tot al 3,608.27 3,608.27 356.69 (0.37) (44.32) 3.16 315.16 43.90 271.26 2,225.73 43.51 2,269.24 381.61 387.16 768.77 19.47 47.37

Particulars External sales Intersegment sales Total Revenue Segment result Unallocated corporate expenses net of unallocated income Interest expense Other income Profit before tax Taxation Profit after tax Other information Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure Depreciation and amortisation

Application Services 669.59 40.21 709.80 187.45 234.32 42.65 1.13 20.12

Eliminations (40.21) (40.21) (7.77) (7.77) -

177

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 6. Segment reporting (continued)

As at and for the quarter ended 30 June 2010 Independent Verification and Validation Services 125.80 125.80 6.04 294.01 84.22 1.50 System Integration Solutions 867.52 867.52 34.64 2,039.82 450.95 4.50 3.91 Consolidated Tot al 1,166.36 1,166.36 90.81 (2.49) (7.25) 1.01 82.08 13.29 68.79 2,575.99 42.77 2,618.76 537.95 466.84 1,004.79 4.97 10.60

Particulars External sales Intersegment sales Total Revenue Segment result Unallocated corporate expenses net of unallocated income Interest expense Other income Profit before tax Taxation Profit after tax Other information Segment assets Unallocated corporate assets Total assets Segment liabilities Unallocated corporate liabilities Total liabilities Capital expenditure Depreciation and amortisation Secondary segment information:

Application Services 173.04 53.29 226.33 50.13 298.40 59.02 0.47 5.19

Eliminations (53.29) (53.29) (56.24) (56.24) -

Sales revenues by geographic markets For the year ended 31 March Particulars 2007 United States of America Europe India Others Total 813.82 813.82 2008 754.01 175.93 5.14 935.08 2009 1,974.28 537.89 3.52 7.05 2,522.74 2010 2,779.54 415.18 409.59 3.96 3,608.27 For the quarter ended 30 June 2010 1,021.42 59.36 84.23 1.35 1,166.36

178

ANNEXURE V (continued) SIGNIFICANT ACCOUNTING POLICIES AND RELATED NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 6. Segment reporting (continued)

Analysis of assets by geography Particulars United States of America Europe India Others Total As at 31 March 2008 282.68 21.34 889.81 1,193.83 As at 30 June 10 2,396.87 49.26 172.63 2,618.76

2007 231.89 748.90 980.79

2009 2,135.20 107.27 279.86 1.82 2,524.15

2010 1,979.38 69.23 220.63 2,269.24

Cost of tangible and intangible assets acquired by geography For the year ended 31 March Particulars United States of America Europe India Others Total 2007 3.04 43.89 46.93 2008 20.02 54.52 74.54 2009 22.81 24.11 46.92 2010 17.94 1.53 19.47 For the quarter ended 30 June 2010 4.97 4.97

7)

Subsequent event Pursuant to the resolution of the Compensation Committee dated 8 October 2010 and of the shareholders on 1 October 2010, the Company approved the Employee Stock Option Plan-2010 (“the ESOP Plan 2010”) under which 1,552,502 stock options were set aside, each convertible into 1 equity share each.

179

ANNEXURE – VI STATEMENT OF ACCOUNTING RATIOS (Amount in Rupees Millions except share and per share data) For the quarter ended 2008 2009 2010 30 June 2010 1,353.14 177.70 1,500.47 271.26 1,613.97 68.79

Particulars

For the year ended 31 March 2007 873.35 301.52

Net Worth (A) Restated profit after tax (B) Weighted average number of equity shares outstanding during the year/ period - For basic earnings per share (C) - For diluted earnings per share (D) Earnings per share Rs.10 each - Basic earnings per share (Rs.) (E) - Diluted earnings per share (Rs.) (F) Return on Net Worth (%) (G - B/A) Number of shares outstanding at the end of the year / period (H) Net Assets Value per share of Rs. 10 each (I - A/H)

1,039.62 173.79

11,877,272 11,877,272

11,877,272 11,877,272

11,877,272 11,877,272

11,914,491 11,914,491

12,028,215 12,028,215

25.39 25.39 34.52% 11,877,272

14.63 14.63 16.72% 11,877,272

14.96 14.96 13.13% 11,877,272

22.77 22.77 18.08% 12,028,215

5.72 5.72 4.26% 12,028,215

73.53

87.53

113.93

124.75

134.18

Notes: 1. The above ratios are calculated as under: a) Earnings per share (Rs.) = Net profit after tax, as restated / Weighted average number of equity shares as at year / period end b) Return of Net worth (%) = Net profit after tax, as restated / Net worth as restated as at year or period end "Net worth" means the sum total of the paid-up equity capital and free reserves "Free reserves" means all reserves created out of the profits and share premium account but does not include reserves created out of revaluation of assets, write back of depreciation provisions and amalgamation; c) Net asset value (Rs.) = Net worth as restated / Number of equity shares as at year or period end 2. The figures disclosed above are based on the restated consolidated financial information of Semantic Space Technologies Limited. 3. Earnings per shares (EPS) calculation are done in accordance with Accounting Standard (AS) 20 "Earnings per share" prescribed by the Companies (Accounting Standards) Rules, 2006.

180

ANNEXURE – VII DETAILS OF OTHER INCOME, AS RESTATED (Amount in Rupees Millions except share and per share data) For the quarter For the year ended 31 March ended 2008 2009 2010 30 June 2010 1.65 0.23 0.34 0.17 14.98 4.88 78.65 0.49 1.80 4.27 2.82 0.35 18.43 88.03 3.16 1.01

Particulars Interest on deposits Dividend income from mutual funds Foreign exchange fluctuation gain, net Miscellaneous income Total 2007 0.16 13.34 1.88 15.38

Note: The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited.

181

ANNEXURE – VIII DETAILS OF SECURED LOANS, AS RESTATED Particulars Cash credit Working capital demand loan Term loan Finance leases Total 2007 5.56 5.56 (Amount in Rupees Millions except share and per share data) As at 31 March As at 30 June 2010 2008 2009 2010 18.10 22.32 41.70 110.45 30.00 509.50 270.84 186.40 12.33 11.31 9.82 18.10 544.15 353.85 306.67

Note: The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited.

182

ANNEXURE – VIIIA STATEMENT OF SECURED LOANS AS ON 30 JUNE 2010 S. No Bank Amou nt Sancti oned 100.00 Amoun t Outsta nding 92.76 Rate of Interest (Amount in Rupees Millions except share and per share data) Repayment Security offered Terms

1

ICICI Bank Limited Cash credit

-

Working capital demand loan

Cash credit-3.75% per annum below the sum of I-BAR and Cash Credit Risk Premium below the sum of IBAR and the cash credit premium prevailing on each day, plus applicable interest, tax or other statutory levy, if any, on the principal amount of the loan remains outstanding each day. The rate of interest for each drawal of the Facility will be stipulated by ICICI Bank at the time of disbursement of each drawal on the basis of the repayment schedule for that drawal plus applicable interest tax or other statutory levy, if any, subject to a minimum pricing of 10% p.a.

On demand

2

Bridge Bank, National Associati on - Cash credit

58.25

17.69

US prime rate + 2%.

On demand

3

ICICI Bank UK, Plc

66.00

186.40

LIBOR + 5%

Repayment of 20% each of the facility amount of USD 10,000,000 by the end of the 12th, 18th, 24th, 30th and 36th month from the date of drawdown. Repayment in monthly installments over a period of 6 months to 32 months from the inception of lease

4

Finance lease from various leasing companies / financial institution s

9.82

9.82

3.1% to 14%

1. Exclusive First charge by way of hypothecation of the borrower’s entire current assets interalia includes stock in trade, raw materials, work in progress, finished goods, consumable stores and spares and such other movables including book debts, outstanding monies, receivables, whether documentary or clean, both present and future of such form satisfactory to the bank. 2. Exclusive charge on the movable fixed assets of the Company. 3. Exclusive charge by way of equitable mortgage on the residential property belonging to Ms. Sridevi Bolli valued at Rs. 20 million. 4. Personal Guarantee of Mr. Satyanarayana Bolli. Line of credit secured by hypothecation of all current assets and fixed assets of Arsin Corporation, both present and future. Pledge of all copyrights of Arsin Corporation. Validity Indemnification of Danis Yadegar, CEO of Arsin Corporation, Unconditional Guarantee from Semantic Space Technologies Limited. Secured by First charge on all assets of SST North America Inc, both present and future, negative lien on assets of Semantic Space Technologies Limited, pledge of JYACC Inc shares and SST North America Inc shares, and personal guarantee of Mr. Satyanarayana Bolli, director of the Company. Corporate Guarantee of Semantic Space Technologies Limited. Hypothecation of office equipments of JYACC Inc.

183

ANNEXURE – IX DETAILS OF UNSECURED LOANS, AS RESTATED Particulars Loan from promoter Total Rate of interest on loan from promoter (Amount in Rupees Millions except share and per share data) As at 31 March As at 30 June 2010 2008 2009 2010 22.57 22.57 LIBOR + 4.5% 23.30 23.30 LIBOR + 4.5%

2007 -

Note: The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited.

184

ANNEXURE – X DETAIL OF INVESTMENTS, AS RESTATED Particulars Long term investments-unquoted National Saving Certificate (Refer note 2) Current investments-unquoted Mutual funds Total Investments Aggregate book value of unquoted current investment Aggregate fair value of unquoted current investment (Amount in Rupees Millions except share and per share data) As at 31 March As at 30 June 2010 2007 2008 2009 2010

-

-

-

-

-

245.39 245.39 245.39 245.74

153.62 153.62 153.62 153.64

-

-

-

Notes: 1. The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited. 2. Investment in National Saving Certificate is Rs 6,000 which has been rounded off in the above table.

185

ANNEXURE – XI STATEMENT OF SUNDRY DEBTORS, AS RESTATED Particulars Debts outstanding for a period exceeding six months Unsecured, considered good - Related parties - Others Unsecured - considered doubtful Total (A) Other debts Unsecured, considered good - Related parties - Others Unsecured - considered doubtful Total (B) Less: Provision for doubtful debts (C) TOTAL (A+B-C) (Amount in Rupees Millions except share and per share data) As at 31 March As at 30 June 2010 2007 2008 2009 2010

-

1.29 1.29

18.75 6.39 25.14

3.37 4.03 7.40

2.61 3.34 5.95

131.47 131.47 131.47

136.72 136.72 138.01

667.62 667.62 6.39 686.37

525.12 0.97 526.09 5.00 528.49

714.71 1.81 716.52 5.15 717.32

Note: The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited.

186

ANNEXURE – XII STATEMENT OF LOANS AND ADVANCES, AS RESTATED Particulars Unsecured, considered good Security deposits Advances recoverable in cash or in kind or for value to be received Advance to SST Welfare Trust Prepaid expenses Advance tax and tax deducted at source, net Advance fringe benefit tax, net of provision for tax Interest accrued on investments MAT credit entitlement Dividend receivable TOTAL (Amount in Rupees Millions except share and per share data) As at 31 March As at 30 June 2010 2007 2008 2009 2010 8.56 4.59 8.00 1.50 0.07 0.17 22.89 8.73 19.13 8.00 5.89 0.35 5.50 47.60 10.66 15.24 7.17 33.30 0.34 26.47 93.18 16.83 6.13 5.53 30.43 26.39 0.51 22.11 107.93 17.92 9.05 5.53 33.15 24.79 0.51 21.69 112.64

Note: The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited.

187

ANNEXURE – XIII DETAIL OF CONTINGENT LIABILITIES, AS RESTATED (Amount in Rupees Millions except share and per share data) As at As at 31 March 30 June 2007 2008 2009 2010 2010

Particulars

CAPITAL COMMITMENTS Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances CONTINGENT LIABILITIES Income tax matters under dispute Bank guarantees issued to the custom authorities Bond to the Government of India for exemption of customs duty on imports Contingent purchase consideration payable to ex-shareholders of Watson SCS by JYACC, Inc Guarantee provided to ex-shareholders of JYACC, Inc on account of contingent purchase consideration payable by SST North America, Inc Total

4.73

-

-

-

-

2.23 0.60 12.07 -

4.27 0.70 12.07 -

34.44 0.63 12.68 679.68

36.02 0.41 8.13 125.36

37.39 0.58 11.58 10.62 -

19.63

17.04

727.43

169.92

60.17

Note: 1. The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited.

188

ANNEXURE – XIV CAPITALISATION STATEMENT Particulars Borrowings Short term debt Long term debt (A) Total borrowings Shareholders’ funds Share capital Reserves and surplus Total shareholders’ funds (B) Long term debt/Equity (A/B) (Amount in Rupees Millions except share and per share data) Pre-issue as at Post-issue 30 June 2010 133.75 196.22 329.97

120.28 1,493.69 1,613.97 0.12

Note: The above figures disclosed are as per the restated consolidated financial information of Semantic Space Technologies Limited.

189

ANNEXURE – XV DETAILS OF THE LIST OF RELATED PARTIES AND NATURE OF RELATIONSHIPS For the year ended 31 March Particulars Key Management Personnel 2007 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited 2008 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited 2009 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited 2010 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited For the quarter ended 30 June 2010 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited

Entity controlled by Key Management Personnel Enterprise where SST Employees SST Employees SST Employees SST Employees SST Employees principal shareholders Welfare Trust Welfare Trust Welfare Trust Welfare Trust Welfare Trust are trustees Note 1: Above disclosures are made in accordance with Accounting Standard (AS) 18 "Related Parties" prescribed by the Companies (Accounting Standards) Rules, 2006.

DISCLOSURES OF SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Amount in Rupees Millions except share and per share data) For the year ended 31 March For the quarter Name of the party Nature of transaction 2007 2008 2009 2010 ended 30 June 2010 Mrs. Sridevi Bolli Remuneration and 1.20 1.20 1.20 1.20 0.30 allowances Dividend 2.30 Mr. Rama Rao Bolli Remuneration and 1.01 1.01 1.90 1.67 0.66 allowances Dividend 0.08 Icon Investments Dividend 2.59 Limited SST Employees Dividend 0.80 Welfare Trust Loans and advances8.00 given Loans and advances(0.83) (1.64) repaid Mr. Satyanarayana Loan from key 22.57 Bolli management personnel Dividend 2.00 Remuneration and 2.34 2.07 2.32 0.58 allowances to directors Interest on loan from 0.33 0.29 key management personnel Note: 1. The figures disclosed above are based on the restated consolidated financial information of Semantic Space Technologies Limited. 2. Above disclosures are made in accordance with Accounting Standard (AS) 18 "Related Parties" prescribed by the Companies (Accounting Standards) Rules, 2006.

190

ANNEXURE - XV (continued) DETAILS OF RELATED PARTIES OUTSTANDING BALANCES (Amount in Rupees Millions except share and per share data) As at 31 March As at Name of the party Nature of transaction 30 June 2007 2008 2009 2010 2010 SST Employees Loans and advances 8.00 8.00 7.17 5.53 5.53 Welfare Trust given included in Loans and advances Dividend payable 0.80 Rama Rao Bolli Dividend payable 0.08 Sridevi Bolli Dividend payable 2.30 Satyanarayana Bolli Loan taken included 22.57 23.30 in Unsecured loans Dividend payable 2.00 Interest on loan 0.33 0.29 included in current liabilities Icon Investments Dividend payable 2.59 Limited Note : 1. The figures disclosed above are based on the restated consolidated financial information of Semantic Space Technologies Limited. 2. Above disclosures are made in accordance with Accounting Standard (AS) 18 "Related Parties" prescribed by the Companies (Accounting Standards) Rules, 2006.

191

ANNEXURE – XVI DETAILS OF DIVIDEND (Amount in Rupees Millions except share and per share data) As at 31 March As at 30 June 2010 2007 2008 2009 2010 Equity share capital 118.77 118.77 118.77 120.28 120.28 Face value (Rs.) 10.00 10.00 10.00 10.00 10.00 Rate of dividend % 10% Amount of dividend* 11.88 * Payment of dividend is at the rate of 10% on the amount paid up at prorata from the date of allotment. Particulars Note : 1. The figures disclosed above are based on the restated consolidated financial information of Semantic Space Technologies Limited. 2. The Board of directors of the Company in their meeting dated 4 September 2008 had proposed for dividend of Rs.5.93 Mn for the year 2008. However the same was not approved by the shareholders in Annual General Meeting for that year and accordingly, the provision for the same in the financial statement was reversed in the subsequent year.

192

Auditors’ Report The Board of Directors Semantic Space Technologies Limited

1

We have examined the attached restated financial information of Semantic Space Technologies Limited (‘the Company’), as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II to the Companies Act, 1956, as amended (‘the Act’) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, issued by Securities and Exchange Board of India (“SEBI”) in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992 (the ‘SEBI Regulations’), and in terms of our engagement agreed upon with you in accordance with our engagement letter 16 September 2010 in connection with the proposed issue of equity shares of the Company. These information have been extracted by the Management from the financial statements for the years ended 31 March 2006, 2007, 2008, 2009 and 2010 and from the financial statements for the quarter ended 30 June 2010. Audit of the financial statements for the year ended 31 March 2006 was conducted by the previous auditors, M/s P.V.R.K. Nageshwara Rao & Co, whose reports have been furnished to us and accordingly relied upon by us. The financial statements for the year ended 31 March 2007, 2008, 2009 and 2010 and the financial statements for the quarter ended 30 June 2010 have been audited by us. In accordance with the requirements of Paragraph B, Part II of Schedule II of the Act, the SEBI Regulations, the Guidance note on ‘Reports in Company’s Prospectus (Revised)’ issued by the Institute of Chartered Accountants of India (‘ICAI’) to the extent applicable, and the terms of our engagement agreed with you, we further report that: (a) The Restated Summary Statement of assets and liabilities of the Company as at 31 March 2006, 2007, 2008, 2009, 2010 and as at 30 June 2010 examined by us, as set out in Annexure I to this report read with the significant accounting policies and related notes in Annexure V are after making such adjustments and regroupings as in our opinion are appropriate and more fully described in Notes to the Restated Summary Statements enclosed as Annexure IV to this report. (b) The Restated Summary Statement of Profits and Losses of the Company for the years ended 31 March 2006, 2007, 2008, 2009, 2010 and for the quarter ended 30 June 2010 are as set out in Annexure II to this report read with the significant accounting policies and related notes in Annexure V are after making such adjustments and regroupings as in our opinion are appropriate and more fully described in Notes to the Restated Summary Statements enclosed as Annexure IV to this report. (c) Based on the above, we are of the opinion that the restated financial information have been made after incorporating: i. ii. Adjustments for the changes in accounting policies retrospectively in respective financial years / period to reflect the same accounting treatment as per the changed accounting policy for all the reporting periods. Adjustments for the material amounts in the respective financial years / period to which they relate.

2

3

iii. And there are no extra-ordinary items that need to be disclosed separately in the accounts and qualification requiring adjustments. (d) We have also examined the following financial information as set out in Annexures prepared by the Management and approved by the Board of Directors relating to the Company for the years ended 31 March 2006, 2007, 2008, 2009, 2010 and for the quarter ended 30 June 2010. i. ii. Annexure III containing statement of cash flows, as restated; Annexure VI containing statement of accounting ratios, as restated;

iii. Annexure VII containing details of other income, as restated; iv. Annexures VIII and VIIIA containing statement of secured loans, as restated; v. Annexure IX containing details of investments, as restated;

193

vi. Annexure X containing statement of sundry debtors, as restated; vii. Annexure XI containing statement of loans and advances, as restated; viii. Annexure XII containing details of contingent liabilities, as restated; ix. Annexure XIII containing capitalisation statement as at 30 June 2010; x. Annexure XIV containing details of the list of related parties, significant transactions and balances outstanding with them;

xi. Annexure XV containing details of dividend, and xii. Annexure XVI containing statement of tax shelter. In our opinion, the above financial information contained in Annexure I to XVI of this report read along with the significant accounting policies and related notes (refer Annexure V) and schedules Notes to the Restated Summary Statements (refer Annexure IV) are prepared after making adjustments and regrouping as considered appropriate and have been prepared in accordance with Paragraph B, Part II of Schedule II of the Act, the SEBI Regulations and the Guidance note on ‘Reports in Company’s Prospectus (Revised) issued by the ICAI to the extent applicable, as amended from time to time, and in terms of our engagement as agreed with you. Our report is intended solely for use of the Management and for inclusion in the Draft Red Herring Prospectus in connection with the proposed issue of equity shares of the Company. Our report should not to be used, referred to or distributed for any other purpose without our written consent. for B S R & Company Chartered Accountants Firm’s Registration Number: 128032W

Sriram Mahalingam Partner Membership No: 49642 Place: Hyderabad Date: 10 November 2010

194

ANNEXURE – I STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED Particulars 1. FIXED ASSETS : i) Gross block Less : Accumulated depreciation / amortisation Net block ii) Capital work-in-progress Total 2. INVESTMENTS 3. CURRENT ASSETS, LOANS AND ADVANCES: a) Unbilled revenue b) Sundry debtors c) Cash and bank balances d) Loans and advances Total 4. DEFERRED TAX ASSET 5. LIABILITIES AND PROVISIONS : a) Secured loans b) Current liabilities and provisions Total 6. DEFERRED TAX LIABILITY, NET SHARE HOLDERS' FUNDS (1+2+3+4-5-6) REPRESENTED BY 7. SHARE CAPITAL a) Equity share capital 8. RESERVES AND SURPLUS SHARE HOLDERS' FUNDS (7+8) (Amounts in Rupees Millions, except share and per share data) As at 31 March As at 2007 2008 2009 2010 30 June 2010 66.47 (19.21) 47.26 10.55 57.81 312.67 78.82 (26.07) 52.75 52.23 104.98 260.04 155.27 (37.02) 118.25 118.25 827.67 156.40 (57.13) 99.27 99.27 827.68 170.14 (72.30) 97.84 97.84 827.67

2006 30.53 (14.63) 15.90 2.70 18.60 233.28

103.02 245.13 16.33 364.48 -

109.61 435.16 21.20 565.97 -

2.32 73.33 608.52 57.82 741.99 -

16.98 82.04 69.37 150.56 318.95 0.08

4.73 85.84 14.43 387.13 492.13 0.08

134.40 28.57 493.00 655.97 0.08

26.82 26.82 1.26 588.28

54.30 54.30 9.79 872.36

90.91 90.91 6.49 1,009.61

82.59 82.59 6.40 1,175.96

48.99 42.65 91.64 6.41 1,321.11

92.76 111.19 203.95 5.92 1,371.69

118.77 469.51 588.28

118.77 753.59 872.36

118.77 890.84 1,009.61

118.77 1,057.19 1,175.96

120.28 1,200.83 1,321.11

120.28 1,251.41 1,371.69

Note: The above statement should be read with the significant accounting policies and notes to restated summary statements as appearing in Annexure V.

195

ANNEXURE - II STATEMENT OF PROFITS AND LOSSES, AS RESTATED (Amounts in Rupees Millions, except share and per share data) For the year ended 31 March Particulars 2006 I. INCOME Income from software development services Income from sale of licenses Other income TOTAL II. EXPENDITURE Personnel expenses Operating and other expenses Finance charges Depreciation and amortisation TOTAL Profit before tax Less: Provision for tax a) Current tax- domestic b) Current tax- foreign c) Fringe benefit tax d) Deferred tax-domestic e) Deferred tax-foreign f) MAT credit (entitlement)/utilisation Net profit after tax, as restated Add: Balance in profit and loss account brought forward, as restated Amount available for appropriation Appropriations: a) Proposed dividend b) Provision for corporate dividend tax Balance carried forward to balance sheet, as restated 464.05 5.93 469.98 2007 779.13 14.22 793.35 2008 712.85 17.68 730.53 2009 650.68 1.67 70.33 722.68 For the quarter ended 2010 30 June 2010 709.05 0.75 1.13 710.93 226.08 0.25 0.65 226.98

209.36 73.34 2.95 285.65 184.33 0.35 3.03 0.60 (0.25) (0.46) 181.06 106.60 287.66 5.54 0.78 281.34

343.65 131.13 4.58 479.36 313.99 5.36 0.88 0.66 7.87 299.22 281.34 580.56 11.88 2.02 566.66

385.63 175.23 6.86 567.72 162.81 20.40 2.83 0.98 (0.52) (2.19) (5.50) 146.81 566.66 713.47 5.93 1.01 706.53

407.20 148.05 0.01 10.94 566.20 156.48 21.03 0.19 1.06 4.53 (4.70) (19.58) 153.95 706.53 860.48 (5.93) (1.01) 867.42

374.28 127.95 5.70 20.12 528.05 182.88 32.02 0.04 0.01 6.77 144.04 867.42 1,011.46 1,011.46

118.63 52.39 1.67 5.18 177.87 49.11 8.90 (0.48) 0.42 40.27 1,011.46 1,051.73 1,051.73

Note: The above statement should be read with the significant accounting policies and notes to restated summary statements as appearing in Annexure V.

196

ANNEXURE – III STATEMENT OF CASH FLOWS, AS RESTATED For the year ended 31 March (Amounts in Rupees Millions, except share and per share data) For the quarter ended 2007 2008 2009 2010 30 June 2010

Particulars

2006 A) Cash flow from operating activities Net profit before tax, as restated 184.33 313.99 162.81 156.48 182.88 49.11 Adjustments for: Depreciation and amortisation 2.95 4.58 6.86 10.94 20.12 5.18 Interest and finance charges 5.26 1.60 Interest income (0.11) (0.16) (1.32) (0.17) (0.11) (0.15) Dividend income (1.30) (13.34) (14.98) (2.84) Unrealised foreign exchange (gain) / loss 0.24 (1.24) 30.95 (2.73) 0.60 (1.94) Employee stock compensation cost 1.12 Bad debts 2.92 15.57 8.57 Operating profit before changes in working 186.11 303.83 187.24 178.37 217.32 53.80 capital Adjustments for: (Increase) / decrease in unbilled revenue (2.32) (14.66) 12.25 4.73 (Increase) / decrease in sundry debtors (53.91) (6.59) 33.35 (19.62) (12.89) (0.06) (Increase) / decrease in loans and advances (14.57) (4.69) (7.91) (0.39) 10.04 (3.25) Increase / (decrease) in current liabilities and 11.78 18.99 (9.78) 7.99 (0.82) 8.34 provisions Cash outflow from operating activities 129.41 311.54 200.58 151.69 225.90 63.56 Adjustments for: Income-tax paid, net (3.85) (4.52) (9.50) (22.16) (69.76) (7.32) Fringe benefit tax paid (0.56) (0.81) (1.09) (1.40) (0.18) Net cash flow generated from operating 125.00 306.21 189.99 128.13 155.96 56.24 activities - (A) B) Cash flows from investing activities Purchase of fixed assets (7.00) (43.78) (54.03) (24.23) (1.13) (0.47) Investments in subsidiaries (67.28) (721.25) (32.69) Investments in mutual funds (233.27) (122.05) (115.39) Proceeds from sale of investments 109.94 207.16 153.62 Loans to wholly owned subsidiaries (23.37) (79.05) (240.85) (85.96) Cash of subsidiary taken over on merger 0.95 Interest received 0.24 0.14 1.32 0.17 0.11 0.15 Dividend received from mutual funds 1.30 13.17 15.15 2.84 Net cash flow from investing activities - (B) (238.73) (109.86) 30.84 (667.90) (274.56) (85.33) C) Cash flows from financing activities Proceeds from issue of share capital 259.45 20.00 Proceeds from secured loans 48.99 73.77 Repayment of demand loan (30.00) Interest paid (5.25) (1.60) Dividend paid (including tax thereon) (6.32) (13.90) Net cash flow from financing activities - (C) 259.45 (6.32) (13.90) 63.74 42.17 145.72 190.03 206.93 (539.77) (54.86) 13.08 Net increase / (decrease) in cash and cash equivalents (A+B+C) Exchange (loss)/gain on cash and cash (33.57) 0.62 (0.08) 1.06 equivalents Cash and cash equivalents at the beginning of 99.41 245.13 435.16 608.52 69.37 14.43 the year / period Cash and cash equivalents at the end of the 245.13 435.16 608.52 69.37 14.43 28.57 year / period Note: 1. The cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 on Cash Flow Statements as prescribed under by the Companies (Accounting Standards) Rules, 2006. 2. The above statement should be read with the significant accounting policies and notes to restated summary statements as appearing in Annexure V.

197

ANNEXURE – IV STATEMENT OF ADJUSTMENTS FOR RESTATED FINANCIAL STATEMENTS (Amounts in Rupees Millions, except share and per share data) For the For the year ended 31 March quarter ended 2006 2007 2008 2009 2010 30 June 2010 181.06 303.42 147.20 152.94 143.67 35.90 181.06 (5.36) 1.75 (0.59) 299.22 (0.39) 146.81 1.01 153.95 0.37 144.04 4.37 40.27

Particulars Profit after tax as per audited profit and loss account Adjustments on account of: 1) (Short)/ excess tax provision adjusted 2) Transition effect of revised AS-15 3) Deferred tax impact Profit after tax, as restated Notes: 1) (Short)/ excess tax provision adjusted

The Company during the quarter ended 30 June 2010 provided for an amount of Rs.4.37 Million as income tax provision with respect to earlier years. Accordingly, in the preparation of the Restated Summary Statements, the effect of these items has been appropriately adjusted to the results of the respective year/ period to which these items pertain to with a corresponding adjustment to the respective asset / liability balances. 2) Transitional adjustment pursuant to AS-15 (revised) Effective 1 April 2007, the Company adopted the revised accounting standard on employee benefits. Pursuant to the adoption, the transitional obligations of the Company amounted to Rs.1.75 Million which was adjusted against the opening balance of the profit and loss account for the year ended 31 March 2008. This obligation has now been adjusted against the profit for the year ended 31 March 2007. 3) Deferred tax Deferred tax represents the tax impact on the transitional provision for AS-15(revised).

198

ANNEXURE – V NOTES TO THE RESTATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED A. Background The restated summary statement of assets and liabilities of Semantic Space Technologies Limited as at 31 March 2006, 31 March 2007, 31 March 2008, 31 March 2009, 31 March 2010 and 30 June 2010, and the related restated summary statement of profits and losses and cash flows for years/period ended on that date (hereinafter collectively referred to as “Restated Summary Statements”) relate to Semantic Space Technologies Limited (“the Company”) and have been prepared specifically for inclusion in the offer document to be filed by the Company with the Securities and Exchange Board of India (“SEBI”) in connection with its proposed Initial Public Offering. These Restated Summary Statements have been prepared to comply in all material respects with the requirements of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the “Regulations”). B. Statement of significant accounting policies Company overview Semantic Space Technologies Limited (“the Company”) is a public limited company incorporated on 24 November 1997 with its registered office in Hyderabad, India. The Company is engaged in the business of providing software development and support services. The Company has a branch in California, USA. (a) Basis of preparation of financial statements The financial statements of the Company have been prepared and presented in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis of accounting. GAAP comprises accounting standards notified by the Central Government of India under Section 211 (3C) of the Companies Act, 1956, other pronouncements of Institute of Chartered Accountants of India (ICAI) and the provisions of Companies Act, 1956. The financial statements are presented in Indian Rupees (Million) except share and per share data. (b) Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amounts of revenues and expenses for the year/ period. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. (c) Fixed assets and depreciation Fixed assets are carried at cost of acquisition less accumulated depreciation. The cost of fixed assets comprises purchase price, taxes, duties, freight and other directly attributable costs of bringing the asset to working conditions for the intended use. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. Advances paid towards the acquisition of fixed assets outstanding at each balance sheet date and the costs of fixed assets acquired but not ready for their intended use, not before such date are disclosed as capital work in progress. Depreciation on fixed assets is provided using the straight-line method over the estimated useful lives of assets as determined by management. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as minimum rates. If the management’s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than envisaged in the aforesaid Schedule, depreciation is provided at a higher rate based on the management’s estimate of the useful life / remaining useful life. Pursuant to this policy, the depreciation on fixed assets have been provided at the rates prescribed in Schedule XIV of the Companies Act, 1956, except for assets lying at the branch office in California USA, for which the management has estimated the useful life to be five years.

199

Leasehold improvements are amortised over the primary period of the lease or the useful life of assets, whichever is shorter. Depreciation is charged on a proportionate basis from the date of addition till the date of disposal for all assets purchased and sold during the year/period. Individual assets costing less than Rs.5,000 are depreciated in full in the year/period of purchase.

200

ANNEXURE – V NOTES TO THE RESTATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (d) Intangible assets and amortisation Internally generated intangible assets are stated at cost and are capitalised if it can be measured reliably during the development phase and when it is probable that future economic benefits that are attributable to the assets will flow to the company. Intangible assets are amortised over their estimated useful life (5 – 10 years) on a straight line basis. (e) Revenue recognition Revenue is primarily derived from software development and related technical services. Arrangements with customers for software development and related technical services are either fixed-price or on a time-and-material basis. Revenue on time-and-material contracts are recognised as the related services that are performed and revenue from the end of the last billing to the Balance sheet date is recognised as unbilled revenues. Revenue from fixed-price contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognised based upon the percentage of completion. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.Earnings in excess of billings are classified as Unbilled Revenue while billings in excess of earnings are classified as Unearned Revenue. Revenue from sale of licenses for software applications is recognised on the transfer of the title in the user license to the customer. Dividend income is recognised when the unconditional right to receive the income is established. Interest income is recognised on time proportion method using the underlying rates of interest. (f) Employee benefits Gratuity, which is a defined benefit scheme, is provided for based on an actuarial valuation carried out by an independent actuary at the balance sheet date. Actuarial gain /losses are recognised in the profit and loss account. Long term compensated absences are accrued based on an actuarial valuation at the balance sheet date, carried out by an independent actuary. Contributions to provident fund, which is a defined contribution scheme, are charged to the profit and loss account on an accrual basis. (g) Foreign currency transactions and balances Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions. Exchange differences arising on foreign currency transactions settled during the year/ period are recognised in the profit and loss account. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at year-end rates. The resultant exchange differences are recognised in the profit and loss account. Non-monetary assets are recorded at the rates prevailing on the date of the transaction. Exchange differences arising on a monetary item that, in substance, forms part of the enterprise’s net investment in a nonintegral operation has been accumulated in a foreign currency translation reserve in the enterprise’s financial statements until the disposal of the net investment, at which time they will be recognised as income or expense.

201

ANNEXURE – V NOTES TO THE RESTATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (g) Foreign currency transactions and balances (continued) The Company’s foreign branch in US has been identified as integral operation in accordance with the requirements of AS11 “The Effect of Changes in Foreign Exchange Rates”. The financial statements of foreign integral operation are translated into Indian Rupees as follows:      (h) Revenue items, except depreciation are translated at the respective monthly average rates. Depreciation is translated at the rates used for the translation of the values of the assets on which depreciation is calculated. Monetary items are translated using the closing rate. Non-monetary items are translated using the exchange rate at the date of transaction i.e., the date when they were acquired. The net exchange difference resulting from the translation of items in the financial statements of foreign integral operations is recognised as income or as expense for the year/ period. Contingent liabilities are translated at the closing rate.

Investments Investments are classified as current or long term based on management’s intention at the time of purchase. Long-term Investments are carried at cost less provision recorded to recognise any decline, other than temporary, in the carrying value of each investment. Current Investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investment.

(i)

Income-tax expense Income tax expense comprises of current, deferred and fringe benefit tax. Current tax The current charge for the income tax is calculated in accordance with the relevant tax regulations applicable to the Company. Deferred tax Deferred tax charge or benefit reflects the tax effects of timing differences between accounting income and taxable income, which originate during the year/period but reverse after the tax holiday period. The deferred tax charge or benefit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written-down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised. The amount of deferred tax assets and liabilities has a legally enforceable right and on its intention to set off assets against liabilities and where such assets and liabilities relate to taxes on Income levied by the same governing laws. Minimum Alternate Tax (MAT) Credit entitlement MAT credit entitlement represents amounts paid in a year/ period under Section 115 JB of the Income Tax Act, 1961 (‘IT Act’), in excess of the tax payable, computed on the basis of normal provisions of the IT Act. Such excess amount can be carried forward for set off against future tax payments in accordance with the relevant provisions of the IT Act. Since such credit represents a resource controlled by the Company as a result of past events and there is evidence as at the reporting date that the Company will pay normal income tax during the specified period, when such credit would be adjusted, the same has been disclosed as “MAT Credit entitlement”, under “Loans and Advances” in balance sheet with a corresponding credit to the profit and loss account, as a separate line item.

202

ANNEXURE – V NOTES TO THE RESTATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (i) Income-tax expense (continued) Such assets are reviewed as at each balance sheet date and written down to reflect the amount that will not be available as a credit to be set off in future, based on the applicable taxation law then in force. Fringe benefit tax Consequent to the introduction of Fringe Benefit Tax (“FBT”) effective 1 April 2005, the Company provides for and discloses FBT in accordance with the provisions of Section 115 WC of the Income-tax Act, 1961 and the guidance note on FBT issued by the ICAI. Fringe benefit tax was abolished with effect from 1 April 2010. (j) Earnings per share The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the year/ period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year/ period. For the purpose of calculating diluted earnings per share, net profit after tax for the year/ period and the weighted average number of shares outstanding during the year/ period are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. The diluted potential equity shares have been adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). (k) Provisions and contingent liabilities The Company recognises a provision when there is a present obligation as a result of past or obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions for onerous contracts i.e., contract where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is possible that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligatory event based on a reliable estimate of such obligation. (l) Impairment of assets The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. (m) Leases Leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight line basis over the lease term. (n) Stock-based compensation As prescribed by the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India and related interpretations, the Company applies the intrinsic value method of accounting to account for stock options issued to the employees of the Company. The excess of the intrinsic value of shares, at the date of grant of options under the Employee stock option schemes, over the exercise price is treated as employee compensation and amortised over the vesting period.

203

ANNEXURE – V NOTES TO THE RESTATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 1) Stock option Plan SST Employee Stock Option Plan - I 2007 The Company had formed an employee trust on 11 October 2000 in the name of “SST Employees Welfare Trust (“The Trust”) for holding the shares for the benefit of the eligible employees in accordance with the terms and conditions of the plan. The Plan was named as the Semantic Space Employee Stock Option Plan – I 2007 (“Semantic Space ESOP 2007” or “the Plan I -2007 -”). The Board of the Company has accorded the approval of the plan on 20 December 2007. The Compensation Committee administers the Plan – I 2007. The plan is effective from 3 November 2008 and will terminate on 31 March 2011. Total number of shares issued under the plan shall not exceed an aggregate of 310,000 shares of common stock. During the year ended 31 March 2009, the Trust issued 243,500 equity shares to the eligible employees. All initial grants made to any employee vested immediately at the time of grant and have been exercised by the employees. There are no outstanding options as of 30 June 2010. 2) Share investments in the Company During the year ended 31 March 2006, the Company entered into share subscription and shareholders agreement with UTI India Technology Venture Unit Scheme and New Vernon Private Equity Limited (hereinafter collectively referred to as “Investors”), for the subscription and allotment of equity shares (face value of Rs. 10 each). The below mentioned table depicts the total equity shares that have been issued to the investors, under the agreements: Equity capital Investors UTI India Technology Venture Unit Scheme New Vernon Private Equity Limited Number of shares 863,636 863,636 Amount (In Rs. millions) 87 87

In addition to the above, UTI India Technology Venture Unit Scheme has purchased additional 400,000 shares from existing shareholders, increasing its shareholding in the Company to 1,263,636 shares. Further, the agreement with the above shareholders also mentions that the Company shall issue shares to the public on or before 30 September 2008 else the investors have a put option on the shares held by them for purchase by the promoter or any of his nominees at a price which will give them an effective compound annualized return 25% per annum on their investment. As of 30 June 2010, the investors have not exercised their put option. The above agreement was amended on 20 September 2010, pursuant to which the timeline to undertake an IPO was extended till 31 March 2011. 3) Merger of Arsin Systems Private Limited (‘Arsin’) with the Company With a view to bring better synergies and to reduce the overall cost of operations and for the purpose of optimum utilisation of financial and human resources and other allied objects, a scheme of amalgamation (‘the Scheme’) was proposed to amalgamate Arsin Systems Private Limited, a step-down subsidiary (“the Transferor company”) with the Semantic Space Technologies Limited (“the Transferee company”). a) Names and General nature of business of the Amalgamating Company; Arsin Systems Private Limited or transferor company, a company incorporated under the Companies Act, 1956 and having its registered office at 6-3-249/2/B, PVR Chambers, Road No. 1, Banjara Hills, Hyderabad - 500034, Andhra Pradesh, India is engaged in the business of software development and testing in India.

204

ANNEXURE – V NOTES TO THE RESTATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 3) Merger of Arsin Systems Private Limited (‘Arsin’) with the Company (continued) Effective date of amalgamation for accounting purposes is 1 April 2010. On filing an application, High Court of Andhra Pradesh has accorded the approval for the scheme of Merger on 15 September 2010 with effect from 1 April 2010. The Company has filed the requisite form with the Registrar of Companies.

b)

The method of accounting used to reflect the amalgamation: On the Scheme becoming effective, the accounting for the merger will be done in accordance with the “Pooling of Interest method” referred to in AS -14 – Accounting for Amalgamations.

c)

Particulars of the scheme sanctioned under a statute: i. All assets, liabilities and reserves of the transferor company shall be transferred to the transferee company under this scheme and shall be recorded in the books of the accounts of the transferee company at the values as appearing in the books of accounts of the transferor company. ii. Inter-company deposits, loans, share application money and other balances and investments, if any between the transferor and transferee company shall be cancelled and there shall be no further obligation / outstanding in that respect. iii. The entire equity share capital of the transferor company is held by transferee company. Upon the coming into effect of the Scheme, the investments made by the transferee company in the equity share capital of the transferor company will stand cancelled. The difference between assets, liabilities and reserves of the transferor company and the carrying value of investments being cancelled would be adjusted against the balances in the reserves appearing in the books of the transferee company as determined by the Board of the transferee company. iv. In case of any difference in accounting policy between the transferee company and the transferor company , the impact of the same till the appointed date will be quantified and adjusted in the general reserves of the transferee company to ensure that the financial statements of the transferee company reflects the financial position on the basis of consistent accounting policy, with effect from the appointed date.

d)

The amount of any difference between the consideration and the value of net identifiable assets acquired, and the treatment thereof : Based on the above method of accounting, the following assets and liabilities of the transferor company have been incorporated in the books of account of the Company as on 1 April 2010 as per details below: Assets of Arsin Net fixed assets of the Company Sundry debtors Cash and bank balances Loans and advances Total assets (A) Liabilities of Arsin Current liabilities and provisions Total liabilities (B) Net assets of transferor company as at 1 April 2010 (A-B) Less: Purchase consideration (Profit)/ loss on amalgamation* Amount 3.29 47.39 0.95 7.90 59.53 8.14 8.14 51.39 52.19 0.80

* The above excess of cost of investment over the net assets acquired has been adjusted against the balance of General reserve as of 1 April 2010.

205

ANNEXURE – V NOTES TO THE RESTATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR SEMANTIC SPACE TECHNOLOGIES LIMITED (continued) (All amounts in Rupees Millions except share and per share data) 4) Segment Reporting In accordance with AS-17 “Segment Reporting”, segment information has been given in the consolidated financial statements of Semantic Space Technologies Limited and therefore no separate disclosure on segment information is given in these financial statements. 5) Subsequent event Pursuant to the resolution of the Compensation Committee dated 8 October 2010 and of the shareholders on 1 October 2010, the Company approved the Employee Stock Option Plan-2010 (“the ESOP Plan 2010”) under which 1,552,502 stock options were set aside, each convertible into 1 equity share each.

206

ANNEXURE – VI STATEMENT OF ACCOUNTING RATIOS (Amounts in Rupees Millions, except share and per share data) For the For the year ended 31 March quarter ended 2007 2008 2009 2010 30 June 2010 872.36 299.22 1,009.61 146.81 1,175.96 153.95 1,321.11 144.04 1,371.69 40.27

Particulars 2006 Net worth (A) Restated profit after tax (B) Weighted average number of equity shares outstanding during the year/ period - For basic earnings per share (C) - For diluted earnings per share (D) Earnings per share Rs.10 each - Basic earnings per share (Rs.) (E) - Diluted earnings per share (Rs.) (F) Return on Net Worth (%) (G - B/A) Number of shares outstanding at the end of the year / period (H) 588.28 181.06

5,543,062 5,543,062

11,877,272 11,877,272

11,877,272 11,877,272

11,877,272 11,877,272

11,914,491 11,914,491

12,028,215 12,028,215

32.66 32.66 30.78% 11,877,27 2

25.19 25.19 34.30% 11,877,272

12.36 12.36 14.54% 11,877,272

12.96 12.96 13.09% 11,877,272

12.09 12.09 10.90% 12,028,215

3.35 3.35 2.94% 12,028,215

Net Assets Value per share of Rs. 10 each (I - A/H) Notes: 1. The above ratios are calculated as under:

49.53

73.45

85.00

99.01

109.83

114.04

a) Earnings per share (Rs.) = Net profit after tax, as restated / Weighted average number of equity shares as at year / period end b) Return of Net worth (%) = Net profit after tax, as restated / Net worth as restated as at year or period end "Net worth" means the sum total of the paid-up equity capital and free reserves "Free reserves" means all reserves created out of the profits and share premium account but does not include reserves created out of revaluation of assets, write back of depreciation provisions and amalgamation; c) Net asset value (Rs.) = Net worth as restated / Number of equity shares as at year or period end 2. The figures disclosed above are based on the restated standalone financial information of Semantic Space Technologies Limited. 3. Earning per shares (EPS) calculation are done in accordance with Accounting Standard (AS) 20 "Earnings per share" prescribed by the Companies (Accounting Standards) Rules, 2006.

207

ANNEXURE – VII DETAILS OF OTHER INCOME, AS RESTATED (Amounts in Rupees Millions, except share and per share data) For the quarter For the year ended 31 March ended 2007 2008 2009 2010 30 June 2010 0.16 1.32 0.17 0.11 0.15 13.34 14.98 2.84 65.49 0.48 0.72 1.38 1.83 1.02 0.02 14.22 17.68 70.33 1.13 0.65

Particulars Interest on deposits Dividend income from mutual funds Foreign exchange fluctuation gain, net Miscellaneous income Total 2006 0.11 1.30 3.62 0.90 5.93

Note: The above figures disclosed are as per the restated financial information of Semantic Space Technologies Limited.

208

ANNEXURE – VIII DETAILS OF SECURED LOANS, AS RESTATED (Amounts in Rupees Millions, except share and per share data) As at 31 March As at 30 June 2010 2007 2008 2009 2010 18.99 92.76 30.00 48.99 92.76

Particulars Cash credit Working capital demand loan Total -

2006

Note: The above figures disclosed are as per the restated financial information of Semantic Space Technologies Limited.

209

ANNEXURE – VIIIA STATEMENT OF SECURED LOANS AS ON 30 JUNE 2010 S. No 1 Bank ICICI Bank Limited - Cash credit Amount Sanctioned 100.00 Outstanding 92.76 (Amounts in Rupees Millions, except share and per share data) Rate of Interest Repayment Security offered Terms Cash credit-3.75% per annum below the sum of I-BAR and Cash Credit Risk Premium prevailing on each day, plus applicable interest, tax or other statutory levy, if any, on the principal amount of the loan remains outstanding each day. The rate of interest for each drawal of the Facility will be stipulated by ICICI Bank at the time of disbursement of each drawal on the basis of the repayment schedule for that drawal plus applicable interest tax or other statutory levy, if any, subject to a minimum pricing of 10% per annum. On demand 1. Exclusive First charge by way of hypothecation of the borrower’s entire current assets interalia includes stock in trade, raw materials, work in progress, finished goods, consumable stores and spares and such other movables including book debts, outstanding monies, receivables, whether documentary or clean, both present and future of such form satisfactory to the bank. 2. Exclusive charge on the movable fixed assets of the Company. 3. Exclusive charge by way of equitable mortgage on the residential property belonging to Ms. Sridevi Bolli valued at Rs. 20 million. 4. Personal Guarantee of Mr. Satyanarayana Bolli.

Working capital demand loan

210

ANNEXURE – IX DETAIL OF INVESTMENTS, AS RESTATED Particulars Long term investment, unless otherwise stated Investments In subsidiaries – Unquoted Arsin Corporation Arsin System Private Limited SST North America Others – Unquoted National Saving Certificate (Refer Note 2) Current investments – Unquoted Investment in Mutual funds Total Aggregate book value of long-term unquoted investment Aggregate book value of current investment Aggregate market value of current investment Notes: 1. The above figures disclosed are as per the restated financial information of Semantic Space Technologies Limited. 2. Investment in National Saving Certificate is Rs 6,000 which has been rounded off in the above table. (Amounts in Rupees Millions, except share and per share data) As at 31 March As at 30 June 2010 2007 2008 2009 2010

2006

-

67.27 -

106.42 -

139.03 688.64

139.03 0.01 688.64

139.03 688.64

-

-

-

-

-

-

233.27 233.28 233.28 233.28

245.39 312.67 67.28 245.39 245.74

153.62 260.04 106.42 153.62 153.64

827.67 827.67 -

827.68 827.68 -

827.67 827.67 -

211

ANNEXURE – X STATEMENT OF SUNDRY DEBTORS, AS RESTATED Particulars Debts outstanding for a period exceeding six months from Unsecured, considered good - Related parties - Others Unsecured - considered doubtful Total (A) Other debts Unsecured, considered good - Related parties - Others Unsecured - considered doubtful Total (B) Less: Provision for doubtful debts (C) TOTAL (Amounts in Rupees Millions, except share and per share data) As at 31 March As at 30 June 2010 2006 2007 2008 2009 2010

-

-

0.99 0.02 1.01

8.56 1.09 9.65

0.85 0.10 0.95

-

103.02 103.02 103.02

1.08 108.53 109.61 109.61

0.18 72.14 72.32 73.33

8.02 65.46 73.48 1.09 82.04

6.39 78.50 0.97 85.86 0.97 85.84

49.17 85.23 1.00 135.40 1.00 134.40

Note: The above figures disclosed are as per the restated financial information of Semantic Space Technologies Limited.

212

ANNEXURE – XI STATEMENT OF LOANS AND ADVANCES, AS RESTATED (Amounts in Rupees Millions, except share and per share data) Particulars 2006 Considered good Loans and advances to subsidiaries Security deposit Advances recoverable in cash or in kind or for value to be received Advance to SST Welfare Trust Prepaid expenses Advance tax and tax deducted at source, net Advance fringe benefit tax, net of provision for tax Interest accrued on investments MAT credit entitlement Dividend receivable TOTAL 6.32 9.37 0.59 0.05 16.33 As at 31 March 2007 7.26 4.42 8.00 1.35 0.17 21.20 2008 23.37 7.49 10.95 8.00 2.51 5.50 57.82 2009 97.68 8.02 12.44 7.17 2.29 0.34 22.62 150.56 2010 320.28 7.88 2.32 5.53 4.15 30.60 0.51 15.86 387.13 As at 30 June 2010 421.63 10.94 3.96 5.53 4.10 24.64 0.51 21.69 493.00

Note: The above figures disclosed are as per the restated financial information of Semantic Space Technologies Limited.

213

ANNEXURE – XII DETAIL OF CONTINGENT LIABILITIES, AS RESTATED Particulars CAPITAL COMMITMENTS Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances CONTINGENT LIABILITIES Income tax matters under dispute Bank guarantees issued to the custom authorities Bond to the Government of India for exemption of customs duty on imports Contingent purchase consideration payable to ex-shareholders of Watson SCS by JYACC, Inc Guarantee provided to ICICI Bank Plc, UK on account of loan taken by SST North America,Inc Corporate guarantee given to Bridge Bank - working capital facility with Arsin Corporation Guarantee provided to shareholders of JYACC, Inc on account of deferred purchase consideration payable by SST North America, Inc over the period of two years Total (Amounts in Rupees Millions, except share and per share data) As at 31 March As at 30 June 2010 2006 2007 2008 2009 2010 4.73 -

0.35 7.07 -

2.23 0.60 12.07 -

4.27 0.70 12.07 -

34.44 0.63 12.68 509.50 679.68

36.02 0.41 8.13 270.84 56.43 125.36

37.39 0.58 11.58 10.62 186.40 58.25 -

7.42

19.63

17.04

1,236.93

497.19

304.82

Note: The above figures disclosed are as per the restated financial information of Semantic Space Technologies Limited.

214

ANNEXURE – XIII CAPITALISATION STATEMENT (Amounts in Rupees Millions, except share and per share data) Pre-issue Post-issue As at 30 June 2010

Particulars

Borrowings Short term debt Long term debt (A) Total borrowings Shareholders’ funds Share capital Reserves and surplus Total shareholders’ funds (B) Long term debt/Equity (A/B)

92.76 92.76

120.28 1,251.41 1,371.69 -

Note: The above figures disclosed are as per the restated financial information of Semantic Space Technologies Limited.

215

ANNEXURE – XIV DETAILS OF THE LIST OF RELATED PARTIES AND NATURE OF RELATIONSHIPS Particulars Year ended 31 March 2006 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited Year ended 31 March 2007 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited Year ended 31 March 2008 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited Year ended 31 March 2009 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited Year ended 31 March 2010 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited Period ended 30 June 2010 Mr. Satyanarayana Bolli Mrs. Sridevi Bolli Mr. Rama Rao Bolli Icon Investments Limited

Key Management Personnel

Entity controlled by Key Management Personnel Subsidiaries (including step down subsidiaries)

Arsin Corporation Arsin System Private Limited

Arsin Corporation Arsin System Private Limited

Arsin Corporation Arsin System Private Limited Semantic Space Technologies North America, Inc (SST NA) JYACC, Inc doing business as "Prolifics" Prolifics Deutschland GmbH SST Employees Welfare Trust

Arsin Corporation Arsin System Private Limited Semantic Space Technologies North America, Inc (SST NA) JYACC, Inc doing business as "Prolifics" Prolifics Deutschland GmbH SST Employees Welfare Trust

Arsin Corporation Arsin System Private Limited Semantic Space Technologies North America, Inc (SST NA) JYACC, Inc doing business as "Prolifics" Prolifics Deutschland GmbH SST Employees Welfare Trust

Enterprise where principal shareholders are trustees

SST Employees Welfare Trust

SST Employees Welfare Trust

SST Employees Welfare Trust

Note 1: Above disclosures are made in accordance with Accounting Standard (AS) 18 "Related Parties" prescribed by the Companies (Accounting Standards) Rules, 2006.

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ANNEXURE - XIV (continued) DISCLOSURES OF SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES (Amounts in Rupees Millions, except share and per share data) For the For the year ended 31 March quarter ended 2006 2007 2008 2009 2010 30 June 2010 2.34 2.07 2.32 0.58 0.51 2.00 0.30 1.20 1.20 1.20 1.20 0.30 1.35 2.30 0.57 1.01 1.01 1.90 1.67 0.66 0.08 0.08 1.57 3.43 4.08 2.02 44.02 2.84 0.02 67.28 2.59 0.80 8.00 39.14 11.00 0.49 11.88 32.61 10.77 10.68 12.65 42.84 33.71 688.64 (0.83) 38.19 8.28 0.01 265.25 (1.64) 52.18 9.27 99.40 -

Particulars Satyanarayana Bolli Sridevi Bolli Rama Rao Bolli Arsin Corporation Remuneration and allowances Dividend Remuneration and allowances Dividend Remuneration and allowances Dividend Income from software development Investment in subsidiaries Loan given Interest on loan given Loan recovered from subsidiaries Income from software development Reimbursement of expenses Investment in subsidiaries Expenses incurred on behalf of subsidiaries Loan given to subsidiaries Investment in subsidiaries Dividend Dividend Loans and advances given Loans and advances repaid

JYACC, Inc doing business as "Prolifics" Arsin Systems Private Limited Semantic Space Technologies North America, Inc (SST NA) Icon Investments Limited SST Welfare Trust

Note 1: The figures disclosed above are based on the restated financial information of Semantic Space Technologies Limited. Note 2: Above disclosures are made in accordance with Accounting Standard (AS) 18 "Related Parties" prescribed by the Companies (Accounting Standards) Rules, 2006.

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ANNEXURE - XIV (continued) DETAILS OF RELATED PARTIES OUTSTANDING BALANCES (Amounts in Rupees Millions, except share and per share data) As at 31 March As at 30 June 2010 2007 2008 2009 2010 8.00 8.00 7.17 5.53 5.53 0.80 40.38 33.22 0.54 52.74 11.49 0.72 67.28 106.42 139.03 139.03 139.03 1.08 1.17 0.95 0.85 44.57 7.07 6.39 4.60 2.59 2.00 2.30 0.08 11.88 24.73 72.23 688.64 1.51 0.01 318.17 688.64 421.63 688.64 -

Name of the party SST Employees Welfare Trust Arsin Corporation

Nature of transaction Loans and advances Dividend payable Current liabilities Loans and advances Investments Sundry debtors Sundry debtors Loans and advances Purchase of shares Loans and advances Investments Dividend payable Dividend payable Dividend payable Dividend payable

• JYACC, Inc doing business as "Prolifics" Arsin Systems Private Limited SST North America, Inc (SST NA) Icon Investments Limited Satyanarayana Bolli Sridevi Bolli Rama Rao Bolli

2006 0.02 2.84 0.51 1.35 0.08

Note 1: The figures disclosed above are based on the restated financial information of Semantic Space Technologies Limited. Note 2: Above disclosures are made in accordance with Accounting Standard (AS) 18 "Related Parties" prescribed by the Companies (Accounting Standards) Rules, 2006.

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ANNEXURE - XV DETAILS OF DIVIDEND (Amounts in Rupees Millions, except share and per share data) As at 31 March Particulars Equity share capital Face value (Rs.) Rate of dividend % Amount of dividend* 2006 118.77 10.00 10.00% 5.54 2007 118.77 10.00 10.00% 11.88 2008 118.77 10.00 0.00% 2009 118.77 10.00 0.00% 2010 120.28 10.00 0.00% As at 30 June 2010 120.28 10.00 0.00% -

* Payment of dividend is at the rate of 10% on the amount paid up at prorata from the date of allotment. Note 1: The figures disclosed above are based on the restated financial information of Semantic Space Technologies Limited. Note 2: The Board of directors of the Company in their meeting dated 4 September 2008 had proposed for dividend of Rs.5.93 Million for the year 2008. However, the same was not approved by the shareholders in Annual General Meeting for that year and accordingly, the provision for the same in the financial statement was reversed in the subsequent year.

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ANNEXURE – XVI STATEMENT OF TAX SHELTER (Amounts in Rupees Millions, except share and per share data) PARTICULARS 2006 Profits before taxes, as restated (A) Income tax rates (including surcharge and education cess) applicable (B) Tax at notional rates (C) Permanent differences Dividend income exempt under section 10(34) Exemption u/s 10A of Income Tax Act Filling Fee paid towards increase in authorised share capital disallowed under the tax law Other disallowances u/s 40 (a) (ia) Total permanent differences (D) Timing differences Differences between book depreciation and tax depreciation Other timing differences Amounts disallowed u/s 43B, net Total timing differences (E) Net adjustments(F)=(D+E) Set off of carry forward losses (G) Adjustments (H)=[(F)-(G)] Tax impact of adjustments (I)=(H)*(B) Tax payable under MAT/ (utilisation of MAT credit) (J) Relief for taxes paid by US branch (K) Tax provision based on taxable income as per tax laws (C+I+J+K) Interest payable under section 234 of Income tax Act 1961 Current tax payable in India MAT credit (entitlement)/ utilization Fringe benefit tax Tax expenses (L) Deferred tax charge / (credit) on expenses debited to profit and loss account in the current year/ period but allowable for tax purpose in following year/ period (net of reversal of earlier periods) (M) Tax expense on US branch (N) Total tax expenses / (credit) (L+M+N) (0.72) 1.37 0.65 (175.78) (175.78) (59.17) 2.53 0.35 0.35 0.60 0.95 (0.25) (1.80) (0.28) (2.08) (292.28) (292.28) (98.38) 2.22 5.09 0.27 5.36 0.88 6.24 0.66 (5.02) (2.46) (7.48) (122.81) (122.81) (41.74) 5.50 19.10 1.30 20.40 (5.50) 0.98 15.88 (0.52) (7.02) 1.79 (1.06) (6.29) (207.66) (51.18) (156.48) (53.19) 19.58 19.58 1.45 21.03 (19.58) 1.06 2.51 4.53 (1.84) 1.50 0.09 (0.25) (17.59) 51.18 (68.77) (23.37) (6.77) 32.02 32.02 6.77 38.79 0.01 0.90 0.90 (21.03) (21.03) (6.99) (0.42) 8.90 8.90 0.42 9.32 (0.48) (1.30) (175.66) 0.49 (13.34) (276.87) (14.98) (101.01) (2.84) (199.65) (17.35) 0.01 (21.93) 184.33 33.66% 62.05 For the year ended 31 March 2007 313.99 33.66% 105.69 2008 162.81 33.99% 55.34 2009 156.48 33.99% 53.19 2010 182.88 33.99% 62.16 For the quarter ended 30 June 2010 49.11 33.22% 16.31

0.04 (176.43)

0.01 (290.20)

0.66 (115.33)

1.12 201.37)

(17.34)

(21.93)

2.57 3.27

7.87 14.77

0.64 16.00

(4.51) 2.53

0.04 38.84

8.84

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with restated audited consolidated financial statements of our Company included in this Draft Red Herring Prospectus, including the notes thereto and reports thereon. This financial information has been prepared in accordance with Indian GAAP, the SEBI ICDR Regulations and the Companies Act and restated in accordance with the SEBI ICDR Regulations. The restated financial information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and International Financial Reporting Standards. Our Company’s fiscal year ends on March 31 of each year; all references to a particular fiscal year are to the twelve-month period ended March 31 of that year. This discussion contains forward-looking statements and reflects our current views with respect to plans, estimates and beliefs as well as future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors and contingencies that could impact our financial condition and results of operations such as those set forth in the chapter titled “Risk Factors” beginning on page XVIII of this Draft Red Herring Prospectus. Overview Semantic Space Technologies Limited was founded in 1997 with an engaging vision of providing solutions and services that would help simplify the enablement, implementation and upgrade of Information Technology for business enterprise and provide value realisation for not only our immediate customers, but to their end customers as well. We have thereby evolved to emerge as a specialized solutions provider offering a variety of solutions and services in mainly three areas: Application Services, Independent Verification and Validation Services (IVV) and Systems Integration (SI) Solutions in the Application Infrastructure and Middleware space. We leverage a differentiated business model through investments in pre-fabricated software components and frameworks to build enduring value for our customers. We have expanded our service portfolio with strategic acquisitions to emerge as a well-balanced player in the IT services segment. We offer our services under three SBUs viz. Application Services, IVV and SI - each of which possesses a set of unique attributes and delivers value that strengthen the overall business proposition from our organization. Application Services is an encompassing portfolio of general IT services around Application Development, Maintenance, Modernization and Support. Systems Integration in the AI&M space underscores our focus and attention to the growing market space of middleware and application infrastructure layer. Our premium services and solutions of Systems Integration in this space give us the advantage of spreading our offerings for the same clients into the Application Services arena. In addition, the IVV services and solutions that focus on testing and quality assurance have a presence in everything that we build, maintain, migrate, support, configure and implement – be it in SI or in Application Services space. Application Services, IVV and SI complement each other effectively and operate with a common strategy of relying on pre-built tools, utilities, reusable components and application frameworks to provide increased value to our customers. We build our competencies around key technologies and domains that develop our expertise and continue to differentiate us. Our growth and current business positioning is attributable to our recent past where we have proved the success of our inorganic strategies and our capabilities to manage growth. Through our acquisitions in the years 2006 and 2008 we stepped into the specialized service delivery areas of IVV (Independent Verification and Validation) and SI (Systems Integration).These initiatives have largely driven us towards diversifying and integrating our value proposition. These strategic moves have benefitted us in our financial performance to grow at 5 year CAGR (ending Fiscal 2010) of over 70% in our revenues and about 37% and 26% in our EBITDA and Profits After Tax respectively.

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Material Developments after June 30, 2010 that may affect our future Results of Operations:  Merger of Arsin Systems Private Limited (‘Arsin’) with the Company

With a view to bring better synergies and to reduce the overall cost of operations and for the purpose of optimum utilisation of financial and human resources and other allied objects, a scheme of amalgamation (‘the Scheme’) was proposed to amalgamate Arsin Systems Private Limited, a step-down subsidiary (“the Transferor company”) with its ultimate parent Company, Semantic Space Technologies Limited (“the Transferee company”). Effective date of amalgamation for accounting purposes is 1 April 2010. On filing an application, High Court of Andhra Pradesh has accorded the approval for the scheme of Merger on 15 September 2010 with effect from 1 April 2010. The Company has filed the requisite form with the Registrar of Companies. This merger did not have any impact on the consolidated financial statements of the Company. Certain Factors Affecting our Results of Operations and Financial Condition Results of our business operations and the resultant financial condition of our Company are contingent upon several factors that are not necessarily within direct control of our operations. Most of these factors are exigent upon global business realities, fluctuation in the financial markets that affect the exchange rates, government rules and regulations and the applicable tax laws and liabilities. Some of the factors that have influenced the state of our business, results of our operations and the consequent financials are factors such as: global economic downturn, foreign exchange fluctuations, our dependence on US markets, our client concentration and applicable taxation laws. Global Economic Downturn Negative trends in the general economy globally have in the past and may continue to cause a downturn in the market for our services. The financial disruption affecting the banking system, housing market and financial markets have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets and extreme volatility in credit and equity markets. This financial crisis may adversely affect our industry and may continue to do so if it results, for example, in the insolvency of a key customer or the inability of our customers to obtain credit to finance their operations. Foreign Exchange Fluctuations Our financial statements under Indian GAAP are reported in Indian Rupees. A substantial portion of our income from the software services is generated in US Dollars while a large part of our expenses are incurred in Indian Rupees. We expect that a majority of our revenues will continue to be generated in US Dollars for the foreseeable future. Consequently, our results from operations are affected to the extent the value of the Indian Rupee fluctuates against the US Dollar. In particular, a significant appreciation of the Indian Rupee against the US Dollar and other foreign currencies has the effect of reducing the Indian Rupee value of our foreign currency denominated revenues, thereby adversely affecting our results of operations. We have not hedged for this foreign exchange fluctuation in the past and, thus, there was a negative effect marked during Fiscal 2007, 2008 and 2010 as the Indian Rupee appreciation against the US Dollar has been significant. Our Dependence on US Markets A significant portion of our revenues is derived and may continue to be derived from the clients located in the United States. For the quarter ended June 30, 2010, and for the Fiscal 2010 and Fiscal 2009, 87.6%, 77.0% and 78.3%, respectively, of our aggregate revenues were derived from the clients located in the United States. Consequently, in the event of any economic slowdown in the United States, clients may reduce or postpone their IT or software spending significantly. Further, clients who presently outsource a significant proportion of their IT services to vendors in India may, for various reasons, including to diversify geographic risk or due to changes in the

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US taxation laws disfavoring outsourcing, may reduce their outsourcing to us. This is a factor that can significantly affect our business and thereby our financial position. Our Client Concentration The Company enjoys enduring long-term relationships with limited number of large corporate clients. For the quarter ended June 30, 2010, and for Fiscal 2010 and Fiscal 2009, our top ten clients accounted for 62.1%, 53.0% and 50.5%, respectively, of our revenues. Since there is significant competition for the services we provide, and we are not an exclusive service provider to our major clients, the level of revenues from our major clients could vary from period to period. Our major clients typically retain us under master services agreements that do not provide for specific amounts of guaranteed business. These agreements, as well as the project assignments received under these master services agreements, are typically terminable by our clients upon short notice and without significant penalties and with or without cause. The loss of one or more major clients, or a significant reduction in the revenues that we receive from one or more of our major clients, may adversely affect our business and profitability. Applicable Taxation Laws Currently, we benefit from certain tax incentives under Section 10A of the Income Tax Act, 1961, for the IT services that we provide from specially designated “Software Technology Parks,” or STPs. The STP tax incentives currently include a ten year “tax holiday” from the payment of Indian corporate income tax for the operations of most of our Indian facilities. As a result of these incentives we enjoy partial exemption from Indian corporate income taxes in respect of profits derived from exported Information Technology services and products. Pursuant to the Finance Act, 2009, this tax holiday will continue until March 31, 2011. A substantial portion of our profits is, therefore exempt from income tax. When our tax benefits expire or terminate, our tax expense is likely to materially increase, reducing our profitability after tax. Further, we would also be entitled to tax holiday for our offshore delivery centre situated in Gachibowli, Hyderabad, in case of the entire income earned from export of software under Sec 10AA of the Income Tax Act, as a Special Economic Zone (SEZ) Unit. With effect from April 1, 2007, we are exposed to the Minimum Alternative Tax (MAT) on our book profits as per provisions of section 115JB of the Income Tax Act. However, we are entitled to claim set-off against future tax liability of an amount equal to the excess of MAT paid over actual income-tax liability for the year. Effective April 1, 2010, the rate of MAT was increased from 15% to 18%. When our tax benefits expire or terminate, or where the rate of MAT is increased further our tax expense is likely to materially increase, reducing our profitability after tax. Significant Accounting Policies (a) Basis of preparation The restated consolidated summary statement of assets and liabilities of Semantic Space Technologies Limited (‘SSTL’ or ‘the Company’), the parent company and all of its subsidiaries (collectively referred to as “Group”) as at 30 June 2010, 31 March 2010, 31 March 2009, 31 March 2008 and 31 March 2007 and the related restated consolidated summary statement of profits and losses and cash flows for years/period ended on that date (hereinafter collectively referred to as “Restated Consolidated Summary Statements”) relate to Semantic Space Technologies Limited (“the Company”) and have been prepared specifically for inclusion in the offer document to be filed by the Company with the Securities and Exchange Board of India (“SEBI”) in connection with its proposed Initial Public Offering. These Restated Consolidated Summary Statements have been prepared to comply in all material respects with the requirements of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the “ SEBI Regulations”). The restated consolidated summary statements have been prepared based on the consolidated financial statements of the Group prepared and presented in accordance with the Indian Generally Accepted Accounting Principles (“GAAP”) under the historical cost convention on the accrual basis. GAAP comprises accounting standards notified by the Central Government of India under Section 211 (3C) of the Companies Act, 1956,

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other pronouncements of Institute of Chartered Accountants of India, the provisions of Companies Act, 1956, to the extent applicable. (b) Use of estimates The preparation of the Restated Consolidated Summary Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the Restated Consolidated Summary Statements and reported amounts of revenues and expenses for the year. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. (c) Principles of consolidation The consolidated financial statements include the financial statements of Semantic Space Technologies Limited, the parent company and all of its subsidiaries (collectively referred to as “the Group” or “Semantic Space Group”), in which SSTL has more than one-half of the voting power of an enterprise or where it controls the composition of the board of directors. The Restated Consolidated Summary Statements have been prepared on the following basis:  The financial statements of the parent company and the subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances/ transactions and resulting unrealised profits in full. Unrealised losses resulting from intra-group transactions have also been eliminated except to the extent that recoverable value of related assets is lower than their cost to the Group. The amounts shown in respect of reserves comprise the amount of the relevant reserves as per the balance sheet of the parent company and its share in the post-acquisition increase in the relevant reserves of the subsidiaries. The excess / deficit of cost to the parent company of its investment in the subsidiaries and associates over its portion of equity at the respective dates on which investment in such entities were made is recognised in the financial statements as goodwill / capital reserve. The parent company’s portion of equity in such entities is determined on the basis of the book values of assets and liabilities as per the financial statements of such entities as on the date of investment and if not available, the financial statements for the immediately preceding period are adjusted for the effects of significant transactions, up to the date of investment. Minority interest in the net assets of consolidated subsidiaries consists of: (a) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and (b) the minorities’ share of movements in equity since the date the parent subsidiary relationship came into existence. The Restated Consolidated Summary Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

(d) Fixed assets and depreciation Fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. Advances paid towards the acquisition of the fixed assets outstanding at each balance sheet date and the cost of fixed assets not ready for their intended use before such date are disclosed under capital work-in-progress.

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Depreciation on fixed assets is provided using the straight-line method over the estimated useful lives of assets as determined by management. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as minimum rates. Pursuant to this policy, the depreciation on fixed assets of the Company have been provided at the rates prescribed in Schedule XIV of the Companies Act, except for assets at the branch office in California, USA and the US subsidiaries, for which the management has estimated the useful life to be five years, which is lower than that envisaged by the aforesaid Schedule XIV. The Management’s estimates of the useful lives for various categories of fixed assets are given below: For SSTL Asset For Subsidiaries and US Branch office Asset Estimated useful life (in years) Data Processing Equipment 3-5 Furniture and fixtures 5-7 Leasehold improvement 5-7 Computer software and 3-5 licenses Plant & machinery/ 20-22 electrical installations/ office equipment

Data Processing Equipment Furniture and fixtures Leasehold improvement Computer software and licenses Plant & machinery/ 20-22 electrical installations/ office equipment Vehicles 9-11 Leasehold improvements are amortised over the primary period of the lease or the useful life of assets, whichever is shorter. Depreciation is calculated on a pro-rata basis from the date of installation till the assets are sold or disposed. Individual assets costing less than Rs 5,000 are depreciated in full in the year of purchase. (e) Intangible assets and amortisation Internally generated intangible assets are stated at cost and are capitalised if it can be measured reliably during the development phase and when it is probable that future economic benefits that are attributable to the assets will flow to the company. Intangible assets are amortised over their estimated useful life (5 – 10 years) on a straight line basis. (f) Investments Long-term investments are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment. Current investments are carried at the lower of cost and market value. The comparison of cost and market value is done separately in respect of each category of investment. (g) Employee benefits Contribution payable to the recognised provident fund and 401K plan in United Sates of America, which is a defined contribution scheme is made on a monthly basis at a predetermined rates to the appropriate authorities and are charged to the profit and loss account. Provision for gratuity and leave encashment, which are defined benefit schemes, are charged to the profit and loss account based on actuarial valuations at the balance sheet date, carried out by an independent actuary.

Estimated useful life (in years) 6-7 15-16 5 5-8

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(h) Revenue recognition Revenue is primarily derived from software development and related technical services. Arrangements with customers for software development and related technical services are either fixed-price or on a time-andmaterial basis. Revenue on time-and-material contracts are recognised as the related services that are performed and revenue from the end of the last billing to the balance sheet date is recognised as unbilled revenues. Revenue from fixedprice contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognised based upon the percentage of completion. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Costs and earnings in excess of billings are classified as Unbilled Revenue while billings in excess of cost and earnings are classified as unearned revenue. Revenue from sale of licenses for software applications is recognised on the transfer of the title in the user license to the customer. Dividend income is recognised when the unconditional right to receive the income is established. Interest income is recognised on time proportion method based on the underlying rates of interest. (i) Foreign currency transactions, balances and translation of financial statements of foreign subsidiaries Foreign currency transactions are recorded using the exchange rates prevailing on the dates of the respective transactions or at an average monthly rate that approximates the actual rate at the date of transaction. Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account. Monetary assets and liabilities that are denominated in foreign currency are translated at the exchange rate prevalent at the date of the balance sheet. The resultant exchange differences are recognized in the profit and loss account. Non-monetary assets are recorded at the rates prevailing on the date of the transaction. Exchange differences arising on a monetary item that, in substance, forms part of the enterprise’s net investment in a non-integral operation are accumulated in a foreign currency translation reserve in the enterprise’s financial statements until the disposal of the net investment, at which time they will be recognised as income or as expense. The Company’s foreign branch in US has been identified as an integral operation in accordance with AS-11 (Revised 2003) “The Effect of Changes in Foreign Exchange rates”. The financial statements of the non-integral foreign operations are translated into Indian rupees as follows:  All Monetary items are translated using the closing rate.  Non-monetary items are translated using the exchange rate at the date of transaction i.e., the date when they were acquired.  Revenue items, except depreciation are translated at the respective monthly average rates. Depreciation is translated at the rates used for the translation of the values of the assets on which depreciation is calculated.  The resulting net exchange difference is credited or debited to a foreign currency translation reserve. However, an exchange difference arising out of intra-group monetary item, whether short term or long term is recognised in the Profit and Loss Account.  Contingent liabilities are translated at the closing rate. The Company’s foreign subsidiaries have been identified as non- integral foreign operations in accordance with the requirements of AS-11 “The Effect of Changes in Foreign Exchange Rates”. The financial statements of non integral foreign operations are translated into Indian rupees as follows:  All assets and liabilities, both monetary and non-monetary, are translated using the closing rate.  Income and Expense items are translated at the average rate for the year; and 226

 

All resulting net exchange differences are accumulated in a foreign currency translation reserve in the enterprise financial statements until the disposal of the net investment, at which time they should be recognised as income or as expenses. Contingent liabilities are translated at the closing rate.

(j) Income-tax expense Income tax expense comprises of current, deferred and fringe benefit tax. Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the entities in the Group. Deferred tax Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period which originate during the year but reverse after the tax holiday period. The deferred tax charge or benefit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date and written-down or written-up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised. Deferred tax consequences of timing differences which originate during the tax holiday period and reverse after the tax holiday period are recognised in the year in which the timing differences originate. The break-up of the major components of the deferred tax assets and liabilities as at the balance sheet date have been arrived at after setting off deferred tax assets and liabilities where the group has a legally enforceable right to set-off assets against liabilities, and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws. Minimum Alternate Tax (MAT) Credit entitlement MAT credit entitlement represents amounts paid in a year under Section 115 JA/JB of the Indian Income Tax Act 1961 (‘IT Act’), in excess of the tax payable, computed on the basis of normal provisions of the IT Act. Such excess amount can be carried forward for set off against future tax payments for ten succeeding years in accordance with the relevant provisions of the IT Act. Since such credit represents a resource controlled by the Group as a result of past events and there is evidence as at the reporting date that the Group will pay normal income tax during the specified period, when such credit would be adjusted, the same has been disclosed as “MAT Credit entitlement”, under “Loans and Advances” in balance sheet with a corresponding credit to the profit and loss account, as a separate line item. Such assets are reviewed as at each balance sheet date and written down to reflect the amount that will not be available as a credit to be set off in future, based convincing evidence and on the applicable taxation law then in force. Fringe benefit tax Consequent to the introduction of Fringe Benefit Tax (“FBT”) effective 1 April 2005, the Company provides for and discloses FBT in accordance with the provisions of Section 115 WC of the Income-tax Act, 1961 and the guidance note on FBT issued by the ICAI. Fringe benefit tax was abolished with effect from 1 April 2010.

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(k) Borrowing cost: Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalized as part of the cost of such asset. A qualifying asset is one that necessarily takes substantial period of time i.e., more than 12 months to get ready for its intended use. All other borrowing costs are charged to revenue. (l) Earnings per share The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit after tax for the year and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. The dilutive potential equity shares are deemed converted as of the beginning of the period, unless they have been issued at a later date. The diluted potential equity shares have been adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). (m) Provisions and contingent liabilities The Group creates a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a reliable estimate of such obligation. (n) Impairment of assets The Group assesses at each balance sheet date whether there is any indication that an asset including goodwill may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost. (o) Leases Leases where the lessor effectively retains substantially all the risks and benefits of the ownership of the leased assets are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight line basis over the lease term. (p) Stock based compensation As prescribed by the Guidance Note on Accounting for Employee Share- based Payments issued by Institute of Chartered Accountants of India and related interpretations, the Company applies the intrinsic value method of accounting to account for stock options issued to the employees of the Company. The excess of the intrinsic value of shares, at the date of grant of options under the Employee stock option schemes, over the exercise price is treated as employee compensation and amortised over the vesting period.

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Discussion on Results of Operations Our results of operations are discussed here based on the consolidated figures. The table below shows a comparative analysis of our consolidated Income, Expenditures, EBITDA and Profits After Tax for the Fiscals 2007, 2008, 2009 and 2010 and for the quarter ended June 30, 2010.
(Amount in Rupees million)

31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10 30-Jun-10 PROFIT AND LOSS ACCOUNT Amount As % * Amount As % * Amount As % * Amount As % * AmountAs % * Income from Operations Software Development Services 814 100% 935 100% 1,859 2,349 633 54% 74% 65% Product Sales 664 1,259 533 46% 0% 0% 26% 35% Total 814 935 100% 2,523 100% 3,608 100% 1,166 100% 100% 75% 15% 170% 43% y-o-y growth in % Less: Product Cost 515 1,075 481 41% 0% 0% 20% 30% Personnel Expenses 361 492 1,584 409 35% 44% 53% 1,418 56% 44% Operating and Other Expenses 146 258 418 545 178 15% 18% 28% 17% 15% EBIDTA 307 185 171 404 99 38% 20% 7% 11% 8% Less: Interest and Financial Charges 0 3 35 44 7 0% 0% 1% 1% 1% Depreciation / Amortisation 5 11 38 47 11 1% 1% 2% 1% 1% Add: Other Income (Net) 15 18 88 3 1 2% 2% 3% 0% 0% Profits Before Tax 316 190 186 315 82 39% 20% 7% 9% 7% Tax 15 16 8 44 13 2% 2% 0% 1% 1% Profits After Tax 302 174 178 271 69 37% 19% 7% 8% 6%

* As percentage of income from operations

The discussion given below on Income and Expenditure items are based on consolidated figures for that fiscal unless specified otherwise. All the figures discussed below are in Rupees million (rounded off to the nearest decimal) and all the percentages given below have been rounded off for the purpose of discussion. We have made two acquisitions in the past three years where our Arsin acquisition was in effect from December 29, 2006 and Prolifics acquisition was in effect from June 26, 2008. Our financial performance (both revenues and expenses) for the Fiscal 2008 may not be directly comparable to that of Fiscal 2007 since the former includes financial performance of Arsin for 12 months vis-à-vis latter which includes financial performance of Arsin for 3 months. Likewise, our financial performance for the Fiscal 2009 may not be directly comparable to that of Fiscal 2008 since financial performance of Prolifics is first consolidated for the period of 9 months in Fiscal 2009 and again due to this the Fiscal 2010 (carrying financial performance of 12 months) may not be directly comparable to Fiscal 2009. On consolidated basis, we have significant revenues and expenditures in foreign currencies. The foreign exchange fluctuation affects both the revenues and expenditures in absolute terms when converted into Indian Rupees. To this extent, the revenues and expenditures will be higher or lower depending on the depreciation or appreciation of Indian Rupee in foreign currency terms. Review of Financial Performance Our income (consolidated) grew from Rs.814 million for the Fiscal 2007 to Rs.3,608 million for the Fiscal 2010 recording a 3-Year CAGR of 64.3%. We grew our income from ‘Software Development Services’ at a 3-Year CAGR of 42.4% achieving Rs.2,349 million for the Fiscal 2010 which comprised of 65.1% of our consolidated income for that fiscal. Our income from ‘Product Sales’ of Rs.1,259 million was 34.9% of our consolidated income for the Fiscal 2010 achieving an annual growth of 89.7% when compared to the previous fiscal. Our EBITDA and PAT, for the Fiscal 2010, on consolidated basis were Rs.404 million and Rs.271 million respectively, i.e. 11.2% and 7.5% of our consolidated income for that fiscal. Our revenues from IVV have remained about 11% of our 229

consolidated income since Fiscal 2009 and our revenues from SI grew from about 64% in Fiscal 2009 to about 74% of our consolidated income for the quarter ended June 30, 2010. Review of Financial Performance for the quarter ended June 30, 2010: During this quarter, JYACC purchased substantially all the assets of Watson SCS, Inc., a Florida-based consulting firm specialized in information security with effect from April 1, 2010. Analysis of Profit and Loss Account Items: Income Our Income for the quarter ended June 30, 2010 was Rs.1,166 million of which 54.3% comprised of our income from ‘Software Development Services’ and 45.7% of that from ‘Product Sales’.
Revenue Mix for the QE June 2010

This being the first quarter of the fiscal it may not reflect an appropriate revenue mix which is relevant for the full 12 month of a financial year.

Expenditure Product Cost Our Product Cost for the quarter ended June 30, 2010 was Rs.481 million, i.e. 41.2% of our income. This cost when measured as a percentage of our income from Product Sales increased to 90.1% from 85.4% in Fiscal 2010. Personnel Expenses Our Personnel Expenses for the quarter ended June 30, 2010 was Rs.409 million i.e. 35.0% of our Income. Personnel Expenses and Consultancy Charges collectively for the quarter ended June 30, 2010 was Rs.503 million i.e. 73.4% of our total Income as reduced by Product Cost. Operating and Other Expenses Our Operating and Other Expenses for the quarter ended June 30, 2010 was Rs.178 million, i.e. 15.3% of our Income. It primarily comprised of Consultancy Charges of Rs. 95 million, i.e. 53.2% of the total Operating and Other Expenses for the period. EBITDA We earned Rs.99 million EBITDA for the quarter ended June 30, 2010, which translates as 8.5% of our Income and 14.4% of our total Income as reduced by Product Cost. Profits After Tax

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Our Profits After Tax for the quarter ended June 30, 2010 was Rs.69 million which is 5.9% of our Income and 10.0% of our total Income as reduced by Product Cost. Fiscal 2010 in comparasion with Fiscal 2009 Analysis of Profit and Loss Account Items: Our financial performance (both revenues and expenses) for the Fiscal 2010 may not be directly comparable to that of Fiscal 2009 since the latter includes financial performance of Prolifics for 12 months vis-à-vis former which includes financial performance of Prolifics for 9 months. Further, in Fiscal 2010 the foreign exchange fluctuation affected our US Dollar denominated revenues and expenditures in absolute terms to the extent of depreciation in the Indian Rupee by 3.3% in average terms compared to Fiscal 2009. Income Our Income grew from Rs.2,523 million in Fiscal 2009 to Rs.3,608 million in Fiscal 2010, an annual growth of 43%. It comprised of our income from ‘Software Development Services’ and ‘Product Sales’ being 65.1% and 34.9% of our Income respectively for the Fiscal 2010. Our income from ‘Software Development Services’ grew by 26.4% while ‘Product Sales’ grew by 89.7% when compared to the previous fiscal. We witnessed growth in our revenues from IVV during this fiscal with increased business from our existing clients and from the addition to the list of clients we cater.
Revenue Mix for the Fiscal 2010

Expenditure Product Cost Our Product Cost for the Fiscal 2010 was Rs.1,075 million, i.e. 29.8% of our income. As this is directly attributable to our income from Product Sales as a percentage it increased to 85.4% of our Product Sales income from 77.7% of that in Fiscal 2009. Personnel Expenses Our Personnel Expenses for the Fiscal 2010 was Rs.1,584 million, i.e. 43.9% of our Income. This has improved from 56.2% of our Income for the Fiscal 2009. In absolute terms, though, it has increased by 11.7%, the improvement relatively is primarily on account of the growth in sales. Personnel Expenses and Consultancy Charges collectively for the Fiscal 2010 was Rs.1,818 million i.e. 71.8% (78.2% in the previous fiscal) of our Income as reduced by Product Cost. Operating and Other Expenses Our Operating and Other Expenses for the Fiscal 2010 was Rs.545 million, i.e. 15.1% of our Income improving from 16.6% of our Income for the previous fiscal. These expenses comprised of Consultancy Charges and Travelling and Conveyance apart from other costs.

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Consultancy Charges These costs showed an increase from Rs.152 million (i.e. about 36.4% of the total Operating and Other Expenses) in Fiscal 2009 to Rs.234 million (i.e. about 42.9% of the total Operating and Other Expenses) in Fiscal 2010. This increase has been in relation to the growth in revenues from IVV and SI. During this fiscal, the group adopted a strategy of hiring temporary resources (Just- In-Time) based on the business opportunities. This in turn increased the Consultancy Charges and reduced the Personnel Expenses proportion to the sales growth. In addition, Arsin was identified as an offshore testing partner for one of our key clients for which the resources who were working from other vendors were taken on hire at the client premises till the same was replaced with the permanent positions.

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Travelling and Conveyance We witnessed these costs increase from Rs.70 million in Fiscal 2009 to Rs.91 million in Fiscal 2010. In absolute terms, it increased by about 30% in Fiscal 2010 primarily on account of increase in travel of resources deployed offshore for IVV business which travelled onsite based on the client requirements.

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Rent The rental costs for the company for the Fiscal 2010 was Rs. 67 million vis-à-vis Rs.64 million for the Fiscal 2009.

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Loss on account of Foreign Exchange fluctuations The Loss on account of Foreign Exchange fluctuations was Rs.14.8 million for the Fiscal 2010. This was on account of the mark to market adjustments of the foreign currency balances and forex fluctuation between the amounts booked and collected of Sundry Debtors in foreign currencies. Apart from these, other expenses witnessed some improvement on account of cost rationalization measures taken by us. Other Income The Other Income was Rs. 3 million for the Fiscal 2010 vis-à-vis Rs.88 million for the Fiscal 2009. The figure of Rs.88 million for the previous fiscal includes Rs.78.65 million towards foreign exchange gain arising from the mark to market adjustment on the foreign currency balances held by us and foreign exchange fluctuation between the amounts booked and collected of Sundry Debtors in foreign currencies. EBITDA Our EBITDA for the Fiscal 2010 was Rs.404 million i.e. 11.2% of our income against Rs.171 million i.e. 6.8% of our Income for the Fiscal 2009. The EBITDA margins when compared as a percentage of our total income as reduced by Product Cost improved by 7.4% to be 15.9% for Fiscal 2010 (i.e. 8.5% for the Fiscal 2009). The improvement in margin was attributable to significant cost rationalization made across all operational expenses and across the group. Interest and Financial Charges Our Interest and Financial Charges on consolidated basis for the Fiscal 2010 was Rs.44 million. During this year, to manage the operational cash requirements, we had a credit limit with ICICI Bank, India for Rs.100 million. Depreciation / Amortisation Our Depreciation / Amortisation charge for the Fiscal 2010 was Rs.47 million primarily due to amortization of intangible asset pertaining to PPM Studio and Job a Fair for the entire 12 months compared to previous fiscal when it was only for 3 months.

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Profits After Tax Our Profits After Tax for the Fiscal 2010 was Rs.271 million, which translates to 7.5% of our Income and 10.7% of our total Income as reduced by Product Cost. Though improving marginally from the previous fiscal as a percentage of our Income it grew by 52.7% in absolute terms in lines with the growth in our consolidated Income. Fiscal 2009 in comparasion with Fiscal 2008 Major Activities / Events: During Fiscal 2009 we incorporated a wholly owned subsidiary, namely SSTNA in the US for acquiring JYACC, a New York based corporation, doing business as Prolifics. JYACC formed in the year 1978, had been providing consulting services and proprietary software for multiple platforms for more than 20 years. In the year 2000, JYACC’s strategy was refocused on IBM technologies, specifically IBM’s WebSphere application server products. On June 26, 2008, we acquired 100% of equity interest in the share capital of JYACC and thereby acquired control over JYACC. Analysis of Profit and Loss Account Items: Our financial performance (both revenues and expenses) for the Fiscal 2009 may not be directly comparable to that of Fiscal 2008 since the latter includes financial performance of Prolifics for 9 months from the date of acquisition vis-à-vis former which doesn’t includes financial performance of Prolifics. Further, in Fiscal 2009 the foreign exchange fluctuation affected our US Dollar denominated revenues and expenditures in absolute terms to the extent of depreciation in the Indian Rupee by 14.1% in average terms compared to Fiscal 2008. Income Our Income grew from Rs.935 million in Fiscal 2008 to Rs.2,523 million in Fiscal 2009, an annual growth of 169.8%. Our income from ‘Software Development Services’ almost doubled growing by 98.8%. ‘Product Sales’ being revenues from SI was for the period of 9 months in Fiscal 2009 amounting to Rs.664 million being the first period of operation after the acquisition. In relative term, our consolidated Income comprised of our income from ‘Software Development Services’ and ‘Product Sales’ being 73.7% and 26.3% respectively for the Fiscal 2009.
Revenue Mix for the Fiscal 2009

*figures for the period of 9 months

Expenditure Product Cost Our Product Cost for the Fiscal 2009 was Rs.515 million, i.e. 20.4% of our income. As this is directly attributable to our income from Product Sales as a percentage it was 77.7% of our Product Sales income. These figures are for the period of 9 months being the first period of operation after the acquisition of Prolifics.

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Personnel Expenses Our Personnel Expenses for the Fiscal 2009 was Rs.1,418 million, i.e. 56.2% of our income which has marginally changed from 52.6% for the previous fiscal. In absolute terms, though, it has increased by about 188.2% it is in lines with the growth in our overall revenues and post inclusion of Prolifics numbers from the date of acquisition. Personnel Expenses and Consultancy Charges collectively for the Fiscal 2009 was Rs.1,570 million i.e. 78.2% (62.1% in the previous fiscal) of our total income as reduced by Product Cost. Operating and Other Expenses Our Operating and Other Expenses for the Fiscal 2009 was Rs.418 million, i.e. 16.6% of our Income improving from 27.6% of our Income for the previous fiscal. These expenses comprised of Consultancy Charges and Travelling and Conveyance apart from other costs. Consultancy Charges Consultancy Charges was Rs.152 million (i.e. about 36.4% of the total Operating and Other Expenses) in Fiscal 2009. In absolute terms, the expenses grew by 71.9% compared to the previous fiscal. This entire increase came from Prolifics inclusion in the consolidated results from the date of its acquisition. Travelling and Conveyance We witnessed these costs increase from Rs.28 million in Fiscal 2008 to Rs.70 million in Fiscal 2009 primarily on account of Prolifics expenses included from the date of its acquisition and additional sales resources in Arsin made to travel for new client acquisition and technical resources travelled onsite based on the client requirements. Rent The rental costs for the company for the Fiscal 2009 was Rs.64 million vis-à-vis Rs.29 million for the Fiscal 2008. Bad Debts Our Bad Debts for the Fiscal 2009 were Rs.15.6 million vis-à-vis Rs.2.9 million. This increase was primarily on account of write-off of one of our customers with whom we had a long term relationship and which filed for liquidation during the year. Other Income The Other Income was Rs.88 million for the Fiscal 2009 vis-à-vis Rs.18 million for the previous fiscal. For the Fiscal 2009, Other Income comprised Rs.78.65 million towards Forex gain arising from the mark to market adjustment of the foreign currency balances and forex fluctuation between the amounts booked and collected on Sundry Debtors in foreign currencies. EBITDA Our EBITDA for the Fiscal 2009 was Rs.171 million i.e. 6.8% of our Income for this fiscal. As a percentage of our total Income as reduced by Product Cost our EBITDA margin stood at 8.5% for the Fiscal 2009. There has been significant reduction in margins compared to the previous fiscal primarily this being the first period of Prolifics operations by virtue of which the consolidated margins declined. Interest and Financial Charges Our Interest and Financial Charges on consolidated basis for the Fiscal 2009 was Rs.35 million. This is on account of loan taken from ICICI Bank, UK of $10m towards acquisition of JYACC.

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Depreciation / Amortisation Our Depreciation / Amortisation charge for the Fiscal 2009 was Rs.38 million vis-à-vis Rs.11 million for the previous fiscal primarily due to amortization of intangible asset pertaining to PPM Studio and Job a Fair for the 3 months commencing from January 1, 2009, depreciation cost of Prolifics for 9 months in this fiscal and amortization of goodwill arising from 7 Irene in Prolifics for a period of 2 years from the date of its acquisition i.e. June 1, 2007. Profits After Tax Our Profits After Tax for the Fiscal 2009 has been Rs.178 million, which translates to 7.0% of our Income and 8.9% of our total Income as reduced by Product Cost. Though in absolute terms it improved marginally from the previous fiscal, as a percentage of our Income it reduced from 18.6% net margins in the previous fiscal. This significant reduction in margins compared to the previous fiscal was primarily due to Prolifics operations by virtue of which the consolidated margins declined. Fiscal 2008 in comparison with Fiscal 2007 Analysis of Profit and Loss Account Items: Our financial performance (both revenues and expenses) for the Fiscal 2008 may not be directly comparable to that of Fiscal 2007 since the latter includes financial performance of Arsin for 12 months from the date of acquisition vis-à-vis former which includes financial performance of Arsin for 3 months period. Further, in Fiscal 2009 the foreign exchange fluctuation affected our US Dollar denominated revenues and expenditures in absolute terms to the extent of appreciation in the Indian Rupee by 11.1% in average terms compared to Fiscal 2008. Income Our income was Rs.935 million in Fiscal 2008 vis-a-vis Rs.814 million in Fiscal 2007. The consolidated income comprised 76% of revenues from Application Services and 24% from IVV. Post acquisition of Arsin its revenues grew primarily due to addition of clients during this fiscal. Expenditure Personnel Expenses Our Personnel Expenses for the Fiscal 2008 was Rs.492 million (Rs.361 million in the previous fiscal), i.e. 52.6% (44.3% in the previous fiscal) of our Income which increased both in absolute and relative (as a percentage of our Income) terms during this fiscal when compared with the previous fiscal. Personnel Expenses and Consultancy Charges collectively for the Fiscal 2008 was Rs.581 million, i.e. 62.1% of our Income. Operating and Other Expenses Our Operating and Other Expenses for the Fiscal 2008 was Rs.258 million, i.e. 27.6% of our Income vis-à-vis 18.0% for the previous fiscal. These expenses comprised of Consultancy Charges and Travelling and Conveyance apart from other costs. Consultancy Charges Consultancy Charges was Rs.89 million (i.e. 34.3% of the total Operating and Other Expenses) in Fiscal 2008. In absolute terms it has increased significantly when compared with corresponding figures in the previous fiscal on account of full year impact of IVV business and growth in onsite business from new clients were fulfilled through contractual resources. Travelling and Conveyance

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We saw an increase in this cost to Rs.28 million in Fiscal 2008 from Rs.16 million in Fiscal 2007 primarily on account of full year impact of IVV business and resources travelled onsite based on the client requirements. Rent The rental costs for the company for the Fiscal 2009 was Rs.29 million vis-à-vis Rs.21 million for the Fiscal 2008. Loss on account of Foreign Exchange fluctuations Loss on account of Foreign Exchange fluctuations grew from Rs.15.2 million in Fiscal 2007 to Rs. 41.7 million in Fiscal 2008 due to appreciation in rupee for our revenues billed in foreign currencies and Forex loss arising from the mark to market adjustment of the foreign currency balances. Other Income The Other Income was Rs.18 million in Fiscal 2008 primarily on account of dividend income from mutual funds. EBITDA Our EBITDA for the Fiscal 2008 had a sharp decline both in absolute and relative terms. EBITDA for the Fiscal 2008 was Rs.185 million vis-à-vis Rs.307 million in the previous fiscal. As a percentage of our Income it declined from 37.7% in Fiscal 2007 to 19.8% in Fiscal 2008. Decline was primarily on account of investment made in broadening the management team to manage the Arsin acquisition, to strengthen the new sales team at onsite for new businesses, etc. In addition to this, one of our large client in the second half of the fiscal (in order to comply with its global outsourcing strategy) moved all our employees to their premises whereby our rate per hour charged reduced to the extent of the involved infrastructure cost, however, we continue to maintain the investment made in infrastructure created for the client for new businesses. Interest and Financial Charges Our Interest and Financial Charges on consolidated basis for the Fiscal 2008 was Rs.3 million. Depreciation / Amortisation Our Depreciation / Amortisation charge for the Fiscal 2008 was Rs.11 million. Profits After Tax Our Profits After Tax for the Fiscal 2008 has been Rs.174 million, which translates to 18.6% of our Income. Analysis of Balance Sheet Items: Net Worth Our Net Worth as on June 30, 2010 was Rs.1,614 million increasing from Rs.1,500 million as on March 31, 2010. Our Net Worth grew at a CAGR of 19.8% (three years ending March 31, 2010). Secured Loans Our Secured Loans stood at Rs.307 million as on June 30, 2010. Our debt position in the form of Cash Credits was as low as Rs.5.6 million as on March 31, 2007 which increased to Rs.18 million as on March 31, 2008 with need for the increase in revenues. However, the total debt position increased significantly due to ICICI Bank, UK Term Loan of Rs.509.5 million obtained for the acquisition of JYACC in the Fiscal 2009 and it stood at Rs.544 million as on March 31, 2009. This position improved to Rs.354 million as on March 31, 2010 which comprised of Term Loans being reduced to Rs.271 million, Working Capital Demand Loan of Rs.30 million and Cash Credits of Rs.42

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million. As on June 30, 2010 it reduced to Rs.307 million with outstanding Term Loan of Rs.186 million and Cash Credits of Rs.110 million. Unsecured Loans Our Unsecured Loans comprises of Loan from Promoters which stood at Rs.22.6 million and Rs.23.3 million as on March 31, 2010 and as on June 30, 2010 respectively. Debt-Equity Ratio Our Debt-Equity position has always remained favorable being 0.40, 0.25 and improving to 0.20 as on March 31, 2009, March 31, 2010 and June 30, 2010 respectively. As on June 30, 2010, the Debt-Equity Ratio when calculated as Long Term Debt to Equity further improves to stand at 0.12. Fixed Assets Our Net Block of Fixed Assets stood at Rs.167 million as on June 30, 2010. There were significant additions in our Fixed Assets from the acquisitions of Arsin and Prolifics in the years ending March 31, 2007 and March 31, 2009 respectively. Goodwill Goodwill in our books has originated from our acquisitions of Arsin and Prolifics during the years ending March 31, 2007 and March 31, 2009 respectively. As on June 30, 2010, the balance of Goodwill in our books stood at Rs.1,461.16 million, the year-wise details of which are as follows: (Amount in Rs. million) Year/peri Cumulative Particulars Arsin Prolifics od ended total 31-Mar-07 Goodwill on acquisition (Refer note 1) 79.85 Translation adjustment (1.64) 78.21 78.21 Balance as at 31 March 2007 31-Mar-08 Earn-out consideration 39.14 Translation adjustment (6.50) 110.86 110.86 Balance as at 31 March 2008 31-Mar-09 Earn-out consideration 32.61 Goodwill on acquisition (Refer note 2) 963.92 Translation adjustment 30.45 185.44 Goodwill on business purchase 2.07 173.92 1,151.43 1,325.35 Balance as at 31 March 2009 31-Mar-10 Earn-out consideration 115.43 Translation adjustment (19.83) (131.06) Amortisation of goodwill on business purchase (2.07) 154.09 1,133.72 1,287.81 Balance as at 31 March 2010 30-Jun-10 Earn-out consideration 125.36 Translation adjustment 4.98 36.67 Goodwill on business purchase 6.34 Balance as at 30 June 2010 159.07 1,302.09 1,461.16
1

On December 29, 2006, we acquired 100% of equity interest in the share capital of Arsin Corporation and thereby acquired control over Arsin Corporation. The net liabilities acquired were Rs.12.57 million against the payment made for acquisition in cash of Rs.67.28 million arising to Goodwill of Rs.79.85 million as on the date of acquisition. 2 On June 26, 2008, we acquired 100% of equity interest in the share capital of JYACC, Inc d/b/a Prolifics and there by acquired control over JYACC, Inc. The net assets acquired were Rs.214.90 million against the payment made for acquisition in cash of Rs.1,178.82 million arising to Goodwill of Rs.963.92 million as on the date of acquisition.

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Current Assets, Loans and Advances Our Current Assets, Loans and Advances were Rs.987 million as on June 30, 2010. It comprised of Unbilled Revenues of Rs.70 million, Sundry Debtors of Rs.717 million, Cash and Bank Balances of Rs.87 million and Loans and Advances of Rs.113 million. Of the total Sundry Debtors (net) of Rs.717.3 million, Rs.716.5 million are the receivables for less than 6 months and Rs.6 million are the receivables more than 6 months and the provisions were made for Rs.5.2 million. Loans and Advances primarily comprised of Advance Tax and TDS of Rs.24.8 million, MAT Credit Entitlement of Rs.21.7 million, Prepaid Expenses of Rs.33.1 million and Security Deposit of Rs.17.9 million. MAT Credit Entitlement represents amounts paid in a year under Section 115 JA/JB of the Indian Income Tax Act 1961 (‘IT Act’), in excess of the tax payable, computed on the basis of normal provisions of the IT Act. Such excess amount can be carried forward for set off against future tax payments for ten succeeding years in accordance with the relevant provisions of the IT Act. Since such credit represents a resource controlled by the Group as a result of past events and there is evidence as at the reporting date that the Group will pay normal income tax during the specified period, when such credit would be adjusted, the same has been disclosed as “MAT Credit entitlement”, under “Loans and Advances” in balance sheet with a corresponding credit to the profit and loss account, as a separate line item. Such assets are reviewed as at each balance sheet date and written down to reflect the amount that will not be available as a credit to be set off in future, based convincing evidence and on the applicable taxation law then in force. Current Liabilities and Provisions Our Current Liabilities and Provisions were Rs.669 million as on June 30, 2010 which includes Rs.125 million provided towards payment due for the acquisition of JYACC. Working Capital Ratio Our Working Capital Ratio stands at 1.5 as on June 30, 2010 improving from 2.1 as on March 31, 2010. Foreign Exchange Fluctuations Foreign Exchange gain / (loss) credited / debited (net) to Profit and Loss Account for the Fiscal 2008, 2009 and 2010 and for the period ended June 30, 2010 were loss of Rs.41.67 million, gain of Rs.78.65 million, loss of Rs.14.79 million and gain of Rs.0.49 million respectively. Foreign Currency Translation Reserve Account balances as on March 31, 2008, 2009 and 2010 and as on June 30, 2010 were Rs.10.29 million (debit), Rs.124.42 million, Rs.19.50 million (debit)and Rs.25.11 million,respectively. For the accounting policy followed by us for foreign currency transactions, balances and translation of financial statements of foreign subsidiaries, please refer to the paragraph titled “Significant Accounting Policies” under this Chapter. Liquidity and Cash Flow: (Amount in Rupees million) Year Ended Quarter March 31, Ended June 2010 30, 2010 362.22 56.32 (230.45) (7.37) (125.68) (61.15) 6.09 (12.20)

Particulars

Net cash from /(used in) Operating Activities Net cash from /(used in) Investing Activities Net cash from /(used in) Financing Activities Net increase in Cash & Cash Equivalents

Year Ended March 31, 2008 178.47 33.73 (3.52) 208.68

Year Ended March 31, 2009 118.43 (840.50) 288.51 (433.56)

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Cash Flows from Operating Activities Our net cash flow generated from Operating activities for Fiscal 2008 has been from our net profits earned during this fiscal. The cash flow position for Fiscal 2010 and for the quarter ended June 30, 2010 improved with increase in our net profits.

Cash Flows from Investing Activities Our net cash flow from Investing activities for Fiscal 2008 has been from the net proceeds from investments of Rs.91.77 million, dividends received from mutual funds of Rs.15.15 million and outflow on account of purchases of fixed assets of Rs.74.55 million. During Fiscal 2009 there was a significant outflow on account of our acquisition of JYACC. On June 26, 2008, we acquired JYACC for which we made a payment towards initial consideration of US$ 25.63 million and the involved transaction cost of US$ 0.68 million. We also made a first payment towards Arsin’s acquisition due in December 2007 of US$ 0.98 million. The investments in Subsidiaries during Fiscal 2009 was of Rs.955.5 million. We sold our investments in mutual funds of Rs.153.62 million to fund this acquisition during this fiscal. Our purchases of fixed assets during this fiscal were of Rs.44.49 million. During Fiscal 2010, we made payments due towards our acquisition of JYACC of US$ 3.84 million and a final payment towards Arsin’s acquisition due in December 2008 of US$ 0.64 million aggregating to Rs.211.78 million. Our purchases of fixed assets during this fiscal were of Rs.20.49 million and during the quarter ended June 30, 2010 of Rs.6.78 million.

Cash Flows from Financing Activities Our net cash outflow from Financing activities for Fiscal 2008 was on account of dividends paid. The term loan from ICICI Bank, UK of US$ 10 million after deducting US$ 0.2 million as upfront interest payment i.e. Rs.404.30 million was drawn during Fiscal 2009. The two installments due on June 24, 2009 and December 24, 2009 aggregating to US$ 4 million (i.e.Rs.189.68 million) were paid during Fiscal 2010. Our third installment of US$ 2 million was due on June 24, 2010 i.e.Rs.91.34 million which was paid during the quarter ended June 30, 2010. We availed an unsecured loan of Rs.23.71 million during Fiscal 2010. There were interests paid towards outstanding loan of Rs.20.48 million, Rs.31.78 million and Rs.7.93 million during fiscals 2009, 2010 and for the quarter ended June 30, 2010 respectively.

Revenue Segmentation  Geographic Segmentation:
Geographic Segmentation Consolidated Reve nues US Europe India Others Total Fiscal 2008 Fiscal 2009 Fiscal 2010 80.6% 18.8% 0.0% 0.5% 100.0% 78.3% 21.3% 0.1% 0.3% 100.0% 77.0% 11.5% 11.4% 0.1% 100.0% Period Ending Jun 30, 2010 87.6% 5.1% 7.2% 0.1% 100.0%

Our revenues from Application Services and IVV have always been from the US. However, since Fiscal 2010 Application Services has derived more revenues from the APAC region (i.e. India) than that from the US. SI revenues have been from the US, UK and Germany markets. We intend to replicate our service delivery model in the potential markets outside the US as one of our growth strategies viz. ‘Globalisation’ is to take our existing services to newer markets, which holds significant opportunities and synergies for a business model like ours.

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Vertical Segmentation:
Period Vertical Segmentation Fiscal 2008 Fiscal 2009 Fiscal 2010 Ending Jun Consolidated Revenues 30, 2010 BFSI 64.8% 41.2% 38.2% 37.5% Aerospace 0.0% 8.6% 11.6% 23.6% Hi-tech 10.6% 8.1% 11.5% 10.7% Healthcare 14.7% 7.8% 6.7% 6.8% Govt 0.0% 7.1% 5.8% 5.8% Retail 0.4% 6.7% 7.7% 5.5% Mfg 1.3% 3.8% 2.0% 2.1% Others 8.3% 16.7% 16.6% 8.1% Grand Total 100.0% 100.0% 100.0% 100.0%

As it is evident from above, the key verticals we cater to include BFSI, Hi-tech, Healthcare, Government, Retail and Manufacturing. Our major clients in BFSI space include a Fortune 25 Financial Services Conglomerate and one of the largest banks of Japan and our key client in Hi-tech space includes a leading player in virtualization and cloud infrastructure solutions. Our consolidated revenues reflect revenues from both our Software Development Services and Product Sales. If we analyse this segmentation based purely on our Software Development Services it appears as follows:
Pe riod Vertical Segmentation Fiscal 2008 Fiscal 2009 Fiscal 2010 Ending Jun Software De ve lopme nt Se rvice s 30, 2010 BFSI 64.8% 42.0% 39.3% 48.2% Hi-tech 10.6% 9.8% 14.9% 16.5% Healthcare 14.7% 9.1% 9.6% 9.5% Retail 0.4% 5.9% 7.2% 5.4% Govt 0.0% 8.9% 7.7% 5.4% Media & Ent. 2.9% 4.4% 2.4% 2.7% Mfg 1.3% 3.7% 2.4% 1.7% Others 5.4% 16.3% 16.6% 10.5% Grand Total 100.0% 100.0% 100.0% 100.0%

With or without Product Sales business, BFSI remains the key vertical where we deliver majority of our revenues followed by Hi-tech and Healthcare. However, as one of our growth strategy of ‘Verticalisation’ we are embarking on a program of industry-specific service offerings which would significantly expand our market out-reach as well as strengthen our brand identity.  Client Concentration: Client Concentration Consolidated Revenues Top Customers Top 5 customers Top 10 customers others Fiscal 2008 61.7% 86.3% 92.2% 7.8% Fiscal 2009 18.0% 38.3% 50.5% 49.5% Fiscal 2010 14.5% 38.5% 53.0% 47.0% Period Ending Jun 30, 2010 23.6% 49.4% 62.1% 37.9%

Our Top Customer for Fiscal 2008 has been a Fortune 25 Financial Services Conglomerate (SST client). Our Top Customer for the fiscals 2009, 2010 and for the period ending June 30, 2009 has been a global leader of the aerospace industry (Prolifics client).

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Client concentration - Software Development Services Top Customers Top 5 customers Top 10 customers others

Fiscal 2008 61.7% 86.3% 92.2% 7.8%

Fiscal 2009 24.5% 44.0% 55.3% 44.7%

Fiscal 2010 22.2% 43.5% 55.5% 44.5%

Period ending June 30,2010 21.0% 48.5% 59.2% 40.8%

Our Top Customer for Fiscal 2008 remains unchanged to be a Fortune 25 Financial Services Conglomerate and continuous to be that for the fiscals 2009, 2010 and for the period ending June 30, 2010 if analysed only for Software Development Services. As it is evident from above our Top 10 Customers contribute over 55% of our revenues. This is primarily on account of several large corporations being our clients with whom we have significant business. SST serves a Fortune 25 Financial Services Conglomerate as their client which contributes majority of our revenues from Application Services alone. SST’s relationship with this customer has been long standing (8+ years). We provide a wide portfolio of services across several lines of business ranging from Consumer Banking to Global Infrastructure Operations. We are associated with building mission-critical technology applications. Our business involvement with our top customer is also across geographies. We work closely with the local teams in both North America as well as Asia Pacific. Thus, our business with this customer is enduring and not dependent or impacted by any one line of business, technology or geography. Likewise, Prolifics serves as its largest customer, a global leader of the aerospace industry. This client relationship is largely focused around reselling and renewing product licenses. Such deals are typically very high in value when compared to our SI solutions and services business. Through Prolifics we serve over 350 client accounts from various verticals including BFSI, Retail, Government, Telecom and Hi-tech. Arsin has a few large client accounts including a leading player in virtualization and cloud infrastructure solutions with which we have undertaken several projects. Arsin has been working with the customer’s IT QA for the 3+ years on manual, automation, performance, security, web services, resiliency, ERP and CRM functional testing on several projects of business significance. Our services cut across a number of different technology platforms including Interactive Voice Response, Computer Telephony Integration, Siebel, Oracle EBS and Service Portals. Arsin has also been involved in automating diverse applications which include Oracle-Apps, Siebel, UCM, SFDC, Web and Window-based applications. Though these clients appear as one of our top 10 clients we either have continued business from them over the years or have multiple projects undertaken at any point of time. Nevertheless, our clientele is broad-based, for instance we served over 400 client accounts in the Fiscal 2010, and we continue to enhance our synergies exploring cross-selling opportunities available to us through both Arsin and Prolifics. Further, though, our revenues appears concentrated amongst our top ten clients, these top ten clients have been varying each year depending on the volume of potential business with them. Further, since there is significant competition for the services we provide, and we are not an exclusive service provider to our major clients, the level of revenues from our major clients could vary from period to period. Revaluation Reserves Our Company has not revalued its assets since inception. Related Party Transactions In the normal course of business the Company enters into transactions with its related parties. For details please refer to the discussion in the paragraph titled “Annexure XV-Related Party Transactions” in the Chapter titled “Financial Statements” beginning on page 159 of this Draft Red Herring Prospectus.

241

Off Balance Sheet Arrangements We do not have any off balance sheet arrangements, derivative instruments, swap transactions or relationships with unconsolidated entities or financial partnerships that would have been established for the purpose of facilitating offbalance sheet transactions. Quantitative and Qualitative Disclosure about Market Risk Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk, foreign exchange risk, inflation and commodity price risk. We are exposed to different degrees of these risks in the normal course of our business. We are specifically exposed to the following market risks: Interest Rate Risk We are exposed to market risk with respect to changes in interest rates related to our borrowings. Interest rate risk exists with respect to our indebtedness that bears interest at floating rates tied to certain benchmark rates as well as borrowings where the interest rate is reset primarily based on changes in the short-term interest rates set by banks, as well as due to changes in interest rates set by the respective regulatory bodies, which are generally announced through credit policy measures issued during the year. We undertake short term debt obligations to support our working capital needs. We have also assumed long term debt obligations to finance our recent acquisition. Upward fluctuations in interest rates increase the cost of debt and interest cost of outstanding variable rate borrowings. As at June 30, 2010, our Secured Loan funds aggregated to Rs.307 million, all of which were at floating rates of interest. We have not entered into agreements to hedge risks associated with changes in interest rates. Foreign Exchange Risk Our exchange rate risk primarily arises from our foreign currency revenues, receivables, payables and other foreign currency assets and liabilities. On consolidated basis, we have significant revenues and expenditures in foreign currencies especially US Dollar (US$). The foreign exchange fluctuation affects both the revenues and expenditures in absolute terms when converted into Indian rupees. To this extent, the revenues and expenditures will be higher or lower depending on the depreciation or appreciation of Indian rupee in foreign currency terms. We expect that a majority of our revenues will continue to be generated in US$ for the foreseeable future. The exchange rate between the Indian rupee and the US$ has been volatile in recent years and may fluctuate in the future. Therefore, changes in the exchange rate between the Indian rupee and the US$ may have a material adverse effect on our revenues, other income, cost of services, operating costs and net income, which may in turn have a negative impact on our business, operating results and financial condition. We have not entered into agreements to hedge risks associated with changes in foreign exchange rates. Inflation Although India has experienced fluctuation in inflation rates in recent years, inflation has not had a material impact on our business or results of operation. Information required as per Item (2) (IX) (E) (5) of Part A of Schedule VIII to the SEBI Regulations: 1. Unusual or Infrequent Events or Transactions. Other than the above, there have been no other events or transactions that, to our knowledge, may be described as “unusual” or “infrequent”. 2. Significant economic changes that materially affected or are likely to affect income from continuing operations. There are no significant economic changes that materially affected our Company’s operations or are likely to affect our income from continuing operations except, as described under “Certain Factors Affecting Our Results of Operations” on page 222 of this chapter and as described in the chapter titled “Risk Factors” beginning on page XVIII of this Draft Red Herring Prospectus. 3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations. 242

Other than as described under “Certain Factors Affecting Our Results of Operations” on page 222 of this chapter and as described in the chapter titled “Risk Factors” beginning on page XVIII of this Draft Red Herring Prospectus, to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on our sales, revenue or income from continuing operations. 4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known. Other than as described in the chapters titled “Risk Factors” and “Our Business” beginning on pages XVIII and 76 of this Draft Red Herring Prospectus respectively and as described under this chapter, to our knowledge there are no future relationship between costs and revenues that have or had or are expected to have a material adverse impact on our operations and finances. 5. The extent to which material increases in net sales or revenues are due to increased sales volume, introduction of new products or services or increased sales prices. The reasons for changes in our consolidated revenues during the fiscals 2007, 2008, 2009 and 2010 and for the quarter ended June 30, 2010 are explained above under this chapter. For details please refer to the paragraph ‘Discussion on Results of Operations’ under this chapter. 6. Total turnover of each major industry segment in which our Company operates. In the field of IT Solutions and Services we are a specialized solutions provider offering Application Services, Independent Verification and Validation Services and Systems Integration Solutions. The entire operations are governed by the same set of risk and returns which governs an IT service provider. The industry which we belong to and the segment of solutions and services we offer has been discussed in the chapter titled “Industry Overview” beginning on page 65 of this Draft Red Herring Prospectus. 7. Status of any publicly announced new products or business segment. Since June 30, 2010, our Company has not announced any new products or business segments. 8. Seasonality of Business. There is no seasonality in the business we operate. 9. Any significant dependence on a single or few suppliers or customers. For details please refer to the paragraph ‘Revenue Segmentation’ under this chapter on page 239 of this Draft Red Herring Prospectus. 10. Competitive Conditions. For details please refer to the paragraph ‘Competitive Conditions’ under the chapter titled “Our Business” on page 76 of this Draft Red Herring Prospectus. Recent Accounting Pronouncements There are no recent accounting pronouncements that were not yet effective as at June 30, 2010 that will result in a change in our Company’s significant accounting policies.

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FINANCIAL INDEBTEDNESS

Our Company and our Subsidiaries are enjoying various credit facilities as sanctioned by Bankers and Financial Institutions for conducting their business operations. I. Details of Secured Borrowings of our Company

Set forth below is a brief summary of our Company’s Secured Borrowings as on September 30, 2010, from banks and financial institutions together with a brief description of certain significant terms of such financing arrangements:
Sr. No 1 Bank Amount Sanctioned (Rs) 100,000,000 Outstanding (Rs) 106,044,053 Rate of Interest Repayment Terms On Demand Security offered

ICICI Bank Limited, Hyderabad – Working Capital Loan (Refer note 1)

Cash credit: 3.75% per annum below the sum of I-BAR and Cash Credit Risk Premium prevailing on each day plus applicable interest tax or other statutory levy on the principal amount of the loans remaining outstanding each day. Working capital demand loan: The Rate of interest for each drawal of the facility will be stipulated by ICICI bank at the time of disbursement of each drawal on the basis of repayment schedule for that drawal plus applicable interest tax or other Statutory levy, if any, subject to minimum pricing of 10% p.a.

1. Exclusive First charge by way of hypothecation of the borrower’s entire current assets interalia includes stock in trade, raw materials, work in progress, finished goods, consumable stores and spares and such other movables including book debts, outstanding monies, receivables, whether documentary or clean, both present and future of such form satisfactory to the bank. 2. Exclusive charge on the movable fixed assets of the Company. 3. Exclusive charge by way of equitable mortgage on the residential property belonging to Ms. Sridevi Bolli valued at Rs. 20 million. 4. Personal Guarantee of Mr. Satyanarayana Bolli.

Note 1: The amount outstanding as at 30 September 2010 includes utilisation of Rs 6.04 million from an additional temporary overdraft sanctioned by ICICI Bank Limited to the extent of Rs 10 million for a period of 30 days. Restrictive Covenants The following are the restrictive covenants as per the Master Facility Agreement dated August 12, 2010, which our Company is required to observe: 1. The Borrower shall carry out such modifications to its constitutional documents / other relevant agreements as may be deemed necessary in the opinion of the ICICI Bank to safeguard the interests of ICICI under the Master Facility Agreement and other documents. 244

2.

In the event that the existing auditors cease to act as the auditors of our Company for any reason, the Company shall promptly inform ICICI of the reasons for cessation and shall appoint another firm of independent chartered accounts, acceptable to ICICI, in accordance with applicable laws. The Company shall ensure that, save as provided in the Master Facility Agreement and the transaction documents, its obligations under the Master Facility Agreement and the transaction documents, do and will rank above and prior to all its other present and future documents. The Company hereby covenants and agrees that without the prior written approval of the Bank, the Company shall not: a. b. Contract, create, incur, assume or suffer to exist any Indebtedness in any manner whatsoever except as otherwise permitted under this Agreement. The provision shall not apply to normal trade transactions. Undertake or permit any merger, de-merger, consolidation, reorganization, scheme of arrangement, or compromise with its creditors or shareholders or effect any scheme of amalgamation or reconstruction including creation of any subsidiary or permit any company to become its subsidiary. Create or permit to subsist any encumbrance (excluding for securing borrowings for working capital requirements in the ordinary course of business, upto the limit approved by ICICI) or any type of preferential arrangement (including retention arrangements or escrow arrangements having the effect of granting security), in any form whatsoever on any of its assets, or (whether voluntarily or involuntarily) sell, transfer, grant lease or otherwise dispose of or deal with (or agree to do any of the foregoing at any future time), any of the assets. Declare or pay any dividend or authorize or make any distribution to its shareholders / members / partners or permit withdrawal of amounts brought in: (a) unless it has paid all the dues in respect of the Facilities upto the date on which the dividend is proposed to be declared or paid/ such distribution is to be made, or has made provisions therefore satisfactory to the Bank, or (b) if an Event of Default has occurred and is subsisting or would occur as a result of such declaration or payment of dividend or authorization or making of distribution. Prepay any indebtedness incurred by the Borrower; Pay any commission to its promoters, directors, managers or other persons for furnishing guarantees, counter guarantees or indemnities or for undertaking any other liability in connection with any Indebtedness incurred by the Company or in connection with any other obligation undertaken for or by the Company. Undertake any new project, diversification, modernization, which are material in nature, or substantial expansion of any its projects. Make any investments whether by way of deposits, loans, or investments in share capital or otherwise, in any concern or provide any credit or give any guarantee, indemnity or similar assurance except as otherwise permitted under this Agreement. This provision shall not apply to loans and advances granted to staff or contractors or suppliers in the ordinary course of business. Recognize or register any transfer of shares in the Company’s capital or to be made by the promoters and their associates except as may be permitted by the Bank. Amend or modify its constitutional documents, if any. (a) buy back, cancel, reduce, retire, redeem, re-purchase, purchase or otherwise acquire any of its share capital now or hereafter outstanding, or set aside any funds for the foregoing purposes, or (b) issue any further share capital whether on a preferential basis or otherwise or change its capital structure in any manner whatsoever. Change its financial year-end from the date it has currently adopted.

3.

4.

c.

d.

e. f.

g. h.

i. j. k.

l.

m. Change the accounting method or policies currently followed by the Company unless expressly required by applicable law. n. Avail of any credit facilities or accommodation from any bank(s) or financial institution(s) or any person, firm or company in any manner (other than the bank(s) at present providing working capital facilities to the 245

Borrower and as disclosed to the Bank) nor shall it deal with or through any other bank(s) or financial institution(s). o. Engage in any business or activities other than those which the Company is currently engaged in, either alone or in partnership or joint venture with any other person, nor acquire any ownership interest in any other entity or person or enter into any profit-sharing or royalty agreement or other similar arrangement whereby the Company’s income or profits are, or might be, shared with any other entity or person, or enter into any management contract or similar arrangement whereby its business or operations are managed by any other person. The bank shall have a right to appoint and remove from time to time, Nominee Director(s) on the Board of Directors of the Company

p.

II.

Details of Borrowings of our Subsidiaries Set forth below is a brief summary of our subsidiary SST North America Inc (‘Borrower’) Secured and Unsecured borrowings as on September 30, 2010, from banks and financial institutions together with a brief description of certain significant terms of such financing arrangements: A. Secured Borrowings by SSTNA
Sr. No 1 Bank Amount Sanctioned (Rs) 449,200,000 Outstanding (Rs) 179,680,000 Rate Interest LIBOR + 5% of Repayment Terms Repayment of 20% each of the facility amount by the end of the 12th, 18th, 24th, 30th and 36th month of drawdown. Security offered

ICICI Bank UK, PLC – Term Loan (Refer note 1)

Secured by First charge on all assets of SST North America Inc, both present and future, negative lien on assets of Semantic Space Technologies Limited, pledge of JYACC Inc shares and SST North America Inc shares, and personal guarantee of Mr. Satyanarayana Bolli, director of the Company. Corporate Guarantee of Semantic Space Technologies Limited

Note 1: The ICICI Bank UK, PLC term loan has been utilised for the purposes for which it was raised. Restrictive Covenants 1. 2. The Borrower shall not and shall ensure that no member of the Borrower Group other than the Target will create or permit to subsist any security over any of its assets, without the prior consent of the Lender. The Borrower shall not and shall ensure that no other member of the Borrower Group other than the Target will, without the prior consent of the Lender: a. b. c. d. e. Sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or reacquired by any member of the Borrower Group; Sell, transfer or otherwise dispose of any of its receivables on recourse terms; Enter into or permit to subsist any title retention arrangement; Enter into or permit to subsist any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or Enter into or permit to subsist any other preferential arrangement having a similar effect, in circumstances where the arrangement or transaction is entered into primarily as a method of raising financial indebtedness or of financing the acquisition of an asset.

246

3.

The Borrower shall not (and shall ensure that no other member of the Borrower Group other than the Target will) enter into a single transaction or a series of transactions (whether related or not and whether voluntary or involuntary) to sell, lease, transfer or otherwise dispose of any asset, without the prior consent of the lender. The aforementioned paragraph above does not apply to any sale, lease, transfer or other disposal of an asset (other than a Charged Asset): a. b. c. Made in the ordinary course of trading of the disposing entity; Of assets in exchange for other assets comparable or superior as to type, value and quality and for a similar purpose; or Where the higher of the market value or consideration receivable (when aggregate with the higher of the market value or consideration receivable for any other sale, lease, transfer or other disposal, other than any permitted under paragraphs (i) or (ii) above) does not exceed US$ 0.5 million (or its equivalent in another currency or currencies) in any financial year.

4.

5.

The Borrower shall not (and shall ensure that no other member of the Borrower Group other than the Target will) enter into any amalgamation, demerger, merger or corporate reconstruction, without the prior consent of the Lender. The Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower or the Borrower Group taken as a whole from that carried on at the date of this Agreement, without the prior consent of the Lender. The Lender shall the right of first refusal with respect of the following: a. b. Any derivative transaction to be entered into by any member of the Promoter Group in connection with the loan facility. Any debt issuance by any member of the Promoter Group by way of domestic or foreign loan or bond issuance, etc.

6.

7.

8.

The Borrower shall not (and shall ensure that no other member of the Borrower Group, other than the Target shall), without the prior consent of the Lender: a. Invest in or acquire, whether by incorporation or otherwise, any share in or any security issued by any person, or any interest therein or in the capital of any person, or make any capital contribution to any person; Invest in or acquire any business or going concern, or the whole or substantially the whole business of the assets, property or business of any person or any assets that constitute a division or operating unit of the business of any person; or enter into any joint venture, consortium, partnership or similar arrangement with any person; The management control and ownership of upto atleast 100% of the Target shall remain with the Borrower during the currency of the Facility.

b.

c. d.

9.

The Borrower shall not alter its financial year so that such financial year ends on any date other than on March 31 of each year without the prior consent of the Lender.

10. The Borrower shall not without the prior consent of the Lender: a. b. c. d. Make any loan, or provide any form of credit or financial accommodation, to any other person; or Give or issue any guarantee, indemnity, bond or letter of credit to or for the benefit of any person; or Permit to subsist any guarantee of any Financial Indebtedness of any of its Subsidiaries; Raise further debt during the term of the loan facility

247

11. Notwithstanding anything to the contrary in this Agreement the Borrower shall obtain prior written consent of the Lender with respect to any debt issuance by the Target in excess of US$ 3.0 million post Acquisition of the Target. 12. The Borrower shall not carry out any Capital Raising Exercise, save with the prior consent of the Lender. 13. The Borrower shall not (and shall ensure that no other member of the Borrower Group, other than the Target will) enter into any arrangement, agreement or commitment with any person or pay any fees, commissions or other sums on any account whatsoever to any persons other than: a. b. In the ordinary course of trading, at arm’s length and on normal commercial terms; or As required by the Finance Documents

B. Unsecured Borrowings by SSTNA SSTNA borrowed a sum of US$ 500,000 from Mr. Satyanarayana Bolli vide a promissory note dated December 22, 2009. As per the terms of the promissory note, SSTNA is to pay an Interest rate of LIBOR plus 4.50% per annum. LIBOR shall mean the rate per annum offered for US Dollar deposits on the London Inter-Bank Market for sixmonth maturities. The loan was to be repaid within a period of 180 days from the date on which the loan was availed. The term of repayment of the loan has been extended till March 31, 2011, vide letter agreement dated June 10, 2010 between SSTNA and Mr. Satyanarayana Bolli. C. Secured Borrowings of JYACC
S. No 1 Bank Amount Sanctioned (Rs) 21,125,226 Outstanding (Rs) 9,828,626 Rate of Interest Repayment Terms Repayment in Monthly Installments over a period of 12 months to 48 months from the inception of the lease. Security offered

From various leasing / financial institutions – Lease Loans

3.1% to 14%

Hypothecation of office equipments of JYACC Inc.

JYACC has availed line of credit of Rs.3.0 Mn from Wells Fargo Bank, National Association. The said limits were not utilized till 30th Sep 2010. Restrictive Covenants So long as the Lender remains committed to extend to credit to the Borrower, and so long as any of the liabilities remaining outstanding under the loan facility, the Borrower cannot undertake the following without the Lender’s prior written consent: a. b. c. Make any additional investment in fixed assets in any fiscal year in excess of US $ 300,000; Incur operating lease expense in any fiscal year in excess of US $ 200,000; Create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to the lender, (b) any other liabilities of Borrower shall existing as of, and disclosed to the Lender prior to, the date hereof and (c) additional debt in amounts not to exceed an aggregate of S 200,000 in any fiscal year; Merge into or consolidate with any other entity; make any substantial change in the nature of Borrower’s business as conducted as of the date hereof; acquire all or substantially all of the assets of any other entity; nor

d.

248

sell, lease, transfer or otherwise dispose of all or a substantial or material portion of Borrower’s assets except in the ordinary course of its business; e. Guarantee or become liable in any way as surety, endorser (other than as endorser of negotiable instruments for deposit or collection in the ordinary course of business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of the Borrower as security for, any liabilities or obligations of any other person or entity, except any of the forgoing in favour of the lender. Make any loans or advances to or investments in any person or entity, except any such loans in an aggregate amount not exceeding US $ 50,000, including any of the forgoing existing as of, and disclosed to the Lender prior to the date of the agreement; Mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of the Borrower’s assets now owned or hereafter acquired, except any of the foregoing in favour of the Lender or which is existing as of, and disclosed to the Lender in writing prior to the date of the credit agreement.

f.

g.

D. Secured Borrowings by Arsin Corp.
S. No 1 Bank Amount Sanctioned (Rs) 56,150,000 Outstanding (Rs) 1,049,849 Rate of Interest US prime rate + 2%. Repayment Terms On Demand Security offered

Bridge Bank, National Association Line of Credit (Receivable Financing)

Line of credit secured by hypothecation of all current assets and fixed assets of Arsin Corporation, both present and future. Pledge of all copyrights of Arsin Corporation. Validity Indeminification of Danis Yadegar, CEO of Arsin Corporation, Unconditional Guarantee from Semantic Space Technologies Limited.

Restrictive Covenants The following are the restrictive covenants as per the Business Financing, which our Company is required to observe: 1. 2. 3. 4. The Borrower shall maintain its corporate existence and good standing in its jurisdictions of incorporation and maintain its qualification in each jurisdiction necessary to Borrower’s business or operations. The Borrower will give to the Lender at least 30 days prior written notice of changes to its name, organization, chief executive office or location of records. The Borrower will not incur, create, assume or be liable for any indebtedness. The Borrower will immediately notify the Lender if the Borrower hereinafter obtains any interest in any copyrights, patents, trademarks, or licenses that are significant in value or are material to the conduct of the business or the value of any financial receivables. Events of default: a) Cross Default: if any default occurs under any agreement in connection with any credit Borrower (or any guarantor) or any of the Borrowers related entities or affiliates has obtained from any one else or which the Borrower or any of Borrower’s related entities or affiliates has guaranteed. b) Default under related documents: if any default occurs under any guaranty, subordination agreement, security agreement, deed of trust, mortgage or any other document required by or delivered in connection with this agreement or any such document is no longer in effect. c) If the Borrower fails to meet the conditions or fails to perform any obligations under any term of the agreement.

5.

249

SECTION VI – LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS

Except as stated below, there are no outstanding litigations, suits, civil or criminal prosecutions, proceedings before any judicial, quasi-judicial, arbitral or administrative tribunals, including pending proceedings for violation of statutory regulations or alleging criminal or economic offences or tax liabilities or show cause notices or legal notices pending or penalties imposed in the last five years against our Company, our Promoters, our Directors, our Subsidiaries, Entities promoted by our Promoters that would have a material adverse effect on our business and there are no defaults, non-payments or overdue of statutory dues, institutional / bank dues and dues payable to holders of debentures, fixed deposits and arrears on cumulative preference shares that would have a material adverse effect on our business. Further, except as stated below, our Company, our Directors, our Subsidiaries, our Promoters and Entities promoted by our Promoters have not been declared as wilful defaulters by the Reserve Bank of India, have not been debarred from dealing in securities and/or accessing capital markets by SEBI and no disciplinary action has been taken against them by SEBI or any stock exchanges or any other Governmental authority and, except as disclosed in this section in relation to litigation, there are no violations of securities laws committed by them in the past or pending against them. Also none of our Promoters or Directors was or is a promoter, director or person in control of any other company that is debarred from accessing the capital market under any order or directions made by SEBI. This chapter has been divided into nine parts: I. Contingent Liabilities II. Outstanding litigations involving our Company III. Outstanding litigations involving our Subsidiaries IV. Outstanding litigations involving our Directors V. Potential litigations involving our Subsidiaries VI. Outstanding litigations involving our Group Companies VII. Past penalties levied in the last five years VIII. Material Developments since the last Balance Sheet Date IX. Outstanding dues to small scale undertaking(s) or any other creditors Summary of Outstanding Litigations Type of Proceedings Cases filed against our Company Money Recovery and other Civil Suit Tax Proceedings Total Cases filed by our Company Tax Proceedings Total Cases filed against our Directors Tax Proceedings Total Cases filed against our Subsidiaries Potential Litigations Total Cases filed by our Subsidiaries Money Recovery and other Civil Suit Total Number of cases 1 2 3 2 2 2 2 1 1 1 1 (Amount in Rupees million) Amount to the extent quantifiable 0.36 Not Quantifiable Not Quantifiable 37.39 37.39 Not Quantifiable Not Quantifiable 3.28* 3.28* 12.99* 12.99*

* converted using exchange rate 1 US$ = Rs. 44.54 as at October 29, 2010 (source: www.rbi.org.in.)

250

I.

Contingent Liabilities

As on June 30, 2010 contingent liabilities not provided for were as follows: (Amount in Rupees million) As at June 30, 2010 Income tax matters under dispute 37.29 Bank guarantees issued to the custom authorities 0.58 Bond to the Government of India for exemption of customs duty on imports 11.58 Contingent purchase consideration payable to ex-share holders of Watson SCS by JYACC 10.62 Total 60.17 Particulars

II. Outstanding litigations involving our Company A. Outstanding litigations against our Company Civil Litigation i. Original Suit bearing number 62 of 2009 filed by Mr. G. Prashanth Reddy (“Plaintiff”) against our Company (“Defendant”) before the Court of the Senior Civil Judge: R. R. District Courts at L. B. Nagar (“District Court”).

The Plaintiff was issued an appointment letter dated February 01, 2007, by the Defendant. The terms of appointment were that the Plaintiff would be on probation for a period of 6 months from the date of the letter and the gross salary receivable would be Rs. 330,000 per annum. Thereafter, the Plaintiff’s employment was terminated by the Defendant, vide letter dated July 09, 2008. The Plaintiff has filed the present suit against the Defendant alleging that the Defendant unlawfully terminated the Plaintiff’s employment. The Plaintiff alleges that on completion of a year’s service, the Plaintiff was entitled to receiving incentives, apart from the gross salary. The Plaintiff further alleges that the Defendant has not paid the salary for June 2008. The Plaintiff is claiming an amount of Rs. 362,390 towards medical expenses, annual emoluments etc. The Plaintiff therefore prays inter alia that: a) The termination order passed by the Defendant be declared contrary to law, arbitrary and consequently declare that the services of the Plaintiff have been continuing; and b) That the suit amount of Rs. 362,390, with subsequent interest at the rate of 24% per annum from the date the amount become due, till the date of realization. The Defendant has filed its written statement dated July 16, 2009 wherein the Defendant has denied all the allegations made by the Plaintiff. The Suit is currently pending for hearing before the District Court and the next date of hearing is November 29, 2010. Income Tax ii. Income Tax Appeal bearing number 1445/11/08 dated September 11, 2008 (“Appeal”) filed by the Deputy Commissioner of Income Tax, Circle 3 (1), Hyderabad (“Appellant”) against our (“Respondent”) before the Income Tax Appellate Tribunal for the assessment year 2005-2006.

Our Company filed return of income for the Assessment Year 2005-2006 on October 30, 2005 declaring a total income of Rs. 8,260,520. The return was processed U/s. 143(1) of the Income Tax Act, 1961. The return was taken up for scrutiny and an order Under Section 143(3) dated November 27, 2007 was passed assessing the total income as Rs. 11,020,235. While passing the order the learned assessing officer reduced an amount of Rs. 852,059 from other income and included a sum of Rs. 2,732,059 in other income representing rent, dividend, interest and miscellaneous income in total turnover for calculation of deduction under section 10A of the Income Tax Act, 1961. 251

Being aggrieved by the said order our Company preferred an appeal before the Commissioner of Income-Tax (Appeals)-IV Hyderabad (“CIT (A)”). The CIT (A) vide order dated June 06, 2008 partly allowed the appeal to the extent that it allowed the inclusion of other income of Rs. 2,732,059 in the total turnover. Being aggrieved by this order dated June 06, 2008 passed by the CIT (A) the Appellant has preferred an appeal before the Income Tax Appellate Tribunal, before whom the matter is currently pending. The next date of hearing is on December 14, 2010. iii. Appeal bearing number 915/HYD-2010 dated June 11, 2010 (“Appeal”) filed by the Assistant Commissioner of Income Tax Circle 3 (1), Hyderabad (“Appellant”) against our Company (“Respondent”) before the Income Tax Appellate Tribunal for the assessment year 2006-2007.

The Appellant has filed the above Appeal against the Respondent challenging the order dated March 31, 2010 (“Impugned Order”) passed by the Commissioner Income Tax (Appeal) (“CIT (A)”) wherein the CIT (A) partly allowed the appeal that was filed by the Respondent. The CIT(A) vide the Impugned Order had passed the following order: i. Directing the Respondent to include the miscellaneous income of Rs. 549,684 and credit balances written back of Rs. 15,648 (from the profits eligible under Section 10A) for the computation of deductions. ii. Directing the Respondent to include Rs. 151,334, pertaining to the notice period salary for the purpose of computation of deduction under Section 10A. iii. Directing the Respondent to include the foreign exchange fluctuations income of Rs. 3,620,165 while computing the eligible income under Section 10A. iv. Directing the Respondent to exclude the interest income of Rs. 109,087 from the profits and gains derived from the export activity and further directing to calculate the income from export of software. v. Directing the Respondent to recomputed the deductions under Section 10A pertaining to income from software development charges. vi. The Respondent was correct in disallowing of sub contract payments of Rs. 2,465,098 for contravention of provisions of Section 195 of the Income Tax Act. vii. Directing the Respondent to consider the disallowances, including the disallowances under Section 40a of the Income Tax Act for adopting the income eligible for deductions under Section 10A. Being aggrieved by the order of the CIT(A), the Appellant has filed the above Appeal before the Appellate Tribunal. The above Appeal has been filed by the Appellant on the following grounds: i. ii. That the Impugned order is erroneous both in fact and in law. That the CIT (A) erred in inclusion of miscellaneous income of Rs. 549,684, credit balance written back and notice period salary for the purpose of arriving at deductions under Section 10A of the Income Tax Act. That the CIT (A) ought to have upheld the action of the assessing officer for not including “foreign exchange fluctuations” of Rs. 3,620,165 for the purpose of calculation of deductions under Section 10A of the Income Tax Act. That that CIT (A) ought to have upheld the disallowance made by the Assessing Officer under Section 40 (a)(ia).

iii.

iv.

The Appeal is currently pending before the Income Tax Tribunal and the next date of hearing is on December 09, 2010. B. Outstanding litigations by our Company Income Tax i. Income Tax Appeal bearing number 824/H/10 filed by our Company (“Appellant”) against the Deputy Commissioner of Income Tax, Circle 3(1), Hyderabad (“Respondent”) before the Income Tax Appellate Tribunal for the assessment year 2006-2007.

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The Appellant had filed its return of income on November 29, 2006 declaring income under normal provision at Rs. 8,260,520 and Book Profits under Section 115JB at Rs. 8,287,350. The return was processed and the same was subject to scrutiny and the Respondent declared the total assessed income of the Appellant as Rs. 101,086,300 and vide its assessment order dated December 31, 2008 raised a demand of Rs. 41,329,686 on the Appellant (“Impugned Order”). The Appellant, in the meantime filed a rectification application dated January 27, 2009 under Section 154 of the Income Tax Act before the Respondent stating there are certain arithmetical errors in the Impugned Order. After verification of records, the Respondent vide its order dated February 17, 2009 revised the amount payable by the Appellant from Rs. 41,329,686 to Rs. 38,462,855. Being aggrieved by the Impugned Order passed by the Respondent our Company filed an Appeal bearing number 379/AC-3(3)/CIT (A)-IV/08-09/ before the Commissioner of Income Tax (Appeals) (“CIT (A)”) on the following grounds that: i. The Respondent excluded an amount of Rs. 5,744,547 from the profits eligible under Section 10A attributing these amounts, credited to P&L account, as not derived from the business of software development/services. The Respondent excluded two amounts from the income of the undertaking eligible for exemption under Section 10A attributable to the service fee received from the branch office as they are rendered to the branch office in USA. The undertaking in India is eligible for exemption under Section 10Aand renders services to its branch in USA and also to its customers in USA. Hence, when the Company is paying tax upon the consolidated total income (i.e. India + USA) from both the units the transactions between the two entities will have no impact. The Respondent has excluded dividend income of Rs. 1,298,656 from the computing of eligible profits under Section 10A twice. The dividend income was excluded separately and was also excluded as part of income from other source of Rs. 5,744,547. The Respondent disallowed an amount of Rs. 960,000 as interest towards advance given to Semantic Space Welfare Trust. The Respondent failed to appreciate the business reasons that these amounts are advanced to meet the welfare of the employees and have a strong business reason, further, these amounts are advanced out of the accumulated reserves of the Company.

ii.

iii.

iv.

The CIT (A) vide its Appellate Order (“Appellate Order”) dated March 31, 2010 partly allowed the Appeal and passed the following order; i. ii. iii. iv. v. vi. vii. Directing the Respondent to include the miscellaneous income of Rs. 549,684 and credit balances written back of Rs. 15,648 (from the profits eligible under Section 10A) for the computation of deductions. Directing the Respondent to include Rs. 151,334, pertaining to the notice period salary fro the purpose of computation of deduction under Section 10A. Directing the Respondent to include the foreign exchange fluctuations income of Rs. 3,620,165 while computing the eligible income under Section 10A. Directing the Respondent to exclude the interest income of Rs. 109,087 from the profits and gains derived from the export activity and further directing to calculate the income from export of software. Directing the Respondent to recomputed the deductions under Section 10A pertaining to income from software development charges. The Respondent was correct in disallowing of sub contract payments of Rs. 2,465,098 for contravention of provisions of Section 195 of the Income Tax Act. Directing the Respondent to consider the disallowances, including the disallowances under Section 40a of the Income Tax Act for adopting the income eligible for deductions under Section 10A.

Further being aggrieved by the Appellate order passed by the CIT (A), the Appellant has filed the above Appeal before the Income Tax Appellate Tribunal. The above Appeal has been filed on the following grounds: i. That the CIT (A) erred in directing the exclusion of the interest income of Rs. 109,087 for purposes of computing eligible income. ii. The CIT (A) failed to appreciate that there are two streams of income- Indian income eligible under Section 10A of Income Tax Act and income from foreign branches and this lead to an erroneous conclusion that the sale of services by Indian entity to its foreign branch will not be entitled to benefits under Section 10A as it is a sale to itself.

253

iii. That the CIT (A) erred in confirming that the sums of Rs. 6,177,900 representing software development charges and Rs. 19,646,151 representing HR and marketing services, aggregating to Rs. 25,824,051 received from the US branch of the assessee in convertible foreign exchange do not constitute “export turnover” for purposes of Section 10A. iv. The CIT (A) ought to have appreciated that software development charges and HR and marketing services fall within the definition of computer services notified vide notification no. 0890E/F. No. 142/49/2000-TPL dated September 26, 2000 and also that the receipts of Rs. 6,177,900 and Rs. 19,646,151 representing the consideration received for rendering these services has been duly approved by the STPI and consequently these services receipts constitute “export turnover”. v. That the CIT (A) erred in holding that the aggregate sum of Rs. 25,824,051 represented exports to the Appellant itself ignoring the fact that the said amount represented input services to the branch for rendering services to foreign customers and that the impugned amount represented receipts in convertible foreign exchange for export of computer services through the branch. vi. That the CIT (A) erred in confirming disallowance of Rs. 24,650,958 on the grounds that the Appellant made the payment to a foreign entity and that accordingly the Appellant ought to have deducted tax at source. vii. That the CIT (A) that the CIT (A) failed to appreciate that the payment of Rs. 24,650,958 made by the head office to the branch represented movement of funds within the entity and that the payment to oneself did not attract TDS provisions. viii. That the CIT (A) failed to appreciate that in any case, the residential status of the foreign branch is “Resident” as per the provisions of \Section 6 (5) of the Income Tax Act and thus the payment is not to a non-residential entity. ix. That the CIT (A) failed to appreciate that the impugned amount recorded as a payment in the head office accounts and correspondingly as a receipt in the branch office, got nullified on the consolidation of the accounts and accordingly, the payment has not been claimed as a deduction in computing total income on the basis of the consolidated profit and loss account and that the provisions of Section 40 (a) (ia) are not attracted to the impugned payment. The Appeal is currently pending for hearing before the Income Tax Appellate Tribunal. The next date of hearing is on December 09, 2010. ii. Income Tax Appeal dated February 05, 2010 filed by our Company (“Appellant”) against the Deputy Commissioner of Income Tax, Circle – 3(1), Hyderabad (“Respondent”) before the Commissioner of Income Tax (Appeals) for the assessment year 2007-2008

The Appellant has filed an Appeal dated February 05, 2010 (“Appeal”) before the Commissioner of Income Tax (Appeals) (“CIT (A)”) against the assessment order dated December 31, 2009 (“Impugned Order”) passed by the Respondent disallowing certain deductions and demanding a payment of Rs. 24,560,084 for the assessment year 2007 – 2008. The Appeal has been filed on the following grounds: i. That the Respondent failed to appreciate that the inextricable nature of the source for deriving the income reflected as other income and that the credit balances written back, notice period salary, etc., arise directly out of the business activity and hence should not have been reduced from the eligible profits under Section 10A. The Respondent failed to note that the approval of the STPI for the sales to branch and realization in foreign currency qualify the same export turnover. The Respondent failed to appreciate that it is only the income comprises in the service charges and not the entire service charges that could have been excluded from the purview of eligible profits while computing the deductions. That the Respondent erred in excluding the disallowances made under Section 43B, 40A (7) and 35D of the Income Tax Act and other statutory disallowances. That The Respondent failed to appreciate that the provisions of Section 195 read with Section 9 of the Income Tax Act and DTAA with USA, which do not warrant any deduction of tax for this nature of remittance. That notwithstanding the above, the remittance represents movement of funds within the entity itself., hence the payment made by an entity to itself does not attract deductions of tax at source. That the Respondent erred in understanding the residential status of the branch in US and incorrectly concluded that Section 195 of the Income Tax is applicable to payments made to the branch.

ii. iii.

iv. v. vi. vii.

254

viii. ix. x.

xi.

That the Respondent erred in disallowing expenditure incurred on “employer taxes” “leased line charges” and “sub-contract charges” under Section 40(a)(ia) of the Income Tax Act. The Respondent erred in disallowing a sum of Rs. 12,951,514 without affording an opportunity of hearing to the Appellant and that the same is in violation of the principles of natural justice. That the Respondent erroneously took into consideration a sum of Rs. 14,221,117 as income from other sources whereas the Respondent should have excluded notice period salary and credit balance written back since amounts constitute eligible profits under the income derived from other business. That the Respondent erred in excluding from the purview of export turnover the expenses incurred on staff perdium, professional charges and seminar and training charges though the said staff expenses were not a part of the expenses related to the consideration in respect of export of articles or things or computer software received in India by the Appellant in convertible foreign exchange.

The Appeal is currently pending for hearing before the Commissioner of Income Tax (Appeals). A hearing was held on November 10, 2010 where the matter has been adjourned sine die. III. Outstanding litigations involving our Subsidiaries JYACC A. Outstanding litigations by JYCACC / Prolifics Complaint filed by JYACC (“Plaintiff”) against Hornell Brewing Co., Inc (“Defendant”) before the Supreme Court of the State of New York County of Nassau (“Complaint”). Plaintiff has filed the above Complaint against the Defendant alleging that the Defendant has failed to make a payment as per the invoices raised by the Plaintiff from time to time. The Plaintiff has entered into a Master Service Agreement (“Service Agreement”) with the Defendant on November 01, 2008, wherein the Plaintiff had agreed to provide computer programming and other advisory and consulting services (“Services”) to the Defendant. In addition to that, the Defendant had executed a Universal Binding Letter of Authorization (“LOA”) wherein the Plaintiff had agreed to and did supply to the Defendant support renewals on various IBM software products. The Plaintiff sent detailed invoices to the Defendant with respect to the Services provided, amounting to $97,185.74. The Complaint has been filed alleging the following: i. First cause of action: a) The Plaintiff performed its Services in accordance with the terms of the Service Agreement and the LOA . b) The Plaintiff sent detailed invoices to the Defendant amounting to US$ 97,185.74. c) The Service required the Defendant to pay all the amounts due within 30 days of the receipt of each invoice. d) The Defendant has failed to pay the invoice amounts totalling US$ 97,185.74, despite due demand. e) Under the Service Agreement the Defendant agreed to pay all invoices within 30 days and incase the payment is not received within 30 days, the Defendant agreed to pay interest @ 1% per calendar month. f) Therefore, the Defendant has breached the contract entitling the Plaintiff to a judgement in the amount of US$ 97,185.74 plus interest @ 1% per calendar month. ii. Second cause of action: a) On or about and between November, 2008 and September 2009, the Plaintiff provided Services to the Defendant at its request for an agreed price and reasonable value. b) The Defendant benefitted from these Services. c) The reasonable value of the goods and services is the sum of US$ 97,185.74 d) The Defendant still owes to the Plaintiff US$ 97,185.74 after the payment was demanded, and the Plaintiff is entitled to judgement in such amount plus interest @ 1% per calendar month. iii. Third cause of action: 255

a)

On or about and between November, 2008 and September 2009, the Plaintiff provided goods and services to the Defendant at its request for an agreed price and reasonable value. b) The Plaintiff rendered to the Defendant periodic, full and true accounts of the indebtedness due and owing by the Defendant to the Plaintiff as a result of the Service Agreement, in the amount of US$97,185.74. c) The account statements were accepted by the Defendant without objection. d) The Defendant owes to the Plaintiff the amount of US$ 97,185.74 on an account stated after payment was duly demanded and the Plaintiff is entitled to judgement in such amount plus interest @ 1% per calendar month. The Complaint has been filed demanding the following: a) On the First cause of action in favour of the Plaintiff and against the Defendant in the amount of US$ 97,185.74, plus interest @ 1% per calendar month. b) On the Second cause of action in favour of the Plaintiff and against the Defendant in the amount of US$ 97,185.74, plus interest @ 1% per calendar month. c) On the Third cause of action in favour of the Plaintiff and against the Defendant in the amount of US$ 97,185.74, plus interest @ 1% per calendar month. The Defendant has filed its answer to the Complaint on January 19, 2010 wherein it has denied all the allegations made by the Plaintiff and has demanded the dismissal of the Plaintiff’s Complaint, together with the costs and disbursements of this action and in the alternative, and in the event that the Plaintiff prevails, the Defendant has demanded reduction of the amount of damages by the respective percentage of the fault of the Plaintiff and all persons liable. The total amount involved in this Complaint is US$ 291,557.22. The Complaint is currently pending before the Supreme Court of the State of New York County of Nassau. The next date of hearing is on December 17, 2010. IV. Outstanding litigations involving our Directors Litigations against our Director, Mr. Vivek Mundra 1. Income Tax Appeal bearing number ITA No. 448/K/9 dated March 2009 (“Appeal”) filed by the Assistant Commissioner of Income Tax, Circle (“Appellant”) against Mr. Vivek Mundra (“Respondent”) before the Income Tax Appellate Tribunal for the assessment year 2005-2006.

The above Appeal has been filed by the Appellant challenging the order dated January 21, 2009 (“Impugned Order”) passed by the Commissioner of Income Tax (Appeals) – VIII, Kolkata (“CIT(A)”) wherein the CIT(A) had partly allowed the Appeal in favour of the Respondent and allowed the deduction of Rs. 17,101,763 from the total income of Rs. 29,679,932.00 as disclosed by the Respondent. The Appeal has been filed on the ground that the CIT(A) erred in holding the income of Rs. 17,101,763 was income from short term capital gains rather than business income as contended by the Assessing officer. The Appeal is currently pending before the Income Tax Appellate Tribunal and the next date of hearing was on November 4, 2010 where it has been adjourned sine die. 2. Income Tax Appeal bearing number 1409(K)19 of 2009 dated August 14, 2009 (“Appeal”) filed by the Assistant Commissioner of Income Tax, Circle – 7, Kolkata (“Appellant”) against Mr. Vivek Mundra (“Respondent”) before the Income Tax Appellate Tribunal for the assessment year 2006 – 2007.

The above appeal has been filed by the Appellant challenging the order dated June 18, 2009 (“Impugned Order”) passed by the Commissioner of Income Tax (Appeals) – VIII, Kolkata (“CIT (A)”), wherein the CIT(A) reversed the assessment order dated December 31, 2008 passed under section 143(3) of the I.T. Act by the Appellant disallowing certain deductions and expenses claimed by the Respondent and determined the income at Rs. 33,595,350. The Appeal has been filed on the grounds that the CIT(A) erred on fact that the income of Rs. 26,463,001 was income

256

from short term capital gains rather than business income despite the clear findings of the Assessing officer that the main motive of the Respondent was to earn profits by trading in shares rather than investment. The Appeal is currently pending before the Income Tax Appellate Tribunal. The matter was heard on November 4, 2010 and was adjourned sine die. V. Potential litigations involving our Subsidiaries Notice dated June, 2009 received from HQ Global Workplaces/Regus: Since 2006 Prolifics LLC, had leased two serviced offices (“Premises”) through HQ Global Workplaces/Regus (“Regus”) in San Francisco, California at an aggregate cost of approximately US$4,000 per month. Those offices were underutilized, and in December 2008 JYACC sought to re-negotiate those arrangements. Regus refused to negotiate, and JYACC vacated the offices and ceased paying rent in February 2009. Subsequently, Regus forwarded the matter to a collection agency, which has made written demand for US$72,469 in June, 2009. No further communication has been received. This may give rise to litigation. VI. Outstanding litigations involving our Group Companies Our Group Companies are not involved in any litigation either initiated by or against them. VII. Past penalties levied in the last five years Other than as stated below there are no penalties imposed on our Company, Promoters, Directors, Entities Promoted by our Promoters and our Subsidiaries in the last five years: Our Company Sr. No. Penalty imposed (in Rs.) Brief particulars regarding penalty Remarks (paid / payable and reasons thereof) Paid Paid

1. 2.

24,000 17,633

Due to the change in the name of the Company not being reflected in the records of the Central Excise Department Delay in payment of amount owed towards provident fund

Arsin Corp. Sr. No. Penalty imposed (in $) Brief particulars regarding penalty Remarks (paid / payable and reasons thereof) Paid

1.

559.97

Penalty imposed by the Franchise Tax Board for partial payment for Franchise Tax

JYACC Sr. No. Penalty imposed (in $) Brief particulars regarding penalty Remarks (paid / payable and reasons thereof) Paid

1.

88.48

Penalty on late filing of quarterly sales tax return; unable to locate detail due

257

2. 3. 4. 5. 6.

50.00

1,125.66 111.50

5,221.26 200.00

to office move Penalty on late filing of quarterly sales tax return; unable to locate detail due to office move Penalty on late filing of 2007 CA corporate income tax return; unable to locate detail due to office move Penalty on late filing of quarterly sales tax return; unable to locate detail due to office move Penalty on late filing of B&O Tax with the state of Washington; unable to locate detail due to office move Penalty on late filing of quarterly sales tax return; unable to locate detail due to office move

Paid Paid Paid Paid Paid

VIII.

Material Developments since the last Balance Sheet Date

Except as disclosed in the chapter titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 221 and in the paragraph titled “Material Developments Since The Balance Sheet Date” in the chapter titled “Outstanding Litigations and Material Developments” beginning on page 250 of this Draft Red Herring Prospectus, in the opinion of our Company’s Board, there have not arisen, since the date of the last financial statements disclosed in this Draft Red Herring Prospectus, any circumstances that materially or adversely affect or are likely to affect our profitability taken as a whole or the value of our consolidated assets or our ability to pay material liabilities within the next 12 months. IX. Outstanding dues to small scale undertaking(s) or any other creditors There are no outstanding dues above Rs. 0.10 million to small scale undertaking(s) or any other creditors by our Company, for more than 30 days.

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GOVERNMENT AND OTHER APPROVALS

We have received the necessary consents, licenses, permissions and approvals from the Government and various governmental agencies required for our present business (as applicable on date of this Draft Red Herring Prospectus) and except as mentioned below, no further approvals are required for carrying on our present business. In view of the approvals listed below, we can undertake this Issue and our current/proposed business activities and no further major approvals from any governmental or regulatory authority or any other entity are required to undertake the Issue or continue our business activities. It must be distinctly understood that, in granting these approvals, the Government of India does not take any responsibility for our financial soundness or for the correctness of any of the statements made or opinions expressed in this behalf. Unless otherwise stated, these approvals are all valid as of the date of this Draft Red Herring Prospectus.

The main objects clause of the Memorandum of Association and objects incidental to the main objects enable our Company to carry out its existing activities. The following statement sets out the details of licenses, permissions and approvals taken by our under various central and state laws for carrying out its business. A. APPROVALS FOR THE ISSUE Corporate Approvals The following approvals have been obtained in connection with the Issue: 1. The Board of Directors have, pursuant to a resolution passed at its meeting held on August 13, 2010 authorized the Issue, subject to the approval of the shareholders of our Company under Section 81(1A) of the Companies Act, and such other authorities as may be necessary. The shareholders of our Company have, pursuant to a special resolution held on September 20, 2010 under Section 81(1A) of the Companies Act, 1956 have authorized the Issue. The Offer for Sale comprises an offer for sale of 1,263,636 and 863,636 Equity Shares, by UTI ITVUS and New Vernon, respectively, which has been authorised as follows: UTI ITVUS has vide a letter dated September 24, 2010 consented to the Offer for Sale of 1,263,636 Equity Shares. New Vernon has authorized the Offer for Sale of 863,636 Equity Shares vide resolution of its board of directors dated September 30, 2010.

2.

3.

4.

Our Company has obtained in-principle listing approvals dated [●], 2010 and [●], 2010 from the BSE and the NSE, respectively.

Approval from the RBI 1. Letter bearing reference number FE.CO.OID.2330/19.19.803/2007-2008 dated July 27, 2007 from the Assistant General Manager, RBI allotting identification number HYWAZ20070323 to the wholly owned subsidiary of our Company, Arsin Corp. Our Company has filed its latest Annual Performance Report with the authorised dealer vide its letter dated July 30, 2010. Letter bearing reference number F.E. CO. OID. 220369/19.19.875/2007-2008 dated June 19, 2008 from the Assistant General Manager, RBI allotting an identification number HYWAZ20080295 to the wholly owned subsidiary of our Company, SSTNA Incorporation. Our Company has filed its latest Annual Performance Report with the authorised dealer vide its letter dated July 30, 2010. 259

2.

B. INCORPORATION AND OTHER DETAILS Incorporation details of the Company 1. Certificate of Incorporation dated November 14, 1997 issued by the Registrar of Companies, Karnataka in the name of Infoquest Systems Private Limited bearing certificate No. 08/23062 of 1997. Fresh Certificate of Incorporation dated April 10, 2000 issued by the Registrar of Companies, Andhra Pradesh upon the change in name of the Company from “Infoquest Systems Private Limited” to “Infoquest Systems Limited” Fresh Certificate of Incorporation dated July 3, 2000 issued by the Registrar of Companies, Andhra Pradesh upon the change in name of the Company from “Infoquest Systems Limited” to “Semantic Space Technologies Limited”.

2.

3.

C. GENERAL AND CORPORATE APPROVALS 1. Registration Certificate of Establishment bearing number E/JCL/RR ZONE/457/2010 dated October 06, 2010 has been issued to our Company by the Inspector under the Andhra Pradesh Shops and Establishment Act, in respect of registering our Company as the commercial establishment in respect of the premises situated at at 5th Floor, Jayabheri Silicon Towers, Survey No.14, Kondapur Village, Serilingampally Mandal, Rangareddy District, Hyderabad, India. The same is valid until December 31, 2011. Registration Certificate of Establishment bearing number JCL/HYD/82/2010 dated October 08, 2010 has been issued to our Company by the Inspector under the Andhra Pradesh Shops and Establishment Act, in respect of registering our Company as the commercial establishment in respect of the premises situated at 1st,, 2nd and 3rd Floor, Plot No. 226, Road No.17, Jubilee Hills, Hyderabad. The same is valid until December 31, 2011. Importer Exporter Code of our Company is 5197000864 dated January 16, 1998 The Company has obtained a professional tax registration number PJT/10/1/3556/2004-2005 under the A. P. Tax on Professions, Trades, Calling and Employments Act, 1987 from the Profession Tax Officer. The Company has obtained a service tax code AAGCS6868PST001 from the Superintendent of Central Excise and Service Tax, Hyderabad - II, Commissionerate. The Tax Deduction Account Number (“TAN”) of the Company is HYD100444D. The Permanent Account Number (“PAN”) of the Company is AAGCS6868P. The Tax Identification Number (“TIN”) of the Company is 28180136635. Certificate of Qualification bearing No. 2215469 dated April 26, 2000, issued by the Secretary of State, State of California, to our Company in the name of Infoquest Systems Private Limited, qualifying our branch office in California to, United States of America to transact intrastate business in the State of California.

2.

3. 4.

5.

6. 7. 8. 9.

10. Name Change Certificate of Qualification bearing No. C2215469 dated August 31, 2001 issued by the Secretary of the State, State of California, upon the change of name from Infoquest Systems Private Limited to Infoquest Systems Limited to Semantic Space Technologies Limited qualifying our branch office in California to, United States of America to transact intrastate business in the State of California. 11. Our Company, for its branch office situated in California has been issued a Business License Certificate bearing Business License Number 99032291 dated July 10, 2010 from the Irvine Police Department, 260

California, United States of America, pursuant to the City Code of Ordinances to engage in, carry on or transact the business, trade, calling, profession, exhibition or occupation of design and development of software. This license is valid uptil October 31, 2011. 12. Our Company, for its branch situated in California has been issued Employer Identification Number 522236269. D. Customs Approvals 1. The Company has obtained Private Bonded Warehouse License Number 34/2006 dated May 31, 2006 for its warehouse situated at 5th Floor, Jayabheri Silicon Towers, Sy. No. 14, Madhapur Road, Kondapur, Hyderabad. This License has been renewed and is valid which is valid till March 31, 2011. The Company has obtained Private Bonded Warehouse License Number 15/2007 dated February 22, 2007 for its warehouse situated at 1st and 2nd Floors, Plot No. 226, Jubilee Hills, Hyderabad – 500 033. This License has been renewed and is valid till March 31, 2012. The Company has obtained Private Bonded Warehouse License Number 17/2007 dated April 13, 2007 for its warehouse situated at East Wing of the 5th Floor, Jayabheri Silicon Towers, Sy. No. 14, Madhapur Road, Kondapur, Hyderabad. This License is valid till March 30, 2011.

2.

3.

E. Premises specific approvals Software Technology Park of India (“STPI”) related approvals 1. Letter of permission bearing STPC:IMSC:97-98/21/2973 dated December 18, 1997 issued by the Director STPI, Hyderabad and renewed on November 7, 2003 and further renewed vide letter STPH:EXIM:6096:2008-2009/23004 dated January 27, 2009 issued by the Director, STP, Hyderabad permitting our Company to set up a 100% EOU unit under the STPI Scheme of the Government of India for the purpose of development of computer software at the premises situated at 6-3-1109/1, Ground Floor, Navbharat Chambers, Rajbhavan Road, Somajiguda, Hyderabad. The approval is valid till January 15, 2013. Letter of permission bearing STPC:IMSC:06-07/1658 dated January 31, 2007 issued by the Director STPI, Hyderabad permitting our Company to set up a 100% EOU under the STPI Scheme of the Government of India for the purpose of development of computer software at the premises situated at Plot No. 226, Road No. 17, Jubliee Hills, Hyderabad – 500033. The approval is valid for a period of 5 years from the date of commencement of production. Letter of permission bearing STPC:IMSC:06-07/1688 dated March 06, 2007 issued by the Director STPI, Hyderabad permitting our Company to set up a 100% EOU under the STPI Scheme of the Government of India for the purpose of development of computer software at the premises situated at 5th Floor, East Wing, Jayabheri Silicon Towers, Madhapur Road, Kondapur, Hyderabad – 500 032. The approval is valid for a period of 5 years from the date of commencement of production.

2.

3.

Special Economic Zone (“SEZ”) related approvals 1. By a letter bearing No. SEZ(IT/ITES)/STPL/DLF/(HYD)/0030/2010-11 dated June 18, 2010 the Office of the Development Commissioner, Special Economic Zone (IT/ITES) Andhra Pradesh – Ministry of Commerce and Industry, Department of Commerce has extended our Company all facilities and entitlements admissible to a Unit in a Special Economic Zone in respect of the premises situated at 8th Floor, Block-3, Plot No. 129-132, APHB Colony, Gachibowli Village, Hyderabad, Andhra Pradesh for undertaking manufacture and rendering services in respect of IT/IT Enabled Services (setting up, operation and maintenance).

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F. Labour law registrations 1. The Company has obtained Employees’ Provident Fund registration number AP/HY/35748 dated w.e.f. August 01, 1999 and BN No. 873530001 dated November 3, 2006 from Regional Provident Fund Commissioner - I, Employees’ Provident Fund Organisation, Andhra Pradesh. The Company has obtained employer’s code number 52-23160-90 dated April 27, 2004 under the Employees State Insurance Act.

2.

Intellectual Property owned by Our Subsidieries As on the date of this DRHP, we have the following registered Trade Mark/Service Mark: 1. JYACC owns Service Mark “Prolifics” which is registered with the United States Patent and Trademark Office under Registration No. 3,129,757 on August 15, 2006 in class 42 (US CLS. 100 and 101). The registration is valid till August 14, 2016. Arsin owns a Service Mark “ARSIN” which is registered with the United States Patent and Trademark Office under Regisration No. 2,461,709 on June 19, 2001 in class 37. The registration is valid till June 19, 2011.

2.

LICENSES APPLIED FOR BY OUR COMPANY AND OUR SUBSIDIERIES Trademark Applications by our Company We have applied for registration of the following trademarks on November 1, 2010, under class 42 of the Trademarks Act, 1999. A class 42 registration pertains to ‘Scientific and technological services and research and design relating thereto; industrial analysis and research services; design and development of computer hardware and software.’ Trademark applied for Arsin Code Immunizer eRecruiter Job ‘a’ Fair Prolifics SemanticSpace SST PPM Studio Effecta Trademark Applications by our Subsidiery, JYACC JYACC owns Trade Mark “Panther” which is registered with the United States Patent and Trademark Office under Registration No. 2,360,104 on June 20, 2000. The registration was valid till June 20, 2010. JYACC vide its application dated October 13, 2010 has applied for renewal of the registration. Application Number 2047230 2047231 2047232 2047233 2047234 2047235 2047236 2047237 2047238

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OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue From the Company The Issue of Equity Shares has been authorized by the resolution of the Board of Directors at their meeting held on August 13, 2010 and by the shareholders of our Company pursuant to a special resolution passed at the AGM of our Company held on September 20, 2010 From the Selling Shareholders The Offer for Sale comprises an offer for sale of 1,263,636 and 863,636 Equity Shares, by UTI ITVUS and New Vernon, respectively.  UTI ITVUS has, vide letter dated September 24, 2010, consented to the Offer for Sale of 1,263,636 Equity Shares.  New Vernon has authorized the Offer for Sale of 863,636 Equity Shares vide resolution of its board of directors dated September 30, 2010 We have received in-principle approvals from the NSE and the BSE for the listing of our Equity Shares pursuant to letters dated [●] and [●], respectively. [●] is the Designated Stock Exchange. We have also obtained all necessary contractual approvals required for this Issue. For further details, please refer chapter titled “Government and Other Approvals” beginning on page 259 of this Draft Red Herring Prospectus. Prohibition by SEBI, RBI or governmental authorities Our Company, our Directors, our Subsidiaries, our Promoters, Promoter Group or Group Companies ,associates of our Group Companies and such other companies in which our Directors, our Promoter was or also are directors, promoters or person in control of such other companies, have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI or the RBI or any other regulatory or governmental authority. The listing of any securities of our Company has never been refused at anytime by any of the stock exchanges in India. Further, none of the Selling Shareholders have been prohibited from accessing the capital market under any order or direction passed by SEBI. Except for Mr. Vivek Mundra who is associated with Jet Age Securities Private Limited, a SEBI registered trading and clearing member, none of our Directors are associated in any manner with any entities, which are engaged in securities market related business and are registered with SEBI. Further, SEBI has not initiated any action against Jet Age Securities Private Limited. Neither our Company, our Directors, our Promoters nor the relatives of the Promoters (as defined under the Companies Act), have been identified as wilful defaulters by RBI / government authorities and there are no violations of securities laws committed by any of them in the past and there are no such proceedings pending against them. Entities of our Promoter Group do not appear on the RBI defaulter list, nor are there any violations of securities laws committed by them in the past or pending against them. Further, none of the Selling Shareholders have been detained as wilful defaulters by RBI or government authorities in India and there have been no violation of any Indian securities laws committed by any of them in the past and there are no such proceedings pending against them Eligibility for this Issue Our Company is an “unlisted Issuer” in terms of the SEBI ICDR Regulations; and this Issue is an “Initial Public Offer” in terms of the SEBI ICDR Regulations. 263

Our Company is eligible for the Issue in accordance with Regulation 26(1) of the SEBI ICDR Regulations as explained under, with the eligibility criteria calculated in accordance with unconsolidated audited financial statements under Indian GAAP:  Our Company has net tangible assets of at least Rs. 30 million in each of the preceding three full years (of twelve months each) of which not more than 50% is held in monetary assets and is compliant with Regulation 26(1)(a) of the SEBI ICDR Regulations. As at the end of Fiscal 2008 our Monetary Assets as a percentage of Net Tangible Assets were at 62%. This was primarily on account of proceeds from the sale of investments during this fiscal of Rs. 91.77 million for the purpose of funding our acquisition of JYACC, Inc. However during the Fiscal 2009, such monetary assets were utilized by the Company to fund the acquisition of JYACC, Inc. and as such monetary assets during the Fiscal 2009 came down to 6% from 62% as at the end of Fiscal 2008;  Our Company has a track record of distributable profits in accordance with Section 205 of Companies Act, for at least 3 (three) of the immediately preceding 5 (five) years and is compliant with Regulation 26(1)(b) of the SEBI ICDR Regulations;  Our Company has a net worth of at least Rs. 10 Million in each of the preceding three full years (of twelve months each) and is compliant with Regulation 26(1)(c) of the SEBI ICDR Regulations;  The aggregate of the proposed Issue size and all previous issues made in the same financial year in terms of issue size (i.e. offer through the offer document + firm allotment + promoter’s contribution through the offer document) is not expected to exceed five times the pre-Issue net worth of our Company as per the audited balance sheet of the last financial year and is compliant with Regulation 26 (1)(d) of the SEBI ICDR Regulations;  Our Company has not changed its name in the last fiscal year. Our Company satisfies the aforementioned eligibility criteria (as derived from our Audit Report for the last five years ended FY 2010) as follows (Amount in Rupees million) Particulars March March March March March, 31, 2006 31, 2007 31, 2008 31, 2009 31, 2010 Net Tangible Assets* 586.84 875.22 976.57 1,116.53 1,322.49 Monetary Assets** 245.13 435.16 608.50 69.37 14.43 Monetary Assets as a % of Net Tangible Assets 42% 50% 62% 6% 1% Distributable Profits*** 181.06 303.43 147.20 152.94 143.67 Net Worth#, as restated 588.28 876.57 1,022.31 1,180.70 1,325.48 Soruce: Audited unconsolidated financial statements of our Company for the respective periods. Notes: * Net tangible assets is defined as the sum of all net assets of the Company, excluding intangible assets as defined in Accounting Standard 26 (AS 26), “Intangible Assets” issued by the Institute of Chartered Accountants of India. Net tengable assets is the sum of fixed assets (including capital work in progress and excluding revaluation reserves), investments, current assets (excluding deferred tax assets) less current liabilities (excluding deffered tax liabilities and long term liabilities), and net of provision for diminution in value; **Monetary assets include cash on hand and bank balances; ***Distributable profits are as defined under Section 205 of the Companies Act. # Net worth is defined as the aggregate of equity share capital and reserves and surplus. Further, in accordance with sub-regulation (4) of Regulation 26 of the SEBI ICDR Regulations, our Company shall ensure that the number of prospective allottees i.e persons to whom the Equity Shares will be allotted in the Issue shall not be less than 1,000, failing which the entire application money shall be refunded forthwith. In case of delay, if any, in refund of application money, our Company shall pay interest on the application money at the rate of 15% per annum for the period of delay beyond fifteen days from the date of closure of the Issue. Any expense incurred by our Company on behalf of the Selling Shareholders with regard to refunds, interest of delays, etc. for the Equity 264

Shares being offered through the Offer for Sale will be reimbursed by the Selling Shareholders to our Company in proportion to the Equity Shares contributed by the Selling Shareholders to the Issue. DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING PROSPECTUS TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGER, INDIA INFOLINE LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE OFFER DOCUMENT, THE BOOK RUNNING LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE ISSUER DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGER, INDIA INFOLINE LIMITED HAS FURNISHED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI), A DUE DILIGENCE CERTIFICATE DATED NOVEMBER 12, 2010 WHICH READS AS FOLLOWS: “WE, THE BOOK RUNNING LEAD MANAGER TO THE ABOVE MENTIONED FORTHCOMING ISSUE, STATE AND CONFIRM AS FOLLOWS: (1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE ISSUE. (2) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE ISSUER, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER PAPERS FURNISHED BY THE ISSUER, WE CONFIRM THAT: a. THE DRAFT RED HERRING PROSPECTUS FILED WITH THE BOARD IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; b. ALL THE LEGAL REQUIREMENTS RELATED TO THE ISSUE AS ALSO THE REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC., FRAMED/ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND c. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE 265

SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS. (3) WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS ARE VALID. (4) WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS. NOTED FOR COMPLIANCE (5) WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTER’S CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTER’S CONTRIBUTION SUBJECT TO LOCK-IN, SHALL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS. (6) WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS. (7) WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS OF THE ISSUE. – NOT APPLICABLE (8) WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION. (9) WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE PROSPECTUS. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION. – NOTED FOR COMPLIANCE. (10) WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES 266

IN DEMAT OR PHYSICAL MODE. – NOT APPLICABLE AS THE ISSUE SIZE IS MORE THAN RS. 100 MILLION, THEREFORE UNDER SECTION 68B OF THE COMPANIES ACT, 1956, THE ALLOTMENT WILL BE MADE ONLY IN DEMAT FORM. (11) WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION. (12) WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT RED HERRING PROSPECTUS: a. AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE ISSUER, AND

b. AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME. (13) WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE – COMPLIED WITH AND NOTED FOR COMPLIANCE. (14) WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OR THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTER’S EXPERIENCE, ETC. (15) WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT RED HERRING PROSPECTUS WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.” THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY AND SELLING SHAREHOLDERS FROM ANY LIABILITIES UNDER SECTION 63 OR 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE BOOK RUNNING LEAD MANAGER ANY IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS. All legal requirements pertaining to this Issue will be complied with at the time of filing of the Red Herring Prospectus with the Registrar of Companies, Hyderabad, in terms of Section 60B of the Companies Act. All legal requirements pertaining to this Issue will be complied with at the time of registration of the Prospectus with the Registrar of Companies, Hyderabad, in terms of Sections 56, 60 and 60B of the Companies Act. DISCLAIMER STATEMENT FROM OUR COMPANY, OUR SHAREHOLDERS AND THE BOOK RUNNING LEAD MANAGER 267 DIRECTORS, THE SELLING

Our Company, our Directors, the Selling Shareholders and the Book Running Lead Manager accept no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisement or any other material issued by or at instance of our Company and anyone placing reliance on any other source of information, including our website, www.semanticspace.com, would be doing so at his or her own risk. The BRLM accepts no responsibility, save to the limited extent as provided in the Underwriting Agreement to be entered into between our Company, the Selling Shareholders and the Underwriters and the Issue Agreement between the BRLM, our Company and the Selling Shareholders. All information shall be made available by our Company, our Directors, the Selling Shareholders and the BRLM to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports, at bidding centers, etc. The BRLM and its associates and affiliates may engage in transactions with, and perform services for, our Company, affiliates or associates or third parties in the ordinary course of business and have engaged, or may in future engage, in the provision of financial services for which they have received, and may in future receive, compensation. Neither our Company, its Directors, the Selling Shareholders, BRLM nor any member of the Syndicate are liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system or otherwise. Caution Investors that bid in this Issue will be required to confirm and will be deemed to have represented to our Company, the Selling Shareholders and the Underwriters and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company and will not offer, sell, pledge or transfer the Equity Shares to any person who is not eligible under applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company. Our Company, the Selling Shareholders and the BRLM and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares of our Company. Disclaimer in respect of jurisdiction This Issue is being made in India to persons resident in India (including Indian nationals resident in India who are not minors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in equity shares, Indian Mutual Funds registered with the SEBI, Indian financial institutions, commercial banks and regional rural banks, co-operative banks (subject to RBI permission), trusts (registered under Societies Registration Act, 1860, or any other trust law and are authorized under their constitution to hold and invest in equity shares) public financial institutions as specified in Section 4A of the Companies Act, VCFs, state industrial development corporations, insurance companies registered with Insurance Regulatory and Development Authority, provident funds (subject to applicable law) with minimum corpus of Rs. 250 million, pension funds with minimum corpus of Rs. 250 million and the National Investment Fund, permitted non-residents including eligible NRIs and FIIs as defined under the Indian Laws and other eligible foreign investors (i.e., FVCIs, multilateral and bilateral development financial institutions) provided that they are eligible under all applicable laws and regulations to hold Equity Shares of the Company. This Draft Red Herring Prospectus does not, however, constitute an offer to sell or an invitation to subscribe to equity shares issued hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Draft Red Herring Prospectus comes is required to inform himself or herself about and to observe any such restrictions. Any disputes arising out of this Issue will be subject to the jurisdiction of courts in Hyderabad, India only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Draft Red Herring Prospectus has been filed with SEBI for its observations. Accordingly, the Equity Shares, represented thereby may not be offered or sold, directly or indirectly, and this Draft Red Herring 268

Prospectus may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft Red Herring Prospectus nor any sale hereunder shall, under any circumstances create any implication that there has been no change in the affairs of our Company since the date hereof or that the information contained herein is correct as of any time subsequent to this date. The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933 (the “Securities Act”), as amended or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act). Accordingly, the Equity Shares will be offered and sold only outside the United States in offshore transactions in compliance with Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Further, each Bidder where required agrees that such Bidder will not sell or transfer any Equity Shares or create any economic interest therein, including any off-shore derivative instruments, such as participatory notes, issued against the Equity Shares or any similar security, other than pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with applicable laws and legislations in each jurisdiction, including India. Until the expiry of 40 days after the commencement of the Issue, an offer or sale of Equity Shares within the United States by a dealer (whether or not it is participating in the Issue) may violate the registration requirements of the Securities Act. Each purchaser, by its acceptance of the Red Herring Prospectus and of the Equity Shares issued pursuant to this Issue, will be deemed to have acknowledged, represented to and agreed with the Company, the Selling Shareholders and the Underwriters that it has received a copy of the Red Herring Prospectus and such other information as it deems necessary to make an informed investment decision and that: (1) the purchaser is authorized to consummate the purchase of the Equity Shares issued pursuant to this Issue in compliance with all applicable laws and regulations; (2) the purchaser acknowledges that the Equity Shares issued pursuant to this Issue have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state of the United States and are subject to restrictions on transfer; (3) the purchaser is purchasing the Equity Shares issued pursuant to this Issue in an offshore transaction meeting the requirements of Rule 903 of Regulation S under the Securities Act; (4) the purchaser and the person, if any, for whose account or benefit the purchaser is acquiring the Equity Shares issued pursuant to this Issue, was located outside the United States and is not a U.S. person at the time the buy order for such Equity Shares was originated and continues to be located outside the United States and not a U.S. person and has not purchased such Equity Shares for the account or benefit of any person in the United Sates or a U.S. person or entered into any arrangement for the transfer of such Equity Shares or any economic interest therein to any person in the United States or a U.S. person; (5) the purchaser is not an affiliate of the Company or a person acting on behalf of an affiliate; (6) if, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such Equity Shares, or any economic interest therein, such Equity Shares or any economic interest therein may be offered, sold, pledged or otherwise transferred only in accordance with Regulation S under the Securities Act or any transaction exempt from the registration requirements of the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States or any other jurisdiction; 269

(7) the purchaser understands that such Equity Shares (to the extent they are in certificated form), unless the Company determines otherwise in accordance with applicable law, will bear a legend substantially to the following effect: THE EQUITY SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. (8) the Company will not recognize any offer, sale, pledge or other transfer of such Equity Shares made other than in compliance with the above-stated restrictions; and (9) the purchaser acknowledges that the Company, the Selling Shareholders, the Underwriters and their affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations and agreements deemed to have been made by virtue of its purchase of the Equity Shares are no longer accurate, it will promptly notify the Company, and if it is acquiring any of the Equity Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account. Each person in a Member State of the EEA which has implemented the Prospectus Directive (each, a “Relevant Member State”) who receives any communication in respect of, or who acquires any Equity Shares under, the offers contemplated in the Red Herring Prospectus will be deemed to have represented, warranted and agreed to and with each Underwriter, the Company and the Selling Shareholders that: 1. it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and 2. in the case of any Equity Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Equity Shares acquired by it in the placement have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Underwriters has been given to the offer or resale; or (ii) where Equity Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Equity Shares to it is not treated under the Prospectus Directive as having been made to such persons. For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any of the Equity Shares in any Relevant Member States means the communication in any form and by any means of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State. Disclaimer Clause of the Bombay Stock Exchange Limited (“BSE”) As required, a copy of this Draft Red Herring Prospectus has been submitted to BSE. The disclaimer clause as intimated by the BSE to our Company, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to filing the same with the RoC. Disclaimer Clause of the National Stock Exchange of India Limited (“NSE”)

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As required, a copy of this Draft Red Herring Prospectus has been submitted to NSE. The disclaimer clause as intimated by the NSE to us, post scrutiny of this Draft Red Herring Prospectus, shall be included in the Red Herring Prospectus prior to filing the same with the RoC. Disclaimer clause of the IPO Grading Agency [●] Filing A copy of this Draft Red Herring Prospectus has been filed with the Corporation Finance Department of SEBI at SEBI Bhavan, Plot No. C4 - A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051, Maharshtra India. A copy of the Red Herring Prospectus, along with documents required to be filed under Section 60B of the Companies Act, would be delivered for registration to the Registrar of Companies situated at 2nd floor, CPWD Building, Kendriya Sadan, Sultan Bazar, Koti, Hyderabad – 500 195, Andhra Pradesh, India, at least 3 (three) days before the Bid / Issue Opening Date. A copy of the Prospectus would also be filed with the Corporation Finance Department of SEBI and the RoC at their respective addresses upon closure of this Issue and on finalization of the Issue Price. Listing The Equity Shares issued though this Draft Red Herring Prospectus are proposed to be listed on the BSE and the NSE. In-principle approval for listing of the Equity Shares of our Company from BSE and NSE have been received vide their letters dated [●] and [●] respectively. [●] shall be the Designated Stock Exchange with which the basis of allotment will be finalized for the QIB (including Anchor Investor) portion, Non-Institutional portion, Retail portion and Employee portion. In case the permission for listing of the Equity Shares is not granted by any of the above mentioned Stock Exchanges, the Company and the Selling Shareholders shall forthwith repay, without interest, all moneys received from the applicants in pursuance of the Red Herring Prospectus. If such money is not repaid within 8 days after the day from which the Company and the Selling Shareholders becomes liable to repay it or within 70 days from the Bid/ Issue Closing Date, whichever is earlier, then the Company and the Selling Shareholders and every Director of the Company who is an officer in default shall, on and from expiry of 8 days, be jointly and severally liable to repay that money with interest, at 15% per annum on the application monies as prescribed under Section 73 of the Companies Act. Our Company and the Selling Shareholder shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at the Stock Exchanges mentioned above are taken within twelve (12) Working Days of Issue Closure. Impersonation Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act which is reproduced below: “Any person whoa. makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or b. otherwise induces a 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.”

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Consents The written consents of the Selling Shareholders, our Promoters, our Directors, our Compliance Officer, our Auditors, the legal advisor, the Book Running Lead Manager, the Syndicate Members*, the Registrar to the Issue, the Underwriters*, Escrow Collection Bank(s)*, Refund Bank*, IPO Grading Agency and the Bankers to our Company to act in their respective capacities, have been obtained and will be filed along with a copy of the Red Herring Prospectus with the RoC as required under Section 60 and 60B of the Companies Act and such consents have not been withdrawn up to the time of delivery of this Draft Red Herring Prospectus with SEBI. *The aforesaid will be appointed prior to filing of the Red Herring Prospectus with RoC and their consents as above would be obtained prior to the filing of the Red Herring Prospectus with RoC. M/s. B S R & Company, Chartered Accountants, our Statutory Auditors have given their written consent to the inclusion of their report in the form and context in which it appears in this Draft Red Herring Prospectus and such consent and report has not been withdrawn up to the time of filing of this Draft Red Herring Prospectus with SEBI. They have also given their written consent to the statement of tax benefits accruing to our Company and its members in the form and context in which it appears in this Draft Red Herring Prospectus and has not been withdrawn such consent up to the time of filing of this Draft Red Herring Prospectus with SEBI. Credit Analysis & Research Limited, the IPO Grading Agency engaged by us for the purpose of IPO Grading have given their consent as experts, pursuant to their letter dated November 9, 2010 for the inclusion of their report in the form and content in which it will appear in the Red Herring Prospectus and such consents and reports has not been withdrawn up to the time of filing of this Draft Red Herring Prospectus with SEBI. Expert Opinion Except for the report of Credit Analysis & Research Limited in respect of the IPO Grading of this Issue (a copy of which will be annexed to the Red Herring Prospectus as Annexure I), our Company has not obtained any expert opinions. Expenses of the Issue The Issue related expenses includes, amongst others, lead management fees, underwriting fees, selling commission, printing and distribution expenses, legal fees, advertisement expenses, registrar and depositories expenses, SCSB’s commission/ fees, fees and expenses of the SEBI registered rating agency for IPO grading and listing fees. The total expenses of the Fresh Issue shall be made out of the proceeds of the Fresh Issue and is estimated to be approximately Rs. [●] million. The break-up of the estimated expenses of this Issue is as follows: (Amount in Rs. million) As a % of As a % of Total Issue Total Issue Expenses* Size* [●] [●]

Activity

Total Expenses* [●]

Issue Management Fees (Lead Management, Underwriting and Selling Commission) Advertisement and Marketing Expenses Printing, Stationery and Distribution Expenses Others (including Legal Advisors Fee, Auditors Fee, Registrars Fee, SCSB commission, Regulatory Fees including filing fees paid to SEBI and Stock Exchanges) Total estimated Issue expenses * will be incorporated at the time of filing of the Prospectus.

[●] [●] [●]

[●] [●] [●]

[●] [●] [●]

[●]

[●]

[●]

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Pursuant to Regulation 26(7) of the SEBI Regulations our Company needs to obtain grading for this IPO from at least one credit rating agency. In this regard we have appointed Credit Analysis and Research Limited (‘CARE’). The total expenses for IPO Grading are estimated to be Rs. [●] million, which is [●]% of the Issue size. All expenses related to the Issue, including listing fees and issue management fee, will be borne entirely by our Company except for the underwriting fees and selling commissions which will be borne by our Company and the Selling Shareholders in proportion to the Equity Shares being issued / offered. Details of Fees Payable Fees payable to the Book Running Lead Manager The total fees payable to the Book Running Lead Manager will be as per the engagement letter dated September 20, 2010 signed and executed between our Company and the Book Running Lead Manager; and as stated in the Issue Agreement dated November 10, 2010 signed and executed between our Company, the Selling Shareholders and the Book Running Lead Manager, a copy of which is available for inspection at our Registered Office from 10:00 am. to 4:00 pm. during the Bid / Issue period. Underwriting Commission, Brokerage and Selling Commission The underwriting commission and selling commission for this Issue is as set out in the Syndicate Agreement to be entered into between our Company, the Selling Shareholders and the BRLM. The underwriting commission shall be paid as set out in the Underwriting Agreement to be entered into between our Company, the Selling Shareholders and the BRLM, based on the Issue Price and amount underwritten in the manner mentioned in the Prospectus. Payment of underwriting commission, brokerage and selling commission would be in accordance with applicable laws. Fees payable to the Registrar to this Issue The total fees payable to the Registrar to this Issue for processing of application, data entry, printing of CAN/refund order, preparation of refund data on magnetic tape, printing of bulk mailing register will be as per the Memorandum of Understanding dated November 10, 2010, signed and executed between our Company, the Selling Shareholders and the Registrar to the Issue, a copy of which is available for inspection at our Registered Office from 10:00 am. to 4:00 pm. during the Bid / Issue period. The Registrar to this Issue will also be reimbursed with all relevant out-of-pocket expenses such as cost of stationery, postage, stamp duty and communication expenses. Adequate funds will be provided to the Registrar to this Issue to enable them to make refunds orders or Allotment Advice by registered post/speed post/under certificate of posting Fees Payable to Others The total fees payable to the Legal Advisor, Auditor, Credit Rating Agency & Advertiser etc. will be as per the terms of their respective engagement letters. Previous Public or Rights Issues during Last Five Years Other than as stated hereunder, we have not made any previous rights and /or public issues during the last five years and are an “Unlisted Issuer” in terms of the SEBI ICDR Regulations and this Issue is an “Initial Public Offering” in terms of the SEBI ICDR Regulations: The shareholders of our Company vide their resolution dated March 2, 2005 approved rights issue of 250,000 Equity Shares of Rs. 10/- in the proportion of proportion of one equity share for every seventeen equity shares held as on February 1, 2005. Rights allotment of 92,000 Equity Shares to Ms. Sridevi Bolli, 39,800 Equity Shares to Mr. Rama Rao Bolli and 95,000 Equity Shares to Ms. Radhika Bolli.

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The shareholders of our Company vide their resolution dated November 25, 2005 approved rights issue of 3,125,144 Equity Shares of Rs. 10/- in the proportion of seventy equity share for every one hundred equity shares held as on November 25, 2005. Rights allotment of 1,988,784 Equity Shares to Mr. Satyanarayana Bolli, 778,470 Equity Shares to Ms. Sridevi Bolli and 80,780 Equity Shares to Mr. P.V.S. Raju. Previous issue of shares otherwise than for cash We have not issued any Equity Shares for consideration other than for cash. Commission or Brokerage on Previous Issues during Last Five Years Since this is the initial public offer of the Equity Shares by our Company, no sum has been paid or has been payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of our Equity Shares since our inception. Listed companies under the same Management There are no listed companies under the same management as our Company within the meaning of Section 370(1B) of the Companies Act, which have made any capital issues in the last three years. Promise versus performance for Our Company Our Company is an “Unlisted Issuer” in terms of the SEBI ICDR Regulations, and this Issue is an “Initial Public Offering” in terms of the SEBI ICDR Regulations. Therefore, data regarding promise versus performance is not applicable to us. Promise versus Performance – Previous Issues of Group Companies. None of our Group Companies have made any public issues in the past. Outstanding Debentures or Bonds We do not have any outstanding debentures or any bond issue as on the date of this Draft Red Herring Prospectus. Outstanding Preference Shares As on the date of this Draft Red Herring Prospectus, our Company does not have any outstanding preference shares. Option to Subscribe Equity Shares being offered through the Draft Red Herring Prospectus can be applied for in dematerialized form only. Stock Market Data Our Company is an “Unlisted Issuer” in terms of the SEBI ICDR Regulations, and this being the “Initial Public Offering” in terms of the SEBI ICDR Regulations no stock market data is available for the Equity Shares of our Company. Mechanism for Redressal of Investor Grievances by our Company The agreement between the Registrar to the Issue, the Selling Shareholder and us, provides for retention of records with the Registrar to the Issue for a period of at least three years from the last date of dispatch of letters of allotment, demat credit, refund orders to enable the investors to approach the Registrar to the Issue for redressal of their grievances.

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All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, application number, number of Equity Shares applied for, amount paid on application, Depository Participant, and the Bidding centre where the application was submitted.

All grievances relating to the ASBA process may be addressed to the SCSBs, giving full details such as name, address of the applicant, number of Equity Shares applied for, amount paid on application and the Designated Branch or the collection centre of the SCSB where the Bid cum Application Form was submitted by the ASBA Bidders. The Registrar shall act as a nodal agency for redressing complaints of ASBA and non-ASBA investors including providing guidance to ASBA investors regarding approaching the SCSB concerned. Disposal of Investor Grievances by our Company Our Company or the Registrar to the Issue or the SCSB in case of ASBA Bidders shall redress routine investor grievances. We estimate that the average time required by us or the Registrar to this Issuefor the redressal of routine investor grievances shall be ten Working Days from the date of receipt of the complaint. In case of non-routine complaints and complaints where external agencies are involved, our Company will seek to redress these complaints as expeditiously as possible. We and the Selling Shareholders have appointed Mr. Venkatesh Ramachandran, Chief Financial Officer, as the Compliance Officer for this Issue and he may be contacted in case of any Issue related problems at the following address: Mr. Venkatesh Ramachandran Semantic Space Technologies Limited Plot No. 226, Road No. 17, Jubilee Hills Check Post, Hyderabad – 500 033, Andhra Pradesh, India. Tel: +91- 40 - 39991999 Fax: +91- 40 – 23114651 Email: sstipo@semanticspace.com We have also constituted a Shareholders, Share Transfers and Investors’ Grievance Committee of the Board vide resolution passed at the Board Meeting held on October 08, 2010. The composition of the Shareholders, Share Transfers and Investors’ Grievance Committee is as follows. Name of the Director Mr. Ravi Shankararamiah Mr. Satyanarayana Bolli Mr. Vivek Mundra Designation in the Committee Chairman Member Member Nature of Directorship Independent Director Chairman and Managing Director Independent Director

For further details, please refer to the chapter titled “Our Management” beginning on page 132 of this Draft Red Herring Prospectus. Investors can contact the Compliance Officer or the Company Secretory or the Registrar to the Issue in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allocation, credit of allotted Equity Shares in the respective beneficiary account or refund orders, etc.

Changes in the Auditors during the last three financial years and reasons thereof There have been no changes in the Statutory Auditors of our Company during the last three financial years.

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Capitalisation of reserves or profits during the last five years Save and except as stated in chapter titled ‘Capital Structure’, beginning on page 20 of this Draft Red Herring Prospectus our Company has not capitalized its reserves or profits at any time during the last five(5) financial years. Revaluation of assets during the last five years Our Company has not revalued its assets for a period of five (5) years prior to the date of this Draft Red Herring Prospectus.

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SECTION VII – ISSUE RELATED INFORMATION TERMS OF THE ISSUE

Principal Terms & Conditions of the Issue The Equity Shares being offered are subject to the provisions of the Companies Act, the SCRR, the Memorandum and Articles of Association of our Company, conditions of RBI approval, if any, the terms of this Draft Red Herring Prospectus, Red Herring Prospectus, the Prospectus, Bid-cum-Application Form, ASBA Bid-cum-Application Form, the Revision Form, the Confirmation of Allocation Note, Listing Agreements with the Stock Exchanges and other terms and conditions as may be incorporated in the Allotment Advice, and other documents/certificates that may be executed in respect of this Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to this issue of capital and listing and trading of securities issued from time to time by SEBI, Government of India, Stock Exchanges, RBI, ROC, FIPB and / or other authorities, as in force on the date of this Issue and to the extent applicable. Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of our Memorandum and Articles of Association and shall rank pari passu in all respects with the other existing Equity Shares of our Company including in respect of the rights to receive dividends. The Allottees of the Equity Shares in this Issue shall be entitled to dividends and other corporate benefits, if any, declared by our Company after the date of Allotment. As per the SEBI ICDR Regulations, for the Offer for Sale portion, the dividend for the entire year shall be payable to the transferees. For description of our Articles of Association, please refer to section titled “Main Provisions of the Articles of Association” beginning on page 329 of this Draft Red Herring Prospectus. Mode of payment of dividend We shall declare and pay dividend to our shareholders as per the provisions of the Companies Act, and recommended by the Board of Directors and the shareholders at their discretion, and will depend on a number of factors, including but not limited to earnings, capital requirements and overall financial condition of our Company. Face Value and Price Band The Equity Shares with a Face Value of Rs. 10/- each are being issued in terms of this Draft Red Herring Prospectus at a Price Band of Rs. [●]/- to Rs. [●]/- per Equity Share. At any given point of time there shall be only one denomination of Equity Shares, subject to applicable laws. The Floor Price of Equity Shares is Rs. [●] per Equity Share and the Cap Price is Rs. [●] per Equity Share. Rights of the Equity Shareholder Subject to applicable laws, the equity shareholders shall have the following rights:        Right to receive dividend, if declared; Right to attend general meetings and exercise voting powers, unless prohibited by law; Right to vote on a poll either in person or by proxy; Right to receive offers for rights shares and be allotted bonus shares, if announced; Right to receive surplus on liquidation subject to any statutory and other preferential claims being satisfied; Right of free transferability; and Such other rights, as may be available to a shareholder of a listed public company under the Companies Act, 277

the terms of the listing agreements executed with the Stock Exchanges, and the Memorandum and Articles of Association of our Company. For a detailed description of the main provisions of the Articles of Association such as those dealing with voting rights, dividend, forfeiture and lien, transfer and transmission and / or consolidation / splitting, please refer to the section titled “Main provision of the Articles of Association” beginning on page 329 of this Draft Red Herring Prospectus. Market Lot and Trading Lot Under Section 68B of the Companies Act, the Equity Shares of our Company shall be allotted only in dematerialized form. In terms of existing SEBI ICDR Regulations, the trading in the Equity Shares of our Company shall only be in dematerialized form for all investors. Since trading of the Equity Shares is in dematerialized mode, the tradable lot is one Equity Share. Allocation and allotment of Equity Shares through this Issue will be done only in electronic form, in multiple of one Equity Share to the successful Bidders, subject to a minimum allotment of [●] Equity Shares. For details of allocation and allotment, please refer to the section titled “Issue Procedure” beginning on page 290 of this Draft Red Herring Prospectus. Joint Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint – tenants with benefits of survivorship. Jurisdiction The jurisdiction for the purpose of this issue is with competent courts/authorities in Hyderabad, India. The Equity Shares have not been and will not be registered under the U.S. Securities Act 1933, as amended (the “Securities Act”) or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S of the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Equity Shares may be offered and sold only outside the United States in compliance with Regulation S and the applicable laws of the jurisdiction where those offers and sales occur. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Nomination Facility to the Investor In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidder, may nominate any one person in whom, in the event of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares transferred, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/ transfer/ alienation of Equity Share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in this manner prescribed. A fresh nomination can only be made on the prescribed form available on request at our Company’s Registered / Corporate Office or to our Registrar and Transfer Agent.

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In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either: 1. to register himself or herself as the holder of the Equity Shares; or 2. to make such allotment of the Equity Shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payments of all dividends, bonuses or other monies payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Since the allotment of Equity Shares in the Issue will be made only in dematerialized mode, there is no need to make a separate nomination with us. Nominations registered with respective depository participant of the applicant would prevail. If the investors require changing the nomination, they are requested to inform their respective depository participant. Bid/Issue Program BID/ISSUE OPENS ON* BID/ISSUE CLOSES ON FOR ALL BIDDERS [●], 2010 FOR QIBs [●], 2010 FOR RETAIL AND NON-INSTITUTIONAL [●], 2010 BIDDERS (INCLUDING ELIGIBLE EMPLOYEES BIDDING IN THE EMPLOYEE RESERVATION PORTION) *Our Company in consultation with the BRLM, may consider participation by Anchor Investors in terms of the SEBI ICDR Regulations. The Anchor Investor Bid/Issue Period shall be one Working Day prior to the Bid/ Issue Opening Date. Bids by Anchor Investors will be submitted to the BRLM. The number of Equity Shares allocated to each Anchor Investor and Anchor Investor Issue Price shall be made available in the public domain by the BRLM, before the Bid / Issue Opening Date. Bids and any revision in Bids shall be accepted only between 10.00 a.m. to 5.00 p.m. (Indian Standard Time) during the Bid/Issue Period at the Bidding Centers mentioned on the Bid cum Application Form or, in case of Bids submitted through ASBA, by the member of the syndicate or the Designated Branches of the SCSBs except that on the Bid/Issue Closing Date: For QIB Bidders  Bids shall be accepted only between 10.00 a.m. to 4.00 p.m. (Indian Standard Time) and uploaded until 5.00 pm (Indian Standard Time). QIB Bid / Issue Closing Date for the QIB Bidders will be a day prior to the Bid / Issue Closing Date. For Non-Institutional Bidders  Bids shall be accepted only between 10.00 a.m. to 3.00 p.m. (Indian Standard Time) and uploaded until 4.00 pm (Indian Standard Time). For Retail Individual Investors  Bids shall be accepted only between 10.00 a.m. to 4.00 p.m. (Indian Standard Time) and uploaded until 5.00 pm (Indian Standard Time) which may be extended upto such time subject to permission from BSE and NSE. For Eligible Employees (under Employee Reservation Portion)

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Bids shall be accepted only between 10.00 a.m. to 4.00 p.m. (Indian Standard Time) and uploaded until 5.00 pm (Indian Standard Time) which may be extended upto such time subject to permission from BSE and NSE. Due to limitation of the time available for uploading the Bids on the Bid/Issue Closing Date, the Bidders are advised to submit their Bids one Working Day prior to the Bid/Issue Closing Date and, in any case, no later than 3.00 p.m. (Indian Standard Time) on the Bid/Issue Closing Date. Bidders are requested to note that due to clustering of last day applications, as is typically experienced in public offerings, some Bids may not get uploaded on the last date. Such Bids that cannot be uploaded will not be considered for allocation under the Issue. Bids not uploaded in the book would be rejected. If such Bids are not uploaded, our Company, the Selling Shareholders, BRLM, Syndicate Members, Sub-syndicate members and the SCSBs will not be responsible. Bids will be accepted only on Working Days. Bids by ASBA Bidders shall be uploaded by the SCSB in the electronic system to be provided by the NSE and the BSE. On the Bid/Issue Closing Date, extension of time may be granted by the Stock Exchanges only for uploading the Bids received by Retail Individual Bidders and Eligible Employees after taking into account the total number of Bids received up to the closure of timings for acceptance of Bid cum Application Forms and ASBA Form as stated herein and reported by the BRLM to the Stock Exchange within half an hour of such closure. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical Bid form, for a particular bidder, the details as per physical application form of that Bidder may be taken as the final data for the purpose of allotment. In case of discrepancy in the data entered in the electronic book vis-à-vis the data contained in the physical or electronic Bid cum Application Form, for a particular ASBA Bidder, the Registrar to the Issue shall ask for rectified data from the SCSB. Investors please note that as per letter no. List/smd/sm/2006 dated July 03, 2006 and letter no. NSE/IPO/25101-6 dated July 06, 2006 issued by BSE and NSE respectively, Bids and any revision in Bids shall not be accepted on Saturdays and Holidays as declared by the exchanges. Our Company in consultation with the Selling Shareholders and the BRLM reserve the right to revise the Price Band during the Bid/Issue Period in accordance with the SEBI ICDR Regulations provided that the revised cap of the price band should not be more than 20% of the revised floor of the band i.e. revised cap of the Price Band shall be less than or equal to 120% of the revised floor of the price band. The Floor Price can be revised up or down to a maximum of 20% of the original Floor Price and shall be advertised at least one Working Day before the Bid /Issue Opening Date. In the event of any revision in the Price Band, whether upwards or downwards, the minimum application size shall remain [●] Equity Shares irrespective of whether the Bid Amount payable on such minimum application is not in the range of Rs.5,000 to Rs.7,000. In case of revision of the Price Band, the Issue Period will be extended for three additional Working Days after revision of the Price Band subject to the total Bid /Issue Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bid/Issue, if applicable, will be widely disseminated by notification to the BSE and the NSE and the SCSBs, by issuing a press release and also by indicating the changes on the web sites of the BRLM and at the terminals of the Syndicate. Minimum Subscription If our Company does not receive the minimum subscription of 90% of the Fresh Issue including devolvement of the Underwriters/Members of the Syndicate, if any, within 60 days from the date of Bid/closure of the Issue, our Company and the Selling Shareholders shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after our Company and the Selling Shareholders becomes liable to pay the amount, our Company and the Selling Shareholders shall pay interest as prescribed under Section 73 of the Companies Act. It is to be distinctly understood that the requirements for minimum subscription is not applicable to the Offer for Sale. On receipt of minimum subscription i.e. 90% of the Fresh Issue and in case of under-subscription in the Issue, the entire subscription amount would first be adjusted towards the Fresh Issue and thereafter towards the Offer for Sale. 280

Any expense incurred by our Company on behalf of the Selling Shareholder with regard to refunds, interest for delays, etc. for the Equity Shares being offered through the Offer for Sale, will be reimbursed by the Selling Shareholder to our Company to the extent agreed between them. Further, in terms of sub-regulation (4) of Regulation 26 of the SEBI ICDR Regulations, our Company and the Selling Shareholders shall ensure that the number of prospective allottees to whom the Equity Shares will be Allotted will not be less than 1,000. If the number of allottees in the proposed Issue is less than 1,000 allottees, our Company and the Selling Shareholders shall forthwith refund the entire subscription amount received. If there is a delay beyond 15 days after our Company and the Selling Shareholders becomes liable to pay the amount, our Company and the Selling Shareholders shall pay interest at the rate 15% per annum for the delayed period. Withdrawal of the Issue In accordance to SEBI Regulations, our Company in consultation with the Selling Shareholders and BRLM, reserve the right not to proceed with the Issue at anytime including after the Bid/Issue Opening Date but before allotment, without assigning reasons thereof. In the event of withdrawal of this Issue after the Bid/Issue Closing Date, the reasons therefore shall be disclosed in a public notice which shall be published within two Working Days of the Bid/Issue Closing Date in English and Hindi daily national newspapers and one regional daily newspaper, each with wide circulation. The notice of withdrawal shall be issued in the same newspapers where the pre-Issue advertisements have appeared and the Stock Exchanges shall be informed promptly. The BRLM, through the Registrar to the Issue, shall notify the SCSBs to unblock the bank accounts of the ASBA Bidders within one Working Day from the date of receipt of such notification. Further, in the event our Company in consultation with the Selling Shareholders and the BRLM withdraw the Issue after the Bid/Issue Closing Date and subsequently we decided to proceed with the initial public offering of Equity Shares, a fresh draft red herring prospectus will be filed with SEBI. Notwithstanding the foregoing, this Issue is also subject to obtaining (i) the final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after Allotment, and (ii) the final RoC approval of the Prospectus after it is filed with the RoC. In terms of the SEBI Regulations, QIBs bidding in the Net QIB Portion shall not be allowed to withdraw their Bids after the Bid/Issue Closing Date. Since, the Bidding Period for QIBs will close one Working Day prior to the Offer Closing Date, QIBs will not be able to withdraw their Bids after [●] i.e., one Working Day prior to the Offer Closing Date. Arrangement for Disposal of Odd Lots The Equity Shares of our Company will be traded in dematerialized form only and therefore the marketable lot is one (1) Equity Share. Hence, there is no possibility of any odd lots. Application by Eligible NRIs, FIIs and Foreign Venture Capital Funds registered with SEBI It is to be understood that there is no reservation for Eligible NRIs or FIIs registered with SEBI or FVCIs registered with SEBI. Such Eligible NRIs, FIIs registered with SEBI or FVCIs registered with SEBI applicants will be treated on the same basis with other categories for the purpose of Allocation As per the extant policy of the Government of India, OCBs cannot participate in this Issue. The current provisions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, there exists a general permission for the NRIs, FIIs and foreign venture capital investors registered with SEBI to invest in shares of Indian companies by way of subscription in an IPO. However, such investments would be subject to other investment restrictions under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, RBI and/or SEBI regulations as may be applicable to such investors.

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The allotment of the Equity Shares to Non-Residents shall be subject to the conditions, if any, as may be prescribed by the Government of India/RBI while granting such approvals. Restriction on Transfer and Transmission of Equity Shares Except for lock-in as detailed in the chapter titled “Capital Structure” beginning on page 20 of this Draft Red Herring Prospectus, and except as provided in the Articles of Association, there are no restrictions on transfers of Equity Shares. There are no restrictions on transfers of debentures except as provided in the Articles of Association. There are no restrictions on transmission of Equity Shares and on their consolidation/ splitting except as provided in the Articles of Association. For a detailed description in respect of restrictions, if any, on transfer and transmission of shares and on their consolidation/splitting, please refer to section titled “Main Provisions of the Articles of Association” beginning on page 329 of this Draft Red Herring Prospectus. Option to receive Equity Shares in Dematerialized Form Investors should note that Allotment of Equity Shares to all successful Bidders will only be in the dematerialized form. Bidders will not have the option of getting Allotment of the Equity Shares in physical form. The Equity Shares on Allotment shall be traded only in the dematerialized segment of the Stock Exchanges

The above information is given for the benefit of the Bidders. The Bidders are advised to make their own enquiries about the limits applicable to them. Our Company and the BRLM do not accept any responsibility for the completeness and accuracy of the information stated hereinabove. Our Company and the BRLM are not liable to inform the investors of any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations.

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ISSUE STRUCTURE Public Issue of 4,500,000 Equity Shares of face value of Rs. 10/- each for cash at a price of Rs. [●] per Equity Share (including share premium of Rs. [●] per Equity Share), comprising of a Fresh Issue of 2,372,728 Equity Shares by the Company and an Offer for Sale of 2,127,272 Equity Shares by the Selling Shareholders, aggregating [●] million (hereinafter referred to as the “Issue”). The Issue comprises of a Net Issue of 4,475,000 Equity Shares of Rs. 10/each to the public (hereinafter referred to as the “Net Issue”) and an Employee Reservation Portion of upto 25,000 Equity Shares of Rs. 10/- each (hereinafter referred to as the “Employee Reservation Portion”) for subscription by Eligible Employees on a competitive basis. The Issue will constitute 31.25% of the fully diluted post Issue paid-up capital of our Company. The Net Issue will constitute 31.07% of the fully diluted post Issue paid-up capital of our Company. The Issue is being made through the 100% Book Building Process. Particulars Employee Reservation Portion Upto 25,000 Equity Shares Upto 0.56% of the Issue. The Employee Reservation Portion comprises approximately 0.174% of our Company’s post Issue share capital. Qualified Institutional Bidders NonInstitutional Bidders Not less than 671,250 Equity Shares Not less than 15% of the Net Issue or Net Issue to Public less allocation to QIB Bidders and Retail Individual Bidders Retail Individual Bidders Not less than 1,566,250 Equity Shares Not less than 35% of the Net Issue or Net Issue to Public less allocation to QIB Bidders and NonIndividual Bidders

Number of Equity Shares* Percentage of the Issue Size available for Allocation

Not more than 2,237,500 Equity Shares Not more than 50% of the Net Issue shall be allocated to QIBs. However, not less than 5% of the Net QIB Portion shall be available for allocation proportionately to Mutual Funds only. The unsubscribed portion in the Mutual Fund reservation will be available to QIBs.## Upto 30% of the QIB Portion may be available for allocation to Anchor Investors and one-third of the Anchor Investor Portion shall be available for allocation to domestic Mutual Funds#. Proportionate as follows: (a) upto [●] Equity Shares for allocation to Anchor Investor on a discretionary basis, out of which one third shall be available for allocation to domestic Mutual Funds only (b) upto [●] Equity Shares aggregating to Rs. [●] Million, constituting 5% of the Net QIB portion, shall be available for allocation on a proportionate basis to Mutual Funds only; (c) upto [●] Equity Shares aggregating to Rs. [●] Million, shall be allotted on a proportionate basis to all QIBs including Mutual Funds receiving allocation as per (b) above 283

Basis of allocation, if respective category is oversubscribed

Proportionate

Proportionate

Proportionate

Particulars

Minimum Bid

Employee Reservation Portion [●] Equity Shares

Qualified Institutional Bidders

Such number of Equity Shares in multiples of [●] Equity Shares so that the Bid Amount exceeds Rs. 100,000.

Maximum Bid

Mode of Allotment Bid Lot

Such number of Equity Shares in multiples of [●] so as to ensure that the Maximum Bid Amount by each Eligible Employee does not exceed Rs. 100,000 Compulsorily in dematerialized form [●] Equity Shares and in multiples of [●] Equity Shares, thereafter. [●] Equity Shares and in multiples of one Equity Share, thereafter. One Equity Share Eligible Employees being a permanent and full-time employee, working in India or abroad, of the issuer or of the holding company or subsidiary company or of that material associate(s) of the issuer whose financial statements are consolidated with the issuer’s financial

Such number of Equity Shares in multiple of [●] Equity Shares, so that Bid does not exceed the Net Issue subject to applicable limits.

Compulsorily in dematerialized form [●] Equity Shares and in multiples of [●] Equity Shares, thereafter.

Allotment Lot

[●] Equity Shares and in multiples of one Equity Share, thereafter.

Trading Lot / Market Lot Who can Apply **

One Equity Share Public financial institutions as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual fund registered with SEBI, FII and subaccount registered with SEBI, other than a sub-account which is a foreign corporate or foreign individual, multilateral and bilateral development financial institution, venture capital fund registered with SEBI, foreign venture capital investor registered with SEBI, state industrial development corporation, insurance company registered with IRDA, provident fund with minimum corpus of Rs. 250 million, pension fund with minimum corpus of Rs. 250 million and National

NonInstitutional Bidders Such number of Equity Shares in multiples of [●] Equity Shares so that the Bid Amount exceeds Rs. 100,000. Such number of Equity Shares in multiple of [●] Equity Shares, so that Bid does not exceed the Net Issue subject to applicable limits. Compulsorily in dematerialized form [●] Equity Shares and in multiples of [●] Equity Shares, thereafter. [●] Equity Shares and in multiples of one Equity Shares, thereafter. One Equity Share Resident Indian individuals, HUF (in the name of Karta), companies, corporate bodies, Eligible NRIs, Scientific Institutions Societies and Trusts and any FII Sub-account registered with SEBI which is a foreign corporate or a foreign individual.

Retail Individual Bidders [●] Equity Shares

Such number of Equity Shares in multiple of [●] Equity Shares, so as to ensure that the Bid Amount does not exceed Rs. 100,000 Compulsorily in dematerialized form [●] Equity Shares and in multiples of [●] Equity Shares, thereafter. [●] Equity Shares and in multiples of one Equity Shares, thereafter. One Equity Share Individuals (including NRIs and HUFs in the name of karta) applying for Equity Shares such that the Bid Amount per Retail Individual Bidder does not exceed Rs. 100,000 in value.

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Particulars

Terms of Payment***

Employee Reservation Portion statements as per Accounting Standard 21, or a director of the issuer, whether whole time or part time and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of that person or of the spouse) Amount shall be payable at the time of submission of (1) Bid-cumApplication Form to the Member of Syndicate or (2) submission of ASBA form to SCSB. Full Bid Amount on bidding

Qualified Institutional Bidders

NonInstitutional Bidders

Retail Individual Bidders

Investment Fund set up by Government of India, insurance funds set up and managed by the army, navy or air force of the Union of India.

Amount shall be payable at the time of submission of (1) Bid-cumApplication Form to the Member of Syndicate (Including Anchor Investor)or (2) submission of ASBA form to SCSB.

Margin Amount
#

Full Bid Amount on bidding

Amount shall be payable at the time of submission of (1) Bid-cumApplication Form to the Member of Syndicate or (2) submission of ASBA form to SCSB. Full Bid Amount on bidding

Amount shall be payable at the time of submission of (1) Bid-cumApplication Form to the Member of Syndicate or (2) submission of ASBA form to SCSB. Full Bid Amount on bidding

Our Company may allocate up to 30% of the QIB Portion to Anchor Investors on discretionary basis. At least one-third of the Anchor Investor Portion shall be available for allocation to domestic Mutual Funds subject to valid Bids being received from domestic Mutual Funds at or above the Anchor Investor Price. Allocation to Anchor Investors shall be on a discretionary basis subject to minimum number of two, where the allocation under the Anchor Investor Portion is upto Rs.2,500 million. An Anchor Investor shall make a minimum Bid of such number of Equity Shares that the Bid Amount is at least Rs. 100 million. ## If the aggregate demand by Mutual Funds is less than [●] Equity Shares aggregating to Rs. [●] Million, the balance Equity Shares available for allocation in the Mutual Fund reservation will first be added to the QIB Portion and be allocated proportionately to the QIB Bidders in proportion to their Bids. * Subject to valid Bids being received at or above the Issue Price. The Issue is being made under sub-regulation (1) of Regulation 26 of the SEBI ICDR Regulations and through a Book Building Process wherein not more than 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs” and such portion the “QIB Portion”). Our Company in consultation with the BRLM may consider participation by Anchor Investors in the Net Issue for upto 30% of the QIB Portion in accordance with the applicable SEBI ICDR Regulations (“Anchor Investor Portion”), out of which at least one-third will be available for allocation to domestic Mutual Funds only. In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the remaining QIB Portion (“Net QIB Portion”). Such number of Equity Shares representing 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to QIBs, subject to valid Bids being received from them at or above the Issue Price. If the aggregate demand by Mutual Funds is less than 5% of the Net QIB Portion, the balance Equity Shares available for allocation in the Mutual Fund Portion will be added to the Net QIB Portion and be available for allocation on a proportionate basis to the QIBs, subject to valid Bids being received from them at or above the Issue Price. Further not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received

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from them at or above the Issue Price. Further, 25,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids being received from them at or above the Issue Price. Undersubscription, if any, in any category would be allowed to be met with spill over from any of the other categories at the discretion of our Company in consultation with the Selling Shareholders, the BRLM and the Designated Stock Exchange and in accordance with applicable laws, rules, regulations and guidelines, subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in the Employee Reservation Portion, will be added back to the Net Issue. In case of under-subscription in the Net Issue, spill-over to the extent of under-subscription shall be permitted from the Employee Reservation Portion. On receipt of minimum subscription and in case of under-subscription in the Net Issue, the entire subscription amount would first be adjusted towards the Fresh Issue and thereafter towards the Offer for Sale. ** In case the Bid Cum Application Form is submitted in joint names, the investors should ensure that the demat account is also held in the same joint names and in the same sequence in which they appear in the Bid Cum Application Form. *** In case of ASBA Bidders, submission of ASBA Bid cum Application Form to the SCSBs. The SCSBs shall be authorised to block such funds in the bank account of the ASBA Bidder that are specified in the ASBA Bid cum Appl