PENTASOFT TECHNOLOGIES LIMITED – BOARD MEETING ON 22/07/2003

 SALIENT FEATURES:   (Year wise comparison)

      The Turn over forI Quarter 2003-2004Is Rs.22.05 Cr. as against Rs.90.17 Cr.In theI Quarter of previous year.  This means a fall of 75.55%In turn over when compared to theI Quarter of previous year. ThisIs due to overall recessionIn theIT BusinessIn view of SARS /IRAQ war and our careful selection of Orders yielding 20% bottom line.

      Profit after Tax (PAT)In theI Quarter 2003-2004 has decreased to Rs.1.02 Cr. as compared to Rs.9.24 Cr. achieved during theI Quarter of previous year.

      The Software Development ExpensesIncurredIs at 52.20 % of the Total Sales when compared to 53.85%In the   I Quarter to previous year.

      The Domestic Sales during the Quarter under review was only 4.67% as against 8.76% In theI Quarter of previous year.

     Employee Cost has been reduced to 1.32% from 2.84%In theI Quarter of previous year.

        Operating margin for the current yearIs at 36% when compared to 40.37%In theI Quarter of previous year due to settlement of unproductive employee costs.

      Interest and Finance chargesIncreased to Rs.2.87 Cr. as compared to Rs.1.57 Cr. In theI Quarter of previous year.

      Depreciation & Amortization for the current QuarterIs at Rs.6.83 Cr. as compared to Rs.27.16Cr.In theI Quarter of previous year.  Due to accelerated rate of depreciation, some of the softwares were written off fully during the previous year and hence depreciation for the current quarter Is comparatively lower than the I quarter of the previous year.

      Earning per Share (EPS) has gone down to Rs.0.05 for the current Quarter as compared to Rs.1.87In the I Quarter of previous year due toIncreaseIn capitalIn view ofIssue of Bonus Shares and reductionIn profit.

In addition to the strategiesIn place during the last quarter, the new thrust areasIdentified are:

   Pentasoft Technologies Limited recorded a consolidated turnover of Rs.30.06 Crores for the I Quarter ended 30th June 2003 as against Rs.42.05 Crores for the quarter ending 31st March 2003. The operating profit of the Company for the current quarterIs Rs.13.68 Crores as against Rs.18.37 Crores for the quarter ending 31st March 2003. OtherIncome during the I Quarter amounted to Rs.1.88 Crores. Net profit during the current quarter amounted to Rs.1.99 Crores, as against Rs.2.98 Crores achieved during the quarter ending 31st March 2003.

   During this quarter, overseas accounted for 96.57 %, domestic sales 3.43 %. Out of these subsidiaries accounted for 26.65 %.In the domestic segment, Training contributed 90%.In the export segment, Business Software Services contributed 62%, Engineering 23% and International Learning Services 11.57%.

   Pentasoft continues to expandIts client base across the globe by having both repeat customers as well as new customers. This quarter saw an addition of 6 new customers to the existing customer base.

Our GlobalIT Business :

1. Banking &Insurance

   One commercial bankIn USAIdentified toImplement a pilot run of the flagship product ‘PentaBank’.   Any Branch Banking using entirely Pentasoft’s software driven technology wasImplemented at Tumkur Grain Merchant Co-operative Bank and was also officially launched by the bank to the publicIn this quarter.  ThisIs the I of suchImplementationIn the domestic market.  With this we expect to take this up to other banksIn the country.

   Final phase ofInteraction with a major bankInIran with 1300 branches for supply of suite of banking solutions whichIncludes customization, training,Implementation and maintenance activities.

   Activities such as data migration, testing, preparation for live run etc., have beenInitiated In this quarter with regard to two major companiesIn Malaysia namely Hong Leong Assurance and Takaful Nasional.

2. Engineering Services: -

   Pentasoft has completed feasibility study and recommended one ofItsIndigenously developed products “Pentaflute” to one of theIndian Drill cutting Tool Manufacturing Company.

   The Company has signed with World’s eighth largest automotive supplier and a world leaderIn automotive safetyIn USA, developing and producingIndustry’s widest variety and passive systems.

   Pentasoft has on-going projects with a U.S. based leading manufacturer of Engineered Metal Products, whichIncludes Body Structures,Interior Metallics and Engineered Welded for heavy truckIndustry.

The following pilot projects are underwayIn different phasesIn USA: -

1. CAD design upto CAE workIn the areas of powertrain components using SDRC -I-DEAS, CATIA V4, CATIA V5 and Pro/Engineer.

1. GIS design Involving oracle 8 to 9i – close to 6000 packets for data migration using micro stationIntergraphics and oracle experts.

1. CAD design services for walls and piston components using Pro/Engineer, CATIA, SDRCI-DEAS.

3. ERP andInternet Projects

   Pentasoft IsIn the final stage of getting the contract for providing services for development ofInternet Search Engine for a customerIn UK.

   Tuticorin port trust project successfully completed and signed-off during this quarter.

   This quarter activities startedIn providing port trust solution to Visaka Container Terminal.   This projectIs of strategicImportance because of seamlessIntegration with Navis software resultingInInvoice generation of container handling and back officeIntegration through our software.

4. Web Technology:

   PentasoftIs currently engagedIn a web-based solution for a bankIn South Africa.   Pentasoft’s I project with Sudan National Electronic Library (SNEL) has been completed successfullyIn this quarter.   SNELIs a division of Sudatel, which Is the country’s leading telecom provider.  SNEL projectInvolves maintenance of Electronic Library with access to country’s digital assets, which are ever on theIncrease.  This library also provides links to other recognizedInternational digital libraries. 

5. Others:

   Efforts areInitiatedIn this quarter to convert some of Pentasoft products to be serviced In the Application Service Provider (ASP) mode.  Tie-up arrangements are worked out with business partners to position other products as well.  This projectInvolves converting client server technology to the ASP enabling to be made available to the client / subscribes on a lease basis.

6. Education and Training Business

   This quarter had seen consolidation completedIn all the areas of operations of E& T. The growthIn the operational revenue from the previous quartersIs seen at around 65% and almost 80% from the same quarter last year.In the Domestic front,IBM and Multimedia technologies have seen growthIn terms of students joining for those courses.

   Corporate Training has seen a new dimension by giving more emphasis on Mainframe, AS/400 technologies and Domain area technologies.In this line, proposals have been given to top rung corporates. Plans have been formulated to conduct Corporate Training Workshop on the domain area technologies like CATIA,Instrumentation Software, Bio –Informatics and other niche market segments.

   Introducing new courses on ArtificialIntelligenceIn collaboration withISIM Malaysia, Bio-informatics In collaboration with Vita Labs Chennai.

   New opportunities from the Ministry of Education and Ministry of LabourIn Bahrain for the schools and colleges. Also E-learning for the all the University students.

   IVTB, Mauritius has chosen Pentasoft as the partner to run theIT schoolsIn Mauritius and the MOU has been signed for the same.

   In the International arena, E & TIs currently working on major opportunitiesIn South Korea,Indonesia, Srilanka, Nigeria and South Africa.