Results for the Quarter ended September 2002 under consolidated Indian GAPP

PENTASOFT CONTINUES TO DRIVE GROWTH IN GLOBAL IT SERVICES

   Chennai, November 25, 2002– Pentasoft Technologies Limited , today announced its audited results approved by the Board of Directors for the Quarter ended September 2002.

Highlights:-

   For the half-year ended 30th September 2002 , the sales and services from overseas operations maintain the same growth as compared to corresponding period of the previous year.

   For the half-year ended 30th September 2002 , the sales and services from overseas operations maintain the same growth as compared to corresponding period of the previous year.

   Operating Margin is at 40% is being maintained and with future strategies put in place is likely to show more growth in ensuing periods.

   Profit after Tax for the half year ended 30th September 2002 is at 10% compared to 20% for the corresponding period of the last year, mainly on account of expenses towards full and final settlement for the employees working on-site in different countries who have been phased out as strategy to go in for projects yielding higher bottom line than looking at top line figures.

   Earning per share during the current year has come down to Rs.4 compared to Rs.17 in the previous year mainly due to the capital injected to pay high cost loan and settlements. Dividend of 5% and bonus of 2 for 10 with GDR proceeds are the main reasons for increase in capital by approximately Rs.16.20 Crores.

   16 new customers added in the Global IT services during the period.

   Entry into BPO sector in the Finance and Maintenance areas and also planning for acquisition of companies in these area in the short term.

Mr.D.Kannan, Director & CEO on the occasion of the results stated..

   “I am pleased with the strategy adopted to tide over current downtrend in IT segment by adopting to maximize value addition and minimize operating expenses, which has directly improved the Bottomline and assures further growth; Towards this , the strategy adopted in this direction includes creation of technology / resource partners who will handle the overseas projects / product enhancements / product marketing etc., that have been outsourced depending upon the nature and complexity of the assignment.

   Value added partnerships have been signed up with companies

   ProtechSoft Systems (USA)
   JAF Media, Bahrain .
   CNR, Korea
   In the areas of IT services and training in relation to domestic & International markets.

   With the vast infrastructure all over India with real estates, the company is in final stages to start BPO centres and Intelligent Call Centres for overseas clients. In the niche areas of Broadband Network and security systems, Products, Projects and Consultancy are being concentrated.

   The company with its pioneering efforts in providing solutions on Main Frame, AS/400 and SAP environment for many years are once again back into focusing in these areas as the world market demands increase for such environments.

   Due to the current market conditions, the company has out-sourced its domestic operations and will be focusing more on international business, to have more value addition. The company also has tied up with partners for selling the existing products in the areas of Banking, Insurance and ERP segments.

   The Government of Mauritius has in principle allotted 10 acres of land in Mauritius to setup IT Park. This IT Park will primarily focus on software development and training related activities and will cater to the business requirements of Africa , Middle East and Europe segments.

   With the continuing activities in the latest technology areas the company is pursuing, it is poised for assured growth in the ensuing years constantly improving on the Bottomline”.

Financial Overview

   Pentasoft Technologies Limited recorded a turnover of Rs.85.45 Crores for the Second Quarter ended 30th September 2002 as against Rs. 133.09 Crores for the corresponding period last year. The operating profit of the Company for the current quarter is Rs.32.12 Crores as against Rs.56.24 Crores for the corresponding period last year. Other income during the Second Quarter amounted to Rs.1.99 Crores. Net profit during the current quarter amounted to Rs 6.97 Crores, as against Rs.26.61 Crores achieved during the corresponding period last year.

   During this quarter, overseas accounted for 94 %, domestic sales 6 % out of these subsidiaries accounted for 36 %. In the domestic segment, Training contributed 6 %. In the export segment, Business Software Services contributed 73 %, Engineering 14% and International Learning Services 7 %.

   Pentasoft continues to expand its client base across the globe by having both repeat customers as well as new customers. This quarter saw an addition of 7 new customers to the existing customer base.

Our Global IT Business:

1. Banking & Insurance:

USA : Executed repeat orders from ICAT, USA for enhancing their Policy Printing software solutions. This reference will help Pentasoft to position itself for similar jobs in USA , Europe and other countries.

   After successful implementation of Insurance solutions for Zurich Insurance in Thailand and continuing interaction in Malaysia , Pentasoft is planning to adopt the similar strategies for other countries as well including India .

Middle East - Executing a pilot project for one of the major Pension Fund organizations using Pentasoft's Banking Solution.

   Further to the successful completion of our PentaBank project for EBS Sudan, Pentasoft has been retained to provide onsite helpdesk services to support the ongoing implementations.

   The company has established strategic alliance with a local partner in Iran for exploring new opportunities that would follow the Government plans to IT enable the country.

   Pentasoft is poised to execute a pilot project for a major Bank (Bank Tejarat) with 1300 branches in Iran to demonstrate the capability in implementing a centralized banking solution.The company has entered the final stages of evaluation for providing total banking solution including credit card, ATM and Internet banking for 23 branches as Phase I in the Middle East (Post Bank).

Malaysia :Pentasoft's implementation of Insurance solution for Hong Leong Assurance, Berhad, Malaysia (HLA), a licensed composite insurance company listed in KL Stock Exchange has entered the customisation phase after the requirement definition and design phases have been successfully completed and approved by HLA.

   Pentasoft with its vast domain knowledge and high technology solution implementation experience in the Insurance sector is in final stages to build BPO infrastructure to service the needs of the Insurance Giants worldwide.Pentasoft has reached final stage of negotiations for providing our suite of Insurance solutions to Oman Insurance Company, which operates Life, Group Life and Takaful insurance.

   OIC has plans to enter Investment Linked Business. In order to meet the needs of their fast growing business OIC has decided upon implementing a high-end solution to increase productivity and better customer service. Pentasoft has been identified as a potential solution provider to accomplish their corporate mission.

INDIA

   One of the technology partner namely Protech, USA is currently executing some major domestic banking assignments which are at various stages of implementation.

   Similarly, with Insurance sector poised to open-up in a big way in India , talks are already on with Zurich Insurance for taking the assignments. Also, software tools have been developed to accept the data through PDA and other mobile computing devices in relation to assignments dealing with insurance agents data collection.

2. Engineering Services:

   In Detroit, USA , Off-site development centre for doing CAD/CAM related jobs started functioning this quarter. With this offsite development centre, the scope for getting more jobs relating to Auto sector has increased considerably.Pentasoft, being the accredited vendor to Visteon, successfully completed Finite Element Analysis Project for the company based in United Kingdom .

   Completed the offshore product testing & localization for a major European company in European / Asian languages for products relating to Digital Mapping area.

   Bagged New DFMA sales order from Mahindra & Mahindra for - design for assembly & design for manufacturing

   Pentasoft has been working with Autodesk, Switzerland on code testing and localization of their product AUTOMAP. Now Autodesk Inc., USA has signed a contract with Pentasoft to extend services to cover Autodesk products in other languages such as French, Italian, Belgian, Chinese, Japanese and Korean. Also Pentasoft will now cover other products of Autodesk such as MapSeries and Architecture Desktop in its testing and localization services to Autodesk.

   A major US based Engineering contractor has contacted Pentasoft for providing a GIS solution for establishing a navigation system in a major Industrial Free Zone in the Middle East .

   Pentasoft has been retained to provide consultancy in building a GIS enabled Property Management system for a resort city consisting of more than 1500 luxury residential beach side plots with modern, integrated infrastructure in the Middle East .

3. ERP and Internet Projects

USA    Pentasoft bagged a repeat order from Wherehouse Entertainment Inc, USA for providing e-commerce solution for their entertainment sales. The solution is built on J2EE technology running on Weblogic server. In addition WEI has awarded new kiosk project for solution that will be an extension of the e-commerce solution

   For Anthem Technologies based at New York , our E-Business solution for CRM Implementation and ERP Implementation is in the final stages. The other solutions like Datawarehousing Wireless applications will be implemented in the current quarter.

Australia: SAP services Providing HR support services to CANBERRA based govt department- Employment & Work Place Relations.The order value is more than A$ 7 Million to be done over a period of 3 years;Provisind SAP upgrade and HR services to Education , Science & Training division in CANBERRA ; The order value is around A$ 1.25 Million ;Other Major clients include Queensland Treasury, Natural Resources and Mines, DPI Forestry, Australian taxation office,Queensland Audit Office, Corrective services etc.,

   Pentasoft has completed the assignment from Sudan Petroleum Corporation for the development of the IT Roadmap and submitted the report in Sep 2002 to the Ministry of Petroleum. Based on the report SPC has initiated the process of budget allocation for the implementation of the roadmap in various directorates.

   SPC has requested Pentasoft to submit proposals for implementing the parts of the Enterprise wide application in identified priority sectors in the first phase.

   Bank of Sudan has awarded the contract for the development of its Enterprise Management System to Pentasoft after the approval of the Design Documentation. The project involves Financial, Administrative and Human Resources areas, and is being developed using multi-tier architecture. It is bilingual (English and Arabic), and supports multi-currency, multi-location implementations. The development is in progress offshore and expected to be completed by March 2003.

Sudan    National Electronic Library (SNEL) project, is a Digital Library application for Content Administration of eBooks, eJournals and eNews in English and Arabic, is well underway with our consultants working onsite. The project is expected to be completed by Dec 2002. The total value of the project is USD150K.

   Iran Copper has shortlisted Pentasoft for the final phase of evaluation to provide an enterprise wide solution.

Education & Training Business

   Pentasoft has entered into a strategic partnership with CNR Korea for providing IT and language training to Korean students in our facility in Chennai and the first batch is expected to start in Jan 2003.

   Pentasoft is currently discussing various models with an automobile major in Germany for providing an e-learning solution for their corporate training and online training to their partners. Pentasoft has successfully completed the first semester of IT training programme that is developed under the directions of the Government of Columbia and commenced the second semester courses in Sep 2002

   Mitech a unique 13 week residential IT training programme has been launched in our state of the art Software Technology Park Software at Kelambakkam offering combination of courses including Mainframes, Midrange, Client/server, CRM/ERP and Multimedia.

   The objective of the program is to deliver a blend of skills and acquiring these combinations would enable the professionals to develop a great career in IT. MiTech offers the Post Graduate with 4 major avenues for pursuing his career. This course has been designed keeping in view the crying needs of the industry and to provide the student with a complete perspective of the most sought after technologies.

GENERAL
   The company has identified niche areas to work in future and accordingly strategies for employment also has been restructured to have split as permanent employees and staff who can be taken on contract on a project basis. This approach will bring-down the operating costs and will also increase the bottom line.