Pentasoft Technologies Limited Consolidated Financial Results for the Half Year     (Apr - Sep 2001)

Chennai, India, 9th November 2001

Financial Overview:

   In line with the Accounting Standards 21 of the Institute of the Chartered Accountants of India, the financials reflect the combined results of the parent company and its subsidiaries.

   Turnover of Rs.288.54 Crores for the period ended September 30, 2001 as against the corresponding half-year figure of Rs.279.47 Crores indicating a growth of 3.14%. Net Profit for the half-year ended stands at Rs.57.47 Crores as against Rs.63.87 Crores.

   The turnover of Pentasoft Technologies Limited (Parent Company) for the quarter ended September 30, 2001 is at Rs.82.60 Crores and the turnover of the subsidiaries of the company is Rs. 50.49 Crores. Net Profit of Pentasoft Technologies Limited (Parent Company) for the quarter ended September 30, 2001 is at Rs. 13.97 Crores and of the subsidiaries of the company is Rs. 12.64 Crores.

   During this quarter, overseas accounted for 79%, domestic sales 21% out of this, subsidiaries accounted for   38%. In the domestic segment, Training contributed 76%, Engineering Services 16% and Interactive Integration Services 8%. In the overseas segment, Business Software Services contributed 51%, Engineering 23% and International Learning Services 26%.

   As for the geographical spread of Pentasoft’s export earnings during the first quarter, North & South America contributed 43%, Asia Pacific 21%, Middle East and Africa 17%, UK and Europe 13% and Australia 6%.

   Pentasoft has initiated several measures to mitigate the IT slowdown that the industry has been experiencing, by renewing focus on CUSTOMERS, COSTS and COLLABORATIVE MARKETING INITIATIVES.

   The employee strength of parent company as of 30th September 2001 stood at 2235.

Highlights of the Second Quarter (July – Sep 2001)

• For a Multi-billion entertainment media retailer company by name Wherehouse Inc. USA we have successfully completed the offshore project involving migration from legacy to client Server Technology. Maintenance support is in progress and is poised to get the next phase of development from January 2002.
• During this quarter, Pentasoft has bagged a repeat order from XsellSys, a US Based ASP for CRM Tools. Pentasoft has completed the development of the third version of the CRM Trax tool and is currently working on version four.
• Pentasoft has completed the phase-1 development of the Portal for Referral System, for Calibra, a US based Startup Venture.
• Successfully completed the pilot project for FORD, USA-- Phase III which has the V6 cylinder block legacy data conversion and V12 Cylinder block design detailing. On successful completion, repeat orders were given and are in progress.
• Completed the offshore product testing & localization for a major European company in European / Asian languages for their products in Digital Mapping area.
• In Australia, bagged SAP implementation orders worth more than AUD 8 million for various Government departments.
• The HP eStore order from Jacky’s Electronics, UAE, for developing Hewlett Packard’s products portal. This is a repeat order based on the earlier successful implementation of the electronics products portal.
• Completed the implementation of the FAMS for Etisalat, the Telecom Giant in UAE for mobile computing.
• Signed a Business Partner Agreement with JAF Media, a leading IT player in Bahrain, for implementing IT projects in Bahrain, Qatar and Saudi Arabia.
• Major part of the work completed on the US$ one million order from Electronic Banking Services, Government of Sudan for computerization of 200 branches during the first phase.
• Signed a Business Partnership agreement with Imageflux, Korea, for taking Pentasoft’s IT solutions to Korean clients.
• In the international training segment, work is in progress in Columbia connectivity agenda program, GBM Bahrain. Signed up of training partnership with BEA Systems, UK and Learning Tree, USA.

Second Quarter – A Brief Profile

Business Software Division

   During the second quarter, this Division contributed around 51% to Pentasoft’s overall exports.

Overseas

   Of the total contribution by the Business Software Division during this quarter, Banking and Financial Services contributed 31%; Insurance Solutions 22%; Logistics, ERP & CRM 12%; E-Business Solutions 18%; Products and Services 17%.

Banking & Financial Services, Insurance

   The International Banking segment is implementing an order worth over US$ one million from Electronic Banking Services, Government of Sudan for computerization of 200 branches during the first phase. Pentasoft’s banking solution is also under evaluation by other banks in the region and major breakthroughs are expected shortly.

   The International Banking segment has reached an understanding with the Al Ghurair group, UAE, to take Pentasoft’s banking products to banks in UAE. A MoU has been signed with Al Ghurair group to achieve this.

   During the quarter, the Insurance segment bagged a major order from ICAT, USA for Policy Printing software solutions. ICAT also placed repeat order on Pentasoft during the quarter for more support and extensions of the Policy Printing solution. Zurich Insurance is consolidating the success of the installation of Pentasoft’s insurance solutions by planning the rollout of the software to more international locations.

   Pentasoft’s Takaful Insurance solution has been implemented for a major Financial Services Group in Saudi Arabia, which will be the precursor to many more Takaful Insurance implementations in the Middle East and Far East.

Internet & E Commerce / Logistics & Supply Chain Management

   During the Second Quarter, Pentasoft continued to bag orders from Xsellsys, USA, for projects involving reengineering of their CRM package.

   Pentasoft successfully completed the Wherehouse Inc. project involving migration from legacy to client server technology, leading the multi-billion-entertainment media retailer to take ongoing production support from Pentasoft.

   Pentasoft has been short listed by a large Canadian outsourcing company to provide outsourced production support activities out of its Chennai facility.

  IDMedia, a large and successful multimedia player in Germany, continues to place confidence in Pentasoft for its product development activities in Germany.

  Fuji Xerox has placed an order for development of complex communication protocols for inter device communication, in line with international standards.

IT Consulting Services

   Pentasoft bagged orders from State Bank of Mauritius, Mauritius Telecom, OAOT, Komatsu, Cargill Foods, Knowledge Dynamics, Toppan Management Services, Cable & Wireless, Qantas, Harvey Norman, HiServe, etc., to provide IT consulting services during the second quarter.

New Markets

   New Forays have been made into Kazakhstan, Hong Kong, Taiwan, Sri Lanka and Kuwait, during this period, through direct marketing presence or through tie-ups with local organizations which can further Pentasoft’s business interests in these countries.

Domestic Projects

   We have successfully implemented Application software at PWD, Tamil Nadu for Contract, Maintenance, Financial Accounting and Administration modules. After the implementation, PWD has recommended this to Orissa Water Board.

   Implementation of Orion an ERP package at Eastern Group, Cochin has been done, Eastern Group are the manufactures & Exporters of Spices and Food Products.

   Sales, Distribution, Stores, Purchase and Finance modules of ORION – ERP software has been implemented and gone live at Vasant Chemicals, Hyderabad

   At Tuticorin Port Trust Phase I (Implementation of Sales, Administration, Finance accounting & Materials Management) has been completed & is on line.

Engineering Services

International:

   Off-site development centre for doing CAD/CAM related jobs started functioning in Detroit, USA in this quarter. With this offsite development centre, the scope for getting more jobs relating to Auto sector has increased considerably.

   Successfully completed the pilot project for FORD, USA-- Phase III which has the V6 cylinder block legacy data conversion and V12 Cylinder block design detailing. On successful completion, repeat orders were given and are in progress.

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

Domestic:

   Successfully completed the pilot project in Digital Photogrammetry for NRSA and the inspection has also been carried-out.

   Signed an MOU with BEL Multitone, Bangalore for Vehicle Tracking System with GPS. With this signing of MOU, we can able to address the fleet owners; Public and Private transport system to monitor their vehicles effectively.

   Got repeat orders from Mahendra & Mahendra and Eicher for onsite project consultancy work.

   Also got repeat order from Ingersoll-Rand for doing the conversion job on CADDS5.

Education & Training

International:

   Signed up with BEA Systems, UK as Training Partner for conducting training programs, using Pentasoft faculty and centre management resources. Also Signed up with Learning Tree, USA and Learning Tree International, for conducting training programs.

   Conducted corporate trainings for HSBC – Dubai, Coco Cola – Bahrain and for other leading corporates.

   In this quarter successfully launched e-learning products like: i – Solve, i – AIMS & i- Communicator.

  Also, in this quarter, launched new courses on Software Project Management, Enterprise Resource Planning Courses, Programmable Logic Control, Very Large Scale Integration to beat the Training slowdown

Domestic:

   In order to meet the current market slow down, this division has identified the best performing centres and the high-end special courses such as VLSI, Embedded Software, Imedia and are being offered in these centres. Similar courses are also being conducted in major Franchisees centres.

   Within India, Pentasoft has 31 own centres and 145 Franchisees, which are currently in operation.

   To offset the current market down trend, our strategy is to offer specialized Engineering related courses in CAD / CAM, GIS and other areas which will pay rich dividend as these courses did not face the on-slot of US economy slow down.

   This division also pursuing Corporate Training program in Mainframes, Minis using IBM S-390 & IBM AS/400 machines.

Message from CEO’s Desk: "Pentasoft Technologies Ltd., despite troubled times could achieve a sales growth to the tune of 3% for the Half Year ended 30th September 2001, compared to corresponding period in the previous year. During the current quarter, the Training Division has witnessed a slump. This division has decided to concentrate more on medium and high-end courses, which has reasonable demand from Engineering & MCA students.

   In the Enterprise front, the Company has entered into agreements with new clientele in USA, Europe, Asia Pacific including Australia, China, Middle East, Africa regions. Business Software division in addition to executing projects both Onsite & Offshore, also focus on development of products in Insurance, Banking, ERP, Internet, Health care, Telecom segments for international clients. As a strategy, marketing efforts will focus on projects with a margin of around 20% plus and also with good credit terms. This will enable the company to focus on bottom line rather than the top line thereby ensuring regular cash flows."