Money Tree

The salient features and extracts from the Red Herring Prospectus of the issue are given hereunder:

Issue Opens On : July 19, 2007
Issue Closes On : July 25, 2007
Issue Size : Rs.3500 lacs
Face Value : Rs.10/-
Price Range : Rs. 90 to Rs. 105/-
Issue Type : Book Building
Tick Size : Re.1/-
Market Lot : 60
Minimum Order Qty : 60
Listing Stock Exchange : NSE, BSE

Objects Of the Issue :

Acquisition(s) / Strategic investments and/or to alternatively set up new technology center
Setting up of overseas offices
Enhancement of our existing facilities
Setting up of new technology centre(s)
To meet issue expenses and for general corporate purposes

Basis for Issue Price :

Face Value : Rs.10/-
Issue Price : 9 Times(Lower Price Band) of the Face Value.
Issue Price : 10.5 Times(Higher Price Band) of the Face Value.
Issue Price : Rs. 90 to Rs. 105
EPS for the last financial year 2006-07 : Rs 14.82
EPS for the last year 2005-2006 : Rs 12.45
EPS for the financial year 2004-05 : Rs. 0.56
Weighted Average EPS for the years April 2004- March 2007 : Rs 11.66

PE ratio of Omnitech Infosolutions Ltd. on the higher side of price band comes out to 7.4 times and on the lower side of the price band comes out to 6.07 times on the basis of the EPS for the year ended 31st March 2007.

Industry Overview :

Over the past few years, Indian IT-ITES industry has contributed significantly to the economic growth of the country. This industry has grown from US$8.30 billion in FY 2000 to US$47.78 billion in FY 2007, showing healthy CAGR of approximately 28%. In the same period export markets have contributed significantly to overall growth in this industry as compared to domestic markets. Currently the industry directly employs nearly 1287000 people in the export segment and provides indirect employment to approximately 3 million workers.

In the last decade global offshore market for Indian IT-ITES industry is growing rapidly due to “India Advantage” of having right skills, better communication ability, high quality delivery capabilities, different time zones and most cost-effective execution and operation model. India Advantage is further enhanced by effective education system and favorable Government policies for IT-ITES industry. Presently India accounts for 65% and 46% of the global offshore IT services and ITES market respectively.

Infrastructure Management Services (IMS) encompass all the services that relate to monitoring, managing and enhancing performance of a client’s IT infrastructure backbone. These include helpdesk services, server management, data centre management, network management, asset management, desk-side support, IT security services, maintenance services and applications operations. Today companies are working hard to reduce the cost of IT infrastructure and so are adapting standardization for application and environment platforms and development languages. As a result of this there has been an increase in
the degree of standardization of IT infrastructure and increasing automation in infrastructure management technology has made remote delivery of IMS more streamlined and less complex. Not only has this enabled service providers to deliver higher levels of service quality but also evolve towards more efficient service delivery by leveraging the offshore model. This Offshore IMS is a logical extension of India’s offshore-based delivery capabilityand it represents a sizeable opportunity for Indian vendors.

Business Overview :

The company provides infrastructure management, application management and software testing services including a range of business support and technical services through one product and one delivery channel customized to suit the clients requirements. Besides conventional delivery channels, these services are offered through unique Build- Operate-Transfer and SaaS delivery models.

History :

The Company was incorporated on January 30, 1990 as Omnitech Business Machines Private Limited, under the Companies Act, 1956. The name of the Company was changed to Omnitech Infosolutions Private Limited on January 9, 2001 and subsequently to Omnitech Infosolutions Limited on April 12, 2001.

Financial Information :

Total income of the Company for the year ended 31st March, 2007 : Rs. 7779.69 lacs
Total income of the Company for the year ended 31st March, 2006 : Rs. 5415.92 lacs
Total income of the Company for the year ended 31st March, 2005 : Rs. 4666.53 lacs

Net profit (after tax) for the year ended 31st March, 2007 : Rs. 1219.38 lacs
Net profit (after Tax) for the year ended 31st March, 2006 : Rs. 624.74 lacs
Net profit (after Tax) for the year ended 31st March, 2005 : Rs. 99.15 lacs

Comments :

The company provides Business availability and Business continuity services together with systems integration solutions and is trying to cap the potential of fast growing Infrastructure Management Services (IMS). The company adopts unique and cost effective delivery models like BOT (Build, Operate and Transfer) and SaaS (Service as a Software) which provides an edge over its competitors. The company is planning expansion on national as well as internatinal level. The past performance of the company in terms of revenues and profits has been consistent and the same is expected to continue going forward. The valuations are also reasonably good and we recommend subscribing to the issue.

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