Analyst Presentation for Quarter 3 FY 08-09

16th January 2009

S BalasubramaniamChief Financial Officer

Agenda

Quarter 3 Overall Performance

SBU Business Update

Business Highlights

Quarter 3 Overall Performance

In Rs lakhs

Particulars

Q3 (08-09) Actual

Q3 (07-08) Actual

% Growth (YoY)

Q2 (08-09) Actual

% Growth (QoQ)

Revenue 24943 19920 25% 23282 7%

Direct Cost 16881 14348 18% 16444 3%

Gross Margin 8062 5572 45% 6838 18%

Opex 3885 3277 19% 4116 -6%

Non Operating Income (Net) (535) 123 -535% 592 -190%

PBT 2969 1835 62% 2644 12%

PAT 2022 1502 35% 1856 9%

Ratios

Direct Cost 68% 72% 71%  

Gross Margin 32% 28% 29%  

Opex 16% 16% 18%  

PBT 12% 9% 11%  

PAT 8% 8% 8%  

• Positive effect of dollar appreciation was countered by depreciation of other currencies vis-à-vis the US Dollar – cross currency depreciation of the Pound, Australian Dollar and

Rand against the US Dollar• As against a net income of Rs 123 lacs in the last year, the net

income was a loss of Rs 535 lacs in the current year

Analysis of Q3 PATYear-on-year growth

• Revenue growth Rs 5023 lacs (25%)• Gross Margin growth Rs 2490 lacs (45%)• Opex growth Rs 608 lacs (19%)• Other Income (Net) reduction by Rs 658 lacs• PBT growth Rs 1134 lacs (62%)• PAT growth Rs 520 lacs (35%)

The PAT was also affected by increase in overall tax rate from 18% to 26%

– Increase in US entities’ profit where tax provision is higher at 40%. Contribution of US entities’ profit last year was 11% as against 56% this year

– Additional provision of Rs 155 lacs has been made in respect of the transfer pricing assessment order received for the year 2004-05. This has had a 5% impact on the tax rate

Analysis of Q3 PATYear-on-year growth

Benchmarking

Parameter Zensar Infosys Mastek NIIT Tech

Ratios for the Quarter ended 31st Dec 2008        

EBITDA 12% 35% 15% 18%

PBT 12% 33% 14% 10%

PAT 8% 28% 12% 7%

Earning Per Share Basic (Rs./Quarter) 8.44 28.66% 11.65 2.85

 

YoY Growth (Dec 08 over Dec 07)

Revenue 25% 35% 19% 6%

EBITDA 54% 46% 4% 0.45%

PBT 62% 35% 6% -42%

PAT 35% 33% 16% -52%

 

Sequential Quarter Growth (Dec 08 over Sep 08)

Revenue 6% 7% -3% -4%

EBITDA 13% 13% -19% -3%

PBT 12% 12% -18% -45%

Net PAT 9% 15% -24% -54%

Commentary by Ganesh on performance and

Plans for ZENSAR

SBU Revenue for Quarter 3 FY 08-09

Revenue In Rs. Lakhs

ParticularsQ3

(08-09)Q3

(07-08)YoY

GrowthQ2

(08-09)QoQ

Growth

GTS 15265 12765 20% 14436 6%

BPO 1334 917 45% 1370 -3%

EAS Oracle 6625 4901 35% 5937 12%

EAS SAP 1616 1395 16% 1464 10%

EAS 8241 6296 31% 7401 11%

Others 103 0 75 37%

Total 24943 19978 25% 23282 7%

SBU PBT for Quarter 3 FY 08-09

PBT In Rs. Lakhs

ParticularsQ3

(08-09)Q3

(07-08)YoY

GrowthQ2

(08-09)QoQ

Growth

GTS 2971 1520 95% 2276 31%

BPO 198 94 111% 159 25%

EAS Oracle 569 (293) 415 37%

EAS SAP 145 288 -50% -99

EAS 714 (5) 316 126%

Corporate (914) 226 -107

Total 2969 1835 62% 2644 12%

Zensar Business Updates

Operations• Attrition at its lowest at 4%• Critical Talent Retention at 100%

Customers• The largest client exceeds 1000 headcount• Two large financial services clients amongst top 6 global accounts for Zensar• Clearly Business (a Barclays enterprise) won the Banking Financial Innovation Award and have given

Zensar credit for working on the system that got them the accolade • Key new wins include

– (UK): one of UK and Ireland’s leading utilities service contractors – (SA): a central securities depository for electronic settlement – (US): largest supplier of business accounting software

Geographies• South Africa: 70% above LY - expected to do 14.9 Mn USD against 9.9 Mn USD LY • UK: Third year of good performance in Oracle in a tough market

Practices • New practices have become a competitive edge

– IM, BI, Fusion Middleware, Demantra– SAP A1 – Pharma and Textiles : First ever end-to end implementation in Pharma

BPO Update

• Business Performance

– 62% revenue growth Y-o-Y over 07-08.

– 112% growth in gross margin realization Y-o-Y over 07-08

– Consistently profitable in the financial year 9-12% PBT

• New Business/Verticals

– Entry into Airline BPO vertical

– Entry into Equity Research domain

– Inbound project for large Indian credit cards company won

• Existing Business Growth

– Managing multiple support engagements in a large telecom giant

– Managing multiple processes for large US retail company

– Unique Global Supply Chain offering for leading UK retailer

Zensar’s Horizons of Growth2009-2012

Core ServicesAMS

ERP (Oracle)

New Services

BPO ERP (SAP)

IMTESTING

Special ServicesDESEES

UtilitiesHealthcare

eGovernance

H1 H2 H3

Profitability White SpaceGrowth

Ma

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Continue to Invest in People Motivation

Implementing the Zensar

Dress Code Across Locations

Solidarity at Zensar

Keeping Fit-Zensar Fitness

Centre

Zensar Time Off Scheme

Ideating and strategizing with

Vision Community

Business Outlook for the Year

• Continue the watchful optimism and look for wider and deeper opportunities with existing clients and invest more in sales to find new customers

• Optimise structures and strategy for the slowdown• Costs under extreme control and push-back customer

requests of price cuts• Combat industry challenges of governance, security, safety• Keep the associate morale high and attrition low !

Thank You!