Introduction to

Share Market
&

Fundamental Analysis
Of 3

IT Stocks

Pragnesh Rabari Roll No. 38

Hiral Mistry Roll no. 24

PREFACE
October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February! The market is weird. Every time one guy sells, another one buys, and they both think they're smart. A market analyst is an expert who will know tomorrow why the things he predicted yesterday didn't happen today!

The above-mentioned quotes are not only interesting but relate to the realities an investor faces at the time of making investments; lack of knowledge of the stock market, the various so-called analyst or broker and the investment opportunities and periodicity. Fundamental analysis is a selfassessment tool that helps an investor while making any investment. Generally fundamental analysis considers the long-term perspective on the contrary to the technical analysis that takes a short-term view while investing in stocks. IT is a booming sector and is rocking Indian economy. Demand for Information Technology is ever rising and so does the value of the stocks of IT companies. Computers have brought a change over in the way of working and Indian companies have contributed to a greater extent in the world of Information Technology. The fundamental analysis of the IT stocks has been represented in our report stating the example about the factuality of how the analysis is done.

ACKNOWLEDGEMENT
As such being novice to the stock market it was very difficult to understand the working of the stock market first. We are very much thankful to Karvy Stock Broking Ltd. that provided us the platform to have a deep view into the working of stock market. Our sincere thanks to Mr. Paresh Bhatiya (branch head) for granting us permission and guiding our efforts in the right direction. It had been our privilege working with him, as it was not merely training but a wholesome package of corporate training where we were allowed to look into the daily activities performed by the Karvy Nadiad Branch. Besides that we are also thankful to the other staff member of Karvy, Mr. Nimish Narkhi and Mr. Nilesh Patel in order to guide us as to how the market operates. Our wholehearted thanks to our professor Mr. Taral Pathak for his support and guidance during the period of the summer training. A free choice of selection of any topic helped us get a better idea where exactly we want to land for our career. Stock market is place of our interest and we would definitely like to carve our future in it. Finally, our sincere thanks to all the people who have directly or indirectly helped us in shooting down the problems faced during this period. Thank you, Pragnesh Rabari Hiral Mistry

The National Stock Exchange of India Ltd. (NSE), set up in the year 1993, is today the largest stock exchange in India and a preferred exchange for trading in equity, debt and derivatives instruments by investors. NSE has set up a sophisticated electronic trading, clearing and settlement platform and its infrastructure serves as a role model for the securities industry. The standards set by NSE in terms of market practices; products and technology have become industry benchmarks and are being replicated by many other market participants. It provides a screen-based automated trading system with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information dissemination through the on-line system has helped in integrating retail investors across the nation. The exchange has a network in more than 350 cities and its trading members are connected to the central servers of the exchange in Mumbai through a sophisticated telecommunication network comprising of over 2500 VSATs. NSE has around 850 trading members and provides trading in over 1000 equity shares and 2500 debt securities. Besides this, NSE provides trading in various derivative products such as index futures, index options, stock futures, stock options and interest rate futures. At NSE, it has always been our endeavor to continuously upgrade the skills and proficiency of the Indian investor. Since, financially literate investors are the backbone of the securities market, knowledge and awareness about the securities market is of the foremost concern to us, starting with the most basic of information being made available as the first step. This booklet has therefore been prepared for those of you who are keen to acquire some basic but key information about the stock markets as an initial step towards becoming a more informed investor. We hope this booklet will act as a means of satisfying some of your initial queries on the stock markets.

BSE
Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in the country to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of Persons (AOP), the Exchange is now a demutualised and corporatised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation, the trading rights and ownership rights have been delinked effectively addressing concerns regarding perceived and real conflicts of interest. The Exchange is professionally managed under the overall direction of the Board of Directors. The Board comprises eminent professionals, representatives of Trading Members and the Managing Director of the Exchange. The Board is inclusive and is designed to benefit from the participation of market intermediaries. In terms of organization structure, the Board formulates larger policy issues and exercises over-all control. The committees constituted by the Board are broad-based. The Managing Director and a management team of professionals manage the day-to-day operations of the Exchange. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and processes of the Exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth. The Exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS 7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO 9001:2000 certified.

Fundamental Analysis:

Fundamental analysis is the method of analyzing companies based on factors that affect their intrinsic value. As with the analysis of fixed income securities, equities may be analyzed on an expected future cash flow, or benefit, to the shareholder basis. When reading the financial papers one often encounters the term "intrinsic value". This concept is what is considered to be the corner stone of fundamental analysis. How does an investor determine if a stock is undervalued, overvalued, or trading at fair market value? With fundamental analysis, applying the concept of intrinsic value may do this. If all the information regarding a corporation's future anticipated growth, sales figures, cost of operations, and industry structure, among other things, are available and examined, then the resulting analysis is said to provide the intrinsic value of the stock. There are two sides to this method: the quantitative and the qualitative. The quantitative side involves looking at factors that can be measured numerically, such as the company's assets, liabilities, cash flow, revenue and price-to-earnings ratio. The limitation of quantitative analysis, however, is that it does not capture the company's aspects or risks immeasurable by a number - things like the value of an executive or the risks a company faces with legal issues. The analysis of these things is the other side of fundamental analysis: the qualitative side or non-number side. Although relatively more difficult to analyze, the qualitative factors are an important part of a company. Since a number does not measure them, they more represent an either negative or positive force affecting the company. But some of these qualitative factors will have more of an effect, and determining the extent of these effects is what is so challenging. To start, identify a set of qualitative factors and then decide which of these factors add value to the company, and which of these factors decrease value. Then determine their relative importance. The qualities you analyze can be categorized as having a positive effect, negative effect or minimal effect. The best way to

incorporate qualitative analysis into your evaluation of a company is to do it once you have done the quantitative analysis. The conclusion you come to on the qualitative side can put your quantitative analysis into better perspective. If when looking at the company numbers you saw good reason to buy the company, but then found many negative qualities, you may want to think twice about buying. Negative qualities might include potential litigations, poor R and D prospects or a board full of insiders. The conclusions of your qualitative analysis either reconfirm or raise questions about the conclusions of your quantitative analysis. Fundamental analysis is not as simple as looking at numbers and computing ratios; it is also important to look at influences and qualities that do not have a number value.

Using Dividend Discount Model:

When using the dividend discount model, the type of industry involved and the dividend policy of the industry is important in choosing which of the dividend discount models to employ. As mentioned earlier, the intrinsic value of a share is the future value of all dividend cash flows discounted at the appropriate discount factor. For those familiar with the calculation of yield in fixed income analysis, the concepts are similar. For constant dividends: P=Dt/ke Where:

P = intrinsic value D t= expected dividend ke = appropriate discount factor for the investment

This method is useful for analyzing preferred shares where the dividend is fixed. However, the constant dividend model is limited in that it does not allow for future growth in the dividend payments for growth industries. As a result the constant growth dividend model may be more useful in examining a firm.

For constant dividend growth: P=Dt/(ke-g) Where:

P = intrinsic value D t= expected dividend ke = appropriate discount factor for the investment g = constant dividend growth rate

The constant dividend growth model is useful for mature industries, where the dividend growth is likely to be steady. Most mature blue chip stocks may be analyzed quickly with the constant dividend growth model. This model has its limitations when considering a firm, which is in its growth phase and will move into a mature phase at some time in the future. A two-stage growth dividend model may be utilized in such situations. This model allows for adjustment to the assumptions of timing and magnitude of the growth of the firm. For the two stage growth model; P=n
t=1[D0

(1+g1) t/(1+ke) t]+

t=n+1[Dn

(1+g2) t-n/(1+ke) t]

Where:

P = intrinsic value D0= expected initial period dividend Dn= expected dividend during mature period ke = appropriate discount factor for the investment g1 = expected dividend growth rate for initial growth period g2 = expected dividend growth rate for mature period

The two-stage model allows for greater flexibility in the testing of scenarios for the investor looking at a firm in its infancy or in a new industry.

Fundamental Analysis Tools:

These are the most popular tools of fundamental analysis. They focus on earnings, growth, and value in the market. Earnings per Share EPS Price to Earnings Ratio P/E Projected Earning Growth PEG Price to Sales P/S Price to Book P/B Dividend Payout Ratio Dividend Yield Book Value Return on Equity

No single number from this list is a magic bullet that will give you a buy or sell recommendation by itself, however as you begin developing a picture of what you want in a stock, these numbers will become benchmarks to measure the worth of potential investments.

Strengths of Fundamental Analysis:

Long-term Trends

Fundamental analysis is good for long-term investments based on long-term trends, very long-term. The ability to identify and predict longterm economic, demographic, technological or consumer trends can benefit patient investors who pick the right industry groups or companies.

Value Spotting

Sound fundamental analysis will help identify companies that represent a good value. Some of the most legendary investors think longterm and value. Graham and Dodd, Warren Buffet and John Neff are seen as the champions of value investing. Fundamental analysis can help uncover companies with valuable assets, a strong balance sheet, stable earnings, and staying power.

Business Acumen

One of the most obvious, but less tangible, rewards of fundamental analysis is the development of a thorough understanding of the business. After such painstaking research and analysis, an investor will be familiar with the key revenue and profit drivers behind a company. Earnings and earnings expectations can be potent drivers of equity prices. Even some technicians will agree to that. A good understanding can help investors avoid companies that are prone to shortfalls and identify those that continue to deliver. In addition to understanding the business, fundamental analysis allows investors to develop an understanding of the key value drivers and companies within an industry. Its industry group heavily influences a stocks price. By studying these groups, investors can better position themselves to identify opportunities that are high-risk (tech), low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer staples), cyclical (transportation) or income-oriented (high yield).

Knowing Who's Who

Stocks move as a group. By understanding a company's business, investors can better position themselves to categorize stocks within their relevant industry group. Business can change rapidly and with it the revenue mix of a company. This happened to many of the pure Internet retailers, which were not really Internet companies, but plain retailers. Knowing a company's business and being able to place it in a group can make a huge difference in relative valuations.

Weaknesses of Fundamental Analysis:

Time Constraints

Fundamental analysis may offer excellent insights, but it can be extraordinarily time-consuming. Time-consuming models often produce valuations that are contradictory to the current price prevailing on Wall Street. When this happens, the analyst basically claims that the whole street has got it wrong. This is not to say that there are not misunderstood companies out there, but it is quite brash to imply that the market price, and hence Wall Street, is wrong.

Industry/Company Specific

Valuation techniques vary depending on the industry group and specifics of each company. For this reason, a different technique and model is required for different industries and different companies. This can get quite time-consuming, which can limit the amount of research that can be performed. A subscription-based model may work great for an Internet Service Provider (ISP), but is not likely to be the best model to value an oil company.

Subjectivity

Fair value is based on assumptions. Any changes to growth or multiplier assumptions can greatly alter the ultimate valuation. Fundamental analysts are generally aware of this and use sensitivity analysis to present a base-case valuation, a best-case valuation and a worst-case valuation. However, even on a worst-case valuation, most models are almost always bullish, the only question is how much so.

Analyst Bias

The majority of the information that goes into the analysis comes from the company itself. Companies employ investor relations managers specifically to handle the analyst community and release information. As Mark Twain said, "there are lies, damn lies, and statistics." When it comes to massaging the data or spinning the announcement, CFOs and investor relations managers are professionals. Only buy-side analysts tend to venture past the company statistics. Buy-side analysts work for mutual funds and money managers. They read the reports written by the sell-side analysts who work for the big brokers (Angel, Merrill Lynch, India Bulls, Karvy, Motilal Oswal, Marwadi to name a few). These brokers are also involved in underwriting and investment banking for the companies. Even though there are restrictions in place to prevent a conflict of interest, brokers have an ongoing relationship with the company under analysis. When reading these reports, it is important to take into consideration any biases a sell-side analyst may have. The buy-side analyst, on the other hand, is analyzing the company purely from an investment standpoint for a portfolio manager. If there is a relationship with the company, it is usually on different terms. In some cases this may be as a large shareholder.
Definition of Fair Value

When market valuations extend beyond historical norms, there is pressure to adjust growth and multiplier assumptions to compensate. It used to be that free cash flow or earnings were used with a multiplier to arrive at a fair value. In 1999, the S&P 500 typically sold for 28 times free cash flow. However, because so many companies were and are losing money, it has become popular to value a business as a multiple of its revenues. This would seem to be OK, except that the multiple was higher than the PE of many stocks! Some companies were considered bargains at 30 times revenues.
Conclusions

Fundamental analysis can be valuable, but it should be approached with caution. If you are reading research written by a sell-side analyst, it is important to be familiar with the analyst behind the report. We all have personal biases, and every analyst has some sort of bias. There is nothing

wrong with this, and the research can still be of great value. Learn what the ratings mean and the track record of an analyst before jumping off the deep end. Corporate statements and press releases offer good information, but they should be read with a healthy degree of skepticism to separate the facts from the spin. Press releases don't happen by accident, they are an important PR tool for companies. Investors should become skilled readers to weed out the important information and ignore the hype.

Definitions of analysis tools:

EPS The EPS is arrived by dividing the net profit by the expanded equity. The expansion in equity may be due to various reasons, which are indicated by putting the following marks after the price: Rights, Bonus. Conversion, Public issue, Foreign issue, Miscellaneous issues, Cum-bonus, Ex-bonus, Cum-rights and Ex-rights. P/E Ratio The P/E ratio reflects the price currently being paid by the market for each rupee of currently reported EPS. It measures investors expectations and market appraisal of the performance of the firm. P/E ratio = _market price of share EPS Book Value The book value per share is arrived at by dividing the sum of equity and reserves (excluding revaluation reserves) by the number of equity shares. Dividend Yield It is closely related to EPS. While the EPS is based on book value per share, the yield is expressed in terms of the market value per share. The dividend yield is calculated by dividing the cash dividends per share (DPS) by the market value per share, (not price actually paid by investors). Dividend yield = dividend per share Market price per share * 100

Return on Equity It reflects the rate of return, which a firm is able to generate on equity. Return on equity = net income after tax Equity* *Equity refers to equity share capital and reserves & surplus.

INDUSTRY PROFILE (INFORMATION TECHONOLOGY)

Worldwide spending on IT-ITES witnessed steady growth in 2005, on the back of healthier spending across key markets of the US and Western Europe, and strong growth in emerging markets. Outsourcing continued to be the primary growth engine with global delivery forming an integral part of the strategies adopted by customers as well as service providers. The year 2005 also witnessed the coming of age of the Indian IT multinationals, with the traditionally India-centric, indigenous players beginning to build noticeable presence in other locations - through cross border acquisitions, onshore contract wins and organic growth in other lowcost locations. This was complemented by global majors continuing to significantly ramp-up their offshore delivery capabilities -predominantly in India, vindicating the success of the global delivery model and highlighting India's increasingly important role in the new world IT order. In addition to the growth in scale, the portfolio of services sourced globally continued to expand into higher-value, more complex activities- further reinforcing the growing maturity of the global delivery model. The Information Technology (IT) sector is amongst the fastest growing in the country. IT professionals work in all major markets around the world. Indian technology products and solutions are accepted globally. The first year of the new millennium has been a year of turbulence, tragedy, terrorism and slow-down in the world economy. The Indian IT software and services industry has weathered this storm well. It is indeed creditable that the IT software and services industry in India has reasonably continued its robust growth of about 28 per cent during the year 2001-02. The software industry has emerged as one of the fastest growing sectors in the economy with a compound annual growth rate (CAGR) exceeding 50 per cent over the last five years and with turnover of

US$ 10.25 billion and exports of US$ 7.8 billion during 2001-02. Software exports have registered a CAGR of about 60 per cent. The IT software and services industry accounted for about 2% of Indias GDP during 2001-02 and 18 per cent of total exports. It is expected that by the year 2008, IT software and services industry will account for 7 per cent of Indias GDP and 35 per cent of total exports. The Asscom McKinsey Report 2002, released in June 2002, has reiterated that despite recent slowdown, the Indian IT services (ITS) and IT enabled services (ITES) industry is poised to meet its long-term exports potential of US$ 57 billion. The IT enabled services sector has witnessed explosive growth the last two years. As a result, IT enabled services exports is likely to reach US$ 21-24 billion by 2008. A large number of Indian software companies have acquired international quality certification. Out of top 400 companies, more than 250 have already acquired ISO 9000 certification As Stated by Kiran Karnik (Chairman NASSCOM) 2005 was a year of steady growth with gradually increasing optimism for the global IT-ITES sector. Increasing outsourcing adoption and maturing global service delivery were the key drivers of growth. Worldwide spending on information technology (IT) and IT-enabled business services (together referred to as IT-ITES) grew by nearly seven per cent in 2005, on the back of healthier spending across key markets of the US and Western Europe, and strong growth in emerging markets. Outsourcing continued to be the primary growth engine with global service delivery forming an integral part of the strategies adopted by customers as well as service providers. The year 2005 also witnessed the coming of age of the Indian IT multinationals with the traditionally India-centric, indigenous players beginning to build noticeable global presence through cross border acquisitions and organic growth in other low cost locations. This was complemented by global majors continuing to significantly ramp-up their offshore delivery capabilities predominantly in India, vindicating the success of the global delivery model and highlighting Indias increasingly important role in the new world IT order. In addition to the growth in scale, the portfolio of services sourced globally continued to expand into highervalue, more complex activities, further reinforcing the increasing maturity of

the global delivery model. The Indian IT-ITES sector continues to record strong growth; estimated to grow by 28 per cent over FY 2004-05. Service exports growth estimated at 32 per cent. The Indian IT-ITES sector continues to chart remarkable double-digit growth and is expected to exceed USD 36 billion in annual revenue in FY 2005-061, an increase of nearly 28 per cent in this current fiscal. 1 The fiscal year for the Indian economy follows a twelve month-cycle spanning AprilMarch. Hence all the figures reported for the current Indian fiscal year (FY 2005-06) pertain to the industrys performance during AprilDecember 2005 that have been used to arrive at the year end estimates governments vie for investments by IT companies by providing incentives and a conducive business environment. Talent continues to be a challenge, a problem resulting from the success of the industry and Indias accelerating economic growth. The issue is not so much about overall quantity, but of quality. NASSCOMs work is focused on increasing the supply of persons with the appropriate skill sets and the right quality. This report documents these issues in some detail, as also the action that is underway. In addition, as always, it provides a perspective on broader aspects of the IT industry and includes a considerable amount of statistical detail about the industry. The NASSCOM research team, headed by Sunil Mehta, and comprising Gaurav Singh, Nirmala Balakrishnan, Diksha Nerurkar and Mukta Anand, has taken great pains and very considerable efforts to put together this report. I hope readers will find it interesting and useful. We would welcome feedback and comments.

Here we will talk about why India has emerged as a preferred offshore outsourcing destination for leading global companies. The goal of this section is to provide inputs on the kind of companies that are present in India and the benefits they are deriving from making India their first investment choice. Infrastructure Scenario

Indias strengths in the areas of infrastructure (power, telecom and physical),

skilled workforce availability and conducive regulatory environment will be discussed in this section. The focus here will also be on emerging Indian cities, in the Tier II and Tier III categories that are being explored by ICT organizations for setting up software development and ITES-BPO facilities. Business In India

This is a one-stop information shop on how an IT-ITES company can be set up in India. The aim is to keep global organizations in the know about the policy and business requirements that have to be met to kick-start such an enterprise. Government Policies

This section is a compilation of the key Government policies that govern the flow of IT-ITES investment into the country, plus a host of regulatory and procedural tenets that impact such ventures. This section also provides a window into the laws related to SEZs, EPZs, STPs and other export processing zones.

Fundamental Analysis (Qualitative):

OVERVIEW:
Pioneering a new generation of Strategic Offshore Outsourcing Infosys Technologies Ltd. (NASDAQ: INFY) provides consulting and IT services to clients globally - as partners to conceptualize and realize technology driven business transformation initiatives. With over 58,000 employees worldwide, we use a low-risk Global Delivery Model (GDM) to accelerate schedules with a high degree of time and cost predictability. As one of the pioneers in strategic offshore outsourcing of software services, Infosys has leveraged the global trend of offshore outsourcing. Even as many software outsourcing companies were blamed for diverting global jobs to cheaper offshore outsourcing destinations like India and China, Infosys was recently applauded by Wired magazine for its unique offshore outsourcing strategy it singled out Infosys for turning the outsourcing myth around and bringing jobs back to the US. Infosys provides end-to-end business solutions that leverage technology. We provide solutions for a dynamic environment where business and technology strategies converge. Our approach focuses on new ways of business combining IT innovation and adoption while also leveraging an organization's current IT assets. We work with large global corporations and new generation technology companies - to build new

products or services and to implement prudent business and technology strategies in today's dynamic digital environment.

Products:
Application Development and Maintenance Application Development Application Maintenance Application Re-engineering Application Portfolio Management Platform Services

Corporate Performance Management Enterprise Quality Services Infrastructure Services Application Management Datacenter Services Desktop Services Infrastructure & ITIL Consulting Mainframe Operations Network Services Service Desk

Packaged Application Services Customer Relationship Management (CRM) Enterprise Application Integration (EAI) Enterprise Resource Planning (ERP) Supply Chain Management (SCM)

Product Engineering Additional Product Services Offshore Product Development Center

Product Consulting and Professional Services Product Design & Development Product Lifecycle Management Product Sustenance Testing & Automation

Systems Integration Architecture Services Business Intelligence and Data Warehousing Enterprise Content Management Enterprise Information Portal Enterprise Mobility Enterprise Security Identity Management Migration and Re-hosting

Infosys Foundation, the philanthropic arm of Infosys Technologies Ltd., came into existence on 4th December 1996 with the objective of fulfilling the social responsibility of the company by supporting and encouraging the underprivileged sections of society. In a short span of time, the Foundation has implemented numerous projects in its chosen areas. The Foundation has undertaken various initiatives in providing medical facilities to remote rural areas, organizing novel pension schemes and in aiding orphans and street children. It has undertaken a large rural education program titled "A library for every school" under which 5500 libraries have been set up in government schools spread across many villages. Other activities include the reconstruction of old school buildings, setting up of rural Science Centers and schemes to provide support to dying traditional art and culture forms

Awards
Infosys has won Indias Best Managed Company Award based on a study conducted by Business Today and A.T. Kearney. Infosys was placed ahead of 13 finalists. The study looked at a companys financial performance (quantitative) as well as the qualitative, non-commercial aspect of management, examining how it innovates, learns and delivers on stakeholder needs. Infosys has excelled in both aspects. In its cover story of March 27, 2005, Business Today made the following observations about Infosys: Best Practice: Infosys, which has never missed a target in 48 quarters, has a planning process that is quite clearly the best in class.

Key Differentiator: With around 36,000 employees on its rolls, Infosys has addressed the challenge of inducting and orienting a large number of employees into the Infosys way. The benefits: An army of employees that works the same way gains in process efficiency and productivity, and higher quality.

People focus: Infosys sharp and intense people focus is a natural corollary of its booming business, with customers identifying this as a quality that often separates it from other competitors in the IT services space.

Knowledge Sharing: Infosys has near perfected the art of knowledge management and believes that it is important to build a knowledge sharing culture within the organization. Competitive Advantage: Infosys has built an engine that can deliver everything from consulting to contact center services and scale. Yet, its competitive advantage comes from an unlikely source: its soul.

Other information and announcements:

Infosys Technologies signs MoU with Government of Andhra Pradesh for expansion plans in Hyderabad-Infosys wishes to expand in 550 acres; Plans to ramp up headcount to 25,000 with an added investment of Rs.1250 crore". The Board of Directors recommended a Silver Jubilee special dividend of Rs. 30 per share (600% on par value of Rs. 5 per share). The Board has also, proposed a final dividend of Rs. 8.50/- per share (170% on an equity share par value Rs. 5/-). 3) The Board of Directors recommended an issue of bonus shares (stock dividend) on the companys equity shares in the ratio of 1:1 i.e. one additional equity shares for every one equity share held by the members on the record date to be fixed by the Board. 4) The Twenty Fifth Annual General Meeting of the Members of the Company will be held on June 10, 2006. The authorized capital of the company has been increased from Rs. 150,00,00,000/- (divided into 30,00,00,000 equity shares of Rs. 5/- each) to Rs. 300,00,00,000/- (divided into 60,00,00,000 equity shares of Rs. 5/each). Innovating the "Infosys way-Product Engineering Services contributed close to 10% to total revenues; employs approximately 5000 Infoscions-Invested 1.2% of total revenues on R&D in 2005-06Infosys'SETLabs generated over 82 invention disclosures and filed over 20 patents". "Infosys' continuing search for excellence: To hire top talent from US and UK universities. 300 American college graduates to join Infosys directly out of US universities. Expanded recruiting initiative to hire 25 college graduates from UK in 2007." Infosys' Finacle to power Banco Continental de Panama operations across Central America." "Analog Devices Reduces Certain IT Costs By More Than 40% With Infosys' Predictability and Process-Rigor; Additional Benefits Include Better Alignment of IT to Business and Improved Customer Experience."

 "Infosys Recognized in the "Leader" Quadrant in Offshore Applications Services Magic Quadrant".

Vision
At Infosys we have a vision of where we want to go, and it's really exciting. Would you like to be part of a company that is making history? If yes, read on. With an annual compounded growth rate of around 60% in the last 5 years, and branches across the world, we are forging ahead in the global market. To achieve our vision, we are always looking out for talented, learnable individuals who are ambitious, who love challenges and who have a passion to excel! Towards this objective, Infosys participates in campus hiring programs and also conducts a number of off-campus initiatives throughout the year at various locations. Apart from college hiring, we also hire experienced professionals from the industry at various mid-level and senior positions.

Fundamental Analysis of Infosys (Quantitative):

Ratio: EPS (rs.) P/E ratio (rs.)

Dividend (rs.)

05-06 88.67 33.62 15 250.29

04-05 69.26 32.59 11.50 193.73

Book value (rs.)

Infosys is proving to be a technically super power among the IT giants with a robust growth year by year. The numerical figures indicate a very bright future on the quantitative side of the analysis. The ratios that show the ever-increasing growth trends for the company. The dividend payouts have been excellent and that the company is fulfilling its promises of increasing the shareholders value. The EPS that shows the earning on the each share that is continuously increasing and strengthening the growth and competitiveness of the company. The book value of the shares is also continuously increasing year by year. It shows the confidence of the shareholders in the company. The recent results of the Q1 of FY 2006-07 have not been included in this report. The results have again proved the excellent working of the company. There has been a tremendous rise in every aspect say EPS, P/E ratio, Book value and other financials records.

On the qualitative side, the company has got really good administration for which it has been awarded as the best managed company by Business Today. It offers a wide range of products and services to its huge number of associates. It has also been successful in bagging many contracts. In order to achieve excellent results the company has the staff of professionals with masterminds giving best out of them in order to make the company success in every aspect.

Considering the results and the management of Infosys the stock prices are expected to move upward with the way it has been rewarding in past. Even though there had been tremendous downfall in the stock market where all scripts saw

Fundamental Analysis (Qualitative):

CORPORATE OVERVIEW:
The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set, the means of attaining those objectives and monitoring performance

BUSINESS OVERVIEW:
When we commenced operations in 1968, we pioneered the offshore delivery model for IT services. Today, with a presence in 34 countries across 6 continents, & a comprehensive range of services across diverse industries, we are one of the world's leading Information Technology companies. Six of the Fortune Top 10 companies are among our valued customers. We are part of one of Asia's largest conglomerates - the TATA Group -, which, with its interests in Energy, Telecommunications, Financial Services, Chemicals, Engineering & Materials, provides us with a grounded understanding of specific business challenges facing global companies.

Mission, Vision & Values

While the Mission articulates the reason for our existence, our vision reflects an aspiration to continually improve, to excel & be the best. Our values characterize us as an organization & guide our every action. Mission Vision Values To help customers To be among the global Integrity achieve their business top 10 by 2010 Leading Change objectives by providing Excellence innovative, best-in-class Respect for the consulting, IT solutions Individual and services. Make it a Learning and Sharing joy for all stakeholders to work with us.

Products:
Its products are popular all over the world. They are known to be user-

friendly, flexible, comprehensive, and trailblazers in their respective areas Banking

Payments Securities Corporate Actions Custody Internet Delivery Channel Anti Money Laundering Core Banking Trade Finance

Accounting
E.X. Next Generation 1.5 E. X. Personal Investment Manager E.X. Personal Accountant

Insurance
Apollo TARABS Reinsurance System PDA Quotation System Product Designer Workbench Integrated Insurance Management System (IIMS)

Financial Services
NCS Corporate Actions NCS Custody Financial Industry Gateway EClearSettle E-Integrated Brokerage System TradeX

ESecurity
Tata-Dhruvam Tata-Saakshi OCSP Validation Server FileSigner FormSigner

Manufacturing
CemPac FACTORe

Life Sciences and Healthcare

Tata HMS Bio-Suite

Tools
MasterCraft Assent Infrex DataClean

S-Governance
SMARTGOV framework for knowledge-led governance Online government-citizen interface (PORTAL) VAT administration, income tax and sales tax administration Computerized administration for enhanced responsiveness and efficiency (CARE) at the district and collectorate level Computerized project finance management system (CPFMS) Army insurance management system (AIMS) Motor vehicle registration/ tax / driving licence KisanNet Treasury integrated system (TIS) Primary health centers Public distribution system Temple accommodation and seva system (TASS) Integrated computer-based management information system (ICMIS) for state forest departments Integrated MIS applications for municipal area development authorities Hazard management system (PROMPT)

Energy & Utilities

En'rgise

Fundamental Analysis of Infosys (Quantitative):

Ratio: EPS (rs.) P/E ratio (rs.)

Dividend (rs.)

05-06 55.53 30.4 4.50 48.93

04-05

5 -

Book value (rs.)

Conclusion:

Fundamental Analysis (Qualitative): Wipro Technologies is the No.1 provider of integrated business, technology and process solutions on a global delivery platform. Wipro Technologies is a global services provider delivering technology-driven business solutions that meet the strategic objectives of our clients. Wipro has 40+ Centers of Excellence that create solutions around specific needs of industries. Wipro delivers unmatched business value to customers through a combination of process excellence, quality frameworks and service delivery innovation. Wipro is the World's first CMMi Level 5 certified software services company and the first outside USA to receive the IEEE Software Process Award. CHARTER FOR THE NOMINATION AND CORPORATE GOVERNANCE COMMITTEE OF THE BOARD OF DIRECTORS OF WIPRO LIMITED A. OBJECTIVES:

A Nomination and Corporate Governance Committee is central to the effective functioning of the Board. The purpose of this Committee is to ensure that the Board of Directors is appropriately constituted to meet its fiduciary obligations to the shareholders and the company. To accomplish this purpose, the Nomination and Corporate Governance shall; - Develop and recommend the Board a set of corporate governance guidelines applicable to the Company - Implement policies and processes relating to corporate governance principles - Ensure that appropriate procedures are in place to assess Board membership needs - Recommend potential director candidates to the Board of Directors

B. MEMBERSHIP: The Nomination and Corporate Governance Committee shall consist of three non-management and independent members of the Board. The Board of Directors shall appoint the members of the Nomination and Corporate Governance Committee. C. POWERS: In discharging its responsibilities, the Nomination and Corporate Governance Committee shall have the following powers; Sole authority to retain and terminate any search firm to be used to identify director candidates Sole authority to approve the search firms fees and other retention terms D. RESPONSIBILITIES AND DUTIES: The Nomination and Corporate Governance Committee shall be responsible for considering and making recommendations to the Board concerning the appropriate size, function and needs of the Board. The Nomination and Corporate Governance Committee may diverge from these responsibilities and may assume such other responsibilities, as it deems necessary or appropriate in carrying out its functions. 1.1 Responsibilities relating to the Board/Company (a) Taking a leadership role in shaping the corporate governance of the Company (b) Assisting the Board in; - Evaluating the current composition and governance of the Board of Directors and its Committees - Determining the future requirements for the Board as well as its Committees and making recommendations to the Board for approval - Formulating the desired/preferred board skills, attributes and qualifications for selecting new directors - Conducting searches for prospective board members whose skills and attributes reflect the requirements those desired

- Evaluating the selection process of the prospective board members and making recommendation of the proposed nominees for election to the Board of Directors - Evaluating and recommending termination of membership of individual directors in accordance with the Boards corporate governance guidelines, for cause or for other appropriate reasons. - Developing and overseeing the execution of a formal Board member capacity building program, including such elements as orientation of new members, continuing education and training, and a mentoring program with senior Board members. 1.2 Responsibilities relating to the Committees of the Board Assisting the Board in; - Evaluating and making recommendations to the Board of Directors concerning the appointment of Directors to Board Committees. Selecting the Chairman for each of the Board Committees 1.2 Other responsibilities a. The Nomination and Corporate Governance Committee shall coordinate and approve Board and Committee meeting schedules. b. The Nomination and Corporate Governance Committee shall consider matters of corporate governance and to review, periodically, the corporate governance guidelines of the Company c. The Nomination and Corporate Governance Committee shall review and assess its performance on a periodic basis

E. MEETINGS: The Nomination and Corporate Governance Committee shall meet as often as required and at least four times each year. However, the Nomination and Corporate Governance Committee may establish its own schedule, which it will provide to the Board of Directors in advance. F. REPORTS: The Nomination and Corporate Governance Committee shall record its summaries of recommendations to the Board that will be incorporated as a

part of the minutes of the Board of Directors meeting at which those recommendations are presented. G. MINUTES: The Company Secretary will maintain minutes of the meetings of the Nomination Committee, which minutes will be filed with the minutes of the meetings of the Board of Directors

PRODUCTS:
Our alliances with leading organizations worldwide through our comprehensive alliance program ensure that we can offer our customers a choice of best-of-breed products and technologies. We have over 100 best-inclass alliances across products and services that include the following:

B2B integration WebMethods

Business intelligence & data warehousing IBM WebSphere DataStage Informatica Business Objects MicroStrategy Cognos Hyperion SAS Information Builders Netezza Enterprise application integration IBM SeeBeyond Tibco WebMethods Vitria Cyclone Commerce Blue Titan Cape Clear Amber Point Sonic Software Reactivity Sterling Commerce Magic Software GXS e-procurement Ariba

Customer relationship management Clarify Oracle SAP Siebel

Enterprise resource planning PeopleSoft Oracle SAP Siebel m-commerce

Portals & content management

Aether Systems

IBM BEA Oracle Plumtree ATG Documentum Interwoven FileNet Vignette FormScape Supply chain management Ariba i2 Technologies Oracle SAP

Product design services 3DSP ARM Artisan Embedded Linux Consortium Hyundai Metrowerks MS Embedded Developer's Forum Symbian Texas Instruments TSMC UMC Technology infrastructure services Cisco Computer Associates Nortel Sun Microsystems

Telecom service providers Axiom Cape Technologies Concept Wave Cramer HP Infovista Metasolv Oblicore Openet Subex Web services BEA Microsoft .Net

Web security Blockade Borland Critical Path IBM RSA Knowledge management Fast Search & Transfer Autonomy Verity

Manufacturing
Process Manufacturing: OM Partners Discrete Manufacturing: Selectia

Innovation is Wipro - Wipro is Innovation is our statement of purpose. The challenge this pursuit presents to us every day is how does one make Innovation Purposeful, ingrained and Deliberate in our organization. We recognize and nurture innovative solutions as part of our Wipro values. We prioritize focus and resources guided by this value. The Wipro way of Innovation is really about this deliberate sustained innovation. Our purpose of Innovation is to create higher value for our customers. This continuous thought led us to foresee the benefit of partnering with technology companies to bring value to our customers. Combining these relationships with our strong R&D talent led to the idea of Lab on Hire and subsequently to offshore development centers which made offshore outsourcing truly mainstream. Pushing this idea a little further helped us conceptualize the remote infrastructure service model, branded as global command center or GCC to manage the customers IT infrastructure. Today, we serve our customers with a wide spectrum of services fuelled by the power of innovation

QUALITY:
The maturity of our quality processes takes offshore engagements to another level, ensuring that our customers benefit from: 30-40% lower Total Cost of Ownership 20-30% higher productivity On-time deliveries (93% projects completed on time) Lower field defect rates (67% lower than industry average) Quality Leadership Our quality leadership is marked by a number of "firsts" SEI-CMM Level 5, World's first IT Services company, 1998

Six Sigma, World's first IT Services company, 1999 PCMM Level 5, World's first software company, 2001 CMMi Level 5 ver 1.1, Worlds first company, 2002 ISO 9001, TL 9000 The Focus Quality: The #1 objective for all employees 33% business parameters for the CEO relate to quality The Champions 15,000+ employees trained in Six Sigma methodologies 180+ certified Black Belts & 850+ live Six Sigma projects Over 200 PMI certified consultants

Some quick facts on Wipro Wipro becomes the first Indian IT Service Provider to be awarded Gold-Level Status in Microsofts Windows Embedded Partner Program 1st company outside the USA to receive IEEE award Wipro is the worlds largest independent R&D Services Provider Worlds 1st PCMM Level 5 software company. Worlds 1st IT Services Company to use Six Sigma The pioneers in applying Lean Manufacturing techniques to IT services Worlds first SEI CMM/CMMI Level 5 IT services company the first to get the BS15000 certification for its Global Command Center

 Functional RFID Enabled Concept Store and Global Data Synchronization Laboratory BS7799 and ISO 9000 certified among the top 3 offshore BPO service providers in the world Wipro is a strategic partner to five of the top ten most innovative companies in the world* (*Technology Review Innovation Index 2005) Over 40 industry facing Centers of Excellence 490+ clients - 53000 + employees 40+ development centers across globe

Fundamental Analysis of Infosys (Quantitative):

Ratio: EPS (rs.)

05-06 14.37

04-05 21.48

P/E ratio (rs.)

Dividend (rs.)

32.80 5 44.9

5 -

Book value (rs.)