MphasiS BFL Q1 Revenues Up 19%

31 July 2006: The MphasiS BFL Group Consolidated revenues for the quarter ended 30 June 2006 increased by 19% to Rs. 260.68 crores over the quarter ended 30 June 2005. During the same period net profit decreased to Rs 15.16 crores for the quarter ended 30 June 2006, compared to a net profit of Rs 33.70 crores in the quarter ended 30 June 2005. On a sequential quarter on quarter basis revenues have grown by 4.1%.

MphasiS recently announced that its Board had approved the merger of EDS Electronic Data Systems (India) Private Limited (EDS India - a wholly owned subsidiary of Electronic Data Systems Corporation) with MphasiS BFL Limited, subject to shareholder and regulatory approvals, with effect from 1 April 2006. EDS Corporation will be declaring its financial results later this week.

We are not in a position to provide the results of EDS India for the quarter ended 30 June 2006 at this stage. During the year ended 31 March 2006 EDS India recorded revenues of Rs 322.3 crores and net profits of Rs 42.2 crores. The financials of the two companies can be consolidated only after the necessary shareholder and regulatory approvals are received.

Revenues in the IT Services business have increased from Rs 147.93 crores in the quarter ended 30 June 2005 to Rs 182.77 crores in the current quarter a growth of almost 24%. This has been somewhat offset by the BPO business where the revenue growth has been somewhat subdued at 8.6 % to Rs. 77.91 crores compared to the same quarter last year.

Revenue growth in IT Services has been 6% on a sequential quarter on quarter basis.

During the quarter Electronic Data Systems Corporation (EDS) made a successful open offer for 83 million shares of the Company and is now the majority shareholder of MphasiS.

Commenting on the results Mr Jerry Rao, CEO MphasiS, said "This has been a challenging quarter for us with cost increases from salary hikes eroding our margins. This was aggravated by slow-downs at the front-end due to the long process around the open offer. We are, however, positive about the Company's outlook especially given the fact that we are now part of the larger EDS Group and expect the benefits of the alignment to start flowing through soon. We have also invested in scale and capacity to cater to the increased demand that we expect will flow through in the coming months."

During the quarter the Group added twelve clients, ten in the IT and two in the BPO businesses. These include a leading provider of business roles automation solutions, a leading hospital chain in the Asia -Pacific region, a leading investment bank in the middle-east, a global leader in healthcare equipment and a leading provider of network & enterprise security systems in IT services, and a global bio-pharmaceutical company in BPO.

The Group headcount was 11,234 as at 30 June 2006. While the IT Services business added 137 people during the quarter the headcount in the BPO business reduced by 317. Cash balances at 30 June 2005 stood at Rs. 115.69 crores.