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3i Infotech

Prepared by – Siddharth Saini

Brief Overview of the Company:

3i Infotech is a global Information Technology company which provides


technology solutions to over 500 customers in more than 50 countries across
5 continents, spanning a range of verticals - Banking, Insurance,
Manufacturing, Contracting, Retail & Distribution and Government.

3i Infotech offers a comprehensive range of software and IT solutions,


including packaged applications for the Banking, Financial Services &
Insurance (BFSI), Manufacturing, Contracting, and Retail & Distribution
industries. In addition, it offers a broad range of software services such as
Custom Software Development, IT Consulting, IS and IT Security Consulting,
Enterprise Application Integration (EAI), Managed IT Services, and specialized
services such as Product Re-engineering, Compliance Consultancy,
Application Rehabilitation and e-Governance, among others.

The Company has its Intellectual Property Rights (IPR) driven solutions for
Banking, Insurance, Mutual Fund and Capital Markets. The Company also
provides Business Process Outsourcing (BPO), Managed Services, Technology
Services, Workflow and Document Imaging, Business Intelligence and Data
Warehousing Services.

The Company has established its sound presence in the developed markets of
US and UK with about one-third of its total revenue coming from these
markets. It has its presence world wide, with its offices across 10 countries
and clients spread in more than 50 countries.

The Company's quality certifications include SEI CMMI Level 5 for Software
business and ISO 9001:2000 for Infrastructure Services and Business Process
Outsourcing (BPO) operations.

Business Solutions:

Solutions

• Insurance - Enterprise-wide solution for Life, Non-Life, Islamic (Takaful)


insurance businesses and Insurance Brokering Businesses
• Banking - Core Banking, Treasury, ALM, Risk Management, Factoring
and Loan Management solutions
• ERP - For Retail, Distribution, Manufacturing and Contracting
enterprises
• ERM - Customer Relationship Management (CRM), Supply Chain
Management (SCM), Partner Relationship Management (PRM) and
Vendor Relationship Management (VRM) Services
Services

• IT Consulting - Security Consulting, Digital Certification, IS Consulting


and System Integration
• Software Development - Bespoke development of conventional, web, e
& m commerce
• applications
• Managed Services - System Maintenance, Network Management, Data
Center, Disaster Recovery, Configuration and Operation

Products

• PREMIA - Insurance Management


• KASTLE - Secure Banking Solutions
• AMLOCK - Anti Money Laundering & Fraud Detection
• iBOSS - Integrated Broker Office Solutions Suite
• AWACS - Stock Exchange Surveillance
• MFund - Mutual Funds
• ORION - Enterprise Resource Planning (ERP)
• Xroadz - Enterprise Relationship Management (ERM)
• Armada - Fleet Management Solution
• Veda - Recruitment Automation Solution
• DataScan.Online - Document Management System

The Company continues to focus on technology related to the Banking and


Financial Services Industry (BFSI) segment. The Company has achieved
leadership in retail lending solutions, factoring solutions, end to end offerings
in claim processing and Life Insurance Solutions in Asia.
In Mutual Fund solutions, the Company is a leader in fund accounting and
investors servicing in Malaysia. The Company is also a leader in India in
providing Anti Money Laundering Solutions. The Company is gaining
leadership in e-governance services in India.

Major Customers:

The Company's list of customers worldwide includes Prudential Assurance,


Finansa, AIG, Emirates Bank, RAK Bank, Hong Leong Bank, SBI Factors,
Oriental Insurance Company Limited, National Health Insurance Fund,
Solidarity Islamic Insurance & Assurance Co., Comercial America Insurance
Company, National Takaful Insurance, Hirsch International Corporation,
Pidilite Industries, among others.

Executive Management

Hoshang Sinor, Chairman


V. Srinivasan, MD& CEO
Hariharan Padmanabhan, Managing Director
Amar Chintopanth, Executive Director & CFO
Anirudh Prabhakaran, Head - South Asia
Debneel Mukherjee, Head - Asia Pacific
Kalpesh Desai, Head - Europe, Middle East & Africa

Major Events in the company (M&A etc.):

3i Infotech acquired US-based J&B Software and its subsidiaries for $25.25
million (around Rs 100 crore) (Oct 15th, 2007). It would enable penetration
into the blue chip BFSI customer base in the US and enable taking J&B’s
payment processing solutions to global markets, including high growth Asian
markets. The acquisition will also provide 3i Infotech significant cross selling
opportunities. J&B Software is engaged in the business of providing software
products and services related to remittance processing in the US. It has an
operating margin of $3.8 million (EBITDA) and revenues of around $25
million.

3i Infotech Ltd acquired 26% stake in Taxsmile.com India Pvt. Ltd. on


September 11, 2007. 3i Infotech Ltd will acquire a majority stake over a
period.

3i Infotech acquired a 51% stake in HCCA Business Services Pvt Ltd on


August 29, 2007.

Financials:

− The Company’s revenue grew at a rate of 58% compared to its


previous year.
− Lower growth in costs as compared to the revenue resulted in
improvement in margins, both at
− the operating level and at the net level.
− Operating profits (EBITA) grew to Rs 1.585 million, a growth of 85%
compared to the previous
− year.
− The net profit grew to Rs 1,045 million, a growth of 81% compared to
last year
Revenue trends
Historical stock prices (Oct 06-Oct 07)

Sources of Revenue:

The Company derives its revenue from sale of software products and
services. This year also we witnessed a balanced growth between products
and services businesses. In the last five years, the company has de-risked its
business model by reducing its dependency on services business from 94% to
the current 49%. This de-risking has been made possible by working towards
the strategy of having a 50:50 mix between products and services.
Overall the geographical operating revenue mix in 2006-07 was broad based
and well distributed with India & other South Asian countries contributing
about 35%, North America 28%, and Middle East Asia and Africa about 21%
and the Far East region contributing about 10% of the revenues. The UK
geography contributed 6% of the revenue in 2006-07.

Competitors:

The major competitors are as below :

1. Geodesic Information Systems Ltd


2. Hinduja TMT Ltd
3. Infotech Enterprises Ltd
4. Nucleus Software Exports Ltd
5. Onward Technologies Ltd

Source:
http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ca
pId=9376063

Company Strategy:
To balance diversification with maintenance of growth by product acquisition
strategy. It has developed two pronged strategy for this:
1. To acquire products already launched and accepted in the market.
2. To add 3i-infotech driven value to them, to make them much stronger
offerings.

Strategic decisions taken


The Company has taken few strategic decisions that will contribute to its
growth significantly in coming years. These include
- Launch of PREMIA Insurance Broking Exchange (IBX), a first of its kind
subscription based
internet solution for Indian insurance industry
- Entry of the Company in the Mutual Funds vertical, both in the products and
services space
- Commencement of BPO operations for the Mutual Funds Industry
- Entry into UK market through acquisition and also making it its first
Insurance product sale in
that geography
- Tie up with Government of Karnataka’s e-Governance project
- Launch of Technology Center of Excellence together with Oracle
News about the company:
1. 3i Infotech Ltd. has been selected as the Service Centre Agency by the
State of Gujarat for setting up of Common Service Centers in Zone-III
(Rajkot region) and Zone IV (South Gujarat region). The Company is in
discussion with the State of Gujarat for finalization of Master Services
Agreement.
2. It has been selected by the Haryana State Government for the
establishment of e-Disha Ekal Seva Kendra Project. As a part of the
project, 3i Infotech will set up over 322 Citizen Service Centers (eDisha
Ekal Seva Kendras) in 7 districts. The centers will serve as a single
window service delivery channel for Government Services and will
greatly benefit the citizens of Haryana.
3. 3i Infotech will release a range of solutions for the Islamic financial
sector at Gitex.
The solutions and services provider will launch the new line, targeted
at financial service providers who operate Islamic compliant services,
along with a new business execution outsourcing service.

Awards and Recognitions

- Rated as one of the top 4 Indian software products companies (Source:


Dataquest, India)
- Ranked 2nd in the lending segment in 2006, by the UK based International
Banking System (IBS) (2006)
- Asia Insurance Review “Service Provider of the Year” Award (2005 and 2006)
- Frost & Sullivan Product Innovation Award for Insurance Solutions, (2006)
- Oracle "Top Revenue for FSI Industry FY06 Award" for ISV category in
Malaysia (2006)
- AMLOCK (Anti Money Laundering software solution) won the Hyderbad
Software Exporters
Association (HYSEA) Award for the “ Best Software Product of 2005-2006”
- IBM Best New ISV Partner Award (2006)
- Oracle Partner Excellence Independent Software Vendor Award (2004 and
2005)
- Winner of Dubai Quality Appreciation Program award (2005)

Summary - Take aways:


Going forward, the company is expected to deliver superior performance
backed by twin engines of products and services. This, it is believed, will be
powered by strong growth in the company's products business, as well as
renewed traction in the services business, following a few focused
acquisitions in both these spaces. In the software products space, the
insurance segment is expected to drive growth, while the ERP business is
expected to clock stable growth. Lower SG&A will also provide a further
margin boost. Major headwinds are in the form of high competition in the BFSI
products space and, also employee attrition and wage cost inflation, given
increasing competition for scarce talent in the industry.