"Allied Digital Services Limited Conference Call April 27, 2010

MODERATORS: MR. ATUL THAKKAR MR. NITIN SHAH MR. AJAY AGARWAL MR. BIMAL RAJ MR. BASIT SHEIKH MS. VIDHI DESAI

Page 1 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Moderator:

Ladies and gentlemen, good morning and welcome to the Allied Digital Q4 FY 2010 earnings conference call hosted by Anand Rathi Shares and Stockbrokers. As a reminder, for the duration of this conference all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions at the end of todays presentation. If you should need assistance during the conference call, please signal an operator by pressing * and 0 on your touchtone phone. Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Atul Thakkar from Anand Rathi. Thank you and over to you Sir.

Atul Thakkar:

Good morning everyone. First of all I would like to congratulate the entire team of Allied Digital for a very good set of numbers for the entire year of FY 2010 as well as the fourth quarter of FY 2010. Without wasting much time, we have with us the top management of Allied Digital, Mr. Nitin Shah who is the Chairman and Managing Director, Mr. Bimal Raj, CEO, and Executive Director Mr. Prakash Shah, Mr. Ajay Agarwal and Mr. Basit Sheikh. Without wasting any more time, I would like to hand over the floor to the management team and Vidhi, the corporate communication head will take over from here.

Vidhi Desai:

Thanks everyone for joining us. I will just give a brief overview of the way the call is going to be managed. We will start first with our Chairman, Mr. Nitin Shah and then it will be Bimal Raj who will be joining us from USA who is the CEO & Executive Director and after that of course we will open the floor to you guys for questions. I think we could start with Mr. Shah.

Nitin Shah:

Good morning friends. It gives me great pleasure to have you all at the earning call for the fourth quarter and full year FY 2010 results today. I hope all of you are in receipt of the results that we declared yesterday. In case there are instances where we have missed mailing the results to people I would urge you to get in touch with Vidhi Desai and she will do the needful. Let me set a broad agenda for the discussion. I will take you through the key financials for the fiscal 2010 and the state of the remote infrastructure management space after which Bimal will talk about the operational aspect of the business. We will then proceed to a question and answer session where we have members from the management team who will answer your queries if any. Fiscal 2010 was a challenging year for the IT industry. The IT industry was hard hit by the global recession and many firms had to endure a substantial reduction in their topline and margins as several large projects in the pipeline was scaled back and budget drastically reduced for outsourced services. Against this backdrop, Allied managed to post strong numbers for the year gone past. Our revenue on a consolidated full-year basis was Rs.698 Crores, a growth of 26% on year-on-year basis and services contributed 56% on this while the rest came from solutions. Interesting thing out here about the EBITDA margin at 20.4% showed an uptake of 210 basis point compared to the last fiscal. I would like to highlight that the quarter witnessed the fourth consecutive quarterly increase in margin from 17.7 last year this quarter to 18.8% of EBITDA margins to 20.3 next quarter, Q3 20.8 and Q4 21.3 and hence you can see the gradual increase in EBITDA margin growth and we are excited by this margin resilience and our focus would be to further increase this level by focusing on automated managed services using advanced tools and technologies. At a net profit level, we registered an income in margins of 38% to 106 Crores on yearly basis and EPS for the fiscal stood at Rs.26.1 as against Rs.21.8 last year for a face value of Rs.5 per share.

Page 2 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Our case and case equivalents stood at Rs.215 Crores at the end of the last quarter and this includes the money raised about 231 Crores through the successful QIP offering. The order book position looks very strong and solution rupees 110 Crores to be executed in about 90-120 days while in the services side we have already booked about 434 Crores to be executed in the next 12 months. Revenue from EPGS for this quarter was approximately about $11 bn, another quarter of strong performance from our US subsidiary. The financial of the quarter ended March 31, 2010 has been enclosed in the investment presentation as well as in the financials sent in the press release. I would like to spend a few moments in the RIM space and Allieds positioning within the space before I make Bimal take you through the official issues. We truly believe that RIM will be the next big opportunity in the IT outsourcing space. The factors that have propelled RIM to the forefront of this we have include evaluation in technology and architecture (05:18). Customer demand patterns and shift in customer demand and development in the offshore service delivery methodology. To capture this RIM opportunity there needs to be a paradigm shift in the way the traditional outsourcing companies have operated till now. We believe that the focus will shift from the plain project management capabilities as in case of ADM and BPO companies now to business service management over an integrated service delivery framework which Allied has pioneered and continues to build on. Allied has also taken the lead in Cloud Computing arena this fiscal with the launch of Cloud Computing management and security services for enterprises. The companys Cloud Management services would help large enterprise and hosting service provider to easily deploy and manage business critical application on the Cloud with a new level of automation, control, profitability and security. I will now request Bimal to talk a bit about the operational aspect after which we will throw open the floor to questions and answers. Thanks. Bimal Raj: Mr. Shah said that we have been trying to put our focus entirely on the remote infrastructure management space and what we have been seeing in the last one year of our operations in US market as well as in the Indian market as in increasing traction that is building from customers in towards looking at an automated remote management (6:58) remote management model and this model we have been able to successfully convert most of our existing customers in to the remote management model, where the customers here who were in to the traditional infrastructure management services from our side and also the En Pointe global service customers who were in the lower end, traditional onsite kind of infrastructure management services, we were able to successfully move most of those customers in to the automated remote management model actually. What we also did in the last one year was that with the visibility of the scale that we were getting, we looked at augmenting our management bandwidth and we were able to successfully attract experienced talents from larger competition and peers actually. We had people in senior level at both service delivery and business development side, people with experience joining us from organizations like EDS, IBM Global Services, and Wipro etc. It has been a very interesting year of growth and the challenges in terms of looking at scale of delivery and I think what we have done in the past year is that we have pushed towards moving our customers in to the Remote Management Model and also look at strategically strengthening our management strength to handle the scale that we are seeing visibility on. With this I would request Vidhi that we should have this more interactive with questions and answers. Atul.

Page 3 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Moderator:

Ladies and gentlemen. We will now begin with a question and answer session. At this time, anyone who has a question may press * and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. Anyone who has a question may press * and 1 at this time. The first question is from the line of Rishi Maheshwari from Enam Asset Management. Please go ahead.

Rishi Maheshwari:

Good Morning and Good Evening to Bimal. Congratulations on a good set of numbers. The first question is largely to Bimal on what is happening over there because we are still not looking at margin improvement over there. Still, when I bifurcate the consolidate standalone IMS profits; I still see that the margins have still not managed to shape up over there. If you can give us a clear picture and when do we actually look at margins and how do you actually report this, does any of the nonpoint revenue is included in the standalone profits?

Bimal Raj:

See from an overall contract standpoint what we have done is that we acquired the company En Pointe they had revenue of around $30 million, which had a mix of lower ending standalone infrastructure management services as well as on-site model based services actually. We have been able to successfully convert these customers mostly into the remote management model except a few who were more in terms of the government, the quasi government kind of space actually. Even there we had certain amount of success in certain customers but predominantly we moved them into the remote management model and while moving this some of the customers were contracted directly into Allied Digital by either the preference of the customer themselves or also in view of the tax benefits that we had in the STPI model currently in terms of directly contracting them. In spite of that we were able to which actually would have meant that 30 million in En Pointe standalone would have actually gone down a bit but we were able to, actually all the new customers that we added on, we were able to add on there and grow that $30 million across to a $44 million revenue, so from last year to this year if you look at there have been changes in the contracts, some of the contracts have been moved to Allied Digital directly and also the change in model would have meant in certain cases, not in all, but in some of the cases, a little price benefit being passed on to the customer also, but that is largely over in the sense that the existing customer base the old pricing model that En Pointe had that I think whatever changes could be done in that in terms of changing to the new model that has already been done actually over the course of the last year. And the current customers that we are adding on are completely on to the remote management model. So what you would see is basically a shift in terms of some of the customers orders directly into Allied Digital and also in spite of that the revenues growing there.

Rishi Maheshwari:

So how much of the order book, that you spoke about in services, I presume you spoke about 434 Crores in 12 months in services. How much of that comes from En Pointe?

Bimal Raj:

At the current levels on the order book it is somewhere close to around 51 million which is coming in from there.

Page 4 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Rishi Maheshwari:

If you could also update on what is happening on the Lenovo and the IBM Global Services? As Lenovo revenue streams coming up in this quarter and how much was it and what is happening on the IBM Global Services deal?

Bimal Raj:

Rishi, we dont wish to start a trend in terms of disclosing customer wise numbers but to tell you very clearly we have already started on boarding customers from Lenovo side. Though there was a pause somewhere during the mid of January to somewhere close to end of February in terms of roll outs because of the Window 7 launch that came in which enterprises wanted to test their applications on Window 7 and if you are aware there were some issues in terms of Window 7 not supporting some of the old XP based applications actually which they have overcome by the end of February and by mid March the rollouts have again gone back in to normal actually, so the Lenovo traction is building up. We are having good contract additions happening there and as we go in, I think the Window 7 end of life of support for XP would act as an accelerator because, Microsoft has announced that July is the end of support of XP, which today the whole PC business group all the PC manufacturers are seeing it as a trend in terms of sense of acceleration coming into enterprises to move to a new or refresh for Windows 7. This will only accelerate the rollout pace and we have internally actually geared up for it in terms of expanding our delivery capacity and we are augmenting strengths there in terms of delivery.

Rishi Maheshwari:

Thanks. Just couple of bookkeeping, what were the debtor days at the end of FY10 and CapEx at the end of this year and next year plans?

Ajay Agarwal:

The receivers position as on March 31, 2010 stands on a consolidated basis around 140 days against 149 days, which we have recorded last year.

Rishi Maheshwari: Ajay Agarwal:

Right and the CapEx? The CapEx last year we have done close to 45 Crores and in the current year on our data center as well our extension plan we are planning to put another 50 Crores.

Rishi Maheshwari: Ajay Agarwal: Rishi Maheshwari: Moderator:

What would be your tax rate in FY 2011? FY 2011 tax rate will be anything close to 20% to 21%. Thanks so much sir and all the best to the management team. Thank you. The next question is from the line of Nikunj Doshi from Bay Capital. Please go ahead.

Nikunj Doshi:

Congrats on decent set of numbers as well as announcing results earlier in the time period. Just wanted to know the services order book of 434 Crores what does it signify? What is the time period for execution and like what exactly it means?

Bimal Raj:

These are executable orders for next 12 months. This is a 12-month execution order value for the next 12 months that have been booked. However most of these contracts are of three years and

Page 5 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

four years nature, that would be a much larger number for three-year period that the order book possession is currently but since our business nature in terms of the additions of contracts and it is in the growth phase we have been like from last year declaring only the 12-month period value actually. So this is to explain it simpler this number would be executable over the next period of next twelve months in this fiscal year rather. Nikunj Doshi: As far as cash in concerned I think Nithin Bhai mentioned about 215 Crores of cash in the balance sheet and would raise 230 odd Crores. So balance would have definitely gone towards funding of the operations in CapEx. What is the plan with the cash that we have because European acquisition till date we have not done, any plans on that? Bimal Raj: Two things, I mean, one is the additional cash, I mean if you look at it is for the CapEx and the data centers that we have outlaid in our QIP intent for deployment in the QIP proceeds. The European acquisition I think we had stated to everybody also that we have been pursuing two targets actually, one of them recently we had to give up pursuing the target basically because of certain reasons that the promoter held around 85% of the overall company and wanted an exit on day one which was not giving us comfort in terms of the continuity there. The other one we are still doing the diligence phase actually, since they have presence in places like Sweden and Ireland and things like that we are going through an extra careful diligence in terms of employment issues and employment laws and things like that, however we have not concluded anything there but I think we are in a much advanced stage with them. Nikunj Doshi: And this UID project, are we there in the bidding process and are we there looking for any business? Nitin Shah: Yes, UID project you have seen that, the first propagated (17:35) had come for in terms of application development, but there would be more tenders, which will be coming in terms of, managed services, in terms of systems integration, in terms of capturing biometric images, these are the areas that we would be interested in and definitely we will also be in to the fray. Nikunj Doshi: And just one more question, Bimal mentioned about beefing up of the team, could you just name a few guys who are senior in the ranks that you have recruited during the year? Bimal Raj: Yes we have Mr. Paresh Shah, who was the Chief Infrastructure Management Solution Architecting Team in Wipro. He has joined as the Head of Technology. We have Mr. Sanjeev Patni who had background from companies like EDS, Amdocs and Patni close to around 20 years in the business of infrastructure management and the traditional model of remote infrastructure management and areas like that. He has joined as Vice President for Service Delivery and we also have Mr. Irfan Bazir Shah from IBM Global Services who is joining us for our business development. These are the few of them and we also had few additions in the US from competitors like CompuCom and Wipro and others. We had Jennifer Warren. She is from CompuCom and she also headed the business development activities for Motorolas infrastructure service business for quite sometime. We also had a couple of people like John and Gregg and others who joined us from various organizations like Wipro, Cognizant, and others

Page 6 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

actually in the US. In the US, the additions were predominantly around the business development area, where we could see significant strength in terms of leveraging business relationships actually and in India the major area was thrust upon are in terms of beefing up the delivery capabilities and also in terms of increasing the technology depth and coverage. Nikunj Doshi: I just wanted to know is there any other kind of Lenovo kind of opportunities that we are pursuing which can change the face of the company going forward? Bimal Raj: We have a few of them in the anvil, where we are at the contractual stage or just passed the contractual stage currently in terms of the strategic alliances. One of them have been with our large system integration organization, which covers predominantly the East Coast of US, a company called Presidio, which is giving us extra coverage into various verticals that En Pointe Global was not present earlier and also into the East Coast, which was not a fully covered area by En Pointe Global, so this give us a geographic spread and reach into the East Coast as well as other complementary verticals in the market, two is, we also had a couple of other manufacturers, at this point in time we are not in a position to disclose their names actually where we already have a contractual signup done for a similar model as in Lenovo. We also have a complementary strategic alliance stuck with a very large remote voice management company, wherein we would add to their strength in terms of getting deliverables across for data center management as well as network management, so these have been a few strategic alliances which we have stuck to get a scale which is to scale out compared to the direct reach model actually. Nikunj Doshi: Bimal Raj: Moderator: Okay. Thank you very much I will come back for more questions. Thanks. Thank you. The next question is from the line of Grishma Shah from Envision Capital. Please go ahead. Grishma Shah: I just wanted to know why would the tax rate go up from around 16% this year to around 21% next year? Ajay Agarwal: The reason is, in last two years we had been getting depreciation benefit due to our CapEx program. Since IT equipment has high depreciation rate in the initial year, so that benefit will erode going forward and due to that our taxation increased from 17-18% to 20-22%. Grishma Shah: No, but then you are doing CapEx now 45 Crores this year, next year you will do around 50 crores CapEx. Ajay Agarwal: Bimal Raj: Yes, even though in that scenario, the taxation will increase to 21%. Predominantly, the CapEx may not be overall in terms of high-depreciated IT assets it might be more in to other areas of asset increases actually.

Page 7 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Grishma Shah:

Okay. The other thing is that since you highlighted that you are adding or you are building up a team with so many people give us a sense of what is the wage hike that you are expecting going into next year.

Bimal Raj:

I will answer that the wage hike might be definitely a certain percentage, but it is overall insignificant compared to our overall cost model, if you look at our cost model, our people is not a very significant portion of our costing actually, so even the wage hike can link with the market may not significantly make a major change actually. Because our cost model predominantly is technology leveraged, it is licensing and technology, which is our major cost and then the people cost actually and it is not a linear model in terms of people and these additions that we talked about are few in nature in certain strategic functions, whereas on the delivery side the actual end delivery technicians that we needed the increase is minimal and there the wage patterns have not significantly changed compared to the kind of skills that were required for body shopping industry.

Grishma Shah:

So you at least expect a 10% to 11% kind of a year-on-year absolute price increase in your employee cost.

Bimal Raj: Grishma Shah: Bimal Raj: Grishma Shah: Bimal Raj:

Overall wage. Overall everything put together. Definitely, this will be a mix in terms of wage hike as well as in terms of addition in new people. So, what is the strength that you are going to add this year? At the current visibility of revenues, we would be adding around 10% to 11% in terms of people for delivery.

Grishma Shah: Bimal Raj: Grishma Shah:

I mean can I know the base. The base is around 2700 today. See we are at around 115 Crores in terms of order book in the solution business as of Q3 and then we moved to around 110 Crores, so is it that we are going to maintain this kind of run rate for the solution business?

Bimal Raj:

No madam, the solution run rate is an order executable over a period of anywhere between 90 days to 120 days, so the figure keeps fluctuating from a month-to-month basis, the order book rate definitely, that overall business would grow by around 25% to 26% this year in spite of a significant reduction in terms of the hardware, which we are continuously moving across to procurement assistance model where we are letting the customers buy directly from the vendors, so in spite of the absolute hardware numbers going down, we still would see close to 25% increase in revenues there.

Page 8 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Grishma Shah: Bimal Raj: Grishma Shah: Moderator: Anand Bhushan: Bimal Raj:

Okay. Any guidance that you have given for the next year? We yet have not. Okay. Fine. Thank you. Thank you. The next question is from the line of Anand Bhushan from IFA. Please go ahead. Will you expect this margin or services to continue going forward? This particular business that we are talking about in terms of the remote infrastructure management model on a technology leveraged area we have still not seen any major margin pressures or pricing pressures currently because I think from a curve perspective, we are slightly ahead in the curve in terms of our overall technology leverage business model compared to competition, which is still predominantly on a people based model, so our pricing today into the market is more from a people based model versus our technology model. We have a significant saving to show to the customer. We do not see pricing pressure coming in from a year to year and a half, post a year-and-a-half with all the major M&A activities that we have seen in the market place, which larger players are trying to do would bring them maybe into a position of delivery capability. Even at that stage I do not think with their operational cost scale and other relative business margin pressures that they have that we would get in to a low pricing pressure scenario in this business, so at least for around a year-and-a-half.

Anand Bhushan: Bimal Raj: Nitin Shah: Anand Bhushan:

Okay. You are expecting the pricing will remain stable? Yeah, pricing and the margins. I think margin will remains stable if you really ask for. Because margin constitutes pricing and volume growth both right? So you were taking about the margin.

Basit Sheikh: Anand Bhushan:

Yes Okay. If we bifurcate the standalone result and consolidated results, we can see there is a difference between 60 to 65 Cores of revenue and on that the net profit is coming out to be 1 Crore or 2 Crores, I guess this is all coming from En Pointe, right?

Basit Sheikh: Anand Bhushan:

Yes. So after one year or one-and-a-half years of integration process, we still are not anywhere close to the net profit margin sense with Allied Digital, so when do you expect En Pointe Global Services will align more towards in terms of margins towards Allied Digital?

Page 9 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Bimal Raj:

I think if you read it from a few areas in terms of the results today, what we have done is that basically we tried to move the customers gradually over a period of the last one year, year-toyear, year and two months actually because effectively that is the timeframe that we had in terms of starting to move people. Initially, we had duel costs in both the ends in terms of charged back to En Pointe Global and then we started, today if you look at it there has been a consistent reduction in the overall staffing cost. That has basically happened because of the work that we have moved from US to India, and now we would with all the new addition that are coming in and the scale that we are achieving on the remote management model you would see consistently the margin improvement happening. Let me, Bimal head out here, because last year this quarter we had 17.7 EBITDA in terms of percentage, which we have grown it up to 18.8% in Q1 this year to 20.3 Q2 this year, so 20.8 in Q3 and now to 21.3 is overall about 360 basis points we have increased the margin from what it was last year to this quarter this year. And it clearly indicates that we have been constantly looking out for the automation and bring in those processes into India to improve upon the margins.

Anand Bhushan: Moderator: Kris Yap:

Okay, I got it. Thanks a lot. Thank you. The next question is from the line of Kris Yap from Atlantis. Please go ahead. Hi, my first question would be on your revenue break down. What is it going to be in terms of services and solutions for the next year as what kind of EBITDA guidance do you have for the post business? Thank you.

Bimal Raj:

So this year our breakup from a consolidated perspective is overall services revenue contributed to around 56% of our revenues. And going by the current financial year the mix would be in terms of the services revenue growing from here. Our overall, Ajay would you be able to comment on the overall effect on the EBITDA with those change that would happen in the year?

Kris Yap:

So on the revenue you have continued to be a 60:40 between your services and the solutions, right on the FY'11, would be still the same?

Bimal Raj: Kris Yap: Bimal Raj: Kris Yap: Ajay Agarwal:

We would be around instead of 56 we would be at around 60 plus kind of a percentage level. 60 plus for services and may be 30 plus for solution? Right. Okay, then what about the EBITDA? EBITDA level for the current year we have achieved an EBITDA level of 21.3%, we expect to definitely do better bigger than this particular level with increase in the service revenue.

Page 10 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Bimal Raj:

And we have not actually come out with the official guidance in terms of the overall matrix, which we would soon be doing.

Kris Yap:

Sure, Sir, one last question will be on your exchange rate because you are doing more and more business overseas right? What is your policy for exchange rate?

Ajay Agarwal:

If you will see that out of our total revenue of 700 Crores close to 250 Crores came from the export business and out of this 250 Crores close to 200 Crores is coming from the US operation. From the US operation all the income as well expenditure in the US dollar, so ultimately on the profit part we have taken a hit(32:15) or getting gain in terms of the exchange fluctuation. As far as the India revenue is concerned on the export front it is close to $11 million. So it is not a significant revenue in the overall revenue of the company.

Bimal Raj: Ajay Agarwal: Kris Yap: Moderator:

But going forward Ajay? Going forward also the US revenue will be dominant in the overall revenue. Okay thank you. Thank you. The next question is from the line of Sanjay Shah from KSA Shares and Securities. Please go ahead.

Sanjay Shah:

Good morning to you all, and good evening to Bimal. Sir, my many questions have been replied, but few are there, Sir any progress in capacity augmentation within India for the delivery services and also for setting up of disaster center?

Ajay Agarwal:

Let me tell you first of all we have increased the delivery capacity which was 250 into our service delivery center in Arkansas (ph)33:28 we have increased by another 400 seaters, which will be made available from June 1 onwards and hence we will have now 650 seats in our Arkansas (ph)33:41 put in together and as you might have seen that we have purchased the entire building at Mahape there will be a lot of centralized service delivery will be taking place out there. So definitely you will see a lot of augmentation in terms of our delivery capacity this year.

Sanjay Shah: Ajay Agarwal: Sanjay Shah: Ajay Agarwal:

What are our disaster centers? We do have disaster already there in our Bangalore ITPL? Are we increasing the centers? We are having our own disaster recovery in our Bangalore NOC and Bangalore NOC disaster is there in our Mumbai NOC, but we might look out for the tertiary disaster recovery in outside this country.

Sanjay Shah:

And in the current year?

Page 11 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Nitin Shah:

Yes, we are talking to another country and we probably might convert it. Not as a cost center, but a profit center, so we are in talk with that country where we probably could start a complete disaster recovery center in this country for outside country disaster recovery.

Sanjay Shah:

Nitin Bhai, you told regarding Cloud Computing, can you throw us some light of what progress we are doing on that front?

Nitin Shah: Bimal Raj:

Bimal can you clarify on Cloud Computing? The model that we have had is that we are not directly a Cloud Computing Solution provider like we do not intend to be an application provider on the Cloud like www.Salesforce.com. What we have created is that if you look at the Cloud Computing area the biggest objection or the biggest resistance to that model has been around is around its stability and security actually. We are seeing a lot of application providers as well as service providers who intent to move applications or services made available on the Cloud. What we have created is from our NOC and SOC offerings combined together a complete infrastructure management and security management solution, which should give the customer confidence in terms of their data being on the Cloud application service provider, so the solution is predominantly aimed at looking at Cloud Computing application service providers to have a secured and stable environment and managing their environment to be more secure which could help them in terms of customer acquisition and b) in terms of large enterprises who would wish to move some of their applications into a private Cloud scenario, we provide management solution and the security solution there. So this basically has meant that a lot of hosting service providers or lot of application providers who intent moving on to the Cloud would be able to from Day 1 ensure the customer about the data security as well as their data stability actually.

Sanjay Shah:

Sir, that is one of the vertical of the Cloud Computing, am I right? That is from a security angle, but what about the operational angle?

Bimal Raj:

We do not intent to see one of the areas we are doing definitely is the private computing, private Cloud model actually. Like we have a customer called AIP, American Industrial Partners, we have been able to move their entire application into a private Cloud model between their various multiple organizations that they had in the group. So Cloud migration and management has been the offering that we have. So we would not be having a www.salesforce.com or one of those applications on the Cloud model. That would not be our intent at all.

Sanjay Shah:

Bimal could we be able to secure any large deal size around 100 to 200 Crores. What we have been talking in last quarter?

Bimal Raj:

So this AIP deal that I just referred to is a $6 million per annum contract actually, so that is the size of contract that we have been able to get on to this model actually.

Nitin Shah:

If we look at a ticket size for three years it is going to be more than 100 Crores.

Page 12 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Sanjay Shah:

Right, I got it. Now any improvement in debtor cycle because we have not seen in the last quarter it is still 140 days?

Ajay Agarwal:

As of today also the debtor's position should be 140 days but now it has improved from 149 days last year to 140 days with increase in the service revenue coming in the overall revenue of the company debtors days will definitely improve further.

Sanjay Shah:

Fine, Sir, can you throw us some light on our subsidiaries, which are still not making much of the profit, how do you see the future of Digicom?

Nitin Shah:

One, we have Digicom, Digicom was a very small revenue base when we acquired them, strategically we repositioned them and redid their capabilities in terms of addressing larger technology, higher end of the technology actually. So from a baseline retired services on the client equipment we have moved them across to having capabilities to move right up to the base technology areas in terms of both the network equipment and servers and things like that. We had some strategic wins for them that came in as in terms of support for Dell equipment and for various other ODM manufacturers actually and towards the end of last year that is like in February we were able to strike a joint venture with Four Digicom(38:57) (ph) for a company called Tes Amm in Singapore. Tes Amm is one of the world's top three players in terms of ewaste management and e-recycling actually. So one of the reverse integration for that was an opportunity to create captive repair capacities for very large manufacturers for their internal refurbishment platforms. So Digicom would have a significant growth, I would say in this coming financial year. As far an En Pointe is concerned like we explained several times that earlier also in the call that we have moved the customer from traditional model to successfully into the newer model actually most of the customer and with all the new strategic alliances and the kind of pipeline growth that we are seeing we definitely see a significant I think this would be the first year when we are moving from a transformation stage to a growth stage actually. So we would definitely a growth stage, a significant growth in En Pointe also.

Sanjay Shah: Moderator:

Got you very well. Thank you and good luck to you all. Thank you. The next question is from the line of Ashwini Agarwal from Demeter Advisors. Please go ahead.

Ashwini Agarwal:

Hi, I had a quick question, if you look at the consolidated and standalone numbers the difference is about 226 Crores, how much of that is Digicom?

Ajay Agarwal: Ashwini Agarwal: Ajay Agarwal: Ashwini Agarwal:

Digicom is close to 20 Crores. Okay and the balance 206 is all En Pointe Global Services? Yes. One more question I had the En Pointe Global Services has a 20% ownership by En Pointe Global the parent?

Page 13 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Ajay Agarwal: Ashwini Agarwal:

19.5% precisely. So my question is that going ahead if you are transferring all the clients to Allied Digital directly and you are capturing most of the earnings in Allied Digital because they are more tax efficient, how do you compensate the minority shareholders in En Pointe because En Pointe Global Services as it stands in the US does not make any money?

Bimal Raj:

Let me explain to you this in a very different way. See the 19.5% that we had on En Pointe we still continue to hold was basically to get their interest into the organization for helping us to grow and have continuity from a continuity standpoint as well as from helping us to leverage on their client base. So the predominant interest even today and the way they compensated is that when we move into this total transformation deals the account control that we have helps even En Pointe Technologies to leverage for a lot of product sales into those customers. So there is a huge indirect benefit which they have been very, very happy about in terms of even on a downturn economy and when hardware their traditional, their competition as on the wars and the product resellers have been taking major heads they actually have grown this year piggybacking on the overall transformation models. To sight a few there are the customers we went in with the overall remote management model, we converted them into the total infrastructure management model actually and the kind of control that it gave the customer for pushing the licenses and things like that they were able to increase their revenues and their Microsoft licensing business and also in virtualization and VMWare licensing businesses and a tonnes of hardware pressures that they could participate with their customer. So they could go in as a unified body with our services model keeping the customer to be in terms of total control and leverage on that information cycle to actually upsell a lot of hardware into those customers so they have been indirectly significantly benefited in a way that they have grown in the last year when most hardware vendors saw a degrowth or a negative scenario for themselves. En Pointe Technologies was able to grow their business at the product sales significantly in the last financial year.

Ashwini Agarwal:

Sir, they are not so worried about the profitability of En Pointe Global Services, the US Company?

Bimal Raj:

Getting them to be there at 19.5 was more strategic for us in terms of kind of having them for a longer time for sustaining their interest and also leverage in terms of unified and the reason why we did not change the name of En Pointe Global at that point in time to get the unified space in the market actually and leverage on their customer base actually.

Ashwini Agarwal:

The other question I had was the solutions business grew only about 10% last year but you are saying that going ahead 25% growth is possible and from what I have understood is that last years growth was probably tough a) because of the first half being a little rough patch, but is there any other reason why solutions growth will be much faster going ahead as compared to fiscal 2010?

Bimal Raj:

So last year was the first complete year, in which we try to transform that business with minus the hardware kind of a model with the customers and also as you rightly said the first half of last

Page 14 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

year saw more revenues coming in from integration opportunities than actually technology refresh opportunities actually, like we were helping customers revenue actually grew from projects which helped customers in terms of consolidating their servers or storage virtualizing their current environment to increase capacities within the system in itself, but this year as you are all aware that there is a huge amount of technology spend coming in terms of refresh and new projects actually. So added with that the positioning that we got in the last one one and a half years in terms of an access to customers in terms of our integration strength is accelerating this growth along with some of the large infrastructure projects that are happening in the country. Ashwini Agarwal: What was the name of the US Company with which Digicom is pursuing this new contract, sorry Singapore base company? Bimal Raj: Ashwini Agarwal: Yes the companies name is Tes Amm. Okay and last question is the other income of 3.84 Crores is that basically the interest income or is there something else included in it? Ajay Agarwal: Interest and the dividend income is just from the mutual fund investment of the money, which you have raised and kept with mutual funds. Ashwini Agarwal: Ajay Agarwal: Ashwini Agarwal: Moderator: This essentially financial income? Yes. All right. Thank you so much and all the best. The next question is from the line of Rohit Gajare from UTI Portfolio Management. Please go ahead. Rohit Gajare: Good afternoon everybody. Sir, one question I have is what is the competitive scenario you mentioned a few minutes back that we are ahead of the competition in the types of services we offer. So can you perhaps evenly give this instances of how we are ahead of the competition what kind of services the competition that is the primarily Indian offshore vendors do within IMS just give some insight to that? Bimal Raj See if you look at the traditional infrastructure to the remote infrastructure management model that most service providers from India provide today has been predominantly lead by a geographic labour cost arbitrage actually so it is moving people remotely and managing the sites actually and there are others who have done some amount of technology leverage or process leverages actually. So there is a combination of some of them who are predominantly focused around people based delivery model that is the geographic cost arbitrage that we get. Then there are others who have some amount of technology leverage that they have done vis--vis or our model where we have predominantly technology leveraged as in terms of the automation levels in our remote management has a significant amount of delta over competition today. The automation scenarios are today that we are able to achieve something close to around a 74% to

Page 15 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

75% of most of our alerts or calls being raised in the system automatically being resolved automatically without any people intervention, which basically means that are some of the proprietary or I would not say proprietor some of the I-cable technology that we kind of integrated, the framework that we created in terms of doing automation, in terms of even call resolutions by leveraging on a knowledge base and using an auto resolve or engine is the basic differentiator in terms of our model where we have not seen too much of competition being competition readiness today and in terms of wherever we participated in terms of competitive scenarios our SLAs or the service levels for the level of automation we have been offering to the customer we have not seen competition responding to it at equivalent levels. Rohit Gajare: But let us say with a more automated solution, does it imply some pricing risk to our billing in anyway or do we have to keep our margins with the same billing? Bimal Raj: We will be able to keep our margins with the same billing or rather with volumes and scale and knowledge based improving in a strength, we would definitely see the scale of economy on the technology licensing and things like that combined with that, we would definitely see margin improvements. Rohit Gajare: Bimal Raj: Rohit Gajare: Bimal Raj: Sir, if could name me three competitors you have for projects that you have to beat to? From an automated management model or from an overall perspective? From an overall perspective? So in India, predominantly what the competition that we have been facing is with Wipro and to a certain extent that certain cases with HCL Technologies actually and we have had some good wins against these large players actually today. We had a very significant win in the infrastructure management phase in India with one of the big four consulting firms that you have today and some of the other larger manufacturing firms. In the US, we have had a mixed bag competition actually from a traditional very large players like I would say CSE, EDS, and others to some larger Indian players like there are been cases where we had competition from Wipro, HCL Technology, Infosys, iGate and others actually. Rohit Gajare: Okay. Let say if I talk about within the US market; from an automation perspective compared to the CSE or EDS, how are we placed? Bimal Raj: I would say that from a CSE perspective, we say that CSE on the data center side would be almost at a similar level of offering that they provide today. But with their cost model today and our cost delivery model today, we definitely have a cost advantage over them. None of the Indian service providers have been in competition we have not seen them providing similar automated models actually. We have had niche players they are in the US and some of the competitions like on network management or in security management or in specific cases of virtualization management, we have seen certain niche players in the market who have been delivering automated services at a similar level of automation actually, but we have not seen overall

Page 16 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

comprehensive enterprise level automation being provided other than some of the big biggies like CSE to a certain extent other European company called Getronics and others. Rohit Gajare: Ajay Agarwal: Rohit Gajare: Okay. Another finance question, how much is the debt on books? Way about 90 Crores. 90 Crores. So this basically is flattish on a year-on-year basis right? Last year was something 86 right? Last year was also 90, so, we maintained it? Okay, could you guys give me a flavour of what has been growth in the international business in dollar terms on a year-on-year basis and quarter-on-quarter basis sequentially on year-on-year? Can you give me what has been growth in the international business in dollar terms? Bimal Raj: Last year and this year, Ajay they want to know what is the international that is what he wants to know, dollar terms or whatever has been. Ajay Agarwal: Rohit Gajare: Ajay Agarwal: Rohit Gajare: Ajay Agarwal: Rohit Gajare: Ajay Agarwal: Rohit Gajare: Moderator: Dollar term was close to 25%. 25% dollar terms in international business on a year-on-year basis? Yes. Okay and sequentially? Sequentially, this last quarter or this quarter, the growth goes to 2.5% to 3%. 2.5% to 3%, okay and with the rupee appreciating this has led to a fallen On the rupee term, we have reduced by almost 2%. That is all from my side. Thank you very much. Thank you. Ladies and gentlemen due to time constraints we will take one last question from the line of Rishi Patel from Lloyd George Management. Please go ahead. Rishi Patel: Hi gentlemen I have just one question on the Lenovo deal. I want to know what is kind of live billable unit that we have on our system that Lenovo deal and what is pipeline looking like? Bimal Raj: Rishi, we will not be able to put both the numbers on record here, because it is an arrangement between Lenovo and us where it indirectly affects them in terms of their reporting also. Rishi Patel: Moderator: Okay, sure. No problem. Thanks. Thank you. I would know like to hand the floor back to the management for closing comments. Please go ahead.

Page 17 of 18

Allied Digital Services Ltd. 4Q FY10 Results Conference Call April 27, 2010

Nitin Shah:

Thanks gentlemen. We are very sorry this is the first time that I have across that there were so many questions and I really personally feel so sorry about that that we could not address every questions; however, we would definitely be available whenever you would like to talk to us or we like to have a personal meeting or you can send your queries to us. We will respond to you, but at this time, I am really sorry that we have to cut short on that and may be next time I will make sure we will have quite more time available with us for us to respond back to you and thanks for the kind hearing about our company and the interest, which has been shown to us. Thank you very much.

Moderator: Atul Thakkar:

Mr. Thakkar would like to speak any closing comments. I thank the management for spending time and giving an insight into the company. Hope to see the management again in next quarter around. Thank you Sir.

Moderator:

Thank you. Ladies and gentlemen on behalf of AnandRathi Shares & Stockbrokers that concludes this conference call. Thank you for joining us and you may now disconnect your lines

Page 18 of 18