February 2008, Quarter -1

1. February 2008, Quarter -1 private and confidential

2. the india proposition – select economic criteria • 4th largest economy in the world; 2nd largest GDP among the developing countries (based on purchasing power parity) • over the past 15 years, has been the second fastest growing economy in the world, after China, with an average annual growth rate exceeding 6.5% • displaced the US as the second-most favoured destination for foreign direct investment (FDI) in the world after China. (source: AT Kearney's FDI Confidence Index) key metrics • probably the most preferred country for future R&D investments, with slightly more than 40 percent of CEOs indicating they will likely make such investments over the next three years • most mature and well developed capital markets amongst developing countries • 3-4 years of unabated “bull-run” based on record corporate growth & earnings have provided Indian companies the necessary foundation for expansion with minimal leverage • modest inflation despite spiraling crude prices

3. the india proposition – availability of funds

4. the india proposition – availability of funds

5. the india proposition – the global indian: cross border acquisitions * list excludes the take-over of Arcelor by Mittal Steel (essentially Indian promoter and management team)

6. the india proposition – the global indian: cross border acquisitions

7. the india proposition – Telecom and Media, Entertainment & Publishing

8. the Indian telecom market • Indian mobile market to cross US$25 billion • According to Gartner, Cellular services market in India in 2011 is expected to be US$25.6billion. Total earnings of cellular services market in 2006 was US$8.95 billion and would reach US$25.617 billion by 2011 growing at a compounded annual growth rate (CAGR) of 18.4%. Cellular market penetration is also projected to increase from 12.7% in 2006 to 38.6% in 2011 • The overall penetration will primarily be driven by an increased focus on rural market. By 2011, Gartner expects 58% of the rural population and 95% of the urban population to be covered with mobile connections. It is indicating that there was still scope for reducing mobile tariff, although call rates have reduced to about 2.6 cents per minute, it remained high compared with fixed-line rates at 0.9 cents per minute • Rural market presents immense growth opportunities as mobile penetration was just 2%. Many firms are planning to tap this market by introducing handsets that would cost below Rs1,000

9. the Indian telecom market Current Statistics • The total number of telephone subscribers has reached 264 mn at the end of November 2007 of which 225 mn were mobile subscribers and 39 mn were fixed/landline subscribers. The overall tele-density improved further to 23% in November 2007 compared to 22% in October 2006. • The Average Revenue per User (ARPU) for the GSM, CDMA and broadband services segment were at Rs275, Rs173 and Rs200 respectively.

10. the Indian telecom market Wireless mobile segment • Wireless segment has yet again witnessed a feverish growth with the total subscriber base touching 225m in November 2007 compared with 143m in November 2006 and adding up 60.3m subscribers during Apr-Nov 2007 • Lower handset prices coupled with an increased urge to stay connected while on the move have been driving the growth in wireless segment • Wireless penetration currently stands at 20.4% (up 69bps MoM) • The wireless-to-fixed penetration is at ~495% and wireless-to-total penetration is at ~85.6% • Bharti, RCOM and Vodafone were major gainers in absolute terms on a MoM basis

11. the Indian telecom market GSM mobile segment • The GSM segment comprises 72% of the overall wireless market • The total number of subscribers in the metro region jumped by 41% to 54.1 mn during October November 2007 compared with same period of 2006 • Subscriber base in Circle A touched the 90 mn mark during October-November 2007, growing by 29% • Circle B registered a decline of 6% in subscriber base during October-November 2007 compared with same period of 2006 • Circle C has market share of just 14% in all India mobile users, with a subscriber base of 19.6 mn – this circle showed 80% growth during October-November 2007 compared with same period of 2006 • GSM service providers are rapidly enhancing coverage and reach of service, which is getting reflected in the healthy subscriber growth CDMA mobile segment • The CDMA market is witnessing stiff competition with players like Reliance Communications and Bharti Airtel losing ground to Tata Teleservices over a period of time • Revenue from call charges comprised 62% and rental charges 18% of the revenues of the CDMA players

12. the Indian telecom market

13. the Indian telecom market Wire-line segment • The wire-line subscriber base declined yet again to 39.31 mn in November 2007 compared with 39.41 mn in October 2007 • Although the private players witnessed growth in subscriber base, it was the public companies that lost the ground and dragged the growth • The wire-line segment is still led by PSUs – BSNL dominance in the fixed line remained intact with a market share of 82%, followed by MTNL at 9%; Bharti Airtel remained the leader amongst the private players, garnering a share of 5%, BSNL commands 73% in the urban landscape and almost cent percent in the rural areas Internet & broadband segment • India currently has 72 broadband service providers, having a subscriber base of 2.87 mn as of November 2007 • Out of the 72 broadband service providers, only 13 service providers are having subscriber base more than 10,000 and these providers share 98% of the total market • There were 9.63 mn wire-line Internet subscribers at the end of September 2007 compared to 9.22 mn at the end of June 2007, registering a growth of nearly 4.37% • The growth trend indicates a slight increase in the market share of PSU-owned internet service providers (ISPs) vis-à-vis private operators • The growth in Broadband segment has not been satisfactory – it is still slow and below the expected levels • As per the recent TRAI proposal, companies like BSNL and MTNL should be allowed to appoint franchisees and spectrum for 3G and WiMAX should be made available at the earliest to boost the deployment of broadband using these technologies • The regulator has also laid down policies for hastening implementation of Internet protocol TV (IPTV) platform across the country

14. the Indian telecom market

15. the Indian telecom market Operating strategy: Stay big; get bigger; expand world-wide • All of the Indian telecom majors, both private, namely: Reliance Communications, Bharti Televentures, Tata, AV Birla Group, Aircel, Essar; and government owned namely: MTNL and BSNL – all have explicit intents to expand world-wide – with special emphasis on emerging markets such as Africa and Asia • Reliance, Bharti, MTNL and other Indian companies have already made moves in acquiring licenses in various countries in Africa including those in Kenya, Gabon, Tanzania, etc • VSNL (Tatas) and Flag (Reliance) already together rank as worlds second biggest ethernet backbone in the world • Scale is a key competitive strength in this business segment and RCOM’s recent moves reflect an ambition to leverage this facet to drive growth. It recently announced the completion of FALCON, a 2.5Tbps sub-sea cable system which connects 11 countries in the Middle–East with the FLAG’s existing cable system. RCOM also intends to spend $1.5bn over the next three years to build an IP-overlay on FLAG’s sub-sea cable network. Though bandwidth sales and IRUs currently account for the largest portion of revenues, IP-based services are the fastest growing segment. RCOM faces significant competition from VSNL which is also gearing up to focus on this profitable market segment • Bharti Airtel, which had earlier bagged the licence to become Sri Lanka’s fifth GSM-based service provider, will launch second and third generation mobile services in the island nation by the end of the current fiscal and invest about US$200m by 2012. Bharti will have to compete with the Telekom Malaysia-owned Dialog Telecom (the largest operator in the country), Celltel Lanka (owned by Luxembourg-based service provider Millicom International

16. the Indian media market • The Indian entertainment and media industry is one of the fastest growing industries and has outperformed the Indian economy • According to FICCI PwC report, the television industry revenues are expected to grow from the present Rs 191 bn (USD 4.77 bn) to Rs 519 bn (USD 12.97 bn) by 2011, implying a 22% compounded annual growth rate • The radio industry recorded a growth of nearly 58% in 2006 – the share of radio in the total advertising industry increased from 2.4% to 3.1% during the year • According to PwC report, the print industry is expected to grow from Rs 128 bn (USD 3.2 bn) in 2006 to Rs 232 bn (USD 5.8 bn) by 2011, at 12.6% CAGR • Currently, the size of film industry is estimated to be around Rs 230 bn (USD 5.8bn), which is supposed to be the largest in the world • The Indian media and entertainment industry will grow at twice the rate of the country’s GDP in a few years, driven largely by the emergence of regional players, technology and digitisation

17. the Indian media market

18. the Indian media market

19. the Indian media market Radio industry • The radio industry recorded a growth of nearly 58% in 2006 • The share of radio in the total advertising industry increased from 2.4% to 3.1% during the same year • This is further expected to increase to 5.5% by 2011 as per the FICCI-PwC report on the Indian entertainment and media industry • The size of the radio industry is projected to increase at a CAGR of 28% from Rs 5 bn in 2006 to Rs 17 bn by 2011 • The major advertisers on radio are the entertainment channels, real estate firms and retailers - all these industries are expected to witness robust growth in the years to come • More than 90 channels across various languages and genres are being launched this year Film industry • The Indian film industry is the biggest film industry in the world in terms of number of viewers, with an audience of more than 3 billion compared with Hollywood’s 2.6 billion globally • The size of the Indian domestic film industry is likely to double to Rs 400 bn (around USD 10 bn) in the next three years, creating employment opportunities for about 6m people by 2010 • Currently, the size of film industry is estimated to be around Rs 230 bn (around USD 6 bn), which is supposed to be the largest in the world - it produces 800 films in different languages and earns nearly USD 100 mn of foreign exchange

20. the Indian media market Print industry • The structure of the Indian print media industry is highly fragmented with regional dominance • The Indian print media segment primarily comprises newspaper and magazine publishing • According to PwC report, the print industry is expected to grow from Rs 128 bn in 2006 to Rs 232 bn by 2011, at 12.6% CAGR • While the newspaper industry is estimated at Rs 112 bn, the magazine segment is valued at Rs 16 bn Print media – revenues • The primary source of revenues for a newspaper companies is advertising and subscription - the other sources include providing news to other agencies and sale of scrap paper • The subscription revenues formed nearly 39% of the total print media revenues of Rs 128 bn in 2006 • Print ads have the highest share of the ad pie in the media industry – dailies and magazines combined had a share of 48% of the total Rs 131 bn advertising revenues in 2005 • Looking ahead, print media would continue to dominate other media in terms of revenues from advertising, with a market share of 46% of the total ad spend (Rs 293bn) by 2010 • Advertising revenues formed 61% of the total print media revenues in 2006 and is expected to touch 66% of the total Rs 206 bn revenues in 2010

21. the Indian media market Television • The television industry in India has come a long way from the time when only a couple of Doordarshan channels were broadcast for a limited duration of the day • Today, there are 300 channels across various languages and genres catering to audiences 24 hours a day • The size of the industry is estimated to be approximately Rs 191 bn - with 112 mn TV households, India is the third largest television market in the world, next only to China and the US Regulations • The Ministry of Information and Broadcasting is aiming for a further cut in entertainment tax to 25-30% - with technology and digitisation fuelling the 18% CAGR, a tax breather will only enhance the growth • FDI Cap for FM Radio may be raised to 26% - retaining the current 20% FDI cap in radio companies, Government may allow an additional 6% for FIIs and others • India to increase cable TV foreign investment cap - India is set to raise the foreign direct investment limit in cable television to 74% from 49% and allow 100% ownership in down linking general and entertainment channels

22. the Indian media market Outlook • The Indian media and entertainment industry will grow at twice the rate of the country’s GDP in a few years, driven largely by the emergence of regional players, technology and digitisation • Around 28% of the 100 mn pay TV households would be going digital by 2010, as a result of this trend • In a digitised Indian media and entertainment environment, DTH would emerge leader over the next three years, while IPTV would gain close to 1m subscribers by 2010 • A booming Indian economy, literate population on the rise, increasing consumerism, entry of global brands in the country and opening of the sector to foreign investors would drive the growth in print media • Newspaper companies entering into newer regions and segments would lead to stronger growth - with the economy expected to be robust and increasing penetration of newspapers, the advertisement revenues are expected to remain strong • The share of the print media in the total ad pie is expected to go down due to increasing competition from other forms of media like the Internet – the Internet has emerged as the most actively used medium for news, as it offers instant news just like television and has a long shelf-life like newspapers

23. the india proposition – Information Technology & ITeS

24. the india proposition – Information Technology & ITeS

25. the Indian information technology & ITeS market • The services sector is one of the most significant sectors of the Indian economy, contributing nearly 55% to the GDP in 2006–07 • The sector continues to be the key driver of economic activities holding a share of more than 44% of GDP. The contribution of the IT industry to the country’s economy is increasing - the industry’s contribution to the nation’s GDP has gone up to 5.4% in FY07 as against 4.8% in FY06 • The Indian ITES-BPO segment continues to chart strong year-on-year growth, witnessing high levels of activity both onshore and offshore • The IT software services and BPO industries have had a mixed year (2007) – the rupee played spoil sport, but top players reacted quickly in tightening the slack in the system • The year 2008 promises to bring in newer growth opportunities, potentially billion dollar ones, for the Indian IT industry • The export-driven Indian IT/ITeS industry — which has been dominated by application development and maintenance (ADM), voice-based BPO services and BFSI vertical — could see new and niche areas scaling up rapidly • Growth of IT services market is primarily being driven by growth of the economy, small and midsize businesses, government projects and increased customer focus – Indian IT services market is pegged to grow to US$10.73 billion by 2011 with anticipation of more contracts from firms, grappling with high attrition of IT staff

26. the Indian information technology & ITeS market ITeS-BPO Segment • The Indian ITES-BPO segment continues to chart strong year-on-year growth, witnessing high levels of activity both onshore as well as offshore • The industry is moving up the value chain into KPO to raise profits • BPO market prospered with year-on-year TCV (Total Contract Value) growth of 147% for 2007 • The current hot spots in KPO industry are engineering and design, basic data search, integration and management and biotech and pharma • These opportunities in the KPO will help the Indian market climb the global value and knowledge chain

27. the Indian information technology & ITeS market

28. the Indian information technology & ITeS market Industry Trends • BPO entities have been at the front position of large mergers and acquisitions (M&A) in the Indian IT space as compared to IT services firms • India's knowledge process back-office (KPOs) firms are venturing overseas for acquisitions as they scale-up, struggle for talent, try to beat a rising rupee and face competition from big software firms • Indian firms are looking to partner with or acquire local firms in Germany in an effort to tap European market for offshore IT services which, apart from growing at a fast clip, is also emerging as a natural hedge against a slowdown in the US, which accounts for the bulk of their business • BPO services that are moving into Tier 2 and 3 cities and it is now expected that IT services will follow suit, though at a slower pace Outlook • Indian domestic IT/ITES market revenue is likely to reach Rs1,100 billion in 2008, an increase of 24% growth • For the domestic IT/ITeS sector, 2008 would also mark the beginning of the second growth phase characterised by the opportunities arising out of leveraging the IT infrastructure built up • With the slowdown in the US economy, a strong rupee and questions over extension of the STP scheme looming large, 2008 will be a crucial year for the Indian BPO industry • Global clients will turn to new countries as inflation and employee turnover in Indian cities like Bangalore and Pune will frustrate them – talent shortage will push them to Tier-II within India, and to Latin America, Eastern Europe and Asia. Canada, Brazil, Chile, Costa Rica and Mexico will be some of the new hot spots in providing sourcing solutions

29. the Indian information technology & ITeS market IT Software Services (ITSS) Segment • The IT software services and BPO industries have had a mixed year (2007) • Large IT companies with robust margins suffered an impact on their bottom line, but were able to absorb or even counter the effect - however, the smaller ones, which had lower margins, were hard hit. • More and more global corporations are trying to improve their cost efficiency and thus outsourcing their technology requirements to low-cost countries like India

30. the Indian information technology & ITeS market

31. the Indian information technology & ITeS market Industry Trends • The Banking and Financial Services (BFS) vertical forms the largest contributor to the total IT services revenue in India, and has maintained its lead over other verticals for a considerable number of years, almost 38% of the US$24 billion IT services business • IT companies are looking for ways to extend their value chain and bolster bottom-line – the uncertainty and cutting costs are some of the aspects which the IT companies would have to keep in mind during 2008 • After sustained focus on Western shores, China is now high on their charter for Indian IT services providers • The year 2007 appears to have been a year of consolidation for the security industry with organisations demanding better performing and flexible security solutions with constrained budgets and vendors responding with consolidated offerings • With the US slowdown and a depreciating dollar, US tech firms are likely to push for export-led growth for earnings - hence, the Indian market is emerging as a hot spot growth area Outlook • According to Gartner, Indian IT services market is pegged to grow to US$10.73 billion by 2011 with anticipation of more contracts from firms, which are grappling with high attrition of IT staff • The market segments that are expected to witness strongest growth are consulting, IT management and business process management services with five-year CAGR of 28.1%, 23.8% and 27.1% respectively • However, some risks pertain to this scenario including uncertainty over the future evolution of the tax regime governing computer manufacturers and importers, and rupee appreciation • IT sector faces moderate threat through resource crunch, weakening dollar, sub-prime crisis and recession fears in the US

32. Sanjay Krishnan London sanjay@mosaiccap.com hand phone: +44 (0) 7738321449 facsimile: +44 (0) 208 711 3943 Vinay Shah Mumbai vinay@mosaiccap.com hand phone: +91 (0) 9967642785 facsimile: +44 (0) 20 66325631 Vikram Bihani Bangalore vikram@mosaiccap.com hand phone: +44 (0) 9886409387 facsimile: +44 (0) 80 25091532 key contact information