05 November 2007
CRISIL IPO grade 3/5 assigned to
the IPO of eClerx Services Ltd.

Proposed public issue of about 18.4 million equity shares of face value Rs 10 at a targeted price of Rs 370 per share

CRISIL has assigned a CRISIL IPO Grade '3/5' (pronounced 'three on five') to the proposed initial public offer of eClerx Services Ltd (ESL). This grade indicates that the fundamentals of the issue are average, in relation to other listed equity securities in India.

The grading reflects management's ability to get contracts from large global clients in its two niche verticals, IT hardware retailing and the post trade OTC derivative segment, and increase in the size of client relationships over the last 3-4 years. The company has also benefited from the promoters' strategic focus on knowledge management as seen in its strong margins. The grading is tempered by anticipated pressures on margins from the expected increase in competition from large third party players in India, exchange rate movement and wage pressures. The grading also reflects the heavy client concentration, especially in the retailing vertical and likely moderation in revenue growth.

About the company
ESL, promoted by Mr P D Mundhra and Mr Anjan Malik, was incorporated in 2000. The company provides data analytics and customised process solutions to its global clients through three offshore delivery centres in Mumbai. Primary activities in customised process solutions comprise post-trade transaction support in the OTC derivative segment through strong awareness of the client's internal business processes and verification/audit of client products and websites in the retailing segment. As of March 31, 2007, ESL had around 1,000 employees at its offshore delivery locations in Mumbai. The company has around 21 global clients, of which nearly five account for over 87 per cent of its business.

The company plans to expand its operations by developing new client relationships and setting up additional offshore facilities in a SEZ in Pune and other Tier-II cities. It is also considering an acquisition in the UK or the US in the medium term.

For the year ended March 31, 2007, the company's total income was Rs 861.2 million as compared with Rs 441.2 million in 2005-06. Net profit increased by 62 per cent to Rs 396.7 million in 2006-07 from Rs 244.6 million in the previous year.

About CRISIL IPO Grading
CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security.

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Ajay Dwivedi
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Tel: +91-22-6691 3502
Email: adwivedi@crisil.com

Sudhir Nair
Head, CRISIL Research
Phone: +91-22-6691 3526
Email : snair@crisil.com
Client Servicing
Tel: +91-22-6691 3561
Email: clientservicing@crisil.com

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A CRISIL IPO Grading is a one-time assessment and reflects CRISIL's current opinion on the fundamentals of the graded equity issue in relation to other listed equity securities in India. A CRISIL IPO Grading is neither an audit of the issuer by CRISIL nor is it a credit rating. Every CRISIL IPO Grading is based on the information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the grading is based. A CRISIL IPO Grading is not a recommendation to buy / sell or hold the graded instrument; it does not comment on the issue price, future market price or suitability for a particular investor.

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November 05, 2007