23 July 2008
CRISIL IPO grade 2/5 assigned to the IPO of Neoteric Infomatique Ltd.

CRISIL has assigned a CRISIL IPO Grade "2/5" (pronounced "two on five") to the proposed initial public offer of Neoteric Infomatique Ltd. (Neo). This grade indicates that the fundamentals of the issue are below average relative to other listed equity securities in India. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The offer price for the issue may be higher or lower than the level justified by its fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, the graded instrument's future market price or its suitability for a particular investor.

The grading factors in Neo's market position as one of the top 10 IT-Hardware distributors in India and the increased relationships with some of the key IT Hardware vendors in the past 3 years. The grading also takes into cognizance the favourable volume driven growth expected in the computer hardware industry especially in the laptops and the TFT monitors segment.

The grading is however constrained by the inherent risks attached to the distribution business which is characterized by thin margins and undifferentiated nature of the products. In addition, the anticipated pressure on margins due to expected increase in competition and due to the underlying risk associated with technology driven products is expected to limit the company's ability to improve profitability in the long term. The grading also reflects the crucial role played by the promoter for developing vendor relationships. Notably also, the company's stated use of around 20-25 per cent of the IPO proceeds for setting up corporate office might not be the optimum use of the investors money as this is likely to suppress the Return on Equity.

Media Contact:

Ramya Krishnan Anil
Head, Market Development & Communications
CRISIL Limited

Phone: +91-22-6758-8051
Mobile: +91 98203 42671
Facsimile: +91-22-6758-8088
Email: RamyaKA@crisil.com

Analytical Contacts:

Arun Panicker
Senior Director,
CRISIL Limited

Tel: +91-22-6691 3300
Mobile: +91 98202 14483
Email: apanicker@crisil.com

Chetan Majithia
Head- Equities,
CRISIL Research

Phone: +91-22-6691 4148
Mobile: +91 97692 00201
Email : chetanmajithia@crisil.com

Client Servicing Contact:

Client Servicing
Tel: +91-22-6691 3561
Email: clientservicing@crisil.com

The company aims to raise approximately Rs. 470 million to Rs. 480 million through the fresh issuance of 6.97 million shares.

About the company and the issue
Neoteric Infomatique Ltd (Neo) is into the business of distribution of IT-Hardware products. The company started as a reseller in 1991 and thereafter in the year 1997, commenced the business of distribution. Neo caters to the domestic market and has network of 36 branches, 4 logistic centres and 4 additional warehouses catering to over 7,200 channel partners in around 350 cities. Neo primarily operates in the domestic market. Monitors, PCs, components such as hard disks, motherboard, RAM and peripherals such as printers form its key offerings. Neo has relationship with around 20 vendors and its key vendors include Samsung, Apple, HP, Hitachi, Logitech, BenQ, Wipro, Lenovo and Moserbaer.

Neoteric is the sixth largest IT Hardware distributor in India. The company's revenues grew at a compounded rate of 40 per cent between 2004-05 and 2006-07. This was largely driven by the growth in volumes of computer hardware products and due to the increase in the number of relationships with some of the key IT Hardware vendors. In 2006-07, the company reported a net profit of Rs 36.8 million on a turnover of Rs 4,885.4 million. The company's return on capital employed (RoCE) and return on equity (RoE) was 28.4 per cent and 28.6 per cent, respectively, in 2006-07.

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.

About CRISIL Limited
CRISIL is India's leading Ratings, Research, Risk and Policy Advisory Company.

About CRISIL Research
CRISIL Research is India's largest independent, integrated research house. We leverage our unique, integrated research platform and capabilities spanning the entire economy-industry-company spectrum to deliver superior perspectives and insights to over 600 domestic and global clients, through a range of subscription products and customised solutions.

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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July 23, 2008