Revenue from new clients and higher offshore volumes drive turnaround as Hexaware meets its guidance

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1 Press Release HEXAWARE ANNOUNCES POSITIVE YEAR-END RESULTS Revenue from new clients and higher offshore volumes drive turnaround as Hexaware meets its guidance February 17, 2003 Financial Highlights: Hexaware Technologies recorded consolidated global revenues of Rs mn and net profit of Rs 57.5 mn for the Financial Year ended December, For the fourth quarter ended December, 2002, global revenues were Rs mn and consolidated net profit was Rs mn. The results of FY 2002 compare favorably with the FY2001 consolidated revenues (that included partial revenues from the Training business prior to the 2001 merger) of Rs mn and net loss of Rs mn, and represent a solid platform for future growth. This turnaround in the business was achieved by changing the mix of business, several new client wins, two major deals, and growing offshore volumes. Incremental revenues from new clients. Hexaware acquired over 28 new customers in 2002, several of which have already billed over a million dollars each. Major new customers signed up last year included Exult, Deutsche Leasing, Citibank NA, Unisys, Axa Belgium, American Express, Lufthansa, Virgin Atlantic, Cisco and Unilever. These client wins, several against the major vendors, reaffirm the Company s strategic direction. Improving margins. Offshore revenues as a percentage of total revenues have been growing steadily from 31% in Q1 02 to 40% in Q4 02 resulting in improved gross margins. Cost reduction. The company carried out several measures to rationalize its operations. As a result, SG & A expenses have been going down as a percentage of revenue and EBITDA margins have been rising. Strong order book. The improving order book position, which currently exceeds $100 mn, provides strong indication of the visibility and robustness of future business and profitability. During FY 2002, Hexaware commenced delivering long term deals, each worth over $ 20 mn.

2 Commenting on the strong performance, Mr. Rusi Brij, CEO said, "Despite a prolonged uncertain market environment, the company has been able to meet its market guidance. Our strategy of being very differentiated, and becoming market leaders in our focus areas like Peoplesoft solutions and airlines sector has started paying dividends. There has been all round improvement in our business. Based on some very important client wins last year, we are very confident about our prospects in the new fiscal year. For the financial year 2003, Hexaware is providing the following guidance of our Global operations: Revenue growth of % over FY 2002 ; Consolidated net profit before taxes of over $ 5 mn (includes profit of associate) The Company expects project and client ramp to pick up towards the end of first half of the year. Further, Hexaware has restructured and revised salaries in India effective January 2003, and this is expected to affect earnings in the first two quarters. Hexaware is therefore projecting flat growth for Q1, However, revenues and profitability will scale up quickly thereafter. Hexaware also expects strong growth in Europe. Hexaware has also launched its BPO initiative with a significant entry in the claims processing field with at least a 300-seat operation by year-end. It has recently signed up a major Health Management Organisation (HMO) as its first client. Company Operations: During the last year, Hexaware continued to build on its differentiated strategy of offering technology-intensive solutions in few market segments. The Company offers high-end solutions in the Banking, Finance and Insurance Services and the Airlines sectors, besides a host of Peoplesoft services. It has market leadership positions in the Peoplesoft and Airlines segments. While N America continues to be its major market, Hexaware has begin focusing on Germany as a specific region, and hopes to be among the major Indian IT vendors by end of this year in that geography. Among the most significant wins last year was the Euro 22mn contract with Deutsche Leasing, a $ 4 bn German leasing company the single largest win by any Indian vendor in that region. The contract is also notable for the high level of work involved which includes IT consulting, architecture and design, and rerevamping of the client s entire IT structure. A number of separate projects have

3 already been initiated last year under this contract, making it the second largest client. Hexaware is very hopeful of increasing the size of this relationship in the current year. Exult, Hexaware s top client in 2002, is the largest pure-play HR BPO outsourcer globally. Hexaware now supports several global HR systems for Exult s clients - Bank of America and Prudential on a long-term basis. The relationship with Exult is growing rapidly and the Company is very hopeful of significantly increasing the size of this long-term contract in the current year. Among the most satisfying projects last year was the implementation of Peoplesoft CRM for a division of Citibank, North America. In a short period of six months, the system was implemented and received rave reviews by the user and IT group in Citibank. This was an extremely important project for Hexaware and together with its maintenance project with Citibank, Germany, strongly positions the Company s growth prospects within Citibank globally. A notable achievement was bringing the receivables to under 73 days. From July 2002, the company s cash flows from operations have been positive. During the last year, Hexaware strengthened its prospects in the banking sector with a long-term strategic alliance with Temenos, the largest vendor of banking solutions in Europe. Hexaware will undertake implementation and support projects for Temenos banking products and solutions. During the new year, Hexaware intends to launch several new solutions, including a dedicated service offering for HR applications, an integrated testing suite, a billing system for asset management systems, and a new leasing solutions for global clients. Hexaware closed the year with a total headcount of Technical manpower comprised 87% of the total headcount. Between January and December 2002, the Company rationalized its global head count reducing non-technical staff by 94 and increasing its technical manpower by 170. About Hexaware: Hexaware Technologies Limited, is a global IT services specializing in Application Management, EAI, e-commerce, ERP and Embedded Systems. Subspecialties include the new Affirma PeopleSoft specific post-production support services, B2B extraprise integration, and Mobile Commerce. Hexaware is one of the few companies worldwide to achieve SEI CMM Level 5 the highest quality accreditation. Hexaware s U.S. offices are located in Princeton, NJ, Chicago, IL,

4 San Jose, CA, London - United Kingdom, Frankfurt - Germany, Canada, Singapore, Chennai and Mumbai, India. please visit: For more information contact: Kapil Krishan Assoc. Vice President Hexaware Technologies Limited Tel : kapilk@hexaware.com Issued on behalf of Hexaware Technologies Limited by Sandeep Sawant/ Prasanna Kotian Sampark Public Relations Pvt. Ltd. Tel: (022) Fax: (022) samparkbombay@yahoo.com

5 CONSOLIDATED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER, 2002 PREPARED AS PER INDIAN GAAP PARTICULARS (Rs. in Lacs ) YEAR ENDED 31st DEC'2002 INCOME SOFTWARE AND CONSULTING 24, OTHER INCOME (NET) TOTAL INCOME 24, EMPLOYMENT EXPENDITURE 14, SOFTWARE, DEVELOPMENT & TRAINING EXPENSES 4, ADMINISTRATION EXPENDITURE 4, TOTAL EXPENDITURE 23, EBITDA 1, DEPRECIATION 1, PROFIT BEFORE TAX PROVISION FOR TAXATION (157.38) PROFIT AFTER TAX SHARE OF PROFIT IN ASSOCIATE PROFIT AFTER TAX (Incl. Associate)

6 INCOME HEXAWARE TECHNOLOGIES LIMITED - INDIA AUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 31ST DECEMBER, 2002 (Rs. in Lacs except per share data) NINE MONTHS THREE MONTHS THREE MONTHS YEAR YEAR PARTICULARS ENDED ENDED ENDED ENDED ENDED 30th SEP'02 31st DEC'02 31st DEC'01 31st DEC'02 31st DEC'01 UNAUDITED UNAUDITED UNAUDITED AUDITED AUDITED SOFTWARE AND CONSULTING 6, , , , TRAINING AND EDUCATION , OTHER INCOME (NET) TOTAL INCOME 6, , , , , EMPLOYMENT EXPENDITURE 3, , , , SOFTWARE, DEVELOPMENT & TRAINING EXPENSES , , , ADMINISTRATION EXPENDITURE 1, , , TOTAL EXPENDITURE 5, , , , , EBITDA , (742.28) 1, , DEPRECIATION , , PROFIT BEFORE TAX (921.46) PROVISION FOR TAXATION - (3.46) (74.32) (3.46) 1.68 PROFIT AFTER TAX (847.14) PAID UP EQUITY SHARE CAPITAL 2, , , , , RESERVE AND SURPLUS 20, , EPS BASIC DILUTED AGGREGATE OF NON-PROMOTERS SHAREHOLDING NUMBER OF SHARES 13,453,876 13,468,412 13,468,412 PERCENTAGE OF SHAREHOLDING 60.88% 60.91% 60.91% Page 1 of 2

7 AUDITED SEGMENT REPORTING (Rs. In lakhs) YEAR QUARTER YEAR PARTICULARS ENDED ENDED ENDED 31st DEC' st DEC' st DEC'2002 CONSOLIDATED INDIA INDIA REVENUE BY INDUSTRY SEGMENT AIRLINES & TRANSPORT 2, , FINANCE & BANKING 6, , , INSURANCE 2, , OTHERS 12, , TOTAL 24, , , LESS : INTER-SEGMENT REVENUE NET REVENUE FROM OPERATIONS 24, , , SEGMENT PROFIT BEFORE TAX AIRLINES & TRANSPORT FINANCE & BANKING 1, , INSURANCE (667.83) OTHERS (133.06) TOTAL 1, , ADD :OTHER INCOME LESS : OTHER UN-ALLOCABLE EXPENDITURE 1, , (EXCLUDING UN-ALLOCABLE INCOME) PROFIT BEFORE TAX Notes on segment information Principal segments The company's operations mainly relates to providing Information Technology ("IT") services to customers operationg in various industry segments. Accordingly, IT service revenues represented along industry classes comprise the primary basis of segmental information set out above. Segmental capital employed Fixed assets used in the company's business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and liabilities contracted are used interchangeably between segments. Accordingly, no disclosures relating to total segment assets and liabilities are made Notes :- 1) These results have been reviewed and recommended by the Audit Committee and taken on record by the Board of Directors of the compnay at its meeting held on 17th February ) In terms of the Accounting Standards with respect to deferred taxation, provision for tax has been made in terms of the standards in the above financial statement and recorded a net cumulative deferred tax liability of Rs lakhs until 1st January, 2002 as a deduction from the General Reserve. 3) The Company has issued and alloted equity shares of Rs. 10/- each under the erstwhile Hexaware Technologies Limited - Employee Stock Option Plan 1999 which has resulted in the marginal increase in the non-promoter shareholding. 4) The previous year figures include income and expenditure of Aptech Limited (formerly Aptech Training Limited) for the period from 1st January, 2001 to 31st March Hence the figures for the year ending 31st December, 2002 are not comparable with the previous year. 5) Figures have been regrouped / rearanged wherever necessary. For Hexaware Technologies Limited Place : Mumbai Date : 17th February 2003 P. K. Sridharan (Executive Director) Page 2 of 2

8 Hexaware Technologies Ltd - Key Metrics 1 Geographic Revenue Break-up 2002 Q Q Q Q USA 74% 71% 76% 80% 75% - Europe 18% 22% 22% 15% 12% - Rest of World 8% 7% 2% 5% 13% 2 Technology concentration risks - E-commerce/Application Management 55% 58% 53% 57% 65% - Research & Development 17% 11% 19% 19% 22% - Peoplesoft 21% 24% 20% 21% 11% - Others 7% 7% 8% 3% 2% 3 Domain concentration risks - Airlines and Transport 12% 11% 11% 13% 13% - Finance and Banking 31% 33% 32% 32% 28% - Insurance 13% 17% 11% 14% 12% - Others 44% 39% 46% 41% 47% 4 Client data - Repeat Business 54% 50% 57% 67% 70% - Number of clients billed Number of new clients added Client concentration - Top client 11% 12% 10% 11% 10% - Share of top 5 clients in total revenue 35% 36% 41% 39% 30% - Share of top 10 clients in total revenue 50% 53% 56% 52% 43% 6 Average Billing Rates(USD/ hour) - Onsite Offshore Human Resource Mix - Technical : On-site Off Shore Support : Marketing : General Mgmt / Others Attrition rate (%) (Avg.) 12.5% 14.0% 12.0% 12.0% 12.0% 8 Revenue Mix - Onsite 63% 60% 62% 64% 69% - Offshore 37% 40% 38% 36% 31% 9 Revenue Utilisation Levels - Overall 76% 76% 74% 76% 76% 10 Debtors - Global Debtors 73 days 73 days 77 days 81 days 80 days