India's BSE-listed Company [ BSE Code - 532607] Ontrack Acquires USA's Intellisys Group- 1 bn. Revenue by 08

Great Bargain Buy at current levels as IPO expected within 3 months at the rate of Rs. 6 to fund the acquisition Deal




India's listed company Ontrack Systems Limited, [BSE Code - 532607](www.ontrackindia.com) has agreed to acquire Intellisys group, (www.intellisystechnology.com) an IT solutions group for approximately $6.94 million in cash and shares. The group constitutes Intellisys Technology LLC, USA, Microhard Technical Institute, USA, Intellisys Technology (Australia) Pty Ltd, Australia, India Intellisys Technology, Pvt Ltd., India and SHS Pvt Ltd, India. The acquisition will strengthen Ontrack’s entry into the North American and Australian market while opening new opportunities for the company to cross sell services across the existing customer base of both companies. The acquisition presents a unique opportunity for the Intellisys Management to collaborate with Ontrack management to aggressively offer BPO and software solutions to clients in North America, Europe, Asia and Australia.

"High performance teams, niche products and services are crucial to build a world class ICT company," said B Hari, Chief Executive Officer of Ontrack. "By combining the two companies, we will create an excellent Global Management team with near shore and off shore service delivery capabilities with an existing customer base in North America, Australia, Europe and Asia. This initiative opens up tremendous opportunities for acquiring new customers and offer an enhanced range of services to our existing customers in these locations", he added.

Founded in 1997 by Raju Iyer and Vishi Viswanath, and based in Chicago, USA Intellisys offers high-quality software testing, BPO and embedded software development services to companies in North America, Australia and India.

"Our vision for Intellisys has been to build a globally competitive organization and provide high quality services to our customers," said Raju Iyer, Intellisys Co-founder and CEO. "We believe Ontrack provides us a great platform to fulfill this vision", he said.

"We’re great admirers of how Ontrack has expanded its operations from India into Europe and the Middle East," said Vishi Viswanath, Intellisys co-founder. "Together we feel we can really grow our business and create a compelling value proposition for customers across the globe", he added.

"We are excited about this alliance. It will help leverage our combined strengths" said K. Ramdevan Head of India Intellisys Pvt. Ltd. The entire Intellisys Management and service delivery teams in North America, India and Australia will continue to work after the acquisition is completed.

A powerful combination of two matured companies in different geographies

Successful outsourcing relationships depend on a number of critical factors. Both Ontrack and Intellisys have an established track record in delivering services to their customers. The combined entity which are individually profitable , will now have a truly global reach with offices in UK, Holland, USA, Australia, UAE and India (Kolkata & Chennai). It will offer a wide range of solutions from QA & Testing to e-tendering, from ERP solutions to embedded software. "We are looking at very strong, robust and market driven vertical specialization across 3-4 verticals. We have identified Retail and Transport as being two among them; we are examining customer and technology trends across the globe (markets in which we will be operating) and will decide on more verticals. We are also re-examining our combined service offerings particularly in BPO services which is likely to become a major revenue driver in the years to come. The combined entity now offers us the scope to scale up these services and look at 70 to 80% of our revenues coming from these verticals" says Mr. B Hari, CEO Ontrack Systems. Speaking on synergy and integration Hari said " In Ontrack and Intellisys , we have a highly experienced management team who have all done it before and we are confident of rolling out our integration strategy which will unleash the full capability of our teams in various markets which in turn is expected to add substantial value to our existing customers and other stake holders."

Transaction and Financial Information

Ontrack will acquire all of the outstanding shares of Intellisys group for a total consideration of $ 6.94 million in a combination of cash and stocks. Initially, Ontrack will pay cash and make a preferential allotment to the shareholders of Intellisys Technology Australia Pty Limited and thereafter will acquire all the shares of Intellisys Technology LLC, USA, Microhard Technical Institute LLC, USA and the Indian entities. The combined revenues of the Intellisys group is around $ 6.5 million (Rs. 312 million) for the year ended 2005. Ontrack’s current year revenues are Rs. 301.4 Million and Profit after Tax (PAT) of Rs. 23.1 Million (un-audited for 31/03/2006) . The consolidated financials ( after acquisition) for the period ending March 2007 is likely to be in the range of Rs. 600 Million to Rs. 700 million and PAT is expected to be around 7-10 %.

Ontrack will allot about 7.15 Million shares (9.5 % of outstanding shares of 75 Million shares) at a price of Rs. 4.21 per share as consideration for the first phase of the transaction, subject to all approvals. " To part finance the transaction and our future growth plans , we are considering various funding options including raising funds through a Follow on Public Offering (FPO) in India or by way of a FCCB/GDR issue from overseas markets in the near future " said S V Ramani, Whole time Director , Ontrack Systems.

Ernst & Young, India acted as advisers for the transaction. The acquisition is subject to various closing conditions and is expected to be completed in all respects by close of September 2006.

About Ontrack

Ontrack, a public limited company , has evolved as a matured player in the global IT and IT Enabled Services (ITES) market. The company serves global customers through its offices in Kolkata, Chennai (India), London, Maidenhead (UK), Abu Dhabi, Fujairah (UAE), and Bilthoven (Netherlands). The company employs about 150 people in India and 60 people in other parts of the world. About 75 % of Ontrack’s current service revenues come from Europe with the balance coming from India and the Middle East.

Its technological prowess lies in its state-of-the-art Managed Service Centre in UK and Global Development Centre in Kolkata and Offshore Development Centre in Fujairah where quality software, support and integration work is accomplished at competitive costs.

About Intellisys

Intellisys is headquartered in Chicago, USA with offices in the United States, Australia, Singapore and India. The company’s philosophy is "TEAMS MAKE IT WORK™;.Intellisys boasts of a youthful and vibrant work culture complemented by a work environment that promotes Team Work and gets the best from every employee. The company employs about 50 people in the USA and about 40 people in other offices. The company has partnerships and preferred vendor relationships with leading companies like Mercury Interactive, Borland, Compuware, CA- Unicenter , Microsoft, IBM. The company has an established track record with several Fortune 100 customers primarily in the Mid-West region . The company has made its entry in the BPO segment for the Property Management/Realty market-sector in USA.

Forward-Looking Statements

This announcement contains forward-looking statements regarding Ontrack and the expected impact of the acquisition of Intellisys on Ontrack’s financial results. Those statements involve risks and uncertainties, and actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, the timing of the closing of the transaction, the possibility that the transaction may not close, the reaction of customers of Intellisys services, the future growth of business. All forward-looking statements are based on information available to Ontrack on the date hereof, and Ontrack assumes no obligation to update such statements.

For Further Information please contact:

In India

Mr. S.V.Ramani
Whole time Director
Ontrack Systems Limited
Ontrack House
19 Ekdalia Road, Kolkata: 700 019
Phone: +91-33-24601980/81/82
Fax: +91-33-24601281
Email: ramani@ontrackindia.com

In USA

Mr. Raju Iyer
CEO
Intellisys Technology LLC,
600 Enterprise Drive, Suite 208
Oak Brook, Illinois, 60523
Phone: +(630) 522 1111
Fax: +(630) 455 1333
Email: riyer@intellisystechnology.com