Small Companies: Rapid Growth

While the media spotlight and investor interest is focused on big software

services companies, a lot of action goes unnoticed among small and medium sized

companies that focus on a particular niche area. Small and medium sized

companies are enroute to becoming veritable leaders in their respective spaces.

At the same time, valuations of big software services companies

have reached such refined levels that limit the opportunities of retail

investors to make huge returns. The undiscovered companies in the SMB segment

remain potential for much larger gains, despite risks of investing into mid cap

stock.

Four Soft: Stellar Performance



Four Soft was established in 1999 with an objective to build the enterprise
software/IT solutions in supply chain process management using advanced Web

technologies. During the financial year FY 06, the consolidated operating

revenues stood at Rs 947.70 mn for FY 06, compared to Rs 216.40 mn for FY 05.

The gross profit stood at Rs 129.60 mn for FY 06 compared to Rs 59.20 mn for FY

05. The net profit grew from Rs 41.50 mn in FY 05 to Rs 63.10 mn for FY 06. The

earnings per share (EPS) of the company stood at Rs 1.90 for FY 06 compared to

Rs 1.35 for FY 05. The EPS for the current quarter is up at 0.38 paise from 0.05

paise in the quarter ending December 05. The company plans to hire 200-300

professionals by the end of this year. The company's profit for the quarter is

up 641% on y-o-y basis.

During Q3 ending December 2006, the company, through its

wholly owned subsidiary Four Soft UK, has signed a definitive agreement to

acquire freight and shipping business of FWL Technologies, including business

and assets, employees, and customer contracts. FWL Technologies has operations

in the UK, the US, India, and Singapore. The company has entered into an

agreement to acquire 100% of the Denmark-based Transaxiom Holding A/S, a global

provider of transportation and logistics solutions. With this merger, the

company has consolidated its leadership position within transportation and

logistics industry. The acquisition adds a number of strategic players in

transportation and logistics to current customer base of the company. In

addition, the merger will augment the company's current domain and technology

competence, and expand global presence in Scandinavia, Australia, and Hong Kong

markets. The company also has signed an agreement with a large logistics company

for the 4s iLogistics Software for a value of 120,000 Euros toward license and

maintenance, and has also secured an order for Visilog Product from Panasonic

for a value of Rs 70 Lakh. DHL Global Mail, a business unit of Deutsche Post

World Net, has selected the company's iLogistics product suite as the platform

to manage their day-to-day logistical operations. Foursoft shares trade at Rs

59.

IT People (India): Raising Funds



IT People (India) is an e-recruitment and consulting company providing human
capital solutions focused on the IT and ITeS industry on a global basis. The

company provides placement, contract and projects staffing services, and special

projects like build-operate-transfer. IT People is a global recruitment exchange

portal exclusively catering for the requirement of IT professionals in the field

of IT and ITeS. The company has presence across all major IT hubs in India, and

the Middle East. For the year ended March 31, 2007, IT People's revenues

increased by 58% to Rs 17.51 crore against Rs 11.09 crore achieved last year,

and operating profit increased by 175% to Rs 3.21 crore compared to Rs 1.17

crore achieved last year. Tax profits grew 493% from Rs 0.52 crore to Rs 3.08

crore during the period.

The company is proposing to make a Follow on Public Offering

(FPO) of equity shares to the tune of Rs 45.25 crore through 100% book building

process, and has filed its Draft Red Herring Prospectus with SEBI, and BSE. The

above FPO has been planned to generate additional resources to meet its

expansion needs such as investment in technology infrastructure, product

enhancement, and business expansion. IT People has announced that the company

has tied up with Global Venture Group in Doha to start its active operations,

and provide a full range of staffing services in this fast progressing country.

IT People (Qatar) has already signed service agreements with companies like

Siemens, Qatar Foundation, Toyota, International Islamic Bank, HSBC, and few

others for providing their IT staffing services. The company successfully

completed its BS7799 post-certification 1st surveillance audit on November 09,

2006. It is the only company in its space to have stringent information security

standards of BS7799. The shares of the company trade at Rs 38.