BFL Software and MphasiS Corporation to Form Combined Entity

Jerry Rao to Assume Leadership

Mumbai, February 7, 2000: BFL Software Ltd. (BFL) and MphasiS Corporation (MphasiS) of USA today announced their intent to form a combined entity under the leadership of Jaithirth (Jerry) Rao who will be appointed Chairman. This transaction will enable the combined entity to become a significant participant in the high-value Interactive Architect IT segment that is estimated to grow from US $8 billion to US $80 billion by 2003, according to Forrester Research.

The Board of Directors of BFL Software Ltd. will meet on February 14, 2000 to consider the proposal to issue 6.5 million equity shares of BFL Software on a preferential basis in exchange for all common stock equivalent securities of MphasiS Corporation. The issue will be in accordance with SEBI guidelines. This transaction is subject to the approval of all regulatory authorities in India and USA, and is also subject to the approval of the respective Boards of Directors and shareholders.

Barings, which is an investor in MphasiS and which holds 52% of the paid-up capital of BFL, will remain a significant investor in the combined entity.

This transaction will provide enormous synergies to the combined entity by putting together the front-end capabilities and marketing expertise of MphasiS, with the scale benefits of BFL's established development experience. BFL has a sizeable offshore fulfillment capability with a CMMi-SEI Level 4 certification. MphasiS has substantial marketing capabilities with a global business development team and access to the leading financial institutions of the world.

BFL is a software services company deriving approximately two-thirds of its revenues from off-shore development. Based in Bangalore, BFL delivers software services and products to its international clients, which include Fortune 500 companies.

MphasiS is an IT company promoted by Jerry Rao who was head of Citibank's Development Division, Chairman and CEO of Transaction Technology Inc. The global management team at MphasiS includes Jeroen Tas, formerly COO of Transaction Technology, Arthur Flew, formerly CIO/CTO of Diner's Club International, Hans Bloem formerly CEO of Fox TV (Holland), Mohan Krishnan formerly CEO of Byzan Systems, Willem Van Duin, formerly CEO of Ingenio, and CFO Yash Joshi who was formerly with McKinsey & Company.

MphasiS investors include Barings and Richard Braddock, CEO of and Director E-Trade, and Chairman of the MphasiS Advisory Board. MphasiS has had three rounds of funding in the U.S., in each of which there was significant Venture Capital participation.

MphasiS belongs to a new breed of high-growth technology companies called "Interactive Architects" -- providers of web-enabled solutions for both established companies and Internet start-ups. MphasiS delivers personalised e-business solutions leveraging Customer Relationship Management (e-CRM) technologies for Just-in-Time One-on-One Marketing and Cross-Channel Integration. MphasiS owns the IPR of the "1.2.1" component suite - a set of software components which are enablers of these solutions.

MphasiS has special domain expertise in the Financial Vertical, which has one of the highest IT spends. The Internet and e-Commerce share of this segment is expected to grow exponentially; the combined entity is particularly well positioned to take advantage of this opportunity.

BFL, which has its development base in Bangalore, has several overseas marketing offices. Headquartered in Santa Monica-California, MphasiS has marketing offices spanning 3 continents and development centres in Pune and Mumbai. The combined entity will have 1,300 employees, 17 marketing offices worldwide and 3 development centres in India.

DSP Merrill Lynch advised MphasiS in this transaction, and BFL was advised by Enam Financial Consultants Pvt. Ltd.