cellebrum technologies limited

CMYK
DRAFT RED HERRING PROSPECTUS
Dated June 26, 2008
Please read Section 60B of the Companies Act, 1956
(This Draft Red Herring Prospectus will be updated
upon filing with the RoC) 100% Book Built Issue
CELLEBRUM TECHNOLOGIES LIMITED
(Our Company was incorporated as Cellebrum.Com Private Limited on April 4, 2000 under the Companies Act, 1956 (“Companies Act”). Subsequently, our Company was
converted into a public limited company and the name of our Company was changed to “Cellebrum.Com Limited” pursuant to a fresh certificate of incorporation granted to our
Company on February 14, 2008, by the Registrar of Companies, National Capital Territory of Delhi and Haryana, at New Delhi (“RoC”). The name of our Company was further
changed from “Cellebrum.Com Limited” to “Cellebrum Technologies Limited” pursuant to a fresh certificate of incorporation granted to our Company on April 22, 2008, by the
RoC. For details of changes in name and registered office of our Company, see the section “History and Certain Corporate Matters” beginning on page 74.
Registered Office: D-4 Okhla Industrial Area, Phase-1, New Delhi- 110020, India. Telephone: +91 11 26814544; Facsimile: +91 11 26817702.
Corporate Office: D-1, Sector 3, Noida- 201301, Uttar Pradesh, India. Telephone: +91 120 4035600; Facsimile: +91 120 4265786.
Compliance Officer and Company Secretary: Mr. Ashok Agarwal; E-mail: [email protected]; Website: www.cellebrum.com
PUBLIC ISSUE OF 11,271,012 EQUITY SHARES OF RS. 10 EACH (“EQUITY SHARES”) OF CELLEBRUM TECHNOLOGIES LIMITED (THE “COMPANY” OR
z] PER EQUITY SHARE INCLUDING A SHARE PREMIUM OF RS. [z
z] PER EQUITY SHARE, AGGREGATING
THE “ISSUER”) FOR CASH AT A PRICE OF RS. [z
z] MILLION (“THE ISSUE”), CONSISTING OF A FRESH ISSUE OF 6,982,042 EQUITY SHARES BY THE COMPANY (“FRESH ISSUE”) AND AN OFFER FOR
RS. [z
SALE OF 4,288,970 EQUITY SHARES (“OFFER FOR SALE”) BY LEHMAN BROTHERS OPPORTUNITY LIMITED AND OMNIA INVESTMENTS PRIVATE LIMITED
(“THE SELLING SHAREHOLDERS”). THE ISSUE COMPRISES A NET ISSUE TO THE PUBLIC OF 11,171,012 EQUITY SHARES (“NET ISSUE”) AND 100,000
EQUITY SHARES ARE RESERVED FROM THE FRESH ISSUE FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED HEREIN) AT THE ISSUE PRICE
(“EMPLOYEE RESERVATION PORTION”). THE ISSUE WILL CONSTITUTE APPROXIMATELY 22.60% OF THE FULLY DILUTED POST-ISSUE PAID-UP SHARE
CAPITAL OF THE COMPANY. THE NET ISSUE WILL CONSTITUTE APPROXIMATELY 22.40% OF THE FULLY DILUTED POST-ISSUE PAID-UP SHARE CAPITAL
OF THE COMPANY.*
z] Equity Shares to certain investors, prior to filing of the Red Herring Prospectus with the RoC
*Our Company and the Selling Shareholders are considering a sale of up to [z
(“Pre-IPO Placement”). If the Pre-IPO Placement is completed, the number of Equity Shares sold pursuant to the Pre-IPO Placement, will be reduced from the Net Issue, subject
to minimum Net Issue size of 10% of the post-Issue paid up share capital of our Company. The Pre-IPO Placement is at the discretion of our Company and the Selling Shareholders.
PRICE BAND: RS. [z
z] TO RS. [z
z] PER EQUITY SHARE OF FACE VALUE OF RS. 10 EACH.
z] TIMES OF THE FACE VALUE AND THE CAP PRICE IS [z
z] TIMES OF THE FACE VALUE.
THE FLOOR PRICE IS [z
In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three additional Business Days after such revision, subject to the Bidding/Issue Period not
exceeding 10 Business Days. Any revision in the Price Band, and the revised Bidding/Issue Period, if applicable, shall be widely disseminated by notification to the Bombay Stock
Exchange Limited (the “BSE”) and the National Stock Exchange of India Limited (the “NSE”), by issuing a press release and also by indicating the change on the website of the
Book Running Lead Managers (“BRLMs”) and the terminals of the other members of the Syndicate.
Pursuant to Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (“SCRR”), this Issue is for less than 25% of the post Issue share capital of the Company
and is therefore being made through a 100% Book Building Process (as defined below) wherein at least 60% of the Net Issue shall be allocated on a proportionate basis to Qualified
Institutional Buyers (“QIBs”), out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only and the remainder shall be available for allocation
on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. If at least 60% of the Net Issue cannot be allotted to
QIBs, then the entire application money will be refunded forthwith. In addition, in accordance with Rule 19(2)(b) of the SCRR, a minimum of two million securities are being offered
to the public and the size of the Issue shall aggregate to at least Rs. 1,000 million. Further, not less than 10% of the Net Issue shall be available for allocation on a proportionate basis
to Non Institutional Bidders and not less than 30% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being
received at or above the Issue Price. Further, up to 100,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible Employees, subject to valid Bids
being received at or above the Issue Price.
RISKS IN RELATION TO FIRST ISSUE
This being the first issue of the Equity Shares, there has been no formal market for the Equity Shares. The face value of the Equity Shares is Rs. 10 each and the Issue Price is [z
z]
times the face value. The Issue Price (as determined by the Company and the Selling Shareholders, in consultation with the BRLMs, on the basis of the assessment of market demand
for the Equity Shares by way of the Book Building Process) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No
assurance can be given regarding an active and/or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing
their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely
on their own examination of the Company and the Issue, including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the
Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of the contents of this Draft Red Herring Prospectus. Specific attention of
the investors is invited to the statements in the section “Risk Factors” beginning on page X.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer having made all reasonable inquiries, accept responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Company
and the Issue that is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not
misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft
Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING
The Equity Shares offered through the Red Herring Prospectus are proposed to be listed on the BSE and the NSE. The Company has received in-principle approvals from the BSE
z] and [z
z], respectively. For the purposes of the Issue, the [z
z] shall be the Designated Stock Exchange.
and the NSE for the listing of the Equity Shares pursuant to letters dated [z
IPO GRADING
This Issue has been graded by [z
z] Limited and has been assigned the “IPO Grade [z
z]/5”indicating [z
z], through its letter dated [z
z], 2008. The IPO grading is assigned on a five
point scale from 1 to 5 with an “IPO Grade 5” indicating strong fundamentals and an “IPO Grade 1” indicating poor fundamentals. For further details regarding the grading of
the Issue, see the section “General Information” beginning on page 13.
BOOK RUNNING LEAD MANAGER
REGISTRAR TO THE ISSUE
Enam Securities Private Limited
Karvy Computershare Private Limited
SEBI Reg. No: INM000006856
801/802, Dalamal Towers, Nariman Point,
Mumbai- 400 021, Maharashtra, India.
Telephone: +91 22 6638 1800
Facsimile: +91 22 2284 6824
E-mail: [email protected]
Investor Grievance E-mail: [email protected]
Website: www.enam.com
Contact Person: Ms. Kanika Sarawgi
SEBI Reg. No.: INR000000221
“Karvy House”, No. 46
Avenue 4, Street No.1, Banjara Hills,
Hyderabad- 500 034, Andhra Pradesh, India.
Telephone: + 91 40 2343 1553
Facsimile: + 91 40 2343 1551
E-mail: [email protected]
Website: www.karvy.com
Contact Person: Mr. Murali Krishna
BID/ISSUE OPENING DATE [z
z ], 2008
BID/ISSUE PROGRAM
BID/ISSUE CLOSING DATE [z
z ], 2008
CMYK
TABLE OF CONTENTS
SECTION I: GENERAL ................................................................................................................................ i
DEFINITIONS AND ABBREVIATIONS ................................................................................................... i
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND
CURRENCY OF PRESENTATION ............................................................................................................ vii
FORWARD-LOOKING STATEMENTS..................................................................................................... ix
SECTION II: RISK FACTORS .................................................................................................................... x
SECTION III: INTRODUCTION................................................................................................................. 1
SUMMARY OF BUSINESS ........................................................................................................................ 1
SUMMARY OF INDUSTRY ....................................................................................................................... 6
SUMMARY FINANCIAL INFORMATION ............................................................................................... 8
THE ISSUE................................................................................................................................................... 12
GENERAL INFORMATION ....................................................................................................................... 13
CAPITAL STRUCTURE.............................................................................................................................. 21
OBJECTS OF THE ISSUE ........................................................................................................................... 30
BASIS FOR THE ISSUE PRICE.................................................................................................................. 33
STATEMENT OF TAX BENEFITS ............................................................................................................ 37
SECTION IV: ABOUT THE COMPANY ................................................................................................... 45
INDUSTRY OVERVIEW ............................................................................................................................ 45
BUSINESS .................................................................................................................................................... 54
REGULATIONS AND POLICIES............................................................................................................... 69
HISTORY AND CERTAIN CORPORATE MATTERS.............................................................................. 74
OUR MANAGEMENT................................................................................................................................. 80
OUR PROMOTERS AND PROMOTER GROUP....................................................................................... 93
RELATED PARTY TRANSACTIONS ....................................................................................................... 139
DIVIDEND POLICY .................................................................................................................................... 165
SECTION V: FINANCIAL INFORMATION ............................................................................................. 166
FINANCIAL STATEMENTS ...................................................................................................................... 166
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS........................................................................................................................................ 280
SECTION VI: LEGAL AND OTHER INFORMATION ........................................................................... 300
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS ................................................... 300
GOVERNMENT AND OTHER APPROVALS ........................................................................................... 347
OTHER REGULATORY AND STATUTORY DISCLOSURES................................................................ 356
SECTION VII: ISSUE INFORMATION ..................................................................................................... 367
TERMS OF THE ISSUE............................................................................................................................... 367
ISSUE STRUCTURE ................................................................................................................................... 370
ISSUE PROCEDURE ................................................................................................................................... 375
SECTION VIII: MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ................................ 406
SECTION IX: OTHER INFORMATION.................................................................................................... 429
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ..................................................... 429
DECLARATION .......................................................................................................................................... 431
SECTION I: GENERAL
DEFINITIONS AND ABBREVIATIONS
Unless the context otherwise indicates or requires, the following terms shall have the meanings given
below in this Draft Red Herring Prospectus.
Company Related Terms
Term
Description
The “Company”, the “Issuer” or Cellebrum Technologies Limited, a public limited company incorporated
“Cellebrum”
under the Companies Act.
“we” or “us” or “our”
The Company and where the context otherwise requires or implies, the
Company together with its Subsidiaries.
Articles/Articles of Association The articles of association of our Company.
Auditors
The statutory auditors of our Company, being S.R. Batliboi & Associates.
Board of Directors/Board
The board of directors of our Company, as constituted from time to time, or a
committee thereof.
Director(s)
The director(s) on the Board, as appointed from time to time.
Equity Shares
Equity shares of our Company, of face value of Rs. 10 each.
Lehman Brothers Opportunity
A company incorporated in Mauritius, having its registerd office at 608, St.
Limited
James Court, St. Dennis, Port Louis, Mauritius, an affiliate of Lehman
Brothers Securities Private Limted, one of the BRLMs.
Memorandum/Memorandum of The memorandum of association of our Company, as amended.
Association
Promoters
Mr. Dilip Modi, Omnia Investments Private Limited and Indian Televentures
Private Limited.
Promoter Group
Individuals, companies and entities enumerated in the section “Our
Promoters and Promoter Group” beginning on page 93.
Selling Shareholders
Lehman Brothers Opportunity Limited and Omnia Investments Private
Limited.
Registered Office
D-4 Okhla Industrial Area, Phase-1, New Delhi- 110020, India.
Subsidiaries
Mobisoc Technology Private Limited and Spice Mobiles VAS Pte. Limited
Issue Related Terms
Term
Allot/Allotment/Allotted
Allottee
Bankers to the Issue/Escrow
Collection Banks
Basis of Allotment
Bid
Bidder
Bid Amount
Bid cum Application Form
Bidding/Issue Period
Bid/Issue Opening Date
Bid/Issue Closing Date
Description
Unless the context otherwise requires or implies, the allotment of Equity
Shares pursuant to the Issue.
A successful Bidder to whom an Allotment is made.
[●].
The basis on which Alltment shall be made as described in the section “Issue
Procedure – Basis of Allotment” beginning on page 400.
An indication to make an offer during the Bidding Period by a Bidder to
subscribe to the Equity Shares at a price within the Price Band by the Bid
cum Application Form or the Revision Form, as the case may be.
Any prospective investor who makes a Bid pursuant to the terms of the Red
Herring Prospectus and the Bid cum Application Form.
The highest value of the optional Bids indicated in the Bid cum Application
Form and payable by the Bidder on submission of the Bid.
The form in terms of which the Bidder makes an offer to subscribe to the
Equity Shares pursuant to the Issue and which will be considered as the
application for Allotment.
The period between the Bid/Issue Opening Date and the Bid/Issue Closing
Date (inclusive of both days) during which Bidders can submit their Bids.
The date on which the members of the Syndicate shall start accepting Bids,
which shall be the date notified in an English national newspaper and a Hindi
national newspaper, each with wide circulation.
The date after which the members of the Syndicate will not accept any Bids,
which shall be the date notified in an English national newspaper and a Hindi
national newspaper, each with wide circulation.
i
Term
Book Building Process
BRLMs/Book Running Lead
Managers
Business Days
CAN/Confirmation of
Allocation Note
Cap Price
Cut-off Price
Designated Date
Designated Stock Exchange
Draft Red Herring
Prospectus/DRHP
Eligible NRI
Eligible Employee/s
Employee Reservation Portion
Enam
Escrow Accounts
Escrow Agreement
First Bidder
Floor Price
Fresh Issue
Issue
Issue Price
Lehman
Margin Amount
Mutual Funds
Mutual Fund Portion
Net Issue
Non-Institutional Bidders
Non-Institutional Portion
Description
The book building process as described in Chapter XI of the SEBI
Guidelines, in terms of which the Issue is being made.
Enam Securities Private Limited and Lehman Brothers Securities Private
Limited.
All days except Saturday, Sunday and any public holiday.
The note or advice or intimation sent to the Bidders who have been allocated
Equity Shares, after discovery of the Issue Price in accordance with the Book
Building Process.
The higher end of the Price Band, above which the Issue Price will not be
finalised.
Any price within the Price Band finalised by our Company and the Selling
Shareholders, in consultation with the BRLMs, at which only Retail
Individual Bidders and Eligible Employees are entitled to Bid, for a Bid
Amount not exceeding Rs. 100,000.
The date on which the Escrow Collection Banks transfer the funds from the
Escrow Accounts to the Public Issue Account, in terms of the Red Herring
Prospectus.
[●].
This Draft Red Herring Prospectus issued by the Company in accordance
with section 60B of the Companies Act and the SEBI Guidelines, which does
not contain, inter alia, complete particulars of the price at which the Equity
Shares are offered and the size (in terms of value) of the Issue.
An NRI from such jurisdictions outside India where it is not unlawful to
make an offer or invitation under the Issue.
A permanent employee of the Company or its Subsidiaries and based,
working and present in India as on the date of submission of the Bid cum
Application Form.
The portion of the Fresh Issue being up to 100,000 Equity Shares available
for allocation to Eligible Employees.
Enam Securities Private Limited having its registered office at 24, B.D.
Rajabahadur Compound, Ambalal Doshi Marg, Fort, Mumbai 400 001,
Maharashtra, India.
Accounts opened with the Escrow Collection Banks for the Issue to which
cheques or drafts of the Margin Amount are issued by a Bidder, when
submitting a Bid and the remainder of the Bid Amount, if any.
An agreement to be entered into by our Company, the Selling Shareholders,
the Registrar, the Escrow Collection Banks, the BRLMs and the Syndicate
Members for the collection of Bid Amounts and for remitting refunds, if any,
to the Bidders on the terms and conditions thereof.
The Bidder whose name appears first in the Bid cum Application Form or
Revision Form.
The lower end of the Price Band, below which the Issue Price will not be
finalised and below which no Bids will be accepted.
The issue of 6,982,042 Equity Shares by the Company offered for
subscription pursuant to the terms of the Red Herring Prospectus.
The public issue of an aggregate 11,271,012 Equity Shares, consisting of
Fresh Issue and Offer For Sale.
The final price at which Equity Shares will be Allotted, as determined by the
Book Building Process, as decided by the Company and the Selling
Shareholders, in consultation with the BRLMs.
Lehman Brothers Securities Private Limited, having its registered office at
Ceejay House, 11th Level, Plot F, Shivsagar Estate, Dr. Annie Besant Road,
Worli, Mumbai 400 018, India.
The amount paid by the Bidder at the time of submission of the Bid, which
may range between 10% to 100% of the Bid Amount.
Mutual funds registered with SEBI under the SEBI (Mutual Funds)
Regulations, 1996, as amended.
5% of the QIB Portion, consisting 335,131 Equity Shares, available for
allocation to Mutual Funds.
The Issue less the Equity Shares included in the Employee Reservation
Portion, aggregating 11,171,012 Equity Shares.
All Bidders that are neither Qualified Institutional Buyers nor Retail
Individual Bidders and who have bid for an amount more than Rs. 100,000.
The portion of the Issue being not less than 10% of the Net Issue consisting
ii
Term
Non-Residents
Offer for Sale
Pay-in Date
Pay-in Period
Price Band
Pricing Date
Prospectus
Public Issue Account
QIBs or Qualified Institutional
Buyers
QIB Margin Amount
QIB Portion
Refund Account
Refund Banker (s)
Registrar to the Issue
Retail Individual Bidders
Retail Portion
Revision Form
Red Herring Prospectus
SEBI Guidelines
Securities Act
Stock Exchanges
Syndicate Agreement
Syndicate Members
Syndicate or members of the
Description
of 1,117,101 Equity Shares available for allocation to Non-Institutional
Bidders, subject to valid Bids being received at or above the Issue Price.
All eligible Bidders that are persons resident outside India, as defined under
FEMA, including Eligible NRIs, FIIs and FVCIs.
The offer for sale of 4,288,970 Equity Shares by the Selling Shareholders,
pursuant to terms of the Red Herring Prospectus.
The Bid/Issue Closing Date with respect to the Bidders whose Margin
Amount is 100% of the Bid Amount or the last date specified in the CAN
sent to the Bidders with respect to the Bidders whose Margin Amount is less
than 100% of the Bid Amount.
(i) With respect to Bidders whose Margin Amount is 100% of the Bid
Amount, the period commencing on the Bid/Issue Opening Date and
extending until the Bid/Issue Closing Date; and
(ii) With respect to Bidders whose Margin Amount is less than 100% of the
Bid Amount, the period commencing on the Bid/Issue Opening Date
and extending until the closure of the Pay-in Date specified in the CAN.
The price band with Floor Price of Rs. [●] per Equity Share and Cap Price of
Rs. [●] per Equity Share and any revisions thereof.
The date on which the Issue Price is finalised by our Company and the
Selling Shareholders, in consultation with the BRLMs.
The prospectus of the Company to be filed with the RoC for the Issue post
the Pricing Date which would include the Issue Price and the size of the
Issue.
The account opened with the Bankers to the Issue by the Company and the
Selling Shareholders to receive money from the Escrow Accounts on the
Designated Date.
Public financial institutions specified in section 4A of the Companies Act, FIIs,
scheduled commercial banks, Mutual Funds, multilateral and bilateral
development financial institutions, FVCIs, venture capital funds registered with
SEBI, state industrial development corporations, insurance companies
registered with the Insurance Regulatory and Development Authority, National
Investment Fund set up by resolution F. No. 2/3/2005‐DD‐II dated November
23, 2005 of the GOI published in the Gazette of India, provident funds with a
minimum corpus of Rs. 250 million and pension funds with a minimum corpus
of Rs. 250 million.
An amount representing at least 10% of the Bid Amount that the QIBs are
required to pay at the time of submitting a Bid.
The portion of the Issue being at least 60% of the Net Issue consisting of
6,702,607 Equity Shares, to be Allotted to QIBs on a proportionate basis.
The account opened with the Refund Banker(s), from which refunds, if any,
of the whole or part of the Bid Amount shall be made.
[●].
Karvy Computershare Private Limited having its registered office at 46,
Avenue 4, Street No.1, Banjara Hills, Hyderabad- 500 034, Andhra Pradesh,
India.
Bidders (including HUFs) who have Bid for an amount less than or equal to
Rs. 100,000.
The portion of the Issue being not less than 30% of the Net Issue consisting
of 3,351,303 Equity Shares, available for allocation to Retail Individual
Bidders, subject to valid Bids being received at or above the Issue Price.
The form used by the Bidders to modify the quantity of Equity Shares or the
Bid price in any of their Bid cum Application Forms or any previous
Revision Form(s).
The offer document to be issued in accordance with Section 60B of the
Companies Act and the SEBI Guidelines, by our Company for the Issue.
The Securities and Exchange Board of India (Disclosure and Investor
Protection) Guidelines, 2000, as amended.
The U.S. Securities Act of 1933, as amended.
The BSE and the NSE.
The agreement to be entered into between our Company, the Selling
Shareholders and members of the Syndicate, in relation to the collection of
Bids.
[●].
The BRLMs and the Syndicate Members.
iii
Term
Syndicate
TRS or Transaction Registration
Slip
Underwriters
Underwriting Agreement
Description
The slip or document issued by any of the members of the Syndicate to a
Bidder as proof of registration of the Bid.
The BRLMs and the Syndicate Members.
The agreement to be entered into among the Underwriters, our Company and
the Selling Shareholders, on or after the Pricing Date.
Abbreviations/Terms
Term
Act or Companies Act
AGM
AS
AY
BIFR
BSE
CDSL
CESTAT
CIN
CIT
CRPC
Depository
Depositories Act
Depository Participant
DIN
DP ID
EGM
EPS
FDI
FEMA
FEMA Regulations
FII(s)
Fiscal/ Financial Year/FY
FIPB
FVCI
GIR Number
GoI/Government
HUF
IPC
IPO
ITAT
I.T. Act
IT Department
Merchant Banker
MOU
NA
NAV
Description
Companies Act, 1956, as amended from time to time.
Annual General Meeting.
Accounting Standards issued by the Institute of Chartered Accountants of
India.
Assessment Year.
Board for Industrial and Financial Reconstruction.
Bombay Stock Exchange Limited.
Central Depository Services (India) Limited.
Customs, Excise and Service Tax Appellate Tribunal (earlier, Customs,
Excise & Gold (Control) Appellate Tribunal).
Corporate Identification Number
Commissioner of Income Tax.
The Criminal Procedure Code, 1973.
A depository registered with SEBI under the SEBI (Depositories and
Participant) Regulations, 1996, as amended from time to time.
The Depositories Act, 1996, as amended from time to time.
A depository participant as defined under the Depositories Act.
Director’s Identification Number.
Depository Participant’s Identity.
Extraordinary General Meeting.
Earnings Per Share i.e., profit after tax for a Fiscal/period divided by the
weighted average number of equity shares/potential equity shares during
that Fiscal/period.
Foreign Direct Investment.
Foreign Exchange Management Act, 1999 read with rules and regulations
thereunder and amendments thereto.
Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) Regulations, 2000 and amendments thereto.
Foreign Institutional Investors as defined under SEBI (Foreign Institutional
Investor) Regulations, 1995 and registered with SEBI under applicable laws
in India.
Period of twelve months ended March 31 of that particular year, unless
otherwise stated.
Foreign Investment Promotion Board.
Foreign Venture Capital Investors, as defined under the Securities and
Exchange Board of India (Foreign Venture Capital Investor) Regulations,
2000, as amended and registered with SEBI.
General Index Registry Number.
Government of India.
Hindu Undivided Family.
The Indian Penal Code, 1860.
Initial Public Offering.
Income Tax Appellate Tribunal.
The Income Tax Act, 1961, as amended from time to time.
Income Tax Department.
Merchant banker as defined under the Securities and Exchange Board of
India (Merchant Bankers) Rules, 1992.
Memorandum of Understanding.
Not Applicable.
Net Asset Value being paid up equity share capital plus free reserves
(excluding reserves created out of revaluation, preference share capital and
share application money) less deferred expenditure not written off
iv
Term
NRE Account
NRI
NRO Account
NSDL
NSE
OCB
OSP
p.a.
PAN
P/E Ratio
PLR
QIB
RBI
RoC
RONW
SCRA
SCRR
SEBI
SEBI Act
SICA
TRAI
U.K.
U.S./U.S.A.
USD
US GAAP
Description
(including miscellaneous expenses not written off) and debit balance of
‘profit and loss account’, divided by number of issued equity shares
outstanding at the end of a Fiscal/Period.
Non Resident External Account.
Non Resident Indian, is a person resident outside India, as defined under
FEMA and the FEMA (Transfer or Issue of Security by a Person Resident
Outside India) Regulations, 2000.
Non Resident Ordinary Account.
National Securities Depository Limited.
The National Stock Exchange of India Limited.
A company, partnership, society or other corporate body owned directly or
indirectly to the extent of at least 60% by NRIs including overseas trusts, in
which not less than 60% of beneficial interest is irrevocably held by NRIs
directly or indirectly as defined under Foreign Exchange Management
(Transfer or Issue of Foreign Security by a Person resident outside India)
Regulations, 2000.
Other Service Providers.
Per annum.
Permanent Account Number allotted under the Income Tax Act, 1961.
Price/Earnings Ratio.
Prime Lending Rate.
Qualified Institutional Buyer.
The Reserve Bank of India.
Registrar of Companies, National Capital Territory of Delhi and Haryana, at
New Delhi.
Return on Net Worth.
Securities Contracts (Regulation) Act, 1956, as amended from time to time.
Securities Contracts (Regulation) Rules, 1957, as amended from time to
time.
The Securities and Exchange Board of India constituted under the SEBI Act,
1992.
Securities and Exchange Board of India Act, 1992, as amended from time to
time.
The Sick Industrial Companies (Special Provisions) Act, 1985.
Telecom Regulatory Authority of India.
United Kingdom.
United States of America.
U.S. Dollars, the official currency of U.S.A.
Generally Accepted Accounting Principles in the United States of America.
Industry Related Terms/Abbreviations and Clients Specific Abbreviations
Term
3G
ADC
Airtel
ARPU
BGM
BSNL
CRBT
CDMA
CMMI
COAI
DNC
DoT
DTMF
GPRS
GSM
HFCL
IDEA
IN
IS
ISO
Description
Third Generation Protocol.
Access Deficit Charge.
Bharti Airtel Limited.
Average Revenue Per User.
Background Music
Bharat Sanchar Nigam Limited.
Caller Ring Back Tone.
Code Division Multiple Access.
Capability Maturity Model ®Integration.
Cellular Operators Association of India.
Do Not Call
Department of Telecommunications.
Dual-tone multi-frequency.
General Packet Radio Services.
Global System for Mobile Communications.
HFCL Infotel Limited.
Idea Cellular Limited.
Intelligent Network.
Information Systems.
International Organisation for Standardisation.
v
Term
IT
ITES
IT Services
IUC
IVR
IVRS
MMP
MMS
MTNL
MVAS
NASSCOM
OBD
P2P
NDNC
RAID
RBT
Reliance
R&D
SIM
SMS
SMSC
Spice
Takeover Code
TDSAT
UCC
USSD
VAS
Vodafone
WAP
Description
Information Technology.
Information Technology Enabled Services.
Information Technology Services.
Interconnection User Charges.
Interactive Voice Response.
Interactive Voice Response System.
Multi-modal Platform.
Multimedia Messaging Services.
Mahanagar Telephone Nigam Limited.
Mobile Value Added Services.
National Association of Software and Services Companies.
Outbound dialer.
Peer to Peer.
National Do Not Call.
Redundant Array of Independent Disks.
Ring Back Tone.
Reliance Communication Limited.
Research and Development.
Subscriber Identity Module.
Short Messaging Service.
Short Message Service Centre.
Spice Communications Limited.
Securities and Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997, as amended from time to time.
Telecom Disputes Settlement And Appellate Tribunal.
Unsolicited Commercial Communications.
Unstructured Supplementary Service Data.
Value Added Services.
Vodafone Essar Limited.
Wireless Application Protocol.
vi
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA
AND CURRENCY OF PRESENTATION
Certain Conventions
All references in this Draft Red Herring Prospectus to “India” are to the Republic of India. All references
in this Draft Red Herring Prospectus to the “US”, “USA” or “United States” are to the United States of
America.
Financial Data
Unless indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our
restated consolidated and unconsolidated summary statements, which are based on our audited
consolidated and unconsolidated summary statements restated in accordance with paragraph B(1) of
Part II of Schedule II of the Companies Act and the SEBI Guidelines for the 12 months ended
December 31, 2003, 15 months ended March 31, 2005, Fiscal 2006 and 2007 and the nine months
ended December 31, 2007. The audited consolidated and unconsolidated financial statements are
prepared in accordance with Indian GAAP. There was no requirement to prepare consolidated
summary statements for the periods prior to March 31, 2007 as the Company did not have any
subsidiaries and accordingly the Company did not prepare consolidated summary statements for any
periods prior to March 31, 2007.
Our year ended December 31, 2003 reflects a 12 month fiscal year, our year ended March 31, 2005
reflects a 15 month fiscal year, our year ended March 31, 2006 reflects a 12 month fiscal year, our year
ended March 31, 2007 reflects a 12 month fiscal year and our year ended December 31, 2007 reflects a
nine month fiscal year, as a result of change of end of financial years of the Company. Our future fiscal
years will end on December 31 each year and as a result will not be comparable to our nine months
ended December 31, 2007.
Currency of Presentation
All references to “Rupees” or “Rs.” are to Indian Rupees, the official currency of the Republic of India.
All references to “US$”, “U.S. Dollar” or “US Dollars” are to United States Dollars, the official
currency of the United States of America. All references “SGD” are to Singapore Dollar, official
currency of Singapore.
Market and Industry Data
Unless stated otherwise, industry and market data used throughout this Draft Red Herring Prospectus
has been obtained from industry publications. Industry publications generally state that the information
contained in those publications has been obtained from sources believed to be reliable but that their
accuracy and completeness are not guaranteed and their reliability cannot be assured. Although our
Company believes that industry data used in this Draft Red Herring Prospectus is reliable, it has not
been independently verified. Similarly, internal Company reports, while believed by us to be reliable,
have not been verified by any independent sources.
The extent to which the market and industry data used in this Draft Red Herring Prospectus is
meaningful depends on the reader’s familiarity with and understanding of the methodologies used in
compiling such data.
Exchange Rates
This Draft Red Herring Prospectus contains translations of certain foreign currency amounts into
Indian Rupees that have been presented solely to comply with the requirements of Clause 6.9.7.1 of the
SEBI Guidelines. These convenience translations should not be construed as a representation that those
U.S. Dollar. SGD or other currency amounts could have been, or can be converted into Indian Rupees,
at any particular rate, the rates stated below or at all.
Year ended March 31,
vii
Year ended March 31,
Year ended March
U.S Dollar
As on
2008
2007
31, 2006
39.90
43.44
44.62
(Source: www.oanda.com)
viii
FORWARD-LOOKING STATEMENTS
This Draft Red Herring Prospectus contains certain “forward-looking statements”. These forward
looking statements generally can be identified by words or phrases such as “aim”, “anticipate”,
“believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “would’ “will
continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe
our strategies, objectives, plans or goals are also forward-looking statements. All forward looking
statements are subject to risks, uncertainties and assumptions about us that could cause actual results to
differ materially from those contemplated by the relevant statement.
These forward-looking statements are based on our current plans and expectations and actual results
may differ materially from those suggested by the forward looking statements due to risks or
uncertainties associated with our expectations with respect to, but not limited to, regulatory changes
pertaining to the industries in India in which we have our businesses and our ability to respond to them,
our ability to successfully implement our strategy, our growth and expansion, technological changes,
our exposure to market risks, general economic and political conditions in India and which have an
impact on our business activities or investments, the monetary and fiscal policies of India, inflation,
deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates
or prices, the performance of the financial markets in India and globally, changes in domestic laws,
regulations and taxes and changes in competition in our industry. Important factors that could cause
actual results to differ materially from our expectations include, but are not limited to, the following:
•
•
•
•
•
•
The loss of any one of our major customers, a decrease in the volume of business derived
from these customers or a decrease in the prices at which we offer our services to them may
adversely affect our operating income and profitability.
Our contracts with carrier customers do not obligate the customers to market or promote our
services to their end-user subscribers.
We cannot provide any assurances that our relationship with Spice Communications will
continue on the same terms.
Our roaming network solutions and enterprise services products are presently provided only
through Spice Communications.
A substantial portion of our income is subject to the end-user pricing decisions of our carrier
customers and reconciliation of billing information between our records and those of our
customers.
Failure to develop and introduce new products and solutions that achieve market acceptance
could result in a loss of market opportunities.
For further discussion of factors that could cause our actual results to differ, see the section “Risk
Factors” beginning on page x. By their nature, certain market risk disclosures are only estimates and
could be materially different from what actually occurs in the future. As a result, actual future gains or
losses could materially differ from those that have been estimated. Forward looking statements speak
only as of the date of this Draft Red Herring Prospectus. Neither our Company nor the Selling
Shareholders, nor the members of the Syndicate, nor any of their respective affiliates have any
obligation to update or otherwise revise any statements reflecting circumstances arising after the date
hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not
come to fruition. In accordance with SEBI requirements, our Company, the Selling Shareholders and
the BRLMs will ensure that investors in India are informed of material developments until such time as
the grant of listing and trading permission by the Stock Exchanges for our Equity Shares Allotted
pursuant to the Issue.
ix
SECTION II: RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider all the
information in this Draft Red Herring Prospectus, including the risks and uncertainties described
below, before making an investment in our Equity Shares. To obtain a complete understanding you
should read this section in conjunction with the sections “Business” beginning on page 54 and
“Management’s Discussion and Analysis on Results of Operations and Financial Conditions”
beginning on page 278. Any of the following risks as well as other risks and uncertainties discussed in
this Draft Red Herring Prospectus could have a material adverse effect on our business, financial
condition and results of operations and could cause the trading price of our Equity Shares to decline
which could result in the loss of all or part of your investment. Unless otherwise stated in the relevant
risk factors set below, we are not in a position to specify or quantify the financial or other implications
of any risk mentioned herein.
INTERNAL RISK FACTORS
Risks Relating to Our Business
1.
Mr. Dilip Modi, one of our Promoters and Dr. Bhupendra Kumar Modi, a person forming
part of our Promoter Group, are directors in other group companies which are either
appearing on the RBI’s list of defaulters or are under winding up.
All banks and financial institutions are required to submit to the RBI details of debt defaulters where
the amount of default exceeds Rs.10 million or where the account holders have been classified as
willful defaulters. This data on defaulters is circulated in a consolidated form by RBI to the banks and
financial institutions.
Mr. Dilip Modi, one of our Promoters, was a director on the board of Modi Stones Limited during the
period August 20, 1992 until November 7, 1998 and Dr. Bhupendra Kumar Modi, another individual
member of our Promoter Group, is a member of the board of directors in Modi Rubber Limited and
was also a director on the board of Modi Stones Limited until December 7, 1998. Both Modi Stones
Limited and Modi Rubber Limited appear on the list of defaulting companies as per the RBI database.
For more details, please see the section “Outstanding Litigation and Material DevelopmentsCompanies under RBI Defaulter’s list” beginning on page 345. We cannot assure you that Modi Stone
Limited and Modi Rubber Limited will not continue to remain on the RBI’s list of defaulters, or that
such companies’ status as defaulters will not have any adverse effect on our business.
MBM Limited (“MBM”) is neither a Promoter nor a Promoter Group Company of our Company and
Dr. Bhupendra Kumar Modi was a director on the board of MBM only uptil October 30, 1993. The
Hon’ble Punjab and Haryana High Court vide its order dated February 20, 1997, passed winding up
orders against MBM and appointed an official liquidator and MBM is under winding up proceedings
and all the documents were handed over to the official liquidator of the company.
2.
There are certain criminal proceedings pending against some of our Promoter Group
companies.
Certain of our Promoter Group companies have certain criminal proceedings pending against them,
details of which are provided below:
Omnia BPO Services Limited
A criminal case has filed by the labour department against the Omnia BPO Services Limited under
sections 23 and 24 of the Contract Labour (Regulation & Abolition) Act, 1970 read with the Central
Rules, 1971.
Spice Communications Limited
A criminal complaint under section 420 of the IPC has been filed against Spice Communications
Limited by Sukhjit Singh Chandi in the Court of Judicial Magistrate First Class, Chandigarh.
x
A criminal complaint has been filed by the Assistant Controller of Legal Metrology, Tumkur against
Spice Communications Limited in the Court of Judicial Magistrate, First Class, Tumkur under the
Standard Weights and Measures Act, 1976.
Further, three complaints have been filed against Spice Communications Limited under section 133 of
the CRPC for restraining it from installing a cell phone tower.
A complaint has been filed against the company for violation of the provisions of Equal Remuneration
Act, 1976 in the Labour Court, Mysore under the Equal Remuneration Act, 1976 and the Contract
Labour (Regulation and Abolition) Act, 1970.
For more details, please see the section “Outstanding Litigation and Material Developments” beginning
on page 300.
3.
A few major carrier customers account for a significant portion of our income. The loss of
any one of our major customers, a decrease in the volume of business derived from these
customers or a decrease in the prices at which we offer our services to them may adversely
affect our operating income and profitability.
We have derived and believe that we will continue to derive a significant portion of our income from a
few major carrier customers. For our nine months ended December 31, 2007, and our Fiscals 2007 and
2006, respectively, our five largest customers accounted for approximately 82%, 78% and 78% of our
operating income, respectively. As a result of significant our reliance on a small number of carrier
customers, we may face certain issues including pricing pressures. Our contracts with these carrier
customers are typically for a limited period, ranging between one and three years, and the terms of such
contracts allow the carrier customers to terminate the contracts without cause by giving notice as per
the terms of the agreement. In addition, we have no guarantee of income under these agreements or
minimum requirements for the use of our services. The loss or significant decrease in the volume of
business from one or more of our large carrier customers would have an adverse effect on our business,
financial condition and cash flows. Further, the income from these customers may vary from year to
year, making it hard to forecast future business needs, particularly since we are not the exclusive
service provider for any of our customers. Any significant decreases in spending on MVAS by the enduser subscribers of our major customers may accordingly reduce the demand for our services and
adversely affect our income, profitability and results of operations. In addition, our income may be
affected by competition and decreasing rates in the telecommunications industry and a number of
factors, other than our performance, that could cause the loss of a customer and that may not be
predictable such as financial difficulties, bankruptcy or insolvency affecting our customers. These
carrier customers may in the future demand price reductions, develop and implement newer
technologies, automate some or all of their processes or change their strategy by moving more work inhouse or to other providers, any of which could reduce our profitability. Any of the foregoing events or
any delay or default in payment by our customers for services rendered may adversely affect our
business, financial condition and results of operations.
4.
Our contracts with carrier customers do not obligate the customers to market or promote
our services to their end-user subscribers.
Most of our contracts with carrier customers are on a revenue sharing basis and provide that we earn
income only if our customers’ end-user subscribers use or subscribe to the value added services offered
by our customers. As a result, our income is subject to uncertainties that are beyond our control, such
as market acceptance of our products and services by our customers’ end-user subscribers and the
subscriber churn rate and are dependent upon the pricing of the services, product placement and
marketing and promotion activities conducted by our customers either jointly with us or solely. None
of our contracts obligate our customers to market or distribute any of our products or services to their
end-user subscribers. Without the appropriate marketing, promotion and pricing of the services we
provide to our customers, the subscribers may not be aware of, or may cease to use, or decrease usage
of, our products and services. For example, the current practice among our customers generally is to
place the most popular wireless applications at the top of the menu on the first page available on their
mobile phone portals or in the most prominent positions on their websites. Services at the top of the
menu and in more prominent positions are more accessible to subscribers and, in our experience, are
xi
more frequently accessed than those services in less prominent positions. If our customers change their
current practices so that our products are displayed less prominently or are less accessible to the enduser subscribers, our services could become more difficult for users to access and could, therefore,
become less popular. This could adversely affect the income from our products and services, and thus
our overall results of operations and financial condition.
In addition, as most of our customer contracts are non-exclusive, our customers may purchase similar
products and services from third parties and cease to offer our products and services in the future. Even
if our customers retained our services, our customer contracts do not prevent our customers from
significantly reducing the level of marketing or promotion of our products or from electing to market or
promote similar products purchased from and provided by our competitors. Any of the foregoing may
result in the loss of future income from our carrier customers.
5.
We cannot provide any assurances that our relationship with Spice Communications will
continue on the same terms.
Historically, we have entered into agreements with Spice Communications wherein we have agreed to
provide roaming services and value added services at an agreed revenue sharing arrangement. As per
the provisions of our agreement with Spice Communications dated June 25, 2008, Spice
Communications would continue to avail general VAS services such as mobile radio, BGM, CRBT
from our Company for a period of three years, while with respect to SMS, GPRS, roaming and
outbound dialer services, Spice Communications, would avail such services from our Company for a
period of nine months starting from the date of the agreement.. Historically we have derived significant
revenues from Spice Communication and they contributed approximately 50.44 % to our total income
during the nine months period ended December 31, 2007 and 38.36% in Fiscal ended March 2007. On
June 25, 2008 Spice Communications has communicated to us that one of its promoter shareholder i.e.
MCorpGlobal Communication Private Limited has entered into a Share Purchase Agreement with Idea
Cellular Limited to divest its entire shareholding comprising 40.8% in Spice Communications to Idea
Cellular Limited. The board of directors of Spice Communications has also approved its merger with
Idea Cellular Limited. Pursuant to the aforesaid proposed change in shareholding and ownership of
Spice Communications, we cannot assure you that we will continue to do business with Spice
Communications and through Spice Communications with its customers on the same terms or at all.
Any continued business relationship may not be on terms commercially favourable to us. In the event
we were to lose our relationship with Spice Communications, our failure to make alternative
arrangements in a timely manner and on terms commercially acceptable to us could have an adverse
effect on our business, financial condition and results of operations.
6.
Our roaming network solutions and enterprise services products are presently provided only
through Spice Communications.
We provide roaming products and solutions and enterprise products to corporate clients through
agreements entered into with Spice Communications, which has developed a roaming network through
alliances with these operators. On June 25, 2008 Spice Communications has communicated to us that
one of its promoter shareholder, MCorpGlobal Communication Private Limited has entered into a
Share Purchase Agreement with Idea Cellular Limited to divest its entire shareholding comprising
40.8% of the paid-up share capital in Spice Communications to Idea Cellular Limited. The board of
directors of Spice Communications has also approved its merger with Idea Cellular Limited.
Subsequent to such ownership change, roaming network of Spice Communication may not be available
to us. In such scenario, we will need to establish direct relationships with carriers other than Spice
Communications for provision of our roaming solutions and enterprise products for the maintaining
growth and expansion of our business. Currently, we are dependent on Spice Communications’
continued relationship with these operators as well as our continued relationship with Spice
Communications. In the event of an arrangement being terminated between Spice Communications and
the operator, we may suffer a resulting negative effect on our ability to offer our roaming products and
services to these operators and enterprise products to corporate clients, which in turn could have an
adverse effect on our results of operations.
xii
7.
A substantial portion of our income is subject to the end-user pricing decisions of our
carrier customers and reconciliation of billing information between our records and those
of our customers.
We earn a substantial portion of our income through revenue sharing agreements with our carrier
customers. Under such revenue sharing agreements, we earn as income a percentage of the retail price
that our customers charge to their end-user subscribers for the use of our products and applications. We
earned approximately 81% and 67% of our income from such revenue sharing agreements in our nine
months ended December 31, 2007 and in prior Fiscal 2007. We have no control over their pricing
decisions and most of our customer contracts do not provide for guaranteed minimum payments. As a
result, our income derived from such revenue sharing agreements may be substantially reduced
depending on the pricing decisions and pressures of our customers, which may adversely affect our
results of operations and financial condition.
Further, according to revenue sharing agreements with our customers, the calculation of net revenue
from the usage of our services by their respective subscribers is based on records maintained by our
customers or on records maintained by us that are reconciled with those prepared by our customers in
the event of a discrepancy. The billing methodologies and management information systems of our
customers are critical in preparation of accurate and timely usage reports. Our income realization with
respect to such records may become subject to dispute and may adversely affect our business, financial
condition and results of operations.
8.
Failure to develop and introduce new products and solutions that achieve market
acceptance could result in a loss of market opportunities.
Our business depends on developing and providing innovative products and solutions to our customers
that will create and fulfill demand by end users. Development of new products and solutions is subject
to unpredictable and volatile factors beyond our control, including end user preferences and competing
products and solutions. In addition, due to the competitive nature of the telecommunications market in
which we operate, and given the fact that time-to-market and service features are key differentiators of
MVAS offerings between carriers, products, solutions and applications in our industry have short
lifespans. We need to continuously invest in research and development to develop new and
differentiated products and solutions for our customers. Further, some or all of such products and
solutionsmay not provide adequate returns commensurate with our investments. Our products and
solutions could also be rapidly rendered obsolete by the introduction of newer technologies based on
more advanced mobile networks using broader bandwidths. Unexpected technical, operational,
deployment, distribution or other problems could delay or prevent the timely introduction of new
products and solutions, which could result in a loss of market opportunities. Our growth could also
suffer if our products and solutions are not responsive to the needs of wireless carriers, the
technological advancements of mobile networks or the preferences of the subscribers.
9.
Increasingly, a majority of the new subscribers of our carrier customers are from nonmetro areas and they tend to have lower levels of the purchase of value added services per
user.
With the expanding penetration of wireless telecommunications in India, a majority of the new
subscribers of our carrier customers are increasingly from non-metro areas. These subscribers generally
spend less on telecommunications solutions and value added products and services than subscribers
from metro areas and may not purchase mobile phones capable of receiving many of our products and
services. These end-users tend to purchase fewer and less expensive mobile telecommunication
applications and products and hence represent lower revenue potential for the carriers and also for us,
since most of our contracts with our carrier customers are on a revenue sharing basis. If this trend
continues, it may have an adverse effect on our results of operations.
10.
We currently depend on entertainment and music related products/services and solutions,
including mobile radio, caller ringback tones, ringtone downloads and Jukebox, for a
significant portion of our operating income.
We earned approximately 61% and 63% of our operating income from our music related services,
including mobile radio, caller ringback tones, BGM and Jukebox, in nine months ended December 31,
xiii
2007 and in prior Fiscal 2007, respectively. We expect to continue to derive a significant portion of our
operating income from these services over the next few years. There could be a decline in the demand
for our products/services and solutions due to various factors, including increases in the cost of our
products/services and solutions due to an increase in the cost of the content we source, competition or
technological advancements rendering our technology obsolete. A decrease in the popularity of our
music related services and solutions among mobile phone users, or a failure by us to maintain, improve,
update or enhance such services and solutions in a timely manner, enter into new markets, or
successfully diversify our products/services and solutions could adversely affect our business, financial
condition and results of operations.
11.
An affiliate of Lehman Brothers Securities Private Limited, one of the BRLMs, currently
has and upon completion of the Issue will continue to have, a significant shareholding in
the Company.
Lehman Brothers Opportunity Limited (“LBOL”), an affiliate of Lehman Brothers Securities Private
Limited, one of the BRLMs in the Issue, holds 17.27% of the Equity Shares prior to the Issue and will
hold 9.69% of the Equity Shares immediately upon the completion of the Issue. For details of the
shareholding of LBOL, see the section “Capital Structure” beginning on page 21 and “History and
Certain Corporate Matters” beginning on page 74.
In addition, LBOL has certain rights under the Investor Rights’ Deed dated November 22, 2006, which
inter alia, grants LBOL with (a) a right of first refusal for issuances of securities by our Company and
(b) rights in relation to certain corporate actions to be taken by our Company. Also, LBOL is entitled to
appoint one director as long as it holds more than 7.5% of the equity share capital of our Company and
quorum and affirmative voting rights at board and shareholder meetings. Further, any change in the
present business of our Company would require the prior consent of LBOL. The Investor Rights’ Deed
would be terminated at the date of completion of initial public offering or when LBOL or any of the
associated companies ceasing to hold 7.5% of the total issued Equity Shares, whichever is earlier. For
details of the Investors’ Rights’ Deed, see the sections “Capital Structure” beginning on page 21 and
“History and Certain Corporate Matters” beginning on page 74.
The interests of LBOL may be different from our interests or the interests of our other shareholders. By
exercising its rights under the Investor Rights’ Deed, LBOL may take actions with respect to our
business that may not be in our or our other shareholders’ best interests. LBOL could delay or defer a
change in our capital structure, a merger, consolidation, or other business combination involving us,
which may not be in our best interest, or in the best interest of our other shareholders.
In accordance with the SEBI Guidelines, the Equity Shares held by LBOL will be subject to a one-year
lock-in period commencing from the date of Allotment. However, LBOL is offering part of its
shareholding in the Company in the Pre-IPO Placement and the Offer for Sale and there can be no
assurance that LBOL will not sell some or all of its Equity Shares either prior to Allotment or
immediately upon the expiry of lock-in, one year after the date of Allotment. The sale of such Equity
Shares, or the perception that such sales will occur, may adversely impact the Issue Price or the price of
the Equity Shares trading in the market.
12.
Lehman Brothers Opportunity Limited, is an affiliate of Lehman Brothers Securities
Private Limited, one of the BRLMs, and one of the Selling Shareholders in the Issue, which
may result in a conflict of interest with investors in the Issue.
LBOL is an affiliate of Lehman Brothers Securities Private Limited, one of the BRLMs in the Issue,
and is a Selling Shareholder. LBOL might have interests in the Issue that may conflict with that of an
investor in the Issue, including commercial interests such as a high return on its equity investment in
the Company, which may in turn influence the decision relating to the Issue Price.
13.
Our limited operating history may make it difficult for prospective investors to evaluate our
business.
We launched our first product/service in 2001. There is limited historical financial and operating
information available to help prospective investors evaluate our past performance and future prospects
or to make a decision about an investment in our Equity Shares. In addition, because of our limited
xiv
operating history, and changes in our fiscal year ends since 2003, our historical financial results are not
directly comparable and may not accurately predict our future performance. Our financial results in
recent years have reflected growth in income as our business was launched, however given our short
operating history, we cannot offer any assurances that this positive trend will continue as our business
matures and moves through various economic cycles. For example, as a result of industry factors,
economic circumstances or factors specific to us, we may have to alter our anticipated methods of
conducting our business, such as the nature, amount and types of risks we assume. The
telecommunications value added services market is nascent, highly competitive and is rapidly evolving.
As a result, any evaluation of our business and our prospects must be considered in light of our
industry, our limited operating history and the risks and uncertainties often encountered by companies
at our stage of development.
14.
Any inability to manage our growth could disrupt our business and reduce our profitability.
We have experienced significant growth in income in recent years. Our operating income has increased
from Rs. 324.95 million in our Fiscal 2006 to Rs. 661.78 million in our Fiscal 2007 to Rs. 734.56
million in our nine months ended December 31, 2007. The total number of employees has grown from
265 as of March 31, 2007 to 372 as of May 31, 2008. While these growth rates are not indicative of our
future growth, we expect this growth to place significant demands on both our management and our
resources. This will require us to continuously evolve and improve our operational, financial and
internal controls across the organization.
In particular, continued expansion increases the challenges involved in:
•
maintaining high levels of customer satisfaction and loyalty;
•
adhering to our high quality and process execution standards;
•
recruiting, training and retaining sufficient skilled technical, sales and management personnel;
•
preserving our culture, values and entrepreneurial environment; and
•
developing and improving our internal administrative infrastructure, particularly our
financial, operational, communications and other internal systems.
Any inability to manage growth may have an adverse effect on our business, financial condition and
results of operations and could result in decline of the price of our Equity Shares.
15.
Failure to meet the expected level of performance in accordance with our contracts with
customers could result in a loss of our income or adversely affect the customer relationships
or the business of our customers, all of which could be detrimental to our business and
reputation.
Mobile telecommunication applications and products such as those we offer are complex and utilize
sophisticated software systems which may result in operational errors or performance problems. In
connection with the provision of our mobile telecommunication products and applications, we enter
into contracts with some of our customers which contain provisions requiring us to maintain the
services at or above certain minimum performance standards. In certain cases, we are required to post a
bank guarantee against performance. Under these contracts, if we fail to meet the specified standards,
we may be subject to liquidated damages or penalties or, if applicable, the customer could require
payment under a bank guarantee, and in certain cases, termination of contracts by our carrier
customers. In addition, any defects in our intellectual property which we license to our customers could
result in a claim against us for substantial damages, regardless of our responsibility for such a failure or
defect. We cannot assure prospective investors that in case any claims for damages are made by our
customers, the limitations on liability we provide for in our service contracts will be enforceable, or
that they will otherwise be sufficient to protect us from liability for damages.
Further, any failure of, or technical problems with, our servers, systems or platforms could disrupt the
ability of the subscribers of our carrier customers to use our telecom applications and platforms. In the
past, we have experienced failures with our servers, systems and/or platforms, which were generally
xv
related to heavy surges in volume associated with holiday entertainment purchase activities or activities
relating to promotions being made by our customers. If failures occur on our customers’ multiple
networks or software systems, it may be difficult for us to identify the source of the problem and to
correct it on a timely basis, in particular as our customers generally use our services together with their
own services and services from other vendors. In addition, our systems or platforms are, in most cases,
integrated into the voice and data networks of our customers for which we operate and manage
applications. Failure of our systems or platforms could disrupt the delivery of voice and data service by
our customers. Any of the foregoing problems could result in a loss of income or adversely affect the
customer relationships and business of our customers, all of which could be detrimental to our business
and reputation generally.
16.
Many of our contracts do not have a fixed term or are of short duration and are subject to
renewal. If we are unable to renew or extend our contracts with our existing customers on
terms acceptable to us or at all, our future financial condition and results of operations may
be adversely affected.
Our contracts with our carrier customers are generally term contracts of one year or three years in
duration or open ended and in effect until termination by either party after a requisite notice period.
All customer contracts are on a non-exclusive basis and we cannot guarantee that they will continue to
be our customers. As these contracts reach the end of their stated terms, our customers can seek to
renegotiate pricing or other terms with us or not renew the contracts. In addition, all of our contracts
allow our customers to terminate a contract without cause after a requisite notice period, typically
ranging from 30 to 90 days. There is no assurance that we will be able to maintain our existing business
relationships with our customers. If we are unable to renew or extend our contracts with existing
customers or if our customers seek to renegotiate the contracts on terms unfavorable to us as they
expire, it may be difficult to find a suitable replacement carrier customer with the requisite licenses and
permits, infrastructure and customer base. This may have an adverse effect on our growth, financial
condition and results of operations.
17.
We will be controlled by our Promoters so long as they control a majority of our Equity
Shares.
After the completion of the Issue, our Promoters will hold approximately 65.85% of our outstanding
Equity Shares. As a result, one of our Promoters, Omnia Investments Private Limited which, will have
the ability to exercise significant control over us and all matters requiring shareholder approval,
including election of directors, our business strategy and policies and approval of significant corporate
transactions such as mergers and business combinations. The extent of their shareholding in us may
also delay, prevent or deter a change in control, even if such a transaction is beneficial to our other
shareholders. The interests of our Promoters and Promoter Group as our controlling shareholders could
also conflict with our interest or the interests of our other shareholders. We cannot assure prospective
investors that our Promoters and Promoter Group will act to resolve any conflicts of interest in our
favour.
18.
Our carrier customers could develop some or all of our mobile telecommunication
applications and products on their own or otherwise bring them in-house, which could
result in the loss of future income.
We derived over 94.52% and 96.36% of our income from providing mobile telecommunication
applications and products in our nine months ended December 31, 2007 and our Fiscal 2007,
respectively. Currently most of our carrier customers do not themselves offer such services and
products independently; however, if our carrier customers begin developing these services and products
or otherwise were to bring development and provisions in-house, we could be under price pressure in
order to maintain our business with existing carrier customers, if at all. Our inability to remain a
provider of mobile telecommunication applications and products of choice could result in the loss of
future income and may have an adverse effect on our future business, financial condition and results of
operations.
xvi
19.
Usage of our applications and services may be difficult to predict and we may not be able to
adequately and quickly expand capacity and upgrade our systems to meet increased
demand.
It is difficult to predict end-user subscriber adoption of new mobile telecommunication applications
and products, particularly in new markets. As a result, while we may launch a new product with a
planned or expected capacity, such capacity may not be sufficient to meet demand if it exceeds our
expectations. In such situations, we may not be able to expand and upgrade our systems and application
platforms quickly enough to accommodate increased usage of our services. If we do not appropriately
expand and upgrade our systems and application platforms, we may lose market opportunities or
damage our reputation with our carrier customers, which may adversely affect our business, financial
condition and results of operations.
20.
Our management information systems are critical to our ability to realize income from our
operations.
Sophisticated customer management information systems are critical for increasing our income
streams, avoid income loss and charge our customers accurately and in a timely manner. We expect
new technologies and applications to create increasing demands on our customer management systems.
Problems such as reconciliation of payments, revenue recognition and delayed payments will occur in
the complexities involved in the process of billing by our customers to their end-user subscribers. We
need to expand and adapt our payment and credit control systems as we introduce new services and as
our business expands. The development of new businesses may impose a greater burden on our
systems and may strain our administrative, operational and financial resources. If adequate payment
information, credit control and customer relations systems are unavailable or if upgrades or new
systems are delayed or not introduced or integrated in a timely manner, this could adversely affect our
business and results of operations.
21.
Our agreement with Virtual Marketing Private Limited has expired.
Virtual Marketing Private Limited (“VMIL” or “Hungama”) is one of our largest content providers for
us. Our agreement to provide content with Hungama expired on March 31, 2008 and we are currently
negotiating terms for renewal of this agreement. We cannot assure you that our agreement with
Hungama will get renewed on terms favourable to us, or renewed at all. If we are unable to renew this
agreement, we may be prevented from providing content sourced from Hungama and will have to
source alternative content which may not be at terms favorable to us, which may result in loss of
income or business opportunities or reduced margins that would harm our business, financial condition
and results of operations.
22.
Consolidation among, or change of ownership of, our carrier customers may result in the
loss of carrier customers or reduce our potential customer base, which would negatively
affect our financial performance.
Consolidation among carriers may reduce our potential customer base or may negatively affect our
ability to expand our customer base or may result in the loss of our current carrier customers. In
addition, as fewer carrier customers gain control of the telecom mobile subscriber market, pricing
pressure is likely to increase and consequently, a change of ownership of our carrier customers could
also result in the loss of our current customers if the new owners select another mobile
telecommunication applications and products service provider to provide MVAS and solutions. The
occurrence of any of these events could have an adverse effect on our business, financial condition and
results of operations.
23.
Delay or defaults in payments by our carrier customers or termination of the contract may
adversely affect our income realization.
Approximately 87% of our operating income is derived from our contracts with carrier customers,
which provide for payments for most of our services on a revenue sharing basis, for the nine months
ended December 31, 2007. Typically, delays in payment by our customers will arise primarily due to
delays in reconciling our billing and usage records with the records prepared by our customers. In the
event of delayed payments beyond a certain period, we are entitled to discontinue our provision of
xvii
services or terminate the contract without any liability of the customer, other than for payments owed.
Our income is concentrated in five customers and any delay or default in payment by them, or
termination of the contract, decrease in usage of the services provided to them by us or certain loss of
end-user subscribers may have an adverse effect on our income, business, financial condition and
results of operations.
24.
We currently source and aggregate content from a variety of content providers. If we are
unable to secure a license designed to aggregate content on terms favorable to us, we may
be prevented from providing the customer services, or will need to incur significant costs to
seek alternative content, which could adversely affect our business. Further, breach of our
contracts with our vendors, third party suppliers or content providers may adversely affect
our business, financial condition and results of operations
We have entered into licensing agreements with several content providers to use copyrighted content or
works as part of the services we provide to our carrier customers and their subscribers. Most of the
licensing agreements we have entered into with our content providers have confidentiality obligations.
Some of these agreements also restrict us from entering into similar agreements with other third parties
during the term of such agreements. We depend upon vendors and third party suppliers to provide us
with the hardware and software required for installation and use of our services by our customers. We
may be liable to our vendors, third party suppliers or content providers if we breach our contracts with
them. Any failure on our part to comply with such obligations could cause us to be in breach of our
contract and could result in a claim against us for substantial damages or even termination of the
contract by the content provider. The successful assertion of any claim by a third party would have an
adverse effect on our business, financial condition and results of operations. In addition, these
agreements are mostly for a term of one year. If we are unable to renew these licenses on terms
favorable to us, or at all, upon their expiration we may be prevented from providing content sourced
from these content providers and will have to source alternative content may not be at terms favorable
to us, which may result in loss of income or business opportunities or reduced margins that would harm
our business, financial condition and results of operations.
25.
Third parties may successfully sue us for intellectual property infringement which could
disrupt our business or require us to pay significant damage awards which we may not
succeed in recovering from our content providers.
Third parties may sue us for intellectual property infringement or initiate proceedings to invalidate our
intellectual property rights, either of which, if successful, could disrupt the conduct of our business or
require us to pay significant damage which we may not recover from our content providers. In addition,
in the event of a successful claim against us, we may be subject to injunctions preventing us from using
our intellectual property, incur significant licensing fees and/or be forced to develop alternative
technologies. Our failure or inability to develop non-infringing technology or applications or to license
the infringed or similar intellectual property rights, technology or applications on a timely basis could
force us to withdraw services from the market or prevent us from introducing new services on a timely
basis, or at all. In addition, even if we are able to license the infringed or similar intellectual property
rights, technology or applications, license fees could be substantial and the terms of such licenses could
be unfavorable. Any of the foregoing may result in increased costs and loss of income which may have
an adverse effect on our business, financial condition and results of operations.
We may also incur substantial expenses in defending against third-party infringement claims,
regardless of their merit. Such claims may arise frequently, especially with respect to our music-ondemand and music service platform, given the evolving nature of and resulting uncertainty in laws and
regulations governing the use and distribution of music and other content in digital format. However,
we cannot assure prospective investors that the same would be adequate to cover one or more large
claims. For more information, see the section “Our Business — Insurance” beginning on page 68. In
the event that we are unsuccessful in defending against infringement claims, our business may be
disrupted and we may incur substantial legal costs and infringement liability damages, which in turn
could result in a loss of income and could have an adverse effect on our business, financial condition
and results of operations.
26.
We have made applications for registration of our intellectual property rights, which are
currently pending. If we do not adequately protect our intellectual property rights, we may
xviii
have to resort to litigation to enforce our intellectual property rights, which could result in
substantial costs and diversion of management attention and resources.
We rely on a combination of copyright, trademark, patents and trade secret laws and restrictions on
disclosure, such as confidentiality provisions and non-disclosure agreements, to protect our intellectual
property rights. As of May 31, 2008, we have one registered trademark. Our trademark and logo
“Cellebrum” is registered with the Trademarks Registry in Delhi, India. We have recently filed an
application for alteration of our existing registered trademark “Cellebrum” with the Trademarks
Registry in Delhi, India. We have currently applied to register 15 other trademarks with the
Trademarks Registry in New Delhi, India. We have also filed 11 patent applications with the Controller
of Patents in the Patent Office, New Delhi, India. As of May 31, 2008, we also have 18 registered
copyrights with the Registrar of Copyrights and we have applied for two copyright registrations with
the Registrar of Copyrights. For more information, see the section “Our Business — Intellectual
Property” beginning on page 67. We cannot assure you that the application for registration of such
trademarks, copyrights or patents which are pending registration will be granted by the relevant
authorities. In the event we do not obtain patents, trademarks and copyrights for which we have applied
we may lose protection of the intellectual property associated with the product the subject of the patent,
trademark or copyright application, which may provide opportunities to competitors to compete with
our products and services, which could be detrimental to our existing and future business.
Despite our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy
or otherwise obtain and use our technology and applications and the applicable laws may not
adequately protect our proprietary rights. Monitoring unauthorized use of our applications is difficult
and costly, and we cannot be certain that the steps we have taken will prevent piracy and other
unauthorized distribution and use of our technology and applications. From time to time, we may have
to resort to litigation to enforce our intellectual property rights, which could result in substantial costs
and diversion of management attention and resources. Any such litigation could be time consuming and
costly and the outcome cannot be guaranteed. We may not be able to detect any unauthorized use or
take appropriate and timely steps to enforce or protect our intellectual property. In addition, India is a
party to international agreements which may in the future require it to modify its existing intellectual
property protection regime, which may in turn impact our ability to secure appropriate levels of such
protection for our products.
Historically, we have relied on trade secrets, know-how and other proprietary information as well as
requiring our principal employees to sign confidentiality agreements and deeds of relinquishment and
requiring our subcontractors, vendors and suppliers to sign agreements which impose a confidentiality
obligation on them. However, these confidentiality obligations may be breached, and we may not have
adequate remedies for any breach. Third parties may otherwise gain access to our proprietary
information or may independently develop substantially equivalent proprietary information.
27.
Our statutory auditors have made certain qualifications in their audit report, which may
adversely affect the trading price of our Equity Shares.
Our statutory auditors in their report dated March 27, 2008 on the audited unconsolidated financial
statements of our Company as of and for the nine month period ended December 31, 2007 included, as
an Annexure, a statement on certain matters specified in the Companies (Auditor’s Report) Order,
2003, which was qualified to indicate that (i) fixed assets had not been physically verified by the
management during the period and discrepancies therein, if any, as compared to book records were not
ascertainable, and (ii) undisputed statutory dues have generally been regularly deposited with the
appropriate authorities though there have been delays in some cases. In addition, the Auditor’s report
dated September 28, 2007 on the audited unconsolidated financial statements of our Company as of and
for the year ended March 31, 2007 included, as an Annexure, a statement on certain matters specified
in the Companies (Auditor’s Report) Order, 2003, which was qualified to indicate that undisputed
statutory dues have generally been regularly deposited with the appropriate authorities though there has
been a slight delay in a few cases. Our statutory auditors report dated June 26, 2008 on the audited
consolidated financial statements of our Company as of and for the Fiscal 2007 was qualified to
indicate that Mobisoc Technology Private Limited, our subsdiary had capitalized certain costs relating
to development of software during the year ended March 31, 2007 for which technical feasibility and
probable future economic benefits were yet to be established. As the auditors of the parent Company
believed that such costs did not qualify for capitalization as per the guidance given under Accounting
xix
Standard 26 ‘Intangible Assets’ issued by the Institute of Chartered Accountants of India, the
consolidated financial statements for the year ended March 31, 2007 were qualified to that extent. For
more details, see the sections “Financial Statements” and “Management’s Discussion and Analysis of
Financial Conditions and Results of Operations” beginning on pages 166 and 280, respectively. We
cannot assure you that our Auditors will not qualify their opinion in their audit report on the audited
consolidated or unconsolidated financial statements in the future, which may adversely affect the
trading price of our Equity Shares.
28.
Security vulnerabilities, illegal downloads, or transfers of audio and video files directly onto
handsets may harm our music-on-demand business and the income we earn from it.
Our music solutions business depends on the ability of our carrier customers to receive paid
subscription fees from downloads or streaming of music content, including full-track music titles.
However, computer and internet technologies that enable or facilitate illegal downloads or transfers of
music files, such as MP3 files, to personal computers and mobile handsets pose a significant threat to
wireless carriers, service providers and content providers alike. While industry efforts are being made
to restrict such functions through development of terminals, encoding technologies and sophisticated
customer interface, no assurance can be given that illegal downloads or transfers will be eliminated.
There are individuals and groups who develop and deploy software programmes that compromise
security and encoding technology. For example, hackers may find or develop and widely circulate
software that enables unauthorized decoding of digital rights management technology to download
music or other content directly onto mobile phones without using our music-on-demand or other
content delivery applications. Prevalence of security vulnerabilities, illegal downloads or transfers of
music files or lack of market acceptance of paid subscription for music content could adversely affect
our music solutions business and the income we earn from it.
29.
If we are unable to successfully protect our information technology infrastructure from
security risk, our business may suffer.
Our servers, like those of all businesses, are vulnerable to computer viruses, break-ins, power losses,
Internet and telecommunications or data network failures, software theft or destruction and similar
disruptions from unauthorized tampering with our computer systems. We maintain disaster recovery
capabilities and back-up systems for certain critical functions in our business, which are located at
Mohali and Parwanoo. We also maintain checks and systems for ensuring network security against
virus or other malignant attacks. However, we cannot assure you that these capabilities will
successfully prevent a disruption to or an adverse effect on our business or operations in the event of a
disaster or other business interruption. Any extended interruption in our technologies or systems could
significantly curtail our ability to conduct our business and generate income. We cannot assure you that
we will be able to continue to operate effectively and maintain such information technologies and
systems.
30.
Our senior management team and other key team members are critical to our continued
success and the loss of such personnel or an inability to attract and retain talented
personnel could harm our business.
We are dependent on the continued service and performance of our senior management team and other
key team members to continue our growth. Our growth strategy will place significant demands on our
management and other resources because it requires us to continue to improve operational, financial
and other internal controls. These key personnel possess technical and business capabilities that are
difficult to replace. We do not maintain key man life insurance for any of our senior management or
other key team members. The loss in the services of the members of our senior management or other
key team members, particularly to competitors, or our failure to otherwise retain the necessary
management and other resources to maintain and grow our business, may have an adverse effect on our
results of operations, financial condition and prospects.
Our future success and our ability to maintain our competitive position and implement our business
strategy are dependent to a large degree on our ability to identify, attract, train and retain technical
service operation and application development engineers and personnel with skills that enable us to
keep pace with growing demands and evolving industry standards and on the continued service and
performance of our senior management team and other key team members in our business units.
xx
Qualified individuals are in high demand and competition for qualified engineers and personnel in our
industry is intense, and we may incur significant costs to retain or attract them. The average experience
of our senior management and other key team members as of May 31, 2008 is 14 years. We may not be
able to retain our existing engineers or personnel or attract and retain new engineers and personnel in
the future. Many well-qualified candidates may be subject to contractual non-compete clauses which
may restrict our ability to employ them.
31.
The acquisition of other companies, businesses or technologies in the future could result in
operating difficulties, dilution and other harmful consequences.
As of the date of this Draft Red Herring Prospectus, we have experienced only organic growth.
However, as part of our growth strategy, we intend to pursue acquisitions to expand our business.
There can be no assurance that we will be able to identify suitable acquisition, strategic investment or
joint venture opportunities at acceptable cost and on commercially reasonable terms, obtain the
financing necessary to complete and support such acquisitions or investments, integrate such
businesses or investments or that any business acquired or investment made will be profitable. Any
future acquisitions may result in integration issues and employee retention problems. We may not be
able to realize the benefits we might anticipate from any such acquisitions.
If we attempt to acquire non-Indian companies, we may not be able to satisfy certain Indian regulatory
requirements for such acquisitions and may need prior approval from the RBI which we may not
obtain. In addition, acquisitions and investments involve a number of risks, including possible adverse
effects on our operating results, diversion of management’s attention, failure to retain key personnel,
risks associated with unanticipated events or liabilities and difficulties in the assimilation of the
operations, technologies, systems, services and products of the acquired businesses or investments.
Foreign acquisitions involve risks related to integration of operations across different cultures and
languages, currency risks and the particular economic, political and regulatory risks associated with
doing business in other countries. Any failure to achieve successful integration of such acquisitions or
investments could have an adverse effect on our business, results of operations or financial condition.
In addition, the anticipated benefits of our future acquisitions may not materialize. Future acquisitions
could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent
liabilities or other unforeseen complications or liabilities, any of which could harm our financial
condition and may have an adverse effect on the price of our Equity Shares.
32.
The markets in which we operate are highly competitive and some of our competitors have
greater resources than we do.
Competition is expected to intensify in the telecommunications value added services industry in India,
and there may be increasing competition from global players. We expect competition to intensify
further as new entrants emerge in the industry due to the growth opportunities available and as existing
competitors seek to expand their services. Consolidation among our competitors may also leave us at a
competitive disadvantage. In addition, in the event we expand into international markets, we will
increasingly compete with both local and global providers of telecommunications value added services.
Competitors in the future may include other content aggregators and technology applications providers
from India and overseas. Some or all of our competitors may have advantages over us, which include
substantially greater financial resources, stronger brand recognition, the capacity to leverage their
marketing expenditures across a broader portfolio of products and services and more extensive
relationships with customers, content owners and broader geographic presence.
Increased competition may result in pricing pressure and force us to lower the selling price of our
services or cause a loss of business. In addition, our competitors may offer new or different services in
the future which are more popular than our current services. If we are not as successful as our
competitors in our target markets, our sales could decline, our margins could be negatively affected and
we could lose market share, any of which could harm our business and results of operations.
33.
Carrier network congestion or failures could reduce our sales, increase costs or result in a
loss of income.
xxi
We rely on our carrier customers’ networks to deliver our products and services and telecom
applications to their end-user subscribers. Congestion on, failures of, or technical problems with, our
carrier customers’ delivery systems or communications networks could result in the inability of the
subscribers to use our applications. If any of these systems fail, including as a result of an interruption
in the supply of power, an earthquake, fire, flood or other natural disaster, or an act of war or terrorism,
our carrier customers’ subscribers may be unable to access our applications. Any failure of, or technical
problem with, our carrier customers’ networks could result in a loss of income and have an adverse
effect on our business, financial condition and results of operations.
34.
As we propose to expand outside of our existing markets, we may face added business,
political, regulatory, operational, financial and economic risks, any of which could increase
our costs and hinder our growth.
An important element of our business strategy is the expansion of our sales globally by targeting
domestic and international markets in which we do not currently provide our services. However, we
have limited experience in global expansion, and thus we face considerable challenges in executing our
strategy. These risks include:
•
development of appropriate products and services for non-Indian markets;
•
difficulties in obtaining market acceptance of our services in other global markets;
•
our lack of local presence and familiarity with business practices and conventions in certain
markets;
•
difficulties and additional time and expenses in customizing and localizing our applications
and systems for new markets, including addressing language and cultural differences;
•
shortages of personnel with both local language skill and experience with our services and
applications;
•
legal uncertainties or unanticipated changes in regulatory requirements; and
•
uncertainties of laws and enforcement relating to the protection of intellectual property.
In addition, we are subject to risks generally applicable to international operations such as:
•
differences in network and system requirements that may require additional time and
resources to ensure compatibility between our applications and services and the carrier
networks;
•
burdens or cost of complying with a wide variety of foreign laws and regulations, including
unexpected changes in regulatory requirements;
•
foreign exchange controls that might prevent us from repatriating income earned in countries
outside India; and
•
longer payment cycles and greater difficulty collecting accounts receivable in developing
countries.
Any of the foregoing risks could prevent us from introducing services globally on a timely basis or at
all and may harm our international expansion efforts and adversely affect our business, operating
results and financial condition. In addition, as we expand globally, this will increase our costs of
operations which may have an adverse effect on our operational margins.
35.
We face risks associated with the challenges faced by the mobile communications value
added services industry in which we operate.
xxii
The telecom industry in India faces a number of challenges with respect to the growth of MVAS which
translates into a risk for our operations. These include:
•
Slow penetration of MVAS. While mobile penetration rates in India may rise sharply over the
next few years, there is an uncertainty on how much of that penetration may translate into an
increase in the penetration of MVAS services, which tend to be comparatively expensive to
end-users and require more sophisticated hand-sets to access.
•
Revenue sharing arrangements. Telecom operators keep a significant portion of the revenue
generated through MVAS services. In line with this and the constant pricing pressure on
telecom operators, MVAS providers will need to gain leverage in relationships with telecom
operators in order to obtain a higher percentage share of revenues.
•
Lack of coordination between participants. There exists no common platform for handset
manufacturers and MVAS providers to ensure consistency of features and software across
various handset models, thus complicating the development of universally accessible value
added services and products.
•
Spam. There are high volumes of spam in the mobile value added services market currently.
As an industry initiative there is a pressing need to address this as a source of end-user
dissatisfaction.
•
Low GPRS connectivity. GPRS connectivity in India continues to be low given limited handset
capability and operator constraints and there is a large population of users who are not familiar
with accessing GPRS. As GPRS is the most prevalent delivery technology for MVAS, the
lack of growth in the technology may hinder the expansion of MVAS in India.
•
Preference for low feature handsets. Consumers generally purchase handsets for the basic
utility service, which is voice. However, low cost handsets are not capable of supporting many
MVAS products. Since in many of these value added services, like MMS, both the sender and
receiver handsets need to support MMS, the scope of expansion and use of the service is
limited.
•
High cost to end-user. The cost of value added services is not inexpensive, and end-user
acceptance of the costs remains to be proven in India.
•
Lack of infrastructure. A lot of services cannot be introduced in India because of lack of
supporting infrastructure, for example, the absence of location-based MVAS. Location based
value added services is still not possible due to the current lack of a digitized map of India.
In addition, while we believe that we are currently not subject to any specific governmental regulations,
except those specifically mentioned in this Draft Red Herring Prospectus, there can be no assurance
that we will not be subject to any approvals, licenses, registrations or permissions for operating our
business in the future. If we fail to obtain any of these approvals, licenses, registrations or permissions,
in a timely manner, or at all, our business, results of operations, financial condition and prospects could
be adversely affected.
36.
We face risks associated with currency exchange rate fluctuations.
We have adopted the Indian Rupee as our reporting currency. We currently transact our business
primarily in Indian Rupees and, to a lesser extent, in Singapore dollars, U.S. dollars and Euros. In
particular, we have capital expenditure costs (in forex) prominently in US Dollars. We spent Rs. 123.49
million and Rs. 62.3 million which amounted to 28.84% and 26.29%, of our total operating costs and
expenses, including depreciation, for the nine months ended December 31, 2007 and our Fiscal 2007,
respectively. To the extent these currencies appreciate against the Indian Rupee, it would increase our
expenses reported in the Indian Rupee.
We intend to expand our business overseas, which will increase our exposure to the risk of currency
fluctuations in foreign jurisdictions. In addition, conducting business in currencies other than the Indian
xxiii
Rupee subjects us to fluctuations in currency exchange rates that could have a negative effect on our
reported operating results. Fluctuations in the value of the Indian Rupee relative to other currencies
impact our income, cost of sales and services and operating margins and result in foreign currency
translation gains and losses. While we have not engaged in exchange rate hedging activities in the past
due to the size of our operations, we may implement hedging strategies to mitigate these risks in the
future. However, these hedging strategies may not eliminate our exposure to foreign exchange rate
fluctuations and involve costs and risks of their own, such as ongoing management time and expertise,
external costs to implement the strategy and potential accounting implications.
37.
The proprietary information or data of our carrier customers may be misappropriated by
our employees and as a result, cause us to breach our contractual obligations in relation to
such confidential information.
We require our employees to enter into confidentiality and non-disclosure agreements to limit access to
and distribution of the confidential information of our carrier customers’ subscribers such as their name
and address lists. There can be no assurance that the steps taken by us will adequately prevent the
disclosure of confidential information by an employee or a subcontractor or a subcontractor’s employee
and we do not have internal controls and processes to ensure that our employees comply with their
obligations under such confidentiality and non-disclosure agreements. If the confidential information is
disclosed by us or is misappropriated by our employees or subcontractors, our customers may raise
claims against us for breach of our contractual obligations. The successful assertion of any claim may
have an adverse effect on our business, financial condition and results of operations.
38.
Our insurance coverage may prove inadequate to satisfy future claims against us.
We may become subject to liabilities against which we are not adequately insured or insured at all or
for which we cannot obtain insurance. Our insurance policies contain exclusions and limitations on
coverage and we do not have business interruption insurance. In addition, our insurance policies may
not continue to be available on reasonable terms, at economically acceptable premiums, or at all. As a
result, our insurance coverage may not fully cover the claims against us. Our insurers may not accept
all claims made by us. A successful assertion of one or more large claims against us that exceeds our
available insurance coverage or changes in our insurance policies, including premium increases or the
imposition of a larger deductible or co-insurance requirement, could adversely affect our business,
financial condition and results of operations and could cause the price of our Equity Shares to decline.
For more information, see the section “Business — Insurance” beginning on page 68.
39.
We currently enjoy certain tax benefits, and any change in our eligiblity for these benefits
or tax policies applicable to us may affect our results of operations.
Presently, we enjoy certain benefits under Section 80IC of the I.T. Act, 1961. We also enjoy exemption
from sales tax with respect to sales tax under a notification issued by the Himachal Pradesh
government. The sales tax exemption requires that 65% and 70%of the persons employed at our offices
in Parwanoo undertaking I and undertaking II, respectively, within the state continue to be ‘Himachal
bonafide’, subject to any exemptions granted by the state government in this regard. As a result of these
incentives, most of our business activities (for further information, see the section “Business”
beginning on page 54) are not subject to income or sales tax liabilities. There is no assurance that we
will continue to enjoy these tax benefits in future. When our tax incentives expire or terminate, our tax
expense will materially increase, reducing our profitability to the extent of exemption available during
the exemption period. Further, the Government of India could enact laws in the future that may
adversely affect our tax incentives and consequently, our tax liabilities and profits.
40.
We provide applications and services to our carrier customers who operate in a highly
regulated industry and the licenses and the regulatory environment in which they operate
are subject to change, which may indirectly adversely affect our operations.
We are subject to Telecommunications Regulatory Authority of India (“TRAI”) regulation under
which we are required to apply for a tele-marketing license. However, we cannot guarantee that we
may not be subject to other regulations and licensing requirements including new regulations issued by
TRAI in the future which may adversely affect the business, financial condition and prospects.
xxiv
We provide applications and services to our carrier customers and are dependent on them to market or
distribute our applications or services to their end-user subscribers. Our carrier customers operate in the
telecommunications industry which is subject to extensive government regulation and licensing
requirements. The extensive regulatory structure under which they operate could constrain their
flexibility to respond to market conditions, competition or changes in cost structure. In addition, our
carrier customers are required to obtain a wide variety of approvals and licenses from various
regulatory bodies. There can be no assurance that such approvals will be granted on a timely basis or at
all. The Government of India may also revise regulations or policies related to carriers or operators in
the telecommunications industry on terms which may not be favorable to our carrier customers or
which may result in uncertainties with respect to their implementation. In addition, the licenses which
our carrier customers require to operate in the telecommunications industry reserve broad discretion to
the Government of India to influence the conduct of their businesses by giving the Government of India
the right to modify at any time the terms and conditions of such licenses, take over our carrier
customers’ networks and terminate, modify, revoke or suspend the licenses in the event of default by
our carrier customers in complying with the terms and conditions of the licenses. Any unfavorable
change in the regulatory environment as it relates to MVAS may adversely affect the business,
financial condition and prospects of our carrier customers and this may in turn have an adverse effect
on our business and results of operations. See the section “— External Risk Factors — Risks Relating
to Our Industry — Our carrier customers are subject to extensive government regulation of the
telecommunications industry in India” on page 31 for more information.
41.
The new Do Not Call (“DNC”) regulation issued by TRAI imposes an obligation on us. In
addition, our new contracts include a clause in relation to imposition of liabilities on us in
the event we do not comply with the DNC regulation.
TRAI has recently issued the DNC regulation which provides that if subscribers to telecom operators’
services do not wish to receive unsolicited commercial communication (“UCC”) on their telephone, it
will be the operators’ responsibility to register its subscribers’ numbers with the National Do Not Call
(“NDNC”) registry. Telemarketers can call only those numbers that are cleared by the NDNC registry.
The regulations provide for registration of the telemarketers with the Department of
Telecommunications (“DoT”), the registration of subscribers with the NDNC registry, and the
mechanisms on which it would operate. We have registered with the DOT for all operational circles of
our carrier customers. In the event that we violate these guidelines, marketing our services and products
by way of SMS or voice communications may be directed to be stopped which will adversely affect the
income from our application services, and thus our overall financial condition.
Since TRAI has come out with stringent penalties in case of violations, our customers have passed on
the burden of registration with DoT and compliance to these guidelines on us. As per our recent
agreement with Airtel, which constituted 18% of our operating income as of December 31, 2007, we
have undertaken to comply with the DNC legislation and in case of violation, Airtel has the right to
recover any penalties that maybe imposed, from us. In addition, while currently we have this obligation
only to Airtel, other operators may also ask for similar obligations in the future.
42.
We have entered into, are likely to continue to enter into, related party transactions with our
Promoters and Directors in the future.
We have entered into transactions with several related parties for providing our telecommunications
value added services, platforms, products and solutions products and services, including our Promoters
and Directors. While we believe that all such transactions have been conducted on, and have
commercial terms consistent with, an arm’s length basis, there can be no assurance that we could not
have achieved more favorable terms had such transactions not been entered into with related parties.
Furthermore, it is likely that we will enter into related party transactions in the future. Conflicts may
also arise in the ordinary course of our decision-making in connection with our negotiations and
dealings with our Promoters and/or Promoter Group companies with respect to services that we provide
to them and the arrangements that we may enter into with them. There can be no assurance that such
transactions, individually or in the aggregate, will not have an adverse effect on our financial condition
and results of operations. For more information regarding our related party transactions, see the section
“Related Party Transactions” beginning on page 139.
xxv
43.
We may find ourselves in breach of the terms of our arrangements with one or more carrier
customers or be subject to fines and financial penalties because of our failure to help
ensure that content is not obscene, defamatory, racist, or otherwise offensive or unlawful in
nature.
We take steps to ensure that the content we deploy adheres to the standards and terms of our customer
contracts. However, there can be no assurance that such content will not contain obscene, defamatory,
racist, or otherwise offensive or unlawful material. If offensive or unlawful material is detected, we are
able to take action to prevent the delivery of such material and fine or impose financial penalties on
third-party content or service providers responsible for the attempted conveyance of such material.
Such fines or financial penalties can be taken from revenue held by us that has not yet been delivered to
a third party content or service provider. However, any failure on our part to detect and prevent the
conveyance of such material could result in a breach of an arrangement with a carrier customer, which
could cause such carrier customer to terminate its arrangement with us. In addition, fines and financial
penalties may be imposed on us for such breach and we may not be successful in recovering such fines
or financial penalties from our content or service providers. Any of the foregoing may in turn have an
adverse effect on our growth, business, financial condition or results of operations.
44.
We will have broad discretion in how we use the proceeds of this Issue and we may not use
the proceeds as per the stated objects. This could affect our profitability and cause the price
of our Equity Shares to decline.
Our management will have considerable discretion in the application of the net proceeds of the Issue,
and you will not have the opportunity, as part of your investment decision, to assess whether we are
using the proceeds in a manner that you believe enhances our market value. See the section “Objects of
the Issue” beginning on page 30. Pending utilization of the proceeds of this Issue for the purposes
described in this Draft Red Herring Prospectus, we intend to invest the proceeds of the Issue in interest
bearing liquid instruments including money market mutual funds, for the necessary duration. Such
investments would be made in accordance with investment policies or investment limits approved by
our Board of Directors and shareholders from time to time. We also intend use the net proceeds for
general corporate purposes that do not improve our profitability or increase our market value, which
could cause the price of our Equity Shares to decline.
45.
We have not entered into any definitive agreements to utilize the proceeds of the Fresh Issue
and our intended use of proceeds from the Fresh Issue has not been appraised by any bank
or financial institution.
We intend to use the net proceeds of the Fresh Issue for purchase of office equipments for our various
office premises and various customer sites and general corporate purposes. For more information, see
the section “Objects of the Issue” beginning on page 30. We have not entered into definitive
arrangements for utilization of net proceeds of the Fresh Issue.
Pending use of the funds for these purposes, we intend to invest the funds in high quality,
interest/dividend bearing liquid instruments. If we are unable to spend the amount on acquisitions or
setting up of additional facilities, the balance funds will be used for augmentation of our working
capital and/or for general corporate purposes.
The objects of the Issue have not been appraised by any bank or other financial institution. We have not
entered into any definitive agreements to utilize such proceeds.
46.
Valuations in our industry are presently high and may not be sustained in the future and
are also not reflective of future valuations for such industry.
There is no standard valuation methodology for companies in businesses similar to ours. The valuations
in our and related sectors such as telecommunications, software and the information technology
industries are presently high and may not be sustained in the future. Additionally, current valuations
may not be reflective of future valuations within these industries or our industry.
xxvi
47.
Our restated consolidated and unconsolidated summary statements follow different
accounting years and as a result, our results of operations for certain periods are not
comparable.
Our restated consolidated and unconsolidated summary statements follow different accounting years
due to changes in our fiscal year end. Our results for our most recently ended fiscal accounting period
reflect a nine-month period ending December 31, 2007, our fiscal years ended March 31, 2007 and
March 31, 2006 reflect 12 month periods, our fiscal year ended March 31, 2005 reflects a 15 month
period and the fiscal year ended December 31, 2003 reflects a 12 month period. Due to the difference
in fiscal year ends, our results of operations discussed under the section “Management’s Discussion
and Analysis of Financial Condition and Results of Operations’ beginning on page 280 are not
comparable and our historical financial performance may not be considered as an accurate indicative of
future financial performance.
48.
Our growth requires additional capital which may not be available on terms acceptable to
us or at all.
We intend to pursue a strategy of continued investment to grow our business and expand the range of
products and services we offer. We anticipate that we may need to obtain financing as we expand our
operations. We may not be successful in obtaining additional funds in a timely manner, on favorable
terms or at all. If we do not have access to additional capital, we may be required to delay, scale back
or abandon some or all of our acquisition plans or growth strategies or reduce capital expenditures and
the size of our operations. See the section “External Risk Factors- Risks Relating to India- Any
downgrading of India’s debt rating by an independent agency may harm our ability to raise debt
financing” beginning on page xxxii for more information.
49.
We do not own our registered office or most of our offices from which we operate.
We lease and do not own the premises on which our registered office in New Delhi and most of our
other offices in Noida, Kolkata, Mohali, Hyderabad, Parwanoo, Bangalore and Mumbai are located.
Although most of the lease agreements provide for an option to renew, this option to renew is on
mutually agreed terms. The majority of our lease agreements are not registered with the local or state
authorities, and could be terminated without much difficulty by the relevant property owner or
manager. If any of the property owners or managers do not renew the agreements under which we
occupy the premises or will only renew such agreements on terms and conditions that may be
unfavorable to us, or if the property owners or managers were to terminate the lease, we may suffer a
disruption in our operations or have to pay increased rental rates which could have an adverse effect on
our business, financial conditions and results of operations. For more information, see the section “Our
Business – Properties” beginning on page 68.
We currently own a property in Singapore. We may in the future purchase other properties. There can
be no assurance that any information relating to our decision to purchase such properties will be
accurate, complete or current. Any decision based on inaccurate, incomplete or current information
may result in risks and liabilities associated with acquiring and owning such properties, being passed
onto us. We may also require financing to fund our capital expenditures on these properties which may
place restrictions on us which may, among other things, increase our vulnerability to general adverse
economic and industry conditions, require us to dedicate a substantial portion of our cash flow to fund
capital expenditures, meet working capital requirements and use for other general corporate purposes,
either through the imposition of restrictive financial or operational covenants or otherwise.
50.
Our ability to pay dividends in the future will depend upon future earnings, financial
condition, cash flows, working capital requirements and capital expenditures.
The amount of our future dividend payments, if any, will depend upon our future earnings, financial
condition, cash flows, working capital requirements and capital expenditures. There can be no
assurance that we will be able to pay dividends. Additionally, we may be restricted in our ability to
make dividend payments by the terms of any debt financing we may obtain in the future.
51.
Rapid technological changes may render our technologies, products or services obsolete.
xxvii
The telecommunication services industry is characterized by rapid technological change and significant
capital requirements. Given the fast pace of technological innovation in the telecommunication sector,
we face the risk of our technology becoming obsolete and hence the need to invest significantly large
amounts of capital to upgrade our networks or use new technologies. We face the risk of unforeseen
complications in the deployment of new value added services and products, and there is no assurance
that the estimate of the necessary capital expenditure to offer such services will not be exceeded. New
services may not be developed and/or deployed according to expected schedules or may not achieve
commercial acceptance or be cost effective. Failure to achieve commercial acceptance of services
offered by us could result in additional capital expenditures being required or a reduction in
profitability. Any such change may adversely affect our business, financial condition and results of
operations.
52.
Our employee attrition rate may increase to a level where we are not able to sustain our
deliverables at a given point of time.
We believe we pay competitive compensation package and benefits to our employees, however, given
the increasing wage levels in India we cannot assure you that our employee attrition rate will not
increase to an unsustainable level or that we will be able to recruit experienced professionals to replace
the professionals leaving at that particular point of time. Furthermore, increase in compensation
payable to employees in India may reduce some of the inherent cost competitiveness enjoyed by us
through our operations in India. Employee compensation in India is increasing at a fast rate, which
could result in increased costs relating to engineers, managers and other mid-level professionals. We
may need to continue to increase the levels of our employee compensation to retain talent and this will
reduce our competitiveness compared to competitors. Our attrition rate for the Fiscal 2007 and the nine
months ended December 31, 2007 was 16.47% and 16.25%, respectively.
53.
One of our Subsidiaries has incurred significant losses and certain of our Promoter Group
have incurred significant losses companies have incurred significant losses in the past or
have had negative networth.
Mobisoc Technology Private Limited, one of our Subsidiaries, has incurred loss of Rs. 14.03 million
for the nine months period ended December 31, 2007.
In addition, some of our Promoter Group companies also incurred losses in the last three fiscal years.
The details of such companies and their respective losses are as follows:
(Rs. in million)
S. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Promoter Group Company
IO System Limited
Spice Communications Limited
Twenty First Century Capitals Limited
Assam Plywood Limited
Hotspots Retails Limited
Modikem Limited
Spice Corp Limited
Ace Airways Private Limited
Duro International Rubber Private Limited
G. M. Modi Hospitals Corporation Private
Limited
Harjas Logic Systems Private Limited
Mcorpglobal Communications Private
Limited
Oasis Cineplex Private Limited
Super Infosys Private Limited
Teesho Rubbers Private Limited
Tuberose Investments Private Limited
VCorp Mercantile Private Limited
For the year ended
March
31, March
31,
2007
2006
(7.90)
(13.50)1
3
3801.31
(386.88) 4
(2.90)
0.46
0.04
(0.43)
(68.78)
(15.19)
(3.38)
(10.24)
(35.79)
63.527
(0.31)
15.90
(0.29)
(0.39)
0.35
(0.35) 7
1 For fifteen months period ended March 31, 2006
2 For the year ended December 31, 2004
3 For the year ended December 31, 2007
4 For the six months period ended December 31, 2006
5 For the year ended June 30, 2006
xxviii
March
2005
31,
(11.00)2
46.35 5
39.316
0.06
(1.02)
(10.59) 6
44.34
(3.84)
(0.24) 6
0.798
11.14
(0.22) 3
12.329
(0.07) 4
(0.03) 10
(0.80)5
1.85
(0.01) 4
(0.02)
(0.01)
(0.29)
0.50
(0.19)5
(0.01)
(0.12)
(0.05)
(0.01)
(0.33) 11
(0.03) 6
-
6 For the fifteen months period ended March 31, 2005
7 For the fifteen months period ended March 31, 2006
8 For the year ended March 31, 2004
9 For the thirteen and a half month period ended March 31, 2006
10 For the ten and a half month period ended February 15, 2005
11 For the year ended June 30, 2005
Some of these Promoter Group companies had negative net worth during the three fiscal years. The
details of such companies and their networth are as follows:
(Rs. in million)
S. No.
1
2
3
4
5
6
7
Promoter Group Company
IO System Limited
Jyotsana Investment Company Limited
Khatu Investment & Trading Company
Limited
Spice Communications Limited
Hotspots Retails Limited
Teesho Rubbers Private Limited
Tuberose Investments Private Limited
For the year ended
March
31, March
2007
2006
(0.02)
(1.26)
(0.12)
5219.171
(41.12)
(0.25)
(0.08)
31,
March 31, 2005
7.881
(2.08)
(0.85)
21.382
(2.13)
(0.89)
(1523.81) 2
(15.35)
(0.23)
(0.07)
(1136.93) 3
(0.16)
(0.22) 4
-
1 For the year ended December 31, 2007
2 For the six months period ended December 31, 2006
3 For the year ended June 30, 2006
4 For the fifteen months period ended March 31, 2005
We cannot assure you that our Subsidiaries will not continue to incur losses in future and our Promoter
Group companies will not continue to incur losses in future, that their net worth will be positive in the
future or that any of the foregoing will not materially affect our business, prospects, financial condition
and results of operations.
54.
Equity shares of some of our listed Promoter Group companies are infrequently traded/not
traded on the stock exchanges and trading of one of our Promoter Group company was
suspended in past.
The equity shares of some of our listed Promoter Group companies are infrequently traded/not traded
on the Stock Exchanges on which they are listed. The trading of equity shares of one of our listed
Promoter Group Company, Spice Mobile Limited (formerly known as Spice Limited), was suspended
by BSE due to non compliance of certain provisions of the Listing Agreement from October 6, 1997 to
September 2, 2003. In addition, IO System Limited, one of our Promoter Group companies, has
received four show cause notices from the BSE and one show cause notice from the Delhi Stock
Exchange for alleged violation of the listing agreements with these stock exchanges. Further, it has also
received two show cause notices from the BSE on account of non-compliance with certain provisions
of the Takeover Code. For further details, see the section “Our Promoters and Promoter Group”
beginning on page 93. We cannot assure you that trading of equity shares of Spice Mobile Limited or
any other Promoter Group company will not be suspended in the future by the relevant stock exchange.
In the event trading of shares of any of our Promoter Group companies is so suspended, it may have an
adverse effect on trading of our Equity Shares and which may negatively affect our financial condition
and results of operations.
55.
Plus Paper Foodpac Limited, one of our Promoter Group company, had withdrawn the
draft red herring prospectus filed with SEBI.
Plus Paper Foodpac Limited, one of our Promoter Group company had filed the draft red herring
prospectus to SEBI for its proposed initial public offering of its equity shares on November 1, 2004.
SEBI vide a letter dated January 3, 2005 has raised certain observations with respect to the promoter’s
contribution for the purpose of the eligibility of the proposed initial public offering planned by the
company. Subsequently, the lead manager vide letter dated March 4, 2005 withdrew the draft red
herring prospectus filed by the company.
56.
Our contingent liabilities could adversely affect our financial conditions.
xxix
As of December 31, 2007, we had a contingent liability of Rs. 38.89 million towards not charging of
service tax on the ‘short messaging peer to peer services’ including penalties, thereof, as disclosed in
our restated consolidated financial statements. For details see the section “Financial Statements”
beginning on page 166.
57.
We are involved in certain tax proceedings and have received show cause notices under
labour laws.
We have received a show cause notice from the Central Excise Division in relation to payment of
service tax alleging that we have not filed our tax returns appropriately and has imposed penalties
against our Company amounting to Rs. 489,940. In addition, the Central Excise Commissioner has
passed an order against our Company for the alleged fraudulent suppression of the material fact of
providing services of ‘Short Message Peer to Peer Messaging’ under the self assessment procedure
under the service tax laws and procedures, with an intention to evade service tax. The liability of our
Company under the said order for the assessment year 2006-2007 is Rs. 15,576,854, with applicable
interest; penalty of Rs. 100 for every day for the period during which failure in payment continues,
provided the total amount of this penalty should not exceed the amount of service tax and cess that our
Company failed to pay; and further penalty of Rs. 1,000.
In addition, our Company has received a notice from the Labour Officer cum Additional Officer
Inspector of Factories, Office of the Labour Officer, Solan, Himachal Pradesh alleging that our unit in
Parwanoo comes under the definition of “factory” under the Factories Act, 1948 and our Company is in
the alleged violation of the Factories Act, 1948 and the Himachal Pradesh Factories Rules, 1950 and
other labour laws. Subsequently, three complaints dated May 17, 2008 have been filed before the
Judicial Magistrate, 1st Class, Kasauli, Solan, Himachal Pradesh against our Company, the Managing
Director, the Factory Manager and the Senior Manager (Human Resources) of our Company, alleging
that our Company is in violation of certain provisions of the Contract Labour (Regulation and
Abolition) Act, 1970 and the Contract Labour (Regulation and Abolition) Himachal Rules 1974; the
Payment of Wages Act, 1936 and the Himachal Pradesh Payment of Wages Rules, 1979; and the
Minimum Wages Act,1948 read with the Himachal Pradesh Minimum Wages (Amendment) Rules,
2006.
It has also been alleged that despite a rectification notice (LO/Solan/Inspections/2007-1084-88) being
sent to our Company by the Labour Officer, Solan for submitting a compliance report, our Company
failed to do so and is hence liable for punishment under the above-mentioned legislations.
All such proceedings are currently pending. For further details see the section “Outstanding Litigation
and Material Developments” beginning on page 300.
58.
There are outstanding litigations against certain of our Directors, our Promoters and our
Promoter Group Companies
There are certain proceedings, including criminal proceedings, pending in various courts and
authorities at different levels of adjudication against our Subsidiaries, our Directors, our Promoters and
our Promoter Group. These legal proceedings are pending at different levels of adjudication before
various courts and tribunals. The amounts claimed in these proceedings have been disclosed to the
extent ascertainable, excluding contingent liabilities but including amounts claimed jointly and
severally from parties. For further details see the section “Outstanding Litigation and Material
Developments” beginning on page 300.
59.
Our Company has in the last 12 months, issued Equity Share sat a price that could be lower
than the Issue Price
We have, in the last 12 months, issued Equity Shares at a price that could be lower than the Issue Price.
For further details regarding such issuances of Equity Shares, see the section “Capital Structure – Notes
to the Capital Structure” beginning on page 22.
60.
Our Company is considering a Pre-IPO Placement and Equity Shares issued pursuant to
the Pre-IPO Placement may be at a price lower than the Issue Price
xxx
Our Company is considering Pre-IPO Placement of up to [●] Equity Shares to certain investors
including persons resident outside India, prior to filing of the Red Herring Prospectus with the RoC.
Equity Shares issued to such investors pursuant to the Pre-IPO Placement may be at a price lower than
the Issue Price.
EXTERNAL RISK FACTORS
Risks Relating to Our Industry
61.
Our carrier customers are subject to extensive government regulation of the
telecommunications industry in India.
We are dependent on our carrier customers to market and sell our white label applications and services
which we offer. As such, any regulation which may have an adverse effect on our carrier customers
may in turn adversely harm our business. The telecommunications industry in which our carrier
customers operate is subject to extensive government regulation. The Government of India along with
the TRAI regulate many aspects of the telecommunications industry in India. The extensive regulatory
structure under which our carrier customers operate could constrain their flexibility to respond to
market conditions, competition or changes in their cost structure, and thereby adversely affect them. In
addition, they are required to obtain a wide variety of approvals from various regulatory bodies. There
can be no assurance that these approvals will be forthcoming on a timely basis or at all, which could
have an adverse effect on their business, results of operations, financial condition and prospects.
The Government of India may replace or revise regulations or policies, including end-user subscriber
pricing rules. TRAI has recently released a consultation paper dated May 28, 2008 on “Growth of
Value Added Services and Regulatory Issues” to expolore the possibility for introduction of regulatory
regime and licencing for value added services in the telecom industry. Any such changes, and related
uncertainties with respect to their implementation, could have an adverse effect on the business, results
of operations, financial condition and prospects of our carrier customers which may in turn adversely
affect us. Our carrier customers may also need to incur capital expenditures to comply with and benefit
from anticipated changes in regulation that are then postponed, not implemented or not implemented on
terms favorable to them. In addition, their inability to complete certain actions required by the
regulators on time or at all may adversely affect their operations and financial condition.
The licenses under which our carrier customers operate their businesses typically reserve broad
discretion to the Government of India to influence the conduct of their businesses by giving it the right
to modify, at any time, the terms and conditions of the licenses and to terminate or suspend the licenses
in the interests of national security or in the event of a national emergency, war or similar situations. In
addition, the Government of India may also impose certain penalties including suspension, revocation
or termination of a license in the event of default by our carrier customers in complying with the terms
and conditions of the license. Our carrier customers’ licenses may also be for a fixed term and there can
be no assurance that any of these licenses will be renewed at all or renewed on the same or better terms.
Any of the foregoing may have an adverse effect on business, results of operations, financial condition
and prospects of our carrier customers which may in turn have an adverse effect on us.
62.
We may be adversely affected by future government regulations implemented for the
telecommunications value added services industry in which we operate.
Currently, the telecommunications value added services industry is not subject to any specific
government regulations. However, there can be no assurance that the Government of India may not
implement new regulations and policies which will require us to obtain approvals and licenses from the
Government of India and other regulatory bodies or impose onerous requirements and conditions on
our operations. Any such changes and the related uncertainties with respect to the implementation of
the new regulations, or our inability to obtain these approvals and licenses or perform such
requirements and conditions on time or at all, may have an adverse effect on our business and results of
operations. In addition, we may have to incur capital expenditures to comply with any new regulations,
which may also harm our results of operations.
63.
Concerns about health risks relating to the use of mobile handsets may adversely affect our
prospects.
xxxi
In recent years, media and other research reports have linked radio frequency emissions from mobile
handsets to various health concerns, including cancer, and to interference with various electronic
medical devices, including hearing aids and pacemakers. As research and studies are ongoing, we
cannot assure you that further research and studies will not demonstrate a link between radio frequency
emissions and health concerns, which could have an adverse effect on our business, results of
operations, financial condition and prospects. Further, concerns over radio frequency emissions may
discourage the use of mobile handsets which could have an adverse effect on our business, results of
operations, financial condition and prospects.
Risks Relating to India
64.
A slowdown in economic growth in India could cause our business to suffer.
Our performance and growth are dependent on the health of the Indian economy. The economy could
be adversely affected by various factors such as political or regulatory action, including adverse
changes in liberalization policies, social disturbances, terrorist attacks and other acts of violence or war,
natural calamities, interest rates, commodity and energy prices and various other factors. Any
slowdown in the Indian economy may adversely affect our business and financial performance and the
price of our Equity Shares.
65.
Political instability or changes in the government could delay the liberalization of the
Indian economy and adversely affect economic conditions in India generally, which could
affect our financial results and prospects.
Since 1991, successive Indian governments have pursued policies of economic liberalization, including
significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and
state governments in the Indian economy as producers, consumers and regulators has remained
significant. The leadership of India has changed many times since 1996. The current central
government, the United Progressive Alliance, which came to power in May 2004, is a coalition of
several political parties and is headed by the Indian National Congress Party. Although the current
government has announced policies and taken initiatives that support the economic liberalization
policies that have been pursued by previous governments, the rate of economic liberalization could
change, and specific laws and policies affecting foreign investment and other matters affecting
investment in our securities could change as well. Any significant change in liberalization and
deregulation policies could adversely affect business and economic conditions in India generally and
our business in particular.
66.
Any downgrading of India’s debt rating by an independent agency may harm our ability to
raise debt financing.
Any adverse revisions to India’s credit ratings for domestic and international debt by international
rating agencies may adversely affect our ability to raise additional financing and the interest rates and
other commercial terms at which such additional financing is available. This could have an adverse
effect on our capital expenditure plans, business and financial performance.
67.
Wage pressures in India may prevent us from sustaining our competitive advantage and
may reduce our profit margins.
Wage costs in India have historically been significantly lower than wage costs in the United States,
Europe and other developed economies for comparably skilled professionals, which has been one of
India’s competitive strengths. However, wage increases in India may prevent us from sustaining this
competitive advantage and may negatively affect our profit margins. Wages in India are increasing at a
faster rate than in the western countries, which could result in increased costs for software
professionals, particularly project managers and other mid-level professionals. We may need to
continue to increase the levels of our employee compensation to remain competitive and manage
attrition. Compensation increases may result in an adverse effect on our business, financial condition
and results of operations and could cause the price of our Equity Shares to decline.
Risks Relating to this Issue and Investment in our Equity Shares
xxxii
68.
After this Issue, our Equity Shares may experience price and volume fluctuations or an
active trading market for our Equity Shares may not develop.
The price of the Equity Shares may fluctuate after this Issue as a result of several factors, including the
results of our operations, the performance of our competitors, developments in the Indian
telecommunications sector and changing perceptions in the market about investments in the Indian
telecommunications sector, adverse media reports on us or the Indian telecommunications sector,
changes in the estimates of our performance or recommendations by financial analysts, significant
developments in India’s economic liberalization and deregulation policies, and significant
developments in India’s fiscal regulations.
69.
Any future issuance of Equity Shares may dilute prospective investors’ shareholding and
sales of our Equity Shares by our Promoters or other major shareholders may adversely
affect the trading price of the Equity Shares.
Any future equity issuances by us, including in a primary offering, may lead to the dilution of
investors’ shareholdings in our Company. Any future equity issuances by us or sales of our Equity
Shares by our Promoters or other major shareholders may adversely affect the trading price of the
Equity Shares. In addition, any perception by investors that such issuances or sales might occur could
also affect the trading price of our Equity Shares.
70.
Conditions in the Indian securities market may affect the price or liquidity of the Equity
Shares.
The Indian securities markets are smaller than securities markets in more developed economies. Stock
Exchanges have in the past experienced substantial fluctuations in the prices of listed securities. These
exchanges have also experienced problems that have affected the market price and liquidity of the
securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays
and strikes by brokers. In addition, the governing bodies of the Stock Exchanges have from time to
time restricted securities from trading, limited price movements and restricted margin requirements.
Further, disputes have occurred on occasion between listed companies and the Stock Exchanges and
other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar
problems occur in the future, the market price and liquidity of the Equity Shares could be adversely
affected.
71.
You will not be able to sell immediately on an Indian Stock Exchange any of the Equity
Shares you purchase in the Issue.
Under the SEBI Guidelines, we are permitted to allot Equity Shares within 15 days of the closure of the
public issue. Consequently, the Equity Shares you purchase in the Issue may not be credited to your
demat account with Depository Participants until approximately 15 days after the Bid/Issue Closing
Date. You can start trading in the Equity Shares only after they have been credited to your demat
account and final listing and trading approvals are received from the Stock Exchanges. Further, there
can be no assurance that the Equity Shares allocated to you will be credited to your demat account, or
that trading in the Equity Shares will commence, within the specified time periods.
72.
There has been no public market for the Equity Shares prior to this Issue so the Issue Price
may not be indicative of the value of the Equity Shares.
Prior to this Issue, there has been no public market for the Equity Shares in India or elsewhere. After
this Issue, there will be no public market for the Equity Shares in any country other than India. The
Issue Price will be determined by our Company in consultation with the BRLMs and could differ
significantly from the price at which the Equity Shares will trade subsequent to completion of this
Issue. We cannot assure you that even after the Equity Shares have been approved for listing on the
Stock Exchanges, any active trading market for the Equity Shares will develop or be sustained after this
Issue, or that the offering price will correspond to the price at which the Equity Shares will trade in the
Indian public market subsequent to this Issue.
xxxiii
73.
There is no guarantee that the Equity Shares will be listed on the Indian stock exchanges in
a timely manner, and prospective investors will not be able to sell immediately on an Indian
stock exchange any of the Equity Shares they purchase in the Issue.
In accordance with Indian law and practice, permission for listing of the Equity Shares will not be
granted until after those Equity Shares have been issued and allotted. Approval will require all other
relevant documents authorizing the issuing of Equity Shares to be submitted. There could be a delay in
listing the Equity Shares on the NSE and BSE. Any delay in obtaining the approval would restrict
prospective investors’ ability to dispose of their Equity Shares.
In addition, pursuant to Indian regulations, certain actions must be completed before the Equity Shares
can be listed and trading may commence. Investors’ book entry, or “demat”, accounts with depository
participants in India are expected to be credited within two working days of the date on which the basis
of allotment is approved by NSE and BSE. Thereafter, upon receipt of final approval from the NSE and
the BSE, trading in the Equity Shares is expected to commence within seven working days of the date
on which the basis of allotment is approved by the Designated Stock Exchange. We cannot assure that
the Equity Shares will be credited to investors’ demat accounts, or that trading in the Equity Shares will
commence, within the time periods specified above.
74.
There are restrictions on daily movements in the price of the Equity Shares, which may
adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity
Shares at a particular point in time.
We are subject to a daily circuit breaker imposed by all stock exchanges in India, which does not allow
transactions beyond a certain volatility in the price of the Equity Shares. This circuit breaker operates
independently of the index based market-wide circuit breakers generally imposed by SEBI on Indian
stock exchanges. The percentage limit on our circuit breaker is set by the stock exchanges based on the
historical volatility in the price and trading volume of the Equity Shares. The stock exchanges do not
inform us of the percentage limit of the circuit breaker from time to time, and may change it without
our knowledge. This circuit breaker effectively limits the upward and downward movements in the
price of the Equity Shares. As a result of this circuit breaker, there can be no assurance regarding the
ability of shareholders to sell the Equity Shares or the price at which shareholders may be able to sell
their Equity Shares.
Notes to Risk Factors
•
Public issue of 11,271,012 Equity Shares for cash at a price of Rs. [●] per Equity Share
including a share premium of Rs. [●] per Equity Share, aggregating Rs. [●] million, consisting
of a Fresh Issue of 6,982,042 Equity Shares and an Offer For Sale of 4,288,970 Equity Shares
by the Selling Shareholders. The Issue comprises a Net Issue to the public of 11,171,012
Equity Shares and 100,000 Equity Shares are reserved from the Fresh Issue for subscription
by Eligible Employees at the Issue Price. The Issue will constitute approximately 22.60% of
the fully diluted post-issue paid-up share capital of the Company. The Net Issue will constitute
approximately 22.40% of the fully diluted post-issue paid-up share capital of the Company.
Our Company and the Selling Shareholders are considering a Pre-IPO Placement of up to [●]
Equity Shares to certain investors, prior to filing of the Red Herring Prospectus with the RoC.
If the Pre-IPO Placement is completed, the number of Equity Shares sold pursuant to the PreIPO Placement, will be reduced from the Net Issue, subject to minimum Net Issue size of 10%
of the post-Issue paid up share capital of our Company. The Pre-IPO Placement is at the
discretion of our Company and the Selling Shareholders.
•
In terms of to Rule 19(2)(b) of the SCRR, this being an Issue of less than 25% of the postIssue share capital of our Company, the Issue is being made through the 100% Book Building
Process wherein at least 60% of the Net Issue will be allocated to QIBs on a proportionate
basis, out of which 5% shall be available for allocation on a proportionate basis to Mutual
Funds only and the remaining QIB Portion shall be available for allocation to the QIBs
including Mutual Funds, subject to valid Bids being received at or above the Issue Price. If at
least 60% of the Net Issue cannot be allotted to QIBs, then the entire application money will
be refunded forthwith. Further, not less than 10% of the Net Issue shall be available for
allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the
xxxiv
Net Issue shall be available for allocation on a proportionate basis to Retail Individual
Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to
100,000 Equity Shares shall be available for allocation on a proportionate basis to the Eligible
Employees, subject to valid Bids being received at or above the Issue Price. For further
details, see the section “Issue Structure” beginning on page 370.
•
Under-subscription, if any, in the Non-Institutional Portion and/or Retail Portion would be
allowed to be met with spill-over from other categories at the discretion of our Company and
the Selling Shareholders, in consultation with the BRLMs. Under-subscription, if any, in the
Employee Reservation Portion will be added back to the Net Issue portion at the discretion of
our Company and the Selling Shareholders, in consultation with the BRLMs. In case of undersubscription in the Net Issue, spill-over to the extent of under-subscription shall be permitted
from the Employee Reservation Portion subject to the Net Issue constituting at least 10% of
the post Issue paid-up share capital of our Company. If at least 60% of the Net Issue cannot be
allotted to QIBs, then the entire application money will be refunded forthwith.
•
The average costs of acquisition of Equity Shares by our Promoters, Mr. Dilip Modi, Omnia
Investments Private Limited are Rs. 0.97 and Rs. 0.33 per Equity Share, respectively. Our
other Promoter, Indian Televentures Private Limited does not hold any Equity Shares. For
details see the section “Capital Structure” beginning on page 21.
•
The net worth of our Company, on a consolidated basis, is Rs. 1,083.13 million as at
December 31, 2007 as per the restated consolidated summary statements of our Company. For
more information, see the section “Financial Statements” beginning on page 166.
•
The net asset value per Equity Share was Rs. 74.33 as at December 31, 2007, as per the
restated consolidated summary statements of our Company. For more information, see the
section “Financial Statements” beginning on page 166.
•
Other than as stated in the section “Capital Structure” beginning on page 21, our Company has
not issued any Equity Shares for consideration other than cash.
•
For details of transactions in the securities of our Company by our Promoters, our Promoter
Group and Directors in the last six months, see the section “Capital Structure — Notes to
Capital Structure” beginning on page 22.
•
For information on changes in our Company’s name and registered office, see the section
“History and Certain Corporate Matters” beginning on page 74.
•
Except as disclosed in the sections, “Our Promoters and Promoter Group” and “Our
Management” beginning on pages 93 and 80, respectively, none of our Promoters, Directors
or key managerial employees have any interest in our Company except to the extent of
remuneration and reimbursement of expenses and to the extent of the Equity Shares held by
them or their relatives and associates or held by the companies, firms and trusts in which they
are interested as directors, member, partner or trustee and to the extent of the benefits arising
out of such shareholding.
•
Trading in Equity Shares for all investors shall be in dematerialised form only. For further
details, see the section “Issue Procedure” beginning on page 375.
•
For details pertaining to our related party transactions, refer to the notes on related party
transactions in the section “Related Party Transactions” beginning on page 139.
•
Our Company has not made any loans and advances to any person(s)/ company in which the
Directors are interested, except as disclosed in the section “Financial Statements” beginning
on page 166.
xxxv
•
Investors may note that in case of over-subscription in the Issue, allocation to QIB Bidders,
Non-Institutional Bidders and Retail Bidders shall be on a proportionate basis. For more
information, see the section “Issue Procedure - Basis of Allotment” beginning on page 400.
•
Investors are also advised to refer to the section “Basis for the Issue Price” beginning on page
33.
•
Any clarification or information relating to the Issue shall be made available by the BRLMs
and our Company to the investors at large and no selective or additional information would be
available for a section of investors in any manner whatsoever. Investors may contact the
BRLMs, the Compliance Officer and the Syndicate Members for any complaints pertaining to
the Issue and for any clarification or information relating to the Issue, who will be obliged to
provide the same.
xxxvi
SECTION III: INTRODUCTION
SUMMARY OF BUSINESS
Overview
Our Company is one of the leading providers of telecommunications value added products, services
and solutions in India. We provide a wide range of telecommunications value added services,
platforms, products and solutions to telecommunications carrier customers, subscribers of such carriers
and enterprises across India. As a value added services provider, we not only conceptualize products to
meet our customer needs, we source and aggregate content, provide the relevant platform for delivery
of our products and services and integrate these services with the core network elements of our carrier
customer. We have the ability to provide a comprehensive suite of value added products, services and
solutions across all key technology bearers. Our telecommunications products and services and
telecommunications solutions are delivered to subscribers of major telecommunications carriers in
India, including Airtel, Spice Communications, BSNL, IDEA, Reliance, Vodafone, MTNL, Tata
Teleservices Limited and “Connect” & “Ping” of HFCL.
Our product portfolio includes music, information and entertainment based products and services (such
as mobile radio, BGM, CRBT, ringtone downloads, videos, contests, astrology, news, sports updates
and commodity rates), social networking products and services (such as voice chat), and call
management solutions (such as voicemail, voice SMS, select caller list, Pay4Me and missed call
alerts), all of which enable subscribers to personalize their mobile phones and enhance user experience.
Our products allow subscribers to access informational and entertainment content in more than 17
languages using IVRS speech-based navigation. Using our social networking platform, subscribers are
able to generate their own interactive content through messaging and conversations. We provide these
value added services and products through our carrier customers to mobile subscribers and enterprise
clients using IVRS, SMS, USSD, GPRS and WAP technology and delivery methods. Our applications
(other than GPRS) can be deployed on any network and accessed from most mobile handsets and fixedline devices. Many of our products and services can be accessed by subscribers using a variety of
delivery platforms, i.e., voice, SMS, USSD, GPRS, WAP and 3G network, thereby enabling us to
deploy our products and services across a majority of operators and networks.
We focus on multi-modal platforms based on voice, text and data. Our mobile radio platform gives
subscribers the interactive option to access content on demand in the language of their choice, using
their mobile phones. Given the demographic diversity of India, our platforms offer an efficient, easyto-use and attractive solution to our carrier customers for providing services to their subscribers. The
platform enables our carrier customers to introduce better targeted, more innovative content based
services. Our data platform, Mitr proposes to provide a unified framework for discovering and
accessing content and services, giving the subscriber a personalized experience. Our delivery
infrastructure is deployed across most network circles of our carrier customers.
Our roaming solutions provide traffic flow information, enable network optimization and identify
network bottlenecks for our carrier customers. Subscribers benefit from real-time updates and better
coverage while roaming outside their regular network. Through our in-house research and development
team, we have developed roaming solutions such as Welcome Roamer, Roam Tracker, Roam Globe,
Roam Secure and Roam Privilege.
Our value added services and products provide a source of additional revenue to our carrier customers
with relatively insignificant capital expenditure. Our music, entertainment and information based value
added products and services are dependent on the content which we provide. We have alliances with a
number of content owners and license holders and licensed content is delivered to our carrier customers
through our delivery platforms. As of May 31, 2008, we had more than 140,000 songs in more than 17
languages, as well as logos, wallpaper and 12,000 ringtones in our content database to cater to the
needs of multicultural and multilingual subscribers in India.
Our consolidated income increased from Rs. 332.26 million in Fiscal 2006 to Rs. 686.80 million in
Fiscal 2007 and to Rs. 777.19 million for the nine months ended December 31, 2007. Our consolidated
1
profit after tax increased from Rs. 220.38 million in Fiscal 2006 to Rs. 410.50 million in Fiscal 2007
and to Rs. 330.68 million for the nine months ended December 31, 2007.
We were incorporated in India in April 2000. Our registered office is located in New Delhi, India. We
also maintain offices in Noida, Kolkata, Bangalore, Mohali, Hyderabad, Parwanoo and Mumbai and
have an overseas office in Singapore.
Our Competitive Strengths
The telecommunications services industry has grown exponentially in recent years as a result of India’s
expanding economy. Land-based telephone connections and services are inadequate for current
consumer needs and mobile phones are increasingly filling the growing demand. Competitive pressures
have also resulted in decreasing prices and declining average revenue per user in the Indian
telecommunications industry and telecommunications operators and service providers are increasingly
looking to additional services and products to support and grow their market share, revenues and
margins.
Innovative platform based product development and diversity of products and services
We are continually engaged in the development of new products and services on our platforms to
enhance the product portfolio we offer to our telecommunications carrier customers and other
enterprises and bring new products and services to the market to address consumer needs and drive
demand. We focus on multi-modal platforms based on voice, text and data. Our mobile radio platform
gives subscribers the interactive option to access content on demand in the language of their choice
using their mobile phones. Given the demographic diversity of India, our platforms offer an efficient,
easy-to-use and attractive solution to our carrier customers for providing services to their subscribers.
The platform enables carriers to introduce better targeted, more innovative content based services. Our
data platform, Mitr, proposes to provide a unified framework for discovering and accessing content and
services, giving the subscriber a personalized experience. We continue to invest in the growth of our
platforms to ensure that these are in tune with the requirements of our customers. In addition, we are
constantly refining our offerings to improve adoption of mobility-related products by consumers and
address pricing pressures. We provide a diverse portfolio of services, products and content, with a
focus on entertainment, information, music and games. We have introduced new services in India,
including tambola via mobile phone, BGM, VAS on USSD, Pay4Me and select caller list. For music,
entertainment and infotainment products, we have launched our BGM service, mobile radio and
ringtones; for call-related products, we have launched select caller VAS on USSD and Pay4Me; for
services and applications, we have launched user generated products such as voice chat; and we have
developed and launched innovative roaming solutions such as Welcome Roamer, Roam Tracker, Roam
Globe, Roam Secure and Roam Privilege. Our ability to offer a complete suite of products and services
allows our customers to offer a wide range of user interface services to their subscribers, resulting in
ease of market adoption, revenue growth, and higher subscriber satisfaction.
Entrenched customer relationships
All of the major telecommunications carriers in India form a part of our customer base, including
Airtel, Spice Communications, BSNL, IDEA, Reliance, Vodafone, MTNL, Tata Teleservices Limited
and “Connect” & “Ping” of HFCL. We have successfully marketed our solutions to a multitude of
diverse telecommunication carriers customers. Service deployments with our customers involve
complex hardware systems and software applications deeply embedded within the customer’s core
network systems. Since the service deployment on our customers’ network is complex, our relationship
development personnel are stationed at our telecommunication carriers office, giving us the ability to
expand quickly and efficiently the range of services deployed and benefiting from the revenue growth
from their subscriber base.
Our presence and deep experience across the mobile industry value chain
Our experience in the mobile industry value chain provides us with valuable insight into the mobile
eco-system. Our association with Spice Communications has in the past provided us with enhanced and
expedited feedback on the ever-changing needs of end-user subscribers and their feedback has been
incorporated by our research and development team into new products and services. We believe
2
expedited feedback from the telecommunication carriers perspective gives us a time-to-market
advantage for development of new products and services. In addition, we have the capability of
managing the entire value added services segment which a telecommunications carrier customer
requires in providing value added services to its subscribers. Currently, we provide this management
service to Spice Communications. This managed services model benefits the carrier by reducing its
investment in the value added services segment and helps the launch of innovative data and multimedia
services quickly and efficiently.
Strong core technological capabilities
We have significant in-house resources and capabilities and a deep domain understanding in the areas
of voice, data, and signaling. In the past, this understanding has allowed our Company to build
technology intensive applications and products such as BGM (voice domain), mobile radio platform
(voice domain), USSD/SMSC (signaling domain) and services, such as call filter (enhanced IN
services) and Mitr. Our technology team works closely with the business teams and keeps a close
watch on the value added services environment worldwide. We have a sophisticated understanding of
the complexities of the operations of our carrier customers, which enables us to better address the
technological concerns involved in incorporating products and services into operators’ networks. We
were one of the first to develop products and services such as BGM, VAS on USSD, Select Caller List
and Pay4Me, resulting in revenue growth for our Company over the last few years.
Our diversified content database
Our music, entertainment and information based value added services and products are dependent on
the content we source, license, reformat and re-position. We have invested significant effort in growing
the necessary relationships and have forged alliances with more than 300 content owners and license
holders. We have a content database of more than 140,000 songs in more than 17 languages, as well as
logos, wallpaper and 12,000 ringtones in our content database, to cater to the needs of multicultural and
multilingual users in India. With our pan-India presence and a well diversified offering of value added
products and services, we provide relevant services in a convenient manner to our consumers in the
language of their choice. Hosting a gamut of content varieties, consisting of music, entertainment,
gaming, contesting and information based services, we facilitate continuous access to the content
required by our carrier customers.
Experienced management and research and development team
Our senior management team has an average of, over 14 years of experience in the telecommunications
and technology industries with well-established companies. We have a research and development team
comprised of 128 members and have in the past created and nurtured innovative products and services
in the evolving mobile eco-system and building community brands across product and service verticals.
Our experienced senior management tea
m has been a primary contributor to our current status as a leading provider of telecommunications
value added services and products and solutions in India.
Our Strategy
Our strategy is to be the preferred VAS business partner of telecommunications carriers and enterprise
clients. We strive to offer the most innovative platforms, products and services that can be accessed and
used by our carrier customers’ subscribers on mobile phones and by our enterprise clients, delivering
value added voice services, data transmission, mobile commerce and communications.
Provide innovative applications to fulfill our carrier customers’ total telecommunication needs in
new and existing markets
Mobile phones have developed beyond simple voice communications and have become a sophisticated
multi-utility tool for consumers to enjoy and access a variety of services. We believe that the value
added services industry is rapidly evolving to provide rich and varied content and services for
subscribers. We intend to utilize our expertise to develop and launch innovative products and services
that will meet the evolving needs of the end-user subscribers for our carrier customers and enterprise
3
customers in our current markets, as well as market new products and services to new and existing
customers in India and internationally. We continue to focus on and invest in our development
activities to anticipate the needs of the growing subscriber market and continue to develop products and
services which match consumer preferences as well as foster cross-selling of services to these end-user
subscribers that our products and services reach.
Deepen our relationships with carrier customers
We intend to expand our geographic presence and market penetration in India. Based on our experience
serving as an integrated telecommunications solutions provider for some of our carrier customers who
want to rapidly and cost-effectively provide a broad range of telecommunications value added services
and products to their subscribers and create new revenue streams, we believe we have the leverage to
expand our domestic carrier customer base, becoming a value added service provider of choice. We
intend to increase our market share with existing customers by providing a broader range of services
and products to these customers, and also cross-marketing additional products, such as our roaming
solutions to our carrier customers. Furthermore, we intend to enhance our presence in enterprise
services by providing a broader range of services to our enterprise clients within India and overseas. In
order to develop and support these new customer relationships, we intend to upgrade and expand our
network of development, sales and support resources in potential growth markets and to enter into local
partnerships and distribution arrangements. We also intend to be present in all aspects of the value
added services chain, acting as a partner to our customers by managing the entire value added services
offering of our customers.
Build on our platforms
While we continue to innovate and launch value added services and products, we intend to focus on the
development of platforms on which various applications can be hosted, including hosting of third party
applications. We have developed a voice platform through mobile radio, which is a one-stop-shop for
music, comedy, sports and other such products, a roaming platform allowing a multitude of
applications for multiple carrier customers to take advantage of economies of scale and the breadth of
our product portfolio, and a service control point platform for offering a multitude of enhanced
Intelligent Network (IN) services, such as select caller list, call control and ‘follow me’. Our data
platform, Mitr, proposes to provide a unified framework for discovering and accessing content and
services and a personalized customer experience. We continue to build platforms for new emerging
opportunities such as mobile marketing, mobile commerce and enterprise customer relationship
management.
Grow our technological capabilities and improve our product deployment
We have successfully tested and launched applications such as bulk outbound messaging (through our
enterprise solutions platform), select caller list, VAS on USSD, Pay4Me and missed call alerts through
voice and data technologies. With the evolution of the mobile phone beyond its basic call functionality,
we believe there are opportunities to offer products and services which enable merchants and
consumers to sell and purchase goods, mobile content and other products using the wireless handset as
a sales channel. Merchants will be able to leverage the increasing reach of telecommunications
networks by using products, such as outbound messaging, to access large and difficult to reach markets
in India.
We intend to leverage the mass customization capabilities of our value added software services
deployments with our carrier customers to bring to market advanced capabilities such as demand
aggregation and personalized one-to-one direct marketing. We believe that our experience in providing
telecommunications value added services and products for delivery to mobile users gives us a deep
understanding of subscriber behavior and use of value added products and services, which assists us in
formulating new products and services and improving existing products to enhance the user experience.
Strengthen our long-standing content sourcing relationships
Our current initiatives include providing channels for both user generated and media generated content.
We seek to develop one of the strongest content databases in India, cutting across genres and
4
languages. Since most of our products and services are dependent on the content we provide, our focus
is to create one of the largest digital and music databases in India. Currently, the major growth in
mobile telephony is from semi-urban and rural areas. With coverage expansion by the operators in
semi-urban and rural areas where there are few entertainment and information outlets other than
television, we expect there will be significant requirements for content focused on semi-urban and rural
populations, such as commodity market prices, commodity rates, weather information and education.
We intend to have online content in these areas through our partnerships with content providers.
Expand our operations into new enterprises and international markets
As the cellular subscriber base is growing, enterprises are using the mobile phone as a tool for customer
relationship management, mobile advertising and MCommerce. Examples of this growth are banks and
insurance companies using the mobile phones for banking transactions and due-date alerts. We intend
to focus on growing our enterprise customer base to expand and grow our business.
We also believe there is significant market growth potential in emerging telecommunications services
markets outside India. We have set up and own an office in Singapore to research the market in
Singapore and in the Asia-Pacific region. In addition, we have a presence in Jordan where we provide
our telecommunication value added services and products. We intend to market existing products and
services and develop customized products and services within the Asia-Pacific region and further to
other parts of the world. We believe that with our strong technological, product innovation and
bandwidth handling capabilities, we can offer cost efficient, innovative and diverse range of products
and services internationally. We believe overseas markets, with potentially higher average revenues per
user, offer expansion and business growth opportunities with manageable increased costs. We are in the
process of evaluating markets such as Bangladesh, Indonesia, Malaysia and Africa.
Pursue selective strategic acquisitions and investments
We continually seek new growth and acquisition opportunities in our existing business lines as well as
related businesses to expand our geographic presence domestically and internationally, service
offerings, customer relationships and technological expertise. By selecting the opportunities for growth
and acquisition carefully and leveraging our transactional, project execution and operational skills, we
expect to continue to expand our business. We will pursue similar opportunities in other regions to
strengthen and grow our business, including investment in or acquisition of minority or majority stakes
in companies which support our business and product strategy.
5
SUMMARY OF INDUSTRY
Telecommunications and Mobile Value Added Services (MVAS) Market Opportunity in India
The Indian telecommunications industry has experienced significant growth in recent years and is
expected to continue as India’s large population and low mobile penetration offer considerable scope
for growth. This growth has been highly visible in the mobile sector. India’s cellular market penetration
is estimated at approximately 20% as of 2007 and is projected to rise to approximately 61% by 2012, a
CAGR of 26.9%. Correspondingly, revenues from cellular services in India are projected to increase
from US$14 billion in 2007 to US$37 billion in 2012, an implied CAGR of 18.0% (Source: Gartner
Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and Nick Ingelbrecht, 3
June 2008 1). A more recent analysis by TRAI (no. 54, 2008) estimates the total wireless subscribers as
of April 2008 was 269.3 million.
India Cellular: Total Market, 2003- 2012
Mobile Connections (in thousands)
Penetration
800,000
70%
60.7%
700,000
60%
54.8%
600,000
47.8%
50%
40.0%
500,000
40%
400,000
29.7%
737,119
30%
657,488
300,000
565,759
19.8%
466,839
200,000
12.6%
6.9%
100,000
0
2.7%
20%
341,536
224,388
4.5%
10%
141,136
28,442
48,220
75,923
2003
2004
2005
0%
2006
2007
2008
2009
2010
2011
2012
(Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and
Nick Ingelbrecht, 3 June 2008)
The growth of telecom subscribers has led to the emergence of the Mobile Value Added Services
(MVAS) market. MVAS are those services that are not part of the basic voice offer and are availed
separately by the end user. They are used as a tool for differentiation and allow mobile operators to
develop another stream of revenue. The nature of value added services changes over time. For example,
P2P SMS was the only form of VAS in the early days of adoption of mobile telephony in India. Now
VAS includes data offerings such as games, music, video/TV, ringtones, graphics, information
services, contests and other. Data service revenue, (including SMS) was estimated to be approximately
US$1.5 billion in 2007 and growing to approximately US$5.6 billion in 2012, a CAGR of 26.3% for
1
The Gartner Report(s) described herein, (the "Gartner Report(s)") represent data, research opinion or
viewpoints published, as part of a syndicated subscription service available only to clients, by Gartner, Inc., a
corporation organized under the laws of the State of Delaware, USA, and its subsidiaries ("Gartner"), and are not
representations of fact. The Gartner Report(s) do not constitute a specific guide to action and the reader of this
Draft Red Herring Prospectus assumes sole responsibility for his or her selection of, or reliance on, the Gartner
Report(s), or any excerpts thereof, in making any decision, including any investment decision. Each Gartner
Report speaks as of its original publication date (and not as of the date of this Draft Red Herring Prospectus) and
the opinions expressed in the Gartner Report(s) are subject to change without notice. Gartner is not responsible,
nor shall it have any liability, to the Company or to any reader of this Draft Red Herring Prospectus for errors,
omissions or inadequacies in, or for any interpretations of, or for any calculations based upon data contained in, the
Gartner Report(s) or any excerpts thereof.
6
the period 2008-2012 (Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012,
Madhusudan Gupta and Nick Ingelbrecht, 3 June 2008).
India Cellular Services, Total Market — 2003-2012
Total Services Revenue (US$ million)
Data Revenue (US$ million)
40,000
5,576.7
35,000
6,000
4,870.6
5,000
30,000
4,152.5
4,000
25,000
3,230.4
20,000
3,000
37,766
34,796
2,194.9
30,787
15,000
1,524.6
10,000
2,000
25,632
19,460
901.8
14,338
1,000
563.8
5,000
9,021
323.4
146.6
2,706
4,645
6,479
0
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
(Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and
Nick Ingelbrecht, 3 June 2008)
Historically, the telecommunications sector was run by the Indian Government through the Ministry of
Telecommunications and Information Technology, Department of Telecommunications. The
liberalisation of this key sector began in the early 1990s with the realisation that in order to expedite
development of the infrastructure throughout India, wide scale investment was required and this could
not be fulfilled exclusively by public investment. Since early 1998, telecommunications services areas
have been opened up on a nationwide basis to competition and private sector participation. This
transition from a government-controlled monopoly to an industry with widespread private sector
participation, coupled with population growth and strong economic trends in recent years has been
instrumental in the telecommunications sector becoming one of the fastest growing sectors in India.
7
SUMMARY FINANCIAL INFORMATION
CONSOLIDATED SUMMARY STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED
Particulars
(Amount in Rs. Million)
As at March 31, 2007
As at December 31,
2007
APPLICATION OF FUNDS
Fixed Assets
452.69
185.70
(113.51)
(52.99)
339.18
132.71
8.05
31.21
347.23
163.92
-
1.87
-
1.36
Sundry Debtors
357.24
262.53
Cash and Bank Balances
500.59
648.30
84.65
3.34
294.27
47.84
Total
1,236.75
963.37
TOTAL (A)
1,583.98
1,129.17
2.04
-
0.10
0.10
Current Liabilities
181.98
86.85
Provisions
316.73
11.68
Total
498.81
98.63
TOTAL (B)
500.85
98.63
1,083.13
1,030.53
Gross Block
Less: Accumulated Depreciation/ Amortisation
Net Block
Capital Work In Progress including Capital Advances
Total
Deferred Tax Assets (net)
Current Assets, Loans & Advances
Inventories
Other Current Assets
Loans & Advances
Deferred Tax Liabilities (net)
Liabilities and Provisions
Minority Interest
Net Worth (A-B)
8
Particulars
As at December 31,
2007
As at March 31, 2007
Represented by
Share Capital and Reserves
Equity Share Capital
Reserves and Surplus (Figure for December 31, 2007 is net of
Rs. 5.11million being adjustment for employee provisions
(Refer Note No. G (3) of the Annexure XIX)
Less: Miscellaneous Expenditure
(to the extent not written off or adjusted)
Net Worth
145.72
145.72
885.92
937.41
-
1.11
1,083.13
1,030.53
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Consolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure XIX
9
.
CONSOLIDATED SUMMARY STATEMENT OF PROFIT AND LOSS, AS RESTATED
Particulars
(Amount in Rs. Million)
Year Ended March 31,
2007
Nine- months Period
Ended December 31, 2007
INCOME
Operating Income
734.56
661.78
Other Income
42.63
25.02
Total Income
777.19
686.80
0.99
3.38
82.13
50.11
138.37
66.11
EXPENDITURE
Purchase of Goods for Sale
Operating Expenses
Staff Cost
Selling and Distribution Expenses
16.56
7.28
126.31
78.53
Decrease / (Increase) in Inventories
1.36
(1.36)
Interest
0.94
0.04
Miscellaneous Expenditure written off
Depreciation / Amortization (Refer note no. C(iv) and
G (9) of the Annexure XIX)
1.11
-
General and Administration Expenses
60.47
32.90
428.24
236.99
348.95
449.81
5.31
0.38
343.64
449.43
14.91
24.06
Deferred Tax Charge / (Credit)
3.43
(1.24)
Fringe Benefits Tax
4.65
2.16
22.99
24.98
320.65
424.45
Adjustments ( Refer Note no. E of Annexure XIX)
10.45
(15.64)
Current Tax impact of Adjustments
(0.42)
1.21
-
0.48
10.03
(13.95)
330.68
410.50
Total Expenditure
PROFIT BEFORE TAX AND PRIOR PERIOD
ITEMS
Prior Period Items
PROFIT BEFORE TAX AND AFTER PRIOR
PERIOD ITEMS
Provision for Tax
Current Tax (Net of MAT Credit entitlement, refer
note no. G (10) of the Annexure XIX)
Total Tax Expense
NET PROFIT AS PER AUDITED
ACCOUNTS
Deferred Tax impact of Adjustments
Net Impact of Adjustments
NET PROFT AS RESTATED, BEFORE
MINORITIES SHARE
Less: (Losses) / Profits attributable to minority
shareholders
(0.001)
0.001
NET PROFT AS RESTATED
330.68
410.50
201.22
289.42
531.90
699.92
33.47
42.37
Profit & Loss Account at the beginning of the year /
period
PROFIT AVAILABLE FOR
APPROPRIATION
Appropriations:
Transfer to General Reserve
10
Particulars
Nine- months Period
Ended December 31, 2007
Proposed Dividend on Equity Shares (at the rate of
Rs. 16.07 per share)
Interim Dividend on Equity Shares (at the rate of Rs.
33.35 per share)
Tax on dividend
BALANCE CARRIED FORWARD AS
RESTATED
Year Ended March 31,
2007
234.28
-
-
400.20
39.82
56.13
224.343
201.22
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Consolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure XIX.
11
THE ISSUE
Public Issue
Of which:
11,271,012 Equity Shares*
Fresh Issue by the Company
Of which:
Employee Reservation Portion(1)
6,982,042 Equity Shares
100,000 Equity Shares
Offer for Sale by Selling Shareholders**
4,288,970 Equity Shares
Net Issue to public
Of which:
11,171,012 Equity Shares
QIB Portion(2)
At least 6,702,608 Equity Shares
Of which:
Mutual Fund Portion
Balance for all QIBs including Mutual Funds
335,131 Equity Shares
6,367,477 Equity Shares
Non-Institutional Portion(1)
Not less than 1,117,101 Equity Shares
Retail Portion(1)
Not less than 3,351,303 Equity Shares
Equity Shares outstanding prior to the Issue
Equity Shares outstanding after the Issue
42,889,685 Equity Shares
49,871,727 Equity Shares
Use of Issue proceeds
See the section “Objects of the Issue” beginning
on page 30. Our Company will not receive any
proceeds of the Offer for Sale.
*Our Company and the Selling Shareholders are considering a sale of up to [●] Equity Shares to certain investors, prior to
filing of the Red Herring Prospectus with the RoC (“Pre-IPO Placement”). If the Pre-IPO Placement is completed, the number
of Equity Shares sold pursuant to the Pre-IPO Placement, will be reduced from the Net Issue, subject to minimum Net Issue size
of 10% of the post-Issue paid up share capital of our Company. The Pre-IPO Placement is at the discretion of our Company and
the Selling Shareholders.
** Lehman Brothers Opportunity Limited, one of the Selling Shareholders, an affiliate of Lehman Brothers Securities Private
Limited, one of the BRLMs, is transferring 2,571,454 Equity Shares as part of the Offer for Sale in this Issue.
(1)
Subject to valid Bids being received at or above the Issue Price, under-subscription, if any, in the Non-Institutional Portion
and Retail Portion would be allowed to be met with spill-over from other categories at the discretion of our Company and
the Selling Shareholders, in consultation with the BRLMs. Under-subscription, if any, in the Employee Reservation Portion
will be added back to the Net Issue portion at the discretion of our Company and the Selling Shareholders, in consultation
with the BRLMs. In case of under-subscription in the Net Issue, spill-over to the extent of under-subscription shall be
permitted from the Employee Reservation Portion subject to the Net Issue constituting at least 10% of the post Issue paidup share capital of our Company. If at least 60% of the Net Issue cannot be allotted to QIBs, then the entire application
money will be refunded forthwith.
(2)
Allocation to QIBs is proportionate as per the terms of this Draft Red Herring Prospectus. 5% of the QIB Portion shall be
available for allocation to Mutual Funds. Mutual Funds participating in the 5% reservation in the QIB Portion will also be
eligible for allocation in the remaining QIB Portion. Further attention of all QIBs is specifically drawn to the following:
(a) QIBs will not be allowed to withdraw their Bid cum Application Forms after the Bid/Issue Closing Date; and (b) each
QIB, is required to deposit a Margin Amount of at least 10% with its Bid cum Application Form.
12
GENERAL INFORMATION
Our Company was incorporated as Cellebrum.Com Private Limited on April 4, 2000 under the
Companies Act. Subsequently, our Company was converted into a public limited company and the
name of our Company was changed to “Cellebrum.Com Limited” pursuant to a fresh certificate of
incorporation granted to our Company on February 14, 2008, by the RoC. Further, the name of our
Company was changed from “Cellebrum.Com Limited” to “Cellebrum Technologies Limited”
pursuant to a fresh certificate of incorporation granted to our Company on April 22, 2008, by the RoC.
For details of changes in name and registered office of our Company, see the section “History and
Certain Corporate Matters” beginning on page 74.
Registered Office
D-4 Okhla Industrial Area,
Phase-1,
New Delhi- 110020, India.
Telephone: +91 11 26814544
Facsimile: +91 2681 7702
Corporate Office
D-1, Sector 3,
Noida- 201 301,
Uttar Pradesh, India.
Telephone: +91 120 4035600
Facsimile: +91 120 4265786
Website: www.cellebrum.com
Corporate Identity Number: U72900DL2000PLC104989
Registration Number: 55-104989
Address of the Registrar of Companies
The Registrar of Companies,
National Capital Territory of Delhi and Haryana,
4th Floor, IFCI Tower,
Nehru Place,
New Delhi- 110 019, India.
Board of Directors
Name, Designation, Occupation and DIN
Age
Mr. K.N. Memani
Chairman
Non-Executive Director
Independent Director
Professional
DIN: 00020696
Mr. Dilip Modi
Managing Director
Non-Independent Director
Industrialist
DIN: 00029062
Mr. Vivek Bali
Non-Executive Director
Non-Independent Director
13
Address
69
177C, Western Avenue,
Lane 7, Sainik Farm,
New Delhi- 110062, India
34
36, Amrita Shergill Marg,
New Delhi- 110004, India
47
C-66, Defence Colony,
New Delhi- 100024, India
Name, Designation, Occupation and DIN
Age
Service
DIN: 02078398
Mr. Hanif M. Dahya
Non-Executive Director
Independent Director
Industrialist
DIN: 01068575
Mr. Andreas Vourloumis
Non-Executive Director
Non-Independent Director
Nominee of Lehman Brothers
Opprtunity Limited
Service
DIN: 01058533
Ms. Divya Modi
Non-Executive Director
Non-Independent Director
Industrialist
DIN: 00031073
52
Address
5, Beechwood Road,
Allendale, New Jersey,
U.S.A
33
FLT D 4, Scenic Villa,
2-28, Scenic Villa,
Pok Fu Lam, Hong Kong
24
36, Amrita Shergill Marg,
New Delhi- 110004, India
For further details regarding our Board of Directors, see the section “Our Management” beginning on
page 80.
Company Secretary and Compliance Officer
Mr. Ashok Agarwal
Cellebrum Technologies Limited,
D-1, Sector 3,
Noida- 201301, Uttar Pradesh, India.
Telephone: +91 120 4363652
Facsimile: +91 120 4320467
E-mail: [email protected]
Investors can contact the Compliance Officer in case of any pre-Issue or post-Issue related problems
such as non-receipt of letters of Allotment, credit of Equity Shares in the respective beneficiary
accounts and refund orders.
Book Running Lead Managers
Enam Securities Private Limited
SEBI Reg. No:INM000006856
801/802, Dalamal Towers,
Nariman Point,
Mumbai- 400 021, Maharashtra, India.
Telephone: + 91 22 6638 1800
Facsimile: + 91 22 2284 6824
E-mail: [email protected]
Investor Grievance E-mail:
[email protected]
Website: www.enam.com
Contact Person: Ms. Kanika Sarawgi
Lehman Brothers Securities Private Limited
SEBI Reg. No.: INM000010957
Ceejay House, 11th Level, Plot F, Shivsagar Estate, Dr.
Annie Besant Road, Worli
Mumbai- 400 018, Maharashtra, India.
Telephone: +91 22 4037 4037
Facsimile: +91 22 4037 4111
Investor Grievance E-mail: [email protected]
E-mail: [email protected]
Website:
www.lehman.com/ibd/geographic/asia/ipos_india.htm
Contact person: Mr. Harishwar Sukhthankar
Syndicate Members
[●]
Legal Counsels
Domestic Legal Counsel to the Company
Khaitan Jayakar Sud & Vohra
14
Solicitors & Advocates,
D-41, Defence Colony,
New Delhi- 110024, India.
Telephone: + 91 11 3294 4972, 4155 2824
Fascimile: +91 11 4151 0266
E-mail: [email protected]
Domestic Legal Counsel to the Underwriters
Luthra & Luthra Law Offices
103, Ashoka Estate,
24, Barakhamba Road,
New Delhi- 110 001, India.
Telephone: +91 11 4121 5100
Facsimile: +91 11 2372 3909
International Legal Counsel to the Issue
Jones Day
29th Floor, Edinburg Towers,
The Landmark,
15 Queen’s Road Central,
Hong Kong.
Telephone: +852 2526 6895
Facsimile: +852 2868 5871
Legal Counsel to Lehman Brothers Opportunity Limited as Selling Shareholder
Amarchand & Mangaldas & Suresh A. Shroff & Co.
Peninsula Chambers,
Peninsula Corporate Park,
Ganpatrao Kadam Marg,
Lower Parel,
Mumbai- 400 013, India
Telephone: +91 22 2496 4455
Facsimile: +91 22 2496 3666
Registrar to the Issue
Karvy Computershare Private Limited
SEBI Reg. No.: INR000000221
“Karvy House”, No. 46
Avenue 4, Street No.1
Banjara Hills, Hyderabad
500 034, Andhra Pradesh, India
Telephone: + 91 40 2343 1553
Facsimile: + 91 40 2343 1551
E-mail: [email protected]
Website: www.karvy.com
Contact Person: Mr. Murali Krishna
Bankers to the Issue/Escrow Collection Banks
[●]
Auditors
S.R. Batliboi & Associates (Chartered Accountants)
15
Golf View, Corporate Tower-B
Near DLF Golf Course, Sector 42, Sector Road
Gurgaon- 122002, Haryana, India.
Telephone: +91 124 4644 000
Facsimile: +91 124 4644 050/51
E-mail: [email protected]
Contact Person: Mr. Raj Agrawal
Bankers to our Company
Indusind Bank
International Trade Tower
‘F’ Block, Ground Floor
Nehru Place,
New Delhi- 110019, India.
Telephone: +91 11 2644 5809
Facsimile: +91 11 2623 6537
E-mail: [email protected]
Contact Person: Mrs. Sangeeta Marwah
The Hongkong and Shanghai Banking Corporation
Limited
3rd Floor, Ashoka Estate
24, Barakhamba Road,
New Delhi-110001, India.
Telephone: +91 11 4159 2099
Facsimile: +91 11 4101 2624
E-mail: [email protected]
Contact Person: Mr. Nitin Madhra
Statement of Responsibility of the Book Running Lead Managers
The following table sets forth the inter se allocation of responsibilities for various activities among the
BRLMs:
(i)
(ii)
Activities
Capital structuring with the relative components and
formalities such as type of instruments, etc.
Due diligence of the Company’s operations/
management/ business plans/ legal, etc.
Drafting and design of offer document and of
statutory advertisement including memorandum
containing salient features of the Prospectus.
The BRLMs shall ensure compliance with
stipulated requirements and completion of
prescribed formalities with the Stock Exchanges
and SEBI including finalisation of the
Prospectus and filing with the Stock Exchanges.
Drafting and approval of all publicity material other than
statutory advertisement as mentioned above including
corporate advertisement, brochure, etc.
Appointment of other Intermediaries:
(a)
Printers;
(b)
Registrar;
(c)
Grading Agency
(d)
Advertising Agency; and
(e)
Banker to the Issue
Responsibility
Enam
Enam
Co-ordinator
Enam
Enam
Enam
Enam
Enam
Enam
Enam, Lehman
Enam
Enam, Lehman
Lehman
ENAM, Lehman,
Lehman
(iii)
(iv)
(v)
vi)
(viii)
Domestic Institutional marketing of the Offer , which will
cover, inter alia:
•
Institutional marketing strategy
Finalise the list and division of investors for one
on one meetings
Co-ordination for all domestic roadshow logistics
International Institutional marketing of the Offer , which
will cover, inter alia:
•
Institutional marketing strategy
•
Finalise the list and division of investors for one
on one meetings
•
Co-ordination for international roadshow logistics
Preparation of road show marketing presentation and
FAQ
16
(ix)
(x)
(xi)
Activities
Retail/Non-institutional marketing strategy which will
cover, inter alia,
Finalize media, marketing and public relation
strategy,
Finalize centers for holding conferences for
brokers, etc.
Finalize collection centers,
Follow-up on distribution of publicity and Issue
material including form, Prospectus and
deciding on the quantum of the Issue material
Managing the Book, pricing and allocation to QIB
Bidders.
Post bidding activities including coordination with Stock
Exchanges ,management of Escrow Accounts, coordinate non-institutional allocation, intimation of
allocation and dispatch of refunds to Bidders, etc. The
post issue activities of the Issue will involve essential
follow up steps, which include finalization of trading
and dealing instruments and dispatch of certificates and
demat delivery of shares, with the various agencies
connected with the work such as Registrars to the Issue,
Banker to the Issue and the bank handling refund
business. The BRLMs shall be responsible for ensuring
that these agencies fulfil their functions and enable
them to discharge this responsibility through suitable
agreements with the Company.
Responsibility
Enam, Lehman
Enam
Co-ordinator
Enam, Lehman
Enam
Enam
Enam
Credit Rating
As the Issue consists of the issue of equity shares, a credit rating is not required.
IPO Grading
[●]
This Issue has been graded by [●] and has been assigned the “IPO Grade [●]/5”indicating [●]
fundamentals, through its letter dated [●]. The IPO grading is assigned on a five point scale from 1 to 5
with an “IPO Grade 5” indicating strong fundamentals and an “IPO Grade 1” indicating poor
fundamentals. A copy of the report provided by [●], furnishing the rationale for its grading is available
for inspection at our Registered Office from 10.00 am to 4.00 pm on Business Days from the date of
the Red Herring Prospectus until the Bid/Issue Closing Date.
Monitoring Agency
In terms of clause 8.17.1 of the SEBI Guidelines, the size of the Issue being less than Rs. 5,000
million, we are not required to appoint a monitoring agency.
Trustees
As the Issue consists of the issue of equity shares, the appointment of trustees is not required.
Project Appraisal
None of the objects of the Issue have been appraised.
Book Building Process
Book building refers to the process of collection of Bids from investors on the basis of the Red Herring
Prospectus and Bid cum Application Forms. The Issue Price is determined by our Company and the
Selling Shareholders, in consultation with the BRLMs, after the Bid/Issue Closing Date. The principal
parties involved in the Book Building Process are:
17
(1)
(2)
(3)
(4)
(5)
(6)
our Company;
the Selling Shareholders;
the BRLMs;
Syndicate Members who are intermediaries registered with SEBI or registered as brokers with
BSE/NSE and eligible to act as underwriters. Syndicate Members are appointed by the
BRLMs;
Registrar to the Issue; and
Escrow Collection Banks.
The Equity Shares are being offered to the public through the 100% Book Building Process in
accordance with Rule 19(2)(b) of the SCRR and the SEBI Guidelines, wherein at least 60% of the Net
Issue shall be Allotted on a proportionate basis to QIBs, of which 5% shall be reserved for allocation
on a proportionate basis to Mutual Funds only. The remainder of the QIB Portion shall be available for
allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being
received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be Allotted to
QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the
Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not
less than 30% of the Net Issue shall be available for allocation on a proportionate basis to Retail
Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, up to
100,000 Equity Shares shall be available for allocation on a proportionate basis to our Eligible
Employees, subject to valid Bids being received at or above the Issue Price.
Under the SEBI Guidelines, QIBs are not allowed to withdraw their Bids after the Bid/Issue
Closing Date. In addition, QIBs are required to pay the QIB Margin Amount, representing at
least 10% of the Bid Amount, upon submission of their Bids and allocation to QIBs will be on a
proportionate basis. For details, see the section “Issue Procedure” beginning on page 375.
Our Company and the Selling Shareholders will comply with the guidelines issued by SEBI in
connection with the Issue. In this regard, our Company has appointed Enam and Lehman as the Book
Running Lead Managers to manage the Issue and to procure subscriptions to the Issue.
The process of book building under the SEBI Guidelines is subject to change from time to time.
Investors are advised to make their own judgment about an investment through this process
prior to submitting a Bid in the Issue.
Steps to be taken by the Bidders for bidding:
•
•
•
•
•
Check eligibility for making a Bid. See the section “Issue Procedure” beginning on page 375;
Ensure that you have a demat account and the demat account details are correctly mentioned
in the Bid cum Application Form;
Ensure that the Bid cum Application Form is duly completed as per the instructions given in
the Red Herring Prospectus and in the Bid cum Application Form; and
Ensure that you have mentioned your PAN in the Bid cum Application Form (see the section
“Issue Procedure” beginning on page 375).
Ensure the correctness of your demographic details (as defined in the section “Issue Procedure
– Bidder’s Depository Account and Bank Account Details” beginning on page 390), given in
the Bid cum Application Form, with the details recorded with your Depository Participant.
Illustration of Book Building Process and the Price Discovery Process
(Investors should note that the following is solely for the purpose of illustration and is not specific to
the Issue)
Bidders can bid at any price within the price band. For instance, assuming a price band of Rs. 20 to
Rs. 24 per share, an issue size of 3,000 equity shares and receipt of five bids from bidders, details of
which are shown in the table below, the illustrative book would be as given below. A graphical
representation of the consolidated demand and price would be made available at the bidding centres
during the bidding period. The illustrative book as shown below indicates the demand for the shares of
the company at various prices and is collated from bids from various investors.
18
Bid Quantity
500
1,000
1,500
2,000
2,500
Bid Price
(Rs.)
Cumulative equity shares Bid for
Subscription
500
1,500
3,000
5,000
7,500
16.67%
50.00%
100.00%
166.67%
250.00%
24
23
22
21
20
The price discovery is a function of demand at various prices. The highest price at which the issuer is
able to issue the desired number of shares is the price at which the book cuts off, i.e., Rs. 22 in the
above example. The issuer, in consultation with the book running lead managers, will finalise the
issue price at or below such cut-off, i.e., at or below Rs. 22. All bids at or above this issue price and
cut-off bids are valid bids and are considered for allocation in the respective categories.
Withdrawal of the Issue
Our Company and the Selling Shareholders, in consultation with the BRLMs, reserve the right not to
proceed with the Issue at any time after the Bid/Issue Opening Date but before the Allotment, without
assigning any reason thereof. Notwithstanding the foregoing, the Issue is also subject to obtaining the
final listing and trading approvals of the Stock Exchanges, which our Company shall apply for after
Allotment; and (ii) the final RoC approval of the Prospectus after it is filed with the RoC. Under the SEBI
Guidelines, QIBs are not allowed to withdraw their Bids after the Bid/Issue Closing Date.
Bid/Issue Program
BID/ISSUE OPENING DATE
BID/ISSUE CLOSING DATE
[●], 2008
[●], 2008
Bids and any revision in Bids shall be accepted only between 10.00 a.m. and 3.00 p.m. (Indian
Standard Time) during the Bidding/Issue Period as mentioned above at the bidding centers mentioned
on the Bid cum Application Form except that on the Bid/Issue Closing Date, Bids shall be accepted
only between 10.00 a.m. and 3.00 p.m. (Indian Standard Time) and uploaded till (i) 5.00 p.m. in
case of Bids by QIB Bidders, Non-Institutional Bidders and Eligible Employees bidding under the
Employee Reservation Portion where the Bid Amount is in excess of Rs. 100,000 and (ii) till such time
as permitted by the Stock Exchanges, in case of Bids by Retail Individual Bidders and Eligible
Employees bidding under the Employee Reservation Portion, where the Bid Amount is up to Rs.
100,000. Due to limitation of time available for uploading the Bids on the Bid/Issue Closing Date, the
Bidders are advised to submit their Bids one day prior to the Bid/Issue Closing Date and, in any case,
no later than 3.00 p.m (Indian Standard Time) on the Bid/Issue Closing Date. Bidders are cautioned
that in the event a large number of Bids are received on the Bid/Issue Closing Date, as is typically
experienced in public offerings, which may lead to some Bids not being uploaded due to lack of
sufficient time to upload, such Bids that cannot be uploaded will not be considered for allocation under
the Issue. Bids will only be accepted on Business Days.
On the Bid/Issue Closing Date, extension of time will be granted by the Stock Exchanges only for
uploading the Bids received by Retail Bidders after taking into account the total number of Bids
received upto the closure of timings for acceptance of Bid cum Application Forms as stated herein and
reported by the BRLMs to the Stock Exchange within half an hour of such closure.
Our Company and the Selling Shareholders, in consultation with the BRLMs, reserve the right to
revise the Price Band during the Bidding/Issue Period in accordance with the SEBI Guidelines,
provided that the Cap Price is less than or equal to 120% of the Floor Price. The Floor Price can be
revised up or down up to a maximum of 20% of the Floor Price disclosed in the Red Herring
Prospectus.
In case of revision in the Price Band, the Bidding/Issue Period shall be extended for three
additional Business Days after such revision, subject to the Bidding/Issue Period not exceeding
10 Business Days. Any revision in the Price Band, and the revised Bidding/Issue Period, shall be
widely disseminated by notification to the Stock Exchanges, by issuing a press release and also by
19
indicating the change on the websites of the BRLMs and the terminals of the Syndicate
Members.
Underwriting Agreement
After the determination of the Issue Price but prior to filing of the Prospectus with the RoC, our
Company and the Selling Shareholders intend to enter into an Underwriting Agreement with the
Underwriters for the Equity Shares proposed to be issued and sold in the Issue. Pursuant to the terms
of the Underwriting Agreement, the BRLMs shall be responsible for bringing in the amount devolved
in the event that the members of the Syndicate do not fulfill their underwriting obligations. Pursuant to
the terms of the Underwriting Agreement, the obligations of the Underwriters are several and are
subject to certain conditions to closing, as specified therein.
The Underwriters have indicated their intention to underwrite the following number of Equity Shares:
(This portion has been intentionally left blank and will be completed before filing of the Prospectus
with the RoC.)
Name and Address of the Underwriters
Indicated Number of
Equity Shares to be
Underwritten
[●]
[●]
[●]
Enam
Lehman
Total
Amount
Underwritten
(Rs. Million)
[●]
[●]
[●]
The above-mentioned amount is an indicative underwriting and will be finalised after determination of
the Issue Price and actual allocation of the Equity Shares. The Underwriting Agreement is dated [●],
2008.
Allocation among the Underwriters may not necessarily be in the proportion of their underwriting
commitments. Notwithstanding the above table, the BRLMs and the Syndicate Members shall be
responsible for ensuring payment with respect to the Equity Shares allocated to investors procured by
them. In the event of any default in payment, the respective Underwriter, in addition to other
obligations defined in the Underwriting Agreement, will also be required to procure/subscribe for
Equity Shares to the extent of the defaulted amount in accordance with the Underwriting Agreement.
The BRLMs shall be responsible for bringing in amounts devolved in the event that the other members
of the Syndicate do not fulfill their underwriting obligations.
In the opinion of the Board of Directors (based on a certificate given by the Underwriters), the
resources of the above-mentioned Underwriters are sufficient to enable them to discharge their
respective underwriting obligations in full. All the above-mentioned Underwriters are registered with
SEBI under section 12(1) of the SEBI Act or registered as brokers with the Stock Exchanges.
Lehman Borthers Opportunity Limited, an affiliate of Lehman, one of the BRLMs, owns
approximately 17.27% of the Equity Shares prior to the Issue and will own 9.69% of the Equity Shares
upon completion of the Issue. Please also see the section “Risk Factors” beginning on page x.
20
CAPITAL STRUCTURE
The share capital of our Company as of the date of this Draft Red Herring Prospectus, before and after
the proposed Issue is set forth below:
.
Aggregate Nominal Value
(Rs.)
A) AUTHORISED SHARE CAPITAL(a)
100,000,000 Equity Shares
Aggregate Value at
Issue Price
(Rs.)
1,000.00
B) ISSUED, SUBSCRIBED AND PAID UP SHARE
CAPITAL
42,889,685 fully paid up Equity Shares
428,896,850
C) PRESENT ISSUE IN TERMS OF THE DRAFT
RED HERRING PROSPECTUS
11,271,012 Equity Shares(b)
112,710,120
[•]
69,820,420
[•]
1,000,000
[•]
42,889,700
[•]
Which comprises
a) Fresh Issue of 6,982,042 Equity Shares(c)
Of which:
Employee Reservation Portion
100,000 Equity Shares
b) Offer for Sale of 4,288,970 Equity Shares(d)
[•]
Net Issue to the Public
11,171,012 Equity Shares
Of which:
QIB Portion of at least 6,702,608 Equity
Shares
Of which:
Mutual Funds Portion is 335,131 Equity
Shares
67,026,070
[•]
Non Institutional Portion of not less than
1,117,101 Equity Shares
11,171,010
[•]
Retail Portion of not less than 3,351,303 Equity
Shares
33,513,040
[•]
Balance for all QIBs including Mutual
Funds is 6,367,477
D) PAID-UP SHARE CAPITAL AFTER THE ISSUE
49,871,727 Equity Shares
498,717,270
E) SHARE PREMIUM ACCOUNT
Before the Issue
637,482,588
After the Issue
a)
[●]
The initial authorized share capital of our Company was increased from Rs. 1,000,000 divided into
100,000 Equity Shares to Rs. 20,010,000 divided into 2,001,000 Equity Shares, pursuant to a resolution
of the shareholders of our Company dated January 20, 2001.
The authorized share capital of our Company was further increased from Rs. 20,010,000 divided into
2,001,000 Equity Shares to Rs. 120,010,000 divided into 12,001,000 Equity Shares pursuant to a
resolution of the shareholders of our Company dated January 30, 2006.
21
The authorized share capital of our Company was further increased from Rs. 120,010,000 divided into
12,001,000 to Rs. 320,000,000 divided into 32,000,000 Equity Shares pursuant to a resolution of the
shareholders of our Company dated September 30, 2006.
The authorized share capital of our Company was further increased from Rs. 320,000,000 divided into
32,000,000 Equity Shares to Rs. 1,000,000,000 divided into 100,000,000 Equity Shares pursuant to a
resolution of the shareholders of our Company dated May 20, 2008.
b)
Our Company and the Selling Shareholders are considering a Pre-IPO Placement of up to [●] Equity
Shares to certain investors, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO
Placement is completed, the number of Equity Shares sold pursuant to the Pre-IPO Placement, will be
reduced from the Net Issue, subject to minimum Net Issue size of 10% of the post-Issue paid up share
capital of our Company. The Pre-IPO Placement is at the discretion of our Company and the Selling
Shareholders.
(c)
The Issue has been authorized by a resolution of our Board dated June 24, 2008 and by a special
resolution passed by the shareholders of our Company pursuant to section 81(1A) of the Companies Act
at the EGM of our Company held on June 24, 2008.
(d)
Lehman Brothers Opportunity Limited, an affiliate of Lehman Brothers Securitites Private Limited, one
of the BRLMs, has authorized transfer of 2,571,454 Equity Shares as part of the Offer for Sale pursuant
to its board resolution dated June 25, 2008 and Omnia Investments Private Limited authorized transfer of
1,717,516 Equity Shares as part of the Offer for Sale pursuant to its board resolution dated May 14,
2008. The Offer for Sale constitutes:
(Rs. in millions except share data)
Selling Shareholder
Number of Equity
Shares
Lehman Brothers Opportunity Limited*
2,571,454
Omnia Investments Private Limited
1,717,516
* an affiliate of Lehman Brothers Securitites Private Limited, one of the BRLMs
Aggregate value at
Issue Price
[•]
[•]
The Equity Shares constituting the Offer for Sale have been held by the Selling Shareholders for a period
of at least one year as on the date of filing of the Draft Red Herring Prospectus with SEBI and hence are
eligible for being offered for sale in the Issue.
RBI approval shall be sought for the transfer of Equity Shares forming part of Offer for Sale in the Issue.
Notes to the Capital Structure
1.
Share Capital History
Date of
Allotment of
the Equity
Shares
April 5, 2000
No. of
Equity
Shares
Issue
Price
per
Equity
Shares
(Rs.)
Nature of
Consideration
Reasons for
Allotment
10
10 Cash
10
10 Cash
Subscription to the
Memorandum and
Articles of
Association
Subscription to the
Memorandum and
Articles of
Association
2,000,000
10 Cash
Allotment
April 5, 2000
Cumulative
number of
Equity
Shares
Cumulative
Issued
Capital
(Rs.)
9,999,600
Nil Bonus shares
January 31,
2006
500
Nil Bonus shares
November 28,
2006
2,571,454
260.92 Cash
100
Mr. Atul
Nil Prakash
20
200
Mr. Ravinder
Nil Lal Ahuja
2,000,020
20,000,200
Bonus issue of
Equity Shares in
the ratio of 5:1(a)
Bonus issue of
Equity Shares in
the ratio of 5:1(a)
11,999,620
119,996,200
12,000,120
120,001,200
Preferential
allotment(b)
14,571,574
145,715,740
22
Individuals/
entities to
whom Equity
Shares allotted
10
January 20,
2001
January 31,
2006
Cumulative
Share
Premium
(Rs.)
Modicorp
Nil Private Limited
Omnia
Investments
Private
Nil Limited*
Nil Mr. Dilip Modi*
Lehman
Brothers
Opportunity
645,229,238 Limited
Date of
Allotment of
the Equity
Shares
No. of
Equity
Shares
June 23, 2008
320,685
June 24, 2008
27,997,426
Total
42,889,685
Issue
Price
per
Equity
Shares
(Rs.)
Nature of
Consideration
Reasons for
Allotment
10 Cash
Preferential
allotment
Nil Bonus shares
Bonus issue
Cumulative
number of
Equity
Shares
Cumulative
Issued
Capital
(Rs.)
14,892,259
148,922,590
Cumulative
Share
Premium
(Rs.)
645,229,238
42,889,685
428,896,850
645,229,238
42,889,685
428,896,850
645,229,238
*
For details of build up of shareholding of Omnia Investments Private Limited and Mr. Dilip Modi, see
“Build-up of Promoter’s share capital in our Company” on page 23.
**
Preferential allotment made to certain of our employees namely, Mr. Saket Agarwal, Mr. Kartar Singh, Ms.
Monika Aggarwal, Mr. Lokesh Gupta, Mr. Atul Sachdeva, Mr. Abhinav Mathur, Mr. Atul Mukheja, Mr.
Satish Arora, Mr. Varun Gupta, Ms. Mona Sharma, Mr. Amit Dua, Mr. Amrish Lakhanpal, Mr. Amit
Khurana, Mr. Sandeep Rajan, Mr. Kishori Lal Sharma, Mr. Arun Dogra, Mr. Pankaj Sharma, Mr. Jatinder
Verma, Mr. Rajib Roy, Mr. Shehzad Azad, Mr. Samit Tarafdar, Mr. Anuj Bajpai, Mr. Vineet Singh, Ms.
Sumi Dhody, Mr. Vivek Sharma, Mr. Pardeep Kumar, Mr. Amit Sharma, Mr. Amritpal Singh, Mr. Manoj
Kashyap, Mr. Avninder Singh, Mr. Amit K Gupta, Mr. Vikas Chandla, Mr. Rahul Bassi, Mr. Amit Kashyap,
Mr. Maninder Mandyal,Mr. Sushen Sharma, Mr. Tanuj Chopra, Mr. Rajan Khosla, Mr. Vivek Kapur and Mr.
Sunil Kapoor.
Other than as mentioned in the table above, our Company has not made any issue of Equity Shares during the
preceding one year.
a)
The bonus issues of Equity Shares have been made by way of capitalization of general reserves/profit
and loss account/share premium.
Date of Allotment of
Bonus Shares
Ratio of the
Bonus Issue
Number of Equity
Shares issued as
Bonus Shares
Face Value of
Shares
Amount of reserves/
profit and loss account
capitalized
January 31, 2006
5:1
10,000,100
Rs. 10
Rs. 100,001,000
June 24, 2008
47:25
27,997,426
Rs. 10
Rs. 279,974,260
(b)
2,571,454 Equity Shares were allotted to Lehman Brothers Opportunity Limited pursuant to Share and
Warrant Subscription Agreement and Investor’s Rights Deed, both dated November 22, 2006. For
further details see the section “History and Certain Corporate Matters” beginning on page 74.
2.
Build up of Promoters’ Capital, Promoters’ Contribution and Lock-in
a) Details of build up of Promoters’ share capital in our Company:
Set forth below are the details of the build up of the Promoters’ shareholding in our Company:
Name of the
Promoter
Date of
Allotment/transfer
July 9, 2004
Omnia
Investments
Private Limited
July 15, 2005
No. of Equity
Issue/
Nature of
Nature of Transaction
Shares*
Acquisition Consideration
Price per
Equity Share
(Rs.)**
1,880,020
5.00 Cash
Transfer from Indian
Televentures Private
Limited and MCorp
Global Private Limiteda
119,900
16.70 Cash
Transfer from Mr.
Dheeraj Agarwalb
23
Individuals/
entities to
whom Equity
Shares allotted
Preferential
allotment made
to certain
employees of
our Company**
Bonus shares
issued to all the
exisiting
shareholders of
the Company
Name of the
Promoter
Date of
Allotment/transfer
January 31, 2006
September 30, 2006
June 24, 2008
Total
No. of Equity
Issue/
Nature of
Nature of Transaction
Shares*
Acquisition Consideration
Price per
Equity Share
(Rs.)**
9,999,600
Nil Bonus shares
Bonus Issue in the ratio
of 5:1
10 Equity Shares each
transferred in favour of
Mr. Atul Prakash, Mr.
O.P. Dani, Ms. Divya
Modi, Mrs. Veena Modi
(50)
34.00 Cash
and Dr. B.K Modi
Bonus shares
Bonus Issue in the ratio
22,559,003
Nil
of 47:25
34,558,473
Mr. Dilip Modi September 11, 2000
1
10 Cash
(1)
10 Cash
July 15, 2005
100
16.70 Cash
January 31, 2006
500
August 11, 2003
Nil Bonus shares
Bonus shares
June 24, 2008
1,128
Total
1,728
August 11, 2003
Indian
July 9, 2004
Televentures
Private Limited Total
Total
Nil
Transfer from Mr. Atul
Prakashc
Transfer in favour of
Indian Televentures
Private Limited by Mr.
Dilip Modi
Transfer from Mr.
Dheeraj Agarwalb
Bonus Issue in the ratio
of 5:1
Bonus Issue in the ratio
of 47:25
20,020
10 Cash
(20,020)
5 Cash
Transfer from Spicecorp
Limited
Transfer in favour of Soft
Solution Private Limited
Nil
34,569,191
*
The Equity Shares were fully paid up at the time of allotment. Hence, the date of them being made fully paid
up is the same as the date of allotment.
** The cost of acquisition includes the stamp duty paid.
a.
Indian Televentures Private Limited acquired 20,020 Equity Shares by way of transfer from SpiceCorp
Limited. MCorp Global Private Limited acquired 1,000,000 Equity Shares by way of transfer from SpiceCorp
Limited and 860,000 Equity Shares by way of transfer from from Mr. Ashok Kumar Goyal, Mr. Umang Das,
Mr. S.K. Jain and Mr. G.P. Singh (these individuals had acquired the Equity Shares held by them by way of
transfer from SpiceCorp Limited).
b.
Mr. Dheeraj Agarwal had acquired 120,000 Equity Shares from SpiceCorp Limited.
c.
Mr. Atul Prakash was allotted 10 Equity Shares as initial subscriber to Memorandum and Articles of
Association.
b)
Details of Promoter’s Contribution locked-in for three years:
Name of the Promoter
Omnia Investments Private
Limited
No. of Equity
Shares locked-in*
9,974,345
24
Percentage of Pre
Issue Capital
Percentage of Post Issue
Capital
23.26
20
*Omnia Investments Private Limited has by a written undertaking dated June 26, 2008 granted their consent to consider Equity
Shares held by them, constituting 20% of the post-Issue Equity Share capital of our Company as Promoters’ contribution and be
locked-in for a period of three years from the date of Allotment (“Promoters’ Contribution”).
All Equity Shares, which are being locked-in are eligible for computation of Promoters’ Contribution
and are being validly locked-in as per SEBI Guidelines.
All the Equity Shares are currently in physical form. On finalisation of the Basis of Allotment, Equity
Shares forming part of Promoters’ Contribution would be locked-in as required as under the SEBI
Guidelines. Such Equity Shares would carry inscription ‘non transferable’ along with duration of
specified non-transferable period mentioned in the face of the security certificate and the Equity Shares
would be locked-in as per the bye-laws of the depositories. We will also inform the Stock Exchanges
about the details of the Equity Shares locked-in for a period of three years.
Omnia Investments Private Limited has agreed not to sell/transfer/pledge/or dispose of in any manner,
Equity Shares forming part of the Promoters’ Contribution from the date of filing of this Draft Red
Herring Prospectus till the date for a period of three years from the date of Allotment.
The Equity Shares held by our Promoters may be transferred to and amongst the Promoters/Promoter
Group or to a new promoter or persons in control of our Company, subject to continuation of lock-in in
the hands of the transferees for the remaining period and compliance with the Takeover Code, as
applicable.
Further, the locked-in Equity Shares held by the Promoters, including , can be pledged with banks or
financial institutions as collateral security for loans granted by such banks or financial institutions
provided that the pledge of the Equity Shares is one of the terms of the sanction of such loans. Such
loans should have been granted for the purpose of financing one or more of the objects of the Issue. For
further details regarding the objects of this Issue, see the section “Objects of the Issue” beginning on
page 30.
The Equity Shares proposed to be included as part of the minimum Promoters’ Contribution are arising
out of bonus issue of Equity Shares to our Promoters which was made out of share premium and free
reserves of our Company.
c)
Details of build up of shareholding of Promoter Group:
Name of the
Promoters
Date of
No. of Equity Issue/ Acquisition
Nature of
*
Allotment/transfer
Price per Equity Consideration
Shares
**
Share
(Rs.)
September 30, 2006
June 24, 2008
Ms. Divya Modi Total
Ms. Veena Modi September 30, 2006
10
18
10
18
Total
28
June 24, 2008
Nil Bonus shares
Transfer from
Omnia Investments
Private Limited
Bonus Issue in the
ratio of 47:25
28
June 24, 2008
Dr. B. K. Modi September 30, 2006
34.00 Cash
Nature of
Transaction
34.00 Cash
Nil Bonus shares
10
34.00 Cash
18
Nil Bonus shares
Transfer from
Omnia Investments
Private Limited
Bonus Issue in the
ratio of 47:25
Transfer from
Omnia Investments
Private Limited
Bonus Issue in the
ratio of 47:25
Total
28
* The Equity Shares were fully paid up at the time of allotment. Hence, the date of them being made fully paid
up is the same as the date of allotment.
** The cost of acquisition includes the stamp duty paid.
25
d)
Details of share capital locked-in for one year:
In addition to the Promoters’ Contribution, as specified above, other than those Equity Shares which
are transferred under the Offer for Sale, our entire pre-Issue Equity Share capital including the Equity
Shares proposed to be issued in the Pre-IPO Placement, constituting 42,889,685 Equity Shares (“PreIssue Equity Shares”) will be locked-in for a period of one year from the date of Allotment.
On finalisation of the Basis of Allotment, all of the Pre-Issue Equity Shares would be locked-in for a
period of one year and would carry inscription ‘non transferable’ along with duration of specified nontransferable period and the Equity Shares would be locked-in as per the bye-laws of the depositories.
We will also inform the Stock Exchanges about the details of the Equity Shares locked-in for a period
of one year.
The Equity Shares held by persons other than the Promoters, prior to the Issue, may be transferred to
any other person holding the Pre-Issue Equity Shares, subject to continuation of the lock-in in the
hands of the transferees for the remaining period and compliance with the Takeover Code, as
applicable. The Equity Shares subject to lock-in will be transferable in accordance with the provisions
of the SEBI Guidelines.
3.
Our shareholding pattern
The table below presents the shareholding pattern of our Company before the proposed Issue and as
adjusted for the Issue:
Pre-Issue
No. of Equity
Shares
A. Promoters
Omnia Investments Private Limited
Mr. Dilip Modi
Sub Total (A)
B. Promoter Group
Ms. Divya Modi
Ms. Veena Modi
Dr. B.K Modi
Sub Total (B)
C. Others
Lehman Brothers Opportunity Limited
Individiuals
D. Public in the Issue
%
Post-Issue
No. of Equity
Shares*
%
34,558,473
1,728
34,560,201
80.57
0.00
80.58
32,840,957**
1,728
32,842,685
65.85
0.00
65.85
28
28
28
84
0.00
0.00
0.00
0.00
28
28
28
84
0.00
0.00
0.00
0.00
7,405,787
923,613
17.27
2.15
4,834,333**
923,613
9.69
1.85
Nil
Nil
11,271,012
22.60
Total (A+B+C+D)
*
**
42,889,685 100.00
49,871,727
100.00
This is based on the assumption that such shareholders shall continue to hold the same number of Equity
Shares after the Issue. This does not include any Equity Shares that such shareholders (excluding
Promoter and Promoter Group) may subscribe for and be Allotted in the Issue.
This is further based on the assumption that the Equity Shares forming part of Offer for Sale are Allotted
in full.
Our Directors, other than Mr. Dilip Modi and Ms. Divya Modi (as mentioned above), do not hold any Equity
Shares.
Shareholding our key managerial personnel
Except as mentioned below, none of our key managerial personnel hold any Equity Shares.
26
S. No.
1
2
3
4
5
6
7
8
9
10
Key managerial personnel
No. of Equity Shares
Held
273,928
117,164
43,200
90,083
7,200
84,847
11,520
11,520
9,737
7,200
656,399
Mr. Saket Agarwal
Mr. Kartar Singh
Dr. Abhinav Mathur
Ms. Monika Aggarwal
Mr. Shehzad Azad
Mr. Lokesh Gupta
Mr. Jatinder Verma
Mr. Pankaj Sharma
Mr. Rajib Roy
Mr. Samit Tarafdar
Total
Pre-Issue Percentage
of Shareholding
0.64
0.27
0.10
0.21
0.02
0.20
0.03
0.03
0.02
0.02
1.54
Top Ten shareholders
4.
The list of the top ten shareholders of our Company and the number of Equity Shares held by them is
provided below:
(a)
Our top ten shareholders and the number of Equity Shares held by them as on the date of filing
this Draft Red Herring Prospectus are as follows:
S. No.
1
2
3
4
5
6
7
8
9
10
(b)
1
2
3
4
5
6
7
8
Omnia Investments Private Limited
Lehman Brothers Opportunity Limited
Mr. Saket Agarwal
Mr. Kartar Singh
Ms. Monika Agarwal
Mr. Lokesh Gupta
Mr. Abhinav Mathur
Ms. Mona Sharma
Mr. Amit Dua
Mr. Amrish Lakhanpal
Total
Shareholder
No. of Equity Shares
Held
11,999,470
2,571,454
600
10
10
10
10
10
14,571,574
Omnia Investment Private Limited
Lehman Brothers Opportunity Limited
Mr. Dilip Modi
Mr. O. P. Dani
Mr. Atul Prakash
Dr. B. K Modi
Ms. Divya Modi
Ms. Veena Modi
Total
(c)
S. No.
5.
No. of Equity Shares
Held
34,558,473
7,405,787
273,928
117,164
90,083
84,847
43,200
31,417
31,417
31,417
42,667,733
Pre-Issue Percentage
of Shareholding
80.57
17.27
0.64
0.27
0.21
0.20
0.10
0.07
0.07
0.07
99.47
Our top 10 shareholders and the number of Equity Shares held by them 10 days prior to filing
of this Draft Red Herring Prospectus are as follows:
S. No.
1
2
Shareholder
Pre-Issue Percentage
of Shareholding
82.35
17.65
0.00
0.00
0.00
0.00
0.00
0.00
100.00
Our top 10 shareholders and the number of Equity Shares held by them as of two years prior
to filing this Draft Red Herring Prospectus were as follows:
Shareholder
No. of Equity Shares
Held
1,999,920
600
2,001,520
Omnia Investments Private Limited
Mr. Dilip Modi
Total
Percentage of
Shareholding
99.99
0.00
100.00
Our Company, the Selling Shareholders, our Promoters, our Directors, our Promoter Group,
their respective directors and the BRLMs have not entered into any buy-back and/or standby
27
arrangements for the purchase of Equity Shares from any person.
6.
At least 60% of the Net Issue, that is, 6,702,608 Equity Shares shall be available for allocation
on a proportionate basis to QIBs, out of which 5% shall be available for allocation on a
proportionate basis to Mutual Funds only. The remainder shall be available for Allotment on a
proportionate basis to QIBs and Mutual Funds, subject to valid Bids being received from them
at or above the Issue Price. Not less than 10% of the Net Issue, i.e. 1,117,101 Equity Shares
shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not
less than 30% of the Net Issue, that is 3,351,303 Equity Shares shall be available for allocation
on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or
above the Issue Price. Further, up to 100,000 Equity Shares shall be available for allocation on
a proportionate basis to our Eligible Employees, subject to valid Bids being received at or
above the Issue Price.
7.
Subject to valid Bids being received at or above the Issue Price, under-subscription, if any, in
the Non-Institutional Portion and Retail Portion would be allowed to be met with spill-over
from other categories at the discretion of our Company and the Selling Shareholders, in
consultation with the BRLMs. Under-subscription, if any, in the Employee Reservation
Portion will be added back to the Net Issue portion at the discretion of our Company and the
Selling Shareholders, in consultation with the BRLMs. In case of under-subscription in the
Net Issue, spill-over to the extent of under-subscription shall be permitted from the Employee
Reservation Portion subject to the Net Issue constituting at least 10% of the post Issue paid-up
share capital of our Company. If at least 60% of the Net Issue cannot be allotted to QIBs, then
the entire application money will be refunded forthwith.
8.
Except as disclosed in this section, the Directors, the Promoters, or the Promoter Group have
not purchased or sold any securities of our Company, during a period of six months preceding
the date of filing this Draft Red Herring Prospectus with SEBI.
9.
An investor cannot make a Bid for more than the number of Equity Shares offered through the
Issue, subject to the maximum limit of investment prescribed under relevant laws applicable to
each category of investor. Bids by Eligible Employees can be made also in the “Net Issue”
portion and such Bids shall not be treated as multiple bids.
10.
Except any allotment pursuant to the Pre-IPO Placement, there will be no further issue of
capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any
other manner during the period commencing from submission of this Draft Red Herring
Prospectus with SEBI until the Equity Shares have been listed.
11.
There shall be only one denomination of the Equity Shares, unless otherwise permitted by law.
Our Company shall comply with such disclosure and accounting norms as may be specified by
SEBI from time to time.
12.
As on the date of this Draft Red Herring Prospectus, the total number of holders of Equity
Shares is 48.
13.
Our Company has not raised any bridge loans against the proceeds of the Issue.
14.
Our Company has not issued any Equity Shares out of revaluation reserves or for
consideration other than cash except for bonus issues dated January 31, 2006 and June 24,
2008.
15.
There are no outstanding warrants, options or rights to convert debentures, loans or other
instruments into the Equity Shares.
16.
The Equity Shares held by our Promoters are not subject to any pledge.
17.
Any oversubscription to the extent of 10% of the Issue can be retained for the purpose of
rounding off while finalising the Basis of Allotment.
28
18.
Our Promoters will not Bid in this Issue.
19.
Our Company presently does not intend or propose to alter its capital structure for a period of
six months from the Bid/ Issue Opening Date, by way of split or consolidation of the
denomination of Equity Shares or further issue of Equity Shares (including issue of securities
convertible into or exchangeable, directly or indirectly for Equity Shares) whether preferential
or otherwise.
20.
The Equity Shares issued pursuant to the Issue shall be fully paid-up at the time of Allotment,
failing which no Allotment shall be made.
29
OBJECTS OF THE ISSUE
The objects of the Issue are to (a) purchase equipments for the offices of our Company and various
customer sites and (b) fund expenditure for general corporate purposes.
The main objects clause of the Memorandum of Association enables our Company to undertake the
existing activities and the activities for which funds are being raised through this Issue.
Our Company will not receive any proceeds from the Offer for Sale.
Except for the listing fee which will be borne by our Company, expenses relating to the Issue,
including underwriting and management fees, selling commission and other expenses will be borne by
our Company and the Selling Shareholders in proportion of the Equity Shares contributed to the Issue.
We intend to utilise the proceeds of the Fresh Issue, after deducting our share of the underwriting and
management fees, selling commissions and other expenses associated with the Issue which is estimated
at Rs. [•] (“Net Proceeds”) for financing the above mentioned objects.
Requirement of funds and deployment of funds
The details of utilization of Net Proceeds and the proposed schedule of deployment of funds are as per
the table set forth below:
(In Rs. Million)
1
2
Particulars
Total
Estimated
Cost
Purchase of equipments for the offices of our
Company and various customer sites
General corporate purposes
1,705
Proposed utilization of Net Proceeds
Year
Year
Year
ending
ending
ending
December
December
December
31, 2009
31, 2010
31, 2011
349
517
839
[•]
Total
[•]
Our Company’s funding requirement and deployment are based on internal management estimates,
vendor quotations and have not been appraised by any bank or financial institution. These are based on
current conditions and are subject to change in light of changes in external circumstances, or costs or
changes in our financial condition, business or strategy. In case of variations in the actual utilisation of
funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose
may be financed by surplus funds, if any, available in respect of the other purposes for which funds are
bring raised through the Fresh Issue. If surplus funds are unavailable, the required financing will be
through our internal accruals and debt.
Our Company operates in a highly competitive, dynamic market environment, and may have to revise
our estimates from time to time. Consequently, our Company’s funding requirements may also change
accordingly. Any such change in our Company’s plans may require rescheduling of its expenditure
programs, at the discretion of our management. In case of any shortfall or cost overruns, our Company
intends to meet our estimated expenditure from the internal accruals and debt.
Details of the Objects
Purchase of equipments for the officesof our Company and various customer sites
In order to achieve our growth strategy to further penetrate into our exisiting customer base as well as
expand our presence in new operators and geographies, we continuosly need to develop innovative
platforms, products and services and enhance our existing products and services. We would require
significant procurement of new equipments including software capabilities to enhance our products and
services.
30
We estimate to incur a total expenditure of approximately Rs. 1,705 million towards purchase of new
equipments and for replacement of existing equipments including costs for procurement of software to
be installed. The estimates for the aforesaid costs are based on quotations received from Tecnomic
Marketing Services Private Limited dated June 25, 2008.
The details of costs of the hardware and software required for setting up the offices are:
Description of Items
Usage/Function
16 E1card (DMN 160TECW)
Used for providing IVR
services
Used for connecting links
with our carrier customers
Used for connecting links
with our carrier customers
560
Unit cost
(in Rs.)*
213,444
560
19,656
560
15,246
560
272,958
540
326,214
268,800
1,806
Dongle
(CTADE0PROGKEYUSB)
Used for providing IVR
services
Used for hosting of voice
cards
Software to run IVR
applications
Used for storing the
licence
560
4,300
Hard Disk Drive (fpr SS&G2X)
Used for storage functions
560
40,614
ISUP SS7 (BG20)
Protocol software to
facilitate IVR services
Used for supply of power
560
101,346
280
10,290
280
495,600
560
37,800
280
987,000
BOB Kit (32 T1E1W)
Rear
Input
(ODM16TECW)
Output
Quantity
Price (in Rs.
Million)
119.53
11.01
8.54
16 E1 card (DMV 4800BCW)
Chassis cPCIS (6400US/AC)
CTADE upgradation string
152.86
176.16
485.45
2.41
22.74
Power Supply (TLPACPSU)
56.75
2.88
G21 SIU with
(SS7G21AQ1)
4
Links
SCCP license ( SS7 BG20)
SIU G22 with 64 links (SS7
G22AH1W)
Used for connectivity and
data transfer with our
carriage customers and us
Protocol software to
enable data applications
Used for connectivity and
data transfer with our
carriage customers and us
138.77
21.17
Total excluding duties, taxes
and charges
Duties, taxes and charges
TOTAL
* The unit cost is based on quotes received in USD, which is converted at the rate of Rs. 42 per USD.
276.36
1,474.62
230.30
1,704.92
We would not purchase any pre-used equipments from the Net Proceeds.
General Corporate Purposes
In accordance with the policies set up by our Board, we propose to retain flexibility in applying the
remaining Net Proceeds for general corporate purposes, including expansion and upgrade our existing
offices and infrastructure. Our Board will have flexibility in utilizing Net Proceeds earmarked for
general corporate purposes.
The management of our Company, in response to the competitive and dynamic nature of the industry,
will have the discretion to revise its business plan from time to time and consequently our Company’s
funding requirement and deployment of funds may also change. This may also include rescheduling
proposed utilisation of Net Proceeds and increasing or decreasing expenditure for a particular object
vis-à-vis the utilisation of Net Proceeds. In case of a shortfall in the Net Proceeds, the management
may explore a range of options including utilising our internal accruals or raising debt. The
management expects that such alternate arrangements would be available to fund any such shortfall.
31
Issue Related Expenses
The expenses of this Issue include, among others, underwriting and management fees, printing and
distribution expenses, legal fees, IPO grading, advertisement expenses and listing fees. The Issue
expenses, except the listing fee, shall be shared between our Company and the Selling Shareholders in
the proportion to the number of Equity Shares sold to the public as part of the issue. The listing fees
will be paid by our Company.
The estimated Issue expenses are as follows:
Activity
Expenses* (Rs. in
million)
% of Issue size
% of Issue expenses
[●]
[●]
[●]
[●]
[●]
[●]
[●]
[●]
[●]
[●]
[●]
[●]
Lead management, underwriting and selling
[●]
commission
IPO Grading fees
[●]
Advertisement and Marketing expenses
[●]
Printing, stationery including transportation
of the same
[●]
Others (Registrar’s fees, legal fees, listing
[●]
fees, etc.)
[●]
Total
* Will be incorporated after finalisation of the Issue Price
Interim use of funds
Pending utilisation for the purposes described above, our Company intends to invest the funds in high
quality interest bearing liquid instruments including money market mutual funds, deposits with banks.
The Net Proceeds will not be invested in equity capital markets. The management, in accordance with
the policies established by our Board from time to time, will have flexibility in deploying the Net
Proceeds.
Monitoring of Utilization of Funds
Our Board will monitor the utilization of the Net Proceeds. We will disclose the details of the
utilization of the Net Proceeds, including interim use, under a separate head in our financial statements
for fiscal 2009, fiscal 2010 and fiscal 2011, specifying the purpose for which such proceeds have been
utilized or otherwise disclosed as per the disclosure requirements of our listing agreements with the
Stock Exchanges and in particular Clause 49 of the Listing Agreement.
Working Capital
We would not utilize any amount raised from the Net Proceeds towards fulfilling our working capital
requirements.
Offer for Sale
The Issue includes an offer for sale of 4,288,970 Equity Shares aggregating to not less than Rs. [●]
million by the Selling Shareholders and our Company will not benefit from such proceeds.
Bridge Financing Facilities
We have not raised any bridge loan against the proceeds of the Issue.
Other Confirmations
Except for proceeds from the transfer of 1,717,516 Equity Shares by Omnia Investments Private
Limited as part of the Offer for Sale, no part of the proceeds from the Issue will be paid by our
Company as consideration to the Promoters, the Directors, the Promoter Group and key managerial
employees, except in normal course of business.
32
BASIS FOR THE ISSUE PRICE
The Issue Price of Rs. [●] has been determined by our Company and the Selling Shareholders in
consultation with the BRLMs, on the basis of demand from the investors for the offered Equity Shares
by way of Book Building process. The face value of the equity shares is Rs 10 and the Issue price is [●]
times the face value at the lower end of the price band and [●] times the face value at the higher end of
the price band.
QUALITATIVE FACTORS
Innovative platform based product development and diversity of products and services
We are continually engaged in the development of new products and services on our platforms to
enhance the product portfolio we offer to our telecommunications carrier customers and other
enterprises and bring new products and services to the market to address consumer needs and drive
demand. We focus on multi-modal platforms based on voice, text and data. Our mobile radio platform
gives subscribers the interactive option to access content on demand in the language of their choice
using their mobile phones. Given the demographic diversity of India, our platforms offer an efficient,
easy-to-use and attractive solution to our carrier customers for providing services to their subscribers.
The platform enables carriers to introduce better targeted, more innovative content based services. Our
data platform, Mitr, proposes to provide a unified framework for discovering and accessing content and
services, giving the subscriber a personalized experience. We continue to invest in the growth of our
platforms to ensure that these are in tune with the requirements of our customers. In addition, we are
constantly refining our offerings to improve adoption of mobility-related products by consumers and
address pricing pressures. We provide a diverse portfolio of services, products and content, with a
focus on entertainment, information, music and games. We have introduced new services in India,
including tambola via mobile phone, BGM, VAS on USSD, Pay4Me and select caller list. For music,
entertainment and infotainment products, we have launched our BGM service, mobile radio and
ringtones; for call-related products, we have launched select caller VAS on USSD and Pay4Me; for
services and applications, we have launched user generated products such as voice chat; and we have
developed and launched innovative roaming solutions such as Welcome Roamer, Roam Tracker, Roam
Globe, Roam Secure and Roam Privilege. Our ability to offer a complete suite of products and services
allows our customers to offer a wide range of user interface services to their subscribers, resulting in
ease of market adoption, revenue growth, and higher subscriber satisfaction.
Entrenched customer relationships
All of the major telecommunications carriers in India form a part of our customer base, including
Airtel, Spice Communications, BSNL, IDEA, Reliance, Vodafone, MTNL, Tata Teleservices Limited
and “Connect” & “Ping” of HFCL. We have successfully marketed our solutions to a multitude of
diverse telecommunication carriers customers. Service deployments with our customers involve
complex hardware systems and software applications deeply embedded within the customer’s core
network systems. Since the service deployment on our customers’ network is complex, our relationship
development personnel are stationed at our telecommunication carriers office, giving us the ability to
expand quickly and efficiently the range of services deployed and benefiting from the revenue growth
from their subscriber base.
Our presence and deep experience across the mobile industry value chain
Our experience in the mobile industry value chain provides us with valuable insight into the mobile
eco-system. Our association with Spice Communications has in the past provided us with enhanced and
expedited feedback on the ever-changing needs of end-user subscribers and their feedback has been
incorporated by our research and development team into new products and services. We believe
expedited feedback from the telecommunication carriers perspective gives us a time-to-market
advantage for development of new products and services. In addition, we have the capability of
managing the entire value added services segment which a telecommunications carrier customer
33
requires in providing value added services to its subscribers. Currently, we provide this management
service to Spice Communications. This managed services model benefits the carrier by reducing its
investment in the value added services segment and helps the launch of innovative data and multimedia
services quickly and efficiently.
Strong core technological capabilities
We have significant in-house resources and capabilities and a deep domain understanding in the areas
of voice, data, and signaling. In the past, this understanding has allowed our Company to build
technology intensive applications and products such as BGM (voice domain), mobile radio platform
(voice domain), USSD/SMSC (signaling domain) and services, such as call filter (enhanced IN
services) and Mitr. Our technology team works closely with the business teams and keeps a close
watch on the value added services environment worldwide. We have a sophisticated understanding of
the complexities of the operations of our carrier customers, which enables us to better address the
technological concerns involved in incorporating products and services into operators’ networks. We
were one of the first to develop products and services such as BGM, VAS on USDD, Select Caller List
and Pay4Me, resulting in revenue growth for our Company over the last few years.
Our diversified content database
Our music, entertainment and information based value added services and products are dependent on
the content we source, license, reformat and re-position. We have invested significant effort in growing
the necessary relationships and have forged alliances with more than 300 content owners and license
holders. We have a content database of more than 140,000 songs in more than 17 languages, as well as
logos, wallpaper and 12,000 ringtones in our content database, to cater to the needs of multicultural and
multilingual users in India. With our pan-India presence and a well diversified offering of value added
products and services, we provide relevant services in a convenient manner to our consumers in the
language of their choice. Hosting a gamut of content varieties, consisting of music, entertainment,
gaming, contesting and information based services, we facilitate continuous access to the content
required by our carrier customers.
Experienced management and research and development team
Our senior management team has an average of, over 14 years of experience in the telecommunications
and technology industries with well-established companies. We have a research and development team
comprised of 128 members and have in the past created and nurtured innovative products and services
in the evolving mobile eco-system and building community brands across product and service verticals.
Our experienced senior management team has been a primary contributor to our current status as a
leading provider of telecommunications value added services and products and solutions in India.
QUANTITATIVE FACTORS
Information presented in this section is derived from our restated consolidated financial statements and
restated standalone financial statements prepared in accordance with Indian GAAP.
Some of the quantitative factors which may form the basis for computing the Issue Price are as follows:
1.
STANDALONE EARNING PER SHARE EPS (BASIC & DILUTED):
Year ended
Nine months period ended
December 31, 2007
March 31, 2007
March 31, 2006
WACC
Face Value per Share (Rs. 10 per share)
Weight
Rupees
31.00*
3
32.29
18.36
29.32
* Annualized
Note:
34
2
1
a)
b)
c)
d)
The Earning per Share has been computed on the basis of the restated profits and losses of the
respective years/period.
The denominator considered for the purpose of calculating Earnings per Share is the weighted
average number of Equity Shares outstanding during the year/period.
EPS calculations have been done in accordance with Accounting Standard 20-“Earning per
share” issued by the Institute of Chartered Accountants of India.
EPS is not adjusted for the Bonus issue declared by the company during June 2008
PRICE EARNING RATIO (P/E RATIO)
Price/Earning (P/E) ratio in relation to issue Price of Rs [●]
a)
b)
c)
For the nine months period ended December 31, 2007 EPS (Basic & Diluted) on Standalone
basis is Rs. 23.25
P/E based on nine months period ended December 31, 2007 is [●]
Peer Group P/E –
a. Highest
78.80
b. Lowest
11.57
c. Peer Group Average
28.70
Source: Capital Markets Vol. XXIII/08 dated June 16-29, 2008 (Industry – Telecommunications –
Service Provider). Data based on full year results as reported in the edition.
A.
Return on Net Worth on Standalone Basis as per Restated Indian GAAP Financials:
Year/Period Ended
December 31, 2007
March 31, 2007
March 31, 2006
WACC
RONW (%)
31.00
40.00
53.00
37.67
Weight
3
2
1
B.
Minimum Return on Increased Net Worth required to maintain pre-issue EPS is [●]
5.
NET ASSET VALUE PER EQUITY SHARE:
a.
b.
c.
As of December 31, 2007 on Standalone basis is Rs. 75.24
After the Issue [●]
Issue Price [●]*
*Issue Price per Share will be determined on conclusion of book building process.
Net Asset Value per Equity Share represents Net Worth, as restated, divided by the number of Equity
Shares outstanding at the end of the period.
6.
COMPARISON WITH INDUSTRY PEERS:
Companies
Cellebrum
Cellebrum
OnMobile Global Limited
Year/Period
Nine months ended
December 31, 2007
Year ended March 31,
2007
Year ended March 31,
2008
EPS
(Rs.)
23.25
NAV (per
share)
(Rs.)
75.24
32.29
71.16
-
40.00
8.30
103.50
78.80
26.90
P/E
-
RONW
(%)
31.00
Source: Capital Markets Vol. XXIII/08 dated June 16-29, 2008 (Industry – Telecommunications – Service Provider). Data based
on full year results as reported in the edition.
35
Since the Issue is being made through the 100% Book Building Process, the Issue Price will be
determined on the basis of investor demand.
The face value of our Equity Shares is Rs. 10 each and the Issue Price is [•] times of the face value of
our Equity Shares.
36
STATEMENT OF TAX BENEFITS
Auditor’s Report
The Board of Directors
Cellebrum Technologies Limited
D-1, Sector 3, Gautam Buddh Nagar,
Noida – 201301 (UP)
India
Dear Sirs,
We hereby report that the enclosed statement states the possible tax benefits available to Cellebrum
Technologies Limited (‘CL’ or ‘the Company’) (formerly known as Cellebrum.com Limited) and to its
shareholders under the Income Tax Act, 1961 and Wealth Tax Act, 1957, presently in force in India.
Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions
prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its
shareholders to derive the tax benefits is dependent upon their fulfilling such conditions, which based
on business imperatives the Company faces in the future, the Company may or may not choose to
fulfill.
The benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to
provide general information to the investors and is neither designed nor intended to be a substitute for
professional tax advice. In view of the individual nature of the tax consequences and the changing tax
laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax
implications arising out of their participation in the issue.
We do not express any opinion or provide any assurance as to whether:
i) the Company or its shareholders will continue to obtain these benefits in future; or
ii) the conditions prescribed for availing the benefits have been / would be met with.
The contents of the enclosed statement are based on information, explanations and representations
obtained from the Company and on the basis of the understanding of the business activities and
operations of the Company.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
per Raj Agrawal
Partner
Membership No. 82028
Place: Gurgaon
Date: June 26, 2008
37
STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS
SHAREHOLDERS
UNDER THE INCOME TAX ACT, 1961 (‘THE ACT’)
A.
BENEFITS AVAILABLE TO THE COMPANY
1.
Deduction under section 80IC of the Act
Section 80-IC of the Act provides for tax holiday for certain industries located in Himachal Pradesh as
follows:
•
100% of the profits of the eligible undertaking for the first five years of operations;
•
30% of profits of the eligible undertaking for the next five years
The Company is claiming tax holiday under section 80IC of the Act in respect of its two units located
in Himachal Pradesh which became operational in the financial years 2004-2005 and 2005-2006
respectively.
2.
Amortization of Preliminary Expenses
A company is entitled to a deduction equal to 1/5th of certain specified expenditure by way of
amortization over a period of five successive years, beginning with the year in which the business
commences or extension of undertaking2 is completed. The total deduction however cannot exceed 5%
of the cost of project/ capital employed at the end of the last day of the previous year in which the
extension of undertaking gets completed or new industrial undertaking commences business. [section
35D of the Act].
3.
Expenditure on Scientific Research
A company is entitled to claim weighted deduction of 150% of the operating and capital expenses
(except land or building) incurred on Research and Development, if the Company complies with the
procedures required for obtaining such benefits and obtaining of approval from the Department of
Industrial and Scientific Research (DSIR) [section 35(2AB) of the Act].
4.
Credit of Minimum Alternate Tax (‘MAT’)
MAT credit allowable is the difference between MAT paid and the tax computed as per the general
provisions of the Act and can be utilized in those years in which tax becomes payable under the general
provisions of the Act. MAT credit can be utilized to the extent of difference between any tax payable
under the general provisions and MAT payable for the relevant year. MAT credit cannot be carried
forward and set off beyond 7 years immediately succeeding the assessment year in which it becomes
allowable under section 115JAA(1A) of the Act [section 115 JAA(1A) of the Act].
5.
Dividends
Dividend income (interim or final) received from a domestic company is exempt from tax in the hands
of the resident shareholders. Thus the dividend income received by CL from investments made in any
domestic company will be exempt in its hands [section 10(34) of the Act read with section 115O].
6.
Income from Units
The following incomes are exempted from tax under the Act:
a.
b.
2
Income received in respect of the units of a Mutual Fund specified under clause (23D) of
section 10; or
Income received in respect of units from the Administrator of a specified undertaking; or
Upto Assessment Year 2008-2009, this deduction was available only to an ‘industrial undertaking’
38
c.
Income received in respect of units from a specified company, a company as referred to in
clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeals Act,
2002 (58 of 2002)).
However, this exemption does not apply to any income arising from transfer of units of the
Administrator of the specified undertaking or of the specified company or of a mutual fund, as the case
may be [section 10(35) of the Act].
7.
Capital Gains
7.1.
Capital assets may be categorized into short-term capital assets and long-term capital assets
based on the period of holding. All capital assets (except shares held in a company or any
other listed securities or units of UTI or specified Mutual Fund units) are considered to be
long-term capital assets if they are held for a period in excess of 36 months. Shares held in a
company, any other listed securities, units of UTI and specified Mutual Fund units are
considered as long-term capital assets if these are held for a period exceeding 12 months.
Consequently, capital gains arising on sale of shares held in a company or other listed
securities or units of UTI or specified Mutual Fund units held for more than 12 months are
considered as ‘long term capital gains’.
7.2.
In computing the capital gains arising on sale of a capital asset, the cost of acquisition/
improvement and expenses incurred in connection with the transfer of a capital asset shall be
deducted from the sale consideration. However, in respect of capital gains arising from
transfer of long-term capital assets, the Act offers a benefit by permitting substitution of cost
of acquisition/ improvement with the indexed cost of acquisition/ improvement. The indexed
cost of acquisition/ improvement is computed by adjusting the cost of acquisition/
improvement by a cost inflation index as prescribed from time to time [section 48 of the Act]
7.3.
As per the provisions of section 10(38) of the Act, long term capital gains arising on sale of
equity shares in a company or a unit of an equity oriented fund would be exempt from tax
where the sale transaction has been entered into on a recognized stock exchange of India and
is liable to securities transaction tax (‘STT’). Such income can however be taxed under the
provisions of Minimum Alternate tax (‘MAT’).
7.4.
Long-term capital gains (other than mentioned in point 6.3 above) are taxed at the rate of 20%
(plus applicable surcharge and education cess) after claiming indexation benefit. However,
the tax liability on long term capital gains arising from the transfer of a long term capital asset
being listed security can be restricted to 10% (plus applicable surcharge and education cess) if
the indexation benefit is not claimed [section 112 of the Act].
7.5.
As per the provisions of section 54EC of the Act and subject to the conditions and to the
extent specified therein, long-term capital gains (which are not exempt under section 10(38) of
the Act) would not be chargeable to tax to the extent such capital gains are invested up to Rs
50 lakhs in certain notified bonds within 6 months from the date of transfer. The investment
in such bonds would need to be retained for a period of 3 years from the date of acquisition.
7.6.
Under section 111A of the Act, short-term capital gains arising from sale of an equity share in
a company or a unit of an equity oriented fund would be taxable at a concessional rate of 15
percent3 (plus applicable surcharge and education cess) where such transaction of sale is
entered on a recognized stock exchange in India and is liable to STT.
8.
Depreciation
8.1.
Under Section 32 of the Act, the company can claim depreciation allowance at the prescribed
rates on tangible assets such as building, plant and machinery, furniture and fixtures, etc. and
intangible assets such as patent, trademark, copyright, know-how, licenses etc .
3
With effect from Assessment Year 2009- 2010 (10% upto Assessment Year 2008-2009)
39
8.2.
In terms of sub section (2) of 32 of the Act, the company is entitled to carry forward and set
off the unabsorbed depreciation arising due to absence / insufficiency of profits or gains
chargeable for the previous year. The amount is allowed to be carried forward and set off for
the succeeding previous years until the amount is exhausted without any time limit.
9.
Carry forward of the losses
9.1.
As per provisions of section 72 of the Act, the company is entitled to carry forward its
business losses for a period of 8 consecutive assessment years commencing from the
assessment year when the losses were first computed and set off such losses from income
chargeable under the head “Profits and gains from business or profession”.
B.
BENEFITS AVAILABLE TO SHAREHOLDERS
B.I
RESIDENT SHAREHOLDERS
1.
Dividends
Dividend income (interim or final) received from a domestic company is exempt from tax in the hands
of the resident shareholders and accordingly no taxes are required to be deducted at source on the
dividend payment [section 10(34) of the read with section 115O].
2.
Capital gains
In computing the capital gains arising on sale of a capital asset, the cost of acquisition/ improvement
and expenses incurred in connection with the transfer of a capital asset shall be deducted from the sale
consideration. However, in respect of capital gains arising from transfer of long-term capital assets, the
Act offers a benefit by permitting substitution of cost of acquisition/ improvement with the indexed
cost of acquisition/ improvement. The indexed cost of acquisition/ improvement is computed by
adjusting the cost of acquisition/ improvement by a cost inflation index as prescribed from time to time
[section 48 of the Act]
Long-term capital gains arising on transfer of equity shares of a listed company are exempt from tax in
the hands of the shareholders provided the transaction for sale of such equity shares is liable to STT
[section 10(38) of the Act].
Long-term capital gains (other than mentioned in point 2.2 above) are taxed at the rate of 20% (plus
applicable surcharge and education cess) after claiming indexation benefit. However, the tax liability
on long term capital gains arising from the transfer of a long term capital asset being listed security can
be restricted to 10% (plus applicable surcharge and education cess) if the indexation benefit is not
claimed [section 112 of the Act].
Short-term capital gains from transfer of equity shares are taxed at the rate 15%4 (plus applicable
surcharge and education cess) provided the transaction for sale of such equity shares is liable to STT
[section 111A of the Act].
As per the provisions of section 54EC of the Act and subject to the conditions and to the extent
specified therein, long-term capital gains (which are not exempt under section 10(38) of the Act) would
not be chargeable to tax to the extent such capital gains are invested up to Rs 50 lakhs in certain
notified bonds within 6 months from the date of transfer. The investment in such bonds would need to
be retained for a period of 3 years from the date of acquisition.
Long-term capital gains (other than those covered in point 2.2 above) arising to an individual or a
Hindu Undivided Family (‘HUF’) on transfer of shares are exempt from capital gains tax if the net
consideration from transfer of such shares are used for purchase of residential house property within a
period of 1 year before or 2 years after the date on which the transfer took place or for construction of
residential house property within a period of 3 years after the date of such transfer. If part of the net
4
With effect from Assessment Year 2009-2010 (10% upto Assessment Year 2008-2009)
40
consideration is invested within the prescribed period in a residential house, such gains would be
exempt from tax on a proportionate basis. The minimum holding period for the new purchased /
constructed house to remain eligible for exemption is 3 years [section 54F of the Act].
3.
Securities Transaction Tax (STT) allowed as deductible expenditure5
In computing the business income, an amount equal to STT paid in respect of taxable securities
transactions entered into in the course of business will be allowed as a deductible expense, if the
income arising from such taxable securities transactions is included in the income computed under the
head ‘Profits and Gains of Business or Profession’ (section 36 (xv) of the Act)
B.II
NON-RESIDENT SHAREHOLDERS
1.
Dividends
Dividend income (interim or final) received from a domestic company is exempt from tax in the hands
of the non resident shareholders and accordingly no taxes are required to be withheld on dividend
payment [section 10(34) of the Act read with section 115O].
2.
Capital gains
2.1.
In computing capital gains arising from transfer of shares acquired in convertible foreign
exchange (as per the exchange control regulations), the capital gain/ loss in such a case is
computed by converting the cost of acquisition, sales consideration and expenditure incurred
wholly and exclusively in connection with such transfer, into the same foreign currency which
was utilized for the purchase of shares. Cost indexation benefit is not available in such a case
[section 48 of the Act].
2.2.
Long-term capital gains arising on transfer of equity shares of a listed company are exempt
from tax in the hands of the shareholders provided the transaction for sale of such equity
shares is liable to STT[section 10(38) of the Act].
2.3.
Long-term capital gains (other than those covered in point 2.2 above) are taxed at the rate of
20% (plus applicable surcharge and education cess). However, the tax liability on long term
capital gains arising from the transfer of a long term capital asset being listed security can be
restricted to 10% (plus applicable surcharge and education cess) without considering the
indexation benefit [section 112 of the Act].
2.4.
Short-term capital gains from transfer of equity shares are taxed at the rate 15%6 (plus
applicable surcharge and education cess) provided the transaction for sale of such equity
shares is liable to STT [section 111A of the Act].
2.5.
As per the provisions of section 54EC of the Act and subject to the conditions and to the
extent specified therein, long-term capital gains (which are not exempt under section 10(38) of
the Act) would not be chargeable to tax to the extent such capital gains are invested up to Rs
50 lakhs in certain notified bonds within 6 months from the date of transfer. The investment
in such bonds would need to be retained for a period of 3 years from the date of acquisition.
2.6.
Long-term capital gains (other than those covered in point 2.2 above) arising to an individual
or a Hindu Undivided Family (‘HUF’) on transfer of shares of CL are exempt from capital
gains tax if the net consideration from transfer of such shares are used for purchase of
residential house property within a period of 1 year before or 2 years after the date on which
the transfer took place or for construction of residential house property within a period of 3
years after the date of such transfer. If part of the net consideration is invested within the
prescribed period in a residential house, such gains would be exempt from tax on a
proportionate basis. The minimum holding period for the new purchased / constructed house
5
6
With effect from Assessment Year 2009-2010
With effect from Assessment Year 2009-2010 (10% upto Assessment Year 2008-2009)
41
to remain eligible for exemption is 3 years [section 54F of the Act].
2.7.
A non resident taxpayer has an option to be governed by the provisions of the Act or the
provisions of a Tax Treaty that India has entered into with another country of which the
investor is a tax resident, whichever is more beneficial [section 90(2) of the Act]
3.
STT as deductible expenditure7
In computing the business income, an amount equal to STT paid in respect of taxable securities
transactions entered into in the course of business will be allowed as a deductible expense, if the
income arising from such taxable securities transactions is included in the income computed under the
head ‘Profits and Gains of Business or Profession’ (section 36 (xv) of the Act)
B.III
NON RESIDENT INDIANS
Non resident Indian means an individual, being a citizen of India or person of Indian origin who is not
a resident. A person shall be deemed to be of Indian origin if he, or either of his parents or any of his
grand parents, was born in undivided India.
1.
DIVIDENDS
Dividend income (interim or final) received from a domestic company is exempt from tax in the hands
of the Non Resident Indian shareholders and accordingly no taxes are required to be withheld on
dividend payment [section 10(34) of the Act read with section 115O]
2.
CAPITAL GAINS
2.1
In computing capital gains arising from transfer of shares acquired in convertible foreign
exchange (as per the exchange control regulations), the capital gain/ loss in such a case is
computed by converting the cost of acquisition, sales consideration and expenditure incurred
wholly and exclusively in connection with such transfer, into the same foreign currency which
was utilized in the purchase of shares. Cost indexation benefit will not be available in such a
case [section 48 of the Act].
2.2
Long-term capital gain arising on transfer of equity shares of a listed company are exempt
from tax in the hands of the shareholders provided the transaction for sale of such equity
shares is subject to STT and accordingly no taxes are required to be deducted at source
[section 10(38) of the Act].
2.3
Short-term capital gains from transfer of equity shares are taxed at the rate 15%8 (plus
applicable surcharge and education cess) provided the transaction for sale of such equity
shares is subject to STT [section 111A of the Act].
2.4
The provisions referred to in point no 2.5 to point no 2.8 below are optional and the tax payer
can opt out by filing the declaration along with the return of income [section 115I of the Act].
2.5
Long-term capital gains (other than mentioned in point 2.2 above) arising on transfer of
shares, are taxed at the rate of 10 percent (plus applicable surcharge and education cess),
without indexation benefit [section 115D read with section 115E of the Act and subject to the
conditions specified therein].
2.6
Long-term capital gains (other than those covered in point 2.2) arising on transfer of shares
shall not be chargeable to tax if the entire net consideration received on such transfer is
invested within a period of 6 months in any specified asset or savings certificates referred to in
Section 10(4B) of the Act. If part of such net consideration is invested within the prescribed
period of 6 months in any specified asset or savings certificates referred to in Section 10(4B)
7
8
With effect from Assessment Year 2009-2010
With effect from Assessment Year 2009-2010 (10% upto Assessment Year 2008-2009)
42
of the Act, then such gains would be exempt from tax on a proportionate basis. The net
consideration means full value of the consideration received or accrued as a result of the
transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in
connection with such transfer. The minimum holding period for the specified asset or savings
certificates to remain eligible for exemption is 3 years [section 115Fof the Act].
2.7
Non-resident Indians are not required to file a return of income under section 139 of the Act, if
their only source of income is income from investments or long-term capital gains earned on
transfer of such investments or both, provided tax has been deducted at source from such
income as per the provisions of Chapter XVII-B of the Act [section 115G of the Act]
2.8
Where the non-resident Indian becomes assessable as a resident in India, he can continue to
avail the benefits as mentioned in point no 2.5 to point no 2.7 above by filing declaration
along with his return of income for that year in relation to such investment income derived
from the specified assets until such assets are converted into money [section 115H of the Act].
2.9
A non resident taxpayer has an option to be governed by the provisions of the Act or the
provisions of a Tax Treaty that India has entered into with another country of which the
investor is a tax resident, whichever is more beneficial [section 90(2) of the Act]
B.IV
SHAREHOLDERS BEING MUTUAL FUNDS
Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations
made thereunder, or Mutual Funds set up by public sector banks or public financial institutions or
Mutual Funds authorized by the Reserve Bank of India and subject to the conditions notified by Central
Government in this regard, would be eligible for income-tax exemption on their income [section
10(23D) of the Act].
B.V SHAREHOLDERS BEING FOREIGN INSTITUTIONAL INVESTORS (FIIS)
1.
DIVIDENDS
Dividend income (interim or final) received from a domestic company is exempt from tax in the hands
of the FIIs and accordingly no taxes are required to be withheld on dividend payment [section 10(34) of
the Act read with section 115O]
2.
CAPITAL GAINS
Long-term capital gain arising on transfer of equity shares of a listed company are exempt from tax in
the hands of the shareholders provided the transaction for sale of such equity shares is subject to STT
and accordingly no taxes are required to be deducted at source [section 10(38) of the Act].
Short-term capital gains from transfer of equity shares are taxed at the rate 15%9 (plus applicable
surcharge and education cess) provided the transaction for sale of such equity shares is subject to STT
[section 111A of the Act].
Long term Capital gains arising from transfer of shares [other than those covered in point 2.1 above],
are taxed at the rate of 10% (plus applicable surcharge and education cess). The benefits of indexation
and foreign currency fluctuation protection as provided under section 48 of the Act are not available to
FIIs. [section 115AD of the Act]
As per the provisions of section 54EC of the Act and subject to the conditions and to the extent
specified therein, long-term capital gains (which are not exempt under section 10(38) of the Act) would
not be chargeable to tax to the extent such capital gains are invested up to Rs 50 lakhs in certain
notified bonds within 6 months from the date of transfer. The investment in such bonds would need to
be retained for a period of 3 years from the date of acquisition.
A non resident taxpayer has an option to be governed by the provisions of the Act or the provisions of a
9
With effect from Assessment Year 2009-2010 (10% upto Assessment Year 2008-2009)
43
Tax Treaty that India has entered into with another country of which the investor is a tax resident,
whichever is more beneficial [section 90(2) of the Act]
3.
STT as deductible expenditure10
In computing the business income, an amount equal to STT paid in respect of taxable securities
transactions entered into in the course of business will be allowed as a deductible expense, if the
income arising from such taxable securities transactions is included in the income computed under the
head ‘Profits and Gains of Business or Profession’ (section 36 (xv) of the Act)
UNDER THE WEALTH TAX ACT, 1957
Shares in a Company held by a shareholder will not be treated as an asset within the meaning of
Section 2(ea) of Wealth-tax Act, 1957; hence, wealth tax is not leviable on shares held in a Company.
UNDER THE GIFT TAX ACT, 1958
Gift of shares of the Company made on or after October 1, 1998 are not liable to gift tax.
The tax benefits listed above are the possible benefits available under the current tax laws in India.
Several of these benefits are dependent on CL or its Shareholders fulfilling the conditions prescribed
under the relevant tax laws (and acceptance of same by the Revenue authorities). Hence the ability of
CL or its Shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which
based on business imperatives CL faces in the future, it may or may not choose to fulfill. The
information provided is generic in nature and each investor is advised to consult his or her own
consultant with respect to the specific tax implications arising out of their participation in the issue.
10
With effect from Assessment Year 2009-2010
44
SECTION IV: ABOUT THE COMPANY
INDUSTRY OVERVIEW
The information in this section is derived from various government and academic publications and
industry sources. Neither we nor any other person connected with the Issue have verified this
information. Industry sources and publications generally state that the information contained therein
has been obtained from sources generally believed to be reliable, but that their accuracy, completeness
and underlying assumptions are not guaranteed and their reliability cannot be assured and,
accordingly, investment decisions should not be based on such information.
Telecommunications and Mobile Value Added Services (MVAS) Market Opportunity in India
The Indian telecommunications industry has experienced significant growth in recent years and is
expected to continue as India’s large population and low mobile penetration offer considerable scope
for growth. This growth has been highly visible in the mobile sector. India’s cellular market penetration
is estimated at approximately 20% as of 2007 and is projected to rise to approximately 61% by 2012, a
CAGR of 26.9%. Correspondingly, revenues from cellular services in India are projected to increase
from US$14 billion in 2007 to US$37 billion in 2012, an implied CAGR of 18.0% (Source: Gartner
Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and Nick Ingelbrecht, 3
June 2008). A more recent analysis by TRAI (no. 54, 2008) estimates the total wireless subscribers as
of April 2008 was 269.3 million.
India Cellular: Total Market, 2003- 2012
Mobile Connections (in thousands)
Penetration
800,000
70%
60.7%
700,000
60%
54.8%
600,000
47.8%
50%
40.0%
500,000
40%
400,000
29.7%
737,119
30%
657,488
300,000
565,759
19.8%
466,839
200,000
12.6%
6.9%
100,000
0
2.7%
20%
341,536
224,388
4.5%
10%
141,136
28,442
48,220
75,923
2003
2004
2005
0%
2006
2007
2008
2009
2010
2011
2012
(Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and
Nick Ingelbrecht, 3 June 2008)
The growth of telecom subscribers has led to the emergence of the Mobile Value Added Services
(MVAS) market. MVAS are those services that are not part of the basic voice offer and are availed
separately by the end user. They are used as a tool for differentiation and allow mobile operators to
develop another stream of revenue. The nature of value added services changes over time. For example,
P2P SMS was the only form of VAS in the early days of adoption of mobile telephony in India. Now
VAS includes data offerings such as games, music, video/TV, ringtones, graphics, information
services, contests and other. Data service revenue, (including SMS) was estimated to be approximately
US$1.5 billion in 2007 and growing to approximately US$5.6 billion in 2012, a CAGR of 26.3% for
the period 2008-2012 (Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012,
Madhusudan Gupta and Nick Ingelbrecht, 3 June 2008).
45
India Cellular Services, Total Market — 2003-2012
Total Services Revenue (US$ million)
Data Revenue (US$ million)
40,000
5,576.7
35,000
6,000
4,870.6
5,000
30,000
4,152.5
4,000
25,000
3,230.4
20,000
3,000
37,766
34,796
2,194.9
30,787
15,000
10,000
2,000
25,632
1,524.6
19,460
901.8
14,338
1,000
563.8
5,000
9,021
323.4
146.6
2,706
4,645
6,479
0
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
(Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and
Nick Ingelbrecht, 3 June 2008)
Historically, the telecommunications sector was run by the Indian Government through the Ministry of
Telecommunications and Information Technology, Department of Telecommunications. The
liberalisation of this key sector began in the early 1990s with the realisation that in order to expedite
development of the infrastructure throughout India, wide scale investment was required and this could
not be fulfilled exclusively by public investment. Since early 1998, telecommunications services areas
have been opened up on a nationwide basis to competition and private sector participation. This
transition from a government-controlled monopoly to an industry with widespread private sector
participation, coupled with population growth and strong economic trends in recent years has been
instrumental in the telecommunications sector becoming one of the fastest growing sectors in India.
Comparative analysis versus China opportunity
Statistical data indicates that much of the growth in the Asia Pacific wireless telecommunication
market is due to the growth in demand in countries like India and China. China is currently the largest
market in Asia Pacific with 528 million connections accounting for 42.8% of the market share. As
India and China have comparable populations, India’s low mobile penetration offers considerable
scope for growth. Given below is the forecast for the mobile connections and services revenue in
China, from 2003 to 2012 (Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012,
Madhusudan Gupta and Nick Ingelbrecht, 3 June 2008).
46
China Cellular: Total Market, 2003- 2012
Mobil e C onnecti ons (i n th ousands)
Pe netrati on
1,200,000
90%
74.8%
1,000,000
80%
69.3%
70%
62.3%
800,000
54.8%
60%
46.9%
50%
39.6%
600,000
33.4%
1,025,171
400,000
844,212
24.1%
30%
738,619
19.8%
628,612
527,802
200,000
257,628
40%
943,862
28.3%
316,373
374,445
20%
442,013
10%
0
0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
(Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and
Nick Ingelbrecht, 3 June 2008)
China Cellular Services, Total Market — 2003-2012
Total Services Revenue (US$ million)
Data Revenue (US$ million)
12 0 ,0 00
2 5,00 0
20 ,68 3
10 0 ,0 00
2 0,0 00
18 ,09 3
15,9 11
8 0 ,0 00
13 ,46 6
15,0 00
11,36 4
6 0 ,0 00
110 ,73 3
9,32 7
10 2 ,6 95
10 ,00 0
93 ,20 2
7,30 1
4 0 ,0 00
82 ,6 81
72,18 7
5,83 5
60 ,8 85
3,80 0
2 0 ,0 00
48 ,2 3 1
5,0 00
2,2 34
29 ,111
3 4,62 8
2 00 3
2 00 4
4 0 ,4 97
0
0
2 00 5
20 0 6
20 07
2 0 08
2 0 09
20 10
20 11
2 0 12
(Source: Gartner Inc., Forecast: Mobile Services, Asia/Pacific, 2003-2012, Madhusudan Gupta and
Nick Ingelbrecht, 3 June 2008)
Comparative analysis of the growth in PCs vs mobile phones.
According to IDC India (February 2008 release), the number of client personal computer (PC) owners
in India has increased by 20% over the previous calendar year (CY) 2006 to touch 6.5 Million for CY
2007. This represents a market penetration of 0.65% a in India. As per TRAI’s press release no. 54,
2008, the total wireless subscriber base as of March 2007 stood at 165.11 million and the estimated
total wireless subscriber base as of April 2008 according to the same press release was 269.3 million.
This accounts for a tele-density of 26.89% according to TRAI’s press release no. 54, 2008. Mobile
47
phones are becoming more popular and common as compared to PCs. Additionally, with the
availability of cheap mobile phones and a host of mobile value added services, mobile phones are
expected to become the preferred communication device for the mass Indian consumer. The following
table shows the growth in commercial shipment of PCs in India.
Product category
Total desktop PC
market
Total notebook PC
market
Total client PC
market
CY 2005
shipments
(million
units)
3.9
Year-onyear growth
(CY
2005
over 2004)
19%
CY 2006
shipments
(million
units)
4.4
Year-onyear growth
(CY
2006
over 2005)
14%
CY 2007
shipments
(million
units)
4.7
Year-onyear growth
(CY
2007
over 2006)
7%
0.5
148%
1.0
106%
1.8
81%
4.3
26%
5.4
24%
6.5
20%
(Source: IDC)
India Mobile Phone Shipments (millions) FY2007 vs. FY2008: Unit Shipments, Growth
2007- 2007
65.8
2007- 2008
84.9
Growth in shipments
29%
(Source: IDC)
IDC’s Asia/Pacific Quarterly Mobile Phone Tracker, Q1 2008, June 2008 release, indicated that close
to 85 million mobile phones were shipped in India between April 2007 and March 2008, compared to
just under 66 million units shipped over the equivalent period a year ago which amounts to a year-onyear growth of around 29 % in terms of units. According to the same IDC June 2008 release, shipments
in January, February and March (JFM) 2008 stood at more than 22 million handsets, which amounts to
around 10,000 mobile phones being shipped every hour during the quarter. In the same quarter in JFM
2007, just under 18 million mobile phones were shipped.
Mobile Value Added Services (“MVAS”) Industry Trends
Introduction
The Indian mobile telephony market has grown at a rapid pace in the past six to seven years. Declining
call tariffs in conjunction with favourable regulatory policies have led to a tremendous increase in the
subscriber base (Source: A Study of the Mobile Value Added Services (MVAS) Market in India by
Boston Analytics (October 2007)). While the growing subscriber base has positively impacted industry
revenues (which have risen consistently over the past few years), operator margins also have shrunk,
pulling down Average Revenue Per User (“ARPU”). As ARPU declines and voice gets commoditized,
the challenge in the industry is to retain customers, develop alternative revenue streams, and create a
basis for differentiation in high-churn markets. (Source: Emerging Markets: How to Make Big Margins
in the Mobile Telecoms,” December 2006). The charts below depict recent trends in ARPUs in India.
Trends in all India Monthly ARPU
48
(Source: “Future Mobile VAS in India” by Stanford University in conjunction with BDA Connect
Research, December 2007)
In the wake of recent industry trends, telecom operators are looking at MVAS as the next wave of
potential growth, and significant source of future revenues. MVAS services can enable customers to
play games, enter contests, read news, keep tabs on astrology predictions, conveniently book tickets,
make bill payments, choose roaming solutions, listen to music radio and even check their bank balance.
Market growth drivers on the supply side include declining ARPU, brand differentiation needs, and
increasing access to diverse content; demand-side drivers include the strong Indian economy,
increasing user comfort with basic mobility services, personalization of content and devices and the
increasing prevalence of more sophisticated handsets. From the early days of Person-to-Person Short
Message Service (“P2P SMS”), the industry has witnessed an emergence of a growing portfolio of
services including graphics or wallpapers downloads, ringtones and Caller Ring Back Tones
(“CRBT”), SMS contests and games.
VAS Contribution and Growth
In India, the total market size of VAS revenues was estimated to be USD $926 million in 2007, and
projected to reach US$2.7 billion by 2010, a CAGR of 44%. (Source: Future of Mobile VAS in India
by Stanford University in conjunction with BDA Connect Research, December 2007). Entertainment
MVAS is expected to drive the growth of the data services VAS market going forward with Video/TV
and games registering the highest growth rates among other segments in the near future.
Estimated growth in India’s VAS market and the breakdown of the usage of various services is
exhibited below:
(Source: Future of Mobile VAS in India by Stanford University in conjunction with BDA Connect Research,
December 2007)
As of December 2007, VAS services contributed approximately 7% of the total telecom revenue for
Indian telecom operators. In particular, non-voice revenues have been increasing since 2000. The
49
revenue growth is driven by SMS (including P2P, A2P, P2A), which contributed over 55% of total
VAS revenues in 2006. Over the last three years the percentage share of revenues coming from SMS is
on a decline as other services gain, with SMS, Ringtones/CRBT, and Voice VAS expected to continue
to be the highest revenue generating services in India. (Source: Future of Mobile VAS in India by
Stanford University in conjunction with BDA Connect Research, December 2007).
Voice Services
Voice VAS has historically generated higher revenues for operators as compared to data revenues due
to higher usage by subscribers, and also higher call charges (USD 0.15 per minute, or INR 6/7 per
minute for voice-based services as compared to USD 0.07/SMS or INR 3/SMS for text-based services
(Source: A Study of the Mobile Value Added Services (MVAS) Market in India by Boston Analytics
(October 2007)). Higher usage of voice-based services is significantly being driven by IVRS,
particularly in rural India, due to a multilingual subscriber base and the relative ease of use of the voice
interactive system.
Data Services
Data services, consisting primarily of SMS (including P2P, A2P and P2A), games, enterprise services
and mobile commerce-oriented products are expected to see significant revenue growth in the future.
The impetus for growth in services is being driven primarily by the following factors:
Increasing consumer demand for value added services
Globally, there has been a trend towards consumers utilizing their phones for music, entertainment,
games and to obtain information. This has been driven by with the development and availability of
richer content through telecom networks as well as more sophisticated handsets which provide easy
user interfaces and will support delivery of the content and use of MVAS applications.
Increasing Comfort Levels with Basic Mobility Services
The Indian mobile telephony market has attained critical mass due to the increasing affordability of
mobile services, as well as the increasing comfort with basic mobility services. Most users are
comfortable with operating their mobile phones for basic voice services, and would progress into
demanding addition of more value beyond basic voice applications, driving the next phase of growth
(Source: A Study of the Mobile Value Added Services (MVAS) Market in India by Boston Analytics
(October 2007)).
Certain Market Initiatives Contributing to Growth in MVAS
50
SMS Contests
Television is an integral part of the daily lives of average Indians. The proliferation of global television
channels has changed TV viewing from a passive activity to an interactive activity. Daily soaps, music,
and contest shows provide the option for viewers to participate through SMS. The popularity of
contests can be gauged from the fact that during November 2004–March 2005 “Indian Idol” (a singing
competition hosted by Sony Television) received over 55 million votes via SMS, amounting to a total
revenue of US$3.75 million (Rs. 165 million) at US$0.07/SMS (Rs. 3/SMS). Of this amount, telecom
companies earned US$2.61 million (Rs. 115 million), and Sony TV earned about US$1.14 million (Rs.
50 million). Further, a popular television game show “Kaun Banega Crorepati,” on Star Television,
generated 58 million SMSs over a period of three months. These shows have increased the familiarity
of low usage segments such as housewives and the senior population with SMS utilities (Source: A
Study of the Mobile Value Added Services (MVAS) Market in India by Boston Analytics (October
2007)).
Music
Mobile music comprises ringtones, CRBTs, and music clips. Indians are known for their affinity for
music and movies. According to an official of Sony–BMG, approximately US$0.22–0.26 million (Rs.
10–12 million)—about 5% of an album’s sales—can be generated from mobile revenues. A popular
radio station, Radio Mirchi, receives approximately 40,000–50,000 SMSs daily with requests for songs
to be played on air. Saregama (an Indian music company) generates 50% of its revenues from ringtones
offered through its catalogue (Source: A Study of the Mobile Value Added Services (MVAS) Market
in India by Boston Analytics (October 2007)).
Video/TV and Games
Services such as mobile TV/video, full-motion videos, wireless teleconferencing, multi-player online
games, and M-commerce. These services typically require high bandwidth and a superior level of
support technology than the currently available 2.5G. The introduction of 3G/4G in the near future is
therefore expected to facilitate a wider portfolio of MVAS available to mobile users. The video/TV and
games segment of the MVAS market are expected to register the highest CAGR during 2004–2009
(Source: A Study of the Mobile Value Added Services (MVAS) Market in India by Boston Analytics
(October 2007)).
VAS Value Chain
The Indian VAS market remains fragmented with most VAS providers operating in niche segments.
However, the MVAS market in India has evolved into a complex eco-system with multiple entities
involved in the value chain as illustrated below, many with overlapping roles and functions.
51
(Source: A Study of the Mobile Value Added Services (MVAS) Market in India by Boston Analytics
(October 2007)
The increased importance of MVAS has also inspired content and application developers to constantly
innovate to produce new concepts and services. In addition, the respective roles of content aggregators,
software developers and technology enablers have expanded. Content/application owners develop or
own copyrighted content and applications such as songs, entertainment news, movies, games and
promotional media content. Aggregators bring together content and applications such as games,
wallpapers, ringtones and all other types of content, from owners and/or smaller boutiques to distribute
in accordance with customer needs. Aggregators may also manage IVR, billing, quality control and
accounting. Software developers may develop software on a for-hire basis or in-house, and develop
items such as security applications, games, and other applications for mobile VAS. Technology
enablers provide the platform for items such as ringtone downloads, games, streaming, audio and video
downloads, IVR and WAP for the telecom operators and create a bridge between aggregators and
operators and manage and maintain the platform and integrate the applications (Source: “Future Mobile
VAS in India” by Stanford University in conjunction with BDA Connect Research, December 2007).
Delivery Methods and Categories of Mobile Value Added Services
The spectrum of VAS offerings is illustrated below:
Delivery
Platforms
SMS
Entertainment
Alerts and News
Commerce
Social VAS
Enterprise VAS
SMS
Ringtones/CBRT
Customized
Wallpapers
Cricket/Match
Alerts
News
Astrology,
Vaastu,
Fengshui,
Personality Test
Banking
Info/Alerts
Travel alerts
details like Train,
Flight details etc.
Mobile
banking
Ticketing
Travel and
Holiday
bookings
Location,
infotainment
Search **
Advertising
Contests, voting,
information
Push Advertising
Enterprise IM
Group messaging
Astrology
Mobile
Astrology
IVR based Contact
Animations
Quiz
Jokes
IVRS
Religious chants
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WAP
Portals
Music on
Demand
Vaastu
Fengshui
banking
Ticketing
services
Voice SMS
Video Clips
Mobile Games
Mobile Themes
Mobile Radio
Movies related
info
Stock Portfolio
Managers
News
tickers/alerts
Mobile
banking
Ticketing
Travel and
Holiday
bookings
Mail
Mobile-Greetings
Dating, Chatting,
Blogging etc.
Infotainment
SNC/UGC
Advertising
Messengers
Centers
Self Help centers
Voice Portals
Location based
information
Internet Mobile e-mail
Mobile calendar
Access to Intranet and
Core Business
Applications
Mobile VPA
Push E-mail over
handheld devices (e.g.
BlackBerry)/ Wireless
e-mail
(Source: “Future Mobile VAS in India” by Stanford University in conjunction with BDA Connect Research,
December 2007)
The above reflects innovation of only the past few years. The breadth of the potential for MVAS
offerings in a multitude of usages is still evolving.
53
BUSINESS
Overview
Our Company is one of the leading providers of telecommunications value added products, services
and solutions in India. We provide a wide range of telecommunications value added services,
platforms, products and solutions to telecommunications carrier customers, subscribers of such carriers
and enterprises across India. As a value added services provider, we not only conceptualize products to
meet our customer needs, we source and aggregate content, provide the relevant platform for delivery
of our products and services and integrate these services with the core network elements of our carrier
customer. We have the ability to provide a comprehensive suite of value added products, services and
solutions across all key technology bearers. Our telecommunications products and services and
telecommunications solutions are delivered to subscribers of major telecommunications carriers in
India, including Airtel, Spice Communications, BSNL, IDEA, Reliance, Vodafone, MTNL, Tata
Teleservices Limited and “Connect” & “Ping” of HFCL.
Our product portfolio includes music, information and entertainment based products and services (such
as mobile radio, BGM, CRBT, ringtone downloads, videos, contests, astrology, news, sports updates
and commodity rates), social networking products and services (such as voice chat), and call
management solutions (such as voicemail, voice SMS, select caller list, Pay4Me and missed call
alerts), all of which enable subscribers to personalize their mobile phones and enhance user experience.
Our products allow subscribers to access informational and entertainment content in more than 17
languages using IVRS speech-based navigation. Using our social networking platform, subscribers are
able to generate their own interactive content through messaging and conversations. We provide these
value added services and products through our carrier customers to mobile subscribers and enterprise
clients using IVRS, SMS, USSD, GPRS and WAP technology and delivery methods. Our applications
(other than GPRS) can be deployed on any network and accessed from most mobile handsets and fixedline devices. Many of our products and services can be accessed by subscribers using a variety of
delivery platforms, i.e., voice, SMS, USSD, GPRS, WAP and 3G network, thereby enabling us to
deploy our products and services across a majority of operators and networks.
We focus on multi-modal platforms based on voice, text and data. Our mobile radio platform gives
subscribers the interactive option to access content on demand in the language of their choice, using
their mobile phones. Given the demographic diversity of India, our platforms offer an efficient, easyto-use and attractive solution to our carrier customers for providing services to their subscribers. The
platform enables our carrier customers to introduce better targeted, more innovative content based
services. Our data platform, Mitr proposes to provide a unified framework for discovering and
accessing content and services, giving the subscriber a personalized experience. Our delivery
infrastructure is deployed across most network circles of our carrier customers.
Our roaming solutions provide traffic flow information, enable network optimization and identify
network bottlenecks for our carrier customers. Subscribers benefit from real-time updates and better
coverage while roaming outside their regular network. Through our in-house research and development
team, we have developed roaming solutions such as Welcome Roamer, Roam Tracker, Roam Globe,
Roam Secure and Roam Privilege.
Our value added services and products provide a source of additional revenue to our carrier customers
with relatively insignificant capital expenditure. Our music, entertainment and information based value
added products and services are dependent on the content which we provide. We have alliances with a
number of content owners and license holders and licensed content is delivered to our carrier customers
through our delivery platforms. As of May 31, 2008, we had more than 140,000 songs in more than 17
languages, as well as logos, wallpaper and 12,000 ringtones in our content database to cater to the
needs of multicultural and multilingual subscribers in India.
Our consolidated income increased from Rs. 332.26 million in Fiscal 2006 to Rs. 686.80 million in
Fiscal 2007 and to Rs. 777.19 million for the nine months ended December 31, 2007. Our consolidated
54
profit after tax increased from Rs. 220.38 million in Fiscal 2006 to Rs. 410.50 million in Fiscal 2007
and to Rs. 330.68 million for the nine months ended December 31, 2007.
We were incorporated in India in April 2000. Our registered office is located in New Delhi, India. We
also maintain offices in Noida, Kolkata, Bangalore, Mohali, Hyderabad, Parwanoo and Mumbai and
have an overseas office in Singapore.
Our Competitive Strengths
The telecommunications services industry has grown exponentially in recent years as a result of India’s
expanding economy. Land-based telephone connections and services are inadequate for current
consumer needs and mobile phones are increasingly filling the growing demand. Competitive pressures
have also resulted in decreasing prices and declining average revenue per user in the Indian
telecommunications industry and telecommunications operators and service providers are increasingly
looking to additional services and products to support and grow their market share, revenues and
margins.
Innovative platform based product development and diversity of products and services
We are continually engaged in the development of new products and services on our platforms to
enhance the product portfolio we offer to our telecommunications carrier customers and other
enterprises and bring new products and services to the market to address consumer needs and drive
demand. We focus on multi-modal platforms based on voice, text and data. Our mobile radio platform
gives subscribers the interactive option to access content on demand in the language of their choice
using their mobile phones. Given the demographic diversity of India, our platforms offer an efficient,
easy-to-use and attractive solution to our carrier customers for providing services to their subscribers.
The platform enables carriers to introduce better targeted, more innovative content based services. Our
data platform, Mitr, proposes to provide a unified framework for discovering and accessing content and
services, giving the subscriber a personalized experience. We continue to invest in the growth of our
platforms to ensure that these are in tune with the requirements of our customers. In addition, we are
constantly refining our offerings to improve adoption of mobility-related products by consumers and
address pricing pressures. We provide a diverse portfolio of services, products and content, with a
focus on entertainment, information, music and games. We have introduced new services in India,
including tambola via mobile phone, BGM, VAS on USSD, Pay4Me and select caller list. For music,
entertainment and infotainment products, we have launched our BGM service, mobile radio and
ringtones; for call-related products, we have launched select caller VAS on USSD and Pay4Me; for
services and applications, we have launched user generated products such as voice chat; and we have
developed and launched innovative roaming solutions such as Welcome Roamer, Roam Tracker, Roam
Globe, Roam Secure and Roam Privilege. Our ability to offer a complete suite of products and services
allows our customers to offer a wide range of user interface services to their subscribers, resulting in
ease of market adoption, revenue growth, and higher subscriber satisfaction.
Entrenched customer relationships
All of the major telecommunications carriers in India form a part of our customer base, including
Airtel, Spice Communications, BSNL, IDEA, Reliance, Vodafone, MTNL, Tata Teleservices Limited
and “Connect” & “Ping” of HFCL. We have successfully marketed our solutions to a multitude of
diverse telecommunication carriers customers. Service deployments with our customers involve
complex hardware systems and software applications deeply embedded within the customer’s core
network systems. Since the service deployment on our customers’ network is complex, our relationship
development personnel are stationed at our telecommunication carriers office, giving us the ability to
expand quickly and efficiently the range of services deployed and benefiting from the revenue growth
from their subscriber base.
Our presence and deep experience across the mobile industry value chain
Our experience in the mobile industry value chain provides us with valuable insight into the mobile
eco-system. Our association with Spice Communications has in the past provided us with enhanced and
expedited feedback on the ever-changing needs of end-user subscribers and their feedback has been
incorporated by our research and development team into new products and services. We believe
55
expedited feedback from the telecommunication carriers perspective gives us a time-to-market
advantage for development of new products and services. In addition, we have the capability of
managing the entire value added services segment which a telecommunications carrier customer
requires in providing value added services to its subscribers. Currently, we provide this management
service to Spice Communications. This managed services model benefits the carrier by reducing its
investment in the value added services segment and helps the launch of innovative data and multimedia
services quickly and efficiently.
Strong core technological capabilities
We have significant in-house resources and capabilities and a deep domain understanding in the areas
of voice, data, and signaling. In the past, this understanding has allowed our Company to build
technology intensive applications and products such as BGM (voice domain), mobile radio platform
(voice domain), USSD/SMSC (signaling domain) and services, such as call filter (enhanced IN
services) and Mitr. Our technology team works closely with the business teams and keeps a close
watch on the value added services environment worldwide. We have a sophisticated understanding of
the complexities of the operations of our carrier customers, which enables us to better address the
technological concerns involved in incorporating products and services into operators’ networks. We
were one of the first to develop products and services such as BGM, VAS on USSD, Select Caller List
and Pay4Me, resulting in revenue growth for our Company over the last few years.
Our diversified content database
Our music, entertainment and information based value added services and products are dependent on
the content we source, license, reformat and re-position. We have invested significant effort in growing
the necessary relationships and have forged alliances with more than 300 content owners and license
holders. We have a content database of more than 140,000 songs in more than 17 languages, as well as
logos, wallpaper and 12,000 ringtones in our content database, to cater to the needs of multicultural and
multilingual users in India. With our pan-India presence and a well diversified offering of value added
products and services, we provide relevant services in a convenient manner to our consumers in the
language of their choice. Hosting a gamut of content varieties, consisting of music, entertainment,
gaming, contesting and information based services, we facilitate continuous access to the content
required by our carrier customers.
Experienced management and research and development team
Our senior management team has an average of, over 14 years of experience in the telecommunications
and technology industries with well-established companies. We have a research and development team
comprised of 128 members and have in the past created and nurtured innovative products and services
in the evolving mobile eco-system and building community brands across product and service verticals.
Our experienced senior management tea
m has been a primary contributor to our current status as a leading provider of telecommunications
value added services and products and solutions in India.
Our Strategy
Our strategy is to be the preferred VAS business partner of telecommunications carriers and enterprise
clients. We strive to offer the most innovative platforms, products and services that can be accessed and
used by our carrier customers’ subscribers on mobile phones and by our enterprise clients, delivering
value added voice services, data transmission, mobile commerce and communications.
Provide innovative applications to fulfill our carrier customers’ total telecommunication needs in
new and existing markets
Mobile phones have developed beyond simple voice communications and have become a sophisticated
multi-utility tool for consumers to enjoy and access a variety of services. We believe that the value
added services industry is rapidly evolving to provide rich and varied content and services for
subscribers. We intend to utilize our expertise to develop and launch innovative products and services
that will meet the evolving needs of the end-user subscribers for our carrier customers and enterprise
56
customers in our current markets, as well as market new products and services to new and existing
customers in India and internationally. We continue to focus on and invest in our development
activities to anticipate the needs of the growing subscriber market and continue to develop products and
services which match consumer preferences as well as foster cross-selling of services to these end-user
subscribers that our products and services reach.
Deepen our relationships with carrier customers
We intend to expand our geographic presence and market penetration in India. Based on our experience
serving as an integrated telecommunications solutions provider for some of our carrier customers who
want to rapidly and cost-effectively provide a broad range of telecommunications value added services
and products to their subscribers and create new revenue streams, we believe we have the leverage to
expand our domestic carrier customer base, becoming a value added service provider of choice. We
intend to increase our market share with existing customers by providing a broader range of services
and products to these customers, and also cross-marketing additional products, such as our roaming
solutions to our carrier customers. Furthermore, we intend to enhance our presence in enterprise
services by providing a broader range of services to our enterprise clients within India and overseas. In
order to develop and support these new customer relationships, we intend to upgrade and expand our
network of development, sales and support resources in potential growth markets and to enter into local
partnerships and distribution arrangements. We also intend to be present in all aspects of the value
added services chain, acting as a partner to our customers by managing the entire value added services
offering of our customers.
Build on our platforms
While we continue to innovate and launch value added services and products, we intend to focus on the
development of platforms on which various applications can be hosted, including hosting of third party
applications. We have developed a voice platform through mobile radio, which is a one-stop-shop for
music, comedy, sports and other such products, a roaming platform allowing a multitude of
applications for multiple carrier customers to take advantage of economies of scale and the breadth of
our product portfolio, and a service control point platform for offering a multitude of enhanced
Intelligent Network (IN) services, such as select caller list, call control and ‘follow me’. Our data
platform, Mitr, proposes to provide a unified framework for discovering and accessing content and
services and a personalized customer experience. We continue to build platforms for new emerging
opportunities such as mobile marketing, mobile commerce and enterprise customer relationship
management.
Grow our technological capabilities and improve our product deployment
We have successfully tested and launched applications such as bulk outbound messaging (through our
enterprise solutions platform), select caller list, VAS on USSD, Pay4Me and missed call alerts through
voice and data technologies. With the evolution of the mobile phone beyond its basic call functionality,
we believe there are opportunities to offer products and services which enable merchants and
consumers to sell and purchase goods, mobile content and other products using the wireless handset as
a sales channel. Merchants will be able to leverage the increasing reach of telecommunications
networks by using products, such as outbound messaging, to access large and difficult to reach markets
in India.
We intend to leverage the mass customization capabilities of our value added software services
deployments with our carrier customers to bring to market advanced capabilities such as demand
aggregation and personalized one-to-one direct marketing. We believe that our experience in providing
telecommunications value added services and products for delivery to mobile users gives us a deep
understanding of subscriber behavior and use of value added products and services, which assists us in
formulating new products and services and improving existing products to enhance the user experience.
Strengthen our long-standing content sourcing relationships
Our current initiatives include providing channels for both user generated and media generated content.
We seek to develop one of the strongest content databases in India, cutting across genres and
57
languages. Since most of our products and services are dependent on the content we provide, our focus
is to create one of the largest digital and music databases in India. Currently, the major growth in
mobile telephony is from semi-urban and rural areas. With coverage expansion by the operators in
semi-urban and rural areas where there are few entertainment and information outlets other than
television, we expect there will be significant requirements for content focused on semi-urban and rural
populations, such as commodity market prices, commodity rates, weather information and education.
We intend to have online content in these areas through our partnerships with content providers.
Expand our operations into new enterprises and international markets
As the cellular subscriber base is growing, enterprises are using the mobile phone as a tool for customer
relationship management, mobile advertising and MCommerce. Examples of this growth are banks and
insurance companies using the mobile phones for banking transactions and due-date alerts. We intend
to focus on growing our enterprise customer base to expand and grow our business.
We also believe there is significant market growth potential in emerging telecommunications services
markets outside India. We have set up and own an office in Singapore to research the market in
Singapore and in the Asia-Pacific region. In addition, we have a presence in Jordan where we provide
our telecommunication value added services and products. We intend to market existing products and
services and develop customized products and services within the Asia-Pacific region and further to
other parts of the world. We believe that with our strong technological, product innovation and
bandwidth handling capabilities, we can offer cost efficient, innovative and diverse range of products
and services internationally. We believe overseas markets, with potentially higher average revenues per
user, offer expansion and business growth opportunities with manageable increased costs. We are in the
process of evaluating markets such as Bangladesh, Indonesia, Malaysia and Africa.
Pursue selective strategic acquisitions and investments
We continually seek new growth and acquisition opportunities in our existing business lines as well as
related businesses to expand our geographic presence domestically and internationally, service
offerings, customer relationships and technological expertise. By selecting the opportunities for growth
and acquisition carefully and leveraging our transactional, project execution and operational skills, we
expect to continue to expand our business. We will pursue similar opportunities in other regions to
strengthen and grow our business, including investment in or acquisition of minority or majority stakes
in companies which support our business and product strategy.
58
Our Principal Products and Services
SEGMENT
MUSIC, ENTERTAINMENT
AND INFOTAINMENT
VALUE ADDED SERVICE
PRODUCT OFFERINGS
BGM
Mobile Radio
CRBT
Ringtones
Jukebox
Sports Updates
Rural Value Added Service
(Voice SMS & Commodity
Rates)
Video Zone
Missed Call Alert
CALL MANAGEMENT VALUE
ADDED SERVICE
Wallpaper
Astrology
Contests
Devotional and Regional Content
Recipes
News
Logos
Content Discovery (Live Agent
Value Added Service and USSD
Value Added Service)
Select Caller List
Excuse Me
SERVICES & APPLICATION
VALUE ADDED SERVICE
Content Uploader
Voice Chat
MOBILE COMMERCE
Mobile Banking
Inbound campaigns
Outbound campaigns
Welcome Roamer
Roam Privilege
Gateways (USSD, IVRS,
SMSC, GPRS)
Outbound Dialers (OBDs)
ENTERPRISE SERVICES
ROAMING SOLUTIONS
TELECOM
INFRASTRUCTURE
SOLUTIONS
Pay4Me
Voice Mail
Device Manager
Smart Dial
Call Conferencing
Mobile Advertising and OBDs
Pre-paid Rechrge
Mobile Bill Payments
Mitr
Mitr
Roam Tracker
Roam Secure
Roam Globe
Music, Entertainment and Infotainment Value Added Service
•
Mobile Radio. Mobile radio is a voice based platform which gives the subscriber an
experience of a radio by listening and dedicating songs and comedies of their choice,
download songs as ringtones and save them in their personalized album. This feature which
was initially launched by Airtel through ‘Airtel Music Station’ for its subscribers is currently
also offered to a few other carrier customers. Currently, subscribers can choose from more
than 100,000 songs in more than 17 different languages.
59
•
BGM. Our BGM application allows pre-paid and post-paid subscribers to play music in the
background when the call is in progress. Subscribers can select music of their choice or any
other pre-recorded sound such as traffic noise for playing in the background during a call to
any number. We have applied for a patent for this application.
•
CRBT. We have a CRBT platform where subscribers can choose ring back tones of their
choice and select it to be played for various callers. Our CRBT platform provides other special
features like time based caller songs and group caller songs. We also source CRBT content
from major music label companies and provide it to various mobile carrier customers.
•
Ringtones. We source and aggregate ringtone content from major music label companies and
unbranded content from local musicians. Our ringtone repository is updated regularly (usually
between a week to a month), to provide subscribers with the latest content. Our ringtone
application provides subscribers the option to download ringtones over voice, SMS, USSD,
GPRS and WAP and supports multiple carrier technologies, such as GSM and CDMA.
•
Jukebox. Our jukebox application allows subscribers to access content and services in multiple
languages from one place. Subscribers can download songs from our music jukebox and set
them as ringtones and ringback tones or sing to selected songs in karaoke style, record it and
forward it to other subscribers. Our music jukebox application supports multiple carrier
technologies, such as GSM and CDMA.
•
Video Zone. Video Zone provides subscribers an option to download videos from a wide range
of categories. We provide high quality videos which can be downloaded and viewed by the
subscribers on their video enabled handsets.
•
Wallpaper. Our wallpaper application allows subscribers to download colored wallpaper from
a wide range of categories, such as religion, bollywood, nature and sports. The subscribers can
connect to the data network via GPRS and a wide range of wallpaper is made available to
them to choose from.
•
Astrology. Our astro zone application allows subscribers to download personalized horoscopes
on their mobile phones based on astrology or numerology, tips on feng shui and personality
analysis.
•
Contests. Our contest application enables carriers, media and advertising companies,
corporations and merchants to set up contests for mobile phone and wireline subscribers. As
part of our services, we provide the technology as well as the content for this application. Our
contest application enables us, for example, to create a question bank, set up different quiz
formats, conduct a post-contest analysis of the scores and manage the distribution of prizes to
winners of the contests. We also offer “Fastest Finger”, an interactive game where the
subscriber competes with other players to see who is the fastest to respond. Subscribers are
rewarded with prizes. In addition to having the prestige of being crowned the “ultimate
texter”, there is also the excitement of beating prior scores, the anticipation of waiting for the
next challenge and the chance to meet other people. Sponsors and advertisers can use the
opportunity to make subscribers aware of their brands and new products.
•
Devotional and Regional Content. This application gives subscribers access to a repository of
devotional songs in multiple languages using voice. We provide content related to a variety of
religions around the world.
•
Sports Updates. Our sports update application allows subscribers to receive live updates and
commentary on sporting events, such as cricket, on their mobile phones. In addition,
subscribers can browse other sports-related content and subscribe for scores updates. We
regularly update and archive our content to ensure that subscribers can access updates and
information even when a live event is not occurring.
•
Rural Value Added Service. With mobile handsets becoming cheaper, subscribers in rural
markets have embraced mobile handsets to enhance their daily lives. The usage is primarily to
60
access commodity rates, agricultural product rates and weather related information through
SMS, IVRS and USSD.
Commodity Rates. Given the significant percentage of the Indian population whose
livelihood is based on agriculture, we provide information on the latest market rates
of vegetables, seeds and grains in various regions across India. Subscribers simply
dial a preconfigured number to hear the current rates.
Voice SMS. Our voice SMS application is a short messaging service that addresses
the limitations of conventional SMS messages such as character limitations and the
lack of support for vernacular languages by using voice instead of text. Our voice
SMS application provides flexibility to subscribers by supporting multiple languages
and enabling subscribers to customize the duration of their messages. Subscribers can
review their messages and re-record their messages, have the option of sending their
voice messages during non-peak hours and can customize the application to ensure
that the voice messages are not sent to roaming recipients.
•
Recipes. Subscribers can access cookbooks and recipes from media including newspapers and
magazines.
•
News. We provide news content on a real-time basis in multiple languages accessible by
categories such as politics, business or international news. Subscribers can subscribe for alerts
with callbacks for breaking news.
•
Logos. We provide a wide variety of logos that subscribers can select and download onto their
mobile phones using voice.
•
Content Discovery
Live Agent Value Added Service. This application provides subscribers an option to
talk directly to our live agents and request various value added service content links,
such as caller songs, ringtones, astrology and wallpaper. Once requested, the agents
deliver the content to the subscriber’s mobile handset.
USSD Value Added Service. We provide a unique USSD mechanism to subscribers to
view and request subscription based services, such as ring tones, select caller list,
caller songs and cricket scores. USSD is a session based protocol where subscribers
can view value added service content through an online menu. The subscriber can
access this menu and request content for download.
CP-NXT1000. This platform provides a plug and play model for interfacing all
current and future bearers, and it also interfaces with network management, billing
and customer care application. The platform offers to the users access to services
using speech, text and touch inputs with graphics, text and audio output. The content
discovery services which are supported by the platform in combination to the above
enrich the users experience and encourage users to use the offered service
extensively. The platform reduces the time to market for operators by enabling
network wide deployment of services and applications rapidly, supports all bearers
such as Voice, SMS, USSD, GPRS, WAP allowing the development of truly
converged applications which can work across wireline, 2G, 2.5G and 3G networks
and mobile handsets, enables mobile banking and payment applications for
subscribers allowing them to make banking transactions and make payments from
their mobile phones for their utility bills and other transactions, enables the delivery
of applications in multiple languages and supports the storage, classification and
management of content.
Call Management Value Added Service
61
•
Select Caller List. Our select caller list product is a customized solution in which the
subscriber can select the calls to receive. This can be done by creating a list of callers whose
calls the subscriber wishes to receive and can also contain a similar list of callers whose calls
will get barred and automatically deferred to a voicemail or an automatic message. This
solution helps in barring spam or unwanted calls and preventing calls outside of the defined
list from going through if the subscriber is roaming. We have applied for a patent for this
application.
•
Pay4Me/Collect Call. This product is useful for prepaid subscribers running out of credit in
their account. This service requires the called party to agree to pay for the calling party, which
is made possible by opening a number wherein outgoing barred subscribers can call and can
log their request to get connected to the other party, which will pay for the call. Pay4Me is
particularly convenient for calls between parents and children, emergency phone calls and
corporate calls. Even non-subscribers can use the Pay4Me code. Subscribers can also create a
list from whom the caller agrees to bear charges for every call made from a caller on that list.
A monthly subscription fee is charged from the subscribers for this service. We have applied
for a patent for this application in India.
•
Voice Mail Service. Our voice mail service allows subscribers to handle their calls by an IVR
based assistant in cases when the mobile is switched off, out of coverage or other diverted
settings. The subscriber can receive, save, edit, forward, delete send or broadcast voicemail
messages. Other key features include the ability to stay connected, create customized
greetings, customer-oriented voicemail menu navigation and real-time call control.
•
Missed Call Alert Service. Our missed call alert service is a customized service where a
subscriber can get missed call alerts when unable to take calls, and the caller receives an alert
when the subscriber is back on the network. As a result, subscribers stay connected even if
they are on another call, their mobile is switched off, they are out of their coverage area, or
they cannot pick up the call in time. Other key features are notification of the date and time of
multiple missed calls and notification of the number of missed calls from one calling number.
This service allows for subscribers’ mailboxes to be managed dynamically and is particularly
useful in countries where a majority of subscribers are pre-paid. Additionally, the service
enables subscribers to quickly access their voicemail as they have the option to navigate and
manage their voice mailbox using our speech technology.
•
Device Manager. Device Manager is a solution which pushes GPRS/MMS settings over the
air to the mobile subscribers whenever requested or on other subscriber generated events, such
as a new handset. These settings configure the subscriber’s handset for accessing the data
services provided by the network operator. Once configured, the subscriber can connect to the
data network anytime and browse online.
•
Smart Dial. Our smart dial service allows subscribers to send a request to the system to initiate
a call if another party’s number is busy or out of reach when the subscriber tried to speak the
first time. These calls are retried by the Smart Dial system and are patched on the consent of
both the parties, hence regenerating revenues that were actually lost.
•
Call Conferencing. Our call conferencing service provides a ‘chatting’ environment to mobile
subscribers. Based on a conference feature of the network, multiple parties can have a joint
discussion at a specific time slot. The features of this service include custom entry/exit
announcements and defining the maximum number of parties in a conference.
•
Excuse Me. This application provides the subscriber an option to auto-generate a call from the
system on their handsets providing an impression that a normal call has come in for the
subscriber. The subscriber can request an auto call through a very simple process of accessing
a USSD menu. After the request is received from the subscriber, the system generates an auto
call to the subscriber and the subscriber can use this excuse to move out of a gathering.
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Services & Application Value Added Service
•
Content Uploader. This utility provides subscribers an option to create a backup of the content
on their handsets such as phone book contacts, multimedia content such as videos and tones
and text messages to a central server. This content can be retrieved by the subscriber at any
time. This utility provides subscribers the option of retrieving content in situations where their
handset may be lost or damaged. Privacy for the uploaded content is maintained by allowing
access of the uploaded content only through a user name and password.
•
Mobile Advertising and OBDs. We provide a platform to advertisers to advertise through
various mobile platforms including SMS, GPRS and IVRS. We also provide an option
wherein smaller P2P messages are appended with advertisements.
•
Voice Chat. This is a community service which allows mobile subscribers to make friends
without revealing their own identities. Customers can dial in to an IVR short code and make
their own profile including age, likes and sex. They can also leave their own recording. The
system then intelligently searches for all the matching profiles and provides an option to the
subscriber to talk to those profiles. Also, the system makes the subscriber’s profile available to
all other users so they can also get in touch with the customer. The mobile number of the users
is not revealed to the other users and they know each other via chat identity numeric codes.
Mobile Commerce (MCommerce) Solutions
MCommerce is the ability to conduct commercial transactions using mobile phones. This solution
facilitates charging an amount to a mobile phone or a user by using certain MCommerce applications,
such as mobile banking, mobile bill payments, pre-paid recharge and mobile ticketing. This amount can
be charged to the mobile subscriber’s account, or to an alternative account such as a bank account or a
credit card account. Some of the commonly used MCommerce solutions include:
•
Mobile Banking (MBanking). Banks and other financial institutions are extending banking
services using MCommerce to allow customers to not only access account information and
confirm transactions, but also enable subscribers to conduct financial transactions such as
purchase stocks, remit money and pay bills using their mobile phones.
•
Pre-paid Recharge. Our pre-paid recharge solution allows carriers to offer subscribers the
option to top up directly their own or any other person’s mobile account using their mobile
phones at any time and anywhere using their credit cards and the airtime re-charge is sent
directly to the number specified.
•
Mobile Bill Payments. Our mobile bill payment solution allows subscribers to pay their utility
bills conveniently using their mobile devices and allows a subscriber to navigate to a specific
utility company, check the outstanding bill and choose to make the required payment. This
facility can also be used by the utility company to alert the subscribers of the payment due
date and the outstanding amounts.
Enterprise Services
•
SMS / Outbound Campaigns. Our outbound calling facility is designed to send out automated
messages about new promotions and offers on products and services to a specific list of
subscribers based on the target profile. Our enterprise solutions enable the advertiser or
corporate client or merchant to direct their marketing efforts to a target subscriber group based
on a pre-defined set of profile parameters set by the advertiser, and thereby helps the
advertiser to avoid wasting a significant portion of their advertising budget on non-target
subscribers due to the inability to profile the subscriber. Current outbound messaging clientele
sectors include consumer durables, airways, railways, automotive and financial institutions.
When our outbound dialing facility contacts a subscriber and the subscriber is connected, the
system becomes an interactive sales tool and information on a product or service can be
gathered or dispersed. Our solution can be customized so that outbound calls are only made to
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subscribers who are not on roaming and to remember preferences from the previous calls,
such as choice of language.
•
Lead Generation SMS Inbound Campaigns. Our inbound calling CRM solution is designed to
allow the subscriber to be in touch with the enterprise through a short code (5 digit number) or
a long code (10 digit number). subscribers can use inbound messaging for customer service
complaints and feedback, opinion polls, surveys, media-voting and electronic media.
Our enterprise service provides subscriber benefits, such as instant access to desired
information and a cheaper SMS. In addition, this service reduces call center cost and
promotional budgets for our carrier and enterprise customers.
•
Mitr. Mitr, a mobile centric and content services platform, is a user friendly single mobile
interface that will deliver a host of attractive web based applications and provides a unified
framework for discovering and accessing content and services and a rich, personalized and
intuitive customer experience. The Mitr software enables any application written using the
Mitr software development kit to run on the mobile phone irrespective of the mobile phone
model or operating system. Mitr products consist of Mitr SDK (a software development kit
that enables rapid development of mobile applications), Mitr VM ( a virtual machine that
provides an execution environment for applications developed using Mitr SDK) and Mitr Mart
(a market place of all applications developed using Mitr SDK).
Roaming Solutions
•
Welcome Roamer. Welcome Roamer is a combined monitoring and SMS delivery product that
gives a carrier customer visibility of subscribers who roam in the local network, as well as
subscribers from the local network roaming in any another network. The carrier customer can
use this information to issue a greeting SMS to the subscriber informing the roaming
subscriber of the services available in that network. It identifies the inbound and outbound
roamers by tapping a roaming link in real-time enabling the carrier customer to deliver
accurately targeted and personalized messages to the roaming subscriber.
•
Roam Tracker. Roam Tracker helps carrier customers achieve increased revenue by
monitoring and managing the profitability of the carrier’s roaming business by providing
traffic flow information, enabling network dimensioning, capacity planning, as well as
allowing carrier customers to gain a better insight into subscriber behavior. This solution also
helps carrier customers in providing traffic flow information and identifying any network
glitches.
•
Roam Globe. Carrier Customers find negotiating multiple roaming service agreements with
operators worldwide a time consuming and expensive process. Our Roam Globe service offers
carrier customers a quick route to enhanced international roaming, by building on the existing
roaming agreements of a host mobile network. Our solution works on the principle of dual
international mobile subscriber identity (IMSI), which can be deployed as a standalone
application or as a bundled product. With Roam Globe, new carrier customers operators are in
a position to offer roaming services from inception without having to carry out bilateral
roaming negotiations with other operators.
•
Roam Secure. Roam Secure allows carrier customers to retain inbound subscribers, assuring
revenue, network monitoring and customer loyalty, while providing access to the subscriber,
independent of the SIM card.
•
Roam Privilege. Roam Privilege allows carrier customers to control the selection of roaming
networks, ensuring that out-roamer subscribers log onto a network of preferred operators. This
influences the selection of roaming networks according to pre-defined rules and criteria.
Carrier customers benefit from greater revenues, subscriber loyalty and wide accessibility.
The subscriber also benefits from easier access outside their network and from cost-effective
roaming.
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Telecommunications Infrastructure Solutions
•
Unstructured Supplementary Services Data (USSD). USSD is a GSM service that allows high
speed interactive communication between the subscribers and applications across a GSM
network. USSD requests are processed instantaneously in contrast to SMPP requests which
are stored for transmission on the SMSC. In addition, unlike SMS, which is a store-andforward technology, USSD is a session oriented protocol, thus reducing the turn around
response time for interactive applications as compared to SMS. As a result, USSD allows for
larger transmissions of information in real-time, such as ringtones, picture messages, news
flashes, sports updates, account balance inquiries and call histories.
•
Short Message Service (SMS). SMS messages are an alternative to voice communication over
the telephone when silent, private, or very brief communications are best. Since they are
somewhat non-traditional, SMS messages have an element of playfulness that often
encourages creativity, and subscribers can find this novelty addictive. SMS messages can be
sent between users or to and from an application, which gives service development an extra
flexibility that encourages innovation.
•
Short Message Service Center (SMSC). SMSC is an open system architecture which allows
easy integration with various network elements. We offer an innovative load-sharing option,
where the mobile switching centre shares the load for several SMSC units. This enables a
server cluster to be seen as a single large SMSC by the carrier customers thus providing an
opportunity of easy and fast scaling of SMSC capacity by adding server units. The features of
our SMSC include:
Message Priority: Allows setting of message priority levels to enable customization
of message deliveries as in high, medium or low.
Validity Period Definition: Enables customization of time period after which
undelivered messages will be deleted from the queue.
Alert Based Retry: Provides an inbuilt mechanism which entails automatic attempt of
retrying message delivery in the event of an alert message of non-delivery of the
SMS.
Configured Retry Intervals: Allows customization of intervals at which undelivered
messages would be retried for delivery.
Scheduled Delivery: Offers a feature of scheduled delivery through which messages
are delivered based on scheduled date/time rather than immediate delivery.
SMS Forwarding: Enables a subscriber to forward the SMS to an email id.
Message Tracking and Logging: Offers database based logging features to track
status of message delivery at any point of time.
•
General Packet Radio Service (GPRS). GPRS is the world's most ubiquitous wireless data
service, available with almost every GSM network. GPRS is a connectivity solution based on
Internet Protocols that supports a wide range of enterprise and consumer applications. GPRS
subscribers enjoy advanced, feature-rich data services such as internet browsing, e-mail on the
move, powerful visual communications such as video streaming, multimedia messages and
location-based services.
•
Outbound Dialer (OBD). OBD is an important mechanism for selling value added service.
The system generates an auto call and provides pre-recorded information to the subscriber
about the value added service once the subscriber picks up that call. The subscriber is given an
option to subscribe for that particular value added service immediately through DTMF input.
Our OBD supports special features such as Do Not Disturb (DND) filter, and online
subscription of service requests received via OBDs.
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Our Customers
As of May 31, 2008, we had a diverse carrier customer base of more than 60 customers across a variety
of industries. Our major customers include Airtel, Spice Communications, BSNL, IDEA, Reliance,
Vodafone, MTNL, Tata Teleservices Limited, HFCL, Route SMS, SMS Junction, Nazara, Pinnacle
Media, People Infocom Private Limited, Eastern Power Distribution Company, Axis Convergence
Private Limited and ACL Wireless.
Customer Contracts
Most of our carrier customer contracts are on a revenue sharing basis pursuant to which we receive a
fixed percentage of the net revenue generated by our products and services for our customers, thus
providing a recurring revenue stream for us. These contracts are typically master contracts which allow
our new products and services to be quickly deployed under the contracts’ existing terms and
conditions without the need to enter into and negotiate a new contract. However, under our enterprise
client contracts we get paid for each SMS successfully delivered or not delivered to the end users,
based on the volume of SMSs that are sent per month.
Under most of our carrier customer contracts, we have agreed to indemnify our customers against loss
or damage arising from our breach of contract, including for the infringement of intellectual property
rights in respect of the content that we have sourced and aggregated from third party content providers.
Under certain of our enterprise client contracts we typically agree to indemnify these customers against
loss or damage for any infringement of intellectual property rights and any violation of laws or
regulations of any governmental, regulatory or judicial authority arising from the performance of
obligations under the contract. In such enterprise client contracts the enterprise clients further
indemnify us from any liability from the contents of the SMS.
Our contracts with our carrier customers are typically on a non-exclusive basis. While some of our
contracts have terms varying between one to three years, which are subject to an annual review in case
of renewal, others are typically valid until termination. Our customer contracts also allow either party
to terminate the contract for specific reasons, including for a breach of a material term or condition that
is not rectified within a specified cure period. Either party is also allowed to terminate the contract
without cause by giving written notice of between 30 to 90 days and without termination-related
penalties.
Content Database
Our applications are dependent on our ability to source and provide content to fulfill subscriber needs
and interests. We source content through licensing contracts with content developers and content
aggregators and re-position such content at our end. Our licensing contracts with content providers are
usually for a term of one year which is renewable by mutual consent and generally contain a provision
that the content provider will indemnify us against any third party claim for infringement of intellectual
property rights in respect of the content sourced by them.
Music based services and products claim a significant share of the Indian value added services market,
including CRBT and ring tones. With 140,000 music tracks, we are a significant provider in the mobile
entertainment space in India. We cover 17 regional languages across bollywood, regional, devotional
and international music. These songs are accessible via various services, such as ring-tone download,
CRBT, BGM and full song streaming and cut across 25 diverse file formats. Music contributes a
majority of the revenue on content based services and products provided by us.
Apart from music and entertainment, we have also diversified the reach of our content across visual,
gaming, contesting and infotainment genres. We partner with international gaming houses and have
access to over 3,000 gaming titles catering to our mobile internet enabled subscribers.
Since most of the products and services are dependent on the content we provide, our focus is to create
one of the largest digital and mobile ready music databases in India. Currently, the major growth in
mobile telephony is from semi-urban and rural areas. With coverage expansion by the our carrier
customers in semi-urban and rural areas where there are few entertainment and information outlets
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other than television, we believe there will be high demand for content focused on semi-urban and rural
population, such as commodity market rates and education. We intend to have online content in these
areas through our partnerships with content providers.
Sales, Marketing and Business Development
In order to cater to our carrier customers, enterprise clients and other opportunities, we have equipped
ourselves with a sales and marketing structure to work on carefully identified focus areas for each
team. We have structured our sales/marketing and business development structure as follows:
•
Product Marketing – Our product marketing group owns the products once launched,
maximizing the revenues and managing the product life cycle.
•
Business Development and Pre Sales – This team focuses on new customer acquisitions and
pitching new products and applications to the existing carrier customers.
•
Sales – Sales team focuses on maximizing revenues from the live products and services. This
team is also responsible for maintaining relationship with the carrier and other customers at
local levels.
Since the service deployment on our carrier customers’ network is complex, our relationship
development personnel is stationed at our carrier customers office, helping us to expand quickly and
efficiently the range of services deployed and growing revenue from their subscriber base. Our sales,
marketing and business development team is responsible for the development of strategic distribution
partnerships, alliances and direct sales, including contract negotiations. As of May 31, 2008, we had
over 100 employees working in our sales, marketing and business development team, all of whom are
permanent employees.
Competition
The telecommunication value added services industry is fragmented, nascent and highly competitive
and is characterized by frequent introductions of new solutions and products, evolving wireless
platforms and new and improved technologies. However, we believe we compete effectively because
of our track record, the sophistication of our technology, products and platforms, our proven ability to
consistently deliver new innovative products, our operational expertise and project execution, our
insight into the subscriber market, demand and preferences, the technology and systems which we have
installed and integrated in our carrier customers’ infrastructure, our service level commitments and due
to our established relationships with carrier customers. We believe that OnMobile and Bharti Telesoft
are our biggest competitors in certain aspect of the services and products we offer.
Intellectual Property
Our success depends in large part on our proprietary technology and know-how. We rely primarily on a
combination of trade secrets and copyright laws and restrictions on access to protect our trade secrets
and proprietary rights. We have also applied for 11 patents with the Indian Patents Office. We
distribute our software products under license agreements, which grants customers a non-exclusive
license to use the software and contain terms and conditions prohibiting its unauthorized reproduction
or transfer. In addition, we enter into confidentiality agreements with our carrier customers when we
disclose proprietary information to them. We also enter into confidentiality agreements and deeds of
relinquishment with our employees and consultants.
As of May 31, 2008, we have one registered trademark. Our trademark and logo “Cellebrum” is
registered with the Trademarks Registry in Delhi, India. We have recently filed an application to
register a new logo for “Cellebrum”. As of May 31, 2008, we have applied to register 16 other
trademarks with the Trademarks Registry in India. As of May 31, 2008, we have also filed 11 patent
applications with the Indian Patents Office.
As of May 31, 2008, we have 19 registered copyrights and two pending applications with the Registrar
of Copyrights.
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Technology and Product Development
We follow a product development process which allows the launch of a product and services in an
expeditious yet controlled manner, after careful market research and conceptual tests. Once we receive
market and end-user feedback through our carrier customers, we develop products and services which
are initially tested within our R&D facility located at Parwanoo, wherein we have sophisticated
equipments replicating a mobile network in which we can test all aspects of our products’ operational
feasibility, which help stimulate the real mobile networks. Once the offerings are refined and suitably
established, we then propose introduction of the offering with our carrier customers. Our ability to test
the offerings in our R&D facility provides valuable and direct insight into consumer needs, adoption,
preferences and price-points, which are all important in making the offerings successful and managing
the uncertainties of new product and services development.
We have multiple teams focusing on conceptualizing, architecting, implementing, testing, delivering,
securing and maintaining our platform, products and services. These include our R&D, information
technology, quality assurance, configuration management and delivery teams. As of May 31, 2008, we
had 186 employees working in our R&D, information technology, quality assurance, configuration
management and delivery teams.
We have a dedicated team of technology experts to explore new technology and develop value added
services and products. To date, we have developed numerous value added services applications
including BGM, select caller list, Pay4Me, my music, call conferencing and voice mail. We have filed
for 11 patents in India as a result of our research and development efforts.
Employees
We have a strong focus on recruitment, training and retention of our employees. As of 31 May, 2008,
we had a total of 372 permanent employees. We have 58 employees on our operations and deployment
team, 113 employees on our sales, marketing and business development team, 128 employees on our
R&D team and 73 employees in our finance and administration department.
We continuously review and deliver effective training programs on smart hiring process, provide
strategic oversight to business units in their recruitment efforts, and successfully promote our business
to potential new hires. By building our brand presence in the market, we intend to identify, attract and
train skilled personnel across all our business segments. For our existing employees, we encourage
rewards and recognition programs, training and development to continuously improve overall
employee caliber.
Our employees are not unionized and we have never experienced any work stoppages. We believe that
our employee relations are good.
Insurance
We maintain standard insurance policies for our physical assets and our employees as required by
applicable laws and regulations.
Properties
Our registered office is located at D-4, Okhla Industrial Estate, Phase –I, New Delhi, India. We also
maintain offices in Noida, Kolkata, Bangalore, Mohali, Hyderabad, Parwanoo and Mumbai and have
an overseas office in Singapore to cater to our international business. We lease most of our office space
under various lease agreements, subject to renewal by mutual consent. We own our office space in
Singapore.
We believe that our existing facilities are adequate for our current requirements and that additional
space can be obtained on commercially reasonable terms to meet our future requirements.
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REGULATIONS AND POLICIES
The following description is a summary of the relevant regulations and policies as prescribed by the
GOI, state governments, certain international treaties and conventions to which India is a signatory.
The information detailed in this chapter has been obtained from the various legislations, international
treaties and conventions..
Intellectual Property
Our intellectual property includes our registered intellectual property rights, including patents and
patent applications made by us in relation to various inventive products and processes and registered, as
well as unregistered rights in intellectual property including copyrights in relation to software. The
salient features of the legal regime governing the acquisition and protection of intellectual property in
India are briefly outlined below. For further details on the above, see the section “Business” beginning
on page 54.
Patent Protection
The Patents Act, 1970 (“Patents Act”) is the primary legislation governing patent protection in India.
In addition to broadly requiring that an invention satisfy the requirements of novelty, utility and non
obviousness in order for it to avail patent protection, the Patents Act further provides that patent
protection may not be granted to certain specified types of inventions and materials even if they satisfy
the above criteria. The tern of a patent granted under the Patents Act is for a period of twenty years
from the date of filing of application for the patent.
The Patents Act deems that computer programmes per se are not ‘inventions’ and are therefore not
entitled to patent protection. This position was diluted by the the Patents Amendment Ordinance, 2004
which included as patentable subject matter:
a) Technical applications of computer programs to industry; and
b) Combinations of computer programs with the hardware.
However, the Patents Amendment Act, 2005 does not include this specific amendment and
consequently, the Patents Act, as it currently stands, disentitles computer programs per se from patent
protection.
The public use or publication of an invention prior to the making of an application for a patent, may
disentitle the said invention to patent protection on grounds of lack of novelty. Under the Patents Act,
an invention will be regarded as having censed to be novel (and hence unpatentable), inter alia, by the
existence of:
i.
ii.
iii.
iv.
any earlier patent on such invention in any country;
prior publication of information relating to such invention;
an earlier product showing the same invention; or
a prior disclosure or use of the invention that is sought to be patented
For details in relation to the risks arising from the above position see the section “Risk Factors”
beginning on page x.
Following its amendment by the Patents Amendment Act, 2005, the Patents Act permits opposition to
grant of a patent to be made, both pre-grant and post—grant. The grounds for such patent opposition
proceedings, inter alia, include lack of novelty, inventiveness and industrial applicability, nondisclosure or incorrect mention of source and geographical origin of biological material used in the
invention and anticipation of invention by knowledge (oral or otherwise) available within any local or
indigenous community in India or elsewhere.
The Patents Act also prohibits any person resident in India from applying for patent for an invention
outside India without making an application for the invention in India. Following a patent application
in India, a resident must wait for six weeks prior to making a foreign application or may obtain the
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written permission of the Controller of Patents to make foreign applications prior to this six week
period. The Controller of Patents is required to obtain the prior consent of the Government before
granting any such permission in respect of inventions relevant for defense purpose or atomic energy.
This prohibition on foreign applications does not apply, however, to an invention for which a patent
application has first been filed in a country outside India by a person resident outside India.
International Patent Protection Mechanisms
The extent of patent protection granted by any national patent law is limited to the jurisdiction of the
country of registration of the said patent. Therefore, the protection of patents on an international scale
ordinarily requires that patent applications be filed and granted in multiple jurisdictions. In order to
avoid multiplicity of applications, mechanisms under various international treaties have evolved
providing for the effective filing of simultaneous patent applications in multiple jurisdictions by filing
of a single international application. The Patent Co-operation Treaty, 1970, (“PCT”) creates one such
mechanism whereby filing an application under the treaty results in the effective filing of a separate
application in each of several designated countries under the PCT.
An application under the PCT is processed in two phases:
a.
b.
an international phase wherein an international application is filed in the International Bureau;
and
a national phase consisting of the conversion of the application into national patent
applications in designated countries.
A PCT application may be filed by a national or resident of a state which is a signatory to the PCT at
the patent office of such state at the WIPO International Bureau. At the filing stage, the applicant
indicates those contracting states in which he wishes his application to form an effective filing. Upon
filing, the invention, which is claimed under the application, is selected to an “international search”
which is carried out by an International Searching Authority identified by the patent filing office. In the
event that the international search results in any evidence of prior art, which resembles the claim being
searched for, the applicant has the option to either withdraw his application, or defend the claim at the
national level with each national patent office. If the application is not withdrawn, it is published in the
International Bureau along with the international search report and communicated to the patent office
in each designated country. Subsequently, upon the applicant electing to do so, patent applications are
submitted to the national phase wherein the claimed invention is examined by the national patent
offices of the designated countries for grant of the patent.
Another international treaty governing international patent protection is the Paris Convention for the
Protection of Industrial Property, 1883, which requires its member countries to guarantee to the citizens
of the other countries the same rights in patent and trademark matters that it gives to its own citizens.
Further, in case of patent filings in multiple jurisdictions, this treaty grants a right of priority to the
applicant which means that the applicant who has filed an application in any contracting states, may
apply for protection in any other contracting states within 12 months and claim priority over other
applications which have been filed by other applicants during the said 12 month period.
Copyright Protection
The Copyright Act, 1957 (“Copyright Act”) governs copyright protection in India. Under the
Copyright Act, copyright may subsist in original literary, dramatic, musical or artistic works,
cinematograph films, and sound recordings. Software, both in source and object code, constitutes a
literary work under Indian law and is afforded copyright protection. Following the issuance of the
International Copyright Order, 1999, subject to certain exceptions, the provisions of the Copyright Act
apply to nationals of all member states of the World Trade Organisation.
While copyright registration is not a prerequisite for acquiring or enforcing a copyright in an otherwise
copyrightable work, registration constitutes prima fade evidence of the particulars entered therein and
creates a rebuttable presumption favoring the ownership of the copyright by the registered owner.
Copyright registration may expedite infringement proceedings and reduce delay caused due to
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evidentiary considerations. Once registered, copyright protection of a work lasts for a 60-year period
following the death of the author.
Reproduction of a copyrighted work for sale or hire, issuing of copies to the public, performance or
exhibition in public, making a translation of the work, making an adaptation of the work and making a
cinematograph film of the work without consent of the owner of copyright are all acts which expressly
amount to an infringement of copyright. With respect to computer software, in addition to the above,
any unauthorised sale and commercial rental of software also amount to infringement of copyright. The
Copyright Act also prescribes certain fair use exceptions which permit certain acts which are otherwise
considered copyright infringement. In respect of computer software, these fair use exceptions would
include:
a)
b)
c)
d)
the making of copies or adaptations of a computer program by the lawful possessor of a copy
of such computer program in order that it may be utilised for the purposes for which it was
supplied;
the right of the lawful possessor to obtain any other essential information for interoperability
of an independently created computer program, if that information is not otherwise readily
available;
the observation, study, or test of functioning of the computer program in order to determine the
ideas and principle which underline any elements of the program while performing such acts
necessary for the functions for which the computer program is supplied; and
the making of copies or adapting the computer program from a personal legally obtained copy
for any non-commercial personal use.
The remedies available in the event of infringement of copyright under the Copyright Act include civil
proceedings for damages, account of profits, injunction and the delivery of the infringing copies to the
copyright owner.
The Copyright Act also provides for criminal remedies including imprisonment of the accused and the
imposition of tines and seizures of infringing copies. A third set of remedies are administrative or quasi
judicial remedies which are prosecuted before the Registrar of Copyright to ban the import of
infringing copies into India and the confiscation of infringing copies.
Trademarks
The Trade Marks Act, 1999 (the “Trade Marks Act”) governs the statutory protection of trademarks
in India. In India, trademarks enjoy protection under both statutory and common law.
Indian trademarks’ law permits the registration of trademarks for goods and services. Certification
trademarks and collective marks are also registrable under the Trade Marks Act.
An application for trademark registration may be made by any person claiming to be the proprietor of a
trademark and can be made on the basis of either current use or intention to use a trademark in the
future. The registration of certain types of trade marks are absolutely prohibited, including trademarks
that are not distinctive and which indicate the kind or quality of the goods.
Applications for a trademark registration may be made for in one or more international classes. Once
granted, trademark registration is valid for 10 years unless cancelled. If not renewed after 10 years, the
mark lapses and the registration for such mark has to be obtained afresh.
While both registered and unregistered trademarks are protected under Indian law, the registration of
trademarks offers significant advantages to the registered owner, particularly with respect to proving
infringement. Registered trademarks may be protected by means of an action for infringement, whereas
unregistered trademarks may only be protected by means of the common law remedy of passing off. In
case of the latter, the plaintiff must, prior to proving passing off, first prove that he is the owner of the
trademark concerned In contrast, the owner of a registered trademark is prima facie regarded as the
owner of the mark by virtue of the registration obtained.
71
Trade Secrets and Confidential Information
In India, trade secrets and confidential information enjoy no special statutory protection and are
protected under Common Law.
Labour laws
There are various legislations in India which have defined ‘employee’ and ‘workman’ based on factors
which inter a/ia include nature of work and remuneration. People who come under the definition of
workman or employee are entitled to various statutory benefits including gratuity, bonus, retirement
benefits and insurance protection.
Termination of the employment of a non-workman is governed by the terms of the relevant
employment contract As regards a ‘workman’, the IDA sets out certain requirements in relation to the
termination of services. These include a detailed procedure prescribed for resolution of disputes with
labour, removal and certain financial obligations upon retrenchment. The applicability of such laws
depends on the number of workers employed and their monthly remuneration.
Shops and Commercial Establishments Legislation
The conditions of service of employees of IT companies are regulated, inter a/ia, by the relevant shops
and establishments law.
Employees State Insurance Act, 1948
The Employees State Insurance Act, 1948 provides for certain benefits to employees in case of
sickness, maternity and employment injury. All employees in establishments covered by the
Employees State Insurance Act, 1948 are required to be insured, with an obligation imposed on the
employer to make certain contributions in relation thereto. In addition, the employer is also required to
register itself under the Employees State Insurance Act, 1948 and maintain prescribed records and
registers.
Payment of Gratuity Act, 1972
The Payment of Gratuity Act, 1972 provides for payment of gratuity to employees employed in
factories, shops and other establishments who have put in a continuous service of five years, in the
event of their superannuation, retirement, resignation, death or disablement due to accidents or
diseases. The rule of five year continuous service’ is however relaxed in case of death or disablement
of an employee. Gratuity is calculated at the rate of 15 days wages for every completed year of service
with the employer. Presently, an employer is obliged for a maximum gratuity payout of Rs. 350,000 for
an employee.
Employees Provident Fund and Miscellaneous Provisions Act, 1952.
The Employees Provident Fund and Miscellaneous Provisions Act, 1952 provides for the institution of
compulsory provident fund, pension fund and deposit linked insurance funds for the benefit of
employees in factories and other establishments. A liability is placed both on the employer and the
employee to make certain contributions to the funds mentioned above.
The Maternity Benefit Act, 1961
The purpose of the Maternity Benefit Act, 1961 is to regulate the employment of pregnant women and
to ensure that they get paid leave for a specified period during and after their pregnancy. It provides,
inter alia, for payment of maternity benefits, medical bonus and enacts prohibitions on dismissal,
reduction of wages paid to pregnant women, etc.
The Contract Labour (Regulation and Abolition) Act, 1979
72
The purpose of the Contract Labour (Regulation and Abolition) Act, 1970 is to regulate the
employment and protect the interests of labourers who are hired on the basis of individual contracts. In
the event that any aspect of the activity is outsourced and is carried out by labourers hired on a
contractual basis, then compliance with the Contract Labour (Regulation and Abolition) Act, 1970 will
also be necessary.
The Telecom Unsolicited Commercial Communications Regulations, 2007 (as amended on the
March 17, 2008)
TRAI has introduced the Telecom Unsolicited Commercial Communications Regulations, 2007
(“Regulations”) to curb unsolicited telemarketing communications, thereby reducing the nuisance and
inconvenience to subscribers. TRAI has set up the NDNC registry, which is operational since October,
2007 for this purpose.
The Regulations aim at balancing the right to privacy of the subscriber and the rights to freedom of
speech and profession of the telemarketing industry. TRAI has therefore set out an ‘opt-out approach’
where a subscriber has an option of opting out of receiving the UCC. All service providers have to
maintain a “Private Do Not Call List” of the subscribers who request non-reception of the UCC. This
list is then subsequently uploaded on to a NDNC registry. The telemarketers undertake to not make
UCC to any subscriber registered on the NDNC registry, failing which disconnection of connection
may be a possibility. Further, UCC made to other subscribers, who have not requested non-reception of
the UCC, has to be prefixed with a message informing the subscriber of the UCC and to approach the
service provider if it is unwanted. All these services, above mentioned, are provided free of charge to
the subscribers under the Regulations.
The service provider has an obligation to incorporate the registration of a subscriber into the NDNC
registry within 30 days of such a request. If the subscriber after 45 days from the day of his request still
receives the UCC, he can file a complaint with his service provider. The complaint is then forwarded to
the originating service provider who shall charge the tariff from the telemarketer, which is Rs. 500 for
each UCC and Rs. 1,000 for every subsequent UCC. The connection of the telemarketer shall also be
disconnected if he has made an UCC even after one UCC has been charged as above.
The 2008 amendment to the Regulations provides for a detailed procedure for conducting an inquiry by
a committee consisting of three officers, not below the rank of ‘Advisor’ in the TRAI, for violation of
certain provisions of the Regulations. Chapter IVA specifically laid down the payment that was needed
to be made by service providers violating the Regulations by way of financial disincentive not
exceeding Rs. 5,000 for the first non-compliance and Rs, 20,000 for subsequent non-compliance(s).
Any decision made by the TRAI in this respect may be appealed to the Telecom Disputes Settlement
and Appellate Tribunal.
Registration of Other Service Providers (“OSPs”)
The New Telecom Policy, 1999 mandates that OSPs, providing services such as call centres, network
operation centres, tele-marketing, tele-education, tele-banking, tele-trading, e-commerce, bill payment
terminal, vehicle tracking system etc. and using infrastructure provided by various access providers,
shall be registered under the OSP category for specific services being offered by them. The registration,
which does not require any license fee to be paid, shall be valid for three years unless revoked earlier,
and may be extended for a further period of maximum three years after expiry.
The registration requirement has been put inbto place to ensure that the OSPs will not infringe upon the
jurisdiction of other authorized telecom service providers and shall not provide switched telephony.
The OSPs shall take telecom resources only from an authorized service provider. Further,
interconnectivity of an international OSP with a domestic OSP is not permitted. However,
interconnectivity of two or more domestic OSP centres of the same company or group of companies in
permitted.
73
HISTORY AND CERTAIN CORPORATE MATTERS
Our Company was incorporated as Cellebrum.Com Private Limited on April 4, 2000 under the
Companies Act. Subsequently, our Company was converted into a public limited company and the
name of our Company was changed to “Cellebrum.Com Limited” pursuant to a fresh certificate of
incorporation granted to our Company on February 14, 2008, by the RoC. Further, the name of our
Company was changed from “Cellebrum.Com Limited” to “Cellebrum Technologies Limited”
pursuant to a fresh certificate of incorporation granted to our Company on April 22, 2008, by the RoC.
Changes in the registered office
At the time of incorporation, the registered office of our Company was situated at 13th Floor SpiceCorp
Tower, 98, Nehru Place, New Delhi- 110019, India. By a Board resolution dated June 20, 2003 the
registered office was shifted to Ground Floor, Modi Tower, 98 Nehru Place, New Delhi-110019.
Subsequently, by a Board resolution dated December 9, 2003 the registered office was shifted to “M
Square”, Press Enclave Road, Saket, New Delhi- 110 017, India. Further, by a Board resolution dated
April 30, 2004 the registered office was shifted to D-4, Okhla Industrial Area, Phase -1, New Delhi110 020, India.
Major Events
Year
Events
2003
•
2004
•
•
We launched Tambola on mobile phones in partnership with Zee TV and Aaj Tak television
channels.
We started providing VAS on IVR/GPRS/SMS platform.
We established a new development center in Parwanoo (Himachal Pradesh).
2005
2006
•
•
•
•
Launched CRBT.
We established another development center in Parwanoo.
We introduced products such as BGM and VAS on USSD.
Lehman Brothers Opportunity Limited invested USD 15 million in our Company.
2007
•
We launched products such as Roam Privilege, Welcome Roamer, Roam Secure, Roam
Tracker, Mobile Radio, Select Caller List, Pay4Me.
Launched our services internationally in Jordan.
•
Pre-IPO Placement
Our Company and the Selling Shareholders are considering a Pre-IPO Placement of up to [●] Equity
Shares to certain investors, prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO
Placement is completed, the number of Equity Shares sold pursuant to the Pre-IPO Placement, will be
reduced from the Net Issue, subject to minimum Net Issue size of 10% of the post-Issue paid up share
capital of our Company. The Pre-IPO Placement is at the discretion of our Company and the Selling
Shareholders.
Main Objects
The main objects of our Company as contained in its Memorandum of Association are:
1.
To design, develop, maintain, sell, distribute, market and licence computer software and
programmes for educational, commercial and industrial use, service and other applications and
to provide business, commercial and productivity solutions and network based information
and other services including licensing of computer software and programmes and to provide
customer support, training and consultancy services relating to all or any of the foregoing
matters and things including relating or incidental thereto.
2.
To design, develop, invent improve, carry out research, prepare, own, make use of,
manufacture, buy, sell, import, export, maintain, repair, alter, convert, distribute, market,
licence, hire, lease and otherwise deal in all kinds of computer software and programmes and
74
for applications of any kind or for any purpose including computers, data processing
machines, cards, memory equipments or any other equipments and materials including
computer peripherals and accessories of every kind and description useful in connection with
computer and electronic hardware and software, programmes, design or other substance or
thing used in or with computers and in telecommunications and in data processing, preparation
and retrieval products and equipments and telecommunication equipment and products.
3.
To develop systems applications, general purposes and all kinds of software including microprogramming for demonstration, sales within and outside the country and to carry on research
or assist in the carrying on of research by individuals, research institutes and other institutions
and to do all such acts connected therewith.
4.
To plan, design, develop, programme and implement:
(i)
Systems for the use of all kind of data processing equipments and techniques.
(ii)
Systems for the collection arrangement and analysis of any information.
(iii)
The application of data processing techniques and equipments.
5.
To assist, set up, operate and supervise the operation of the data processing departments of
other organizations.
6.
To design and develop websites and portals of varied contents for targeting different
communities, wherever located for information dissemination, community building and other
commercial applications, accessable through personal computers, mobile phones or any other
wireline or wireless devices.
7.
Deleted.
8.
To provide value added services to cellular and fixed line subscribers like SMS, SMS based
content services, games, interactive voice response systems for content, entertainment
services, voice mail system, alert services.
9.
To assemble, distribute, operate, sell, export, import, trade, maintain, run, improve, repair,
service, research, develop all type of telecommunication and electronic system, cellular
telephone units and equipments and systems, pagers, components, accessories, assemblies,
apparatus, spares, hardware, software and services including subscribers and
telecommunication equipment and apparatus for line telephony/telegraphy.
10.
The provision, operation and maintainance of telepoint service and the sale of telephone
handset units and equipment.
11.
To render consultancy and technical services in areas of telecommunications, electronics,
multimedia etc.
12.
To provide Services {whether in relation to Information Technology Enabled Services (ITES)
or not} including, without limitation, remote help desk management, remote hardware and/or
software management, remote customer interaction, customer relationship management and
customer servicing through contact/call centre, Business Process Outsourcing, Back Office
Operation and Management Services, Network Management Support, and any other activities
related to the business of the Company.
13.
To acquire, develop, install, maintain and run all types of services in the telecommunication
(including cellular mobile telephone or fixed telephone), electronics and multimedia and also
to manufacture, produce, acquire, import, export and deal in any manner in any product
relating to telecommunication electronics and multimedia.
Amendments to the Memorandum of Association of our Company
Since the incorporation of our Company, the following changes have been made to its Memorandum of
Association:
75
Date
Nature of Amendment
January 20, 2001
June 27, 2003
Increase in authorized share capital from Rs. 1,000,000 to 20,010,000.
Change in main objects clause to include insurance selling:
October 17, 2005
“Clause 7) To act as agent for selling insurance products and all allied activities
related thereto.”
Change in main objects clause by inserting the following new objects:
8.
January 30, 2006
September 25, 2006
“To provide value added services to Cellular and Fixed Line Subscribers like
SMS, SMS based Content Services, Games, Interactive Voice Response Systems
for content, entertainment services, Voice Mail System, Alert Services etc.
9.
To manufacture, assemble, distribute, operate, sell, export, import, trade,
maintain, run, improve, repair, service, research, develop all type of
telecommunication and electronic system, cellular telephone units and
equipments and systems, pagers, components, accessories, assemblies, apparatus,
spares, hardware, software and services including subscribers and
telecommunication equipment and apparatus for line telephony/telegraphy.
10. The provision, operation and maintenance of telephonic service and the sale of
telephone handset units and equipment.
11. To render consultancy and technical services in areas of telecommunications,
electronics, multimedia etc.
12. To provide Services {whether in relation to Information Technology Enabled
Services (ITES) or not} including, without limitation, remote help desk
management, remote hardware and/or software management, remote customer
interaction, customer relationship management and customer servicing through
contact/call centre, Business Process Outsourcing, Back Office Operation and
Management Services, Network Management Support, and any other activities
related to the business of the Company.”
Increase in authorized share capital from Rs. 20,010,000 to 12,000,000.
Increase in authorized share capital from Rs. 12,000,000 to 320,000,000.
Change in main objects clause by deleting the existing Clause III (A) of the
Memorandum of Association comprising of the ‘Main Objects’ of the Company by
deleting sub-clause 7 from the existing Clause III (A):
7.
December 13, 2007
May 20, 2008
June 24, 2008
“To act as agent for selling insurance products and all allied activities related
thereto.”
Conversion of the Company to a public company and deletion of the word ‘Private’
from the name of the Company.
Increase in authorized share capital from Rs. 320,000,000 to 1,000,000,000.
Change in main objects clause by inserting the following new object:
13. “To acquire, develop, install, maintain
telecommunication (including cellular
electronics and multimedia and also to
export and deal in any manner in any
electronics and multimedia.”
and run all types of services in the
mobile telephone or fixed telephone),
manufacture, produce, acquire, import,
product relating to telecommunication
Material Agreements and Arrangements
Share and Warrant Subscription Agreement
Our Company has entered into a share and warrant subscription agreement dated November 22, 2006
(“Share and Warrant Subscription Agreement”) with Lehman Brothers Opportunity Limited, an
affiliate of Lehman Brothers Securities Private Limited, one of the BRLMs, (“LBOL”), Omnia
Investments Private Limited (“Omnia”) and MCorp (BVI) Limited (“MCorp”) by which LBOL had
subscribed to 2,571,454 Equity Shares and 1,023,607 warrants of our Company each representing one
Equity Share for a total consideration of USD 15 million. Our Company, Omnia and MCorp had
agreed to indemnify LBOL for all losses, costs and expenses incurred by LBOL as a result of breach of
any of the warranties provided by then under the Share and Warrant Subscription Agreement.
76
As per the provisions of the Share and Warrant Subscription Agreement, LBOL was entitled to exercise
the warrants issued to it provided the EBIDTA of our Company as at March 31, 2007 was lesser than
USD 10 million.*
* (As our EBIDTA as at March 31, 2007 was more than USD 10 million there was no conversion of
warrants and such warrants lapsed as on March 31, 2007)
Investor Rights’ Deed
Our Company has entered into an Investor Rights’ Deed dated November 22, 2006 and an Investor
Variance Deed dated June 10, 2008 (“Investor Rights’ Deed”) with Lehman Brothers Opportunity
Limited (“LBOL”), Omnia Investments Private Limited (“Omnia”), MCorp (BVI) Limited
(“MCorp”) which grants LBOL with inter alia (a) right to appoint a director on the board of our
Company; (b) rights in relation to the initial public offering of our Company; (c) right of first refusal
with respect to issuances of securities by our Company; (d) certain rights in relation to certain corporate
actions to be taken by our Company and (e) to amend certain provisions of our articles of association
our Company.
It was agreed that our board should constitute of not less than two directors and not more than 12
directors and LBOL and would be entitled to appoint one director as long as it holds more than 7.5% of
the Equity Share capital of our Company. In addition, certain items are reserved where the presence of
the director appointed by LBOL is compulsory for determining quorum of the meeting including
affirmative voting rights in board and shareholders’meetings of our Company.
It is represented that our Company and all of our wholly owned subsidiaries would distribute a
minimum of 70 percent of their profits as dividend to its shareholders. It was further agreed that any
future issuance of securities by our Company, such securities should be first offered to LBOL and
Omnia (including Mr. Dilip Modi or any other associated company of Omnia which would be holding
Equity Shares) on a proportionate basis.
In addition, there are certain restrictions on the transfer of Equity Shares under the terms of the
agreement and any transfer can be approved only if such transfer is in compliance with the agreement.
Further, in terms of the Investor Rights’ Deed, business of our Company would be confined to such
businesses as is described in the agreement unless approved by LBOL or the director appointed by
LBOL.
It is represented that our Company is obligated to make best efforts to carry out an initial public
offering within 24 months from the closing date of the agreement. The initial public offering must be of
(a) upto 25% of post issued share capital of our Company; (b) at a price per Equity Shares so that the
total market capitalisation is more than 150 million USD if the initial public offering is made post 12
months of the closing date. In the event initial public offering is not carried out within 24 months from
the closing date of the agreement then LBOL would be entitled to sell all the Equity Shares held by it at
a price as determined by the formula prescribed in the agreement.
The Investor Rights’ Deed would be terminated at the date of completion of initial public offering or
when LBOL or any of the associated companies ceasing to hold 7.5% of the total issued Equity Shares,
whichever is earlier. Our Company is also obliged to procure director’s insurance with respect to the
director appointed by LBOL for an amount and coverage satisfactory to LBOL.
Arrangements with carrier customers
We have entered into various agreements with all of our carrier customers, including Airtel, Spice
Communications, Reliance, IDEA, Vodafone, BSNLand MTNL. Under the terms of such agreements,
as amended from time to time, our Company would be developing, running, maintaining and/or
providing content for, value added services, including, BGM, ASR/IVRS services and certain SMS
based services, to the carrier customers’ subscribers. The essential terms of the said agreements are as
follows:
77
•
•
•
•
•
•
•
•
•
The carrier customer would pay our Company a certain percentage of the revenue generated
by each service provided under these agreements, as per the terms of each agreement;
Our Company shall raise invoices based upon the revenue data/statement provided by the
carrier customer for a particular month;
Most of the agreements are for a tenure of one-three years and can be renewed for further
periods on such terms and conditions as mutually agreed in writing;
Either party may terminate the agreements by serving a prior written notice of specified
number of days;
Our Company shall be solely responsible for obtaining, at its own cost, all necessary
approvals, sanctions, permissions and licenses for providing the services under the
agreements;
Our Company shall not sub-contract or appoint an agent to perform its obligations under the
agreements without the prior written consent of the carrier customer;
Our Company has agreed to comply with the Regulations and Guide for Telemarketers and
other regulations and guidelines issued by DoT;
The parties would treat in confidence all documents, materials and other information, which it
would have obtained regarding any other party during the course of the negotiations and/or
preparation and/or implementation of the agreement; and
The agreement shall terminate with immediate effect if the license of the carrier customer to
provide cellular mobile telephone services is terminated by DoT or if any party ceases or
threatens to cease to carry on its business.
Subsidiaries
Mobisoc Technology Private Limited
Mobisoc Technology Private Limited (“MTPL”) was incorporated on August 12, 2006 with the main
object to carry on in India or outside the business of developing, selling and providing software
solutions in the field of telecommunication like mobile and internet services and other related areas.
The registered office of MTPL is D-60, Street no. C-5, Sainik Farm, New Delhi- 110 062, India.
Shareholding Pattern
The shareholding pattern of MTPL as of May 31, 2008 was as follows:
Name of Shareholder
No. of Shares
% of Issued
Capital
Cellebrum Technologies Limited
Spice Corp Limited
Mr. Dilip Modi
Mr. Atul Prakash
Total
1,00,00,000
4,995
4,995
10
1,00,10,000
99.90
0.05
0.05
0.00
100.00
Directors as of June 19, 2008
The board of directors of MTPL comprises Mr. Ashok Kumar Goyal, Mr. S.K. Jain and Mr. Kartar
Singh.
Financial Performance
The audited financial results of MTPL from the date of its incorporation to December 31, 2007 is as
follows:
(in Rs.millions except for share data)
Income/Sales
Profit (Loss) after Tax
Equity Share Capital
Reserves and surplus (excluding
Nine months period ended
For the period between August
on December 31, 2007
12, 2006 and March 31, 2007
24.49
1.22
(14.03)
0.76
100.10
100.10
(13.27)
0.76
78
revaluation reserves) (1)
Earnings (Loss) per share
Book value per share
(1)
(2)
(1.40)
8.67
0.08
9.97
Net of miscellaneous expenditure not written off.
The face value is Rs. 10/- per equity share.
MTPL is an unlisted company and has not made any public issue (including any rights issue to the
public) in the preceding three years. It has not become a sick company under the meaning of SICA, is
not under winding up and does not have negative net worth.
MTPL became one of our Subsidiary by way of allotment of 1,00,00,000 shares constituting 99.90% of
the total paid up share capital of MTPL. The allotment of the shares of MTPL in favour of our
Company was as follows:
Sl. No.
1.
2.
3.
Date of Allotment
December 13, 2006
February 27, 2007
March 7, 2007
No. of Shares Alloted
10,00,000
40,00,000
50,00,000
Spice Mobiles VAS Pte. Limited
Spice Mobiles VAS Pte. Limited was incorporated on February 28, 2008. It is registered with the
Registrar of Companies and Businesses, Singapore under the registration number 200803978D. The
registered office of Spice Mobiles VAS Pte. Limited is 1 North Bridge Road, #19-04/05, High Street
Centre, Singapore- 179 094.
The main object of the company is to design, develop, maintain, sell, distribute, market amd licence
computer software and programmes for educational, commercial and industrial use, service and other
applications and to provide business, commercial and productivity solutions and network based
information and other services including licencing of computer software and programmes and to
provide customer support, training and consultancy services relating to all or any of the foregoing
matters and things including relating or incidental thereto.
Shareholding Pattern
The shareholding pattern of Spice Mobiles VAS Pte. Limited as of May 31, 2008 was as follows:
Name of Shareholder
No. of Shares
% of Issued
Capital
Cellebrum Technologies Limited
Total
100
100
100.00
100.00
Directors as of May 31, 2008
The board of directors of Spice Mobiles VAS Pte. Limited comprises Dr. B.K. Modi, Mr. Hemant
Samor and Mr. Vangal Rangarajan Ranganathan.
Financial Performance
The audited financial results of Spice Mobiles VAS Pte. Limited are not available as it was
incorporated only in February 28, 2008.
Spice Mobiles VAS Pte. Limited is an unlisted company and has not made any public issue (including
any rights issue to the public) since its incorporation. It has not become a sick company under the
meaning of SICA, is not under winding up and does not have negative net worth.
79
OUR MANAGEMENT
Under the Articles of Association, our Company cannot have lesser than three Directors and more than
twelve directors. Our Company currently has six Directors.
The following table sets forth details of the Board as of the date of this Draft Red Herring Prospectus.
Name, Father’s Name, Residential Nationality
Address, Designation, Occupation,
Term, DIN
Mr. K.N. Memani
Indian
Age
69
Father’s Name:
Late Mr. Bhagwan Das Memani
Residential Address:
177C, Western Avenue,
Lane 7, Sainik Farm,
New Delhi- 110062, India
Other Directorships
•
•
•
•
•
•
Chairman
•
•
•
Non-Executive Director
•
Independent Director
•
•
•
•
Professional
DLF Limited;
Emami Limited;
Great Eastern Energy Corporation Limited;
HEG Limited;
HT Media Limited;
ICICI Venture Funds Management Company
Limited;
India Glycols Limited;
Indo Rama Synthetics (India) Limited;
Aegon India Business Services Private
Limited;
Global Education Management System India
Private Limited;
HT Consultancy Services Private Limited;
Kaleidoscope Entertainment Private Limited;
National Engineering Industries Limited; and
KNM Advisory Private Limited.
Liable to retire by rotation
DIN: 00020696
Mr. Dilip Modi
Indian
34
Father’s Name:
Dr. B. K. Modi
Residential Address:
36, Amrita Shergill Marg,
New Delhi- 110004, India
•
•
•
•
•
•
•
•
•
Managing Director
Hotspots Retails Limited;
Spice Communications Limited;
Spice Mobiles Limited;
MCorpglobal Communications Private
Limited;
Super Infosys Private Limited;
Omnia BPO Services Limited;
Indian Televentures Private Limited;
MCorp Communications Pte. Limited; and
Hindustan Retails Private Limited.
Non-Independent Director
Industrialist
Five years
DIN: 00029062
Mr. Vivek Bali
Indian
47
Father’s Name:
Mr. Jeyoti Saroop Bali
Residential Address:
C-66, Defence Colony,
New Delhi- 100024, India
Non-Executive Director
Non-Independent Director
Service
80
Nil
Name, Father’s Name, Residential Nationality
Address, Designation, Occupation,
Term, DIN
Age
Other Directorships
Liable to retire by rotation
DIN: 02078398
Mr. Hanif M Dahya
American
52
Father’s Name:
Mr. Sadrudin Dahya
Hot Spot Distribution Private
Limited
New York Community Bank
•
•
Residential Address:
5, Beechwood Road,
Allendale, New Jersey,
U.S.A
Non-Executive Director
Independent Director
Industrialist
Liable to retire by rotation
DIN: 01068575
Mr. Andreas Vourloumis
Greek
33
Nil
Indian
24
•
•
•
•
Father’s Name:
Mr. Panagis Vourloumis
Residential Address:
FLT D 4, Scenic Villa,
2-28, Scenic Villa,
Pok Fu Lam, Hong Kong
Non-Executive Director
Non-Independent Director
Nominee of Lehman Brothers
Opprtunity Limited
Service
DIN: 01058533
Ms. Divya Modi
Father’s Name:
Dr. B. K. Modi
Residential Address:
36, Amrita Shergill Marg,
New Delhi- 110004, India
•
•
Non-Executive Director
Non-Independent Director
Industrialist
Liable to retire by rotation
81
Indian Televentures Private Limited;
Oasis Cineplex Private Limited;
Tuberose Investments Private Limited;
Bougainvillea Multiplex &
Entertainment Centre Private Limited;
and
Mcorp (Europe) Limited; and
Mcorpglobal Communications Private
Limited.
Name, Father’s Name, Residential Nationality
Address, Designation, Occupation,
Term, DIN
Age
Other Directorships
DIN: 00031073
Brief profile of our Directors
Mr. K.N. Memani, is the Chairman of our Company. He was formerly the Chairman and Country
Managing Partner of Ernst & Young, India. He was also a member of Ernst & Young Global Council
for a period of 10 years. Mr. Memani specializes in business and corporate advisory, foreign taxation,
financial consultancy among other things. He has also assisted several multi-national companies in
setting up businesses in India.
Mr. Memani is a chartered accountant from the Institute of Chartered Accountants of India and is
currently a member of the National Advisory Committee on Accounting Standards. Mr. Memani was
also a member of the Expert Committee constituted by the Ministry of the Company Law for the
amendment of the Companies Act. Mr. Memani was on the External Audit Committee (“EAC”) of the
International Monetary Fund for two consecutive years and was appointed as the Chairman of EAC for
the year 1999-2000. He is the only Indian appointed in this committee by International Monetary Fund.
Mr. Memani is also on the board of various Indian companies including, HEG Limited, HT Media
Limited, Indo Rama Synthetics (India) Limited, DLF Limited and Agon India Business Services
Private Limited. Mr. Memani is also associated with various chambers of commerce. He is the
immediate Past President of PHD Chamber of Commerce and Industry, former Chairman of American
Chamber of Commerce in India, former President of FIEO and Indo American Chamber of Commerce.
Currently he is member of managing committees of PHD Chamber of Commerce, Assocham, FICCI,
American Chamber of Commerce and Indo American Chamber of Commerce.
Mr. Memani is also member of governing bodies of some business schools, social, educational, service
and charity organizations. He joined our Board on January 26, 2008.
Mr. Dilip Modi, is the Managing Director of our Company. He is an alumnus of the Brunel University,
London, UK, having obtained a bachelor’s degree in science (management and technology) with first
class honours. He has also done his masters in business administration from the Management School,
Imperial College, London, UK, with specialisation in finance. Mr. Modi has experience in the telecom
business for over 10 years and had been the President of COAI. He has developed many companies in
last few years in the areas of telecom value added services and IT enabled business. He joined our
Board on January 26, 2008.
Mr. Vivek Bali, is a Non-Executive and Non-Independent Director of our Company and is currently
working as a Group President - Global Brand and Marketing with Spice Corp Limited. Mr. Bali holds a
masters of business management degree from Faculty of Management Studies, Delhi University. He
has 27 years of varied experience in marketing, brand management and new product launch in India
and international markets in FMCG and telecom services. Mr. Bali has previously been associated with
Bharti Airtel Limited as Senior Vice President (Marketing), heading the Marketing and Consumer
business from 2003 to 2007, where he spearheaded the building of the USD 40 Bn Market Cap “Airtel”
Brand, the dominant telecom service provider in India. Prior to working at Bharti Airtel Limited, he
was the International Business Consultant based out of USA for Bristol Myers Squibb in 2002. Mr,
Bali has also worked with The Gillette Company in India, Middle East, Africa and Europe from 1986
to 2001(last designation being as Regional Business Director); with Godfrey Philips, from 1982 to
1985 as Product Executive; and with Wimco Limited from 1981 to 1982 as Management Trainee. He
joined our Board on January 26, 2008.
Mr. Hanif M Dahya, is a Non-Executive and Independent Director of our Company. Mr. Dahya has an
experience of 14 years in the field of securities related business in New York. He started his career in
investment banking with E.F. Hutton and Co. Inc., and was Managing Director at L.F. Rothschild and
Co. Inc. He also ran the mortgage-backed securities group at UBS Securities Inc. and was a partner at
Sandler O’Neill and Partners LLC. Mr. Dahya is currently the Chief Executive Officer of The Y
82
Company LLC, a private investment firm involved in the investment and restructuring of companies in
the emerging markets. Mr. Dahya received his masters in business administration degree from Harvard
Business School, Cambridge, Massachusetts, USA and obtained his bachelor’s degree in technology
from Loughborough University of Technology in the UK. He joined our Board on August 30, 2006.
Mr. Andreas Vourloumis, is a Non-Executive and Non-Independent Director of our Company. He is
appointed as a nominee of Lehman Brothers Opportunity Limited. He holds a bachelors degree in
economics and a masters degree in economic history, both from the London School of Economics and
Political Science. He has nine years of experience in the banking industry. Prior to joining Lehman
Brothers Opportunity Limited in 2006, he was associated with Deutsche Bank since 1999. He joined
our Board November 28, 2006.
Ms. Divya Modi, is a Non-Executive and Non-Independent Director of our Company. Ms. Modi
obtained her masters of accounting degree from University of Southern California in 2007 and a
bachelor of science in economics and business finance (honors) from Brunel University, West London
in the year 2003. She has also obtained professional training in certificate in business accounting from
the Chartered Institute of Management Accountants, London. She has passed Level-1 of the
professional development course in International Council of Shopping Centers and Level I of the
Chartered Financial Analyst examination.
She has three years of experience in the entertainment and real estate industry. Prior to joining our
Company, she was associated with SpiceCorp Limited and Bougainvillea Multiplex & Entertainment
Centre Private Limited. She joined our Board on January 26, 2008.
Mr. Dilip Modi is the brother of Ms. Divya Modi. None of our other Directors are related to each other.
Borrowing powers of the Board
Our Board can borrow from time to time, any sum or sums of money for the purposes of our Company,
upon such terms and conditions and with or without security, in Indian/foreign currency, as the Board
may in its discretion think fit, notwithstanding that the money or monies to be so borrowed by our
Company (apart from the temporary loans obtained or to be obtained from time to time from our
Company’s bankers in the ordinary course of business) together with the sums already borrowed,
provided however that it may not exceed the aggregate of the paid-up capital of our Company and its
free reserves that is to say, reserves not set apart for any specific purposes.
Remuneration of the Directors
Executive Directors
The remuneration of the Managing Director, Mr. Dilip Modi was fixed by way of a resolution of the
Board dated March 27, 2008. Mr. Dilip Modi is entitled to:
(a) Salary, allowances and perquisites of Rs. 20,000,000 p.a.; and
(b) Performance linked bonus to be paid annually as determined by the remuneration committee of the
Board.
The remuneration under clause (a) and (b) as aforesaid taken together shall not exceed 5% of the net
profits of the Company computed in the manner prescribed in Section 349 and 350 of the Companies
Act for each of the financial year as determined by the remuneration committee of the Board and
approved by the Board from time to time.
Further, during the tenure of his appointment, in case the Company has no profits or its profits are
inadequate, Mr. Dilip Modi shall be entitled to remuneration, in the aggregate, including salary,
allowance and perquisites as per the limits laid down in Schedule XIII to the Companies Act.
Non-executive and Independent Directors
83
The Non-Executive and Independent Directors are not paid any remuneration, but are paid sitting fees
for attending meetings. The sitting fees to which the Directors are entitled was decided by a resolution
of the Board dated January 3, 2008 the details of which are as follows.
Designation
As a Director present in the meeting
As chairman of a committee
As a sub-committee member
Fees Payable
20,000
20,000
20,000
Shareholding of our Directors
The Articles of Association do not require the Directors to hold any qualification Equity Shares in our
Company. The following table details the shareholding of the Directors in their personal capacity, as at
the date of this Draft Red Herring Prospectus.
Equity Shares owned before the
Issue
Name of the Director
No. of shares
% of paid-up
capital
Mr. Dilip Modi
1,728
Negligible
Ms. Divya Modi
28
Negligible
Negligible
Total
1,756
* Mr. Dilip Modi and Ms. Divya Modi will not participate in the Issue.
Equity Shares owned after the
Issue*
No. of shares
% of paid-up
capital
1,728
Negligible
28
Negligible
Negligible
1,756
Interest of Directors
Except as stated in the section “Related Party Transactions” beginning on page 139, and to the extent of
compensation and their shareholding in our Company, the Directors do not have any other interest in
our business.
All the Directors, including Independent Directors, may be deemed to be interested to the extent of fees
payable to them for attending meetings of the Board or a committee thereof as well as to the extent of
other remuneration and reimbursement of expenses, if any, payable to them under the Articles of
Association and the executive Directors are also interested to the extent of remuneration paid to them
for services rendered as an officer or employee of our Company.
The Directors have no interest in any property acquired by our Company or its Subsidiaries during two
years prior to the date of filing of this Draft Red Herring Prospectus except as stated in the section
“Related Party Transactions” beginning on page 139.
Changes in the Board of Directors during the last three years
Name
Mr. Dheeraj Agarwal
Mr. Lokesh Gupta
Mr. Atul Prakash
Mr. R L Ahuja
Mr. Ashok Kumar Goyal
Mr. Hanif M Dahya
Dr. B. K. Modi
Mr. Dilip Modi
Mr. Umang Das
Mr. Andreas Vourloumis
Mr. Kartar Singh
Mr. R C Vaish
Mr. Saket Agarwal
Mr. Vivek Bali
Mr. Dilip Modi
Ms. Divya Modi
Mr. K. N. Memani
Ms. Michelle Crames
Date of Appointment
June 20, 2003
April 30, 2004
July 15, 2005
March 7, 2006
August 30, 2006
August 30, 2006
September 30, 2006
September 30, 2006
September 30, 2006
November 28, 2006
September 29, 2007
September 29, 2007
September 29, 2007
January 26, 2008
January 26, 2008
January 26, 2008
January 26, 2008
January 26, 2008
84
Date of Cessation
July, 2005
March 7, 2006
August 30, 2006
January 10, 2007
September 30, 2007
NA
September 30, 2007
September 30, 2007
September 30, 2007
NA
January 26, 2008
December 5, 2007
January 26, 2008
NA
NA
NA
NA
NA
Reason
Resignation
Resignation
Resignation
Resignation
Resignation
Appointment
Resignation
Resignation
Resignation
Appointment
Resignation
Resignation
Resignation
Appointment
Appointment
Appointment
Appointment
Appointment
Name
Mr. Dheeraj Agarwal
Ms. Michelle Crames
Date of Appointment
June 20, 2003
January 26, 2008
Date of Cessation
July, 2005
June 20, 2008
Reason
Resignation
Resignation
Corporate Governance
The provisions of the listing agreements to be entered into with the Stock Exchanges with respect to
corporate governance become applicable to our Company at the time of seeking in-principle approval
of the Stock Exchanges. Our Company has taken steps to comply with such provisions, including with
respect to the appointment of Independent Directors to the Board and the constitution of the following
committees of the Board: the Audit Committee, the Remuneration Committee and the
Shareholders/Investors Grievance Committee. Our Company undertakes to take all necessary steps to
comply with all the requirements of the guidelines on corporate governance and adopt the corporate
governance code as per Clause 49 of the Listing Agreement to be entered into with the Stock
Exchanges, as would be applicable to our Company upon the listing of its Equity Shares.
Our Board has six Directors and the Chairman of our Board is a Non-Executive Director. In
compliance with the requirements of Clause 49 of the Listing Agreement, our Company has (i) not less
than 50% Non-Executive Directors; and (ii) at least one third Independent Directors on the Board.
Audit Committee
The Audit Committee was constituted by the Board by their resolution dated March 27, 2008.
The Audit Committee has been constituted in accordance with Clause 49 of the Listing Agreement.
The constitution of the Audit Committee is as follows.
Name of the Directors
Mr. K. N. Memani (Chairman)
Mr. Hanif M Dahya
Mr. Andreas Vourloumis
Executive/Non-executive/Independent
Independent
Independent
Non-executive
The terms of reference of the Audit Committee include:
1.
2.
3.
4.
5.
6.
7.
8.
Overseeing the Company’s financial reporting process and disclosure of its financial
information;
Recommending to the Board the appointment, re-appointment, and replacement of the
statutory auditor and the fixation of audit fee;
Approval of payments to the statutory auditors for any other services rendered by them;
Reviewing, with the management, the annual financial statements before submission to the
Board for approval, with particular reference to:
(a)
Matters required to be included in the ‘Director’s Responsibility Statement’ to be
included in the Board’s report in terms of clause (2AA) of section 217 of the
Companies Act;
(b)
Changes, if any, in accounting policies and practices and reasons for the same;
(c)
Major accounting entries involving estimates based on the exercise of judgment by
management;
(d)
Significant adjustments made in the financial statements arising out of audit findings;
(e)
Compliance with listing and other legal requirements relating to financial statements;
(f)
Disclosure of any related party transactions; and
(g)
Qualifications in the draft audit report.
Reviewing, with the management, the quarterly, half-yearly and annual financial statements
before submission to the Board for approval;
Reviewing, with the management, the performance of statutory and internal auditors, and
adequacy of the internal control systems;
Reviewing the adequacy of internal audit function, if any, including the structure of the
internal audit department, staffing and seniority of the official heading the department,
reporting structure coverage and frequency of internal audit;
Discussion with internal auditors any significant findings and follow up there on;
85
9.
10.
11.
12.
13.
Reviewing the findings of any internal investigations by the internal auditors into matters
where there is suspected fraud or irregularity or a failure of internal control systems of a
material nature and reporting the matter to the Board;
Discussion with statutory auditors before the audit commences, about the nature and scope of
audit as well as post-audit discussion to ascertain any area of concern;
To look into the reasons for substantial defaults in the payment to the depositors, debenture
holders, shareholders (in case of non payment of declared dividends) and creditors;
Reviewing the functioning of the whistle blower mechanism, in case the same is existing; and
Review of management discussion and analysis of financial condition and results of
operations, statements of significant related party transactions submitted by management,
management letters/letters of internal control weaknesses issued by the statutory auditors,
internal audit reports relating to internal control weaknesses, and the appointment, removal
and terms of remuneration of the chief internal auditor.
Remuneration Committee
The Remuneration Committee was constituted by the Board by their resolution dated March 27, 2008.
The Remuneration Committee has been constituted in accordance with Clause 49 of the Listing
Agreement.
The constitution of the Remuneration Committee is as follows.
Name of the Directors
Executive/Non-executive/Independent
Mr. Hanif M Dahya (Chairman)
Mr. K. N. Memani
Mr. Andreas Vourloumis
Independent
Independent
Non-executive
The terms of reference of the Remuneration Committee include:
1.
2.
3.
4.
Framing suitable policies and systems to ensure that there is no violation, by an employee of
any applicable laws in India or overseas;
Determine on behalf of the Board and the shareholders the Company’s policy on specific
remuneration packages for executive directors including pension rights and any
compensation payment;
Perform such functions as are required to be performed by the Remuneration Committee
under the ESOP Guidelines, in particular, those stated in Clause 5 of the ESOP Guidelines;
and
Such other matters as may from time to time be required by any statutory, contractual or
other regulatory requirements to be attended to by such committee.
Shareholders/Investors Grievance Committee
The Shareholders/Investors Grievance Committee was constituted by the Board by way of their
resolution dated March 27, 2008. The Shareholders and Investors Grievance Committee is responsible
for the redressal of investor grievances.
The Shareholders/Investors Grievance Committee has been constituted in accordance with Clause 49 of
the Listing Agreement.
The constitution of the Shareholders/Investors Grievance Committee is as follows:
Name of the Directors
Mr. Hanif M Dahya (Chairman)
Ms. Divya Modi
Mr. Vivek Bali
Executive/Non-executive/Independent
Independent
Non-executive
Non-executive
The terms of reference of the Shareholders/Investors Grievance Committee are as follows.
86
1.
2.
3.
Transfer/transmission of shares issued by our Company, issue of duplicate share certificates
and certificates after split/ onsolidation/replacement/rematerialisation;
Investor relations and redressal of shareholders grievances in general and in particular relating
to non receipt of dividends, interest, non- receipt of balance sheet etc.; and
Such other matters as may from time to time be required by any statutory, contractual or other
regulatory requirements to be attended to by such committee.
Other Committees
In addition to the above, the Board has constituted an IPO Committee at the Board meeting held on
January 26, 2008.
The constitution of the IPO Committee is as follows.
1.
2.
3.
4.
Mr. Dilip Modi (Chairman)
Mr. Andreas Vourloumis
Mr. Hanif M Dahya
Mr. Ashok Agarwal
The IPO Committee was constituted for the following purposes:
1.
2.
3.
4.
5.
to take all decisions relating to the Issue, including the appointment of various intermediaries
and other advisors for the Issue such as inter alia, the Registrar to the Issue, escrow collection
banks, bankers to the Issue, brokers, sub-brokers, Syndicate Members, decide on the fees and
other terms and conditions of such intermediaries and advisors;
to prepare and finalise, along with the BRLMs, the Draft Red Herring Prospectus, Red
Herring Prospectus and Prospectus, do all requisite filings with SEBI, the Stock Exchanges,
the FIPB, RBI, if required and any other concerned authority;
to execute all documents and contracts for the Issue including the memorandum of
understanding with the BRLMs, Escrow Agreement, Syndicate Agreement, memorandum of
understanding with the Registrar to the Issue and the Underwriting Agreement;
to determine and finalise the Price Band, approve the basis for allocation and confirm
allocation of the Equity Shares to various categories of persons as disclosed in the Draft Red
Herring Prospectus, the Red Herring Prospectus and the Prospectus, in consultation with the
BRLMs and do all such acts and things as may be necessary and expedient for, and incidental
and ancillary to the Issue; and
modify, reapply, redo, make necessary changes, approach and do all such acts and deeds that
are necessary to do, to modify the Articles Of Association subject to the approval of the
shareholders of our Company, the Draft Red Herring Prospectus, Red Herring Prospectus and
the Prospectus, all approvals thereunder and as required under applicable law, and to approach
the SEBI, Stock Exchanges and/or any other statutory authority to resubmit any such modified
documentation in this regard.
87
6.
Management Organisational Structure
MANAGING DIRECTOR
COMPANY SECRETARY
&
HEAD LEGAL
CHIEF EXECUTIVE
OFFICER
CHIEF
FINANCIAL
OFFICER
HEAD
MARKETING
&
PRODUCT
INNOVATION
HEAD
CONTENT
&
ALLIANCES
88
HEAD
HUMAN
RESOURCE
&
ADMINISTRATION
HEAD
SALES
HEAD
TECHNOLOGY
& STRATEGY
Key Managerial Personnel
The key managerial personnel are of the ranks of General Manager and above. All the key managerial
personnel are permanent employees of our Company or our Subsidiaries.
Key Managerial Personnel who are employees of our Company
Mr.Saket Agarwal, 37 years, is the Chief Executive Officer of our Company. He joined our Company
in 2004 and has 15 years of experience in the field of telecom – global system for mobile
communication, operation support system/business support system, software development, relational
database management syatem, enterprise resource planning and research and development. He holds a
masters (honours) degree in Physics and bachelors (honours) in elecrtical and electronics engineering
from Birla Institute of Technology and Science, Pilani. He has previously worked with Spice
Communications Limited as an Assistant General Manager and Crompton Greaves Limited as Senior
Engineer. The gross compensation paid to him during the nine months period ended December 31,
2007 was Rs. 4.65 million.
Mr. Kartar Singh, 35 years, is the Chief Financial Officer of our Company. He joined our Company
in 2004 and has 12 years of experience in finance, accounts, taxation, legal and audit. He is a fellow
member of Institute of Chartered Accountants of India and Associate Member of Institute of Cost and
Works Accountants of India. He has previously worked with Spice Communications Limited as Senior
Manager (Finance) and with Mcorp Global Private Limited as internal auditor. He is currently
responsible for handling finance, accounts, taxation and legal in our Company. The gross compensation
paid to him during the nine months period ended December 31, 2007 was Rs. 4.65 million, which
includes incentive of Rs. 1.5 million.
Dr. Abhinav Mathur, 36 years, is the Chief Technical Officer of our Company and is the overall in
charge of technology strategy of our Company. He has over 15 years of experience in the telecom
industry. He holds a bachelors of engineering degree in computer science from NSIT, Delhi University,
a PhD in electrical engineering from Indian Institute of Technology, Delhi and post graduate diploma
in management from Indian Institute of Management, Lucknow, with specialization in strategy, finance
and marketing. He has previously worked with the Indian subsidary of Lotus Interworks Inc and CDOT, which is the research and development arm of the DoT. He has held various leadership roles for
more than nine years. He is currently responsible for new generation technology innovation in our
Company. He joined our Company on February 8, 2008. Since he joined our Company in February 8,
2008 no compensation was paid to him during the nine months period ended December 31, 2007.
Mr. Ashok Agarwal, 50 years, is the Vice President (Legal) and the Company Secretary of our
Company. Mr. Agarwal is a fellow member of the Institute of Company Secretaries of India and is a
law graduate. He has around 22 years of varied experience in the fields of secretarial and legal
functions with various companies in the telecom and software industries, including Spice
Communications Limited, Samsung SDS Infotech Private Limited, Modi Telstra Limited and Modi
Olivetti Limited. Prior to joining our Company, he was the General Manager (Legal) in Spice
Communications Limited. He joined our Company on May 20, 2008. Since he joined our Company in
May 2008 no compensation was paid to him during the nine months period ended December 31, 2007.
Ms. Monika Aggarwal, 34 years, is the Assistant Vice President (Technical) of our Company. She
joined our Company in 2004 and has 11 years of experience in the field of telecom – global system for
mobile communication, infrastructure and solutions, software development and relational database
management syatem and research and development. She holds a bachelor’s degree in engineering from
C.R. State College of Engineering, Murthal Chottu State College of Engineering, Sonepat. She has
previously worked with Spice Communications Limited as a Manager and Senior Faculty at Aptech
Computers Limited. She is currently responsible for technology and product innovation in our
Company. The gross compensation paid to her during the nine months period ended December 31,
2007 was Rs. 2.40 million.
Mr. Shehzad Azad, 35 years, is the Vice President – Sales and Marketing of our Company. He joined
our Company in August, 2007 and and has 14 years of experience in business development, strategic
89
planning, alliance development, sales and marketing in the software and telecom industry. He holds a
master’s degree in management from Indian Institute of Foreign Trade, Delhi and a bachelor’s degree
in engineering from Jamia Millia Islamia University, Delhi. His last assignment was with Alacre, Inc as
Vice President – Sales and Marketing. He is currently responsible for sales and operations of the social
networking business of our Company. The gross compensation paid to him during the nine months
period ended December 31, 2007 was Rs. 1.07 million.
Mr. Lokesh Gupta, 36 years, is the Assistant Vice President (Sales and Marketing) of our Company.
He carries the overall responsibility of the enterprise and roaming business of our Company. He joined
our Company in 2004 and has over 13 years of experience in the telecom industry. He holds a
bachelor’s of technology degree in computer science from Punjab University, Patiala. Prior to joining
our Company, he worked with telecom divisions of Mercury Corporation & Punjab Communication
Limited in various leadership roles for more than nine years. The gross compensation paid to him
during the nine months period ended December 31, 2007 was Rs. 2.25 million.
Mr. Jatinder Verma, 36 years, is the Program Director (Delivery) of our Company. He joined our
Company in May, 2007 and has about 12 years of experience in the field of telecom - GSM
infrastructure, network/systems engineering, it security, telecom billing operations and office
automation. He holds a master’s degree in management sciences from the University of Pune and a
diploma in business management from Dr. Babasaheb Ambedkar Marathwada University, Aurangabad.
He has previously worked as a Group Leader with Unicorp Overseas Limited and as Deputy General
Manager – Information Technology in Spice Communications Limited and as a Principal ArchitectTelecom at Wipro Limited. He is currently responsible for project implementation and delivery in our
Company. The gross compensation paid to him during the nine months period ended December 31,
2007 was Rs. 1.57 million.
Mr. Pankaj Sharma, 41 years, is the Assistant Vice President – Product Innovation and Management
of our Company. He joined our Company in 2008 and has 19 years of experience in the field of
marketing management, brand management, new product development and managing revenues, sales
and marketing. He holds masters degrees in technology and business administration from Kurukshetra
University. He has previously worked with Bharti Telesoft Limited as a Product Director. He is
currently responsible for managing our key customer accounts. Since he joined our Company in
February 21, 2008 no compensation was paid to him during the nine months period ended December
31, 2007.
Mr. Rajib Roy, 36 years, is the General Manager (Human Resource and Administration) of our
Company. He joined our Company in October 2007 and has 10 years of experience in the field of
human resource management. He holds a masters degree in personnel management from Symbiosis
Institute of Business Management, Pune. He has previously worked with Pricewaterhouse Coopers,
Ernst &Young and Microsoft Corporation in the capacity of a team manager, human resources. He is
currently responsible for human resource management and administration in our Company. The gross
compensation paid to him during the nine months period ended December 31, 2007 was Rs. 0.58
million.
Mr. Samit Tarafdar, 39 years, is the General Manager (Finance) of our Company. He joined our
Company in February, 2007 and has 15 years of experience in the field of accounts, revenue assurance
and billing, collections & recovery, credit management, fraud management and provisioning. He holds
a bachelor’s degree in commerce from Punjab University. He has previously worked with Bharti Airtel
Limited as Subscriber Management Group Head for Haryana Circle. He is currently responsible for
revenue assurance, collections, billing and quality assurance in our Company. The gross compensation
paid to him during the nine months period ended December 31, 2007 was Rs. 1.57 million.
Key Managerial Personnel who are employees of our Subsidiaries:
MTPL, is in the business of research in mobile platform development, among other things, Mr. Lokesh
Gupta is one of the key personnel in the field of mobile platform development, therefore has been
included as one of the key managerial personnel of our Company, whose details are mentioned below:
Mr. Lokesh Gupta, 34 years, is the Chief Executive Officer of MTPL. He has previously worked with
Spice Communications Limited. He joined MTPL on August 12, 2006 and has over 10 years of
90
management experience in diversified domains. He holds his management diploma from Indian
Institute of Management, Ahmedabad and bachelor’s degree in computers from Indian Institute of
Technology, Delhi. Mr. Gupta started his management career with ICICI Bank Limited before
founding Hexys, an IT services company in 2000. The gross compensation paid to him during the nine
months period ended December 31, 2007 was Rs. 3.75 million.
Shareholding of the key managerial personnel
Except as mentioned below, none of our key managerial personnel hold any Equity Shares.
S. No.
1
2
3
4
5
6
7
8
9
10
Key managerial personnel
No. of Equity Shares
Held
Mr. Saket Agarwal
Mr. Kartar Singh
Dr. Abhinav Mathur
Ms. Monika Aggarwal
Mr. Shehzad Azad
Mr. Lokesh Gupta
Mr. Jatinder Verma
Mr. Pankaj Sharma
Mr. Rajib Roy
Mr. Samit Tarafdar
Total
Pre-Issue
Percentage of
Shareholding
0.64
0.27
0.10
0.21
0.02
0.20
0.03
0.03
0.02
0.02
1.54
273,928
117,164
43,200
90,083
7,200
84,847
11,520
11,520
9,737
7,200
656,399
Bonus or profit sharing plan for the key managerial personnel
There is no bonus or profit sharing plan for key managerial personnel of our Company.
Interest of Key Managerial Personnel
The key managerial personnel of our Company do not have any interest in our Company and/or our
Subsidiaries other than the extent of any remuneration or benefits to which the key managerial
personnel are entitled as per their terms of appointment and company policy,reimbursement of
expenses incurred by them during the ordinary course of business and to the extent of the Equity Shares
held by them.
Changes in the Key Managerial Personnel
The following are the changes in the key managerial personnel of our Company and/or our Subsidiaries
in the last three years preceding the date of filing this Draft Red Herring Prospectus otherwise than by
way of retirement in the normal course.
Name
Date of Appointment
Date of Cessation
Ms. Monika Bajpai
May 1, 2007
October 31, 2007
Mr. Vinod Shingri
Mr. Tapas Acharya
March 14, 2003
April 11, 2006
March 31, 2007
April 30, 2007
Mr. Savinder Sarna
Mr. Dheeraj Aggarwal
Mr. Kartikeya Shukla
Mr. Rajib Roy
Mr. Samit Tarafdar
Mr. Sudhir Kathuria
Mr. Jatinder Verma
Dr. Abhinav Mathur
Mr. Lokesh Gupta*
May 1, 2005
February 1, 2004
April 16, 2007
October 8, 2007
February 7, 2007
July 16, 2007
May 15, 2007
February 8, 2008
August 12, 2006
March 31, 2007
July 15, 2005
NA
NA
NA
May 23, 2008
NA
NA
NA
91
Reason
Transfer to Global
Mobile
Infrastructure
Private Limited
Resignation
Transfer to Spice
Communications
Limited
Resignation
Resignation
Appointment
Appointment
Appointment
Resignation
Appointment
Appointment
Appointment
Name
Mr. Newton Bubber
Mr. Shehzad Azad
Mr. Pankaj Sharma
Mr. Ashok Agarwal
Mr. Kartikeya Shukla
* Mr. Lokesh Gupta joined MTPL
Date of Appointment
July 19, 2006
August 20, 2007
February 21, 2008
May 20, 2008
April 16, 2007
Date of Cessation
Reason
February 29, 2008
NA
NA
NA
May 31, 2008
Resignation
Appointment
Appointment
Appointment
Resignation
Payment of Benefit to Officers of our Company
Except the normal remuneration rendered to Directors, officers or employees during the course of their
employment and statutory benefits upon termination of their employment in our Company or
superannuation, no officer of our Company is entitled to any benefit upon termination of such officer’s
employment in our Company or superannuation. However, our Company has a policy of perfomance
linked bonus wherein employees are paid variable amount based on their performance at their
respective functions and levels. In addition, our Company also has an incentive policy by virtue of
which our employees are entitled to various incentives in the event they achieve certain pre-set targets.
Loans taken by Directors/Key Managerial Personnel
Except Mr. Rajib Roy, General Manager (Human Resource and Administration), one of our key
managerial personnel, who has taken a loan of Rs. 2 million from our Company at an interest rate of
10%, none of our Directors and key managerial personnel have taken any loan from our Company:
92
OUR PROMOTERS AND PROMOTER GROUP
Promoters
Mr. Dilip Modi, Omnia Investments Private Limited and Indian Televentures Private Limited are the
promoters of our Company:
The details of our Promoters are as follows:
1.
Mr. Dilip Modi
Identification Particulars
Passport No.
Voter ID No.
Driving License No.
Details
F-7680545
Not available
9209087
For more details of Mr. Dilip Modi, see the section “Our Management” beginning on page 80.
2.
Omnia Investments Private Limited
Omnia Investments Private Limited was incorporated on November 27, 1980 as T.R. Metal Industries
Private Limited under registration number 55-11082 with the RoC. Its registered office is situated at
D-4, Okhla Industrial Area, Phase I, New Delhi- 110 020, India. The name of the company was
changed to Spicesoft Solutions Private Limited on April 21, 2003 and thereafter to its present name,
Omnia Investments Private Limited on January 20, 2005.
Promoter: Indian Televentures Private Limited
CIN: U27203DN1980PTC011082
The main objects of the company are investment and acquisition of shares, debentures, bonds,
securities etc issued or guaranteed by any company or body corporate, to carry on the business of
technical, financial and management consultants and advisors, and to manufacture, assemble, import,
undertake service contract and other wise deal in all kinds of computers, data processing machines, IT
equipments, office automation equipments etc.
Directors as on May 31, 2008
The board of directors of Omnia Investments Private Limited as on May 31, 2008 comprises Dr. B.K.
Modi, Mr. H. N. Nanani and Mr. Ashok Kumar Goyal. There have been no changes in the management
of Omnia Investments Private Limited in the last three years preceding the date of filing this Draft Red
Herring Prospectus.
Shareholding pattern
93
The shareholding pattern of Omnia Investments Private Limited as at May 31, 2008 is as under:
Names of Shareholder
%
of
Shareholding
No. of Shares held
Sl.
No.
1.
Indian Televentures Private Limited
97,821
60.00
2.
Mcorp Communications Pte Limited
65,214
40.00
163,035
100.00
Total
There have been no changes in the capital structure of Omnia Investments Private Limited in the last
six months preceding the date of filing this Draft Red Herring Prospectus.
Financial Performance
The audited financial results of Omnia Investments Private Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
March 31, 2007
Year ended
March 31, 2006
Year ended
March 31, 2005
16.30
9.78
9.78
Reserves and Surplus
679.57
(1.59)
(0.26)
Total Income
410.50
0.22
Profit/(Loss) after Tax
394.29
(1.33)
(0.26)
Earnings per share (Rs.) (Face Value Rs. 10/-)
2,418.42
(13.60)
(2.63)
Book Value per equity share (Rs.)
4,268.18
83.52
97.04
Equity Capital
-
Omnia Investments Private Limited is an unlisted company and has not made any public or rights issue
in the preceding three years. It has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition. It does not have a negative net worth.
3.
Indian Televentures Private Limited
Indian Televentures Private Limited was incorporated on June 18, 2001 under registration number 55111304 with the RoC. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms, New
Delhi- 110 062, India.
The main object of the company is to develop, install, maintain and run all type of services in the
telecommunication sector (including cellular mobile telephone or fixed telephone), IT, electronics and
multi-media, and also to manufacture, produce, import, export, and deal in any manner in any product
relating to telecommunication, electronics, IT and multimedia.
Promoter: Mr. Dilip Modi
CIN: U64202DL2001PTC111304
Directors as on May 31, 2008
The board of directors of Indian Televentures Private Limited as at May 31, 2008 comprises Mr. Dilip
Modi, Ms. Divya Modi, Mr. Ravinder Lal Ahuja and Mr. Atul Prakash. There have been no changes in
the management of Indian Televentures Private Limited in the last three years preceding the date of
filing this Draft Red Herring Prospectus.
Shareholding pattern
94
The shareholding pattern of Indian Televentures Private Limited as at May 31, 2008 is as under:
Names of Shareholder
Sl.
No.
1.
Mr. Dilip Modi
2.
Mrs. Veena Modi
1,020,000
%
of
Shareholding
Shareholding
51.00
980,000
49.00
2,000,000
100.00
No. of Shares held
Total
There have been no changes in the capital structure of Indian Televentures Private Limited in the last
six months preceding the date of filing this Draft Red Herring Prospectus.
Financial Performance
The audited financial results of Indian Televentures Private Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
June 30, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share
Book Value per equity share
20.0
(0.34)
0.02
(0.27)
(0.14)
9.83
Period ended
June 30, 2006
(15 months)
10.00
(0.07)
0.06
0.01
0.01
9.93
Year ended
March 31, 2005
0.10
(0.08)
0.05
0.04
3.48
1.93
Indian Televentures Private Limited is an unlisted company and has not made any public or rights
issue in the preceding three years. It has not become a sick company within the meaning of SICA nor
is it subject to a winding-up order or petition. It does not have a negative net worth.
Interest in the property of our Company
The Promoters do not have any interest in any property acquired by our Company during the two years
preceding the date of this Draft Red Herring Prospectus or proposed to be acquired by our Company
except as disclosed in the section “Related Party Transactions” beginning on page 139.
Payment of benefits to our Promoters during the last two years
Except as stated in the section “Related Party Transactions” beginning on page 139, there has been no
payment of benefits to our Promoters during the last two years prior to the date of filing of this Draft
Red Herring Prospectus.
Related Party Transactions
For details of the related party transactions, see the section “Related Party Transactions” beginning on
page 139.
Undertakings
We undertake that the details of the PANs, bank account numbers and passport numbers (for
individuals), company registration number and the addresses of the registrar of companies where our
Promoter companies are registered will be submitted to the Stock Exchanges at the time of filing this
Draft Red Herring Prospectus with the Stock Exchanges.
Further, our Promoters and Promoter Group, including relatives of the Promoters, have confirmed that
they have not been detained as willful defaulters by the RBI or any other governmental authority except
for those disclosed in the sections “Outstanding Litigation and Material Developments” and “Risk
Factors” beginning on pages 300 and x, respectively.
95
There are no violations of securities laws committed by them in the past or are pending against them
and none of our Promoters or persons in control of bodies corporate forming part of our Promoter
Group have been restricted from accessing the capital markets for any reasons, by SEBI or any other
authorities, except for those disclosed in the section “Outstanding Litigation and Material
Developments” and “Risk Factors” beginning on pages 300 and x, respectively.
Common Pursuits
Our Promoters do not have an interest in any venture that is involved in any activities similar to those
conducted by our Company, our Subsidiaries or any member of our Promoter Group.
Promoter Group
In addition to the Promoters named above, the following natural persons, companies and entities form
part of our Promoter Group:
The natural persons who are part of the Promoter Group (being immediate relatives of our Promoters),
apart from the individual Promoters mentioned above, are as follows:
Promoter
Mr. Dilip Modi
Name
Dr. B.K. Modi
Mrs. Veena Modi
Mrs. Sonal Modi
Baby Siya Modi
Mrs. Ritika Rungta
Ms. Divya Modi
Mr. Rakesh Himatsingka
Mrs. Anita Himatsingka
Mr. Shaurya Veer
Himatsingka
Ms. Maalika Himatsingka
Relationship with Mr. Dilip Modi
Father
Mother
Wife
Daughter
Sister
Sister
Father-in-law
Mother-in-law
Brother-in-law
Sister-in-law
Promoter Group Companies and Entities
The entities which are part of the Promoter Group have been provided below:
Listed Public Companies:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Fund Flow Investment & Trading Company Limited;
Goneril Investment & Trading Company Limited;
IO System Limited;
Jyotsana Investment Company Limited;
Kallol Investments Limited;
Khatu Investment & Trading Company Limited;
New Look Investment (Bengal) Limited;
Spice Communications Limited;
Spice Mobiles Limited; and
Twenty First Century Capitals Limited;
Unlisted Public Companies:
1.
2.
3.
4.
5.
6.
7.
8.
9.
APL Holdings & Investments Limited;
APL Investments Limited;
Assam Plywood Limited;
Budge Budge Carbon Limited;
Hotspots Retails Limited;
Modikem Limited;
Omnia BPO Services Limited
Plus Paper Foodpac Limited; and
Spice Corp Limited
96
Private Companies:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Ace Airways Private Limited;
Burlington Investments Private Limited;
Duro International Rubber Private Limited;
G. M. Modi Hospitals Corporation Private Limited;
Harjas Logic Systems Private Limited;
Hindustan Retail Private Limited;
Mcorpglobal Communications Private Limited;
Mcorp Communications Pte Limited;
Mcorp Investments Pte. Limited;
Mudaliar & Sons Hotels Private Limited;
Nik Travels Private Limited;
Oasis Cineplex Private Limited;
Shenzhen SIBASI Catering Management Company Limited;
Super Infosys Private Limited;
Teesho Rubbers Private Limited;
Tuberose Investments Private Limited; and
VCorp Mercantile Private Limited
Listed companies forming part of our Promoter Group companies:
Fund Flow Investment & Trading Company Limited
Fund Flow Investment & Trading Company Limited was incorporated on November 25, 1982 under
registration number 21-35482 with the Registrar of Companies, Kolkata. Its registered office is situated
at 6, Old Post Office Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to invest and trade in shares, stocks, debentures and other securities
issued by any government, public bodies, local bodies and companies.
Directors as of May 31, 2008
The board of directors of Fund Flow Investment & Trading Company Limited as at May 31, 2008
comprises Mr. Jyotish Chandra Goswami, Mr. Arun Das and Mrs. Bimla Bajaj.
Shareholding as of May 31, 2008
The shareholding pattern of Fund Flow Investment & Trading Company Limited as at May 31, 2008 is
as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Rakesh Kumar Shaurya Veer (HUF)
Tower Investment & Trading Company Limited
Kallol Investments Limited
Goneril Investment & Trading Company Limited
Ms. Maalika Himatsingka
Ms. Sonal Himatsingka
Assam Plywood Limited
Mr. Shaurya Veer Himatsingka
Subarna Plantation and Trading Company Limited
Jyotsana Investment Company Limited
Mr. Vivek Himatsingka
Rakesh Kumar Himatsingka (HUF)
Mrs. Anita Himatsingka
Remaining 64 shareholders
Total
97
45,200
35,000
31,775
30,000
15,000
15,000
14,300
10,000
10,000
10,000
7,500
5,000
2,500
8,725
240,000
% of
Shareholding
18.83
14.58
13.24
12.50
6.25
6.25
5.96
4.17
4.17
4.17
3.13
2.08
1.04
3.64
100.00
Financial Performance
The audited financial results of Fund Flow Investment & Trading Company Limited for the past three
years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (face value Rs. 10)
Book Value per equity share
Year ended
March
31, 2006
2.40
1.18
1.41
0.02
0.06
14.92
2.40
1.33
3.17
0.25
1.02
15.52
Year ended
March
31, 2005
2.40
1.08
10.49
1.07
4.45
14.50
Disclosure on Capital Issue
The company came out with a public issue of 200,000 equity shares of Rs. 10 each for cash at a price
of Rs. 10 each pursuant to a statement in lieu of prospectus dated November 30, 1982.
The equity shares of the company are listed on the Calcutta Stock Exchange Association Limited. The
equity shares of the company are not actively traded since last five years and accordingly no market
price may be provided for the shares of the company.
Promise vs. Performance
The proceeds of the issue were applied for the objects of the issue as disclosed in the prospectus for the
said issue i.e. raising long term capital. There were no deviation from the objects and the manner in
which the issue proceeds were utilized. No projections were made since the issue was to meet the long
term requirement of funds.
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of equity shares of the company during the
last three years.
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated its Director as the compliance officer.
The compliance officer is responsible for attending to investor queries / complaints etc to present the
same before the shareholder grievance committee on a regular basis for their review and
comments/suggestions. Generally, investor queries are attended in three days and the complaints are
resolved with in the next two days. As of March 31, 2008, there were no investor complaints pending
against the company.
Goneril Investment & Trading Company Limited
Goneril Investment & Trading Company Limited was incorporated on November 29, 1982 under
registration number 21-35494 with the Registrar of Companies, Kolkata. Its registered office is situated
at 6, Old Post Office Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to trade in shares, stocks, debentures and other securities issued by
any government, public bodies, local bodies and companies.
Directors as of May 31, 2008
The board of directors of Goneril Investment & Trading Company Limited as at May 31, 2008
comprises Mr. Jyotish Chandra Goswami, Mr. Sujit Kumar Das and Mr. Arun Das.
Shareholding as of May 31, 2008
98
The shareholding pattern of Goneril Investment & Trading Company Limited as at May 31, 2008 is as
under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Mr. Shaurya Veer Himatsingka
Ms. Maalika Himatsingka
New Look Investment (Bengal) Limited
Ms. Sonal Himatsingka
Subarna Plantation and Trading Company Limited
Mr. Vivek Himatsingka
Kallol Investments Limited
Rakesh Kumar Shaurya Veer (HUF)
Fund Flow Investments & Trading Company Limited
Mr. Dipak Kumar Gaurav Kumar
Mr. Prabhudayal Himatsingka
Mr. Bhagwati Prasad Himatsingka
Remaining 33 shareholders
Total
% of
Shareholding
63,800
30,000
20,000
20,000
15,000
15,000
15,000
12,900
10,100
7,500
5,000
5,000
20,700
240,000
26.58
12.50
8.33
8.33
6.25
6.25
6.25
5.38
4.21
3.13
2.08
2.08
8.62
100.00
Financial Performance
The audited financial results of Goneril Investment & Trading Company Limited for the past three
years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
2.40
3.23
2.38
0.15
0.63
23.45
2.40
3.08
2.57
0.60
2.51
22.82
Year ended
March
31, 2005
2.40
2.47
2.67
0.61
2.53
20.31
Disclosure on Capital Issue
The company came out with a public issue of 200,000 equity shares of Rs. 10 each for cash at a price
of Rs. 10 each pursuant to a statement in lieu of prospectus dated December 8, 1982. The equity shares
of the company are listed on at Calcutta Stock Exchange Association Limited. The equity shares of the
company are not actively traded since last five years and accordingly no market price may be provided
for the shares of the company.
Promise vs. Performance
The proceeds of the issue were applied for the objects of the issue as disclosed in the prospectus for the
said issue i.e. raising long-term capital. There were no deviation from the objects and the manner in
which the issue proceeds were utilized. No projections were required and hence not made.
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of its equity shares during the last three
years.
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated its director as the compliance officer.
The compliance officer is responsible for attending to investor querries/complaints etc to present the
same before the shareholder grievance committee on a regular basis for their review and
99
comments/suggestions. Generally, investor querries are attended in three days and the complaints are
resolved with in next two days. As of March 31, 2008 there were no investor complaints pending
against the company.
IO System Limited
IO System Limited was incorporated on May 25, 1987 as GBC Hi-Tech (India) Limited under
registration number 20-08764 and is registered with the Registrar of Companies, Uttar Pradesh. The
name of the company was changed from GBC Hi-Tech (India) Limited to Modi GBC Limited on July
9, 1992 and was further changed to GBC Modicorp Limited on July 13, 2000 and to Spice Systems
Limited on January 1, 2003. Further, the name of the company was changed from Spice Systems
Limited to the present name IO System Limited on August 14, 2007. Its registered office is situated at
E-53, Sector-3, Noida- 201 301, Uttar Pradesh, India.
The main object of the company is to carry on business as manufacturers, distributors, importers,
exporters, buyers, sellers, agents, stockists of and to market, transport, supply assemble, alter, service,
repair, store, and deal in printing machinery and equipment and their systems, components, including
spiral punching and/or binding machines, laminating machines, lettering machines and consumables
items used therein.
Directors as of May 31, 2008
The board of directors of IO System Limited as at May 31, 2008 is comprised of Mr. Arun Seth
(Chairman), Mr. Satish Kumar Gupta and Mr. Ramesh Chandra Agarwal.
Shareholding as of March 31, 2008
The shareholding pattern of IO System Limited as at March 31, 2008 is as under:
Sl. No.
1.
2.
1.
2.
Names of Shareholder
No. of Shares held
(A) Shareholding of Promoter and Promoter
Group
(1) Indian
Individuals / Hindu Undivided Family
Bodies Corporate
(2) Foreign
Total shareholding of Promoter and Promoter
Group (A)
(B) Public Shareholding
(1) Institutions
(2) Non-Institutions
Bodies Corporate
Individuals
Individual shareholders holding nominal share capital
up to Rs. 1 lakh
Any Others (Specify)
NRIs/OCBs
Sub Total
Total Public shareholding (B)
Total (A) + (B)
% of
Shareholding
29,600
16,270,400
16,300,000
0.18
96.27
96.45
19,800
0.12
566,100
3.35
14,100
600,000
600,000
16,900,000
0.08
3.55
3.55
100.00
Financial Performance
The audited financial results of IO System Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
100
Period ended
March
31, 2006
Year ended
December
31, 2004
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
169.00
(169.02)
6.05
(7.90)
(0.47)
(0.00)
(15 months)
169.00
(161.12)
20.02
(13.50)
(0.80)
0.47
169.00
(147.62)
58.14
(11.00)
(0.65)
1.27
Disclosure on Capital Issue
The company’s equity shares are listed on the BSE, Delhi Stock Exchange and Uttar Pradesh Stock
Exchange.
Out of the total paid up equity share capital of Rs.169 million, three million equity shares of Rs.10 each
amounting to Rs. 30 million are listed with the above mentioned stock exchanges and continue to
remain listed and there has been no suspension/discontinuance of these equity shares in the past.
The balance 13,900,000 shares of Rs.10 each amounting to Rs.139 million, allotted on preferential
basis on September 28, 1999 to the two corporate promoters of the company, continue to remain
unlisted for which the company was served with show cause notices, last received dated July 10, 2003
from the Delhi Stock Exchange Association Limited.
The company has applied to the BSE, Delhi Stock Exchange and Uttar Pradesh Stock Exchange on
February 20, 2008 for delisting of its shares in accordance with the Securities and Exchange Board of
India (Delisting of Securities) Guidelines, 2003. The delisting of the shares of the company from the
BSE, Delhi Stock Exchange and Uttar Pradesh Stock Exchange has been approved by a special
resolution of the shareholders of the company in an extra-ordinary general meeting held on February, 8
2008. The said applications of the company for delisting of its shares are pending.
The company has negative net worth of Rs. 17,680.
Information about the Share Price of IO System Limited
The existing equity shares of IO System Limited are listed at the Uttar Pradesh Stock Exchange, the
BSE and the Delhi Stock Exchange. There has been no trading of the equity shares in the last six
months at Uttar Pradesh Stock Exchange and Delhi Stock Exchange.
The monthly high and low of the market price of the shares on BSE for the last six months are as
follows:
High
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
Low
nil
25.50
29.20
nil
29.75
31.55
nil
25.00
26.00
nil
29.75
30.35
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of equity shares during the last three years.
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated its company secretary as the
compliance officer, who is responsible for attending to investor queries/complaints etc., to present the
same before shareholders grievance committee on a quarterly basis for their review and
comment/suggestions. The normal time taken to process the share transfer/transmission is within 15
days and for redressal of grievances/ complaints received from the shareholders is within 30 days.
101
As of March 31, 2008, there were no investor complaints pending against the company.
Jyotsana Investment Company Limited
Jyotsana Investment Company Limited was incorporated on May 10, 1974 under registration number
21-29417 with the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old Post
Office Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to trade in shares, stocks, debentures and other securities issued by
any government, public bodies, local bodies and companies.
Directors as of May 31, 2008
The board of directors of Jyotsana Investment Company Limited as at May 31, 2008 comprises Mr.
Sujit Kumar Das, Mr. Narayan Kar and Mr. Jyotish Chandra Goswami.
Shareholding as of March 31, 2008
The shareholding pattern of Jyotsana Investment Company Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
Tower Investment & Trading Company Limited
Mrs. Rohini Himatsingka
Fund Flow Investment & Trading Company Limited
Mr. Amrit Kumar Sanghi
Mr. Vijay Kumar Sanghi
Mr. Deepika Agarwal
Goneril Investment & Trading Company Limited
Kallol Investments Limited
Remaining 136 shareholders
Total
49,000
40,000
34,600
20,000
10,000
10,000
10,000
10,000
16,400
200,000
% of
Shareholding
24.50
20.00
17.30
10.00
5.00
5.00
5.00
5.00
8.20
100.00
Financial Performance
The audited financial results of Jyotsana Investment Company Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
2.00
(3.26)
3.23
0.81
4.07
(6.32)
2.00
(4.08)
2.36
0.05
0.24
(10.39)
Year ended
March
31, 2005
2.00
(4.13)
2.49
0.12
0.62
(10.63)
The Company currently has a negative networth.
Disclosure on Capital Issue
The company came out with a public issue in 1974. Since the relevant papers/documents relating to the
said issue are not in the custody of the company as the income-tax department has taken the same into
their custody during a routine survey and scrutiny conducted on September 23, 1983, details related to
the issue are not available.
The shares of the company are listed on the Calcutta Stock Exchange Association Limited since May
14, 1974. The shares of the company are not actively traded since last five years and accordingly no
market price may be provided for the shares of the company.
102
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of its equity shares during the last three
years.
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated one of its directors as the compliance
officer. The compliance officer is responsible for attending to investor queries / complaints etc, to
present the same before the shareholder grievance committee on a regular basis for their review and
comments/suggestions. Generally, investor queries are attended to in three days and the complaints are
resolved within next two days. As of March 31, 2008, there were no investor grievances pending.
Kallol Investments Limited
Kallol Investments Limited was incorporated on December 8, 1982 under registration number 2135533 with the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old Post Office
Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to trade in shares, stocks, debentures and other securities issued by
any government, public bodies, local bodies and companies.
Directors as of May 31, 2008
The board of directors of Kallol Investments Limited as at May 31, 2008 comprises Mr. Susheel
Kumar Sharma, Mr. Swarup Kumar Maity and Mr. Narayan Kar.
Shareholding as on March 31, 2008
The shareholding pattern of Kallol Investments Limited as at March 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Tower Investment & Trading Company Limited
Subarna Plantation and Trading Company Limited
Jyotsana Investment Company Limited
Goneril Investment & Trading Company Limited
Saket Cement Products Private Limited
Fund Flow Investment & Trading Company Limited
Rakesh Kumar Shaurya Veer (HUF)
Mrs. Rohini Himatsingka
New Look Investment (Bengal) Limited
Mr. Vivek Himatsingka
Ms. Maalika Himatsingka
Mr. Shaurya Veer Himatsingka
Mrs. Anita Himatsingka
Mr. Gaurav Himatsingka
Remaining 14 shareholders
Total
% of
Shareholding
35,725
30,000
24,925
24,300
20,000
19,450
15,000
14,375
14,300
10,000
10,000
10,000
5,000
5,000
1,925
240,000
14.89
12.50
10.39
10.13
8.33
8.10
6.25
5.99
5.96
4.17
4.17
4.17
2.08
2.08
0.80
100.00
Financial Performance
The audited financial results of Kallol Investments Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Year ended
March
31, 2006
2.40
0.94
103
2.40
0.85
Year ended
March
31, 2005
2.40
0.27
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
1.09
0.09
0.36
13.90
1.69
0.44
1.83
13.54
1.72
0.50
2.09
11.13
Disclosure on Capital Issue
The company came out with a public issue of 200,000 equity shares of Rs. 10 each for cash at a price
of Rs. 10 each pursuant to a statement in lieu of prospectus dated January 18, 1983.
The equity shares of the company are listed on at Calcutta Stock Exchange Association Limited since
September 15, 1983. The equity shares of the company are not actively traded since last five years and
accordingly no market price may be provided for the equity shares of the company.
Promise vs. Performance
The proceeds of the issue were applied for the objects of the issue as disclosed in the prospectus for the
said issue i.e. raising long-term capital. There were no deviation from the objects and the manner in
which the issue proceeds were utilized. No projections were made since the issue was to meet the long
term requirement of funds.
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of its equity shares during the last three
years.
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated one of its directors as the compliance
officer. The compliance officer is responsible for attending to investor queries/complaints etc. to
present the same before the shareholder grievance committee on a regular basis for their review and
comments/suggestions. Generally, investor queries are attended to in three days and the complaints are
resolved with in next two days.
As of March 31, 2008 there were no investor grievances pending against the company.
Khatu Investment & Trading Company Limited
Khatu Investment & Trading Company Limited was incorporated on December 10, 1979 under
registration number 21-32406 with the Registrar of Companies, Kolkata. The company received its
certificate of commencement of business on December 17, 1979. Its registered office is situated at 6,
Old Post Office Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to trade in shares, stocks, debentures and other securities issued by
any government, public bodies, local bodies and companies.
Directors as of May 31, 2008
The board of directors of Khatu Investment & Trading Company Limited as at May 31, 2008
comprises Mr. Sujit Kumar Das, Mr. Goutam Kumar Das and Mr. Jyotish Chandra Goswami.
Shareholding as of March 31, 2008
The shareholding pattern of Khatu Investment & Trading Company Limited as at March 31, 2008 is as
under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
Tower Investment & Trading Company Limited
Kallol Investments Limited
104
39,100
31,900
% of
Shareholding
19.55
15.95
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Fund Flow Investment & Trading Company Limited
Mr. Dipak Kumar Gaurav Kumar
Goneril Investment & Trading Company Limited
Subarna Plantation and Trading Company Limited
Mrs. Rohini Himatsingka
Jyotsana Investment Company Limited
Burlington Investments Private Limited
New Look Investment (Bengal) Limited
Mr. Rakesh Himatsingka
Remaining 64 shareholders
Total
22,150
15,000
15,000
15,000
14,000
13,900
11,800
9,000
5,000
8,150
200,000
11.08
7.50
7.50
7.50
7.00
6.95
5.90
4.50
2.50
4.07
100.00
Financial Performance
The audited financial results of Khatu Investment & Trading Company Limited for the past three years
are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
2.00
(2.12)
1.19
0.73
3.64
(0.59)
2.00
(2.85)
0.38
0.05
0.24
(4.23)
Year ended
March
31, 2005
2.00
(2.89)
0.39
0.01
0.04
(4.47)
The Company currently has a negative networth.
Disclosure on Capital Issue
The company came out with a public issue of 169,300 equity shares of Rs. 10 each for cash at a price
of Rs. 10 each pursuant to a statement in lieu of prospectus dated December 13, 1979.
The equity shares of the company are listed on at Calcutta Stock Exchange Association Limited since
May 2, 1980. The equity shares of the company have not actively been traded since the last five years
and accordingly no market price may be provided for the equity shares of the company.
Promise vs. Performance
The proceeds of the issue were applied for the objects of the issue as disclosed in the prospectus for the
said issue i.e. raising long term capital. There were no deviations from the objects and the manner in
which the issue proceeds were utilized. No projections were made since the issue was to meet the long
term requirement of funds.
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of its equity shares during the last three
years.
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated one of its directors as the compliance
officer. The compliance officer is responsible for attending to investor queries / complaints etc to
present the same before the shareholder grievance committee on a regular basis for their review and
comments/suggestions. Generally, investor queries are attended to in three days and the complaints are
resolved within next two days.
As of March 31, 2008 there were no investor grievances pending.
105
New Look Investment (Bengal) Limited
New Look Investment (Bengal) Limited was incorporated on May 27, 1975 under registration number
21-30035 with the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old Post
Office Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to trade in shares, stocks, debentures and other securities issued by
any government, public bodies, local bodies and companies.
Directors as of May 31, 2008
The board of directors of New Look Investment (Bengal) Limited as at May 31, 2008 comprises Mr.
Susheel Kumar Sharma, Mrs. Manju Jalan and Mrs. Bimla Bajaj.
Shareholding as of March 31, 2008
The shareholding pattern of New Look Investment (Bengal) Limited as at March 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
Goneril Investment & Trading Company Limited
Tower Investment & Trading Company Limited
Kallol Investments Limited
Fund Flow Investment & Trading Company Limited
Ms. Sushil Himatsingka
Assam Plywood Limited
Mrs. Rohini Himatsingka
Khatu Investment & Trading Company Limited
Remaining 142 shareholders
Total
% of
Shareholding
39,750
38,150
21,750
20,000
19,750
15,000
14,950
1,600
29,050
200,000
19.88
19.08
10.88
10.00
9.88
7.50
7.48
0.80
14.53
100.00
Financial Performance
The audited financial results of New Look Investment (Bengal) Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
2.00
0.06
0.62
0.10
0.52
10.29
2.00
(0.05)
0.55
0.04
0.20
9.77
Year ended
March
31, 2005
2.00
(0.08)
0.60
0.04
0.18
9.58
Disclosure on Capital Issue
The company’s shares are listed on the Calcutta Stock Exchange. Since the relevant papers/documents
relating to the last issue are not in the custody of the company as income-tax department has taken the
same into their custody during a routine survey and scrutiny conducted on September 23, 1983, details
related to the issue are not available.
The equity shares of the company have not been actively traded since the last five years and
accordingly no market price may be provided for the equity shares of the company.
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of its equity shares during the last three
years.
106
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated of its directors as the compliance
officer. The compliance officer is responsible for attending to investor queries / complaints etc to
present the same before the shareholder grievance committee on a regular basis for their review and
comments/suggestions. Generally, investor queries are attended to in three days and the complaints are
resolved within next two days.
As of March 31, 2008 there were no investor grievances pending against the company.
Spice Communications Limited
Spice Communications Limited was incorporated on March 28, 1995 as a private limited company in
the name of Modicom Network Private Limited under registration number 55-66827 with the RoC. The
company subsequently became a deemed public company under section 43(1A) of the Companies Act
with effect from April 1, 1999 and the name of the company was changed to Modicom Network
Limited. The name of the company was further changed to Spice Communications Limited vide fresh
certificate of incorporation dated December 3, 1999. Subsequently, the name was again changed to
Spice Communications Private Limited with effect from October 28, 2003. On December 28, 2006, the
company was converted into a public limited company and the name was changed to Spice
Communications Limited. Its registered office is situated at 60-D, Sainik Farms, New Delhi- 110 062.
The company is engaged in the business of providing unified access services in the telecom circles of
Punjab and Karnataka under licence from DoT. Its main object is to develop, install, maintain and run
all types of services in the telecommunication (including cellular mobile telephone or fixed telephone),
IT, electronics and multimedia and also to manufacture, produce, acquire, import, export and deal in
any manner in any product relating to telecommunication, electronics, IT and multimedia.
The company has recently been given licences by DoT to provide unified access services in the telecom
circles of Delhi, Haryana, Maharashtra and Andhra Pradesh. The company also has licences from DoT
to provide national long distance and international long distance services.
Directors as of May 31, 2008
The board of directors of Spice Communications Limited as at May 31, 2008 comprises Dr. B.K. Modi,
Mr. Dilip Modi (Managing Director), Dr. S.S Hansawijayasuriya, Mr. Yusof Annuar Bin Yaacob, Mr.
Prabahar N.K. Singam, Mr. Devendra Raj Mehta, Mr. Krishan Lal Chugh, Mr. Hetal Gandhi and Mr.
Mahesh Prasad.
Shareholding as of March 31, 2008
The shareholding pattern of Spice Communications Limited as of March 31, 2008 is as under:
Sl. No.
Names of Shareholder
(A)
1
(a)
(b)
Shareholding of Promoter & Promoter Group
Indian
Individuals/ Hindu Undivided Family
Bodies Corporate
Total Shareholding of Promoter and
Promoter Group (A)
Public Shareholding
Institutions
Mutual Funds / UTI
Financial Institutions / Banks
FII
Sub-Total (B)(1)
Non-Institutions
Bodies Corporate
(B)
1
(a)
(b)
(c)
2
(a)
Total
No.
Shares held
107
of
Total shareholding as
a % of
Total number (as a
% of (A+B)
20
281,489,350
281,489,370
0.00
40.80
40.80
12,888,599
600
50,801,851
63,691,050
1.87
0.00
7.36
9.23
25,178,766
3.65
Sl. No.
Names of Shareholder
(b)
Individuals
- Individual shareholders holding nominal share
capital up to Rs.1 lakh
- Individual shareholders holding nominal share
capital in excess of Rs.1 lakh
Any others specify
Foreign Corporate bodies
Non Resident Indians
Trusts
Clearing Members
Sub-Total (B)(2)
Total Public Shareholding
(B)= (B)(1)+(B)(2)
TOTAL (A)+(B)
(c)
Total
No.
Shares held
of
Total shareholding as
a % of
Total number (as a
% of (A+B)
32,695,967
4.74
12,409,170
1.80
270,450,650
3,480,911
3,246
525,870
344,744,580
408,435,630
39.20
0.50
0.00
0.08
49.97
59.20
689,925,000
100.00
Financial Performance
The audited financial results of Spice Communications Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
December
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
6,899.25
1,680.08
14,738.84
3,801.31
5.51
11.57
Period ended
December
31, 2006
(6 months)
5,519.40
(7,043.21)
3,957.00
(386.88)
(0.70)
(3.27)
Year ended
June
30, 2006
5,519.40
(6,656.33)
7,492.48
46.35
0.08
(2.49)
Disclosure on Capital Issue
Public Issue in fiscal 2007
The company has last completed initial public offering (IPO) comprising of fresh issue of 113,111,111
equity shares of Rs. 10/- each for cash at a premium of Rs.36 (issue price of Rs. 46) per equity share
aggregating to Rs. 5203,111,106/- through 100% book building route. In pursuance to Pre-IPO
Placements, the company also made an allotment of 24,873,889 equity shares of Rs. 10/- each for cash
at Rs. 45 per equity share including a premium of Rs. 35 per equity share.
The opening date of the issue was June 25, 2007 and the closing date was June 27, 2007. The objects of
the Issue were to achieve the benefits of listing on the Stock Exchange and to raise funds for (a) part
payment of the long term debt, (b) payment for NLD/ILD license fees, (c) meet the capital expenditure
requirements, (d) for other general corporate purposes and (e) meet the expenses of the Issue.
Information about the Share Price of Spice Communications Limited
The existing equity shares of Spice Communications Limited are listed at the BSE since July 19, 2007.
The monthly high and low of the market price of the shares on BSE for the last six months are as
follows:
High
May 2008
April 2008
March 2008
February 2008
Low
60.15
45.80
36.85
39.60
108
38.20
27.55
23.25
30.20
January 2008
December 2007
69.15
69.65
23.25
46.80
The existing equity shares of Spice Communications Limited are listed at the BSE since July 19, 2007.
Promise vs. Performance
The objects of the initial public offering of the company completed in fiscal 2007 were to to raise funds
for (a) part payment of the long term debt; (b) payment for NLD/ILD license fees; (c) meet the capital
expenditure requirements; (d) for other general corporate purposes; and (e) meet the expenses of the
initial public offering. The proceeds of the initial public offering were used as disclosed in the
prospectus. The company had not made any future forecasts for financial performances in the
prospectus.
Mechanism for redressal of investor grievance
For redressal of investor grievances, Spice Communications Limited has nominated its company
secretary as the compliance officer. The compliance officer is responsible for attending to investor
queries/complaints etc. to present the same before the investors’ grievance and share transfer
committee on periodical basis for their review and comments/suggestions.
As a matter of practice, queries of the investors are attended to and the complaints are resolved within
fifteen to thirty days. The company confirms that its name has not appeared in the list of SEBI with the
highest number of outstanding investor complaints. As of March 31, 2008, there was no investor
complaint pending against Spice Communications Limited.
Material development
On June 25, 2008 one of the promoter shareholder of Spice Communications Limited, MCorpGlobal
Communication Private Limited has entered into a Share Purchase Agreement with Idea Cellular
Limited to divest its entire shareholding comprising 40.8% in Spice Communications Limited, one of
our Promoter Group Companies, to Idea Cellular Limited. The board of directors of Spice
Communications Limited has also approved its merger with Idea Cellular Limited.
Spice Mobiles Limited
Spice Mobiles Limited was incorporated on December 23, 1986 as a public limited company in the
name of Modi Olivetti Limited under registration number 20-08448 with the Registrar of Companies,
Uttar Pradesh. The name of the company was changed to MOL India Limited with effect from August
23, 1999. The name of the company was further changed to Spice Net Limited on December 5, 2000
and subsequently to Spice Limited with effect from July 4, 2005 to reflect the increase in the
diversified nature of company’s area of operations. The name of the company has recently been
changed to Spice Mobiles Limited with effect from April 26, 2007 by issuance of a fresh certificate of
incorporation. Its registered office is situated at D-1, Sector-3, District Gautam Budh Nagar, Noida201 301, Uttar Pradesh, India.
The company is engaged in two business segments:
• Mobile Handsets; and
• IT
Mobile handset segment represents the business of trading in mobile handsets. The IT segment is
primarily engaged in the business of manufacturing, trading and installation/erection of computer
hardware, including maintenance and servicing thereof.
The shareholders of the company have under section 293(1) (a) of the Companies Act passed the
necessary resolution effective from April 24, 2007 to discontinue the manufacturing/assembling of IT
products carried out at its manufacturing unit located at Baddi, Himachal Pradesh and the
sale/transfer/disposal of the said manufacturing unit excluding land and building.
109
Directors as of May 31, 2008
The board of directors of Spice Mobiles Limited as at May 31, 2008 comprises Dr. B.K. Modi
(Chairman), Mr. Dilip Modi (Vice Chairman), Mr. Radha Krishna Pandey, Mr. Ram Nath Bansal, Mr.
K.L. Chugh, Mr. S.K. Jain and Mr. Ashok Kumar Goyal.
Shareholding as of March 31, 2008
The shareholding pattern of Spice Mobiles Limited as at March 31, 2008 is as under:
Sl. No.
Names of Shareholder
(A)
1
(a)
(b)
Shareholding of Promoter & Promoter Group
Indian
Individuals/ Hindu Undivided Family
Bodies Corporate
Total Shareholding of Promoter and
Promoter Group (A)
Public Shareholding
Institutions
Financial Institutions / Banks
Central Government/ State Government(s)
FII
Insurance Companies
Sub-Total (B)(1)
Non-Institutions
Bodies Corporate
Individuals
NRIs / OCBs
Clearing Members
Sub-Total (B)(2)
Total Public Shareholding
(B)= (B)(1)+(B)(2)
TOTAL (A)+(B)
(B)
1
(a)
(b)
(c)
2
(a)
(b)
(c)
(d)
Total
No.
Shares held
of
Total shareholding as
a % of
Total number (as a
% of (A+B)
0
47,194,234
47,194,234
0.00
63.23
63.23
1,545
104,596
3,289,474
0
3,395,615
0.00
0.14
4.41
0.00
4.55
16,290,472
7,352,307
386,849
18,523
24,048,151
27,443,766
21.83
9.85
0.52
0.02
32.22
36.77
74,638,000
100.00
Financial Performance
The audited financial results of Spice Mobiles Limited for the past three years are as follows:
(in Rs. million except for share data)
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 3/-)
Book Value per equity share (Rs.)
Period ended
December
31, 2007
(9 months)
223.91
556.38
2,912.86
146.73
1.97
10.45
Year ended
March
31, 2007
223.91
448.95
2,044.42
23.86
0.32
9.01
Period ended
March
31, 2006
(9 months)
111.96
197.31
1,180.65
41.71
1.12
8.29
Disclosure on Capital Issue
Rights Issue in fiscal 2007
The company has last completed rights issue of 37,319,000 equity shares of Rs. 3 each for cash at a
premium of Rs. 7 (issue price of Rs. 10) per equity share on rights basis to the existing equity
shareholders of the company in the ratio of 1 (One) equity share for every 1 (One) equity share (1:1)
held as on December 1, 2006 (record date) aggregating to Rs. 373.19 million. The objects of the issue
110
of equity shares on rights basis were to meet working capital requirements, to repay existing unsecured
loans and to meet the general corporate purposes.
Rights Issue in fiscal 2004
Spice Mobiles Limited had earlier completed a rights issue of 18,659,500 equity shares of Rs. 3 each
for cash at a premium of Rs. 2 per share aggregating to Rs. 93,297,500 to the existing equity
shareholders of the company in the ratio of one equity share for every existing one equity share held on
the record date of December 13, 2003 to augment the working capital resources of the company. The
opening date of the issue was January 27, 2004 and the closing date was February 26, 2004.
Information about the Share Price of Spice Mobiles Limited
The existing equity shares of Spice Mobiles Limited are listed at the BSE since January 1, 1990 and on
the NSE since May 27, 2008.
The trading of the equity shares of the company was suspended in the BSE from October 6, 1997 to
September 2, 2003 due to non-compliance of certain provisions of the Listing Agreement.
Subsequently, on payment of reinstatement fee of Rs. 240,000 by the company, the suspension was
revoked by the BSE and the trading of the equity shares of the company on the BSE resumed with
effect from September 3, 2003.
The monthly high and low of the market price of the shares on BSE for the last six months are as
follows:
High (BSE)
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
Low (BSE)
35.90
29.15
23.60
27.70
32.20
30.40
22.15
19.25
16.90
21.00
21.00
20.25
Promise vs. Performance
Rights Issue in fiscal 2007
The objects of the issue of equity shares on rights basis were to meet working capital requirements, to
repay existing unsecured loans and to meet the general corporate purposes. The proceeds of the rights
issue were used as disclosed in the letter of offer. The company had not made any future forecasts for
financial performances in the letter of offer.
Rights Issue in fiscal 2004
The objects of the rights issue of the company completed in fiscal 2004 were to augment the working
capital resources of the company. The proceeds of the rights issue were used as disclosed in the letter
of offer. The company had not made any future forecasts for financial performances in the letter of
offer.
Mechanism for redressal of investor grievance
For redressal of investor grievances, Spice Mobiles Limited has nominated its company secretary as the
compliance officer. The compliance officer is responsible for attending to investor queries/complaints
etc. to present the same before the share transfer and investor grievance committee on fortnightly basis
for their review and comments/suggestions.
As a matter of practice, queries of the investors are attended to and the complaints are resolved within
fifteen to thirty days. The company confirms that its name has not appeared in the list of SEBI with the
highest number of outstanding investor complaints. As of March 31, 2008, there was no investor
complaint pending against Spice Mobiles Limited.
111
Twenty First Century Capitals Limited
Twenty First Century Capitals Limited was incorporated on January 25, 1985 as Progressive
Automobiles Limited with the RoC under registration number 55-019941. The name of the company
was changed to Twenty First Century Capitals Limited on June 27, 1994 by issuance of a fresh
certificate of incorporation. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms, New
Delhi- 110 062, India. The company is registered with RBI as an NBFC under registration number
1400303.
The company is engaged in asset financing, purchase, sale or otherwise dealing in equity shares,
debentures, bonds and other types of securities and acting in the capacity of general financiers and
providing corporate advisory services.
Directors as of May 31, 2008
The board of directors of Twenty First Century Capitals Limited as at May 31, 2008 comprises Mr.
R.K. Gupta, Mr. S.K. Jain and Mr. G.S. Negi.
Shareholding as of March 31, 2008
The shareholding pattern of Twenty First Century Capitals Limited as at March 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1.
2.
3.
4.
5.
6.
7.
Spice Corp Limited
Oasis Cineplex Private Limited
Fine Instalments Private Limited
Handsome Investments Private Limited
Modikem Limited
Avon Mercantile Limited
Others (233 shareholders)
Total
No. of Shares held
2,825,800
145,000
427,000
427,000
1,087,800
275,000
1,371,964
6,559,564
% of
Shareholding
43.08
2.21
6.51
6.51
16.58
4.19
20.92
100.00
Financial Performance
The audited financial results of Twenty First Century Capitals Limited for the past three years are as
follows:
(in Rs. million except for share data)
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
Year
ended
March
31, 2007
Year
ended
March
31, 2006
65.60
6.28
4.91
(2.90)
(0.93)
10.96
65.60
12.37
33.71
0.46
0.99
11.85
Period
ended
March
31, 2005
(15
months)
65.60
5.90
106.61
39.31
7.14
10.64
Disclosure on Capital Issue
The company completed its initial public offering of 150,000 equity shares of Rs. 10 each for cash at
par pursuant to a prospectus dated December 30, 1985. Further, company completed the right issue of
one million equity shares of the company for cash at par pursuant to a letter of offer dated April 4,
1990. Thereafter, the company came out with a further right issue of 979,200 equity shares of Rs. 10
each for cash at par, pursuant to letter of offer dated December 3, 1991.
112
The equity shares of the company are listed on the Delhi Stock Exchange since 1986 and the Uttar
Pradesh Stock Exchange since 1991. However, the equity shares have not been traded since the last
three years and accordingly no market price may be provided for the equity shares of the company.
Promise vs. Performance
The proceeds of the aforesaid issues were duly applied for the objects of the issue as disclosed in the
offer documents i.e. working capital requirements of the company. No projections were made in the
offer document.
Details of Public/Rights Issue in the Last Three Years
The company has not made any public issue or rights issue of its equity shares during the last three
years.
Mechanism for redressal of investor grievance
For redressal of investor grievances, the company has nominated its manager and company secretary as
the compliance officer. The compliance officer is responsible for attending to investor
queries/complaints etc and to present the same before the shareholder grievance committee on a
quarterly basis for their review and comments/suggestions.
As of March 31, 2008, there were no investor complaints pending against the company.
Unlisted public companies forming part of our Promoter Group companies:
APL Holdings & Investments Limited
APL Holdings & Investments Limited was incorporated on October 10, 1991 under registration
number 21-53342 with the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old
Post Office Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to invest in security and sell or otherwise deal with shares, stocks,
bonds and debentures etc. issued by any body corporate and to purchase, lease, hire and develop land,
buildings and flats.
Directors as of May 31, 2008
The board of directors of APL Holdings & Investments Limited as at May 31, 2008 comprises Mrs.
Rohini Himatsingka, Mr. Hemant Kumar Ruia, Mr. Rakesh Himatsingka and Mrs. Anita Himatsingka.
Shareholding as of May 31, 2008
The shareholding pattern of APL Holdings & Investments Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares
held
1.
2.
3.
4.
5.
6.
7.
8.
9.
Mrs. Anita Himatsingka
Mrs. Rohini Himatsingka
Mr. Gaurav Himatsingka
Mr. Vivek Himatsingka
Ms. Sonal Himatsingka
Ms. Maalika Himatsingka
Mr. Shaurya Veer Himatsingka
Mr. Gaurav Himatsingka jointly with Mr. Dipak Himatsingka
Mr. Vivek Himatsingka jointly with Mr. Dipak Himatsingka
Total
Financial Performance
113
2,500
2,500
900
900
1,000
1,000
1,000
100
100
10,000
% of
Shareholding
25.00
25.00
9.00
9.00
10.00
10.00
10.00
1.00
1.00
100.00
The audited financial results of APL Holdings & Investments Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
0.10
2.39
0.84
0.44
44.24
249.03
Year ended
March
31, 2005
0.10
1.95
0.81
0.38
37.82
204.78
0.10
1.57
0.77
0.34
33.96
166.96
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
APL Holdings & Investments Limited is an unlisted company and has not made any public or rights
issue in the preceding three years. It has not become a sick company within the meaning of SICA nor is
it subject to a winding-up order or petition. It does not have a negative net worth.
APL Investments Limited
APL Investments Limited was incorporated on May 30, 1991 under registration number 21-51882 with
the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old Post Office Street, 4th
Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to invest in securities and sell or otherwise deal in shares, stocks,
bonds and debentures issued by any body corporate.
Directors as of May 31, 2008
The board of directors of APL Investments Limited as at May 31, 2008 comprises Mrs. Anita
Himatsingka, Mr. Dipak Himatsingka and Mr. Susheel Kumar Sharma.
Shareholding as of May 31, 2008
The shareholding pattern of APL Investments Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares
held
1.
2.
3.
4.
5.
6.
7.
8.
9.
Mrs. Anita Himatsingka
Mrs. Rohini Himatsingka
Mr. Gaurav Himatsingka
Mr. Vivek Himatsingka
Ms. Sonal Himatsingka
Ms. Maalika Himatsingka
Mr. Shaurya Veer Himatsingka
Mr. Gaurav Himatsingka jointly with Mr. Dipak Himatsingka
Mr. Vivek Himatsingka jointly with Mr. Dipak Himatsingka
Total
% of
Shareholding
2,500
2,500
900
900
1,000
1,000
1,000
100
100
10,000
25.00
25.00
9.00
9.00
10.00
10.00
10.00
1.00
1.00
100.00
Financial Performance
The audited financial results of APL Investments Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Year ended
March
31, 2006
0.10
114
Year ended
March
31, 2005
0.10
0.10
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
1.81
0.78
0.45
45.09
191.38
1.36
0.76
0.32
31.83
146.28
1.04
0.75
0.31
31.49
114.45
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
APL Investments Limited is an unlisted company and has not made any public or rights issue in the
preceding three years. It has not become a sick company within the meaning of SICA nor is it subject
to a winding-up order or petition. It does not have a negative net worth.
Assam Plywood Limited
Assam Plywood Limited was incorporated on June 25, 1952, under registration number 21-20483 with
the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old Post Office Street, 4th
Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to invest in the security and sell or otherwise deal with shares,
stocks, bonds and debentures etc. issued by any body corporate and to acquire by purchase or otherwise
of any business of plywood.
Directors as of May 31, 2008
The board of directors of Assam Plywood Limited as at May 31, 2008 is comprised of Mr. Dhirendra
Nath Maity, Mr. Ashok Jajra, Mr. Santosh Kumar Bajaj and Mr. Sagar Sarkar.
Shareholding as of May 31, 2008
The shareholding pattern of Assam Plywood Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Subarna Plantation & Trading Company Limited
Rakesh Kumar Shaurya Veer (HUF)
Gulmohar Trading Company Private Limited
Mr. Shaurya Veer Himatsingka
Ms. Sonal Himatsingka
Ms. Maalika Himatsingka
Fund Flow Investment & Trading Company Limited
Mrs. Rohini Himatsingka
Mr. Anand Kumar Himatsingka
Mr. Vivek Himatsingka
Mr. Mahendra Kumar Himatsingka
Mr. Rajendra Kumar Himasingka
New Look Investment (Bengal) Limited
Remaining 27 shareholders
Total
% of
Shareholding
68,000
51,000
40,000
35,050
35,000
35,000
27,500
25,000
6,025
5,000
4,700
4,000
3,750
19,675
359,700
18.90
14.18
11.12
9.74
9.73
9.73
7.65
6.95
1.68
1.39
1.31
1.11
1.04
5.47
100.00
Financial Performance
The audited financial results of Assam Plywood Limited for the past three years are as follows:
(in Rs. million except for share data)
Year
ended
March
31, 2007
1.44
(0.39)
Equity Capital
Reserves and Surplus
115
Year
ended
March
31, 2006
1.44
(0.43)
Year
ended
March
31, 2005
1.44
(0.11)
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 4/-)
Book Value per equity share (Rs.)
0.18
0.04
0.12
2.51
0.20
(0.43)
(1.19)
2.30
0.87
0.06
0.17
3.62
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Assam Plywood Limited is an unlisted company and has not made any public or rights issue in the
preceding three years. It has not become a sick company within the meaning of SICA nor is it subject
to a winding-up order or petition. It does not have a negative net worth.
Budge Budge Carbon Limited
Budge Budge Carbon Limited was incorporated on June 26, 1980 under registration number 21-32824
with the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old Post Office Street,
4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to invest in security and sell or otherwise deal with shares, stocks,
bonds and debentures etc issued by any body corporate and to manufacture, refine, import, export,
graphitize, coke, coal, hydrocarbons and other by-products.
Directors as of May 31, 2008
The board of directors of Budge Budge Carbon Limited as at May 31, 2008 comprises Mr. Susheel
Kumar Sharma, Mr. Siddhartha Chatterjee and Mr. Sandip Modi.
Shareholding as of May 31, 2008
The shareholding pattern of Budge Budge Carbon Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
Juwita Trading Company Private Limited
Mokara Trading Company Private Limited
Subhag Mercantile Private Limited
Jyotsana Investment Company Limited
Subarna Plantation & Trading Company Limited
Saket Cement Products Private Limited
Gulmohur Trading Company Private Limited
Burlington Investments Private Limited
Sudama Trading & Investments Limited
Nortel Cosmetics Private Limited
Zipper Mercantiles Private Limited
Veeyu Traders Private Limited
Nahar Viniyog Private Limited
Namokar Consultants Private Limited
Venus Dealing Private Limited.
Shriste Marketing Private Limited
Sakambari Commercial Private Limited
Sheetal Tie-Up Private Limited
Sati Trexim Private Limited
Lord Enclave Private Limited
Tobu Engineering Limited
Tower Investment and Trading Company Limited
Total
2,000
2,000
40,000
38,000
38,700
40,000
40,000
40,000
5,000
7,000
5,000
5,000
5,000
5,000
10,000
4,000
5,750
7,500
5,000
7,000
8,000
76,750
396,700
% of
Shareholding
0.50
0.50
10.08
9.58
9.76
10.08
10.08
10.08
1.26
1.76
1.26
1.26
1.26
1.26
2.52
1.01
1.45
1.89
1.26
1.76
2.02
19.35
100.00
Financial Performance
The audited financial results of Budge Budge Carbon Limited for the past three years are as follows:
116
(in Rs. million except for share data)
Year ended
March
31, 2007
3.97
16.87
2.20
1.09
2.74
52.53
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
2.93
15.32
0.91
0.44
1.50
62.35
Year ended
March
31, 2005
2.93
5.98
2.47
0.53
1.81
30.44
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Budge Budge Carbon Limited is an unlisted company and has not made any public or rights issue in
the preceding three years. It has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition. It does not have a negative net worth.
Hotspots Retails Limited
Hotspots Retails Limited was incorporated on February 19, 1988 as Modi Telematics Limited under
registration number 06-08020 with the Registrar of Companies, Punjab, Chandigarh & Himachal
Pradesh. The name of the company was changed to Modi Distributors Private Limited on July 27, 2004
and was further changed to Hotspots Retails Private Limited on January 10, 2005 by issuance of a fresh
certificate of incorporation and then changed to Hotspots Retails Limited on April 8, 2008. The
registered office of the company is situated at Village Billanwali Labana, Post Office Baddi, Tehsil
Nalagarh, District Solan, Himachal Pradesh- 173 205, India.
The main object of the company is to carry on business as retailers, sellers, buyers, traders, dealers,
importers and exporters of telecommunication, electronics, digital, electrical, photographic, home
appliances, IT and hardware products and their components, accessories, assemblies, apparatus and
spares and music/video/games software.
Directors as of May 31, 2008
The board of directors of Hotspots Retails Limited as at May 31, 2008 comprises Mr. Dilip Modi, Mr.
H. N. Nanani and Mr. Ashok Kumar Goyal.
Shareholding as of May 31, 2008
The shareholding pattern of Hotspots Retails Limited as at May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
Hindustan Retail Private Limited
Mr. Dilip Modi*
Dr. B.K. Modi *
Mrs. Veena Modi*
Ms. Divya Modi*
Mr. Ashok Kumar Goyal*
Mr. Atul Prakash*
Total
* as nominees of Hindustan Retail Private Limited.
% of
Shareholding
4,350,015
5
10
10
10
10
10
4,350,070
100.00
0.00
0.00
0.00
0.00
0.00
0.00
100.00
Financial Performance
The audited financial results of Hotspots Retails Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
117
Year ended
March
Year ended
March
31, 2007
43.50
(84.62)
839.53
(68.78)
(15.81)
(9.45)
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
31, 2006
0.50
(15.85)
95.35
(15.19)
(303.47)
(314.64)
31, 2005
0.50
(0.66)
0.11
(1.02)
(20.38)
(3.17)
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Hotspots Retails Limited has not become a sick company within the meaning of SICA nor is it subject
to a winding-up order or petition. The company currently has a negative net worth.
Modikem Limited
Modikem Limited was incorporated on October 31, 1995 as Modikem Private Limited. Subsequently,
on conversion to a public limited company on July 25, 2001, the name of the company was changed to
Modikem Limited by issuance of a fresh certificate of incorporation. It is incorporated under
registration number 55-73505 with the RoC. Its registered office is situated at 60-D, Street No. C-5,
Sainik Farms, New Delhi- 110 062, India.
The main objects of the company are to carry on the business of manufacturers of and dealers in
chemical products of any nature and kind whatsoever, importers, exporters; and to engage in the
business of manufacturers of and dealers in heavy chemicals, alkalies, acids, chemicals, petrochemical,
industrial and other preparations, and articles of any nature and kind whatsoever, waxes natural and
synthetic industrial solvents, and gases, extenders, anti-oxidants, inhibitors, catalysts, iron-exchanger,
resin, water treatment chemicals and special chemical substance, plasticizers and extenders.
Directors as of May 31, 2008
The board of directors of Modikem Limited as at May 31, 2008 comprises Mr. B.K. Gupta (wholetime
director), Mr. G.S. Negi and Mr. R.K. Gupta.
Shareholding as of May 31, 2008
The shareholding pattern of Modikem Limited as at May 31, 2008 is as under:
Sl.
No.
1.
Names of Shareholder
No. of Shares held
Spice Corp Limited
2.
3.
4.
Mudaliar & Sons Hotels Private Limited
Avon Mercantile Limited
GCorp International Limited
5.
6.
7.
8.
9.
10.
11.
Licensintorg & Co. India Private Limited
Toplight Corporate Management Private Limited
Mr. R. L Ahuja
Mr. R P Goyal
Mr. R K Guta
Mr. S K Jain
Dr. B K Modi
Total
% of
Shareholding
15.60
34.39
14.76
2,916,298
6,428,702
2,760,000
5,573,739
646,500
368,400
10
10
10
10
60
18,693,739
29.82
3.46
1.97
0.00
0.00
0.00
0.00
0.00
100.00
Financial Performance
The audited financial results of Modikem Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
118
Year ended
March
31, 2006
Period ended
March 31, 2005
(15 months)
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
186.94
80.88
0.01
(3.38)
(0.18)
14.33
186.94
84.26
0.01
(10.24)
(0.55)
14.51
186.94
94.50
0.16
(10.59)
(0.57)
15.05
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Modikem Limited is an unlisted company and has not made any public or rights issue in the preceding
three years. It has not become a sick company within the meaning of SICA nor is it subject to a
winding-up order or petition. It does not have a negative net worth.
Omnia BPO Services Limited
Omnia BPO Services Limited was incorporated on June 23, 2004 under the name of Stracon Back
Office Solutions Limited under registration number 55-127093 with the RoC. Subsequently, the name
of the company was changed to Omnia BPO Services Limited in January 4, 2007. Its registered office
is situated at Flat No. 417, 4th Floor, Vishal Tower, 10, District Centre, Janak Puri, New Delhi- 110
058, India.
The main object of the company is to carry on the business of operating, managing, running and
developing call centers, voice call centers and contact centers and providing all kinds of telemarketing,
teleservices, IT based and ITES, business process outsourcing, back office processing, electronic
remote processing services, e-services in India and internationally.
Directors as of May 31, 2008
The board of directors of Omnia BPO Services Limited as at May 31, 2008 comprises Mr. Dilip Modi,
Mr. Pravin Kumar and Mr. Atul Prakash.
Shareholding as of May 31, 2008
The shareholding pattern of Omnia BPO Services Limited as at May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1.
Omnia Investments Private Limited
No. of Shares held
Mr. Dilip Modi*
Mr. Atul Prakash*
Mr. Ram Prakash Goyal*
Mr. S.K. Jain*
Mr. Santosh Kumar Gupta*
Mr. Rakesh Kumar Gupta*
Total
* as nominee of Omnia Investments Private Limited.
% of
Shareholding
7,032,470
100.00
1
1
1
1
1
1
0.00
0.00
0.00
0.00
0.00
0.00
2.
3.
4.
5.
6.
7.
7,032,476
100.00
Financial Performance
The audited financial results of Omnia BPO Services Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
70.32
0.98
283.19
119
Year ended
March
31, 2006
52.50
0.24
181.62
Year ended
March
31, 2005
15
0.22
24.29
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
0.74
0.11
10.14
0.03
0.01
10.04
0.22
0.14
10.13
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Omnia BPO Services Limited is an unlisted company and has not made any public or rights issue in the
preceding three years. It has not become a sick company within the meaning of SICA nor is it subject
to a winding-up order or petition. It does not have a negative net worth.
Plus Paper Foodpac Limited
Plus Paper Foodpac Limited was incorporated on January 28, 1994 as Modi Federal Limited under
registration number is 55-57146 with the RoC. On December 9, 1996, the name of the company was
changed from Modi Federal Limited to Modi International Paper Limited. The name was further
changed to International Paper Food Services Packaging Limited on October 3, 2001 and further to
Plus Paper Foodpac Limited on July 1, 2003. Its registered office is situated at 60-D, Street No. C-5,
Sainik Farms, New Delhi- 110 062, India.
The main object of the company is to carry on business as manufacturers, distributors, importers,
exporters, buyers, sellers, agents, stockists of and to market, transport, supply, assemble, alter, service,
repair, store, and deal, in paperboards and other forest based products, pulp of all kinds including, soda
pulp, chemical pulp, paper including paper cups for hot and cold drinks, copier paper, printing and
packaging material, cartons and containers and consumable for based products.
Directors as of May 31, 2008
The board of directors of Plus Paper Foodpac Limited as at May 31, 2008 comprises Dr. Surendra
Ambalal Dave (Chairman), Mr. Nikhil Rungta (Managing Director), Mrs. Ritika Rungta, Mr. B.K.
Gupta and Mr. Atul Prakash.
Shareholding as of May 31, 2008
The shareholding pattern of Plus Paper Foodpac Limited as at May 31, 2008 is as under:
Sl.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Names of Shareholder
No. of Shares held
Mrs. Ritika Rungta
Mr. Atul Prakash
Mr. D.V.Tyagi
Mr. R.P.Goyal
Mr. R.K.Gupta
Mr. S.K.Gupta
Mr. S.K.Jain
Mr. Nikhil Rungta
Dr. B.K. Modi
Toplight Corporate Management Private Limited
Spice Corp Limited
Spice Mobiles Limited
Odyssey Capital Private Limited
Accelerate Investments Private Limited
Brook Trading Company Private Limited
Radiant (International) Private Limited
Hinduja Finance Limited
SICOM Limited
Niskalp Investments & Trading Company Limited
Total
3,615,900
40
30
30
30
30
40
3,615,900
7,231,800
2,350,000
4,598,200
3,403,000
125,000
125,000
125,000
125,000
1,045,000
1,000,000
1,000,000
28,360,000
% of
Shareholding
12.75
0.00
0.00
0.00
0.00
0.00
0.00
12.75
25.50
8.29
16.21
12.00
0.44
0.44
0.44
0.44
3.68
3.53
3.53
100.00
Financial Performance
The audited financial results of Plus Paper Foodpac Limited for the past three years are as follows:
120
(in Rs. million except for share data)
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
Year ended
March
31, 2007
283.60
91.71
236.25
6.05
0.21
13.23
Year ended
March
31, 2006
141.80
85.66
221.29
8.26
0.58
16.72
Year ended
March 31, 2005
141.80
77.40
203.88
4.72
0.33
15.92
Plus Paper Foodpac Limited on November 1, 2004 had filed the draft offer document for its proposed
initial public offering. The SEBI vide a letter dated January 3, 2005 raised observations with respect to
the promoter’s contribution for the purpose of the eligibility of the proposed initial public offering
planned by the company. Subsequently, the lead manager vide letter dated March 4, 2005 withdrew the
draft offer document.
Plus Paper Foodpac Limited had offered 14,180,000 equity shares of Rs. 10 each for cash at par
aggregating to Rs. 141,800,000 to the existing shareholders of the company on rights basis in the ratio
of 1:1. The offer opened on May 15, 2006 and closed on September 7, 2006 after getting extended
thrice to June 15, 2006; to July 15, 2006; and to August 31, 2006. On September 16, 2006, the
company allotted 14,180,000 equity shares to Dr. B.K. Modi (7,231,800 equity shares), Toplight
Corporate Management Private Limited (2,350,000 equity shares) and Spice Corp Limited (4,598,200
equity shares). Post the rights issue, the paid-up capital of the company is Rs. 283,600,000 divided into
28,360,000 equity shares of Rs.10 each.
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Plus Paper Foodpac Limited is an unlisted company and has not made any public or rights issue in the
preceding three years. It has not become a sick company within the meaning of SICA nor is it subject
to a winding-up order or petition. It does not have a negative net worth.
Spice Corp Limited
Spice Corp Limited was incorporated on January 24, 1992 as Modi Holdings Limited under registration
number 20-13974 with the Registrar of Companies, Uttar Pradesh at Kanpur. Subsequently, on
conversion to a private limited company, the name of the company was changed to Modi Holdings
Private Limited by issuance of a fresh certificate of incorporation. Thereafter, the company again got
converted into a public limited company and its name was changed to Modi Holdings Limited on July
18, 2001 by issuance of a fresh certificate of incorporation. On March 6, 2002, the name of the
company was changed from Modi Holdings Limited to MCorp Limited. On May 8, 2003 the company
was again converted to a private limited company and its name was changed to MCorp Private Limited
by issuance of a fresh certificate of incorporation. The name of the company was further changed to
MCorpglobal Private Limited on February 23, 2004. The company again got converted into a public
limited company and its name was changed to MCorpglobal Limited on September 5, 2007 by issuance
of a fresh certificate of incorporation. The name of the company was further changed to Spice Corp
Limited on October 8, 2007. The registered office of the company is situated at D-1, Sector-3, Noida201 301, Uttar Pradesh, India.
Spice Corp Limited is an investment company and is managing its subsidiaries/associate companies
engaged in the information, communication and entertainment sector. Spice Corp Limited is running its
operations under the brand “SPICE” which stands for ‘Synchronized Performance through Information,
Communication and Entertainment’. The main object of the company is to invest in and acquire and
hold either in the name of the company or in that of any nominees of the company, shares, stocks,
debentures, debenture stocks, bonds, obligation and securities issued or guaranteed by any company or
body corporate and debentures, debenture stocks, bonds, obligations and securities issued or guaranteed
by any government, public body or authority or corporation central or state, municipal, local or
otherwise, whether in India or elsewhere.
121
Directors as of May 31, 2008
The board of directors of Spice Corp Limited as at May 31, 2008 comprises of Dr. B.K. Modi
(Chairman), Mrs. Veena Modi (Executive Vice Chairman), Mr. Hemant Kumar Samor, Mr. Yagya
Prakash Gupta and Mr. Atul Prakash.
Shareholding as of May 31, 2008
The shareholding pattern of Spice Corp Limited as on May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Mrs. Veena Modi
Mr. Dilip Modi
Mrs. Ritika Rungta
Ms. Divya Modi
Dr. B. K. Modi & Sons (HUF)
Twenty First Century Capitals Limited
Mcorp Communications Pte Ltd.
Touchwood Investments Private Limited
Daisey Investments Private Limited
Leaf Investments Private Limited
Momentum Investments Private Limited
Laoleen Investments Private Limited
Longwell Investments Private Limited
Upasana Investments Private Limited
Swasth Investments Private Limited
Mr. Atul Prakash
Mr. R. P. Goyal
Mr. S. K. Jain
Mr. S. K. Gupta
Mr. R. K. Gupta
Mr. G. S. Negi
Total
No. of Shares held
% of
Shareholding
2,884,637
251,129
26,579
26,621
42,017
158,112
2,859,311
1,274
1,274
1,274
1,274
1,274
1,274
1,274
1,261
10
10
10
10
10
10
6,258,645
46.09
4.01
0.42
0.43
0.67
2.53
45.69
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.00
0.00
0.00
0.00
0.00
0.00
100.00
Financial Performance
The audited financial results of Spice Corp Limited for the past three years are as follows:
Year ended
March 31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
62.59
2,646.04
90.46
(35.79)
(5.72)
433.38
(in Rs. million except for share data)
Period ended
Year ended
March
December
31, 2006
31, 2004
(15 months)
62.59
62.59
2,686.63
3,038.42
172.17
145.42
63.52
44.34
10.15
7.08
440.08
495.22
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Spice Corp Limited is an unlisted company and has not made any public or rights issue in the
preceding three years. It has not become a sick company within the meaning of SICA nor is it subject
to a winding-up order or petition. It does not have a negative net worth.
Private companies forming part of our Promoter Group companies:
Ace Airways Private Limited
122
Ace Airways Private Limited was incorporated on January 9, 1984 as Delhi Gulf Airways Services
Private Limited under registration number 55-17298 with the RoC. The name of the company was
changed to Ace Airways Private Limited with effect from January 23, 1996 by issuance of a fresh
certificate of incorporation. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms, New
Delhi- 110 062, India.
The main objects of the company are to construct, equip, maintain, work, to take or give on lease,
purchase or hire airplanes, helicopters and hovercrafts for the carriage of passengers or freight; and to
carry on the business of carriers by air or hovercraft.
Directors as of May 31, 2008
The board of directors of Ace Airways Private Limited as at May 31, 2008 comprises Mr. Hemant
Kumar, Mr. R.K. Gupta and Mr. Harish Nag.
Shareholding as of May 31, 2008
The shareholding pattern of Ace Airways Private Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
1.
2.
3.
4.
5.
6.
Twenty First Century Capitals Limited
Positive Investment Private Limited
Spice Corp Limited
MCorp Limited
Ms. Divya Modi
Mrs. Ritika Rungta
Total
No. of Shares held
255,875
178,750
548,125
51,625
45,000
22,000
1,101,375
% of
Shareholding
23.23
16.23
49.77
4.69
4.09
2.00
100.00
Financial Performance
The audited financial results of Ace Airways Private Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March 31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
11.01
14.87
0.23
(0.31)
(0.28)
20.36
Period ended
March
31, 2006 (15
months)
11.01
15.18
25.77
15.90
14.44
20.35
Year ended
December 31,
2004
11.01
(0.61)
80.25
(3.84)
(3.48)
5.91
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Ace Airways Private Limited has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition. It does not have a negative net worth.
Burlington Investments Private Limited
Burlington Investments Private Limited was incorporated on September 12, 1983 under registration
number 21-36763 with the Registrar of Companies, Kolkata. Its registered office is situated at 6, Old
Post Office Street, 4th Floor, Kolkata- 700 001, West Bengal, India.
The main object of the company is to invest in the security and to sell or otherwise deal with shares,
stocks, bonds and debentures etc. issued by any body corporate; and to purchase, lease, hire develop
land, buildings, flats etc.
123
Directors as of May 31, 2008
The board of directors of Burlington Investments Private Limited as at May 31, 2008 is comprised of
Mrs. Manju Jalan, Mr. Jyotish Chandra Goswami and Mr. Ashok Jajra.
Shareholding as of May 31, 2008
The shareholding pattern of Burlington Investments Private Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
Mr. Rajendra Kanoria
Mr. Ashok Chaturvedi
Ms. Urmila Kothari
Mr. N.K Padmanabhan
Ms. Nirmala Jha
Ms. Aradhana Jha
Ms. Sadhana Jha
Mr. Vikram Jha
Shree Kunwar Kothari
Mr. Ram Gopal Chakraborty
Mr. Manoj Kothari
Mr. Alok Kothari
Mr. Hemanta Kumar Chatterjee
Ms. Sujata Chatterjee
Ms. Malay Bhaduari
Mr. Basant Kumar Chatterjee
Mr. Goutam Mukherjee
New Look Investment (Bengal) Limited
Tower Investment & Trading Company Limited
Kallol Investments Limited
Goneril Investment & Trading Company Limited
Fund Flow Investment & Trading Company Limited
Subarna Plantation & Trading Company Limited
Jyotsana Investment Company Limited
Mr. Gaurav Himatsingka
Mr. Shaurya Veer Himatsingka
Total
10
10
500
500
500
500
500
500
500
500
500
500
1,160
1,000
300
300
400
1,000
50,000
10,000
30,800
20,000
40,000
20,000
30,000
30,000
239,980
% of
Shareholding
0.00
0.00
0.21
0.21
0.21
0.21
0.21
0.21
0.21
0.21
0.21
0.21
0.48
0.42
0.13
0.13
0.17
0.42
20.84
4.17
12.83
8.33
16.67
8.33
12.50
12.50
100.00
Financial Performance
The audited financial results of Burlington Investments Private Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
2.40
3.60
0.60
0.29
1.20
24.99
Year ended
March
31, 2006
2.40
3.31
0.32
0.13
0.54
23.79
Year
ended
March
31, 2005
2.40
3.18
0.61
0.34
1.43
23.26
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
124
Burlington Investments Private Limited has not become a sick company within the meaning of SICA
nor is it subject to a winding-up order or petition. It does not have a negative net worth.
Duro International Rubber Private Limited
Duro International Rubber Private Limited was incorporated on June 22, 1987 as Royal Rubber Private
Limited under registration number 55-127404. The name of the company was changed to Duro
International Rubber Private Limited with effect from October 22, 1997 by issuance of a fresh
certificate of incorporation. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms, New
Delhi- 110 062, India.
The company is engaged in the business of manufacturers, fabricators, traders, importers, exporters and
distributors of tyres, tubes, flaps, fan-belts, tread rubber and other related rubber and polymer products
for cycles, automobiles and airplanes, including manufacturing and maintaining the machines and
presses thereof.
Directors as of May 31, 2008
The board of directors of Duro International Rubber Private Limited as at May 31, 2008 comprises Mr.
S.K. Jain and Mr. Rakesh Haldia.
Shareholding as of May 31, 2008
The shareholding pattern of Duro International Rubber Private Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
1.
2.
Mr. Nikhil Rungta
Mrs. Ritika Rungta
Total
No. of Shares held
% of
Shareholding
50.00
50.00
100.00
22,000
22,000
44,000
Financial Performance
The audited financial results of Duro International Rubber Private Limited for the past three years are
as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 100)
Book Value per equity share (Rs.)
4.40
(3.81)
(0.29)
(6.70)
13.47
Year ended
March
31, 2006
4.40
(3.51)
0.03
(0.39)
(8.86)
20.17
Period ended
March
31, 2005 (15
months)
4.40
(3.12)
0.55
(0.24)
(5.43)
29.02
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Duro International Rubber Private Limited has not become a sick company within the meaning of
SICA nor is it subject to a winding-up order or petition. It does not have a negative net worth.
G. M. Modi Hospitals Corporation Private Limited
G. M. Modi Hospitals Corporation Private Limited was incorporated on January 8, 1991 as G.M. Modi
Hospitals Corporation Limited under registration number 55-42646 with the RoC. Subsequently, on
conversion to a private limited company, the name of the company was changed to G.M. Modi
Hospitals Corporation Private Limited on June 18, 2003 by issuance of a fresh certificate of
125
incorporation. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms, New Delhi- 110
062, India.
The main objects of the company are to purchase, lease or otherwise acquire, establish, maintain,
operate, run, manage or administer hospitals, medicare, day care and health care centres, nursing
homes, clinics for in-door and out-door patients and facilities for reception and treatment of persons
suffering from injuries and illness, disabilities and deficiencies of any kind or nature whatsoever,
contagious or otherwise and treatment of persons, during convalescence or of persons requiring
medical attention or rehabilitation; and to provide for free treatment to a reasonable number of patients
belonging to economically weaker sections of society in the specialty and super specialty departments.
Directors as of May 31, 2008
The board of directors of G. M. Modi Hospitals Corporation Private Limited as at May 31, 2008
comprises Dr. N.K. Gupta, Mr. S.K. Jain and Mr. Rakesh Haldia.
Shareholding as of May 31, 2008
The shareholding pattern of G. M. Modi Hospitals Corporation Private Limited as at May 31, 2008 is
as under:
Sl. No.
Names of Shareholder
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Mr. R. K. Gupta
Mr. S.K. Jain
Mr. S.K. Gupta
Mr. R.L. Ahuja
Mr. R.P. Goyal
Mrs. Sukhmani Ganguli
Mr. M.C. Mittal
Spice Corp Limited
Fine Installments Private Limited
Mudaliar & Sons Hotels Private Limited
Total
No. of Shares held
10
10
10
10
30
30
100
4,050,000
200,000
3,999,000
8,249,200
% of
Shareholding
0.00
0.00
0.00
0.00
0.00
0.00
0.00
49.10
2.42
48.48
100.00
Financial Performance
The audited financial results of G. M. Modi Hospitals Corporation Private Limited for the past three
years are as follows:
(in Rs. million except for share data)
Year ended
March 31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10)
Book Value per equity share (Rs.)
82.49
0.79
26.73
0.35
0.04
10.30
Period ended
March
31, 2006
(15 months)
82.49
0.45
39.93
(0.35)
(0.04)
10.27
Year ended
December
31, 2004
78.49
0.79
20.79
0.79
0.10
10.25
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
G. M. Modi Hospitals Corporation Private Limited has not become a sick company within the meaning
of SICA nor is it subject to a winding-up order or petition. It does not have a negative net worth.
Harjas Logic Systems Private Limited
126
Harjas Logic Systems Private Limited was incorporated on February 19, 2002 under registration
number 55-114284 with the RoC. Its registered office is situated at 60-D, Street No.C-5, Sainik Farms,
New Delhi- 110 062, India.
The main object of the company is to carry on the business of manufacturers, importers, exporters of
computer, computer parts, accessories and other items connected with or incidental to computer
hardware and to import, export, manufacture, develop or deal-in software, data storage devices and
management information systems.
Directors as of May 31, 2008
The board of directors of Harjas Logic Systems Private Limited as at May 31, 2008 comprises Mr.
Ashok Agarwal and Ms. Preeti Malhotra.
Shareholding as of May 31, 2008
The shareholding pattern of Harjas Logic Systems Private Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
No. of Shares held
1.
2.
3.
4.
Mudaliar & Sons Hotels Private Limited
Positive Investment Private Limited
Spice Corp Limited
Mr. O.P. Dani (Beneficial Owner Spice Corp
Limited)
Total
6,000
500
5,999
% of
Shareholding
48.00
4.00
47.99
1
12,500
0.01
100.00
Financial Performance
The audited financial results of Harjas Logic Systems Private Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
March 31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 100)
Book Value per equity share (Rs.)
1.25
23.46
15.63
11.14
891.03
1,966.86
Period ended
March
31, 2006
(13.5 months)
1.25
12.32
16.93
12.32
985.73
1,074.40
Period ended
February 15,
2005
(10.5
months)
1.20
(0.05)
0.05
(0.03)
(2.57)
82.54
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Harjas Logic Systems Private Limited has not become a sick company within the meaning of SICA nor
is it subject to a winding-up order or petition. It does not have a negative net worth.
Hindustan Retail Private Limited
Hindustan Retail Private Limited was incorporated on May 7, 2007 under registration number 20033258 and is registered with the Registrar of Companies, Uttar Pradesh. The registered office of the
company is situated at D-1, Sector-3, Noida- 201 301, Uttar Pradesh, India.
The main business of the company is to carry on the business as retailers, traders and dealers of
telecommunication, electronics and digital equipments.
Directors as of May 31, 2008
127
The board of directors of Hindustan Retail Private Limited as at May 31, 2008 comprises Mr. Dilip
Modi and Ms. Veena Modi
Shareholding as of May 31, 2008
The shareholding pattern of Hindustan Retail Private Limited as at May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1
2.
Ms. Veena Modi
Mr. Dilip Modi
Total
No. of Shares held
% of
Shareholding
5,000
5,000
1,0000
50
50
100
Financial Performance
The company was incorporated on May 7, 2007 therefore no audited financials are available.
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Hindustan Retail Private Limited has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition. It does not have a negative net worth.
Mcorpglobal Communications Private Limited
Mcorpglobal Communications Private Limited was incorporated on January 1, 1995 under name of
Modi Wellvest Private Limited company under registration number 20-17382 with Registrar of
Companies, Uttar Pradesh at Kanpur. The name of the company was changed to Mcorpglobal
Communications Private Limited with effect from July 24, 2007. The company’s registered office is
situated at D-1, Sector-3, Noida 201 301, Uttar Pradesh, India.
The main business activity of the company is to carry on the business of investment and to buy, sell,
underwrite, invest, acquire and hold shares and other securities issued by any company.
Directors as of June 9, 2008
The board of directors of Mcorpglobal Communications Private Limited as at June 9, 2008 comprises
Dr. B.K. Modi, Mr. Dilip Modi, Ms. Divya Modi and Mr. Atul Prakash.
Shareholding as of June 9, 2008
The shareholding pattern of Mcorpglobal Communications Private Limited as at June 9, 2008 is as
under:
Sl.
No.
Names of Shareholder
1.
2.
3.
4.
5.
6.
7.
No. of Shares held
Super Infosys Private Limited
Orion Telecoms Limited
Asian Infrastructure (Mauritius) Inc
DAI (Mauritius) Co. Limited
Falcon Securities Limited
Guiding Star Limited
ChristChurch Investments Limited
Total
80,758,354
14,515,043
14,779,980
14,921,352
15,600,000
7,853,337
8,638,671
157,066,737
% of
Shareholding
51.42
9.24
9.41
9.50
9.93
5.00
5.50
100
Financial Performance
The audited financial results of Mcorpglobal Communications Private Limited for the past three years
are as follows:
128
(in Rs. million except for share data)
Year ended
December 31,
2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
1,570.67
1,233.41
(0.22)
(0.00)
17.85
Period ended
December 31,
2006
(6
months)
1,570.67
1,233.63
0.04
(0.07)
(0.00)
17.86
Year ended
June 30, 2006
1,570.67
1,233.70
(0.80)
(0.01)
17.85
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Mcorpglobal Communications Private Limited has not become a sick company within the meaning of
SICA nor is it subject to a winding-up order or petition. It does not have a negative net worth.
MCorp Communications Pte. Limited
MCorp Communications Pte. Limited was incorporated on July 25, 1996 in the name of Gil Singapore
Pte. Limited. The company was registered with the Registrar of Companies and Businesses, Singapore
under the registration no. 199605439C. The name of the company was changed to MCorp Far East Pte.
Limited with effect from October 1, 2003 and subsequently to MCorp Communication Pte. Limited
with effect from September 4, 2006. The registered office of the company is situated at 1 North Bridge
Road, #19-04/05, High Street Centre, Singapore- 179 094.
The company is engaged in the business of marketing, sales, distribution and service of computers and
related products.
Directors as of May 31, 2008
The board of directors of MCorp Communications Pte. Limited as at May 31, 2008 comprises Dr. B.K.
Modi, Mr. Dilip Modi, Mr. Yagya Prakash Gupta and Mr. Vangal Rangarajan Ranganathan.
Shareholding as of May 31, 2008
The shareholding pattern of MCorp Communications Pte. Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
1.
Dr. B.K. Modi
Total
No. of Shares held
1,400,000
1,400,000
% of
Shareholding
100.00
100.00
Financial Performance
The audited financial results of MCorp Communications Pte. Limited for the period ended December
31, 2006 (6 months) is as follows:
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
Year ended
December 31,
2006
1.40
5.04
0.25
5.62*
40.12
46.00
* including share of results of Associated Company as per Audit report
129
Year ended
December 31,
2005
1.40
(0.58)
0.29
0.27
1.94
5.89
Amount in SGD
Year ended
December 31,
2004
1.40
(0.85)
0.10
0.04
0.27
3.95
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
MCorp Communications Pte. Limited has not become a sick company within the meaning of SICA nor
is it subject to a winding-up order or petition. It does not have a negative net worth.
Mcorp Investments Pte. Limited
Mcorp Investments Pte. Limited was incorporated on June 14, 2007. The company was registered with
the Registrar of Companies and Businesses, Singapore under the registration no. 200710572E. The
registered office of the company is situated at 1 North Bridge Road, #19-04/05, High Street Centre,
Singapore- 179 094.
The main object of the company is to carry on the business of fund management, financial advisors and
trading in futures, to undertake, carry on and execute all kinds of investment and commercial, trading
and other operations; to invest the capital and other monies of the company in the purchase or upon the
security of shares, stocks, debentures, debenture stocks, bonds, mortgages, obligations and securities of
any kind issued or guaranteed by any company corporation or undertaking of whatever nature or
wheresoever constituted and carrying on business, and shares, stocks, debentures, debenture stocks,
bonds, mortgages, obligations and other securities issued or guaranteed by any government, sovereign
ruler, commissioners, public body or authority, supreme, municipal, local or otherwise, whether at
home or abroad.
Directors as of May 31, 2008
The board of directors of Mcorp Investments Pte. Limited as at May 31, 2008 comprises Mr. Vangal
Rangarajan Ranganathan
Shareholding as of May 31, 2008
The shareholding pattern of Mcorp Investments Pte. Limited as at May 31, 2008 is as under:
Sl. No.
Names of Shareholder
1.
Mcorp Communications Pte. Limited
Total
No. of Shares held
1
1
% of
Shareholding
100.00
100.00
Financial Performance
The audited financial results of Mcorp Investments Pte. Limited for the past three years are not
available as the company was incorporated only on June 14, 2007.
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Mcorp Investments Pte. Limited has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition. It does not have a negative net worth.
Mudaliar & Sons Hotels Private Limited
Mudaliar & Sons Hotels Private Limited was incorporated on April 8, 1981 under registration number
24215 with the Registrar of Companies, Mumbai. Its registered office is situated at 1, Shreyas, Madam
Cama Road, opposite Air India Building, Nariman Point, Mumbai- 400 020, Maharashtra, India.
The main objects of the company are to acquire, take on lease or otherwise to carry on the business of
hotels, tourist hotels, guest houses, loading and boarding houses and to arrange for and provide all
manner of entertainment, amusement and recreation for the public as caterers.
Directors as of May 31, 2008
130
The board of directors of Mudaliar & Sons Hotels Private Limited as at May 31, 2008 comprises Mr.
G.S. Negi and Mr. R.K. Gupta.
Shareholding as of May 31, 2008
The shareholding pattern of Mudaliar & Sons Hotels Private Limited as at May 31, 2008 is as under:
Sl.
No.
1.
2.
Names of Shareholder
No. of Shares held
Spice Corp Limited
Mr. Hemant Kumar Samor
Total
390,076
24
390,100
% of
Shareholding
99.99
0.01
100.00
Financial Performance
The audited financial results of Mudaliar & Sons Hotels Private Limited for the past three years are as
follows:
(in Rs. million except for share data)
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
Year ended
March
31, 2007
39.01
2.46
3.76
0.49
1.24
106.25
Year ended
March
31, 2006
39.01
1.97
2.96
0.90
2.30
104.96
Year ended
March
31,
2005
39.01
1.08
2.96
0.36
0.93
102.61
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Mudaliar & Sons Hotels Private Limited has not become a sick company within the meaning of SICA
nor is it subject to a winding-up order or petition. It does not have a negative net worth.
NIK Travels Private Limited
NIK Travels Private Limited was incorporated on September 18, 1995 under registration number 5572526 with the RoC. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms, New Delhi110 062, India.
The main objects of the company are to carry on business as travel agents and tour operators by land,
sea and air; to facilitate travelling and to provide for tourist and travellers, or promote the provisions of
conveniences of all kinds in the way of through tickets, circular tickets, sleeping cars or berths,
reserved places, hotel and boarding and/or lodging accommodation and guides, safe, deposits, enquiry,
bureau, libraries, resting rooms, baggage transport, and otherwise; and to charter steamships and
airplanes for fixed periods or for particular voyages and flights.
Directors as of May 31, 2008
The board of directors of NIK Travels Private Limited as at May 31, 2008 comprises Mr. Ramesh Nair,
Mr. Atul Prakash and Mr. R.K.Gupta.
Shareholding as of May 31, 2008
The shareholding pattern of NIK Travels Private Limited as at May 31, 2008 is as under:
Sl.
No.
1.
Names of Shareholder
No. of Shares held
Spice Corp Limited
200,000
131
% of
Shareholding
50.00
2.
3.
Modikem Limited
Mr. R. K. Gupta
Total
199,900
100
400,000
49.98
0.02
100.00
Financial Performance
The audited financial results of NIK Travels Private Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
4.00
0.43
10.65
0.59
1.48
11.73
Year ended
March
31, 2005
4.00
(0.16)
5.62
0.05
0.14
9.24
4.00
(0.22)
4.06
0.15
0.37
8.90
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
NIK Travels Private Limited has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition. It does not have a negative net worth.
Oasis Cineplex Private Limited
Oasis Cineplex Private Limited was incorporated on February 10, 1987 as Oasis Overseas Private
Limited under registration number 55-26953 with the RoC. The name of the company was changed to
Oasis Cineplex Private Limited on May 6, 2004 by issuance of a fresh certificate of incorporation. Its
registered office is situated at 60-D, Street No. C-5, Sainik Farms, New Delhi- 110 062, India.
The main object of the company is to carry on the business of exhibition of films, cinema owners, film
distributors, studio owners and all other allied materials, traders and techniques.
Directors as of May 31, 2008
The board of directors of Oasis Cineplex Private Limited as at May 31, 2008 comprises Ms. Divya
Modi, Mr. Hemant Kumar Samor and Mr. S.K. Jain.
Shareholding as of May 31, 2008
The shareholding pattern of Oasis Cineplex Private Limited as at May 31, 2008 is as under:
Sl.
No.
1.
2.
3.
4.
5.
6.
Names of Shareholder
No. of Shares held
Mr Dilip Modi
Mr. Santosh Kumar Gupta
Mr. Rakesh Haldia
Mr. R. K. Gupta
Mr. Ram Prakash Goyal
First Choice Enterprises Private Limited
Total
600
500
500
500
500
1,600
4,200
% of
Shareholding
14.30
11.90
11.90
11.90
11.90
38.10
100.00
Financial Performance
The audited financial results of Oasis Cineplex Private Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
132
Year ended
March
31, 2006
Year ended
March
31, 2005
Equity Capital
Preference Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
0.04
10.00
2.32
2.81
1.85
441.56
562.85
0.04
10.00
0.47
1.67
0.50
118.26
121.29
0.04
10.00
(0.02)
(0.01)
(1.81)
(34.37)
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Oasis Cineplex Private Limited has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition. It does not have a negative net worth.
Shenzhen SIBASI Catering Management Company Limited
Shenzhen SIBASI Catering Management Company Limited was incorporated on January 17, 2006.
The company registered with the Shenzhen City Industry and Commerce Administration under
registration number 440301503283387. Its registered office is situated at P119, Tianjun mansion,
South DongMen RD. LuoHu district Shenzhen GuangDong China.
The company is engaged in the business of catering of western-style food.
Directors as of May 31, 2008
The board of directors of Shenzhen SIBASI Catering Management Company Limited as at May 31,
2008 comprises Dr. B.K. Modi - Chairman, Mr. Gupta Prabhakar and Mr. Hemant Samor.
Shareholding as of May 31, 2008
The shareholding pattern of Shenzhen SIBASI Catering Management Company Limited as at May 31,
2008 is as under:
Sl.
No.
1.
Names of Shareholder
No. of Shares held
Dr. B.K. Modi
Total
2,000,000
2,000,000
% of
Shareholding
100.00
100.00
Financial Performance
The audited financial results of Shenzhen SIBASI Catering Management Company Limited for the past
three years are not available as the company was incorporated on January 17, 2006 only.
The registered capital of the company has increased from 1,000,000 RMB to 2,000,000 RMB on
January 8, 2008.
Shenzhen SIBASI Catering Management Company Limited has not become a sick company within the
meaning of SICA nor is it subject to a winding-up order or petition. It does not have a negative net
worth.
Super Infosys Private Limited
Super Infosys Private Limited was incorporated on June 9, 1995 under the registration number 5569600 with the RoC. Its registered office is situated at D-60, Street No. C-5, Sainik Farms, New Delhi110062, India.
The main objects of the company are relating to the services in the telecommunication, IT, electronics,
multimedia and software industry as well as to deal in the products of telecommunication, IT,
electronics, multimedia and software industry.
133
Directors as of May 31, 2008
The board of directors of Super Infosys Private Limited as at May 31, 2008 is comprised of Mr. Dilip
Modi and Dr. B.K. Modi.
Shareholding as of May 31, 2008
The shareholding pattern of Super Infosys Private Limited as at May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1.
2.
ITPL
Mr. Dilip Modi
Total
No. of Shares held
% of
Shareholding
41,664,919
1
41,664,920
100.00
0.00
100.00
Financial Performance
The audited financial results of Super Infosys Private Limited for the past three years are as follows:
(in Rs. million except for share data)
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
Period ended
December
31, 2006
416.65
390.18
(0.01)
(0.00)
19.36
Year ended
June
30, 2006
416.65
390.19
(0.19)
(0.00)
19.36
Year ended
June 30, 2005
416.65
390.38
(0.33)
(0.01)
19.37
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
Super Infosys Private Limited has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition.
Teesho Rubbers Private Limited
Teesho Rubbers Private Limited was incorporated on December 24, 1993 under registration number
55-56621 with the RoC. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms, New
Delhi- 110 062, India.
The company is engaged in the business of manufacture of and dealers in all types of natural rubber,
synthetic rubbers and other rubber products, plastic products and goods.
Directors as of May 31, 2008
The board of directors of Teesho Rubbers Private Limited as at May 31, 2008 comprises Mr. S.K.
Gupta and Mr. S.K. Jain.
Shareholding as of May 31, 2008
The shareholding pattern of Teesho Rubbers Private Limited as at May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1.
2.
3.
Mr. Ravinder Lal Ahuja
Mr. R.K. Gupta
Fine Instalments Private Limited
No. of Shares held
% of
Shareholding
10
10
12,500
134
0.01
0.01
17.12
4.
5.
6.
Modikem Limited
Toplight Corporate Management Private Limited
Oasis Cineplex Private Limited
Total
36,000
12,500
12,000
73,020
49.30
17.12
16.43
100.00
Financial Performance
The audited financial results of Teesho Rubbers Private Limited for the past three years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
Year ended
March
31, 2006
0.73
(0.98)
(0.02)
(0.22)
(3.43)
0.73
(0.96)
(0.01)
(0.19)
(3.21)
Period ended
March 31, 2005
(15 months)
0.73
(0.95)
0.00
(0.03)
(0.41)
(3.01)
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus. The company currently has a negative net worth.
Teesho Rubbers Private Limited has not become a sick company within the meaning of SICA nor is it
subject to a winding-up order or petition.
Tuberose Investments Private Limited
Tuberose Investments Private Limited was incorporated on November 27, 1996 under registration
number 55-83487 with the RoC. Its registered office is situated at 60-D, Street No. C-5, Sainik Farms,
New Delhi- 110 062, India.
The main object of the company is to carry on the business of investment and to buy, sell, acquire and
hold shares, debentures, stocks etc. issued by any body corporate.
Directors as of May 31, 2008
The board of directors of Tuberose Investments Private Limited as at May 31, 2008 comprises Mrs.
Veena Modi, Ms. Divya Modi, Mr. R.P. Goyal, Mr S.K. Gupta and Mr. Harish Nag.
Shareholding as of May 31, 2008
The shareholding pattern of Tuberose Investments Private Limited as at May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1.
2.
Mrs. Veena Modi
Ms. Divya Modi
Total
No. of Shares held
% of
Shareholding
20
10,000
10,020
0.20
99.80
100.00
Financial Performance
The audited financial results of Tuberose Investments Private Limited for the past three years are as
follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Year ended
March
31, 2006
0.10
135
Year ended
March
31, 2005
0.10
0.10
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
(0.18)
(0.01)
(0.94)
(7.76)
(0.17)
(0.12)
(12.24)
(6.81)
(0.05)
(0.00)
(0.36)
5.42
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus. The company has negative net worth.
Tuberose Investments Private Limited has not become a sick company within the meaning of SICA nor
is it subject to a winding-up order or petition.
VCorp Mercantile Private Limited
VCorp Mercantile Private Limited was incorporated on October 18, 2005 under registration number
55-141853 with the RoC. The registered office of the company is situated at 60-D, Street No. C-5,
Sainik Farms, New Delhi- 110062, India.
The main object of the company is to carry on business as retailers, sellers, buyers, traders, dealers,
importers and exporters of consumer and household goods such as clothes, jewellery, perfumes,
watches, fancy goods and plastic products.
Directors as of May 31, 2008
The board of directors of VCorp Mercantile Private Limited as at May 31, 2008 comprises Mr. Abhay
Kumar Agarwal, Mrs. Savita Agarwal and Ms. Dwiti Agarwal.
Shareholding as of May 31, 2008
The shareholding pattern of VCorp Mercantile Private Limited as at May 31, 2008 is as under:
Sl.
No.
Names of Shareholder
1.
2.
Mrs. Veena Modi
Mr. G.S. Negi
Total
No. of Shares held
% of
Shareholding
49,990
10
50,000
99.98
0.02
100.00
Financial Performance
The audited financial results of VCorp Mercantile Private Limited are available for the past two years
alone as the company was incorporated in October 2005. The audited financial results of VCorp
Mercantile Private Limited for the past two years are as follows:
(in Rs. million except for share data)
Year ended
March
31, 2007
Equity Capital
Reserves and Surplus
Total Income
Profit/(Loss) after Tax
Earnings per share (Rs.) (Face Value Rs. 10/-)
Book Value per equity share (Rs.)
0.50
(0.33)
52.92
(0.29)
(5.71)
4.57
Period ended
March 31, 2006
0.50
(0.05)
(0.05)
(0.92)
1.01
There have been no changes in the capital structure in the last six months preceding the date of filing
this Draft Red Herring Prospectus.
VCorp Mercantile Private Limited has not become a sick company within the meaning of SICA nor is
it subject to a winding-up order or petition. It does not have a negative net worth.
136
Dr B K Modi & Sons (HUF)
Constitution of Dr. B. K. Modi & Sons (HUF)
•
•
•
•
Dr. B. K. Modi, Karta
Mrs. Veena Modi, Member
Mr. Dilip Modi, Member
Ms. Divya Modi, Member
Dr. B. K. Modi & Sons (HUF) is in the business of investments.
Rakesh Kumar Shaurya Veer (HUF)
Constitution of Rakesh Kumar Shaurya Veer (HUF)
•
•
•
Mr. Rakesh Himatsingka, Karta
Mrs. Anita Himatsingka, Member
Mr. Shauryaveer Himatsingka, Member
Rakesh Kumar Shaurya Veer (HUF) is in the business of investments.
Interest of our Promoter Group in our Company
Except as disclosed in the the section “Related Party Transactions” beginning on page 139 and to the
extent of their shareholding in our Company, our Promoters and Promoter Group do not not have any
other interest in our Company.
Other Confirmations
There are no defaults by any of the Promoters or Promoter Group companies in respect of payment of
interest and/or principal to the debenture/ bond/ fixed deposit holders. In addition, there are no
disciplinary actions taken by any of the stock exchanges and regulatory authorities against any of the
Promoters or Promoter Group companies.
Past Ventures of our Promoters
Our Promoters have not disassociated with any company in the last three years, however, on June 25,
2008 one of the promoter shareholder of Spice Communications Limited, MCorpGlobal
Communication Private Limited has entered into a Share Purchase Agreement with Idea Cellular
Limited to divest its entire shareholding comprising 40.8% in Spice Communications Limited, one of
our Promoter Group Companies, to Idea Cellular Limited. The board of directors of Spice
Communications Limited has also approved its merger with Idea Cellular Limited.
Public/Rights Issue
Our Promoter Group companies have not made public or rights issue in the preceding three years,
other than as mentioned above in this section.
Winding up or Sick Company
Our Promoter Group companies have neither become a sick company within the meaning of the Sick
Industrial Companies (Special Provisions) Act, 1995 nor are they under winding up.
Defunct Promoter Group Companies
None of our Promoter Group companies are defunct companies.
Conflict of Interest
There is no conflict of interest between our Promoters and our Company.
137
Related Party Transactions
For details of the related party transactions, see the section “Related Party Transactions” beginning on
page 139.
138
RELATED PARTY TRANSACTIONS
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
DETAILS OF TRANSACTIONS WITH RELATED PARTIES
Particulars
Holding Company
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31,
2007
Year
Ended
March
31,
2006
Subsidiary
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
Year
Ended
March
31,
2006
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
A) Transactions
i)
Revenue from Value Added Services
Spice Communications Limited
ii)
Revenue from Roaming Services
Spice Communications Limited
iii)
Sale of Softwares
iv)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Purchase of Fixed Assets
Spice Mobiles Limited
v)
-
Other Income (Rental Income)
Hot Spot Retails Private Limited
iv)
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Roaming Expenses
139
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
vi)
Enterprise Solution Charges
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
vii)
Gifts and Prizes
Hot Spot Retails Private Limited
viii)
ix)
x)
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Website Development Charges
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Hardware and Equipment Maintenance Services
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Rent Paid
Spice Communications Limited
Harjas Logic Systems Private Limited
-
Wellwisher Holdings Private Limited
xi)
xii)
xiii)
xiv)
xv)
xvi)
-
Repair Services
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
Business Promotion Expenses
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
Nik Travels Private Limited
-
-
-
-
-
-
-
-
-
-
Communication expenses
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Sundry Debit Balances Written Off
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Balances Provided for
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Travelling expenses
140
xvii)
Electricity Expenses
Spice Communications Limited
xiii)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
18.18
-
-
-
-
Corporate Guarantee Commission income
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
Interest Income
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Remuneration paid
Saket Agarwal
-
-
-
-
-
-
-
-
-
-
Kartar Singh
-
-
-
-
-
-
-
-
-
-
Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
Reimbursement of Expenses Paid by the
Company
-
-
-
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
3.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Staff Welfare
Spice Communications Limited
xix)
xx)
xxi)
xxii)
xxiii)
xxiv)
xxv)
Legal & Professional Charges
Reimbursement of Expenses Incurred by the
Company
Dividend Paid
Omnia Investments Private Limited
-
Dr. B.K Modi
-
400.18
-
141
xxvi)
xxvii)
xxviii)
xxix)
xxx)
Mrs. Veena Modi
-
-
-
-
-
-
-
-
-
-
Mr. Dilip Modi
-
-
-
-
-
-
-
-
-
-
Ms. Divya Modi
-
-
-
-
-
-
-
-
-
-
Investment in Equity Share Capital
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
100.00
Share Application money paid
Bougainvillea Multiplex & Entertainment
Center Private Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Share Application money received back
Bougainvillea Multiplex & Entertainment
Center Private Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
60.00
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
60.00
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
Advance Given During the Year
Advance received back during the year
142
Twenty First Century Capitals Limited
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Security Deposits Given
Mudaliar & Sons Hotels Pvt Ltd
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
xxxii)
Loan Given During the Year
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
xxxiii)
Loan received back during the year
MCorpGlobal Private Limited
As at
March
31, 2005
As at
December
31, 2003
As at
March
31,
2007
As at
March
31,
2006
xxxi)
B) Balances at
the year end
i)
As at
December
31, 2007
As at
March
31,
2007
As at
March
31,
2006
As at
December
31, 2007
As at
March
31, 2005
As at
December
31, 2003
Receivables
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Modi Distributors Pvt. Ltd.
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
Bougainvillea Multiplex & Entertainment
Center Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
Kartar Singh
-
-
-
-
-
-
-
-
-
-
143
Mudaliar & Sons Hotels Pvt Ltd (against
security deposit)
Mudaliar & Sons Hotels Pvt Ltd (against
advances recoverable)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Nik Travels Private Limited
-
-
-
-
-
-
-
-
-
-
Mr. Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
0.51
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
ii)
Payables
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
144
Particulars
Fellow Subsidiary
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31,
2007
Year
Ended
March
31,
2006
Key Management Personnel
Fifteenmonths
Period
Ended
March
31,
2005
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Fifteenmonths
Period
Ended
March
31,
2005
Year
Ended
December
31, 2003
A) Transactions
i)
ii)
iii)
iv)
Revenue from Value Added Services
Spice Communications Limited
7.85
-
-
-
-
-
-
-
-
-
Revenue from Roaming Services
Spice Communications Limited
3.62
-
-
-
-
-
-
-
-
-
52.70
-
-
-
-
-
-
-
-
-
0.20
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
0.01
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
5.97
-
-
-
-
-
-
-
-
-
Enterprise Solution Charges
Spice Communications Limited
2.96
-
-
-
-
-
-
-
-
-
Sale of Softwares
Other Income (Rental Income)
Hot Spot Retails Private Limited
iv)
v)
vi)
vii)
Purchase of Fixed Assets
Roaming Expenses
Gifts and Prizes
145
viii)
ix)
x)
Hot Spot Retails Private Limited
-
0.02
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Website Development Charges
Spice Communications Limited
Hardware and Equipment Maintenance
Services
Spice Communications Limited
Rent Paid
Spice Communications Limited
Harjas Logic Systems Private Limited
Wellwisher Holdings Private Limited
xi)
Repair Services
Hot Spot Retails Private Limited
xii)
0.05
0.03
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.44
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Balances Provided for
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Electricity Expenses
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
Travelling expenses
Nik Travels Private Limited
xiv)
Communication expenses
Spice Communications Limited
xv)
xvi)
xvii)
xiii)
-
Business Promotion Expenses
Hot Spot Retails Private Limited
xiii)
-
Sundry Debit Balances Written Off
Staff Welfare
146
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
xix)
Legal & Professional Charges
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
xx)
Corporate Guarantee Commission income
Omnia BPO Services Limited (formerly known
as Stracon Back Office Solutions Limited)
-
0.39
0.02
-
-
-
-
-
-
-
xxi)
Interest Income
-
-
-
-
-
-
-
-
-
-
Saket Agarwal
-
-
-
-
-
0.99
-
-
-
-
Kartar Singh
-
-
-
-
-
2.27
-
-
-
-
Dheeraj Agarwal
-
-
-
-
-
-
-
0.54
2.55
-
Reimbursement of Expenses Incurred by the
Company
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
Reimbursement of Expenses Paid by the
Company
-
-
-
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Dr. B.K Modi
-
-
-
-
-
-
-
-
-
Mrs. Veena Modi
-
-
-
-
-
-
-
-
-
-
Mr. Dilip Modi
-
-
-
-
-
-
0.02
-
-
-
Ms. Divya Modi
-
-
-
-
-
-
-
-
-
-
Investment in Equity Share Capital
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
xxii)
xxiii)
xxiv)
xxv)
xxvi)
Remuneration paid
Dividend Paid
147
-
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
148
Particulars
Fellow Subsidiary
Ninemonths
Period
Ended
December
31, 2007
xxvii)
xxviii)
xxix)
xxx)
Year
Ended
March
31,
2007
Year
Ended
March
31,
2006
Key Management Personnel
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31,
2007
Year
Ended
March
31,
2006
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
Share Application money paid
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
43.20
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share Application money received back
Bougainvillea Multiplex &
Entertainment Center Private Limited
ZZZZZZ
Hot Spot Retails Private Limited
-
43.20
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
2.50
-
-
-
-
-
-
-
-
0.40
2.50
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
-
-
-
-
-
-
-
-
-
-
Advance Given During the Year
Advance received back during the year
149
xxxi)
xxxii)
xxxiii)
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
2.50
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
-
0.40
2.50
-
-
-
-
-
-
-
Mudaliar & Sons Hotels Pvt Ltd
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
Loan Given During the Year
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
As at
March
31, 2005
As at
December
31, 2003
As at
March
31,
2007
As at
March
31,
2006
Security Deposits Given
Loan received back during the year
MCorpGlobal Private Limited
B) Balances
at the year
end
i)
As at
December
31, 2007
As at
March
31,
2007
As at
March
31,
2006
As at
December
31, 2007
As at
March
31, 2005
As at
December
31, 2003
Receivables
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Modi Distributors Pvt. Ltd.
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
-
0.40
0.02
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
-
-
-
-
-
-
-
-
-
-
150
ii)
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
Kartar Singh
Mudaliar & Sons Hotels Pvt Ltd (against
security deposit)
Mudaliar & Sons Hotels Pvt Ltd (against
advances recoverable)
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
Nik Travels Private Limited
-
Mr. Dheeraj Agarwal
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
0.12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.06
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Payables
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
151
Particulars
Relatives of Key Management Personnel
Ninemonths
Period
Ended
December
31, 2007
A) Transactions
i)
Revenue from Value Added Services
Spice Communications Limited
Year
Year Ended
Ended
March 31,
March 31,
2006
2007
-
-
-
Fifteenmonths
Period
Ended
March 31,
2005
Enterprises owned or significantly influenced by key
management personnel or their relatives
Year Ended
December
31, 2003
-
-
NineYear
Year
months
Ended
Ended
Period March 31, March
Ended
2007
31, 2006
December
31, 2007
34.32
117.80
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
87.74
2.12
133.18
ii)
Revenue from Roaming Services
Spice Communications Limited
-
-
-
-
-
42.80
50.69
78.66
-
221.23
-
-
-
-
-
-
-
-
-
-
-
-
-
4.67
-
11.87
-
13.79
iii)
Sale of Softwares
iv)
Other Income (Rental Income)
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
254.76
1.60
iv)
v)
Purchase of Fixed Assets
Spice Mobiles Limited
Hot Spot Retails Private Limited
MCorpGlobal Private Limited
Roaming Expenses
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.16
0.27
-
21.96
18.72
vi)
vii)
viii)
Enterprise Solution Charges
Spice Communications Limited
Gifts and Prizes
Hot Spot Retails Private Limited
Spice Communications Limited
Website Development Charges
Spice Communications Limited
10.63
-
-
-
-
-
9.95
4.07
-
-
-
-
-
-
-
-
-
0.07
-
-
-
-
-
-
-
-
-
1.20
-
-
-
152
ix)
x)
Hardware and Equipment Maintenance Services
Spice Communications Limited
Rent Paid
Spice Communications Limited
Harjas Logic Systems Private Limited
Wellwisher Holdings Private Limited
-
-
-
-
-
-
-
0.75
3.75
-
-
-
-
-
-
0.27
2.93
0.36
3.91
1.00
0.36
0.33
-
0.81
-
-
1.80
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
153
Particulars
Relatives of Key Management Personnel
Ninemonths
Period
Ended
December
31, 2007
Enterprises owned or significantly influenced by key
management personnel or their relatives
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
xiii)
Travelling expenses
Nik Travels Private Limited
-
-
-
-
xiv)
Communication expenses
-
-
-
xv)
Spice Communications Limited
Sundry Debit Balances Written
Off
Spice Communications Limited
-
-
Balances Provided for
Spice Communications Limited
-
Electricity Expenses
Spice Communications Limited
xi)
xii)
xvi)
xvii)
xiii)
xix)
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
-
-
-
-
-
-
-
-
6.50
-
-
-
-
-
4.59
3.03
0.54
1.39
-
-
-
1.47
1.26
0.95
1.54
-
-
-
-
-
0.16
-
0.10
-
-
-
-
-
-
-
0.30
-
-
-
-
-
-
-
1.11
0.58
-
-
-
Spice Communications Limited
-
-
-
-
-
0.05
-
-
-
-
Legal & Professional Charges
Mobisoc Technology Private
-
-
-
-
-
-
-
-
-
-
Repair Services
Hot Spot Retails Private Limited
Ninemonths
Period
Ended
December
31, 2007
-
Business Promotion Expenses
-
Staff Welfare
154
Limited
xx)
xxi)
xxii)
xxiii)
xxiv)
xxv)
xxvi)
Corporate Guarantee Commission
income
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
5.88
3.20
-
-
Remuneration paid
Saket Agarwal
-
-
-
-
-
-
-
-
-
-
Kartar Singh
-
-
-
-
-
-
-
-
-
-
Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
0.36
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
0.33
-
Spice Communications Limited
Reimbursement of Expenses Paid
by the Company
Mobisoc Technology Private
Limited
-
-
-
-
-
-
0.59
0.97
49.47
-
Interest Income
Reimbursement of Expenses
Incurred by the Company
-
-
-
-
-
-
-
-
-
-
Dividend Paid
Omnia Investments Private
Limited
-
-
-
-
-
-
-
-
-
-
Dr. B.K Modi
-
-
-
-
-
-
-
-
-
-
Mrs. Veena Modi
-
-
-
-
-
-
-
-
-
Mr. Dilip Modi
-
-
-
-
-
-
-
-
-
Ms. Divya Modi
Investment in Equity Share
Capital
Mobisoc Technology Private
Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
155
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
156
Particulars
Relatives of Key Management Personnel
Ninemonths
Period
Ended
December
31, 2007
xxvii)
xxviii)
xxix)
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Fifteenmonths
Period
Ended
March
31, 2005
Enterprises owned or significantly influenced by key
management personnel or their relatives
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
-
Year
Ended
March
31, 2006
-
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
-
Share Application money paid
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
150.00
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
Share Application money received
back
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
79.50
-
-
-
-
-
-
-
-
150.00
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
79.50
-
-
-
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
17.50
-
Spice Net Limited
-
-
-
-
-
-
-
-
19.05
-
Hot Spot Retails Private Limited
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
Twenty First Century Capitals
Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.50
-
-
Advance Given During the Year
157
xxx)
xxxi)
xxxii)
Advance received back during the
year
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
19.00
-
Hot Spot Retails Private Limited
Twenty First Century Capitals
Limited
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.50
-
-
-
-
-
-
-
-
-
-
-
-
-
Mudaliar & Sons Hotels Pvt Ltd
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
1.95
-
-
-
-
-
-
-
-
-
54.10
115.50
-
-
Security Deposits Given
Loan Given During the Year
MCorpGlobal Private Limited
xxxiii)
Loan received back during the year
MCorpGlobal Private Limited
B)
Balances
at the year
end
i)
150.00
As at
December
31, 2007
As at
March
31, 2007
As at
March
31, 2006
As at
March
31, 2005
As at
December
31, 2003
As at
December
31, 2007
119.60
As at
March
31, 2007
50.00
As at
March
31, 2006
265.08
As at
March
31, 2005
As at
December
31, 2003
Receivables
Spice Communications Limited
-
-
-
-
-
184.13
20.27
47.30
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
17.60
-
Spice Net Limited
-
-
-
-
-
-
-
-
0.05
-
Modi Distributors Pvt. Ltd.
Omnia BPO Services Limited
-
-
-
-
-
-
-
-
5.00
-
-
-
-
-
-
-
-
-
-
-
158
(formerly known as Stracon Back
Office Solutions Limited)
ii)
Hot Spot Retails Private Limited
Twenty First Century Capitals
Limited
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
2.07
-
-
-
-
-
-
-
-
-
-
-
0.50
-
-
-
-
-
-
-
-
-
150.00
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
1.95
-
-
-
Kartar Singh
Mudaliar & Sons Hotels Pvt Ltd
(against security deposit)
Mudaliar & Sons Hotels Pvt Ltd
(against advances recoverable)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150.00
-
-
-
-
-
-
-
-
-
8.43
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
145.00
-
-
Nik Travels Private Limited
-
-
-
-
-
0.03
0.01
0.08
0.00*
-
Mr. Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
0.25
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
6.50
-
-
-
-
Spice Communications Limited
-
-
-
-
-
33.75
0.10
-
-
-
Payables
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
159
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED) GROUP
DETAILS OF TRANSACTIONS WITH RELATED PARTIES
Particulars
Holding Company
Fellow Subsidiary
Key Management
Personnel
Relatives of Key
Management Personnel
Enterprises owned or
significantly influenced by
key management
personnel or their
relatives
Total
For the nine
For the
For the nine
For the
For the nine
For the
For the nine
For the
For the nine
For the
For the nine
For the
months
year ended
months
year ended
months
year ended
months
year ended
months
year ended
months
year ended
period ended March 31, period ended March 31, period ended March 31, period ended March 31, period ended March 31, period ended March 31,
December 31,
2007
December 31,
2007
December 31,
2007
December 31,
2007
December 31,
2007
December 31,
2007
2007
2007
2007
2007
2007
2007
A) Transactions
i) Revenue from Value Added
Services
Spice Communications
Limited
ii) Revenue from Roaming
Services
Spice Communications
Limited
iii) Sale of Products
Spice Communications
Limited
iv) Other Income (Rental
Income)
Hot Spot Retails Private
Limited
v) Purchase of Fixed Assets
Spice Mobiles Limited
Hot Spot Retails Private
Limited
vi) Roaming Expenses
Spice Communications
Limited
vii) Enterprise Solution
Charges
-
-
7.85
-
-
-
-
-
34.32
117.80
42.17
117.80
-
-
3.62
-
-
-
-
-
13.79
42.80
17.41
42.80
-
-
52.70
-
-
-
-
-
254.76
221.23
307.46
221.23
-
-
0.20
-
-
-
-
-
1.60
-
1.80
-
-
-
-
-
-
-
-
-
0.16
0.13
0.16
0.13
-
-
-
-
-
-
-
-
0.27
0.02
0.27
0.02
-
-
5.97
-
-
-
-
-
18.72
21.96
24.69
21.96
160
viii)
ix)
x)
xi)
xii)
Spice Communications
Limited
Gifts and Prizes
Hot Spot Retails Private
Limited
Spice Communications
Limited
Website Development
Charges
Spice Communications
Limited
Rent Paid
Spice Communications
Limited
Harjas Logic Systems
Private Limited
Wellwisher Holdings
Private Limited
Repair Services
Hot Spot Retails Private
Limited
Business Promotion
Expenses
Hot Spot Retails Private
Limited
Spice Mobiles Limited
-
-
2.96
-
-
-
-
-
9.95
4.07
12.91
4.07
-
-
-
0.02
-
-
-
-
-
-
-
0.02
-
-
-
-
-
-
-
-
-
0.07
-
0.07
-
-
-
-
-
-
-
-
-
1.20
-
1.20
-
-
-
-
-
-
-
-
0.27
0.36
0.27
0.36
-
-
-
-
-
-
-
-
2.93
3.91
2.93
3.91
-
-
-
-
-
-
-
-
1.80
1.00
1.80
1.00
-
-
-
0.00
-
-
-
-
-
-
-
0.00
-
-
0.05
0.03
-
-
-
-
0.00
-
0.05
0.03
-
-
-
-
-
-
-
-
6.50
-
6.50
-
-
-
-
-
-
-
-
-
4.59
3.24
4.59
3.24
-
-
0.44
-
-
-
-
-
1.47
1.26
1.91
1.26
-
-
-
-
-
-
-
-
-
0.16
-
0.16
-
-
-
-
-
-
-
-
1.11
0.58
1.11
0.58
xiii) Travelling expenses
Nik Travels Private Limited
xiv) Communication expenses
Spice Communications
Limited
xv) Sundry Debit Balances
Written Off
Spice Communications
Limited
xvi) Electricity Expenses
Spice Communications
Limited
xvii) Staff Welfare
Spice Communications
161
Limited
xviii) Corporate Guarantee
Commission income
Omnia BPO Services
Limited (formerly known as Stracon Back Office
Solutions Limited)
xix) Interest Income
MCorpGlobal Private
Limited
xx) Remuneration paid
Saket Agarwal
Kartar Singh
Lokesh Gupta
xxi) Reimbursement of
Expenses Incurred by the
Company
MCorpGlobal Private
Limited
Spice Communications
Limited
xxii) Reimbursement by the
Group of expenses incurred
MCorpGlobal Private
Limited
xxiii) Dividend Paid
Omnia Investments Private
Limited
Dr. B.K Modi
Mrs. Veena Modi
Mr. Dilip Modi
Ms. Divya Modi
xxiv) Share Application money
paid
Hot Spot Retails Private
-
-
-
-
-
-
-
0.05
-
0.05
-
-
-
0.39
-
-
-
-
-
-
-
0.39
-
-
-
-
-
-
-
-
5.88
-
5.88
-
-
-
0.99
-
-
-
-
-
0.99
-
-
-
-
2.27
-
-
-
-
-
2.27
-
-
-
-
3.89
3.15
-
-
-
-
3.89
3.15
-
-
-
-
-
-
-
-
0.36
-
0.36
-
-
-
-
-
-
-
-
0.59
-
0.59
-
-
-
-
-
-
-
-
0.43
-
0.43
400.18
-
-
-
-
-
-
-
-
-
400.18
-
-
-
-
0.00 -
-
-
-
-
0.00
-
-
-
-
-
-
0.00 -
-
-
0.00
-
-
-
-
0.02
-
-
-
-
0.02
-
-
-
-
-
-
0.00 -
-
-
0.00
162
-
Limited
xxv) Share Application money
received back
Bougainvillea Multiplex &
Entertainment Center Private
Limited
Hot Spot Retails Private
Limited
MCorpGlobal Private
Limited
xxvi) Share Application money
received
Omnia Investments Private
Limited
xxvii Share Application money
) paid back
Omnia Investments Private
Limited
xxviii Advance Given During the
) Year
Omnia BPO Services
Limited (formerly known as
Stracon Back Office
Solutions Limited)
xxix) Advance received back
during the year
Twenty First Century
Capitals Limited
Omnia BPO Services
Limited (formerly known as
Stracon Back Office
Solutions Limited)
xxx) Security Deposits Given
Harjas Logic Systems
Private Limited
Mudaliar & Sons Hotels Pvt
Ltd
xxxi) Loan Given During the
Year
MCorpGlobal Private
Limited
xxxii Loan received back during
-
-
-
43.20
-
-
-
-
-
-
-
43.20
-
-
-
-
-
-
-
-
-
150.00
-
150.00
-
-
-
43.20
-
-
-
-
-
-
-
43.20
-
-
-
-
-
-
-
-
-
79.50
-
79.50
-
10.00
-
-
-
-
-
-
-
-
-
10.00
-
10.00
-
-
-
-
-
-
-
-
-
10.00
-
-
-
0.40
-
-
-
-
-
-
-
0.40
-
-
-
-
-
-
-
-
-
0.50
-
0.50
-
-
-
0.40
-
-
-
-
-
-
-
0.40
-
-
-
-
-
-
-
-
-
1.95
-
1.95
-
-
-
-
-
-
-
-
150.00
-
150.00
-
-
-
-
-
-
-
-
-
-
54.10
-
54.10
163
)
the year
MCorpGlobal Private
Limited
B) Balances at the year end
i)
ii)
Receivables
Spice Communications
Limited
Omnia BPO Services
Limited (formerly known as
Stracon Back Office
Solutions Limited)
Hot Spot Retails Private
Limited
Harjas Logic Systems
Private Limited
Mr. Kartar Singh
-
-
As at
December 31,
2007
-
-
As at March 31, 2007
-
-
-
-
-
119.60
-
119.60
As at
As at
As at
As at
As at
As at
As at
As at
December 31, March 31, December 31, March 31, December 31, March 31, December 31, March 31,
2007
2007
2007
2007
2007
2007
2007
2007
-
-
-
-
-
-
-
-
265.08
184.13
265.08
184.13
-
-
-
0.40
-
-
-
-
-
-
-
0.40
-
-
-
-
-
-
-
-
2.07
-
2.07
-
-
-
-
-
-
-
-
-
-
1.95
-
1.95
Mudaliar & Sons Hotels Pvt
Ltd (against security deposit) Mudaliar & Sons Hotels Pvt
Ltd (against advances
recoverable)
Payables
Nik Travels Private Limited
Spice Communications
Limited
Spice Mobiles Limited
-
-
-
-
0.12
-
-
-
-
-
0.12
-
-
-
-
-
-
-
-
150.00
-
150.00
-
-
-
-
-
-
-
-
8.43
-
8.43
-
-
-
-
-
-
-
-
0.03
0.01
0.03
0.01
-
-
-
-
-
-
-
33.75
0.10
33.75
0.10
-
-
-
-
-
-
-
6.50
-
6.50
-
Notes:
1)
2)
All amounts are in Rs. Million.
Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of
prices with the market rate.
164
DIVIDEND POLICY
The declaration and payment of dividend will be recommended by our Board and approved by the
shareholders of our Company at their discretion and will depend on a number of factors, including the
results of operations, earnings, capital requirements and surplus, general financial conditions,
contractual restrictions, applicable Indian legal restrictions and other factors considered relevant by the
Board. The Board may also from time to time pay interim dividend. All dividend payments are made in
cash to the shareholders of our Company.
The dividend declared by the company during the period ended December 31, 2007 and the last four
years/periods are presented below.
(Amount in Rs. Million)
Particulars
Nine- months
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
Fifteenmonths
Period Ended
March 31,
2005
Year
Ended
December
31, 2003
14,571,574
14,571,574
12,000,120
2,000,020
2,000,020
16.07*
33.35**
-
-
-
160.70%
333.5%
-
-
-
234.28
400.20
-
-
-
39.82
56.13
-
-
-
Class of Shares
Equity Share Capital as outstanding at
the year end
Dividend on Equity Shares
- Dividend per equity share ( Rs. )
- Dividend rate ( % to paid up
capital)
- Dividend amount
Dividend Tax
*Proposed Dividend on equity shares for the nine months period ended December 31, 2007.
**Interim Dividend on equity shares for the year ended December 31, 2007.
Notes:
1)
The amount paid as dividend in the past is not indicative of the dividend policy in the future.
2)
The figures disclosed above are based on the Unconsolidated Summary Statement of Profits
and Losses, as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Limited
)
165
SECTION V: FINANCIAL INFORMATION
FINANCIAL STATEMENTS
RESTATED FINANCIAL INFORMATION FOR CELLBRUM TECHNOLOGIES LIMITED
(FORMERLY CELLEBRUM.COM LIMITED)
UNCONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES AS AT
DECEMBER 31, 2007, MARCH 31, 2007, 2006, 2005 AND DECEMBER 31, 2003 AND PROFITS
AND LOSSES AND CASH FLOWS FOR THE NINE MONTHS PERIOD ENDED DECEMBER 31,
2007, AND THE YEARS ENDED MARCH 31, 2007, MARCH 31, 2006 AND FIFTEEN MONTHS
PERIOD ENDED MARCH 31, 2005 AND YEAR ENDED DECEMBER 31, 2003, AS RESTATED
UNDER INDIAN GAAP FOR CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY
CELLEBRUM.COM LIMITED)
AND
CONSOLIDATED SUMMARY STATEMENT OF ASSETS AND LIABILITIES AS AT
DECEMBER 31, 2007 AND MARCH 31, 2007 AND PROFITS AND LOSSES AND CASH FLOWS
FOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2007, AND FOR THE YEAR
ENDED MARCH 31, 2007, AS RESTATED UNDER INDIAN GAAP FOR CELLEBRUM
TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
Auditors’ Report as required by Part II of Schedule II to the Companies Act, 1956
The Board of Directors
Cellebrum Technologies Limited
D-1, Sector 3, Gautam Buddh Nagar,
Noida – 201301 (UP)
India
Dear Sirs,
1.
We have examined (read together with the para 5(b) below) the attached restated financial
information of Cellebrum Technologies Limited (formerly Cellebrum.com Limited) (the
“Company”) for the purposes of inclusion in the offer document (“Offer Document”) prepared by
the Company in connection with its proposed Initial Public Offer (“IPO”). Such financial
information, which has been approved by the Board of Directors of the Company, has been
prepared in accordance with the requirements of:
a) paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (“the Act”) as amended;
b) the Securities & Exchange Board of India (Disclosure & Investor Protection) Guidelines 2000
(the “Guidelines”) issued by the Securities and Exchange Board of India (“SEBI”) on January
19, 2000, as amended from time to time in pursuance of Section 11 of the Securities and
Exchange Board of India Act, 1992;
2.
We have examined such restated financial information taking into consideration:
a)
the terms of reference received from the Company vide their letter dated February 27, 2008,
requesting us to carry out work on such financial information, proposed to be included in the
Offer Document of the Company in connection with its proposed IPO;
b) the Guidance Note on Reports in Company Prospectuses (Revised) issued by the Institute of
Chartered Accountants of India.
3.
Such restated financial information has been compiled by the management from:
a)
the audited unconsolidated balance sheets of the Company as at December 31, 2007, March
31, 2007, 2006, 2005 and December 31, 2003 and the related audited unconsolidated profit
166
and loss accounts and cash flow statements, for the nine months period ended December 31,
2007 and the years ended March 31, 2007, 2006, fifteen months period ended March 31, 2005
and year ended December 31, 2003. The audit of the unconsolidated financial Statements of
the Company as at and for the year ended March 31, 2006, fifteen months period ended March
31, 2005 and year ended December 31, 2003 was conducted by Gupta Garg & Agrawal,
Chartered Accountants.
The restated financial information of the Company as at and for the year ended March 31,
2006, fifteen months period ended March 31, 2005 and year ended December 31, 2003 has
been examined by Gupta Garg & Agrawal. Accordingly, we have placed reliance on the
restated financial information examined and reported upon by Gupta Garg & Agrawal for the
said years / periods and have not carried out any additional procedures thereon.
b) the audited consolidated balance sheets of the Company and Mobisoc Technology Private
Limited (the ‘subsidiary’) (collectively hereinafter referred to as the “Group”) as at December
31, 2007 and March 31, 2007 and the related audited consolidated profit and loss accounts and
cash flow statements for the nine months period ended December 31, 2007 and the year ended
March 31, 2007. We have not audited the financial statements of the subsidiary of the
Company as at and for the nine months period ended December 31, 2007 and year ended
March 31, 2007; those financial statements have been audited by Gupta Garg & Agrawal,
Chartered Accountants and our opinion, in so far as it relates to amounts included for the
subsidiary, is based solely on the reports of Gupta, Garg & Agrawal.
4.
This report is being issued for the purpose of incorporating the same in the Offer Document to be
issued by Cellebrum Technologies Limited in connection with the proposed offer of issue of fresh
equity shares by the Company.
5.
In accordance with the requirements of Schedule II of the Act, the SEBI Guidelines and the terms
of our engagement agreed with you, we report that :
a)
We have examined the restated unconsolidated summary statement of assets and liabilities of
the Company as at December 31, 2007 and March 31, 2007 and the related restated
unconsolidated summary statement of profits and losses and cash flows for the nine months
period ended December 31, 2007 and the year ended March 31, 2007 and the notes thereon
(these statements hereinafter are collectively referred to as the “Restated Current
Unconsolidated Summary Statements”)
b) Gupta Garg & Agrawal, the immediate previous auditors of the Company, have examined the
restated unconsolidated summary statement of assets and liabilities of the Company as at
March 31, 2006, 2005 and December 31, 2003 and the related restated unconsolidated
summary statement of profits and losses and cash flows for the year ended March 31, 2006,
fifteen months period ended March 31, 2005 and year ended December 31, 2003 (these
restated unconsolidated summary statements of assets and liabilities, profits and losses and
cash flows and the notes thereon, as examined and reported upon by Gupta Garg & Agrawal,
hereinafter are collectively referred to as “Restated Prior Years Unconsolidated Summary
Statements”). The report dated June 26, 2008 submitted by them is attached herewith;
The Restated Current Unconsolidated Summary Statements and the Restated Prior Years
Unconsolidated Summary Statements are hereinafter collectively referred to as “Restated
Unconsolidated Summary Statements” and are attached as Annexures I to IV to this report.
c)
We have also examined the restated consolidated summary statement of assets and liabilities
of the Group as at December 31, 2007 and March 31, 2007 and the related restated
consolidated summary statement of profits and losses and cash flows for the nine months
period ended December 31, 2007 and the year ended March 31, 2007 and the notes thereon
(these statements hereinafter are collectively referred to as the “Restated Consolidated
Summary Statements”)
The Restated Consolidated Summary Statements are attached as Annexures XVI to XIX to
this report.
167
6.
a) Without qualifying our opinion and as further elaborated in Note F (i) appearing in AnnexureIV to Restated Unconsolidated Summary Statements and Note E (l) (i) appearing in
Annexure- XIX to Restated Consolidated Summary Statements, we draw attention to the fact
that for the purpose of these Restated Unconsolidated Summary Statements and Restated
Consolidated Summary Statements, the changes in estimates of useful lives of fixed assets
have not been restated as the management believes that such changes in estimates of useful
lives of fixed assets were bonafide and occasioned by technical / environmental factors and
hence do not require restatement. Accordingly, the impact of such changes in accounting
estimates has not been considered as an adjustment item for the purpose of the restatement of
all the other years/ periods presented.
b) Without qualifying our opinion and as further elaborated in Note F (ii) appearing in AnnexureIV to Restated Unconsolidated Summary Statements and Note E (l) (ii) appearing in
Annexure- XIX to Restated Consolidated Summary Statements, we draw attention to the fact
that for the purpose of these Restated Unconsolidated Summary Statements and Restated
Consolidated Summary Statements, due to practical difficulties in retrospective application of
Accounting Standard (“AS”) 15, the Company has adopted the revised AS 15 on ‘Employee
Benefits’ issued by the Institute of Chartered Accountants of India (“ICAI”) effective April 1 ,
2007. Accordingly, the impact of the revised AS 15 has not been considered as an adjustment
item for the purpose of the restatement of all the other years/ periods presented.
c) Without qualifying our opinion and as further elaborated in Note F (iii) appearing in AnnexureIV to Restated Unconsolidated Summary Statements and Note E (l) (iii) appearing in
Annexure- XIX to Restated Consolidated Summary Statements, we draw attention to the fact
that for the purpose of these Restated Unconsolidated Summary Statements and Restated
Consolidated Summary Statements, due to practical difficulties in retrospective application of
the notified Accounting Standard (‘AS’) 11 which is mandatory from the accounting periods
commencing on or after December 7, 2006, the Company has adopted the AS 11 on ‘The
Effect of Changes in Foreign Exchange Rates’ notified under the Companies (Accounting
Standard) Rules, 2006 effective April 1, 2007. Accordingly, the impact of revised AS 11 has
not been considered as an adjustment item for the purpose of the restatement of all the other
years/ periods presented. In our opinion, the impact of such adjustment will not be material in
relation to the Restated Unconsolidated Summary Statements and Restated Consolidated
Summary Statements.
7.
Based on our examination and also as per the reliance placed on the report dated June 26, 2008
submitted by Gupta Garg & Agrawal as referred in paragraph 5 above, we further report that the
restated unconsolidated and consolidated profits and losses have been arrived at:
a)
after making such adjustments and regroupings as, in our opinion, are appropriate and more
fully described in the notes appearing in Annexure IV and Annexure XIX to Restated
Unconsolidated Summary Statements and Restated Consolidated Summary Statements
respectively;
b) after incorporating the impact of changes in accounting policies adopted by the Company and
the Group as at and for the nine months period ended December 31, 2007, which have been
adjusted with retrospective effect in the Restated Unconsolidated Summary Statements and
Restated Consolidated Statements respectively, except to the extent stated in 6 (b) and (c)
above;
c)
after making adjustments for the material amounts relating to prior years in the Restated
Unconsolidated Summary Statements and Restated Consolidated Summary Statements in the
respective financial years/ periods to which they relate;
d) after making adjustment for rectification of the qualification in the auditors’ report on the
financial statements relating to the year ended March 31, 2007 in the Restated Consolidated
Summary Statements. There are no qualifications in the auditors’ reports, which require any
adjustments to the Restated Unconsolidated Summary Statements.
168
There are no extraordinary items which need to be disclosed separately in the Restated
Unconsolidated Summary Statements and Restated Consolidated Summary Statements.
8.
We have not audited any unconsolidated financial statements of the Company or consolidated
financial statements of the Group as of any date or for any period subsequent to December 31,
2007. Accordingly, we express no opinion on the financial position, results of operations or cash
flows of the Company or the Group as of any date or for any period subsequent to December 31,
2007.
9.
We have also examined the unconsolidated financial information of the Company as at and for the
nine months period ended December 31, 2007 and year ended March 31, 2007, listed below, which
is proposed to be included in the Offer Document, as approved by the Board of Directors of the
Company and attached to this report. Gupta Garg & Agrawal, vide their report dated June 26, 2008
attached herewith, have examined (except Annexure VII) such unconsolidated financial
information of the Company as at and in respect of the year ended March 31, 2006, fifteen months
period ended March 31, 2005 and year ended December 31, 2003, proposed to be included in the
Offer Document, as approved by the Board of Directors of the Company and attached to this
report.
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
Details of Other Income, as appearing in Annexure V ;
Details of Rates of Dividend, as appearing in Annexure VI
Capitalization Statement, as appearing in Annexure VII ;
Details of Secured Loans, as appearing in Annexure VIII ;
Details of Investments, as appearing in Annexure IX ;
Details of Sundry Debtors, as appearing in Annexure X;
Details of Loans and Advances, as appearing in Annexure XI ;
Details of Other Current Assets, as appearing in Annexure XII
Statement of Tax Shelters, as appearing in Annexure XIII ;
Statement of Accounting Ratios, as appearing in Annexure XIV ; and
Details of the Related Parties and transactions with them, as appearing in Annexure XV
10. We have also examined the consolidated financial information of the Group as at and for the nine
months period ended December 31, 2007 and year ended March 31, 2007 listed below, which is
proposed to be included in the Offer Document, as approved by the Board of Directors of the
Company and attached to this report.
a)
b)
c)
d)
e)
f)
g)
h)
Details of Other Income, as appearing in Annexure XX ;
Details of Rates of Dividend, as appearing in Annexure XXI;
Capitalization Statement, as appearing in Annexure XXII ;
Details of Sundry Debtors, as appearing in Annexure XXIII ;
Details of Loans and Advances as appearing in Annexure XXIV ;
Details of Other Current Assets as appearing in Annexure XXV ;
Statement of Accounting Ratios as appearing in Annexure XXVI ; and
Details of the Related Parties and transactions with them, as appearing in Annexure XXVII
11. In our opinion, the financial information as disclosed in the Annexures to this report, read with the
respective significant accounting policies and notes disclosed in Annexure IV and XIX, and after
making adjustments and re-groupings as considered appropriate and disclosed in Annexure IV and
XIX, has been prepared in accordance with Part II of Schedule II of the Act and the Guidelines.
12. This report should not in any way be construed as a reissuance or redating of any of the previous
audit reports issued by us, nor should this report be construed as a new opinion on any of the
financial statements referred to herein.
13. Our audits referred to in paragraph 3 above were carried out for the purpose of certifying the
general purpose financial statements taken as a whole. For none of the years/ periods referred to in
paragraph 3 above, did we perform audit tests for the purpose of expressing an opinion on
individual balances of accounts or summaries of selected transactions, and accordingly, we express
no such opinion thereon.
169
14. We have no responsibility to update our report for events and circumstances occurring after the
date of the report.
15. This report is intended solely for your information and for inclusion in Offer Document prepared
in connection with the proposed IPO of the Company and is not to be used, referred to or
distributed for any other purpose without our prior written consent.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
per Raj Agrawal
Partner
Membership No. 82028
Place: Gurgaon
Date: June 26, 2008
Enclosed: Report of Gupta Garg & Agrawal dated June 26, 2008
170
RESTATED FINANCIAL INFORMATION FOR CELLBRUM TECHNOLOGIES LIMITED
(FORMERLY CELLEBRUM.COM LIMITED)
UNCONSOLIDATED SUMMARY STATEMENTS OF ASSETS AND LIABILITIES AS AT
MARCH 31, 2006, 2005 AND DECEMBER 31, 2003 AND PROFITS AND LOSSES AND CASH
FLOWS FOR THE YEAR ENDED MARCH 31, 2006, FIFTEEN MONTHS PERIOD ENDED
MARCH 31, 2005 AND YEAR ENDED DECEMBER 31, 2003, AS RESTATED UNDER INDIAN
GAAP FOR CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM
LIMITED)
Auditors’ Report as required by Part II of Schedule II to the Companies Act, 1956
The Board of Directors
Cellebrum Technologies Limited
D-1, Sector 3, Gautam Buddh Nagar,
Noida – 201301 (UP)
India
Dear Sirs,
1.
We have examined the attached restated financial information of Cellebrum Technologies Limited
(formerly Cellebrum.com Limited) (the “Company”) for the purposes of inclusion in the offer
document (“Offer Document”) prepared by the Company in connection with its proposed Initial
Public Offer (“IPO”). Such financial information, which has been approved by the Board of
Directors of the Company, has been prepared in accordance with the requirements of:
a) paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (“the Act”) as amended;
b) the Securities & Exchange Board of India (Disclosure & Investor Protection) Guidelines 2000
(the “Guidelines”) issued by the Securities and Exchange Board of India (“SEBI”) on January
19, 2000, as amended from time to time in pursuance of Section 11 of the Securities and
Exchange Board of India Act, 1992;
2.
We have examined such restated financial information taking into consideration:
a) the terms of reference received from the Company vide their letter dated February 27, 2008,
requesting us to carry out work on such financial information, proposed to be included in the
Offer Document of the Company in connection with its proposed IPO;
b) the Guidance Note (Revised) on Reports in Company Prospectuses issued by the Institute of
Chartered Accountants of India.
3.
Such restated financial information has been compiled by the management from the audited
unconsolidated balance sheets of the Company as at March 31, 2006, 2005 and December 31, 2003
and the related audited unconsolidated profit and loss accounts and cash flow statements, for the
year ended March 31, 2006, fifteen months period ended March 31, 2005 and year ended
December 31, 2003.
4.
This report is being issued for the purpose of incorporating the same in the Offer Document to be
issued by Cellebrum Technologies Limited in connection with the proposed offer of issue of fresh
equity shares by the Company.
5.
In accordance with the requirements of Schedule II of the Act, the SEBI Guidelines and the terms
of our engagement agreed with you, we report that we have examined the restated unconsolidated
summary statement of assets and liabilities of the Company as at March 31, 2006, 2005 and
December 31, 2003 and the related restated unconsolidated summary statement of profits and
losses and cash flows for the year ended March 31, 2006, fifteen months period ended March 31,
2005 and year ended December 31, 2003 and the notes thereon (these statements hereinafter are
collectively referred to as the “Restated Prior Years Unconsolidated Summary Statements”) and
are attached as Annexures I to IV to this report.
171
6. a) Without qualifying our opinion and as further elaborated in Note F (i) appearing in Annexure-IV
to Restated Prior Years Unconsolidated Summary Statements, we draw attention to the fact that
for the purpose of these Restated Prior Years Unconsolidated Summary Statements, the changes
in estimates of useful lives of fixed assets have not been restated as the management believes
that such changes in estimates of useful lives of fixed assets were bonafide and occasioned by
technical / environmental factors and hence do not require restatement. Accordingly, the impact
of such changes in accounting estimates has not been considered as an adjustment item for the
purpose of the restatement of all the other years/ periods presented.
b) Without qualifying our opinion and as further elaborated in Note F (ii) appearing in Annexure-IV
to Restated Prior Years Unconsolidated Summary Statements, we draw attention to the fact that
for the purpose of these Restated Prior Years Unconsolidated Summary Statements, due to
practical difficulties in retrospective application of Accounting Standard (“AS”) 15, the
Company has adopted the revised AS 15 on ‘Employee Benefits’ issued by the Institute of
Chartered Accountants of India (“ICAI”) effective April 1 , 2007. Accordingly, the impact of the
revised AS 15 has not been considered as an adjustment item for the purpose of the restatement
of all the other years/ periods presented.
c) Without qualifying our opinion and as further elaborated in Note F (iii) appearing in AnnexureIV to Restated Prior Years Unconsolidated Summary Statements, we draw attention to the
fact that for the purpose of these Restated Prior Years Unconsolidated Summary Statements,
due to practical difficulties in retrospective application of the notified Accounting Standard
(‘AS’) 11 which is mandatory from the accounting periods commencing on or after December
7, 2006, the Company has adopted the AS 11 on ‘The Effect of Changes in Foreign Exchange
Rates’ notified under the Companies (Accounting Standard) Rules, 2006 effective April 1,
2007. Accordingly, the impact of revised AS 11 has not been considered as an adjustment
item for the purpose of the restatement of all the other years/ periods presented. In our
opinion, the impact of such adjustment will not be material in relation to the Restated
Unconsolidated Summary Statements.
7.
Based on our examination, we further report that the restated unconsolidated profits and losses
have been arrived at:
a)
after making such adjustments and regroupings as, in our opinion, are appropriate and more fully
described in the notes appearing in Annexure IV to Restated Prior Years Unconsolidated
Summary Statements:
b) after incorporating the impact of changes in accounting policies adopted by the Company as at
and for the nine months period ended December 31, 2007, which have been adjusted with
retrospective effect in the Restated Prior Years Unconsolidated Summary Statements, except to
the extent stated in 6(b) and (c) above; and
c)
after making adjustments for the material amounts relating to prior years in the Restated Prior
Years Unconsolidated Summary Statements in the respective financial years / periods to which
they relate.
There are no extraordinary items which need to be disclosed separately in the Restated Prior
Years Unconsolidated Summary Statements.
There are no qualifications in the auditors’ reports, which require any adjustments to the
Restated Prior Years Unconsolidated Summary Statements.
8.
We have not audited any unconsolidated financial statements of the Company as of any date or for
any period subsequent to March 31, 2006. Accordingly, we express no opinion on the financial
position, results of operations or cash flows of the Company or as of any date or for any period
subsequent to March 31, 2006.
9.
We have also examined (except Annexure VII) the unconsolidated financial information of the
Company as at and for the year ended March 31, 2006, fifteen months period ended March 31,
2005, and year ended December 31, 2003, listed below, which is proposed to be included in the
172
Offer Document, as approved by the Board of Directors of the Company and attached to this
report.
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
Details of Other Income, as appearing in Annexure V;
Details of Rates of Dividend, as appearing in Annexure VI;
Capitalisation Statement, as appearing in Annexure VII;
Details of Secured Loans, as appearing in Annexure VIII;
Details of Investments, as appearing in Annexure IX;
Details of Sundry Debtors, as appearing in Annexure X;
Details of Loans and Advances, as appearing in Annexure XI ;
Details of Other Current Assets, as appearing in Annexure XII;
Statement of Tax Shelters, as appearing in Annexure XIII;
Statement of Accounting Ratios, as appearing in Annexure XIV ; and
Details of the Related Parties and transactions with them, as appearing in Annexure XV
10. In our opinion, the financial information as disclosed in the Annexures to this report, read with the
respective significant accounting policies and notes disclosed in Annexure IV, and after making
adjustments and re-groupings as considered appropriate and disclosed in Annexure IV, has been
prepared in accordance with Part II of Schedule II of the Act and the Guidelines.
11. This report should not in any way be construed as a reissuance or redating of any of the previous
audit reports issued by us, nor should this report be construed as a new opinion on any of the
financial statements referred to herein.
12. Our audits referred to in paragraph 3 above were carried out for the purpose of certifying the
general purpose financial statements taken as a whole. For none of the years/ periods referred to in
paragraph 3 above, did we perform audit tests for the purpose of expressing an opinion on
individual balances of accounts or summaries of selected transactions, and accordingly, we express
no such opinion thereon.
13. We have no responsibility to update our report for events and circumstances occurring after the
date of the report.
14. This report is intended solely for your information and for inclusion in Offer Document prepared
in connection with the proposed IPO of the Company and is not to be used, referred to or
distributed for any other purpose without our prior written consent.
For GUPTA GARG & AGRAWAL
Chartered Accountants
per B. B. Gupta
Partner
Membership No. 012399
Place: Delhi
Date: June 26, 2008
173
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE I : UNCONSOLIDATED SUMMARY STATEMENT OF ASSETS AND
LIABILITIES, AS RESTATED
Particulars
As at
December
31, 2007
(Amt in Rs. million)
As at March
As at
31, 2005
December
31, 2003
As at March
31, 2007
As at March
31, 2006
451.62
185.26
68.50
29.38
-
(113.29)
(52.99)
(9.28)
(2.22)
-
Net Block
Capital Work In Progress
including Capital Advances
338.33
132.27
59.22
27.16
-
8.05
31.21
9.24
-
-
Total
346.38
163.48
68.46
27.16
-
Investments
100.00
100.00
-
-
-
Deferred Tax Assets (net)
Current Assets, Loans &
Advances
-
1.87
0.06
-
2.93
Inventories
-
1.36
-
-
-
Sundry Debtors
357.24
262.53
46.09
67.40
0.15
Cash and Bank Balances
414.26
554.95
21.22
90.56
6.42
83.44
2.39
2.61
1.39
3.75
293.24
47.70
300.77
24.07
0.17
Total
1,148.18
868.93
370.69
183.42
10.49
TOTAL (A)
1,594.56
1,134.28
439.21
210.58
13.42
2.60
-
-
0.55
-
179.67
-
0.67
19.57
12.80
-
APPLICATION OF FUNDS
Fixed Assets
Gross Block
Less: Accumulated
Depreciation/ Amortisation
Other Current Assets
Loans & Advances
Deferred Tax Liabilities (net)
Liabilities and Provisions
Secured Loan
Current Liabilities
85.89
0.43
Provisions
315.88
11.50
4.68
3.33
0.01
Total
495.55
97.39
24.92
16.13
0.44
TOTAL (B)
498.15
97.39
24.92
16.68
0.44
1,096.41
1,036.89
414.29
193.90
12.98
145.72
145.72
120.00
20.00
20.00
Net Worth (A-B)
Represented by
Share Capital and Reserves
Equity Share Capital
174
Particulars
Reserves and Surplus (Figure
for December 31, 2007 is net
of Rs. 5.11 million being
adjustment for employee
provisions (Refer Note No. C
(iii ) and G (2) of the
Annexure IV)
As at
December
31, 2007
As at March
31, 2007
As at March
31, 2006
As at March
31, 2005
950.69
891.17
294.29
173.90
-
-
-
-
-
(6.93)
-
-
-
-
(0.09)
1,096.41
1,036.89
414.29
193.90
12.98
Profit and Loss Account
Less: Miscellaneous
Expenditure
(to the extent not written off
or adjusted)
Net Worth
As at
December
31, 2003
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Unconsolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure IV.
As per our report of even date
FOR S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Per Raj Agrawal
Partner
Membership No. : 82028
Place: Gurgaon
Date: June 26, 2008
For and on behalf of the Board of Cellebrum Technologies Limited
(Directors)
(Directors)
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
Kartar Singh
Chief Finance Officer
Company secretary
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
175
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE II : UNCONSOLIDATED SUMMARY STATEMENT OF PROFIT AND LOSS,
AS RESTATED
Particulars
Ninemonths
Period
Ended
December
31, 2007
(Amount in Rs. Million)
FifteenYear
months
Ended
Period
December
Ended
31, 2003
March 31,
2005
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
734.56
661.78
324.95
268.28
8.54
Other Income
36.31
23.79
7.31
3.49
0.06
Total Income
770.87
685.57
332.26
271.77
8.60
0.99
3.38
-
-
-
82.13
53.69
21.49
23.45
-
108.62
66.11
28.53
20.15
0.59
16.56
7.28
4.79
5.15
1.92
144.82
74.95
23.77
13.45
1.17
1.36
(1.36)
-
-
-
0.94
0.04
0.01
0.53
-
-
-
0.03
0.06
0.64
60.31
32.90
14.59
5.54
-
415.73
236.99
93.21
68.33
4.32
355.14
448.58
239.05
203.44
4.28
(0.69)
0.38
-
-
-
355.83
448.20
239.05
203.44
4.28
12.64
23.64
20.03
21.22
0.06
Deferred Tax Charge / (Credit)
3.99
(1.24)
(0.30)
3.48
1.53
Fringe Benefits Tax
4.51
2.10
1.03
-
-
21.14
24.50
20.76
24.70
1.59
334.69
423.70
218.29
178.74
2.69
INCOME
Operating Income
EXPENDITURE
Purchase of Goods for Sale
Operating Expenses
Staff Cost
Selling and Distribution
Expenses
General and Administration
Expenses
Decrease / (Increase) in
Inventories
Interest
Miscellaneous Expenditure
written off
Depreciation / Amortization (Refer
note no. C (ii) and G (11) of the
Annexure IV)
Total Expenditure
PROFIT BEFORE TAX AND
PRIOR PERIOD ITEMS
Prior Period Items
PROFIT BEFORE TAX AND
AFTER PRIOR PERIOD
ITEMS
Provision for Tax
Current Tax (Net of MAT Credit
entitlement, refer note no. G (13)
of the Annexure IV)
Total Tax Expense
NET PROFIT AS PER
AUDITED ACCOUNTS
176
Particulars
Ninemonths
Period
Ended
December
31, 2007
Adjustments ( Refer Note no. E
of Annexure IV)
Current Tax impact of
Adjustments
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
4.46
(9.64)
2.46
2.60
(0.42)
1.21
(0.28)
(0.51)
0.12
Deferred Tax impact of
Adjustments
-
0.48
(0.09)
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
4.04
(7.95)
2.09
1.70
0.12
NET PROFT AS
RESTATED
338.73
415.75
220.38
180.44
2.81
Profit & Loss Account at the
beginning of the year / period
206.50
289.45
169.07
(11.37)
(14.18)
PROFIT AVAILABLE FOR
APPROPRIATION
545.23
705.20
389.45
169.07
(11.37)
33.47
42.37
-
-
-
234.28
-
-
-
-
-
-
-
Particulars
Ninemonths
Period
Ended
December
31, 2007
Net Impact of Adjustments
(0.39)
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
Appropriations:
Transfer to General Reserve
Proposed Dividend on Equity
Shares (at the rate of Rs 16.07 per
share)
Interim Dividend on Equity Shares
(at the rate of Rs. 33.35 per share)
Tax on dividend
Utilized for Issue of bonus
shares
400.20
39.82
-
BALANCE CARRIED
FORWARD
AS RESTATED
56.14
-
237.66
100.00
206.50
289.45
-
-
169.07
(11.37)
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Consolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure XIX.
As per our report of even date
FOR S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
177
Per Raj Agrawal
Partner
Membership No. : 82028
Place: Gurgaon
Date: June 26, 2008
For and on behalf of the Board of Cellebrum Technologies Limited
(Directors)
(Directors)
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
Kartar Singh
Chief Finance Officer
Company secretary
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
178
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE III : UNCONSOLIDATED SUMMARY STATEMENT OF CASH FLOWS, AS
RESTATED
Particulars
(Amount in Rs. Million)
FifteenYear
months
Ended
Period
December
Ended
31, 2003
March 31,
2005
Nine- months
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
Net Profit Before Tax, As
Restated
360.29
438.56
241.52
206.04
4.40
Net Profit Before Tax, As
Restated
360.29
438.56
241.52
206.04
4.40
60.31
43.71
7.09
2.24
-
-
-
-
0.09
0.64
-
-
-
0.10
-
11.66
8.10
2.24
-
-
0.23
(0.86)
0.19
(0.01)
-
(33.61)
(22.98)
(6.26)
(3.28)
(0.06)
0.94
0.04
0.01
0.53
-
399.82
466.57
244.79
205.71
4.98
(105.89)
(224.51)
18.87
(67.24)
(0.12)
1.36
(1.36)
-
-
-
(216.94)
(15.42)
(2.93)
(1.40)
(0.17)
(77.12)
(0.96)
1.18
2.46
(3.75)
103.86
71.83
8.26
13.30
0.42
Cash Generated from
Operations
105.09
296.15
270.17
152.83
1.36
Direct Taxes Paid (including
Fringe Benefits Taxes)
(30.79)
(49.78)
(23.14)
(19.34)
(0.02)
A. Cash Flow from Operating
Activities
Adjustment for:
Depreciation / Amortization
Miscellaneous Expenditure
Written off
Loss on Sale of Fixed Assets
Provision for Doubtful Debts
Foreign Exchange (Gain) /
Loss
Interest Income
Interest Expense
Operating Profit Before
Working Capital Changes
Movement in Working
Capital:
Decrease / (Increase) in Sundry
Debtors
Decrease / (Increase) in
Inventories
(Increase) in Loans and
Advances
Decrease / (Increase) in Other
Current Assets
Increase in Current Liabilities
and Provisions
179
Particulars
Net Cash Generated from
Operations (A)
Particulars
Nine- months
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
74.30
246.37
247.03
Nine- months
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
(243.73)
(137.94)
(48.46)
(29.49)
-
-
-
0.06
-
4.02
117.17
(498.18)
66.87
(82.05)
(0.30)
-
(43.20)
(224.50)
(5.00)
-
-
272.70
-
-
-
-
(54.10)
(119.50)
(36.50)
-
-
119.60
71.50
19.00
-
-
(100.00)
-
-
-
29.67
24.15
3.86
3.18
0.06
(96.89)
(416.97)
(250.17)
(130.86)
3.78
-
25.71
-
-
-
-
645.23
-
-
-
-
(7.75)
-
-
-
-
-
0.67
-
-
-
(0.67)
-
-
-
(0.94)
(0.04)
(0.01)
(0.53)
-
-
(456.33)
-
-
-
(0.94)
206.15
0.66
(0.53)
-
(23.53)
35.55
(2.47)
2.10
5.12
133.49
Fifteenmonths
Period
Ended
March 31,
2005
1.34
Year
Ended
December
31, 2003
B. Cash Flow from Investing
Activities
Purchase of Fixed Assets
Proceeds from Sale of Fixed
Assets
Fixed Deposits with Banks
Share Application Money Paid
Share Application Money
Received Back
Inter Corporate Deposit Given
Inter Corporate Deposit
Received Back
Investment in Subsidiary
Interest Received
Net Cash Generated from /
(Used In) Investing
Activities(B)
C. Cash Flows from
Financing Activities
Proceeds from Issuance of
Share Capital
Securities Premium Received
Share Issue Expenses
Proceeds from Long-Term
Borrowings
Repayment of Long-Term
Borrowings
Interest Paid
Dividend Paid (including tax
on dividend paid)
Net Cash Generated from /
(Used in) Financing Activities
(C)
Net Changes in Cash & Cash
Equivalents (A+B+C)
180
Particulars
Nine- months
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
40.34
4.79
7.26
5.17
0.05
16.81
40.34
4.79
7.27
5.17
Cash in Hand
0.26
0.05
0.06
0.02
0.10
Cheques in Hand
Balances with Scheduled
Banks on Current Accounts
Balance with Hongkong and
Shanghai Banking Corp.,
Singapore on current account
Total
4.49
-
-
2.81
-
10.85
33.21
4.73
4.44
5.07
1.21
7.08
-
-
-
16.81
40.34
4.79
7.27
5.17
Cash and Cash Equivalents
at the Beginning of the Year /
Period
Cash and Cash Equivalents
at the End of the Year /
Period
Components of Cash and
Cash Equivalents:
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
Notes:
a)
Cash Flow Statement has been prepared under the 'Indirect Method' as set out in Accounting
Standard -3 on cash flow statement issued by the Institute of Chartered Accountants of India.
b)
Negative figures have been shown in brackets.
c)
The above Statement should be read with the significant accounting policies and Notes to the
Unconsolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash
Flows as restated under Indian GAAP ,as appearing in annexure IV
As per our report of even date
FOR S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Per Raj Agrawal
Partner
Membership No. : 82028
Place: Gurgaon
Date: June 26, 2008
For and on behalf of the Board of Cellebrum Technologies Limited
(Directors)
(Directors)
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
Kartar Singh
Chief Finance Officer
Company secretary
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
181
ANNEXURE IV - NOTES TO THE RESTATED UNCONSOLIDATED SUMMARY STATEMENTS OF
ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER
INDIAN GAAP, FOR CELLEBRUM TECHNOLOGIES LIMITED [FORMERLY CELLEBRUM.COM
LIMITED]
A.
Background
a.
The Company is into the Information and Communication Technology business providing Value Added Services,
Mobile Content and Roaming Management Services to the Telecom Operators. Also, the Company undertakes
development and sale of telecom related software.
b.
The Restated Unconsolidated Summary Statement of Assets and Liabilities of the Company as at December 31, 2007,
March 31, 2007, March 31, 2006, March 31, 2005 and December 31, 2003 and the related Restated Unconsolidated
Summary Statement of Profits and Losses and Cash Flows for the nine months period ended December 31, 2007,
years ended March 31, 2007 and March 31, 2006, fifteen months period ended March 31 2005 and year ended
December 31, 2003 (hereinafter collectively referred to as “Restated Unconsolidated Summary Statements”) relate to
Cellebrum Technologies Limited (formerly Cellebrum.com Limited) (“the Company”) and have been prepared
specifically for inclusion in the Offer Document to be filed by the Company with the Securities and Exchange Board
of India (“SEBI”) in connection with its proposed Initial Public Offering of its equity shares.
These Restated Unconsolidated Summary Statements have been prepared to comply in all material respects with the
requirements of Schedule II to the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India
(Disclosure and Investor Protection) Guidelines, 2000 (“the SEBI Guidelines”) issued by SEBI on January 19, 2000, as
amended from time to time, except to the extent stated in Note F (i), (ii) and (iii) below.
B.
Statement of Significant Accounting Policies adopted by the Company in the preparation of Financial
Statements as at and for the nine-months period ended December 31, 2007
Basis of Preparation
The financial statements have been prepared to comply in all material respects with the Notified Accounting Standards by
the Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared under the historical cost convention and on an accrual basis. The accounting policies have
been consistently applied by the Company except for the changes in accounting policy discussed more fully in (C) below,
are consistent with those used in the previous years / periods.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the results of operations during the reporting period end. Although
these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from
these estimates.
Fixed Assets
Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the purchase
price and any attributable cost of bringing the asset to its working condition for its intended use.
Insurance spares / stand by equipments are capitalized as part of mother assets.
Depreciation
Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by the management,
or at the rates prescribed under Schedule XIV of the Companies Act, 1956 whichever is higher as under:
Tangible Assets
Rates (SLM) (in %)
Buildings
Data Processing Machines
Furniture & Fixtures
Office Equipment
Mobile phones
Others
3.34
31.67
13.57
Schedule XIV Rates
(SLM) (in %)
3.34
16.21
6.33
31.67
13.57
4.75
4.75
182
Vehicles
Motor Cars
Motor buses
9.50
13.57
9.50
11.31
Cost of Leasehold improvements is amortized over the period of lease or their useful lives whichever is lower.
Individual assets costing upto Rs.5,000/- are depreciated fully in the month of purchase.
Insurance spares / standby equipments are depreciated prospectively over the remaining useful lives of the respective
mother assets.
Intangibles
Intangibles assets acquired from outside are amortized using the Straight Line Method over their estimated useful lives as
follows:
Intangible Assets
Computer Software
Estimated Useful Life (Years)
3 years
ii) Costs incurred towards development of computer software products meant for sale, lease or otherwise marketed, are
capitalized subsequent to establishing technical feasibility. Capitalization ceases when the product is available for general
release to customers. Capitalized software product costs are amortized on a product-by-product basis. The amortization
shall be greater of the amount computed using (a) the ratio that current gross revenue for a product bears to the total of
current and anticipated future gross revenues for that product or (b) straight line method over the remaining estimated useful
life of the product. The unamortized cost of Capitalized software products is carried at cost, less accumulated amortization
less impairment, if any.
Impairment
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on
internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its
recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
Leases
Where the Company is the lessee
Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are
classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss Account on a
straight-line basis over the lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Profit and Loss Account on
a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Profit and Loss
Account. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Profit and Loss
Account.
Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments.
All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value
determined on an individual investment basis. Long term investments are carried at cost. However, provision for diminution
in value is made to recognize a decline other than temporary in the value of such investments.
Inventories
Inventories are valued as follows:
Traded goods
At Cost or Net Realizable Value, whichever is lower. Cost is
determined on FIFO basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
183
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue
can be reliably measured.
Rendering of Services
Service revenue is recognized at the end of each month in which the services are rendered. Service revenue includes income
on value added services, revenue from roaming management services and providing mobile content.
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, which
coincides with their delivery to the customer.
Interest
Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
Foreign Currency Translation
Foreign currency transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting Company’s monetary items at rates
different from those at which they were initially recorded during the year, or reported in previous financial statements, are
recognized as income or as expenses in the year in which they arise. Exchange differences arising in respect of fixed assets
acquired from outside India on or before accounting period commencing after December 7, 2006 are capitalized as a part of
fixed asset.
Translation of Integral foreign operation
The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have
been those of the Company itself.
Retirement and other employee benefits
Retirement benefits in the form of Provident Fund is a defined contribution scheme and the contributions are charged to the
Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations
other than the contribution payable to the statutory authorities.
Retirement Gratuity is a defined benefit obligation. The Company has taken insurance policy under the Group Gratuity
Scheme of Life Insurance Corporation of India (LIC) to cover the gratuity liability of the employees and the premium
paid/payable to LIC, in respect of the present value for liability of past services is charged to the Profit and Loss account
every year. Also, the difference between amount paid/payable to LIC and the actuarial valuation on projected unit credit
method made at the end of each financial year is charged to the Profit and Loss account.
Short term compensated absences are provided for on based on estimates. Long term compensated absences are provided
for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.
Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.
Income Taxes
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe benefit tax is measured at
the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes
184
reflects the impact of current year timing differences between taxable income and accounting income for the year and
reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be realised. In situations where the company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by
convincing evidence that they can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred
tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future
taxable income will be available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying
amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down
is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future
taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay
normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes
eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying
amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will
pay normal Income Tax during the specified period.
Earning per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by
the weighted average number of shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all
dilutive potential equity shares.
Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an
outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions
are not discounted to its present value and are determined based on best management estimate required to settle the
obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best
management estimates.
Segment Reporting Policies
Identification of segments
The analysis of geographical segments is based on the geographical location of the customers.
Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
C.
Changes in Accounting Policies
(i) Change in the method of providing Depreciation
The Company was following Straight Line Method of providing depreciation on fixed assets upto the financial year
ended December 2003 and Written Down Value method for the fifteen months period ended March 31, 2005 and
year ended March 31, 2006. During the financial year ended March 31, 2007, the Company changed, with
retrospective effect, its method of providing depreciation on fixed assets, other than leasehold buildings, from the
Written Down Value (‘WDV’) method at the rates prescribed in Schedule XIV to the Companies Act, 1956 to the
Straight Line Method (‘SLM’) at the rates which are higher of the useful lives of assets and the rates prescribed in
Schedule XIV to the Companies Act, 1956.
185
As a result of this change, the charge to the Profit and Loss Account before taxation for the year ended March 31,
2007 was lower by Rs. 25.60 million and the net block of fixed assets was correspondingly higher by the same
amount. The effect of such change in accounting policy has been appropriately adjusted in the years/ periods to
which it pertains [refer Note E (h) below].
(ii) Change in the method of accounting for Earned Leaves
The Company changed its accounting policy during the year ended March 31, 2007 and accounted for the liability
for employees’ earned leaves based on actuarial valuation as at the end of the year in line with Accounting Standard
15 issued by the Institute of Chartered Accountants of India. Till the year ended March 31, 2006, leave liability was
accounted for based on actual amount payable as per current encashable salary as at the end of the year. As a result
of this change, the accumulated liability of earned leaves was higher and the profit for the year ended March 31,
2007 was lower by Rs. 3.10 million. The effect of such change in accounting policy has been appropriately adjusted
in the years/ periods to which it pertains [refer Note E (i) below].
(iii) Adoption of Accounting Standard AS 15 (Revised) Employee Benefits
Till the year ended March 31, 2007, the Company was providing for gratuity based on actuarial valuation as per LIC
certificate and leave benefits based on actuarial valuation. During the period ended December 31, 2007, the
Company has adopted Accounting Standard 15 (Revised) which is mandatory for accounting periods commencing
on or after December 7, 2006. Accordingly the Company has provided for gratuity based on actuarial valuation done
as per projected unit credit method. Also, the Company has changed the method of providing short-term leave
benefits from actuarial valuation to estimate basis. As a result, actuarial valuation of leave liability and gratuity
liability as at April 1, 2007 is higher by Rs. 5.11 million (net of tax of Rs. 0.65 million) which, in accordance with
the transitional provision in the revised accounting standard, has been adjusted to the General Reserve.
(iv) Adoption of Accounting Standard 11 ‘The Effect of Changes in Foreign Exchange Rates’
As per the requirements of the Companies (Accounting Standards) Rules, 2006 read in consonance with notified
Accounting Standard 11 which is mandatory for the accounting periods commencing on or after December 7, 2006,
the exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside
India have been adjusted to revenue as against the hitherto followed practice of adjusting the same to the carrying
amount of fixed assets. As a result, net exchange gain of Rs 0.53 million which otherwise would have been
adjusted against the carrying amount of fixed assets, has been credited to the Profit and Loss Account during the
period ended December 31, 2007 and thus the profit before tax for the nine-months period ended December 31,
2007 is higher by the same amount.
D.
Material Regroupings
Appropriate adjustments have been made in the Restated Summary Statements of Assets and Liabilities, Profits and
Losses and Cash Flows, wherever required, by a reclassification of the corresponding items of income, expenses,
assets, liabilities and cash flows, in order to bring them in line with the groupings as per the audited financials of the
Company for the nine months period ended December 31, 2007.
E.
Material Adjustments
186
a)
Below mentioned is the summary of results of restatements made in the audited accounts for the respective years
and its impact on the profits of the Company.
(Amount in Rs. million)
Adjustments for
Prior Period Items (Refer note b)
Sundry Balances written back (Refer note c)
Provision for doubtful debts (Refer note d)
Sundry Balances written off (Refer note e)
Bad Debts written off (Refer note f)
Bad Debts recovered (Refer Note g)
Depreciation (Refer Note h)
Leave Encashment (Refer Note i)
Miscellaneous Expenditure (to the extent not
written off) (Refer Note j)
Tax paid for earlier years/ periods (Refer note
k)
Total impact of adjustments
Current Tax impact of adjustments (Refer note
l)
Deferred Tax impact of adjustments (Refer
note l)
Net impact of adjustments
b)
December
31, 2007
March
31, 2007
March
31, 2006
March
31, 2005
December
31, 2003
(0.69)
1.18
(0.36)
(0.12)
(0.01)
(0.12)
(0.04)
(0.90)
0.81
0.25
4.98
(4.44)
(0.54)
-
-
0.04
0.11
0.09
(0.14)
(0.12)
-
2.78
(2.58)
(0.20)
-
(0.50)
-
0.20
0.30
-
-
(10.8)
7.49
3.31
-
-
1.25
(0.98)
(0.27)
-
-
-
0.04
(0.04)
-
0.75
0.30
-
(1.05)
-
4.46
(9.64)
2.46
2.60
0.12
(0.42)
1.21
(0.28)
(0.51)
-
-
0.48
(0.09)
(0.39)
-
4.04
(7.95)
2.09
1.70
0.12
Prior Period Items
In the financial statements for the year ended March 31, 2007 and the period ended December 31, 2007, certain
items of income / expenses have been identified as prior period items. For the purpose of this statement, such prior
period items have been appropriately adjusted in the respective years/ periods.
c)
Sundry Balances Written Back
In the financial statements for the years ended March 31, 2006 and 2007 and periods ended March 31, 2005 and
December 31, 2007, certain liabilities created in the earlier years/ periods were written back. For the purpose of this
statement, the said liabilities, wherever required, have been appropriately adjusted in the respective years/ periods in
which the same were originally created.
d)
Provision for Doubtful Debts
During the year ended March 31, 2006 and period ended December 31, 2007, certain provisions for doubtful debts
which pertained to debtors of earlier years/ periods were created. For the purpose of this statement, the said
provisions, wherever required, have been appropriately adjusted in the respective years/ periods in which these
debtors and revenue were accounted for.
e)
Sundry Balances Written off
In the financial statements for the years ended March 31, 2007 and March 31, 2006 and period ended December 31,
2007, certain advances paid in the earlier years/ periods were written off. For the purpose of this statement, the said
advances, wherever required, have been appropriately adjusted in the respective years/ periods in which the same
were originally paid.
f) Bad Debts Written off
During the year ended March 31, 2007, certain bad debts which pertained to debtors of earlier years/ periods were
187
written off. For the purpose of this statement, the said bad debts have been appropriately adjusted in the respective
years/ periods in which these debtors and revenue were accounted for.
g)
Bad Debts Recovered
During the period ended December 31, 2007, and year ended March 31, 2007, certain bad debts written off in earlier
years/ periods were recovered. For the purpose of this statement, the said recoveries have been appropriately
adjusted in the respective years/ period in which the same were originally written off.
h)
Depreciation
During the year ended March 31, 2007, the Company has changed the method of providing depreciation on fixed
assets, as referred to in Note no. C (i) above. For the purpose of this statement, the retrospective effect of
depreciation has been appropriately adjusted in the year ended March 31, 2006 and period ended March 31, 2005.
i)
Leave Encashment
During the year ended March 31, 2007, the Company has changed its accounting policy for provisioning of earned
leaves, as referred to in Note no. C (ii) above. For the purpose of this statement, the effect of such change in policy
has been appropriately adjusted in the year ended March 31, 2006 and period ended March 31, 2005.
j)
Miscellaneous Expenditure (to the extent not written off)
Upto the year ended March 31, 2006, amounts carried forward under the head ‘Miscellaneous Expenditure (to the
extent not written off)’ representing preoperative expenditure, were being amortized on a pro-rata basis over a
period of 5 years from the date of commencement of commercial operations. However, Accounting Standard -26
issued by the Institute of Chartered Accountants of India, which became applicable to the Company during the
period ended March 31, 2005, did not permit such carrying forward of expenditure. For the purpose of this
statement, the effect of amortisation of such Miscellaneous Expenditure has been appropriately adjusted in the year
ended March 31, 2006 and fifteen months period ended March 31, 2005.
k)
Taxes for earlier years/ periods
During the year ended March 31, 2007 and period ended December 31, 2007, certain taxes pertaining to the period
ended March 31, 2005 were paid. For the purpose of this statement, such tax expense has been appropriately
adjusted in the period ended March 31, 2005.
l)
Current Tax and Deferred Tax impact of adjustments
In the preparation of the Restated Unconsolidated Summary Statements, the Company has made adjustments for
the current tax and deferred tax impact of the adjustments in the respective years / periods to which such
adjustments pertain.
F.
Non – Adjustment Items
(i)
The Company has changed the estimates of useful lives of some of its fixed assets during the year ended
March 31, 2007 and the period ended December 31, 2007, more fully described in Note No. 11 below.
The management believes that such change in estimated useful lives is bonafide and occasioned by
technical/ environmental factors and hence should not be restated in previous periods/ years financials, as
restated.
(ii)
The Company has adopted revised Accounting Standard 15 on Employee Benefits issued by the Institute
of Chartered Accountants of India effective April 1, 2007. However, due to practical difficulties in
retrospective application of the same, it has not been possible for the management to determine the effect
on the profits for the year ended December 31, 2003, fifteen-months period ended March 31, 2005, and
years ended March 31, 2006 and 2007 as if the revised Standard had been adopted by the Company for
each of those years/periods. Accordingly, such adjustment has not been made in the attached
unconsolidated restated summary statements.
(iii)
As per the requirements of Companies (Accounting Standards) Rules, 2006 read in consonance with
notified Accounting Standard 11 which is mandatory for the accounting periods commencing on or after
188
December 7, 2006, the exchange differences on foreign currency transactions relating to fixed assets
acquired from a country outside India have been adjusted to revenue as against the hitherto followed
practice of adjusting the same to the carrying amount of fixed assets. However, due to practical
difficulties in retrospective application of the same, it has not been possible for the management to
determine the effect of such change on the financial statements of earlier years / periods. Accordingly,
such adjustment has not been made in the attached unconsolidated restated summary statements. The
impact of such adjustment will not be material in relation to the Restated Unconsolidated Summary
Statements.
G.
Other Significant Notes
1.
Segment Information
Business Segments:
The Company is into the Information and Communication Technology business rendering mobile-related services
to telecom service providers. Based on identical services the Company deals in, which have similar risks and
rewards, the entire business is considered as operating as a single business segment in terms of Accounting
Standard-17 ‘Segment Reporting’ issued by the Institute of Chartered Accountants of India and hence, there are no
additional disclosures to be provided other than those already provided in the financial statements.
Geographical Segments *
The following table shows the distribution of the Company’s consolidated sales by geographical market, regardless
of where the goods were produced / services were rendered:
(Amount in Rs. million)
Particulars
For the NineFor the Year
For the Year
For the Fifteen- For the Year
months
Ended
Ended
months Period
Ended
Period Ended March 31,
March 31,
Ended March
December
December 31, 2007
2006
31, 2005
31, 2003
2007
Domestic Market
702.30
637.55
301.84
251.02
8.06
Overseas Market
32.26
24.23
23.11
17.26
0.48
734.56
661.78
324.95
268.28
8.54
Total
The following table shows the distribution of the Company’s consolidated debtors by geographical market:
Particulars
(Amount in Rs. million)
As at March
As at
31, 2005
December 31,
2003
As at
December 31,
2007
As at March
31, 2007
As at March
31, 2006
Domestic Market
355.90
259.01
44.28
64.55
0.13
Overseas Market
1.34
3.52
1.81
2.86
0.02
357.24
262.53
46.09
67.40
0.15
Total
* The Company has common assets for producing goods / rendering services for Domestic market and Overseas
Markets. Hence, separate figures for fixed assets / additions to fixed assets cannot be furnished.
2.
Defined Benefits Plan
Gratuity (Revised Accounting Standard 15)
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service
gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is
funded with an insurance company in the form of a qualifying insurance policy.
The following tables summarise the components of net benefit expense recognised in the profit and loss account and
the funded status and amounts recognised in the balance sheet:
Profit and Loss account
189
Net employee benefit expense (recognised in Employee Cost) for the nine-months period ended December 31,
2007
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Net actuarial( gain) / loss recognized in the year
Past service cost
Net benefit expense charged to Profit and Loss account
Gratuity
(Rs. in million)
4.25*
0.32
(0.08)
0.62
Nil
5.11
Actual return on plan assets
* Including Rs. 0.23 million being payments made during the current period.
Nil
Balance sheet
Details of Provision for gratuity as at December 31, 2007
Gratuity
(Rs. in million)
9.86
1.18
8.68
--(8.68)
Defined benefit obligation
Fair value of plan assets
Less: Unrecognised past service cost
Plan asset / (liability)
Changes in the present value of the defined benefit obligation for the nine months period ended December 31, 2007
are as follows:
Gratuity
(Rs. in million)
2.17
0.32
4.02
---3.35
9.86
Opening defined benefit obligation
Interest cost
Current service cost
Benefits paid
Actuarial (gains) / losses on obligation
Closing defined benefit obligation
Changes in the fair value of plan assets are as follows:
Gratuity
(Rs. in million)
1.18
0.08
Nil
Nil
(0.08)
1.18
Opening fair value of plan assets
Expected return
Contributions by employer
Benefits paid
Actuarial gains / (losses)
Closing fair value of plan assets
The Company’s expected contribution to Gratuity during the next year is not presently ascertainable.
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
Investments with insurer (Life Insurance Corporation of India)
Gratuity
100 %
The overall expected rate of return on assets is determined based on the market prices prevailing on that date,
applicable to the period over which the obligation is to be settled.
190
The principal assumptions used in determining gratuity obligations for the Company’s plans are shown below:
Gratuity (%)
8.00
8.70
15.00
Discount rate
Expected rate of return on assets
Employee turnover
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority,
promotion and other relevant factors, such as supply and demand in the employment market.
Notes:
a) The Institute of Chartered Accountants of India has issued a limited revision to AS 15 (Revised) which allows an
entity to make disclosures required by paragraph 120(n) of AS 15 (Revised) prospectively from the transition date.
The limited revision has not yet been incorporated in AS 15 notified under Companies (Accounting Standard)
Rules, 2006. The Company expects that limited revision will be incorporated in notified standards shortly and
hence, the information in respect of defined benefit obligation for previous four years / periods as required by Para
120(n) of AS -15 (Revised) are not furnished.
b) Period ended December 31, 2007 being the first period of adoption of AS 15 (revised) by the Company, the
previous years/ periods comparative information has not been furnished.
Defined Contribution Plan
For the nine-months
period ended December
31, 2007
Employer’s Contribution to Provident Fund
including Family Pension Fund*
* Included in the head Contribution to Provident and Other Funds
3.
(Amount in Rs. million)
For the year ended March
31, 2007
7.36
4.33
Leases – In case of assets taken on lease
Operating Lease:
Vehicles, office premises and guest houses are obtained on operating lease. In the case of vehicles, the lease term is
for 1 year and renewable for further 1 year at the option of the Company. In the case of office premises and guest
houses, the lease terms vary between 3 to 5 years. There is no escalation clause in the lease agreements. There are no
restrictions imposed by lease arrangements.
(Amount in Rs. million)
Particulars
Lease Payment
Contingent
rent
recognized in Profit and
Loss Account
For the Ninemonths Period
Ended
December 31,
2007
For the Year
Ended
March 31,
2007
17.12
NIL
12.30
NIL
For the
Year
Ended
March 31,
2006
3.42
NIL
For the Fifteenmonths Period
Ended March
31, 2005
2.09
NIL
For the Year
Ended
December
31, 2003
NIL
NIL
The Company has sub-let a portion of the above office premises on operating lease. The lease term is for 11 months
and thereafter renewable on mutual agreement. There is no escalation clause in the lease agreement. There are no
restrictions imposed by lease arrangements.
(Amount in Rs. million)
Particulars
For the Nine
For the
For the Year
For the Fifteen- For the
months Period
Year
Ended
months Period
Year
Ended
Ended
March 31,
Ended March
Ended
December 31,
March 31,
2006
31, 2005
December
2007
2007
31, 2003
Sub-lease
payments
received during the year
Sub-lease
payments
NIL
NIL
NIL
NIL
NIL
1.80
NIL
NIL
NIL
NIL
191
receivable at the balance
sheet date
4.
Capital Commitments
Particulars
For the
Year Ended
March 31,
2007
For the
Year
Ended
March 31,
2006
29.45
18.36
12.94
As at
December
31, 2007
As at
March 31,
2007
As at
March 31,
2006
NIL
NIL
18.00
NIL
NIL
NIL
38.89
NIL
31.15
0.40
NIL
2.00
NIL
NIL
NIL
Estimated
amount
of
contracts (Net of advances)
remaining to be executed on
capital account and not
provided for.
5.
NIL
NIL
Contingent Liabilities not provided for
Particulars
Counter Bank Guarantee given to
Indusind Bank on behalf of Omnia
BPO Services Limited for bill
discounting
Performance Bank Guarantees
Contingent Liability in respect of
non-charging the service tax on the
Short messaging peer-to-peer
service including penalty thereon.
The matter is under adjudication
with the Commissioner of Central
Excise, Chandigarh. The Company
is of the view that it is an
‘information technology service’
and thus is exempt from the
service tax.
6.
(Amount in Rs. million)
For the Fifteen- For the
months Period
Year
Ended March
Ended
31, 2005
December
31, 2003
For the Ninemonths Period
Ended
December 31,
2007
(Amount in Rs. million)
As at
As at
March 31,
December 31,
2005
2003
Based on discussions with the
solicitors/legal opinion taken by
the Company, the management
believes that the Company has a
good chance of success in the
above mentioned case and hence,
no provision there against is
considered necessary.
Break-up of Deferred Tax Assets / (Liabilities) :
(Amount in Rs. million)
Deferred Tax Asset/ Liability as at
Timing Difference on account of
December
March
31, 2007
March
31, 2006
March
31, 2005
3.69
0.05
0.28
0.81
-
3.69
0.05
0.28
0.81
-
1.09
1.92
0.34
0.26
-
31, 2007
December
31, 2003
Deferred Tax Liabilities
Difference in depreciation and other
differences in block of fixed assets as per
Tax books and Financial books
Gross Deferred Tax Liabilities
Deferred Tax Assets
Effect of expenditure debited to Profit and
Loss Account but allowed for tax purposes
in the following years
192
Brought forward losses and depreciation
-
-
-
-
2.93
1.09
1.92
0.34
0.26
2.93
(2.60)
1.87
0.06
(0.55)
2.93
Gross Deferred Tax Assets
Net Deferred Tax (Liabilities) / Assets
7.
The amount of foreign currency exposures that are not hedged by a derivative instrument or otherwise
are as under:
Particulars
Export
Debtors
Amount (in Rs. million)
As at
As at
As at
December
March
March
31, 2007
31, 2007
31, 2006
1.29
1.01
1.31
0.26
2.48
0.50
0.09
NIL
NIL
As at December 31,
2007
Foreign Currency
As at March 31,
2007
USD 32,785
EUR 4,456
Mauritius Rs. 63,476
USD 23,226
EUR 42,720
NIL
USD 29,425
EUR 9,274
NIL
As at March 31,
2006
IL
Advances
from
Customers
Import
Creditors
0.47
0.88
0.23
0.11
0.22
0.15
USD 11,877
EUR 15,178
USD 5,331
EUR 1,973
USD 4,903
EUR 2,751
4.45
7.18
2.12
USD 112,848
USD 164,789
USD 47,631
Closing rate as on the closing dates are as followsForeign Currency
USD 1
EUR 1
Mauritius Rs. 1
As at December 31,
2007
Rs. 39.41
Rs. 58.12
Rs. 1.43
As at March 31, 2007
As at March 31, 2006
Rs 43.59
Rs. 58.14
--
Rs. 44.61
Rs. 54.20
---
Note: This disclosure has been given as required by the Announcement issued by the Institute of Chartered
Accountants of India which was made applicable in respect of the financial statements for the accounting period(s)
ending on or after March 31, 2006 and hence, the prior years/ periods comparative disclosures have not been
furnished.
8.
Accounting Standard “ AS 22 “ “Taxes on Income “ issued by the Institute of Chartered Accountants of India, had
become mandatory from the financial year ended December 31, 2003. As required by the Accounting Standard, the
Company, at the beginning of that year, recognized deferred tax assets of Rs. 4.46 million on its carried forward
unabsorbed depreciation of Rs. 8.61 million and business losses of Rs. 3.82 million and carried it to General
Reserves of that year in terms of the transitional provisions of the said Standard. Deferred tax liabilities for the year
ended December 31, 2003 amounting to Rs.1.53 million were adjusted against the above deferred tax assets.
9.
During the financial year ended March 31, 2006, the Company had increased its authorised share capital from Rs.
20.01 million divided into 2,001,000 equity shares of Rs. 10 each to Rs. 120.01 million divided into 12,001,000
equity shares of Rs. 10 each pursuant to the ordinary resolution passed in its Extra Ordinary General Meeting of
shareholders held on January 30, 2006.
10.
During the financial year ended March 31, 2006, the Company had issued 10,000,110 bonus shares by capitalising
its profits, in the ratio of 5:1 pursuant to the resolution passed in its Extra Ordinary General Meeting of shareholders
held on January 30, 2006.
11.
During the year ended March 31, 2007, the Company reassessed the estimates of useful lives of Data Processing
Machines and Computer Software as 3 years (as against the hitherto followed practice of depreciating the same over
a period of 6 years) and provided depreciation on the same based on the revised estimates of their economic useful
lives. As a result of this change, the charge to the Profit and Loss Account before taxation for the year ended March
31, 2007 was higher by Rs. 25.89 million and the net block of fixed assets was correspondingly lower by the same
amount.
Further, during the period ended December 31, 2007, the Company has reassessed the estimates of useful lives of
Furniture-Fixtures, Office Equipments & Vehicles, as 7 years (as against the hitherto followed practice of
depreciating the same over a period of 15 years, 20 years and 8.4 years respectively) and provided depreciation on
the same based on the revised estimates of their economic useful lives. As a result of this change, the charge to the
Profit and Loss Account before taxation for the period ended December 31, 2007 was higher by Rs. 1.59 million and
193
the net block of fixed assets was correspondingly lower by the same amount.
12.
The Company has obtained expert opinions stating that the two units set up at Parwanoo, Himachal Pradesh, would
be eligible for income tax benefits under Section 80-IC of the Income Tax Act, 1961, resulting in deduction of 100%
of profits and gains of such units for the first five assessment years commencing with the initial assessment year and
thereafter thirty per cent of the profits and gains for the next five years. Income tax provision has been made in the
books of account accordingly.
13.
The asset of Rs. 56.39 million recognised by the Company as ‘MAT Credit Entitlement’ in respect of the MAT
payment during the year ended March 31, 2006 and 2007 and period ended December 31, 2007 and shown under
‘Loans and Advances’ represents that portion of MAT liability, which can be recovered and set off in subsequent
years based on the provisions of Section 115JAA of the Income Tax Act, 1961. The management based on the
present trend of profitability and also the future profitability projections, is of the view that there would be sufficient
taxable income in foreseeable future, which will enable the Company to utilize MAT credit assets.
14.
Previous Year Comparatives
The Company was following calendar year as its accounting year till December 31, 2003. However, the Company
changed its statutory accounting year to end on March 31, 2005 instead of December 31, 2004 and thus accounts
were prepared for the fifteen months ended March 31, 2005. The Company continued to follow the financial year as
its statutory year for the years ended March 31, 2006 and March 31, 2007. Further, the Company has again changed
its statutory year to end on December 31, 2007 instead of March 31, 2008. Accordingly, the restated unconsolidated
summary statements have been made for the year ended December 31, 2003, fifteen months period ended March 31,
2005, years ended March 31, 2006 and March 31, 2007 and nine months period ended December 31, 2007.
15.
Change of Name
Subsequent to the Restated Unconsolidated Summary Statements as at December 31, 2007, the Company got itself
converted into a public limited Company and consequently, the name of the Company was changed from
‘Cellebrum.com Private Limited’ to ‘Cellebrum.com Limited’ with effect from February 14, 2008. Further, the
name of Company was again changed from ‘Cellebrum.com Limited’ to ‘Cellebrum Technologies Limited’ with
effect from April 22, 2008.
As per our report of even date
For S. R. BATLIBOI & ASSOCIATES
Chartered Accountants
per Raj Agrawal
Partner
Membership No.82028
For and on behalf of the Board of Directors of Cellebrum
Technologies Limited
(Director)
(Director)
(Chief Financial officer)
June 26, 2008
Place : Gurgaon
Date : June 26, 2008
194
(Company Secretary)
June 26, 2008
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE V : DETAILS OF OTHER INCOME, AS RESTATED
PARTICULARS
Nine- months
Period Ended
December 31,
2007
Year Ended
March 31,
2007
( Amount in Rs. Million)
Fifteen-months
Year Ended
Period Ended
December
March 31, 2005
31, 2003
Year Ended
March 31,
2006
Other income, as restated
35.69
23.46
6.33
3.31
0.06
Net Profit before tax, as
restated after prior
360.29
438.56
241.52
206.04
4.40
9.91
5.35
2.62
1.61
1.36
period items
Percentage
Year
Ended
March 31,
2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
17.08
2.09
2.08
0.06
Recurring
Related /
Not
related to
Business
Activity
Not
Related
0.12
5.90
4.17
1.20
-
NonRecurring
Not
Related
Rental Income
1.80
-
-
-
-
Other Income
0.27
0.48
0.07
0.03
-
Recurring
NonRecurring
Non
Related
Non
Related
35.69
23.46
6.33
3.31
0.06
Nine- months
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
33.50
Interest Others
Source of other
income
Interest on Bank
deposits
Total Other
Income, as
restated
Nature
Notes:
(i)
(ii)
(iii)
The details of ''Other Income'' disclosed above are stated after adjusting the effect of
restatement. The same have been shown gross of restatement in the summary Statement of
Profits & Losses, as restated and the adjustments have been listed separately under the head
"Adjustments" in the Notes to Accounts.
The classification of other income as recurring/non-recurring and related/not related to
business activity is based on the current operation and business activity of the Company as
determined by the management.
The above amounts are as per Unconsolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited).
195
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE VI : DETAILS OF RATES OF DIVIDEND
The dividend declared by the company during the period ended December 31, 2007 and the last four
years/periods are presented below.
(Amount in Rs. Million)
Particulars
Nine- months
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
Fifteenmonths
Period Ended
March 31,
2005
Year
Ended
December
31, 2003
14,571,574
14,571,574
12,000,120
2,000,020
2,000,020
16.07*
33.35**
-
-
-
160.70%
333.5%
-
-
-
234.28
400.20
-
-
-
39.82
56.13
-
-
-
Class of Shares
Equity Share Capital as outstanding at
the year end
Dividend on Equity Shares
- Dividend per equity share ( Rs. )
- Dividend rate ( % to paid up
capital)
- Dividend amount
Dividend Tax
*Proposed Dividend on equity shares for the nine months period ended December 31, 2007.
**Interim Dividend on equity shares for the year ended December 31, 2007.
Notes:
1)
The amount paid as dividend in the past is not indicative of the dividend policy in the future.
2)
The figures disclosed above are based on the Unconsolidated Summary Statement of Profits
and Losses, as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private
Limited).
196
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE VII : CAPITALISATION STATEMENT AS AT DECEMBER 31, 2007
(Amount in Rs. Million)
Pre Issue
Post Issue
Borrowings
Short Term Debt (A)
-
[*]
Long Term Debt (B)
-
[*]
Total Debts (C)
-
[*]
Shareholders' funds
Equity Share Capital
145.72
[*]
950.69
[*]
Reserves and Surplus, as restated
- Profit & Loss Account
237.66
- Securities Premium
637.48
- General Reserve
75.58
1,096.41
Total shareholders' fund (D)
Long Term debt / Equity ratio (B / D)
-
Total Debt / Shareholders' Funds (C / D)
-
Notes:
1)
2)
3)
4)
5)
Short Term debts represents debts which are due within twelve months from 31st December,
2007.
Long Term debt represents debt other than short term debt as defined above.
Long term debt/equity :- Long Term Debt / Total Shareholder's funds.
The above amounts are as per the Unconsolidated Summary Statement of Assets and
Liabilities, as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private
Limited).
The corresponding post issue figures are not determinable at this stage pending the completion
of Book Building Process and hence have not been furnished.
197
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE VIII : DETAILS OF SECURED LOANS
S. NO
Particulars
As at
December
31, 2007
As at
March 31,
2007
As at
March 31,
2006
(Amount in Rs. Million)
As at
As at
March 31,
December
2005
31, 2003
I)
VEHICLE LOANS
1
Secured by hypothecation of
respective vehicles financed
through the loans
-
-
0.67
-
-
TOTAL
-
-
0.67
-
-
Notes:
1)
2)
Interest rate on vehicle loans from bank was payable at the rate of 5.71% for the year ended March 31,
2006.
The above amounts are as per Unconsolidated Summary Statement of Assets and Liabilities, as restated
of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited).
198
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE IX : DETAILS OF INVESTMENTS
Particulars
As at
December
31, 2007
As at March
31, 2007
As at March
31, 2006
(Amount in Rs. Million)
As at
As at
March 31,
December
2005
31, 2003
Long Term Investments ( At
Cost), in a Subsidiary Company
Unquoted, Trade fully paid-up
(10,000,000 Equity Shares of
Rs.10/- each in Mobisoc
Technology Private Limited)
Total
100.00
100.00
-
-
-
100.00
100.00
-
-
-
Notes:
1)
The above amounts are as per Unconsolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited).
199
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE X : DETAILS OF SUNDRY DEBTORS
Particulars
As at
December
31, 2007
As at
March 31,
2007
As at
March 31,
2006
(Amount in Rs. Million)
As at
As at
March 31,
December
2005
31, 2003
Debts Outstanding for a period
exceeding 6 Months
Unsecured, Considered Good
16.77
8.76
0.05
0.80
-
Considered Doubtful
11.40
7.94
1.70
-
-
340.46
253.77
46.04
66.60
0.15
Considered Doubtful
10.61
2.40
0.54
-
-
Less : Provision for Doubtful Debts
22.00
10.34
2.24
-
-
357.24
262.53
46.09
67.40
0.15
Other Debts
Unsecured, Considered Good
Total
Notes:
1)
The above amounts are as per Unconsolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited).
200
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE XI : DETAILS OF LOANS & ADVANCES
As at
December
31, 2007
Particulars
(Amount in Rs. Million)
As at
As at
March 31,
December
2005
31, 2003
As at March
31, 2007
As at March
31, 2006
0.92
2.97
0.27
0.05
-
24.37
3.20
1.89
1.08
0.17
-
-
229.50
5.00
-
-
-
65.50
17.50
-
15.58
9.41
1.68
0.22
-
195.98
4.33
0.66
0.22
-
56.39
27.79
-
-
-
-
-
1.27
-
-
293.24
47.70
300.77
24.07
0.17
Unsecured, Considered good
Loan to employees
Advance Recoverable in Cash
or in Kind or for value to be
received
Share application money
pending allotment
Inter-corporate deposits
Balances with excise
authorities
Security deposits
MAT credit entitlement (refer
Note No. G (11) of the
Annexure IV)
Advance Income Tax/ Tax
deducted at source (net of
provision for tax)
Total
Notes:
1)
The above amounts are as per Unconsolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited).
201
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE XII : DETAILS OF OTHER CURRENT ASSETS
Particulars
Unbilled Revenue
Assets Held for Sale
Interest Accrued on Deposits
Total
(Amount in Rs. Million)
As at
As at
March 31,
December
2005
31, 2003
As at
December
31, 2007
As at
March 31,
2007
As at
March 31,
2006
78.18
1.07
0.11
1.29
3.66
-
-
-
-
0.08
5.26
1.32
2.50
0.10
0.01
83.44
2.39
2.61
1.39
3.75
Notes:
1)
The above amounts are as per Unconsolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited).
202
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE XIII : STATEMENT OF TAX SHELTERS
Nine- months
Period Ended
December 31,
2007
Net Profit Before Tax, As
Restated
Tax Rate (A)
Tax at Notional Rates (B)
(Amount in Rs. Million)
Fifteen-months Year Ended
Period Ended December 31,
March 31, 2005
2003
Year Ended
March 31,
2007
Year Ended
March 31,
2006
360.29
438.56
241.52
206.04
4.40
33.99%
33.66%
33.66%
37.34%
36.75%
122.46
147.62
81.30
76.93
1.62
(325.68)
(373.59)
(184.45)
(133.77)
-
-
1.31
0.65
-
-
1.40
0.00
0.17
0.53
-
(324.28)
(372.28)
(183.63)
(133.24)
-
3.92
0.99
0.70
0.09
-
7.93
(2.16)
(3.62)
(4.02)
-
-
-
(0.17)
(0.15)
(0.07)
(0.05)
(3.63)
(0.06)
-
-
0.44
0.30
1.70
-
-
12.24
(4.50)
(1.45)
(4.08)
(0.07)
-
-
-
(8.83)
(4.32)
(312.04)
(376.78)
(185.08)
(146.15)
(4.39)
(106.06)
(126.82)
(62.30)
(55.20)
(1.61)
Permanent Differences
Deduction under Section 80
IC of the Income Tax Act,
1961
Filing Fees paid to ROC for
increasing Authorised Share
Capital
Interest/ Penalties on Income
Tax
Total Permanent
Difference (C)
Timing Differences
Differences due to
allowability / disallowability
of Section 43B items
Differences between book
depreciation and tax
depreciation
Difference in tax and
accounting treatment of
Miscellaneous Expenditure
Amounts inadmissible u/s
40(a) of the Income Tax Act,
1961
Provision for Doubtful Debts
Total Timing Difference
(D)
Profits Set off against
brought forward losses and
unabsorbed depreciation of
previous years / periods (E)
Net Adjustments F=
(C+D+E)
Tax impact of Adjustments
(G=A*F)
Tax Liability after
considering impact of
Adjustments (H=B+G)
Book Profits Before Tax, As
Restated
16.40
20.80
19.00
21.73
0.01
360.29
438.56
241.52
206.04
4.40
Adjustments in Book profit
(4.51)
(2.10)
(1.03)
-
(3.57)
203
Nine- months
Period Ended
December 31,
2007
Book Profits for MAT *
MAT Rate
MAT Liability
Tax Liability being higher
of Regular Tax liability
and MAT Liability for the
year/ period
Year Ended
March 31,
2007
Year Ended
March 31,
2006
Fifteen-months Year Ended
Period Ended December 31,
March 31, 2005
2003
355.78
436.46
240.49
206.04
0.83
11.33%
11.22%
8.42%
8.00%
7.88%
40.31
48.97
20.24
16.49
0.07
40.31
48.97
20.24
21.73
0.07
* MAT refers to Minimum Alternate Tax as referred to in section 115 JB of the Income Tax Act,
1961.
Notes:
1)
2)
3)
The aforesaid Statement of Tax Shelters is based on the Profits as per the 'Restated
Unconsolidated Summary Statement of Profits and Losses’ of Cellebrum Technologies
Limited (Formerly Cellebrum.com Private Limited).
The permanent / timing differences for the years ended March 31, 2007 and 2006, fifteen
months period ended March 31, 2005 and year ended December 31, 2003 have been computed
considering the acknowledged copy of the income- tax return filed by the Company and
considering the impact of broken period included therein. Disallowances on account of
assessment proceedings, notices, appeals etc have been adjusted in the tax liability of the year/
period to which they pertain.
The figures for nine months ended December 31, 2007 are based on provisional computation
of total income prepared by the Company and are subject to any changes that may be
considered at the time of filing final return of income.
204
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE XIV : STATEMENT OF ACCOUNTING RATIOS (ON RESTATED PROFITS)
Particulars
As at
March 31,
2007
As at
March 31,
2006
As at
March 31,
2005
As at
December
31, 2003
23.25
32.29
18.36
15.04
0.23
31%
40%
53%
93%
22%
75.24
71.16
34.52
96.95
6.49
Basic and Diluted Earnings per share
14,571,574
12,873,710
12,000,120
12,000,120
12,000,120
Total number of equity shares
outstanding at the end of the year /
period*
14,571,574
14,571,574
12,000,120
2,000,020
2,000,020
Earnings per share -Basic and Diluted
(Rs.)
Return on Net Worth %
Net Asset Value per equity share (Rs.)
As at
December
31, 2007
Weighted average number of equity share
used for calculating:
* Face value Rs. 10/Ratios have been computed as per the following formulae
1.
2.
3.
4.
Earnings per share (Rs.) =
Net Profit after Tax, as restated attributable to equity shareholders
Weighted average number of equity shares outstanding during the
year/ period
Return on Net Worth (%) =
Net Profit after Tax, as restated
Net Worth, as restated, at the end of the year/ period
Net Asset Value (NAV) per share (Rs.)=
Net Worth, as restated, at the end of the year
Number of equity shares outstanding at the end of year/ period
Weighted average number of equity shares is the number of equity shares outstanding at the
beginning of the year/ period, adjusted by the number of equity shares issued during the year/
period multiplied by the time - weighting factor. The time weighting factor is the number of days
for which the specific shares are outstanding as a proportion of the total number of days during the
year/ period.
Net profit, as appearing in the statement of profit and loss of the respective years/ periods, has been
considered for the purpose of computing the above ratios.
Earnings per share calculations are done in accordance with Accounting Standard 20 "Earnings per
Share" issued by the Institute of Chartered Accountants of India. In terms of para 24 of AS-20, in
case of a bonus issue, the number of equity shares outstanding before the event is adjusted for the
proportionate change in the number of equity shares outstanding as if the event had occurred at the
beginning of the earliest period reported. Weighted average number of equity shares outstanding
during all the previous years/ periods have been considered accordingly.
Net worth means Equity Share capital + Reserves and Surplus (including Securities Premium) Miscellaneous Expenditure not written off or adjusted.
205
5.
These ratios are computed on the basis of Unconsolidated Summary Statements, as restated of
Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited).
206
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE XV (A): DETAILS OF THE NAMES OF RELATED PARTIES AND NATURE
OF RELATIONSHIPS
1. Names of related parties where control exists irrespective of whether transactions have occurred or
not.
Ultimate Holding Company
Indian Televentures Private Limited
Holding Company
Omnia Investments Private Limited
Subsidiary Company
Mobisoc Technology Private Limited
2. Names of other related parties
Fellow Subsidiaries
Omnia BPO Services Limited (formerly known as
Stracon Back Office Solutions Limited)
Spice Communications Limited (upto June 5, 2007)
Super Infosys Private Limited
Mcorp Communication Private Limited (formerly
known as Modi Wellvest Private Limited)
Hot Spot Retails Private Limited (upto May 9, 2007)
Key Management Personnel
Dr. B.K. Modi (Sep 30, 2006 – Sep 30, 2007)
Mr. Dilip Modi
Mr. Saket Agarwal
Mr. Kartar Singh
Mr. Dheeraj Agarwal (Feb 1, 2004 – July 15, 2005)
Relatives of Key Management Personnel
Mrs. Veena Modi
Mrs. Sonal Modi
Mrs. Ritika Modi Rungta
Ms. Divya Modi
Enterprises significantly influenced by
Management Personnel or their Relatives
Key
Twenty First Century Capitals Limited
Wellwisher Holdings Private Limited
Harjas Logic Systems Private Limited
Nik Travels Private Limited
Spice Corp Private Limited (formerly known as MCorp
Global Private Limited)
Spice Communications Limited (from June 6, 2007)
Spice Mobiles Limited
Ace Airways Private Limited
Duro International Rubber Private Limited
G.M.Modi Hospitals Corporation Private Limited
Modikem Limited
Plus Paper Foodpac Limited
I O Systems Limited (formerly known as Spice Systems
Limited)
Tuberose Investments Private Limited
Mudaliar & Sons Hotels Private Limited
Vcorp Mercantile Private Limited
207
Hindustan Retails Private Limited
Hot Spot Retails Private Limited (from May 10, 2007)
208
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
ANNEXURE XV (B) : DETAILS OF TRANSACTIONS WITH RELATED PARTIES
Particulars
Holding Company
Subsidiary
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
Year
Ended
March
31,
2006
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
Year
Ended
March 31,
2006
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
A) Transactions
i)
Revenue from Value Added Services
Spice Communications Limited
ii)
Revenue from Roaming Services
Spice Communications Limited
iii)
Sale of Softwares
iv)
Other Income (Rental Income)
Hot Spot Retails Private Limited
iv)
Purchase of Fixed Assets
Spice Mobiles Limited
v)
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Roaming Expenses
Spice Communications Limited
vi)
-
Enterprise Solution Charges
209
Spice Communications Limited
vii)
-
Gifts and Prizes
Hot Spot Retails Private Limited
-
Spice Communications Limited
viii)
x)
Rent Paid
Spice Communications Limited
Harjas Logic Systems Private Limited
xv)
xvi)
xvii)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Sundry Debit Balances Written Off
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Balances Provided for
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Electricity Expenses
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Business Promotion Expenses
Travelling expenses
Nik Travels Private Limited
xiv)
-
Repair Services
Hot Spot Retails Private Limited
xiii)
-
-
-
xii)
-
-
-
Wellwisher Holdings Private Limited
xi)
-
Website Development Charges
Spice Communications Limited
Hardware and Equipment Maintenance
Services
Spice Communications Limited
ix)
-
Communication expenses
210
xiii)
Staff Welfare
Spice Communications Limited
xix)
xx)
xxi)
xxii)
xxiii)
xxiv)
xxv)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18.18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Remuneration paid
Saket Agarwal
-
-
-
-
-
-
-
-
-
-
Kartar Singh
-
-
-
-
-
-
-
-
-
-
Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
Reimbursement of Expenses Paid by the
Company
-
-
-
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
3.00
-
-
-
-
-
-
-
-
-
-
-
-
Legal & Professional Charges
Mobisoc Technology Private Limited
Corporate Guarantee Commission
income
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
Interest Income
Reimbursement of Expenses Incurred by
the Company
Dividend Paid
Omnia Investments Private Limited
-
400.18
Dr. B.K Modi
-
-
-
-
-
-
-
-
-
-
Mrs. Veena Modi
-
-
-
-
-
-
-
-
-
-
Mr. Dilip Modi
-
-
-
-
-
-
-
-
-
-
211
xxvi)
xxvii)
xxviii)
xxix)
xxx)
Ms. Divya Modi
-
-
-
-
-
-
Investment in Equity Share Capital
Mobisoc Technology Private Limited
-
-
-
-
-
-
100.00
-
-
-
-
-
-
Share Application money paid
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
Share Application money received
back
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
60.00
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
60.00
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
-
-
-
-
-
-
-
-
-
-
Advance Given During the Year
Advance received back during the year
212
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
Mudaliar & Sons Hotels Pvt Ltd
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
xxxii)
Loan Given During the Year
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
xxxiii)
Loan received back during the year
As at
March
31, 2005
As at
December
31, 2003
xxxi)
Security Deposits Given
MCorpGlobal Private Limited
B) Balances
at the year
end
i)
As at
December
31, 2007
As at
March
31, 2007
As at
March
31,
2006
As at
December
31, 2007
As at
March
31, 2007
As at
March
31, 2006
As at
March 31,
2005
As at
December
31, 2003
Receivables
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Modi Distributors Pvt. Ltd.
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
Kartar Singh
-
-
-
-
-
-
-
-
-
-
Mudaliar & Sons Hotels Pvt Ltd
-
-
-
-
-
-
-
-
-
-
213
(against security deposit)
ii)
Mudaliar & Sons Hotels Pvt Ltd
(against advances recoverable)
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Nik Travels Private Limited
-
-
-
-
-
-
-
-
-
-
Mr. Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
0.51
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Payables
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
214
Particulars
Fellow Subsidiary
Year
Ended
March
31, 2006
Key Management Personnel
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
Revenue from Value Added Services
Spice Communications Limited
7.85
-
-
-
-
-
-
-
-
-
Revenue from Roaming Services
Spice Communications Limited
3.62
-
-
-
-
-
-
-
-
-
52.70
-
-
-
-
-
-
-
-
-
0.20
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
Hot Spot Retails Private Limited
-
-
0.01
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
5.97
Enterprise Solution Charges
Spice Communications Limited
-
-
-
-
-
-
-
-
-
2.96
-
-
-
-
-
-
-
-
-
Fifteenmonths
Period
Ended
March
31,
2005
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
A) Transactions
i)
ii)
iii)
iv)
Sale of Softwares
Other Income (Rental Income)
Hot Spot Retails Private Limited
iv)
v)
vi)
vii)
Purchase of Fixed Assets
Roaming Expenses
Gifts and Prizes
215
viii)
ix)
x)
Hot Spot Retails Private Limited
-
0.02
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Website Development Charges
Spice Communications Limited
Hardware and Equipment Maintenance
Services
Spice Communications Limited
Rent Paid
Spice Communications Limited
Harjas Logic Systems Private Limited
Wellwisher Holdings Private Limited
xi)
Repair Services
Hot Spot Retails Private Limited
xii)
0.05
0.03
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.44
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Balances Provided for
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Electricity Expenses
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
Travelling expenses
Nik Travels Private Limited
xiv)
Communication expenses
Spice Communications Limited
xv)
xvi)
xvii)
xiii)
-
Business Promotion Expenses
Hot Spot Retails Private Limited
xiii)
-
Sundry Debit Balances Written Off
Staff Welfare
216
Spice Communications Limited
xix)
xx)
xxi)
xxii)
xxiii)
xxiv)
xxv)
xxvi)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.39
0.02
-
-
-
-
-
-
-
Interest Income
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Remuneration paid
Saket Agarwal
-
-
-
-
-
0.99
-
-
-
-
Kartar Singh
-
-
-
-
-
2.27
-
-
-
-
Dheeraj Agarwal
-
-
-
-
-
-
-
0.54
2.55
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
Reimbursement of Expenses Paid by the
Company
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend Paid
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Dr. B.K Modi
-
-
-
-
-
-
-
-
-
Mrs. Veena Modi
-
-
-
-
-
-
-
-
-
-
Mr. Dilip Modi
-
-
-
-
-
-
0.02
-
-
-
Ms. Divya Modi
-
-
-
-
-
-
-
-
-
-
Legal & Professional Charges
Mobisoc Technology Private Limited
Corporate Guarantee Commission
income
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
Reimbursement of Expenses Incurred by
the Company
Investment in Equity Share Capital
217
-
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
218
Particulars
Fellow Subsidiary
Ninemonths
Period
Ended
December
31, 2007
xxvii)
xxviii)
xxix)
xxx)
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Key Management Personnel
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March 31,
2007
Year
Ended
March 31,
2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
Share Application money paid
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
43.20
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
Share Application money received
back
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
ZZZZZZ
Hot Spot Retails Private Limited
-
43.20
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
-
-
2.50
-
-
-
-
-
-
-
-
0.40
2.50
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
-
-
-
-
-
-
-
-
-
-
Advance Given During the Year
Advance received back during the year
219
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
2.50
-
-
-
-
-
-
-
Twenty First Century Capitals Limited
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
-
-
-
-
-
-
-
-
-
-
-
0.40
2.50
-
-
-
-
-
-
-
Mudaliar & Sons Hotels Pvt Ltd
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
xxxii)
Loan Given During the Year
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
xxxiii)
Loan received back during the year
MCorpGlobal Private Limited
As at
March 31,
2005
As at
December
31, 2003
As at
March 31,
2005
As at
December
31, 2003
xxxi)
Security Deposits Given
B)
Balances
at the
year end
i)
As at
December
31, 2007
As at
March
31, 2007
As at
March
31, 2006
As at
December
31, 2007
As at
March 31,
2007
As at
March 31,
2006
Receivables
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
-
-
Modi Distributors Pvt. Ltd.
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
-
-
-
-
-
-
-
-
-
-
-
0.40
0.02
-
-
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
220
ii)
Twenty First Century Capitals Limited
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
Kartar Singh
Mudaliar & Sons Hotels Pvt Ltd
(against security deposit)
Mudaliar & Sons Hotels Pvt Ltd
(against advances recoverable)
-
-
-
-
-
0.12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
-
-
-
Payables
Nik Travels Private Limited
-
-
-
-
-
-
-
-
-
-
Mr. Dheeraj Agarwal
-
-
-
-
-
-
-
-
0.06
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
-
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
-
-
-
-
-
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
221
Particulars
Relatives of Key Management Personnel
Ninemonths
Period
Ended
December
31, 2007
A) Transactions
i)
Revenue from Value Added Services
Spice Communications Limited
Year
Year Ended
Ended
March 31,
March 31,
2006
2007
-
-
-
Fifteenmonths
Period
Ended
March 31,
2005
Enterprises owned or significantly influenced by key
management personnel or their relatives
Year Ended
December
31, 2003
-
-
NineYear
Year
months
Ended
Ended
Period March 31, March
Ended
2007
31, 2006
December
31, 2007
34.32
117.80
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
87.74
2.12
133.18
ii)
Revenue from Roaming Services
Spice Communications Limited
-
-
-
-
-
42.80
50.69
78.66
-
221.23
-
-
-
-
-
-
-
-
-
-
-
-
-
4.67
-
11.87
-
13.79
iii)
Sale of Softwares
iv)
Other Income (Rental Income)
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
254.76
1.60
iv)
v)
Purchase of Fixed Assets
Spice Mobiles Limited
Hot Spot Retails Private Limited
MCorpGlobal Private Limited
Roaming Expenses
Spice Communications Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.16
0.27
-
21.96
18.72
vi)
vii)
viii)
Enterprise Solution Charges
Spice Communications Limited
Gifts and Prizes
Hot Spot Retails Private Limited
Spice Communications Limited
Website Development Charges
Spice Communications Limited
10.63
-
-
-
-
-
9.95
4.07
-
-
-
-
-
-
-
-
-
0.07
-
-
-
-
-
-
-
-
-
1.20
-
-
-
222
ix)
x)
Hardware and Equipment Maintenance Services
Spice Communications Limited
Rent Paid
Spice Communications Limited
Harjas Logic Systems Private Limited
Wellwisher Holdings Private Limited
-
-
-
-
-
-
-
0.75
3.75
-
-
-
-
-
-
0.27
2.93
0.36
3.91
1.00
0.36
0.33
-
0.81
-
-
1.80
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
223
Particulars
Relatives of Key Management Personnel
Ninemonths
Period
Ended
December
31, 2007
Enterprises owned or significantly influenced by key
management personnel or their relatives
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
-
-
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
xiii)
Travelling expenses
Nik Travels Private Limited
-
-
-
-
xiv)
Communication expenses
-
-
-
-
-
-
xi)
xii)
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Fifteenmonths
Period
Ended
March 31,
2005
Year
Ended
December
31, 2003
-
-
-
-
-
-
-
-
6.50
-
-
-
-
-
4.59
3.03
0.54
1.39
-
-
-
1.47
1.26
0.95
1.54
-
-
-
-
-
0.16
-
0.10
-
-
-
-
-
-
-
0.30
-
-
-
-
-
-
-
1.11
0.58
-
-
-
Spice Communications Limited
-
-
-
-
-
0.05
-
-
-
-
Legal & Professional Charges
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
Repair Services
Hot Spot Retails Private Limited
Balances Provided for
Spice Communications Limited
xvii)
Electricity Expenses
Spice Communications Limited
xiii)
xix)
-
Sundry Debit Balances Written Off
Spice Communications Limited
xvi)
-
Business Promotion Expenses
Spice Communications Limited
xv)
Ninemonths
Period
Ended
December
31, 2007
Staff Welfare
224
xx)
xxi)
xxii)
xxiii)
xxiv)
xxv)
xxvi)
Corporate Guarantee Commission
income
Omnia BPO Services Limited (formerly
known as Stracon Back Office Solutions
Limited)
-
-
-
-
-
-
-
-
-
-
Interest Income
MCorpGlobal Private Limited
-
-
-
-
-
-
5.88
3.20
-
-
Remuneration paid
Saket Agarwal
-
-
-
-
-
-
-
-
-
-
Kartar Singh
-
-
-
-
-
-
-
-
-
-
Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
0.36
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
0.33
-
Spice Communications Limited
Reimbursement of Expenses Paid by
the Company
-
-
-
-
-
-
0.59
0.97
49.47
-
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Dr. B.K Modi
-
-
-
-
-
-
-
-
-
-
Mrs. Veena Modi
-
-
-
-
-
-
-
-
-
Mr. Dilip Modi
-
-
-
-
-
-
-
-
-
Ms. Divya Modi
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Reimbursement of Expenses Incurred
by the Company
Dividend Paid
-
Investment in Equity Share Capital
Mobisoc Technology Private Limited
-
-
Note:
1. All figures are in Rs. Million
225
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
Cont..
226
Particulars
Relatives of Key Management Personnel
Ninemonths
Period
Ended
December
31, 2007
xxvii)
xxviii)
xxix)
Year
Ended
March
31, 2007
Year
Ended
March
31, 2006
Fifteenmonths
Period
Ended
March
31, 2005
Enterprises owned or significantly influenced by key
management personnel or their relatives
Year
Ended
December
31, 2003
Ninemonths
Period
Ended
December
31, 2007
Year
Ended
March
31, 2007
-
Year
Ended
March
31, 2006
-
Fifteenmonths
Period
Ended
March
31, 2005
Year
Ended
December
31, 2003
-
Share Application money paid
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
150.00
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
Share Application money received
back
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
-
-
79.50
-
-
-
-
-
-
-
-
150.00
-
-
-
Hot Spot Retails Private Limited
-
-
-
-
-
-
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
79.50
-
-
-
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
17.50
-
Spice Net Limited
-
-
-
-
-
-
-
-
19.05
-
Hot Spot Retails Private Limited
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
Twenty First Century Capitals
Limited
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.50
-
-
Advance Given During the Year
227
xxx)
xxxi)
xxxii)
Advance received back during the
year
Omnia Investments Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Net Limited
-
-
-
-
-
-
-
-
19.00
-
Hot Spot Retails Private Limited
Twenty First Century Capitals
Limited
Omnia BPO Services Limited
(formerly known as Stracon Back
Office Solutions Limited)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.50
-
-
-
-
-
-
-
-
-
-
-
-
-
Mudaliar & Sons Hotels Pvt Ltd
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
1.95
-
-
-
-
-
-
-
-
-
54.10
115.50
-
-
Security Deposits Given
Loan Given During the Year
MCorpGlobal Private Limited
xxxiii)
Loan received back during the year
MCorpGlobal Private Limited
B)
Balances
at the
year end
i)
150.00
As at
December
31, 2007
As at
March
31, 2007
As at
March
31, 2006
As at
March
31, 2005
As at
December
31, 2003
As at
December
31, 2007
119.60
As at
March
31, 2007
50.00
As at
March
31, 2006
265.08
As at
March
31, 2005
As at
December
31, 2003
Receivables
Spice Communications Limited
-
-
-
-
-
184.13
20.27
47.30
-
Spice Global Pvt Ltd.
-
-
-
-
-
-
-
-
17.60
-
Spice Net Limited
-
-
-
-
-
-
-
-
0.05
-
Modi Distributors Pvt. Ltd.
Omnia BPO Services Limited
-
-
-
-
-
-
-
-
5.00
-
-
-
-
-
-
-
-
-
-
-
228
(formerly known as Stracon Back
Office Solutions Limited)
ii)
Hot Spot Retails Private Limited
Twenty First Century Capitals
Limited
Bougainvillea Multiplex &
Entertainment Center Private Limited
-
-
-
-
-
2.07
-
-
-
-
-
-
-
-
-
-
-
0.50
-
-
-
-
-
-
-
-
-
150.00
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
1.95
-
-
-
Kartar Singh
Mudaliar & Sons Hotels Pvt Ltd
(against security deposit)
Mudaliar & Sons Hotels Pvt Ltd
(against advances recoverable)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150.00
-
-
-
-
-
-
-
-
-
8.43
-
-
-
-
MCorpGlobal Private Limited
-
-
-
-
-
-
-
145.00
-
-
Nik Travels Private Limited
-
-
-
-
-
0.03
0.01
0.08
0.00*
-
Mr. Dheeraj Agarwal
-
-
-
-
-
-
-
-
-
-
Harjas Logic Systems Private Limited
-
-
-
-
-
-
-
0.25
-
-
Mobisoc Technology Private Limited
-
-
-
-
-
-
-
-
-
-
Spice Mobiles Limited
-
-
-
-
-
6.50
-
-
-
-
Spice Communications Limited
-
-
-
-
-
33.75
0.10
-
-
-
Payables
Note:
1. All figures are in Rs. Million
2. Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of prices
with the market rates or with sales of similar products to other parties.
229
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XVI : CONSOLIDATED SUMMARY STATEMENT OF ASSETS AND
LIABILITIES, AS RESTATED
Particulars
(Amount in Rs. Million)
As at March 31, 2007
As at December 31,
2007
APPLICATION OF FUNDS
Fixed Assets
452.69
185.70
(113.51)
(52.99)
339.18
132.71
8.05
31.21
347.23
163.92
-
1.87
-
1.36
Sundry Debtors
357.24
262.53
Cash and Bank Balances
500.59
648.30
84.65
3.34
294.27
47.84
Total
1,236.75
963.37
TOTAL (A)
1,583.98
1,129.17
2.04
-
0.10
0.10
Current Liabilities
181.98
86.85
Provisions
316.73
11.68
Total
498.81
98.63
TOTAL (B)
500.85
98.63
1,083.13
1,030.53
Gross Block
Less: Accumulated Depreciation/ Amortisation
Net Block
Capital Work In Progress including Capital Advances
Total
Deferred Tax Assets (net)
Current Assets, Loans & Advances
Inventories
Other Current Assets
Loans & Advances
Deferred Tax Liabilities (net)
Liabilities and Provisions
Minority Interest
Net Worth (A-B)
230
Particulars
As at December 31,
2007
As at March 31, 2007
Represented by
Share Capital and Reserves
Equity Share Capital
Reserves and Surplus (Figure for December 31, 2007 is net of
Rs. 5.11 million being adjustment for employee provisions
(Refer Note No. G (3) of the Annexure XIX)
Less: Miscellaneous Expenditure
(to the extent not written off or adjusted)
Net Worth
145.72
145.72
885.92
937.41
-
1.11
1,083.13
1,030.53
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Consolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure XIX
As per our report of even date
FOR S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Per Raj Agrawal
Partner
Membership No. : 82028
Place: Gurgaon
Date: June 26, 2008
For and on behalf of the Board of Cellebrum Technologies Limited
(Directors)
(Directors)
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
Kartar Singh
Chief Finance Officer
Company secretary
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
231
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XVII : CONSOLIDATED SUMMARY STATEMENT OF PROFIT AND LOSS,
AS RESTATED
Particulars
(Amount in Rs. Million)
Year Ended March 31,
2007
Nine- months Period
Ended December 31, 2007
INCOME
Operating Income
734.56
661.78
Other Income
42.63
25.02
Total Income
777.19
686.80
0.99
3.38
82.13
50.11
138.37
66.11
EXPENDITURE
Purchase of Goods for Sale
Operating Expenses
Staff Cost
Selling and Distribution Expenses
16.56
7.28
126.31
78.53
Decrease / (Increase) in Inventories
1.36
(1.36)
Interest
0.94
0.04
Miscellaneous Expenditure written off
Depreciation / Amortization (Refer note no. C(iv) and
G (9) of the Annexure XIX)
1.11
-
General and Administration Expenses
Total Expenditure
PROFIT BEFORE TAX AND PRIOR PERIOD
ITEMS
60.47
32.90
428.24
236.99
348.95
449.81
Prior Period Items
PROFIT BEFORE TAX AND AFTER PRIOR
PERIOD ITEMS
5.31
0.38
343.64
449.43
Provision for Tax
Current Tax (Net of MAT Credit entitlement, refer
note no. G (10) of the Annexure XIX)
14.91
24.06
Deferred Tax Charge / (Credit)
3.43
(1.24)
Fringe Benefits Tax
4.65
2.16
22.99
24.98
320.65
424.45
Adjustments ( Refer Note no. E of Annexure XIX)
10.45
(15.64)
Current Tax impact of Adjustments
(0.42)
1.21
-
0.48
10.03
(13.95)
330.68
410.50
Total Tax Expense
NET PROFIT AS PER AUDITED
ACCOUNTS
Deferred Tax impact of Adjustments
Net Impact of Adjustments
NET PROFT AS RESTATED, BEFORE
MINORITIES SHARE
Less: (Losses) / Profits attributable to minority
shareholders
(0.001)
0.001
NET PROFT AS RESTATED
330.68
410.50
201.22
289.42
531.90
699.92
Profit & Loss Account at the beginning of the year /
period
PROFIT AVAILABLE FOR
APPROPRIATION
232
Particulars
Nine- months Period
Ended December 31, 2007
Appropriations:
Transfer to General Reserve
Proposed Dividend on Equity Shares (at the rate of
Rs. 16.07 per share)
Interim Dividend on Equity Shares (at the rate of Rs.
33.35 per share)
Tax on dividend
BALANCE CARRIED FORWARD AS
RESTATED
Year Ended March 31,
2007
33.47
42.37
234.28
-
-
400.20
39.82
56.13
224.343
201.22
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Consolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure XIX.
As per our report of even date
FOR S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Per Raj Agrawal
Partner
Membership No. : 82028
Place: Gurgaon
Date: June 26, 2008
For and on behalf of the Board of Cellebrum Technologies Limited
(Directors)
(Directors)
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
Kartar Singh
Chief Finance Officer
Company secretary
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
233
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XVIII : CONSOLIDATED SUMMARY STATEMENT OF CASH FLOWS, AS
RESTATED
Particulars
(Amount in Rs. Million)
Year Ended March 31,
2007
Nine- months Period
Ended December 31,
2007
A. Cash Flow from Operating Activities
Net Profit Before Tax, As Restated
354.09
433.79
Net Profit Before Tax, As Restated
354.09
433.79
60.53
43.71
Adjustment for:
Depreciation / Amortization
Miscellaneous Expenditure Wriiten off
Provision for Doubtful Debts
1.11
-
11.66
8.10
0.23
(0.86)
(39.93)
(24.20)
0.94
0.04
388.63
460.58
(105.89)
(224.51)
1.36
(1.36)
(217.82)
(15.56)
(77.12)
(0.96)
107.11
72.79
-
(1.11)
96.27
289.87
(34.42)
(50.07)
61.85
239.80
(244.35)
(138.39)
117.15
(498.19)
-
(43.20)
-
272.70
-
(54.10)
-
119.60
Foreign Exchange (Gain) / Loss
Interest Income
Interest Expense
Operating Profit Before Working Capital Changes
Movement in Working Capital:
(Increase) in Sundry Debtors
Decrease / (Increase) in Inventories
(Increase) in Loans and Advances
(Increase) in Other Current Assets
Increase in Current Liabilities and Provisions
Miscellaneous Expenditure (to the extent not written
off or adjusted)
Cash Generated from Operations
Direct Taxes Paid (including Fringe Benefits
Taxes)
Net Cash Generated from Operations (A)
B. Cash Flow from Investing Activities
Purchase of Fixed Assets
Fixed Deposits with Banks
Share Application Money Paid
Share Application Money Received Back
Inter Corporate Deposit Given
Inter Corporate Deposit Received Back
234
Particulars
Nine- months Period
Ended December 31,
2007
Interest Received
Net Cash Generated from / (Used In) Investing
Activities(B)
Particulars
Year Ended March 31,
2007
35.73
24.43
(91.47)
Nine- months Period
Ended December 31,
2007
(317.15)
Year Ended March 31,
2007
-
25.71
-
645.23
-
(7.75)
-
0.10
-
10.00
-
(10.00)
-
(0.67)
(0.94)
(0.04)
-
(456.33)
(0.94)
206.25
(30.56)
128.90
133.69
4.79
103.13
133.69
0.30
0.05
4.49
-
97.13
126.56
1.21
7.08
103.13
133.69
C. Cash Flows from Financing Activities
Proceeds from Issuance of Share Capital
Securities Premium Received
Share Issue Expenses
Minority Interest
Share Application Money received
Share Application Money paid back
Repayment of Long-Term Borrowings
Interest Paid
Dividend Paid (including tax on dividend paid of Rs.
56,128,611)
Net Cash Generated from / (Used in) Financing
Activities ( C )
Net Changes in Cash & Cash Equivalents
(A+B+C)
Cash and Cash Equivalents at the Beginning of the
Year / Period
Cash and Cash Equivalents at the End of the Year
/ Period
Components of Cash and Cash Equivalents:
Cash in Hand
Cheques in Hand
Balances with Scheduled Banks on Current Accounts
Balance with Hongkong and Shanghai Banking
Corp., Singapore on current account
Total
Notes:
1)
2)
3)
Cash Flow Statement has been prepared under the 'Indirect Method' as set out in Accounting
Standard -3 on Cash Flow Statements issued by the Institute of Chartered Accountants of
India.
Negative figures have been shown in brackets.
The above Statement should be read with the significant accounting policies and Notes to the
Consolidated Summary Statement of Assets and Liabilities, Profits and Losses and Cash
Flows as restated under Indian GAAP, as appearing in Annexure XIX.
As per our report of even date
FOR S.R. BATLIBOI & ASSOCIATES
235
Chartered Accountants
Per Raj Agrawal
Partner
Membership No. : 82028
Place: Gurgaon
Date: June 26, 2008
For and on behalf of the Board of Cellebrum Technologies Limited
(Directors)
(Directors)
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
Kartar Singh
Chief Finance Officer
Company secretary
Place: Noida
Date : June 26, 2008
Place: Noida
Date : June 26, 2008
236
ANNEXURE XIX: NOTES TO THE RESTATED CONSOLIDATED SUMMARY STATEMENTS OF
ASSETS AND LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER
INDIAN GAAP, FOR CELLEBRUM TECHNOLOGIES LIMITED [FORMERLY CELLEBRUM.COM
LIMITED]
A.
Background
a)
Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited) (‘the Company’)
is into the Information and Communication Technology business providing Value Added
Services, Mobile Content and Roaming Management Services to the Telecom Operators.
Also, the Company and its subsidiary undertake development and sale of telecom related
software. Further, the subsidiary is engaged in the business of providing management and
support services in the field of telecommunication technology to the Parent Company.
b)
The Restated Consolidated Summary Statement of Assets and Liabilities of the Company as at
December 31, 2007 and March 31, 2007 and the related Restated Consolidated Summary
Statement of Profits and Losses and Cash Flows for the nine months period ended December
31, 2007 the year ended March 31, 2007 (hereinafter collectively referred to as “Restated
Consolidated Summary Statements”) relate to Cellebrum Technologies Limited (formerly
Cellbrum.com Private Limited) (“the Company”) and its subsidiary (Mobisoc Technology
Private Limited) (such subsidiary, together with the Company hereinafter collectively referred
to as the “Group”) and have been prepared specifically for inclusion in the Offer Document to
be filed by the Company with the Securities and Exchange Board of India (“SEBI”) in
connection with its proposed Initial Public Offering of its equity shares.
These Restated Consolidated Summary Statements have been prepared to comply in all
material respects with the requirements of Schedule II to the Companies Act, 1956 (“the Act”)
and the Securities and Exchange Board of India (Disclosure and Investor Protection)
Guidelines, 2000 (“the SEBI Guidelines”) issued by SEBI on January 19, 2000, as amended
from time to time, except to the extent stated in Note F (i), (ii) and (iii) below.
B.
Statement of Significant Accounting Policies adopted in the preparation of Consolidated
Financial
Statements as at and for the nine-months period ended December 31, 2007
a)
Basis of Preparation
The consolidated financial statements have been prepared to comply in all material respects with
the Notified Accounting Standards by the Companies Accounting Standards Rules, 2006 and the
relevant provisions of the Companies Act, 1956. The restated consolidated financial statements
have been prepared under the historical cost convention and on an accrual basis except in case of
assets for which provision for impairment is made and revaluation is carried out. The accounting
policies have been consistently applied by the Group and except for the changes in accounting
policy discussed more fully in (C) below, are consistent with those used in the previous year.
b)
Principles of Consolidation
The consolidated financial statements relate to Cellebrum Technologies Limited (formerly
Cellebrum.com Private Limited) (hereinafter referred to as the “Company”) and its subsidiary
(hereinafter collectively referred to as ‘the Group’). In the preparation of these consolidated
financial statements, investment in subsidiary has been accounted for in accordance with
Accounting Standard (AS) 21 (Consolidated Financial Statements) as notified by Companies
Accounting Standard Rules, 2006. The consolidated financial statements are prepared on the
following basis:(i) Subsidiary company is consolidated on a line-by-line basis by adding together the book
values of the like items of assets, liabilities, income and expenses after eliminating all
significant intra-group balances and intra-group transactions and also unrealized profits or
237
losses, except where cost cannot be recovered. The results of operations of a subsidiary are
included in the consolidated financial statements from the date on which the parent
subsidiary relationship came into existence.
(ii) Minorities’ interest in net profits of the consolidated subsidiary for the period is identified
and adjusted against the income in order to arrive at the net income attributable to the
shareholders of the Group. Their share of net assets is identified and presented in the
consolidated balance sheet separately. Where accumulated losses attributable to the
minorities are in excess of their equity, in the absence of the contractual obligation on the
minorities, the same is accounted for by the holding company.
(iii) As far as possible, the consolidated financial statements are prepared using uniform
accounting policies for like transactions and other events in similar circumstances and are
presented, to the extent possible, in the same manner as the Company's stand alone financial
statements. Differences in accounting policies are disclosed separately.
(iv) The financial statements of the subsidiary used for the purpose of consolidation are drawn up
to the same reporting date as that of the Company i.e. the nine months period ended
December 31, 2007.
c)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial
statements and the results of operations during the reporting period end. Although these
estimates are based upon management’s best knowledge of current events and actions, actual
results could differ from these estimates.
d)
e)
Fixed Assets
i)
Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any.
Cost comprises the purchase price and any attributable cost of bringing the asset to its
working condition for its intended use.
ii)
Insurance spares / stand by equipments are capitalized as part of mother assets.
Depreciation
i)
Depreciation is provided using the Straight Line Method (‘SLM’) as per the useful lives of
the assets estimated by the management, or at the rates prescribed under Schedule XIV of
the Companies Act, 1956 whichever is higher as under:
Tangible Assets
Rates (SLM) (in %)
Schedule XIV Rates
(SLM) (in %)
3.34
Buildings
3.34
Data Processing Machines
31.67
16.21
Furniture & Fixtures
13.57
6.33
31.67
13.57
4.75
4.75
9.50
13.57
9.50
11.31
Office Equipment
Mobile phones
Others
Vehicles
Motor Cars
Motor buses
ii)
Cost of Leasehold improvements is amortized over the period of lease or their useful lives
whichever is lower.
iii)
Individual assets costing upto Rs.5,000/- are depreciated fully in the month of purchase.
238
iv)
f)
Insurance spares / standby equipments are depreciated prospectively over the remaining
useful lives of the respective mother assets.
Intangibles
i)
Intangibles assets acquired from outside are amortized using the Straight Line Method over
their estimated useful lives as follows:
Intangible Assets
Estimated Useful Life (Years)
Computer Software
ii)
g)
h)
3 years
Costs incurred towards development of computer software products meant for sale, lease
or otherwise marketed, are capitalized subsequent to establishing technical feasibility.
Capitalization ceases when the product is available for general release to customers.
Capitalized software product costs are amortized on a product-by-product basis. The
amortization shall be greater of the amount computed using (a) the ratio that current gross
revenue for a product bears to the total of current and anticipated future gross revenues for
that product or (b) straight line method over the remaining estimated useful life of the
product. The unamortized cost of Capitalized software products is carried at cost, less
accumulated amortization less impairment, if any.
Impairment
i)
The carrying amounts of assets are reviewed at each balance sheet date if there is any
indication of impairment based on internal / external factors. An impairment loss is
recognized wherever the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the asset’s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value
at the weighted average cost of capital.
ii)
After impairment, depreciation is provided on the revised carrying amount of the asset over
its remaining useful life.
Leases
Where the Company is the lessee
Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of
the leased term, are classified as operating leases. Operating lease payments are recognized as an
expense in the Profit and Loss Account on a straight-line basis over the lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease income is recognised in the
Profit and Loss Account on a straight-line basis over the lease term. Costs, including depreciation
are recognised as an expense in the Profit and Loss Account. Initial direct costs such as legal
costs, brokerage costs, etc. are recognised immediately in the Profit and Loss Account.
i)
Inventories
Inventories are valued as follows:
Traded goods
At Cost or Net Realizable Value, whichever is lower. Cost
is determined on FIFO basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and estimated costs necessary to make the sale.
j)
Revenue Recognition
239
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured.
Rendering of Services
Service revenue is recognized at the end of each month in which the services are rendered.
Service revenue for the Company includes income on value added services, revenue from
roaming management services and providing mobile content. Service Revenue for the Subsidiary
includes income from management and support services in the field of telecommunication
technology.
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership of the goods have
passed to the buyer, which coincides with their delivery to the customer.
Interest
Revenue is recognized on a time proportion basis taking into account the amount outstanding and
the rate applicable.
k)
Foreign Currency Translation
Foreign currency transactions
i)
Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign
currency amount the exchange rate between the reporting currency and the foreign currency at
the date of the transaction.
ii)
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which
are carried in terms of historical cost denominated in a foreign currency are reported using the
exchange rate at the date of the transaction.
iii)
Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting Company’s
monetary items at rates different from those at which they were initially recorded during the year,
or reported in previous financial statements, are recognized as income or as expenses in the year
in which they arise. Exchange differences arising in respect of fixed assets acquired from outside
India on or before accounting period commencing after December 7, 2006 are capitalized as a
part of fixed asset.
iv)
Translation of Integral foreign operation
The financial statements of an integral foreign operation are translated as if the transactions of
the foreign operation have been those of the Company itself.
l)
Retirement and other employee benefits
i)
Retirement benefit in the form of Provident Fund is a defined contribution scheme and the
contributions are charged to the Profit and Loss Account of the year when the contributions
to the respective funds are due. There are no other obligations other than the contribution
payable to the statutory authorities.
ii)
Retirement Gratuity is a defined benefit obligation. The Company has taken insurance
policy under the Group Gratuity Scheme of Life Insurance Corporation of India (LIC) to
cover the gratuity liability of the employees and the premium paid/payable to LIC, in
respect of the present value for liability of past services is charged to the Profit and Loss
account every year. Also, the difference between amount paid/payable to LIC and the
240
actuarial valuation on projected unit credit method made at the end of each financial year is
charged to the Profit and Loss account.
m)
iii)
Short term compensated absences are provided for on based on estimates. Long term
compensated absences are provided for based on actuarial valuation at the end of each
financial year. The actuarial valuation is done as per projected unit credit method.
iv)
Actuarial gains / losses are immediately taken to profit and loss account and are not
deferred.
Income Taxes
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe
benefit tax is measured at the amount expected to be paid to the tax authorities in accordance
with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted
at the balance sheet date. Deferred tax assets are recognised only to the extent that there is
reasonable certainty that sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that they can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It
recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or
virtually certain, as the case may be, that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The
Company writes-down the carrying amount of a deferred tax asset to the extent that it is no
longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be realised. Any such write-down is
reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there is convincing evidence
that the Company will pay normal income tax during the specified period. In the year in which
the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued by the Institute of
Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss
account and shown as MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is
no longer convincing evidence to the effect that the Company will pay normal Income Tax
during the specified period.
n)
Miscellaneous Expenditure
Miscellaneous expenditure of the subsidiary is written off in the first year of commencement of
commercial operations.
o)
Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable
to equity shareholders by the weighted average number of shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period
attributable to equity shareholders and the weighted average number of shares outstanding during
the period are adjusted for the effects of all dilutive potential equity shares.
241
p)
Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event and
it is probable that an outflow of resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to its present value and are
determined based on best management estimate required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best
management estimates.
q)
Segment Reporting Policies
Identification of segments
The analysis of geographical segments is based on the geographical location of the customers.
r)
Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term
investments with an original maturity of three months or less.
C.
Changes in Accounting Policies
i) Adoption of Accounting Standard AS 15 (Revised) Employee Benefits
Till the year ended March 31, 2007, the Company was providing for gratuity based on actuarial
valuation as per LIC certificate and leave benefits based on actuarial valuation. During the
period ended December 31, 2007, the Company has adopted Accounting Standard 15 (Revised)
which is mandatory from accounting periods commencing on or after December 7, 2006.
Accordingly the Company has provided for gratuity based on actuarial valuation done as per
projected unit credit method. Also, the Company has changed the method of providing shortterm leave benefits from actuarial valuation to estimate basis. As a result, actuarial valuation of
leave liability and gratuity liability as at April 1, 2007 is higher by Rs. 5.11 million (net of tax
of Rs.0.65 million) which, in accordance with the transitional provision in the revised
accounting standard, has been adjusted to the General Reserve.
ii) Adoption of Accounting Standard) 11 ‘The Effect of Changes in Foreign Exchange Rates’
As per the requirements of the Companies (Accounting Standards) Rules, 2006 read in
consonance with notified Accounting Standard 11 which is mandatory from the accounting
periods commencing on or after December 7, 2006, the exchange differences on foreign
currency transactions relating to fixed assets acquired from a country outside India have been
adjusted to revenue as against the hitherto followed practice of adjusting the same to the
carrying amount of fixed assets. As a result, net exchange gain of Rs 0.53 million which
otherwise would have been adjusted against the carrying amount of fixed assets, has been
credited to the Profit and Loss Account during the period ended December 31, 2007 and thus
profit before tax for the nine-months period ended December 31, 2007 is higher by the same
amount.
iii) Change in the method of accounting for Earned Leaves
The Company changed its accounting policy during the year ended March 31, 2007 and
accounted for the liability for employees’ earned leaves based on actuarial valuation as at the
end of the year in line with Accounting Standard 15 issued by the Institute of Chartered
Accountants of India. Till the previous year ended March 31, 2006, leave liability was
accounted for based on actual amount payable as per current encashable salary as at the end
of the year. As a result of this change, the accumulated liability of earned leave was higher
and the profit for the year ended March 31, 2007 was lower by Rs. 3.10 million The effect of
such change in accounting policy has been appropriately adjusted in the years/ periods to
which it pertains (refer Note E (i) below).
242
iv) Change in the method of providing Depreciation
The Company was following Straight Line Method of providing depreciation on fixed assets
upto the financial year ended December 2003 and Written Down Value method for the
fifteen months period ended March 31, 2005 and year ended March 31, 2006. During the
financial year ended March 31, 2007, the Company changed, with retrospective effect, its
method of providing depreciation on fixed assets, other than leasehold buildings, from the
Written Down Value (‘WDV’) method at the rates prescribed in Schedule XIV to the
Companies Act, 1956 to the Straight Line Method (‘SLM’) at the rates which are higher of
the useful lives of assets and the rates prescribed in Schedule XIV to the Companies Act,
1956.
As a result of this change, the charge to the Profit and Loss Account before taxation for the
year ended March 31, 2007 was lower by Rs. 25.60 million and the net block of fixed assets
was correspondingly higher by the same amount. The effect of such change in accounting
policy has been appropriately adjusted in the years/ periods to which it pertains [refer Note E
(h) below].
D.
Material Regroupings
Appropriate adjustments have been made in the Restated Summary Statements of Assets and
Liabilities, Profits and Losses and Cash Flows, wherever required, by a reclassification of the
corresponding items of income, expenses, assets, liabilities and cash flows, in order to bring
them in line with the groupings as per the audited financials of the Group for the nine months
period ended December 31, 2007.
E.
Material Adjustments
a)
Below mentioned is the summary of results of restatement made in the audited accounts for
the respective years and its impact on the profits of the Group.
(Amount in Rs.)
Adjustments for
December 31, 2007
Prior Period Items (Refer note b)
(0.69)
1.18
Sundry Balances written back (Refer note c)
(0.12)
(0.04)
Provision for doubtful debts (Refer note d)
4.98
(4.44)
Sundry Balances written off (Refer note e)
0.04
0.11
Bad Debts written off (Refer note f)
-
2.77
Bad Debts recovered (Refer Note g)
(0.51)
(0.00)
-
(10.80)
Depreciation (Refer Note h)
-
1.25
Tax paid for earlier years/ periods (Refer note j)
0.75
0.33
Audit Qualification / Prior period Items (Refer note k)
6.00
(6.00)
Total impact of adjustments
10.45
(15.64)
Current Tax impact of adjustments (Refer note l)
(0.42)
1.21
-
0.48
10.03
(13.95)
Leave Encashment (Refer Note i)
Deferred Tax impact of adjustments (Refer note l)
Net impact of adjustments
b)
March 31, 2007
Prior Period Items
243
c)
In the financial statements for the year ended March 31, 2007 and the period ended December
31, 2007, certain items of income / expenses have been identified as prior period items. For the
purpose of this statement, such prior period items have been appropriately adjusted in the
respective years/ periods.
Sundry Balances Written Back
In the financial statements for the year ended March 31, 2007 and nine months period ended
December 31, 2007, certain liabilities created in the earlier years/ periods were written back.
For the purpose of this statement, the said liabilities, wherever required, have been
appropriately adjusted in the respective years in which the same were originally created.
d)
Provision for Doubtful Debts
During the nine months period ended December 31, 2007, certain provisions for bad debts
which pertained to debtors of earlier years/ periods were created. For the purpose of this
statement, the said provisions, wherever required, have been appropriately adjusted in the
respective years/ periods in which these debtors and revenue were accounted for.
e)
Sundry Balances Written off
In the financial statements for the years ended March 31, 2007 and nine months period ended
December 31, 2007, certain advances paid in the earlier years/ periods were written off. For the
purpose of this statement, the said advances, wherever required, have been appropriately
adjusted in the respective years/ periods in which the same were originally paid.
f)
Ba Debts Written off
During the year ended March 31, 2007, certain bad debts which pertained to debtors of earlier
years/ periods were written off. For the purpose of this statement, the said bad debts have been
appropriately adjusted in the respective years/ periods in which these debtors and revenue were
accounted for.
g)
Bad Debts Recovered
During the nine months period ended December 31, 2007, and year ended March 31, 2007,
certain bad debts written off in earlier years/ periods were recovered. For the purpose of this
statement, the said recoveries have been appropriately adjusted in the respective years/ period in
which the same were originally written off.
h)
Depreciation
During the year ended March 31, 2007, the Company has changed the method of providing
depreciation on fixed assets, as referred to in Note no. C (iv) above. For the purpose of this
statement, the retrospective effect of depreciation has been appropriately adjusted in the year
ended March 31, 2006 and period ended March 31, 2005.
i)
Leave Encashment
During the year ended March 31, 2007, the Company has changed its accounting policy and
accounted for provisioning of earned leaves, as referred to in Note no. 2(iii) above. For the
purpose of this statement, the effect of such change in policy has been appropriately adjusted in
earlier years.
j)
Taxes for earlier years/ periods
During the year ended March 31, 2007 and period ended December 31, 2007, certain taxes
pertaining to the period ended March 31, 2005 were paid. For the purpose of this statement,
such tax expense has been appropriately adjusted in the period ended March 31, 2005.
244
k)
Audit Qualification/ Prior Period Items
The Subsidiary of the Company had capitalized certain costs relating to development of
software during the year ended March 31, 2007 for which technical feasibility and probable
future economic benefits were yet to be established. As the auditors of the parent Company
believed that such costs did not qualify for capitalization as per the guidance given under
Accounting Standard 26 ‘Intangible Assets’ issued by the Institute of Chartered Accountants of
India, the Consolidated Financial Statements for the year ended March 31, 2007 were qualified
to that extent. In the current year, such costs have been charged to profit and loss account by the
management and disclosed under the head ‘Prior Period expenses’ in the Consolidated
Financial Statements for the nine months period ended December 31, 2007 and accordingly
have been appropriately adjusted in the year ended March 31, 2007 for the purpose of this
statement.
l)
Current Tax and Deferred Tax Impact of adjustments
The Group has, for the purpose of the Restated Summary Statements, made adjustments for the
current tax and deferred tax impact of the adjustments in the respective years to which the
adjustments pertain.
m)
Profit and Loss Account as at April 1, 2006 as Restated
Profit and Loss Account as at April 1, 2006 (Audited)
Prior Period Expenses (Refer Note E (b) above)
Sundry Balances written back (Refer Note E (c) above)
Provision for doubtful debts (Refer Note E (d) above)
Balances written off (Refer Note E (e) above)
Bad Debts written off (Refer Note E (f) above)
Bad Debts recovered (Refer Note E (g) above)
Depreciation (Refer Note E (h) above)
Leave Encashment (Refer Note E (i) above)
Taxes for earlier years paid (Refer note E (j) above)
Total impact of adjustments in earlier years
Current Tax impact of adjustments (Refer Note E (l) above)
F.
(Amount in Rs. million)
285.51
(0.49)
0.16
(0.54)
(0.15)
(2.77)
0.51
10.80
(1.25)
(1.08)
5.19
(0.79)
Deferred Tax impact of adjustments (Refer Note E (l) above)
(0.47)
Profit and Loss Account as at April 1, 2006 (Restated)
289.42
Non – Adjustment Items
(i)
The Company has changed the estimates of useful lives of some of its fixed assets
during the year ended March 31, 2007 and the period ended December 31, 2007 more
fully described in Note No. 9 below. The management believes that such change in
estimated useful lives is bonafide and occasioned by technical/ environmental factors
and hence should not be restated in previous year financials in the statement of assets
and liabilities, as restated.
(ii)
The Company has adopted revised Accounting Standard 15 on Employee Benefits
issued by the Institute of Chartered Accountants of India effective April 1, 2007.
However, due to practical difficulties in retrospective application of the same, it has
not been possible for the management to determine the effect on the profits for the
year ended March 31, 2007 had the revised standard been adopted by the Company
for the earlier year(s). Accordingly, such adjustment has not been made in the
245
attached consolidated restated financial statements.
(iii)
As per the requirements of Companies (Accounting Standards) Rules, 2006 read in
consonance with notified Accounting Standard 11 which is mandatory from the
accounting periods commencing on or after December 7, 2006, the exchange
differences on foreign currency transactions relating to fixed assets acquired from a
country outside India have been adjusted to revenue as against the hitherto followed
practice of adjusting the same to the carrying amount of fixed assets. However, due to
practical difficulties in retrospective application of the same, it has not been possible
for the management to determine the effect of such change in the financial statements
of the earlier year(s). Accordingly, such adjustment has not been made in the attached
consolidated restated financial statements.
G.
Other Significant Notes
1.
Composition of the Group
The details of the Subsidiary consolidated on a line by line basis in the preparation of the
consolidated financial statements of the Company is as underName of the Subsidiary
Company
Mobisoc Technology Private
Limited
Country of
Incorporation
India
Proportion of
ownership
interest as at
December 31,
2007
99.90%
Proportion of
ownership
interest as at
March 31, 2007
99.90%
The subsidiary was incorporated on August 12, 2006 and commenced its commercial operations
during the nine months period ended December 31, 2007.
2.
Segment Information
Business Segments:
The Group is into the Information and Communication Technology business rendering mobilerelated services to telecom service providers. Based on identical services the Group deals in,
which have similar risks and rewards, the entire business is considered as operating as a single
business segment in terms of Accounting Standard-17 ‘Segment Reporting’ issued by the
Institute of Chartered Accountants of India and hence, there are no additional disclosures to be
provided other than those already provided in the financial statements.
Geographical Segments *
The following table shows the distribution of the Company’s consolidated sales by
geographical market, regardless of where the goods were produced / services were rendered:
Particulars
For the Nine- months Period
Ended December 31, 2007 (Rs.)
For the Year Ended March
31, 2007 (Rs.)
702.30
32.26
637.55
734.56
661.78
Domestic Market
Overseas Market
Total
24.23
The following table shows the distribution of the Company’s consolidated debtors by
geographical market:
246
Particulars
As at December 31, 2007
(Rs.)
As at March 31, 2007 (Rs.)
Domestic Market
355.90
259.01
Overseas Market
1.34
3.52
357.24
262.53
Total
* The Company has common assets for producing goods / rendering services for Domestic
market and Overseas Markets. Hence, separate figures for fixed assets / additions to fixed
assets cannot be furnished.
3.
Defined Benefits Plan
Gratuity and leave benefits (Revised Accounting Standard 15)
The Company has a defined benefit gratuity plan. Every employee who has completed five
years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for
each completed year of service. The scheme is funded with an insurance company in the form
of a qualifying insurance policy.
The Subsidiary also has a defined benefit gratuity plan. Every employee who has completed
two years or more of service gets a gratuity on departure at 15 days salary (last drawn salary)
for each completed year of service.
The following tables summarise the components of net benefit expense recognised in the profit
and loss account and the funded status and amounts recognised in the balance sheet for the
respective plans:
Profit and Loss account
Net employee benefit expense (recognised in Employee Cost) for the nine-months period
ended December 31, 2007
Gratuity
(Rs. in million)
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Net actuarial( gain) / loss recognized in the year
Past service cost
Net benefit expense charged to Profit and Loss account
Actual return on plan assets
4.76*
0.33
(0.08)
0.55
Nil
5.56
Nil
* Including Rs 0.23 million being payments made during the current period and excluding Rs.
0.12 million against Gratuity of the employees of the Software division of the Subsidiary.
Balance sheet
Details of Provision for gratuity as at December 31, 2007
Gratuity
(Rs. in million)
10.53
1.18
9.35
--(9.35)
Defined benefit obligation
Fair value of plan assets
Less: Unrecognised past service cost
Plan asset / (liability)
Changes in the present value of the defined benefit obligation for the nine months period ended
December 31, 2007 are as follows:
247
Gratuity
(Rs.)
2.26
0.33
4.65
---3.29
10.53
Opening defined benefit obligation
Interest cost
Current service cost
Benefits paid
Actuarial (gains) / losses on obligation
Closing defined benefit obligation
Changes in the fair value of plan assets are as follows:
Gratuity
(Rs.)
1.18
0.08
Nil
Nil
(0.08)
1.18
Opening fair value of plan assets
Expected return
Contributions by employer
Benefits paid
Actuarial gains / (losses)
Closing fair value of plan assets
The Company’s expected contribution to Gratuity during the year ending December 31, 2008 is
not presently ascertainable.
The major categories of plan assets as a percentage of the fair value of total plan assets are as
follows:
Investments with insurer (Life Insurance Corporation of India)
Gratuity
100 %
The overall expected rate of return on assets is determined based on the market prices
prevailing on that date, applicable to the period over which the obligation is to be settled.
The principal assumptions used in determining gratuity and leave benefit obligations for the
Company’s plans are shown below:
Gratuity (%)
8.00
Discount rate
Expected rate of return on assets
8.70
Employee turnover
15.00
The estimates of future salary increases, considered in actuarial valuation, take account of
inflation, seniority, promotion and other relevant factors, such as supply and demand in the
employment market.
Notes:
a) The Institute of Chartered Accountants of India has issued a limited revision to AS 15
(Revised) which allows an entity to make disclosures required by paragraph 120(n) of AS 15
(Revised) prospectively from the transition date. The limited revision has not yet been
incorporated in AS 15 notified under Companies (Accounting Standard) Rules, 2006. The
Company expects that limited revision will be incorporated in notified standards shortly and
hence, the information in respect of defined benefit obligation for previous four years as
required by Para 120(n) of AS -15 (Revised) are not furnished.
b) Period ended December 31, 2007 being the first period of adoption of AS 15 (revised) by
the Company, the previous years/ periods comparative information has not been furnished.
Defined Contribution Plan
248
For the nine-months
period ended
December 31, 2007
For the year ended
March 31, 2007
8.58
4.33
Employer’s Contribution to Provident Fund
including Family Pension Fund*
* Included in the head Contribution to Provident and Other Funds
4.
Leases – In case of assets taken on lease
Operating Lease:
Vehicles, office premises and guest houses are obtained on operating lease. In the case of
vehicles, the lease term is for 1 year and renewable for further 1 year at the option of the
Company. In the case of office premises and guest houses, the lease terms vary between 3 to 5
years. There is no escalation clause in the lease agreements. There are no restrictions imposed
by lease arrangements.
Particulars
For the Nine- months
Period Ended
December 31, 2007
(Rs.)
Lease Payment
Contingent rent recognized in Profit and Loss
Account
17.12
NIL
For the Year Ended
March 31, 2007 (Rs.)
12.30
NIL
The Company has sub-let a portion of the above office premises on operating lease. The lease
term is for 11 months and thereafter renewable on mutual agreement. There is no escalation
clause in the lease agreement. There are no restrictions imposed by lease arrangements.
Particulars
For the Nine months
Period Ended
December 31, 2007
(Rs.)
Sub-lease payments received during the year
Sub-lease payments receivable at the balance
sheet date
5.
NIL
1.80
NIL
NIL
Capital Commitments
Particulars
For the Nine- months
Period Ended December
31, 2007 (Rs.)
Estimated amount of contracts (Net of
advances) remaining to be executed on capital
account and not provided for.
6.
For the Year Ended
March 31, 2007 (Rs.)
29.45
For the Year Ended
March 31, 2007
(Rs.)
18.36
Contingent Liabilities not provided for
Particulars
As at December 31,
2007 (Rs.)
Contingent Liability in respect of non-charging the
service tax on the Short messaging peer-to-peer
service including penalty thereon.
The matter is under adjudication with the
Commissioner of Central Excise, Chandigarh. The
Company is of the view that it is an ‘information
technology service’ and thus is exempt from the
service tax.
249
38.89
As at March 31,
2007 (Rs.)
31.15
Based on discussions with the solicitors/legal
opinion taken by the Company, the management
believes that the Company has a good chance of
success in the above mentioned case and hence, no
provision there against is considered necessary.
7.
Break-up of Deferred Tax Assets / (Liabilities) :
Timing Difference on account of
Deferred Tax Asset/ Liability as at
Difference in depreciation and other differences in
block of fixed assets as per Tax books and Financial
books
Gross Deferred Tax Liabilities
Effect of expenditure debited to Profit and Loss
Account but allowed for tax purposes in the
following years
Gross Deferred Tax Assets
December 31, 2007
(Rs.)
3.69
Net Deferred Tax (Liabilities) / Assets
8.
March 31, 2007 (Rs.)
0.05
3.69
1.65
0.05
1.92
1.65
1.92
(2.04)
1.87
The amount of foreign currency exposures that are not hedged by a derivative instrument or
otherwise
are as under:
Particulars
Export Debtors
Advances from
Customers
Import
Creditors
Amount (in Rs.)
As at
As at March
December
31, 2007
31, 2007
1.29
1.01
0.26
2.48
0.09
NIL
0.47
0.23
0.88
0.11
4.45
Foreign Currency
As at December 31, 2007
As at March
31, 2007
7.18
USD 32,785
EUR 4,456
Mauritius Rs. 63,476
USD 11,877
EUR 15,178
USD 112,848
USD 23,226
EUR 42,720
NIL
USD 5,331
EUR 1,973
USD 164,789
Closing rate as on the closing dates are as followsForeign Currency
USD 1
EUR 1
Mauritius Rs. 1
9.
As at December 31, 2007
Rs. 39.41
Rs. 58.12
Rs. 1.43
As at March 31, 2007
Rs 43.59
Rs. 58.14
--
During the year ended March 31, 2007, the Company reassessed the estimates of useful lives of
Data Processing Machines and Computer Software as 3 years (as against the hitherto followed
practice of depreciating the same over a period of 6 years) and provided depreciation on the
same based on the revised estimates of their economic useful lives. As a result of this change,
the charge to the Profit and Loss Account before taxation for the year ended March 31, 2007
was higher by Rs. 25.89 million and the net block of fixed assets was correspondingly lower by
the same amount.
Further, during the period ended December 31, 2007, the Company has reassessed the estimates
of useful lives of Furniture-Fixtures, Office Equipments & Vehicles, as 7 years (as against the
hitherto followed practice of depreciating the same over a period of 15 years, 20 years and 8.4
years respectively) and provided depreciation on the same based on the revised estimates of
250
their economic useful lives. As a result of this change, the charge to the Profit and Loss
Account before taxation for the period ended December 31, 2007 was higher by Rs. 1.5 million
and the net block of fixed assets was correspondingly lower by the same amount.
10.
The asset of Rs. 56.39 million recognised by the Company as ‘MAT Credit Entitlement’ in
respect of the MAT payment during the year ended March 31, 2006 and 2007 and period ended
December 31, 2007 under ‘Loans and Advances’ represents that portion of MAT liability,
which can be recovered and set off in subsequent years based on the provisions of Section
115JAA of the Income Tax Act, 1961. The management based on the present trend of
profitability and also the future profitability projections, is of the view that there would be
sufficient taxable income in foreseeable future, which will enable the Company to utilize MAT
credit assets.
11.
Period ended December 31, 2007 being the first year of commercial operations of the
Subsidiary, the total of “Miscellaneous Expenditure (to the extent not written off)” representing
preliminary and pre-operative expenditure amounting to Rs. 1.11 million, has been written off
during the nine months period ended December 31, 2007.
12.
The Company has obtained expert opinions stating that the two units set up at Parwanoo,
Himachal Pradesh, would be eligible for income tax benefits under Section 80-IC of the
Income Tax Act, 1961, resulting in deduction of 100% of profits and gains of such units for the
first five assessment years commencing with the initial assessment year and thereafter thirty per
cent of the profits and gains for the next five years. Income tax provision has been made in the
books of account accordingly.
13.
Previous Year Comparatives
The Group has changed its statutory accounting year to end on December 31, 2007 instead of
March 31, 2008. Thus, the accounts for the period ended December 31, 2007 have been
prepared for 9 months and are not comparable with the previous year accounts prepared for 12
months.
14.
Change of Name
Subsequent to the Balance Sheet date of December 31, 2007, the Company has got itself
converted into a public limited Company and consequently, the name of the Company has
changed from ‘Cellebrum.com Private Limited’ to ‘Cellebrum.com Limited’ with effect from
February 14, 2008. Further, the name of the Company was again changed from
“Cellebrum.Com Limited” to “Cellebrum Technologies Limited” with effect from April 22,
2008.
251
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XX : DETAILS OF OTHER INCOME, AS RESTATED
PARTICULARS
Nine- months Period
Ended December 31,
2007
Other income, as restated
Net Profit before tax, as restated after prior period items
Percentage
Source of other income
Interest on Bank deposits
Nine- months
Period Ended
December 31,
2007
Year Ended
March 31, 2007
39.81
18.30
Interest Others
0.12
5.90
Rental Income
1.80
-
Other Income
Total Other Income, as restated
0.27
0.48
42.00
24.68
(Amount in Rs. Million)
Year Ended March 31,
2007
42.00
24.68
354.09
433.79
11.86
5.69
Nature
Related /
Not related
to Business
Activity
Recurring
Not Related
Non-Recurring
Not Related
Recurring
Non Related
Non-Recurring
Non Related
Notes:
1)
2)
3)
The details of ''Other Income'' disclosed above are stated after adjusting the effect of
restatement. The same have been shown gross of restatement in the summary Statement of
Profits & Losses, as restated and the adjustments have been listed separately under the head
"Adjustments" in the Notes to Accounts.
The classification of other income as recurring/non-recurring and related/not related to
business activity is based on the current operation and business activity of the Company as
determined by the management.
The above amounts are as per Consolidated Summary Statement of Assets and Liabilities, as
restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited)
Group.
252
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XXI : DETAILS OF RATES OF DIVIDEND
The dividends declared by the Group during the period ended December 31, 2007 and the year ended
March 31, 2007 are presented below.
Particulars
Nine- months Period
Ended December 31,
2007
(Amount in Rs. Million)
Year Ended March 31,
2007
Class of Shares
Equity Share Capital as outstanding at the year end
14571574
14571574
Dividend on Equity Shares
- Dividend per equity share ( Rs. )
- Dividend rate ( % to paid up capital )
- Dividend amount
Dividend Tax
16.07*
33.35**
160.70%
333.5%
234.28
400.20
39.82
56.13
* Proposed Dividend on Equity Shares for the nine months period ended December 31, 2007
** Interim Dividend on Equity Shares for the year ended March 31, 2007
Notes:
1)
2)
The amounts paid as dividend in the past is not indicative of the dividend policy in the future.
The figures disclosed above are based on the Consolidated Summary Statement of Profits and
Losses, as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private
Limited) Group.
253
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XXII : CAPITALISATION STATEMENT AS AT DECEMBER 31, 2007
(Amount in Rs. Million)
Pre Issue
Post Issue
Borrowings
Short Term Debt (A)
-
[*]
Long Term Debt (B)
-
[*]
Total Debts (C)
-
[*]
145.72
[*]
937.40
[*]
Shareholders' funds
Equity Share Capital
Reserves and Surplus, as restated
- Profit & Loss Account
224.35
- Securities Premium
637.48
- General Reserve
75.59
1,083.13
Total shareholders' fund (D)
Long Term debt / Equity ratio (B / D)
-
Total Debt / Shareholders' Funds (C / D)
-
Notes:
1)
2)
3)
4)
5)
Short Term debts represents debts which are due within twelve months from 31st December,
2007.
Long Term debt represents debt other than short term debt as defined above.
Long term debt/equity :- Long Term Debt / Total Shareholder's funds
The above amounts are as per the Consolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited)
Group.
The corresponding post issue figures are not determinable at this stage pending the completion
of Book Building Process and hence have not been furnished.
254
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XXIII : DETAILS OF SUNDRY DEBTORS
(Amount in Rs. Million)
Particulars
As at December 31,
2007
As at March 31, 2007
Debts Outstanding for a period exceeding 6 Months
Unsecured, Considered Good
16.77
8.76
Considered Doubtful
11.40
7.94
340.46
253.77
Other Debts
Unsecured, Considered Good
2.4
0
Considered Doubtful
10.61
Less : Provision for Doubtful Debts
22.00
10.34
357.24
262.53
Notes:
1)
The above amounts are as per the Consolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited)
Group.
255
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XXIV : DETAILS OF LOANS & ADVANCES
(Amount in Rs. Million)
Particulars
As at December
31, 2007
As at March 31,
2007
Unsecured, Considered good
Loan to employees
1.32
2.97
Advance Recoverable in Cash or in Kind or for value to be received
24.99
3.35
Balances with excise authorities
15.59
9.41
Security deposits
MAT credit entitlement (refer Note No. G (10) of the Annexure
XIX)
195.98
4.33
56.39
27.78
Total
294.27
47.84
Notes:
1)
The above amounts are as per the Consolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited)
Group.
256
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XXV : DETAILS OF OTHER CURRENT ASSETS
(Amount in Rs. Million)
Particulars
As at December 31, 2007
Unbilled Revenue
Interest Accrued on Deposits
Total
As at March 31, 2007
78.18
1.07
6.47
2.27
84.65
3.34
Notes:
1)
The above amounts are as per the Consolidated Summary Statement of Assets and Liabilities,
as restated of Cellebrum Technologies Limited (formerly Cellebrum.com Private Limited)
Group.
257
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XXVI : STATEMENT OF ACCOUNTING RATIOS (ON RESTATED PROFITS)
Particulars
As at December 31, 2007
Earnings per share -Basic and Diluted (Rs.)
Return on Net Worth %
Net Asset Value per equity share (Rs.)
As at March 31, 2007
22.69
31.89
31%
40%
74.33
70.72
14571574
12873710
14571574
14571574
Weighted average number of equity share
used for calculating:
Basic and Diluted Earnings per share
Total number of equity shares outstanding at the
end of the year / period*
* Face Value of Rs. 10
Ratios have been computed as per the following formula
Earnings per share (Rs.) =
Net Profit after Tax, as restated attributable to equity shareholders
Weighted average number of equity shares outstanding during the
year/ period
Return on Net Worth (%) =
Net Profit after Tax, as restated
Net Worth, as restated, at the end of the year/ period
Net Asset Value (NAV) per share (Rs.)=
Net Worth, as restated, at the end of the year
Number of equity shares outstanding at the end of year/ period
1)
2)
3)
4)
Weighted average number of equity shares is the number of equity shares outstanding at the
beginning of the year/ period, adjusted by the number of equity shares issued during the year/
period multiplied by the time - weighting factor. The time weighting factor is the number of
days for which the specific shares are outstanding as a proportion of the total number of days
during the year.
Net profit, as appearing in the statement of profit and loss of the respective years/ periods, has
been considered for the purpose of computing the above ratios.
Earnings per share calculations are done in accordance with Accounting Standard 20
"Earnings per Share" issued by the Institute of Chartered Accountants of India. In terms of
para 24 of AS-20, in case of a bonus issue, the number of equity shares outstanding before the
event is adjusted for the proportionate change in the number of equity shares outstanding as if
the event had occured at the beginning of the earliest period reported. Weighted average
number of equity shares outstanding during all the previous years have been considered
accordingly.
Net worth means Equity Share capital + Reserves and Surplus (including Securities Premium)
- Miscellaneous Expenditure not written off or adjusted.
258
5)
The figures above are based on the Restated Consolidated Summary Statements of Cellebrum
Technologies Limited (formerly Cellebrum.com Private Limited) Group.
259
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED)
GROUP
ANNEXURE XXVII (A): DETAILS OF THE NAMES OF RELATED PARTIES AND NATURE
OF RELATIONSHIPS
1. Names of related parties where control exists irrespective of whether transactions have occurred or
not.
Ultimate Holding Company
Indian Televentures Private Limited
Holding Company
Omnia Investments Private Limited
2. Names of other related parties
Fellow Subsidiaries
Omnia BPO Services Limited (formerly known as Stracon
Back Office Solutions Limited)
Spice Communications Limited (upto June 5, 2007)
Super Infosys Private Limited
Mcorp Communication Private Limited (formerly known
as Modi Wellvest Private Limited)
Hot Spot Retails Private Limited (upto May 9, 2007)
Key Management Personnel
Dr. B.K. Modi (Sep 30, 2006 – Sep 30, 2007)
Mr. Dilip Modi
Mr. Saket Agarwal
Mr. Kartar Singh
Mr. Lokesh Gupta
Relatives of Key Management Personnel
Mrs. Veena Modi
Mrs. Sonal Modi
Mrs. Ritika Modi Rungta
Ms. Divya Modi
Enterprises significantly influenced by Key
Management Personnel or their Relatives
Twenty First Century Capitals Limited
Wellwisher Holdings Private Limited
Harjas Logic Systems Private Limited
Nik Travels Private Limited
Spice Corp Private Limited (formerly known as MCorp
Global Private Limited)
Spice Communications Limited (from June 6, 2007)
Spice Mobiles Limited
Ace Airways Private Limited
Duro International Rubber Private Limited
G.M.Modi Hospitals Corporation Private Limited
Modikem Limited
Plus Paper Foodpac Limited
I O Systems Limited (formerly known as Spice Systems
Limited)
Tuberose Investments Private Limited
Mudaliar & Sons Hotels Private Limited
Vcorp Mercantile Private Limited
260
Hindustan Retails Private Limited
Hot Spot Retails Private Limited (from May 10, 2007)
261
CELLEBRUM TECHNOLOGIES LIMITED (FORMERLY CELLEBRUM.COM LIMITED) GROUP
ANNEXURE XXVII (B) DETAILS OF TRANSACTIONS WITH RELATED PARTIES
Particulars
Holding Company
Fellow Subsidiary
Key Management
Personnel
Relatives of Key
Management Personnel
Enterprises owned or
significantly influenced by
key management
personnel or their
relatives
Total
For the nine
For the
For the nine
For the
For the nine
For the
For the nine
For the
For the nine
For the
For the nine
For the
months
year ended
months
year ended
months
year ended
months
year ended
months
year ended
months
year ended
period ended March 31, period ended March 31, period ended March 31, period ended March 31, period ended March 31, period ended March 31,
December 31,
2007
December 31,
2007
December 31,
2007
December 31,
2007
December 31,
2007
December 31,
2007
2007
2007
2007
2007
2007
2007
A) Transactions
i) Revenue from Value Added
Services
Spice Communications
Limited
ii) Revenue from Roaming
Services
Spice Communications
Limited
iii) Sale of Products
Spice Communications
Limited
iv) Other Income (Rental
Income)
Hot Spot Retails Private
Limited
v) Purchase of Fixed Assets
Spice Mobiles Limited
Hot Spot Retails Private
Limited
vi) Roaming Expenses
Spice Communications
Limited
vii) Enterprise Solution
-
-
7.85
-
-
-
-
-
34.32
117.80
42.17
117.80
-
-
3.62
-
-
-
-
-
13.79
42.80
17.41
42.80
-
-
52.70
-
-
-
-
-
254.76
221.23
307.46
221.23
-
-
0.20
-
-
-
-
-
1.60
-
1.80
-
-
-
-
-
-
-
-
-
0.16
0.13
0.16
0.13
-
-
-
-
-
-
-
-
0.27
0.02
0.27
0.02
-
-
5.97
-
-
-
-
-
18.72
21.96
24.69
21.96
262
viii)
ix)
x)
xi)
xii)
Charges
Spice Communications
Limited
Gifts and Prizes
Hot Spot Retails Private
Limited
Spice Communications
Limited
Website Development
Charges
Spice Communications
Limited
Rent Paid
Spice Communications
Limited
Harjas Logic Systems
Private Limited
Wellwisher Holdings
Private Limited
Repair Services
Hot Spot Retails Private
Limited
Business Promotion
Expenses
Hot Spot Retails Private
Limited
Spice Mobiles Limited
-
-
2.96
-
-
-
-
-
9.95
4.07
12.91
4.07
-
-
-
0.02
-
-
-
-
-
-
-
0.02
-
-
-
-
-
-
-
-
-
0.07
-
0.07
-
-
-
-
-
-
-
-
-
1.20
-
1.20
-
-
-
-
-
-
-
-
0.27
0.36
0.27
0.36
-
-
-
-
-
-
-
-
2.93
3.91
2.93
3.91
-
-
-
-
-
-
-
-
1.80
1.00
1.80
1.00
-
-
-
0.00
-
-
-
-
-
-
-
0.00
-
-
0.05
0.03
-
-
-
-
0.00
-
0.05
0.03
-
-
-
-
-
-
-
-
6.50
-
6.50
-
-
-
-
-
-
-
-
-
4.59
3.24
4.59
3.24
-
-
0.44
-
-
-
-
-
1.47
1.26
1.91
1.26
-
-
-
-
-
-
-
-
-
0.16
-
0.16
-
-
-
-
-
-
-
-
1.11
0.58
1.11
0.58
xiii) Travelling expenses
Nik Travels Private Limited
xiv) Communication expenses
Spice Communications
Limited
xv) Sundry Debit Balances
Written Off
Spice Communications
Limited
xvi) Electricity Expenses
Spice Communications
Limited
xvii) Staff Welfare
263
Spice Communications
Limited
xviii) Corporate Guarantee
Commission income
Omnia BPO Services
Limited (formerly known as Stracon Back Office
Solutions Limited)
xix) Interest Income
MCorpGlobal Private
Limited
xx) Remuneration paid
Saket Agarwal
Kartar Singh
Lokesh Gupta
xxi) Reimbursement of
Expenses Incurred by the
Company
MCorpGlobal Private
Limited
Spice Communications
Limited
xxii) Reimbursement by the
Group of expenses incurred
MCorpGlobal Private
Limited
xxiii) Dividend Paid
Omnia Investments Private
Limited
Dr. B.K Modi
Mrs. Veena Modi
Mr. Dilip Modi
Ms. Divya Modi
xxiv) Share Application money
paid
-
-
-
-
-
-
-
0.05
-
0.05
-
-
-
0.39
-
-
-
-
-
-
-
0.39
-
-
-
-
-
-
-
-
5.88
-
5.88
-
-
-
0.99
-
-
-
-
-
0.99
-
-
-
-
2.27
-
-
-
-
-
2.27
-
-
-
-
3.89
3.15
-
-
-
-
3.89
3.15
-
-
-
-
-
-
-
-
0.36
-
0.36
-
-
-
-
-
-
-
-
0.59
-
0.59
-
-
-
-
-
-
-
-
0.43
-
0.43
400.18
-
-
-
-
-
-
-
-
-
400.18
-
-
-
-
0.00 -
-
-
-
-
0.00
-
-
-
-
-
-
0.00 -
-
-
0.00
-
-
-
-
0.02
-
-
-
-
0.02
-
-
-
-
-
-
0.00 -
-
-
0.00
264
-
xxv)
xxvi)
xxvii
)
xxviii
)
xxix)
xxx)
xxxi)
Hot Spot Retails Private
Limited
Share Application money
received back
Bougainvillea Multiplex &
Entertainment Center Private
Limited
Hot Spot Retails Private
Limited
MCorpGlobal Private
Limited
Share Application money
received
Omnia Investments Private
Limited
Share Application money
paid back
Omnia Investments Private
Limited
Advance Given During the
Year
Omnia BPO Services
Limited (formerly known as
Stracon Back Office
Solutions Limited)
Advance received back
during the year
Twenty First Century
Capitals Limited
Omnia BPO Services
Limited (formerly known as
Stracon Back Office
Solutions Limited)
Security Deposits Given
Harjas Logic Systems
Private Limited
Mudaliar & Sons Hotels Pvt
Ltd
Loan Given During the
Year
MCorpGlobal Private
Limited
-
-
-
43.20
-
-
-
-
-
-
-
43.20
-
-
-
-
-
-
-
-
-
150.00
-
150.00
-
-
-
43.20
-
-
-
-
-
-
-
43.20
-
-
-
-
-
-
-
-
-
79.50
-
79.50
-
10.00
-
-
-
-
-
-
-
-
-
10.00
-
10.00
-
-
-
-
-
-
-
-
-
10.00
-
-
-
0.40
-
-
-
-
-
-
-
0.40
-
-
-
-
-
-
-
-
-
0.50
-
0.50
-
-
-
0.40
-
-
-
-
-
-
-
0.40
-
-
-
-
-
-
-
-
-
1.95
-
1.95
-
-
-
-
-
-
-
-
150.00
-
150.00
-
-
-
-
-
-
-
-
-
-
54.10
-
54.10
265
xxxii Loan received back during
) the year
MCorpGlobal Private
Limited
B) Balances at the year end
i)
ii)
Receivables
Spice Communications
Limited
Omnia BPO Services
Limited (formerly known as
Stracon Back Office
Solutions Limited)
Hot Spot Retails Private
Limited
Harjas Logic Systems
Private Limited
Mr. Kartar Singh
-
As at
December 31,
2007
-
-
As at March 31, 2007
-
-
-
-
-
119.60
-
119.60
As at
As at
As at
As at
As at
As at
As at
As at
December 31, March 31, December 31, March 31, December 31, March 31, December 31, March 31,
2007
2007
2007
2007
2007
2007
2007
2007
-
-
-
-
-
-
-
-
265.08
184.13
265.08
184.13
-
-
-
0.40
-
-
-
-
-
-
-
0.40
-
-
-
-
-
-
-
-
2.07
-
2.07
-
-
-
-
-
-
-
-
-
-
1.95
-
1.95
Mudaliar & Sons Hotels Pvt
Ltd (against security deposit) Mudaliar & Sons Hotels Pvt
Ltd (against advances
recoverable)
Payables
Nik Travels Private Limited
Spice Communications
Limited
Spice Mobiles Limited
-
-
-
-
0.12
-
-
-
-
-
0.12
-
-
-
-
-
-
-
-
150.00
-
150.00
-
-
-
-
-
-
-
-
8.43
-
8.43
-
-
-
-
-
-
-
-
0.03
0.01
0.03
0.01
-
-
-
-
-
-
-
33.75
0.10
33.75
0.10
-
-
-
-
-
-
-
6.50
-
6.50
-
Notes:
1)
2)
All amounts are in Rs. Million.
Sales of softwares to Spice Communications Limited are of unique and specialized nature, and hence, in such a case, it is not possible to make the comparison of
prices with the market rate.
266
RESTATED FINANCIAL INFORMATION FOR MOBISOC TECHNOLOGY PRIVATE
LIMITED
STANDALONE SUMMARY STATEMENTS OF ASSETS AND LIABILITIES AS AT DECEMBER
31, 2007 AND MARCH 31, 2007 AND PROFITS AND LOSSES AND CASH FLOWS FOR THE
NINE MONTHS PERIOD ENDED DECEMBER 31, 2007 AND PERIOD ENDED MARCH 31,
2007, AS RESTATED UNDER INDIAN GAAP FOR MOBISOC TECHNOLOGY PRIVATE
LIMITED
Auditors’ Report as required by Part II of Schedule II to the Companies Act, 1956
The Board of Directors
Mobisoc Technology Pvt. Limited
D-1, Sector 3, Gautam Buddh Nagar,
Noida – 201301 (UP)
India
Dear Sirs,
1.
We have examined the attached restated financial information of Mobisoc Technology Pvt.
Limited (the “Company”) for the purposes of inclusion in the offer document (“Offer Document”)
prepared by the Company in connection with the proposed Initial Public Offer (“IPO”) of its
Holding Company(“Cellebrum Technologies Limited”). Such financial information, which has
been approved by the Board of Directors of the Company, has been prepared in accordance with
the requirements of:
a) paragraph B (1) of Part II of Schedule II to the Companies Act, 1956 (“the Act”) as amended;
b) the Securities & Exchange Board of India (Disclosure & Investor Protection) Guidelines 2000
(the “Guidelines”) issued by the Securities and Exchange Board of India (“SEBI”) on January
19, 2000, as amended from time to time in pursuance of Section 11 of the Securities and
Exchange Board of India Act, 1992;
2.
We have examined such restated financial information taking into consideration:
a) the terms of reference received from the Company vide their letter dated February 27, 2008,
requesting us to carry out work on such financial information, proposed to be included in the
Offer Document of its Holding Company in connection with proposed IPO;
b) the Guidance Note (Revised) on Reports in Company Prospectuses issued by the Institute of
Chartered Accountants of India.
3.
Such restated financial information has been compiled by the management from the audited
Standalone balance sheets of the Company as at December 31, 2007 and March 31,2007 and the
related audited Standalone profit and loss accounts and cash flow statements, for the Nine months
period ended December 31, 2007 and period ended March 31, 2007.
4.
This report is being issued for the purpose of incorporating the same in the Offer Document to be
issued by Cellebrum Technologies Limited, its Holding Company in connection with the proposed
initial public offering of its Holding Company.
5.
In accordance with the requirements of Schedule II of the Act, the SEBI Guidelines and the terms
of our engagement agreed with you, we report that we have examined the restated Standalone
summary statement of assets and liabilities of the Company as at December 31, 2007 and March
31, 2007 and the related restated Standalone summary statement of profits and losses and cash
flows for the nine months period ended December 31, 2007 and period ended March 31, 2007 and
the notes thereon (these statements hereinafter are collectively referred to as the “Restated
Standalone Summary Statements”) and are attached as Annexures I to IV to this report.
6.
Based on our examination, we further report that the restated standalone profits and losses have
been arrived at:
267
(a) after making such adjustments and regroupings as, in our opinion, are appropriate and more fully
described in the notes appearing in Annexure IV to Restated Standalone Summary Statements:
(b) after incorporating the impact of changes in accounting policies adopted by the Company as at and
for the nine months period ended December 31, 2007, which have been adjusted with retrospective
effect in the Restated Standalone Summary Statements, and
(c) after making adjustments for the material amounts relating to prior years in the Restated
Standalone Summary Statements in the respective financial years / periods to which they relate.
There are no extraordinary items which need to be disclosed separately in the Restated
Standalone Summary Statements.
There are no qualifications in the auditors’ reports, which require any adjustments to the
Restated Standalone Summary Statements.
7.
We have not audited any Standalone financial statements of the Company as of any date or for any
period subsequent to December 31, 2007. Accordingly, we express no opinion on the financial
position, results of operations or cash flows of the Company or as of any date or for any period
subsequent to December 31, 2007.
8.
In our opinion, the financial information as disclosed in the Annexures to this report, read with the
respective significant accounting policies and notes disclosed in Annexure IV, and after making
adjustments and re-groupings as considered appropriate and disclosed in Annexure IV, has been
prepared in accordance with Part II of Schedule II of the Act and the Guidelines.
9.
This report should not in any way be construed as a reissuance or redating of any of the previous
audit reports issued by us, nor should this report be construed as a new opinion on any of the
financial statements referred to herein.
10. Our audits referred to in paragraph 3 above were carried out for the purpose of certifying the
general purpose financial statements taken as a whole. For none of the years/ periods referred to in
paragraph 3 above, did we perform audit tests for the purpose of expressing an opinion on
individual balances of accounts or summaries of selected transactions, and accordingly, we express
no such opinion thereon.
11. We have no responsibility to update our report for events and circumstances occurring after the
date of the report.
12. This report is intended solely for your information and for inclusion in Offer Document prepared
in connection with the proposed IPO of its Holding Company and is not to be used, referred to or
distributed for any other purpose without our prior written consent.
For GUPTA GARG & AGRAWAL
Chartered Accountants
per B. B. Gupta
Partner
Membership No. 012399
Place: Delhi
Date: June 22, 2008
268
MOBISOC TECHNOLOGY PRIVATE LIMITED
ANNEXURE I : STANDALONE SUMMARY STATEMENT OF ASSETS AND LIABILITIES,
AS RESTATED
Particulars
As at December 31, 2007
(Amount in Rs. Million)
As at March 31, 2007
APPLICATION OF FUNDS
Fixed Assets
Gross Block
1.07
0.44
(0.22)
(0.06)
Net Block
0.85
0.38
Total
0.85
0.38
Deferred Tax Assets (net)
0.57
0.00
0.51
0.00
86.33
93.35
Less: Accumulated Depreciation/ Amortisation
Current Assets, Loans & Advances
Sundry Debtors
Cash and Bank Balances
Other Current Assets
1.21
0.94
Loans & Advances
4.89
0.42
Total
92.94
94.72
TOTAL (A)
94.36
95.09
Liabilities and Provisions
Current Liabilities
2.82
0.90
Provisions
4.72
0.45
Total (B)
7.54
1.35
86.83
93.74
100.10
100.10
Net Worth (A-B)
Represented by
Share Capital and Reserves
Equity Share Capital
Profit & Loss Account
(5.25)
(13.28)
Less: Miscellaneous Expenditure
(to the extent not written off or adjusted)
Net Worth
-
1.11
86.83
93.74
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Standalone Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure IV
269
As per our report of even date
For and on behalf of the Board of Directors of Mobisoc Technology Pvt. Ltd.
For Gupta Garg & Agrawal
Chartered Accountants
Per B.B Gupta
Partner
Membership No: 012399
Place: Delhi
Date: June 22, 2008
(Director)
270
(Director)
MOBISOC TECHNOLOGY PRIVATE LIMITED
ANNEXURE II :STANDALONE SUMMARY STATEMENT OF PROFIT AND LOSS, AS
RESTATED
(Amount in Rs. Million)
Nine- months
Year Ended March
Period Ended
31, 2007
December 31, 2007
Particulars
INCOME
Operating Income
18.18
0.00
Other Income
6.31
1.22
Total Income
24.49
1.22
EXPENDITURE
Personnel expenses
26.75
0.00
Selling and Distribution Expenses
2.67
0.00
Miscellaneous Expenditure written off
1.11
0.00
0.16
0.00
Total Expenditure
30.69
-
PROFIT BEFORE TAX AND PRIOR PERIOD ITEMS
(6.20)
1.22
Prior Period Items
PROFIT BEFORE TAX AND AFTER PRIOR PERIOD
ITEMS
6.00
-
(12.20)
1.22
Depreciation / Amortization
Provision for Tax
Current Tax
Deferred Tax Charge / (Credit)
Fringe Benefits Tax
Total Tax Expense
NET PROFIT AS PER AUDITED ACCOUNTS
2.26
0.41
(0.57)
0.00
0.14
0.06
1.83
0.47
(14.03)
-
0.75
-
6.00
(6.00)
NET PROFT AS RESTATED
(8.03)
(5.25)
Profit & Loss Account at the beginning of the year / period
(5.25)
-
PROFIT AVAILABLE FOR APPROPRIATION
(13.28)
(5.25)
BALANCE CARRIED FORWARD AS RESTATED
(13.28)
(5.25)
Adjustments
Net Impact of Adjustments
Notes:
The above Statement should be read with the significant accounting policies and Notes to the
Standalone Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows as
restated under Indian GAAP, as appearing in Annexure IV
271
As per our report of even date
For and on behalf of the Board of Directors of Mobisoc Technology Pvt. Ltd.
For Gupta Garg & Agrawal
Chartered Accountants
Per B.B Gupta
Partner
Membership No: 012399
Place: Delhi
Date: June 22, 2008
(Director)
272
(Director)
MOBISOC TECHNOLOGY PRIVATE LIMITED
ANNEXURE III :STANDALONE SUMMARY STATEMENT OF CASH FLOWS, AS
RESTATED
Particulars
(Amount in Rs. Million)
Year Ended March 31,
2007
Nine- months Period
Ended December 31,
2007
A. Cash Flow from Operating Activities
Net Profit Before Tax, As Restated
(6.19)
(4.77)
Net Profit Before Tax, As Restated
(6.19)
(4.77)
0.16
0.06
1.11
-
(6.31)
(1.22)
(11.23)
(5.93)
(0.51)
0.00
(0.88)
(0.15)
3.82
0.90
Adjustment for:
Depreciation / Amortization
Miscellaneous Expenditure Wriiten off
Interest Income
Operating Profit Before Working Capital Changes
Movement in Working Capital:
(Increase) in Sundry Debtors
(Increase) in Loans and Advances
Increase in Current Liabilities and Provisions
Miscellaneous Expenditure (to the extent not written off
or adjusted)
Cash Generated from Operations
0.00
(1.11)
(8.80)
(6.29)
(3.63)
(0.29)
(12.43)
(6.58)
Direct Taxes Paid (including Fringe Benefits Taxes)
Net Cash Generated from Operations (A)
B. Cash Flow from Investing Activities
Purchase of Fixed Assets
(0.64)
(0.44)
Interest Received
6.05
0.27
Net Cash Generated from / (Used In) Investing
Activities(B)
5.41
(0.17)
-
100.10
(7.02)
100.10
C. Cash Flows from Financing Activities
Proceeds from Issuance of Share Capital
Net Cash Generated from / (Used in) Financing
Activities ( C )
Net Changes in Cash & Cash Equivalents (A+B+C)
Cash and Cash Equivalents at the Beginning of the
Year / Period
Cash and Cash Equivalents at the End of the Year /
Period
93.35
93.35
86.33
93.35
0.04
0.00
Components of Cash and Cash Equivalents:
Cash in Hand
273
Particulars
Balances with Scheduled Banks on Current Accounts
Total
Nine- months Period
Ended December 31,
2007
86.28
Year Ended March 31,
2007
86.33
93.35
93.35
Notes:
1)
2)
3)
Cash Flow Statement has been prepared under the 'Indirect Method' as set out in Accounting
Standard -3 on Cash Flow Statements issued by the Institute of Chartered Accountants of
India.
Negative figures have been shown in brackets.
The above Statement should be read with the significant accounting policies and Notes to the
Standalone Summary Statement of Assets and Liabilities, Profits and Losses and Cash Flows
as restated under Indian GAAP, as appearing in Annexure IV.
As per our report of even date
For and on behalf of the Board of Directors of Mobisoc
Technology Pvt. Ltd.
For Gupta Garg & Agrawal
Chartered Accountants
Per B.B Gupta
Partner
Membership No: 012399
Place: Delhi
Date: June 22, 2008
(Director)
274
(Director)
ANNEXURE IV - NOTES TO THE RESTATED STANDALONE SUMMARY STATEMENTS OF ASSETS AND
LIABILITIES, PROFITS AND LOSSES AND CASH FLOWS, AS RESTATED UNDER INDIAN GAAP, FOR
MOBISOC TECHNOLOGY PRIVATE LIMITED
A.
Background
a.
The Company is into the business of developing, selling, and providing Software Solutions in the
field of telecommunication like mobile, internet and other related areas to various users.
b.
The Restated Standalone Summary Statement of Assets and Liabilities of the Company as at
December 31, 2007, March 31, 2007 and the related Restated Standalone Summary Statement of
Profits and Losses and Cash Flows for the nine months period ended December 31, 2007, years
ended March 31, 2007 (hereinafter collectively referred to as “Restated Standalone Summary
Statements”) relate to Mobisoc Technology Private Limited (“ the Company”) and have been
prepared specifically for inclusion in the Offer Document to be filed by its holding company
Cellebrum Technologies Limited (formerly Cellebrum.Com Limited) with the Securities and
Exchange Board of India (“SEBI”) in connection with its proposed Initial Public Offering of its
equity shares.
These Restated Standalone Summary Statements have been prepared to comply in all material
respects with the requirements of Schedule II to the Companies Act, 1956 (“the Act”) and the
Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000
(“the SEBI Guidelines”) issued by SEBI on January 19, 2000, as amended from time to time,
except to the extent stated in Note F (i), (ii) and (iii) below.
B.
a)
Statement of Significant Accounting Policies adopted by the Company in the preparation of
Financial Statements as at and for the nine-months period ended December 31, 2007
Basis of Preparation
The financial statements have been prepared to comply in all material respects with the Notified
Accounting Standards by the Companies Accounting Standards Rules, 2006 and the relevant
provisions of the Companies Act, 1956. The financial statements have been prepared under the
historical cost convention and on an accrual basis. The accounting policies have been consistently
applied by the Company except for the changes in accounting policy discussed more fully in (C)
below, are consistent with those used in the previous years / periods.
b)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of the financial statements and the
results of operations during the reporting period end. Although these estimates are based upon
management’s best knowledge of current events and actions, actual results could differ from these
estimates.
c)
Fixed Assets
i)
ii)
d)
Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any.
Cost comprises the purchase price and any attributable cost of bringing the asset to its
working condition for its intended use.
Insurance spares / stand by equipments are capitalized as part of mother assets.
Depreciation
i)
Depreciation is provided using the Straight Line Method as per the useful lives of the assets
estimated by the management, or at the rates prescribed under Schedule XIV of the
Companies Act, 1956 whichever is higher as under:
275
Tangible Assets
e)
Rates (SLM) (in %)
Data Processing Machines
31.67
Schedule XIV Rates
(SLM) (in %)
16.21
Furniture & Fixtures
13.57
6.33
Office Equipment
13.57
4.75
ii)
Individual assets costing upto Rs.5,000/- are depreciated fully in the month of purchase.
iii)
Insurance spares / standby equipments are depreciated prospectively over the remaining
useful lives of the respective mother assets.
Taxes on Income
Current tax and Fringe Benefit Tax are determined as the amount of tax payable in respect of
taxable
income/ fringe benefits for the year. Deferred Tax Asset is recognised, subject to
consideration of prudence, on timing differences, being the difference between taxable income and
accounting income that originate in one period and is capable of reversal in one or more subsequent
years. The Deferred tax Assets are recognised only to the extent that there is reasonable certainty of
sufficient future profits against which such deferred tax assts can be realised.
f)
Retirement and other employee benefits
Retirement benefits in the form of Provident Fund are charged to the Profit and Loss Account of
the year when the contributions to the respective funds are due. Provision for leave encashment and
gratuity are charged to the Profit & Loss Account on the basis of actuarial valuation made at the
end of each financial year.
g)
Segment Reporting Policies
The Company operates in only in business of software development and maintainence.
h)
Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term
investments with an original maturity of three months or less.
C.
Material Regroupings
Appropriate adjustments have been made in the Restated Summary Statements of Assets and
Liabilities, Profits and Losses and Cash Flows, wherever required, by a reclassification of the
corresponding items of income, expenses, assets, liabilities and cash flows, in order to bring them in
line with the groupings as per the audited financials of the Company for the nine months period
ended December 31, 2007.
D.
Material Adjustments
a)
Below mentioned is the summary of results of restatements made in the audited accounts for the
respective years and its impact on the profits of the Company.
( Amount in Rs. million)
Adjustments for
December 31, 2007
March 31, 2007
Prior Period Items (Refer note b)
6.00
(6.00)
Total impact of adjustments
6.00
(6.00)
Current Tax impact of adjustments
NIL
NIL
6.00
Net impact of adjustments
276
(6.00)
b)
Prior Period Items
The Company had capitalized certain costs relating to development of some software during the
year ended March 31, 2007 for which technical feasibility and probable future economic benefits
were yet to be established. As the auditors of the parent Company believed that such costs did not
qualify for capitalization as per the guidance given under Accounting Standard 26 ‘Intangible
Assets’ issued by the Institute of Chartered Accountants of India, such costs have been charged to
profit and loss account by the management and disclosed under the head ‘Prior Period expenses’ in
the Standalone Financial Statements for the nine months period ended December 31, 2007 and
accordingly have been appropriately adjusted in the year ended March 31, 2007 for the purpose of
this statement.
E.
1.
Other Significant Notes
Defined Benefits Plan
Gratuity and leave benefits (Revised Accounting Standard 15)
The Company has a defined benefit gratuity plan. Every employee who has completed five years or
more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed
year of service.
The Company also provides leave encashment benefits to its employees during the tenure of service
on reaching specified levels as well as on resignation / retirement. These benefits are unfunded.
The following tables summarise the components of net benefit expense recognised in the profit and
loss account and the funded status and amounts recognised in the balance sheet for the respective
plans:
Profit and Loss account
Net employee benefit expense (recognised in Employee Cost) for the nine-months period ended
December 31, 2007
( Amount in Rs. million)
Gratuity
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Net actuarial( gain) / loss recognized in the year
Net benefit expense charged to Profit and Loss account
Actual return on plan assets
Leave encashment
1.24
NIL
NIL
0.10
0.97
Nil
0.64
NIL
NIL
(0.07)
0.45
Nil
Balance sheet
Details of Provision for gratuity and leave encashment as at December 31, 2007
( Amount in Rs. million)
Defined benefit obligation
Fair value of plan assets
Less: Unrecognised past service cost
Net asset / (liability) recognised in Balance Sheet
Gratuity
(0.66)
0.06
NIL
(0.66)
Leave encashment
(1.24)
1.24
NIL
(1.24)
Changes in the present value of the defined benefit obligation for the nine months period ended
December 31, 2007 are as follows:
Gratuity
0.08
0.00
0.64
----
Opening defined benefit obligation
Interest cost
Current service cost
Benefits paid
277
Leave encashment
NIL
NIL
1.24
(0.10)
Actuarial (gains) / losses on obligation
Closing defined benefit obligation
(0.07)
0.66
0.10
1.24
Changes in the fair value of plan assets are as follows:
Gratuity
NIL
NIL
Nil
Nil
NIL
NIL
Opening fair value of plan assets
Expected return
Contributions by employer
Benefits paid
Actuarial gains / (losses)
Closing fair value of plan assets
The principal assumptions used in determining gratuity and leave benefit obligations for the
Company’s plans are shown below:
Gratuity (%)
LIC 1994-96 ultimate
15% P.A
8% P.A
N.A
15% P.A
32.46 years
Mortality table
Attrition Rate
Discount rate
Return on Plan Assets
Salary Rise
Remaining working life
Leave encashment (%)
LIC 1994-96 ultimate
15% P.A
8% P.A
N.A
15% P.A
32.46 years
Break-up of Deferred Tax Assets / (Liabilities) :
( Amount in Rs. million)
2.
Timing Difference on account of
December
March 31,
2007
31, 2007
Difference in depreciation and other differences in block of fixed assets
as per Tax books and Financial books
Gross Deferred Tax Liabilities
Effect of expenditure debited to Profit and Loss Account but allowed
for tax purposes in the following years
Brought forward losses and depreciation
3.
0.00
-
0.00
0.57
-
-
-
Gross Deferred Tax Assets
0.57
-
Net Deferred Tax (Liabilities) / Assets
0.57
-
Previous Year Comparatives
The Company has changed its statutory accounting year to end on December 31, 2007 instead of
March 31, 2008. Thus, the accounts for the period ended December 31, 2007 have been prepared
for 9 months and are not comparable with the previous year accounts prepared for 12 months.
As per our report of even date
For and on behalf of the Board of Directors of Mobisoc
Technology Pvt. Ltd.
For Gupta Garg & Agrawal
Chartered Accountants
Per B.B Gupta
(Director)
278
(Director)
Partner
Membership No: 012399
Place: Delhi
Date: June 22, 2008
279
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations is based
upon, and should be read in conjunction with our restated consolidated financial statements for Fiscal
2007 and the nine months ended December 31, 2007 and our unconsolidated restated financial
statements for Fiscal 2006, 15 months ended March 31, 2005 and 12 months ended December 31, 2003
including the schedules, annexures and notes thereto and the report thereon. Our consolidated and
unconsolidated summary statements are prepared in accordance with Indian GAAP. All references to
‘Fiscal’ are to the twelve month period ended March 31 of that year.
The following discussion and analysis contains forward-looking statements that involve risks and
uncertainties. For additional information regarding such risks and uncertainties, see “ForwardLooking Statements” and “Risk Factors”.
Overview
Our company is one of the leading providers of telecommunications value added products, services and
solutions in India. We provide a wide range of telecommunications value added services, platforms,
products and solutions to telecommunications carrier customers, subscribers of such carriers and
enterprises across India. As a value added services provider, we not only conceptualize products to
meet our customer needs, we source and aggregate content, provide the relevant platform for delivery
of our products and services and integrate these services with the core network elements of our carrier
customer. We have the ability to provide a comprehensive suite of value added products, services and
solutions across all key technology bearers. Our telecommunications products and services and
telecommunications solutions are delivered to subscribers of major telecommunications carriers in
India, including Airtel, Spice Communications, BSNL, IDEA, Reliance Communication, Vodafone,
MTNL, Tata Teleservices Limited and “Connect” & “Ping” of HFCL.
Our product portfolio includes music, information and entertainment based products and services (such
as mobile radio, BGM, CRBT, ringtone downloads, videos, contests, astrology, news, sports updates
and commodity rates), social networking products and services (such as voice chat), and call
management solutions (such as voicemail, voice SMS, select caller list, Pay4Me and missed call
alerts), all of which enable subscribers to personalize their mobile phones and enhance user experience.
Our products allow subscribers to access informational and entertainment content in more than 17
languages using IVRS speech-based navigation. Using our social networking platform, subscribers are
able to generate their own interactive content through messaging and conversations. We provide these
value added services and products through our carrier customers to mobile subscribers and enterprise
clients using IVRS, SMS, USSD, GPRS and WAP technology and delivery methods. Our applications
(other than GPRS) can be deployed on any network and accessed from most mobile handsets and fixedline devices. Many of our products and services can be accessed by subscribers using a variety of
delivery platforms, i.e., voice, SMS, USSD, GPRS, WAP and 3G network, thereby enabling us to
deploy our products and services across a majority of operators and networks.
We focus on multi-modal platforms based on voice, text and data. Our mobile radio platform gives
subscribers the interactive option to access content on demand in the language of their choice, using
their mobile phones. Given the demographic diversity of India, our platforms offer an efficient, easyto-use and attractive solution to our carrier customers for providing services to their subscribers. The
platform enables our carrier customers to introduce better targeted, more innovative content based
services. Our data platform, Mitr proposes to provide a unified framework for discovering and
accessing content and services, giving the subscriber a personalized experience. Our delivery
infrastructure is deployed across most network circles of our carrier customers.
Our roaming solutions provide traffic flow information, enable network optimization and identify
network bottlenecks for our carrier customers. Subscribers benefit from real-time updates and better
coverage while roaming outside their regular network. Through our in-house research and development
team, we have developed roaming solutions such as Welcome Roamer, Roam Tracker, Roam Globe,
Roam Secure and Roam Privilege.
280
Our value added services and products provide a source of additional revenue to our carrier customers
with relatively insignificant capital expenditure. Our music, entertainment and information based value
added products and services are dependent on the content which we provide. We have alliances with a
number of content owners and license holders and licensed content is delivered to our carrier customers
through our delivery platforms. As of May 31, 2008, we had more than 140,000 songs in more than 17
languages, as well as logos, wallpaper and 12,000 ringtones in our content database to cater to the
needs of multicultural and multilingual subscribers in India.
Basis of Preparation
The following discussion is based on our restated consolidated and unconsolidated financial statements,
which are based on our audited consolidated and unconsolidated financial statements restated in
accordance with paragraph B(1) of Part II of Schedule II of the Companies Act and the SEBI
Guidelines for the 12 months ended December 31, 2003, 15 months ended March 31, 2005, Fiscal 2006
and 2007 and the nine months ended December 31, 2007. The audited consolidated and unconsolidated
financial statements are prepared in accordance with Indian GAAP. There was no requirement to
prepare consolidated financial statements for the periods prior to March 31, 2007 as the Company did
not have any subsidiaries and accordingly the Company did not prepare consolidated financial
statements for any periods prior to March 31, 2007.
Our year ended December 31, 2003 reflects a 12 month fiscal year, our year ended March 31, 2005
reflects a 15 month fiscal year, our year ended March 31, 2006 reflects a 12 month fiscal year, our year
ended March 31, 2007 reflects a 12 month fiscal year and our year ended December 31, 2007 reflects a
nine month fiscal year, as a result of change of fiscal year ends. As a result, our results of operations for
the periods presented below are not comparable. Our historical financial performance may not be
considered as indicative of future financial performance. Our future fiscal years will end on December
31 each year and as a result will not be comparable to our nine months ended December 31, 2007.
We prepare our consolidated financial statements in accordance with the requirements of Accounting
Standard 21 – Consolidated Financial Statements (“AS–21”) and Accounting Standard 23 – Accounting
for Investments in Associates in Consolidated Financial Statements (“AS–23”). We consolidate
financial statements of our Subsidiary in our consolidated financial statements.
Factors Affecting our Results of Operations
Our financial condition and results of operations are affected by numerous factors and the following are
of particular importance:
•
General economic and business conditions. As a company operating in India, we are affected
by the general economic conditions in the country and in particular the factors affecting the
telecommunications industry in general. The Indian economy has grown steadily over the past
several years. GDP growth was 7.5% in Fiscal 2004, 8.1% in Fiscal 2005, 8.4% in Fiscal 2006
and 9.2% in the Fiscal 2007. The overall economic growth will impact the results of our
operations. The growth prospects of our business and our ability to implement our strategies
will be influenced by macro-economic growth.
•
Change in technology and our ability to innovate and develop new products and services. Our
business depends on developing and providing innovative solutions to our customers that will
create and fulfill demand by end users. Development of new products is subject to
unpredictable and volatile factors beyond our control, including end user preferences and
competing solutions. In addition, due to the competitive nature of the telecommunications
market in which we operate, and because time-to-market and service features are key
differentiators of mobile value added services offerings between carriers, solutions and
applications in our industry have short life-spans. We need to continuously invest in research
and development in the past to develop new and differentiated products and services for our
customers. Further, some or all of such products may not provide adequate returns
commensurate with our investments. Our solutions could also be rapidly rendered obsolete by
the introduction of newer technologies based on more advanced mobile networks using
broader bandwidths. Our inability to deal with the above factors would impact our results of
operations.
281
•
Competition. Our results of operations have been affected by competition in the
telecommunications value added services industry in India in the past. We expect competition
to intensify in the future due to possible new entrants in the market, existing competitors
further expanding their operations and our entry into new markets where we may compete
with well-established telecommunications value added services companies. This we believe
may impact our financial condition and operations.
•
Dependency on entertainment and music related services. We earned approximately 61% and
63% of our operating income from our music related services including mobile radio, caller
ring back tones, BGM and Jukebox in nine months ended December 2007 and in prior fiscal
2007, respectively. We expect to continue to derive a significant portion of our operating
income from these services over the next few years. There could be a decline in the demand
for our products/services and solutions due to various factors, including increase in cost of our
products/ services and solutions. A decrease in the popularity of our music related services
and solutions among mobile phone users, or a failure by us to maintain, improve, update or
enhance such services and solutions in a timely manner, enter into new markets, or
successfully diversify our products/services and solutions could materially and adversely
affect our business, financial condition and results of operations.
•
Content availability. We procure our content from various content providers (who license
these to us) for use as part of the services we provide to our carrier customers. Any failure on
our part to comply with our obligations under the content license agreements could cause us to
be in breach of our contract and could result in a claim against us for substantial damages or
even termination of the contracts by the content provider. In addition, these licencing
arrangements are typically for a term of one year. If we are unable to renew these licenses on
terms favourable to us, or at all, upon their expiration we may be prevented from providing
content sourced from these content providers and will have to source alternative content which
may result in loss of income or business opportunities or reduced margins that would harm our
business, financial condition and results of operations.
•
Intellectual property protection. Third parties may sue us for intellectual property
infringement or initiate proceedings to invalidate our intellectual property rights, either of
which, if successful, could disrupt the conduct of our business or require us to pay significant
damage awards which we may not succeed in recovering from our content providers. In
addition, in the event of a successful claim against us, we may be subject to injunctions
preventing us from using our intellectual property, incur significant licencing fees and/or be
forced to develop alternative technologies. Our failure or inability to develop non-infringing
technology or applications or to licence the infringed or similar intellectual property rights,
technology or applications on a timely basis could force us to withdraw services from the
market or prevent us from introducing new services on a timely basis, or at all. In addition,
even if we are able to licence the infringed or similar intellectual property rights, technology
or applications, licence fees could be substantial and the terms of such licenses could be
unfavorable. Any of the foregoing may result in increased costs and loss of income which may
have an adverse effect on our business, financial condition and results of operations.
Our Significant Accounting Policies
Our restated summary statements are prepared in accordance with Indian GAAP, the accounting
standards prescribed by ICAI and the relevant provisions of the Companies Act, and the accompanying
notes thereto included in this Draft Red Herring Prospectus include information that is relevant to this
discussion and analysis of our financial condition and results of operations. The financial statements
require our management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenditures, and the related disclosure of cash flows and contingent liabilities,
among other items. Certain key accounting policies that are relevant and specific to our business and
operations have been described below. The financial accounts have been prepared based on historical
cost convention on an accrual basis in accordance with applicable accounting standards.
Fixed Assets. Fixed Assets are stated at cost less accumulated depreciation and impairment losses, if
any. Cost comprises of the purchase price and any attributable cost of bringing the asset to its working
282
condition for its intended use. Insurance spares/stand by equipments are capitalized as part of mother
assets.
Depreciation. Depreciation is provided using the straight line method as per the useful lives of the
assets estimated by the management, or at the rates prescribed under Schedule XIV of the Companies
Act, whichever is higher as under:
Tangible Assets
Rates (SLM) (in %)
Buildings
Data Processing Machines
Furniture & Fixtures
Office Equipment
Mobile phones
Others
Vehicles
Motor Cars
Motor buses
3.34
31.67
13.57
Schedule XIV Rates (SLM)
(in%)
3.34
16.21
6.33
31.67
13.57
4.75
4.75
9.50
13.57
9.50
11.31
Cost of leasehold improvements is amortised over the period of lease or their useful lives whichever is
lower. Individual assets costing up to Rs. 5,000 are depreciated fully in the month of purchase.
Insurance spares / standby equipments are depreciated prospectively over the remaining useful lives of
the respective mother assets.
Intangibles. Intangible assets acquired from third parties are amortised using the straight line method
over their estimated useful lives as follows:
Intangible Assets
Estimated Useful Life (Years)
Computer Software
3 years
Costs incurred towards development of computer software products meant for sale, lease or otherwise
marketed, are capitalized subsequent to establishing technical feasibility. Capitalization ceases when
the product is available for general release to customers. Capitalized software product costs are
amortized on a product-by-product basis. The amortization shall be greater of the amount computed
using (a) the ratio that current gross revenue for a product bears to the total of current and anticipated
future gross revenues for that product or (b) straight line method over the remaining estimated useful
life of the product. The unamortized cost of Capitalized software products is carried at cost, less
accumulated amortization less impairment, if any.
Cost
Impairment. The carrying amounts of assets are reviewed at each balance sheet data if there is any
indication of impairment based on internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater
of the asset's net selling price and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value at the weighted average cost of capital. After impairment,
depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
Leases. Leases, where the lessor effectively retains substantially all the risks and benefits of ownership
of the leased term, are classified as operating leases. Operating lease payments by the Company are
recognised as an expense in the profit and loss account on a straight-line basis over the lease term.
Assets subject to operating leases from the Company are included in fixed assets. Lease income is
recognised in the profit and loss account on a straight-line basis over the lease term. Costs, including
depreciation are recognised as an expense in the profit and loss account. Initial direct costs such as
legal costs and brokerage costs are recognised immediately in the profit and loss account.
Investments. Investments that are readily realisable and intended to be held for not more than a year are
classified as current investments. All other investments are classified as long term investments. Current
investments are carried at lower of cost and fair value determined on an individual investment basis.
283
Long term investments are carried at cost. However, provision for diminution in value is made to
recognise a decline other than temporary in the value of such investments.
Inventories: Inventories are valued as follows:
Traded goods
At Cost or Net Realizable Value, whichever is lower. Cost is
determined on FIFO basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the sale.
Revenue Recognition. Revenue is recognised to the extent that it is probable that the economic benefits
will flow to the Company and the revenue can be reliably measured.
Rendering of Services: Service revenue is recognised at the end of each month in which the services
are rendered. Service revenue includes income on value added services, revenue from roaming
management services, short message service distribution services and providing mobile content.
Sale of Goods: Revenue from the sale of goods is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, which coincides with their delivery to the customer.
Interest: Interest revenue is recognised on a time proportion basis taking into account the amount
outstanding and the rate interest applicable.
Foreign Currency.
Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying
to the foreign currency amount the exchange rate between the reporting currency and the foreign
currency at the date of the transaction.
Conversion: Foreign currency monetary items are reported using the closing rate. Non-monetary items
which are carried in terms of historical cost denominated in a foreign currency are reported using the
exchange rate at the date of the transaction.
Exchange Differences: Exchange differences arising on the settlement of monetary items or on
reporting Company's monetary items at rates different from those at which they were initially recorded
during the year, or reported in previous financial statements, are recognised as income or as expenses in
the year in which they arise. Exchange differences arising in respect of fixed assets acquired from
outside India on or before accounting period commencing after December 7, 2006 are capitalized as a
part of fixed asset.
Translation of Integral Foreign Operation: The financial statements of an integral foreign operation are
translated as if the transactions of the foreign operation have been those of the Company itself.
Retirement and other employee benefits
Retirement benefits in the form of Provident Fund is a defined contribution scheme and the
contributions are charged to the Profit and Loss Account of the year when the contributions to the
respective funds are due. There are no other obligations other than the contribution payable to the
statutory authorities.
Retirement Gratuity is a defined benefit obligation. The Company has taken insurance policy under the
Group Gratuity Scheme of Life Insurance Corporation of India (LIC) to cover the gratuity liability of
the employees and the premium paid/payable to LIC, in respect of the present value for liability of past
services is charged to the Profit and Loss account every year. Also, the difference between amount
paid/payable to LIC and the actuarial valuation on projected unit credit method made at the end of each
financial year is charged to the Profit and Loss account.
Short term compensated absences are provided for on based on estimates. Long term compensated
absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected
unit credit method.
284
Actuarial gains / losses are immediately taken to profit and loss account and are not deferred.
Income Taxes.
Tax expense comprises of current, deferred and fringe benefit tax. Current income tax and fringe
benefit tax is measured at the amount expected to be paid to the tax authorities in accordance with the
I.T. Act. Deferred income taxes reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the
balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available against which such deferred tax assets
can be realised. In situations where the Company has unabsorbed depreciation or carry forward tax
loses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits.
At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises
unrecognised deferred tax assets to the extent that it has become unreasonably certain or virtually
certain, as the case may be, that sufficient future taxable income will be available against which such
deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company
writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient future taxable income will be available
against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable
income will be available.
MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the
Company will pay normal income tax during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the
recommendations contained in Guidance Note issued by ICAI, the asset is created by way of a credit to
the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent
there is no longer convincing evidence to the effect that the Company will pay normal Income Tax
during the specified period.
Changes in Accounting Policies
Change in the Method of Accounting for Earned Leaves. The Company changed its accounting policy
during the year ended March 31, 2007 and accounted for the liability for employees' earned leaves
based on actuarial valuation as at the end of the year in line with Accounting Standard-15 (“AS-15”)
issued by ICAI. Until the previous fiscal year ended March 31, 2006, leave liability was accounted for
based on actual amount payable as per current encashable salary as at the end of the year. As a result of
this change, the accumulated liability of earned leaves was higher and the profit for the year ended
March 31, 2007 was lower by Rs. 3.10 million. The effect of such change in accounting policy has
been appropriately adjusted in the years/periods to which it pertains.
Change in the Method of Providing Depreciation. The Company was following the straight line
method of providing depreciation on fixed assets up to the 12 months ended December 2003 and the
written down value method for the fifteen months period ended March 31, 2005 and Fiscal 2006.
During Fiscal 2007, the Company changed, with retrospective effect, its method of providing
depreciation on fixed assets, other than leasehold buildings, from the written down value method at the
rates prescribed in Schedule XIV to the Companies Act to the straight line method at the rates which
are higher of the useful lives of assets and the rates prescribed in Schedule XIV to the Companies Act.
As a result of this change, the charge to the profit and loss account before taxation for Fiscal 2007 was
lower by Rs. 25.60 million and the net block of fixed assets was correspondingly higher by the same
285
amount. The effect of such change in accounting policy has been appropriately adjusted in the
years/periods to which it pertains.
Adoption of AS-15 (Revised) Employee Benefits. Until Fiscal 2007, the Company was providing for
gratuity based on actuarial valuation as per LIC certificate and leave benefits based on actuarial
valuation. During the nine months ended December 31, 2007, the Company adopted AS-15 (Revised),
which is mandatory from accounting periods commencing on or after December 7, 2006. Accordingly,
the Company has provided for gratuity based on actuarial valuation done as per the projected unit credit
method. In addition, the Company has changed the method of providing short-term leave benefits from
an actuarial valuation to an estimate basis. As a result, actuarial valuation of leave liability and gratuity
liability as at April 1, 2007 was higher by Rs. 5.11 million (net of tax of Rs. 0.65 million) which, in
accordance with the transitional provision in the revised accounting standard, has been adjusted to the
general reserve.
Adoption of Accounting Standard-11 'The Effect of Changes in Foreign Exchange Rates' (“AS-11”).
As per the requirements of the Companies (Accounting Standards) Rules, 2006 and with AS-11, which
is mandatory from the accounting periods commencing on or after December 7, 2006, the exchange
differences on foreign currency transactions relating to fixed assets acquired from a country outside
India have been adjusted to revenue as against the previously followed practice of adjusting the same to
the carrying amount of fixed assets. As a result, net exchange gain of Rs 0.53 million which otherwise
would have been adjusted against the carrying amount of fixed assets, previously credited to the profit
and loss account for the nine months ended December 31, 2007. Therefore, the profit before tax for the
nine months period ended December 31, 2007 was higher by the same amount.
Material Regroupings
Appropriate adjustments have been made in the Restated Summary Statements of Assets and
Liabilities, Profits and Losses and Cash Flows, wherever required, by a reclassification of the
corresponding items of income, expenses, assets, liabilities and cash flows, in order to bring them in
line with the groupings as per the audited financials of the Company for the nine months ended
December 31, 2007.
Material Adjustments
The summary of results of restatements made in the audited accounts for the respective years and its
impact on the profits of the Company is set forth below.
Adjustments for
Prior Period Items
Sundry Balances written back
Provision for doubtful debts
Sundry Balances written off
Bad Debts written off
Bad Debts recovered
Depreciation
Leave Encashment
Miscellaneous Expenditure (to the
extent not written off)
Tax paid for earlier years/periods
Audit Qualification / Prior period
Items
Total impact of adjustments
Current Tax impact of adjustments
Deferred Tax impact of adjustments
Net impact of adjustments
December
31, 2007
(0.69)
March 31,
2007
1.18
(0.04)
(4.44)
0.11
2.77
(0.00)
(10.80)
1.25
-
March 31,
2006
(0.36)
(0.90)
(0.54)
0.09
(2.58)
0.20
7.49
(0.98)
0.04
March 31,
2005
(0.12)
0.81
(0.14)
(0.20)
0.30
3.31
(0.27)
(0.04)
December
31, 2003
(0.01)
0.25
(0.12)
-
(0.12)
4.98
0.04
(0.50)
0.75
6.00
0.33
(6.00)
-
(1.05)
-
-
10.45
(0.42)
10.03
(15.64)
2.46
(0.28)
(0.09)
2.09
2.60
(0.51)
(0.39)
1.70
0.12
0.12
286
1.21
0.48
(13.95)
Prior Period Items. In the financial statements for Fiscal 2007 and the nine months ended December
31, 2007, certain items of income/expenses have been identified as prior period items. Such prior
period items have been appropriately adjusted in the respective years/periods.
Sundry Balances Written Back. In the financial statements for Fiscal 2006 and 2007 and the 15 months
ended March 31, 2005 and nine months ended December 31, 2007, certain liabilities created in the
earlier years/periods were written back. These liabilities, wherever required, have been appropriately
adjusted in the respective years/periods in which they were originally created.
Provision for Doubtful Debts. During Fiscal 2006 and the nine months ended December 31, 2007,
certain provisions for doubtful debts which pertained to debtors of earlier years/periods were created.
These provisions, wherever required, have been appropriately adjusted in the respective years/periods
in which these debtors and revenue were accounted for.
Sundry Balances Written off. In the financial statements for Fiscal 2007 and 2006 and the nine months
ended December 31, 2007, certain advances paid in the earlier years/periods were written off. These
advances, wherever required, have been appropriately adjusted in the respective years/periods in which
they were originally paid.
Bad Debts Written off. During Fiscal 2007 certain bad debts which pertained to debtors of earlier
years/periods were written off. These bad debts have been appropriately adjusted in the respective
years/periods in which these debtors and revenue were accounted for.
Bad Debts Recovered. During the nine months ended December 31, 2007 and Fiscal 2007, certain bad
debts written off in earlier years/periods were recovered. These recoveries have been appropriately
adjusted in the respective years/period in which they were originally written off.
Depreciation. During Fiscal 2007, the Company changed the method of providing depreciation on
fixed assets. The retrospective effect of depreciation has been appropriately adjusted in Fiscal 2006
and the 15 months ended March 31, 2005.
Leave Encashment. During Fiscal 2007,the Company changed its accounting policy and accounted for
provisioning of earned leaves. The effect of such change in policy has been appropriately adjusted in
Fiscal 2006 and the 15 months ended March 31, 2005.
Miscellaneous Expenditure (to the extent not written off). Up to Fiscal 2006, amounts carried forward
under the head 'Miscellaneous Expenditure (to the extent not written off)' representing pre-operative
expenditure, were being amortized on a pro-rata basis over a period of five years from the date of
commencement of commercial operations. However, Accounting Standard – 26 issued by ICAI, which
became applicable to the Company during the 15 month period ended March 31, 2005, did not permit
such carrying forward of expenditure. The effect of amortisation of such miscellaneous expenditure has
been appropriately adjusted in Fiscal 2006 and the 15 months ended March 31, 2005.
Taxes for earlier years/periods. During Fiscal 2007 and the nine months ended December 31, 2007,
certain taxes pertaining to the 15 months ended March 31, 2005 were paid. Such tax expense has been
appropriately adjusted in the 15 months ended March 31, 2005.
Audit Qualification/ Prior Period Items The Subsidiary of the Company had capitalized certain costs
relating to development of some software during the year ended March 31, 2007 for which technical
feasibility and probable future economic benefits were yet to be established. As the auditors of the
parent Company believed that such costs did not qualify for capitalization as per the guidance given
under Accounting Standard 26 ‘Intangible Assets’ issued by the Institute of Chartered Accountants of
India, the Consolidated Financial Statements for the year ended March 31, 2007 were qualified to that
extent. In the current year, such costs have been charged to profit and loss account by the management
and disclosed under the head ‘Prior Period expenses’ in the Consolidated Financial Statements for the
nine months period ended December 31, 2007 and accordingly have been appropriately adjusted in the
year ended March 31, 2007 for the purpose of this statement.
Current Tax and Deferred Tax impact of adjustments. In the preparation of the Restated
Unconsolidated Summary Statements, the Company has made adjustments for the current tax and
287
deferred tax impact of the adjustments in the respective years/periods to which such adjustments
pertain.
Non-Adjustment Items
(i)
The Company has changed the estimates of useful lives of some of its fixed assets during
Fiscal 2007 and the nine months ended December 31, 2007. The management believes that such
change in estimated useful lives is bonafide and occasioned by technical/environmental factors and
hence should not be restated in previous periods/years financials in the statement of assets and
liabilities, as restated.
(ii)
The Company has adopted revised AS-15 on Employee Benefits issued by ICAI effective
from April 1, 2007. However, due to practical difficulties in retrospective application of the same, it
has not been possible for the management to determine the effect on the profits for the 12 months
ended December 31, 2003, the 15 months ended March 31, 2005, and Fiscal 2006 and 2007 had the
revised standard been adopted by the Company for each of those years/periods. Accordingly, such
adjustment has not been made in the attached unconsolidated restated financial statements.
(iii)
As per the requirements of Companies (Accounting Standards) Rules, 2006 and AS-11, which
is mandatory from the accounting periods commencing on or after December 7, 2006, the exchange
differences on foreign currency transactions relating to fixed assets acquired from a country outside
India have been adjusted to revenue as against the previously followed practice of adjusting the same to
the carrying amount of fixed assets. However, due to practical difficulties in retrospective application
of the same, it has not been possible for the management to determine the effect of such change in the
financial statements of earlier years/periods. Accordingly, such adjustment has not been made in the
attached unconsolidated restated financial statements. The impact of such adjustment is not material in
relation to the Restated Unconsolidated Summary Statements.
Our Results of Operations
Unless otherwise stated, “Fiscal” refers to the twelve month period ending March 31 of that year. Our
year ended December 31, 2003 reflects a 12 month fiscal year, our year ended March 31, 2005 reflects
a 15 month fiscal year, our year ended March 31, 2006 reflects a 12 month fiscal year, our year ended
March 31, 2007 reflects a 12 month fiscal year and our year ended December 31, 2007 reflects a nine
month fiscal year, as a result of change of fiscal year ends. As a result, our results of operations for the
periods presented below are not comparable. Our historical financial performance may not be
considered as indicative of future financial performance.
Our results of operations are consolidated for the nine months ended December 31, 2007 and for Fiscal
2007 and unconsolidated for Fiscal 2006, 15 months ended March 31, 2005 and 12 months ended
December 31, 2003. There was no requirement to prepare consolidated financial statements for the
periods prior to March 31, 2007 as the Company did not have any subsidiaries and accordingly the
Company did not prepare consolidated financial statements for any periods prior to March 31, 2007
The table below summarizes our results of operations, including as a percentage of total income, for the
periods indicated:
(Rs. In millions)
December 31, 2007
(9 months)
% of
Total
Income
INCOME:
Operating
Income………………
Other
Income..……….................
TOTAL
INCOME…………….
EXPENDITURE:
Purchase of Goods for
Sale…….
Operating
Expenses…………….
Staff
March 31, 2007
(12
% of
months)
Total
Income
March 31, 2006
(12
% of
months)
Total
Income
March 31, 2005
(15 months)
% of
Total
Income
December 31, 2003
(12 months) % of
Total
Income
734.56
94.52
661.78
96.36
324.95
97.80
268.28
98.72
8.54
99.30
42.63
5.48
25.02
3.64
7.31
2.20
3.49
1.28
0.06
0.70
777.19
100.00
686.80
100.00
332.26
100.00
271.77
100.00
8.60
100.00
0.99
0.13
3.38
0.49
-
-
-
-
-
-
82.13
10.57
50.11
7.30
21.49
6.47
23.45
8.63
-
-
138.37
17.80
66.11
9.63
28.53
8.59
20.15
7.41
0.59
6.86
288
December 31, 2007
(9 months)
% of
Total
Income
Cost…………….................
Selling and Distribution
Expenses……………………….
.
General and Administration
Expenses……………………….
.
Decrease/(Increase) in
Inventories……………………..
.
Interest…………………………
.
Miscellaneous Expenditure
Written Off
…………………….
Depreciation/Amortisation…….
.
TOTAL
EXPENDITURE…….
Profit Before Tax and
Prior Period
Items………………
Prior Period
Items………………
Profit Before Tax and
After Prior Period
Items……..…
Provision for Tax
Current
Tax……………………..
Deferred Tax
Charge/(Credit)….
Fringe Benefits
Tax…………….
Total Tax
Expense…………….
Adjustments…………………
….
Current Tax impact of
Adjustments…………………
….
Deferred Tax impact of
Adjustments…………………
….
Net impact of
Adjustments……..
NET PROFIT, AS
RESTATED…………………..
March 31, 2007
(12
% of
months)
Total
Income
March 31, 2006
(12
% of
months)
Total
Income
March 31, 2005
(15 months)
% of
Total
Income
December 31, 2003
(12 months) % of
Total
Income
16.56
2.13
7.28
1.06
4.79
1.44
5.15
1.90
1.92
22.33
126.31
16.25
78.53
11.43
23.77
7.15
13.45
4.95
1.17
13.60
1.36
0.17
(1.36)
(0.20)
-
-
-
-
-
-
0.94
0.12
0.04
0.01
0.01
0.00
0.53
0.20
-
-
1.11
0.14
-
-
0.03
0.00
0.06
0.02
0.64
7.44
60.47
7.78
32.90
4.79
14.59
4.39
5.54
2.04
-
-
428.24
55.10
236.99
34.51
93.21
28.05
68.33
25.15
4.32
50.23
348.95
44.90
449.81
65.49
239.05
71.95
203.44
74.85
4.28
49.77
5.31
0.68
0.38
0.06
-
-
-
-
-
-
343.64
44.22
449.43
65.43
239.05
71.95
203.44
74.85
4.28
49.77
14.91
1.92
24.06
3.50
20.03
6.03
21.22
7.81
0.06
0.70
3.43
0.44
(1.24)
(0.18)
(0.30)
(0.09)
3.48
1.28
1.53
17.79
4.65
0.60
2.16
0.31
1.03
0.31
-
-
-
-
22.99
2.96
24.98
3.63
20.76
6.25
24.70
9.09
1.59
18.49
10.45
1.34
(15.64)
(2.28)
2.46
0.74
2.60
0.96
0.12
1.39
(0.42
(0.05)
1.21
0.18
(0.28)
(0.08)
(0.51)
(0.19)
(0.00)
(.00)
-
-
0.48
0.07
(0.09)
(0.03)
(0.39)
(0.14)
-
-
10.03
1.29
(13.95)
(2.03)
2.09
0.63
1.70
0.63
0.12
1.40
330.68
42.55
410.50
59.77
220.38
66.33
180.44
66.39
2.81
32.67
Income. Our income comprises of operating income and other income. We derive our operating income
primarily from the rendering of services, which includes income on value added services, income from
roaming management services, short message service distribution services and providing mobile
content and the sale of goods, which includes sale of telecom related software and computer hardware
and other operating income. Our other income consists of income from interest on bank deposits,
sundry balances written back, bad debts recovered, rental income and interest from others.
Expenditure. Our expenditure consists of expenses on purchase of goods for sale, operating expenses,
staff cost, selling and distribution expenses, general and administration expenses, decrease/increase in
inventories, interest on taxes, miscellaneous expenditure written off and depreciation/amortisation.
Expenses on Purchase of Goods for Sale. Our expenses on purchase of goods for sale includes
expenses on hardware which are sold to carrier customers as a part of our telecom solution sale.
Expenses on purchase of goods for sale accounted for 0.23% and 1.42% of our total expenditure for the
nine months ended December 31, 2007 and Fiscal 2007. We had no expenses on purchase of goods for
sale for Fiscal 2006 and the fifteen months ended March 31, 2005 since we did not have any sale of
software and related hardware during such period.
289
Operating Expenses. Our operating expenses consists of expenses on provisioning of content, roaming
charges and charges on account of short message service distribution. Operating expenses accounted
for 19.18%, 21.14%, 23.05% and 34.32% of our total expenditure for the nine months ended December
31, 2007, Fiscal 2007 and 2006 and the fifteen months ended March 31, 2005.
Staff Cost. Staff cost consists of salaries, wages and bonuses paid to our officers and employees,
contributions to provident and other funds for the benefit of our officers and employees and other
workmen and staff welfare expenses. Staff cost accounted for 32.31%, 27.90%, 30.61% and 29.49% of
our total expenditure for the nine months ended December 31, 2007, Fiscal 2007 and 2006 and the
fifteen months ended March 31, 2005.
Selling and Distribution Expenses. Selling and distribution expenses primarily constitute our sales and
marketing expenses including expenses on contesting , expenses on advertisement, publicity and sales
promotion. Selling and distribution expenses accounted for 3.87%, 3.07%, 5.14% and 7.54% of our
total expenditure for the nine months ended December 31, 2007, Fiscal 2007 and 2006 and the fifteen
months ended March 31, 2005.
General and Administrative Expenses. General and administrative expenses include expenses on rent,
rates and taxes, insurance, repairs and maintenance of plant and machinery and buildings, travelling
and conveyance, communications costs, legal and professional fees, auditor’s remuneration, vehicle
running and maintenance and electricity and water. General and administrative expenses accounted for
29.50%, 33.13%, 25.50% and 19.68% of our total expenditure for the nine months ended December 31,
2007, Fiscal 2007 and 2006 and the fifteen months ended March 31, 2005.
Decrease/(Increase) in Inventories. Decrease and increase in inventories deals with the change in
inventory including both, hardware and software which are provided to our customers.
Interest. Interest expenses consists of interest paid on a term loan obtained for the purchase of a car, as
well as the related processing charges.
Miscellaneous Expenditure Written Off. Miscellaneous expenditure written off consists of preliminary
expenses incurred at the time of incorporation of the company and pre-operative expenses.
Depreciation/Amortisation. Depreciation is provided using the straight line method as per the useful
lives of the assets estimated by the management, or at the rates prescribed under Schedule XIV of the
Companies Act, whichever is higher as provided under “– Significant Accounting Policies –
Depreciation” on page 182. Intangible assets acquired from outside are amortized using the straight line
method over their estimated useful lives as provided under “– Significant Accounting Policies –
Intangibles” on page 183.
Taxation. We provide for current taxes, fringe benefit tax and deferred taxes. Current income tax and
fringe benefit tax is measured at the amount expected to be paid to the tax authorities in accordance
with the I.T. Act. Deferred income taxes reflects the impact of current year timing differences between
taxable income and accounting income for the year and reversal of timing differences of earlier years.
Nine Months Ended December 31, 2007 Compared to Fiscal 2007
Our results of operations for the nine months ended December 31, 2007 were particularly affected by
the following factors:
•
•
•
•
Pan-India launch of Mobile Radio with Airtel.
Pan-India launch of Select Caller List with Vodafone.
Launch of USSD, BGM and Mobile Radio with Reliance.
Significant increase in user base for existing services.
Income. Our total income was Rs. 777.19 million for the nine months ended December 31, 2007 and
Rs. 686.80 million for the Fiscal 2007.
290
Operating Income. Our operating income was Rs. 734.56 million for the nine months ended December
31, 2007 and Rs. 661.78 million for the Fiscal 2007. Our income from rendering of services was
57.90% of our total operating income for the nine months ended December 31, 2007 and our income
from sale of telecom solutions comprised 42.10% of our total operating income for the nine months
ended December 31, 2007.
Other Income. Our other income was Rs. 42.63 million, or 5.48% of our total income for the nine
months ended December 31, 2007 and Rs. 25.02 million, or 3.64% or our total income for the Fiscal
2007. A majority of our other income for the nine months ended December 31, 2007 was attributable to
interest accrued on bank deposits and rental income from sub-leasing our office premises at Noida.
Expenditure. Our total expenditure was Rs. 428.24 million for the nine months ended December 31,
2007 and Rs. 236.99 million for the Fiscal 2007. Our total expenditure for the nine months ended
December 31, 2007 comprised primarily of staff cost, general and administration expenses and
operating expenses, which constituted 32.31%, 29.50% and 19.18%, respectively, of our total
expenditure for such period.
Purchase of Goods for Sale. Our expenses on purchase of goods for sale were Rs. 0.99 million, or
0.13% of our total income for the nine months ended December 31, 2007 and Rs. 3.38 million, or
0.49% of our total income for the Fiscal 2007.
Operating Expenses. Our operating expenses were Rs. 82.13 million, or 10.57% of our total income for
the nine months ended December 31, 2007 and Rs. 50.11 million, or 7.30% of our total income for the
Fiscal 2007. Our operating expenses for the nine months ended December 31, 2007 primarily
constituted expenses on provisioning of content, roaming services and enterprise messaging.
Staff Cost. Our staff cost was Rs. 138.37 million, or 17.80% of our total income for the nine months
ended December 31, 2007 and Rs. 66.11 million, or 9.63% of our total income for the Fiscal 2007. Our
expenses on salaries and contribution to welfare funds constituted 13.98% and 1.12% of our total
income for the nine months ended December 31, 2007.
Selling and Distribution Expenses. Our selling and distribution expenses were Rs. 16.56 million, or
2.13% of our total income for the nine months ended December 31, 2007 and Rs. 7.28 million, or
1.06% of our total income for the Fiscal 2007. Our selling and distribution expenses for the nine
months ended December 31, 2007 primarily constituted expenses on advertisement, publicity and sales
promotions.
General and Administrative Expenses. Our general and administrative expenses were Rs. 126.31
million, or 16.25% of our total income for the nine months ended December 31, 2007 and Rs. 78.53
million, or 11.43% of our total income for the Fiscal 2007. Our general and administrative expenses for
the nine months ended December 31, 2007 primarily constituted expenses on rent, travelling and
conveyance, communication cost and legal and professional fees.
Decrease/(Increase) in Inventories. Our expense to (increase)/decrease in inventories were Rs. 1.36
million, or 0.17% of our total income for the nine months ended December 31, 2007 and Rs. (1.36)
million, or 0.21% of our total income for the Fiscal 2007.
Interest. Our interest expense on account of interest paid on taxes was Rs. 0.94 million, or 0.12% of our
total income for the nine months ended December 31, 2007 and Rs. 0.04 million, or 0.01% of our total
income for the Fiscal 2007.
Miscellaneous Expenditure Written Off. Our miscellaneous expenditure written off was Rs. 1.11
million, or 0.14% of our total income, for the nine months ended December 31, 2007. We did not have
any miscellaneous expenditure written off for the Fiscal 2007.
Depreciation/Amortisation. Our depreciation and amortisation costs were Rs. 60.47 million, or 7.78%
of our total income for the nine months ended December 31, 2007 and Rs. 32.90 million, or 4.79% of
our total income for the Fiscal 2007.
291
Taxation. Our taxes were Rs. 22.99 million for the nine months ended December 31, 2007 and Rs.
24.98 million for the Fiscal 2007.
Net Profit, as Restated. Our net profit, as restated was Rs. 330.68 million for the nine months ended
December 31, 2007 and Rs. 410.50 million for the Fiscal 2007.
Fiscal 2007 Compared to Fiscal 2006
Our results of operations for the Fiscal 2007 were particularly affected by the following factors:
•
•
•
Launch of various services for Spice Communications such as Select Caller List and Pay4me.
Launch of BGM with Airtel in all circles and IVR and Mobile radio in four circles of Airtel.
Overall growth in the telecom industry resulting in an increase in user base for existing and
new services.
Income. Our total income increased by 106.71% to Rs. 686.80 million for the Fiscal 2007 from Rs.
332.26 million for the Fiscal 2006, primarily due to an increase in the value added services rendered to
our carrier customers and sale of software solutions to our carrier customers.
Operating Income. Our operating income increased by 103.66% to Rs. 661.78 million for the Fiscal
2007 from Rs. 324.95 million for the Fiscal 2006, primarily due to an increase in the members of our
carrier customers (including Airtel), the launch of new products such as back ground music, voice chat,
select caller list, mobile radio and collect call, the addition of new users in existing products and
addition of enterprise customers.
Other Income. Our other income increased by 242.27% to Rs. 25.02 million for the Fiscal 2007 from
Rs. 7.31 million for the Fiscal 2006, primarily because of an increase in interest received on bank
deposits.
Expenditure. Our total expenditure increased by 154.26% to Rs. 236.99 million for the Fiscal 2007
from Rs. 93.21 million for the Fiscal 2006, primarily as a result of an increase in operating expenses,
staff cost and general and administrative expenses as a result of the overall growth of our business and
operations.
Purchase of Goods for Sale. Our expenses on purchase of goods for sale were Rs. 3.38 million for the
Fiscal 2007. We did not have any expenses on purchase of goods for sale for the Fiscal 2006 since we
did not have any software sales with hardware during such period.
Operating Expenses. Our operating expenses increased by 133.18% to Rs. 50.11 million for the Fiscal
2007 from Rs. 21.49 million for the Fiscal 2006, primarily as a result of growth of our business and
change in product revenue mix.
Staff Cost. Our staff cost increased by 131.72% to Rs. 66.11 million for the Fiscal 2007 from Rs. 28.53
million for the Fiscal 2006, primarily as a result of growth in our business, which required additional
regional offices resulting in an increase in the number of employees from 95 to 265 and a normal
increase in the salaries, bonuses and ex-gratia paid to our officers and employees. We also had a
addition of employees due to the addition of our Subsidiary.
Selling and Distribution Expenses. Our selling and distribution expenses increased by 51.98% to Rs.
7.28 million for the Fiscal 2007 from Rs. 4.79 million for the Fiscal 2006, primarily as a result of
additional customers and due to promotions through contests and overall growth of our business
General and Administrative Expenses. Our general and administrative expenses increased by 230.37%
to Rs. 78.53 million for the Fiscal 2007 from Rs. 23.77 million for the Fiscal 2006, primarily as a result
of and increase in rents due to addition of new offices, consequent increase in electricity and water,
travelling and conveyance expenses due to increased geographical presence, expenses on site
maintenance and increase in our communication expenses.
292
Decrease/(Increase) in Inventories. Our expense to (increase)/decrease in inventories increased to Rs.
1.36 million, or 0.20% of our total income for the Fiscal 2007. We had no inventories in Fiscal 2006.
Interest. Our interest expenses increased by 300.00% to Rs. 0.04 million for the Fiscal 2007 from Rs.
0.01 million for the Fiscal 2006 since interest paid in Fiscal 2006 was for part of the year and interest
paid in Fiscal 2007 was for a full year and also due to prepayment charges on early repayment of Car
loan
Miscellaneous Expenditure Written Off. Our miscellaneous expenditure written off was Rs. 0.03
million for the Fiscal 2006. We had no miscellaneous expenditure written off in Fiscal 2007.
Depreciation/Amortisation. Our depreciation and amortisation costs increased by 125.50% to Rs. 32.90
million for the Fiscal 2007 from Rs. 14.59 million for the Fiscal 2006, due to addition of Rs. 117.20
million of fixed assets required for overall business growth, including hardware & software, and due to
change in estimated useful life of the fixed assets.
Taxation. Our provision for taxation increased by 20.35% to Rs. 24.98 million for Fiscal 2007 from
Rs. 20.76 million for Fiscal 2006. The primary component of this increase was an increase in our
current tax liability to Rs. 24.06 million in Fiscal 2007 from Rs. 20.03 million for Fiscal 2006
corresponding with an increase in its profit before tax. The Company’s effective tax rate calculated as
provision for taxation divided by profit before taxation, for Fiscal 2007 was 5.55% as compared to its
effective tax rate of 8.69% for Fiscal 2006.
Net Profit, as Restated. Our net profit, as restated increased by 86.27% to Rs. 410.50 million for Fiscal
2007 from Rs. 220.38 million for Fiscal 2006.
Fiscal 2006 Compared to the 15 months ended March 31, 2005
Our results of operations for the Fiscal 2006 were particularly affected by the following factors:
•
•
•
Launch of IVR and BGM in all existing circles of Idea.
Launch of new services for Spice Communications such as BGM and CRBT.
Launch of IVR services for BSNL/MTNL and another major carrier customer.
Income. Our total income was Rs. 332.26 million for the Fiscal 2006 and Rs. 271.77 million for the 15
months ended March 31, 2005.
Operating Income. Our operating income was Rs. 324.95 million for the Fiscal 2006 and Rs. 268.28
million for the 15 months ended March 31, 2005. Our operating income primarily constituted income
from rendering of services, which was 99.20% of our total operating income for Fiscal 2006 and
99.90% of our operating income for the 15 months ended March 31, 2005.
Other Income. Our other income was Rs. 7.31 million for the Fiscal 2006 and Rs. 3.49 million for the
15 months ended March 31, 2005, and comprised 2.20% and 1.28% of our total income, respectively,
for such periods. A majority of our other income in each of such periods was attributable to interest on
bank deposits.
Expenditure. Our total expenditure was Rs. 93.21 million, or 28.05% of our total income, for the Fiscal
2006 and Rs. 68.33 million, or 25.15% of our total income, for the 15 months ended March 31, 2005.
Purchase of Goods for Sale. We did not incur any expenses on purchase of goods for sale in Fiscal
2006 and 15 months ended March 31, 2005.
Operating Expenses. Our operating expenses were Rs. 21.49 million, or 6.47% of our total income, for
the Fiscal 2006 and Rs. 23.45 million, or 8.63% of our total income, for the 15 months ended March
31, 2005. Our operating expenses for such period primarily constituted expenses on provisioning of
content and roaming services.
Staff Cost. Our staff cost was Rs. 28.53 million, or 8.59% of our total income, for the Fiscal 2006 and
Rs. 20.15 million, or 7.41% of our total income, for the 15 months ended March 31, 2005. Our staff
293
cost increased in Fiscal 2006 as a result of an increase in the number of employees from 64 to 95 and a
normal increase in the salaries, bonuses and ex-gratia paid to our officers and employees.
Selling and Distribution Expenses. Our selling and distribution expenses were Rs. 4.79 million, or
1.44% of our total income, for the Fiscal 2006 and Rs. 5.15 million, or 1.90% of our total income, for
the 15 months ended March 31, 2005. Our selling and distribution expenses were attributable to
expenses on sales promotion and publicity during such period.
General and Administrative Expenses. Our general and administrative expenses were Rs. 23.77
million, or 7.15% of our total income, for the Fiscal 2006 and Rs. 13.45 million, or 4.95% of our total
income, for the 15 months ended March 31, 2005. General and administrative expenses for such
periods constituted expenses on communication, rent, legal and professional fees and travelling and
conveyance.
Decrease/(Increase) in Inventories. We had no expense on inventories in Fiscal 2006 and the 15
months ended March 31, 2005.
Interest. Our interest expenses was Rs. 0.01 million in Fiscal 2006 and Rs. 0.53 million for the 15
months ended March 31, 2005. Our interest expenses in Fiscal 2006 were attributable to interest paid
on a car loan obtained by the Company and for the 15 months ended March 31, 2005 were attributable
to interest on taxes due to delay in payment of advance tax.
Miscellaneous Expenditure Written Off. Our miscellaneous expenditure written off was Rs. 0.03
million for the Fiscal 2006 and Rs. 0.06 million for the 15 months ended March 31, 2005.
Depreciation/Amortisation. Our depreciation and amortisation costs were Rs. 14.59 million, or 4.39%
of our total income, for the Fiscal 2006 and Rs. 5.54 million, or 2.04% of our total income, for the 15
months ended March 31, 2005. The increase in depreciation costs for the Fiscal 2006 as compared to
for the 15 months ended March 31, 2005, was primarily due to Rs. 39.12 million of fixed assets,
including hardware and software.
Taxation. Our provision for taxation was Rs. 20.76 million, or 6.25% of our total income, for the Fiscal
2006 and Rs. 24.70 million, or 9.09% of our total income, for the 15 months ended March 31, 2005.
Our effective tax rate, calculated as provision for taxation divided by profit before taxation, for the
Fiscal 2006 was 8.69% as compared to 12.14% for the 15 months ended March 31, 2005.
Net Profit, as Restated. Our net profit, as restated was Rs. 220.38 million, or 66.33% of our total
income for the Fiscal 2006 and Rs. 180.44 million, or 66.39% of our total income, for the 15 months
ended March 31, 2005.
15 months ended March 31, 2005 Compared to 12 months ended December 31, 2003
Our results of operations for the 15 months ended March 31, 2005 was particularly affected by the
launch of IVR services for Idea, Spice Communications and Reliance.
Income. Our total income was Rs. 271.77 million for the 15 months ended March 31, 2005 and Rs.
8.60 million for the 12 months ended December 31, 2003.
Operating Income. Our operating income was Rs. 268.28 million for the 15 months ended March 31,
2005 and Rs. 8.54 million for the 12 months ended December 31, 2003. Our operating income for such
period were attributable to income from rendering of services.
Other Income. Our other income was Rs. 3.49 million for the 15 months ended March 31, 2005 and Rs.
0.06 million for the 12 months ended December 31, 2003, and comprised 1.28% and 0.69% of our total
income, respectively, for such periods. A majority of our other income during such period was
attributable to insurance comission and interest on bank deposits.
Expenditure. Our total expenditure was Rs. 68.33 million, or 25.15% of our total income, for the 15
months ended March 31, 2005 and Rs. 4.32 million, or 50.23% of our total income, for the 12 months
ended December 31, 2003.
294
Purchase of Goods for Sale. We did not incur any expenses on purchase of goods for sale for the 15
months ended March 31, 2005 and for the 12 months ended December 31, 2003.
Operating Expenses. Our operating expenses were Rs. 23.45 million, or 8.63% of our total income, for
the 15 months ended March 31, 2005 We had no operating expenses for the 12 months ended
December 31, 2003 since we only started our business of value added services on January 1, 2004.
Staff Cost. Our staff cost was Rs. 20.15 million, or 7.41% of our total income, for the 15 months ended
March 31, 2005 and Rs. 0.59 million, or 6.87% of our total income, for the 12 months ended December
31, 2003. The increase in staff cost was as a result of an increase in the number of employees from 10
to 64 and a normal increase in the salaries, bonuses and ex-gratia paid to our officers and employees.
Selling and Distribution Expenses. Our selling and distribution expenses were Rs. 5.15 million, or
1.90% of our total income, for the 15 months ended March 31, 2005 and Rs. 1.92 million, or 22.33% of
our total income, for the 12 months ended December 31, 2003. Our selling and distribution expenses
were attributable to expenses on sales promotion and marketing.
General and Administrative Expenses. Our general and administrative expenses were Rs. 13.45
million, or 4.95% of our total income, for the 15 months ended March 31, 2005 and Rs. 1.17 million, or
13.60% of our total income, for the 12 months ended December 31, 2003. General and administrative
expenses for 15 months ended March 31, 2005 constituted expenses on communication, travelling and
conveyance, rent and legal and professional fees. We had minimal general and administrative expenses
in the 12 months ended December 31, 2003 since our business was in the initial phase.
Decrease/(Increase) in Inventories. We had no exoense on inventories for the 15 months ended March
31, 2005 and for the 12 months ended December 31, 2003.
Interest. Our interest expense for the 15 months ended March 31, 2005 was Rs. 0.53 million, or 0.20%
of our total income which were attributable to interest on taxes due to delay in payment of advanced
tax. We did not have any interest expenses for the 12 months ended December 31, 2003.
Miscellaneous Expenditure Written Off. Our miscellaneous expenditure written off was Rs. 0.06
million, or 0.02% of our total income, for the 15 months ended March 31, 2005 and Rs. 0.64 million, or
7.44% of our total income, for the 12 months ended December 31, 2003.
Depreciation/Amortisation. Our depreciation and amortisation costs were Rs. 5.54 million, or 2.04% of
our total income, for the 15 months ended March 31, 2005. We did not incur any depreciation and
amortisation costs for the 12 months ended December 31, 2003 since we had no fixed assets.
Taxation. Our provision for taxation was Rs. 24.70 million, or 9.09% of our total income, for the 15
months ended March 31, 2005 and Rs. 1.59 million, or 18.49% of our total income, for the 12 months
ended December 31, 2003. Our effective tax rate, calculated as provision for taxation divided by profit
before taxation, for the 15 months ended March 31, 2005 was 12.14% as compared to 37.22% for the
12 months ended December 31, 2003. The decrease in the effective rate of tax and provision for
taxation for the 15 months ended March 31, 2005 compared to the 12 months ended December 31,
2003 is due to the availibilty of a tax exemption for our undertaking I at Parwanoo.
Net Profit, as Restated. Our net profit, as restated was Rs. 180.44 million, or 66.39% of our total
income for the 15 months ended March 31, 2005 and Rs. 2.81 million, or 32.67% of our total income,
for the 12 months ended December 31, 2003.
Financial Condition, Liquidity and Capital Resources
Cash Flows
The table below summarises our cash flows on a consolidated basis for the period indicated:
Nine Months ended
December 31, 2007
295
For the
Fiscal 2007
For the
Fiscal 2006
Net Cash-Flow From/(Used In) Operating
Activities……………………………….
Net Cash-Flow From/(Used In) Investing
Activities……………………………….
Net Cash-Flow From/(Used In) Financing
Activities…………………………………
Net Increase/(Decrease) In Cash And Cash
Equivalents……………………
Nine Months ended
December 31, 2007
61.85
For the
Fiscal 2007
239.80
For the
Fiscal 2006
247.03
(91.47)
(317.15)
(250.17)
(0.94)
206.25
0.66
(30.56)
128.90
(2.48)
Cash in form of bank deposits, current account balances and cash on hand represents our cash and cash
equivalents.
Operating Activities. Net cash from operating activities was Rs. 61.85 million for the nine months
ended December 31, 2007, and consisted of net profit before taxation, as restated of Rs. 354.09 million,
as adjusted for a number of non-cash items, primarily depreciation and amortisation of Rs. 60.53
million, and other items, primarily interest income of Rs. 39.93 million, interest expense of Rs. 0.94
million, provision for doubtful debt of Rs. 11.66 million and changes in working capital, such as
increases/(decreases) in sundry debtors, inventories, loans and advances, other current assets and
increase in current liabilities and provisions of Rs. 105.89 million, Rs. (1.36) million, Rs. 217.82
million, Rs. 77.12 million and Rs. 107.11 million, respectively.
Net cash from operating activities was Rs. 239.80 million for Fiscal 2007, and consisted of net profit
before taxation, as restated of Rs. 433.79 million, as adjusted for a number of non-cash items, primarily
depreciation and amortisation of Rs. 43.71 million, and other items, primarily interest income of Rs.
24.20 million, interest expense of Rs. 0.04 million, provision for doubtful debt of Rs. 8.10 million and
changes in working capital, such as increases/(decreases) in sundry debtors, inventories, loans and
advances, other current assets and increase in current liabilities and provisions of Rs. 224.51 million,
Rs. 1.36 million, Rs. 15.56 million, Rs. 0.96 million and Rs. 72.79 million, respectively.
Net cash from operating activities was Rs. 247.03 million for Fiscal 2006, and consisted of net profit
before taxation, as restated of Rs. 241.52 million, as adjusted for a number of non-cash items, primarily
depreciation and amortisation of Rs. 7.09 million, and other items, primarily interest income of Rs.
6.26 million, interest expense of Rs. 0.01 million, provision for doubtful debt of Rs. 2.24 million and
changes in working capital, such as increases/(decreases) in sundry debtors, loans and advances, other
current assets and increase in current liabilities and provisions of Rs. (18.87) million, Rs. 2.93 million,
Rs. (1.18) million and Rs. 8.26 million, respectively.
Investing Activities. Net cash used in investing activities was Rs. 91.47 million for the nine months
ended December 31, 2007, primarily as a result of purchases of fixed assets of Rs. 244.35 million.
Net cash used in investing activities was Rs. 317.15 million for Fiscal 2007, primarily as a result of
purchases of fixed assets of Rs. 138.39 million and fixed deposits with banks of Rs. 498.19 million,
partially offset by share application money received of Rs. 272.70 million.
Net cash used in investing activities was Rs. 250.17 million for Fiscal 2006, primarily as a result of
share application money paid to some of our group companies of Rs. 224.50 million and purchase of
fixed assets of Rs. 48.46 million.
Financing Activities. Net cash used in financing activities was Rs. 0.94 million for the nine months
ended December 31, 2007, primarily as a result of interest paid on the additional interest demand by the
income tax authorities of Rs. 0.94 million.
Net cash generated from financing activities was Rs. 206.25 million for Fiscal 2007, primarily as a
result of securities premium received of Rs. 645.23 million, proceeds from issuance of share capital of
Rs. 25.71 million, partially offset by dividend paid of Rs. 456.33 million.
Net cash generated from financing activities was Rs. 0.66 million for Fiscal 2006, primarily as a result
of proceeds from borrowings of Rs. 0.67 million, partially offset by interest paid of Rs. 0.01 million.
296
Capital Expenditures
During the nine months ended December 31, 2007, we spent Rs. 267 million on capital expenditure,
primarily on computer hardware and software. During Fiscal 2008, we expect to spend approximately
Rs. 480 million on capital expenditures, primarily on computer and hardware.
We believe that we will have sufficient capital resources from our operations, net proceeds of this
offering of equity shares and other financings from banks, financial institutions and other lenders to
meet our capital requirements for at least the next 12 months.
Our Investments
We have an investment in our subsidiary, Mobisoc Technology Private Limited. Our total investment
in our subsidiary was Rs. 100 million as of December 31, 2007.
Transactions with Related Parties
We have certain transactions with our Promoter Group Companies. For details, please refer to the
section titled “Related Party Transactions” beginning on page 139.
Off-Balance Sheet Arrangements
All of our obligations are reflected on our balance sheet.
Auditors Qualification
Our Auditors in their report dated March 27, 2008 on the audited unconsolidated financial statements
of the Company as of and for the nine month period ended December 31, 2007 included, as an
Annexure, a statement on certain matters specified in the Companies (Auditor’s Report) Order, 2003,
which was qualified to indicate that (i) fixed assets had not been physically verified by the
management during the period and discrepancies therein, if any, as compared to book records were not
ascertainable, and (ii) undisputed statutory dues have generally been regularly deposited with the
appropriate authorities though there have been delays in some cases. Further, in this Annexure, without
qualifying, the Auditors have drawn attention that in respect of sales of telecom related software, the
same being of unique and specialised nature, comparison with market rates or with sales of similar
products to other parties are not possible.
The Auditor’s report dated September 28, 2007 on the audited unconsolidated financial statements of
the Company as of and for the year ended March 31, 2007 included, as an Annexure, a statement on
certain matters specified in the Companies (Auditor’s Report) Order, 2003, which was qualified to
indicate that undisputed statutory dues have generally been regularly deposited with the appropriate
authorities though there has been a slight delay in a few cases. Further, in this Annexure, without
qualifying, the Auditors have drawn attention that in respect of sales of certain software to a group
company, the same being of unique and specialised nature, comparison with market rates or with sales
of similar products to other parties are not possible.
Our statutory auditors in their report dated June 26, 2008 on the audited consolidated financial
statements of our Company as of and for the Fiscal 2007 was qualified to indicate that Mobisoc
Technology Private Limited, one of our Subsdiaries had capitalized certain costs relating to
development of software during the year ended March 31, 2007 for which technical feasibility and
probable future economic benefits were yet to be established. As the auditors of the parent Company
believed that such costs did not qualify for capitalization as per the guidance given under Accounting
Standard 26 ‘Intangible Assets’ issued by the Institute of Chartered Accountants of India, the
consolidated financial statements for the year ended March 31, 2007 were qualified to that extent.
In addition, in the examination report dated June 26, 2008 on the Restated Unconsolidated Summary
Statements and Restated Consolidated Summary Statements, the Auditors without qualifying, have
drawn attention to the following items:
297
(i) the Company has adopted the revised AS 15 on ‘Employee Benefits’ issued by ICAI effective April
1 , 2007. Accordingly, the impact of the revised AS 15 has not been considered as an adjustment item
for the purpose of the restatement of all the other years/ periods presented.
(ii) the changes in estimates of useful lives of fixed assets effective April 1, 2006 and April 1, 2007
have not been considered as an adjustment item for the purpose of the restatement of all the other
years/periods presented.
(iii) the Company has adopted AS 11 on ‘The Effect of Changes in Foreign Exchange Rates’ notified
under the Companies (Accounting Standard) Rules, 2006 effective April 1, 2007. Accordingly, the
impact of revised AS 11 has not been considered as an adjustment item for the purpose of the
restatement of all the other years/ periods presented.
Quantitative and Qualitative Disclosure about Market Risk
Inflation
In recent years, India has experienced significant inflation and accordingly inflation may have material
impact on our business and results of operations. Inflation in India was approximately 5.5%, 6.5%,
4.4%, 5.5% and 8.1% in Fiscal 2004, 2005, 2006, 2007 and May 2008, respectively, which has
increased to 11.05% for the week ending June 5, 2008. Although GOI has initiated several economic
measures to curb the rise in inflation rates, it is unclear at this stage whether these measures will have
the desired effect. This rise in inflation rates in recent years may adversely affect growth in the Indian
economy and our results of operations.
Unusual or Infrequent Events or Transactions
Except as described in this Draft Red Herring Prospectus, there have been no events or transactions to
our knowledge which may be described as “unusual” or infrequent”.
Known Trends or Uncertainties
Other than as described in the sections titled “Risk Factors”, and this section and elsewhere in this
Draft Red Herring Prospectus, to the best of our knowledge there are no known trends or uncertainties
that have had, or are expected to have, a material adverse impact on our income from continuing
operations.
Total Turnover of Each Major Industry Segment
We report industry segments under consolidated financial statements prepared in accordance with
Indian GAAP.
New Product or Business Segment
Other than as described in the section “Business” beginning on page 54, to our knowledge, there are no
new products or business segments.
Seasonality of business
Seasonal variations do not materially impact our results of operations.
Dependence on a Single or Few Customers
As described in the sections “Risk Factors” and “Business” beginning on pages x and 54 respectively,
we depend on a few customers, for a substantial portion of our income.
Competitive Conditions
In view of the long-term concession or license agreements, subject to capacity augmentation
requirements set forth in the concession agreements, we do not foresee any competition in our business
during the term of these agreements. For further details, please refer to the discussions of our
298
competition in the sections titled “Risk Factors” and “Business” beginning on pages x and 54,
respectively.
Significant Developments after December 31, 2007
Except as stated in this Draft Red Herring Prospectus, to our knowledge, no circumstances have arisen
since December 31, 2007, the date of the last financial statements included in the Draft Red Herring
Prospectus, which materially and adversely affect, or are likely to affect, our operations or profitability,
or the value of our assets or our ability to pay our material liabilities within the next twelve months.
Except as stated above and elsewhere in this Draft Red Herring Prospectus, there are no subsequent
developments after the date of the Auditor’s report which we believe are expected to have a material
and adverse impact on our reserves, profits, earnings per share or book value.
New Accounting Standards
Our management believes that there would not be any material impact on our financial statements on
account of changes in accounting policies under Indian Accounting Standards as announced by
Institute of Chartered Accountants of India.
299
SECTION VI: LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
Except as disclosed in this section, there is no outstanding material litigation, suits, criminal or civil
prosecutions, proceedings or tax liabilities against our Company, and there are no material defaults,
non payment of statutory dues, over-dues to banks or financial institutions, defaults against banks or
financial institutions, defaults in dues payable to holders of any debenture, bonds or fixed deposits or
arrears of preference shares issued by our Company, defaults in creation of full security as per terms of
issue/other liabilities, proceedings initiated for economic, civil or any other offences (including past
cases where penalties may or may not have been awarded and irrespective of whether they are specified
under paragraph (I) of Part 1 of Schedule XIII of the Companies Act) other than unclaimed liabilities of
our Company and no disciplinary action has been taken by SEBI or any stock exchanges against our
Company, its Subsidiaries, its Promoters or Directors, that may have a material adverse effect on our
unconsolidated financial position, nor, so far as we are aware, are there any such proceedings pending
or threatened.
Neither our Company nor our Promoters, members of the Promoter Group, Subsidiaries and Directors
have been declared as wilful defaulters by the RBI or any other Governmental authority and, there are
no violations of securities laws committed by them in the past or pending against them, except as
mentioned below.
Show Cause Notices
1.
Our Company received a notice (C.No. IV(16)STC/SCN/CELLEBRUM/37/SML/07/9307) dated
August 3, 2007 from the Assistant Commissioner, Central Excise Division, stating that for the
period 2006-2007 education cess, under section 73 of the Finance Act, 1994 was not mentioned
separately while service tax was paid by our Company through TR-6 Challan. The said nonaccountal of payment in the proper head of education cess was treated as non-payment of
education cess.
The liability of our Company under the said notice is Rs. 489,940 with applicable interest and
penal action for contravention of section 68 of the Finance Act, 1994. Our Company has filed a
reply to the said notice dated August 29, 2007.
2.
Our
Company
received
two
notices
(V(STC)15/CE/Adj/43/07/5077-79
and
V(STC)15/CE/Adj/44/07/5080-82) dated October 24, 2007 from the Commissioner, Central
Excise, Chandigarh.
Our Company was alleged to have fraudulently suppressed the material fact of providing services
of ‘Short Message Peer to Peer Messaging’ under the self assessment procedure under the service
tax laws and procedures, with an intention to evade service tax. Since the facts and submissions
made in relation to the two show cause notices were identical and our Company was the noticee in
both, the two show cause notices were clubbed together. Our Company duly filed its reply.
The Central Excise Commissioner passed an order (05-06/ST/CHD/2008) dated February 12, 2008
against our Company demanding:
•
•
•
•
Service tax of Rs. 15,576,854 under section 73 of the Finance Act, 1994 for the assessment
year 2006-2007.
Interest for delayed payment at the applicable rate under section 75 of the Finance Act, 1994.
Penalty of Rs. 100 under Section 76 of the Finance Act, 1994 for every day for the period
during which failure in payment continues. However, the total amount of this penalty should
not exceed the amount of service tax and cess that our Company failed to pay; and
Penalty of Rs. 1,000 under section 77 of the Finance Act, 1994.
Our Company had filed a stay application and an appeal dated May 13, 2008 before the Customs,
Excise and Service Tax Appellate Tribunal, Delhi to set aside said order. The appeal is currently
pending adjudication.
300
In eventuality of appeal, adjudicated against our Company, in addition to the amount
aforementioned , the amount of Rs. 23,317,878 for nine months period ended on December 31,
2007 and Rs. 10,807,000/- for the period January 1, 2008 to May 31, 2008 shall also stand as
contingent liability. Interest and penalty as aforementioned would also be applicable on this
contingent liability.
3.
Our Company received a notice (LO/Solan/Inspections/2007-1085) dated December 10, 2007 from
the Labour Officer cum Additional Officer Inspector of Factories, Office of the Labour Officer,
Solan district, Solan, Himachal Pradesh.
It is alleged by the Labour Officer that during his inspectional visit to our Company’s Parwanoo
unit, it was discovered that our Company is running a factory employing 165 direct workers and 26
contract labour and thus, our Company is in the alleged violation of the Factories Act, 1948 and
the Himachal Pradesh Factories Rules, 1950, the Minimum Wages Act, 1948 and the Himachal
Pradesh Rules, 1978 , the Payment of Wages Act, 1936 and the Himachal Pradesh Rules, 1979, the
Payment of Gratuity Act, 1972 and Himachal Pradesh Rules, 1972, the Himachal Pradesh
Industrial Establishments (National Festival, Casual and Sick Leave) Act, 1979, the Equal
Remuneration Act, 1976, the Maternity Benefit Act, 1961, the Payment of Bonus Act, 1965 and
the Contract Labour (R&A) Act, 1970 and the Himachal Pradesh Rules, 1974.
Our Company has filed a reply dated December 31, 2007 to the Labour Officer cum Additional
Officer Inspector of Factories.
Three complaints (3/2008) dated May 17, 2008 under labour laws have been filed before the
Judicial Magistrate, 1st Class, Kasauli, Solan, Himachal Pradesh against our Company, the
Managing Director, the Factory Manager and the Senior Manager (Human Resources) of our
Company. The three complaints further allege that our Company is in violation of the following
legislations, respectively:
•
sections 7, 8 and 29 of the Contract Labour (Regulation and Abolition) Act, 1970 and rules
17, 74, 75, 76, 78 and 80(4) of the Contract Labour (Regulation and Abolition) Himachal
Rules 1974 for non- maintenance of relevant registers and records and non-registration of the
establishment;
•
sections 3, 4, 13, 14, 26(3) and rules 4 to 5 and 18 of the Payment of Wages Act, 1936 and the
Himachal Pradesh Payment of Wages Rules, 1979 for non-maintenance of relevant registers
and records and non-fixation of wage periods and rates thereto; and
•
sections 18 and 19 and rules 27, 28 and 30 of the Minimum Wages Act,1948 read with the
Himachal Pradesh Minimum Wages (Amendment) Rules, 2006 for non-maintenance of
relevant registers and records.
It has also been alleged that despite a rectification notice (LO/Solan/Inspections/2007-108488) being sent to our Company by the Labour Officer, Solan for submitting a compliance
report, our Company failed to do so and is hence liable for punishment under the abovementioned legislations. Further, under the said complaints the Labour Inspector also seeks
permission to alter/amend in the said complaints, if and when necessary. The next date of
hearing is fixed for July 18, 2008.
Litigation involving our Directors
Mr. Dilip Modi, Managing Director
1.
Three complaints (3/2008) under labour laws has been filed with the Judicial Magistrate First
Class, Kasauli by the Himachal Pradesh state government through the Labour Inspector
against our Company, the Managing Director, the Factory Manager and the Senior Manager
Human Resource of our Company for non-compliance under:
301
•
sections 7, 8 and 29 of the Contract Labour (Regulation and Abolition) Act, 1970 and rules
17, 74, 75, 76, 78 and 80(4) of the Contract Labour (Regulation and Abolition) Himachal
Rules 1974 for non- maintenance of relevant registers and records and non-registration of the
establishment;
•
sections 3, 4, 13, 14, 26(3) and rules 4 to 5 and 18 of the Payment of Wages Act, 1936 and the
Himachal Pradesh Payment of Wages Rules, 1979 for non-maintenance of relevant registers
and records and non-fixation of wage periods and rates thereto; and
•
sections 18 and 19 and rules 27, 28 and 30 of the Minimum Wages Act,1948 read with the
Himachal Pradesh Minimum Wages (Amendment) Rules, 2006 for non-maintenance of
relevant registers and records.
The next date of hearing is fixed for July 18, 2008.
Mr. K.N. Memani, Chairman
Nil
Mr. Vivek Bali
Nil
Mr. Hanif M Dahya
Nil
Mr. Andreas Vourloumis
Nil
Ms. Divya Modi
Nil
Litigation involving our Subsidiaries
Mobisoc Technology Private Limited
Nil
Spice Mobiles VAS Pte. Limited
Nil
Litigation involving our Promoters
We have been intimated by the Company that there is no outstanding material litigation involving the
Promoters, there are no suits or criminal prosecutions or civil proceedings involving the Promoters, and
there are no material defaults, non-payment of statutory dues, over dues to banks/financial institutions
or defaults against banks/financial institutions by the Promoters (including past cases where penalties
may or may not have been awarded and irrespective of whether they are specified under paragraph (i)
of part 1 of Schedule XIII of the Companies Act), other than as disclosed in this section.
Mr. Dilip Modi
302
For outstanding litigations against Mr. Dilip Modi, please see the section “Outstanding Litigation and
Material Developments – Litigation involving our Directors” on page 301.
Indian Televentures Private Limited
Litigation against Indian Televentures Private Limited
1.
Mohd Irfan Alamgir Mulla, Mohd Nasir Alamgir Mulla and Mohd Asim Alamgir Mulla (the
“Plaintiffs”) have filed a suit (310/2007) for injunction and declaration in the Civil Court,
Thane against Jauss Polymers Limited (“Jauss”), MCorpGlobal Private Limited, Indian
Televentures Private Limited, Mr. Harish Chota Bhai Patel, the Talathi Saja Met, the Circle
Officer, Wada Revenue Circle, the Tehsildar Wada, State of Maharashtra and Mrs. Safiyabibi
Gulam Mohd Mulla, contending that they are the absolute owners in possession of the suit
schedule property.
It is contended that the Plaintiffs had executed a registered sale deed on September 29, 1995 in
favour of Jauss for sale of land at Gram Panchayat Nara, Taluka Wada, Thane, Maharashtra
(“Land”) for Rs. 3.5 million. Subsequently, Jauss executed a registered sale deed on March
24, 1998 in favour of Modifin Private Limited (“Modifin”) for the Land at Rs 3.5 million.
Modifin further executed a registered sale deed on September 28, 1998 in favour of Modicorp
Private Limited (“Modicorp”) for Land at Rs 3.67 million. Subsequently, MCorpGlobal
Private Limited (since Modicorp merged with MCorpGlobal Private Limited) executed a
registered sale deed on December 26, 2005 in favour of Indian Televentures Private Limited
(“ITPL”) for the Land at Rs. 4 million.
The contention of the Plaintiffs is that they had sold the Land to Jauss but had not handed
over the possession of the same. They further contend that they have possession of the Land
and are occupying, holding and cultivating the Land as owners of the same. Moreover, they
have not sold the Land to Modicorp or to ITPL and sale deed dated December 26, 2005
between Modicorp and ITPL is illegal.
The Civil Judge, Thane had issued a notice on May 3, 2007. Thereafter, Spice Corp and
ITPL have filed their reply. The next date of hearing is June 27, 2008 for reply of the other
parties.
Litigation by Indian Televentures Private Limited
Nil
Omnia Investments Private Limited
Litigation against Omnia Investments Private Limited
Nil
Litigation by Omnia Investments Private Limited
Nil
Litigation involving our Promoter Group Companies
Ace Airways Private Limited
Litigation against Ace Airways Private Limited
Nil
Litigation by Ace Airways Private Limited
Nil
303
APL Holdings & Investments Limited
Litigation against APL Holdings & Investments Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed. The contempt
proceeding in the matter filed against the defendant have been disposed of by the court against
which an appeal (APO355/2007) has been preferred before the division bench of the Kolkata
High Court.
2.
An application (112/2007) has been filed against the company by Dipak Himatsingka under
sections 397, 398, 399, 402, 405 and 406 of the Companies Act before the Company Law
Board, Principal Bench, New Delhi. The application is pending for hearing.
Litigation by APL Holdings & Investments Limited
Nil
APL Investments Limited
Litigation against APL Investments Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
2.
An application (113/2007) has been filed against the company by Dipak Himatsingka under
sections 397, 398, 399, 402, 405 and 406 of the Companies Act before the Company Law
Board, Principal Bench, New Delhi. The application is pending for hearing.
Litigation by APL Investments Limited
Nil
Assam Plywood Limited
Litigation against Assam Plywood Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit suit (450/1998) in the
Kolkata High Court against the defendants, one of which is the company. The matter is
pending before Kolkata High Court for adjudication. The next date of hearing is yet to be
fixed.
Litigation by Assam Plywood Limited
Nil
Budge Budge Carbon Limited
Litigation against Budge Budge Carbon Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
Litigation by Budge Budge Carbon Limited
Nil
304
Burlington Investments Private Limited
Litigation against Burlington Investments Private Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
Litigation by Burlington Investments Private Limited
Nil
Duro International Rubber Private Limited
Litigation against Duro International Rubber Private Limited
Nil
Litigation by Duro International Rubber Private Limited
Nil
Fund Flow Investment & Trading Co. Limited
Litigation against Fund Flow Investment & Trading Co. Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
Litigation by Fund Flow Investment & Trading Co. Limited
Nil
G.M. Modi Hospitals Corporation Private Limited
Litigation against G.M. Modi Hospitals Corporation Private Limited
Nil
Litigation by G.M. Modi Hospitals Corporation Private Limited
Nil
Goneril Investment & Trading Company Limited
Litigation against Goneril Investment & Trading Company Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
Litigation by Goneril Investment & Trading Company Limited
Nil
Harjas Logic Systems Private Limited
Litigation against Harjas Logic Systems Private Limited
305
Nil
Litigation by Harjas Logic Systems Private Limited
Nil
Hindustan Retail Private Limited
Litigation against Hindustan Retail Private Limited
Nil
Litigation by Hindustan Retail Private Limited
Nil
Hotspots Retails Limited
Litigation against Hotspots Retails Limited
1.
Nilabh Sharma has filed a complaint (938/2006) in the Consumer Forum against the company
and Nokia India Private Limited.
The complainant has alleged deficiency in service against the company and Nokia India
Private Limited. The complainant has alleged that the power button of his handset, Nokia
6151 does not operate and the service centre of Nokia has failed to redress his grievance. The
complainant was informed by the service centre of Nokia that his handset has been repaired
but he refused to accept the repaired handset. The extent of claim is Rs. 41,120. The matter is
pending adjudication.
2.
Sushil Kumar Kabra Kumar has filed a complaint (1133/2007) in the Consumer Forum against
the company, Motorola India Private Limited and Service Centre of Motorola.
Sushil Kumar Kabra Kumar has alleged deficiency in service against the company, Motorola
India Private Limited and Service Centre of Motorola. The complainant has alleged that his
handset, Motorola L6 suffers from inherent manufacturing defect and the service centre of
Motorola has failed to redress his grievance. The extent of claim is Rs. 167,500. The
Consumer Forum reserved its order on April 3, 2008. The order will be conveyed to the
parties by post.
3.
Ashok Nigam has filed a complaint (1170/2007) in the Consumer Forum against the company,
Nokia India Private Limited and Nokia Care.
Ashok Nigam has alleged deficiency in service against the company, Nokia India Private
Limited and Nokia Care. The complainant has alleged that his handset, Nokia 6270 has
stopped reading the memory card and frequently gets switched off automatically. Further, the
service centre of Nokia has failed to redress his grievance. The complainant has claimed
replacement of the handset, refund of the cost thereof and compensation. The next date of
hearing is July 18, 2008 for filing of written statement.
4.
Santosh Paul has filed a complaint (815/2007) in the Consumer Forum against the company
and Nokia India Private Limited.
Santosh Paul has alleged deficiency in service against the company and Nokia India Private
Limited. The complainant has alleged that his handset, Nokia 6708 has frozen on three
occasions and the data was deleted in the process of repairing the handset. Further, the service
centre of Nokia has failed to redress his grievance. The extent of claim is Rs. 34, 250 along
with interest @ 12% on the cost of the handset. The Consumer Forum reserved its order on
March 28, 2008. The order will be conveyed to the parties by post.
306
5.
Hariharnath Singh has filed a complaint (1176/2007) in the Consumer Forum against the
company, FLY and FLY Service Centre.
Hariharnath Singh has alleged deficiency in service against the company, FLY and FLY
Service Centre. The complainant has alleged that his handset, FLY SX210 has a connectivity
problem and the service centre for FLY failed to redress his grievance. The extent of claim is
Rs.50, 900. The Consumer Forum reserved its order on April 28, 2008. The order will be
conveyed to the parties by post.
6.
Madhuri has filed a complaint (993/2007) in the Consumer Forum against the company and
Nokia India Private Limited. Madhuri has alleged deficiency in service against the company
and Nokia India Private Limited. The complainant has alleged that her handset, Nokia 3230
suffers from inherent manufacturing defect and the service centre of Nokia has failed to
redress her grievance. The extent of claim is Rs. 25, 000 and replacement of the handset. The
matter is pending adjudication.
7.
Abhisekh Khanna has filed a complaint (1060/2007) in the Consumer Forum against the
company and Salora International and Suri Telecom.
Abhisekh Khanna has alleged deficiency in service against the company and Salora
International and Suri Telecom. The complainant has alleged that his handset, Sony Ericsson
J230I hanged and is not getting charged. Further, the service centre has failed to redress his
grievance. The extent of claim is Rs.50, 000. The Consumer Forum passed its order on May
23, 2008 against the company and Salora International, to refund the cost of handset, i.e. Rs.
2,550, as well as pay Rs.1,000 as compensation and Rs. 500 as costs of litigation to the
complainant. The said payment is pending on behalf of the company.
8.
Manikant Jha has filed a complaint (165/2007) in the Consumer Forum against the company,
LG Electronics India Private Limited, Digital Service Point and M.R. Telecom.
Manikant Jha has alleged deficiency in service against the company and LG Electronics India
Private Limited, Digital Service Point and M.R. Telecom. Manikant Jha alleges that his
handset, LG S-5200 suffers from battery problem and the service centre of LG has failed to
redress his grievance. The extent of claim is Rs. 58,100. The next date of hearing is July 3,
2008 for settlement by LG Electronics India Private Limited.
9.
Mritunjay Pal has filed a complaint (561/2007) in the Consumer Forum against the company
and Nokia India Private Limited and Nokia Care. Mritunjay Pal has alleged deficiency in
service against the company and Nokia India Private Limited and Nokia Care. The
complainant has alleged that his handset, Nokia 6300 suffers from inherent manufacturing
defect and the service centre of Nokia has failed to redress his grievance. The complainant has
asked for compensation and replacement of his handset. The next date of hearing is August
11, 2008 for filing of written statement
10.
Raghuvir Singh has filed a complaint (235/2007) in the Consumer Forum against the company
and Spice Limited and Selection Zone. Raghuvir Singh has alleged deficiency in service
against the company and Spice Limited and Selection Zone. The complainant has alleged that
the USB data Cable was not getting connected to the handset and the service centre of Spice
has failed to redress his grievance. The Consumer Forum rejected the plea that the jack was
damaged due to moisture and hence the warranty was void. The Consumer Forum directed to
refund Rs. 350 along with some compensation which is not yet fixed. The extent of claim is
Rs. 90, 000. The Consumer Forum passed an order on March 12, 2008 directing Spice Limited
and the company to jointly and severally pay Rs. 350 alongwith interest @ 9% p.a. from the
date of payment till the date of realization and compensation of Rs.3,000 to the complainant.
The said payment is pending on behalf of the company.
11.
Paramjit Singh has filed a complaint (235/2007) in the Consumer Forum against the company
and Spice Limited and Spice Service centre. Paramjit Singh has alleged deficiency in service
against the company and Spice Limited and Spice Service centre. Paramjit Singh alleges that
his handset, Spice 1000 suffers from shortcomings and defects which are not specified and the
307
service centre of Spice has failed to redress his grievance. The fact remains that the handset
has been duly repaired and Paramjit Singh has refused to pick up the handset. The extent of
claim is Rs. 1, 00,000 and issue of a fresh handset. The matter is pending adjudication.
12.
Ankur Khanna has filed a complaint (1602/2007) in the Consumer Forum against the
company and Nokia India Private Limited. Ankur Khanna has alleged deficiency in service
against the company and Nokia India Private Limited. The complainant has alleged that his
handset, Nokia N-70M suffers from poor access, poor incoming audio quality, bad
transmission, flickering display, etc. and the service centre of Nokia has failed to redress his
grievance. The matter has to come up for further proceedings on July 22, 2008. The extent of
claim is Rs. 70,000 and refund of the cost of the handset.
13.
Subhash Chandra has filed a complaint (1461/2007) in the Consumer Forum against the
company and Nokia India Private Limited. Subhash Chandra has alleged deficiency in service
against the company and Nokia India Private Limited. The complainant has alleged that his
handset, Nokia 3230 suffers from inherent manufacturing defect and the service centre of
Nokia has failed to redress his grievance. Subhash Chandra has asked for compensation and
replacement of the handset. The matter is to come up for further proceedings on July 22, 2008.
14.
Nirmal Chawla Bhalla has filed a complaint (1320/2007) in the Consumer Forum against the
company and Nokia India Private Limited. Nirmal Chawla Bhalla has alleged deficiency in
service against the company and Nokia India Private Limited. The complainant has alleged
that his handset, Nokia 3110 has been in use prior to the purchase and the same has been
confirmed by the service centre of Nokia India Private Limited. Further, the service centre of
Nokia India Private Limited and the company has failed to redress his grievance. The extent of
claim is refund of the cost along with 24% interest and Rs. 55,000. The next date of hearing is
July 1, 2008 for final hearing.
15.
Mohamad Yusuf has filed a complaint (265/2007) in the District Consumer Forum against the
company and HCL alleging deficiency in service. The complainant has alleged that the display
on screen and back light on the keypad, Nokia N- 72 does not work and the service centre of
Nokia has failed to redress his grievance. The complainant has claimed cost of the handset,
i.e., Rs. 12,941, 24% interest p.a., Rs. 50,000 as compensation and Rs.500 litigation charges.
The next date of hearing is July 2, 2008 for filing of the rejoinder by the complainant.
16.
S.M. Sana UL Haq has filed a complaint (76/2008) in the District Consumer Forum against
the company and Sony Ericsson, alleging deficiency in service. The complainant has alleged
that his Sony Ericsson W550i had ceased to function within the guarantee period and that the
service centre of Sony Ericsson had failed to redress his grievance. The complainant has
claimed replacement of the defective mobile handset, Rs. 100,000 with pending interest
@18% p.a. as compensation for harassment and mental agony, Rs. 50,000 with interest @18%
p.a, as compensation for damages and Rs.6,000 for litigation charges. The next date of
hearing is July 16, 2008.
17.
Rajinder Singh has filed a complaint (107/2008) in the District Consumer Forum against the
company, Nokia India Private Limited and Nokia Service Centre (Bright Point) alleging
deficiency in service. The complainant has alleged that his handset, Nokia 6300 has been
generating heat at the time of hearing and seeing video clips. Further, the service centre of
Nokia has failed to redress his grievance and has given in writing that “this hand set is not
repairable”. The complainant has claimed replacement of the handset. The company has duly
filed its written statement. The next date of hearing is July 16, 2008 for filing of the written
statement by Nokia India Private Limited -.
18.
Krishan Kumar has filed a complaint (61/2008) in the District Consumer Forum against the
company, Nokia India Private Limited and Nokia Care alleging deficiency in service. The
complainant has alleged that his handset, Nokia 6252 (Reliance) has vital defect wherein the
phone did not have any incoming audio. Further, the service centre of Nokia has failed to
redress his grievance. The complainant has claimed replacement with a new handset or the old
handset properly repaired or Rs. 14,990, Rs. 5,000 as convenience charges, Rs. 200,000 as
308
compensation, Rs. 5,000 as litigation and Rs. 30,000 for deficiency in services. The next date
of hearing is July 4, 2008 for filing of written statement.
19.
Gurvinder Singh Kohli has filed a complaint (136/08) in the District Consumer Forum against
the company, Nokia India Private Limited and Ace communication alleging deficiency in
service. The complainant has alleged that his handset, Nokia N-72 has problems in network
connectivity, display etc. and the service centre of Nokia has failed to redress his grievance.
The complainant has claimed replacement with a new handset or return of cost of the handset
(the billing price being Rs. 9,030), Rs. 50,000 as compensation and Rs. 5,500 as cost of legal
notice. The next date of hearing is July 16, 2008 for filing of rejoinder by the complainant.
20.
Trinater Gupta has filed a complaint (CC/08/109 - Patiala) in the District Consumer Forum
against the company alleging deficiency in service. The complainant has alleged that his
headset, Nokia Bluetooth Headset BH - 700 was not functioning properly. The complainant
has claimed refund of cost of the headset, i.e., Rs. 3,850 and Rs. 20,000 as compensation. The
matter is pending adjudication.
21.
Rajesh Kumar has filed a complaint (CC/238/07) in the District Consumer Forum against the
company, Nokia and Gulati Communication alleging deficiency in service. The complainant
has alleged that his handset, Nokia 5300 was malfunctioning and it neither received calls nor
enabled the complainant to make calls and that the service centre of Nokia has failed to
redress her grievance. The complainant has claimed refund of the full sale amount, Rs. 8,350
with interest and Rs. 25,000 as compensation. The matter is pending adjudication.
22.
Vibhu Benal has filed a complaint (137/2008 - Chandigarh) in the District Consumer Forum
against the company alleging deficiency in service. The complainant has alleged that his
handset, Spice D - 80 has problem in display and networking etc. and that the service centre
has failed to redress his grievance. The complainant has claimed Rs. 56,350 with interest from
the date of purchase @ 12% p.a. The District Consumer Forum passed an orderagainst the
company to replace the handset of the complainant or the cost of the handset, i.e., Rs. 6,350
along with interest @ 9% p.a. from the date of purchase of the handset, Rs. 5,000 as
compensation and Rs. 1,500 as litigation cost. The company has filed a review petition against
the above-mentioned order of the District Consumer Forum. The next date of hearing is July
14, 2008. .
23.
Deepak Kumar has filed a complaint (180/2008) in the District Consumer Forum against the
company alleging deficiency in service. He has alleged that his handset, Spice S-808 creates
hanging and speaker problem and the service centre of LG has failed to redress his grievance.
The complainant has not mentioned the claimed amount. The matter is pending adjudication.
24.
Kusum Chattlani has filed a complaint (251/2008) in the District Consumer Forum against the
company, Nokia and Nokia Care alleging deficiency in service. The complainant has alleged
that her handset, Nokia N – 73 has not been functioning properly. Further, the service centre
of Nokia has failed to redress her grievance. The complainant has claimed replacement of the
handset and Rs. 50,000 as compensation and litigation costs. The next date of hearing is July
14, 2008 for filing of written statement.
25.
Attar Singh has filed a complaint in the District Consumer Forum, Gurgaon against the
company, Sony Ericsson and Mobile Repair Centre alleging deficiency in service. The
complainant has alleged that his handset, Sony Ericsson V580i has problems in switching of
power on, and that the service centre of Sony Ericsson has failed to redress his grievance. The
complainant has asked for replacement of the handset or refund of the cost with interest @
24% p.a., as well as Rs. 10,000 as compensation and litigation charges. The next date of
hearing is July 14, 2008 for further proceedings.
26.
Vishal Juneja has filed a complaint (137/2008 - Faridabad) in the District Consumer Forum
against the company and Nokia Customer Care alleging deficiency in service. The
complainant has alleged that the handset, Nokia 5200L is malfunctioning and fails to save any
data, and has charging and other problems and that the service centre of Nokia has failed to
redress his grievance. The complainant has claimed replacement of defected handset, Rs.
309
4,500 as compensation and Rs. 3,100 as litigation expenses. The next date of hearing is July
8, 2008 for filing of written statement.
27.
Gurdeep Singh has filed a complaint (CC/08/187) in the District Consumer Forum against the
company and Spice Service Centre alleging deficiency in service. The complainant has
alleged that the mobile set – Spice Dual GSM D-80, has problems in receiving signals, poor
voice quality etc. and that the service centre of Spice has failed to redress his grievance. The
complainant has claimed replacement of the defected handset or refund of the amount of
Rs.6,750, Rs.50,000 as compensation and Rs. 11,000 as litigation expenses. The matter is
pending adjudication.
28.
Satish Sharma has filed a complaint (CC/08/195 - Patiala) in the District Consumer Forum
against the company and Nokia care alleging deficiency in service. Satish Singh alleges that
his handset, Nokia N-95 suffers from some technical problem and the service centre of Nokia
has failed to redress his grievance. The complainant has claimed replacement of the defected
handset with fresh warranty, or refund of the purchase price of the handset, Rs. 31,019.41
along with interest @ @ 24% p.a. or Rs. 10,000 as compensation and Rs. 5,000 as litigation
expenses. The matter is pending adjudication.
29.
Vimal Verma has filed a complaint (151/2008 - Noida) in the District Consumer Forum
against the company, Motorola India Pvt. Ltd. and Kamal Communication alleging deficiency
in service. The complainant has alleged that his handset, Motorola A -780 suffers from
stopped working and the service centre has failed to redress his grievance. The complainant
has claimed for Rs. 90,000 as compensation (comprising of Rs. 13,500 as handset costs, Rs.
20,000 as compensation for negligence, Rs. 20,000 as compensation for harassment and Rs.
8,000 as journey expenses). The matter is pending adjudication.
30.
Puneet K Bansal has filed a complaint (287/2008) in the District Consumer Forum against the
company, Nokia India Private Limited and Nokia Care alleging deficiency in service. The
complainant has alleged that his handset, Nokia N-95 suffers from display problem and
defective sound system and that the service centre of Nokia has failed to redress his grievance.
The complainant has claimed refund of cost of handset, Rs. 21,110 and Rs. 75,000 as
compensation and litigation expenses. The next date of hearing is July 14, 2008 for filing of
written statement.
31.
Siddnat Chatwal has filed a complaint (82/08) in the District Consumer Forum against the
company and Nokia India Private Limited alleging deficiency in service. The complainant has
alleged that his handset, Nokia N-91 suffers from stop working within three months and the
service centre of Nokia has failed to redress his grievance. Siddant Chatwal has asked for
compensation and replacement of the handset (compensation amount not mentioned). The
matter is pending adjudication.
32.
Sanjeev Saxena has filed a complaint (324/2008) in the District Consumer Forum against the
company. The company has only received summons in the said matter and a copy of the
complaint was not received. The matter is pending adjudication.
33.
Gaurav Gupta has filed a complaint (353/07) in the District Consumer Forum against the
company. The company has only received summons in the said matter and a copy of the
complaint was not received. The matter is pending adjudication.
34.
Rajesh Kumar has filled a complaint (CC/238/08) in the District Consumer Forum against
Nokia through the company. The company has only received summons in the said matter and
a copy of the complaint was not received. The matter has to come up for further proceeding on
July 7, 2008.
Litigation by Hotspots Retails Limited
1.
The company has filed a case (2309/2008) under section 138 of the N.I. Act against Raj
Veer Iyyer for an amount of Rs.115,000. The next date of hearing is June 30, 2008 for presummoning arguments.
310
2.
The company has filed a case (2310/2008) under section 138 of the N.I. Act against Raj
Veer Iyyer for an amount of Rs. 163,000. The next date of hearing is June 30, 2008 for presummoning arguments.
IO System Limited
Litigation against IO System Limited
1.
An appeal has been filed by the Department of Income Tax in the High Court, Allahabad by
the CIT, Ghaziabad for expenses disallowed in the financial statements of the company with
reference to the change of accounting policy for sale cum lease back transactions amounting to
Rs 4,561,000 for the assessment year 1996-97. The appeal is pending for hearing at the
Allahabad High Court.
2.
Mr. Devender Vatsal has filed a suit (159/2001) against the company in the court of Civil
Judge (Senior Division), Chandigarh for recovery of an amount of Rs. 25,494. The contention
of Mr. Devender Vatsal is that he has qualified in the General’s Club qualifiers list of Spice
Systems Limited by achieving his target as Customer Engineer], together with interest thereon
at the rate of 24% per annum amounting to Rs. 4,494. The case was dismissed on May 21,
2008. The order of court is yet to be received.
3.
Damani Shipping Private Limited had filed a summary suit (3807/1997) against the company
in the High Court of Bombay under order 37 rule 2 of the CPC. The contention of Damani
Shipping Private Limited was that the amount due to them on account of clearing and
forwarding was not paid to them. The High Court of Bombay vide its order dated August 10,
2001 passed an ex-parte decree against the company, against which the company has filed an
appeal in the High Court of Bombay. The claim is for Rs. Rs. 586,664. The appeal is pending
and date of hearing is not yet finalized.
4.
Jaswinder Singh had filed a complaint (1238/2002) against the company before the District
Consumer Disputes Redressal Forum. The contention of the complainant is that he had
purchased a LCD projector from the company for Rs. 306,000 and the company was liable for
deficiency in service to remove the alleged defect in the LCD projector. The company
contented that the said complaint is not maintainable as the complainant is not a consumer as
per Consumer Protection Act and is a company running a cinema hall. Further, the
complainant has given two satisfaction letters for the services provided by the company. The
District Consumer Disputes Redressal Forum dismissed the complaint. Aggrieved by the order
of the District Forum, the complainant has appealed to the State Consumer Disputes Redressal
Commission, Punjab at Chandigarh. The matter is fixed for arguments on July 10, 2008.
5.
The company has received a show-cause notice dated September 8, 1994 from the Zonal Joint
Director of Foreign Trade, New Delhi for non-fulfillment of export obligations of Rs.
2,731,264 against advance license no. P/L/2309067 of cost, insurance and freight (“CIF”)
value Rs. 2,008,256. The company is required to submit the prescribed documents within two
months of to fulfill export obligations which were not filed by the company on time. In
response to show-cause notices, the company has deposited some of the documents like duty
entitlement exemption certificate books, advance licenses and some bank realization
certificates. The rest of the documents and will be submitted at the time of the next date of
hearing to be called by the Joint Director General Foreign Trade Office.
6.
The company has received a show-cause notice dated September 8, 1994 from the Zonal Joint
Director of Foreign Trade, New Delhi for non-fulfillment of export obligations of Rs.
1,536,864 against advance license no. P/L/2309068 of cost, insurance and freight (“CIF”)
value Rs. 1,057,472. The company is required to submit the prescribed documents within two
months of to fulfill export obligations which were not filed by the company on time. In
response to show-cause notices, the company has deposited some of the documents like duty
entitlement exemption certificate books, advance licenses and some bank realization
311
certificates. The rest of the documents and will be submitted at the time of the next date of
hearing to be called by the Joint Director General Foreign Trade Office.
7.
The company has received a show-cause notice dated December 12, 1994 from the Zonal
Joint Director of Foreign Trade, New Delhi for non-fulfillment of export obligations of Rs.
7,223,360 against advance license no. P/L/2270704 of cost, insurance and freight (“CIF”)
value Rs. 2,118,848. The company is required to submit the prescribed documents within two
months of to fulfill export obligations which were not filed by the company on time. In
response to show-cause notices, the company has deposited some of the documents like duty
entitlement exemption certificate books, advance licenses and some bank realization
certificates. The rest of the documents and will be submitted at the time of the next date of
hearing to be called by the Joint Director General Foreign Trade Office.
8.
The company has received a show-cause notice dated March 30, 1995 from the Zonal Joint
Director of Foreign Trade, New Delhi for non-fulfillment of export obligations of Rs. 743,375
against advance license no. P/L/3492181 of cost, insurance and freight (“CIF”) value Rs.
546,599. The company is required to submit the prescribed documents within two months of
to fulfill export obligations which were not filed by the company on time. In response to
show-cause notices, the company has deposited some of the documents like duty entitlement
exemption certificate books, advance licenses and some bank realization certificates. The rest
of the documents and will be submitted at the time of the next date of hearing to be called by
the Joint Director General Foreign Trade Office.
9.
The company has received a show-cause notice dated May 13, 1996 from the Zonal Joint
Director of Foreign Trade, New Delhi for non-fulfillment of export obligations of Rs.
2,344,999 against advance license no. P/L/0002573 of cost, insurance and freight (“CIF”)
value Rs. 1,611,898. The company is required to submit the prescribed documents within two
months of to fulfill export obligations which were not filed by the company on time. In
response to show-cause notices, the company has deposited some of the documents like duty
entitlement exemption certificate books, advance licenses and some bank realization
certificates. The rest of the documents and will be submitted at the time of the next date of
hearing to be called by the Joint Director General Foreign Trade Office.
10.
The company has received a show cause notice dated October 18, 2002 from the BSE on
account of non-submission of quarterly results for the period ended March 31, 2002 and June
30, 2002 under the provisions of clause 41 of the Listing Agreement. The company has
submitted its reply dated November 16, 2002.
11.
The company has received a show cause notice dated July 10, 2003 from the Delhi Stock
Exchange on account of clarifications about the difference in the issued share capital and the
listed share capital. The company has submitted its reply dated August 13, 2003.
12.
The company has received a show cause notice dated July 7, 2003 from the BSE on account of
clarifications on the difference in the issued share capital and the listed share capital and
dematerialisation of unlisted share capital. The company has submitted its reply dated August
13, 2003.
13.
The company has received a show cause notice dated January 15, 2007 from the BSE on
account of non-compliance with Clauses 15 and 16 of the Listing Agreement. The company
has submitted its reply dated January 24, 2007.
14.
The company has received a show cause notice dated January 17, 2007 from the BSE on
account of non-submission of certificate under Clause 47(c) of the Listing Agreement. The
company has submitted its reply dated February 2, 2007.
15.
The company has received a show cause notice dated May 11, 2007 from the BSE on account
of non-compliance with the provisions of regulation 6(4) and/or 6(2) and/or 8(3) of the
Takeover Code. The company has submitted its reply dated July 23, 2007.
312
16.
The company has received a show cause notice dated March 3, 2008 from the BSE on account
of non-compliance with clause 40A of the Takeover Code and as a reminder of earlier letters
dated March 21, 2007, August 24, 2007 and December 17, 2007. The company has submitted
its reply dated March 15, 2008.
Litigation by IO System Limited
1.
The company has filed a recovery suit (48/2000) before the Civil Judge, Tis Hazari Courts,
Delhi for Rs. 201,650 against Mr. Gurpreet Singh Bedi & others for defaults in payment of
outstanding principal amount of Rs.146,350 along with interest till the date of the filing of the
suit and also to pay interest and damages @ 18% p.a. during the pendency of the suit till the
recovery of the suit amount. The company has alleged that it supplied a lamination machine,
model no. GBC 5400 LM (40”), to the defendants for an amount of Rs. 260,100 (inclusive of
sales tax). Against the total amount due the company received an amount of Rs. 113,750 only.
The next date of hearing is July 16, 2008.
2.
The company has filed a criminal complaint (1347/2001) before the Metropolitan Magistrate,
Patiala House Courts, Delhi under sections 138, 141 and 142 of the N.I. Act read with section
200 of the Criminal Procedure Code, 1973 (“CRPC”) against Winsome Enterprises Private
Limited and its managing director for dishonour of cheque. The company has alleged that it
supplied certain goods to Winsome Enterprises Private Limited and against the said supply,
Winsome Enterprises Private Limited through its managing director issued a cheque of Rs.
78,324 bearing No. 930321 in favour of the company which was dishonoured due to
insufficiency of funds in the accounts of the accused persons.
The Metropolitan Magistrate has issued summons to the accused. The next date of hearing is
fixed for July 25, 2008.
3.
The company has filed a criminal complaint (4491/2002) before the Metropolitan Magistrate,
Patiala House Courts, Delhi under sections 138 and 141 of the N.I. Act read with section 200
of the CRPC and section 420 of the IPC against Indigo Images Private Limited and others for
dishonour of cheque. The company has alleged that it supplied certain goods to Indigo Images
Private Limited and others and against the said supply, Indigo Images Private Limited,
through its director issued five cheques bearing Nos. 310558 to 310562 for a total amount of
Rs. 205,000 in favour of the company which were dishonoured due to insufficiency of funds
in the bank account of the accused persons. The next date of hearing is fixed for July 25, 2008.
4.
The company has filed a criminal complaint (2493/2001) before the Metropolitan Magistrate,
Patiala House Courts, Delhi under sections 138, 141 and 142 of the N.I. Act read with section
200 of the CRPC against Communication Media Products (India) Private Limited and its
director for dishonour of cheque. The company has alleged that it supplied certain goods to
Communication Media Products (India) Private Limited and against the supply of the said
goods, Communication Media Products (India) Private Limited through its director, issued a
cheque of Rs. 165,000 bearing No. 765521 in favour of the company which was dishonoured
due to insufficiency of funds in the bank account of the accused persons.
The case is pending before the Metropolitan Magistrate, who has issued summons to the
accused. The next date of hearing is fixed for August 11, 2008.
5.
The company has filed a criminal complaint (647/2001) before the Metropolitan Magistrate,
Patiala House Courts, Delhi under section 138 of the N.I. Act read with section 200 of the
CRPC and section 420 of the IPC against Mr. Sanjeev Prasad, the area sales manager of the
company. The company has alleged that it issued two drafts bearing Nos. 209542 and 209543
for an amount of Rs. 25,470 and Rs. 25,000, respectively, in the name of Mr. Sanjeev Prasad
for the purpose of product launch and other promotional expenses. However, the cheques and
the amounts thereunder were not utilized by the accused for the said purpose. After regular
reminders, he issued a cheque bearing No. 437285 for an amount of Rs. 39,150 in favour of
the company, which was dishonoured due to insufficiency of funds in his bank account.
The case is pending before the Metropolitan Magistrate who has issued summons to the
accused. The next date of hearing is fixed for November 7, 2008.
313
6.
The company has filed a criminal complaint (870/2001) before the Metropolitan Magistrate,
Patiala House Courts, Delhi under section 138 of the N.I. Act read with section 200 of the
CRPC and section 420 of the IPC against Parth Khakkas and others. The company has alleged
that against the supply of certain goods by the company, Creative Papers through its proprietor
issued a cheque bearing No. 739689 for an amount of Rs. 61,971.87 in favour of the company
which was dishonoured due to insufficiency of funds in the bank account of the accused
persons.
The case is pending before the Metropolitan Magistrate who has issued summons to the
accused. The next date of hearing is fixed for July 23, 2008.
7.
The company has filed a criminal complaint (8347/2001) before the Metropolitan Magistrate,
Chennai under sections 138 and 141 of the N.I. Act against Mr. Umakanth, proprietor of Mega
Lazers.
The company has alleged that it supplied certain goods to Mega Lazers against invoice No.
259 dated July 28, 2000 and 261 dated July 29, 2000 against which Mega Lazers issued two
cheques bearing nos. 185121 dated September 10, 2000 drawn at Punjab National Bank,
Chennai for Rs. 410,000 and 949531 dated November 29, 2000 drawn at Standard Chartered
Bank, Chennai for Rs. 86,743. The said cheques were duly presented by the company with its
bankers but the same were dishonoured due to insufficiency of funds in the accounts of Mega
Lazers. Despite the receipt of notice Mega Lazers failed to make the payment of the
dishonoured cheques within the stipulated period of time.
The next date for hearing was fixed for July 16, 2008.
8.
The company has filed a criminal complaint (3230/2007) before the Chief Judicial Magistrate,
Noida filed under sections against 120-B, 418 and 420 of the IPC against Neopost and its
directors for encashing a letter of credit worth Rs. 6,000,000 without sending the complete set
of goods and fraudulently inducing the company not to sign any maintenance contract.
The case is posted for summoning parties on July 10, 2008.
9.
A first appeal has been preferred by the company at the CIT (Appeals) Ghaziabad against the
Assistant CIT, Noida for expenses disallowed in financial statements of the company for the
assessment year 2003-04 in relation to bad debts amounting to Rs. 11,076,000, addition of Rs.
351,000 under section 43B of the I.T. Act, depreciation of Rs. 577,000 on demo machines,
commission advertising of Rs. 3,486,000 and marketing expenses amounting to Rs. 1,334,000.
The next date of hearing is fixed for July 9, 2008.
10.
A second appeal has been preferred by the company at the ITAT, New Delhi against the
Assistant CIT, Noida for expenses disallowed in financial statements of the company for the
assessment year 2004-05 in relation to depreciation of Rs. 464,000 on demo machines and
commission amounting to Rs. 839,000. The date of hearing is yet to be finalised.
11.
The Department of Central Excise issued 35 show cause notices for recovery of differential
amount of wholesale price and retail price for an aggregate amount of Rs. 4,139,612
pertaining to period from April 1992 to September 2000, out of which 25 notices have been
dropped in favour of the company. The company filed two appeals against the Commissioner
of Excise, Meerut before the Commissioner (Appeals), Meerut against six show cause notices
in one appeal and against four show cause notices in second appeal. Both the appeals were
dismissed vide common order both dated April 27, 2006 against which the company has filed
two separate appeals before the CESTAT. The two appeals (2201/2006 and 2202/2006) are
pending with the CESTAT, New Delhi, which has granted stay on August 1, 2006 on demand
raised by the department. The next date of hearing is yet to be scheduled.
12.
The Department of Central Excise issued show cause notices for recovery of short paid duty
(excise duty) on the additional amount arising on account of sale of the machines at higher
prices for the period from July 1999 to September 2001.
314
The Deputy Commissioner, Central Excise, Noida decided the above said show cause notices
against the company vide its order dated September 30, 2002 and demanded the duty amount
of Rs. 54,969 and penalty of equal amount. On appeal filed by the company, the
Commissioner Central Excise reduced the penalty amount to Rs. 15,000 while disposing off
the appeal vide its order dated August 9, 2004 against which the company has filed an appeal
before CESTAT. An appeal filed by the Company is pending with the CESTAT, New Delhi.
The next date of hearing is yet to be fixed.
13.
The Department of Central Excise issued show cause notices for recovery of short paid duty
(excise duty) on the additional amount arising on account of sale of the machines at higher
prices for the period from October 1, 2001 to March 31, 2002.
The Deputy Commissioner, Central Excise, Noida decided the above said show cause notices
against the company vide its order dated December 26, 2002 and demanded the duty amount
of Rs. 14,427 with interest and penalty of equal amount. On appeal filed by the company, the
Commissioner Central Excise reduced the penalty amount to Rs. 5,000 while disposing off the
appeal vide its order dated August 9, 2004, against which the company has filed an appeal
before CESTAT, New Delhi. The next date of hearing is yet to be fixed.
14.
The company has preferred an appeal (1140/96-B) under the Central Excise and Salt Act,
1944 before the CEGAT, New Delhi along with a stay petition against the order of the
Commissioner of Central Excise dated March 23, 1996. The company had been availing the
benefit of exemption under Notification No.175/86 dated March 1, 1986 during the
assessment year 1988-98 to 1990-91. The company used to sell goods to wholesalers as well
as to retailers and was paying duty in respect of retail sales on the basis of the wholesale price
declared by it in its price list filed with the department.
The Department initiated proceedings against the company vide show cause notice (C.No.
V(15) off/Adj/32/95/7797) dated April, 20 1995 wherein it was proposed to :
(a) demand a sum of Rs. 892,500 as due for the period April 1, 1990 to November 27, 1990
invoking the extended time limit provisions on the ground that the company was not entitled
to the benefit of exemption under Notification No.175/86 as the company was using the trade
mark “GBC” on their products and that this trade mark ‘GBC’ belongs to General Binding
Corporation of USA who were not eligible for the benefit of notification; The company has
filed an appeal with CEGAT New Delhi alongwith stay petition against the Commissioner’s
order. CEGAT has decided the stay application and ordered the company to deposit Rs.
700,000 in pursuance of stay order. The company has deposited the same on April 30, 1997.
Hearing on appeal (1140/96-B) is awaited.
(b) demand a sum of Rs.467,376 as due for the period April 1, 1991 to March 31, 1992
invoking the extended time limit provisions on the ground that the company had charged an
amount of Rs.3,236,138 in excess of the price declared by the department.
(c) impose penalty of Rs.150,000 for the alleged contravention of the Central Excise Rules,
1944.
The Commissioner of Central Excise has passed the adjudication order dated March 23, 1996
and confirmed the demand made in the show cause notice and imposed a penalty of
Rs.150,000. In appeal, the CEGAT ordered the company to deposit Rs. 0.7 milllion. The
company has deposited the same on April 30, 1997. The hearing on appeal is awaited.
15.
The company has preferred an appeal (C/605/95-B-2) against the Additional Collector of
Customs. A show cause notice dated January 28, 1995 was issued against the company
alleging that a paper shredder machine - model 926X imported by the company vide bill of
entry 268219 dated September 27, 1994 is a consumer good requiring an import license and
asked to show cause why the goods valued at Rs. 414,587 should not be confiscated under
section 111 of the Customs Act, 1962 and penalty under section 112 of the Customs Act, 1962
should not be imposed. The Additional Collector of Customs imposed a redemption fine of
Rs. 50,000 and a penalty of Rs. 25,000. On appeal by the company, the Commissioner of
315
Customs (Appeals) vide order-in-appeal (134-C/DLH/95) dated August 31, 1995 confirmed
the same. The company has paid the said redemption fine and penalty and cleared the material
from the Customs. However, the appeal is still pending with the CESTAT.
16.
An appeal has been preferred by the company (S/49-273/98 TE) against the order-in-original
(S/40-B-1078/90 VA) of the Assistant Commissioner of Customs, VA, NCH, Mumbai dated
February 27, 1998. As per the conditions of an end use bond, the company was required to file
a consumption certificate for imported goods. The said certififcate was submitted, but the
department has not accepted the same and passed an order for recovery of Rs. 67,000. The
appeal by the company was decided by the Commissioner (Appeals), who set aside the
impugned order-in-original and remanded the matter back to the lower authority for deciding
the matter in de-novo proceedings.
17.
An appeal (S/49-110/98 LIC) has been preferred by the company against against the order of
the Additional Commissioner of Customs, Mumbai (S/10-45/98 2B(I)) dated May 15, 1998.
The company imported plastic binding strips under customs tariff heading 3920.42 as plastic
strips which are freely importable under the export-import (“EXIM”) policy. On examination
by the department, it was noticed that the said plastic strips were molded plastic articles and
were not in regular geometric shapes of a square or a rectangle in order to merit classification
under customs tariff heading 3920.42 as a ‘strip’ and thus, the department wanted to classify
the same under EXIM Code No. 392690 09 90 the import of which is restricted in terms of the
Indian Trade Classification (Harmonized System) classification. The department asked for
specific import license for the clearance of goods and accordingly allowed the goods to be
redeemed on payment of fine of Rs. 50,000 and penalty of Rs. 10,000 for import without
license. The redemption fine and penalty were paid, however, the appeal is still pending.
18.
An appeal (SCN No. F.No. S/26-Misc-459/98-4) has been preferred by the company against
the order of the Assistant Commissioner of Customs dated November 17, 1998. A notice was
served on the company asking why imported goods, which are classified as restricted items
under customs tariff heading 8308.90 and require a specific import license should not be
confiscated under section 111(d) of the Customs Act, 1962 and penal action under section
112 of the Customs Act, 1962 should not be taken . The appeal is still pending.
19.
A first appeal has been preferred by the company before the Joint Commissioner of Trade
Tax, Noida for a dispute arising on the amount of taxes due, whereby a claim of Rs. 151,436,
as compared to an amount of Rs. 34,900 being paid, for the assessment year 1997-1998.
20.
A first appeal has been preferred by the company before the Joint Commissioner of Trade
Tax, Noida for a dispute arising out of a claim of Rs. 45,254 for the assessment year 19981999.
21.
An appeal has been preferred by the company before the Tribunal of Tax, Noida for a dispute
arising out of a claim of Rs. 1,151,438 for the assessment year 2000-2001.
22.
An appeal has been preferred by the company before the Tribunal of Tax, Noida for a dispute
arising on the amount of taxes due, whereby a claim of Rs. 6,887,262 has been made against
an amount of Rs. 237,684 being paid, for the assessment year 2001-2002.
23.
An appeal has been preferred by the company before the Tribunal of Tax, Noida for a dispute
arising on the amount of taxes due, whereby a claim of Rs. 6,665,954 has been made against
an amount of Rs. 1,041,158 being paid for the assessment year 2002-2003.
24.
A first appeal has been preferred by the company before the Joint Commissioner of Trade
Tax, Noida for a dispute arising on the amount of taxes due, whereby a claim of Rs. 622,657
has been made against an amount of Rs. 155,665 being paid for the assessment year 20032004.
25.
A first appeal has been preferred by the company before the Joint Commissioner of Trade
Tax, Delhi for a dispute arising on the amount of taxes due, whereby a claim of Rs. 516,329
316
has been made against an amount of Rs. 174,689 being paid for the assessment year 19981999.
26.
A first appeal has been preferred by the company before the Joint Commissioner of Trade
Tax, Delhi for a dispute arising on the amount of taxes due, whereby a claim of Rs. 643,840
has been made against an amount of Rs. 293,000 being paid, for the assessment year 19992000.
27.
A first appeal has been preferred by the company before the Assistant Commissioner IX,
Delhi for a dispute arising on the amount of taxes due, whereby a claim of Rs. 198,506 has
been made against an amount of Rs. 126,717 being paid for the assessment year 2000-2001.
28.
A first appeal has been preferred by the company before the Additional Commissioner II,
Delhi for a dispute arising on the amount of taxes due, whereby a claim of Rs. 2,628,528 has
been made against an amount of Rs. 110,000 being paid for the assessment year 2001-2002.
29.
A first appeal has been preferred by the company before the Deputy Commissioner (Appeal
IV), Delhi for a dispute arising on the amount of taxes due, whereby a claim of Rs. 350,535
has been made against an amount of Rs. 221,300 being paid, for the assessment year 2002-03.
30.
A first appeal has been preferred by the company before the Additional Commissioner, Delhi
for a dispute arising on the amount of taxes due, whereby a claim of Rs. 2,261,574 has been
made against an amount of Rs. 396,000 being paid for the assessment year 2003-04.
31.
An application has has been filed by the company for rectification of order dated March, 23
2006 passed by the Sales Tax Officer Ward 92, Delhipertaining to a dispute arising on the
amount of taxes due, whereby a claim of Rs. 230,073 has been raised in the assessment year
2004-2005. The said application is pending and the rectified order pursuant to the same is
awaited.
32.
A first appeal has been preferred by the company before the Appellate Additional
Commissioner CT III, Tamil Nadu for a dispute arising on the amount of taxes due, whereby a
claim of Rs. 328,621 has been made against an amount of Rs. 143,772 being paid, for the
assessment year 2000-01.
33.
A first appeal has been preferred by the company before the Appellate Additional
Commissioner CT III, Tamil Nadu for a dispute arising on the amount of taxes due, whereby a
claim of Rs. 289,271, has been made against an amount of Rs. 149,160 being paid, for the
assessment year 2002-03.
34.
A first appeal has been preferred by the company before the Deputy Commissioner CTT 13,
Karnataka for a dispute arising on the amount of taxes due, whereby a claim of Rs. 395,894
has been raised in the assessment year 2001-02.
35.
A first appeal has been preferred by the company before the Assistant Commissioner South
Circle, Directorate of Commercial Taxes, West Bengal for a dispute arising on the amount of
taxes due, whereby a claim of Rs. 288,098 has been raised in the assessment year 1999-2000.
36.
A first appeal has been preferred by the company before the Assistant Commissioner South
Circle, Directorate of Commercial Taxes, West Bengal for a dispute arising on the amount of
taxes due, whereby a claim of Rs. 1,016,606 has been made against an amount of Rs. 5,500
the assessment year 2000-01.
37.
A first appeal has been preferred by the company before the Assistant Commissioner South
Circle, Directorate of Commercial Taxes, West Bengal for a dispute arising on the amount of
taxes due, whereby a claim of Rs. 90,650 has been raised in the assessment year 2002-03.
Jyotsana Investment Company Limited
Litigation against Jyotsana Investment Company Limited
317
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
2.
The Deputy Commissioner of Income Tax has initiated prosecution proceedings (Ref. No.
DCIT(P)/J-13/2000-01/609) against the company under section 276B/278B of the I.T. Act for
failure to timely deposit tax deducted at source with the Central Government for the
assessment year 1976-77 to 1983-84. Pursuant to order no. DC, Cir-5(4)/CQ-4126/ Cal./200001/664 dated February 7, 2001 passed by Deputy Commissioner of Income Tax, Kolkata, the
company has deposited an amount of Rs. 396,943 on April 6, 2001 as composition fees and
establishment expenses. Accordingly, the company has requested several times for withdrawal
of the prosecution proceedings. The official communication regarding withdrawal of the
prosecution proceedings is yet to be received.
Litigation by Jyotsana Investment Company Limited
1.
Jyotsana Investment Company Limited has filed an eviction suit (196/1999) against Dipak
Kumar Himatsingka in Kolkata High Court for eviction of premises being flat no. 9A at 46C,
9th Floor, Chowringee Road, Kolkatta, given to defendant on lease. The suit is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
2.
Jyotsana Investment Company Limited has preferred an appeal (1445/CIT (Appeals) –
XXXVI/Wd 55(1)/CQ-4126/01-02) before the CIT (Appeals) XXXVI Kolkata, against the
assessment order dated March 29, 2001 passed by Deputy Commissioner, Income Tax, Circle
5 (4)/Cal for the assessment year 1998-99 making disallowance of certain miscellaneous
expenses amounting to Rs. 260,384. The appeal is pending before CIT (Appeals) XXXVI,
Kolkata. The next date of hearing is yet to be fixed.
Kallol Investments Limited
Litigation against Kallol Investments Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
Litigation by Kallol Investments Limited
Nil
Khatu Investment and Trading Company
Litigation against Khatu Investment and Trading Company
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
Litigation by Khatu Investment and Trading Company
Nil
Mcorpglobal Communications Private Limited
Litigation against Mcorpglobal Communications Private Limited
Nil
Litigation by Mcorpglobal Communications Private Limited
318
Nil
Mcorp Communications Pte.Limited
Litigation against Mcorp Communications Pte.Limited
Nil
Litigation against Mcorp Communications Pte.Limited
Nil
Mcorp Investments Pte.Limited
Litigation against Mcorp Investments Pte.Limited
Nil
Litigation by Mcorp Investments Pte.Limited
Nil
Modikem Limited
Litigation against Modikem Limited
Nil
Litigation by Modikem Limited
Nil
Mudaliar & Sons Hotels Private Limited
Litigation against Mudaliar & Sons Hotels Private Limited
Nil
Litigation by Mudaliar & Sons Hotels Private Limited
Nil
New Look Investment (Bengal) Limited
Litigation against New Look Investment (Bengal) Limited
1.
Dipak Himatsingka and others have filed a civil family partition suit (450/1998) in the Kolkata
High Court against the defendants, one of which is the company. The matter is pending before
Kolkata High Court for adjudication. The next date of hearing is yet to be fixed.
Litigation by New Look Investment (Bengal) Limited
Nil
Nik Travels Private Limited
Litigation against Nik Travels Private Limited
Nil
319
Litigation by Nik Travels Private Limited
Nil
Oasis Cineplex Private Limited
Litigation against Oasis Cineplex Private Limited
Nil
Litigation by Oasis Cineplex Private Limited
Nil
Omnia BPO Services Limited
Litigation against Omnia BPO Services Limited
1.
A criminal case (No. 141/2007) was filed by the labour department against the company
before the Chief Judicial Magistrate, Ropar, under sections 23 and 24 of the Contract Labour
(Regulation & Abolition) Act, 1970 read with the Central Rules, 1971 for alleged noncompliance of the above sections. The next date of hearing is July 16, 2008.
2.
The company has also been served with a notice as a witness to testify that an employee who
met with an accident was working with the company, in the court of Ms. Sukhvinder Kaur,
Judge, MACT, Room No. 3, Patiala House Courts, New Delhi. The proceedings are to decide
upon the compensation to be paid in the accident case. Next date of hearing is fixed for
September 24, 2008.
3.
Deepak Ahluwalia has filed a suit (737/2007) against the company for vacation of premises in
the court of Shri Satish Kumar Arora, Civil Judge, Tis Hazari Courts, Delhi. The company’s
contention is that the lease agreement for the premises was to be renewed for a further term of
three years on mutually agreed terms/with enhancement of rentals specified in lease
agreement, which the company offered. However, the landlords were asking for exorbitant
rents. The next date of hearing is August 7, 2008.
4.
Shanti Swaroop Goyal has filed a suit (587/2007) against the company for vacation of
premises in the court of Shri Gaurav Rao, Civil Judge, Tis Hazari Courts, Delhi. The
company’s contention is that the lease agreement for the premises was to be renewed for a
further term of three years on mutually agreed terms/with enhancement of rentals specified in
lease agreement, which the company offered. However, the landlords were asking for
exorbitant rents. The next date of hearing is July 30, 2008.
5.
Mr. Kulbhushan Sood has filed a civil suit (160/2008) in the Court of Mr. Manoj Jain,
Additional District Judge, Tis Hazari Courts, Delhi for recovery of possession and mesne
profits/damages in respect of premises bearing no. 615 at Vishal Tower, District Centre, Janak
Puri, New Delhi, on account of expiration of the lease for the said premises on August 9,
2007. The company’s contention is that the lease agreement for the premises was to be
renewed for a further term of three years on mutually agreed terms/with enhancement of
rentals specified in lease agreement, which the company offered. However, the landlords were
asking for exorbitant rents. The next date of hearing is fixed for July 18, 2008.
6.
Mr. Kulbhushan Sood has filed a civil suit (161/2008) in the Court of Mr. Manoj Jain,
Additional District Judge, Tis Hazari Courts, Delhi for recovery of possession and mesne
profits/damages in respect of premises bearing no. 612 at Vishal Tower, District Centre, Janak
Puri, New Delhi, on account of expiration of the lease for the said premises on August 9,
2007. The company’s contention is that the lease agreement for the premises was to be
renewed for a further term of three years on mutually agreed terms/with enhancement of
rentals specified in lease agreement, which the company offered. However, the landlords were
asking for exorbitant rents. The next date of hearing is fixed for July 18, 2008.
320
Litigation by Omnia BPO Services Limited
Nil
Plus Paper Foodpac Limited
Litigation against Plus Paper Foodpac Limited
Nil
Litigation by Plus Paper Foodpac Limited
1.
Plus Paper Foodpac Limited filed an appeal (1015/2005) against the assessment order passed
by the Assessing Officer, for the assessment year 1996-1997, adding Rs. 1,675,541 to the total
income of the company. The appeal was dismissed by the CIT(Appeals). However, the
CIT(Appeals) allowed the appeal of the company against which the CIT, Mumbai filed an
appeal before the Bombay High Court for a sum of Rs. 1,041,846. The matter is currently
pending and the next date of hearing has not been fixed.
Shenzhen SIBASI Catering Management Compnay Limited
Litigation against Shenzhen SIBASI Catering Management Company Limited
Nil
Litigation by Shenhzen SIBASI Catering Management Company Limited
Nil
Spice Communications Limited
Litigation against Spice Communications Limited
Litigations through Cellular Operators Association of India involving Spice Communications Limited
1.
BSNL has filed an appeal against TRAI and COAI and others (1/2006) before the TDSAT
challenging TRAI’s IUC Regulation of October 29, 2003 prescribing a charge of 20p/minute
for calls handed over by CMSPs to BSNL at Level II TAX, on the ground that it is contrary to
the principles of work done and TRAI has no jurisdiction to frame such regulations that
override the terms and conditions of interconnect agreement between the service providers.
The appeal is presently pending adjudication.
2.
BSNL has filed an appeal against TRAI and COAI and others (8/2006) before the TDSAT
seeking the quashing of impugned communication of TRAI dated May 17, 2006 pertaining to
carriage charges collectible by BSNL from private cellular operators and for stay of operation
of the said communication. The appeal is presently pending adjudication.
3.
BSNL has filed an appeal before the TDSAT (4/2007) against TRAI, COAI and others
challenging TRAI’s Port Charges Regulation issued on February 2, 2007 on the grounds that
TRAI does not have the jurisdiction to amend the interconnect agreements, which have been
mutually agreed between the operators, and further, that TRAI has not taken into account all
costs while determining the port charges. The matter is presently pending adjudication.
4.
BSNL has filed an appeal against COAI and others before the Supreme Court of India
(1676/2006) challenging the directions of the TDSAT in the judgment given in petition no.
48/2004 dated November 11, 2005 on the primary ground that the TRAI has no jurisdiction to
modify or override any of the term or condition of the interconnection agreement between the
parties as laid down in earlier judgments of the TDSAT dated April 27, 2005 in appeal no.
321
11/2002 and judgment dated May 3, 2005 in appeal no. 31/2003. The appeal is presently
pending adjudication.
5.
BSNL has filed an appeal against COAI and others before the Supreme Court of India
(5546/2004) challenging the order of the TDSAT dated March 29, 2004 on a petition
(10/2003) filed by COAI and others against DoT and others in which they had sought credit of
5% of revenues (for the period from January 8, 2001 to January 31, 2002) that were allowed to
be retained by the cellular operators vide TRAI’s interconnection determination dated January
8, 2001. The TDSAT in its order dated March 29, 2004 had allowed the said petition and
directed BSNL and MTNL to implement the TRAI recommendations dated January 8, 2001
allowing the petitioners to retain the 5% of their passed through revenue paid to them for calls
made by the petitioners w.e.f. January 25, 2001 and both BSNL and MTNL shall
refund/adjust all the excess amounts received from the petitioners towards the 5% of their
passed through revenues w.e.f. January 25, 2001 up to January 31, 2002. On January 3, 2005
COAI has filed its reply to the BSNL appeal and the Supreme Court has ordered BSNL to
adjust the amount to the respondents subject to respondents giving a bank guarantee of the
refunded amount to BSNL. The appeal is presently pending adjudication.
6.
MTNL has filed an appeal against COAI and others before the Supreme Court of India
(6969/2004). In this appeal, MTNL has challenged the order of the TDSAT dated March 29,
2004 on a petition (10/2003) filed by COAI and others against DoT and others in which they
had sought credit of 5% of revenues (for the period from January 8, 2001 to January 31, 2002)
that were allowed to be retained by the cellular operators vide TRAI’s interconnection
determination dated January 8, 2001. TDSAT in its order dated March 29, 2004 had allowed
the said petition and directed BSNL and MTNL to implement the TRAI recommendations
dated January 8, 2001 allowing the petitioners to retain the 5% of their passed through revenue
paid to them for calls made by the petitioners w.e.f. January 25, 2001 and both BSNL and
MTNL shall refund/adjust all the excess amounts received from the petitioners towards the
5% of their passed through revenues w.e.f. January 25, 2001 up to January 31, 2002. On
January 3, 2005 COAI has filed its reply to the MTNL appeal and the Supreme Court has
ordered MTNL to adjust the amount to the respondents subject to respondents giving a bank
guarantee of the refunded amount to MTNL. The appeal is presently pending adjudication.
Litigations against Spice Communications Limited in Punjab Circle
7.
A criminal complaint (324/1998) under section 420 of the IPC has been filed by Sukhjit Singh
Chandi in the Court of Judicial Magistrate First Class, Chandigarh against the company
alleging misrepresentation and suppression of material facts as the complainant had purchased
a mobile Subscriber Identity Module (“SIM”) card from a dealer of the company under a
scheme floated by the company and the SIM card got locked and was unable for future usage
and thus, the complainant has alleged that the SIM card was projected by the company as
similar in quality to the other marketed cards if not of a better quality, whereas they are of an
inferior quality. The matter is presently pending before the court.
8.
A complaint (200 T/2003) has been filed by Municipal Commissioner, Mandi Gobindgarh in
the Court of Sub-Divisional Judicial Magistrate, Amloh, Fatehgarh Sahib, Punjab against the
company and other alleging violations of provisions under sections 195, 195-A, 220 and other
provisions of the Punjab Municipal Act, 1911 in relation to construction and installation of
transmission tower. The stand taken by the company in an application filed in the court is that
the complaint is not maintainable as offences under sections 195, 195A and 220 of Punjab
Municipal Act, 1911 are compoundable offences and transmission tower has been installed as
per the policy of the government of Punjab. However, the said application has been dismissed.
The matter is presently pending before the court.
9.
Pritam Kaur has filed a complaint under section 133 of the CRPC before the Sub-Divisional
Magistrate, Jalandhar against the company and others, restraining it from installing the cell
phone tower at 85, Modern Market, adjoining Babu Labh Singh Trust, Jalandhar and praying
that the respondents be further restrained from using the cell phone tower and directed to
remove the so made construction of the cell phone tower, as it shall cause nuisance to the
petitioners, as well as to the occupiers of the neighbourhood and it shall also cause nuisance
322
to the general public, which shall also cause number of health problems. The matter is
presently pending.
10.
Gurdarshan Singh and others have filed a complaint under section 133 of the CRPC before the
Sub Divisional Magistrate Faridkot, against the company and others restraining it from
installing the cell phone tower at the shop of Ravinder Kumar c/o Dadsons near Clock Tower,
Faridkot and further praying that the same is injurious to public health and would also
endanger the existence of adjoining buildings and destroy the grace of Clock Tower, its
existence etc. and it would also cause discomfort and health hazards and such trade activity
should be removed to some other place. The court has ordered stay on the installation of the
tower. The matter is presently pending.
11.
Kewal Krishan has filed a complaint under section 133 of the CRPC before Sub Divisional
Magistrate, Zira, against the company and others seeking to restrain them from installing a cell
phone tower at Kehr Mohalla, Ward No:5, Zira. The matter is presently pending.
12.
31 consumer cases are pending against the company. The issues involved in these cases
include deficiency of services, excess bill amount, refunds, rectification of bills, disconnection
due to non-verification, compensation for damages, unwanted promotional calls, and mental
agony. The contingent liability with regard to the pending consumer cases is approximately
Rs. 2,993,814.
13.
16 consumer appeals, both by and against the company, are pending in the State Consumer
Commission at Chandigarh. The contingent liability with regard to the pending consumer
commission cases (Appeals) is approximately Rs. 1,096,400.
14.
One appeal is pending against the company in the National Consumer Commission at Delhi.
The contingent liability (based on the prayer by the complainant) involved is Rs. 276,000 with
18% p.a. interest as well as Rs. 6,000 per month for damages and compensation.
15.
A civil suit (35/2005) has been filed by Charanjit Singh before the Additional Civil Judge
(Senior Division) Garhshankar against the company praying for permanent injunction for
restraining it from disbursing/paying Rs. 68,000 as licence fees for the period from August 4,
2003 to January 4, 2005 at the rate of Rs. 4,000 per month for the use and occupation of the
site admeasuring 12 Marlas out of 3 Kanals 8 Marlas bearing Khasra no. 168/335, Khasra No.
6/16 (3-8) situated in the area of village Sekhowal H.B. No. 493 to any other person except the
co-owners recorded in farad jamabandi 2001-2002 without the consent of the plaintiff. The
plaintiff has also prayed for mandatory injunction for directing the company to pay the licence
fee allegedly due to the plaintiff and other co-sharer as per their share. The company has filed
the written statement. The matter is presently pending before the court.
16.
A civil suit (1631/2006) has been filed by M/s. Super Scientific Works Private Limited before
the Additional Civil Judge (Senior Division), Kharar praying for declaration that the plaintiff
is the owner/subscriber of the mobile phone connection bearing no. 98140 08241 issued by the
company and for consequential relief of mandatory injunction directing the company to
transfer the said mobile connection in the name of the plaintiff or its nominee. The matter is
presently pending adjudication.
17.
A civil suit (1376/A/2006) has been filed by Hatish Kataria against the company and others
before the Additional Civil Judge (Senior Division), Kharar for recovery of an amount of Rs.
3,846,619 from the company. The plaintiff has alleged that he used to earn commission over
sales and marketing of services and products of the company and that the disputed amount
was transferred from the account of the plaintiff by the company to the accounts of the
defendants no. 2 and 3 without the consent of the plaintiff. The company has filed its written
statement and its reply to an interim application. The total amount involved in this case is Rs.
3,846,619 plus interest. The matter is presently pending in the court.
18.
Assistant Estate Officer (Appeals) Estate Office, U.T. Chandigarh has initiated proceedings
against the company (Memo No. 35063/SDE (E) CPL 5249/17/11/05) on the basis of a notice
dated July 25, 2006 from the said authority wherein it is alleged that the company has effected
323
unauthorized construction of transmission towers on buildings at site no. B-219, Sector 39-C
and D, Chandigarh in contravention of the provisions of section 15 of the Capital of Punjab
(Development and Regulation) Act, 1952. The company has represented before the said
authority for grant of permission to install the transmission towers as per policy framed by the
Chandigarh administration and has stated that the company has submitted all necessary papers
along with demand draft of Rs. 0.5 million as installation fee. The matter is pending for
orders.
19.
A civil suit (34/2006) has been filed by the Lovenish Kumar and others against the company
and others in the Court of Civil Judge, Mansa, Punjab under order 39 rule 1&2 read with
section 151 of the CPC restraining the company from installing any transmission tower in the
residential area as the height of the tower may cause damage to the adjoining properties on
falling and it also causes health hazard to human life. The written statement and reply have
been filed on behalf of the company. The matter is presently pending adjudication.
20.
A civil suit (124/2006) has been filed by Chabeel Dass and others against the company and
others in the Court of the Civil Judge (Senior Division), Faridkot praying for permanent
injunction restraining the defendants from installing the transmission tower over the first floor
of the house of the defendant no.1. The plaint is accompanied with an application under order
39 rules 1 & 2 of the CPC praying for grant of temporary injunction restraining the defendants
from installing transmission tower at the above mentioned premises. The matter is presently
pending before the court.
21.
A civil suit (283/2004) has been filed by Thakural Transport Corporation in the Court of Civil
Judge (Senior Division), Chandigarh against the company claiming for damages of Rs.
1,000,000 on account of alleged deficiency of services, cheating and mental harassment
(inadequate services, bad signals, disturbances in calls etc.). The plaintiff has further prayed
that a permanent injunction be granted in favor of the plaintiff for restraining the defendants
from discontinuing the connection bearing no. 98149-08872 and a mandatory injunction
directing the defendant to restore the connections of mobile numbers which have been
discontinued by the defendant. The matter is presently pending before the court.
22.
The Cantonment Board, Jalandhar has initiated eviction proceedings under section 5(b) and
(c) of Public Premises (Eviction of Unauthorised Occupants) Act, 1971 against the company
on the basis of notice no. JCB/4563/C dated March 23, 2004; JCB/ENGG/693/C dated May
17, 2004; and JCB/ENGG/691/C dated May 17, 2004 issued by the said authority alleging
unauthorised construction and illegal occupancy of the cantonment land by the company. The
matter is presently pending before the court.
23.
The land acquisition officer has initiated proceedings against the company (Memo No.
4509/SDE (E) RP – CP 10) on the basis of a notice dated February 3, 2006 issued under
section 15 of the Capital of Punjab (Development and Regulation) Act, 1952 from the said
authority wherein it is alleged that the company has effected unauthorized construction at site
no. 10, Sector 16, Chandigarh in contravention of building rules of the Capital of Punjab
(Development and Regulation) Act, 1952. It has been alleged that the sanctioned plan of the
building has been changed and an unauthorized tower has been installed at the terrace without
getting the permission from the competent authority. The company has represented before the
land acquisition officer for grant of permission to install the transmission towers as per policy
framed by the Chandigarh administration and has stated that it has submitted all necessary
papers along with demand draft of Rs. 0.1 million as installation fee. The matter is presently
pending adjudication.
24.
A civil suit (167/2006) has been filed by Praveen Anand and others against the company and
others before the Court of Civil Judge (Senior Division), Ludhiana for grant of permanent
injunction restraining the company from constructing a transmission tower in their locality
since the same is claimed to pose a risk to people and property. The matter is presently
pending before the court.
25.
Ramesh Kumar, Bhagwan Dass and Surinder Singh have filed a civil suit against the company
before the court of Additionl Civil Judge, Nabha seeking permanent injunction for restraining
324
the company from installing transmission tower on the roof of their shop at old sabzi mandi,
Nabha. The written statement has been filed by the company. The matter is presently pending
before the court.
26.
Baltej Singh has filed a civil suit (308/2006) before the Court of Civil Judge (Senior Division),
Bathinda for permanent injunction restraining the company and other defendants from
encroaching upon, raising of any sort of construction and installation of transmission tower
over the land in dispute. The matter is presently pending before the court.
27.
Tarsem Singh has filed a civil suit before the court of Civil Judge (Senior Division), Anandpur
Sahib against Ram Singh, the company and others for issuance of permanent injunction
restraining the defendants from any way or in any manner forcibly and illegally occupying the
specific portion of the land measuring 2 kanal 5 marla without partition of land by metes and
bounds or in alternative, suit for possession by way of partition of the land mentioned above.
The matter is presently pending before the court.
28.
Darshanlal has filed a civil suit before the court of Additional Civil Judge (Senior Division),
Ludhiana against the company and others. The suit is for grant of mandatory injunction for a
direction to the defendants for removing the generator set and mobile tower installed on the
top of the building and for permanent injunction for restraining the defendants, their
representatives and agents from parking their vehicles in front of the shops of the plaintiff.
The matter is presently pending before the court.
29.
The municipal corporation of Chandigarh has issued a notice (MC/Estate/2007/391) under
rule 20 of the Chandigarh Lease Hold of Sites and Building Rules, 1973 for breach of rule 5 of
the Punjab (Development and Regulation) Building Rules, 1952 stating that the tower has
been constructed in the violation of the rules mentioned above. The matter is presently
pending before the court.
30.
Harbhajan Singh and others have filed a civil suit in the Court of Civil Judge (Senior
Division), Gurdaspur against Ram Nath, the company and other defendants for grant of decree
for mandatory injunction directing the defendants to remove the mobile phone tower from the
site as marked in the site plan, installed by defendant no. 4 in the roof of the house of
defendants nos. 1 to 3. The plaintiffs have alleged that said installation of mobile phone tower
caused disturbance, harassment, physical and mental pain to the plaintiffs and other residents
of the residential locality. The matter is presently pending before the court.
31.
Kulbhushan Sharma has filed a civil suit (43/2007) before the Court of Civil Judge (Senior
Division), Ludhiana against the company for recovery of Rs. 100,000 and interest thereon
towards rent and damages alleging breach of contract with respect to earlier termination of
lease deed executed between the plaintiff and the company for lease of the premises by the
plaintiff to the company for installing its transmission tower. The plaintiff has also alleged that
termination of the lease deed by the company is illegal, void and arbitrary and without any
sufficient reason and cause. The matter is presently pending before the court.
32.
Mukhtiar Singh has filed a civil suit filed before the Civil Judge, JMIC.RC. Moga praying for
issuance of a decree of permanent injunction restraining the company from encroaching,
making any construction, raising telecommunication tower or commissioning the same and
decree for mandatory injunction directing the company from removing the material of the
tower. The matter is presently pending before the court.
33.
Manjit Singh has filed a civil suit filed before the Civil Judge (Junior Division), Amritsar
praying for permanent injunction restraining the company and the other defendants from
installing any mobile towers on the roof of the property owned by defendant no. 3 in any
manner and suit for permanent injunction restraining defendant no. 4 from issuing any
licence/permission to defendant no.1 to 3 for installation of the said mobile tower. The matter
is presently pending before the court.
34.
Gursewak Singh and others have filed a civil suit filed before the Civil Judge (Junior
Division), JMIC, Moga against Jaswinder Singh, the company and others, praying for issuance
325
of a decree for permanent injunction restraining the defendants from installation of any tower,
commissioning/operating of tower, in the property in question forcibly, illegally, without due
course of law and for mandatory injunction directing the defendants to restore all the
underground pipes and other fittings/structure which they have installed in the said property
for the said tower purpose, illegally and unjustly. The matter is presently pending before the
court.
35.
Jasbir Singh and others have filed a civil suit before the Civil Judge (Senior Division),
Ludhiana against Brij Lal, the company and others, praying for grant of temporary injunction
and permanent injunction restraining the defendants from installing any telephone mobile
tower on the property of defendant no.1. The matter is presently pending before the court.
36.
Kartar Singh has filed a civil suit before the Civil Judge (Senior Division), Ropar against the
company praying for permanent injunction restraining the defendants from forcibly and
illegally installing mobile tower on the roof of the house of the plaintiff which is constructed
in the land comprised in Khewat/Khatauni No. 1215/1335, Khasra No. 34//7/9, 8/2, situated in
H.B No. 44, Rupnagar, as the same would be hazardous for the plaintiff as well as inhabitants
of Ropar city. The matter is presently pending before the court.
37.
Mahinderpal Singh and others have filed a civil suit before the Civil Judge (Senior Division),
Patiala against Attar Singh, the company and others praying for grant of permanent injunction
restraining the defendants from constructing and regularsing a telephone mobile tower in the
residential colony, at the II floor of H.No. 51-A, Kartar Park Colony, Ward No.14, Patiala.
The matter is presently pending before the court.
38.
Vasdeep Singh and others have filed a civil suit before the Civil Judge (Senior Division),
Amritsar against the company and another, praying for permanent injunction restraining the
defendants from installing mobile tower and generator, atop on the property of defendant no.2
situated in the area of VPO, Gumtala, Amritsar. The court vide order dated November 29,
2007 has ordered status quo with regard to installing cell/mobile phone signal transmission
tower of signal and generator atop the property of defendant no.2 till further order. The matter
is presently pending before the court.
39.
Rajkumar and others have filed a civil suit before the Civil Judge (Senior Division), Amritsar
against Swaran Singh, the company and others, praying for permanent injunction restraining
the defendants from raising any construction and installing mobile tower and generators on the
property of defendant no.1 situated at Royal Estate Colony, Bal Sachinder, Amritsar and
mandatory injuction directing the defendants to remove the constructions already raised for
the said purpose. Reply to the plaint and application under order 39 rules 1&2 of the CPC has
been filed. The matter is presently pending before the court.
40.
Mahinderpal Singh and others have filed an appeal along with an application under order 39
rules 1 and 2 of the CPC in the Court of District Judge, Patiala, against Attar Singh, the
company and others, against the order dated December 13, 2007 passed by the Court of Civil
Judge (Junior Division), Patiala, whereby the court declined the application of the
appellants/plaintiffs under order 39 rules 1 and 2 read with section 151 of the CPC for the
grant of ad-interim injunction restraining the respondent/defendants from installing the mobile
tower at the residential colony, at the II floor of H.No. 51-A, Kartar Park Colony, Ward
No.14, Patiala. The matter is presently pending before the court.
41.
Surinder Mohan and others have filed a civil suit before the Civil Judge (Senior Division),
Ropar against Saini Bhawan, the company and others, praying for permanent injunction
restraining the defendants from forcibly and illegally installing mobile tower on the roof of the
Saini Bhawan, Ropar as the same would be hazardous for the inhabitants of Ropar city,
including plaintiffs. The plaintiffs have also filed an application under order 39, R1&2 of the
CPC for temporary injunction. The company has filed its reply to the plaint and the
application for temporary injunction. The matter is presently pending before the court.
42.
Rajkumar and others have filed an appeal along with an application under order 39, rules 1
and 2 of the CPC in the Court of District Judge, Amritsar against Swaran Singh, the company
326
and others against the order dated December 22, 2007 passed by the Court of Civil Judge
(Junior Division), Amritsar. The court had stayed further construction of the tower situated at
Royal Estate Colony, Bal Sachinder, Amritsar. The appeal stands disposed off with the
direction to maintain status quo till the decision on the stay application, which is to be decided
by the trial court within one month.
43.
Jasvir Singh has filed a civil suit along with an application under order 39, rules 1 and 2 of the
CPC in the Civil Judge (Senior Division), Ropar against Nasib Singh, the company and others,
praying for permanent injunction restraining the defendants from changing the nature of suit
property by raising construction or by installing tower over the land situated at Pipal Majra,
Rupnagar till the partition of land. The company has filed its reply to the plaint and the
application under order 39, rules 1 and 2 of the CPC. The matter is presently pending before
the court.
44.
Rupinder Singh and others have filed a civil suit before the Civil Judge (Senior Division),
Muktsar against the company and others, praying for permanent injunction restraining the
defendants from raising construction by installing a tower. The matter is presently pending
before the court.
45.
Surjit Singh has filed a civil suit before the Civil Judge (Senior Division), Talwandi Sabo
against the general manager of the company and others, praying for permanent injunction
restraining the defendants from forcibly and illegally installing a mobile tower in the
residential house of defendant no.3, situated at Misar Mohalla, Talwandi Sabo, Bathinda,
alongwith an application under order 39, rules 1 and 2 of the CPC. The matter is presently
pending before the court.
46.
Dr. Lt. Colonel Gurdarshan Singh has filed a civil suit along with an application under order
39, rules 1 and 2 of the CPC before the Civil Judge (Senior Division), Talwandi Sabo against
the chief engineer, Quipo and the company, for restraining the defendants from causing any
type of illegal, unlawful and unauthorized interference into the peaceful possession of the
plaintiff over a plot situated within the red line area of Gobindgarh, Abohar. The matter is
presently pending before the court.
47.
Amarnath Singh and others have filed a civil suit before the Civil Judge (Senior Division),
Sunam against the company and others, praying for permanent injunction restraining the
defendants from forcibly and illegally installing mobile tower on the roof of the property
situated in the residential area of Shaheed Udham Singh Nagar, Jandu Basti, Jakhal Road,
Sunam as the same is dangerous to human and animal life. The matter is presently pending
before the court.
48.
Brij Mohan Lal Aggarwal has filed a civil suit in the Court of Additional Civil Judge (Senior
Division), Batala against the company and others, praying for mandatory injunction directing
the defendants to connect the post paid mobile connection number 9814740844 and damages
to the extent of Rs.150,000. The matter is presently pending before the court.
49.
Sahib Singh and others have filed a civil suit along with an application under order 39, rules 1
and 2 of the CPC before the Civil Judge (Senior Division), Talwandi Sabo against Sonu
Singh, the company and others, praying for permanent injunction restraining the defendants
from forcibily and illegally installing mobile tower in Sekhu, Talwandi Sabo, Bathinda, which
is against the health, safety and security of the plaintiffs and their family, as their houses are
within 200 meters of tower. The matter is presently pending before the court.
50.
Puran Chand has filed a civil suit before the Civil Judge (Senior Division), Pathnkot against
Parshotam Lal, the company and others, praying for permanent injunction restraining the
defendants from raising construction by installing a tower. The matter is presently pending
before the court.
51.
Prem Chand has filed a civil suit against Yograj, the company and others before the Civil
Judge (Senior Division) Gurdaspur, praying for permanent injunction. The plaintiff has also
filed an application under order 39 rules 1 and 2 of the CPC for restraining the defendants
327
from interfering in any manner in the Garha Khad or carving out the passage from the Garha
Khad. The matter is presently pending before the court.
52.
Surinder Kumar has filed a civil suit against Charanjit Singh and the company before the
Additional Civil Judge (Senior Division) Garhshankar, praying for permanent injunction
restraining the defendants from installing a mobile tower at the suit land. The matter is
presently pending before the court.
53.
Davinder Singh has filed a civil suit against Swinder Singh and the company before the Civil
Judge (Senior Division) Gurdaspur, praying for permanent injunction restraining the
defendants from leasing, renting out for installing the mobile tower at the property adjoining
the house of the plaintiff, whereby causing nuisance, inconvenience and risk to the health of
the plaintiff and other inhabitants of the locality and for mandatory injunction directing the
defendant no1 to restore the wall demolished by the defendants of the house of the plaintiff to
its original condition. The matter is presently pending before the court.
54.
Buta Singh and others have filed a civil suit against Avtar Singh, the company and others
before the Civil Judge (Senior Division) Barnala, praying for permanent injunction restraining
the defendants from installing mobile tower at the suit land along with an application under
order 39 rules 1 and 2 of the CPC. The matter is presently pending before the court.
55.
Aman Khanna has filed a suit against the company for recovery of Rs. 204,200, Rs. 143,000
as principal amount, Rs. 11,200 as interest and Rs. 50,000 for damages and harassment to the
plaintiff on the basis of oral and documentary evidence along with future interest till
realization. The matter is presently pending before the court.
56.
Apple Communications has filed a suit against the company for recovery. The copy of the
plaint is yet to be received by the company. The matter is presently pending before the court.
57.
Harjinder Singh has filed a civil suit against Reena Rani, the company and others before the
Civil Judge (Senior Division) praying for permanent injunction restraining the defendants
from installing a mobile tower on the land of the plaintiff situated in the village of Abadi Deh.
The matter is presently pending before the court.
58.
Vikram Singh has filed a civil suit against Gurjit Singh the company and others before the
Additional Civil Judge (Senior Division) Khanna, praying for permanent injunction
restraining the defendants from installing a mobile tower on the roof of the house of defendant
no.1 and adjoining the wall of the plaintiff along with an application under order 39 rules 1
and 2 of the CPC for grant of temporary injunction. The matter is presently pending before the
court.
59.
Makhan Singh and others have filed a civil suit against Sonu Singh, the company and others,
before the Civil Judge (Senior Division) Talwandi Sabo praying for permanent injunction
restraining the defendants from installing a mobile tower in village Sekhu, tehsil: Talwandi
Sabo, Bathinda, which is against the health, safety and security of the plaintiffs and their
family. The plaintiffs have also filed an application under order 39 rules 1 and 2 of the CPC.
The court had passed an interim ex – parte order restraining the defendants from installing the
tower at the suit land. The matter is presently pending before the court.
60.
Nasib Kaur and others have filed a civil suit against Sonu Singh, the company and others,
before the Civil Judge (Senior Division) Talwandi Sabo praying for permanent injunction
restraining the defendants from installing a mobile tower in the residential plot of Gurpal
Singh, tehsil: Talwandi Sabo, Bathinda, which is against the health, safety and security of the
plaintiffs and their family. The plaintiffs have also filed an application under order 39 rules 1
and 2 of the CPC. The court had passed an interim ex – parte order restraining the defendants
from installing the tower at the suit land. The matter is presently pending before the court.
61.
Gurmeet Kaur has filed a civil suit against Ajit Singh, the company and others before the Civil
Judge (Senior Division) Dhuri, praying for permanent injunction restraining the defendants
from installing a mobile tower in the residential plot of the plaintiff, village: Kheri Chailha,
328
tehsil: Dhuri, Sangrur, which is a thickly populated area and is situated near the house of the
plaintiff. The matter is presently pending before the court.
62.
Balwant Singh has filed a civil suit against Suda Singh, the comapny and others, Civil before
the Civil Judge (Senior Division) Ludhiana, praying for permanent injunction restraining the
defendants from installing a mobile tower and generator set in the plot of Suda Singh, situated
at H.No:125, Raja Garden Colony, village: Partap Singh Wala, Ludhiana. The matter is
presently pending before the court.
63.
Jaswant Singh has filed a civil suit against Balwant Singh, the company and others before the
Additional Civil Judge (Senior Division) Rajpura, praying for permanent injunction
restraining the defendants from installing a mobile tower on the land situated at khewat No:
22, khatoni No: 50, khasra No: 769/678/428/688/177 situated within village: Kharola, tehsil:
Rajpura, and further restraining from changing the nature of the suit land. An application
under order 39 rules 1 and 2 for grant of temporary injunction has also been filed. The matter
is presently pending before the court.
64.
Pitambar has filed a civil suit against Kulwant Singh, the company and others before the Civil
Judge (Senior Division) Chandigarh, praying for mandatory injunction restraining the
defendants to remove the tower fixed at the common wall of the plaintiff and defendant no.1
as the common wall is not strong to bear the load of tower, machinery and generator set and
further causing nuisance by creating noise and pollution. The matter is presently pending
before the court.
65.
Bikkar Singh and others have filed a civil suit against Spice Telecom and others before the
Civil Judge (Senior Division) Zira, praying for permanent injunction restraining the
defendants from installing mobile tower in the plot shown in the site plan attached, situated in
village: Kohala, tehsil: Zira. An application under order 39 rules 1 and 2 for grant of
temporary injunction has also been filed. The matter is presently pending before the court.
66.
Vijay Kumar and another has filed a civil writ petition against the Union of India, the
company and others in the nature of mandamus for directing the respondents no:1 and 2 i.e
Union of India and the State Of Punjab, to frame policy/guidelines for installation of mobile
towers in the residential area on the public or privately owned properties taking into
consideration the ill-effects of the mobile towers on the health of the general public living in
the close vicinity and further for directing the respondents no.3 i.e the municipal corporation
Amritsar, not to grant permission to respondent no.4 to 6 i.e Spice Telecom (respondent no:
4&5) and the Bombay Cloth House, Amritsar, to install the mobile towers in the thickly
populated area of Putlighar, Amritsar in violation of the provisions of the telecom policies
issued by the government from time to time. The matter is presently pending before the court.
Litigations against Spice Communications Limited in Karnataka Circle
67.
A criminal complaint (1448/2004) has been filed by the Assistant Controller of Legal
Metrology, Tumkur against the company in the Court of Judicial Magistrate, First Class,
Tumkur under the Standard Weights and Measures Act, 1976 and the rules made there under
for not maintaining the pre-paid packet of SIM cards as per the rules i.e. the pre-paid packet
does not contain manufacture date, address of the manufacturer etc. The company has moved
the High Court of Karnataka (756/2006) under section 482 of the CRPC for quashing the
impugned complaint in the lower court. The High Court of Karnataka has passed an interim
order for staying the proceedings before the lower court. The next date of hearing in the High
Court is yet to be fixed. The matter is presently pending in the lower court.
68.
Sandeep K. Arjunagi has filed a consumer complaint before the District Forum, Bijapur
alleging that there is a network problem and his incoming calls were barred for some time.
The complainant has claimed Rs. 800,000 as compensation towards loss incurred by his
company, loss of its reputation & mental agony. The company has appeared before the forum.
The matter is presently pending before the court for counter and affidavit.
329
69.
Shivanand Mitte has filed a complaint against the company (172/2007) in the District
Consumer Forum, Gulbarga for excess deduction of administration fee on recharge claiming
an amount of Rs 52,000 towards compensation and costs. The Company has filed its counter
to the complaint. The matter is presently pending before the court.
70.
Shivanand Mitte filed complaint against the company (111/2007) in the District Consumer
Forum, Udupi for excess deduction of administration fee on recharge claiming an amount of
Rs 2,000,000 towards compensation and costs. The District Forum has passed an order on
Fberuary 20, 2008 for transferring the matter to Uttara Kannada District Forum, Karwar from
District Forum Udupi for disposal. The company has filed its counter to the complaint. The
matter is presently pending before the court.
71.
Ashok Nayak has filed a complaint against the company (30/2008) in the District Consumer
Forum, Udupi for deduction of excess administrative charges on recharge and claiming
compensation of Rs. 22,087. The company has filed the counter before the District Consumer
Forum. The matter is presently pending adjudication.
72.
Pallavi has filed a complaint against the company (34/2008) in the District Consumer Forum,
Udupi for deduction of excess administrative charges on recharge and claiming compensation
of Rs. 22,090. The matter is presently pending before the District Consumer Forum.
73.
Chacko Varghesse has filed a civil suit (81/2003) against the company in the court of Civil
Judge, Senior Division at Puttur D.K. seeking vacant possession of the premises leased out by
it to the company on yearly tenancy for a period of 10 years by way of a registered lease deed
on various terms and conditions. The plaintiff has sought vacant possession of the premises in
its original condition and also direction to the company to pay damages/cost of repair of Rs.
50,000. The company has filed its written statement and an application for rejecting/staying
the suit and directing the plaintiff to have recourse to provisions of the Arbitration and
Conciliation Act, 1996 before the District Court at Mangalore. The matter is presently pending
adjudication.
74.
A civil suit (260/2006) has been filed by Bhamy Vittaldas Shenoy in the court of the I
Additional Civil Judge (Senior Division), Mangalore D.K. against V. Nagendra Baliga to give
the vacant possession of the subject property and restrain the company from putting up any
telecommunication tower on the suit property. The company has filed an application stating
that it is not a necessary party. This case has been shifted to Civil Judge (Senior Division),
Bantwal. The matter is presently pending adjudication.
75.
A civil suit (581/2007) has been filed by Sneha Trading Corporation in the Court of III
Additional Civil Judge (Junior Division), Belgaum against the company for a declaration that
the plaintiff is the exclusive distributor for prepaid services of the company and consequential
relief of permanent injunction restraining the company from disturbing or terminating their
distributorship in Belgaum. The Court has rejected and dismissed the case. However, the
plaintiff has filed an appeal (67/2008) in the Court of Principal Civil Judge (Senior Division),
Belgaum. The matter is presently pending adjudication.
76.
K. Bhujanga has filed a civil suit against Jaswanth Singh and the company before the Court of
the Civil Judge (Junior Division), Shivamogga. Jaswanth Singh, owner of the property has
leased out premises to the company for construction of a network tower. The plaintiff being
aggrieved by such construction approached the court seeking perpetual injunction on further
construction of the tower at the premises, for removal of the partially constructed tower and to
pay the litigation costs. The matter is presently pending adjudication.
77.
A complaint has been filed against the company for violation of the provisions of Equal
Remuneration Act, 1976 in the Labour Court, Mysore for not maintaining the registers in
prescribed form as required under the Equal Remuneration Act, 1976, non-registration of the
establishment, for not displaying the required statutory notice and for non-submission of the
statutory notices to the inspector under the Contract Labour (Regulation and Abolition) Act,
1970. The matter is presently pending before the labour court.
330
Litigation by Spice Communications Limited
1.
The company has filed a petition against DOT before the TDSAT challenging the rejections of
UAS license applications by DOT for 16 service areas, namely Assam, Bihar, Gujarat,
Himachal Pradesh, Jammu & Kashmir, Kerala, Kolkatta, Madhya Pradesh, Mumbai, North
East, Orissa, Rajasthan, Tamil Nadu (including Chennai Service Area), Uttar Pradesh (west),
Uttar Pradesh (east) and West Bengal on the ground that the company does not possess the
requisite net-worth for grant of UAS license licenses for these 16 service areas. The company
has contended that it had much more than the required net-worth for the grant of the said
licenses at all times including, as on the date of the applications, i.e. August 31 2006, or at any
time thereafter.
The company has also separately filed a petition before the TDSAT challenging the procedure
adopted by DOT for grant of letters of intent and UAS licenses to various applicants as DOT
allegedly failed to follow its well established policy of first-come-first-serve for processing the
applications filed with it. The company has contended that various applicants were handed
over the letters of intent by DOT simultaneously and in fact some applicants were given the
letters of intent even prior to applicants like the company, who had preferred its applications
much prior to such other applicants. The company further contends that it is has the first
priority for grant of UAS licenses in the majority of the above-mentioned service areas, if the
date of application is considered as the criterion for determining seniority.
The matters are presently pending and in the interim the TDSAT vide its orders dated
February 28, 2008 has directed that till further orders DOT shall take into account the
seniority of the company and reserve its rights in respect of the company’s application dated
August 31, 2006 for grant of UASL license.
Litigation through Cellular Operators Association of India involving Spice Communications Limited
2.
Cellular Operators Association of India, of which the company is a member (hereinafter
referred to as “COAI”) and others have filed an execution application (M.A. 26/2006 in
Petition No. 48/2004) before the TDSAT for the enforcement of the pulse petition order
pronounced by TDSAT dated November 11, 2005 with respect to implementation of the
following by BSNL with effect from November 11, 2005: (i) CDR/Reciprocal billing; (ii)
Reciprocity in interest charges; (iii) Application of intra circle carriage charge of only
20p/minute for calls handed over by Cellular Mobile Service Providers (“CMSP”) at Level II
TAX; and (iv) Refund of excess payments made together with interest (at a reciprocal rate).
The matter is presently pending adjudication.
3.
COAI and others have filed an appeal (3/2006) before the TDSAT against the TRAI direction
dated November 29, 2005 to operators to ensure strict compliance to the ‘Quality of Service’
benchmarks laid down by TRAI without taking any steps for ensuring that the operators have
the basic back-up infrastructural facility required for the same in form of, inter alia, adequate,
timely and effective interconnection. The appeal further challenges the arbitrary decision
taken by TRAI to issue show cause notices to some operators on a selective basis demanding
an explanation as to why penal action not be taken against them under sections 29, 30 read
with section 34 of the Telecom Regulatory Authority of India Act, 1997 in spite of implicitly
recognizing the fact that the parameters set by it are incapable of being achieved. The appeal
is presently pending adjudication.
4.
COAI and others have filed an appeal (4/2006) before the TDSAT challenging TRAI’s
Telecommunication Interconnection Usage Charges (Sixth Amendment) Regulation (1 of
2006) dated February 23, 2006 only insofar as the same has maintained the mobile termination
charge at Rs. 0.30 per minute which is not cost based as is being alleged by TRAI. The appeal
is presently pending adjudication.
5.
COAI and others have filed a petition before the TDSAT (140/2005) against Reliance
Infocomm and others for providing their mobile services namely “Unlimited Cordless” in the
garb of fixed wireless services, and thereby forcing the cellular operators to pay Access
Deficit Charge (“ADC”) on such calls on which otherwise no ADC is admissible or payable
331
as per the applicable IUC/ADC regime. Simultaneously, by passing off their said mobile
services as fixed wireless services, Reliance Infocomm is retaining ADC, which otherwise it is
not entitled to retain. This has created and continues to create non-level playing field
conditions for the cellular operators. It is also violative of, inter alia, IUC regulations, the
directions/clarifications issued by TRAI and DoT, terms of the license of Reliance Infocomm
and is also violative of the petitioners’ rights under Article 14 and 19(1)(g) of the Constitution.
The petition is presently pending adjudication.
6.
COAI and others have filed a petition before the TDSAT (74/2005) against Tata Teleservices
Limited for providing their mobile services namely “WALKY” in the garb of fixed wireless
services and thereby forcing the cellular operators to pay ADC on such calls on which
otherwise no ADC is admissible or payable. Simultaneously, by passing off their said mobile
services as fixed wireless services, Tata Teleservices Limited is retaining ADC, which
otherwise it is not entitled to retain. This has created and continues to create non-level playing
field conditions for the cellular operators. It is also violative of, inter alia, IUC regulations, the
directions/clarifications issued by TRAI and Department DoT, terms of the license of Tata
Teleservices Limited and is also violative of the petitioners’ rights under Article 14 and
19(1)(g) of the Constitution. The petition is presently pending adjudication.
7.
COAI and others have filed a petition before TDSAT (122/2007) against DoT and the
Assistant Wireless Advisor, GOI, challenging their order of November, 2006 for unilaterally
and wrongly increasing manifold the spectrum charges (based on revenue share) for
microwave access and microwave backbone networks of GSM based telecom service
providers and such increase being unfair, unreasonable, violative of the terms of licence
agreement, violative of the contract between cellular operators and the GOI, unilateral and
illegal. The petitioners have prayed for striking down the impugned order and directing the
respondents not to raise any demand notes based on the said impugned order and declaring
that the respondents ought to refund/adjust the excess amounts collected by them from cellular
operators pursuant to said order. The matter is presently pending adjudication.
8.
COAI and others have filed a petition (286/2007) before the TDSAT challenging the decision
dated October 19, 2007 of DoT permitting, inter alia, cross over of spectrum allocation and
enhanced subscriber linked criteria for spectrum allocation. The petitioners are further seeking
directions/orders from the tribunal for enforcement of the Petitioners legal rights and for
enforcement of already mutually agreed and executed contract between the cellular operator
and the government. The petitioners have also sought directions to DoT to issue UAS licenses,
on an a priori basis vis-à-vis other applicants, to GSM operators, already holding licenses in
certain service areas and having applied in other service areas for new UAS licenses as per
already existing policy, contractual and licensing framework and issue required spectrum to
them based on and to the extent of availability of spectrum following the principle of ‘First
Come First Serve’ basis. The matter is presently pending adjudication.
9.
COAI and others have filed an appeal (4352/2006) before the Supreme Court of India against
the order pronounced by the TDSAT dated November 11, 2005 to the extent that it does not
provide the relief with retrospective effect and has only directed implementation of the
following by BSNL with effect from November 11, 2005: (i) CDR /Reciprocal billing; (ii)
Reciprocity in interest charges; (iii) Application of intra circle carriage charge of only
20p/minute for calls handed over by CMSPs at Level II TAX; and (iii) Refund of excess
payments made together with interest (at a reciprocal rate). The appeal is presently pending
adjudication and is connected to civil appeal no. 1676/2006 filed by BSNL against COAI and
others before the Supreme Court of India, discussed above.
10.
COAI and others have filed a special leave petition before the Supreme Court of India against
Mr. Jagbir Singh, Union Territory of Chandigarh and others, against an interim order passed
by the High Court of Punjab & Haryana at Chandigarh which had directed that there will be
no further construction of any tower except in the non-residential areas and that too after the
necessary sanction has been taken. The Supreme Court on November 13, 2006 directed
impleadment of Union of India, DoT as a respondent in the case to get its view on the case and
further grant full stay of the impugned order. The matter is presently pending adjudication.
332
Litigation by Spice Communications Limited in Punjab Circle
11.
The company and others have filed a petition (284/2007) before the Telecom Disputes
Settlement And Appellate Tribunal (“TDSAT”) against DoT and TRAI challenging the
definition of “Gross Revenue” and “Adjusted Gross Revenue” as applied and implemented by
DoT for the purposes of levying license fees and wireless planning and co-ordination charges
under the cellular license agreement, as being unfair, unjust, unreasonable, arbitrary,
unilateral, violative of the terms of the migration package] and beyond the scope of the powers
vested with DoT under section 4 of the Indian Telegraph Act, 1885. The petitioners have
additionally challenged the various demand notes cum assessment orders raised by DoT, on
which payment had already been made, on grounds that the same are not in consonance with
previous judgments of the TDSAT. The petitioners have prayed for directing DoT to apply
and implement the correct definition of “Adjusted Gross Revenue” and to rework/recompute
all demands/demand notes in consonance with the correct definition of “Adjusted Gross
Revenue” and to refund/adjust all the excess amounts charged by DoT under the demand
notes. The tribunal passed an interim order dated October 23, 2007, stating that the license
fees will be paid by the petitioners, as per the new definition of “Adjusted Gross Revenue”
from the same date. The matter is presently pending adjudication.
.
12.
A writ petition has been filed by the company before the High Court of Punjab & Haryana
(7807/2001) challenging the orders passed by various authorities. The petitioner has
challenged the applicability of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 (the “EPF Act”) vide letter dated August 12, 1998 made to the Regional Provident
Fund Commissioner (“RPFC”) which rejected the application of the company and directed it
to comply with the provisions of the EPF Act in letter and spirit vide impugned order dated
January 10, 2000. Being aggrieved by the order of RPFC, the petitioner preferred an appeal
before the Employees Provident Fund Appellate Tribunal which was dismissed vide order
dated July 12, 2000. Being aggrieved by the said order(s), the petitioner has filed the present
writ petition. A prayer has also been made by the petitioner for issuance of a writ of certiorari
for quashing the impugned orders and restraining the RPFC from enforcing the provisions of
the EPF Act. An interim prayer was also made for issuing directions to the RPFC for
restraining it from taking further action pursuant to the impugned orders during the pendency
of the writ petition. The interim prayer made by the petitioner was granted by the High Court
vide order dated May 29, 2001 and further proceedings before the Regional Provident Fund
Commissioner, Chandigarh have been stayed. The matter is presently pending adjudication.
13.
A writ petition (10982/2004) has been filed by the company before the High Court of Punjab
& Haryana praying for issuance of a writ in the nature of certiorari quashing the orders dated
July 19, 2004 passed by the Land Acquisition Officer, Chandigarh directing the petitioner to
remove the cell sites/towers of the petitioner within three days. The High Court vide its order
dated July 23, 2004 directed that towers shall not be demolished and parties were further
directed to maintain status quo in relation to the structure and functioning of the towers. Vide
its order dated August 5, 2004, the High Court has directed that no further towers will be
erected and status quo to be maintained. Vide its order dated February 7, 2005, the High Court
has modified the order dated August 5, 2004 to the extent that if the petitioner approaches the
Land Acquisition Officer, Chandigarh/administration and applies for permission to set up
cellular mobile telephony provider towers in non-residential areas, the administration would
dispose off the application of the petitioner in accordance with the guidelines framed by it
within a period of four weeks. Vide its order dated May 11, 2006, the High Court has
adjourned the writ petition sine die. The matter is presently pending before the court.
14.
A civil suit (230/2004) has been filed in the court of Civil Judge (Senior Division), Jalandhar
by the company for declaration to the effect that various notices issued by the defendant,
Cantonment Board, Jalandhar are illegal, arbitrary and void ab initio and are liable to be
declared as null and void and for permanent injunction restraining the defendant from
proceeding with the said notices and from removing/ demolishing the structures raised by the
plaintiff in the said notices. The matter is presently pending adjudication.
333
15.
The company has filed an appeal before the District and Sessions Judge, Chandigarh against
the order of the Rent Controller, Chandigarh dated February 18, 2008 in the rent petition
(34/2006) filed by Laj Rani Bansal under section 13 of the East Punjab Urban Rent Restriction
Act, 1949 ejecting the company from the premises given on lease on expiry of lease period.
The Additional District and Sessions Judge has passed a stay order against the ejectment of
the company from the leased premises. The matter is presently pending.
16.
The company has filed an appeal (KST A.P. No. 1026/1999-2000) before the Joint
Commissioner of Commercial Taxes (Appeals) against the order of the Assistant
Commissioner of Commercial Taxes levying sales tax of Rs. 9,293 on the sale of SIM cards
for the assessment year 1996-1997. The case is presently pending before the Joint
Commissioner of Commercial Taxes (Appeals).
17.
An appeal was preferred by the Service Tax Department before the CESTAT against the order
dated August 17, 2005 of Commissioner (Appeals), Chandigarh made in favour of the
company. The matter pertains to demand of Rs. 2,317,625, as well as interest and penalty
thereon, raised on adjustment of service tax on interconnect bills of DoT for the period
October 1998 – March 1999. The said appeal was decided by the CESTAT vide its order
dated April 11, 2007 in favour of the Service Tax Department against which the company has
filed an appeal (ST/189/05-ST) before Punjab and Haryana High Court.
18.
An appeal (Dairy No. O-27101) has been preferred by the company against the CESTAT,
New Delhi and the Deputy Commissioner of Central Excise Division, Chandigarh in the High
Court of Punjab and Haryana at Chandigarh under section 35G of the Central Excise Act,
1994 for setting aside the order dated January 9, 2006 passed by the CESTAT, New Delhi.
The matter pertains to demand of Rs. 660,720, as well as interest and penalty thereon, raised
on adjustment of service tax on interconnect bills of DoT for the period April 2002 –
September 2002. The CESTAT, vide its order dated January 9, 2006 has rejected any
adjustment of service tax made by the company under rule 6 (3) of the Service Tax Rules,
1994. The appeal has been admitted by the High Court and is pending for adjudication.
19.
An appeal was preferred by the company before the Commissioner of Central Excise
(Appeals), Chandigarh against the order of the Additional Commissioner, Central Excise
dated December 21, 2006. The issue in dispute is whether cenvat credit on pre-fabricated
building/shelter is admissible as capital goods/inputs or not. The period under dispute is
September 2004 – August 2005. Vide its order dated December 21, 2006, the Additional
Commissioner, Central Excise has held that cenvat credit taken by the company against prefabricated building /shelter is irregular and is required to be recovered and thus has confirmed
the demand alongwith interest and imposed penalty under Rule 14 and 15 of Cenvat Credit
Rules, 2004 read with sections 73 and 75 of Finance Act, 1994. The said appeal has been
decided by the Commissioner of Central Excise (Appeals) vide an order dated July 3, 2007, in
favour of the Service Tax Department against which the company preferred an appeal
(76/CE/CHD/07) before the CESTAT, New Delhi, but same case was remanded back to
Commissioner of Central Excise (Appeals) for reconsideration. After reconsideration, the
Commissioner (Appeals) has disposed off the matter in favour of the Service Tax Department
vide its order dated February 13, 2008, against which the company is planning to file the
appeal before CESTAT – New Delhi. The amount in dispute is Rs. 1,181,895 as demand plus
Rs. 1,181,895 as penalty plus interest.
20.
An appeal was filed by the company before the Commissioner of Central Excise (Appeals),
Chandigarh against the order of Additional Commissioner, Central Excise dated December 21,
2006. The issue in dispute is whether cenvat credit on pre-fabricated building/shelter is
admissible as capital goods/inputs or not. The period under dispute is September 2005 –
August 2006. Vide its order dated December 21, 2006, the Additional Commissioner, Central
Excise has held that cenvat credit taken by the company against pre-fabricated building/shelter
is irregular and is required to be recovered and thus, has confirmed the demand alongwith
interest and imposed penalty under rule 14 and 15 of Cenvat Credit Rules, 2004 read with
sections 73 and 75 of Finance Act, 1994. The said appeal has been decided vide an order of
334
the Commissioner of Central Excise (Appeals), dated July 3, 2007, in favour of the Service
Tax Department, against which the company preferred an appeal (77/CE/CHD/07) before
CESTAT, New Delhi, but same was remanded back to the Commissioner of Central Excise
(Appeals ) for reconsideration. After reconsideration, the Commissioner (Appeals) has
disposed off the matter in favour of the Service Tax Department vide its order dated February
13, 2008, against which the company is planning to file the appeal before CESTAT – New
Delhi. The amount in dispute is Rs. 2,933,396 as demand plus Rs. 2,933,396 as penalty plus
interest.
21.
The company has filed a suit against Brigadier B.S.Grewal for permanent injunction under
section 38 of the Specific Relief Act, 1963 against the defendant for restraining him from
demolishing the building i.e plot no. 42, Industrial Area, Phase II, Ram Darbar, Chandigarh in
a mobile tower is installed, till the termination of the lease deed executed between the plaintiff
and the defendant in this regard. An application under order 39 rules 1 and 2 for grant of
temporary injunction has also been filed. The matter is presently pending before the court.
In the Punjab Circle, the company has filed an aggregate of 95 civil suits for recovery involving an
amount of Rs. 1,846,505; 609 criminal complaints under section 138 of the N.I. Act involving an
amount of Rs. 5,211,115; and 102 permanent lok adalat matters for recovery involving an amount of
Rs. 216,527.
Litigation by Spice Communications Limited in Karnataka Circle
22.
A writ petition (21397/2005) has been filed by the company in the High Court of Karnataka
against the Commissioner Corporation of Belgaum, Bangalore for issuing a writ of certiorari
to quash the demand notice issued by the respondent to pay Rs. 60,000 as tax for three cell
sites put up by the petitioner and 5% share in revenue, as the same is not valid. The High
Court has passed an interim order granting stay on the execution of the demand notice. In the
mean time the petitioner has also received a demand notice from the respondent to pay Rs.
40,000 as service charge for four cell sites and for this, the petitioner has filed a contempt
petition in the High Court of Karnataka against the Commissioner Corporation of Belgaum,
Bangalore. The said contempt petition has been withdrawn since the High Court has instructed
for clarification of the order dated September 12, 2005 passed in writ petition filed by
petitioner. The matter is pending in the High Court. The total amount involved is Rs. 0.1
million. The next date of hearing is yet to be fixed.
23.
The company has filed an appeal before the CIT (Appeals)-12, New Delhi against the order of
the DCIT for the assessment year 2005-2006 disallowing expenses amounting to
Rs.31,260,500 on account of advertisement expenses, Rs. 125,318 on account of software
expenses and Rs. 24,468,750 on account of management service charges. The next date of
hearing is yet to be fixed.
In the Karnataka circle, the company has filed one civil suit for recovery involving an amount of Rs.
168,413; and 17 criminal complaints under section 138 of the N.I. Act involving an amount of Rs.
80,827.
Spice Corp Limited
Litigation against Spice Corp Limited
1.
Mohd Irfan Alamgir Mulla, Mohd Nasir Alamgir Mulla and Mohd Asim Alamgir Mulla (the
“Plaintiffs”) have filed a suit (310/2007) for injunction in the Civil Court, Thane against Jauss
Polymers Limited (“Jauss”), MCorpGlobal Private Limited, Indian Televentures Private
Limited, Mr. Harish Chota Bhai Patel, the Talathi Saja Met, the Circle Officer, Wada Revenue
Circle, the Tehsildar Wada, State of Maharashtra and Mrs. Safiyabibi Gulam Mohd Mulla,
contending that they are the absolute owners in possession of the suit schedule property.
It is contended that the Plaintiffs had executed a registered sale deed on September 29, 1995 in
favour of Jauss for sale of land at Gram Panchayat Nara, Taluka Wada, Thane, Maharashtra
335
(“Land”) for Rs. 3.5 million. Subsequently, Jauss executed a registered sale deed on March
24, 1998 in favour of Modifin Private Limited (“Modifin”) for the Land at Rs 3.5 million.
Modifin further executed a registered sale deed on September 28, 1998 in favour of Modicorp
Private Limited (“Modicorp”) for Land at Rs 3.67 million. Subsequently, MCorpGlobal
Private Limited (since Modicorp merged with MCorpGlobal Private Limited) executed a
registered sale deed on December 26, 2005 in favour of Indian Televentures Private Limited
(“ITPL”) for the Land at Rs. 4 million.
The contention of the Plaintiffs is that they had sold the Land to Jauss but had not handed
over the possession of the same. They further contend that they have possession of the Land
and are occupying, holding and cultivating the Land as owners of the same. Moreover, they
have not sold the Land to Modicorp or to ITPL and sale deed dated December 26, 2005
between Modicorp and ITPL is illegal.
The Civil Judge, Thane had issued a notice on May 3, 2007. Thereafter, Spice Corp and
ITPL have filed their reply. The next date of hearing is June 27, 2008 for reply of the other
parties.
2.
An appeal was filed by the Department of Income Tax against the company before the
Allahabad High Court against the order of the Income Tax Appellate Tribunal (“ITAT”)
allowing long term capital loss of Rs. 5,393,943 as against assessed business loss of Rs.
3,226,363 for the assessment year 1995-96. The next date of hearing has not been fixed as yet.
3.
An appeal was filed by the Department of Income Tax before the Allahabad High Court
against the order of the ITAT up holding the disallowance of the following amounts from the
company for the assessment year 1996-1997: Rs. 135,000 on account of prior period
expenses; Rs. 80,000 on account of consultancy charges; Rs. 977,765 on account of
disallowance of expenditure on publication of book, Rs. 680,000 on account of disallowance
of expenditure on market survey; Rs. 1,351,732 on account of disallowance of salary and
traveling expenses of Mr. U.R. Saha, as pertaining to new projects; Rs. 906,600 on account of
disallowance of consultancy fee to the business strategy group. The next date of hearing is yet
to be fixed.
4.
An appeal was filed by the Department of Income Tax before the Allahabad High Court
against the order of the ITAT for holding the assessment order for the assessment year 20012002 as null and void since the notice in relation to the same was not served within the
statutory period, for allowing business loss of Rs. 2,011,277 as against speculative loss as
assessed in the books of accounts and for disallowance of interest of Rs. 145,000. The next
date of hearing is yet to be fixed.
Litigations against Indian Electricity Supply & Transmission Private Limited (since then amalgamated
with MCorpGlobal Private Limited which is now Spice Corp Limited)
5.
Haryana Power Generation Corporation Limited filed a special leave petition (civil)
(17214/2006) against the judgment and order of the High Court of Punjab & Haryana, dated
September 4, 2006 in FAO No. 4676/2002 & FAO No. 5737/2002 passed in favour of the
company (which later amalgamated with MCorpGlobal Private Limited, which is now called
Spice Corp Limited).
The company, which had undertaken a power project at Panipat, provided a bank guarantee of
Rs. 5 million which was invoked by Haryana Power Generation Corporation Limited
(“HPGC”) (formerly Haryana Power Generation Board). The company filed a petition against
the demand of HPGC in the Court of District Judge, Ambala, which was dismissed.
Subsequently, the company filed a revision petition in High Court of Punjab & Haryana for
restraining HPGC and the court restrained HPGC from encashing the bank guarantee till the
disposal of the matter. Meanwhile, HPGC referred the matter for arbitration to the SecretaryLaw, Government of Haryana at Chandigarh. HPGC also lodged a separate additional claim
on January 17, 2000 for recovery of Rs 2,531,750 incurred by them on advisory services from
ICICI, Mumbai for completion of the power project. The Secretary-Law, Government of
Haryana decided the matter on April 27, 2001 in favour of HPGC and ordered for payment of
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Rs 2,531,750 by the company and also encashment of the bank guarantee of Rs. five million.
On May 9, 2001, IESTL filed an appeal before the Additional District Judge (I), Panchkula
against the order of the Secretary-Law, Government of Haryana and it was held vide an order
dated August 7, 2002 that HPGC is not entitled to the bank guarantee. However, it was
entitled for its claim of Rs 2,531,750 alongwith interest @ 15% p.a. w.e.f. January 17, 2000.
HPGC preferred an appeal in the High Court of Punjab & Haryana for the modification of the
judgement and order passed by Additional District Judge (I), Panchkula and the restoration of
the award passed by the Secretary-Law, Government of Haryana. The company also preferred
an appeal against the judgement and order of the Additional District Judge (I), Panchkula
wherein it was held that HPGC was entitled to recover an amount of Rs. 2,531,750 with
interest from January 17, 2000 @ 15% per annum. The High Court vide its order dated
September 4, 2006 allowed the appeal filed by the company and dismissed the appeal of
HPGC. HPGC subsequently filed the present special leave petition in the Supreme Court. The
Supreme Court passed an order on November 3, 2006 for issue of notice and stay on the
operation of the order of the High Court. On the last date of hearing on November 26, 2007,
the arguments were held on admission and the Supreme Court granted leave to HPGC and
placed the matter for final hearing in the Supreme Court which will be listed in the cause list.
Litigations against Indian Management Advisors & Leasing Private Limited (since then amalgamated
with MCorpGlobal Private Limited which is now Spice Corp Limited)
6.
An appeal has been filed by the Department of Income Tax against the company before the
ITAT at New Delhi on account of the allowability of depreciation of Rs. 10,393,667 on
computers purchased from Pertech Computers Limited and given on lease to Altos India
Limited in the assessment year 1989-1990. The next date of hearing is yet to be scheduled.
7.
An appeal has been filed by the Department of Income Tax against the company before the on
the allowability of depreciation of Rs. 1,089,458 on written down value of computers
purchased from Pertech Computers Limited and given on lease to Altos India Limited in the
assessment year 1993-1994. The next date of hearing is yet to be scheduled.
Litigations against Silvertone India Private Limited (since then amalgamated with McorpGlobal Private
Limited which is now Spice Corp Limited)
8.
The Department of Income Tax has filed a case before the Allahabad High Court against the
company on the entry of allowability of horticulture expenses of Rs. 39,527 and investment
allowance of Rs. 397,533 in the assessment year 1985-1986. The next date of hearing is still to
be fixed.
9.
The Department of Income Tax has filed a case before the Allahabad High Court against the
company for the entry of book profits under section 115 of the IT Act, with regard to transfer
from revaluation reserve and depreciation on revalued assets amounting to Rs. 2,224,361 in
the assessment year 1989-1990. The next date of hearing is still to be fixed.
10.
The Department of Income Tax has filed a case before the Allahabad High Court against the
company for reopening of assessment under section 263 of the IT Act, withdrawal under
sections 80HH and 80I of the IT Act and taxability of income from letting out of properties
under the head ‘Income from House Property’ aggregating to Rs. 829,460 in the assessment
year 1990-1991. The next date of hearing is still to be fixed.
11.
The Department of Income Tax has filed a case before the Allahabad High Court against the
company for reopening of assessment under section 263 of the IT Act, withdrawal under
sections 80HH and 80I of the IT Act and taxability of income from letting out of properties
under the head ‘Income from House Property’ aggregating to Rs. 333,220 in the assessment
year 1991-1992. The next date of hearing is still to be fixed.
Litigations against Calcutta Installments Private Limited (since then amalgamated with McorpGlobal
Private Limited which is now Spice Corp Limited)
337
12.
An appeal has been filed by the Department of Income Tax before the Allahabad High Court
against the order of the ITAT alleging that the ITAT erred in holding the assessment made in
the name of the company in the assessment year 1996-1997 is null and void since the
company stood dissolved w.e.f May 16, 1996 consequent upon its amalgamation with
McorpGlobal Private Limited and was thus a non-entity from the above date. The next date of
hearing is still to be fixed.
13.
An appeal has been filed by the Department of Income Tax before the Allahabad High
Court against the order of the ITAT alleging that the ITAT erred in dismissing the appeals
of the Department of Income Tax on the grounds that the assessment for the assessment
year 1995-1996 itself was null and void due to the reason that the notice under section
143(2) of the I.T. Act was not served on the company within the time prescribed under the
proviso to section 143(2) of the I.T. Act. The next date of hearing is still to be fixed.
Litigation by Spice Corp Limited
1.
The company has filed a writ petition (13358/2007) in the Allahabad High Court against the
order of the District Magistrate, Kanpur against State of Uttar Pradesh, through the ADM
(Finance & Revenue, Kanpur & Others).
The District Magistrate, Kanpur vide its order dated February 9, 2007 imposed a stamp fee of
Rs. 150 million with interest @ 1.5% per month and penalty of Rs. 30 million on the
company for the alleged violation of non-payment of stamp fee on the amalgamation order for
amalgamation of Modi Infotech Private Limited, Panipat Power Corporation Private Limited,
Radhakrishna Rubber Chem Private Limited, SpiceCorp Private Limited, Indian Electricity
Supply & Transmission Private Limited, Atman Productions Private Limited, B.K. Modi
Capitals Limited, Indian Rubber Machinery Manufacturers Private Limited, Modi
Petrochemicals Private Limited and Privilege Investments Private Limited with the company.
A stay was granted by the Allahabad High Court on March 13, 2007 on the order of the
District Magistrate, Kanpur. The respondents have filed their reply and the case is pending
adjudication.
2.
The company has filed a writ petition (13381/2007) in the Allahabad High Court against the
order of the District Magistrate, Kanpur against State of Uttar Pradesh (through the Additional
District Magistrate (Finance & Revenue, Kanpur & Others).
The District Magistrate, Kanpur vide its order dated February 9, 2007 imposed a stamp fee of
Rs. 3.05 million with interest @ 1.5% per month and penalty of Rs. 0.95 million on the
company for the alleged violation of non-payment of stamp fee on the amalgamation order for
amalgamation of Diamondstone (India) Private Limited, Fortunate Holdings Private Limited,
Attractive Investments Private Limited, Veena Modi Agro Private Limited, Kush Investment
Private Limited, Wellvest Investment Private Limited with the company. A stay was granted
by the Allahabad High Court on March 13, 2007 on the order of the District Magistrate,
Kanpur. The respondents have filed their reply. The respondents have filed their reply and the
case is pending adjudication.
3.
The company has filed an appeal before the CIT (Appeals) at Ghaziabad on account of
treating long term capital loss of Rs. 8,918,938 as a business loss of Rs. 102,865 and
disallowance on account of membership and subscription of Rs. 1,934,650 in the assessment
year 2004-2005. The next date of hearing is still to be scheduled.
4.
The company has filed an appeal before the CIT (Appeals) at Ghaziabad on account of
treating long term capital loss of Rs. 21,464,900 as business profit of Rs. 8,030,800, the
disallowance on account of membership and subscription of Rs. 618,050 and treating the
expenses on advertisements of Rs. 200,000 as donation under 80G of the I.T. Act in the
assessment year 2005-2006. The next date of hearing is still to be scheduled.
5.
The company has filed an appeal on account of treating short term capital loss of Rs.
2,511,080 as business loss in the assessment year 2002-2003. Also, the Department of Income
Tax has filed an appeal against the order of the CIT (Appeals) for disallowance of
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membership and subscription expenses amounting to Rs. 733,950 and Rs. 68,425 on account
of disallowance of interest in the assessment year 2002-2003. Both these appeals are pending
before the ITAT at New Delhi. The next date of hearing is scheduled for July 16, 2008.
6.
The company has filed an appeal before the ITAT, New Delhi on account of treating long
term capital loss of Rs. 19,669,710 as business loss of Rs. 2,825,238 and Rs. 290,000 on
account of membership and subscription for the assessment year 2002-2003. The next date of
hearing is still to be scheduled.
Litigations by Indian Management Advisors & Leasing Private Limited (since then amalgamated with
MCorpGlobal Private Limited which is now Spice Corp Limited)
7.
The company has filed an appeal before the ITAT at New Delhi against an order under passed
by the CIT on account of depreciation of Rs. 4,207,107 on certain soft drink bottles for the
assessment year 1992-1993. The next date of hearing is yet to be scheduled.
Spice Mobiles Limited
Litigation against Spice Mobiles Limited
1.
A suit has been filed against the company before the High Court of Delhi (1681/2005) by
Super Cassettes Industries Limited for permanent injunction restraining infringement of
copyright in respect of embedded ring tone in the handset marketed by the company. The
plaintiff has also preferred an application under Order 39 Rules 1 and 2 read with section 151
of the CPC for seeking stay/interim injunction restraining the company, its directors, officers,
servants, agents, and representatives, group companies, subsidiaries and all others acting for or
on its behalf from producing, reproducing or making available to the public ring tones/song
clippings produced from the plaintiff’s copyrighted sound recordings in the movies Dus,
Maine Pyar Kyun Kiya and Mujhse Shaadi Karogee for a claim of Rs. 2,100,000. The High
Court passed an ex-parte order dated December 9, 2005 in favour of the plaintiff. Being
aggrieved by the order of the Court, the company filed an application for setting aside of exparte ad-interim order on the ground that plaintiff failed to disclose to the Court about the
memorandum of understanding executed between the parties, under the terms of which the
plaintiff allowed the company to use the ring tones for minimum 90,000 mobile handsets. The
matter is now pending before the Joint Registrar of the Delhi High Court for completion of
pleadings and admission/denial of documents.
2.
Dinesh Singh Bisht filed a writ petition against the company (8297/2006). The plaintiff’s
name was struck off from the muster rolls of the company on June 12, 1996 and Rs. 4,802 was
deposited in his account as full and final payment for his services as a technician in the
company. The plaintiff raised an industrial dispute and on March 7, 2005 the Presiding
Officer, Labour Court, Delhi passed an award in favour of the petitioner granting the relief of
lump-sum compensation of Rs. 50,000 and rejected his claim of reinstatement. Being
aggrieved by the order of the Labour Court, the company filed a writ petition on April 21,
2006 before the High Court of Delhi praying for the quashing/setting aside the award dated
March 7, 2005 and the Court granted unconditional stay against the operation of the award.
The matter has not yet come up for hearing till date.
3.
Redington India Limited has filed a suit against the company in the High Court of Delhi
(1438/1999) for recovery of Rs. 2,804,626.50 together with future interest at the rate of 24%
p.a. for which a letter of credit was issued by the company and the same was not submitted by
the plaintiff before the bank. The company has filed its reply. The High Court has fixed the
matter for final arguments. The next date of hearing date is not yet fixed.
4.
Calicut Engineering Works Limited has filed a suit before the Civil Court at Calcutta
(2731/1993) against the company for the appointment of an arbitrator. The petitioner’s
contention is that the company committed a breach of its contractual obligations under the
agreement for sale entered between the parties for sale in favour of the petitioner of a M-250
computer and an Olivetti DOT Matrix Printer for a price of Rs. 50,420 and Rs. 20,000,
respectively with a warranty of 365 days from the date of installation and 375 days from the
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date of dispatch, whichever is earlier. The petitioner, however, failed to produce original
documents before the Court and hence the arbitrator could not be appointed till date.
5.
Mr. Ravinder Kumar Jain preferred an appeal in the Court of District Judge Civil, Rampur,
Uttar Pradesh (47/2004), against the judgement and decree dated April 29, 2004 passed by
Civil Judge (Senior Division), Rampur in O.S. 3 of 2000, under which the Civil Judge partly
allowed his claim upto the amount of Rs. 16,000 in lieu of Rs. 34,228. The appellant has
prayed for the setting aside of the findings of the Civil Judge, Rampur and claimed the entire
amount. Mr. Ravinder Kumar Jain also filed an execution application (9/2004) before the
Civil Judge (I), Rampur for the execution of the decree dated April 29, 2004 passed by the
Civil Judge (Senior Division), Rampur for the total amount of Rs.35,200. The matter has been
stayed by the Court vide its order dated August 23, 2004 till the final disposal of the appeal
pending in the Court of District Judge, Rampur (Uttar Pradesh). The next date of hearing in
the matter is yet to be fixed.
Litigation by Spice Mobiles Limited
1.
The company has filed a case (730/2006) against Bhushan Kumar and another in the Delhi
High Court. A suit had been filed against the company in the Delhi High Court by Super
Cassettes Industries Limited for permanent injunction restraining infringement of copyright in
respect of embedded ring tone in the handset marketed by the company, damages, delivery of
infringing articles, renditions of accounts, etc. An application under order 39 Rules 1 & 2 read
with section 151 of CPC for seeking stay/interim injunction restraining the company, its
directors, officers, servants, agents, and representatives, group companies, subsidiaries and all
others acting for or on its behalf from producing, reproducing or making available to the
public ring tones/song clippings, etc. produced from the plaintiff’s copyrighted sound
recordings in the movies Dus, Maine Pyar Kyun Kiya, Mujhse Shaadi Karogee had also been
filed along with the suit. The High Court passed an ex parte order dated December 9, 2005
granting interim injunction and restraining the company from producing, reproducing or
making available to the public ring tones/ song clippings produced from the plaintiffs
copyrighted sound recordings in the movies Dus, Maine Pyar Kyun Kiya and Mujhse Shadi
Karogi till the next date of hearing. Being aggrieved by the order of the Court, the company
filed the application for setting aside of the ex-parte ad-interim order of injunction dated
December 9, 2005 on the ground that plaintiff has failed to disclose to the Court about the
memorandum of understanding, which was executed between the parties. Pursuant to the
terms of the memorandum of understanding, the company allowed the defendant to use the
ring tones for minimum 90,000 mobile handsets. The matter is now fixed before Joint
Registrar of the Delhi High Court for completion of pleadings and admission/denial of
documents. In the meantime the company has made a counter claim of Rs. 2,000,000 against
Mr. Bhushan Kumar. The case is posted for hearing on December 1, 2008.
2.
The company has preferred an appeal (A-2553/2001) against the order of the District Forum,
Agra directing the company to either rectify the defects in the printer supplied to Mr. S.S.L.
Tandon at its own cost or to refund Rs. 24,832 towards the price of the machine and Rs. 2,000
towards compensation for mental torture and harassment. The State Commission, Lucknow
has vide its order dated August 7, 2002 stayed the operation of the impugned order of the
District Forum and the execution proceedings till further orders. The respondent has not
appeared in the said appeal till date and summons have been issued. The appeal is still
pending and the date of next hearing is still not fixed.
3.
The company has preferred an appeal (46/2004) against the order of Civil Judge (Senior
Division), Rampur who partly decreed the amount of Rs. 16,000 plus interest @18% p.a. in
favour of Mr. Ravinder Kumar Jain. The company has prayed for setting aside of the
judgment and decree passed by the Civil Judge, Rampur. The appeal is still pending. The next
date for hearing date is not yet fixed.
4.
The company has filed a recovery suit (2094/2000) in the High Court of Delhi for an amount
of Rs. 1,000,798 against Unicorp Industries Limited for defaults in payments of sales tax
claims of Rs. 263,622 and payments against supplies of Rs. 514,080 made by the company.
The company has also claimed a sum of Rs. 223,096 towards interest @ 18% p.a. on the
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outstanding amount till the date of filing of the suit. The matter has been transferred from the
High Court of Delhi to the District Court at Tis Hazari and the fresh date of hearing is yet to
be fixed.
5.
The company has filed a recovery suit (1442/1999) in the High Court of Delhi for an amount
of Rs. 844,959 against Unicorp Industries Limited for defaults of payment against supplies of
Rs. 685,440 made by the company had supplied the equipments/computer peripherals of Rs.
685,440. The company has also claimed a sum of Rs. 159,519 towards interest @ 21% p.a. on
the outstanding amount till the date of filing of the suit. The matter has been transferred from
the High Court of Delhi to the District Court at Tis Hazari and the fresh date of hearing is yet
to be fixed.
6.
The company filed a recovery suit (40/1999) in the Court of District Judge, Tis Hazari Courts,
Delhi for an amount of Rs. 277,544 against Vallabhbhai Patel Chest Institute & Others
through Mr. Atul Mathur for defaults of outstanding payment of Rs. 178,300 for supply of
computers/computer peripherals by the company. The company also claimed a sum of Rs.
99,244 towards interest @ 18% p.a. on the outstanding amount till the date of filing of the suit.
The date of hearing is not yet fixed.
7.
The company has filed a recovery suit (33/2001) in the Court of District Judge, Tis Hazari
Courts, Delhi for an amount of Rs. 1,969,230 against Anil Joglekar for defaults of payment
against supply of goods made by the company. The company also claimed a sum of Rs.
99,244 towards interest @ 18% p.a. on the outstanding amount till the date of filing of the suit.
The company also claimed interest @ 21% p.a. on the outstanding amount from the date of
filing of the suit till the date of realisation. The matter has been transferred from the High
Court of Delhi to the District Court at Tis Hazari and the date of hearing is yet to be fixed.
8.
The company has filed a recovery suit (925/2000) in the High Court of Delhi against
Crompton Greaves Limited for defaults in payments against supplies of goods/materials of Rs.
10,444,456. The company ahs also claimed a pendente lite and future interest compounded
monthly @ 20% p.a. The matter is pending before the High Court of Delhi and next date of
hearing is due in September 2008. However, the company is in discussions with Crompton
Greaves Limited for out of court settlement.
9.
The company has filed a recovery suit (980/1999) against Jayanti Business Systems India for
non-payment against supplies made by the company for an amount of Rs. 621,781 plus
interest @ 18% p.a. from the date of filing of suit till date of realization of the said amount.
The matter is pending before the Tis Hazari Courts, New Delhi. The next date of hearing is
not yet fixed.
10.
The company has filed a recovery suit (970/1999) against New India Assurance Company
Limited for non-payment against supplies made by the company for an amount of Rs.
1,060,508 plus interest @ 18% p.a. from the date of filing of suit till date of realization of the
said amount. The matter has been transferred from the High Court of Delhi to the District
Court at Tis Hazari and a fresh date of hearing is still to be scheduled.
11.
A criminal complaint (626/2002) has been filed by the company before the Court of
Additional Chief Metropolitan Magistrate, Patiala House Courts, New Delhi under sections
138, 141 and 142 of the Negotiable Instruments Act, 1881 (“N.I. Act”) read with section 420
of the Indian Penal Code, 1860 (“IPC”) against Shivam Telecom for dishonour of cheque.
The company has alleged that Shivam Telecom issued a cheque of Rs. 60,000 bearing No.
540072 in the favour of the company and when the said cheque was presented in the State
Bank of Bikaner and Jaipur, Nehru Place, New Delhi on August 31, 2001, it was dishonoured.
Summons have been issued against Shivam Telecom and the matter has been fixed for hearing
on July 5, 2008.
12.
Criminal complaints (67814/2005 and 67816/2005) has been filed by the company before the
Court of Additional Chief Metropolitan Magistrate, Patiala House Courts, New Delhi under
sections 138, 141 of the N.I. Act read with section 420 of the IPC against Gromax Infonet
Limited and its director for dishonour of cheques. The company has alleged that Gromax
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Infonet Limited issued two cheques for an amount of Rs. 125,000 each bearing No. 852651
and 852652 dated September, 20 2005 and September, 30 2005 respectively, in favour of the
company for purchase of computers. When the said cheques were presented in the State Bank
of Bikaner & Jaipur, Nehru Place, New Delhi they were dishonoured.
The Magistrate has issued a non-bailable warrant against the accused. The next date of hearing
is fixed for November 6, 2008.
13.
A criminal complaint (247/1995) has been filed by the company before the Court of
Additional Chief Metropolitican Magistrate, Bangalore under sections 138, 141 of the N.I. Act
read with section 420 of the IPC against Super Star Confectionary Limited and its managing
director for dishonour of cheque. The company has alleged that Super Star Confectionary
Limited issued three cheques for a total sum of Rs. 83,980, in favour of the company for
purchase of computer software and hardware. When the cheques were presented in the
Corporation Bank Limited, Bangalore they were dihonoured.
The Magistrate had issued the summons against the accused and has also issued a non-bailable
warrant. However, the non-bailable warrants remain unserved till date.
14.
A criminal complaint (5608/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Sai Computers and its proprietor, Mr.Pankaj Singh for
dishonour of cheque. The company has alleged that it supplied certain products to Sai
Computers against invoice nos .RIRT050311, RIRT050312, RIRT050313 and RIRTO600004
against which Sai Computers issued two cheques of Rs. 98,336 and Rs.68,748. All the
cheques were duly presented by the company in the State Bank of Hyderabad and State Bank
of Patiala but the same were dihonoured.
The pre-summoning evidence is in process. The matter is fixed for hearing.
15.
A criminal complaint (7098/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Mobile Planet and its partners Mr. Rajesh Kumar and Mr.
Satvit Singh for dishonour of cheque. The company has alleged that it supplied certain
products to Mobile Planet against invoice no. RIHPO60052 and RIHPO60053 against which
Mobile Planet issued a cheque of Rs. 158,780. The said cheque was duly presented in the
Corporation Bank but the same was dishonoured.
The pre-summoning evidence is in process. The matter is fixed for hearing.
16.
A criminal complaint (7099/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Sai Computers and its proprietor, Mr.Pankaj Singh for
dishonour of cheque. The company has alleged that it supplied certain products to Sai
Computers against invoice no. RIRTO600009 against which Sai Computers issued a cheque
of Rs. 58,749. The said cheque was duly presented by the company with in the State Bank of
Patiala but the same was dihonoured.
The pre-summoning evidence is in process. The matter is fixed for hearing.
17.
A criminal complaint (6480/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Allied Systems and its partner Mr. Anoop for dishonour of
cheque. The company has alleged that it supplied certain products to Allied Systems against
invoice no. RIRPO60007 against which Allied Systems issued a cheque of Rs. 54,624. The
said cheque was duly presented in the Corporation Bank but the same was dishonoured.
The pre-summoning evidence is in process. The matter is fixed for hearing.
18.
A criminal complaint (7101/2006) has been filed before the Chief Judicial Magistrate, Gautam
Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with section 420 of the IPC
against Allied Systems and its partner Mr. Anoop for dishonour of cheque. The company has
alleged that it supplied certain products to Allied Systems against invoice nos. RIRTO60001
and RIRT060002 against which Allied Systems issued a cheque of Rs. 222,491. The said
cheque was duly presented in the Corporation Bank but the same was dishonoured.
The pre-summoning evidence is in process. The matter is fixed for hearing.
342
19.
A criminal complaint (7097/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Computer Software and Service for dishonour of cheque. The
company has alleged that it supplied certain products to Computer Software and Service
against invoice no. TIHA060001 against which Computer Software and Service issued a
cheque of Rs. 58,094. The said cheque was duly presented in the Corporation Bank but the
same was dishonoured.
The pre-summoning evidence is in process. The matter is fixed for hearing.
20.
A criminal complaint (5174/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Prime Infosoft Limited for dishonour of cheque. The company
has alleged that it supplied certain products to Prime Infosoft Limited against invoice nos.
TIPU050015 and RIPU050238 against which Prime Infosoft Limited issued two cheques of
Rs. 41,500 each. The cheques were duly presented in the Corporation Bank but the same were
dishonoured.
The pre-summoning evidence is in process. The matter is fixed for hearing.
21.
A criminal complaint (No. 6479/2006) has been filed by the company before the Chief
Judicial Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read
with section 420 of the IPC against Pearl Infotech and its proprietor Mr. Deepak Lamba for
dishonour of cheque. The company has alleged that it supplied certain products to Pearl
Infotech against invoice no. RIHP051113 against which Pearl Infotech issued a cheque of Rs.
92,320. The said cheque was duly presented in the State Bank of Hyderabad but the same was
dishonoured. The matter is fixed for hearing.
22.
A criminal complaint (6482/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Delhi Computers and its proprietor, Mr. Jagjeet Singh for
dishonour of cheque. The company has alleged that it supplied certain products to Delhi
Computers against invoice nos. RIRT050279 and RIRT050280 against which Delhi
Computers issued a cheque of Rs. 155,316. The said cheque was duly presented in the
Corporation Bank but the same was dishonoured. The pre-summoning evidence is in process.
The matter is fixed for hearing.
23.
A criminal complaint (5443/2006) has been filed by the company before the Chief Judicial
Magistrate, Gautam Budh Nagar, Noida under sections 138, 141 of the N.I. Act read with
section 420 of the IPC against Global Education Tree and its director and vice president
Mr.Ajay Changani for dishonour of cheque. The company has alleged that it supplied its
products to Global Education Tree against invoice no. RIHP050721 against which Global
Education Tree issued two cheques of Rs. 100,000 and Rs. 50,000. The cheques were duly
presented in the Corporation Bank but the same were dishonoured. The pre-summoning
evidence is in process. The matter is fixed for hearing.
24.
An appeal has been filed by the company against the DCIT Special Range, Meerut before the
ACIT, Meerut for the disallowed entry towards warranty provision of Rs. 910,000 and
entertainment expenses of Rs. 86,000, all in the assessment year 1990-1991.
25.
An appeal has been filed by company against the DCIT Special Range, Meerut before the
ITAT for the disallowed entries towards commission to Indian Reprographic Systems Private
Limited, Licensintorg & Company India Private Limited for Rs. 3,7640,00, provisions for
doubtful debts of Rs. 8,630,000, payments to clubs of Rs. 12,000, gifts and articles of Rs.
10,000 and managing director’s remuneration Rs. 240,000, all in the assessment year 1992-93.
26.
An appeal has been filed by the company against the Assistant Commissioner, Income Tax,
Meerut before the CIT(Appeals) for the disallowed entry towards change in accounting policy
for Rs. 10,269,000, in the assessment year 2002-03.
343
27.
The Commissioner of Central Excise, Noida had charged the company for suppression of sale
arrangement in order to evade excise duty and done a re-quantification of central excise duty
payable. The company filed an appeal (1471/96-A) and got the order from the Customs,
Excise and Service Tax Appellate Tribunal (“CESTAT”) asking the Commissioner of Central
Excise, Noida to reassess the case. The Commissioner of Central Excise, Noida vide its order
dated November 30, 2006 has confirmed a demand of Rs. 38,263,475 and a penalty of Rs.
28,000,000, against the company has filed and appeal before CESTAT which was restored
back the case on the file of Commissioner Meerut for reassessment. The Commissioner
initiated reassessment proceedings and posted the hearing for hearing on February 5, 2008.
Subsequently, the commissioner has not given any fresh date nor issued any order.
28.
The company has preferred an appeal (Appeal/Delhi/Customs/D-I/ASU/Import/132/2005)
against the Assistant Commissioner, Customs Group – VA, New Delhi. The company
imported a PIN DOT matrix printer and cleared the same under custom tariff heading
no.8471.60 and was assessed to basic duty @ 20%, countervailing duty @16% while special
additional duty was exempt as per government notification. The department alleged that goods
were imported under completely knocked-down/semi-knocked-down conditions and sold after
assembling and thus, were not exempt from payment of special additional duty under the
relevant government notification. The Commissioner of Customs vide its order dated January
4, 2006 granted waiver of pre deposit of the entire amount of duty demanded in the matter and
agreed to dispose of the appeal on merits, without insisting on any amount to be deposited.
The amount involved is Rs. 129,000. The Commissioner of Customs completed arguments
and orders are awaited.
Super Infosys Private Limited
Litigation against Super Infosys Private Limited
Nil
Litigation by Super Infosys Private Limited
Nil
Teesho Rubbers Private Limited
Litigation against Teesho Rubbers Private Limited
Nil
Litigation by Teesho Rubbers Private Limited
Nil
Tuberose Investments Private Limited
Litigation against Tuberose Investments Private Limited
Nil
Litigation by Tuberose Investments Private Limited
Nil
Twenty First Century Capitals Limited
Litigation against Twenty First Century Capitals Limited
Nil
344
Litigation by Twenty First Century Capitals Limited
1.
The company has preferred an appeal before the ITAT, New Delhi for the assessment year
2001-02, against the order disallowing foreign travel expenses of Rs. 4,031,589 and interest
expense of Rs. 1,620,000. The next date of hearing is yet to be fixed.
VCorp Merchantile Private Limited
Litigation against VCorp Merchantile Private Limited
Nil
Litigation by VCorp Merchantile Private Limited
Nil
COMPANIES UNDER RBI’S DEFAULTER LIST
1. Modi Stones Limited
Modi Stones Limited (“MSL”) figures on the RBI’s list of defaulters. MSL was declared as a sick
industrial company by the Board for Industrial and Financial Reconstruction (“BIFR”) by its order
dated April 15, 1998. The rehabilitation proposal submitted to BIFR was not acceptable to the secured
creditors and therefore, BIFR by its order dated April 25, 2001 confirmed its prima facie opinion that
MSL is not likely to make its net worth exceed its accumulated losses within the reasonable time while
meeting its financial obligations and as a result MSL should be wound-up in public interest under
section 20(1) of Sick Industrial (Special Provisions) Act 1985. The opinion of BIFR was forwarded to
the Bombay High Court for further actions under law by the Registrar of BIFR by its letter dated May
11, 2001. The Bombay High Court by its order dated July 25, 2002 has confirmed the opinion of BIFR
for winding up of MSL, and also appointed the official liquidator of MSL. Since then the official
liquidator is proceeding in the matter and all records have been handed over to the official liquidator by
the MSL.
Mr. Dilip Modi, one of our Promoters, was a director on the Board of MSL during the period August
20, 1992 till November 7, 1998 and Dr. B.K. Modi, part of our Promoter Group, was also a director on
the board of MSL till December 7, 1998.
State Bank of Bikaner and Jaipur acting in its capacity of Lead Bank, of the consortium of Banks,
which have granted the loan facilities to the MCL, has filed a recovery suit with Debt Recovery
Tribunal (“DRT”) for an amount of Rs.388.92 Million, as detailed in the table below. The said loan
facilities amongst other was guaranteed by Dr. B.K. Modi. The matter came before the DRT on Apri