Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Hyderabad-500 034
Tel:040-3312454,3320251/751/752
Fax-040-3311968
email:karvy.hyd@karvy.sprintrpg.ems.
vsnl.net.in
ISSUE OPENS ON: .......................,2000
ISSUE CLOSES ON:.........................,2000
Table of Contents
Definitions and Abbreviations
Articles
BDL
Board
CDSL
DSIR
EPS
HSE
Issue
Public Issue of 1910000 equity shares of Rs. 10/- each for cash at par
Issuer or Company or
ZTL
IT Act
MOU
Memorandum of Understanding
Memorandum
NRIs
Non-Resident Indians
NSDL
PAN
Prospectus
RBI
NOC
No Objection Certificate
APTRANSCO
PCB
Registrars
ROC
SEBI
SIA
INTERNAL
1. The company has availed of rupee term loan of Rs.100 lakhs from IDBI out of which an amount of Rs.47.08 lakhs is outstanding as on January
01, 2000. At the option of IDBI, the loan is convertible into equity shares at par during the currency of the loan. Conversion of loan into equity
would result in dilution of equity capital.
Management Perception: This is a standard condition being stipulated by IDBI in all cases where assistance under Venture Capital Scheme
is sanctioned. The above loan is likely to be fully repaid by January 01, 2002. The quantum of loan being small, conversion thereof is unlike to
have any major dilution in the equity capital of the company.
2. For its proposed expansion project, the company has yet to
identify the premises
place orders for some of the items of plant & machinery
recruit suitable personnel
apply to APTRANSCO for power connection
obtain NOC from Pollution Control Board ( PCB )
Management Perception :The company has already applied for the patents of its Zen SATS and is confident of getting the approval of
competent authorities.
11. Company's original project, which involved more than the normal risk, was sanctioned assistance by IDBI under its Venture Capital Scheme.
Management Perception :The company has completed the project and the product viz. Zen SATS has been successfully developed.
12. Company has been supplying its products to Government departments/agencies. The receipt of orders/dues from these departments/agencies
depends on the budgetary allocation/ availability of funds.
Management Perception :The company has been able to procure orders and recover its dues. No difficulty is envisaged by the company in
this regard.
External
1. Competition from imports and future entrants into the software industry.
Management Perception: The Company has a track record of timely execution of the orders. The company proposes to upgrade its
products by incorporating latest advancements in the technology to stay ahead of its competitors
2. The present growth rates in the software industry are high and are not sustainable.
Management Perception: The Company has a niche market with sufficient growth potential
3. Any adverse change in the Government Policies towards the Software industry may affect the financial performance of the Company.
Management Perception: The company feels that govt. policies are unlikely to be detrimental to the interest of software industry.
Notes:
1. Investors are advised to refer to the paragraph on "Basis of Issue Price" appearing later in this Prospectus before making an investment decision
in respect of this issue.
2. Investors are advised to refer to "Notes to Accounts" appearing on Pages 40, 42-44 before making an investment decision in respect of this
issue.
3. Investors may please note that in the event of over-subscription, allotment shall be made on a proportionate basis in consultation with The
Hyderabad Stock Exchange Limited, i.e. the Regional Stock Exchange.
4. The promoter directors do not have any business interest in Zen Technologies Ltd. except to the extent of sitting fees and remuneration, if any,
payable to them. The promoters will be interested to the extent of dividend paid on shares held by them and their relatives and friends and to the
extent of allotment of shares, if any, to their friends and relatives in the public issue.
HIGHLIGHTS
1. Existing profit making company engaged in manufacture of high-end multimedia weapons simulator used for training of police, paramilitary and
armed forces.
2. Promoted by qualified and experienced professionals.
3. Company has satisfied client base of state police organisations and paramilitary organisations, some of which are placing repeat orders for the
existing range of products.
4. Research & Development Center of the company recognised as in-house R & D unit by Department of Scientific & Industrial Research.
5. Project appraised by IDBI.
6. Equity participation to the extent of Rs.100 lakhs from IDBI for the proposed project.
7. Listing of equity shares proposed on Hyderabad Stock Exchange.
ZEN TECHNOLOGIES LIMITED
(Originally incorporated on June 29, 1993 under the Companies Act, 1956 as
Zen Technologies and Computers Limited and renamed as
b. all the legal requirements connected with the said Issue as also the guidelines, instructions etc.; issued by SEBI, the Government
and any other competent authority in this behalf have been duly complied with; and
c. the disclosures made in the Prospectus are true, fair and adequate to enable the investors to make a well-informed decision as
to the investment in the proposed Issue.
(3) We confirm that besides ourselves, all the intermediaries named in the Prospectus are registered with SEBI and that till date such
registration is valid;
4. If underwritten, we shall satisfy ourselves about the worth of the underwriters to fulfill their underwriting commitments.
5. We certify that written consent from shareholders has been obtained for inclusion of their securities as part of promoters'
contribution subject to lock-in and the securities proposed to form part of promoters' contribution subject to lock-in, will not be
disposed/sold/transferred by the promoters during the period starting from the date of filing the draft Prospectus with the Board
till the date of commencement of lock-in period as stated in the draft Prospectus. "
The filing of this Prospectus does not, however absolve Zen Technologies Limited from any liabilities under Section 63 of the Act, or from the
requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed Issue. SEBI, further, reserves the right
to take up, at any point of time, with the Lead Manager to the Issue, any irregularities or lapses in the Prospectus.
Note: The issuer accepts no responsibility for statements made otherwise than in the Prospectus or in the advertisements or any other material issued
by or at the instance of the Issuer and that anyone placing reliance on any other source of information would be doing so at his/her risk.
DISCLAIMER CLAUSE OF THE HYDERABAD STOCK EXCHANGE (HSE)
Hyderabad Stock Exchange has vide its letter No REF/HSE/List/2000/1334 dated March 10, 2000, given permission to Zen Technologies Limited to
use its name in this Prospectus as the stock exchange on which this Company's equity shares are proposed to be listed. The HSE has scrutinized this
Prospectus for their limited internal purpose of deciding on the matter of granting the aforesaid permission to Zen Technologies Limited. HSE does not
in any manner
i. warrant, certify or endorse the correctness or completeness of any of the contents of this Prospectus, or
ii. warrant that Zen Technologies Limiteds equity shares will be listed or will continue to be listed on the Exchange, or
iii. take any responsibility for the financial or other soundness of Zen Technologies Limited, its promoters, its management or any scheme or
project of Zen Technologies Limited.
It should not, for any reason be deemed or construed that this Prospectus has been cleared or approved by the HSE. Every person who desires to
apply for or otherwise acquires any equity shares of Zen Technologies Limited may do so pursuant to independent inquiry, investigation and analysis
and shall not have any claim against the HSE, whatsoever, by reason of any loss, which may be suffered by such person consequent to or in
connection with such subscription / acquisition, whether by reason of anything stated or omitted to be stated herein or for any other reason
whatsoever.
DISCLAIMER IN RESPECT OF JURISDICTION
This offer is being made in India to persons resident in India and to NRIs on a non-repatriation basis. This Prospectus does not, however, constitute
an offer to sell or an invitation to subscribe to shares offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or
invitation in such jurisdiction. Any person into whose possession this Prospectus comes is required to inform himself about and to observe any such
restrictions. Disputes arising out of this Issue shall be subject to the jurisdiction of appropriate Court(s) at Hyderabad.
GENERAL DISCLAIMER
It should be noted that the Company accepts no responsibility for statements made otherwise than in the Prospectus or in the advertisement or any
other material issued by or at the instance of the Company and that anyone placing reliance on any other source of information would be doing so at
his/her own risk.
FILING
A copy of this Prospectus along with the documents required to be filed under Section 60 of the Act, has been delivered for registration to the
Registrar of Companies, Andhra Pradesh at Hyderabad. A copy of the draft Prospectus has also been filed with the Madras Office of SEBI.
LISTING
Initial Listing Application has been made by Zen Technologies Limited to the Stock Exchange at Hyderabad (regional stock exchange), for permission
to list the equity shares and for an official quotation of the equity shares of Zen Technologies Limited.
Hyderabad Stock Exchange vide its letter dated January 17,2000 had advised the company to enhance its authorised capital which has since been
complied with.
In case the permission to deal in and for an official quotation of the equity shares is not granted by the above mentioned stock exchange, the Issuer
shall forthwith repay, without interest, all monies received from applicants in pursuance of this Prospectus and if such money is not repaid within eight
days after the day from which the Issuer is liable to repay it, the Issuer shall pay interest as prescribed under Section 73 (2) of the Act.
IMPERSONATION
Attention of the applicant is specifically drawn to the provisions of sub-section (1) of Section 68A of the Act, which is reproduced below:
"Any person whoa) makes in a fictitious name an application to a Company for acquiring, or
subscribing for, any shares therein, or
b) otherwise induces a Company to allot, or register any transfer of shares
therein to him, or any other person in a fictitious name,
shall be punishable with imprisonment for a term which may extend to five years."
MINIMUM SUBSCRIPTION
If the Company does not receive the minimum subscription of 90% of net offer to public on the date of closure of the issue or the subscription level
falls below 90 % after closure of the issue on account of cheques having been returned unpaid or due to withdrawal of applications, the Company shall
forthwith refund the entire amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the Company shall
pay interest as per Section 73 of the Act.
UTILISATION OF ISSUE PROCEEDS
The sum received in respect of the issue will be kept in a separate bank account and the Company will not have access to such funds unless allotment
of equity shares has been made in consultation with the Hyderabad Stock Exchange and listing/trading approval has been received from Hyderabad
Stock Exchange where listing has been sought.
The Board of Directors of the Company confirms and certifies that:
i. all monies received out of this Issue shall be transferred to a separate bank account other than the bank account referred to in sub-section (3) of
the Section 73 of the Act.
ii. details of all the monies utilised out of the proceeds of the Public Issue shall be disclosed under an appropriate separate head in the Annual
Report of the Issuer indicating the purpose for which such monies had been utilised, for all the financial years till all the monies are fully utilised ;
and
iii. details of all unutilised monies out of the issue, if any, referred to in sub-item (i) shall be disclosed in the Annual Reports of the Issuer indicating
the form in which such unutilised monies have been invested.
LETTERS OF ALLOTMENT/ SHARE CERTIFICATES / REFUND ORDERS
Letters of Allotment / Share Certificates /Letters of Regret / cancelled Stockinvests and / or Refund Orders, if any, will be despatched at the
applicant's sole risk to the sole/first applicant within 10 weeks from the date of closure of the Issue. The Issuer shall despatch refund orders, if any, of
value upto Rs. 1,500/- Under Certificate of Posting (UCP) and Refund Orders above Rs. 1,500/- and Letters of Allotment/Share Certificates by
Registered Post, within 10 weeks from the date of closure of the Issue, in accordance with the Act, stock exchange requirements and SEBI guidelines.
The issuer, as far as possible, will allot the equity shares within 30 days from the date of closure of the Issue and shall pay interest at the rate of 15%
per annum (except to the applicants applying through Stockinvest), if the allotment has not been made and refund orders are not despatched to the
investors within 30 days from closure of the Issue for the period of delay beyond 30 days. The Issuers would also make available adequate funds to
the Registrars to the Issue (hereinafter also referred to as "the Registrars") for this purpose.
ISSUE PROGRAMME
THIS ISSUE WILL OPEN AT THE COMMENCEMENT OF BANKING HOURS AND WILL CLOSE AT THE CLOSE OF BANKING
HOURS ON THE DAYS AS MENTIONED BELOW:
COMPANY SECRETARY
The Company is presently availing the services of a practicing company secretary on a retainership basis. However, the company is in the process of
recruiting a qualified company secretary on full time basis. The company undertakes to appoint a company secretary before filing the prospectus with
ROC.
CREDIT RATING / TRUSTEES
This being an issue of equity shares, no credit rating or appointment of Trustees is required.
COMPLIANCE OFFICER
Mr. P. Bheema Reddy
Finance Manager,
Zen Technologies Limited
40 Radhaswamy Colony, Sikh Road
Secunderabad 500 009
Andhra Pradesh, India.
Telephone no.: (040) 7843279 / 7818534
Fax no.: (040) 7843279.
E-mail: zentech@hd1.vsnl.net.in
BANKERS TO THE COMPANY
Global Trust Bank Limited
SMR Sartaz Complex, Sikh Road
Secunderabad 500 009
Andhra Pradesh, India.
Telephone no. : (040) 7810151
Fax no: (040) 7810184
BANKERS TO THE ISSUE
UNDERWRITING
The proposed issue of 19,10,000 equity shares of Rs. 10/- each for cash at par aggregating Rs. 1,91,00,000/- offered through this Prospectus is not
to be underwritten.
Undertaking by the Issuer
The company undertakes that :
i. the complaints received in respect of the Issue would be attended to by the company expeditiously and satisfactorily
ii. the company shall take necessary steps for the purpose of getting the shares, now being offered, listed on Hyderabad Stock Exchange within
the specified time
iii. the funds required for despatch of refund orders/allotment letters/share certificates by registered post shall be made available to Karvy
Consultants Ltd., the Registrar to the Issue
iv. that the promoters contribution in full shall be brought in advance before the Issue opens for public subscription
v. that the share certificates/ refund orders to the applicants shall be despatched within the specified time.
vi. no further issue of securities shall be made till the shares offered through this Prospectus are listed or till the application moneys are refunded on
account of non-listing/under subscription etc.
II. CAPITAL STRUCTURE OF ZEN TECHNOLOGIES LTD
(As on March 30,2000)
Number of shares
A
Nominal Value
(Rs)
10,00,00,000
Authorised Capital
1,00,00,000
Description
3,44,56,000
fully paid-up
C
4,18,44,000
ii)
iii)
1,00,00,000
1,27,44,000
1,91,00,000
7,63,00,000
Paid-up Equity
Capital after the issue
76,30,000
fully paid-up
IDBI has agreed to subscribe to the equity shares of the company to the extent of Rs 100 lakhs out of which subscription upto Rs 70 lakhs would be
ensured before filing of Prospectus with ROC. The balance amount would be received at least one day before the issue opens for subscription.
Necessary amendments would be carried out in the Capital Structure upon receipt of subscription from IDBI.
Notes forming part of the Capital Structure:
1. The authorised capital of the company was increased from Rs 4 crore to Rs 10 crore pursuant to resolution passed at Extra Ordinary
General Meeting of the members of the company held on 20-10-1999.
2. The capital history of Zen Technologies Limited is as follows:
Date
of
No of
Face Value
Total Paid-
Issue
Considera-
Descrip-
allotment
Equity
Shares
per share
up capital
Price
(Rs)
tion
tion
(Rs)
(Rs)
30-01-96
670100
10/-
6701000
10/-
For cash
Promoters&
Associates
31-05-96
380000
10/-
3800000
10/-
For cash
Promoters
&
Associates
24-11-97
170000
10/-
1700000
10/-
For cash
IDBI
2-02-98
200000
10/-
2000000
10/-
For cash
IDBI
22-4-98
130000
10/-
1300000
10/-
For cash
IDBI
15-02-00
1895500
10/-
18955000
10/-
For cash
Promoters
&
Associates
3. As on date, there are no pending warrants, options, rights to convert any debenture or bond or loan or any other instrument entitling the existing
shareholder to acquire any equity shares or voting rights. The company has availed of a rupee term loan of Rs.100 lakhs from IDBI out of
which an amount of Rs.47.08 lakhs is outstanding as on January 01, 2000. At the option of IDBI, the loan is convertible into equity shares at
par during the currency of the loan. Further, for part financing the original project, IDBI had agreed to subscribe to the equity capital of the
company to the extent of Rs 55 lakhs, out of which subscription upto Rs 50 lakhs has already been received. The company has applied for
cancellation of the balance amount of Rs 5 lakhs. Formal approval from IDBI is awaited.
4. The Company has 133 shareholders as on March 30,2000.
(a) The details of the ten largest shareholders as on 30-03-2000, the date of filing the Prospectus with SEBI are as under:
S No.
Ashok Atluri
No of Shares held
% of holding
1364500
39.60
IDBI
500000
14.51
A Rama Devi
331700
9.63
A Tara Dutt
249500
7.24
Satish Atluri
164500
4.77
Anshu Bhargava
33000
0.96
N V Ramana
30000
0.87
VB Investments
30000
0.87
NLV Prasannam
30000
0.87
Beena Kilaru
30000
0.87
27,63,200
80.19
10
TOTAL
(b)The details of the ten largest shareholders as on 20-03-2000, ten days prior to the date of filing the Prospectus with SEBI are as under:
S No.
Ashok Atluri
2
3
No of Shares held
% of holding
1364500
39.60
IDBI
500000
14.51
A Rama Devi
331700
9.63
A Tara Dutt
249500
7.24
Satish Atluri
164500
4.77
Anshu Bhargava
33000
0.96
N V Ramana
30000
0.87
VB Investments
30000
0.87
NLV Prasannam
30000
0.87
Beena Kilaru
30000
0.87
27,63,200
80.19
10
TOTAL
(c) The details of the ten largest shareholders as on 30-03-1998, two years prior to the date of filing the Prospectus with SEBI are as under:
S No.
No of Shares held
% of holding
IDBI
370000
26.05
Ashok Atluri
136000
9.58
Satish Atluri
74500
5.25
Nandita Dutt
40000
2.82
Premalatha Atluri
30000
2.11
Ravi Kumar M
27600
1.94
Selwyn Samuel
27600
1.94
26100
1.84
Mary Selwyn M
22710
1.60
Kotaiah Kamepalli
20700
1.46
775210
54.59
10
TOTAL
3. The Shareholding Pattern of the company as on March 30,2000 as well as after the public issue is as follows:
Sr No
Existing
(as on
30/3/2000)
No of
equity
shares
No of
equity
shares
Promoters/Directors,
their
friends, relatives and associates
2945600
85.49
4220000
55.31
500000
14.51
1500000
19.66
Public
1910000
25.03
Total
3445600
100.00
7630000
100.00
Ashok Atluri
1364500
Satish Atluri
164500
Ravi Kumar M
27600
Date
of
allotment/
acquisition
Face Value
2,51,600
15-022000
12,74,400
To
allotted
Sr
No
15,26,000
be
Period of Lock in
(Rs)
% of Post
Issue
Capital
25,16,000
3.30
3 years
1,27,44,000
16.70
3 years
1,52,60,000
20.00
a. The above shares will be locked-in for a period of 3 years from the date of allotment of equity shares in the present issue.
b. The shares locked-in by the Promoters are not pledged to any party.
c. The equity shares held by the promoters under lock-in period shall not be sold/hypothecated/transferred during the lock-in-period.
d. All the shares subscribed/ to be subscribed to by the promoters are also subject to non-disposal undertaking furnished by the promoters to
IDBI in terms of the provisions of Loan Agreement/Subscription Agreement executed by the company. Prior approval of IDBI would hence be
required for disposal of shares by the promoters during currency of IDBI loan/till IDBI holds equity shares in terms of the Subscription
Agreement.
e. The share application money with respect to item C(i) and C(ii) above shall be brought in by the promoters and IDBI at least one day prior to
the date of opening of the public issue. In case the entire amount of subscription from firm allottee viz. IDBI is not received one day prior to the
date of opening of the issue, the promoters shall subscribe to the equity shares to the extent of shortfall in subscription from the firm allottee viz
IDBI. However, subscription to the extent of at least Rs 70 lakhs shall be ensured before filing the Prospectus with ROC.
3. In terms of the Subscription Agreement entered into with IDBI on January 18,1996 for Direct Subscription to Equity (DSE) of Rs 55 lakhs, the
promoters have furnished an undertaking to buyback the shares subscribed to by IDBI, at any time on the terms & conditions contained in the
Subscription Agreement . Further, as per IDBI's sanction letter dated March 2,2000 for DSE of Rs 100 lakhs, the promoters are also required
to buyback the shares from IDBI, if so required by IDBI, the equity shares subscribed to by IDBI .This option is exercisable by IDBI on or
before April 1,2004 . Except for these , there is no other buy back or standby arrangement for the purchase of equity shares offered through
this Prospectus by the promoters, Directors or Merchant Bankers.
4. The company has not raised any bridge loan against the proceeds of this public issue.
5. The company has not issued any shares for consideration other than cash. The company has not revalued any of its assets so far and it does not
have any revaluation reserve.
6. The allotment of equity shares, in case of over-subscription, will be on a proportionate basis as follows:
a. A minimum of 50% of the net offer of equity shares to the public shall initially be made available for allotment to individual applicants who have
applied for less than or equal to 1,000 equity shares.
b. The balance 50% of the net offer of equity shares to the public shall initially be made available for allotment to investors, including bodies
corporate / institutions and individual applicants who have applied for more than 1,000 equity shares.
c. Any un-subscribed portion of the net offer to the public in any one of the above categories shall be made available for allotment to applicants in
the other category and the allotment shall be made on proportionate basis in terms of extant SEBI guidelines.
3. The allotment shall be made in market lot of 100 equity shares and in multiple of 100 equity shares. The allotment shall be on proportionate
basis and in the event of oversubscription, the basis of allotment shall be finalised in consultation with the HSE within the overall size of the issue.
4. No single applicant can make an application for number of securities, which exceeds the securities offered. Firm allottees are not eligible to
apply for equity shares being offered to the public.
5. None of the promoters or directors of the company have directly or indirectly purchased any shares of the company during last 6 months.
III. TERMS OF THE PRESENT ISSUE
The equity shares now being issued are subject to the provisions of the Act, the Memorandum and Articles of Association of the Company, terms of
this Prospectus, the Application Form, the guidelines for listing of securities issued by the Stock Exchange and Government of India and/or other
statutory bodies and the guidelines for Disclosure and Investor Protection issued by the Securities and Exchange Board of India (hereinafter also
referred to as "SEBI Guidelines"), and the Depositories Act, 1996, to the extent applicable.
AUTHORITY FOR THE ISSUE
The present issue of equity shares is being made pursuant to the resolution of the Board of Directors of the Company passed at its meeting held on
September 27, 1999. In terms of Section 81(1-A) of the Act, the present public issue of equity shares has also been authorized vide a Special
Resolution passed at the Extra-ordinary General Body Meeting of the members of Zen Technologies Ltd held on October 20, 1999.
FACE VALUE / ISSUE PRICE
Equity shares of face value of Rs 10/- each are being offered at par i.e at a price of Rs 10/- each.
TERMS OF PAYMENT:
Application must be made for a minimum of 200 equity shares and in multiples of 100 equity shares thereafter. The equity shares are being offered at a
price of Rs 10/- per share and the entire amount is payable on application.
A single applicant under the Public category cannot apply for more than the total number of equity shares being offered to public.
INTEREST IN CASE OF DELAY IN ALLOTMENT/DESPATCH
The company agrees that :
a. as far as possible, allotment of securities offered to public shall be made within 30 days of the closure of the issue.
b. it shall pay interest @ 15 % p.a (except to the applicants applying through Stockinvest), if the allotment is not made and/or the allotment
letters/refund orders are not despatched within 30 days from the date of closure of the issue.
RANKING OF NEW EQUITY SHARES
The equity shares now being offered, shall rank pari-passu with the existing equity shares of the Company in all respects save and except that the
holders of the equity shares now being offered will be entitled to dividend, if any, which may be declared or paid on the equity shares from the
respective date of allotment and in proportion to the amount paid up thereon for the period during which such capital is paid up. The holders of equity
shares now being offered will not be entitled to dividend, if any, declared or paid prior to the date of allotment.
RIGHTS OF MEMBERS
a. Right to receive dividend, if declared and paid.
b. Right to attend general meetings and exercise voting rights, unless prohibited by law.
c. Right to vote either personally or by proxy.
d. Right to receive offer for rights issue and be allotted bonus shares, if declared.
e. Right to receive surplus on liquidation, if any.
f. Other rights available under the Act and amendments thereto from time to time.
All applications duly completed in all respects must be submitted before the closure of the subscription list to any of the designated branches of
the Bankers to the Issue, accompanied by cash /cheque / bank draft / stockinvest drawn on any bank located at and which is a member of the
Bankers' Clearing House at the place where the Application Form is submitted. Applications should NOT be sent to the registered office of
Zen Technologies Limited or the Lead Manager to the Issue or to the Registrars to the Issue ( except as stated above ) .
No separate receipt will be issued for the application money. However, the Bankers to the Issue or any of their authorised / approved collecting
branches receiving the duly completed Application Forms will acknowledge receipt of the application by stamping and returning to the
applicant, the acknowledgement slip attached at the bottom of the Application Form.
In terms of the provisions of Section 269SS of the I.T. Act, payment of application money of Rs. 20,000/- and above should not be effected in
cash and must be effected by a crossed account payee cheque / bank draft / Stockinvest.
Where an application for equity shares is for the total value of Rs.50000/- or more, i.e. for 5000 equity shares or more, the sole applicant, or
each of the applicants in case the application is made in joint names, should mention his/ her Permanent Account Number (PAN) allotted under
the Income Tax Act, 1961 or where the same has not been allotted, please mention
the GIR number and the Income Tax Circle/ Ward/ District. In case, neither the PAN nor the GIR number has been allotted, the applicant must
mention "Not Allotted" in the appropriate column in the Application Form. Application Forms without this information will be considered
incomplete and are liable to be rejected.
To Prevent fraudulent encashment of refund orders by third party, the applicants are advised to indicate the name of the bank branch and the
savings / current account number in the application form. In case of refund, the refund order will indicate these details after the name of the
payee and the refund orders will be despatched directly to the payees address. Application without this information would be considered
incomplete and is liable to be rejected. Also, the applicants should write the application number and name of the sole / first applicant on the
reverse of the cheque / Demand Draft / Stock Invest.
Non-resident Indians ( NRIs) applicants wishing to apply for shares on non-repatriable basis may use the form meant for Resident Indian
Public. The remittance of application money must be made out of Non-resident Ordinary ( NRO )Account.
PROCEDURE FOR PAYMENT BY MEANS OF STOCKINVEST
The applicant has the option to use Stockinvest for applying for equity shares offered in terms of this Prospectus. Stockinvest can be obtained
from any bank issuing such instruments, by making the necessary application and depositing the amount with the bank. The applicant using
stockinvest should submit the Application Form alongwith the Stockinvest to any of the designated branches of the Bankers to the Issue
mentioned on the reverse of the Application Form, before closing of the subscription list. Stockinvest is payable at par at all the branches of the
issuing bank and as such should be made payable in favour of " Zen Technologies Limited ".
Only individuals and Mutual Funds have the option to use Stockinvest. A ceiling of Rs.50,000/- per individual per stockinvest has
been imposed by the Banks and hence individual investors can use stockinvest upto Rs.50,000/- only. However, there is no such
ceiling on Mutual Funds. The above ceiling is subject to change from time to time.
Applicants using Stockinvest must note the following:
1. The prospective investor at the time of request for issue of Stockinvest of the issuing bank, may have to:
a. indicate that he/she agrees to abide by the terms of the Issue and encashment of Stockinvest;
b. give irrevocable authority to his/her bank to mark a lien for the value of Stockinvest against the balance held in his/her savings/current/other
deposit account;
c. agree to lifting of the bankers lien on expiry of the currency of the Stockinvest or in case of intimation of partial / non allotment of equity shares;
and
d. agree that the issuing bank will not be liable for any damages or other consequences arising out of the loss of these instruments;
e. The service charges, if any, for procuring Stockinvest shall be borne by the applicant.
2. Stockinvests issued by any scheduled commercial bank including co-operative bank (even where the issuing bank is not a collecting bank) will
be accepted. Stockinvest are to be used by the purchaser(s) within 10 days of its purchase. The last day for the use of Stockinvest for
submitting Application Form to the Bankers to the Issue should be indicated on the face of the Stockinvest with a notation "To be used on/or
before ______"
3. Stockinvest should be marked "Account Payee" and payable only to the Issuer i.e. " Zen Technologies Limited ". The applicant shall provide
necessary details such as payee's name, amount and number of equity shares applied for, Application Form number etc., in the left hand side
portion of the Stockinvest and his/her address in the box on the reverse of the Stockinvest before depositing it with the Bankers to the Issue.
4. Stockinvest is valid for a period of 4 months from the date of issue.
5. Stockinvest will be issued to the applicant in blank format after authentication of the date of issue by the designated branch. Stockinvest duly
completed should be submitted along with the Application Form to the bank branch handling the issue.
6. Stockinvest should be signed and dated by the appropriate authority of the issuing bank. Applicants have to fill in the Stockinvest the following:
a. Name of the company
b. Amount
c. Number of equity shares applied for
and submit the same to the collecting banker duly signed together with the Application Form.
2. Separate Stockinvest of suitable and appropriate denomination (wherever available) should be submitted with each Application Form for the
total number of equity shares applied for. In case of Stockinvest of fixed denomination, the applicant can fill an amount less than the
denomination depending upon the amount required to be paid on application for the equity shares applied for.
3. The applicant should not hand over Stockinvest taken against his or her own account to any third party. Stockinvest should be utilised by the
purchaser(s) and the purchaser's name / name of one of the purchasers should invariably be indicated as the first applicant in the Application
Form. Thus, if the signature of the purchaser on the Stockinvest and the signature of the first applicant on the Application Form do not tally, the
application would be treated as having been accompanied by a third party Stockinvest and shall be rejected.
Applicants should use only one Stockinvest along with each application form for subscribing to the issue.
4. In the interest of the investors, to avoid rejection of application on technical grounds, it is suggested that the applicant should ensure that:
a. the date of issue of the Stockinvest by the Issuing Bank is clearly mentioned on the instrument.
b. the instrument is duly signed by the authorised officer of the Bank, giving his code number.
c. any correction / alteration in the date of issue, amount, name of the Company (i.e. Zen Technologies Limited) etc. should be attested by an
authorised officer of the Issuing Bank.
d. the applicant has clearly written the name of the Company, the amount and signed the instrument. The signature on the instrument should tally
with the specimen signature of the first named applicant as appearing on the Application Form.
e. in case the Stockinvest is purchased in joint account, the names of both the account holders should be mentioned in the Stockinvest instrument
at the place mentioned for writing the name of the investor.
f. the amount written in the Application Form to be deposited and the amount of the Stockinvest instrument accompanying the Application Form
should be the same.
g. the Stockinvest is to be utilised by the purchaser(s) and the purchaser's name or name of one of the purchasers is invariably indicated as the first
applicant in the share Application Form. Thus, if the signature of the purchaser on the Stockinvest and the signature of the first applicant on the
Application Form does not tally, the application would be treated as having been accompanied by a third party Stockinvest and is liable to be
rejected.
h. applications accompanied by Stockinvest, which are not payable at Hyderabad, are liable to be rejected.
The above information is given for the benefit of investors and the Issuer is not liable for any modification of terms of Stockinvest or procedure thereof
by issuing banks.
DISPOSAL OF APPLICATION MONEY IN CASE OF STOCKINVEST
In case of non-allotment, the Registrars to the Issue shall directly send back the cancelled Stockinvest to the applicant(s) along with the relative advice.
The stockinvest would bear stamps such as "CANCELLED" and "NOT ALLOTTED" across the face of the instrument. The issuing bank will lift the
lien on the account on surrender of the same by the investor.
On allotment/partial allotment, the Registrars to the Issue shall fill in the amount (which will be equal to or less than the amount filled in by the investor)
before presenting the Stockinvest to the respective issuing banker for payment to the extent of allotment. The bank will lift the lien on the balance
amount if any, of the deposit.
Inquiries relating to applications submitted with Stockinvest may be addressed only to the Registrars to the Issue and not to the issuing bank.
Registrars to the Issue have been authorised by "Zen Technologies Limited" to sign on behalf of the Issuer for realising the proceeds of the Stockinvest
of the successful applicants or to affix non-allotment advice on the Stockinvest or to cancel the Stockinvest of the unsuccessful applicants or applicants
whose applications are accompanied by more than one stockinvest instrument . The cancelled instrument shall be sent back by the Registrars to the
applicants directly within 30 days of the closure of this Issue. All conditions mentioned earlier for making an application through cheque(s) / demand
draft(s) will also, mutatis mutandis, apply to applications made with Stockinvest.
For further instructions, please read the Application Form carefully.
GENERAL INSTRUCTIONS
Joint Applications
An application may be made in single or in joint names (not more than three). In the case of joint applications, refund orders, if any and dividend
warrants will be made out in favour of the first applicant. All communications will be addressed to the applicant, whose name appears first in the
Application Form and will be despatched to his/her address, as stated in the Application Form.
Multiple Applications
An applicant should submit only one application (and not more than one) for the total number of equity shares required. An application may be made
in single or in joint names (not more than three). Two or more applications in single and/ or joint names will be deemed to be multiple applications, if
the sole and/ or the first applicant is one and the same. The Issuer reserves the right to accept or reject in its absolute discretion any or all such multiple
applications.
Separate applications for dematerialised / electronic and physical equity shares by the same applicant shall be considered as multiple
applications and are liable to be rejected.
In case of application by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with
SEBI and that such applications will not be treated as multiple applications provided that the applications made by the Asset Management Company /
Trustees / Custodian clearly indicate their intention as to the scheme for which the application has been made.
While the investor has the option to obtain shares in dematerialised or physical form, the trading of the shares shall only be in
dematerialised form for all the investors.
The company has entered into agreement both with NSDL and CSDL for offering the shares in dematerialised form. The investor has the option to
receive allotment of securities in dematerialised form through either of the depositories i.e. NSDL/CSDL.
Applications under Power of Attorney
In case of applications under Power of Attorney or by companies or corporate bodies, the relevant Power of Attorney or the relevant authority as the
case may be, or a duly certified copy thereof and a certified copy of the Memorandum and Articles of Association and/or bye laws, wherever
applicable, must be despatched by registered post with acknowledgment due separately to the Registrars to this Issue so as to reach them at
Hyderabad not later than seven days from the closure of the issue, simultaneously with the submission of the Application Form mentioning the Serial
Number of the Application Form and the name of the bank branch where the application has been submitted failing which the issuer reserves full,
unqualified and absolute right to accept or reject any application in whole or in part and in either case without assigning any reason thereof.
Disposal of Application Form and Application Money
The Issuer reserves full, unqualified and absolute right to accept or reject any application, subject to guidelines of SEBI and Stock Exchanges, in
whole or in part and in either case without assigning any reason thereof. In case, an application is rejected in full, the whole of the application money
received will be refunded and where an application is rejected in part, the excess application money received will be refunded to the applicant within
30 days of the closure of the issue. If such money is not repaid within 8 days from the day the company becomes liable to pay, the company and every
director of the company who is an officer in default shall on and from the expiry of the 8th day be jointly and severally liable to repay that money with
interest @15% p.a. except in respect of applications accompanied with Stockinvest.
The issuer, as far as possible, will allot equity shares within 30 days from the closure of the issue and shall pay interest @ 15% p.a. (except to the
applicants applying through stockinvest) if the allotment is not made and the refund orders are not despatched to the investors within 30 days from the
closure of the issue, for the period of delay beyond 30 days.The issuer would also make available funds to the Registrars to the issue for the purpose
of despatch of refund orders. Refund will be made by cheque(s) / pay order(s) / demand draft(s) (only in case of applications not accompanied by
Stockinvest) and will be despatched at the applicant's risk to the first/sole applicant's address. Such cheques or pay order(s) or demand draft(s) will
be payable at par at all the centres where the applications were accepted (subject to RBI regulations issued from time to time in this regard). In case of
joint applications, Refund Orders, if any, will be made out in the first applicant's name and all communications will be addressed to the person whose
following tax benefits, inter-alia, will be available to Zen Technologies Limited and to the members of the Company as given below:
TO THE COMPANY
Under the Income Tax Act, 1961
1. Should the company be liable to Income Tax on its profits, the following concessions/ benefits will be available.
i. The company, in accordance with and subject to the condition laid down in Section 10A of the Income Tax Act, 1961 shall be exempt from
Income Tax for 10 consecutive assessment years as stated in the said provision in respect of the Profits and Gains derived from 100% Export
Oriented Undertaking(EOU) registered with Software Technology Parks of India (STPI).
ii. Under section 80 HHC of the Income Tax Act, 1961 the company shall be entitled to deduction in respect of profits derived from export of
goods in accordance with and subject to the conditions specified therein.
iii. Under Section 80 HHE of the Income Tax Act, 1961 the company shall be entitled to deduction in respect of profits derived from export of
software in accordance with and subject to the conditions specified therein.
iv. The company will be entitled under section 35 D of the Income Tax Act,1961 to amortise certain specified preliminary expenses (including
expenses incurred for the issue of shares) over a period of 5 successive years beginning with the previous year in which the company
commences business, subject to compliance with the conditions specified in the section.
v. In terms of and subject to the provisions of the section 35(2AB) of the Income Tax Act, 1961, the company will be entitled to a deduction of
an amount equal to 125% in respect of expenditure on in-house research and development(other than the acquisition of land) incurred in
connection with the Company in the year in which such expenditure is incurred in accordance with and subject to the conditions specified
therein.
TO THE MEMBERS OF THE COMPANY
Benefit to Indian Share Holders:
a. Dividend income has been made exempt in the hands of share holders u/s. 10(33) of the Income Tax Act 1961.
b. By virtue of provisions of section 2(42A) and section 48 of the Income Tax Act, 1961 the gains arising to the investors from sale of shares of
the company, if held for more than 12 months, shall be considered as long term capital gains, and consequently be computed after indexation of
cost and be liable for taxation at the rate of 20% alternatively i.e without indexation, at the rate of 10 % which ever is lower.
c. In accordance with and subject to the conditions and to the extent specified in sections 54 EA/54EB of the Act, the share holders would be
entitled to exemption from long term capital gains.
d. In case of a shareholder being an individual or a Hindu Undivided Family with in accordance with and subject to the conditions and to the extent
specified in section 54 F of the Act, the shareholders would be entitled to exemption from long term capital gains.
Wealth Tax:
Total exemption from wealth tax would be available on investment in shares of the company.
IV. PARTICULARS OF THE ISSUE
Objects of the Issue
The present Issue of equity shares is being made to :
a. finance companys Expansion project envisaging development of two more simulators
b. meet software development and operating expenses including cost of hardware/software for two prototypes of iSATS and Tacsim and
marketing expenses including travel and business development expenses.
c. meet cost of setting up overseas office
d. augment the long-term working capital resources of the Company
e. list the equity shares of the Company on the recognised stock exchange in India
f. To meet the expenses of the Issue.
The objects clause of the Memorandum of Association enables the Company to undertake the activities for which the funds are being raised through
the Public Issue.
Cost of the Project :
The cost of the project, as appraised by IDBI in February 2000, is given hereunder:
(Rs.
lakh)
Land and site development
48
25
*260
40
90
*70
20
Contingencies
55
60
Total
668
317
100
- Public issue
191
60
668
Notes:
1. IDBI has agreed to subscribe to the equity shares of the company to the extent of Rs 100 lakhs vide their letter dated March 2,2000,
out of which subscription upto Rs 70 lakhs would be ensured before filing of Prospectus with ROC. The balance amount would be
received at least one day before the issue opens for subscription, failing which the promoters would bring in additional funds to meet the
shortfall, if any. .
2. The grant from DSIR is yet to be sanctioned and received. In the unlikely event of the grant not being received, the promoters have
agreed to bring additional funds by way of unsecured loans for meeting the shortfall, if any.
3. As certified by the auditors, the company has incurred an expenditure of Rs.122.97 lakhs on the Expansion Project upto February
82.42
12.93
15.20
10.53
1.89
Total
122.97
Nature
assistance
of
Agree-ment
date
Amount
Rate of
sanctioned/
outstanding
interest
Repayment schedule
Security
(p.a.)
(Rs lakh)
03-04-95
Convertible
Rupee
term
loan
12-02-96
100/47.08
20%
17 quarterly instalments
of Rs 5.88 lakhs each
commencing
from
January
1,1998
and
ending
on
January
01,2002.
i)First
charge over
the
fixed
assets
of
company &
ii)Personal
guarantees
of
promoters
03-04-95
Direct
Subscription to
Equity
12-02-96
55*
NIL
NIL
NIL
02-03-00
Direct
Subscription to
Equity
Yet to be
entered into
100
NIL
NIL
NIL
Notes:
1. Out of the sanctioned DSE of Rs 55 lakh, IDBI has subscribed to Rs 50 lakh as on date and the company has submitted a request for the
cancellation of the balance amount; the approval of which is awaited. The venture for which DSE was sanctioned has been completed and the
promoters have increased their stake to the extent of unsubscribed DSE of Rs 5 lakhs.
2. Outstanding amount of loan sanctioned by IDBI stood at Rs.47.08 lakh as on January 1, 2000.
3. As on date ,there are no overdues to IDBI.
4. Repayment of loan is guaranteed by the four original promoters viz. S/Shri Ashok Atluri, Ravi Kumar, Selwyn Samuel and A.V.Rao. Out of the
original promoters Shri A.V. Rao and Shri Selwyn Samuel stepped down from the Board of the company due to their pre-occupation and they
have divested their shareholding in favour of their friends and relatives.
5. At the option of IDBI, the loan amount is convertible into equity shares at par any time during the currency of the loan.
WORKING CAPITAL ARRANGEMENTS
The company is not having a working capital account with any banker. The working capital requirement for the initial period form part of the project
cost appraised by IDBI. The working capital requirement for the subsequent period is proposed to be met out of internal accruals and no bank
borrowings are envisaged for working capital requirements.
V. COMPANY, MANAGEMENT AND PROJECT
HISTORY OF ZEN TECHNOLOIES LIMITED
ZEN TECHNOLOGIES LIMITED (ZTL),
incorporated in 1993, as a public limited company, is engaged in the manufacture and marketing of high-end
multimedia weapon simulators viz. small arms training simulator (SATS) used for training of police, paramilitary and armed forces. The manufacturing
process involves adaptation of latest hardware and software technologies. The company has so far supplied 22 SATS to various police and para
military organisations, notably The National Police Academy ,Hyderabad and all the SATS are working satisfactorily. The company was sanctioned
assistance of Rs.155 lakh under Venture Capital Fund (VCF) Scheme of IDBI in April 1995 comprising convertible rupee term loan (RTL) of Rs.100
lakh and DSE of Rs.55 lakh for setting up the facilities for the manufacture of weapon training simulators at Hyderabad at an estimated cost of Rs.260
lakh. Implementation of the venture was delayed due to delay in obtaining orders for its products. Although the product development work was
completed earlier, the commercial production commenced in April 1998 as against April 1997 originally envisaged. The company is presently
operating from 2 premises in Hyderabad admeasuring about 4000 sft which the company has taken on lease basis. The 2 Lease Agreements effective
from April 6,1995 and May 15, 1995 are for a duration of 3 years and are renewable after every 3 years upon mutual agreement of both parties. To
ensure integrated operations and for smooth functioning, the company proposes to acquire new premises in Hyderabad, whereupon the company
proposes to vacate the leased premises. However, the company has yet to identify the location of the proposed premises.
The company proposes to expand its existing activities by setting up facilities for the manufacture of advanced weapons training simulators viz. Tactical
Engagement Simulators (TacSim) and Interactive Small Arms Training Simulator (iSATS) at Hyderabad. The above simulators have been developed
as a result of extensive discussions with end users, who have expressed desire to have such advanced training simulators for comprehensive and
effective training of their personnel. The company feels that the addition of the proposed two products would offer its customers a complete range of
weapons training simulators and improve the overall profitability of the unit.
ZTL has entered into a Memorandum of Understanding (MOU) with Bharat Dynamics Ltd. (BDL), a public sector undertaking (under the
Department of Defence Production & Supplies, Ministry of Defence, Govt of India). BDL manufactures defence equipment and small arms to meet
the needs of the Indian Armed Forces and Paramilitary Forces. BDL also makes Trainer Simulators for the defence equipment. BDL would market
the products of ZTL to Indian Army (IA), paramilitary organisations, police establishments and other Government organisations. BDL and ZTL have
already undertaken several visits and demonstrated the products to various Govt. and police establishments and are hopeful of getting orders. The
implementation of the proposed expansion scheme will enable the company to widen its product mix as also its client base.
MAIN OBJECTS OF THE COMPANY
The main objects of the Company, as stated in the Memorandum of Association, are as under:
a) To carry on the business of manufacture, buy, sell, import, export, assemble and maintain computers, electronic gadgets and allied
products including process control equipment, and provide expert advice and services on computer software and hardware packages (
to individuals, firms, companies, societies, association of persons, charitable institutions, government bodies) both within and outside the
country.
b. To carry on the business of management consultancy services, market research and surveys, liaison with statutory bodies and organize or coordinate training programmes such as workshops, seminars, symposiums and conferences to the Educational institutions, Professional
Association, Voluntary Organisations, Business Organisations and Industrial Establishments.
c. To act as commission agents, stockists, representatives, distributors and clearing & forwarding agents of all computers, electronic items process
control equipment, and other allied products.To develop, construct, fabricate, transfer and sell Simulators, Training simulators, and Allied
Products including Weapons Training Simulators for use of Armed Forces, Security Agencies, Police and other similar bodies within and
outside the Country.
SUBSIDIARIES OF THE COMPANY
The Company has no subsidiary.
PROMOTERS AND THEIR BACKGROUND
The company was originally promoted by S/Shri Ashok Atluri, Ravi Kumar, Selwyn Samuel and A.V.Rao. Subsequently, Mr Selwyn Samuel and Mr
A.V.Rao stepped down from the Board due to their pre-occupation and they have divested their shareholding in favour of their friends and relatives.
Later in November 1999, Shri Satish Atluri was inducted as promoter of the company and acquired equity shares from the company. He was also
inducted on the Board of Directors of the company on November 20,1999. The company presently has 3 promoters viz. S/Shri Ashok Atluri, Satish
Atluri and M. Ravi Kumar.
Mr Ashok Atluri aged 35, is a commerce graduate with postgraduate diploma in applied computer science from CMC Ltd. He received Small
Scale Entrepreneur of the Year award from Hyderabad Management Association for the year 1998. He is the Managing Director (MD) of the
company.
Mr Satish Atluri aged 31, brother of Shri Ashok Atluri is a post-graduate in computer science from North Carolina A & T State University. He is
having about 7 years of experience in Information Technology (IT) industry in USA. He worked in SAS Institute as developer (1993-94), Automated
Analysis Corp. as project manager (1994-96), Object Design as senior consultant (1996-97). At present he is working as senior consultant for
Mercury Interactive Corp.,USA, a leading consultant for global companies viz. IBM, Dell, Ernst & Young, Anderson, Price Waterhouse Cooper,
Texas Instruments, KPMG, etc. He is one of the Directors of Zen Technologies Limited.
Mr M Ravi Kumar aged 41,is having 20 years of experience in software industry. He worked in Bureau of Data Processing Services (BDPS)
(1979-85), Nova Computers Pvt. Ltd. (1986-90) and Institute of Engineers as Director. Presently he is working as Whole Time Director of the
company and is actively involved in the designing and development of proposed products of the company.
The share holding of the promoters in ZTL as on March 30,2000 is as follows:
Sr No
Ashok Atluri
1364500
Satish Atluri
164500
Ravi Kumar M
27600
Qualification
Occupation
Particulars of
other
Directorships
B.Com, Diploma in
Applied Computer
Science
Business
Nil
M.S.(Computer
Software
Nil
Managing Director
1-6-17, Chaitanyapuri
Hyderabad-500 660
2
Director
Engg) (USA)
Professional
Diploma
Computer
Applications
(DCA)
in
Software
Professional
Nil
Office,
Secunderabad-500 009
IDBI has stipulated a condition for broad basing of the companies Board.
There has been no pending litigation/ disputes against/with the directors or proceedings initiated against them for economic offences etc.
CHANGES IN BOARD OF DIRECTORS DURING THE LAST THREE YEARS
The following are the changes that have taken place in the Board of Directors of the Company during the last three years:
Sr No
Name
Designation
Date
of
appointment
Date
change
Mr.Venkata Rao Y
Director
01.10.1996
07.10.1998
Resigned due
to pre
occupation
Director
29.06.1993
20.11.1999
Resigned due
to pre
occupation
**
Mr. A V Rao
Wholetime
Director
03.08.1994
17.11.1999
Resigned due
to pre
occupation
**
Mr. Subba
Atluri
Director
03.08.1994
17.11.1999
Resigned due
to
pre
occupation
Director
20.11.1999
---
Appointed as
Director
Rao
of
Particulars
**The company was originally promoted by S/Shri Ashok Atluri, Ravi Kumar, Selwyn Samuel and A.V.Rao. Subsequently, Mr Selwyn Samuel and
Mr A.V.Rao stepped down from the Board due to their pre-occupation and they have divested their shareholding in favour of their friends and
relatives.
Key Managerial Personnel
The overall management of the company is vested with the Board of Directors. The Board is assisted by a team of experienced and qualified
professional executives, who are on the permanent rolls of the company having considerable experience in their respective fields.
Sr
No
Name
Age
Qualification
Designation
Responsibility
(in
years)
Total
experience
(in
years)
1.
Mr. Kishore A.
Dutt
40
Masters
in Vice
Computer
President
Applications
(Univ.
of
Hyderabad).
Operations &
product
development
incl. R & D
15
Mr. Rahul
Thombre
25
B.E.
Software
programmer
RDBMS
Programmer
Mr. K. Srikanth
25
B.E.(Elect)
Software
Systems
Programming
Sr. Systems
Engineer
Mech.
Designing
10
Systems
Engineer
Electronics
Designing
programmer
4
Mr.
A.Samson
Jayaprakash
30
Mr.
Jonnadula
Sudhakar
27
Diploma in
M. E
PGDCA
(Elec)
6
Mr. M. Venkata
Reddy
27
B.E.
Software
engineer
Front
end
programming
7.
Mr P. Bheema
Reddy
35
B.Com
Finance
Manager
Finance
accounts
10
&
TacSim would be used for group training in close encounters and ambush situations. It is meant for providing training in low intensity conflicts between
groups of up to seven members. Each member is provided with harness, weapon and control unit. This simulator provides training for close quarter
battles and hand to hand combat situations as was encountered in the heights of Kargil. In TacSim, the technologies viz. real-time software analysis of
each participant, micro-controller based control system and controlled collimation of laser sources.
The two simulators are being developed as a result of extensive discussions and interactions with the end-users, who have expressed their desire to
have such advanced training simulators for comprehensive and effective training of their personnel. In effect, by commercializing the above two
products, the company would be able to offer its customers a complete range of weapons training simulators.
MANUFACTURING PROCESS
A. TacSim
There are four modules in the TacSim viz. weapon module, harness, control module and the umpire module. Each personnel participating in the
group training is fitted with the harness and the weapons module. About 14 personnel, 7 on each side are equipped with one set each. The
umpire controlling the exercise has an umpire control module and initiates the training exercise by setting up the control module of each of the
trainees. The terrain or place of training is decided by the user and is usually in the unit premises or the training school. During the course of the
exercises, all activities such as number of rounds fired by a trainee, time of fire for each trainee, kill time for each trainee and identification of
trainees making a kill are recorded in the control unit. At the end of a session, the umpire downloads the data from the control unit and
processes the data in the required format.
The manufacturing of TacSim involves producing the above modules and integrating them and testing the final product. The manufacturing
process for the modules consists of i) assembly of circuitry, ii) housing in cabinet or other weatherproof casing, iii) burning of programmable
read only memory (PROMS), iv) fixing the PROMS, and v) aligning the lasers and sensors.
B. iSATS
iSATS comprise 5 modules viz. i) instructor console, ii) projection system, iii) pneumatic/recoil system, iv) sound subsystem and v) weapon
subsystem.
All the sub modules are assembled and tested for proper operation. Different software test programmes are run to test the communication among the
modules. Once the inter- module communication tests are completed the system is packed.
The major components required for manufacture of TacSim are Weapon Modules and Harness supplied by Sri Bhagvan electronics, Control unit by
Pragathi electronics, Umpire unit is built in house and all other computer components and readymade software will be supplied by Sree Systems, a
dealer for reputed computer peripherals.
iSATS
The main components required for manufacture of iSATS are Projector, Frame Grabber Card, Video Overlay Card , Kodak High Speed Camera
2000 fps and many other computer peripherals and ready made software to be procured from R S Components and Sree systems
MARKET
A. Demand outlook (Source : IDBI appraisal report)
1)End Use Applications
The simulators manufactured by the company would be marketed to state police organisations, paramilitary organisations viz. Central Reserve Police
Force (CRPF), etc. and defense service organizations viz. Army, Air Force and Navy.
2) Historic Demand and Growth Rate
SATS manufactured by ZTL have been marketed to various police and paramilitary organizations and some of the clients include organizations like
Delhi Armed Police, New Delhi, the Inspector General of Police (Intelligence Security Wing), Hyderabad, the Inspector General of Police,
Hyderabad, the Inspector General of Police (Training), Hyderabad, North Eastern Police Academy, Meghalaya, Police Training Colleges of Haryana,
West Bengal and Bihar, The Commissioner of Police, Hyderabad, CRPF, Nanded, Maharashtra, Internal Security Academy, CRPF, Mount Abu,
Rajasthan, the Director General of Police, Thiruvananthapuram, Kerala, Sardar Vallabhai Patel National Police Academy, Hyderabad, etc. These
products have been installed at respective training organisations and have been appreciated by the authorities and participants for their utility in training
personnel.
3) Export Potential
The company has demonstrated SATS in the International Defense Exhibition 99 at Abu Dhabi. The response of the visitors was encouraging.
Certain foreign buyers have evinced interest in procuring the products of the company. ZTL is planning to market the simulators in the West Asian and
African continent by appointing agents.
4) Other Factors Affecting Demand
Modern weapons and weapons systems have become so expensive that it is costly to use them for any form of training. On the other hand,
defense/internal security funding is also becoming more constrained. In such situations, training is must with maximum efficiency and minimum costs.
The security forces are establishing an economically viable pattern of effective simulators and training aids to assist field forces to maintain the desired
efficiency but within a permissible cost limits. Hence, weapon-training simulators are expected to play an increasingly important role in training in future.
Due to its presence in India and closer to the end users of the products, the company feels that it has distinct advantage over other suppliers which are
based outside India since the company is able to not only impart basic training to the end users but also provide quick after sales service to its clients.
B. Supply outlook( Source : IDBI appraisal report )
1. Industry Capacity
ZTL is the only manufacturer which has been supplying the above products in the domestic market. The local demand is also being met through
imports.
2) Competitive Environment
Competition for the companys products would be only from imports. Ministry of Defence have sourced similar products viz. SATS and
TacSim through imports. The suppliers are Spartanics, USA (Weaponeer), Oscamar, New Zealand (IWESS) and Fire Arm Training Simulator
(FATS), USA.
The company has been marketing the products to the paramilitary forces and police forces for the last 2 years and has proven its credentials,
both in terms of technology, technical support and unit price.
In terms of quality and price, the companys products are comparable with imported products. However, the company is able to provide cost
effective and quick service/maintenance at all locations. Moreover, the end users would be imparted training in some of the technical aspects, so
that the company need not be contacted for routine type of maintenance problem. The company has distinct advantage over overseas supplier
due to proximity to end users which enable the company to provide prompt after sales service.
Selling price
(Rs.lakh)
ZTL
Import
SATS
12
16
iSATS
30
60
TacSim
30
40
2. Market Estimates
The company has estimated market potential for its two products as follows :(in nos.)
Requirement
Users
No. of locations
TacSim
ISATS
Training Centres
48
96
96
39
Divisions
46
50
50
Army
Navy
Training Centres/ Divisions
Air Force
Training Centres
23
23
State Police
Training Centres
120
120
120
436
436
436
300
300
300
1008
1043
Para Military
Training Centres
District Training Centres
Total
( Source : Company's in house marketing research reports)
The company has projected sale of 24 units each of TacSim and iSATS in the optimum year, which works out to 2.4% and 2.3% of the above
estimated market potential.
3. Other Factors Affecting Market Potential
None
D. Selling arrangements
1) Current Arrangements
ZTL has entered into an MOU with Bharat Dynamics Ltd. ( BDL ), a public sector undertaking, through which it is marketing Zen SATS to Indian
Army and other Govt. organisations. It would develop the mechanical modules for the products and ZTL would provide software integration and other
modules. As per the MoU, BDL will market simulator as its own product. BDL and ZTL have already undertaken several visits and demonstrated the
products to various Govt. and police establishments. It is expected that ZTL would not face any difficulty in selling the products to Govt.
establishments, as BDL is a renowned PSU specialising in defense systems production.
Salient features of the MOU entered into with BDL on January 22,1999 are as under:
i) BDL will manufacture ZEN SATS in association with ZTL under the brand name of BDL-ZEN SATS with cost & benefit sharing and defined
responsibilities, on mutually agreed terms and conditions.
ii) Final assembly/integration of all the component modules, will be carried out by BDL, duly assisted by ZTL.
iii) ZTL in association with BDL will be responsible for the installation, commissioning and after sales support of the system (warranty period/its
extension). Maintenance contract after expiry of warranty, where desired by customer, shall be entered into by BDL and executed by ZTL as
authorised agent of BDL.
iv) BDL will market the product BDL-ZEN SATS and procure the orders, assisted by ZTL where necessary.
v) The product BDL-ZEN SATS will be sold at the prices negotiated by BDL. During price negotiation with prospective customers, the reduction
effected will be absorbed by ZTL and BDL in the ratio of 3:1.
vi)ZTL undertakes to indemnify BDL against patent infringement claims etc.
vii) BDL undertakes not to design/develop/manufacture/market any Small Arms Trainer Simulator (other than BDL-ZEN SATS) which may be
perceived as competition to BDL-ZEN SATS till 5 years after the expiry of the MOU.
viii) The MOU will be valid till March 31,2001 and can be extended for further period by mutual consent.
2) Marketing Strategy
Domestic
The company would extend the MOU with BDL to include the new products being developed by ZTL .ZTL is also marketing the simulators directly
to various organisations.
Export
The company has demonstrated SATS in the International Defense Exhibition 1999 at Abu Dhabi. Many foreign buyers have evinced interest in
procuring the products. Encouraged by the overwhelming response from abroad and export potential, the company is planning to export the simulators
to West Asia and African countries through agents.
The company proposes to establish an overseas office to tap the overseas market. While the company has decided to open its overseas office in
London, it has yet to identify the premises.
The marketing team of the company is planning to visit various cities in West Asia and Africa to give live demonstration to the customers so that they
have a first hand experience about the product.
E. OVERALL MARKET ASSESSMENT
Weapon training simulators would play an increasingly important role in training of armed forces, police and para-military forces in future. In view of
the above, the demand for the existing and proposed simulators in the domestic as well as international market is expected to grow.
The company has satisfied client base of state police organisations, and paramilitary organisations, some of which are placing repeat orders for the
existing product. As the new products are being developed based on the inputs/requirements given by the clients, it is expected that they would place
orders for the new products also.
The companys products are sophisticated, simple, rugged and comparable with the imported ones.
The company has established marketing tie-up with BDL, which is expected to help the company in procuring orders from Army and other Govt.
organisations.
PROJECT DETAILS
The company now proposes to expand its existing activities by setting up facilities for the manufacture of advanced weapons training simulators viz.
Tactical Engagement Simulators (TacSim) and Interactive Small Arms Training Simulator (iSATS).
COST OF THE PROJECT:
The cost of the project, as appraised by IDBI, in February 2000 is given hereunder:
(Rs. lakh)
Land and site development
48
25
*260
40
90
*70
20
Contingencies
55
60
Total
668
Supplier
Cost
(Rs.Lakhs)
Status
Incircuit Emulator
Sree Systems
1.80
Order placed
Sree Systems
3.20
Order placed
Sree Systems
6.55
Order placed
Sree Systems
0.40
Laser Printers
Sree Systems
0.50
PIC Emulator
Sree Systems
0.47
Order placed
Sree Systems
9.00
order placed
Visual studio
Logical solutions
0.80
Mohan
Marketing
Associates
3.65
Order placed
Vemuri
Software
Consultants
1.32
Order placed
Vemuri Software
8.36
Order placed
1.10
Consultants
Win Debugger
Vemuri
consultants
Software
Vemuri
consultants
Software
0.60
Order placed
Vemuri
consultants
Software
1.77
Vemuri
consultants
Software
2.12
Order placed
Vemuri
consultants
Software
1.25
Order placed
Vemuri
consultants
Software
36.60
Order placed
Compuage electronics
0.20
The total estimated cost towards indigenous plant & machinery is Rs.180 lakhs (as appraised by IDBI), of which orders for Rs 80 lakhs have been
placed. The cost of plant and machinery has been firmed up is on the basis of recent quotations obtained from suppliers.
Overseas Office
The company proposes to establish an overseas office along with the related equipment, which will help it to tap the global market for each of the
products manufactured by the company. Total cost towards overseas office is estimated at Rs 80 lakh which includes office equipment and systems
for demonstration at overseas office including 2 sets each of ZEN SATS, TacSim and iSATS. The company proposes to take the premises on lease
basis. The cost of Rs.80 lakhs includes the cost of furnishing of office and cost of production of above sets as estimated by the company.
Miscellaneous Fixed Assets
Total cost towards miscellaneous fixed assets has been estimated at Rs.40 lakh. It comprises D. G. set (Rs.2.00 lakh), office furniture (Rs.5.00 lakh),
office equipment (Rs.3.00 lakh), fire fighting equipment (Rs.2.00 lakh), vehicles (Rs.13.00 lakh), air conditioning (Rs.10 lakh) and electrical cabling
(Rs.5.00 lakh). The cost of miscellaneous fixed assets is based on company's own estimates.
Software development and operating expenses
Software development and operating expenses include cost of software/hardware for two prototypes of iSATS and TacSim each Rs.57 lakh, trial
expenses Rs.5 lakh and salaries for R&D division Rs.28 lakh. The Company is likely to get Rs.60 lakh by way of grant from DSIR for funding the
above prototypes. However, a formal sanction and release of the grant is awaited.
Marketing expenses
Marketing expenses estimated at Rs.70 lakh include inland travel expenses (Rs.20 lakh), overseas travel expenses (Rs.20 lakh), demonstration
expenses (Rs.20 lakh) and business development expenses (Rs.10 lakh).
Preliminary and public issue expenses
Preliminary and public issue expenses have been estimated at Rs.20 lakh. It includes preliminary expenses Rs.3.50 lakh including ROC fees for
increasing the authorised capital etc and public issue expenses - Rs.16.50 lakh. The public issue expenses include lead managers fee , Printing of
stationery, issue conferencing , publicity, brokerage, registrars charges and other expenses.
Provision for contingencies
The contingency provision has been taken @ 10% on non firm cost aggregating Rs.55 lakh
Margin money for working capital
The additional working capital required has been estimated at Rs.60 lakh on the basis of the present operations. This being a non conventional area of
activity, the total working capital requirements are proposed to be met from long term sources. The working capital assessment is based on 1 months
stock of raw material, 1 months stock of consumables, one weeks work-in-progress, 3 weeks stock of finished goods and one and half months
receivables. While the working capital requirement for the initial years is proposed to be financed out of issue proceeds, the working capital request
for the subsequent period shall be met out of internal accruals.
SCHEDULE OF IMPLEMENTATION
The project is expected to be completed within 12 months from the date of first disbursement. It is expected to start its commercial production from
April 1, 2001. Detailed implementation schedule, as per IDBI's appraisal, is as follows :
Sr. No.
Activity
Commencement
Completion
i.
Acquisition of land
January 2000
February 2000
ii.
Site development
January 2000
February 2000
iii.
April 2000
September
2000
iv.
Purchase of plant
and
February 2000
August 2000
Installation
August 2000
October 2000
vi.
Training of
personnel
August 2000
December
2000
vii.
Trial runs
December 2000
February 2001
viii.
Commencement of production
April 2001
*The company has so far ( upto February 15, 2000 ) incurred an expenditure of Rs. 122.97 lakh on the scheme, which has been
brought in by the promoters by way of equity contribution.
As per IDBIs appraisal, the implementation of the project was to commence from January 2000 with the acquisition of land. However, the
implementation of the project has been delayed by about 3 months, as estimated by the company. The product development work is in progress and
the company is confident of completing the project by April 2001 by compressing the period for rest of the activities.
Utilities
Power
The peak power requirement for the unit would be 125 KVA, which will be sourced from Andhra Pradesh State Transmission Corporation
(APTRANSCO). The company would apply to APTRANSCO for the required power at the appropriate time. The company also proposes to have
a 75 KVA DG set as standby arrangement. Power supply arrangements are considered adequate and satisfactory.
Water
The project does not require water for its process. The company would need water only for potable purposes, which would be met from municipal
water supply.
Fuel
The company requires diesel oil for the DG set. Diesel oil would be procured locally from nearby petrol bunks.
Effluent Treatment
The project does not generate any pollutants. However, the company would be required to obtain clearance from State Pollution Control Board. The
company is yet to apply to the State Pollution Control Board for obtaining NOC.
Manpower Requirement
Besides the present strength of 17, the total additional manpower required for the proposed expansion scheme would be 70 comprising project
leaders, system managers, programmers, skilled and semiskilled workers, marketing, administrative and other staff. Required manpower is available
locally. The company would recruit the required manpower progressively during implementation of the Expansion Scheme based on its requirement.
VI. FINANCIAL PERFORMANCE OF THE COMPANY FOR THE LAST FIVE YEARS
The company commenced commercial operations from April 1,1998. The Auditors of the Company have examined and found correct the books of
M/s. Zen Technologies Limited for the last five years ended on March 31,1995, March 31,1996, March 31,1997, March 31,1998 and March 31,
1999. The records for the period ended February 15, 2000 which is the last date upto which the accounts of the Company have been made up, have
also been audited by them. The Auditors of the Company vide their certificate dated March 1,2000 have certified that the same have been prepared in
accordance with the requirements of Clarification XIII & XIV issued by SEBI and in accordance with the requirements of Part II of Schedule II of the
Companies Act, 1956 and they further certify that the same are true and correct.
1. PROFIT & LOSS ACCOUNT:
The profits of the company for the preceding financial year ended 31-3-99 and for the period ended on15-2-2000 after making such
adjustments as are, in our opinion appropriate and subject to the notes appearing hereinafter were as follows: Year ended 31- Period 1-4-99 to
3-1999
15-2-2000
(Rs. in lakhs)
(Rs. in lakhs)
71.02
121.16
Income:
Sales
Other Income
5.28
3.78
Increase in Inventories
2.49
4.98
78.79
129.92
18.31
25.83
3.60
2.70
0.92
4.71
Sales Tax
1.63
2.37
15.90
26.27
1.29
2.79
23.85
13.87
Depreciation
4.43
1.47
Income Tax
0.11
0.02
8.09
7.10
Net Profit
0.66
42.79
78.79
129.92
Total
Expenditure:
Raw Materials Consumed
Administration
Expenses
&
Payments
Employees
Benefits
&
Selling
to
Total
NOTE:
As at
As at
As at
As at
As at
31.3.95
31.3.96
31.3.97
31.3.98
31.3.99
15.2.00
15.96
19.06
49.17
53.84
147.36
160.08
2.04
4.31
7.54
9.49
31.41
42.25
13.91
14.75
41.63
44.35
115.95
117.83
---
---
0.56
3.60
10.59
13.64
13.91
14.75
42.19
47.95
126.54
131.47
A. Fixed Assets
Gross Block
Less: Depreciation
Net Block
Add: Capital work in Progress
Total (A)
B.Current
Advances:
Assets,
Loans
and
Current Assets:
1.10
---
---
---
3.92
7.47
i. Inventories
0.92
8.07
---
28.84
54.71
9.46
4.55
0.78
2.86
15.35
8.05
66.58
8.32
8.13
8.53
40.08
16.22
128.25
14.89
16.98
11.39
84.27
82.90
211.76
6.72
13.40
7.17
5.28
12.47
18.47
4.08
0.16
0.03
0.86
1.67
------
10.79
13.56
7.20
6.14
14.14
18.47
4.10
3.42
4.19
78.13
68.76
193.29
---
1.49
72.76
105.44
128.38
48.55
3.95
10.40
0.29
0.10
4.94
-----
3.95
11.89
73.05
105.54
133.32
48.55
14.06
6.28
-26.67
20.54
61.98
276.21
i. Share Capital
0.01
67.01
70.82
107.81
120.81
344.56
1.05
1.05
1.05
1.05
1.71
44.50
54.63
5.55
6.39
47.20
34.20
-----
Total
55.69
73.61
78.26
156.06
156.72
389.06
41.63
67.33
104.93
135.52
94.74
112.85
14.06
6.28
-26.67
20.54
61.98
276.21
a. EPS (Rs.)
---
---
---
---
0.05
1.43*
---
0.94
---
2.04
5.13
8.02
c. Return to Networth(%)
---
---
---
---
1.07
16.27
Nil
Nil
Nil
Nil
Nil
Nil
3. FINANCIAL RATIOS:
Please note that the above financial statements have been drawn by the Company in compliance with clarification XIII and XIV
issued by the Securities and Exchange Board of India.
* Annualised
Formulae:
1.Earning per share (EPS) =Net Profit after adjustments
revenue expenditure :
i. Research & Development Expenditure: Expenditure(including depreciation on R&D assets) incurred for development of
SATS is written off over a Period of 10 years. Expenditure incurred on New Project (TacSim) will be written off over a period
of time after commencement of commercial production of the product.
(ii) Market Development Expenditure: Expenditure incurred for Market development is written off over a period of 10
years.
(iii) Preliminary expenses are written off over a period of 10 years.
6. Loans from Financial Institutions secured by first charge on immovable properties of the company, present and future,
hypothecation of all the movable properties subject to any prior charges created/to be created by the banks for working capital
purpose and personal guarantees from the directors of the Company.
7. a.)During the period the company has incurred the following expenditure on Research and Development on Tactical Engagement
Simulator (TacSim) another project.
(Rs lakhs)
99-00 (Previous year)
Expenses 13.95 (13.43)
Depreciation 9.38 (8.50)
Total 23.33 (21.93)
b)Estimated amount of contracts remaining to be executed on capital account (net of advances) not provided for nil (previous
year Nil)
i)
ii)
1998-99
15.02.2000
Rs.
Rs.
8,000
Certificate Fee
4,000
4,000
2,22,000
1,94,250
Perks
42,000
35,000
Other Allowances
36,000
30,000
1,38,000
97,000*
Perks
18,000
15,000*
Other Allowances
48,000
21,900*
Auditors Remuneration
Directors Remuneration
Managing Director
Other Directors
iv)
v)
Post Issue as
adjusted
Nil
Nil
48.55
41.20
48.55
41.20
Shareholders funds
344.56
763.00
a. Share Capital
b. Reserves
44.50
44.50
389.06
807.50
0.125:1
0.051:1
0.385
0.77
0.27
Adjustments:
Export profit
0.00
Difference between
2.91
-178.65
Net Adjustments
-175.74
-61.51
Total Taxation
-61.24
0.08
Note: Other adjustments includes scientific research expenditure allowable under Section 35, 35 (2AB) of the Income Tax Act,
1961.
2000
2001
2002
2003
Total Sales
288
720
1800
2160
Operating Cost
210
420
1028
1264
PBDIT
78
300
772
896
Depreciation
25
19
116
88
20
10
10
20
20
PBT
33
275
653
808
Tax
29
229
283
PAT
30
246
425
525
EPS
1.91
3.22
5.57
6.88
VIII. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF THE LAST FINANCIAL YEAR OF ZEN
TECHNOLOGIES LTD
ZTL is a designer, developer and manufacturer of weapons training simulators. ZTL has positioned itself as a conceiver and manufacturer of hi-tech
simulators adopting the latest technologies with a combination of hardware and software. The aim and focus of ZTL always has been to cater to the
needs of training simulators, from basic to advanced.
ZTL has the following advantages:
1. There is a reasonably good awareness about ZTL's simulators in the security forces within India.
2. Department of Science & Industrial Research (DSIR) has recognised ZTL as an inhouse R & D unit.
3. ZTL has developed a rapport with key customers to cater to their long term training needs by way of designing simulators based on their
feedback and requirements.
A table indicating the comparative performance during the last 2 years is given below:
Particulars
Year ended
31-3-1999
Period 1-4-99 to
15-2-2000
(Rs. in lakhs)
(Rs. in lakhs)
Income
78.79
129.92
Expenditure
73.59
85.64
PBIDT
5.20
44.28
Depreciation
4.43
1.47
Income Tax
0.11
0.02
Net Profit
0.66
42.79
ZTL commenced commercial operations from April, 1998 and achieved an income of around Rs 79 lakhs with a marginal profit of less than Rs 1 lakh.
However, during the second year of operations, within first 11 months , the company has achieved an income of Rs 130 lakh with a net profit of
around Rs 43 lakhs.
The companys products are well-established in the domestic market and the company is targeting to export the existing and proposed simulators.
Going by the response received at the International Defence Exhibition held in Abu Dhabi , the company is confident of making a breakthrough in
exports as well.
Working Capital Cycle:
The company has a normal working capital cycle and there has not been any difficulty in inventory and receivable management, to date. This being a
high technology and software intensive product the company has been managing the working capital needs out of the long term sources rather than
depending on bank credit. Even the future working capital resources are being mobilized from long-term sources.
Unusual and infrequent transactions:
There have been no unusual or infrequent transactions since the company commenced commercial operations.
Significant Economic Changes:
There have been no significant economic changes that materially affected or likely to affect the income from continuing operations.
Known Trends and Uncertainties:
There are no known trends or uncertainties that have had or expected to have a material adverse impact on sales, income, or revenue, from continuing
business.
EPS(Rs)
Weight
1998-99
0.05
1999-00
1.43*
0.97
* Annualised
2. Price Earnings Ratio(P/E) in relation to issue price of Rs 10/a) Based on the annualised EPS of the Financial Year 1999-00: 6.99
RONW(%)Annualised)
Weight
1998-99
1.07
1999-00(upto 15-2-00)
18.59
12.75
4. Minimum return on post issue networth required to maintain EPS at Rs 1.43 is 15.71%
8.02
b)After Issue
9.10
c)Issue Price
10/-
X. PARTICULARS OF ISSUES MADE BY COMPANIES UNDER THE SAME MANAGEMENT DURING THE LAST THREE
YEARS
There have been no issues made by companies under the same management in the last three years.
b. There is no default in meeting statutory / bank / institutional dues and towards holders of any financial instrument.
c. No criminal proceedings have been launched against the promoters/directors for any of the offences (including past cases) under the enactment
specified in Paragraph I of Part I of Schedule XIII to the Act or otherwise.
Against the Concerns / Ventures promoted by the Promoters of the Company
There are no Concerns / Ventures promoted by the Promoters of the Company
Material Developments
The Directors of the company undertake that in their opinion there are no circumstances, since the date of last financial statements disclosed in the
prospectus, that would materially and adversely affect or is likely to affect the trading or profitability of the company or the value of its assets or its
ability to pay its liability within the next 12 months.
Investor Grievance Redressal System
The investor grievances against the company will be handled by the Registrars & Transfer Agents viz. Karvy Consultants Ltd in consultation with the
company. To handle investor grievances, the company has appointed Mr Bheema Reddy as Compliance Officer. He will supervise redressal of
complaints received from the investors at the office of the company as well as Registrars to the Issue and ensure timely redressal.
XI. RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF
INTERNAL
1. The company has availed of rupee term loan of Rs.100 lakhs from IDBI out of which an amount of Rs.47.08 lakhs is outstanding as on January
01, 2000. At the option of IDBI, the loan is convertible into equity shares at par during the currency of the loan. Conversion of loan into equity
would result in dilution of equity capital.
Management Perception: This is a standard condition being stipulated by IDBI in all cases where assistance under Venture Capital Scheme
is sanctioned. The above loan is likely to be fully repaid by January 01, 2002. The quantum of loan being small, conversion thereof is unlike to
have any major dilution in the equity capital of the company.
2. For its proposed expansion project, the company has yet to
identify the premises
place orders for some of the items of plant & machinery
recruit suitable personnel
apply to APTRANSCO for power connection
obtain NOC from Pollution Control Board ( PCB )
identify the overseas marketing office
Management Perception: The company is presently operating from leased premises and the product development work is already in progress. The
new premises are being acquired in order to have a well laid out integrated facility. The delay in acquisition of new premises is unlikely to have any
significant impact on the product development work. The company has already placed orders for some of the items of plant & machinery and orders
for the rest of the items are proposed to be placed shortly. The company shall recruit suitable personnel at the appropriate time. For product
development, the company is using the services of existing personnel. The company shall take necessary steps for obtaining power connection and
NOC from PCB at the appropriate time. As regards overseas office, the company has decided to open its marketing office at London and is taking
suitable steps in this regard.
1. The company has yet to receive the grant of Rs 60 lakh from DSIR for the proposed project. Non receipt/delay in receipt of the grant is likely
to impact the cost of the project and its timely implementation.
Management Perception : The company has already applied for the above grant and is confident of getting the same. In the unlikely event of non
receipt of grant, the shortfall would be met from additional contribution from promoters by way of unsecured loans. In view of the low debt equity,
company also has the option to borrow the amount.
1. The implementation of the original project of the company was delayed by about one year and commercial production commenced only in April
External
1.Competition from imports and future entrants into the software industry.
Management Perception: The Company has a track record of timely execution of the orders. The company proposes to upgrade its products by
incorporating latest advancements in the technology to stay ahead of its competitors
2.The present growth rates in the software industry are high and are not sustainable.
Management Perception: The Company has a niche market with sufficient growth potential
3.Any adverse change in the Government Policies towards the Software industry may affect the financial performance of the Company.
Management Perception: The company feels that govt. policies are unlikely to be detrimental to the interest of software industry.
Notes:
1. Investors are advised to refer to the paragraph on "Basis of Issue Price" appearing later in this Prospectus before making an investment decision
in respect of this issue.
2. Investors are advised to refer to "Notes to Accounts" appearing on Pages 40 and 42-44 before making an investment decision in respect of this
issue.
3. Investors may please note that in the event of over-subscription, allotment shall be made on a proportionate basis in consultation with The
Hyderabad Stock Exchange Limited, i.e. the Regional Stock Exchange.
4. The promoter directors do not have any business interest in Zen Technologies Ltd. except to the extent of sitting fees and remuneration, if any,
payable to them. The promoters will be interested to the extent of dividend paid on shares held by them and their relatives and friends and to the
extent of allotment of shares, if any, to their friends and relatives in the public issue.
B. PART - II
A. GENERAL INFORMATION
CONSENTS
Consents in writing of the Lead Manager, Directors, Auditors, Compliance Officer, Company Secretary, Bankers to the Issue, Legal Advisors and
Registrars to act in their respective capacities have been obtained and filed along with a copy of this Prospectus with the Registrar of the Companies,
Andhra Pradesh at Hyderabad, as required under Section 60 of the Act and none of them have withdrawn their consents upto the time of delivery of
this Prospectus for registration.
M/s. Prayaga & Company, the Statutory Auditors of Zen Technologies Limited, have also given their written consent to their Report being included in
the form and content in which it appears in this Prospectus, and also of the tax benefits accruing to the company and its members and all financial
statements and ratios and such consent has not been withdrawn upto the time of filing of this Prospectus with the Registrar of Companies, Andhra
Pradesh at Hyderabad.
EXPERT OPINION
Save as otherwise indicated elsewhere in the Prospectus, Zen Technologies Limited has sought no other expert opinion.
CHANGES IN AUDITORS DURING THE LAST THREE YEARS
Name & Address
Date
Appointment
&
of
Date of change
29/06/1993
Resigned
on
September 27,1999
Resignation
27/09/1999
----
Appointed
Sr No
Name
Designation
Date
of
appointment
Date
change
Mr.Venkata Rao Y
Director
01.10.1996
07.10.1998
Resigned due
to pre
occupation
Director
29.06.1993
20.11.1999
Resigned due
to pre
occupation
**
Mr. A V Rao
Wholetime
Director
03.08.1994
17.11.1999
Resigned due
to pre
occupation
**
Mr. Subba
Atluri
Director
03.08.1994
17.11.1999
Resigned due
to
pre
occupation
Director
20.11.1999
---
Appointed as
Director
Rao
of
Particulars
**The company was originally promoted by S/Shri Ashok Atluri, Ravi Kumar, Selwyn Samuel and A.V.Rao. Subsequently, Mr Selwyn Samuel and
Mr A.V.Rao stepped down from the Board due to their pre-occupation and they have divested their shareholding in favour of their friends and
relatives.
AUTHORITY FOR THE PRESENT ISSUE
The present issue of equity shares is being made pursuant to the resolution of the Board of Directors of the Company passed at its meeting held on
September 27, 1999. In terms of Section 81(1-A) of the Act, the present public issue of equity shares has also been authorized vide a Special
Resolution passed at the Extra-ordinary General Body Meeting of the members of Zen Technologies Ltd held on October 20, 1999.
ALLOTMENT AND REFUND
The Issuer reserves the right to accept or reject any application in whole or in part at its sole, absolute and uncontrolled discretion. In case any
application is rejected in full , the whole of the application money, will be refunded to the applicant. In case an application is rejected in part, the
excess application money received, after adjustment of the allotment amount, will be refunded to the applicant. Such Cheques or Demand Drafts will
be payable at par at all centres where applications are accepted, subject to RBI guidelines issued in this regard from time to time, and bank charges, if
any, for encashment will be payable by the applicant. Letters of Allotment/Share Certificates/Refund Orders, as the case may be, will be despatched
by Registered Post , at the sole risk of the applicant, to the first named /sole applicant's address within 10 weeks from the date of closure of the Issue.
As per the Listing Guidelines, the company will pay interest @15% per annum (to all applicants except applications made through stockinvests), if
there is delay in refund beyond 30 days from closure of the issue. In case of joint applications, refunds/pay orders, if any, will be made out in the first
applicant's name and all communication will be addressed to the first applicant.
The company has given an undertaking to make available the requisite funds to the Registrars to the Issue to despatch Refund Orders/ Allotment
Letters/ Certificates by Registered Post.
DISPOSAL OF APPLICATIONS AND APPLICATION MONEY
The Issuer will inform the applicants in respect of allotments made or applications rejected by despatch of Acceptance Letters/Share
Certificates/Letters of Regret together with refund cheques or pay orders or stockinvests, as indicated below, at the applicant's sole risk to the first
named /sole applicant within 70 days of the closure of this Issue, provided the Issuer as far as possible, will allot the equity shares within 30 days from
the date of closure of the Issue and shall pay interest, except for stockinvest, @15% p.a. for the delayed period if the allotment is not made and/or the
refund orders are not despatched within 30 days from closure of the Issue.
The Issuer will ensure despatch of Refund Orders , if any, of the value upto Rs 1500 Under Certificate of Posting(UCP) and refund orders above Rs
1500, and Share Certificates by Registered Post only. The issuer would also make available adequate funds to the Registrars to the issue for the
purpose of despatch of refund orders. The Issuer reserves full, unqualified and absolute right to accept or reject an application either in whole or in
part and in either case without assigning reasons.
Refunds will be made by cheques or pay orders or demand drafts, drawn on the bank(s) as appointed by the company as Refund Bankers(s). Bank
charges, if any, for encashing such cheques or pay orders or demand drafts at other centres will be payable by the applicants. Such cheque or pay
order or demand draft will however be payable at par at places where the applications are received, subject to RBI guidelines in this regard.
No receipt will be issued for Application Money. However, the Bankers to the Issue receiving the applications will acknowledge receipt by stamping
and returning the detachable acknowledgement slip at the bottom of each Application Form.
DISPOSAL OF APPLICATIONS MADE BY STOCKINVEST
The procedure for applications made by cash/cheque/bank drafts will apply mutatis mutandis to applications accompanied by stockinvest except the
following:
1. In case of non-allotment, the Registrars to the Issue shall directly return the Stockinvest to the applicant(s) along with the stamp
"CANCELLED" and/or "NOT ALLOTTED" across the face of the instrument within 70 days from the closure of the issue.
2. On allotment / partial allotment, the Registrars to the Issue shall fill in the amount (which will be equal to or less than the amount filled by the
investor) before presenting the Stockinvest to the respective issuing bank for payment to the extent of allotment. The issuing bank will lift the lien
on the balance amount, if any, of the deposit.
3. Inquiries relating to applications submitted with Stockinvest may be addressed only to the Registrars to the Issue and not to the issuing bank.
ISSUE OF SHARE CERTIFICATES
The equity share certificates will be despatched through Registered Post within two months from the date of allotment in accordance of section
73/113 of the Companies Act, 1956 or within such further time as may be allowed by the Stock Exchanges at Hyderabad, and / or such other
authority (ies) as may be necessary.
SCHEDULE AND BASIS OF ALLOTMENT
In the event of this Issue of equity shares being oversubscribed, the basis of allotment will be finalised by the Board of Directors in consultation
with Hyderabad Stock Exchange. Investors may note that in case of over subscription, allotment will be on a proportionate basis in marketable
lots .
The basis of allotment for the net public offer will be made in the following manner:
1. A minimum of 50% of the Issue of equity shares to the public shall be initially made available for allotment to individual applicants who have
applied for 1000 equity shares or less.
2. The balance 50% of the Issue of equity shares to the public, shall be made available for allotment to applicants, including bodies corporate /
institutions and individual applicants who have applied for more than 1000 equity shares.
3. The undersubscribed portion of the Issue, if any, in any/ either of the categories specified in (1) or (2) above shall be made available for
allotment to applicants in the other category, if so required.
The allotment will be in marketable lots of 100 equity shares on a proportionate basis as explained below:
a) Applicants will be categorised according to the number of equity shares applied for.
b) The total number of equity shares to be allotted to each category as a whole shall be arrived at on a proportionate basis, i.e. the total number
of equity shares applied for in that category (number of applicants in the category x number of equity shares applied for) multiplied by the
inverse of the oversubscription ratio.
c) Number of the equity shares to be allotted to the successful applicants will be arrived at on a proportionate basis, i.e. total number of equity
shares applied for by each applicant in that category multiplied by the inverse of the oversubscription ratio of that category.
d) In all the applications where the proportionate allotment works out to less than 100 equity shares per applicant, the allotment shall be made
as follows:
i) Each successful applicant shall be allotted a minimum of 100 equity shares; and
ii) The successful applicants out of the total applicants for that category shall be determined by draw of lots in such manner that the total number
of equity shares allotted in that category is equal to the number of equity shares worked out as per (b) above.
e) If the proportionate allotment to an applicant works out to a number that is more than 100 but is not a multiple of 100 (which is the
marketable lot), the number in excess of the multiple of 100 would be rounded off to the higher multiple of 100, if that number is 50 or higher. If
that number is lower than 50, it would be rounded off to the lower multiple of 100. All applicants in such categories would be allotted equity
shares arrived at after such rounding off.
f) If the equity shares allotted on a proportionate basis to any category is more than the equity shares allotted to the applicants in that category,
the balance available equity shares for allotment shall be first adjusted against any other category, where the allotted equity shares are not
sufficient for proportionate allotment to the successful applicants in the category. The balance equity shares, if any, remaining after such
adjustment will be added to the category comprising applicants applying for minimum number of equity shares.
g) The allotment will be made in the market lot of 100 equity shares and in multiples thereof. The allotment shall be made in market lot within the
size of the issue.
The Company agrees that there will be at least 5 public shareholders for every Rs. 1,00,000/- of net capital offer made to the public out of the
Public Issue.
Explanation: For the purpose of this clause a public shareholder shall mean a person who is neither a promoter nor employee nor holds more
than 1% equity capital of Zen Technologies Limited.
UTILISATION OF ISSUE PROCEEDS
The monies received in respect of the Issue will be kept in a separate bank account and the Issuer will not have access to such funds unless
allotment of equity shares is made in consultation with the Hyderabad Stock Exchange Limited and listing approval is obtained from Hyderabad
Stock Exchange, where listing of equity shares is sought.
The Board of Directors of the Issuer confirms and certifies that:
a All monies received in this Issue shall be transferred to a separate bank account referred to in sub-section (3) of the Section 73 of the Act.
b Details of all the monies utilised out of the proceeds of the Public Issue shall be disclosed under an appropriate separate head in the Annual
Report of the Issuer indicating the purpose for which such monies had been utilised, for all the financial years till all the monies are fully utilised
and
c Details of all unutilised monies out of the proceeds of the Public Issue, if any, shall be disclosed under an appropriate separate head in the
Annual Reports of the Issuer indicating the form in which such unutilised monies have been invested.
COMPANY INFORMATION
Registered Office
Zen Technologies Limited
40, Radhaswamy Colony, Sikh Road
Secunderabad 500 009
Andhra Pradesh, India.
Telephone no.: 91 - (040) 7818534, 7843279
Fax no.: 91 - (040) 7843279
E-mail: zentech@hd1.vsnl.net.in
LEAD MANAGERS TO THE ISSUE
Industrial Development Bank of India
IDBI Tower, WTC Complex,
Cuffe Parade, Mumbai 400 005
Telephone no.: (022) - 2189111
Fax no.: (022) -2181195
REGISTRARS TO THE ISSUE
COMPLIANCE OFFICER
Mr. P.Bheema Reddy
Finance Manager
Zen Technologies Limited
Plot No. 40, Radhaswamy Colony, Sikh Road
Secunderabad 500 009
Andhra Pradesh, India.
Telephone no.: (040) 7843279, 7818534
Fax no.: (040) 7843279
E-mail: zentech@hd1.vsnl.net.in
All the investors / applicants may please note that in case of any pre-issue / post-issue queries or difficulties, they should contact the Compliance
Officer.
BROKERS TO THE ISSUE
All members of recognised Stock Exchanges in India can act as Brokers to the Issue.
B. FINANCIAL INFORMATION
AUDITORS REPORT
To,
The Board of Directors
Zen Technologies Limited
40, Radhaswamy Colony, Sikh Road
Secunderabad 500 009
Dear Sirs,
We have examined the following statements, as attached herewith and stamped by us for purposes, with the audited financial
statements, books of account and other relevant records maintained by ZEN TECHNOLOGIES LIMITED (the company) as
produced to us and according to the information and explanations given to us by the Company, have found them to be in
accordance therewith:
On the basis of our verification of the above mentioned statements and particulars and as per the information and
explanations given to us by the Company, we certify that the same have been prepared in accordance with the requirements of
Clarification XIII & XIV issued by SEBI and in accordance with the requirements of Part II of Schedule II of the Companies Act, 1956 and
we further certify that the same are true and correct.
1.PROFIT & LOSS ACCOUNT:
The profits of the company for the preceding financial year ended 31-3-99 and for the period ended on15-2-2000 after making such
adjustments as are, in our opinion appropriate and subject to the notes appearing hereinafter were as follows: Year ended 31- Period 1-4-99 to
3-1999
15-2-2000
(Rs. in lakhs)
(Rs. in lakhs)
71.02
121.16
Other Income
5.28
3.78
Increase in Inventories
2.49
4.98
78.79
129.92
18.31
25.83
3.60
2.70
0.92
4.71
Sales Tax
1.63
2.37
15.90
26.27
1.29
2.79
23.85
13.87
Depreciation
4.43
1.47
Income Tax
0.11
0.02
Income:
Sales
Total
Expenditure:
Raw Materials Consumed
Administration
Expenses
&
Payments
Employees
Benefits
&
Selling
to
8.09
7.10
Net Profit
0.66
42.79
78.79
129.92
Total
NOTE:
As at
31.3.96
As at
31.3.97
As at
31.3.98
As at
31.3.99
As at
15.2.00
15.96
19.06
49.17
53.84
147.36
160.08
2.04
4.31
7.54
9.49
31.41
42.25
13.91
14.75
41.63
44.35
115.95
117.83
---
---
0.56
3.60
10.59
13.64
13.91
14.75
42.19
47.95
126.54
131.47
1.10
---
---
---
3.92
7.47
i. Inventories
0.92
8.07
---
28.84
54.71
9.46
4.55
0.78
2.86
15.35
8.05
66.58
8.32
8.13
8.53
40.08
16.22
128.25
14.89
16.98
11.39
84.27
82.90
211.76
6.72
13.40
7.17
5.28
12.47
18.47
4.08
0.16
0.03
0.86
1.67
------
10.79
13.56
7.20
6.14
14.14
18.47
4.10
3.42
4.19
78.13
68.76
193.29
---
1.49
72.76
105.44
128.38
48.55
3.95
10.40
0.29
0.10
4.94
-----
3.95
11.89
73.05
105.54
133.32
48.55
A. Fixed Assets
Gross Block
Less: Depreciation
Net Block
Add: Capital work in Progress
Total (A)
B.Current Assets, Loans and
Advances:
Current Assets:
&
ii. Provisions
Total (II)
Total B (I-II)
C. Loans Funds:
i. Secured Loans
ii. Unsecured Loan
Total C
14.06
6.28
-26.67
20.54
61.98
276.21
i. Share Capital
0.01
67.01
70.82
107.81
120.81
344.56
1.05
1.05
1.05
1.05
1.71
44.50
54.63
5.55
6.39
47.20
34.20
-----
Total
55.69
73.61
78.26
156.06
156.72
389.06
Less:
Miscellaneous
Expenditure
41.63
67.33
104.93
135.52
94.74
112.85
14.06
6.28
-26.67
20.54
61.98
276.21
D. Represented by:
Shareholders Funds:
3. FINANCIAL RATIOS:
a. EPS (Rs.)
---
---
---
---
0.05
1.43*
---
0.94
---
2.04
5.13
8.02
c. Return to Networth(%)
---
---
---
---
1.07
16.27
Nil
Nil
Nil
Nil
(NPAT/Shareholders
funds * 100)
4. DIVIDEND:
Nil
Nil
Please note that the above financial statements have been drawn by the Company in compliance with clarification XIII and XIV
issued by the Securities and Exchange Board of India.
* Annualised
Formulae:
1. Earning per share (EPS) =Net Profit after adjustments
--------------------------------------Number of equity shares
2. Net Asset Value =Equity Capital +Reserves -Misc exp not w/off
-------------------------------------------------------Number of equity shares
3. Return on Net Worth =Net Profit before extraordinary items * 100
--------------------------------------Net Worth
5. SIGNIFICANT ACCOUNTING POLICIES
General
a. Financial Statements are prepared on historical cost and ongoing basis
b. All expenses and income to the extent considered payable and receivable respectively are accounted for on accrual basis.
Fixed Assets:
A. Fixed Assets are stated at cost including other expenses related to acquisition and installation.
B. Pre-operative Expenditure towards development, documentation and commercial exploitation of new product is capitalised and
included in Plant & Machinery.
C. Depreciation : Depreciation is charged in the accounts on Straight Line Method as prescribed in Schedule XIV of the
Companies Act, 1956. The Depreciation on R&D Assets shall be treated as R&D Expenditure.
D. Inventories : Stores and spare parts are valued at cost, finished goods are valued lower of cost or realisable value.
E.
6. Loans from Financial Institutions secured by first charge on immovable properties of the company, present and future,
hypothecation of all the movable properties subject to any prior charges created/to be created by the banks for working capital
purpose and personal guarantees from the directors of the Company.
a. During the period the company has incurred the following expenditure on Research and Development on Tactical
Engagement Simulator (TacSim) another project.
(Rs lakhs)
(Previous year)
b. Expenses 13.95 (13.43)
c. Depreciation 9.38 (8.50)
d. Total 23.33 (21.93)
e. Estimated amount of contracts remaining to be executed on capital account (net of advances) not provided for nil (previous
year Nil)
Additional Information under Part II of Schedule VI
1998-99 As at 15.02.2000
8. Particulars of capacity
Licensed Capacity NA NA
Installed Capacity NA NA
Actual Production 8 Systems 13 Systems
9. Sales and Stock
Sales Quantity (Systems) 7 11
Value Rs. 71,01,834/- Rs.1,13,82,990/Opening stock (System) Nil 1 Value Rs. 2,49,150
Closing Stock Quantity (System) 1 3
Value Rs. 2,49,150/- Rs. 7,47,450/Raw material and stores consumed Rs. 18,30,667/- Rs.25,82,875/Contingent Liabilities Nil Nil
As at
i)
1998-99
15.02.2000
Rs.
Rs.
8,000
Certificate Fee
4,000
4,000
2,22,000
1,94,250
Perks
42,000
35,000
Other Allowances
36,000
30,000
1,38,000
97,000*
Perks
18,000
15,000*
Other Allowances
48,000
21,900*
Auditors Remuneration
ii)
Directors Remuneration
Managing Director
Other Directors
iv)
v)
Post Issue as
adjusted
Nil
Nil
48.55
41.20
48.55
41.20
Shareholders funds
344.56
763.00
a. Share Capital
b. Reserves
44.50
44.50
389.06
807.50
0.125:1
0.051:1
0.385
0.77
0.27
Adjustments:
Export profit
0.00
Difference between
2.91
-178.65
Net Adjustments
-175.74
-61.51
Total Taxation
-61.24
0.08
Note: Other adjustments includes scientific research expenditure allowable under Section 35, 35 (2AB) of the Income Tax Act,
1961.
For Prayaga & Co.,
Chartered Accountants
Sd/G.S.S.Srinivas
Partner
Place: Secunderabad
Date:01.03.2000
Nature
assistance
of
Agree-ment
date
Amount
Rate of
sanctioned/
outstanding
interest
Repayment schedule
Security
(p.a.)
(Rs lakh)
03-04-95
Convertible
Rupee
term
loan
12-02-96
100/47.08
20%
17 quarterly instalments
of Rs 5.88 lakhs each
commencing
from
January 1998 and ending
on January 01,2002.
i)First
charge over
the
fixed
assets
of
company &
ii)Personal
guarantees
of
promoters
03-04-95
Direct
Subscription to
Equity
12-02-96
55*
NIL
NIL
NIL
02-03-00
Direct
Subscription to
Equity
Yet to be
entered into
100
NIL
NIL
NIL
Notes:
1. Out of the sanctioned DSE of Rs 55 lakh, IDBI has subscribed to Rs 50 lakh as on date and the company has submitted a request for the
cancellation of the balance amount; the approval of which is awaited. The venture for which DSE was sanctioned has been completed and the
promoters have increased their stake to the extent of unsubscribed DSE of Rs 5 lakhs.
2. Outstanding amount of loan sanctioned by IDBI stood at Rs.47.08 lakh as on January 1, 2000. As on date ,there are no overdues to IDBI. At
the option of IDBI, the loan amount is convertible into equity shares at par any time during the currency of the loan.
3. Repayment of loan is guaranteed by the four original promoters viz. Mr Ashok Atluri, Mr Ravi Kumar, Mr Selwyn Samuel and Mr A.V.Rao.
Out of the original promoters Shri A.V. Rao and Shri Selwyn Samuel stepped down from the Board of the company due to their preoccupation and they have divested their shareholding in favour of their friends and relatives.
C. STATUTORY AND OTHER INFORMATION
MINIMUM SUBSCRIPTION
If the Company does not receive the minimum subscription of 90% of net offer to public(i.e.Rs 171.90 lakhs) on the date of closure of the issue or the
subscription level falls below 90 % after closure of the issue on account of cheques having been returned unpaid or due to withdrawal of applications,
the Company shall forthwith refund the entire amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount,
the Company shall pay interest as per Section 73 of the Act.
EXPENSES OF THE ISSUE
The expenses of the present Issue payable by the Company, which includes fees to the Lead Manager and Registrars, Bankers to the Issue, printing &
publication expenses and distribution costs, advertisement and promotional expenses, listing fees, bank charges and other miscellaneous and incidental
expenses are estimated at about Rs 16.5 lakhs and will be met out of the proceeds of the present Issue.
FEE PAYABLE TO THE LEAD MANAGERS TO THE ISSUE
The fee payable to the Lead Managers to the Issue will be as per the Memorandum of Understanding dated March 10, 2000 entered into with the
Lead Manager, Industrial Development Bank of India, copy of which is available for inspection at the Registered Office of the Company. The Lead
Manager will be reimbursed all out of pocket expenses, incurred in connection with the issue.
FEE PAYABLE TO THE REGISTRAR TO THE ISSUE
The fee payable to the Registrars to the Issue as per their offer letter is kept open for inspection at the Registered Office of the Company.
The Registrar will be reimbursed all relevant out-of-pocket expenses such as travelling, conveyance, postal charges, cost of stationary, communication
expenses etc. Adequate funds will be provided to the Registrars to enable them to send Refund Orders of value above Rs 1500/- letters of
allotment/Share Certificates by Registered Post.
Legal Advisor to the Issue
Mr V.S.Raju who is the Legal Advisor to the company, has been appointed as Legal Advisor to the Issue and therefore the fees payable for the issue
cannot be segregated.
Tax Advisor and Auditors to the company
Prayaga & Co are the auditors and tax consultant to the company and therefore the fees payable for the issue cannot be segregated.
UNDERWRITING COMMISSION
No underwriting commission is payable, since the issue is not underwritten.
BROKERAGE
Brokerage will be paid by the company @1.50% on the issue price of the equity shares on the basis of the allotment made against applications bearing
the stamp of the member of any recognised Stock Exchanges in India in the brokers column in the application form. Brokerage at the same rate will be
payable to the Bankers to the Issue in respect of allotment made against applications bearing their stamp in the brokers' column. Apart from
Brokerage, company may, in its absolute discretion, pay procurement based incentive upto 0.5 % of the issue size.
In case of tampering or overstamping of brokers/agents codes on the application form the issuer's decision to pay brokerage in this respect will be final
and no further correspondence would be entertained in this regard.
PREVIOUS ISSUE FOR CASH
The company has allotted 34,45,000 equity shares of Rs 10/- each for cash at par as discussed elsewhere in the Prospectus.
PREVIOUS PUBLIC OR RIGHTS ISSUE
The Company has not issued equity shares or any other securities to the public in the past.
ISSUE OF SHARES AND DEBENTURES OTHERWISE THAN FOR CASH
The Company has not issued or agreed to issue any equity shares and / or debentures for consideration other than in cash.
PREVIOUS COMMISSION AND BROKERAGE
The Company has not paid any commission and/or brokerage to any person subscribing or agreeing to subscribe or procure or agreeing to procure
subscription for any shares or debentures of the Company, within three years before the date of this Prospectus.
OUTSTANDING DEBENTURES/PREFERENCE SHARES
The Company does not have any outstanding debentures / redeemable preference shares.
OPTION TO SUBSCRIBE
Save and except as stated elsewhere in the Prospectus, the Company has not entered into nor does it, propose to enter into any contract or
arrangement whereby any option or preferential right of any kind has been or is proposed to be given to any person to subscribe to any equity shares
in or debentures of the Company. However, the loan granted by IDBI is convertible into equity shares of the company at par at any time during the
currency of the loan as disclosed elsewhere in this Prospectus. The company has already approached IDBI for cancellation of balance subscription of
Rs 5 lakhs agreed to be subscribed to by IDBI, in respect of the earlier project.
OPTION TO SUBSCRIBE IN DEMATERISLISED FORM
The investors have an option to subscribe to the equity shares of Zen Technologies Limited either in the physical form or in dematerialised form.
However, trading of securities shall be in dematerialised form only for all investors.
Separate applications for dematerialised/electronic and physical equity shares by the same applicant shall be considered as multiple
applications and will be rejected.
Applicants must indicate in the application form the number of shares they wish to receive in dematerialised/electronic form and physical form out of
the total number of shares applied for. In case of partial allotment, shares will be first allotted in dematerialised/electronic form and the balance equity
shares, in excess of the applicants request for equity shares in electronic form, will be allotted in physical form. Equity shares allotted in physical form
will be in multiples of 100 shares.
REVALUATION OF ASSETS
The Company has not revalued its assets since the date of its inception.
CLASSES OF SHARES
The authorised share capital of the Company consists of 1,00,00,000 equity shares of face value Rs. 10/- each aggregating Rs.10,00,00,000/-. There
is no other class of shares of the Company.
CAPITALISATION OF PROFITS
The company has not issued any equity shares as bonus shares by capitalising reserves or profit and loss account since incorporation of the company.
PURCHASE OF PROPERTY
Save as elsewhere stated in this Prospectus and save in respect of the property purchased or acquired or to be purchased or acquired under the
contracts referred to under the heading " Material Contracts" there is no property which the company has purchased or acquired or proposes to
purchase or acquire which is to be paid for wholly or partly out of the proceeds of the present issue or the purchase or acquisition of which has not
been completed on the date of the issue of this Prospectus, other than property:
a. the contract for the purchase or acquisition whereof was entered into in the ordinary course of the company's business, such contract not
being made in contemplation of the issue nor the issue in consequence of the contract;
b. in respect of which the amount is material.
Zen Technologies Limited has not purchased any property, in which its promoter and/or any of its Directors has or have any direct or indirect interest
or in respect of any payment made thereto.
TERMS OF APPOINTMENT OF THE MANAGING DIRECTOR
Mr Ashok Atluri has been re-appointed as the Managing Director of the Company for a period of 5 years w.e.f. 01.11.1999 to 31.10.2004 on the
following terms and conditions:
The remuneration payable to Sri Ashok Atluri as Managing Director is fixed as follows:
a) Remuneration : Rs.30,000/- per month
b) Perquisites : In addition to the above, he shall be entitled to the following perquisites classified into three categories A,B&C as follows:
CATEGORY A
i. House Rent Allowance: House rent allowance at the rate of forty percent salary. The expenditure incurred by the company on gas, electricity,
water and furnishing shall be evaluated as per the Income Tax Rules, 1962 subject to a ceiling to ten percent of the salary.
ii. Medical Reimbursement: Expenses incurred for self and family, subject to a ceiling of one months salary in a year or three months salary over
a period of three years
iii. Leave Travel Concession: For self and family, once in a year incurred in accordance with any rules specified by the Company.
iv. Club Fees: Fees of clubs subject to a maximum of two clubs. This will not include admission and life membership fees.
v. Personal Accident Insurance: Of an amount the premium of which shall not exceed Rs.1,000/- per annum
CATEGROY B
i. The Companys contributions to provident fund, superannuation fund or annuity fund shall be in accordance with the rules and regulations of the
Company. Such contributions will not be included in the computation of the ceiling of perquisites to the extent either singlely of put together are
not taxable under the Income Tax Act, 1961.
ii. Gratuity at a rate not exceeding half months salary for each completed year of service.
CATEGORY C
i. Car for use on the Companys business and telephone at residence, provided that personal long distance calls on the telephone and use of car
for private purpose shall be billed by the company. The provisions for car and telephone will not be considered as perquisites.
III Other Terms:
i. Leave : One months leave with full pay and allowance for every eleven months service. Leave accumulated but not availed of at the time of
retirement or superannuation or otherwise shall be allowed to be encashed.
ii. Reimbursement of Expenses: Reimbursement of reasonable entertainment and other expenses actually and properly incurred in connection with
the business of the company.
iii. Disentitlement of Directors Fees: Sri Ashok Atluri shall not so long as he functions as the Managing Director be entitled to receive any fee for
attending any meeting of the Board or a committee thereof.
INTEREST OF DIRECTORS AND PROMOTERS
All the Directors of Zen Technologies Limited are interested to the extent of fees, if any, payable to them for attending meetings of the Board and of
Committees thereof, reimbursement of travelling and other incidental expenses, as well as, to the extent of other remuneration, if any, payable to them
under the Articles.
All the Directors of Zen Technologies Limited may be deemed to be interested to the extent of equity shares, if any, already held by them and / or their
friends and relatives in Zen Technologies Limited or that may be subscribed to and allotted to them, out of the present Issue in terms of this Prospectus
and also to the extent of any dividend payable to them and other distributions in respect of the said equity shares.
The Directors may also be regarded as interested in the equity shares, if any, held or that may be subscribed to by and allotted to the companies, firms
and trust in which they are interested as directors, members, partners and/or trustees.
2. Nothing in clause (1) shall release the estate of a deceased joint holder from any liability in respect of any shares which were jointly held by him
with other persons.
Article 26
1. Any person becoming entitled to a share in consequence of the death or insolvency of a member may upon such evidence being produced as
may from time to time be required by Board and subject as hereinafter provided, elect either.
a. to be registered himself as holder of the shares ; or
b. to make such transfer of the shares as the deceased or insolvent member could have made.
1. The Board shall in either case have the same right to decline or suspend registration as they would have had, if the deceased or insolvent
member had transferred the shares before his death or insolvency.
DEVOLUTION OF RIGHTS
Article 27
1. If the person so becoming entitled shall elect to be registered as holder of the shares himself he shall deliver or send to the Company a notice in
writing by him stating that he so elects.
2. If the person aforesaid shall elect to transfer the share he shall testify his election by executing a transfer deed for transfer of the share.
3. All the limitations, restrictions and provisions of these regulations to the rights to transfer and the registration of transfer of shares shall be
applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occurred and the notice of transfer
signed by that member.
4. A person becoming entitled to share by reason of the death or insolvency of the holder shall be entitled to the same dividends and other
advantages to which he would be entitled if he were the registered holder of the share except that he shall not ,before being registered as a
member in respect of the share be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company.
Provided that the Board may, at any time give notice requiring any such person to elect either to be registered himself or transfer the share and if
the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable
in respect of the share until the requirements of the notice have been complied with.
Article 28
The Company shall incur no liability or responsibility whatever in consequence of their registering or giving effect to any transfer of shares made or
purporting to be made by any apparent legal owner thereof( as shown or appearing in the register) to the prejudice of persons having or claiming any
equitable right, title or interest to or in the same shares not withstanding that the Company may have had notice of such equitable rights or referred
thereto in any books of the Company and the Company shall not be bound by or required to regard or attend to or give effect. To any notice which
may be given to it of any equitable rights, title or interest or be under any liability whatsoever for refusing or neglecting so to do, though it may have
been entered or referred to in the books of the Company, but the Company, shall never the less be at liberty to have regard and attend to any such
notice and give effect thereto, if the Board shall think fit.
FORFEITURE OF SHARES
Article 29
If a member fails to pay any call or installment of a call on the day appointment for the payment thereof, the Board of Directors may at any time
thereafter during such time as any part of such a call or installments remains unpaid, serve a notice on him requiring payment of so much of the call or
installment as unpaid, together with any interest which may have accrued.
Article 30
The notice shall name a further day (not earlier than the expiration of fourteen days from the date of service of the notice), on or before which the
payment required by the notice is to be made, and shall state that, in the event of non-payment on or before the day named, the shares in respect of
which the call was made will be liable to be forfeited.
Article 31
If the requirements of any such notice as aforementioned are not complied with, any share in respect of which the notice has been made, be forfeited
by a resolution of the Board of Directors to that effect, such forfeiture shall include all dividends declared in respect of the forfeited shares, and not
actually paid before the forfeiture.
Article 32
A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Board of Directors may think fit, and at any time
before sale or disposition, the forfeiture may be cancelled on such terms as the Board of Directors may think fit.
Article 33
A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall, not withstanding remain liable to
pay, and shall forthwith pay the Company all monies which at the date of forfeiture were presently payable by him to the Company in respect of the
shares, but his liability shall cease if and when the Company received payment in full of the nominal amount of shares whether legal proceeding for the
recovery of the same had been barred by limitation or not.
Article 34
A duly verified declaration in writing that the declarant is a Director of the Company and that a share in the Company has been duly forfeited on a date
stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and that
declaration and receipt of the Company for the consideration if any given for the shares on the sale or disposition thereof shall constitute a good title to
the share, and the person to whom the share is sold or disposed off shall be registered as the holder of the share and shall not be bound to see to the
application of the purchase money (if any), not shall his title to the share be affected by way of irregularity or invalidity in the proceedings in reference
to the forfeiture sale or disposal of the share.
BORROWING POWERS
Article 35
a. The Company shall have power to borrow from any persons and secure the payment of any sum or sums of money for the purpose of the
Company and the Directors may from time to time at their discretion exercise this power and may themselves lend to the Company on security
or otherwise provided that the Directors shall not contravene the provisions of section292 of the Companies Act, 1956 or any statutory
modification thereof.
b. The Directors may raise or secure the repayment of sum of Rs.10 crores (Rupees Ten Crores) in such manner and upon such terms and
conditions in all respects as they may think fit, and in particular by the creation of any mortgage or charge on the undertaking or the whole or
any part of the property, present or future, or uncalled capital of the Company, or by the issue of bonds, perpetual or redeemable, debentures
debenture stock of the Company charged upon all or any part of the Companys property both present and future including its uncalled capital
for the time being.
VOTING RIGHTS & APPOINTMENT OF PROXY.
Article 39
1. Every member holding any equity shares shall have a right to vote in respect of such shares on every resolution placed before the
meeting. On a show of hands every such member present in person shall have one vote . On a poll, his voting right in respect of his equity
shares shall be in proportion to his share of the paid-up capital in respect of the equity shares.
2. In the event of the Company issuing any preference shares the holders of such preference shares shall have the voting rights set out in that
behalf in section 87 of the Act.
Article 40
A demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than that on which a poll has been
demanded. The demand for a poll may be withdrawn at any time by the person who made the demand.
Article 41
In the case of joint holders the vote of the first named of such joint holders who tenders a vote whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders.
Article 42
A member of unsound mind or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of
hands or on a poll, by his committee or other legal guardian and any such committee or guardian may, on a poll, vote by proxy.
Article 43
No member shall be entitled to vote in any general meeting unless all calls or other sums presently payable by him in respect or his shares in the
Company have been paid.
Article 44
On a poll, votes may be given either personally or by proxy.
Article 45
Any member entitled to attend and vote at a meeting of the Company shall be entitled to appoint any person whether a member or not as his proxy to
attend and vote instead of himself, but the proxy so appointed shall not unless he be a member, have any right to speak at the meeting and shall not be
entitled to vote except on a poll.
Article 46
1. This instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing, or if the
appointer is a Corporation either under the Common seal or under the hand of an officer or attorney so authorised. Any person may act as
proxy whether he is a member or not.
2. A Corporate body (whether a Company within the meaning of the Act or not) may, if it is a member or a creditor or debenture holder of the
Company, by the resolution of its Board of directors or other governing body authorise such person as it things fit to act as its representative at
any meeting of the Company or at any meeting of any creditors of the Company held in pursuance of the provisions contained in or authorised
by resolution as aforesaid shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the body
corporate which he represents as the body could exercise if it were an individual member, creditor or holder of debentures of the Company.
3) So as an authorisation under clauses above is inforce, the power to appoint proxy shall be exercised only by the person so appointed as
representative.
Article 47
The instrument appointing proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certifed copy of the power
of authority, shall be deposited at the registered office of the Company not less than 48 hours before the time for holding the meeting or adjourned
meeting at which the person named in the instrument proposes to vote, or in the case of a poll, not less than 24 hours before the time appointed for the
taking of the poll and in default the instrument proxy shall not be treated as valid.
Article 48
A vote given in accordance with the terms of an instrument of proxy shall be valid, not withstanding the previous death of the principal or the
revocation of the proxy, or the transfer of the share in respect of which the proxy is given. Provided that no intimation in writing of the death,
revocation or transfer shall have been received at the Registered Office of the Company before the commencement of the meeting or adjourned
meeting at which the proxy is used.
Article 49
Every instrument appointing a Proxy shall be retained by the Company and shall be in either of the forms specified in Schedule IX of the Act or a form
as near thereto as circumstances will admit.
Article 50
Subject to the provisions of the Companies Act, 1956, the Chairman of a General Meeting shall be the sole and absolute judge of the validity of every
vote tendered at such meeting, or at a poll demanded at such meeting and may allow or disallow any vote tendered, according as he shall be opinion
that the same is or is not valid.
DIRECTORS
Article 51
The Company shall have not less than three and not more than twelve Directors unless otherwise determined by the members at a General meeting.
Article 52
The first Directors of the Company are
1. Atluri Ramadevi
2. Selwyn Samuel
3. M. Ravi Kumar
Article 53
Any person whether a member of the Company or not, can be appointed as a Director of the Company and no qualification by way of share holding
shall be required from any Director.
Article 54
The Directors may elect one of their body to the office of the Chairman of the Board of Directors, and the Director so elected as Chairman shall hold
office for a period of five years subject to the pleasure of the Board and subject to his continuing as a Director and he shall preside over all the
meetings of the Board and the General Meeting during tenure of office.
Article 55
In case the UNION Government or any State Government, Financial Institutions sponsored or financed by the above Governments and other
institutions, Venture Capital Institutions, Mutual funds etc. by way of grants, or loans accepts participation or extends guarantees on behalf of the
Capital of the Company, such Government or Institution shall, if the agreement between it and the company so provides, be entitled, so long as the
Company is indebted to such Government or Institution which continues to be interested in the Company as a shareholder or in any fiduciary capacity
to nominate and from time to time substitute in place of such nominee one or more Directors, to protect the interest of each such Government or
corporation, on the Board of Directors and while holding such office such nominee shall not be liable to retire by rotation nor be liable to hold any
qualification shares.
Article 56
The Board shall have power to co-opt one or more persons to be Directors, but so that the total number shall not exceed twelve. In the place of a
Director who is about to leave or is absent from the state in which the meetings of Directors are generally held, the Board may appoint any person to
be an alternate Director, provided such absence shall not be for lesser period than three months and such appointee while he holds office as an
alternate Director shall be entitled to receive notice of all meetings of the Directors and to attend and vote there at and on all resolutions proposed in
circulation, but he shall IPSO FACTO vacate office as Director if and when the original Director returns to the state in which the meeting are generally
held.
Article 57
One third of the Directors shall at every Annual General Meeting retire by rotation. If this number is not three or a multiple of three then a number of
Directors nearest thereto shall retire. A retiring Director shall be eligible to seek re-election.
Article 58
The Directors to retire in every year shall be those who have been longest in office since their last election but as between persons who became
Directors on the same day those to retire shall unless they otherwise agree among themselves be determined by lot.
Article 59
Subject to the provisions of section 256 of the Act if any Meeting at which an election of Directors ought to take place, the place of the vacating
Directors is not filled up and the meeting has not expressly resolved not to fill up the vacancy, the meeting shall stand adjourned till the same day in the
next week at the same time and place, or if that day is public holiday till the next succeeding day which is not a public holiday at the same time and
place, and if at the adjourned meeting the place of retiring Directors is not filled up and the meeting has also not expressly resolved not to fill up the
vacancy, then the retiring Directors or such of them as have not had their places filled up shall be deemed to have been re-appointed at the adjourned
meeting.
Article 60
No Director shall be disqualified by his office from contracting with the Company nor shall any such contract entered into by or on behalf of the
Company in which any Director shall be in any way interested be avoided, nor shall any Director so contracting or being so interested be liable to
account to the Company for any profit realised by any such contract by reason only of such Director holding such office or of the fiduciary relations
thereby established but the nature of his interest must be disclosed by him at the meeting of the Directors at which the contract is determined or if he is
interested then existing or in any other case at the first meeting of the Directors after the acquisition of the interest.
Article 61
If any Director appointed by the Chairman in general meeting vacates office as a Director before his term of office expires in the normal course, the
resulting casual vacancy may be filled up by the Board at a meeting of the Board of Directors, but any person so appointed shall retain his office so
long as the vacating Director would have retained the same if no vacancy had occurred. Provided that the Board of Directors may not fill such a
vacancy by appointing thereto any person who has been removed from the office of Director under Section 284 of the Companies Act, 1956.
Article 62
The business of the Company shall be managed by the Directors who may pay all expenses incurred in getting up and registering the Company and
other preliminary expenses and may exercise all such power of the Company as are not, by the Companies Act, 1956 or any statutory modifications
thereof for the time being in force, or by these articles, required to be exercised by the Company in General Meeting subject nevertheless to any
regulation of these articles and to the provisions of the said Act, and to such regulations being not inconsistent with the aforesaid regulations or
provisions as may be prescribed by the Company in General Meeting but no regulation made by the Company in General Meeting shall invalidate any
prior act of the Directors which would have been valid if that regulation had not been made.
Article 63
The Directors shall be paid sitting fees as may be determined from time to time by the Board for every meeting or any committee of the Board
attended by them. In addition to the remuneration payable to them, the Directors including the Managing Director may be paid all travelling, hotel and
other expenses properly incurred by them in attending and returning from meetings of the Board of Directors or any committee thereof or general
meetings of the Company or in connection with the business of the Company.
Article 64
Subject to the provisions of Section 314 of the Act, if any Director shall be appointed to advice the Directors as an expert or be called upon to
perform extra services or make special exertions for any of the purposes of Company, the Board of Directors may pay to such Director such special
remuneration as they think fit, which remuneration may be in the form of either salary, commission or a lump sum and may either be in addition to or in
substitution of the remuneration specified in the last preceding article.
Article 65
Subject to the provisions of the Companies Act, 1956 the Board of Directors may employ from time to time any Director to perform and work or
supply goods required by the Company, or to serve the Company in any professional capacity, or in any other capacity or character, and may
remunerate him for such work or supply of goods or services as they may think proper and may enter into contracts with him for the purpose
aforesaid, but no Director shall vote at any Directors meeting upon any question affecting his or her own employment as aforesaid or any contract
relating hereto.
MANAGING DIRECTOR OR WHOLE-TIME DIRECTOR
Article 66
Subject to provisions of Section 198, 309, 310 of the Act and subject to such approvals as may be necessary. The Board may from time to time
appoint one or more of their body to the office of Managing Director and or Manager of Whole time Director (s) for such term, and on such
remuneration (whether by way of salary and / or commission or partly in one and partly in another ) with or without bonus and any other and/or all
allowances as they may think fit and a Director so appointed shall not, while holding that office, be subject to retirement by rotation or taken into
account in determining the rotation of retirement of Directors but his or her appointment shall be subject to determination ipso facto if he or she ceases
from any cause to be Director, or if the Company in general meeting resolves that his or her term of office of Managing Director or Manager or
Whole-time Director be determined.
MANAGING DIRECTOR
Pursuant to the resolution passed at the Board of Directors meeting held on 01.09.1999 and Annual General Meeting of the Company held on
27.09.1999 Mr Ashok Atluri has been re-appointed as the Managing Director of the Company for a period of 5 years w.e.f. 01.11.1999 to
31.10.2004 on the following terms and conditions:
The remuneration payable to Sri Ashok Atluri as Managing Director is fixed as follows:
a) Remuneration : Rs.30,000/- per month
b) Perquisites : In addition to the above, he shall be entitled to the following perquisites classified into three categories A,B&C as follows:
CATEGORY A
i. House Rent Allowance: House rent allowance at the rate of forty percent salary. The expenditure incurred by the company on gas, electricity,
water and furnishing shall be evaluated as per the Income Tax Rules, 1962 subject to a ceiling to ten percent of the salary.
ii. Medical Reimbursement: Expenses incurred for self and family, subject to a ceiling of one months salary in a year or three months salary over
a period of three years
iii. Leave Travel Concession: For self and family, once in a year incurred in accordance with any rules specified by the Company.
iv. Club Fees: Fees of clubs subject to a maximum of two clubs. This will not include admission and life membership fees.
v. Personal Accident Insurance: Of an amount the premium of which shall not exceed Rs.1,000/- per annum
CATEGROY B
i. The Companys contributions to provident fund, superannuation fund or annuity fund shall be in accordance with the rules and regulations of the
Company. Such contributions will not be included in the computation of the ceiling of perquisites to the extent either singlely of put together are
not taxable under the Income Tax Act, 1961.
ii. Gratuity at a rate not exceeding half months salary for each completed year of service.
CATEGORY C
i. Car for use on the Companys business and telephone at residence, provided that personal long distance calls on the telephone and use of car
for private purpose shall be billed by the company. The provisions for car and telephone will not be considered as perquisites.
III Other Terms:
i. Leave : One months leave with full pay and allowance for every eleven months service. Leave accumulated but not availed of at the time of
retirement or superannuation or otherwise shall be allowed to be encashed.
ii. Reimbursement of Expenses: Reimbursement of reasonable entertainment and other expenses actually and properly incurred in connection with
the business of the company.
iii. Disentitlement of Directors Fees: Sri Ashok Atluri shall not so long as he functions as the Managing Director be entitled to receive any fee for
attending any meeting of the Board or a committee thereof.
WHOLE-TIME DIRECTOR
Pursuant to the resolution passed at the Board of Directors meeting held on 01.09.1998 and Annual General Meeting of the Company held on
28.09.1998 Mr Ravi Kumar M has been appointed as a Whole time Director of the Company for a period of 5 years w.e.f. 29.06.1998 to
28.06.2003 at a remuneration of 8,500/- per month.
Article 67
A Director may from time to time, and a Managing Director or Commercial or Technical Director as the case may be upon the request of any
Director, shall convene the meeting of the Board, All meetings of the Board of the Company shall, unless otherwise determined by the Board, be held
at the Registered Office of the Company. The quorum for a meeting shall be two directors or one third of the total strength (any fraction contained in
one third being rounded off as one) whichever is higher. The Board shall meet at least once in every three months and at least four meetings shall be
held in every calendar year.
Articles 68
Save as otherwise expressly provided in the Act, a resolution in writing signed by all or a majority of the members of the Board or of a committee
thereof for the time being entitled to receive notice of a meeting of the Board or committee, shall be as valid and effectual as if it had been passed at
meeting of the board or committee, duly convened and held. In the event of the signature of any one of the Directors to any such resolution being
affixed on different dates the said resolution shall be deemed to be passed on the date of signature of the Directors signing last.
Article 69
The office of the Director shall be vacated, if:
a. he is found to be of unsound mind by a court of competent jurisdiction; or
b. he applies to be adjudicated or is adjudged an insolvent or
c. he fails to pay dues made on him in respect of shares held by within six months from the last date fixed for the payment of the call unless the
Central government has by notification in the official gazette removed the disqualification incurred by such failure; or
d. he is convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six
months; or
e. he absents himself from three consecutive meetings of the Board or from all meetings of the Board for a continuous period of three months,
whichever is longer without, obtaining leave of absence from the Board, or
f. he (whether by himself of by any person for his benefit of on his account), or any firm in which he is partner or any private company of which he
is a Director) accepts a loan, or any guarantee or security for a loan from the Company in contravention of section 299; or
g. he acts in contravention of Section 295; or
h. he becomes disqualified by an order of court under Section 203; or
i. he is removed in pursuance of Section 284; or
j. having been appointed a Director by virtue of his holding any office or other employment in the Company, he ceases to hold such office or other
employment in the Company.
Provided that notwithstanding anything in sub-clause (b), (d) and (h) above the disqualification referred to in those clauses shall not take effect:
a. for thirty days from the date of the adjudication, sentence or order.
b. Where any appeal or petition is preferred within the thirty days aforesaid against the adjudication, sentence or conviction resulting in the
sentences or order until the expiry of seven days from the date on which such appeal or petition is disposed off, or
c. Where within the seven days aforesaid, any further appeal or petition is preferred in respect of the adjudication, sentence, conviction or order
and the appeal or petition if allowed would result in the removal of the disqualification until such further appeal or petition is disposed off.
POWERS OF THE BOARD
Article 70
The business of the company shall be managed by the Directors who may pay all expenses incurred in getting up and registering the Company and
may exercise all such powers of the Company as are not by the Companies Act,1956 or any statutory modification thereof for the time being in force
or by this Article, required to be exercised by the Company in General Meeting subject nevertheless to any regulation of these Articles or the
provisions of the said Act, and to such regulations not in consistent with the above said regulations or provisions as may be prescribed by the
Company in general meeting but no regulations made by the Company in General Meetings shall invalidate any prior act of the Directors which would
have been valid if that regulation had not been made.
Article 71
Without prejudice to the General powers conferred by the preceding Articles and other powers conferred by these Articles and subject to the
provisions of the Act, the Board of Directors shall have the following powers, that is to say:
a. To pay the costs, charges expenses preliminary and incidental to the promotion, establishment and registration of the Company.
b. At their discretion to pay for any property, rights, privileges acquired by, or services, rendered to, the Company either wholly or partially in
cash or in shares, bonds, debentures or other securities of the Company and any such shares may be issued subject always to the liability of all
share holders in regard to the departments of the Company whether such bonds, debentures or other securities are either specifically charged
upon all or any part of the Company and its uncalled capital not so charged.
c. To take on lease, purchase, or otherwise acquire for the Company any property, rights, or privilege, which the Company is authorised to
acquire, at such price and generally on such terms and conditions as they think fit.
d. To appoint any person or persons to hold in trust for the Company property belonging to the Company or in which it is interested or for any
other purpose and to execute all such instruments and to do all such things as may be necessary or requisite in relation to any such trust.
e. To list the Shares/Debentures and any other instruments for the purpose of rising funds from the Public, of the company, on such stock
exchanges including Over The Counter Exchange of India (OTCEI) in India, and outside India subject to obtaining permission/sanctions from
such authorities and execute all such agreements, instruments, on such terms and conditions as the Board may from time to time think fit.
f. To sell, let, exchange or otherwise dispose of absolutely or conditionally all or any part of the property. Privileges and undertakings of the
Company upon such terms and conditions and for such consideration as they think fit.
g. To appoint and at their discretion remove or suspend such agents, managers, secretaries, clerks and servants for permanent, temporary or
special services, as they may from time to time think fit and to determine their powers and duties and fix their salaries or emoluments and to
require security in such instance and to such amounts as they think fit and generally to provide for the management of the Company in different
parts of India or outside in any countries and to establish and maintain branch offices anywhere.
h. To buy or procure the supply of all articles, goods, merchandises and other movable property required for the purpose of the Company and to
sell them.
i. To appoint any person or persons to be attorneys of the Company for such purposes and with powers, authorities and discretion not exceeding
those vested in or exercisable by the Board and for such period and subject to such conditions as the Board may from time to time think fit.
j. To enter into , carryout rescind or vary, financial arrangements with any banks persons or corporations for or in connection with such
arrangements, to deposit, pledge or hypothecate any property of the Company, to execute and register any documents relating to the same.
k. To make and give receipts, release and other discharges for money payable to the Company for the claims and demands for the Company.
l. To compound and allow time for the payment or satisfaction of any debts due to or by the Company and any claims and demands by or against
the Company and to refer matters to arbitration and observe and perform the awards.
m. To sign, draw, accept, endorse and negotiate and discount, for and on behalf of the Company, all such cheques, bills, of exchange promissory
notes, hundies, drafts, government and other securities and all other documents, whether negotiable or otherwise, as shall be normal in or for
carrying on the affairs of the Company.
n. To institute, prosecute, compromise, withdraw or abandon any legal proceedings by or against the Company or its officers or otherwise
concerning the affairs of the Company.
o. To invest and deal with any of the monies of the Company not immediately required for the purpose thereof upon such securities or investments
and in such manner as they may think fit and from time to time vary or realise such securities and investment.
p. To enter into negotiations and contracts and to rescind or vary all such contracts and do all such acts, deeds, and things in the name and on
behalf of the company as they may consider expedient for or in relation to any of the matters aforesaid or otherwise for the purpose of the
Company.
q. To make, vary and repeal, from time to time bye-laws for the regulation of the business of the Company, its officers and servants.
r. To deposit monies on security or otherwise with other persons or companies whether Banking Company or not and to invest any funds of the
Company not required for the time being for the general purpose of the Company in such investments (other than the shares of the Company) as
any be thought proper, and to hold exchange, sell vary and dispose of or deal with any of the investments of the Company, as may be deemed
expedient.
s. To give credit or deal credit, with or without security with any persons including members of the Company or such amount upon such terms and
conditions as they shall think fit.
t. To call any General Meeting of the Company to transact such business as is mentioned in the notice convening the meeting and.
u. To exercise and to carry into effect any or all of the objects and powers mentioned or referred to in the Memorandum of Association.
Article 72
The Board may from time to time at their discretion raise or borrow or secure the payments of any sum of money for the purpose of Companys
business, and may secure the payment of such money by mortgage or charge upon the whole or any part of the assets and property of the Company
(present and future) including its uncalled and unpaid capital not so charged.
Article 73
Subject to as aforesaid, any bonds, debenture stock or other securities issued by the Company shall be under the control of Directors who may issue
them upon such terms and conditions and such manner and for consideration as they shall consider to be for the benefit of the Company.
Article 74
The Board may at any time pay to any person commission which may represent a share in the profits of the company or in any other manner either in a
lumpsum or in yearly, half-yearly, quarterly installments, in consideration of his guaranteeing to debenture holders or other creditors on behalf of the
Company the payment of the face value of the Debenture or other liabilities. Such commission will be payable only out of the profits of the Company.
Article 75
The Board may receive deposits for the purpose of financing the business of the Company, bearing interest at such rates as the Directors may fix
which may be made payable monthly, quarterly, half yearly or at the beginning or end of the term for which such sums are borrowed.
Article 76
If the Directors or any of them or any other persons shall become personally liable for the payment of any sum primarily due from the Company, the
Directors may execute or cause to be executed any mortgage, charge or security over the whole or any part of the assets of the Company by way or
indemnity to secure the Directors or persons becoming liable as aforesaid for any loss in respect of such liability.
Article 77
Subject to the provision of the Act, the Board may from time to time entrust to and confer upon the Managing Director for the time being or
Committee consisting of such persons as it thinks fit, such of the powers exercisable under these presents by the Board as they may think fit and may
confer such powers for such time and to be exercised for such objects and purposes, upon such terms and conditions with such restrictions as they
think expedient and they may confer such powers either collaterally with or to the exclusion of and substitution for all or any of all or any of the powers
of the Board in that behalf, and may from time to time withdraw, revoke, alter or vary all or any of such powers.
SECRECY
Article 82
No member shall be entitled to inspect the Companys Books without the permission of the Director or to require discovery or any information
respecting any detail of the Companys trading or any matter which is or may be in the nature of trade secret process or trade mystery which may
relate to the conduct of the business of the company and which, in the opinion of the Directors, it will not be expedient in the interest of the members of
the company to communicate to the public.
DIVIDENDS
Article 84
a) The Company shall declare and pay dividends only out of profits and in accordance with the provisions of section 205 of the Companies Act, 1956
or any statutory modifications thereof.
b) The Company in general meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board.
c) The Board may from time to time pay to the members such interim dividends as appear to it to be justified by the profits of Company.
d) The Board may deduct from any dividend payable to any member all sums of money, if any presently payable by him to the Company on account
of call or otherwise in relation to the share of the Company.
e. In the case of Joint holders, it shall be sufficient for the company to effect payment of the dividend to the first named among them.
CAPITALISATION OF RESERVES AND PROFITS
Article 85
1. The company in the Capitalisation of profits General Meeting may upon the recommendation of the Directors resolve:
a. That it is desirable to capitalise any part of the amount for the time being standing to the credit or any of the companys reserve accounts or the
credit of the Profit and Loss Account, or otherwise available for distribution; and
b. That such sum be accordingly set free for distribution in the manner specified in clause (2) among the members who would have been entitled
thereto if distributed by way of dividend and in the same proportion.
1. The sum aforesaid shall not be paid in cash but shall be applied subject to the provisions contained in clause(3) either in or towards.
i. Paying any amounts for the time being unpaid on any shares held by such members respectively;
ii. Paying up in full, unissued shares of the Company to be allotted and distributed, credited as fully paid up amongst such members in the
Proportion aforesaid; or
iii. Partly in the way specified in sub-clause (i) partly in sub-clause (ii).
1. A share premium account and a capital redemption reserve account may, for the purpose of this article, be applied only to issue shares to be
issued to a member of the company as fully unpaid bonus shares.
2. The Board shall give effect to this resolution passed by the company in pursuance of this Article.
INDEMNITY
Article 86
Subject to provisions of the Companies Act, 1956, every Director, Managing Director, Secretary or Manager of the Company shall be indemnified by
the Company against all losses or liabilities and it shall be the duty of the Directors out of the funds of the company to pay all costs, losses and
expenses which any such officer may incur or become liable to by reason of any contract entered into act or deed done by such officer in any way in
the discharging of his duties including travelling expenses and the amount for which such indemnity is provided shall be immediately attached as a lien
on the property of the company and have the priority as between the members over all other claims.
WINDING UP
Article 88
If the company shall be wound up the liquidators may, with the sanction of a special resolution, divide amongst the members and contributions assets
of the company in accordance with the provisions of the Companies Act, 1956.
The following contracts mentioned in Para (A) below (not being contracts entered into in the ordinary course of business carried on by Zen
Technologies Limited ) are or may be deemed to be material contracts. Copies of these contracts along with documents referred to in Para (B) below
have been attached to the copy of this Prospectus delivered to the Registrar of the Companies, Andhra Pradesh at Hyderabad, for registration and
may be inspected at the Registered Office of Zen Technologies Limited between 11.00 a.m. and 1.00 p.m. on any working day until the closure of the
Issue.
A. MATERIAL CONTRACTS
1. Letter dated March 02, 2000 from IDBI offering its services to act as lead managers to the Issue and company's acceptance thereof. Also the
Memorandum of Understanding dated March 10, 2000 signed between IDBI and the company.
2. Memorandum of Understanding dated March 8, 2000 signed between the company and M/s. Karvy Consultants Limited regarding their
appointment as Registrar to the Issue.
3. Tripartite agreement dated _________ between Zen Technologies Limited, M/s. Karvy Consultants Limited and National Securities
Depository Limited and agreement dated __________ with Central Depository Services (India) Limited for dematerialisation of shares.
4. Memorandum of Understanding dated January 22,1999 with Bharat Dynamics Ltd. for marketing of ZEN SATS
5. Loan agreement loan dated February 12,1996 entered into with IDBI for Rs 100 Lakhs convertible Copies of the purchase orders placed
6. Direct subscription agreement of Rs. 55 Lakhs entered into with IDBI dated .January 18,1996.
7. Undertaking to buy back the shares from IDBI dated April 25,1996
B. DOCUMENTS FOR INSPECTION
1. Memorandum and Articles of Zen Technologies Limited as amended up to date.
2. Certificate of Incorporation of Zen Technologies Limited and Certificate of Commencement of Business dated July 9, 1993
3. Lease Agreements dated April 6,1995 and May 15,1995 for the existing Leased Premises of the company at Secunderabad.
4. Resolution passed under Section 81(1A) of the Act, at the Extra-ordinary General Body Meeting (EGM) of the Company held on October 20,
1999.
5. Consents from the Directors, Compliance Officer, Auditor, Legal Advisor, Lead Manager, Registrar and Bankers to the Issue , to act in their
respective capacities.
6. Auditors' Report dated March 1,2000 from M/s Prayaga & Co, Chartered Accountants, certifying the availability of tax benefits as mentioned
in this Prospectus.
7. Auditors' Report dated March 1,2000 on the accounts of the company.
8. Copies of the Annual Reports of the Company for the last 5 accounting years.
9. Copies of Initial Listing Application dated March 7, 2000 made to the Stock Exchanges at Hyderabad.
10. Letter dated March 10, 2000 from Hyderabad Stock Exchange for permission to use their name in the Prospectus.
11. Copies of the Resolution dated September 01, 1999 appointing Mr. Ashok Atluri, as the Managing Director and the terms thereof.
12. Copies of the Resolution dated September 01, 1998 appointing Mr.Ravi Kumar M as the Whole-time Director and the terms thereof.
13. Board resolution dated __________ authorising the Registrars to sign the Stockinvests on behalf of the company.
14. Power of Attorney dated _______ from Directors in favour of Mr. Ashok Atluri, Managing Director to sign the Prospectus.
15. SEBI observation letter dated _______ issued by SEBI in respect of this Prospectus.
16. SIA acknowledgement for manufacture of simulators vide letter No.4442/SIA/IMO/94 dated December 19, 1994 from Department of
Industrial Development, Ministry of Industry, Govt. of India.
17. DSIR letter dated September 15,1998 recognising the company's R& D unit as an in house R& D centre.
18. Receipt of the application made to GOI for patenting ZENSATS
19. Sanction letter dt.13-04-95 from IDBI for venture capital assistance of Rs.155 lakhs.
20. Sanction letter dt.02-03-2000 from IDBI for direct subscription of Rs.100 lakhs.
PART III
DECLARATION
We hereby declare that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government have been complied with
and no statement made in this Prospectus is contrary to the provisions of the Companies Act, 1956 and rules thereunder.
We, the Directors of Zen Technologies Limited declare and confirm that no information / material likely to have a bearing on the decision of the
investors in respect of the equity shares issued in terms of the Prospectus has been suppressed / withheld and /or incorporated in the manner that
would amount to misstatement / misrepresentation and in the event of it transpiring at any point of time till allotment / refund as the case may be that
any information/
material has been suppressed/withheld and/or amounts to misstatement / misrepresentation, we undertake to refund the entire application monies to all
the applicants within eight days thereafter without prejudice to the provisions of the section 63 of the Act.
The Company accepts no responsibility for statements made otherwise than in the Prospectus or in the advertisements or any other material issued by
or at the instance of the Company and that anyone placing reliance on any other source of information would be doing so at his / her own risk.
SIGNED BY DIRECTORS
Names of Directors Designation
Mr Ashok Atluri Managing Director
Mr Satish Atluri Director
Mr M.Ravi Kumar Director
*Through his duly constituted attorney, Shri.......................
Place: Secunderabad
Date: