Tel : 022 852 4914 / 3541

fax : 022 852 5207

AUDITORS TO THE COMPANY comPANY SECRETARY and COMPLIANCE OFFICER –

Hemant R. Vora & Co. Ms. Archana Tatu,

Chartered Accountants 4, Alok Apartment, Alok Society,

301-303 Arjun Complex, 132 ft Road, Satellite,

Opp. Samartheswar Mahadev Ahmedabad – 380 015.

Ahmedabad - 380 006.

Bankers to the Company.

Bank of Baroda Nutan Nagarik Sahakari Bank Ltd

Sector 21 Opp.Samartheshwar Mahadev

Near Rajashree Cinema Near Law Garden

Gandhinagar-383 021 Ellisbridge

Ahmedabad – 380 006

Bankers to the Issue ;

TRUSTEES

Since the present issue is of Equity, appointment of Trustee is not required.

UNDERWRITERS TO THE ISSUE

Underwriting being optional, the company does not propose to underwite the issue.

Nominal Value Aggregate Value

1. Authorised

60,00,000 Equity Shares of Rs. 10 each 6,00,00,000

2. Issued , Subscribed and Paid up *

39,37,200 Equity Shares of Rs. 10 each 3,93,72,000 3,93,72,000

3. Present Issue

13,80,000 Equity Shares of Rs. 10 each for cash at a premium 1,38,00,000 8,28,00,000

of Rs. 50 per share

2,00,000 Equity Shares of Rs. 10 each for cash at a premium 20,00,000 1,50,00,000

of Rs. 65 per Share reserved for firm allotment to SBI

Mutual Fund

4. Now offered to the Indian public in terms of this prospectus

13,80,000 Equity Shares of Rs. 10 each for cash at a premium 1,38,00,000 8,28,00,000

of Rs. 50 per share

 

5. Paid up Capital after the proposed issue

55,17,200 Equity Shares of Rs. 10 each 5,51,72,000

 

6. Share premium Account

Before the issue Nil

After the Issue 8,20,00,000

SHARE CAPITAL HISTORY :-

1.The Details of equity share capital allotted by Contech Software Limited are as under :

23.3.1983 2 Subscribers to the 10 10 Cash

Memorandum

20.9.1985 3450 Allotment of Share 10 10 Cash

17.7.1987 12634 Allotment of Shares 10 10 Other than Cash

17.7.1987 80074 -do- 10 10 Cash

24.7.1987 17040 -do- 10 10 Cash

06.7.1988 3000 -do- 10 10 Cash

4.10.1991 116200 Bonus Issue 10 NA Bonus

23.7.1999 80000 Allot,ent of Shares 10 10 Cash

1.11.1999 1000000 -do- 10 NA on amalgamation

of Contech Software

Pvt. Limited

1.11.199 2624800 Bonus Issue 10 NA Bonus

2. Holding of Ten largest shareholders 2 Years prior to the date of filing with the Registrar of Companies, 10 days prior to the date of filing with Registrar of Companies and as on date of filing with Registrar of Companies are as under.

1. Rajan K vasa 57270 24.64

2. Abir Investment (P)

Limited 53228 22.90

3. Angot Chemicals (P) Limited 50000 21.51

4. Abir Chemicals Limited 36848 15.86

5. Advitya Prodcuts (P) Limited 25000 10.76

6. Ila C Shah 6000 2.58

7. Dipan Shah 2702 1.16

8. Nimish K Vasa 1352 0.59

3.Pre and Post issue Share holding Pattern

Entity Existing After Public Issue

No. of Shares % Holding No. of Shares % Holding

As on 30.11.99

Promoters 26,32,410 66.86 26,32,410 47.71

Bodies Corporate 4,95,228 12.58 4,95,228 8.98

Friends and 8,09,562 20.56 8,09,562 14.67

Associates of

Promoters

Mutual Funds 2,00,000 3.63

Public 13,80,000 25.00

------------------------------------------------------------------------------------

39,37,200 100 55,17,200 100.00

4.Equity shares held by the promoters representing 25% of the post issue capital will be locked in as under :-

Name of the Holder No. of shares Date of Issue Face % of post issue

Allotment Value Paidup Capital

/ Acquisition Rs.

Rajan Vasa & family

3,74,900 1.11.1999 10 6.79

Dr. kalyan Vasa +family

10,04,400 1.11.1999 10 18.22

These Shares will be locked in for a period of 3 years from their date of allotment / acquisition subject to lock in for a minimum period of two years from date of allotment in the present issue.

5.Aggregate number of securities purchased or sold by promoter group , other promoters of the group , their friends and relatives of the Company during last six months.

The Company is going for a initial public offering and as such the shares of the Company are not listed on any of the stock exchanges. Thus information about purchases or sales by Promoter groups / directors during the period of preceding six months is not material.

6. The Company has received a letter dated 20^th December, 1999 from SBI Mutual Fund, Mumbai consenting to subscribe 2,00,000 equity shares of Rs10 each at a premium of Rs65 per share aggregating to Rs1,50,00,000 on firm allotment basis. The Company has confirmed of having not paid commission\discount to the Mutual Fund for their subscription either from the Company or by the promoter.

7.The Company has not raised any bridge loan against the proceeds of this Issue.

8a) A minimum of 50% of the net offer of shares to the public under ‘F’above initially be made available for allotment to individual applicants who have applied for allotment of 1000 and less than 1000 shares.

b) The balance of 50% of the net offer of shares to the public shall initially be made available for allotment to investors, including corporate bodies\institutions and individual applicants who have applied for allotment of more than 1000 shares.

c) The unsubscribed portion of the net offer to any one of the categories specified in (a) or (b) shall\may be made available for allotment to applicants in the other category, if so necessitates.

9.The company has not revalued its assets since inception. The company has not purchased any land, assets from the promoters and has not allotted any shares in consideration thereof.

The equity shares now being issued are subject to the provisions of the Act, Memorandum and Articles of Association of the Company, terms of this Offer Document, the Application Form, the guidelines for listing of securities issued by the Stock Exchanges 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 (" SEBI Guidelines " ) and the Depositories Act, 1996, to the extent applicable.

In addition, the equity shares shall also be subject to such other terms and conditions as may be incorporated in the letter of allotment, Share certificates, as per guidelines, notifications and other regulations for the issue of the capital and listing of Securities laid down from time to time by the Government of India and/or other authorities and other Documents that may be executed in respect of Equity shares.

Face Value : The face value of the Equity Shares will be Rs.10/- per share.

Issue Price : The Equity shares are being offered at a price of Rs.60 /- per share.

Applications should be made for a minimum of 100 equity shares and in multiples of 100 shares thereafter. The Issue price of Rs. 60/- per share is payable and will be appropriated in the following manner:

On Application 5.00 25.00 30.00

On Allotment 5.00 25.00 30.00

Total 10.00 50.00 60.00

A single applicant under the Public Category cannot apply for more than the total number of Securities offered to the Public. Similarily, in case of the reserved Category, no single applicant can make an application for that number of Securities which exceeds the reservation.

Where an applicant is allotted lesser number of equity shares than he/ she has applied for, the excess amount, if any, already paid on application will be first adjusted against the amount payable towards allotment money for the number of equity shares allotted. The balance, if any, remaining after this adjustment will be refunded to the applicant within 30 days from the date of the closure of the Subscription list in terms of Section 73 of the "Act" and as per listing norms of Ahmedabad Stock Exchange.

It is a condition of the Issue that non-payment of the amount due on allotment including premium will attract interest on the allotment money due commencing from the date appointed for payment thereof till date of actual payment (the actual dates in case of Cheques/ Demand Drafts shall be the date of realization) as mentioned in the Article of association of the Company. Failure to pay the amount as aforesaid, shall render the allotment of equity shares liable to cancellation and the amount paid liable to forfeiture. The Company shall be at liberty to re-issue the equity shares so forfeited to any person or persons as it may in its absolute discretion as mentioned in the Articles of Association of the Company

The equity shares now being offered shall rank Pari-Passu with the existing equity shares of the company in all respects except that the Holder(s) of equity shares now being offered will be entitled to Dividends if any, which may be declared or paid on the Equity Shares after the date of Allotment in respect of and in proportion of the amount of Capital paid up on equity shares and on Pro-rata basis for the Period during which such capital is paid up thereon. The Instrument Holders shall also have the rights as mentioned in section 206 A of the Companies act, 1956 and any other rights under the Law.

Application forms together with Memorandum containing salient features of the prospectus may be obtained from Registered and Corporate office of Contech, Lead Managers, Bankers to the issue and Underwriters named herein or from their branches as mentioned in the Application Form, until the closure of the subscription list

i) Indian nationals resident in India who are major, in single or joint names (not more than 3)

ii) Hindu undivided families in the individual name of the Karta.

Applications in the name of minors, foreign nationals/Companies, Trusts not registered under the Societies Registration Act, 1860, or any other Trust Laws, partnership firms or their nominees will be treated as invalid .

Where an application is for allotment of equity shares for a total value of Rs. 50,000 or more i.e. the total number of securities applied for multiplied by the issue price is Rs.50,000/- or more, the applicant or in the case of applications in joint names, each of the applicants should mention his/her permanent account number ( PAN) allotted under the Income Tax Act, 1961 or where the same has not been allotted, the GIR number and the Income Tax Circle/Ward/District should be mentioned. In case where neither the permanent account number nor the GIR number has been allotted, the fact of non allotment should be mentioned in the application form. Application forms without this information will be considered incomplete and are liable to be rejected.

Application must be made only :

(i) On the prescribed application form accompanying the Memorandum containing the salient features of the Prospectus and completed in full in BLOCK LETTERS IN ENGLISH in accordance with the instructions contained herein and in the Application Form and the applications not so made are liable to be rejected.

(ii) For a minimum of 100 equity shares or in multiples of 100 shares thereof.

3. In single name or joint names (not more than three)
4. In the name of Individuals, Limited Companies, or Statutory Corporation or Institutions, Hindu Undivided Families through the Karta, Trusts (unless the Trust is registered under the Societies Registration Act, 1860 or any other Trust laws and is authorised under its constitution to hold shares or debenture of a company), and NOT in the names of foreign nationals, minors, Partnership firms or foreign companies or the nominees of any of them.

(v) A separate Cheque or Bank Draft or Stockinvest must accompany each application form.

(a) All cheques, bank drafts must be :

(i) Made payable to any Bankers to the issue.

(ii)Marked "CSL-Public Issue"

2. Stock Invests should be made payable to the company contech software LIMITED.

A) NRIs wishing to pay through Non-Resident Ordinary (NRO) accounts shall apply in the form meant for the Resident Indian Public .

i) Refunds, Interest, Dividends and other distribution, if any, will be payable in Indian Rupees only. purpose in the application form.

Only Individuals and Mutual Funds are eligible to apply under Stockinvest Scheme.

Stockinvest can be used in lieu of cash / cheque / bank draft for making application by the Individuals / Mutual Funds. The details of the stockinvest scheme are as under :

1. Stockinvest can be obtained from any bank issuing this instrument by making the necessary application and depositing the amounts with them. The Bank will fill in the name of the Company before the stock invest is delivered to the applicant.

2. Stockinvest is issued in denomination specified by the investor to the issuing Bank.The investor has to fill in the following particulars:

a. Payees name as mentioned in the application form, ie, Contech Software LIMITED.

b.Number of equity shares applied for.

c.The amount payable on the equity shares applied for.

d. Application form number on the left hand portion of the stock invest and his name and address in a box on the reverse of the stock invest.

The instrument thereafter should be signed by the applicant. The investors may also note the following :

1. Service charges, if any, for obtaining the stockinvest must be borne by the applicant

2. Stockinvests are payable at par at all the branches of the issuing bank and as such outstation stockinvests can be submitted.

3. Stockinvest is valid for payment only when signed by the issuing banker at the appointed place on its face The instrument should be signed by the applicant. It should also bear a stamp of the Bank issuing the instrument and should be crossed account payee only.

4. The account holder’s instructions to the bank therein are irrevocable. It is understood that at the explicit undertaking of the account holder an amount equivalent to the sum mentioned on the left hand side of the stockinvest is either debited to his account or lien marked on his deposit account from the date of its issue till full liability under the stockinvest is extinguished.

5. The name of the purchaser / one of the purchasers should be invariably indicated as the first applicant in the application form. Otherwise, the application would be treated as having been accompanied by a third party stockinvest and will be rejected.

6. The applicants should not fill in the Right hand portion of the stockinvest instrument. The Registrars to the issue will fill up this portion as under:

a. In case of full allotment, the number of equity shares on the right hand side will be the same as on the left hand side of the instrument.

b. In case of partial allotment, the amount filled up by the Registrars to the issue, after adjusting allotment money payable in respect of equity shares so allotted, will be less than the number filled up by the applicant on the left hand side.

c. In case the allotment is Nil, the number filled up by the Registrars to the Issue on the Right hand side of the instrument will be Nil.

7. Stockinvest is paid on the payee / authorised signatory filling the required particulars on the right side as above and presenting it for payment. Payment will be made only by credit to the payee’s account with their banker.

8. Stockinvests are neither transferable nor negotiable. The issuing bank undertakes to pay the lower of the two sums indicated in the stockinvest instrument.

9. The Bank shall not be liable for any delay, error, fraud, forgery or any other lapse in the issue or encashment of stockinvest. It shall also be not liable for any losses / damages / incase of death, insanity or insolvency of the drawer before actual allotment / delivery of the relative shares by the payee company. Stock invest is valid for 4 months from the date of its issue indicated on its face and no amount can be claimed on the stock invest at a branch of the issuing bank unless the stock invest is presented to it within 4 months of the date of issue of the stock invest. Stock invest is payable at par at all branches of the issuing bank, including all the centres, where stock exchanges are present.

10. Investors may please note that in case of partial or Non-allotment, lien shall be lifted in the following manner :

a. In case of non-allotment, on the presentation of the Stockinvest by the applicant to the issuing Bank branch of the instrument duly cancelled by the Registrars.

b. In case of partial allotment (for the unutilised amount) on receipt of advice from the controlling branch of the issuing Bank as to the amount collected or surrender of unutilised Stockinvest received by the bank/applicant directly from the Registrars.

c. In case the cancelled / partially utilised Stockinvest is not received by the investor from the Registrars, lien will be lifted by the issuing branch on expiry of four months from the date of issue against an indemnity bond from the investor.

11. No refund order will be issued to the applicant using Stockinvest for payment of application money.

12. The Stockinvest should be used by the purchaser within 10 days from the date of the issue of the instrument, failing which such applications are liable to be rejected. Investors are advised to refer the application form for the ex act date.

13. Registrars to the Issue have been authorised by the Company vide a Board Resolution passed on to sign on behalf of the Company for realising the proceeds of the Stockinvest from the issuing bank or to cancel the Stockinvests of the non-allottee or partially successful allottee who has enclosed more than one stockinvest. Such cancelled stockinvests shall be sent back by the Registrars directly to the investor.

14. The company reserves the right to withhold the share certificate till the stockinvest proceeds are credited to the Company’s account.

15. A ceiling of Rs.50000/- per individual per capital issue has been imposed by banks for issue of Stock Invests and these ceilings will not be applicable to Mutual funds. The ceiling is subject to change from time to time.

16. Multiple applications under a single stock invest will be rejected as each application is required to be accompanied by a separate instrument.

17. Enquiries relating to Stock Invests may be addressed only to the Registrars to the Issue and not to issuing bank.

Stockinvest should be marked "A/c Payee" and made payable only to the issuer Company, ie., "Contech Software LIMITED" without mentioning the name of the Bank and deliver it to any of the Bankers to the issue mentioned in the Application Form.

To avoid rejection of applications on technical grounds, it is suggested that the applicant should ensure that

a. The date of issue of stock invest by the issuing bank is clearly mentioned in the instrument.

b. The instrument is duly signed by the authorised officer of the bank giving his code number.

c. The stock invest bears the code number and address of the issuing bank / branch.

d. Any correction / alteration in the date of issue, amount, the name of the company etc, should be attested by an authorised officer of the issuing bank.

e. The name of the company and the amount are clearly written and the signature on the instrument should tally with the specimen signature of the first named applicant as appearing on the application form.

f. In case stock invest is purchased from joint account, the names of both the account holders should be mentioned in the instruments at the place mentioned for writing the name of the investor, eg. Name (joint account).

g. The amount written in the application form to be deposited and the amount of the stock invest accompanying the application form are the same.

h. The stock invest against their own account are not handed over to any third party. The stock invest is intended to be utilised by the account holder applicants.

1. Payment shall be made in cash or by cheque or by Bank draft or Stockinvest. Cheques / Bank drafts / Stockinvest should be drawn on any Bank (including a Co-operative Bank) which is situated at and is a member or sub member of the Banker’s Clearing House located at the centre where the Application Form is submitted. Outstation cheques or Bank drafts will not be accepted and application forms accompanied by such cheques or Bank drafts will be rejected. Money Orders / Postal Orders will not be accepted.

2. Application forms duly completed together with cash, cheque,

bank draft, Stockinvest for amount payable on application must be delivered before the closure of the subscription list to any of the Bankers to the issue at the place mentioned against their names in the application form and NOT to the Company or to the Lead Managers or Registrars to the issue.

Applications received by post will be accepted only up to the close of business hours on the day on which subscription is closed. Hence, investors are advised to mail the applications so as to reach the Bankers to the issue before closure of the subscription list

3. Applications which are not complete in all respects or in contravention to any of the provisions / instructions contained in the prospectus or in the Memorandum containing the salient features of the prospectus are liable to be rejected.

4. No receipt will be issued for the Application money. However, the Bankers to the issue receiving the application will acknowledge receipt of the application by stamping and returning to the applicant the acknowledgement slip at the bottom of each application form.

5. The Company shall open a minimum number of mandatory collection centres which would include major stock exchange centres. Investors applying from places where collection centres have not been opened may send their applications alongwith a demand draft (net of commission) payable at Bangalore / Stock invest, for the amount payable on application to the Registrars to the issue, before the closure of the issue.

Where an application is for more than 1000 shares i.e. the total number of securities applied multiplied by the Issue price is Rs.50,000/- and more, the applicant or in the case of application in joint names, each of the applicants, should mention his/her permanent account number (PAN) allotted under Income Tax Act, 1961 or where the same has not been alloted, the GIR No. and the Income Tax Circle / Ward / District should be mentioned. In case where neither PAN nor GIR No. have been alloted, the fact of non-allotment should be mentioned in the application form. Application without this information will be considered incomplete and are liable to be rejected.

7. The application form number should be mentioned on the reverse of cheques / drafts / stock invest through which the payment is made.

8. No single applicant in the Resident Indian public category can make an application for a number of equity shares exceeding the number of equity shares offered to the Resident Indian Public.

9. No single applicant in the reserved category can make an application for number of equity shares exeeding the number of equity shares offered under the reserved category.

10. For further instructions, please read the Application Form carefully.

To prevent fraudulent encashment of refund orders by third party, the applicants are advised to indicate the name of their 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 payee’s address. Applications without this information is considered incomplete and are liable to be rejected. The applicants should write the application number and name of the sole / first applicant on the reverse of the Cheque / Demand Draft / Stock Invest.

An application may be made in single or joint names (not more than three). In the case of a joint application, refund / pay orders, if any, dividend warrants etc, will be made out in favour of and all communications will be addressed to the applicant whose name appears first at his/her address as stated in the Application Form.

An applicant should submit only one Application (and not more than one) for the total number of shares required. Application may be made in single or 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 are one and the same. The Board reserves the right to reject in its absolute discretion all or any Multiple Applications.

Applications made by different schemes of a Mutual Fund managed by the same Asset Management Company shall not be treated as multiple application provided the applications made by the AMCs / Trustees / Custodians clearly indicate their intention as to each scheme for which the application has been made.

In the case of Applications under Power of Attorney or by Limited Company or Corporate Bodies, or Registered Societies, the relevant Power of Attorney or the relevant Resolution or Authority to make the application , as the case may be, together with a duly certified true copy thereof along with the certified copy of the Memorandum and Articles of Association and/or Bye-laws must be attached to the Application Form at the time of making the application or lodged for scruitiny separately indicating the Serial Number of the Application Form and the Bank Branch where the application form has been submitted with the Registrars to the issue at their Bangalore Address , failing which the application is liable to be rejected.

In respect of all the above categories eligible to apply to the issue, having regard to the provisions of Sec 269 SS of the Income Tax Act, 1961, payment of Rs.20000/- or more shall be effected only by Cheque/ Demand Draft/ Stock Invest and not by cash. In the event of any contravention the application is liable to be rejected.

An application has been made to National Security Depository Limited and Central Depository Services Limited for offering the depository options to the stock investors. 1. A tripartite agreement would be signed between Contech Software Limited, Big Share Services Pvt Ltd and National Securities Depository Limited ("NSDL") for offering the depository option to the investors.

2. The investor has an option to seek allotment of equity shares either in electronic or physical mode.

3. Such an option if exercised should be indicated in the relevant blocks in the share application form itself.

4. Separate applications for electronic and physical equity shares by the same applicant shall be considered as multiple applications.

5. Investors who wish to apply equity shares in electronic form need to have atleast one Beneficiary Account with a Depository Participant prior to the allotment.

6. Allotment Advice/Refund Orders will be directly sent to the investors by the Registrars.

7. If incomplete / incorrect investor depository account details are given in the Application form, physical equity shares will be allocated to the investors.

8. Responsibility for correctness of applicant’s demographic details given in the Share Application Form vis-à-vis, his or her Depository Participant, would rest with the investor.

9. Shares in electronic form can be traded only on Stock Exchanges having electronic connectivity with the NSDL.

10. In case of partial allotment, allotment will be done in demat option for the shares sought in demat and balance, if any, will be allotted in physical shares.

1.1.In terms of Section 35 D of the Income Tax Act, 1961, the Company will be entitled to amortise over a period of 5 successive years, the expenditure incurred in connection with the preliminary expenses including the expenses incurred on the issue in terms of prospectus subject to overall limits prescribed under the said section.

2. In accordance with and subject to the provisions of Section 10 (33) of the Income Tax Act, 1961, any dividend received by the Company is exempt from Income Tax.

3. Software Export Division of the Company is registered with Software Technology Park of India, Gandhinagar. Subject to the compliance of certain conditions laid down in Section 10A

of the Income Tax Act, 1961, the Company will be entitled to the benefit of a tax holiday in respect of the Income derived from STPI operations.

1. Dividend received from the Company will be exempt from Income Tax in the hands of the shareholders as per provisions of Section sec 10(33) of the Income Tax Act 1961.

2. Shares held in the Company will not be considered as assets in accordance with the Provisions of Wealth Tax Act, 1957. Hence the value of shares held in the company will be exempted from Wealth Tax.

1. Under Section 115AD(1)(b)(iii), income by way of Long Term Capital Gain arising from the transfer of shares will be taxable @ 10%.

2. Under Section 115AD(1)(b)(ii),income by way of Short Term Capital Gain arising from the transfer of shares will be taxable @ 30%.

1. Under Section 115AC(1)(b)(ii), income by way of Long Term Capital Gain arising from the transfer of shares will be taxable @10%.

WEALTH TAX :

Under Section 2(EA) of the Wealth Tax Act, 1957, members of the Company will not be liable to pay wealth tax in respect of shares in the Company held by them.

GIFT TAX:

Effective from October 1, 1998, no Gift Tax would be levied on the gift of shares of the Company.

The present issue of equity shares is being made to part finance

a.Investment in wholly owned subsidiary in USA and to open a branch office in U.K.

b.To invest in the infrastructure requirements for increased operations

c.The expansion of existing Offshore Development Centre

d. To Prepay the Term loan availed from Bank.

e. To Augment the working capital resources

f. The expenses of the Issue and

g. The listing of the company’s Equity Shares on the stock exchanges.

The main objects of the Memorandum of Association of the Company enables the Company to undertake the activities for which the funds are being raised and the present activities.

The company being in existence since 1983 and earning regular profits , due care and diligence have been exercised while determining the cost of the project, means of finance and future projections.

Investment in overseas wholly 164.26

owned subsidiary in USA and

branch office in U.K.

Plant & Machinery 159.28

Motor vehicles 40.00

Expansion of existing

Offshore development centre 100.00

Repayment of Debt 68.03

Long Term Working Capital 196.68

Additional Working Capital 160.00

requirements

Public issue expenses 65.84

Contingencies 23.91

Total 978.00

The Company proposes to finance the entire funding requirements of Rs978 lacs from the proceeds of the proposed equity issue.

The Company has been sanctioned various term loans by Nutan Nagarik Co-opertaive Bank towards purchase of plant & machinery, vehicles etc.

The principal terms of Term loans sanctioned by the banks are as below:

Bank Sanction Sanctioned On 30.11.99 Interest Schedule

Monthly 42000 Computer

facility Sanction Sanctioned Interest Schedule

Rs. In Lacs

Cash Credit 5.3.1999 30.00 PLR + 3% (+int. Tax) --- Stocks

Cash Credit 5.3.1999 1.35.00 - do - --- Book Debts

Bills 5.3.1999 10.00 --- --- ---

The Company also enjoys non fund based limits aggregating Rs.245.00 Lacs by way of guarantee/letter of credit facility.

No buy back or standby or similar arrangement have been made for purchase of equity shares offered through this offer document by the promoters, Directors and Lead Managers to the issue.

The Company was incorporated as a Private Limited Company on 23^rd March, 1983 in the name of Contech India Pvt. Ltd. with the Registrar of Companies, Gujarat at Ahmedabad under the Companies Act, 1956 . The Company became a Deemed Public Company w.e.f. 1^st July, 1993. The Company was reconverted into into a Private Limited Company with effect from 17^th April, 1995 and a certificate to that effect was issued by the Registrar of Companies, Gujarat on 18^th June, 1999.. The Company was converted into a Public Limited Company w.e.f. 8^th November, 1999 and the name of the Company was changed to Contech Software Limited w.e.f. 17^th November, 1999.

There was another Company named Contech Software Private Limtied which was incorprorated on 27^th March, 1997. In terms of the Order dated 21^st October, 1999 of the Honourable High Court of Gujarat, M/s . Contech Software Private Limited has merged with the Company w.e.f. 1^st April, 1999 and all assets and liabilities of the said Company has been taken over by the Company in accordance therewith.

The Company was originally promoted by Mr. Nimish Vasa and Mr. Chandrakant Shah in 1983 and started full-fledged activity in 1987. Mr. Rajan Vasa , the present Managing Director who is a qualified software technocrat joined the Company in 1989.

In the initial years, the Company was offering full range of high quality Process Automation products with phenomenal advances in control technology, aided by modern computer software and engineering consultancy as turn key solutions.

At present the Company is offering services in three strategic areas of software technologies as below.

1. E-commerce and Business Applications

1. E-commerce Applications and Secured Web applications
2. Generic Enterprise applications : Financial Accounting, Inventory management, Sales Management and other Client Server Applications etc.
3. Front and back Office management.

1. Control and Real Time Applications

1. Industrial Automation Software systems.
2. CAE & CIM Applications.
3. Embedded solutions for real time applications.
4. "Plant Assistant " – a SCADA software for industrial automation.

1. Telecom Technologies

1. Embedded solutions for worldwide analog and digital signaling schemes.
2. Protocol conversion and engineering solutions for telecom networks.
3. Development on Business Communication systems.
4. Network Management Systems using the TMN Model.

Activities in all these areas of operations are carried out from a state-of-the-art facility registered with Software Technology Park of Gandhinagar, Gujarat, India.

The Company has through continuous Research and Development efforts developed its own software product called Plant Assistant (SCADA PRODUCTS) and has made more than 30 installations in various Companies in the domestic market . The Company has also applied for trade-mark registration of its product Plant Assistant during 1998-99. The company has also started separate software export division of its engineering applications, which was registered with Software Technology Park of India at Gandhinagar as a 100% EOU in July, 1998..

The development processes of the Company are certified as ISO 9001 compliant. The Company is working out to have processes certified for SEI CMM Level 3compliance. The target is to become SEI CMM Level 4 compliant by year 2001. This will be augmented by matured Project Management Capability.

The Company provides quality driven and price competitive software development services services for domestic and international companies. Contech also offers offshore development setup for international clients with full responsibility of resource and project management. For project development and sub-contracting work, Contech can enter into non-disclosure (IPR) and other required agreements as per client’s requirements

" To provide, supply, maintain and operate for the benefit of any individual, firm, society, Company, body corporate, corporations, Government or any other person , natural or artificial, technical, managerial, engineering consultancy services in the field of Data procession, computer, micro-processor process control instruments, telecommunication, mass communication, design and development for chemical, power, computer, instrumentation and tele-communication industries. "

To be globally identfiied as a quality-conscious source for innovative software and telecom solutions, and to perpetually align technologies towards the individual priorities of each customer.

SUBSIDIARY COMPANY

The Company has set up a Wholly Owned Subsidiary Company titled Contech Technologies America Inc. incorporated in U.S.A.on 16^th July, 1999 with an initial capital of U.S. $ 5000. The name of the subsidiary was changed to Contech America Inc on August 17, 1999. The address of the subsidiary is as below:

Contech America Inc

C\o Jamshed Gandhi

Room no.1700

150, Spear St.

San Francisco

CA, USA

However the subsidiary is yet to commence operations. The Company is yet to receive the Identification number for said subsidiary from RBI.

PRESENT PROMOTERS AND THEIR BACKGROUND

Mr. Rajan K. Vasa aged 35 years is the Managing Director of the Company. He is a B.S. (Electrical Engineering), from USC, Los Angeles, CA, 1986 and also an M.S. (Electrical Engineering and Business Administration Courses) from Stanford University, Stanford, CA, 1987 .

He started his career with Oracle Corporation USA as product marketing manager in which capacity he Designed demonstrations, trained worldwide sales force on software products, created marketing kits, brochures, special programs for products, provided market feedback for product design, conducted seminars in various countries, generated national advertising campaigns.

He joined Contech (India ) Private limited in 1989 and looked after the functions of management policies execution , for day to day affairs of the entire company and also was responsible for planning and implementing strategies for further growth of the company.

In 1995 he was appointed as Managing Director of the Company .

He is a member of Tau Beta Pi,( American National Engineering Honor Society), Eta Kappa Nu, (American National Electrical Engineering Honor Society),Phi Beta Kappa,( American National Honor Society),Phi Kappa Phi,( American National Honor Society),National Association of Software and Services Companies (NASSCOM India),Indo American Chamber of Commerce (IACC), Sr. Vice Chairman, Gujarat Chapter.and Gujarat Electronics & Software Industries Association (GESIA) – Executive Committee member.

Dr.. Kalyanbhai L Vasa , aged 73 years is involved in advising the Company in matters related to investment, banking and other commercial activities. He holds M.B.B.S and D.P.H.(London) qualifications.

M/s. Bharat Bhumi Estate Developers Pvt. Ltd. is the body corporate where Shri Rajan Vasa holds more than 10% of the issued capital. The Financials are as below :

Share Capital 20,000 20,000

Net worth 20,000 20,000

Income -- --

Profit/Loss (2500) (5675)

BOARD OF DIRECTORS

Name, Age & Address Qualification Other

Designation Directorships

1. Mr. Rajan K Vasa Ashokwadi M.S. Nil

(35 Years) Panchwati (Stanford Uni.)

S\o K.L.Vasa Ahmedabad

Managing Director

2. Dr. Kalyanbhai L Vasa Ashok Wadi M.B.B.S. Abir Investment (P) limited

(73 Years) Panchwati D.P.H. Arcata Investment(P) Limited

S\o Labhai Vasa Ahmedabad (London)

Director

3. Prof.S.C.Bhatnagar

(53 years) H.No.427 Ahmedabad B.Tech. Nil

S\o Brijmohanlal I.I.M Campus

Bhatnagar M.B.A.

Ahmedabad – 380 005

Mr. Rajan K Vasa , Managing Director of the Company is looking after the day to day management and business promotion functions. He is assisted by the following key managerial personnel:

• An Engineer in Electronics and Communication from National Institute of Engineering University of Mysore.
• Attended various courses in Telecommunications from Oki Electric Industry Co. Ltd., Honjo Manufacturing Plant, Japan as well as from Brite Voice Systems. Wichita, USA.
• Has 13 years experience with more than 11 years experience in Telecom Technologies.
• His fields of professional achievements are in Product Realization and Technical Support, Product Management, R & D and Production.

• A diploma holder in Electrical Engineering from Mafatlal Engineering College and in Business Management from

Dahanukar Institute of Management Studies.

• Has a total experience of 15 years in Sales and Product Development.
• Serving Contech since 1991 and looks after the Sales and Marketing of the Company.
• An Associate Member of ISA International - Maharashtra Section.

• An Engineer in Computer Science from M.S. University.
• Eleven years experience in design development and management of software projects for national and international.
• His expertise in Tools and Technology are on Hardware Platform like Apollo 3500, IBM - PC Family, DEC PDP 11/23,

BBC Micro. Operating Systems like MS-Dos, MS-Windows, MS-Windows 95, MS-Windows NT, MS-Windows CE,

UNIX, QNX, DEC RSX-11M, AEGIS and Languages, GUIs, Networks, Development Environments, Methodologies

and Application Domains.

DEEPAK LONDHE – Senior Project Manager

Diploma in Computer Application

• A Diploma Holder in Computer Application from Computer Society of India, Pune
• *Has 12 years experience in project planning and implementation.
• He is involved in Project and Customer Management for multiple projects and also in estimation and technical

proposal preparation for new prospects

• An Engineer in Instrumentation and Control from Gujarat University and a Post Graduate diploma holder in Operation Management from Indira Gandhi National Open University.
• He started his career with Contech since November 1990.
• His job involves Instrumentation designing & selection, project planning. Material procurement, engineering drawing submission to customer, Erection and successful commissioning of the project.
• Attended various training programs in Engineering & Measurement Company, Logmont USA , VEGA Grieshaber KG, Germany and Max Control Systems, USA.

• Holds Bachelors Degree of Engineering in Instrumentation and Control from Gujarat University.
• Has eight years of experience in project planning and implementation which includes his major role in serving Contech

since last four years and having experience in products of Process Automation and Instrumentation turn key contracts and Products Sales.

• A Chartered Accountant from the Institute of C.A. of India.
• Experience of seven years in the field of Accounts, Finance and Taxation.
• Serving Contech since June 1998 holding major responsibilities in the areas of Accounts, Finance and Taxation.
• His duties include working Capital Management, liaison with the Financial Institutions, Budgeting,
• Finalisation of Accounts.

• Holding a Masters degree in Social Works with the specialisation in Labour Welfare and Personnel Management.
• Having 13 years of experience in the field of Personnel and Human Resource.
• Serving Contech since last 3 years having major responsibilities of handling matters related to Personnel,

Human Resource and Administration.

• An Associate member of HRD Network Ahmedabad and a Corporate Member of Personnel Management Association,

Calcutta.

• An Arts Graduate from Delhi University and a Post Graduate diploma holder in Human Resource Management

from Indira Gandhi National Open University.

• Having 17 years of experience in various fields including Human Resource Development.
• She started her career with Contech since May 1999.
• Her job involves recruitment, training, compensation and motivation.
• She served Motorola after three years of HR Experience.

Material changes in key managerial personnel :

Save and otherwise stated elsewhere , there have been no material changes in the key management personnel during the last one year except the following:

Contech Software Limited is a ISO 9001 company having adequate professional competence in its chosen areas of activity.

The day to day operations are looked after by Mr. Rajan K. Vasa, Managing Director under the overall supervIsion of a competent Board. Mr. Vasa holds specialisation in Software technology having worked with the world leader Oracle Corporation, U.S.A.

The Company is running its eleventh full year of operations. It has been a premier provider of software solutions in its chosen business. It has endeavoured for long term relationship with its customers for strategic business advantage. As a quality conscious innovative software, telecom and process automation solution provider it is aligning technologies towards each customer.

CSL has a strength of 85 technically qualified software specialists looking after the fields of product development, customer service and software solutions.

The Core team of CSL is regularly imparted relative training in the emerging areas of Software and telecom technologies.

EMPLOYEES STOCK OPTION PLAN ( ESOP)

The Company is contemplating to set up Contech Employees Welfare Trust called CONTECH ESOP TRUST or such other appropriate scheme to implement the Employees Stock Option Plan in conformity with SEBI Guidelines. The Company ‘s objective is to encourage ownership of Equity by employees on an on-going basis. ESOP is also an encouraging tool to retain the best avaialable talent on a continuing basis with the Company enabling them to share and contribute in the business growth. Initially the Company proposes to allot adequate number. of shares to the trust and the shares will be transferred to eligible employees subject to the terms and conditions of ESOP scheme. The Company proposes to appoint an advisory committee to identify the employees eligible for this scheme.

DETAILS OF FIRMS , COMPANIES/VENTURES CONNECTED WITH THE PROMOTERS:

There are no other firms or companies or ventures connected with the promoters as on date.

Under Section 370 1 (B) of the Companies Act.

OUTSTANDING LITIGATIONS/DEFAULTS/DISPUTES:

Outstanding Litigation’s

Against the company:

There has been no prosecutions, criminal or civil and no outstanding litigations including disputed tax liabilities lodged against the company except the following

One of the suppliers M/s. Chemcon Engineering has filed a civil suit against company in the court of Judge, Sr. Division, Durgapur, Dist: Burdwan, West Bengal for recovery of Rs. 74,822.60. and the suit was fixed for hearing on 02.12.1999.

The Company has already informed the Court that as per books of accounts of the company no amount is payable to Chemcon Engineering. The company has also submitted to Court the statement of account of the said plaintiff evidencing the full settlement of the account.

The company is hopeful of dismissal of the suit in its favour.

Against the Board of Directors. Promoters, other Ventures of the Promoters:

There has been no prosecution, Criminal or Civil and no outstanding litigations including disputed tax liability lodged against any one of the board of the directors or promoters of the company or other ventures of the promoters except as mentioned below:

Defaults:

Against the company:

There has been no default in meeting statutory dues and other dues and claims against the company.

The company has no overdues, defaults to financial institutions/Banks, Reschedulement of loans to Banks/Fis.

Against the board of the directors, promoters:

There has been no default in meeting statutory dues and other dues and claims against the Board of Directors, Promoters.

There are no pending litigations against the Promoters/Directors in their personal capacities and also involving violation of statutory regulations or criminal offences. There are no pending proceedings initiated for economic offences against the Directors/Promoters/Companies and Firms promoted by the promoters. There are no outstanding litigations/defaults pertaining to matters likely to affect the operations and finances of the company including disputed Tax liability, Prosecution under any enactment in respect of Schedule XIII of the Companies Act, 1956.

The Company, its Promoters/Directors and other Companies with which promoters are associated has neither been suspended by SEBI nor any disciplinary action has been taken by SEBI.

There are no prosecution launched by Income Tax Authorities and no liability compounded by the promoters/company/companies/ventures with which the promoters are associated.

Suit filed by the Company:

The Company has filed a suit on 17.12.1999 against M\s IBIL Tech Ltd, Chennai in the City Civil Court, Ahmedabad for recovery of Rs79,61,511 towards dues against materials supplied and also inclusive of interest and cost s of the suit. The Case is yet to come up for hearing.

The Company, as a part of its strategy to emerge as a global solution provider, to consolidate the existing business and to increase its presence by directly approaching end user has set up a wholly owned subsidiary in USA titled Contech America Inc. The address of the subsidiary at present is Contech America Inc, C\o Jamshed Gandhi, Room no.1700, Spear St, San Francisco, CA, USA. It has also drawn up plans to open its branch office in U.K. In a highly competitive environment of IT, the customer is looking for the solutions and inter actions closest to him. The office in U.K is proposed to be located in London. These offices would be staffed with specialised marketing personnel duly supported by the skilled technical persons from the corporate office in India. The principal function of the marketing personnel is to generate business through scouting business opportunities and active liaison with the prospective customers. These units will operate as fully functional business units.. The company will also focus on building long term business relationship with few large software companies for processing customised projects, product development and support jobs for a consistent stream of earnings. The office premises would be taken on rental basis. The company proposes to finalise the terms/conditions in this regard before March, 2000.

The cost break-up as follows:

(Rs. In lacs)

USA U.K.

Rental Deposit 4.30 4.20

Preliminary and Pre-operative Expenditure 5.16 3.50

Hardware and Software 17.20 15.05

- Hardware & Software covers the following

Servers covering units, Windows NT,

Oracle, SQL Server, Internet, Laptop and

Pentium with 333 MHz, 64 MB, 8 GB disk

and other feature.

Furniture & Fixtures and Office Equipment 10.75 10.50

Working Capital for 6 months 51.60 42.00

(including salary for the professional, rent

and other operational cost)

Total 89.01 75.25

The company has already identified all the Software/Hardware Equipment’s required for the Project. The market for such items continues to be very competitive. As all the machineries are of reputed domestic and international Brand and are available locally the Company would be procuring the Machineries from the original manufacturer/accredited agents directly. The company proposes to invite quotations for the purchase of Hardware and Software .. However, purchase orders will be issued at appropriate time keeping in view of short delivery period (4 to 6 weeks) of the vendors.

List of Machineries proposed to be purchased by the Company are as follows:

(Rs. In lacs)

The Company has been in the business providing software solutions since 1987 and does not foresee any difficulty in procuring plant and machinery and other equipments. The requisite orders will be placed at appropriate time as delivery normally takes 4 – 6 weeks.

MOTOR VEHICLES:

The Company proposes to purchase two buses at a cost of Rs24 lacs and four motor cars at a cost of Rs 16 lacs (Rs 4 lacs each per car) for providing conveyance to employees.

Currently the Company is operating from own premises having built up area of 16000 Sq.Ft. in the GIDC Electronics Estate of Gandhinagar. The company is planning to add further floor space of approximate 10000 Sq.Ft. for setting up a Training Center and also to meet the expansion needs.

The break up cost is as under: (Rs. In lacs)

Land and Site Development (Additional) 10.00

Additional construction in the building 30.00

(Approx.10000 Sq.Ft. rate per sq.ft. Rs. 300.00)

Air Conditioning 10.00

Furniture & Fixtures, Office Equipment & Interiors 40.00

Misc. Fixed Assets 10.00 -----------------

Total 100.00

==========

The Company proposes to commence construction in March, 2000 and hopeful of completing by July,2000. The Company is yet to give civil contracts.

Company requires long term working capital to meet its expenditure for marketing and product development. Company has already developed a product titled PLANT ASSISTANT (SCADA Package) and also has made several installations of this product. These products need continuous upgradation. Company is also planning to develop several Telecom Products like R2 Stack, Power Line Communication Systems, etc., and also to meet marketing expenditure involved in participation in international IT Trade Shows, CD Development, Advertisement, Web Development, etc.,

The break up cost in this regards is as under:

(Rs.in lacs)

A) Marketing Expenditure:

International IT Trade Show Registration 30.00

Travelling etc.,(visit Comdex LASVEGAS,CBIT)

Domestic IT Trade Show 5.00

CD Development and its urgradation 5.00

Brochure for several products like PAWIN, Stack, etc. 5.00

International Travelling 31.68

(1 person per month x 12 month x US$ 6000)

Advertisement 20.00

Web site development 5.00

Sub - Total 96.68

B) Product Development:

Testing Equipment/Development Platform 20.00

Product Development overhead 80.00

Sub – Total 100.00

Total (A+B) 196.68

The Company is presently enjoying working capital facilities aggregating to Rs. 165 lacs with Bank of Baroda , Gandhinagar Branch. The Company is in the business of providing customised software solutions in the area of telecom technology , real time application and e-commerce and business related applications. The Incremental working capital required is estimated by the Company to be Rs160 lacs. The working capital requirements have been estimated by the Company based on the basis of 3 months Sundry Debtors and anticipated Current Liabilities. The working capital requirement projections have been estimated by the Company and are not based on any assessment by any bank\institituion.

Basis of Calculation of Additional Working Capital Requirements:

Particulars 1999-2000 2000-2001

The Company has taken loans from Nutan Nagarik Sahakari Bank Ltd. Ahmedabad on different dates and it is proposed to

prepay the outstandings of Rs. 68.03 Lacs (as on 30.11.1999) from the issue proceeds.

(Rs. in lacs)

Marketing, Mailing & Advertisement Expenses 25.00

Merchant Bankers fee, Brokerage, Registrar’s fee etc 29.59

Miscellaneous Expenses 11.25

The Company has already spent Rs. 89.81 lacs on the project as certified by the auditors the details of which are as below:

Furniture & Fixtures &office Equipment 5.22

Product Development Expenses 51.88

Marketing Expenses 32.71

Total 89.81

Un-Secured Loan from the promoters 78.00

Internal Accruals 11.81

Total 89.81

Through continuos research & development effort the Company has developed a product called PLANT ASSISTANT (SCADA package) Company has made several installation of this product in various Automation Plants in India. Some of the features of Plant Assistant are as under:

Plant Assistant, is the latest 32-bit industrial automation software for supervisory process control and monitoring on WINDOWS NT. The package is driven by features such as Real-time, True Client-Server Architecture with Distributed Database, ODBC and OLE for Process Control. This enables Multithreading and Multitasking system for the process Industry where a deterministic response is required. Plant Assistant is India’s wellknown WINDOWS based Supervisory Control and Data Acquisition software. It has been proven in well over 100 leading industries. The software features integral networking capabilities, local and remote clients, historical data acquisition processing, logic modules, and remote call-out capabilities.

• Lower Cost of ownership
• HMI and SCADA for Windows
• Support of latest tools, including ODBC, OPC and Active X
• Modular client server architecture
• Powerful data base builder with a large library of blocks
• Fully scaleable graphic displays with on-line configuration
• Powerful logging, trending, alarming & reporting features
• DDE interface to other Window packages
• Networking support for multiple workstation
• Security at each station
• Simple & easy to use configuration facility

2. R2 STACK

Overview:

R2MF signaling is IN-BAND Register signalling. This signalling is supported in many countries for faster address signalling in PSTN. Multi frequency tones are exchanged between forward and backward registers for address signaling in compelled or semi compelled way prior to call setup.

R2 stack comprises of all the basic elements that are needed to build a complete stack, which can work with inter-working standard with minimum modifications. The framework and the model of R2 stack is OSI model compatible. All the functional parts are modular and there are clear sets of APIs defined for various layers to interact. This stack takes care of line signaling over different hardware interfaces, call signaling (register signaling) in MF, and the protocol specific inter-working functions

Standard G.704.

• Line signaling in case of R2 is CAS. Depending upon the hardware interface it can be robbed biRegister signals are of the multi-frequency type using a 2-out-of-6 in-band code.

R2 ENGINE IMPLEMENTATION:

FEATURES:

• Each layer conforms to ITU-T standards.
• Supports National and International variants, in the layers applicable.
• Supports standard analog (E&M , Analog DID) and digital (E1, T1) interfaces.
• Supports integration with standard DSP hardware with DSP messaging.
• Independent R2 engine module and user application module.
• Highly portable C source code.
• Portable over a range of operating system.
• Provides well-defined APIs for ease of integration.
• Uniform implementation of State Machine & Message Parsing.
• Error /Statistics Reporting, Tracing, initialization and provisioning
• Higher Level APIs for easy integration of
• Standard analog or digital interface.
• Standard DSP hardware.
• Switching Network

• R2 specific features
• Link by link and End to end registers signaling.
• Compelled, semi compelled and non-compelled sequences supported.
• Called/Calling Party Number.
• Call Type (transit, maintenance, etc.).
• Echo Suppressor Signals.
• Calling Party Category.
• Call Status.

ERP applications make up the largest portion of IT budget: More than39% of large companies and 60% of smaller companies are deploying ERP systems.

The industrial enterprise application market will grow at a compound annual growth rate of 36 percent over the next five years, according to AMR Research Inc., of Boston. AMR’s industrial Enterprise Applications Software Report, 1997-2002, maintains that total vendor revenue will top $72.6 billion (Rs.3,12,180 crores) by the year 2002. The findings are based on the continued momentum of enterprise resource planning vendors and the strong growth of the supply chain management market, AMR officials say:

E-Commerce and Business Applications group (ECBA) of the Company has been a premier provider of software solutions in the commercial applications market place . It is the ability to quickly absorb technologies and master them which makes this group an ideal development partner for organizations set to deliver solutions in today's fast changing technology landscape. ECBA group understands the dynamics involved in the software development industry today and hence has been a chosen partner for software development by various international and domestic companies.

Company leverages knowledge to derive the solution to the problem through a series of, sometimes concurrent, steps in which knowledge is applied and various tools are utilized.

ECBA group further draws on the expertise of the Telecom Technologies group and Real Time Applications group to provide solutions crossing the boundaries of the respective market places.

Application Development Outsourcing

This service is aimed at executing a turnkey software applications and components development project offshore, in India. Though in some cases, initial visits are required to be onsite, the major part of development is carried out in India. The effort is made to carry out development on a "best effort" basis to delivery the project in agreed upon time line and budget.

Application Maintenance support and Enhancements

Under this service, Contech enters into an agreement to maintain an existing application and carry out periodic enhancements to extend the life of the existing application. This service helps client to concentrate their energy and resources towards building new business.

Application.

Re-platforming and Migration

This service helps a client to take advantage of emerging platforms, tools and market requirements for their existing applications. This could be new operating systems, new DBMS or new paradigms like Web and Internet. This service ensures that the client continues to reap benefits from a proven application.

Software Development Offshore Center

This service aims at setting up dedicated infrastructure, including the required people, to carry out software development, offshore, for a client. This is not done on a fixed project cost basis. Instead it usually involves Person-Month based charges. Organizations involved in continuous development efforts can build a very flexible development setup catering to their fluctuating market demands. This avoids the initial negotiation, which goes into any fixed cost development outsourcing effort. Possibility to start long term assignments with staged approach and trust building, coupled with quick and flexible teaming arrangements makes this an attractive approach.

This service is aimed at executing a turnkey product applications and components development project offshore, in India. Though in some cases, initial visits are required to be onsite, the major part of development is carried out in India. The effort is made to carry out development on a "best effort" basis to deliver the project in agreed upon time line and budget.

Application Maintenance support and Enhancements

Under this service, Contech enters into an agreement to maintain an existing application and carry out periodic enhancements to extend the life of the existing application. This service helps client to concentrate their energy and resources towards building new business.

Application Re-platforming and Migration

This service helps a client to take advantage of emerging platforms, tools and market requirements for their existing applications. This could be new operating systems, language upgrade or migration to new signaling scheme like ISDN or ATM. This service ensures that the client is able to connect seamlessly to newer networks and continues to reap benefits from a proven application.

Software Development Offshore Center

This service aims at setting up dedicated infrastructure, including the required people, to carry out software development, offshore, for a client. This is not done on a fixed project cost basis. Instead it usually involves Person-Month based charges. Organizations involved in continuous development efforts can build a very flexible development setup catering to their fluctuating market demands. This avoids the initial negotiation, which goes into any fixed cost development outsourcing effort. Possibility to start long term assignments with staged approach and trust building, coupled with quick and flexible teaming arrangements makes this an attractive approach.

The existing infrastructure like large real estate for expansion, 64 kbps (upgradable) connectivity etc. makes the initial setup easy.

Application Development Outsourcing

This service is aimed at executing a turnkey software applications and components development project offshore, in India. Though in some cases, initial visits are required to be onsite, the major part of development is carried out in India. The effort is made to carry out development on a "best effort" basis to deliver the project in agreed upon time line and budget.

Application Maintenance support and Enhancements

Under this service, Company enters into an agreement to maintain an existing application and carry out periodic enhancements to extend the life of the existing application. This service helps client to concentrate their energy and resources towards building new business.

Application Re-platforming and Migration

This service helps a client to take advantage of emerging platforms, tools and market requirements for their existing applications. This could be new operating systems, new DBMS or situations like Euro Currency support. This service ensures that the client continues to reap benefits from a proven application.

Software Development Offshore Center

This service aims at setting up dedicated infrastructure, including the required people, to carry out software development, offshore, for a client. This is not done on a fixed project cost basis. Instead it usually involves Person-Month based charges. Organizations involved in continuous development efforts can build a very flexible development setup catering to their fluctuating market demands. This avoids the initial negotiation, which goes into any fixed cost development outsourcing effort. Possibility to start long term assignments with staged approach and trust building, coupled with quick and flexible teaming arrangements makes this an attractive approach.

Process Automation

Company offers technical solutions from the plant floor instrumentation & controls to computer networking linking your entire plant. Consultancy services for modernization feasibility provides latest updates on technology to customers, at the bottom of which is low cost, and of high functionality .

Company has been keeping pace with emerging architectures and technologies, to maintain synergy among its development, maintenance and migration services.

E-Commerce and Business Application

• Component based development using COM/DCOM/ActiveX, Java Bean, Enterprise Java Bean
• Client-Server / Multi-tier Architectures
• Web technology based architectures covering ASP, JSP, Servelets etc.
• Middleware Technologies: Transaction Monitors, Message Queues etc.
• Security Technologies: SSL, SHTTP, SET, Digital certificates / signature, Smart Cards etc.

Platforms:

• Microsoft Windows NT / 95 / 98
• Microsoft BackOffice Suite
• Oracle Server 7 / 8/ 8i, MS-SQL server, MS-Access
• MS-IIS, Sun JWS, Oracle WAS, Apache
• Microsoft Transaction Server, MSMQ
• Commerce and Payment Servers

Languages :

• Visual Basic, Java, C/C++, PL/SQL, SQL
• VBScript, JavaScript, HTML/DHTML, XML

Development Tools:

• Microsoft Visual Studio, Inprise Jbuilder, Sun JDK, Oracle Jdeveloper, Microsoft Visual Modeler, Oracle

Designer2000

• Microsoft FrontPage, Macromedia Dreamweaver, Flash etc.

• ANSI and ITU –T Common Channel Signaling no. 7;
• ISDN - PRI and BRI;
• Network Access Solutions for TELCOs and Service Providers;
• In-band signaling on digital transmission like R1, R2, N5, DTMF and the country variants in all the signaling schemes.
• NMS / EMS solutions for standard interfaces like SNMP, TL1, Q3 and web-based NMS solutions.
• Voice over IP based on H 323 standards.
• Emerging technologies like V5.X, TCAP, SCCP, TUP, ATM and QSIG.
• Powerline modem technology based on CE bus protocol standards.

Platforms:

• Microprocessors – 68000, PowerPC Emulators and Development Platforms
• Lucent DSPs and Microcontrollers – Emulators and Development Kits
• Protocol stack simulators and test instruments for SS7 and ISDN
• Development platforms for object oriented development
• Power line communication development platform.

Languages :

• Assembly languages, C/C++, Java on Win NT, pSOS and Linux/Unix platforms.

• Component based development using COM/DCOM, JAVA BEANS, EJB, ATL, CORBA technology
• Applications using Client-Server Architecture
• Web based Applications using Three-tier Architecture
• Device Drivers and System Software
• Network Communications and Interfaces
• Speech Enabled Application

Platforms:

• Windows NT / 95, Windows CE, QNX, UNIX
• Micro-Controller / Micro-Processor based systems

Languages:

• C/C++, Visual Basic, Java, Assembly , XML, HTML / DHTML

Development Tools

:

• Microsoft Visual Studio, Visual Café / Jbuilder, Sun JDK,Visual Modeler / Rational Rose / ObjecTime,

Watcom C/C++ Compiler, IBM via voice, MS FrontPage, DreamWeaver, Fireworks, Cross-Compilers

Design Methodologies:

• SSAD (Yourdon, Hatly-Pirbhai), OOAD (UML / Real-Time UML)

Hardware Integration

:

• I/O Devices, Controllers, Recorders, Scanners, Network Based devices, PLCs, Standard / Proprietary protocols

Each project is assigned for implementation to a Project Manager. His functional responsibility involves the total project planning , designing activity chart and monitoring the progress. Every project is broken into several logical steps and the critical path method is adopted for completing the project in the optimum time. The Project Plan includes the comments of the Management Team. Generally the project plan is the basic document upon which the project manager relies upon. .

Along with the project plan preparations, the project manager appoints the configuration chief who is responsible for all the configuration management related activities.

Every project is monitored by the Project Manager, Management Team and the client representative.

The Company holds regular project monitoring meetings wherein the progress of the project is discussed. The problems involved and also the solutions thereof are arrived at. This review is done on an on going basis and the progress achieved is tracked against the project schedule.

After the formal quality control and testing and handing over to client, training of users, project is stated to be completed. It is checked whether all the objectives and the success criteria are met which were set for the project.

All the above mentioned parameters are compiled and status against each person’s performance is put up to the management. These parameters become the basis for estimates for the future projects.

CONTECH recruits and retains its employees through best HR practices. This covers the entire gamut of activities including training, development, and career planning and performance management. All these activities are taken care by our HR Department in consultation with our HODs through Employees Satisfaction Survey, Feed backs and ratings by the employees on regular basis to maintain healthy working condition and maximum comfort level to company’s employees.

Manpower planning is carried out every year based on Business Projection. Recruitment is made through internal sources, appointment of trainees , through advertisement in newspapers and also placement agencies.

The key to Contech's success is its people. This is reflected in the credo of the organisation - 'Our people make the Difference'. By providing a challenging work environment, Contech helps attract and retain best talent. Great care is taken in recruiting the best people available in India.

The Company provides transportation facility, flexiible working hours, five days week and creative freedom to employees to contribute to the development.

Company is maintaining a Software library with more than 500 books on various platforms, technologies to enable our employees to increase their skill and knowledge.

By giving unlimited access to the latest in technology, Contech helps its people stay at the leading edge of software engineering skills.

The focus is to constantly raise the levels of competency and capabilities of its people by providing the necessary learning inputs and a conducive environment for both professional and personal growth. The technical skills of the Associates are constantly upgraded through a variety of training programs, workshops and seminars.

The Company offers attractive pay packages to the employees commensurate with the standard applicable for similar units in the country.

The Company’s HR and admin. Policies are benchmarked with the best of the Software Industries in India.

The Company is extending all possible assistance to the permanent employees who are keenly interested in pursuing further studies with a view to develop themselves in terms of their skills/job knowledge and proficiency. Financial assistance is provided to such employees when they enroll in external educational programmes of recognised institutions, provided the programme is of benefit to the individual and company goals.

To recognise exceptional contribution by employees, the Company presents awards on quarterly basis to deserving employees.

The Company presently employs around 80 technical personnel and people trained in Software development. With adequate training centres in the state of Gujarat and thereabout the company does not foresee any problem in procurement of requisite manpower. The estimated manpower requirement, including the personnel already recruited by the Company is anticipated as under:

Director 3 5

General Manager 3 5

Senior Manager 6 7

Project Manager 3 5

Project Leader 6 16

Sr.Software Engineer /

Engineer 40 60

Programmer/Trainee 5 10

Administration staff 12 18

Marketing staff 12 18

UTILITIES:

The Company presently has connected load of 97.80 HP which is sufficient to meet it immediate future requirements.

WATER:

Water is required only for drinking and sanitation proposes. Adequate supply of water is available in the present premises from Gujarat Industrial Development Corporation which shall be sufficient for meeting the expansion needs too.

The Company is engaged in software industry leading to provision of software solution and as such the operations of the company do not generate any effluents.

Software Export Division of the Company is registered with Software Technology Parks of India, Gandhinagar vide its Letter Ref.No. 3(1)98-STPG/CIPL/55/2248 dated 24.07.1998. The Company has projected export turnover of Rs. 550.00 lacs in 5 years as per the projections submitted to STPI.

(The Contech Software Private Limited (Merged with Contech Software Limited w.e.f. 01.04.1999) was a 100% E.O.U and as per the agreement with the STPI, all the services and products generated had to be exported.

In view of the merger of the said Company with Contech Software Limited, the export obligation given by erstwhile Contech Software Private Limited becomes the obligation of Contech Software Limited.

The Company confirms that all the hardware software currently used are Y2K Compliant and therefore the risk due to year 2000 bug is nil. No additional expenditure is entailed for installing Y2K Systems.

The Company proposed to complete the expansion project as per following schedules:

Commencement - Completion

Construction of Building for offshore March, 2000 July-2000

development

Procurement of Plant & Machinery April-2000 August-2000

Establishment of U.K. Office Jan.-2000 Feb.-2000

Operation of US Subsidiary Jan.-2000

A strategic review of the Indian Software Industry by NASSCOM through SWOT Analysis depicts:

* High Quality - Low cost large English Speaking, Scientific and trainable manpower pool .

* Use of the State -of the art Technologies .

* Flexibility and adaptability to new technologies .

* Reliability of Programmes to provide expertise for small or large projects .

* Offshore development through Datacom Links providing immense cost and time savings .

* Ability to handle Large & Turnkey projects .

* High domestic & exports demand with annual growth of around 50% .

* Good Educational base for software engineering and related studies .

* Government’s active encouragement & support by way of tax and duty benefits, amendment of

copyright laws, promotion of STP schemes etc .

* Copyright laws, promotion of STP schemes etc .

* Lack of package orientation for products developed .

* Low Domestic Computerisation .

* Lack of efforts to develop original technology .

* Low experience in Mission critical Real Time Operations .

* Inadequate availability of project management skills .

* Lack of adequate venture capital finance .

* Bureaucratic hurdles with regard to Government policies and procedures still exist .

* Immense opportunities in the Global Markets, especially in outsourcing business is yet to be

tapped .

* Good Domestic Demand Potential .

* Multinationals are increasingly resorting to outsourcing .

* Multinationals are increasingly setting up shops in India with R & D facilities .

* Inadequate and expensive infrastructure .

* High inflationary tendencies of cost .

* Protectionism by developed countries including non - tariff barriers .

INDIAN SOFTWARE SCENARIO

Introduction

With the emerging strengths of in the areas of cost effectiveness, world class quality, high reliability, rapid delivery and state of the art technologies India is fast emerging as a leader in software business.

The Indian software industry, has zoomed from a mere US$ 150 million ten years ago to a whopping US$ 3.9 billion in 1998-99. In 1998-99, more than 203 out of the Fortune 1000, that’s nearly one in five, outsourced their software requirements to India. And US customers bought almost 61 per cent of the software that Indian companies exported to 91 countries around the world.

The ultimate tribute to the skill-base of the industry has already been paid by Microsoft Chairman Bill Gates, who picked the Indian city of Hyderabad to house his company’s first-ever development centre outside the U.S.A.

As per a recent analysis by McKinsey & Co., India is best positioned to offer competitive cross-border IT Services and enterprise IT solutions scoring high on multiple parameters of vendor sophistication as well as people sophistication.

According to international experts, ‘’Indian software companies have a unique distinction of providing efficient software solutions with cost and quality as an advantage by using state-of-the-art technologies, a very strong capacity to handle large projects, and, above all, the ability to execute them on time.’’

INDIAN SOFTWARE INDUSTRY: INDICATORS & STATISTICS

In the year 1998-99, the software industry in India was worth Rs. 158.9 billion (US $ 3.9 billion) and if we add in the value of in-house development that takes place at many large commercial / corporate end-users, then the total software industry is close to Rs. 190 billion or US $ 4.6 billion, whereas ten years back the software industry in India was not more than Rs. 2000 million or US $ 150 million.

The C.A.G.R. (Compounded Annual Growth Rate) for the Indian software industry revenues in the last five years has been 56.3%. Here the C.A.G.R. for the software export industry has been 60.71% while that for the domestic industry has been 46.05%.

India still enjoys an advantage over many other nations in software development, services and exports as she possesses the world’s second largest pool of scientific manpower which is also English speaking. Coupled with the fact that the quality of Indian software is extremely good with relatively low cost, it provides India a very good opportunity in the world market.

As on 31 March 1999, the software industry in India employed more than 250,000 people and continues to be amongst the fastest growing sectors in the Indian economy. Out of 250,000 people, almost 80,000 were employed in software exports.

DOMESTIC SOFTWARE MARKET

In 1998-99, the domestic software industry has been estimated at Rs. 49.5 billion (US $ 1.25 billion) and this does not include the in-house development of software by end-users. The domestic software market has shown a C.A.G.R. of 46.05% which has been steadily improving in the last few years.

The growth rate in domestic software market was 41.02% in the year 1998-99. The domestic software market is expected to gross Rs. 73 billion in 1999-2000. With the rigorous enforcement of Copyright laws, increased government spending on IT due to Task Force recommendations, it is expected that in the coming years, the domestic market for software can even register more than 50% annual growth rates. Also, the government has implemented zero import duty on software. This would have a buoyant effect on the market and the increasing trend of buying software through Internet. It is expected that by the year 2008, revenues of Indian domestic software market would equal revenues from India’s software and services exports, touching US $ 35 billion by the year 2008. The maximum growth in domestic software market is expected from banking, e-governance, defence, SOHO, etc.

SOFTWARE EXPORT INDUSTRY

The Indian software export industry has recorded in terms of Indian rupees, the C.A.G.R. over the past five years as high as 60.71%. The industry exported software and services worth Rs. 0.30 billion in 1985; in 1998-99, a total export of US $ 2,650 million (Rs. 109.4 billion) was achieved and it is expected that during 1999-2000, software exports will be worth Rs. 167 billion.

The software industry in India expects to reach an export level of US $ 6.3 billion by year 2000-01 and US $ 9.5 billion by the year 2001-02. The National IT Task Force has set a target of US$ 50 billion of annual software and services exports by 2008.

For achieving this velocity of business, both the software industry and Government of India are currently taking some bold and purposeful steps. Amongst others, this exercise includes path-breaking measures adopted by National IT Task Force to further liberate the economy, simplification of procedures, deployment of additional resources for technical manpower development, new marketing channels, enhancing global brand equity and providing state-of-the-art infrastructure for software development. E-Commerce, Software Development, Interactive Integration services and I. T. Enabled Services are leading the way.

BREAK-UP OF SOFTWARE ACTIVITY

An analysis of break-up of software activity of both domestic as well as export industry is given below.

Domestic Software Activity

As per a Nasscom study, over 122 new software products were launched by domestic software companies and over 158 new software products were launched by overseas companies in the Indian domestic market.

There was a 37% growth in CAD/CAM market; 31% growth in RDBMS sales, 46% increase in sale of ERP packages and 35% increase in financial packages. Increased penetration of computers, strict implementation of copyright act and further control of piracy may further strengthen these segments of the market. Software purchases by SOHO market witnessed an all time high growth rate of 61%.

SOFTWARE EXPORT ACTIVITY

In the export market, India’s expertise in ‘Professional Services’ and ‘Projects’ are expected to continue their dominance as a major part of Indian software export activity.

Indian Software Exports - U.S.A. Tops the List

In 1998-99, India exported almost 61% of its total software exports to USA. Export to Europe was at 23% and more market opportunities in Japan, South Africa, Canada, France and Middle East were discovered.

The six OECD countries (U.S.A, Japan, U.K., Germany, France and Italy) together have almost 71% of the market share of the worldwide software market. Interestingly, India’s exports to these countries is also almost 79% of its total software exports.

In the coming years, software companies in India are expected to strike quite a few deals for joint ventures and strategic alliances in Europe. The new markets being vigorously explored include Korea, South Africa, Latin America and countries in Eastern Europe. U.S.A. continues to be India's largest export market and would continue its leadership position. To increase software trade with Japan, Nasscom has launched special program called NINJAS (Nasscom’s India Japan Alliance in Software). Recently, Nasscom has also signed a software pact with Israel.

INTERNET AND E-COMMERCE

During 1998-99, an interesting survey revealed that out of the top 25 E-Commerce companies in India, 18 were already making profits, besides growing annually by more than 500 percent. Many of them have been funded by angel investors - venture capitalists and many of them are determined to go in for international IPOs over the next 3 years. There has been a steady inflow of international venture capitalists eager to invest in the innovative ideas being conceived by young software entrepreneurs in India.

Industry experts believe that the Internet, although is just about 1.4 million users strong today in India, has the potential to explode to 37 million by the year 2003, once internet connections are available on cable-spreads across India, and will position India as a global hub for content development and e-commerce.

In the year 1999-2000, internet and E-Commerce related software and services exports from India are expected constitute US $ 340 million out of estimated US $ 3.9 billion of software exports from India. This is expected to surge to at least US $ 1 billion of total software and services exports from India in 2002.

LARGE POOL OF PROFESSIONALS

India has the second largest assembly of English-speaking scientific professionals in the world today, second only to the US. It also has a growing bank of 4.1 million technical workers, supplied by, among others, over 1,832 educational institutions and polytechnics, which train more than 67,785 computer software professionals every year.

NASSCOM every year undertakes a survey to understand the manpower requirements of the industry. The study undertaken in April 1999, highlighted the following facts:

•The number of software professionals employed have increased to 250,000 in 1998-99 compared to 2,00,000 in the preceding year. This includes software professionals in non-commercial organisation as well as software development units in user organisation.

•Almost 67% of the software professionals employed in the industry were in software development and operations, 3% in domain expertise development, 11% in marketing and relationship development, 15% in client support and 4% in other activities.

•The overall median age of the software professionals was about 26.2 years.

•77% of software professionals in software companies were men, whereas 18% were women. However, this ratio is likely to be 65:35 (male : female) by the year 2003

•A.D.Half of the software professionals possessed 5 years of working experience.

•There was an average of 21% rise in basic salary in 1998 over the previous year. However, rise in total compensation was supported by issuance of stock options to employees. During 1998-99, as many as 41 software and solutions companies announced employee stock options plans.

•In 1998-99, although the attrition rate was controlled at 16% (from the earlier turnover rate of 25% in 1992), but it still remained high, fuelled by 50% growth in the revenue for the software industry in 1998-99. This caused the HRD market to tighten considerably.

•Our software professionals were highly rated by their employers for their quality. Most gave an average of close to a 9 on a 10 point rating scale, with 1 being the lowest and 10 being outstanding.

•The skills in demand were in the area of business applications of software

development, Y2K tools and practices, E-Commerce, Euro, software engineering, Java, ERP, Interactive Integration Services, Datawarehousing, Internet, Client-Networking, BPR, OOPS, client-server, GUI, Windows, project management, quality assurance, technical writing, telecommunications, networking and RDBMS.

GLOBAL PRESENCE

Software companies are beginning to increase their local presence on a worldwide basis. This entails staffing overseas offices with local teams of professionals. Already, 212 Indian software companies have either subsidiaries or branch offices overseas, mostly in the USA.

HIGH QUALITY

India’s software industry has achieved a remarkable distinction for providing excellent quality. At present, 137 software companies have acquired ISO 9000 certification, and about 147 more companies are in the pipeline to be certified. Out of these 147 companies, about 74 companies are expected to be certified by March 2000 and 73 companies are expected to receive certification by March 2001. In fact, the Indian software industry will soon have more ISO 9000-certified companies than any other country in the world. Many of its members are now focusing on acquiring SEI-CMM (Software Engineering Institute - Capability Maturity Model) certificates of software process capabilities and maturity. As many as 32 Indian companies already have SEI-CMM certification, with six of them having reached Level 5. It must be noted that worldwide, only 12 companies have reached that level, and just six of them do not belong to India.

OUTSOURCING

Out sourcing is no longer just a means of reducing costs, it has become a tool for adding value to business, simultaneously enabling organisations to concentrate on their core business. Furthermore, it helps managers to reengineer business processes and provide the necessary information to assist effective decision making and ensure quality and cost control.

Outsourcing has gradually grown beyond the traditional idea of ‘having a third party running the data centre’, to ‘any use of an outside contractor to replace or extend in-house resources’. Obviously, it is linked closely to corporate strategy, since it must support the organisation’s initiative in using IS as a competency building tool. ’

THE MILLENNIUM BUG OR Y2K PROBLEM

Indian companies were extensively used by global companies to solve their Y2K problems, thanks to the fact that India was the only country in the world which had the abundant workforce required to write the many lines of code. Indian companies solved their clients’ Y2K problem both by sending teams of consultants to work at the client’s site, and by executing projects in India. They have designed a step-by-step methodology for ``finding a solution, with particular attention being paid to the testing of the solution once it has been implemented, and regression-testing of the application to ensure that no secondary damage has occurred.

Till mid-1999, Indian companies had provided Y2K solutions to many leading multinationals, resulting in cumulative export revenues of US $ 2 billion from 1996 to 1999. Out of this, Y2K software solutions exports during 1998-99 constituted revenues about US $ 560 million.

True, the Y2K opportunity is sloping off for the Indian software industry in tandem with global trend as January 1, 2000 approaches, but there is no time to rest. More than 108 companies have begun providing solutions to the Euro Currency Conversion. This is considered a strategically important export opportunity for the Indian software sector even as it allows opportunity to further penetrate high end as well as middle tier European markets. which requires a number of changes in computer systems.

MULTIMEDIA

Indian software companies have a comprehensive pool of varied skills for multimedia development, and bring with them strong expertise in various systems as well as application software, covering multimedia authoring, multimedia databases, multimedia based campus-wide networks, user interfaces, and new media publishing. In 1998-99, almost $105 million worth of exports was through multimedia solutions.

I.T. ENABLED SERVICES

Globally, the telephone-based services industry is estimated at $ 200 billion, and is growing at about 23% per annum. Similarly, other I.T. enabled services, such as backoffice management, transcription and content development, are emerging as a $ 75 billion industry, growing at more than 20% annually. India has already staked her claim as an attractive outsourcing destination in this segment. During 1998-99, I. T. Enabled Services contributed Rs. 1,130 crore out of total software industry revenues.

ENTERPRISE RESOURCE PLANNING

Enterprise Resource Planning (ERP) is being increasingly adopted across a spectrum of industries and enterprises at various stages in terms of size. The objectives are obvious: efficiency, reduced time of response, transparency, lowering of costs, better integrated enterprise-wide and intercorporate enterprise systems and, simply, improved collaborations.

India offers unique solutions including ERP products and ERP implementation services.

GOVERNMENT CHIPS IN

In 1986, Government of India announced the first computer software policy and since then, software has always been identified as a thrust area.

But it was only in May 1998, that Government of India not only put software on its National Agenda, but also created a National Task Force under the order of the office of Prime Minister of India. Within a matter of a few months, the Task Force gave path breaking

recommendations, not only to remove bottlenecks faced by industry, but to chart out the growth of the software industry in the next millennium. In recent months, almost fourteen state governments have announced IT policies and seven more have announced IT Task Forces and Special Committees. There is almost a computer software revolution in the country and both government and industry are getting more and more determined to strengthen the brand equity of Indian software industry and make the country as an IT superpower. According to a report prepared by the National IT Task Force, the country’s software industry can earn an annual revenue of more than U.S. $85 billion at the end of the next decade (i.e., 2008), comprising of $50 billion in software exports and almost $35 billion in domestic software sales. The National IT Task Force has already completed most of its work and has submitted three innovative reports to the Government.

In India, the success of software industry can be attributed in no small measure to the excellent teamwork between Government and Industry. The Government of India, impressed by the excellent performance of the Indian software industry has provided all support, including fiscal benefits, the availability of high speed data communications and infrastructure, besides ensuring an almost red tape-free system. The government, in fact, has given the red-carpet treatment to this industry. The fiscal benefits include trade free zones, Software Technology Park schemes, zero import duty on software, and 100% exemption on profits from software exports.

(Source: The contents of the above report has been sourced from NASSCOM – INDIAN I.T.SOFTWARE AND SERVICES DIRECTORY 1999 –2000)

The Company has more than 12 international customers located in various countries like USA, U.K, Switzerland and Israel. The Company is continuously making its efforts to increase its presence in various parts of North America, Europe and Asia Pacific. In order to increase its geographical reach company is taking following steps:

• Company has already registered its wholly owned subsidiary in USA and is planning to operationalise in the month of January, 2000. Local presence in those markets will result in a direct interaction with the customer which will result into higher credibility of the company. With own marketing and support staff, company will focus on offshore projects and contracting directly with end user.
• Company is planning to start branch office in U.K. which will be based in London and will be exploring European market. By opening a branch office in U.K. the markets of France, Switzerland, Italy, etc., will be directly accessible to the company.
• Company is also planning to participate in the international IT Trade Shows.
• Company is also planning to enter into strategic marketing alliance where it is not opening either subsidiary or branch.
• Company has received letters from its several international customers, for whom company has completed the projects

successfully. This will also enable the company to generate confidence of prospective customer.

• The directors and top executives of the company are visiting existing and also prospective clients regularly explaining

about the company’s services and existing facilities.

• The Company has web page for marketing its services at global level.
• Company sends E-mail to the prospective customers abroad explaining the company’s services and existing facilities.

In the domestic market, company is addressing more than 100 existing customers where company has worked for Process Automation and Engineering Application.

Company has entered into strategic alliance with Masscon Global Limited, Chennai for marketing and providing customisation of their ERP Package in several states.

Also company has certain inherent strengths as compared to other companies in the same market:

1. System Driven quality conscious company with ISO 9001 Certificate.

2. Strong presence of more than 10 years in domestic market.
3. Impressive client list of more than 100 customers.
4. Existing infrastructure of 16000 Sq.Ft. built up area with modern communication facility like 64 KBPS

Internet lease line.

FINANCIAL PEROFORMANCE

The select data of audited financial performance of Contech Software Limited ( formerly known as Contech India Private Limited) for the last five years is as below :

( RUPEES IN LACS)

Particulars For the year ending

Income

Sales

Hardware and other 572.28 905.25 838.44 591.66 149.87

income

Software 34.21 40.73 65.07 97.84 270.33

Increase in software development 10.79

In progress

TOTAL INCOME 606.49 945.98 903.51 689.50 430.99

Expenditure 517.68 869.25 849.87 615.07 316.54

Profit before Tax and 88.81 76.73 53.64 74.43 114.45

Extra ordinary items

Depreciation 18.24 25.37 28.62 37.26 30.09

Profit before Tax 70.57 51.36 25.02 37.17 84.36

Provision for Tax - 3.90 1.00 3.75 5.00

Profit after Tax 70.57 47.46 24.02 33.42 79.36

Equity Capital 23.24 23.24 23.24 23.24 393.72

Reserves & Surplus 217.08 257.65 262.65 272.65 57.20

Profit & Loss Account 9.11 11.36 27.36 30.46 79.82

Earning Per Share 30.36 20.42 10.33 14.37 6.85*

Cash Earning Per Share 38.21 31.34 22.65 30.41 9.44*

Book Value 87.63 88.19 96.05 103.04 10.51

RONW % 34.65 23.15 10.76 13.96 21.67*

Dividend ( Amt) 4.64 4.64 2.32 2.32

*Annualised

The other income as mentioned above includes the following towards compensation for services received from Contech Software Pvt Ltd:

(Rs in lacs)

98. 1998-99

9. 18.00

There are no group companies and no sales or purchase between the companies in the promoter group exceeding value of 10% in aggregate of sales\purchases of the company.

I. Basis  of  Accounting: The Financial  statements  are prepared under historical cost convention in accordance  with  generally accepted accounting principles as per accounting standards prescribed by the Institute of Chartered Accountant of India and are in accordance with the requirement of the Companies Act, 1956. The company generally follows mercantile system of accounting and recognises.

II. significant items of income and expenditure on an accrual basis.

1. Income Recognition:

Revenue from Sales of Hardware include sale of Manufacturing Goods, Trading Goods, Annual Maintenance Charges and Taxes & Duties thereon.

Revenue from Software Sales is recognized on proportionate completion method and on the basis of invoices raised as per the terms of the contract.

Export Sales are recorded using the spot rate prevailing at the time of raising the bills and exchange difference resulting from the transactions settled till Balance Sheet date is adjusted in the Revenue Account, while unsettled Foreign Currency Transactions are restated at year end rates.

2. Fixed Assets & Depreciation: Fixed Assets are  stated at  cost  of acquisition less accumulated  depreciation. Depreciation   has been  provided on straight   line method  at  the  rates specified in schedule XIV to  the Companies Act, 1956, Depreciation on addition is provided   from   the month   of installation   & depreciation  on sale of Assets is provided till  the month of sale.
3. Valuation of Inventories: Stock of Raw Materials, Stores  and Finished  Goods  are  valued  at lower  of  cost  or  market value and work-in-process is valued at cost.

Working Progress relating to Software Development is valued at cost

4. Investments:  Investments  are  stated  at  cost of acquisition. Profits or losses on Investments are accounted as and when realized.

Provision for diminution in value of investments, if any, is made if such diminution is other than temporary.

5. Retirement Benefits:

Contribution to the Provident Fund and Employees State Insurance is deposited in accordance with the provisions of the relevant Acts and is charged to profit and loss account.

Provision for Gratuity, Leave encashment & other retirement benefits is made on payment basis.

Expenditure relating to the development of products are accumalated and shown as work in progress. It is capitalised on establishment of commercial viability. The same is depreciated over 3 to 5 years depending upon the estimated life of the product .

R & D Expenses: Research & Development Expenses are amortized over a period of 10 years.

Preliminary Expenses: Preliminary Expenses are written of equally over a period of 10 years.

Marketing Expenditures: Marketing Expenditure represent the cost incurred by the company on market establishment, the benefit of which are expected to accrue over a period of time. The current marketing expenditure will be amortized equally over a period of 5 years commencing from the next financial year.