AUTHORITY FOR THE ISSUE

Pursuant to section 81(1A) of the Companies Act 1956, the present Issue of Equity Shares has been authorised vide Special resolution passed at the Annual General Meeting held on September 28, 1999. The Board of Directors have approved the Issue by a resolution passed at its meeting held on January 7, 2000.

DISCLAIMERS

FILING

A copy of this Prospectus, along with the documents required to be filed under Section 60 of the Act having attached thereto, has been delivered for registration to The Registrar of Companies, Karnataka at Bangalore. The copy of the draft Prospectus has also been filed with the Chennai office of SEBI.

A copy of the documents referred to elsewhere in the Prospectus has been kept open for public inspection at the registered office of the Company.

LISTING

Applications have been made to The Stock Exchange, Bangalore (BGSE), The Stock Exchange, Mumbai (BSE) for permission to list the equity shares and for an official quotation of the equity shares of the Company.

In case the permission to deal in and for official quotation of the shares is not granted by these Stock Exchanges, the issuer shall forthwith repay without interest, all monies received from applicants in pursuance of this Issue document and if such money is not repaid within 8 days after the day from which the Company is liable to repay it, the Company shall pay interest as prescribed under section 73(2) of the Act.

FICTITIOUS APPLICATION

Attention of the applicant is specifically drawn to the provisions of sub-section (1) of section 68-A of the Act, which is reproduced below:

"ANY PERSON WHO-

shall be punishable with imprisonment for a term which may extend to five years." The Issuer accept full responsibility for the accuracy of the information given in this Prospectus and confirm that to the best of their knowledge and belief, there are no other fact the omission of which make any statement in this Prospectus misleading, and they further confirm that they have made all reasonable enquiries to ascertain such facts.

MINIMUM SUBSCRIPTION

If the company does not receive the minimum subscription of 90% of the net offer to public including devolvement of Underwriters within 60 days from the date of closure of the issue, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest prescribed under Section 73 of the Companies Act 1956.

UTILISATION OF ISSUE PROCEEDS

The sum received in respect of the Issue will be kept in a separate bank account and Deldot will not have access to such funds unless allotment/allocation of equity shares has been made in consultation with the Regional Stock Exchange and listing approval has been received from the Stock Exchanges where listing has been sought.

The Board of Directors of the Company, certify that-

Pending utilisation, the issue proceeds would be invested as per the discretion of the Board of Directors. The Company, normally, invests its surplus funds towards its working capital requirements and/or in units of debt-securities based schemes of mutual funds, bank term deposits and placement as short term inter-corporate deposits with renowned companies of strong financial fundamentals. Any such investments are done only after due assessment of risk involved and after ensuring a reasonable return thereon.

ALLOTMENT, REFUND

Allotment/Allocation Letter(s) and/ or Equity Shares Certificates/ Letters of Regret/ Cancelled stockinvests together with refund orders, if any, will be dispatched at the applicant’s sole risk within 10 weeks from the date of closure of the subscription list. The Company shall ensure despatch of refund orders of value up to Rs. 1500/- Under Certificate of Posting and refund orders over the value of Rs 1500/- and Allotment/Allocation Letter/ Equity Shares Certificates by Registered Post/ Speed Post. The Company, as far as possible, will allot the Equity Shares issued within 30 days from closure of the subscription list and shall pay interest at the rate of 15% p.a. for delay beyond 30 days (except to applicants applying through stockinvests), if the allotment is not made within 30 days from the date of closure of the Issue. The Company will also make available adequate funds to the Registrar to the Issue for the purpose of despatch of Allotment/Allocation letters/Share Certificates/ Refund Orders stated above.

Where the permissions have been applied for dealing and listing of equity shares in the Stock Exchanges, if such permission has not been granted by the Stock Exchanges within 70 days from the date of closure of the subscription list, then the Company shall forthwith repay without interest all money received from applicants in pursuance of the Prospectus, and if any such money is not repaid within eight days after the Company becomes liable to repay it (i.e. from the date of refusal or within 70 days from the date of closure of subscription list, whichever is earlier) , the Company and every director of the Company who is an officer in default shall , on and from the expiry of eight days, be jointly and severally liable to repay that money with interest for the delayed period @ 15% per annum, if however, an appeal against the decision of any recognized Stock Exchange(s) refusing permission for the equity shares to be dealt on that Stock Exchange has been preferred under section 22 of the Securities Contract (Regulation) Act, any allotment /allocation made under this Prospectus shall not be void until the appeal is dismissed.

Refunds will be made by cheques or pay orders drawn on the bank(s) appointed by the Company as refund banker. Such instruments will be payable at par at the places where applications are accepted. Bank charges, if any, for encashing such cheques or pay orders will be payable by the applicants.

GOVERNMENT APPROVALS

The Company has received all the necessary permissions and approvals from the Government and various Government agencies for proceeding with the proposed project except for those mentioned in the Risk Factors, and elsewhere in the Issue document, if any. No further approvals from any Government authority/ Reserve Bank of India (RBI) are required by the Company to undertake the proposed activities, save and except those approvals which may be required to be taken in the normal course of business from time to time.

ISSUE PROGRAM

The subscription list will open at the commencement of banking hours and will close at the close of banking hours on the days mentioned below.

Issue Opens on:_______________
Issue Closes on:_______________

The Issuer accepts full responsibility for the accuracy of the information given in this Prospectus and confirm that to the best of their knowledge and belief, there are no other facts, the omission of which make any statement in this Prospectus misleading, and they further confirm that they have made all reasonable inquiries to ascertain such facts. The Issuers further declare that the Stock Exchanges to which an application for official quotation is proposed to be made do not take any responsibility for the financial soundness of this Issue or for the price at which the equity shares are issued, or for the correctness of the statements made or opinions expressed in this Prospectus.

LEAD MANAGERS TO THE ISSUE

Enam Financial Consultants Pvt Ltd
801/ 802 Dalamal Towers
Nariman Point, Mumbai – 400 021
Phone: (022) 282 8554/57/59/60
Fax : (022) 284 6824

IL&FS Merchant Banking Services Ltd.
Hoechst House, 17th Floor
Nariman Point
Mumbai – 400 021
Phone : (022) 281 8887
Fax : (022) 281 8879

REGISTRAR TO THE ISSUE

Karvy Consultants Limited
“Karvy House”, 46, Avenue 4
Street No. 1, Banjara Hills
Hyderabad – 500 034
Phone : (040) 331 2454/ 332 0751
Fax : (040) 331 1968

UNDERWRITERS TO THE ISSUE

Name & Address of Underwriters	Date of Letter	Amount Underwritten (Rs. Lakhs)

OPINION OF THE BOARD AND THE LEAD MANAGERS

The Lead Managers to the Issue has ascertained the net worth and the outstanding commitment of the aforesaid underwriters. In the opinion of the Board and the Lead Manager, the resources of the aforementioned underwriters are sufficient to enable them to discharge their respective underwriting obligations in full and their respective letters of underwriting have been accepted by the Board at its meeting held on _________.

AUDITORS OF THE COMPANY

M/s Murali & Venkat
No. 14/2, III Floor, Opp. Vikrant Tyres
H Siddiah Road, Bangalore – 560 002
Phone : (080) 221 0257, 2291623
Fax : (080) 2276097

COMPANY SECRETARY & COMPLIANCE OFFICER OF THE COMPANY

Mr. Ramesh Kumar Bhat B
431/28, `A' Cross, 4th Block,10th Main Road,
Jayanagar, Bangalore – 560 011
Phone : 080-6341437
Fax : 080-6634976,
Email : rbhat@deldot.com

In case of any pre-issue/post-issue related problems such as non-receipt of share certificates/refund orders/cancelled stockinvests etc., investors may contact the above mentioned compliance officer of the Company.

LEGAL ADVISOR TO THE ISSUE

Udwadia, Udeshi & Berjis (REGD.)
Solicitors & Advocates
Thomas Cook Building, 3rd Floor,
324, D. N. Road, Fort,
Mumbai 400 001.
Phone : (022) 2883345
Fax : (022) 2871437

BANKERS TO THE COMPANY

IDBI Bank Ltd.
Sarakki Lake Branch,
26/1, Sowbhagya Complex,
24th Main, J.P. Nagar 5th Phase,
Bangalore – 560 078
Phone : 080-6635111, 6638111
Fax : 080-6645900

BANKERS TO THE ISSUE

CREDIT RATING / DEBENTURE TRUSTEE

This being an Issue of Equity Shares, no credit rating or appointment of Debenture Trustee is required.

Share Capital	Nominal Value (Rs.)	Aggregate Value at a premium of Rs. 70(Rs.)
A) Authorised 75,00,000 Equity shares of Rs 10/- each	7,50,00,000
B) Issued, Subscribed And Fully Paid-Up 50,27,400 equity shares of Rs. 10 each fully paid up	5,02,74,000
C) Present Issue Through This Prospectus At A Price Of Rs. 80/- Per Share Public Issue 16,76,600 equity shares of Rs.10/- each for cash at a premium of Rs.70/- per share	1,67,66,000	13,41,28,000
D) PAID-UP CAPITAL AFTER THE ISSUE 67,04,000 equity shares of Rs. 10 each	6,70,40,000
E) SHARE PREMIUM ACCOUNT Before the Issue After the Issue		14,85,68,000 26,59,30,000

NOTES :

1. Details of Equity Share Capital allotted by Deldot are as under:
   
   

   Date of Allotment	No. of Shares Face Value Rs.10/-	Date when fully paid up	Total PaidUp Capital(Cumulative)(Rs.)	Issue Price(Rs.)	Consideration(Rs.)	Remarks
   14-09-93	300	14-09-93	3,000	10	Cash	Subscribers to Memorandum and Articles of Association
   30-05-98	5,05,700	30-05-98	50,60,000	10	Cash	Allotment to Promoters
   21-08-98	21,000	21-08-98	52,70,000	10	Cash	Allotment to Promoters
   14-09-98	39,000	14-09-98	56,60,000	10	Cash	Allotment to Promoters
   22-10-98	15,000	22-10-98	58,10,000	10	Cash	Allotment to Promoters
   29-09-99	23,24,000	29-09-99	2,90,50,000	Bonus	Bonus	Allotment of Bonus shares in the ratio of four shares for every one share held
   	1,900		2,90,69,000	80	Cash	Allotment to Friends & Associates
   20-10-99	4,31,700	20-10-99	3,33,86,000	80	Cash	Allotment to Friends & Associates
   28-10-99	9,80,900	28-10-99	4,31,95,000	80	Cash	Allotment to Information Technology Fund (SEBI Registered Venture Capital Fund), IL&FS Growth & Value Fund, Friends and Associates
   05-11-99	4,00,000	05-11-99	4,71,95,000	80	Cash	Allotment to Promoters
   29-12-99	1, 70,600	29-12-99	4,89,01,000	80	Cash	Allotment to SARA Fund (SEBI Registered Venture Capital Fund), Promoters, Friends & Associates
   7-1-2000	1,37,300	07-1-2000	5,02,74,000	80	Cash	Allotment to Friends & Associates

   
   
2. The Company has not issued any equity shares for consideration other than cash except to the extent of bonus issues to the then existing shareholders by capitalization of its free reserves as shown in the table above.
   
   
3. Particulars of the top ten shareholders 2 years prior to the Issue (as on May 12,1998):
   
   

   Sr. no	Name of shareholder	No. of shares	Percentage of shareholding
   1	Mr. Chandrashekar	200	66.67%
   2	Mr. Chandrakeerthi	100	33.33%
   Total		300	100.00%

   
   
4. Particulars of top ten shareholders as on the date of filing the Prospectus and ten days prior to that:
   
   

   No.	Name of Shareholder	No. of Shares	% holding
   1	Delklip Investments P Ltd	14,40,000	28.64
   2	Chandrashekar	875,000	17.41
   3	Chandrakeerthi	890,000	17.70
   4	IL&FS Trust Company Ltd A/C -IL&FS Growth & Value Fund	300,000	5.97
   5	Talma Chemicals Pvt. Ltd.	250,000	4.97
   6	Development Investment Trustee Co Ltd - A/C Information Technology Fund	200,000	3.98
   7	Deldot Employees Welfare Trust	140,000	2.78
   8	Sara Fund Trustee Company Ltd A/C Sara Fund	100,000	1.99
   9	Spenta Leasing & Investments P Ltd	50,000	0.99
   10	Sharath C. Konanur	49,500	0.98

   
   
5. The current share holding pattern of Deldot and the post-Issue shareholding pattern is given below:
   
   

   Entity	Existing		After the Public Issue
   	No. of Shares	%	No. of Shares	%
   Promoters	3,205,000	63.75	3,205,000	47.80
   Friends & Associates	1,082,400	21.53	1,082,400	16.15
   Mutual/ Venture Fund	600,000	11.93	600,000	8.95
   Employees Welfare Trust	140,000	2.79	140,000	2.09
   Public	-	-	1,676,600	25.01
   Total	5,027,400	100.00	6,704,000	100.00

   
   
6. The present Shareholding pattern of the promoters is:
   
   

   Sr.No.	Name	No. of Shares	Pre Issue	Post Issue
   1	Chandrashekar	875,000	17.40%	13.05%
   2	Chandrakeerthi	890,000	17.70%	13.27%
   3	Delklip Investments P Ltd	1,440,000	28.64%	21.48%
   Total		3,205,000	63.74%	47.80%

   
   The above shareholding constitutes the entire shareholding of the promoter group.

Note : On October 15, 1999, Mr. Chandrashekar and Mr. Chandrakeerthi transferred 5,00,000 shares each to Delklip Investments P. Ltd. On January 7,2000 Mr. Chandrashekar and Mr. Chandrakeerthi transferred 1,00,000 shares and 40,000 shares respectively, to Deldot Employees Welfare Trust. (Refer note no.8 below)

7. Equity shares comprising 20% of the post-Issue capital will be locked in as under:
   
   

   Name of The Promoter	Date of Allotment/ made fully paid-up	Consideration	No. of shares	Face Value(Rs.)	Issue Price(Rs.)	% of Post-Issue paid-up capital	Lock-inPeriod
   Mr. Chandrashekar(ii)	29.09.99	Bonus	6,00,000	10/-	Bonus	8.95%	3 years
   	22.10.98	Cash	10,000	10/-	10/-	0.15%	3 years
   	14.09.98	Cash	24,000	10/-	10/-	0.36%	3 years
   	21.08.98	Cash	10,000	10/-	10/-	0.15%	3 years
   Mr. Chandrakeerthi(ii)	29.09.99	Bonus	6,44,000	10/-	Bonus	9.61%	3 years
   	22.10.98	Cash	5,000	10/-	10/-	0.07%	3 years
   	14.09.98	Cash	15,000	10/-	10/-	0.22%	3 years
   Delklip Investments P. Ltd.	29.12.99	Cash	32,800	10/-	80/-	0.49%	3 years
   Total			13,40,800			20.00%

   
   Note :
   
   
   1. All the above-mentioned shares will be locked in for a period of three years from the date of the allotment in the Public Issue.
   2. Mr. Chandrashekar, Mr. Chandrakeerthi, the promoters of the Company, have pledged the above shares to Industrial Development Bank Of India, as security for the working capital demand loan of Rs.1150 lakhs.
   3. The equity shares held by Promoters under the lock-in period shall not be sold/hypothecated (except for raising financial facilities from institutions/banks by way of additional/collateral security other than the primary security offered for the benefit of the company as mentioned above)/transferred during the lock-in period commencing from the date of allotment of shares in this issue.


8. The transactions between the promoter group during the last twelve months is given below:
   
   

   Date	No of Shares	Buyer	Seller	Price (Rs)
   15.10.1999	500,000	Delklip Investments Pvt Ltd	Chandrashekar	14
   15.10.1999	500,000	Delklip Investments Pvt Ltd	Chandrakeerthi	14
   07.01.2000	100,000	Deldot Employees Welfare Trust	Chandrashekar	10
   07.01.2000	40,000	Deldot Employees Welfare Trust	Chandrakeerthi	10

   
   Apart from the above, there have been no transactions between the promoter group in the equity shares of the Company that have been entered into during the last 12 months.



9. Deldot has not raised any ‘bridge loans’ against the proceeds of this issue.



10. The shareholders of the Company do not hold any warrant, option or convertible loan or any debentures that would entitle them to acquire further shares of the Company.



11. There is no buyback or standby arrangement for the purchase of equity shares offered through this Prospectus by the promoters, directors or Merchant Bankers.



12. Applications by NRIs/ OCBs can only be made on a non-repatriation basis.

Undertaking by the Issuer Company.

The Company has given the following undertaking(s):

1. that the complaints received in respect of the Issue shall be attended to expeditiously and satisfactorily;
2. that the company shall take necessary steps for the purpose of getting the securities listed in the concerned stock exchange within the specified time;
3. that the funds required for despatch of refund orders/allotment letters/ certificates by registered post shall be made available to the Registrar to the Issue by the company;
4. that the promoters’ contribution is from their existing shareholding and would be locked in as per the lock in table under the paragraph `Capital Structure'.
5. that no further issue of securities shall be made till the securities offered through this offer document are listed or till the application moneys are refunded on account of non-listing, undersubscription, etc.

OVER-SUBSCRIPTION

Minimum of 50% of the net Issue to the public will be made available for allotment in favour of those individual applicants who have applied for 1000 equity shares or less. The balance shares of the net Issue to the public shall initially be made available for allotment to individual applicants who apply for more than 1000 shares and other investors, including corporate bodies/Institutions/HUFs. The percentage of the shares available for individual applicants who have applied for 1000 equity shares or less may be increased in consultation with The Regional Stock Exchange depending on the extent of response to the Issue from investors in this category. The unsubscribed portion of the net Issue to any one of the above two categories shall be added to the other category and allotment/allocation made on a proportionate basis as per relevant SEBI Guidelines. In the event of over-subscription, in the process of rounding off to ensure allotment/allocation in marketable lots, the Company may make such adjustments in the basis of allotment, as may be necessary, in consultation with the Stock Exchange. As the basis of allotment is on proportionate basis, in the process of rounding off to the nearest multiple of 100, the Issue size may increase by a maximum of 10% of the present Issue.

No single applicant in either category can make an application for number of securities, which exceeds the securities issued under the paragraph `Present Issue through the Prospectus' i.e. 16,76,600 shares.

PRINCIPLE TERMS AND CONDITIONS OF THE ISSUE

The equity shares being issued are subject to the terms of this Prospectus, the terms and conditions contained in the application form, the Memorandum and Articles of Association of the Company, provisions of the Act and the RBI approval under the Foreign Exchange Regulation Provisios, other applicable acts and the Letters of Allotment / Equity Shares Certificates or other documents and the Guidelines issued from time to time by the Government of India and Securities and Exchange Board of India.

AUTHORITY FOR THE ISSUE

Pursuant to section 81(1A) of the Companies Act 1956, the present Issue of 16,76,600 equity Shares has been authorised vide Special resolution passed at the Annual General meeting held on September 28, 1999. The Board of Directors have approved the Issue by a resolution passed at its meeting held on January 7, 2000.

DESCRIPTION OF THE INSTRUMENT

Face Value: The face value of the Equity Shares will be Rs. 10/- per share. Issue Price: The Equity Shares are being Issued at a price of Rs. 80/- per share

TERMS OF PAYMENT:

Applications should be for minimum of 100 equity shares and in multiples of 100 equity shares thereafter. The Issue price of Rs. 80/- per share is payable on application / allotment and will be appropriated in the following manner-

	Towards Share Capital (Rs.)	Towards Premium (Rs.)	Total Amount Payable (Rs.)
On Application	Rs. 5	Rs.35	Rs. 40
On Allotment	Rs. 5	Rs.35	Rs. 40
Total	Rs. 10	Rs.70	Rs. 80

Where an applicant is allotted / allocated lesser number of equity shares than the applicant has applied for, the excess amount paid on application shall be adjusted towards the amount due on allotment and the balance amount, if any will be refunded to the applicant. No interest would be payable on application money pending allotment up to 30 days from the date of closure of the Issue.

Investors may note that as per SEBI circular no. RMB (compedium) 2(1999-2000) dated February 16, 2000 trading in securities of Companies making an initial public offering shall be in dematerialised form only. Applicants have the option either to receive the share certificates or to hold the securities with a depository. For details refer to paragraph on ‘Depository Option To Investors'

RANKING OF EQUITY SHARES

The equity shares to be Issued shall be subject to the Memorandum and Articles of Association of the Company and shall rank pari passu with the existing equity shares of the Company save and except that the holders of the equity shares now being issued will not be entitled to dividend, if any, declared or paid by the Company for any period prior to the date of allotment. They will be entitled to dividend, if any, declared or paid on the equity shares only in such proportion as is attributable to such part of the financial year after which such equity shares were allotted.

RIGHTS OF MEMBERS

1. Right to receive dividend, if declared.
2. Right to attend general meeting and exercise voting rights unless prohibited by law.
3. Right to vote on a poll either personally or by proxy.
4. Right to receive rights entitlement and be allotted bonus shares.
5. Right to receive surplus on liquidation.
6. Rights as provided under the Act.

INSTRUCTIONS FOR APPLICANTS

APPLICATION BY WAY OF STOCK INVEST:

Only individuals and Mutual Funds have the option to use Stockinvest for applying for equity shares now Issued in terms of this Prospectus. Stockinvest can be obtained from any Bank issuing such instrument in various denominations by making the necessary applications and depositing the amounts with the respective banks. The applicant using the Stockinvest should submit the application form to any of the Bankers to the Issue before closing of the subscription list along with the Stockinvest after filling in the appropriate amount.

The applicant may approach the issuing bank for Issue of Stockinvest of required denomination(s) for payment of application money.

1. The prospective investor, at the time of request for Issue of Stockinvest to the issuing bank may have to:
   1. Indicate that he agrees to abide by the terms of Issue and encashment of the Stockinvest.
   2. Give irrevocable authority to his bank to mark a lien for the value of the Stockinvest against the balance held in his savings / current /other deposit account.
   3. Agree that the issuing bank will not be liable for any damages or consequences arising out of the loss of these instruments.
2. Banker's lien on the applicant's deposit account will be automatically lifted when:
   1. A valid instrument is presented by the Controlling Branch of the Collecting Bank,
   2. The canceled Stock invest is surrendered by the applicant, or applicant has not received the advice of allotment.
   3. On execution of an indemnity bond in favour of the bank after the expiry of the validity period (i.e. 4 months) of the Stockinvest.
3. The Stockinvest should bear "Account Payee" and "Non - Negotiable" crossing and will be payable only to the account of the Issuer Company, i.e. "Deldot Public Issue". Stockinvest should be utilised by the purchaser(s) and the purchaser's name/name of one of the purchasers should be invariably indicated as the first applicant in the composite application form. Thus if the signature of the purchaser on the Stockinvest and the signature of the first applicant on the application form does not tally, the application would be treated as having been accompanied by a third party Stockinvest and is liable for rejection.
   1. Stockinvests are to be used by the purchaser(s) within 10 days of its issue and for this purpose the last day for use of the Stockinvest for submitting application to the Bankers to the Issue should be indicated on the face of the Stock invest with a notation "To be used before...."
   2. The Stockinvest will be issued to the applicant in blank format after authentication of the date of Issue by the designated branch. The Stockinvest duly completed should be submitted along with the APPLICATION FORM to the Bankers to the Issue.
   3. No refund will be made to those applicants using Stockinvest for payment of application money
   4. In case of non-allotment of Equity Shares, the canceled Stockinvest instrument will be returned to the applicant, who will have to approach the issuing bank branch for lifting of lien.

Applications with Stockinvest not fulfilling the above criteria are liable to be rejected. The applicant may approach the banks concerned for obtaining Stockinvest and detailed instructions for the same.

The applicant using Stockinvest should submit the Application Form along with the instrument to any of the Bankers to the Issue or their Branches mentioned in the Application Form. The Stockinvest instruments are payable at par at all the branches of the issuing bank and as such outstation Stockinvest instruments can also be attached to the Application Form, if the issuing Bank has a branch at the place of submitting the application.

The applicant has to fill in the following particulars:

1. Title of the account i.e. " Deldot Public Issue";
2. The number of equity shares applied for and
3. The amount payable on the equity shares applied for
4. The name and address where the Stockinvest should be returned in case of non-allotment.

The instrument should thereafter be signed by the applicant. Service charges, if any, for issuing Stockinvest must be borne by the applicant.

The applicant should not fill in the portion to be filled up by the Registrar to the Issue (right hand portion of the instrument). The Registrar to the Issue will fill up the right hand portion of the Stockinvest indicating the equity shares allotted to the applicant and also the amount calculated as follows:

1. In case of full allotment, the number of equity shares and the amount on the right hand side will be the same as the left hand side of the instrument.
2. In case of partial allotment, the number and the amount after adjusting allotment money, if any, payable in respect of equity shares so allotted, filled up by the Registrar (on the right hand side of the instrument) will be less than or equal to the number and the amount filled up by the applicant (on the left hand side of the instrument)
3. In case the allotment is nil, the number and the amount filled up by the Registrar on the right side of the instrument will be nil.

The above information is given for the benefit of investors and the Company is not liable for any modification of terms of Stockinvest or procedure thereof by issuing Banks.

Inquiries relating to Stockinvest may be addressed only to the Registrar to the Issue and not to the issuing bank.

Registrar to the Issue have been authorised by the Company vide a Board Resolution passed on January 7, 2000 to sign on behalf of the Company for realising the proceeds of the Stockinvest of the successful allottees from the issuing bank or to affix non-allotment advice on the instrument or to cancel the Stockinvest of the non-allottees or partly successful allottees who have enclosed more than one stock-invest. The cancelled instrument shall be sent back by the Registrar to the investors directly.

Only mutual funds and individuals are entitled to use stockinvest. There is a ceiling of Rs.50,000/- per individual per stockinvest for individual applicants. This ceiling is not applicable for mutual funds.

DISPOSAL OF APPLICATION MADE BY STOCKINVEST :

The procedure for disposal of applications made by cash/cheque/demand draft will apply mutatis mutandis to Stockinvest except the following:

DISPOSAL OF APPLICATION AND APPLICATION MONEY:

No receipt will be issued for application money. However, the Bankers to the Issue receiving the applications will acknowledge the receipt of the application by stamping and returning the detachable acknowledgment slip appended to each application.

The sum received in respect of the Issue will be kept in separate bank accounts and the Company will not have any access to the funds unless approval of the Regional Stock Exchange i.e. The Bangalore Stock Exchange, is obtained for the basis of allotment and listing approval from all the Stock Exchange where listing is proposed.

This document constitutes an invitation to an offer and the Company reserves the full, unqualified and absolute right to accept or reject any application in whole or in part and in either case without assigning any reason thereof.

INTEREST IN CASE OF DELAY ON ALLOTMENT & DISPATCH:

As far as possible, allotment/allocation of securities Issued to the public shall be made within 30 days of the closure of this Issue.

The Issuer shall pay interest @ 15% per annum for the period of delay beyond 30 days if the allotment has not been made within 30 days from the date of closure of the Issue (except to applicants applying through stockinvest).

SCOPE OF ACTIVITIES OF THE REGISTRAR TO THE ISSUE:

The Registrar to the Issue shall also be the Share transfer Agent and would also be responsible for all the post Issue activities pertaining to this Issue.

GENERAL INFORMATION

1. Joint Applications: An application may be made in single or joint names (not more than three) as mentioned elsewhere in the prospectus. In case of a joint application, refund pay order (if any) and dividend / warrants, etc. will be made out in favour of the first applicant. All communications will be addressed to the applicant whose name appears first and will be despatched to the first applicant’s address stated in the application form.
   
   
2. Multiple Applications: An applicant should submit only one application (and not more than one) for the total number of equity shares required. Applications may be made in single or joint names (not more than three). Two or more applications, in single and/or in joint names will be deemed to be multiple applications if the sole and / or first applicant is one and the same. However separate applications can be made in respect of each scheme of Indian Mutual Fund registered with SEBI and that such applications will not be treated as multiple application provided that the applications made by AMC/ Trust/ Custodians clearly indicate their intention as to each scheme concerned for which application has been made. The Board reserves the right to reject in its absolute discretion all or any multiple application(s).
   
   
3. Application under Power Of Attorney: In case of applications under a Power of Attorney or by limited companies or bodies corporate or societies, the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case may be, together with a certified true copy thereof along with a copy of Memorandum and Articles of Association and/or bye-laws must be lodged for scrutiny separately indicating the Serial No. of the Application Form, Name of the Applicant, Date/ Bank Branch where the application was deposited, Cheque/ Draft number, with the Registrar to the Issue at their Hyderabad address, within 10 days from the closure of the Issue. Failing which, the Issuer reserves the full, unqualified and absolute right to accept or reject any application in whole or in part and in either case without assigning any reason thereof.
   
   
4. Thumb impression or signature in languages other than the languages specified in the 8th schedule of the constitution of India must be attested by Magistrate or Notary Public or a special Executive Magistrate under his official seal.
   
   
5. All communications should be addressed to the Registrar to the Issue.
   
   
6. The applicant should mention the Application Form number on the reverse of the instrument through which payment is made.
   
   
7. Applicants are advised that it is mandatory for them to indicate in the space provided in the application form, details regarding their Savings Bank/Current Account Numbers and the name of the branch of the bank to which they want the proceeds of refund to be credited. Applications not containing such details are liable to be rejected.
   
   
8. Where an application is for allotment of equity shares for a total value of Rs. 50,000 or more i.e. 700 shares & above, the applicant or in the case of applications in joint names, each of the applicants should mention his permanent account number 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 will be liable to be rejected.
   
   
9. Having regard to provisions of Section 269SS of the Income Tax Act, 1961, the subscription against the equity shares application for an amount of Rs. 20,000 or more should not be effected in cash and must be paid for only by an A/c. payee cheque / bank draft / Stockinvest. In case payment is effected in contravention of the provisions, the application is liable to be rejected and application money will be refunded without interest.
   
   
10. A separate cheque/ stockinvest/ bank draft must accompany each application form.

DEPOSITORY OPTION TO INVESTORS

(Note : Investors may note that as per SEBI circular no. RMB (compedium) 2(1999-2000) dated February 16, 2000 trading in securities of Companies making an initial public offering shall be in dematerialised form only. Applicants have the option either to receive the share certificates or to hold the securities with a depository.)

1. A tripartite agreement has been signed between Deldot, Karvy Consultants Ltd. and National Securities Depository Ltd. (“ NSDL”) for Issuing the shares in the dematerialised/electronic form, at the option of the investors.
   
   
2. A tripartite agreement has been signed between Deldot, Karvy Consultants Ltd. and Central Depository Services (india) Ltd. (“ CDSL”) for Issuing the shares in the dematerialised form, at the option of the investors.
   
   
3. The investor has the option to seek allotment of equity shares in dematerialised and/or physical mode
   
   
4. Such an option if exercised should be indicated in the relevant blocks in the share application form itself.
   
   
5. Investors who wish to apply for equity shares in electronic form need to have at least one Beneficiary Account with a Depository Participant prior to the allotment. The sequence of names of the beneficiary account and the application form should be the same.
   
   
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, equity shares in the physical mode will be allocated to the investor.
   
   
8. Responsibility for correctness of applicant’s demographic details given in the Share Application Form vis-à-vis those with his/her Depository Participant, would rest with the investor
   
   
9. Shares in the dematerialized form can be traded only on Stock Exchanges having electronic connectivity with the NSDL/ CDSL
   
   
10. Separate applications for dematerialized/ electronic and physical equity shares by the same applicant (same first applicant in case of joint application) shall be considered as multiple applications and are liable to be rejected

TAX BENEFITS

The Company has been advised by M/s. Murali & Venkat, Auditors of the company, vide their letter dated 24th April, 2000, that under the current provisions of the Income Tax Act, 1961 and the existing laws for the time being in force, the following benefits, inter alia, will be available to the Company and the members.

A) Benefits to the Company

B) Benefits to the shareholders

PARTICULARS OF THE ISSUE

COMPANY, MANAGEMENT & PROJECT

HISTORY OF DELDOT

The Company was incorporated on September 14, 1993 under the Companies Act, 1956 with limited liability in the name and style of Deldot Systems Pvt. Limited by Mr. Chandrashekar. Mr. Chandrakeerthi, the other promoter, joined the Company as Managing Director on November 26,1993. The Company became a deemed public limited Company on June 30, 1998, vide the operation of Section 43A(2) of the Companies Act, 1956, the word `private was deleted from the name of the Company. The Company was subsequently converted into a public limited Company vide a special resolution at its Annual General Meeting held on September 28, 1999.

The promoters of Deldot started off with offering education and training facilities through a different entity i.e. Compu-Aid. Deldot was subsequently started in 1993 to diversify into hardware and software. It started with assembling personal computers and providing networking solutions during September 1993. It started the power protection division during April 1994 by partnering with American Power Conversion (APC) through Onward Technologies Ltd, Mumbai to act as resellers.

It then started an education center at its office at Jayanagar during September 1994. Subsequently, it received certification as a Microsoft Authorised Training Centre in 1997.

Its software products and services division commenced during May 1995. Data storage solutions were added to its product portfolio in July 1997. It established a software development center at Kanakapura Road, Bangalore in January 1998. Its US subsidiary was incorporated on November 17, 1999. During March 2000, the Company signed an agreement with PCDOCS ASIA LTD ( currently part of Hummingbird group, Canada) to partnered as an authorized integrator of PCDOCS Asia Ltd (currently part of the Hummingbird group, Canada FY1999 Sales US$ 166 mn) for the promotion of their imaging and document management solutions.

A combination of sluggish markets conditions plus a squeeze on availability of working capital during the second half of Fy1999, led to a slowdown in the growth rates posted. The liquidity crunch continued to severely hamper growth in during the first half of FY2000 as well. This led to a delay in the Company servicng its dues to Institutions/Banks/Finance Companies.

In order to tide over this liquidity crunch and to meet its fund requirements for its expansion plans, the Company raised additional capital from the promoters, venture capital funds, mutual funds, friends and associates . The company has placed a total of 21,22,400 shares at a price of Rs. 80/- aggregating to Rs. 16,97,92,000 between September 1999 to early January 2000. The money raised has been used to pay overdues, meet its fund requirements for expansion of its development centre and ongoing working capital requirements. The brief financial highlights of Deldot for the last five years are briefly outlined below:

(Rs in Lakhs)

Particulars	1999-2000	1998-1999	1997-1998	1996-1997	1995-1996
Sales	3140.97	2514.83	1980.16	1166.41	612.74
Total Income	3161.58	2533.81	1985.55	1170.51	613.98
PBDIT	690.39	325.26	195.74	110.20	47.73
Profit after tax	309.52	118.06	49.62	19.91	11.26
Capital(including Share Application Money)	502.74	58.10	50.10	40.10	40.10
Reserves & Surplus	1738.25	204.04	85.97	36.34	16.42
Net Worth	2184.79	262.14	136.07	76.44	56.52

MAIN OBJECTS OF THE COMPANY

The main objects of the Company as stated in the Memorandum are as follows:

PROMOTERS & THEIR BACKGROUND

Details regarding other directors

1. Mr. SHARATH C KONANUR, Director

Mr. Sharath C Konanur, Director, aged 35 years, is a Mechanical Engineering graduate, and holding a masters degree in mechanical engineering from Wayne State University, Detroit, Michigan, USA. After completing his education , he worked as a Research Scientist in National Aerospace Laboratory in Bangalore He was instrumental in developing, managing and implementing business and engineering solutions .Mr. Konanur has over 14 years of experience in the aerospace, automotive, and chemical industries. He has worked in diverse enterprises in various capacities, including executive management , Information Technology (IT) and Enterprise Resource Planning (ERP) projects.

2. Mr. MUNEESH CHAWLA: Director

Mr. Muneesh Chawla, aged 33 years, has been appointed by IL&FS Venture Corporation as a nominee director of Deldot Systems Limited with effect from April 18, 2000. He is an engineer from I.I.T. Kanpur and a Management Graduate from University of Texas at Austin. From 1989-1993 he was working in the Corporate Finance Division of the UB Group. In 1993, he joined IL&FS Investment Banking Group and was involved in a number of assignments relating to financial restructuring and capital mobilization. Presently he is working with IL&FS Venture Corporation Limited as Senior Vice president and is responsible for investment Strategies and supervising investments.

KEY MANAGEMENT PERSONNEL

The Board of directors are assisted in the operations of the Company by the following team of management personnel.

Name & Date of Joining	Designation	Responsibilities	Experience(Yrs.)	Previous Experience
D.G.Shivprasad BE - Mechanical 1994	Senior Vice President(Software)	Overall Management of Software Development	10	Onward Technologies
Girish Baliga B.Com 1.1.1994	Senior Vice President (Operations)	Sales, Marketing new products and establishment of new divisions, Customer Support & Integration	10	Onward Technologies
Vivekanada BE-MBA 1.1.1994	Vice President (Marketing & Sales)	Market development for new and Niche products - currently for Mass storage and Software Solutions	6	-----
Aravind H.R., BE - Mechanical 12.06.95	Vice President (International Operations)	Market development for Software Products development and Business solutions development in the International arena	7	Ashok Leyland
Krishna Prasad, BE - Mech  14.9.93	Associate Vice President	Associate Vice President Overall responsibility of the Imaging and Document Management Division	6	-----------
Subramanya Desai MSc, PGDSM 10.05.95	Head - Resources	Human Resources development and Resources management	6	Bellary Steels & Alloys Ltd, Western India Sugars & Chemicals Ltd
Ramesh Kumar Bhat, BCOM.,ACS 1.1.2000	Company Secretary	Secretarial and Legal	5	Shetron LtdSER Industries LtdBangalore Stock Ex. Ltd.
Praveen Kumar BE - Electrical 4.05.95	Territory Manager - Data Protection	Marketing & Sales - Data Protection	8	Zener Controls Private Ltd
Kiran L.S BE Electronics 15.12.99	Manager - Data Protection	Marketing & Sales - Data Protection (Bangalore)	8	Zener Controls Private Ltd
Subhash Baliga B COM, PGDBM 18.09.96	Sales Manager - Bangalore	Marketing & Sales - Networking Solutions (Bangalore)	6	Guestline Days
Sundar Raman, BSc. MBA 18.9.97	Manager - Human Resources	Personnel Management	14	TVS Electronics, Digital Equipment,Tata Unisys Information Management Resources
Vasanth Kumar BE Electrical 15.01.2000	Branch Manager - New Delhi	Branch activity management - sales and support	8	Measurement Systems (P) Ltd, Powerone Systems
Ranganath Shenoy BE - Mechanical 16.09.1999	Branch Manager - Chennai	Branch activity management - sales and support	5	Cerebra Integrated Technologies Ltd, C.R.Seals
Ajay Nathani, BE - Electronics 01.01.98	Branch Manager - Mumbai Branch	Activity management - sales and support	6	Sara Electronics
Mohan Sharma, BE - Electrical 17.10.97	Branch Manager - Hyderabad	Branch activity management - sales and support	7	ASCII Computer, PCL, Lintas International, Sanver Systems

CHANGES IN KEY MANAGERIAL PERSONNEL

There have been no changes in key managerial personnel, over the last one year, except as outlined below:

S.No	Name	Designation	Date of Joining
1	Ranganath Shenoy	Head Branch Operations, Chennai	16 / 9/ 1999
2	Vasanth Kumar	Head Branch Operations, New Delhi	15/ 1/ 2000
3	Kiran L S	Manager, Data Protection, Bangalore	15/ 12/ 1999
4	Ramesh Kumar Bhat. B	Company Secretary	01/01/2000

PROJECT INFORMATION

Setting up a subsidiary in the US at Detroit, Michigan

The Company has set up Deldot Inc., a subsidiary in the US at Detroit, Michigan. The subsidiary was incorporated on November 17, 1999. The Company has received RBI permission (vide its approval letter no. BGWRB 20000186 dated May 15,2000) to remit, an amount of USD 6 lakhs (i.e Rs. 264 lakhs, Conversion rate: 1US$=Rs.44/-), towards subscription of equity capital of Deldot Inc. This is proposed to be funded through the Issue proceeds ( US$ 4.03 lakhs=Rs.177.32 lakhs) and internal accruals (US$ 1.97 lakhs=Rs.86.68 lakhs). The breakup of the issue funds utilisation towards the cost of setting up the US Subsidiary and expenses for operations over the next two years is estimated as follows:

Rs. in Lakhs

Details	FY2001	FY2002	Total
Office Equipment and Furniture	19.28	00	19.28
Manpower Costs	77.54	25.84	103.28
Establishing Costs	41.00	13.66	54.66
Total	137.82	39.50	177.32

Setting up branch offices in Europe, Australia, Middle East and Singapore

Deldot has drawn up plans to set up branch offices in Europe, Australia, Middle East and Singapore. These offices are being set up to supplement the marketing efforts of its existing operations and to meet the increased requirements of a global marketing infrastructure. The total cost of setting up these offices and expenses for operations over the next two years is estimated as follows:

Rs. in Lakhs

Details	FY2001	FY2002	Total
Office Equipment and Furniture	56.00	00	56.00
Travel & Communications	40.00	40.00	80.00
Initial Expenses	12.00	00	12.00
Establishment Expenses	104.00	48.00	152.00
Total	212.00	88.00	300

The Company is yet to identify the locations of the overseas marketing offices in the above locations. The Company has also not applied to the RBI for permission to set up the same. The Company does not anticipate any problem in getting the permission and would file for the same at an appropriate time.

Expenses of the Issue

The total expenses towards statutory and marketing costs for the Issue, including the fees to be paid to various agencies involved, are estimated at Rs.160 lakhs, which will be funded from the proceeds of this Issue. The issue expenses consists of underwriting fees, brokerage, fees payable to Lead Managers/ Registrars/ Bankers to the Issue, printing & stationery expenses, advertising & marketing expenses & all other expenses to get the shares listed on the stock exchanges.

SCHEDULE OF IMPLEMENTATION

The schedule of implementationfor the project, as per the Company’s estimates is

Activity	Commencement	Completion
Completion of shifting to new Corporate Office(leased)	February 2001	June 2001
Equipments/Facilities for Corporate Office cum Development Center	January 2001	June 2001
Setting up US subsidiary/ Investing in it's operations	February 2001	April 2001
Setting up overseas subsidiary/ Investing in their operations	September 2000	April 2001

BUSINESS OUTLOOK AND OPERATING ENVIRONMENT

(Source for the entire section – www.NASSCOM.org)

Over the last decade, the Indian IT software and service industry has grown from strength to strength. Industry revenues have grown eight-fold, from a mere US $50 million in 1988-89 to US $3.9 billion in 1998-99. In the last five years (1994-1999), the Indian IT Industry has recorded a CAGR of more than 40.5%, which is almost double the growth rate of the IT Industry in many of the developed countries

In 1998-99, the Indian IT industry is estimated to have earned revenues of Rs 24,781 crore or US $6.1 billion, a growth of 32.79% over the revenue of Rs 8,662 crore generated in 1997-98. This high growth rate has been achieved in spite of a slower growth of the Indian economy, an uncertain political situation and a not-so-healthy GDP growth

Indian IT Industry Overview

(Figures in millions)	1994-95		1995-96		1996-97		1997-98		1998-99
	Rs. m	US $m	Rs. m	US $m	Rs. m	US $m	Rs. m	US $m	Rs. m	US $m
Software
Domestic	10,700	350	16,700	4,90	24,100	670	35,100	950	49,500	1,200
Exports	15,350	485	25,200	734	39,00	1,083	65,300	1,750	109,400	2,800
Total	26,050	835	41,900	1,224	63,100	1,753	100,400	2,700	158,900	3,500
Hardware
Domestic	18,300	590	35,600	1,037	37,800	1,050	44,970	1,205	42,350	10,260
Exports	5,500	177	1,200	35	10,300	286	7,430	201	155	4
Total	23,800	767	36,800	1,072	48,100	1,336	52,400	1,406	42,505	1,030
Peripherals
Domestic	4,590	148	6,720	196	6,530	181	8,330	229	13,600	329
Exports	180	6	210	6	520	14	680	19	730	18
Total	4,770	154	6,930	202	7,050	195	9,010	248	14,330	347
Training	3,310	107	4,970	145	6,600	183	9,420	263	12,500	302
Maintenance	4,400	142	5,920	172	6,560	182	8,240	221	9,780	236
Networking & Others	1,120	36	2,400	710	5,590	156	7,150	193	9,800	237
Grand Total	63,450	98,920	2041	2886	137,000	3805	186,620	5,031	247,815	6052

Future Growth: It is expected that in 1999-2000, the Indian IT industry would further improve its performance and is forecast to gross revenues of Rs. 361 billion or US $8.39 billon. The software and services industry would continue to command more than 60% share of the total revenues of the Indian IT industry & exports are estimated to reach US$ 3.9 billion. It is projected that during the year 2001-02, the software industry in India would be worth close to Rs 55,500 crore, with exports contributing Rs. 37,500 crore.

PRESENT ACTIVITIES OF DELDOT

The business model of the Company enables each of the divisions leverage upon the capabilities of the other Divisions to offer a total solution to a customer. Further each of the divisions also has the opportunity to leverage on the client relationships established by other groups.

The Company currently has its branch offices in Bombay, Hyderabad, Delhi, Chennai, Cochin and Coimbatore.The business segmentation of total revenue for 1999 - 2000 is outlined below:

Division wise Breakup - Sales Revenue

Divisions	Rs.lakhs	%
Network Solutions	969	31
Data Protection	1365	43
Software Solutions	642	20
Training & Education	165	6
TOTAL	3141	100

Rs.lakhs

Divisions	1996-97	%	1997-98	%	1998-99	%	Rs.lakhs	%
Network Solutions	1,003.00	86.32	1,525.00	77.02	1,232.00	48.99	969.00	30.85
Data Protection	35.00	3.00	119.00	6.01	453.00	18.01	1,385.00	43.46
Software Solutions	23.00	1.97	217.00	10.96	629.00	25.01	642.00	20.44
Training & Education	105.00	9.91	119.00	6.01	201.00	7.99	165.00	5.25
							3,141.00	100

The business model of the Company so far has been totally focused on the domestic market. With the development of the above software products and having established itself in services through solutions delivered to domestic clients, the Company decided to additionally focus on offering its solutions to International customers. The US subsidiary was subsequently set up for marketing its services in the US markets. A Director and another senior employee currently manage the operations. It is in the process of recruiting people in the US for marketing its services and solutions. It has tied up with Paskon Inc., a US company for marketing its services and products.

The Company currently has its branch offices in Bombay, Hyderabad, Delhi, Chennai, Cochin and Coimbatore. The Company has grown from a team size of less then 40 employees in 1994 to its current size of 219 employees at the end of March 2000. The Company has built a team of experienced and committed professionals in each of its business divisions. In line with its growth plans it has drawn up a people growth plan and is in the process of identifying and recruiting additional manpower. The Company strives to provide a challenging environment for its employees and with other attractive benefits, it is confident of attracting and retaining the requisite talent for its growth plans.

Business Divisions

Network Solution Division:

Deldot acts as a comprehensive solution provider to consult, design, develop, implement and maintain any networked infrastructure, homogeneous or heterogeneous, LAN or/and WAN to best suit customer requirements. Deldot is not in the business of merely acting as a reseller for hardware products. It solicits business only where it can supply the desired/ required hardware components as part of providing a total network solution for a client. However for existing client relationships, the Company caters to all requirements, individual hardware or network components.

Activity Spectrum:

Consult	Educate customers about the different technologies and suggest solutions specific to their needs.
Design	Designing solutions to suit every need and budget.
Deliver & Implement	Deploy the network infrastructure on schedule.
Maintain	Maintaining the installed network to ensure near zero downtime.

Products and Solution Matrix:

Product category	Products	Principals / Brands
Micro computers	Servers, Workstations and Notebooks	Deldot, IBM
RISC Based Systems	Servers, Workstations	Sun SPARC
Network Passive Components	UTP, STP and Fiber, Outlets and interfaces	MOLEX – MODTAP
Network Active Components	Hubs, switches, Routers, Modems Adapter Cards and accessories	Intel, 3COM, Cisco
Operating Systems and Software Tools	Win 98, Win NT, SCO Unix Intranet- ware, Developer 2000	Microsoft, Sun Microsystems, Novell, Oracle, SCO etc.
Power Protection and Management	Server and Workstation Backup, protection and management products	APC – Back-pro, matrix, Smart, Symmetra and accessories

Deldot is positioned between the branded MNCs and domestic operators. Major competitors are HCL, Zenith, Wipro Acer, Compaq, etc. It act as a reseller for various hardware vendors like 3Com, Cisco, Multi-Tech Systems, Molex Premises Networks. It integrates PCs/ servers under its own brand name and also distributes products of other vendors. It has received a ISO 9002 certification from BVQI(BVQI Bureau Veritas Quality International) for its Computer System Integration with service and support activity.

Some Case Studies of Networking solutions provided by Deldot:

Example 1: This was for an organisation into research and study of Food Technologies, head quartered in a 12-acre plot with departments like R&D, Administration, Purchase, Library, Finance, Laboratories & Chemical testing department spread across the vast area. The entire organisation was networked with a thick Ethernet cable backbone and a thin Ethernet cable for local network in each department. The users were majority of 486 computer users and faced the problem of loss of data loss and connectivity problem. The entire organisation worked on projects, which required seamless integration and work flowworkflow between departments with uninterrupted flow of data and information. The campus had a single point connectivity for to the Internet. Therefore,service and people had to travel quite a distance for accessing the same and as there was one single machine users had to wait for their turn, which resulted in loss of manhoursman-hours and productivity. and also man-hours. The organisation was looking for turnkey implementation of the entire networks and to provide an efficient software solution for mailing and Internet access.

Solution: An entire campus wide network on an 4 KM run of 62.5/15 micron outdoor armored Fibre cable backbone with internal 10/100 UTP network with machines having a minimum speed of Pentium II 400 Mhz. The server was configured with exchange software for internal messaging service and also Proxy server software installed for random Internet access.

Benefits: The entire campus which was interconnected had the smooth flow of information with internal messaging service helping the user to save time. in communicating either by travelling a long distance for approvals etc. thus saving time and money for the organisation. The backbone which was installed helped to reduce data loss, and also in speedier speed up information processing of information and research activity.

Example 2 – For a Premier institution in India: The campus is today connected with a fibre optic outdoor cable connecting all the building blocks in the campus. Deldot has provided pre installation consultancy and also handled the complete installation and commissioning of the entire network consisting of high end servers for the knowledge centre and around 100 personal computers for the entire automation of the campus. The solution benefited in total automation of the campus, which helped in better productivity of the staff. The knowledge centre boosted online information gathering by the users, which saved time and also provided instantaneous information of journals, white papers etc. Complimented by the Data Storage Division of Deldot this network is used by hundreds of students. The solution resulted in total automation of the campus, which helped in better productivity of the staff.

Example 3 - Company engaged in development of software for the global automobile industry of the world - The client is developing software for virtual crash analysis for various fortune 500 companies of the world. It wanted a network, which would support the entire heterogeneous server, cluster and also have the best performance at the workstation level. Deldot started by having a site study done and understanding the problem faced by users which, was diagnosed as intensive high network traffic and using use of high end graphics at the workstation level without having a switched network on the server side. Deldot installed a switched network with the 3Com 3900 series switch, which provided 100 Mbps through-put to the servers and also complemented with 3Com PS 50 hubs for port switching capability. The network today functions with more than 150 workstations and 6 servers to it’s best.

Example 4: The only wired school in India with its Intranet - Deldot started its work in a preliminary stage by acting as a technology implementation partner for the entire project. The Network Solution Division provided the consultancy service for the implementation of the entire project. Deldot designed the entire campus network with fibre connectivity and using an enterprise Deldot Zeon server and also commissioned 50 personal computers all across the campus. The server housed the Intranet software, a School ERP software package developed by Deldot software solutions group, which complemented the working of the entire wired school.

Data Storage Solution Division:

Huge quantum Large amounts of data are currently stored electronically that contain vital business and mission critical information. Storage, retrieval, and management of huge volumes of data thus become the most important activity in any computer network.

As enterprises move to IT intensive processes, the volumes of data being generated consequently increases manifold. manifold. Several applications like ERP, data warehousing, data mining, e-commerce solutions revolve around the availability of data. The generation of data has increased manifold. With with paper being replaced by digitized documents and with numerous multimedia applications/ contents,. the generation of data has increased manifold. With these Due to iIincreasing volumes of data and the increased importance of such data to business processes, users require specialized solutions to ensure optimal availability and accessibility of data. With businesses turning being functional 7 days by 24 hours module protection of not just the stored data but the online access of data on the wire data is critical. IT spending on data storage solutions as a percentage of total IT budgets has been increasing over the years.

Data storage solutions are a unique combinations of reliable systems, tools and procedures that enables protection of data / information and enhancing business efficiency by having the right information at the right time with the right people. The challenge of data storage management requires an end-to-end integrated solution that can handle vast amounts of data distributed on complex enterprise networks. This can be met only by strong partnerships that provide expertise and resources across a wide range of disciplines.

Deldot offers a wide range of on-line to off-line solutions in Data Storage.

Any storage solution must be flexible, scalable and configurable to meet the needs of an application. The solution offered depends upon a number of factors like access time, number of transactions per minute, permanency of data etc. For example, where access time is critical (below 15 seconds), an online storage solution is required, where access time is not so critical (30-60 seconds)–, as in case in –process data (data that is constantly updated), a nearline solution is required and where access time is not important (more than a minute) – an offline storage device is required.

Starting from the assessment of the customers’ exact requirements both current and future, Deldot offers a comprehensive range of solutions that are given below:

Products and Solutions Matrix:

Product Category	Product Variants	Principals and Brands
On-line Storage	PCI RAID Arrays, Fibre Channel Arrays, Network Attached storage RAID servers, SANs	RaidTec Corporation
Near On-line	MO Drives, Towers and Juke Boxes	Micro Design International, Cygnet storage solutions, Plasmon IDE
Near Off-line	CD ROM/DVD Drives, Towers and Juke Boxes	Micro Design International, Cygnet, Plasmon IDE, Disc
Off-line	Tape Drives & Libraries	Plasmon LMS
Manageability Software	NT, Unix & Other Platforms	Micro Design International, Tracer Technologies Corp., HIARC
Power Protection	Line Interactive Networked Power systems, Data centre power protection systems, facility power protection systems	American Power Conversion (APC) Inc.

A skilled technical team deploys and supports these complex, mission critical systems nation-wide. Deldot has focused on this niche segment and is currently amongst the few vendors to offer a complete suite of products to address mass storage solutions. It also offers onsite service and support, including field replacement. With an increasing demand for such solutions, the Company proposes to set up a Proof of Concept Centre at its corporate office – to function as a test centre and to showcase the entire suite of solutions.

Explanation of Terms:

RAID – Redundant Array of Independent Disks – allows the storage of the same data in different places on multiple hard disks. Storing data redundantly increases fault tolerances.

Magneto Optical (MO) Diskette/ Drives – Slightly larger than the conventional 3.5” floppy disk, employs magnetic & optical technologies to obtain ultra high data density, with a storage capacity ranging from 100 MB to several GB of data. Access is slower than that of hard disks but faster then floppy disks

Jukebox – Is an array of either CD ROMs (read only facility)/ DVDs (Read & write) or an array of MO Disks (read & write)

WORM: Write Once Read Many – Device used to write information to a master disk from which CD ROMs are replicated. Once written, data is available to users only on a Read Only basis and cannot be erased.

Fibre Channel – A technology for transmitting data between computer devices at a data rate of upto 1 Gbps (one billion bits per second)

Tape/ Tape Drive – Tape is an electromagnetic storage medium that typically is both readable and writeable. A tape drive is the device that positions, writes from and reads to the tape. A tape cartridge is a protectively encased tape that is portable.

DVD – Digital Versatile Disk is an optical disk technology that can hold upto 17 GB of data. DVDs can be either read only or read & write.

Storage Access Area Networks(SAN) – A high speed special purpose network that interconnects different kinds of data storage devices with associated data servers on behalf of larger network of users.

Network Access Attached Storage (NAS) – A distinct way of using network technology to directly attach storage devices to a local area network and multiple servers. NAS is host/ operating system Independent.

CASE STUDIES:

Example1: Data from internal reports and customer bank statements represent the lifeblood of an organisation. However when archived on paper or microfilm, they consume significant portions of a Corporations information technology budget but offer little opportunity for improved service:

XYZ is a financial services company headquarters in Mumbai. The company operated more than 100 banking offices in India and Overseas. The routine XYZ call is from a customer who is viewing a bank statement or making a inquiry into his financial details and history. If the situation required viewing the actual bank statement, the customer service representative had to make a microfilm request. Upon its request, a research file had to be created. By that time, the customer had usually called branch. This process was expensive requiring high volume of customer call-backs and maintenance of a micro-graphics department, not to mention the challenges for customer service. XYZ wanted all their data i.e., extremely distributed bank statements and internal company reports to be on line and accessed in real time mode. They also did not want a proprietary data house and systems that could not be scaled in the future. Moreover all their critical IT Infrastructure was to be protected by scalable, redundant, reliable power protection systems to achieve their objective of 99.999% uptime.

Solution: Imaging, Workflow, Document Management, Data Storage and Power Protection systems along with the incidental Networking and application systems was recommended.

Infrastructure: With their existing IBM Mainframe the COLD solution (Computer Output to Laser Optical Disk) comprising of a 72 GB Plasmon Rapid Changer Jukebox, a Cygnet WORM Jukebox of 300 GB capacity was positioned. The database is Oracle, where highly compressed report and statement data from individual reports were stored and managed. The compressed documents are retrieved and displayed on each Pentium PC. All the IT infrastructure is protected by redundant hot swappable APC Symmetra UPS system and Facility IT infrastructure protected by large, reliable APC Silcon UPS Systems.

Benefits: COLD immediately eliminated the high cost of on-going microfilm development, printing and distribution. All users from the office to back office operations to management can access large volumes of information online in near real time. The system saved in microfilm development. The cost of labour, paper and time to produce hard copies disappeared.

Example 2: Leading Government Research Institute: Complete NearOffline Storage Solution using a 480CD Plasmon JukeBox with 6 CDROM Readers attached to a High Performance Deldot Windows NT Server with SCSI Express – CDROM /DVD JukeBox Mangement Software to Control and Mange the CD JukeBox

The Electronic Library of the customer had over 400 Plus Users and this solution met the requirements by providing a method of Controlling, accessing and organizing their Research documents and data resources. With this Solution all of the data resources are now available to a host of users who now access the information from their desktop throughout the organization. To further enhance performance a 28CD Direct Network Attach CDROM Tower is also installed to facilitate access of frequently used CDs. A title management software, Titleware, was loaded on the clients, which offers applications and asset management for all users and media resources wherever they exist on the network and makes administrative tasks consistent throughout the organization. Titleware catalogues titles in a central or distributed database and track the CDs as they move around the network, generates reports of statistics, inventory and usage, enhances security, limits the number of concurrent users, accesses and launches applications through a catalog or toolbar, installs application without searching through Explorer for setup files.

Example 3: Leading Training & Industrial Engineering Institute at Mumbai: Complete NearOffline Storage Solution using a CD Content Server with a 18GB Hard Drive, attached directly to a Network, Providing access to more than 27CDROMs at Hard Disk access Speeds.

This Solution has eliminated the need for each PC to have a CD-ROM Reader thus reducing System Costs. In addition all subscription journals, databases, encyclopaedias are mounted on the network. The method is convenient because the disks are always available to them. The CD Content Server has also been used to store distribution software, allowing students to connect to the Content Server to install the desired Software.

Software Solutions Division

This group offers software development services and is also involved in development of products.

PRODUCTS

Deldot has focused on building products based on feedback from its marketing team. The marketing team forms an integral part of the entire development process constantly giving feedback on customer domains. The design and development team works on building prototypes and total solutions around this feedback. Currently the division has developed two products – aligned to which it offers to build customized solutions addressing the users requirements. The details of these two products are:

a.SMILE – Simple Modular Integrated Learning Environment: SMILE is an integrated web based learning environment.

The focus of all education-ware is the learner. Any individual learns at his own pace and reasons of his own. A learner centric education framework is the need for such a focus to be accurate. In a growing organisation, for every employee to be highly productive and contributing, it is necessary to keep abreast of the latest developments in all the fields of activities that require organisations to stay competitive. The pace at which the learning process has to complete the cycle and restart is blinding.

SMILE, a concept developed by Deldot, is a technology based education system. It promotes the concept of ‘anywhere learning’ and ‘anytime learning’. It brings together the teachers, learners, course content, and controlling authority on the World Wide Web. It addresses the need for a learner centric approach to content delivery. It understands the need for a integrated learning community built around content that is delivered contextually than in a monotonous class room centered monologue.

SMILE is essentially built on a number of modules, each of them taking care of individual streams of activities in a given learning environment. These activities can range from monitoring student progress, administering tests, feedback, the curriculum and communication between teachers and students to co-ordinating all the activities of the school. It adds value to the role of a teacher by providing him with a tool to deliver content in a customized manner to each one of his/her students and utilize the time left in pursuing meaningful discussions and clearing doubts than become a lecture delivering machine. Developed in two dependent streams of delivery mechanism and content, SMILE can be used by technological universities and other universities for deployment in their campuses as well as across the WWW Internet by distance education programs. Schools and other informal learning communities, to exploit the Internet for their objective maximization, can also use SMILE.

Some of the key modules of SMILE are as following:

Activity manager: The activity manager is used to monitor student progress in the learning course.

Assessment Module: Enables a user to take on assessment tests to monitor his learning.

Content Manager: Allows storage of information in diverse formats like group ware, web formats and databases

Profile Manager: All information about registered users- students and instructors is stored in a user profile. This storehouse of information is resident on the server as database tables.

Client and Server Scheduler: The scheduler component uses the profile information of the user, content management component and metadata of the containers to deliver the right content to their designated users for specific periods and thus maintain a disciplined learning.

Communication module: Facilitates communication between students and instructors, among students, instructors and student groups belonging to the environment. This computer-mediated communication decreases the sense of isolation in a web-based classroom.

A component based integrated application -SMILE has been implemented on both the popular Windows operating systems and the universal open systems through COM/ DCOM Java and CORBA.

SMILE is approximately a 20 man-year research and development effort. Currently, a comprehensive learning material repository on Power Electronics has been developed with in house capabilities in house. Similar knowledge repositories are being created on Networking, Storage Technologies and other such emerging fields that formto form a part of all major university courses, which are prime contents for distance education. SMILE deployment mechanism is in the alpha testing stage.

SMILE, can also be used as a comprehensive knowledge management (KM) tool. With SMILE being a web technology product, it seamlessly integrates into the corporate business system. While in the case of a learning environment deployment of content is restricted to a select few, in case of being used as a KM tool each employee of the enterprise can be allowed to provide inputs. With the inclusion of a powerful search engine that can span the knowledge repository and an additional module to take care of authentication of content, SMILE serves as a knowledge management tool.

The revenue stream for the Company will be through direct license sales and through implementation revenues. A customer may provide the Company the content, which can be ported on to SMILE or the Company may develop the content itself based on its requirement/ depth.

b. SCOPE: SCOPE stands for Software for Customer Oriented Product Education. It is a tool for companies to harness the benefit of multimedia and Internet technologies to remain in touch with the customers and benefit from the same. SCOPE is primarily a tool to communicate with the customer. It is an integrated information management system that seamlessly connects the customer to the business system with transparent operational complexities.

Product education material as of today has remained a post sale support material. SCOPE allows a user to provide a pre-sale product education framework to help the buyers make-informed decisions – extending the same to a life long support tool.

Apart from aiding in market communication activities, SCOPE can also help in the management of the entire customer support and communication based activities such as trouble shooting, dealer personnel training, corporate communications, spare parts management and the like. Encompassing the entire gamut of products, the entire customer – enterprise interface can be managed through SCOPE, implemented with the technologies such as DHTML, COM, DCOM, CORBA and other multimedia technologies to communicate effectively.

Case Study: The Company has built a solution for an MNC automobile manufacturer in India using SCOPE.

Requirement	People were not informed about their company's new models. Details/New features about a particular model of car do not reach the customer. Need to Impress customers to buy their products. Talk back to the customers who have visited the showroom for sales promotion and feedback.
Solution	Hosting a website that details the company and their new models also enabling booking over the web. Multimedia content ware, which gives details for a chosen model. The multimedia content ware presentation allows a customer to view his line of interest/model. Self-running multimedia demonstration of their various models. Information database about the customers who have visited the showroom.
Technology	HTML, DHTML. ADOBE PHOTOSHOP, 3DMAX STUDIO. ASP & SQL Server. Manpower Effort , Windows NT, Internet Explorer.
DurationManpower	Effort 12 man months

Status of trademarks of Deldot's products

The trademarks for the company's products - SMILE - Simple Modular Integrated Learning Environment and SCOPE - Software for Customer Oriented Product Education are not yet registered in the Company's name. The registration formalities are in process. The Company has filed an applications dated January 28, 2000 with the Government of India Trademarks Registry, Madras.

Software Development Services

The software development team has focussed on deploying solutions based on web technologies and have built up skill sets on the same. All the solutions offered are developed for the web where in the user interface is always a browser, though the solution may deploy other technologies as well. The team has built skill sets to offer solutions in the domain of Manufacturing, Retailing and Education, besides offering general development services. The Company has built systems and methodologies based on established models to develop a complete life cycle project – from assessing a user’s requirement for implementation and support.

The team’s capabilities include:

• COM /DCOM /ActiveX components development for a multi tier Client Server computing through VC++ and VB

• Development of Bean Component based applications in JAVA with RMI and CORBA middleware.

• Development of WEB based Multimedia content with DHTML, XML, VB Script, JAVA Script, Direct Animation and Direct Media

• Development of web based Intranets/ extranets with integrated Quality

• Management Systems that is ISO 9001 or SEI CMM standards compliant – on heterogeneous corporate networks.

• Web content development for supplementing the marketing/ supply chain management efforts by integrating web with the marketing/ procurement strategies.

• Object oriented design and components development for multi tier Client/Server computing.

• Systems software for devices integration with C++/ Visual C++

• Domain Solutions and Consulting

Examples of Projects Executed

Example 1: Projects for a leading two-wheeler manufacturer in India.

The initial project given to the Company was to develop a multi lingual corporate training software package on the Principles of 5S – which is a quality concept – when practiced enhances productivity and employee morale. With a very short brief and within a short deadline, the Company developed the same. Subsequently a solution to integrate audit reports with the multimedia training content was provided.

The next project was to provide a solution for integrating the attendance monitoring system with its human resources systems. Communication software was developed to update records on a centralized database system with inputs from the attendance recording system. This solution enabled the client to sharply reduce the number of people dedicated to monitoring attendance.

Subsequently, Deldot has executed other projects for their manufacturers human resources systems and its quality management system. For the human resources systems, its solution has done the following:

• Enabling human resources information online and integrating all other activities related directly and indirectly to employee information.

• Provided a single window interface to all the modules.

• Provided for leave application and approval through the single window interface.

• Provided for appraisal and career development to be carried online through the interface.

• Integrated training and interactive multimedia content ware for subjects/topics on which training is conducted often.

On the total quality management systems front, it accomplished the following tasks:

• Provided an integrated quality management information system for the standards followed at the workplace.

• Suggestion management system online, utilizing the same interface to enter suggestion, approve suggestions, and award the person who made the suggestion.

• Integrated the award scheme to the employee’s payroll.

• Generated reports, award coupons and certificates.

• Integrated quality control circles process monitoring through attendance recording systems.

• Generates multimedia presentation material for quality control presentations.

• Made the problem solving process of cross-functional teams to interact with the interface and track the process and status of the process.

The solutions have been developed using the following technologies:

ASP, DHTML, HTML.
Microsoft SQL Server 6.5.
Internet Information Server 4.0.
Microsoft Visual Basic 6.0, Visual C++ 6.0.

The Company continues to provide solutions to the client on an ongoing basis. The total effort involved in executing projects for this Company is estimated to be 7 man years over the last 1.5 years.

Example 2: IT Solution for a Futuristic Residential School

The Company has developed a total IT solution to an upcoming residential institution. Deldot’s involvement in the project, termed School-Intranet, encompassed providing solutions in the areas of network design up to the installation; Sizing of Servers, Computer systems, Data Storage Devices, Printers, Scanners, Uninterrupted Power Supply systems, and their deployment; and development of the Intranet Software that optimally employs all the hardware installations.

The project began with the system study, capturing customers’ requirements, drawing-up of detailed specifications, computation of the average network traffic, followed by system analysis and design for software development.

The initial phase of development of Intranet software began with design and implementation of four modules. These catered to immediate need of the school. They were Admission Module, Knowledge Enrichment Module (which had word-a-day, general knowledge, curiosity corner, humor-bank, today’s news, sports update, technological news, notable personalities, etc., as sub-modules), Personal Parlor (which included digital personal dairy, address-book, scheduler, task reminders, expenses tracker, personal information, as sub-modules), and Reports and Feedback Module (that primarily addressed grievances, suggestions for improvement, etc.). These catered to the schools immediate needs. of the school.

The Second phase involved, Timetable Management, Test and Assessment Management, Library Management and Health Management. Since, from the start, the software was designed and developed to exhibit modularity, modules coming under this phase could be easily integrated with that executed under phase-1. Major aspects of school functioning were now made on-line, manifested by smooth proceedings of all functional elements. This next order was for a facility to deploy educational material on the Intranet.

The next phase covered Notes Module, Attendance and Leave Management and Appraisal Management. Through these, the software touched upon human resources aspect of the school. Acceptance of the above three modules led to the fourth phase of School-Intranet.

The fourth-phase encompassed development of a system that aided administration of the school-Intranet package, in order to respond to changing needs. The modules covered here included login module and administration module. Based on the specific requirement from the client to provide end-to-end connectivity within the communication network, an Extranet module was developed. This enabled the parent to monitor their child’s progress, be it health, academic, emotional or extracurricular related matters, by simply logging-on to the school’s web-site.

The solutions have been developed on a three-tier application architecture using the following cutting-edge technologies: HTML, DHTML as front-ends; component objects in VB and VC++; VBScript, JavaScript to provide functionalities for Active Server Pages (ASP) on Remote Scripting and MSQL 6.5 Server as the backend.

Example 3:

Client	A Leading Retail outlet.Requirement Customer registration management. Order Processing. Payment management. Stock/Inventory Management.
Solution	Customer registration and approval of the same over the Internet. Customer order booking of items/materials over the WEB. Indent Process for outlets Payment through Internet – E Commerce (payment gateways) Stock and Inventory management system for the customer as well as dealers/outlets reflected over the WEB for customer order processing Online Product information for customer to know details of it before placing into the order basket.
Technology	HTML, DHTML. ASP / JSP, JDK 1.2, Visual Basic 6.0. SQL Server 6.5. Windows NT 4.0,Internet Information Server 4.0,Internet Explorer 4.0/5.0.
DurationManpower Hours effort	18 Man Months – Completed

Example 4

Client	Client A State Government Department.
Requirement	Digitization of all survey maps belonging to the state for a particular Taluk Software to manage all such records, with the client who accesses the records spread all across the state.
Solution	Solution Access to all records is from a single centralized database server, connected to all the clients via a public network system. Security: Each client is given the necessary access to manipulate (add, edit and delete entities) those records falling under his jurisdiction, while storing critical information such as date/time of change and change-requisition details.
Technology	The software is developed as a three-tier Client-Server architecture, with software components developed using VC++ and VB5.0 Server Operating System: WindowsNT 4.0 (Scalability and Robustness) Client Operating System: Windows95/WindowsWorkstation. Database Server: MSSQL7.0 (Greater compatibility with other Microsoft products/technology used in the project, such as WinNT, MTS) Server: Microsoft Internet Information Server 3.0
DurationManpower Hours effort	One Man Year – Ongoing Project

Training & Education

The Company had originally started its operation as a training institute in the name of Deldot Education (DE). DE has also acquired the status of Microsoft’s Authorized Technical Education Center and Prometric testing center in 1997. Due to its recent tie-up with PCDOCS Fulcrum ( Hummingbird) tThe center has also started support level courses in the imaging and document management solutions.

While initially the focus was on offering Novell related courses, it has gradually shifted totally to Microsoft technologies. Being one of the early Microsoft authorized training centers, the company was able to attract students. The focus was on technology courses of short- term duration. There is a team of faculty that conducted the courses using published training material either from Microsoft or other well-written books. It also offers corporate training programmes and conducts training for a number of companies at Bangalore. The Company has one training centre which is located at the registered office.

The Company also bundled some of the courses it offered on different technologies as a packaged course as detailed under:

INFILEARN –Introduction to the latest concepts in computing and overall understanding of the software development process.

FUTUREDEV – Web development program. Course covered the concept level knowledge of Internetworking technologies such as DHTML, ASP, JAVA, 2Dgraphics and data base applications such as SQL SERVER/ Oracle to understand the nuances of web application.

STEP RIGHT –Comprehensive education program on Microsoft’s object technologies.

The Company restructured the entire training business and has relaunched its services in the last quarter of FY2000. Further the Company plans to gradually port the content being developed on to its SMILE product to enable a web based curriculum.

Imaging & Document Management Division:

Deldot has tied-up with PCDOCS Fulcrum (currently Hummingbird ). With this tie-up in place as is an authorized Integrator of PCDOCS Fulcrurns imaging and document management solutions., deldot has the entire range of services in the solutions segment in the IT industry. PCDOCS Asia Ltd. is a part of the Hummingbired group, a leading enterprise information solution providedr with a sales base of US$ 166mn (FY1999). PCDOCS Fulcrum's full knowledge management product provides a single point of access to information in various databases. It is known for its stability, tight integration with Microsoft windows/ of Back office and its low cost of ownership. This has been recently started and is a new growth initiative undertaken by the Company.

The Company identified a need for a document management solution and has also developed a working prototype. The prototype has the following features:

• Web enabled & GUI Interface

• Interfaces with a range of storage devices

• Built-in intelligent search system (with user definable search levels)

• Built-in level of security

• Built-in components to manage the images and devices over heterogeneous and networks that incorporate high security levels

• Data capture in different forms---microfilms and documents

• Reliable data exchange over the Internet/Intranets/Extranets.

The Company has demonstrated this solution to a Municipal Corporation in India for the digital archival of 200,000 records containing diverse information about the citizens, like birth, marriage divorce and death, for which the municipality is responsible.

Marketing

Each of the service groups is headed by a Business head, who is responsible for the sales and revenue generation. Regional revenue targetss generation activities are vested with the sales managers who are responsible for enquiry solicitation and market coverage. Communications is handled by a dedicated Marketing communications head.

The Company currently has branches at Chennai, Cochin, Coimbatore, Hyderabad, New Delhi and Mumbai. These centers, headed by Sales Managers, are responsible for sales and support.These regions are complete sales and support Centres headed by sales managers. It is proposed to add sales and support centres at Pune, Cochin, and Calcutta. . The Company has a total team of about 53 people for marketing of its services in the domestic market.

Marketing Communications are essentially focused on low cost direct mailer campaigns, non mass media vehicles to communicate (product news, advantages and benefits) and create awareness. Newsletters, direct response campaigns and special customer offers are some of the other tools used. These activities are backed up by a Public Relations plan, which includes news releases, press conferences, speaking arrangements, seminars, workshops and roadshows. The company has planned a series of campaigns for boosting its marketing activity and for the direct promotion of its new activitiesreas of activity on an all India basis.

Co-Marketing arrangements are also pursued with OEM’s, Strategic Business Partners like MOLEX, 3COM, AMERICAN POWER CONVERSION etc.

Further, the Company has also started to market its products/ services through dealers. It has currently signed on four dealers – two in Karnataka and one each in Goa and Cochin. It is in the process of adding on more dealers.

For the software business in the domestic market, marketing has largely been a joint effort between regional marketing teams and the development team. Going forward,In the future, the Company will have domain specialists for marketing software services in the domestic market.

To market its software services and solutions in the US, the Company has set up its subsidiary at Detroit, Deldot Inc. The Company is in the process of recruiting local manpower for its subsidiary for marketing activities. The company Company has entered into marketing tie-up with a US Consulting firm – Paskon Inc. The firm has an existing client base, which the Company hopes to leverage on to offer its services and solutions additionally. The Company is in the process of recruiting local manpower for its subsidiary for marketing activities.

Brief Details about Paskon Inc.

Paskon Inc., headquartered in Detroit, USA, is a total solutions company that provides consulting staffing,and training solutions for the enterprise solutions (ERP) market. Paskon Inc. specializes in SAP R/3 implementations for Automotive and other middle market industries. Paskon is partnering with them to provide e business strategy consulting, ERP and e-commerce implementation, training development and deployment and staffing services. Paskon has about 30 employees/consultants working all over the United States of America. Some of Paskon's automotive clients include Lear Corporation, Dickson Associates, Delphi Automotive Systems, SAP America. PMC America, Continental Teves AG Budd Company, TRW, Valeo, Hohn Deere, Holland Hitch Company, ITT Automotive, Keykert AG and Robert Bosch AG.

Place/ Date of incorporation	: Michigan, January 1996
Board of Directors/Shareholders	: Sharath C Konanur Chairman and CEO
Mathew Montpass	President
Lisa Montpass	Vice President
Sheila Konanur	Vice President

All the above directors hold 25% each of Paskon's capital.

Salient Features of Memorandum of Understanding between Paskon and Deldot

Paskon and Deldot wish to cooperate in the following areas:

• Promoting, marketing existing products and co-developing future products based on Deldot's proprietary web based technologies/platforms (including SCOPE, SMILE) and Paskon's proprietary industry domain expertise and share opportunities for increased business in each others areas of market reach throughout the globe.

• Promoting and marketing consulting services of both Deldot and Paskon and share opportunities for increased business in each other's areas of market reach throughout the globe.

• Jointly explore opportunities to develop the application service provider. Web hosting Maintenance, Remote Help Desk and Data Center service offerings.

• Explore opportunities to share each other's market presence throughout the globe including but not limited to office space, distribution channel network and client lists where applicable.

BUSINESS OUTLOOK AND OPERATING ENVIRONMENT

(Source for the entire section – www.NASSCOM.org)

Over the last decade, the Indian IT software and service industry has grown from strength to strength. Industry revenues have grown eight-fold, from a mere US $50 million in 1988-89 to US $3.9 billion in 1998-99. In the last five years (1994-1999), the Indian IT Industry has recorded a CAGR of more than 40.5%, which is almost double the growth rate of the IT Industry in many of the developed countries

In 1998-99, the Indian IT industry is estimated to have earned revenues of Rs 24,781 crore or US $6.1 billion, a growth of 32.79% over the revenue of Rs 8,662 crore generated in 1997-98. This high growth rate has been achieved in spite of a slower growth of the Indian economy, an uncertain political situation and a not-so-healthy GDP growth

Indian IT Industry Overview

(Figures in million)	1994-95		1995-96		1996-97		1997-98		1998-99
	Rs. m	US$ m	Rs. m	US$ m	Rs. M	US$ m	Rs. m	US$ m	Rs. m	US$ m
Software
Domestic	10,700	350	16,700	490	24,100	670	35,100	950	49,500	1,250
Exports	15,350	485	25,200	734	39,000	1,083	65,300	1,750	109,400	2,650
Total	26,050	835	41,900	1,224	63,100	1,753	100,400	2,700	158,900	3,900
Hardware
Domestic	18,300	590	35,600	1,037	37,800	1,050	44,970	1,205	42,350	1,026
Exports	5,500	177	1,200	35	10,300	286	7,430	201	155	4
Total	23,800	767	36,800	1,072	48,100	1,336	52,400	1,406	42,505	1,030
Peripherals
Domestic	4,590	148	6,720	196	6,530	181	8,330	229	13,600	329
Exports	180	6	210	6	520	14	680	19	730	18
Total	4,770	154	6,930	202	7,050	195	9,010	248	14,330	347
Training	3,310	107	4,970	145	6,600	183	9,420	263	12,500	302
Maintenance	4,400	142	5,920	172	6,560	182	8,240	221	9,780	236
Networking & Others	1,120	36	2,400	710	5,590	156	7,150	193	9,800	237
Grand Total	63,450	2041	98,920	2886	137,000	3805	186,620	5,031	247,815	6052

Future Growth: It is expected that in 1999-2000, the Indian IT industry would further improve its performance and is forecast to gross revenues of Rs. 361 billion or US $8.39 billon. The software and services industry would continue to command more than 60% share of the total revenues of the Indian IT industry & exports are estimated to reach US$ 3.9 billion. It is projected that during the year 2001-02, the software industry in India would be worth close to Rs 55,500 crore, with exports contributing Rs. 37,500 crore.

Competition

In the networking business, the Company faces competition from several established domestic and international majors like Wipro, HCL, Zenith, Compaq, Digital etc., coupled with competition from several regional and small scale vendors in the hardware business. For its data protection business, the Company faces competition largely from players like HP and Compaq, who basically sell their own solutions

The Company's competitors for its software business include in-house IT departments of many companies, service divisions of software application companies, international software service companies, software divisions of large accounting firms and local software companies in the related market segment. For its International business, the Company expects future competition from companies in other countries like China, Mexico etc which could position themselves as low cost, quality IT solution providers, besides competition from established software companies. In the training business, its presence at the moment is limited and its offerings face competition from all authorized training institutes in and around Bangalore.

Deldot has positioned itself as a total outsourcing partner in the domestic market providing quality and customized IT solutions to several clients. In providing a total turnkey solutions, it outsources products from all major vendors depending on the clients requirements while giving clients the option of choosing machines integrated by Deldot under its own brand. It acts as resellers for the products of international companies. It leverages its expertise in different relationships of its operations to provide customized solutions. In the training segment it has reworked its courses to position itself distinctly from competition.

It plans to rely on its ability to provide cost effective and timely solutions, meeting customer expectations by maintaining quality standards and continuous process of improvement, constantly and proactively upgrading technology and infrastructure.

Human Resources

Organization Chart

Note : The Company, currently, does not have a Chief Financial Officer and is in the process of recruiting him. Mr. Chandrakeerthi, the promoter-director, oversees the finance function.

At the end of March 2000, the Company has total of 219 employees. The functional break up of the team is given below:

Activity	No. of People	%
Marketing	53	24%
Customer and Technical Support	19	9%
Software Development and Onsite Support	110	50%
Human Resources Development	6	3%
Finance/Accounts/Commercial	16	7%
Support Staff	15	7%
Total	219	100.0%

The break up of skill sets of the Software Development and Onsite Support Team is given below:

Skill sets	No. of People	%
Systems Analysis and Design	12	11
Project Management	6	5
Quality Assurance and Testing	6	5
Low level Design	14	13
Databases	5	5
Development and Implementation	59	54
Customer Support (On site)	8	7
Total	110	100

Recruitment Strategy

Trainees: There is a three- tier selection process at Deldot for trainees. Initially, there is a written test and a (, covering aptitude and technology) and a, Group discussions to test the leadership qualities and communication abilities followed by final interviews on a one to one basis. Currently trainees are recruited through responses to advertisements & referrals.

Professionals: Recruitment of Pprofessionals at Deldot is carried through direct interviews. The candidate is interviewed initially by a Ttechnical panel followedand later by an interview with the concerned management team. Professionals are selected from the responses received to advertisements and through HR Cconsultants.

Consultants: Consultants are also hired the same way as the professionals, except that they are hired on project to project basis.

Artists: Most software projects carried out at Deldot require the artists to design and develop graphical components. These artists are generally recruited from popular art schools and trained at ourthe company's centers on digital art.

Training

Deldot has planned training programs for every individual in the company. While some of them are standard training programs, the rest of them are need based. Trainees undergo a 3-months on the job training program,. O which is compulsory.n an ongoing basis, Later, various feed back mechanisms at Deldot recognize the need for training in employees.every candidate and training is carried out as per the same. Training for skill upgradations/ acquisition is carried out through a combination of internal or external workshops, conferences or seminars,. Additionally, employees are entitled to complete or partial reimbursement of training fees that help them enhance their skill sets.conducted internally or externally. Apart from this, any employee who wants to undergo courses and training programs that will add value to his skill sets is entitled to complete or partial reimbursement of the course/training fee.

Retention Strategies

Deldot tries to ensure employee retention through job rotation, freedom at work and providing a good working environment and ia culture that encourages, cultivates innovative thinking.mplementation of ideas at work. It has evolved certain employee welfare schemes apart from paying competitive remuneration. It has built a recreation cum fitness centre for its employees. The Company provides facilities like lunch and transport facilities to all its employees. It has set up a help desk at each of its locations to take care of mundane tasks that employees have to do like paying various utility bills etc.

Employee Stock Option Trust

This trust was set up on January 7, 2000. The Trust's objective is to implement an Employee Stock Option Plan (ESOP). The Promoters have transferred 140,000 equity shares of the Company at par to the Trust. This trust will award shares to employees as per the ESOP scheme formulated by the Board of Directors.

Appraisal Systems:

Personal appraisals are conducted every quarter. The appraisal takes inputs from self, peers, seniors and clients wherever involved. Outstanding performers are recognized and rewarded. The system is also used to identify training needs.

Quality

Quality plays a very important role in all divisions at Deldot. All employees are trained on quality and systems with respect to their business divisions. Each of the business division has a quality representative who is guided by a management representative.

Deldot has been certified as ISO 9002 by BVQI (with accreditation from UKAS), for its System Integration division with customer service and support. Initial surveillance audits have been conducted for the remaining activities of the Company. Based on the feedback, the Company is changing some of its systems to make them ISO 9001 complaint. Once these systems are in place the Company will get them re-audited for certification.

The software solution division has in built quality systems built in at stage in its thedevelopment methodology it follows for both full life cycle development projects and for product development/ R&D.

Research and Development

It regularly invests in indigenous research and product development efforts. Its R&D team comprising of a core group of engineers has achieved significant success on this front, having developed two branded solutions in-house, SMILE and SCOPE. Encouraged by the response for its branded solutions, the company’s research team has extended the scope of its research to developing competitive home-grown solutions. The team also conducts continuous enhancement programs with respect to business automation and the overall software development process to increase the efficiency and productivity of the company.

Computing and Communications Infrastructure

The registered office of the Company is situated at No.431/28, 10th Main, 4th Block, Jayanagar, Bangalore-560 011. The Software Development center is situated at No.18/2B, Site No. 7, Srinivasa Industrial Estate, 7th Mile Kanakapura Road, Bangalore – 560 062. The Company has branches at Mumbai, Delhi, Hyderabad, Chennai, Cochin, Coimbatore in addition to the office of its subsidiary at Detroit.

Deldot has invested in a Virtual Private Network accessible from any part of the world. All the servers revolve around a single domain for ease of access, administration and synchronization of all departments & activities.

Deldot, to support all the software development activities and the business automation, has deployed a number of Servers – Wintel and RISC servers, SunSparc Server, Databases – Oracle, SQL Server, Functional servers like the Internet web server, Intranet, Extranet, Proxy, DNS Server, Checkpoint Firewall and operating systems like Solaris, Windows NT, Linux and Macintosh.

The servers and the 177 Intel Pentium III nodes at the Development Centre are interconnected through a virtual private network equipped with the latest Nortel switches and Cisco routers. All the three floors of the existing Centre are networked through a gigabit fibre backbone. A 128 kbps leased line facilitates 24-hour access to the Centre from anywhere in the world. The Corporate office at Bangalore is linked to all the branch offices through this virtual private network.

The workstations are all state of the art equipped with Checkpoint remote secure, Intranet/Extranet Client and the other programming and office automation tools. The development centre is with 100% captive power and power protection systems to enable 24 hours X 7 day operation.

Subsidiaries Subsidiary of the Company

Deldot Inc, USA

Deldot Systems Limited has incorporated a Subsidiary namely Deldot Inc., in Detroit, USA to market and support its Software Products and Services in the Global Market.The Company has set up Deldot Inc., a subsidiary in the US at Detroit, Michigan. The subsidiary was incorporated on November 17, 1999. The Company has received RBI permission (vide its approval letter no. BGWRB 20000186 dated May 15,2000) to remit, an amount of USD 6 lakhs (i.e Rs. 264 lakhs, Conversion rate: 1US$=Rs.44/-), towards subscription of equity capital of Deldot Inc. This is proposed to be funded through the Issue proceeds ( US$ 4.03 lakhs=Rs.177.32 lakhs) and internal accruals (US$ 1.97 lakhs=Rs.86.68 lakhs).Setting up a subsidiary in the US at Detroit,Michigan.

The tie-up would enable Deldot to leverage on the existing client base of the individual companies apart from harnessing their marketing resources and support skills across USA.

Mr. Chandra Keerthi – President and CEO heads the US Subsidiary along with Mr. Arvind, Vice President – Software Operations.
The Company is in the process of recruiting marketing executives for promoting Deldot’s products and services in the US. They are also supported by Deldot executives on deputation abroad.

Arrangement between Deldot Systems Limited (Deldot)and Deldot Inc, US

Deldot shall transfer software products to Deldot Inc. at a prefixed transfer price mechanism, for marketing in the US, depending on each individual product, keeping in mind the market acceptance of the same. Deldot Inc. shall market the products accordingly in the US at a margin decided on strategic terms.

Deldot shall transfer software services to Deldot Inc. at a prefixed transfer price, on a case specific basis) depending on the job content and skill sets involved. Deldot Inc. shall accept contracts on behalf of Deldot keeping the above transfer price in mind as also adding additional margins keeping in mind the market acceptance of the service.

The signatories to the Memorandum of incorporation were Mr. Chandrakeerthi and Mrs. Shiela Konanur. Mr. Chandrakeerthi has been authorized by Deldot Systems Ltd to sign on its behalf.

FINANCIAL HIGHLIGHTS & PROJECTIONS

The key financial highlights based on audited accounts are as under : ( Refer Note below)

(Rs. in Lakhs)

STATEMENT OF ASSETS AND LIABILITIES AS AT MARCH 31st
PARTICULARS	1999-00	1998-99	1997-98	1996-97	1995-96
A. Fixed Assets
Gross Block	886.69	552.85	274.48	160.55	56.23
Less : Depreciation(1)	340.46	180.10	93.26	39.63	11.73
Net Block	546.23	372.75	181.22	120.92	44.50
Less: Revaluation Reserve	-	-	-	-	-
Net Block after adjustment of Revaluation Of Reserve	546.23	372.75	181.22	120.92	44.50
Capital work-in-progress	182.29	-	-	-	-
Total	728.52	372.75	181.22	120.92	44.50
B. Current Assets, Loans & Advances Inventory	784.34	281.52	138.30	117.84	54.41
Sundry Debtors	1,362.75	607.26	375.26	134.08	56.10
Cash & Bank Balances	114.45	83.81	78.96	42.30	21.04
Other Current Assets & Loans & Advances	693.00	91.61	35.02	22.77	25.79
Total	2,954.54	1,064.20	627.54	316.99	157.34
Less Current Liabilities and Provisions Current Liabilities	1,018.06	518.92	317.42	44.98	27.96
Provisions	94.08	21.75	15.33	11.10	8.42
Total	1,112.14	540.68	332.75	56.08	36.38
C. Net Current Assets	1,842.40	523.52	294.79	260.91	120.96
D. Total Assets	2,570.92	896.27	476.01	381.83	165.46
E. Loan Funds: Secured Loans	386.13	634.13	338.44	302.01	106.14
Unsecured Loans	-	-	1.50	3.38	2.80
Total	386.13	634.13	339.94	305.39	108.94
F. Net Worth(1)	2,184.79	262.14	136.07	76.44	56.52
G. Represented by Share Capital Equity Share Capital	502.74	58.10	0.03	0.03	0.03
Share Application Money	-	-	50.07	40.07	40.07
Total	502.74	58.10	50.10	40.10	40.10
Reserves & Surplus(1)	1,738.25	204.04	85.97	36.34	16.42
Less: Miscellaneous Expenditure	(56.20)
Total	2,184.79	262.14	136.07	76.44	56.52

(Rs. in Lakhs)

STATEMENT OF PROFITS AND LOSSES FOR THE YEAR ENDED MARCH 31ST
PARTICULARS	1999-00	1998-99	1997-98	1996-97	1995-96
Income Sales: -
- Manufactured / Developed by Company	806.91	629.21	534.64	314.93	177.69
- Distribution and Integration of Solution & Systems	2334.06	1885.62	1445.52	851.48	435.05
Other income from Operations	20.61	18.98	5.39	4.10	1.24
Total Income	3,161.58	2,533.81	1,985.55	1,170.51	613.98
Expenditure Cost of Goods Sold	1,930.48	1,926.46	1,580.15	937.36	492.43
Other Manufacturing Expenses	210.84	146.49	98.56	66.37	40.26
Administrative Expenses	329.87	136.44	111.94	57.05	34.40
Interest	158.11	99.53	77.65	50.47	17.38
Depreciation(1)	160.36	86.84	53.63	27.90	10.50
Total Expenditure	2,789.66	2,395.75	1,921.93	1,139.15	594.97
Net Profit before Tax and Extra ordinary item	371.92	138.06	63.62	31.36	19.01
Taxation	62.40	20.00	14.00	11.45	7.75
Profit After tax & before Extra ordinary item	309.52	118.06	49.62	19.91	11.26
Proposed Dividend	25.99
Corporate Dividend Tax	2.60
Net profit after Extra ordinary items and tax	280.93	118.06	49.62	19.91	11.26

Important Notes :1.  Change in Depreciation Policy : During the previous years, depreciation was provided under the straight line method at the rates in the manner prescribed under Schedule XIV of the Companies Act, 1956. However, in 1999-2000, the company has changed its Accounting Policy pertaining to the provision of depreciation to a higher rate, prospectively from 1.4.99. Due to the change in the method of depreciation provision, net profit has been understated to the tune of Rs.1,28,22,374/- lakhs, otherwise net profit would have been Rs 4,35,14,375/- lakhs. Please note that the above financial figures for the Years 1995-96 to 1999-2000, have been reworked with regard to the accelerated depreciation policy. All figures, ratios in this Prospectus have been based on these figures, assuming the accelerated depreciation policy. The audited figures of depreciation and consequently Net Block, Net Worth, Profit after Tax etc. differ from these figures. For the purpose of uniformity in comparison of the financial statements, the table below, outlines the audited figures for the years 1995-96 to 1998-99 and the figures for 1999-00 on the basis of the accounting policy followed in the earlier years.

PARTICULARS (Rs. in Lakhs)	1999-00	1998-99	1997-98	1996-97	1995-96
Net Worth : Equity Share Capital	502.74	58.10	0.03	0.03	0.03
Share Application Money	0	0	50.07	40.07	40.07
Total	502.74	58.10	50.10	40.10	40.10
Reserves & Surplus(Free Reserves)	2008.32	345.89	159.02	66.18	24.49
Less: Miscellaneous Expenditure	56.20	0	0	0	0
Total Net Worth	2454.86	403.99	209.12	106.28	64.59
Net Profit : A. Net Profit before Tax	371.92	138.06	63.62	31.36	19.01
B. Depreciation as per Changed Policy	160.36	86.84	53.63	27.9	10.5
C. Depreciation as per Companies Act, 1956	32.14	18.04	10.41	6.13	2.43
D. Excess Depreciation Charged	128.22	68.8	43.22	21.77	8.07
E. Profit before Tax adjusted for excess Depreciation ( A+D)	500.14	206.86	106.84	53.13	27.08
F. Taxation (Including Dividend Tax)	65	20	14	11.45	7.75
G. Profit After Tax	435.14	186.86	92.84	41.68	19.33

Accounting Ratios

	March 31,2000	March 31,1999	March 31,1998	March 31,1997	March 31,1996
Earnings Per Share (Rs.)	6.16	20.32	9.9	4.97	2.81
Cash Earnings Per Share (Rs.)	9.35	35.27	20.61	11.92	5.43
Net Assets Value Per Share (Rs.)	43.46	45.12	27.16	19.06	14.09
Return on Networth(%)	14.17	45.04	36.47	26.04	19.92
No.of Equity Shares     of Rs 10/- Each ( Including Share Application Money pending allotment)	5027400	581000	501000	401000	401000

1. Basic earning per share represents earnings per share on the basis of profit after Tax divided by number of shares at the end of the year including share application money pending allotment.  2. Cash Earnings per share represents profit after tax plus depreciation divided by the number of shares at the end of each financial year including share application money received, pending allotment.  3. Net Assets value has been computed on the basis of net equity method . 4. Return of Networth represents profit after tax divided by net worth at the end of each financial year.  5. For the year ending March 96,March 97,and March 98 respectively number of equity shares include ,shares to be allotted against share application money received, pending allotment.  6. Due to the change in the accounting policy , the above ratios have been computed based on figures which have been revised considering the Accelerated depreciation policy . However for comparative purposes, the ratios computed based on figures without such revision are as indicated in the table below:

Accounting Ratios

	March 31,2000	March 31,1999	March 31,1998	March 31,1997	March 31,1996
Earnings Per Share (Rs.)	8.76	32.16	18.53	10.39	4.82
Cash Earnings Per Share (Rs.)	9.29	35.26	20.61	11.92	5.43
Net Assets Value Per Share (Rs.)	48.83	69.53	41.74	26.5	16.11
Return on Networth(%)	17.73	46.25	44.40	39.22	29.93
Year end Networth(Rs.lakhs)	2454.86	403.99	209.12	106.28	64.59
No.of Equity Shares  of Rs 10/- Each ( Including Share Application Money pending allotment)	5027400	581000	501000	401000	401000

Significant accounting policies

1.1 Basis of preparation of financial statements.


1.1.1 The financial statements have been prepared under the historical cost convention in accordance with Indian Generally Accepted Accounting Principles (GAAP), the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, as adopted consistently by the company. All revenues and expenses are recognized on the basis of their accrual.

1.2 Revenue Recognition


1.2.1 Sale of Goods: Revenue from sale of goods is recognised based on contract terms with the passing of titles/despatch of goods to customers. The Revenues from installation and commissioning relating to the sale of Information Technology equipments are recognized on completion of acceptance terms. The sale value includes taxes and duties.



1.2.2 Education and Training: Revenues from the services of education and training are recognized on accrual basis.



1.2.3 Revenue from Software Development Services :



1.2.3.1 From Specific contracts (Time and Material): Revenues are recognized based on time invested and materials spent/incurred for the software developed in case of contracts which are silent on milestones and in cases where the contracts specifically mention milestone achievements, the revenues are recognized based on such milestones and are billed to clients as per the terms of contract.



1.2.3.2 From Fixed price contracts: The revenues are recognized based on the percentage of completion/ milestones achieved.



1.2.3.3 In case of software products developed by the company for specific customers, revenues are recognized at the time of delivery of license to use is made over to customers.



1.2.4 In case of technical support and maintenance services, Revenues are recognized on accrual basis.

1.3 Expenditure


1.3.1 Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.



1.3.2 The cost of software purchased for use in Software Development and services is charged to revenue in the same year of purchase.

1.4 Fixed Assets


1.4.1.1 Fixed Assets are stated at cost of acquisition inclusive of freight, duties, taxes and interest on borrowed money allocated to and utilized for fixed assets pertaining up to the date of capitalization.

1.5 Capital Work in Progress


1.5.1 Capital Work in Progress includes advances made for acquisition of fixed assets and the cost of assets acquired but not put to use before the year-end.

1.6 Depreciation



The company has changed its Accounting Policy for providing Depreciation on certain fixed assets prospectively from 1.4.99 from the rates applicable and were followed consistently in the previous years as per the Schedule XIV of the Companies Act, 1956 to the following accelerated rates under straight line method computed based on useful lives as estimated by the management, keeping in mind the provision of higher outlays for earlier replacement of fixed assets and also their high obsolescence rate, in respect of the following fixed assets:


Fixed Assets	Useful Life of Asset	Rate As per Companies Act	Rate adopted by the Company
Plant and Machinery	4 years	4.75%	25%
Furniture and Fixtures	4 years	6.33 %	25%
Vehicles	4 years	9.50 %	25 %

In respect of all other assets, the company continues to charge the applicable rates of depreciation under schedule XIV of the Companies Act, 1956 as per Straight Line Method.



1.6.1 Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs.5,000/- are charged of to the revenue in full in the year of purchase.

1.7 Investments


1.7.1 Investments are valued at cost.


1.7.2 Investments in subsidiaries are valued at cost. In case of any decline in the value of investments made, adequate provisions, if required, would be made.

1.8 Inventories


1.8.1 Inventories are valued at lower of cost or net realizable value after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Spares and consumables are charged off to revenue in the year of purchase. Costs are arrived based on the weighted average method. Costs inclusive of all such expenses incurred in bringing the inventory to the present condition.

1.9 Retirement benefits to employees


1.9.1 Company’s liability towards retirement benefits in the form of Provident Fund is fully funded and charged to expenditure. Provision for gratuity is made based on the actuarial computation done by the management.

1.10 Research and Development


1.10.1 Expenses incurred on Research and Development are charged to revenue in the same year. Fixed assets purchased for research and development purposes are capitalized and depreciated as per the company’s policy.

1.11 Miscellaneous Expenditure


1.11.1 Product Promotional Expenditure
The Company spends amounts on promotional activity of new product lines every year. The promotional expenditure incurred for the same has been treated as deferred revenue expenditure and the same is to be written off in the year in which substantial revenues are generated from the respective product lines.

1.12 Foreign currency transactions and translation.


1.12.1 All transactions in foreign currencies are recorded on the basis of the exchange rate as on the date of transaction. Disbursements made out of a foreign currency bank account, are accounted at a rate, which approximates the actual rate during the period normally taken as a month. The difference if any on actual payment / realization is charged off to revenue. Foreign currency assets and liabilities are restated at rates ruling at the year-end, wherever applicable. The net loss or gain arising out of such conversion is dealt with in the Profit and Loss account.

1.13 Sundry Debtors and other receivables


1.13.1 Sundry Debtors and other receivables are stated after making adequate provisions for doubtful debts.

1.14 Income Tax


1.14.1 Provision is made for income-tax on a yearly basis, under the tax payable method, based on tax liability, as computed after taking credit for allowances and exemptions under the Income Tax Act 1961.

1.15 Contingent Liabilities


1.15.1 Contingent Liabilities are shown by way of notes to the financial statements.

Changes in the Accounting Policies of the Company

Change in the method of Depreciation provision

During the previous years, depreciation was provided under the straight line method at the rates in the manner prescribed under Schedule XIV of the Companies, 1956. However, the company has changed its Accounting Policy pertaining to the provision of depreciation to a higher rate

Fixed Assets	Useful Life of Asset	Rate As per Companies Act	Rate adopted by the Company
Plant and Machinery	4 years	4.75%	25%
Furniture and Fixtures	4 years	6.33 %	25%
Vehicles	4 years	9.50 %	25 %

Notes to Accounts

1.1 Change in the method of Depreciation provision


1.1.1 During the previous years, depreciation was provided under the straight line method at the rates in the manner prescribed under Schedule XIV of the Companies, 1956. However, the company has changed its Accounting Policy pertaining to the provision of depreciation to a higher rate as described vide Clause 1.6 above. Due to the change in the method of depreciation provision, net profit has been understated to the tune of Rs.1,28,22,374/- lakhs, otherwise net profit would have been Rs 4,35,14,375/- lakhs.

1.2 Secured Loans


1.2.1 Rupee term loans availed from KSIIDC Ltd, SIDBI and The Associates India P Ltd ( previously known as AVCO Financial Services Pvt Ltd) are secured by way of hypothecation of respective machinery and the personal guarantees of promoter directors.


1.2.2 Non-convertible debentures issued to KSFC are secured by way of mortgage/hypothecation of assets already secured to the corporation for Hire Purchase facility and the personal guarantees of the promoter directors.


1.2.3 Hire Purchase and lease facilities obtained from institutions are secured by the charge on the assets acquired out of the loan and the personal guarantees of promoter directors.


1.2.4 Vehicle loans are secured by the vehicles purchased under the facility.


1.2.5 Working Capital Demand loan credit facilities availed from Industrial Development Bank of India is secured by hypothecation of current assets, Second charge on unencumbered existing fixed assets, first charge on Fixed Assets to be acquired through Public Issue proceeds and also the personal guarantees of the promoter directors.

1.3 Managerial Remuneration


1.3.1 A sum of Rs. 11,53,000/- has been paid to the promoter directors as managerial remuneration and the said sum is within the overall maximum remuneration stipulated under the Companies Act 1956. The company has changed the pattern of managerial remuneration from 1st October 1999.

1.4 Miscellaneous Expenditure:
The Company during the year has incurred an amount of Rs. 56,20,072/- towards product promotional expenditure in the area of Imaging and Document Management Solutions. The said amount has been set aside to be written off over future earnings against the sale of Imaging and Document Management Solutions.

1.5 Earning and expenses in foreign Exchange are reckoned on receipt and payment basis. Earning in foreign exchange: USD 2,454 (INR 1,06,626/-).
Outflow of foreign exchange in respect of overseas travel expenditure Rs.23.09 Lakhs.


1.5.1 Sales includes software exports amounting to USD 1,20,000 (INR 52,20,000/-) and other income includes commission received from foreign principal USD 2,454 (INR 1, 06,626/-)


1.5.2 Confirmation of balances in Sundry Debtors, Sundry Creditors and Loans and Advances are subject to receipt of confirmations from the parties.


1.5.3 There are no dues to Small scale industries outstanding for more than a month as at the end of the period

Contingent liabilities

2.1 Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid) Rs. Nil (Previous Year Rs. Nil)

2.2 The Company has issued counter guarantees to its bankers for guarantees issued by them for various statutory purposes, earnest money deposits, security deposits and performance guarantees amounting to Rs. 12.39 Lakhs (As on 31-03-99 Rs. 74.14 Lakhs) and has issued guarantee on behalf of business partners to M/s KSFC, Bangalore. Principal amount outstanding Rs.21.03 Lakhs (As of 31-03-99 Rs.63.73 Lakhs).

2.3 The company has various letters of credit outstanding ,issued by bankers to various vendors amounting to Rs nil (As on 31-03-99 Rs. 192.92 Lakhs)

2.4 Claims against the company, not acknowledged as debts, amounted to Rs. 26.53 lakhs.(Previous year Rs. Nil)

2.5 Liabilities on Disputed taxes Rs. Nil (Previous Year Rs. Nil)

2.6 Future commitments on finance lease rentals payable Rs 51.75 Lakhs. (As on 31-03-99 Rs.97.95 Lakhs).

2.7 The Previous year’s figures have been regrouped and recast, wherever necessary to conform to current year classification.

Qualifications to the accounts for the year ended 31st March 2000

1. Due to the change in the method of depreciation provision, net profit has been understated to the tune of Rs.1,28,22,374/- lakhs for the year ended 31st March 2000, otherwise net profit would have been Rs 4,35,14,375/- lakhs.

Management Discussion Of Past Performance

Comparative study of the significant items of income and expenditure for the period from April 1997 to March 2000

Rs in Lakhs.

PARTICULARS	1999-2000	1998-99	1997-98
I. INCOME
A. Sales	3140.96	2514.83	1980.16
Growth in % terms	24.90	27.00	69.77
B. Other Income from Operations	20.6	18.98	5.39
Growth in % terms	8.54	252.13	31.46
C. Total Operating Income	3161.58	2533.81	1985.55
Growth in % terms	24.78	27.61	69.63
II. EXPENDITURE
D. Cost of Sales	2141.30	2072.95	1678.71
Cost of Sales as a % of Sales	68.17	82.43	84.78
E. Interest and Finance Charges	158.11	99.53	77.65
Interest as a % of sales	5.03	3.96	3.92
F. Administrative Expenses	329.87	136.44	111.94
Admin. Expenses as a % of sales	10.50	5.42	5.65
G. Total Operating Expenditure	2629.30	2308.91	1868.30
Tot. Op. Exp as a % of sales	83.71	91.81	94.35
H. Operating Profit (C-G)	532.28	224.90	117.25
Growth in % terms	136.67	91.81	97.86
Op. profit as a % of Sales	16.95	8.94	5.92
I. Depreciation	160.36	18.04	10.41
Increase in % terms	788.91	73.29	69.82
Depreciation as a % of Sales	5.11	0.72	0.53
J. Total Expenditure	2789.66	2326.95	1878.71
Increase in % terms	19.88	23.86	68.14
Total Expenditure as a % of Sales	88.82	92.53	94.88
K. Profit from Operations before tax (C-J)	371.92	206.86	106.84
PBT increase in % terms	79.79	93.62	101.09
PBT % of Sales	11.84	8.23	5.40
L. Taxation	65.00	20.00	14.00
Tax % of PBT	17.48	9.67	13.10
M. Profit After Tax	309.52	186.86	92.84
Growth in % terms	65.64	101.27	122.74
PAT as a % of Sales	9.85	7.43	4.69

During the above period, the Company has achieved significant growth in sales and net profits and has established a wide band of clientele on the domestic front and has consolidated its position in the domestic market.

Sales:

Sales have grown from Rs. 1980.16 Lakhs during 1997-98 to Rs. 2514.83 Lakhs during 1998-99 and to Rs. 3140.96 Lakhs during 1999-2000. The above increase in sales quantum has been achieved due to the spread of the marketing reach of the company by opening additional offices at various locations and by appointment of additional marketing manpower and the addition of latest technologies in data storage, imaging and documentation and software development services.

Composition of sales revenue:

The sales composition has been changing in favour of the provision of turnkey solutions including the software products and services, data storage solutions and Imaging and Document management solutions. While the networking business has shown a decline in revenues, the other divisions have witnessed higher growth ratesin revenue terms. Whereas the sales from networking activities has reduced from Rs.15.25 Crores(77% of total sales) during 1997-98 to Rs. 12.32 Crores(48.99% of total sales) during 1998-1999 to Rs 9.69 Crores (30.85% of total sales)during the year ending 1999-2000. The sales revenue from Data Storage and Protection activity has increased from Rs. 1.19 Crores( 6.01% of total sales) during 1997-98 to Rs. 4.53 Crores(18.01% of total sales) during 1998-99 and to Rs. 13.65 Crores (43.46% of total sales)during 1999-2000. The following table below indicates the growth pattern of the various activity streams of the company:

Division wise Breakup - Sales Revenue

( Rs. In Lakhs)

Divisions	1996-97	%	1997-98	%	1998-99	%	1999-00	%
Network Solutions	1,003	86	1,525	77	1,232	49	969	31
Data Protection	35	3	119	6	453	18	1,365	44
Software Products/services	23	2	217	11	629	25	642	20
Training & Education	105	9	119	6	201	8	165	5
Total	1,166	100	1,980	100	2,515	100	3,141	100

Other income:

Other income has increased from Rs. 5.39 Lakhs (1997-98) to Rs. 18.98 Lakhs(1998-99)to 20.60 Lakhs during 1999-2000 ,This was due to the increased interest income earned on the higher amount of margin money, for Letters of Credit, placed with the bank as Term Deposits, as also due to increased service income on the sales base developed during the previous years..

Cost of Sales:

The changing sales mix has led to a reduction in the cost of sales from 84.78% during 1997-98 to 82.43 % during 1998-99 to 68.17% during 1999-2000, resulting in the higher profitability for the company. The net margins on data storage and protection activities and on software products and services are higher than the margins on networking services.

Interest and Financial Charges:

Due to increased borrowing during the year to meet capital expenditure needs and enhanced working capital requirement, the interest and finance charges have grown from Rs. 77.65 Lakhs during 1997-98 to Rs. 99.53 Lakhs during 1998-99 to 158.11 Lakhs during 1999-2000. However, as a % of sales, the interest and finance charges has increased from 3.92% during 1997-98 to 3.96% during 1998-99 to 5.03% during 1999-2000.

Administrative Expenses:

Administrative Expenses have increased from Rs. 111.94 Lakhs during 1997-98 to Rs. 136.44 Lakhs during 1998-99 to Rs. 329.87 Lakhs during 1999-2000. The increase is due to the enhanced administrative support levels necessary to back the increased sales and establishment of new branches including foreign subsidiary.

Total Operating Expenditure:

Has increased from Rs.1868.30 Lakhs during 1997-98 to Rs 2308.91 during 1998-99 to Rs.2629.30 Lakhs during 1999-2000. This increase is corresponding to the increase in sales during the above period. However as a % of sales, there has been a reduction from 94.35% 1997-98 to 91.81% during 1998-99 to 83.71% during 1999-2000.

Profit before tax has increased from Rs 106.84 Lakhs during 1997-98 to 206.80 Lakhs during the year 1998-99 to 371.92 during 1999-2000. Profit after tax has increased to Rs.92.84 Lakhs during 1997-98 to Rs. 186.86 Lakhs during year 1998-99 to Rs.309.52 Lakhs during 1999-2000.

Usual or infrequent events or transaction.

There has been no unusual or infrequent transactions in the company

Significant economic changes that materially affected or are likely to affect income from continuing operations:

Over the years, the Government of India has realised the high potential of employment, modernisation and contribution to economy provided by the software industry. In 1986, the Government of India announced the first computer software policy and since then, software has always been identified as a thrust area. In May 1998, the Government has put software on its National Agenda and 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, to remove the bottlenecks faced by the industry and to chart out the growth of the software industry in the next millennium. Even state governments in India have started providing extra thrust to this sector. In recent months, almost 14 state governments have announced IT policies and seven more have announced IT Task Forces and Special Committees. The Government of India, has provided all support, including fiscal benefits, availability of high-speed data communication links and infrastructure, besides ensuring an almost red tape-free system. The fiscal benefits include free trade zones, Software Technology Park schemes, zero import duty on software, and 100% exemption on profits from software exports. The management does not foresee any adverse trade or fiscal policies which would retard the growth of the industry and affect the operations and profitability of the company. Corporate Tax was revised for FY2000 through levy of 10% surcharge on corporate tax on domestic companies, thus raising the corporate tax from 35% to 38.5%.

Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations:

Generally the IT industry is prone to obsolescence. Constant monitoring and upgradation of technologies enable companies to stay ahead of obsolescence. The company has a monitoring/implementation system, which constantly upgrades the skills and technologies. The company possesses latest skill sets in the software area, which is flexible and easily adapts to changes. The company also possesses inhouse expertise in network solutions enabling cost effective quick technology changes

Future changes in relationship between costs and revenues, in case events such as labour or material costs or prices that will cause a material change are known:

The company adopts the cost plus methodology while quoting for assigments. For the software business, the input costs are computed based on manhour basis and any increase in these costs are automatically passed on to the clients, as the same arises due to increased skill levels, quality and experience. Thus the profitability margins of software services division is not materially affected by increase in manpower costs. Reduced equipment costing enables cost effective technology migrations to higher technologies. The Company expects to move up the value chain to effectively counter increased manpower costs. For the other businesses, it bids based on prevailing equipment prices as indicated by Vendors.

The extent to which material increase on net sales or revenue are due to increase sales volume, introduction of new products or services or increased sales prices:

The incremental growth in the projected sales and revenues of the company is based on the assumption that the company will enjoy the benefits of increased productivity, expansion of business and the repeat business anticipated from its clients, for the quality of services that would be rendered to them. The experience and skills of the company’s professionals would further enable the company to solicit larger projects, contributing substantially to the company’s revenues and profitability.

Total turnover of each major industry segment in which the company operates.

Please refer to the the table given under ‘the heading ‘Indian IT Industry Overview’

Status of any publicly announced new products or new segment:

The Imaging and Document management solutions are part of its new growth initiative. A working prototype has been developed around which the Company expects to deliver customized solutions.

The extent to which business is seasonal:

The industry is non seasonal in nature and business volumes are only dependent on the marketing efforts/ contacts of the Company. However orders for hardware equipment are driven to an extent by the customer requirement of booking depreciation charges (September & March).

Any Significant dependence on a single or few suppliers or customers

Over the years of operation the company has built up a network of clientele spread out across the country. This apart the company has a separate marketing division employing qualified professionals with proven track record in marketing. The existence of contacts/tie-ups in relevant quarters enables the company to spread out business transactions and avoids the dependence on a single or few suppliers or customers.

Competitive conditions

In the networking business, the Company faces competition from several established domestic & international majors like Wipro, HCL, Zenith, Compaq, Digital etc., coupled with competition from several regional and small scale vendors in the hardware business. For its data protection business, the Company faces competition largely from players like HP & Compaq, who basically sell their own solutions

The Company's competitors for its software business include in-house IT departments of many companies, service divisions of software application companies, international software service companies, software divisions of large accounting firms and local software companies in the related market segment. For its International business, the Company expects future competition from companies in other countries like China, Mexico etc which could position themselves as low cost, quality IT solution providers, besides competition from established software companies. In the training business, its presence at the moment is limited & its offerings face competition from all authorized training institutes in & around Bangalore.

Deldot has positioned itself as a total outsourcing partner in the domestic market providing quality and customized IT solutions to several clients. In providing a total turnkey solutions, it outsources products from all major vendors depending on the clients requirements while giving clients the option of choosing computers integrated by Deldot under its own brand. It has tie-ups with International majors to act as resellers for their products. It leverages its expertise in different segments that it operates in to provide customized solutions. In the training segment it is currently reworking its offerings to position itself distinctly from competition.

It plans to rely on its ability to provide cost effective and timely solutions, meeting customer expectations by maintaining quality standards and continuous process of improvement, constantly and proactively upgrading technology and infrastructure.

FORECAST FOR THE ESTIMATED FINANCIALS OF THE COMPANY FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2001

A forecast of operations and estimated profit for the Financial Year ended March 31, 2001 as estimated by the company alongwith the major assumptions is set out below:

Note of the Auditors to the forecast is reproduced as under :

` We have reviewed the accounting policies, standards and calculations adopted in arriving at the forecast of the profit after taxation but before extraordinary items of Deldot Systems Limited for the year ending March 2001, for which the directors of the company are solely responsible as set out in the section headed “Profit Forecast” in the prospectus of the Company. The forecast has been prepared by the directors of the Company based on the forecast of the results of the Company for twelve months of the year ending March2001, on the basis of that the company has been in existence throughout the entire year. In our opinion, the profit forecast, as far as the accounting policies, standards and calculations are concerned, has been properly complied in accordance with the assumptions made by the directors of the company as set out in the Prospectus / offer documents and is presented on the basis consistent in all material respects with the accounting policies normally adopted by the Company as set out in the report on the profits and losses of the Company for the years ended March 1995-96 to 1999-2000, made by us and disclosed in the Prospectus.'

(Rs. in lakhs)

Income
Sales, development services and products	4620.00
Misc Income	30.00
Total Revenue	4650.00
Expenditure	3459.50
Operating Profit	1190.50
Depreciation and amortization	300.00
Profit before Interest	890.50
Interest	175.00
Profit Before Tax	715.50
Provision for Tax	200.00
Profit After Tax	515.50
Profit attributable to shareholders	515.50
Dividend 10%	67.04
Tax on dividend	14.74
Reserves Transfer	433.72

Major Assumptions

1. The above financial forecast is based on the business plan for the year 2000-2001 for the Company.

2. Personnel Cost is estimated on the basis of increase in number of employees required to execute project business and the yearly revision of compensation.

3. Any gain / loss on any account of exchange rate fluctuation has not been considered in the forecast. Exchange Rate for Export Revenue have been considered at Rs. 43.5 = US$ 1.

4. Finance Cost is estimated assuming interest on the existing term loans and working capital loans. No fresh term loans are estimated.

5. Depreciation is estimated on the basis of the Company’s predefined policy.

BASIS FOR ISSUE PRICE

QUALITATIVE FACTORS

• Deldot offers a wide spectrum of IT services – networking & data storage solutions, software services & products, education & training. It is able to leverage its strengths in each of these services to offer turnkey solutions and can meet the total outsourcing needs of a client.

• The Company has developed two software products – SMILE - Simple Modular Integrated Learning Environment & SCOPE - Software for Customer Oriented Product Education.

• Quality: Deldot has been certified as ISO 9002 by BVQI for its Computer System Integration and customer service & support activity.

QUANTITATIVE FACTORS

For the purposes of these calculations, the number of equity shares at the end of each year in turn has been taken as the sum total of equity shares issued and the number of shares issued subsequently on the application money outstanding at the end of year. Since the equity capital was only 300 shares till 1997-98, it would otherwise give a distorted view. Further in view of the bonus equity issued and the subsequent dilutions, the equity base has substantially increased.

Earnings Per Share (EPS)

On a fully diluted basis (After considering change in Depreciation Accounting policy).

Year	EPS (Rs.)	Weights used
1997-98	9.90	1
1998-99	20.32	2
1999-2000	6.16	3

Weighted Average for the last 3 years is Rs. 11.50
EPS has been calculated on a fully diluted basis, i.e. EPS = PAT for the year / number of equity shares at the end of the respective period.


Price/ Earnings ratio (P/E)

Particulars	Computer Hardware	Software Medium/Small	Computer Education	Average
Highest	255.00	442.80	303.60	338.80
Lowest	31.00	16.70	10.80	19.50
Industry Composite	41.50	118.00	108.30	89.26

 

(Source: Capital Markets dated 30th April,2000. Vol.XV/03)

P.E ratio in relation to Issue Price is 12.99

Return on Net worth (RONW) After Considering change in Depreciation Accounting policy.

Year	RONW(%)	Weights used
1997-98	36.47	1
1998-99	45.04	2
1999-2000	14.17	3

Weighted average for the last 3 years 28.17%

Net Worth = (share capital + share premium + reserves and surplus + advance towards share capital).

Minimum Return on post-Issue Net Worth required to maintain the Pre-issue EPS as on 31/3/2000 (Rs. 6.16 fully diluted) : 11.71%

Net Asset Value                  Rs./ Share

a) As on March 31, 2000     43.46
b) After Issue @ Rs. 80        52.60

Net Asset value = (Net worth at the end of the period) / Number of equity shares at the end of the year).

RISK FACTORS AND MANAGEMENT’S PERCEPTION THEREOF

Internal Risk Factors

• Banks or Financial Institutions have not appraised the cost of the Project for which the funds are being raised.
  
  Management Perception: The Company believes that it has the professional expertise to assess the cost of project and has not approached any institutions or banks for an appraisal.
• The Company is yet to identify the locations of the overseas marketing offices that it plans to set up in Europe, Middle East, Singapore & Australia. The Company is yet to apply for RBI permission for setting up the these offices.
  
  Management Perception: The Company has recently established its presence in the US, through its subsidiary. It plans to expand to the other markets as indicated above gradually and will identify the locations, the teams and apply for the RBI permission for these offices, at an appropriate time.
  
• As on March 31, 2000, the Company had contingent liabilities aggregating Rs.111.70 lakhs.(Rs. 12.39 lakhs- Counter guarantees to its Bankers; Rs. 21.03 lakhs - Principal amounts outstanding against guarantees on behalf of its business partners to M/s KSFC, Bangalore ; Rs.51.75 lakhs - Future commitments on finance lease rentals payable; Rs.26.53 lakhs - Claims against the Company not acknowledged as debts.)
  
  Management Perception: These liabilities have arisen in the normal course of business operations of the Company. The claims against the Company, if pursued and decreed against the Company, would have a marginal impact on the financial stability and performance of the Company.
  
• The promoter of Deldot -Delklip Investments Pvt. Ltd. has made a loss of Rs.42.30 lakhs for the period September 1999 - March 2000.
  
  Management Perception: Delklip was incorporated on September 23,1999 and is the holding company for Deldot's promoters.It has no other business activities/assets except investment in Deldot's shares. The performance of Delklip has no impact on Deldot's financial performance.
  
• The Company has received a notice from the Registrar of Companies Bangalore, dated December 30,1999, for not appointing a Company Secretary (required from 30.05.98) under Section 383A of the Companies Act.
  
  Management Perception: The Company has appointed Mr. Ramesh Kumar Bhat B, with effect from January 1,2000, as Company Secretary. The Company has filed the relevant compounding application with the Registrar of Companies, Bangalore.
  
• In the second half of Fy1999 and for the first half of Fy2000, the Company went through a liquidity crunch and as a result delayed payments due to Institutions, Banks and other lenders with whom they had various financial relationships in the past.
  
  The details of the delays/ defaults in 1999-2000 are given below:
  

(Rs.in lakhs)

Institution	Facility	Repayment terms	Nature of delay/Period	Delay in payment during 1999-2000	As at 31st March 2000
KSFC	Hire Purchase/Lease	Monthly Equated Monthly Instalment(EMI) of Rs.7,40,000/-	Delay in payment of six EMIs from April 1999 to September 1999	44.40	No overdues
KSFC	Non-Convertible Debentures	Interest @ 19% Payable half yearly 30th June and 31st December Principal Payable in 5 years as follows: 20% end of 2nd yr 20% end of 3rd yr 20% end of 4th yr 40% end of 5th yr	Delay in payment of Interest of Rs.12.35 lakhs during December 1998. Amount paid on 26th July,1999.	12.35	No overdues
KSIIDC	Equipment Finance scheme	Principal : Quarterly Interest @ 18 % payable Quarterly	Delay in payment of interest of Rs. 9.30 lakhs during the period May 1999 to October 1999	9.30	No overdues
KSIIDC	Corporate Loan	Principal : Quarterly Interest @ 18 % payable	Delay in payment of interest of Rs.9.23 lakhs during the period December 1998 to June 1999.	9.23	No overdues
SIDBI	Term Loan	Principal payable quarterly. Interest @ 17.5 % payable quarterly	Delay in payment of Principal Rs. 14.25 lakhs Interest of Rs 8.74 lakhs during the period December 1998 to October 1999	22.99	No overdues
AVCO FINANCIAL SERVICES	Medium Term Loan of Rs. 45 lakhs	Principal and interest payable on equated monthly instalment Of Rs.2,32,165/-	Delay in the Payment of Four EMIs during the period April 1999 to July 1999	9.28	No overdues
AVCO FINANCIAL SERVICES	Hire Purchase	Principal and interest payable on equated monthly instalment Of Rs. 2,82,621/-	Delay in the payment of Four EMIs during the period April 1999 to July 1999	11.28	No overdues
STATE BANK OF INDIA	Cash credit	On Demand	Excess Credit facility availed during July 1998. The facility was regularized during the period August 1999 to October 1999.	355.17	Facility closed on March 6, 2000.
TATA FINANCE	Lease	Principal and interest payable on equated monthly instalment of Rs.1,53,886/-	Delay in the payment of four EMIs During the period April 1999 to July 1999.	6.16	No overdues
INDBANK MERCHANT BANK	Hire Purchase	Principal and interest payable on equated monthly instalment of Rs.1,21,625/-	Delay in the payment of Seven EMIDuring the period April 1999 to October 1999.	8.50	Facility closed on March 24, 2000.
INDIA EQUPMENT LEASING LIMITED	Hire Purchase/Lease	Principal and interest payable on equated monthly instalment Of Rs.2,56,000/-	Delay in the payment of five EMIs during the period April 1999 to August 1999.	12.80	Facility closed on March 24, 2000.
VIJAYA LEASING LIMITED	Hire Purchase	Principal and interest payable on equated monthly instalment of Rs 100700/-	Delay in the payment of three EMIs during the period April 1999 to June 1999.	3.02	Facility closed on July 31, 1999.
MANIPAL FIN.CORPN. LTD	Hire Purchase	Principal and interest payable on the monthly instalment of Rs. 200740/-	Delay in the payment of three EMIs during the period April 1999 to June 1999.	6.03	Facility closed on Jan 13, 2000.

Management Perception: The Company delayed payment of dues as it faced a working capital squeeze vis-à-vis its current assets build-up and growth plan. To overcome the liquidity constraints, the Company raised long term resources from Venture Capital funds, Mutual funds, friends /associates. The Company has since repaid these dues.

• The Promoters are first generation entrepreneurs.
  
  Management Perception: The promoters have been in the current business for about a decade now. The promoters are professionals & have been responsible for building the Company to the current size of operations
  
  
• The growth rates achieved by the Company in the past may not be sustainable in the future. Further, the Company’s inability to manage its growth effectively could have a material adverse effect on its business operations and its financial condition.
  
  
• Litigations against the Company - (1) Outstanding Litigation - A customer i.e. Shivapriya Infotech Ltd. has claimed a sum of Rs. 13.54 lakhs towards refund of advance money for alleged non-supply of computers, alongwith interest thereon. (2)Threatened Litigations - (i)Legal notice from Shivapriya Infotech Ltd. for payment of Rs. 1.40 lakhs being interest plus bank charges for a loan advance taken by the customer for their purchase of hardware/software from Deldot. Shivapriya Infotech Limited has alleged that the Company is liable to pay for the interest because of the delay in repayment of advance dues by the Company to Shivapriya Infotech Limited for a delay in supply of the hardware/software. (ii)Legal notice from Indian Bank for payment of dues of Rs. 11.59 lakhs to it under a tripartite loan agreement. The Bank alleges that it had asked the Company to pay the installments directly to it instead of to Vijaya Leasing Limited to the tune of Rs. 11,59,100. Further, Vijaya Leasing Limited has issued a statement stating that the Company has already cleared its dues with it.
  
  Management Perception : The outstanding litigation and the threatened litigations if pursued and decreed against the Company, would have a marginal impact on the financial stability and performance of the Company.
  
  
• The Company, currently, does not have a Chief Financial Officer. Mr. Chandrakeerthi, the promoter-director, oversees the finance function.
  
  Management Perception: The Company is in the process of appointing a Chief Financial Officer.
  
  
• The trademarks for the company's products - SMILE - Simple Modular Integrated Learning Environment and SCOPE - Software for Customer Oriented Product Education are not yet registered in the Company's name.
  
  Management Perception: The registration formalities are in process. The Company has filed an application dated January 28, 2000 with the Government of India Trademarks Registry, Madras.
  
  
• The Company has not appointed any of the agencies i.e.electrical contractors, interior designers etc. for the Development centre.
  
  Management Perception: The Company has invited quotations from various agencies and is in the process of appointing them.
  
  
• Any fluctuations in the exchange rate will have an impact on the company's export income and also on the cost of the project.
  
  Management Perception: Any increase in project cost will be funded by the Company's internal accruals.
  
  

External Risk Factors

• The market for IT services and products is highly competitive.
  
  Management Perception: The Company relies on its proven ability to provide cost effective and timely solutions, meeting customers expectations to maintain a competitive edge.
  
  
• Rapid technological changes and obsolescence characterise the IT Industry

Management perception: Deldot is into a wide range of IT products and services and has been proactively upgrading the skill sets of all its employees and its infrastructure facilities.

Success in the software services industry is dependent on skilled manpower; low availability levels or high attrition rates which could have an adverse impact on profitability.

Management Perception: The company has several welfare measures including Employee Stock Option Plan, attractive reward package and a congenial work environment to attract skilled manpower and to curtail attrition rates to the lowest possible.

Changes in Government of India (“GOI”) fiscal policies announcement from time to time can have an adverse impact on the profitability of the Company.

Management perception: The IT industry has been identified as a thrust area by the GOI and the Company believes that it is unlikely that the GoI would initiate policies, which could be detrimental to the growth of this industry.

HIGHLIGHTS

Deldot offers a wide spectrum of IT services – networking, data storage solutions, software services and products, imaging and document management, education and training. It is able to leverage its strengths in each of these services to offer turnkey solutions and can meet the total outsourcing needs of a client.

The Company has developed two software products – SMILE - Simple Modular Integrated Learning Environment and SCOPE - Software for Customer Oriented Product Education.

Deldot has been certified as ISO 9002 by BVQI for its Computer System Integration and customer service and support division, which is a part of its networking business division.

NOTES:

The investors are advised to refer to the para on "Basis for Issue Price" before making an investment in this Issue. Investors may note that in case of over-subscription, allotment shall be on proportionate basis.

LITIGATIONS / DEFAULTS OTHER DETAILS

PARTICULARS OF ISSUES MADE BY COMPANIES UNDER THE SAME MANAGEMENT

There have been no issues made by companies under the same management during the last three years.

OUTSTANDING LITIGATIONS

1. Against the Company: There has been no prosecution, criminal or civil and no outstanding litigation including disputed tax liabilities lodged against the Company except as below:
   
   Outstanding litigations against the Company: Shivapriya Infotech Limited has filed a suit for recovery of money against the Company in the City Civil Court at Hyderabad for monies paid as an advance for the supply of 49 computers. In the said Suit, which is still pending, the plaintiff has alleged that the Company did not supply it with the said number of 49 computers for a period of over a year and has claimed a refund of the advance paid of Rs. 10,66,460 in respect of the order along with interest @18% per annum, totaling upto Rs. 13,54,404.20. The Company is contesting the suit and in the event the same is decreed against the Company, the Company would be liable to pay Shivapriya Infotech Limited a sum of Rs. 13,54,404.20 plus interest if so ordered by the court.
   
   Threatened litigations: (1) Shivapriya Infotech Limited has served another legal notice on the Company for payment of Rs. 1,40,379 (being interest on advance amount taken by the Company + 5,290 as bank charges) along with interest @ 20% per annum till the date of realization, towards advance taken by them for the supply of hardware/software. Shivapriya Infotech Limited has alleged that the Company is liable to pay for the interest because of the delay in repayment of the advance a sum of Rs. 5,00,000 due by the Company to Shivapriya Infotech Limited for a delay in supply of the hardware/software. (2) Indian bank has served a legal notice on the Company for payment of dues to it under a tripartite loan agreement entered between the Company, Vijaya Leasing Limited and itself. The Bank alleges that it had asked the Company to pay the installments directly to it instead of to Vijaya Leasing Limited to the tune of Rs. 11,59,100. Further, Vijaya Leasing Limited has issued a statement stating that the Company has already cleared its dues with it.



2. Against the Board of Directors, Promoters, Other Ventures of the Promoters: There has been no prosecutions, criminal or civil, and no outstanding litigation, including disputed tax liabilities lodged against anyone of the board of directors or promoters of the Company or other ventures of the promoters as per the enactment specified under paragraph 1 of Part 1 of Schedule XIII of the Companies Act, 1956.



3. Against the Company’s subsidiaries: There have been no prosecutions, criminal or civil and no outstanding litigation including disputed tax liabilities lodged against the Company’s subsidiary.

Defaults

The Company currently does not have any defaults on any dues on financial facilities taken or on statutory dues However the Company had delayed payments on dues in the past.In the second half of Fy1999 and for the first half of Fy2000, the Company went through a liquidity crunch and as a result defaulted on its payments. During the third quarter of Fy2000, the Company raised funds through a preferential offer. It partly used these funds to retire all its overdues and some debts. The details of the defaults in 1999-2000 are given below:

(Rs.in lakhs)

Institution	Facility	Repayment terms	Nature of delay/Period	Delay in payment during 1999-2000	As at 31st March 2000
KSFC	Hire Purchase/Lease	Monthly Equated Monthly Instalment(EMI) of Rs.7,40,000/-	Delay in payment of six EMIs from April 1999 to September 1999	44.40	No overdues
KSFC	Non-Convertible Debentures	Interest @ 19% Payable half yearly 30th June and 31st December Principal Payable in 5 years as follows: 20% end of 2nd yr 20% end of 3rd yr 20% end of 4th yr 40% end of 5th yr	Delay in payment of Interest of Rs.12.35 lakhs during December 1998. Amount paid on 26th July,1999.	12.35	No overdues
KSIIDC	Equipment Finance scheme	Principal : Quarterly Interest @ 18 % payable Quarterly	Delay in payment of interest of Rs. 9.30 lakhs during the period May 1999 to October 1999	9.30	No overdues
KSIIDC	Corporate Loan	Principal : Quarterly Interest @ 18 % payable	Delay in payment of interest of Rs.9.23 lakhs during the period December 1998 to June 1999.	9.23	No overdues
SIDBI	Term Loan	Principal payable quarterly. Interest @ 17.5 % payable quarterly	Delay in payment of Principal Rs. 14.25 lakhs Interest of Rs 8.74 lakhs during the period December 1998 to October 1999	22.99	No overdues
AVCO FINANCIAL SERVICES	Medium Term Loan of Rs. 45 lakhs	Principal and interest payable on equated monthly instalment Of Rs.2,32,165/-	Delay in the Payment of Four EMIs during the period April 1999 to July 1999	9.28	No overdues
AVCO FINANCIAL SERVICES	Hire Purchase	Principal and interest payable on equated monthly instalment Of Rs. 2,82,621/-	Delay in the payment of Four EMIs during the period April 1999 to July 1999	11.28	No overdues
STATE BANK OF INDIA	Cash credit	On Demand	Excess Credit facility availed during July 1998. The facility was regularized during the period August 1999 to October 1999.	355.17	Facility closed on March 6, 2000.
TATA FINANCE	Lease	Principal and interest payable on equated monthly instalment of Rs.1,53,886/-	Delay in the payment of four EMIs During the period April 1999 to July 1999.	6.16	No overdues
INDBANK MERCHANT BANK	Hire Purchase	Principal and interest payable on equated monthly instalment of Rs.1,21,625/-	Delay in the payment of Seven EMIDuring the period April 1999 to October 1999.	8.50	Facility closed on March 24, 2000.
INDIA EQUPMENT LEASING LIMITED	Hire Purchase/Lease	Principal and interest payable on equated monthly instalment Of Rs.2,56,000/-	Delay in the payment of five EMIs during the period April 1999 to August 1999.	12.80	Facility closed on March 24, 2000.
VIJAYA LEASING LIMITED	Hire Purchase	Principal and interest payable on equated monthly instalment of Rs 100700/-	Delay in the payment of three EMIs during the period April 1999 to June 1999.	3.02	Facility closed on July 31, 1999.
MANIPAL FIN.CORPN. LTD	Hire Purchase	Principal and interest payable on the monthly instalment of Rs. 200740/-	Delay in the payment of three EMIs during the period April 1999 to June 1999.	6.03	Facility closed on Jan 13, 2000.

Notice for Other Defaults

The Company has received a notice form the Registrar of Companies, Bangalore, dated 30/12/99, for not appointing a Company Secretary under Section 383A of the Companies Act.The Company had filed a return of allotment on 30/05/98, for the increase in paid up capital. From the date of increase in capital, the Company had been making serious attempts to appoint suitable candidate as Company Secretary. Subsequently the Company has appointed Mr. Ramesh Kumar Bhat with effect from 1/1/2000 as Company Secretary. The Company has filed the compounding application with the Registrar of Companies, Bangalore.

MATERIAL DEVELOPMENTS

Material developments after the date of the last balance sheet that are likely to affect the performance and prospects of the Company:
The directors opine that to the best of their knowledge, as on date no circumstances have arisen since the date of the last financial statement that materially and adversely affect or are likely to affect the operations of the Company or the value of its assets or its ability to pay its liabilities within the next twelve months.

Other Matters

Investor Grievance Redressal System: The investor grievances against the Company will be handled by the Registrar and Transfer Agents in consultation with the secretarial department of the Company. To handle the grievances received, the Company has appointed Mr. Ramesh Kumar Bhat B, Company Secretary, as the Compliance Officer. He will supervise redressal of complaints received from the investors at the office of the Company as well as the Registrar to the Issue and ensure timely settlement.

Transactions with Companies in the Promoter Group

There are no transactions with the companies in the promoter group.

PART II

1. GENERAL INFORMATION:

CONSENT

Consent in writing of the Directors, Auditors, Lead Managers to the Issue, Underwriters to the Issue, Legal Advisors, Company Secretary, Compliance Officer, Registrars and Bankers to the Issue and Bankers to the Company to act in their respective capacities have been obtained and filed with the Registrar of Companies, Karnataka at Bangalore, along with a copy of this Prospectus required under Section 60 of the Act and none of them have withdrawn their consents upto the time of delivery of a copy of this Prospectus for registration.
M/s. Murali Venkat,Chartered Accountants, the Statutory Auditors of Deldot,have also given their written consent to their report being included form and context in it appears in this Prospectus and also of the tax benefits accruing to the Company and its members and such consent has not been withdrawn upto the time of delivery of a copy of this Prospectus for registration to the Registrar of Companies.

EXPERT OPINION

Save as otherwise indicated elsewhere in the Prospectus, no other expert opinion has been sought for by the Company

CHANGE IN DIRECTORS OF THE COMPANY DURING THE LAST THREE YEARS:

Name	Date of Appointment/Resignation	Remarks
Mr. Nagendra Kumar B K	Resigned on 02.05.98	Resignation
Mr. Sharath Chandra	Appointed on 3-1-2000	Boadbase the Board
Mr. C A Vijaya	Resigned on 15-3-2000	Resignation
Mr. Muneesh Chawla	Appointed as a Nominee Director on 18.4. 2000.	Nominee of M/s IL&FS Venture Corporation Ltd

   CHANGE IN AUDITORS OF THE COMPANY DURING THE LAST THREE YEARS:

Shri M Sai Ganesh,Chartered Accountant was the Auditor of the Company for the years 1993-94 till 1998-99. Consequent to Shri M Sai Ganesh joining M/s Murali Venkat, Chartered Accountants firm as a partner, since April 1999, the audit assignments for the year 1999-2000 is being handled by the firm M/s Murali Venkat, Chartered Accountants, Bangalore. They were appointed as statutory Auditors to the Company vide a resolution passed in the Annual General Meeting held on 28th September 1999.

AUTHORITY FOR THE PRESENT ISSUE

Pursuant to section 81(1A) of the Companies Act 1956, the present Issue of 16,76,600 Shares has been authorised vide Special resolution passed at the Annual General Meeting held on 28^th September 1999. The Board of Directors have approved the Issue by a resolution passed at its meeting held on January 7,2000.

PROCEDURE AND TIME SCHEDULE FOR ALLOTMENT AND ISSUE OF SHARE CERTIFICATES

Deldot reserves at its sole,absolute and uncontrolled discretion and without assigning any reason thereof, the right to accept or reject any application in whole or in part. In case an application is rejected in full, the whole of the application money will be refunded to the applicant. In case an application is rejected in part, the excess application money will be refunded to the applicant within 10 weeks of the closing of the subscription list provided that the Company, as far as possible will allot the equity shares within 30 days from the date of closure of the Issue and shall pay interest @ 15% p.a. for the delayed period if the allotment is not made and /or the refund orders are not dispatched within 30 days from closure of the Issue.

DISPOSAL OF APPLICATIONS AND APPLICATION MONEY

The Company will inform the applicants in respect of the allotments made or applications rejected by dispatch of Allotment Letters/ Share Certificates or Letters of Regret, together, with refund cheques or pay orders or stockinvests, if any, by Registered Post at the applicants sole risk to the first named/ sole applicant within 10 weeks of the closure of the subscription list provided that the Company, as far as possible, will allot the equity shares within 30 days from the date of closure of the Issue and shall pay interest @ 15% p.a. for the delayed period if the allotment is not made and /or the refund orders are not dispatched within 30 days from closure of the Issue.

The Company shall ensure dispatch of Refund Orders of value upto Rs.1500/- Under Certificate of Posting (UCP) and refund orders over the value of Rs 1500/- and Share Certificates by Registered Post only. The Company may also consider, hand delivery of high value Refund Orders against proper authorization of the same. The Company would also make available adequate funds to the Registrars to the Issue for the purpose of dispatch of Refund Orders. The Board of Directors reserves full, unqualified and absolute right to accept or reject an application either in whole or in part and in either case without assigning reasons.

Refunds will be made by cheques/drafts/pay orders or demand drafts drawn on a bank appointed by the Company as a refund banker and bank charges, if any, for encashing such cheques or pay orders at other centres will be payable by the applicants. Such cheque or Pay Order or demand draft will however be payable at par at places where the applications are received, subject to RBI guidelines in this regard.

No receipt will be issued for Application Money.However, the Bankers to the Issue receiving the applications will acknowledge receipt by stamping and returning the detachable acknowledgment slip at the bottom of each Application Form.

If an application is accepted in part, the excess application money will be refunded to the applicant, after making adjustments towards allotment money as mentioned elsewhere in terms of section 73 of the Act, within 10 weeks from the date of the closure of the subscription list.

DISPOSAL OF APPLICATIONS MADE BY STOCKINVEST

The procedure for applications made by cash or cheque or bank drafts will apply mutatis mutandis to applications accompanied by stockinvest except the following:

In case of non allotment , the Registrars to the Issue will return the stockinvest directly to the applicant with the stamp “CANCELLED” and/or “NOT ALLOCATED” across the face of the instrument within 70 days from the closure of the Issue.

On allotment /partial allotment,the Registrars to the Issue shall fill in the amount (which will be less than or equal to the amount filled by the investor) before presenting the stockinvest to the respective issuing Banker for payment to the extent of allotment.The Bank will lift the lien on the balance amount, if any, of the deposit.

INTEREST ON REFUND OF EXCESS APPLICATION MONEY

Payment of interest on the refund of application money at the rate prescribed pursuant to section 73 of the Act will be made to the applicant for the delayed period beyond 10 weeks from the date of closure of the subscription list as per the guidelines issued by the Ministry of Finance, Government of India vide their letter no. F/8/6/SE/79 dated July 21, 1983 as amended by letter no. F/14/2/SE/85 dated September 27, 1985 addressed to Stock Exchanges as further modified by SEBI’s circular number SMO/RCG/33/1819/96.

ISSUE OF SHARE CERTIFICATES

The equity share certificates will be despatched through registered post within two months from the date of allotment,in exchange for the Allotment Letters issued , if any,or within such further time as may be allowed by the Bangalore Stock Exchange or Stock Exchange at Mumbai or the Company Law Board under Section 113 and other relevant provisions of the Act.

SCHEDULE AND BASIS OF ALLOTMENT

In the event of the Public Issue of equity shares being oversubscribed, the basis of allotment will be finalised in consultation with the Bangalore Stock Exchange. Investors may note that in case of oversubscription,allotment will be on a proportionate basis in marketable lots and a SEBI nominated public representative shall be associated in the process of finalisation of the basis of allotment for oversubscription for more than 2 times.

The basis of allotment will be made in the following manner:

a) A minimum of 50% of the Issue shall initially be available for allotment to individual applicants who have applied for 1000 shares or less.

b)The balance shall be made available for allotment to investors, including corporate bodies/institutions, and individual applicants who have applied for more than 1000 shares.

c)The unsubscribed portion of the Issue 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 required.

The allotment will be in marketable lots on a proportionate basis as explained below:

a) Applicants will be categorized according to the number of equity shares applied for;

b) The total number of equity shares to be allotted to each category as a whole shall be arrived at on a proportionate basis, i.e. the total number of equity shares applied for in that category (number of applicants in the category x number of equity shares applied for) multiplied by the inverse of the oversubscription ratio.

c) Number of the equity shares to be allotted to the successful applicants will be arrived at on a proportionate basis, i.e. total number of equity shares applied for by each applicant in that category multiplied by the inverse of the over subscription ratio.

d) In all the applications where the proportionate allotment works out to less than 100 equity shares per applicant, the allotment shall be made as follows:

• Each successful applicant shall be allotted a minimum of 100 equity shares; and

• The successful applicants out of the total applicants for that category shall be determined by draw of lots in such manner that the total number of equity shares allotted in that category is equal to the number of equity shares worked out as per(b) above.

e) If the proportionate allotment to an applicant works out to a number that is more than 100 but is not a multiple of 100 (which is the marketable lot), the number in excess of the multiple of 100 would be rounded off to the higher multiple of 100 if that number is 100 or higher.If that number is lower than 100, it would be rounded off to the lower multiple of 100.All applicants in such categories would be allotted Equity Shares arrived at after such rounding off. If the process of rounding off to the nearest multiple of 100 results in the actual allotment being higher than the equity shares issued, Deldot may allot additional equity shares upto a maximum of 10% of the size of the Issue.

f) If the shares allotted on a proportionate basis to any category is more than the shares allotted to the applicants in that category, the balance available shares for allotment shall be first adjusted against any other category, where the allotted shares are not sufficient for proportionate allotment to the successful applicants in that category. The balance shares, if any, remaining after such adjustment will be added to the category comprising applicants applying for minimum number of shares.

The Company agrees that there will be at least 5 public shareholders for every Rs. 1 lakh of net capital Issue made to the public out of the public Issue.

INVESTOR GRIEVANCE REDRESSAL SYSTEM/COMPLIANCE OFFICER

Since this is first Issue for Public subscription from Deldot, there are no outstanding grievances from investors. To ensure that the grievances of investors are expeditiously attended to, Deldot proposes to set up a share department at its Corporate Office and also proposes to appoint Registrar and Transfer agents. Investors may note that Mr. Ramesh Kumar Bhat B, Company Secretary, has been appointed as the Compliance Officer and he may be contacted in case of any post Issue related matters at the Corporate Office address given elsewhere in Issue document.

COMPANY INFORMATION

REGISTERED AND CORPORATE OFFICE

Deldot Systems Ltd.
431/28, 10th Main Road,
IVth Block, Jayanagar,
Bangalore – 560 011
Phone: 080-6341437,
Fax : 080-6634976,
Website: www.deldot.com

COMPANY SECRETARY AND COMPLIANCE OFFICER OF THE COMPANY
Mr. Ramesh Kumar Bhat B
431/28, 10th Main Road,
IVth Block, Jayanagar,
Bangalore – 560 011
Phone: 080-6341437,
Fax : 080-6634976,
Website: www.deldot.com

ISSUE MANAGEMENT TEAM

LEAD MANAGERS TO THE ISSUE
Enam Financial Consultants Pvt Ltd
801/ 802 Dalamal Towers
Nariman Point, Mumbai – 400 021
Phone: (022) 282 8554/57/59/60

ILFS Merchant Banking Services Ltd.
Hoechst House, 17^thFloor
Nariman Point
Mumbai – 400 021
Phone: (022) 281 8887
Fax: (022) 281 8879

REGISTRAR TO THE ISSUE
Karvy Consultants Limited
“Karvy House”, 46, Avenue 4
Street No. 1, Banjara Hills
Hyderabad – 500 034
Phone: (040) 331 2454/ 332 0751
Fax: (040) 331 1968

AUDITORS OF THE COMPANY
M/s Murali Venkat
No. 14/2, III Floor, Opp. Vikrant Tyres
H Siddiah Road, Bangalore – 560002
Phone: (080) 221 0257, 2291623
Fax: (080) 2276097

BANKERS TO THE ISSUE
LEGAL ADVISOR TO THE ISSUE
Udwadia, Udeshi Berjis (REGD.)
Solicitors & Advocates
Thomas Cook Building, 3^rdFloor,
324, D. N. Road, Fort,
Mumbai 400 001.
Phone : (022) 2883345
Fax: (022) 2871437

BROKERS TO THE ISSUE

All the members of the recognized stock exchanges in India are brokers to the Issue.

AUDITORS REPORT

Date:24^thApril 2000

To,
The Board of Directors,
M/s Deldot Systems Limited,
431/28, 10^th Main, 4^thBlock,
Jayanagar, Bangalore – 560 011.

Dear Sirs,

As required by Part II of Schedule of II to the Companies Act, 1956 and Securities & Exchange Board of India (Disclosure & Investor Protection) Guidelines, 1999 issued on January 19 2000, (“The Guidelines”) in pursuance of Section 11 of the Securities & Exchange Board of India Act, 1992, we have examined the financial information contained in and annexed to this report which is proposed to be included in the prospectus of Deldot Systems Limited (“the Company”), in connection with the public issue of 16,76,600 Equity Shares (nominal value of Rs. 10/- each), at Rs.80/- each, we report that:

Financial information as per audited financial statements

1) We have reviewed the Balance Sheets of the Company as at March 31, 1996, March 31, 1997, March 31, 1998, March 31, 1999 and March 31, 2000 and the Profit & Loss Account for five years ended March 31,2000 enclosed in Annexure I & II to this report (financial statements). Based on our review of these financial statements, we confirm that



The Profits, Assets & Liabilities of the Company have been correctly included in Annexure I and II to this report in accordance with the provisions of the Section B (1) of part II of Schedule II of Companies Act, 1956.



The impact of qualification in auditors report with reference to the changes in the accounting policies, where applicable have been disclosed with and without adjustments for the sake of clarity.

2) The Significant Accounting Policies adopted by the company are enclosed in Annexure III to this report.

3)Details of the changes in Accounting Policies are enclosed in Annexure IV to this report.

4)The relevant Notes to the Accounts pertaining to the audited financial statements for the year ended March 31, 2000 are given in Annexure V to this report.

5)The Qualifications to Accounts by Auditor’s is enclosed in Annexure VI.

6)The Aging Schedule of Sundry Debtors of the Company as on 31^st March 2000 is enclosed in Annexure VII.

7)Capitalization Statement of the Company as at 31^st March 2000 is given in Annexure VIII.

8)The Taxation Statement of the Company is given in Annexure IX.

9)Financial Information in respect to basis of issue price is enclosed in Annexure X.

10) The principal terms of loans & assets charged as securities as on 31^st March 2000 are given in Annexure XI.

11)The break up of Loans and Advances as on 31^stMarch 2000 is furnished vide Annexure XII.

12)Accounting Ratios of the Company are enclosed vide Annexure XIII.

13)As there are no Unsecured Loans from promoters/promoter group/group companies as on 31^st March 2000, no separate break up is furnished.

14)There are no transactions of sales / purchases of the Company for the year ended 31^st March, 2000 with the promoters/promoter group/group companies as defined in guidelines.

15)As there are no receivables due from promoters/promoter group/group companies during all the relevant years under consideration, no separate break up is furnished.

16)The Company has not paid any dividend out of the profits earned in any of the four financial years ended on March 31^st 1999. The Company has made a provision for dividend payment of Rs 25,98,943/-(10% on a pro rata basis) for the year ended 31^st March 2000.

17)Break up of other income has not been furnished,as the same is less than 20 % of the profit before tax in each of the relevant years.

In our view the financial information as per audited financial statements and other financial information mentioned above are in accordance with the relevant requirements of Part II of Schedule II of Companies Act, 1956 and the Guidelines issued by SEBI.

For Murali & Venkat
Chartered Accountants


Sd/-
M.Sai Ganesh
Partner

STATEMENT OF ASSETS AND LIABILITIES AS AT MARCH 31st

Rs in Lakhs.

PARTICULARS	1999-2000	1998-1999	1997-1998	1996-1997	1995-1996
A. Fixed Assets
Gross Block	886.69	552.85	274.48	160.55	56.23
Less Depreciation	340.46	180.10	93.26	39.63	11.73
Net Block	546.23	372.75	181.22	120.92	44.50
Less: Revaluation Reserve	-	-	-	-	-
Net Block after adjustment of Revaluation Of Reserve	546.23	372.75	181.22	120.92	44.50
Capital work-in-progress	182.29	-	-	-	-
Total	728.52	372.75	181.22	120.92	44.50
B. Current Assets, Loans & Advances
Inventory	784.34	281.52	138.30	117.84	54.41
Sundry Debtors	1,362.75	607.26	375.26	134.08	56.10
Cash & Bank Balances	114.45	83.81	78.96	42.30	21.04
Other Current Assets & Loans & Advances	693.00	91.61	35.02	22.77	25.79
	2,954.54	1,064.20	627.54	316.99	157.34
Less current liabilities and provisions
Current Liabilities	1,018.06	518.92	317.42	44.98	27.96
Provisions	94.08	21.75	15.33	11.10	8.42
Total	1,112.14	540.68	332.75	56.08	36.38
C. Net Current Assets	1,842.40	523.52	294.79	260.91	120.96
D. Total Assets	2,570.92	896.27	476.01	381.83	165.46
E. Loan Funds: Secured Loans	386.13	634.13	338.44	302.01	106.14
Unsecured Loans	-	-	1.50	3.38	2.80
Total	386.13	634.13	339.94	305.39	108.94
F. Net Worth	2,184.79	262.14	136.07	76.44	56.52
G. Represented by Share Capital Equity Share Capital	502.74	58.10	0.03	0.03	0.03
Share Application Money	-	-	50.07	40.07	40.07
Total	502.74	58.10	50.10	40.10	40.10
Reserves & Surplus	1,738.25	204.04	85.97	36.34	16.42
Less: Miscellaneous Expenditure (56.20) Total	2,184.79	262.14	136.07	76.44	56.52

  STATEMENT OF PROFITS AND LOSSES FOR THE YEAR ENDED MARCH 31ST

PARTICULARS	1999-2000	1998-1999	1997-1998	1996-1997	1995-1996
Income Sales:
Manufactured / Developed by Company	806.91	629.21	534.64	314.93	177.69
Distribution and Integration of Solution & Systems	2334.06	1885.62	1445.52	851.48	435.05
Other income from Operations	20.61	18.98	5.39	4.10	1.24
Total Income	3,161.58	2,533.81	1,985.55	1,170.51	613.98
Expenditure Cost of Goods Sold	1,930.48	1,926.46	1,580.15	937.36	492.43
Other Manufacturing Expenses	210.84	146.49	98.56	66.37	40.26
Administrative Expenses	329.87	136.44	111.94	57.05	34.40
Interest	158.11	99.53	77.65	50.47	17.38
Depreciation	160.36	86.84	53.63	27.90	10.50
Total Expenditure	2,789.66	2,395.75	1,921.93	1,139.15	594.97
Net Profit before Tax and Extra ordinary item	371.92	138.06	63.62	31.36	19.01
Taxation	62.40	20.00	14.00	11.45	7.75
Profit After tax & before Extra ordinary item	309.52	118.06	49.62	19.91	11.26
Proposed Dividend	25.99
Corporate Dividend Tax	2.60
Net profit after Extra ordinary items and tax	280.93	118.06	49.62	19.91	11.26

For the Years 1995-96 to 1999-2000 , the figures have been revised with regard to the change in accounting policy of the company during 1999-2000 relating to increased depreciation provision on Fixed Assets.  The effects on the profitability of the company due to the above change is reflected in the table below

Net Profit : A. Net Profit before Tax	371.92	138.06	63.62	31.36	19.01
B. Depreciation as per Changed Policy	160.36	86.84	53.63	27.9	10.5
C. Depreciation as per Companies Act, 1956	32.14	18.04	10.41	6.13	2.43
D. Excess Depreciation Charged	128.22	68.8	43.22	21.77	8.07
E. Profit before Tax adjusted for excess	500.14	206.86	106.84	53.13	27.08
Depreciation ( A+D) F. Taxation (Including Dividend Tax)	65	20	14	11.45	7.75
G. Profit After Tax	435.14	186.86	92.84	41.68	19.33

Accounting Ratios

	March 31,2000	March 31,1999	March 31,1998	March 31,1997	March 31,1996
Earnings Per Share (Rs.)	6.16	20.32	9.9	4.97	2.81
Cash Earnings Per Share (Rs.)	9.35	35.27	20.61	11.92	5.43
Net Assets Value Per Share (Rs.)	43.46	45.12	27.16	19.06	14.09
Return on Networth(%)	14.17	45.04	36.47	26.04	19.92
No.of Equity Shares  of Rs 10/- Each ( Including Share Application Money pending allotment)	5027400	581000	501000	401000	401000

1. Basic earning per share represents earnings per share on the basis of profit after Tax divided by number of shares at the end of the year including share application money pending allotment.  2. Cash Earnings per share represents profit after tax plus depreciation divided by the number of shares at the end of each financial year including share application money pending allotment.  3. Net Assets value has been computed on the basis of net equity method .  4. Return of Networth represents profit after tax divided by net worth at the end of each financial year.  5. For the year ending March 96,March 97,and March 98 respectively number of equity shares include ,shares to be allotted against share application money pending allotment

Annexure III

Significant accounting policies

1.16 Basis of preparation of financial statements


1.16.1 The financial statements have been prepared under the historical cost convention in accordance with Indian Generally Accepted Accounting Principles (GAAP), the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956, as adopted consistently by the company. All revenues and expenses are recognized on the basis of their accrual.

1.17 Revenue Recognition

1.17.1 Sale of Goods: Revenue from sale of goods is recognised based on contract terms with the passing of titles/despatch of goods to customers. The Revenues from installation and commissioning relating to the sale of Information Technology equipments are recognized on completion of acceptance terms. The sale value includes taxes and duties.



1.17.2 Education and Training: Revenues from the services of education and training are recognized on accrual basis.



1.17.3 Revenue from Software Development Services.


1.17.3.1 From Specific contracts (Time and Material): Revenues are recognized based on time invested and materials spent/incurred for the software developed in case of contracts which are silent on milestones and in cases where the contracts specifically mention milestone achievements, the revenues are recognized based on such milestones and are billed to clients as per the terms of contract.



1.17.3.2 From Fixed price contracts: The revenues are recognized based on the percentage of completion/ milestones achieved.



1.17.3.3 In case of software products developed by the company for specific customers, revenues are recognized at the time of delivery of license to use is made over to customers.



1.17.4 In case of technical support and maintenance services, Revenues are recognized on accrual basis.

1.18 Expenditure


1.18.1 Expenses are accounted on accrual basis and provision is made for all known losses and liabilities.


1.18.2 The cost of software purchased for use in Software Development and services is charged to revenue in the same year of purchase.

1.19Fixed Assets

1.19.1 Fixed Assets are stated at cost of acquisition inclusive of freight, duties, taxes and interest on borrowed money allocated to and utilized for fixed assets pertaining up to the date of capitalization.

1.20 Capital Work in Progress

1.20.1 Capital Work in Progress includes advances made for acquisition of fixed assets and the cost of assets acquired but not put to use before the year-end.

1.21 Depreciation
The company has changed its Accounting Policy for providing Depreciation on certain fixed assets prospectively from 1.4.99 from the rates applicable and were followed consistently in the previous years as per the Schedule XIV of the Companies Act, 1956 to the following accelerated rates under straight line method computed based on useful lives as estimated by the management, keeping in mind the provision of higher outlays for earlier replacement of fixed assets and also their high obsolescence rate, in respect of the following fixed assets:

In respect of all other assets, the company continues to charge the applicable rates of depreciation under schedule XIV of the Companies Act, 1956 as per Straight Line Method.


1.21.1 Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing less than Rs.5,000/- are charged of to the revenue in full in the year of purchase.

1.22 Investments


1.22.1 Investments are valued at cost.


1.22.2 Investments in subsidiaries are valued at cost. In case of any decline in the value of investments made, adequate provisions, if required, would be made.

1.23 Inventories


1.23.1 Inventories are valued at lower of cost or net realizable value after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Spares and consumables are charged off to revenue in the year of purchase. Costs are arrived based on the weighted average method. Costs inclusive of all such expenses incurred in bringing the inventory to the present condition.

1.24 Retirement benefit to employees


1.24.1 Company’s liability towards retirement benefits in the form of Provident Fund is fully funded and charged to expenditure. Provision for gratuity is made based on the actuarial computation done by the management.

1.25 Research and Developement


1.25.1 Expenses incurred on Research and Development are charged to revenue in the same year. Fixed assets purchased for research and development purposes are capitalized and depreciated as per the company’s policy.

1.26 Miscelleneous Expenditure


1.26.1 Product Promotional Expenditure
The Company spends amounts on promotional activity of new product lines every year. The promotional expenditure incurred for the same has been treated as deferred revenue expenditure and the same is to be written off in the year in which substantial revenues are generated from the respective product lines.

1.27 Foreign currency transactions and translations


1.27.1 All transactions in foreign currencies are recorded on the basis of the exchange rate as on the date of transaction. Disbursements made out of a foreign currency bank account, are accounted at a rate, which approximates the actual rate during the period normally taken as a month. The difference if any on actual payment / realization is charged off to revenue. Foreign currency assets and liabilities are restated at rates ruling at the year-end, wherever applicable. The net loss or gain arising out of such conversion is dealt with in the Profit and Loss account.

1.28 Sundry Debtors and receivables


1.28.1 Sundry Debtors and other receivables are stated after making adequate provisions for doubtful debts.

1.29 Income Tax


1.29.1 Provision is made for income-tax on a yearly basis, under the tax payable method, based on taxliability, as computed after taking credit for allowances and exemptions under the Income Tax Act 1961.

1.30 Contingent Liabilities


1.30.1 Contingent Liabilities are shown by way of notes to the financial statements.

Changes in the Accounting Policies of the Company
Change in the method of Depreciation provision.
During the previous years, depreciation was provided under the straight line method at the rates in the manner prescribed under Schedule XIV of the Companies, 1956. However, the company has changed its Accounting Policy pertaining to the provision of depreciation to a higher rate
Notes to Accounts

2.8 Change in the method of Depreciation provision


2.8.1 During the previous years, depreciation was provided under the straight line method at the rates in the manner prescribed under Schedule XIV of the Companies, 1956. However, the company has changed its Accounting Policy pertaining to the provision of depreciation to a higher rate as described vide Clause 1.6 above. Due to the change in the method of depreciation provision, net profit has been understated to the tune of Rs.1,28,22,374/- lakhs, otherwise net profit would have been Rs 4,35,14,375/- lakhs.

2.9 Secured Loans


2.9.1 Rupee term loans availed from KSIIDC Ltd,SIDBI and The Associates India P Ltd (previously known as AVCO Financial Services Pvt Ltd) are secured by way of hypothecation of respective machinery and the personal guarantees of promoter directors.


2.9.2 Non-convertible debentures issued to KSFC are secured by way of mortgage/hypothecation of assets already secured to the corporation for Hire Purchase facility and the personal guarantees of the promoter directors.


2.9.3 Hire Purchase and lease facilities obtained from institutions are secured by the charge on the assets acquired out of the loan and the personal guarantees of promoter directors.


2.9.4 Vehicle loans are secured by the vehicles purchased under the facility.


2.9.5 Working Capital Demand loan credit facilities availed from Industrial Development Bank of India is secured by hypothecation of current assets, Second charge on unencumbered existing fixed assets, first charge on Fixed Assets to be acquired through Public Issue proceeds and also the personal guarantees of the promoter directors.

2.10 Managerial Remuneration


2.10.1 A sum of Rs. 11,53,000/- has been paid to the promoter directors as managerial remuneration and the said sum is within the overall maximum remuneration stipulated under the Companies Act 1956. The company has changed the pattern of managerial remuneration from 1^st October 1999.

2.11 Miscelleneous Expenditure
The Company during the year has incurred an amount of Rs. 56,20,072/- towards product promotional expenditure in the area of Imaging and Document Management Solutions. The said amount has been set aside to be written off over future earnings against the sale of Imaging and Document Management.

2.12 Earning and expenses in foreign Exchange are reckoned on receipt and payment basis.Earning in foreign exchange: USD 2,454 (INR1,06,626/-). Outflow of foreign exchange in respect of overseas travel expenditure Rs.23.09 Lakhs.


2.12.1 Sales includes software exports amounting to USD 1,20,000 (INR 52,20,000/-) and other income includes commission received from foreign principal USD 2,454 (INR 1, 06,626/-)


2.12.2 Confirmation of balances in Sundry Debtors, Sundry Creditors and Loans and Advances are subject to receipt of confirmations from the parties.


2.12.3 There are no dues to Small scale industries outstanding for more than a month as at the end of the period.

3 Contingent Liabilities

3.1 Estimated amount of contracts, remaining to be executed on capital account and not provided for(net of advances paid) Rs. Nil (Previous Year Rs. Nil)


3.2 The Company has issued counter guarantees to its bankers for guarantees issued by them for various statutory purposes, earnest money deposits, security deposits and performance guarantees amounting to Rs. 12.39 Lakhs (As on 31-03-99 Rs. 74.14 Lakhs) and has issued guarantee on behalfof business partners to M/s KSFC, Bangalore.Principal amount outstanding Rs.21.03 Lakhs (As of 31-03-99 Rs.63.73 Lakhs).


3.3 The company has various letters of credit outstanding,issued by bankers to various vendors amounting to Rs nil(As on 31-03-99 Rs. 192.92 Lakhs)


3.4 Claims against the company, not acknowledged as debts,amounted to Rs. 26.53 lakhs.(Previous year Rs. Nil)


3.5 Liabilities on Disputed taxes Rs. Nil(Previous Year Rs. Nil)


3.6 Future commitments on finance lease rentals payable Rs 51.75 Lakhs. (As on 31-03-99 Rs.97.95 Lakhs)


3.7 The Previous year’s figures have been regrouped and recast, wherever necessary to conform to current year classification.

Annexure VI
Qualifications to the accounts for the year ended 31^st March 2000
Due to the change in the method of depreciation provision, net profit has been understated to the tune of Rs.1,28,22,374/- lakhs for the year ended 31^st March 2000, otherwise net profit would have been Rs 4,35,14,375/- lakhs.

Annexure VII
AGING SCHEDULE

DELDOT SYSTEMS LIMITED
I . AGEWISE ANALYSIS OF SUNDRY DEBTORS AS ON 31-03-2000 (RS. IN LACS)
(Unsecured - considered good)
DAYS	< 30 DAYS	31 - 60	61 - 90	91 - 120	>120	Total
AMOUNT	751.71	191.41	168.02	202.40	49.21	1362.75

Annexure VIII
CAPITALISATION STATEMENT

PARTICULARS	Pre Issue as at 31st March 2000	As adjusted for the offer at issue price Rs. 80.
Short Term Debt	1112.15	1112.15
Long Term Debt	386.13	386.13
Shareholders Funds a) Share Capital	502.74	670.4
b) Reserves & Surplus	1880.1	3053.72
Total	3881.12	5222.40
Long Term Debt/ Equity	0.16	0.10

Annexure IX

TAXATION STATEMENT	1995-1996	1996-1997	1997-1998	1998-1999	1999-2000
Tax at Notional Rate	12.46	22.85	37.39	72.40	143.19
Adjustments 80IA Deduction	5.81	8.39	13.79	20.74	74.79
Difference between Tax Depreciation and Book Depreciation	7.71	25.18	60.87	147.56	122.63
Other Adjustments	0	0	0	-9.84	0
Net Adjustments	13.52	33.57	74.66	158.46	197.42
Tax Savings thereon	6.22	14.44	26.13	55.46	76.01
Total Taxation	6.24	8.41	11.26	16.94	67.18
Tax under MAT on book profit				21.72
Taxation on extra-ordinary items	0	0	0	0	0
MAT Credit carry forward					-4.78
Tax on profits before extra ordinary items	6.24	8.41	11.26	21.72	62.40

LOANS AVAILED AND ASSETS CHARGED

As per provisions of Section 113 of the Act, debenture certificates are required to be issued within three months of the debentures being allotted. The company has not yet issued debenture certificates and paid the corressponding stamp duty as per the provisions of the Indian Stamp Act, in respect of the 19%secured redeemable, non-convertible debentures issued to Karnataka State Financial Corporation(KSFC). Furthermore, the company is yet to apply to the Company Law Board seeking an extension for the above period.

Annexure XI
DETAILS REGARDING LOANS AVAILED AND ASSETS CHARGED

A. LONG TERM BORROWINGS OF THE COMPANY

Financial Institution	Facility	Amt. OutstandingOn 31.3.2000 (Rs. in lakhs)	Interest %	Repayment Terms	Date of Disbursal	Security
KSFC	Non Convertible Debenture	104.00	19.00	20% Yearly over 5years	31-Dec-97	1) Personal Guarantee Of Directors, 2) Charge on the Current Assets & Fixed assets of Company 3)Mortgage/hypothecation of Assets already secured to the corporation for HP facility 4) Collateral securities of property belonging to third party
Bank of India	Hire Purchase- Vehicle	47.72	EMI - 2.14 L	EMI- 35 months	02-Feb-00	1) Personal Guarantee Of Directors 2) Hypothecation of Vehicles.
KSIIDC LIMITED	Equipment Finance Scheme	180.00	19.00	Quarterly,5years repayment	28-Feb-99	1) Personal Guarantee Of Directors 2) Collateral securities of property belonging to third party 3) Charge on the assets acquired out of the loan
KSIIDC LIMITED	Corporate Loan Facility	closed	19.00	Quarterly over 18 Months	13-Mar-98	1) Loan Agreement 2) Personal Guarantee Of Directors 3) Hypothecation of Machinery of the Company valued Rs. 25 Lakhs 4) Collateral securities of property belonging to third party
Associates India Financial Services P Ltd	Term Loan	18.00	22.00	EMI- 24 months	21-Jan-99	1) Personal Guarantee Of Directors     2) Collateral Securities of the property of the third Party
Associates India Financial Services P Ltd	Hire Purchase- Equipments	22.04	EMI 2.32 L	EMI- 24 months	3-Feb-99	1) Personal Guarantee Of Directors 2) Collateral Security of the property belonging to third party
Term Loan - SIDBI	Equipment Finance	14.35	17.50	Quarterly,3years repayment	29-Jul-97	1) Hypothecation of Plant & Machinery acquired out of the loa 2) Personal Guarantee Of Directors 3) Collateral Security of the property belonging to third party
India  Equipment Leasing Ltd	Hire Purchase - Equipment & Vehicles	Facility closed	EMI 1.97L	EMI - 36 months	April 97 onwards	1) Hypothecation of Equipment & Vehicles acquired out of the loan 2) Personal Guarantee Of Director 3) Collateral Security of the property belonging to third party
Indbank Merchant Banking Services Ltd	Hire Purchase - Equipment	Facility closed	EMI 1.22 L	EMI - 36 months	June 97	1) Hypothecation of Equipment & Vehicles acquired out of the loan 2) Personal Guarantee Of Directors
KSFC	Lease - Equipment	39.67	EMI1.44L	EMI - 48 months	7-2-98	1) Personal Guarantee Of Directors 2) Collateral Security of the property belonging to third party
TATA Finance Ltd	Lease - Equipment	12.08	EMI 1.53 L	EMI - 36 months	Oct 97	1) Personal Guarantee Of Director2) Collateral Security of the property belonging to third party B. Working Capital Loan Details

B. Working Capital Loan Details
Thecompany enjoys a sanctioned Working Capital Demand Loan facility of Rs.1150 Lakhs from M/s IDBI, Bangalore, out of which it has utilized an amount of Rs.975 Lakhs as of March 31,2000.

The above working capital facilities are secured by hypothecation of stocks, stores and spares, receivables and other moveable assets and second charge on fixed assets of the Company and also Personal Guarantee of Directors. The promoters have pledged their Lock in portion of equity shares and an additional 80000 free equity shares belonging to them with M/s IDBI as collateral security, for the above loan.

Annexure XII

Breakup of Loans and Advances as on March 31,2000

Loans and Advances	(Rs.)
(Advances recoverable in cash or in kind for a value to be received considered good)
Trade Advances	40,309,074
Earnest Money Deposits	12,169,438
Rental / Security deposits	10,335,000
Telephone deposits	338,800
Other advances	4,148,535
Advance Tax Paid - Income Tax	2,000,000
Total	69,300,847

STATUTORY AND OTHER INFORMATION

MINIMUM SUBSCRIPTION

If the company does not receive the minimum subscription of 90% of the net offer to public including devolvement of Underwriters within 60 days from the date of closure of the issue, the company shall forthwith refund the entire subscription amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the company shall pay interest prescribed under Section 73 of the Companies Act 1956.

    EXPENSES OF THE PRESENT ISSUE

The expenses of the Issue including underwriting commission, brokerage, fees to Lead Managers and Registrars to the Issue, stamp duty, printing, distribution and publication expenses, advertisement expenditure, registration fees, legal and professional charges, bank charges, auditors fees, and other miscellaneous expenses estimated at Rs. 160 lakhs are payable by the Company and will be met out of the proceeds of the present Issue. Fees for listing its shares at stock exchanges will be paid by the Company

    FEES PAYABLE TO THE LEAD MANAGER TO THE ISSUE

The fees payable to the Lead Manager to the Issue, (apart from reimbursement of actual out of pocket expenses) is set out in their letter of appointment, copies of which are kept open for inspection at the Registered office of the Company.

    FEES PAYABLE TO THE REGISTRAR TO THE ISSUE

Fees payable to the Registrars to the Issue are set out in their letter of appointment copies of which are kept open for inspection of the registered office of the Company. In addition to the above, the expenses incurred for postage, envelopes, binding charges, binder’s labour and other incidental expenses are to be reimbursed on an actual basis.

    UNDERWRITING COMMISSION AND BROKERAGE

Underwriting commission is payable at 2.5% to the underwriters on the Issue price of equity shares issued by this Prospectus to the public for subscription and underwritten in the manner mentioned earlier in the prospectus.

Brokerage will be paid by the Company at the rate of 1.50% of the equity shares on the basis of allotment made against applications bearing the stamp of a member of any recognized stock exchange of India in the brokers column in the application form. Brokerage at the same rate will also be payable to the Bankers to the Issue in respect of allotment made against applications procured by them provided application forms bear their respective stamps in the Brokers column. In case of tampering or overstamping of the broker codes on the application form, the Company’s decision to pay brokerage in this respect will be final and no further correspondence will be entertained in this matter.

    PREVIOUS ISSUE OF CAPITAL IN THE LAST FIVE YEARS

The company has not made any public issue previously.The details of issue of capital have been outlined in the paragraph on the buildup of the share capital under the Capital Structure.

    PREVIOUS COMMISSION AND BROKERAGE

No sum has been paid by Deldot since its incorporation or is payable as commission for subscribing or procuring or agreeing to subscribe or procure subscription for any shares or debentures of Deldot.

    ISSUE AT A PREMIUM OR DISCOUNT

The Company has not made any public issue of shares at a premium or discount since inception. The Company has however issued shares at a premium of Rs. 70/- on a private placement basis in FY2000 details of which are mentioned elsewhere in the prospectus

    PREVIOUS ISSUE OF SHARES OTHER THAN FOR CASH

There is no issue of shares or debentures for consideration other than cash, except by way of the Bonus Shares as mentioned under notes on Capital Structure.

    DEBENTURES AND REDEEMABLE PREFERENCE SHARES

The Company has not issued any public issue of debentures or redeemable preference shares since its inception. It has however issued Non Convertible Debentures on a private placement basis to Karnataka State Finance Corporation (KSFC),details of which are given under the paragraph `Details regarding loans availed and assets charged' as part of the Auditors' Report. It placed a total of 130,000 Non Convertible Debentures of Rs. 100/ - each aggregating to Rs. 130 lakhs redeemable over a period of five years. As on March 31,2000, the amount outstanding is Rs.104 lakhs.

    OPTION TO SUBSCRIBE

The Company has not entered into any contract or arrangement nor does it at present proposes to enter into any contract or arrangement whereby any option or preferential right of any kind has been or is proposed to be given to any person to subscribe for any shares or debentures of Deldot.

Investors may note that as per SEBI circular no. RMB (compendium) 2(1999-2000) dated February 16, 2000, trading in securities of Companies making an initial public offering shall be in dematerialised form only. Applicants have the option either to receive the share certificates or to hold the securities with a depository.

    CAPITALISATION OF RESERVES OR PROFITS

Company has issued and allotted the under mentioned equity shares as bonus shares by capitalisation of free reserves.

Date of Allotment	No. of Shares of Face Value Rs.10/-	Bonus Ratio
20-09-99>	23,24,000	4:1

    CLASSES OF SHARES

The authorised capital of the Company consists of 75,00,000 equity shares of Rs. 10/- each. The Company has not issued any preference shares to date.

    PRELIMINARY EXPENSES

As on March,2000 all preliminary expenses were written off.

    PURCHASE OF PROPERTY

There is no property which the Company has purchased or acquired or proposes to purchase or acquire, which is to be paid for wholly or partly out of the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of the issue of this prospectus, other than property:

            a)

the contracts for the purchase or acquisition whereof entered into, or may be entered into, in the ordinary course ofthe Company’s business , such contracts not being made in contemplation of the Issue or in consequence of the contract, or,

            b)

in respect of which the purchase money is not material.

The Company has not purchased any property in which any of its Promoters and/or Directors have any direct or indirect interest in any payment made thereof.

    DETAILS OF DIRECTORS

The details of directors are as given in the earlier part of the prospectus.

    INTEREST OF PROMOTERS AND DIRECTORS

For the year ended March 2000, the company had executed software projects/products of Rs. 52.20 lacs for Paskon Inc., in which Mr Sharath Konanur is one of the directors. Paskon Inc. and Deldot have signed a memorandum of understanding to jointly market their products/services. These transactions are being done on professional terms and conditions.

All the Directors are interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee thereof as well as to the extent of other remuneration, disbursement of expenses payable to them under the Articles. The Directors are also interested to the extent of shares if any already held by them in the Company or that may be subscribed for and allocated to them out of the present Issue.

The Directors may also be regarded as interested in shares that may be held by or that may be subscribed by and allotted to them by the Companies in which they are interested as Directors and/or members.

All Directors may be deemed to be interested in the contracts, agreements/arrangements entered in to or to be entered into by the Company in which they hold Directorships.

No Director of the company is interested in the appointment of any of the Managers, Registrars and Bankers to the Issue. No director of the Company is interested in any property acquired by the Company within 2 years of the date of the Prospectus or proposed to be acquired by it.

    PAYMENTS OR BENEFITS TO DIRECTORS AND OFFICERS OF THE COMPANY

Save as stated herein, no amount or benefit has been paid or given to the Company’s Directors or Officers of the Company, except the normal remuneration and/or reimbursement for services as Directors, officers or employees of the Company.

    REVALUATION OF ASSETS

The Company has not revalued any of it's assets since it's inception.

    MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

    II. SHARE CAPITAL & VARIATION OF RIGHTS

            a

Authorised share capital of the Company shall be such amount as may from time to time be Authorised by the memorandum.    b. The Company shall have the power to increase or reduce the capital for the time being of the Company and to divide the shares in the capital into several classes with rights, privileges or conditions as may be determined. The Company may issue preference shares which shall, or at the option of the Company shall be, liable to be redeemed, subject to the provisions of the Companies Act, 1956.

The Company shall have power to issue shares carrying non-voting rights from time to time as per the guidelines or rules framed by The Government or the Agencies of the Government regulating the stocks and securities and /or OTCEI or Stock exchanges where the shares of the companies are listed.

Subject to the provisions of the Companies Act, 1956, and according to the Regulations if any issued from time to time by the Securities Exchange Board of India, or OTCEI or similar other Government agencies regulating the stocks and securities market, and subject to the provisions of listing agreements, the Company shall have power to determine and vary the rights of holders of non voting shares from time to time.

            6a.

The shares shall be under the control of the Board who may classify, allot or otherwise dispose of the same to such persons on such terms and conditions and either at a premium or at par or subject to the provisions of the Act at a discount and at such terms as the Board thinks fit and with full power to make call for the allotment of any share either at par or at a premium or at a discount and for such term and for such consideration and as the Directors may think fit. The right attached to different classes of shares may be varied in accordance with the provisions of the sections 106 & 107 of the Companies Act and rules made there under. Provided that option or right to call of shares shall not be given to any person except with the sanction of the Company in General Meeting.

            b.

  Subject to the provisions of the Companies Act, 1956,and according to the Regulations if any issued from time to time by the Securities Exchange Board of India, or similar other Government agencies regulating the stocks and securities market, and subject to the provisions of listing agreements with Stock Exchange and Regulations framed thereunder, the company is authorised to buy and deal in its own shares in such a manner as the Board may deem fit from time to time which however does not amount to reduction of share capital

            7a.

   The joint holders of shares shall severally as well as jointly be liable for payment of all instalments and calls due in respect of such shares.

            6a.

  Application for allotment of shares in the names of minors could be made through their natural guardians, provided full amount payable on the face value of shares is paid along with such application for shares and application for allotment of shares by Hindu undivided families may be made through their karta or co-parceners.

    III. LIEN OF SHARES

Provisions contained in Regulation 9 To 12 of Table A in Schedule I to the Companies Act, 1956, shall mutatis mutandis apply.

    IV. CALLS ON SHARES

The Company may, subject to compliance with the provisions of section 76 of the Act, exercise the power of paying commission. The Company may pay on the issue of shares or debentures such brokerage as may be lawful.

Provisions contained in Regulation 13 To 18 of Table A Schedule I to the Companies Act, 1956, shall mutatis mutandis apply.

The Company may accept amount paid in advance of calls on any share and pay interest on such amount at a rate as may be decided by the Board but the holder of the share is not entitled to participate in respect of dividend subsequently declared.

    V.  SHARE CERTIFICATES

The certificates of title to the shares shall be issued under the seal of the Company in the manner prescribed under the rules framed under the Act. The Company shall comply with the provisions of such rules.

The Share Certificates shall be issued in market lots and where share certificates are issued in either more or less than market lots, subdivision or consolidation of share certificates into market lots shall be done free of charges.

The certificate of shares registered in the name of two or more persons shall be delivered to the first named person in the register, and this shall be a sufficient delivery to all such holders.

“No fee shall be charged for issue of new certificate in replacement of those which are old, decrepit, worn out or where the cages on the reverse for recording transfers have been fully utilised”.

    V.  TRANSFER AND TRANSMISSION OF SHARES

Provisions contained in Regulation 19 To 28 of Table A in Schedule I to the Companies Act, 1956, shall mutatis mutandis apply.

Subject to the provisions of Section 111 of the Act, or any statutory modification thereof for the time being in force, the Directors may, at their own absolute and uncontrolled discretion and without assigning any reason decline to register or acknowledge any transfer of shares and in particular may so decline in any case in which the Company has a lien upon the shares or any of them or whilst any monies in respect of the shares desired to be transferred or any of them remain unpaid or unless the transferee is approved by the Directors and such refusal shall not be affected by the fact that the proposed transferee is already a member. The registration of a transfer shall be conclusive evidence of the approval by the Directors of the transfer.

If the Board of Directors refuse to register a transfer of any shares they shall within one month from the date on which the transfer was lodged with the Company, send to the transferee and the transfer a notice of the refusal.

The Board of Directors shall have the same right to refuse to register a person entitled by transmission to any shares or his nominee, as if he were the transferee named in any ordinary instrument of transfer presented for registration.

“In case of refusal by the Board to register any transfer/ transmission the decision of the Board shall be subject to the right of appeal conferred by Section 111 of the Companies Act and also subject to Section 22A of Securities Contract (Regulation) Act”.

“No fee shall be charged for transfer and transmission of shares or for registration of any Power of Attorney, Probate, Letter of Administration or other similar documents.

The transfer books and the register of members may be closed during the 14 days immediately preceding each of the Annual General Meetings but not exceeding in the aggregate 45 days in each year and 30 days at any one time subject to the provisions contained in section 154 of the Companies Act 1956 and as per the requirements of listing agreement with Stock Exchange or OTCEI where the securities are listed.

    22A.  DEMATERIALISATION OF SHARES

i)     Definitions

For the purpose of this Article:- ‘Beneficial Owner’ means a person or persons whose name is recorded as such with a depository;

‘SEBI’ means the Securities and Exchange Board of India;

‘Depositories Act” means the Depositories Act, 1996 and includes any Statutory modifications or re-enactment thereof;

‘Depository’ means a Company formed and registered under the Companies Act, 1956 and which has been granted a certificate of registration to act as a depository under the Securities and Exchange Board of India Act, 1992; and

‘Security’ means such security as may be specified by SEBI from time to time.

ii)     Dematerialisation of Securities

Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialize its existing securities, rematerialize its securities held in Depository(s) and/or to offer its fresh securities in a dematerialized form pursuant to the Depositories Act, and the rules framed thereunder.

iii)     Options for Investors

Every person subscribing to securities offered by the Company shall have the option either to receive security certificates or to hold the securities with a Depository. Such a person who is the Beneficial Owner of the securities can at any time opt out of a Depository, if permitted by the law, in respect of any security in the manner provided by the Depositories Act and the Company shall, in the manner and within the time prescribed, in the Depositories Act, issue to the Beneficial Owner the required certificates of securities.

If a person opts to hold his security with a Depository, the Company shall intimate such Depository the details of allotment of the security and on receipt of the information, the depository shall enter in its record the name of the allottee as the beneficial owner of that security.

iv)     Securities in Depositories to be in fungible form

All securities held by a Depository shall be dematerialized and be in fungible form. Nothing contained in Sections 153, 153A, 153B, 187B, 187C and 372A of the Act shall apply to a Depository in respect of the securities held by it on behalf of the Beneficial owners.

iv)     Rights of Depositories and Benfecial owners

a.

Notwithstanding anything to the contrary contained in the Act or these Articles, a Depository shall be deemed to be the registered owner for the purposes of effecting transfer of ownership of security on behalf of the Beneficial Owners.

b.

Save as otherwise provided in (a) above, the Depository as the registered owner of the securities shall not have any voting rights or any other rights in respect of the securities held by it.

c.

Every person holding securities of the Company and whose name is entered as the beneficial Owner in the records of the Depository shall be deemed to be a Member of the Company. The beneficial Owner of securities shall be entitled to all the rights and benefits and be subject to all the liabilities in respect of his securities which are held by a Depository.

vi)     Service of Documents

Notwithstanding anything contained in the Act or these Articles to the contrary, where securities are held in a Depository, the records of the Beneficial ownership may be served by such Depository on the Company by means of electronic mode or by delivery of floppies or discs.

vii)     Transfer of Securities

Nothing contained in the Act or these Articles, shall apply to a transfer of securities effected by a transferor and transferee both of whom are entered as Beneficial Owners on the records of a Depository.

vii)     Allotment of Securities deal within a Depository

Notwithstanding anything contained in the Act or these Articles, where securities are dealt with by a Depository, the Company shall intimate the details thereof to the Depository immediately on allotment o such securities.

ix)     Distinctive numbers of Securities held in a Depository

Nothing contained in the Act or these Articles regarding the necessity of having distinctive numbers for securities issued by the Company, shall apply to securities held with a Depository.

x)     Register and Index of Beneficial Owners

The Register and Index of Beneficial Owners maintained by a Depository under the Depositories Act shall be deemed to be the Register and Index of Members and Security holders for the purposes of these Articles.

22B. Nomination

Notwithstanding anything stated in Articles of Association, a holder or joint holders of Shares or Debentures, may nominate, in accordance with the provisions of Section 109A of the Act and in the manner prescribed thereunder, a person to whom all the rights in the Shares or Debentures of the Company shall vest in the event of death of such holder/s. Any nominations so made shall be dealt with by the Company in accordance with the provisions of section 109A and 109B of the Act.”

VII. FORFEITURE OF SHARES

            23.

Provisions contained in Regulation 29 To 35 of Table A in Schedule I to the Companies Act, 1956, shall mutatis mutandis apply.

VII. ALTERATION OF CAPITAL

            24.

Provisions contained in Regulation 44 To 46 of Table A in Schedule I to the Companies Act, 1956, shall mutatis mutandis apply.

            25.

The Company may by a special resolution convert non voting shares into Equity shares carrying voting rights on payment of such premium as the Board may think fit from time to time.

VIII. PROCEEDINGS AT GENERAL MEETINGS

            26.

Provisions contained in Regulation 49 to 63 of Table A in Schedule I to the Companies Act, 1956, shall mutatis mutandis apply

VIII. DIRECTORS & PROCEEDINGS OF THE BOARD

            27

a.    The number of Directors shall not be less than three and (unless otherwise determined by the Company in General Meeting) be not more than twelve including all kinds of director. Directors are not required to hold any shares in the Company as qualification shares.

b.     The persons here-in-after named shall be the first Directors of the Company:

        1. CHETAN SANTHA    2. CHANDRASHEKAR    3. VISHWANATH.R.M

            28

Each Director shall receive out of the funds of the Company remuneration for his service a fee of Rs. 250 or such other amount as the Board may fix, for each meeting of the Directors attended by him. The Board may pay all reasonable travelling and other expenses incurred by any Directors for attending the meetings. The Board may pay all reasonable travelling and other expenses incurred by any Director to attend any meeting of the Board. The Company in General Meeting may be passing a special resolution under section 314 of the Act, provide for payment of any percentage of net profits of the Company to the Directors or any Director by way of remuneration in addition to or in lieu of the fee payable to them or him.

            29

If any Director, being willing, is called upon to perform extra services or to make any special exertion in going or residing away for any of the purpose of the Company or in giving special attention to the business of the Company may, subject to the provisions of the Act, provide for remuneration to the Directors so doing and such remuneration may be either in addition to or in substitution of his share in the remuneration from time to time provided for the Directors.

            30

The Company may, by General Meeting elect any person to be a Director and subject to the provisions of any agreement for the time being in force the Company may by Ordinary Resolution remove any Directors.

            31

The Board of Directors at a meeting of the Board or by passing a resolution by circulation shall have power at any time to appoint any other person to be a Director of the Company either to fill a casual vacancy or as an addition to the Board or as an alternate Director in pursuant of the section 313 but the total number of Directors shall not at any time exceed the maximum number fixed under these articles.

            32

Whenever the Directors enter into a contract with any government Central, State of local authority, institution like KSIIDC, KSFC, IFCI, IDBI, ICICI or any person or persons for borrowing any money or for providing any guarantee or security or for technical collaboration or assistance or for underwriting or enter into any other arrangement whatsoever, the Directors shall have, subject to the provisions of Section 255 of the Act, the power to agree that such government authority, institution, person or persons shall have the right to appoint or nominate by a notice in writing addressed to the Company one or more Directors on the Board for such period and upon such conditions as may be mentioned in the agreement and that such Director or Directors may not be liable to retire nor be required to hold any qualification shares. The Directors may also agree that any such Director or Directors may be removed from time to time by the Government, institution, person or persons entitled to appoint or nominate them and such person or persons may appoint another or others in his or their place and also fill in any vacancy, which occurs as a result of any such director or Directors ceasing to hold that office for any reason whatsoever. The Directors appointed or nominated under this Article shall be entitled to exercise and enjoy all or any of the rights and privileges exercised and enjoyed by the Directors of the Company.

            32

a.     The Board may from time to time at their discretion, subject to the provisions of the Companies Act 1956, raise or borrow money either from the Bankers, Directors, or from elsewhere and secure the payment of any such sum or sums of money for the purposes of the Company.

b.     The Board may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects as they think fit, and in particular, by the issue of bonds perpetual or redeemable, debentures, or any mortgage, charge or other security on the undertaking or the whole or any part of the property of the Company (both present and future), including its uncalled capital for the time being.

            34

The quorum for a Board Meeting shall be two Directors or one third of the total strength whichever is higher (excluding Director, if any, whose place may be vacant at that time and any fraction contained in that one-third being rounded off as one), Provided that where at any time the number of interested Directors at any meeting exceeds or is equal to two third of the total strength, the number of the remaining Directors (that is to say the number of Directors who are not interested) present at the meeting being not less than two shall be quorum during such time. The IVC Nominee Director shall be part of the quorum for the Board Meetings as well as any quorum for committee meetings of the Board of Directors.

            35

The Board of Directors may delegate any of its powers, subject to and in accordance with the provisions of the Section 292, to any Managing Director, Manager or other principle officer of the Company or Committee of Directors to such extent and manner as the Board may deem fit. Any power so delegated may be revoked at any time or made to conform to any condition or Regulation as may be required by the Board from time to time.

            36

A Managing Director or Managing Directors may be appointed by a Resolution of the Company or of the Board for such period and with such powers and remuneration (whether by way of salary, perquisites, commission or participation in profits or partly in one way and partly in another) as may be determined.

            36

If it is provided by any agreement, deed or other document securing or otherwise in connection with any loan taken by the Company or in connection with taking of any shares by any person, firm or company that any person or persons shall have power to nominate a Director on the Board of Directors of the Company then and in case of taking of any such loan or shares or entering into such agreement the person or persons having such powers may exercise his power from time to time and appoint a Director accordingly. Such Director may be removed under which he was appointed is vested and another Director may be appointed in his place but while holding such office he shall not be liable to retire by rotation nor hold any qualification shares.

            37

a.     Till such time, the equity shares of the company are not listed on any recognised Stock Exchange, the Investors shall be entitled to nominate one Director (hereinafter referred to as the “IVC Nominee Director”). The IVC Nominee Director shall neither be liable to retire by rotation nor be required to hold any qualification shares in the Company. The IL & FS Venture Corporation Limited may remove and replace the IVC. Nominee Director at any time without the consent or approval of any other person.

            38

Minutes of the meeting of the Board or any committee thereof and the minutes of the members meeting shall be maintained in loose leaf binders or file and the pages of the minutes shall be serially numbered and bound neatly giving volume number, once in six months or in accordance circulars or clarifications issued by the Government or the department of Company Affairs from time to time.

            38

a.     Till such time, the equity shares of the company are not listed on any recognised Stock Exchange, the following clauses shall be operative

b     Regulations 74 and 79(2) of Table A shall not be applicable to this Company.Save as otherwise expressly provided in the Act and in the Article 38A © below,questions arising at any meeting of the Board shall be decided by a majority of votes.Notwithstanding anything to the contrary contained in this Article and so long as the equity shares of the company are not listed on any recognised Stock Exchange, any of the following actions or matters, whether proposed by the Board or the Managing Director or any committee of the board formed for any purpose or the shareholders of the Company pursuant to applicable law, shall require the affirmative vote of the IVC Nominee Director or the Development Investment Trustee Company Limited as shareholders (as the case may be) of the Company (in person or represented by the alternate director appointed in such Director’s place) present at the meeting. Also a seven days prior notice shall be issued by the Company to each of the IVC Nominee Directors or their alternate(s) as the case may be, requiring their presence at the Board Meeting for discussing the agenda specified therein, for and in connection with: Any issue of new shares, debentures or any other securities including bonus shares, rights shares or any new class of shares with preferential rightsii. Any increase or decrease in the number of issued shares of the Company Any proposal to reorganise the capital structure of the Company including proposals for a merger, amalgamation, winding-up of the Company or listing of any class of shares or debentures or any other form of reorganisation Any proposal for the creation of subsidiaries

                              I.

Any proposal to alter the Company’s business or legal structure substantially

                              II.

Any issue of guarantee or indemnity to any third party other than in the normal course of business

                              III.

Any capital expenditure in excess of Rs. 10 million per annum

                              IV.

Any increase in the liability structure by over Rs. 10 million

                              V.

Any transfer of the fixed assets of the Company exceeding 10% of the Net Fixed Assets including by way of sale, lease, mortgage etc.

                              VI.

Any contracts with affiliated parties / sponsors /Directors / Managing Director / Chief Executive Officer

                              VII.

The amendment of any existing collaboration agreements of any kind and the prior approval of any new collaboration agreements

                              VIII.

Investing in any activity/commencing any other activity other than the present business activity of manufacture and sale of computer and related systems and software services and products by the Company and/or acquiring interest in any other firm, organisation or entity whether incorporated or not.

                              IX.

Any proposal to amend the Memorandum and/or Articles of Association of the Company

                              X.

Investing the funds of the Company by subscribing to or otherwise obtaining and/or acquiring any interest in securities issued by either the Promoters or any Affiliate of either the Promoters or the Company for the purposes of this provision, “Affiliate” shall mean any firm, company or corporation of which either the Promoters or the Company as the case may be, directly or indirectly control, is controlled by or is under common control with either the Promoters, or the Company as the case may be. As used in the preceding sentence, “Control” means the right to exercise directly or indirectly, more than 51% of the voting rights attributable to the shares of the controlled entity, or possessing directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled entity

                              XI.

Any transaction with affiliates not related to the normal course of business in excess of Rs. 0.5 million per annum

XI. COMMON SEAL

            39

The Board shall provide for safe custody of the seal. The seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a Committee of the Board authorised by it in that behalf and except in the presence of two Directors or the Managing Director or such other person as Board may appoint for the purpose who shall sign every instrument to which the seal of the Company is so affixed in his presence.

XII. SECRETARY

            40

Subject to the provisions of section 383A of the Act the Board may at any time and from time to time appoint any individual or body of persons to be the Secretary of the Company upon such terms and conditions as it may determine.

XIII. DIVIDENDS AND RESERVES

            41

Provisions contained in Regulation 85 To 94 of Table A in Schedule I to the Companies Act, 1956, shall apply.

            42

"No unclaimed dividend shall be forfeited by the Board unless the claim thereto becomes barred by law and the Company shall comply with all the provisions of Section 205 A of the Act in respect of unclaimed or unpaid dividend.

XIII. ACCOUNTS

            43

Provisions contained in Regulation 95 of Table A in Schedule I to the Companies Act, 1956, shall apply.

XIV. CAPITALISATION OF PROFITS

            44

Provisions contained in Regulation 96 and 97 of Table A in Schedule I to the Companies Act, 1956, shall mutatis mutandis apply.

XV. WINDING UP

            45

Provisions contained in Regulation 98 of Table A in Schedule I to the Companies Act, 1956, shall mutatis mutandis apply.

XVI. RECONSTRUCTION

            46

On any sale of the undertaking of the Company, the Board or the Liquidators on a winding up may, if authorised by a Special Resolution, accept fully paid or party paid up shares, debentures or securities of any other company, whether incorporated in India or not, either then existing or to be formed, for the purchase in whole or in part of the property of the Company, and the Board (if the profits of the Company permit) or the Liquidators (in a winding up) may distribute such shares or securities or any other property of the Company amongst the members without realization, or vest the same in trusts for them, and any Special Resolution may provide for the distribution or appropriation of the cash, shares or other securities, benefit or property, otherwise than in accordance with the strict legal rights of the members or contributories of the Company, and for the valuation of any such securities or property at such price and in such manner as the meeting may approve and all holders of share shall be bound to accept and shall be bound by any valuation or distribution so authorised, and waive all rights in relation thereto, save only in case the Company is proposed to be or is in the course of being wound up, such statutory rights (if any) under Section 494 of the Act, as are incapable of being varied or excluded by these Articles.

XVII. SECRECY

            47

Every Director, Secretary, Trustee for the Company, its members or debenture holders, member of a Committee, officer, servant, agent, accountant or other persons employed in or about the business of the Company shall, if so required by the Board before entering upon his duties, sign a declaration pledging, himself to observe a strict secrecy respecting all transaction of the Company with its customers and the state of accounts with individuals and in matters relating thereto, and shall be such declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his duties except when required so to do by the Board or by any general meeting or by court of law and except so far as may be necessary in order to comply with any of the provisions in these Articles contained. 48. No member or other person (not being a Director) shall be entitled to enter upon the property of the Company or to inspect or examine the premises or properties of the Company without the permission of the Board or, subject to Article 147, to require discovery of or any information respecting any detail of the trading of the Company or any matter which is or may be in the nature of a trade secret, mystery of trade, or secret process or of any matter whatsoever which may relate to the conduct of the business of the Company and which in the opinion of the Board it will be inexpedient in the interest of the Company to communicate.

XVIII. MEMBERS

            48

Every person who is a subscriber to the Memorandum and Articles and or who intends to be or become a member of the Company shall, subject to the provisions of any law in force, be bound by the provisions of the Memorandum and Articles of the Company and any matter of dispute arising between the Company and any such person as regards mutual rights, obligations or otherwise shall be subject to the jurisdiction of the court having jurisdiction over the Registered Office of the Company in respect to the disputed matter.

XIX. INDEMNITY

            48

Every Director, Manager, Auditor or Officer of the Company or any person (whether an officer of the Company or not) employed by the Company shall be indemnified out of the funds of the Company against any liability incurred by him as such Director, Manager, Auditor or Employee in defending any proceeding whether civil or criminal in which judgment is given in his favour or in which he is acquitted or in connection with any application under Section 633 of the Act in which relief is granted to him by the Court

APPOINTMENT OF CHAIRMAN AND MANAGING DIRECTOR, WHOLETIME
DIRECTOR

In accordance with the provisions of Sections 198, 269, 309 read with Schedule XIII and all other applicable provisions, if any of the Act, and with the approval of the shareholders at their Annual General Meeting, the Director and the Managing Director are drawing their remuneration as follows:

Remuneration with effect from 1.10.99

A. Shri. Chandrashekhar, Whole Time Director

1. Salary: Rs. 65,000/- p.m.; with a yearly increase not exceeding 25% (over last year)

2. Perquisites:

           a.

In addition to Salary, perquisites like accommodation (furnished or otherwise) or house rent allowance in lieu thereof; house maintenance allowance, together with reimbursement of expenses or allowances for utilities such as gas, electricity, water and furnishings, repair, servant/gardener salaries, leave travel concession for self and family, club fees, Bonus etc., not exceeding 60 % of the salary.

For purposes of determining the perquisites, the family means spouse, the dependent children and dependent children and dependent parents.

           b.

For purposes of calculating the above ceiling, perquisites shall be evaluated as per Income Tax Rules, wherever applicable; in the absence of any such Rule, perquisites shall be evaluated at actual cost.Provision for use of Car with Chauffeur for Official duties and telephone at residence (including payment for local calls and long distance official calls) shall not be included in the Computation of perquisites for the purpose of calculating the said ceiling.

           c.

Reimbursement of Medical Expenses for self and dependent family members, on actuals, subject to production of actual bills, including medical/accident insurance

           c.

Company's contribution to Provident fund not exceeding 12% of the remuneration.

           c.

Gratuity payable shall not exceed one-month salary for each completed year of service.

           c.

Leave accordance with Rules of the Company from time to time in force and shall also be entitled to encashment of unavailed leave as per the Company rules.

Notwithstanding anything contained herein above, where in any financial year during the currency of this Agreement, the Company has no profits or its profits are inadequate, the remuneration payable to the Director as salary, perquisites and any other allowances shall be governed and be subject to the ceilings provided under Section II of Part II of Schedule XIII to the Companies Act, 1956 or such other limit as may be prescribed by the Government from time to time as minimum remuneration.

A. Shri. Chandrakeerthi, Managing Director

1. Salary: Rs. 52,000/- p.m.; with a yearly increase not exceeding 25% (over last year)

2. Perquisites:

           a.

In addition to Salary, perquisites like accommodation (furnished or otherwise) or house rent allowance in lieu thereof; house maintenance allowance, together with reimbursement of expenses or allowances for utilities such as gas, electricity, water and furnishings, repair, servant/gardener salaries, leave travel concession for self and family, club fees, Bonus etc., not exceeding 60 % of the salary.

For purposes of determining the perquisites, the family means spouse, the dependent children and dependent children and dependent parents.

           b.

For purposes of calculating the above ceiling, perquisites shall be evaluated as per Income Tax Rules, wherever applicable; in the absence of any such Rule, perquisites shall be evaluated at actual cost.  Provision for use of Car with Chauffeur for Official duties and telephone at residence (including payment for local calls and long distance official calls) shall not be included in the Computation of perquisites for the purpose of calculating the said ceiling.

           c.

Reimbursement of Medical Expenses for self and dependent family members, on actuals, subject to production of actual bills, including medical/accident insurance.

           d.

Company's contribution to Provident fund not exceeding            e.

Gratuity payable shall not exceed one month salary for each completed year of service.

           f.

Leave accordance with Rules of the Company from time to time in force and shall also be entitled to encashment of unavailed leave as per the Company rules.

Notwithstanding anything contained herein above, where in any financial year during the currency of this Agreement, the Company has no profits or its profits are inadequate, the remuneration payable to the Managing Director as salary, perquisites and any other allowances shall be governed and be subject to the ceilings provided under Section II of Part II of Schedule XIII to the Companies Act, 1956 or such other limit as may be prescribed by the Government from time to time as minimum remuneration.

NOTE: With effect from 01/01/2000 the designation of Mr. Chandrashekar has been changed to Chairman & Managing Director and that of Mr. Chandrakeerthi has been changed to CEO & President, the other terms of appointment remaining the same.

MATERIAL CONTRACTS & DOCUMENTS FOR INSPECTION

The following contracts and agreements referred to in paragraph ‘A’ below, not being entered into in the ordinary course of the business carried on or intended to be carried on by the Company or contracts entered into more than two years before the date of this prospectus which are or may be deemed to be material have been entered into by or on behalf of the Company. Copies of these contracts together with copies of the documents referred to in para (B) below have been attached with the prospectus and delivered to the Registrar of Companies, Bangalore between 10.00 am to 1.00 pm on any working day until the closing day of the subscription list.

MATERIAL CONTRACTS

1.

Memorandum of understanding between the Company and the Lead Managers dated January 18,2000.

2.

Memorandum of Understanding signed between the Company and Karvy Consultants Limited.

3.

Letter of Underwriting from all underwriters and acceptance thereof by the Company.

4.

Agreement between Deldot, Karvy Consultants Ltd. and National Securities Depository Limited for dematerialization of shares.

5.

Karvy Consultants Ltd. and Central Depository Services Limited for dematerialization of shares.

DOCUMENTS FOR INSPECTION

1.

Memorandum and Articles of Association of Deldot.

2.

Certificate of Incorporation of Deldot dated September 14, 1993.

3.

Resolution passed under Section 81(1A) of the Act, at the AGM of the Company held on September 28, 1999.

4.

Audited Accounts of Deldot for the periods ended on March 31 for the fiscal years 1996, 1997, 1998 , 1999, and 2000 and the Auditors' Report thereon.

5.

Auditors Certificate dated April 24, 2000 on tax benefits to the Company and its members.

6.

Consents from the Directors, Auditors, Legal Advisors, Lead Managers, Underwriters, Registrars and Bankers to the Issue and Bankers to the Company, to act in their respective capacities.

7.

Copy of Due Diligence Certificate issued by the Lead Manager.

8.

Copies of initial listing application made to the Stock Exchanges at Mumbai and Bangalore.

9.

Letter from the Stock Exchange, Mumbai and Bangalore for permission to use their names in the Prospectus.

10.

SEBI Observations reference dated _________issued by SEBI in respect of this Issue document.

11.

All Project related application and approvals, Land deeds etc.,

12.

Power of Attorney of the Directors for signing the Issue document and making corrections/alterations as required.

13.

Copy of RBI permission to set up US subsidiary.

PART III

DECLARATION

We declare that all the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government have been complied with and no statement made in this Issue document is contrary to the provisions of the Companies Act, 1956 and rules thereunder.

The Issuer accepts no responsibility for statements made otherwise than in the Prospectus or in the advertisements or any other material issued by or at the instance of the Issuer and that anyone placing reliance on any other source of information would be doing so at his/her own risk.

SIGNED BYTHE DIRECTORS OF DELDOT SYSTEMS LIMITED,

Mr. Chandrashekar

Mr. Chandrakeerti

Mr. Sharath Chandra

Mr.Muneesh Chawla.

Place: Bangalore.
Date: ___________