(Originally incorporated as private limited Company on 29.06.1993 with Registrar of Companies Tamilnadu at Chennai in the name of Microcon Instruments and Systems Pvt. Ltd., and subsequently converted into a Public Limited Company on 28.07.1994. The Registered Office of the Company was transferred to Bangalore with effect from 26.02.1996 and the Company obtained fresh certificate of incorporation consequent to change of name to Microcon International Limited on 22.07.1997 from Registrar of Companies Karnataka, Bangalore.)
 

Registered Office:

722/22, 10th 'A' Main, IV Block, Jayanagar, Bangalore - 560 011. Tel: (080) 6654409,6654427 Fax: (080) 6654413 Web-site: www.microcon.net Email : ravi@microcon.net

RISKS IN RELATION TO FIRST OFFER

This being the first issue of Microcon International Ltd, there has been no formal market for the shares of Microcon International Ltd. The issue price (as has been determined and justified by the Lead Manager of the Issue as stated under "Basis of Issue Price" on Page No.___ ) should not be taken to be indicative of the market price of the equity shares after the shares are listed. No assurance can be given regarding an active or sustained trading in the shares of Microcon International Ltd nor regarding the price at which the equity shares will be traded after listing.

GENERAL RISKS

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, Investors must rely on their own examination of the issuer and the offer including the risks involved. The securities have not been recommended or approved by Securities and Exchange Board of India nor does Securities and Exchange Board of India guarantee the accuracy or adequacy of this document.

The attention of the investors is drawn to the statement of Risk Factors appearing on Page No.__________ of the Prospectus.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Prospectus contains all information with regard to the Issuer and the issue, which is material in the context of the Issue, that the information contained in this Prospectus is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

GENERAL DISCLAIMER

INVESTORS MAY NOTE THAT MICROCON INTERNATIONAL LIMITED ACCEPTS NO RESPONSIBILITY FOR STATEMENTS MADE OTHERWISE THAN IN THIS PROSPECTUS OR IN THE ADVERTISEMENT OR ANY OTHER MATERIAL ISSUED BY OR AT THE INSTANCE OF THE ISSUER COMPANY OR THE LEAD MANAGER AND THAT ANYONE PLACING RELIANCE ON ANY OTHER SOURCE OF INFORMATION WOULD BE DOING SO AT HIS/HER OWN RISK.

LISTING ARRANGEMENTS

The equity shares are proposed to be listed at The Bangalore Stock Exchange (Regional Stock Exchange), The Stock Exchange, Mumbai, (BSE) and The National Stock Exchange of India Limited (NSE)

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
 

KEYNOTE CORPORATE SERVICES LTD 608, Dalamal House  Nariman Point, Mumbai - 400 021  Tel : (022) 202 5230 Fax : (022) 283 5467  e-mail: keynote@vsnl.com Sebi Regn. No.: INM 000003606	BIGSHARE SERVICES PVT. LTD J/12, Ansa Industrial Estate,  Sakivihar Road, Saki Naka, Andheri – East,  Mumbai – 400 072 Tel : (022) 852 3541,Fax: (022) 852 5207 Sebi Regn No. : INR 000001385
ISSUE OPENS ON : ISSUE CLOSES ON :

INDEX
Content		Page No
PART - I
I. GENERAL INFORMATION
Authority for the Issue	:
License and Other Approvals	:
Disclaimer Clause	:
Disclaimer in respect of jurisdiction	:
Disclaimer Clause of Stock Exchange	:
Statutory Declaration	:
Filing	:
Listing	:
Impersonation	:
Minimum Subscription	:
Utilisation of issue proceeds	:
Allotment / Refund Orders	:
Oversubscription & Basis of Allotment	:
Issue Programme	:
Lead Managers to the Issue	:
Registrars to the Issue	:
Auditor	:
Compliance Officer	:
Company Secretary	:
Legal Advisor to the Issue	:
Bankers to the Company	:
Bankers to the Issue	:
Credit Rating / Debenture Trustee	:
Underwriters to the Issue	:
Brokers to the Issue	:
II. CAPITAL STRUCTURE OF THE COMPANY	:
III. TERMS OF THE PRESENT ISSUE
Authority for the Issue	:
Principal Terms and Conditions of the Issue	:
Interest in case of delay on allotment/despatch	:
Forfeiture	:
Ranking of Equity Shares	:
Terms of Payment	:
Allotment Money	:
Rights of the Equity Shareholders	:
How to apply	:
Payment by stockinvest	:
General Information	:
Disposal of applications and application money	:
Disposal of applications made by stockinvest	:
Basis of allotment	:
Dematerialisation	:
Section 269 SS of Income Tax Act, 1961	:
Disclosure of P.A.N / G.I.R Number	:
Particulars relating to Savings Bank / Current Account Number	:

 
 
 
 

Content		Page No
Access to the funds	:
Allotments and refunds	:
Tax benefits to the Company & its shareholders	:
IV. PARTICULARS OF THE ISSUE
Objects of the issue	:
Cost of the Project & Means of Finance	:
V. COMPANY, MANAGEMENT AND PROJECT
History ,Background and Present Activities of the Company	:
Activity wise income generation	:
Major Clients	:
Main objects of the Company	:
Financial Performance of the Company	:
Details of subsidiary	:
Promoters and their Background	:
Background of other Directors	:
Details of other venture promoted by promoters	:
Details personal guarantees	:
Litigation/Disputes/Defaults	:
Board of Directors	:
Management	:
Key Managerial Personnel	:
Changes in Key Managerial Personnel	:
The Project	:
Present Infrastructure	:
Proposed Venture	:
Raw Materials	:
Utilities	:
Industry & Market Analysis	:
Strategic Business	:
Products & Services	:
Technology	:
Microcon International Limited - SWOT Analysis	:
Forecast of Estimated profits	:
Taxation statement	:
Capitalisation statement	:
Management Discussion & Analysis	:
Schedule of Implementation	:
Sources & Deployment of funds	:
Basis of Issue price	:
Companies under the same management	:
Material developments subsequent to last balance sheet	:
Adverse events	:
Defaults	:

 
 
 
 

Content		Page No
PART - II
General Information
Financial Information and Auditors Report
Statutory and Other information
Main Provisions of the Articles of Association
Material Contracts and Inspection of Documents
PART - III
Declaration

DEFINITIONS / ABREVIATIONS
The Act		The Companies Act, 1956
SEBI		Securities & Exchange Board of India
The Company /Microcon/MIL		Microcon International Ltd.
BgSE/The Regional Stock Exchange		The Bangalore Stock Exchange
BSE		The Stock Exchange, Mumbai
NSE		The National Stock Exchange Of India Ltd.
Articles		Memorandum & Articles of Association
ROC		Registrar of Companies
Board		The Board of Directors of The Company
RONW		Return on Net Worth
NAV		Net Asset Value
EPS		Earning Per Share
IM		Intelligent Manufacturing
IVS		Interactive Visual Simulation
VR		Virtual Reality
ATM		Automatic Teller Machine
XDC		EXtended Development Center
VTP		Virtual Technology Park
LAN		Local Area Network
WAN		Wide Area Network
DRDO		Defence Research and Development Organisations

 

(Originally incorporated as private limited Company on 29.06.1993 with Registrar of Companies Tamilnadu at Chennai in the name of Microcon Instruments and Systems Pvt. Ltd., and subsequently converted into a Public Limited Company on 28.07.1994. The Registered Office of the Company was transferred to Bangalore with effect from 26.02.1996 and the Company obtained fresh certificate of incorporation consequent to change of name to Microcon International Limited on 22.07.1997 from Registrar of Companies Karnataka, Bangalore.)
 

Registered Office:

722/22, 10th 'A' Main, IV Block, Jayanagar, Bangalore - 560 011. Tel: (080) 6654409,6654427 Fax: (080) 6654413 Website: www.microcon.net Email : ravi@microcon.net

RISK FACTORS & MANAGEMENT’S PERCEPTION TO THE RISK FACTORS

FACTORS INTERNAL TO THE COMPANY

1. The Company is promoted by first generation entrepreneurs. The proposed project is the first major expansion of the promoters and the investors would be exposed to all the consequential risks associated.


Management Perception

The promoter of the Company Mr. S Ravi Narayanan is an electrical engineer and has done pioneering work in embedded systems, simulation, testing for 15 years and on Internet for last 3 years. He has considerable domain expertise in automotive, aerospace, discrete process verticals. He has been assisted by technocrat professionals from various fields. The Company having established itself in the line of activity is confident of achieving desired results.

2. The Cost of project and means of finance for the proposed expansion are not appraised by any bank or financial institution. The deployment of the funds will be at sole discretion of the promoters and the management


Management Perception

The Company has already developed infrastructure for the present activities. Based on past experience of the promoters and management Company has considered optimum level of fund requirements in the proposed cost of project. The management shall ensure the proper deployment of funds in the interest of the Company.

3. The implementation of the project is at a preliminary stage. Any delay in implementation of the proposed expansion may have an adverse impact on the financials of the Company.


Management Perception

For the purposes of proposed project furniture & fixtures, communication facilities, additional hardware and software are required to be installed. The Company already has sufficient space available within its existing premises to install additional work stations and manpower envisaged under the project. The management do not foresee any problem in completing the project as per the implementation schedule drawn by the Company.

4. The Company is yet to place orders for major plant & machinery required for the proposed expansion.


Management Perception

All the plant & machinery required for the proposed project is readily available and the management do not foresee any problem in obtaining the required quantity in time.

5. The Company is yet to identify locations for overseas offices to be set up and is yet to apply to Reserve Bank of India for obtaining their permission for the same.


Management Perception

The Company wishes to have its overseas offices in Far east, Europe & USA. The Company will initiate appropriate steps for obtaining RBI permission. The management do not foresee any problem in obtaining the same.

6. Any fluctuation in foreign exchange rates may have an impact on the financials of the Company.
7. The Company has reported a loss to the extent of Rs. 83.43 lacs for the year ended 30.06.1998.


Management Perception

The Company was executing majority DRDO orders with imported technology from USA through special permission from DRDO labs. Subsequent to Pokhran Nuclear Tests, the US government imposed sanctions on all Indian Defence Establishments for importing such technologies which resulted in foreclosure of high value added projects by defence organisations during the year 1997-98. In the same year the Company had a set back due to South East Asian crisis affecting the exports of the Company substantially. On account of this factors Company suffered a loss of Rs. 83.43 lacs during the accounting year ended on 30^th June 1998.

The Company widened the customer base in other areas in IT apart from Defence. After the set back the operations of the Company were restructured mainly to focus on several niche technical groups and the Company evolved a strategy to focus primarily on IT business and markets. The restructuring has resulted in increasing the Company's profitability over 30 % on revenue during last 2 years.

8. The working capital requirement of Company are not assessed by any Bank.


Management Perception

The Company has drawn working capital requirement on the basis of sanction from existing banker. The norms used by the Company in arriving at the requirements are identical to those used by the Bank.

9. In an application no. 1267 of 1998 before the Debt Recovery Tribunal, Chennai filed by Indian Bank, Kellys Branch, Chennai - 600 010 against M/s Genie Foods Pvt Ltd and others for recovery of certain dues Mr. Ravi Narayanan, Managing Director of the Company has been named as one of the defendants in respect of agreement of guarantee executed in the individual capacity for the due repayment of cash credit facilities availed by M/s Genie Foods Pvt. Ltd.

1. Any adverse change in government policies in relation to Software Industry may affect the performance and profitability of the Company.


Management Perception:

The government policies for the software industry in particular are highly progressive and encouraging with specific thrust on globalisation. The Company does not foresee any phenomenal changes in the government policies, which can adversely affect the software industries.
 
 

2. Selection, recruitment and retention of skilled high quality manpower is crucial for the success of the Company.


Management Perception:

The Company is proposing to put in place an attractive employee stock option plan (ESOP) to its employees aimed at retaining key and critical staff. The top management of the Company is highly experienced in this line of activity.

3. The IT Industry is prone to high risk of technological obsolescence.


Management Perception:

Continuous up-gradation of technical skills will enable the Company to set off the technological obsolescence.

4. The Company may face competition from established Companies and future entrants in the Industry.

1. Existing Company engaged in cutting edge technology solutions, services and systems for the manufacturing and defence industry.
2. The Company is promoted by technocrat professionals with domain expertise in manufacturing and IT industry spread over 15 years.
3. The Company is one of the yellow banded approved supplier of Embedded systems, solutions and MIL grade hardware to the Indian Defence Industry for the past 10 years
4. The Company is the member of Software Technology Park (STP) and Electronic Hardware Technology Park (EHTP) having Government of India approved Research and Development Laboratory.
5. The Company has been a global player in providing solutions and services to the IT Markets.
6. Proposed listing at The Stock Exchange, Mumbai (BSE), The National Stock Exchange of India Limited (NSE) and Bangalore Stock Exchange (BgSE).

NOTE:

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 and will be finalised in consultation with The Bangalore Stock Exchange, If the issue is oversubscribed the Executive Director / Managing Director of the Regional Stock Exchange alongwith Lead Merchant Banker and Registrar to the Issue shall be responsible to ensure that the basis of allotment is finalised in a fair and proper manner.

(Originally incorporated as private limited Company on 29.06.1993 with Registrar of Companies Tamilnadu at Chennai in the name of Microcon Instruments and Systems Pvt. Ltd., and subsequently converted into a Public Limited Company on 28.07.1994. The Registered Office of the Company was transferred to Bangalore with effect from 26.02.1996 and the Company obtained fresh certificate of incorporation consequent to change of name to Microcon International Limited on 22.07.1997 from Registrar of Companies Karnataka, Bangalore.)
 

Registered Office:

722/22, 10th 'A' Main, IV Block, Jayanagar, Bangalore - 560 011. Tel: (080) 6654409,6654427 Fax: (080) 6654413 Website: www.microcon.net Email : ravi@microcon.net

9. GENERAL INFORMATION:

The present issue of equity shares is being made pursuant to a special resolution passed by the shareholders under Section 81 (1A) of the Act at the Extra Ordinary General Meeting of the Company held on January 28, 2000.

LICENSES AND OTHER APPROVALS

The Company has obtained Import Export Code no 0792014588 on 02.04.1993 from Government of India, Ministry of Commerce, Director General of Foreign Trade, Bangalore vide letter no. ITC/IEC/5/92-93-Bang dated 02.04.1993.

The Company has obtained approval from Software Technology Park for setting up of 100% Software Export oriented unit under Software Technology Park Scheme of Government of India vides their letter no. STPB/Microcon/94/347 dated 23.05.1994

The Company has obtained sanction from Ministry of Finance, Office of the Assistant Collector of Customs Bangalore vide their letter no. C.NO.VIII/40/141/94 EOU II dated 19.10.1994 to manufacture & development of Hardware and software for Tracking & Networking system and Data Acquisition System under 100 % EOU EHTP Scheme & export.

The Company is yet to apply to RBI for obtaining permission for opening overseas offices.

Besides this, the Company has received all the necessary permissions and approvals from the Government and various non-Government agencies for proceeding with the proposed project. No further approvals from any Government Authority 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. It must be understood that in granting the above approvals the Government of India and Reserve Bank of India do not undertake any responsibility for the financial soundness of the undertaking or for the correctness of any of the statements made or opinions expressed in this regard.

A. DISCLAIMER CLAUSE:

As required a copy of this Prospectus has been submitted to Securities & Exchange Board of India (SEBI). It is to be distinctly understood that submission of the Prospectus to SEBI should not in any way be deemed or construed that the same has been cleared or approved by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made or for the correctness of any of the statements made or opinions expressed in the prospectus. Lead Manager, M/s. Keynote Corporate Services Limited has certified that the disclosures made in the prospectus are generally adequate and are in conformity with SEBI guidelines for disclosures and investor protection for the time being in force. This requirement is to facilitate investors to take an informed decision for making investment in the proposed issue. It should, also, be clearly understood that while the Issuer is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the prospectus, the Lead Manager is expected to exercise due diligence to ensure that the Issuer discharges its responsibility adequately in this behalf and towards this purpose, the Lead Manager, Keynote Corporate Services Limited has furnished to SEBI a due diligence certificate dated 23.03.2000 in accordance with SEBI (Merchant Bankers) regulations 1992 which reads as follows :

1. We have examined various documents including those relating to litigation like commercial disputes, patent disputes, disputes with collaborators etc. and other materials more particularly referred to in the Annexure hereto in connection with the finalisation of the prospectus pertaining to the said issue;
2. On the basis of such examination and the discussions with the Company, its directors and other officers, other agencies, independent verification of the statements concerning the objects of the issue, projected profitability, price justification and the contents of the documents mentioned in the Annexure and other papers furnished by the Company, WE CONFIRM that:

1. the prospectus forwarded to the Board is in conformity with the documents, materials and papers relevant to the issue;
2. all the legal requirements connected with the said issue as also the guidelines, instructions, etc. issued by the Board, the Government and any other competent authority in this behalf have been duly complied with;


and

3. the disclosures made in the prospectus are true, fair and adequate to enable the investors to make a well informed decision as to the investment in the proposed issue.

3. We confirm that besides ourselves, all the intermediaries named in the prospectus are registered with the Board and that till date such registration is valid.

B. DISCLAIMER IN RESPECT OF JURISDICTION

This offer of Equity Shares is made in India to persons resident in India, to Non-Resident Indians (NRIs) and Overseas Corporate Bodies (OCBs) as defined under the Indian Laws. This prospectus does not, however, constitute an offer to sell or an invitation to subscribe to shares issued hereby in any other jurisdiction to any persons to whom it is unlawful to make an offer or invitation to such jurisdiction. Any person into whose possession this offer document comes is required to inform himself about and to observe any such restrictions. Any disputes arising out of this offer will be subject only to the jurisdiction of appropriate courts in Bangalore City.

C. Disclaimer of the Stock Exchanges

The Bangalore Stock Exchange, The Stock Exchange Mumbai (BSE) and The National Stock Exchange of India Ltd (NSE). ("the Stock Exchanges") have given permission to use their names in this prospectus as the stock exchanges on which the Company’s securities are proposed to be listed. They have scrutinized this prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Company. The Stock Exchanges do not in any manner:

1. warrant, certify or endorse the correctness or completeness of any of the contents of this prospectus; or
1. warrant that the Company’s securities will be listed or will continue to be listed on the respective Stock Exchanges; or
1. take any responsibility for the financial or other soundness of this Company, its promoters, its management or any other scheme or project of the Company.

STATUTORY DECLARATION BY ISSUER

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

AUTHORITY FOR THE ISSUE

The members of Microcon International Ltd, at the Extra Ordinary General Meeting held on 28^th January 2000 resolved to issue further capital in accordance with Section 81(1A) of the Companies Act, 1956 (hereinafter referred to as "the Act"). The copies of aforesaid resolution are kept open to public for inspection at the Registered Office of the Company on all working days.

FILING

A copy of this prospectus, having attached thereto, the documents required to be filed under Section 60 of the Companies Act, 1956 has been delivered for registration to the Registrar of Companies, Karnataka, Bangalore.

LISTING

Applications have been made to the Stock Exchanges at Bangalore, Mumbai and The National Stock Exchange of India Limited for an official quotation and permission to deal in the equity shares of the Company.

IMPERSONATION

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

"Any person who—

1. makes in a fictitious name, an application to a Company for acquiring, or subscribing for, any shares therein, or

shall be punishable with imprisonment for a term which may extend to five years".

MINIMUM SUBSCRIPTION:

IF THE COMPANY DOES NOT RECEIVE THE MINIMUM SUBSCRIPTION OF 90% OF THE ISSUED AMOUNT ON THE DATE OF THE CLOSURE OF THE ISSUE OR IF THE SUBSCRIPTION LEVEL FALLS BELOW 90% AFTER THE CLOSURE OF THE ISSUE ON ACCOUNT OF CHEQUES HAVING BEEN RETURNED UNPAID OR WITHDRAWAL OF APPLICATIONS, 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 AS PER SECTION 73 OF THE COMPANIES ACT, 1956.

UTILISATION OF ISSUE PROCEEDS

The Board of Directors of the Company certifies that -

1. all monies received out of this Issue to the Public shall be transferred to a separate bank account other than the bank account referred to in sub-section(3) of Section 73 of the Act.
2. details of all monies utilised out of the Public Issue referred to in sub-item(i) shall be disclosed under an appropriate separate head in the Annual Report of Microcon International Ltd. indicating the purpose for which such monies had been utilised; and

Allotment Letter(s) and/or equity share certificates/Letter of Regret/Cancelled Stockinvest as the case may be together with refund cheques/payorder shall be despatched by registered post(refund cheques/payorder of value upto Rs. 1500/- by ordinary post under postal certificate) at the sole/first named applicant address within 10 weeks from the date of closing of the subscription list. If such money is not repaid within 8^th day from the day the Company becomes liable to pay, the Company and every Director of the Company who is an officer in default shall on and from the expiry of the 8^th day be jointly and severally liable to repay that money with interest @ 15% per annum.

The Company, as far as possible, will allot the equity shares within 30 days from closure of the subscription list and pay interest at the rate of 15% p.a (except to applicants through stockinvests), if the allotment is not made and the refund orders are not despatched to the investors within 30 days from closure of the issue period for delay beyond 30 days. The Company will also make available adequate funds to the Registrars to the Issue for the purpose of despatch of Allotment letters/Share Certificates/Refund Orders as stated above.

Where the permission have been sought for dealing and listing of equity shares in the stock exchange(s) referred to above, if such permission has not been granted by the stock exchange(s) within 70 days from the date of closure of the subscription list or where such permission is refused before the expiry of 78 days from the date of closure of 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 recognised 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 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 applicant

OVERSUBSCRIPTION AND BASIS OF ALLOTMENT.

A minimum 50% of the net Issue to the Indian Public will be made available for allotment in favour of those individual applicants who have applied for 1000 equity shares or less. This percentage may be varied in consultation with the Bangalore Stock Exchange depending on the extent of response to the Issue from investors in this category. In case allotments are made to a lesser extent than 50% because of lower subscription in the above category, the balance equity shares would be added to the higher category, and allotment made on a proportionate basis as per relevant SEBI Guidelines.

ISSUE PROGRAMME

THE SUBSCRIPTION LIST WILL BE KEPT OPEN AT THE COMMENCEMENT OF BANKING HOURS AND WILL CLOSE AT THE CLOSING OF BANKING HOURS ON THE DAYS AS 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 the Prospectus misleading, and they further confirm that they have made all reasonable enquiries to ascertain such facts.
 
 

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
 

KEYNOTE CORPORATE SERVICES LTD 608, Dalamal House  Nariman Point, Mumbai - 400 021  Tel : (022) 202 5230 Fax : (022) 283 5467  e-mail: keynote@vsnl.com Sebi Regn. No.: INM 000003606

BIGSHARE SERVICES PVT. LTD J/12, Ansa Industrial Estate,  Sakivihar Road, Saki Naka, Andheri – East, Mumbai – 400 072 Tel : (022) 852 3541,Fax: (022) 852 5207 Sebi Regn No. : INR 000001385

AUDITORS

K.V.Narasimhan & Co.

No. 25, 3^rd floor, Padmashree Mansions

1^st cross, Sampige Road

Malleswaram, Bangalore-560 003

Tel: 080 - 3366673

COMPLIANCE OFFICER

Mr. R Ramakrishnan
 

Microcon International Limited 722/22, 10th 'A' Main, IV Block, Jayanagar, Bangalore - 560 011. Tel: (080) 6654409,6654427 Fax: (080) 6654413

The investors may contact the aforesaid compliance officer for any pre-issue/post- issue related grievances.

COMPANY SECRETARY

Mr. Srinivasan S, BBA ACS

Company Secretary
 

Microcon International Limited 722/22, 10th 'A' Main, IV Block, Jayanagar, Bangalore - 560 011. Tel: (080) 6654409,6654427 Fax: (080) 6654413

LEGAL ADVISORS TO THE ISSUE

M/s N.C. Associates

16, Pycrofts Garden Road

Chennai-600 006

Tel: 044-8214040, Fax: 044-8279025

Email: nalchid@satyam.net.in

BANKERS TO THE COMPANY

CENTURION BANK LTD.

17, Cunningham Road,

Bangalore - 560 052

Tel : 2267890-93/2088081-83/2284405

Fax: (080) 2874550

BANKERS TO THE ISSUE

CENTURION BANK LTD.

17, Cunningham Road,

Bangalore - 560 052

Tel : 2267890-93/2088081-83/2284405

Fax: (080) 2874550

CREDIT RATING/DEBENTURE TRUSTEE

This being an Equity Issue no Credit Rating or appointment of Debenture Trustee is required.

UNDERWRITERS TO THE ISSUE

The present issue of equity shares is not underwritten.

BROKERS TO THE ISSUE

All the members of the Recognised Stock Exchanges in India will be brokers to the issue.
 
 

2. CAPITAL STRUCTURE OF THE COMPANY

NOTES TO CAPITAL STRUCTURE

1. The authorised capital of the Company has been increased from Rs. 3,00,00,000/- divided into 30,00,000 equity shares of Rs. 10/- each to Rs. 10,00,00,000/- divided into 1,00,00,000 equity shares of Rs. 10/- each. The increase was made through an amendment to the Memorandum and Articles of Association of the Company by a resolution passed at the Extraordinary General Meeting of the Company held on 28^th January, 2000
2. Details of Present share capital

S.No	Date of  Allotment	Date when fully paidup	Consideration	No of shares	Face Value (Rs)	Issue Price (Rs)	% to  post issue	Lock in period
1	Subscribers to the memorandum	29/06/1993	Cash at par	400	10	10.00	Negligible	Nil
2	31/12/1994	31/12/1994	Cash at par	576289	10	10.00	5.76	Nil
3	30/03/1995	30/03/1995	Cash at par	423311	10	10.00	4.23	Nil
4	31/05/1995	31/05/1995	Bonus at 1:2	500000	10	Nil	5.00	Nil
5	30/07/1996	30/07/1996	Cash at premium of Rs. 60/-	300000	10	0.00	3.00	Nil
6	05/10/1998	05/10/1998	Cash at premium of Rs. 5/-	200000	10	15.00	2.00	Nil
7	20/01/1999	20/01/1999	Bonus at 1:2	1000000	10	Nil	10.00	Nil
8	31/01/2000	31/01/2000	Bonus at 3:4	2000000	10	Nil	20.00	Nil
9	31/01/2000	31/01/2000	Bonus at 3:4	2000000	10	Nil	20.00	3 years
10	20/03/2000	20/03/2000	Cash at premium of Rs. 50/-	200000	10	60.00	2.00	Nil
					10		72.00

3. Promoters contribution and lock-in period

* The Lock-in period shares shall not be sold/hypothecated or transferred for a period of 3 years. The lock-in period shall commence from the date of allotment in this issue or the last day of month in which the commercial operation are expected to commence in terms of this prospectus. The lock in period shares represent 20 % of the post issue capital of the Company.

Existing shareholding pattern of the promoter group is given below: -
 

Particulars	No. of Equity Shares	% to Present Equity
a) Promoters	30,91,669	42.94
b) Immediate relative of promoter (Spouse, parent, child,  brother, sister)	15,75,000	21.87
c) Company in which 10% or more of the share capital is held by the promoter his immediate relative firm or HUF in which the promoter or his immediate relative is a member	-	-
d) Company in which the Company mentioned in ( c ) above holds 10% or more of the share capital	-	-
e) HUF in which aggregate share of the promoter and his immediate relatives is equal or more than 10% of the total	-	-
Total	46,66,669	64.81

Note: The number of shares held by the core promoters is 30,91,669 in the present capital. The pre-issue shareholding of core promoters is 30.92 on the total post issue capital and post issue shareholding of the promoters will be 30.92 of the total post issue capital.

4. The market lot of the shares will be 100(Hundred). As the process of rounding off to the nearer multiple of 100 may result in the actual allotment being higher than the shares offered, the final allotment may be higher upto 10% of the net public offer as specified under para E to the Capital Structure.
5. Investors may note that in case of over-subscription, the allotment will be on proportionate basis , subject to the following conditions as per SEBI Clarification no. XI vide RMB(DIP Series) Circular No. 2(95-96) dated 29.5.1995.

1. A minimum of 50% of the net offer of shares to the Public shall initially be made available for allotment to individual applicants who have applied for allotment of 1000 or less than 1000 shares.
2. The balance 50% of the net offer of shares to the public shall initially be made available for allotment to investors, including Corporate Bodies, Institutions and individual applicants who have applied for allotment of more than 1000 shares.
3. The unsubscribed portion of the net offer to any one of the categories specified in (i) or (ii) shall/may be made available for allotment to applicants in the other category,if so required.

6. The ten largest shareholders two years prior to the date of filing of this prospectus with SEBI/ROC are as follows:

7. The ten largest shareholders as on 10 days prior to the date of filing of the prospectus with SEBI/ROC are as follows:

 

S.No	Name of the Shareholder	Number of Shares	% of issued Capital
1	S Ravi Narayanan	3091669	44.17
2	S Badri Narayanan	1306667	18.67
3	Amalgamated Bean Coffee Trading Co. Pvt. Ltd	805000	11.50
4	M S Rajagopal	466667	6.67
5	Ram S Ramanathan	315000	4.50
6	Jayashree B Narayan	175000	2.50
7	Girija Rajagopal	175000	2.50
8	Optimum Securities Pvt. Ltd	163333	2.33
9	Shah Durgesh Sumatilal	81667	1.17
10	C S Seshadri	35000	0.50
	Total

8. The ten largest shareholders as on the date of filing of the prospectus with SEBI/ROC are as follows:

 

S.No	Name of the Shareholder	Number of Shares	% of issued Capital
1	S Ravi Narayanan	3091669	42.94
2	S Badri Narayanan	1306667	18.15
3	Amalgamated Bean Coffee Trading Co. Pvt. Ltd	805000	11.18
4	M S Rajagopal	466667	6.48
5	Ram S Ramanathan	315000	4.38
6	Macketich Consultancy Services Pvt. Ltd	200000	2.78
7	Jayashree B Narayan	175000	2.43
8	Girija Rajagopal	175000	2.43
9	Optimum Securities Pvt. Ltd	163333	2.27
10.	Shah Durgesh Sumatilal	81667	1.13
	Total

9. The Company/Promoters/Directors/Lead Merchant Bankers have not entered into buyback/standby or similar arrangements for purchase of securities issued by the Company.
10. There are no bridge loans or any other financial arrangements made for incurring expenditure on the project, which will be repaid out of the proceeds of the current issue.
11. The shareholders of the Company do not hold any warrant, option or convertible loan or any debentures which would entitle them to acquire further shares of the Company.
12. An applicant in public category can make an application for only that number of shares which is offered to the public.
13. There has been no transaction in shares by the promoters of the Company during the period of last one year.
14. The unsubscribed portion in respect reservations on competitive basis mentioned in Para D(i) & D(ii) above may be adjusted interse and balance will be added back to the net public offer mention under Para E.
15. RBI has simplified the procedure for NRI/OCBs investment under the 24% / 40% scheme and has granted general permission under Section 19 (1) (a), 19 (1) (d) and 29(1) (b) of FERA, 1973 to Indian Companies for issue and export of shares to NRI/OCB investors vide its Notification No. FERA 187/98 - KB dated 3rd October, 1998. Consequently, Indian Companies seeking NRI/OCB investment under 24% / 40% scheme will not require approval from RBI. The Companies are required to file the declaration in the prescribed form to the concerned Regional Office of RBI within 30 days from the date of issue of shares for allotment to NRIs/OCBs with repatriation basis.

III. TERMS OF THE PRESENT ISSUE

AUTHORITY FOR THE PRESENT ISSUE

The present issue of equity shares is being made pursuant to a special resolution passed by the shareholders under Section 81 (1A) of the Act at the Extra Ordinary General Meeting of the Company held on 28^th January 2000.

PRINCIPAL TERMS AND CONDITIONS OF THE ISSUE

The equity shares being issued are subject to 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 letters of Allotments/ Equity Share Certificates or other documents and the guidelines issued from time to time by the Govt. of India and Securities & Exchange Board of India.

INTEREST IN CASE OF DELAY ON ALLOTMENT/DESPATCH

The Company agrees that -

1. As far as possible allotment of securities offered to the public shall be made within 30 days of the closure of the public issue.
2. It shall pay interest @ 15% per annum if the allotment has not been made and the refund orders have not been despatched to the investors within 30 days from the date of the closure of the issue.

It is a condition of the issue that non-payment of amount due on allotment including premium will attract interest @ 15% per annum on the allotment money due commencing from the date appointed for payment thereof till date of actual payment. Failure to pay the amount as aforesaid shall render the allotment of equity shares liable to cancellation and the amount paid liable to forfeiture. The Company shall be at liberty to re-issue the equity shares so forfeited to any person or persons as it may in its absolute discretion deem fit.

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 they shall rank pari-passu for a dividend, if any, which may be declared, pro-rata for the period from the date the new equity shares are allotted.

TERMS OF PAYMENT - RESIDENT INDIAN PUBLIC

The application must be for a minimum of 100 equity shares and thereafter in multiples of 100 shares. The amount payable is as under:

	Towards Share Capital (Rs)	Towards Premium (Rs)	Total Amount Payable (Rs)
On Applicaton	5	25	30
On Allotment	5	25	30
Total	10	50	60

Where an applicant is allotted lesser number of shares than he has applied for, the excess amount paid on application will be adjusted towards the allotment money payable if any on the Equity Shares allotted to him/her, and the balance amount, if any remaining thereafter, will be refunded to applicant in the manner stated elsewhere in the prospectus.

An applicant in the public category can make application for that number of shares only which is offered to the public for subscription.

TERMS OF PAYMENT - NRI/OCBs

The application must be for a minimum of 100 equity shares and thereafter in multiples of 100 shares. The amount payable is as under:

	Towards Share Capital (Rs)	Towards Premium (Rs)	Total Amount Payable (Rs)
On Application	10	50	60
Total	10	50	60

TERMS OF PAYMENT - FIS/MUTUAL FUNDS/BANKS

The application must be for a minimum of 10000 equity shares and thereafter in multiples of 1000 shares. The amount payable is as under:

	Towards Share Capital  (Rs)	Towards Premium (Rs)	Total Amount Payable (Rs)
On Application	10	50	60
Total	10	50	60

ALLOTMENT MONEY

Failure to pay the amount due on allotment after adjusting the excess application money, if any, made by the applicant, on or before the appointed date for payment thereof will render the allottee liable to pay interest at the rate of 15% per annum or such other lower rate as the Directors may determine on the amount outstanding from the date so appointed for payment thereof to the time of actual payment and will also render the Equity Shares including the amount already paid thereon liable for forfeiture in terms of the Articles.

The sums received in respect of the Public Issue will be kept in separate Bank account(s) and the Company will not appropriate the funds unless approval of the Regional Stock Exchange at Bangalore is obtained for basis of allotment and no utilisation shall be made till listing and trading permission is obtained from each of the Exchanges where listing has been proposed.

RIGHTS OF THE EQUITY SHAREHOLDERS

The Equity Shares now being issued shall rank pari-passu in all respects with the existing Equity Shares except that the new Equity Shares shall be entitled to Dividends, if any, which may be declared or paid on the Equity Shares on pro-rata basis for the period for which such capital is paid up thereon. The Shareholders are entitled to receive dividend as and when declared, bonus and rights shares as and when made. The instrument holder shall also be entitled to the rights given under Section 206(A) of the Act and any other rights under the law.

HOW TO APPLY:

GENERAL INSTRUCTIONS

AVAILABILITY OF APPLICATION FORMS AND PROSPECTUS.

Application forms with Memorandum containing salient features of the Prospectus and copies of the Prospectus under Section 56(3) of the Act may be obtained from the Registered Office of the Company, the Lead Managers to the issue, Brokers to the issue and the Bankers to the issue named herein or from their branches as stated on the reverse of the application form.
 
 

PROCEDURE FOR APPLICATION

APPLICATION BY RESIDENT INDIAN PUBLIC

1. Application must be made only :

1. On the prescribed Application Form (White in colour) acCompanying this Prospectus and completed in full in BLOCK LETTERS in English, except signature(s) in accordance with the instructions contained herein and in the application form and is liable to be rejected if not so made.
2. For a minimum of 100 Equity Shares and in multiples of 100 thereafter.
3. In single name or joint names (not more than three);
4. By Indian Nationals resident in India, and
5. In the names of individuals, limited companies or statutory corporations/institutions and NOT in the names of Minors, Foreign Nationals, Non-Residents, trusts, (unless the Trust is registered under the Societies Registration Act, 1860 or any other applicable Trust laws and is authorised under its constitution to hold shares and debentures in a Company), Hindu undivided Families, partnership firms or their nominees. In case of HUF’s application shall be made by the Karta of the HUF.

1. Payment should be made in cash or by cheque/Bank Draft/stock invest drawn on any bank(including a Co-operative Bank) which is situated at and is a Member or Sub-member of the Banker's Clearing House located at the place where the application is submitted.
2. A separate cheque or Bank draft or Stock-invest must acCompany each application form. Applicants should write the Share Application Number on the back of the Cheque /draft. Outstation Cheques will not be accepted and applications accompanied by such cheques drawn on outstation banks are liable for rejection. Money Orders/Postal Orders will not be accepted.
3. All Cheques or Bank Drafts must be payable to any of the Bankers to the Issue with whom the application is lodged and marked "A/c- Microcon International Ltd - Public Issue" and crossed "Account Payee Only" (e.g. Centurion Bank A/c – Microcon International Ltd - Public Issue). However Stock Invests should be marked " Microcon International Limited"
4. All application Forms duly completed together with cash/ cheque/bank draft/stock-invest for the amount payable on application must be delivered before the closing of the subscription list to any of the Bankers to the Issue named herein or to any of their branches mentioned on the reverse of Application Form, and NOT to the Company or to the Lead Managers to the Issue or to the Registrars to the Issue.
5. No receipt will be issued for the application money. However, Bankers to the Issue and/or their branches receiving the applications will acknowledge receipt by stamping and returning acknowledgment slip at the bottom of each application form.
6. When an application for Equity Shares is for a total value of Rs.50,000/- or more, the applicant or in the case of application in joint names each applicant should mention his/her Permanent Account Number(PAN) allotted under the Income Tax Act, 1961 or where the same has not been allotted, the GIR Number and the IT Circle, Ward, District. In case neither PAN, GIR Number has been allotted mention of "Not Allotted" must be made in the place provided. Application Form without this information will be considered incomplete and is liable to be rejected.

8. All Cheques/Bank Drafts or Stockinvest instruments acCompanying the application form should contain the Application Form Number.
9. The applicant should fill in the details of his/her bank account in the space provided in the application form failing which the application is liable to be rejected.
10. Applicants residing at places where no designated branches of the Banker to the Issue are located may submit/mail their applications at a their sole risk alongwith

1. Demand Draft payable at Mumbai only payable to "Microcon International Ltd - Public Issue" or
2. Stock – Invest made payable to "Microcon International Ltd" to the Registrar to the issue at their Mumbai address, superscribing on envelope Microcon International Ltd -Equity Offering so as to reach the Registrar to the Issue on or before the closure of the Issue. The charges if any, for purchase of demand draft/stock invest will have to be borne by the applicants.

11. For further instructions please read Application Form carefully.

Applications by Non-Resident Indians/OCBs must be made only:

1. In the prescribed Application Form (BLUE COLOUR) and completed in full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained herein and in the Application Form. Applications not so made are liable to be rejected.
2. For a minimum of 100 Shares and in multiples of 100 thereof.
3. In single or joint names (not more than three).
4. In the names of individuals, (not in the names of minors or their nominees) of Indian nationality/origin and Overseas Companies and other corporate bodies owned predominantly (at least 60%) by Non-Resident individuals of Indian nationality/ origin.
5. In case of applications by Overseas Companies, and other corporate bodies owned predominantly by Non-Resident Individuals of Indian nationality/origin, a certificate in prescribed form OAC/OAC1 from an overseas auditor/chartered accountant/certified public accountant should be submitted along with the applications.
6. Application forms properly completed together with cheques/bank drafts for the amount payable on application at the rate of Indian Rs.60/- or equivalent of Indian Rs.60/- remitted through normal banking channels or funds held in Non-Resident External (NRE) Accounts/Foreign Currency Non-Resident (FCNR) Accounts maintained with banks authorised to deal in foreign exchange in India along with documentary evidence in support of the remittance, must be delivered before the close of the subscription list to those branches of the Bankers to the Issue at places mentioned against their names in the application forms.

7. All cheques/bank drafts should be made payable to the Bankers to the Issue with whom the application forms are lodged. All cheques or bank drafts should be crossed "A/c Payee Only". All cheques/bank drafts should be marked (Name of the Bank) Microcon International Limited - Public Issue - NRIs/OCB’s. A separate cheque/bank draft must acCompany each application form. NRI application forms can be obtained, on request, from the Registered Office of the Company and the Lead Managers to the Issue.
8. Allotment of Equity Shares to Non-Resident Indians shall be subject to the prior approval of the Reserve Bank of India.
9. Applicants are requested to mention the number of application form on the reverse of the instrument to avoid misuse of instrument submitted along with the application for shares. Applicants are advised in their own interest, to indicate the name of the bank and the savings or current a/c no in the application form. In case of refund, the refund order will indicate these details after the name of the payee. The refund order will be sent directly to the payee’s address.

1. Application made otherwise are liable to be rejected.

2. Payment shall be made in cash or by cheque or by bank draft. Cheques or bank drafts should be drawn on any bank (including a Co-operative Bank) which is situated at and is member or sub-member of the Banker’s Clearing House located at the centre where the Application Form is submitted. Outstation cheques or bank drafts will not be accepted and application form accompanied by such cheques or bank drafts will be rejected. Money orders/Postal orders will not be accepted.
3. Cheques/bank drafts should be crossed "Account Payee Only" and should be made payable to any of the Bankers to the issue with whom the application is to be lodged and marked "A/c Microcon International Limited - Public Issue" (e.g. "Centurion Bank A/c Microcon International Limited Public Issue - IFIs/ Banks/MFs - which ever applicable ). A separate cheque or bank draft should acCompany each Application Form.
4. All application forms duly completed together with cash/cheque/Bank Draft (Money orders/ Postal orders will NOT be accepted) for the amount payable on application at the rate of Rs.60/- per equity share must be delivered before the close of the Subscription List to any of Bankers to the issue named herein or to any of their branches mentioned in the Application Form and NOT to the Company or Registrars or Lead Managers to the issue.
5. No receipt will be issued for the application money. However, the Bankers to the issue or their branches receiving the applications will acknowledge receipt by stamping and returning to the applicants, the acknowledgment slip at the bottom of each application form.
6. The application form number should be mentioned on the reverse of the instrument through which the payment is made. Applicants are advised, in their own interest, to indicate the name of their bank and the savings / current account number in the application form. In case of refund, the refund order will indicate these details after the name of the payee. The refund order will be sent directly to the payee’s address.
7. In case of Mutual Funds Stockinvest should be crossed Account Payee and made payable only to the Issuer Company i.e., MICROCON INTERNATIONAL LIMITED and not to the Bankers to the Issue.

APPLICATIONS WHICH ARE NOT COMPLETE IN EVERY RESPECT OR WHICH ARE IN CONTRAVENTION OF ANY PROVISIONS/INSTRUCTIONS CONTAINED IN THIS PROSPECTUS OR IN THE MEMORANDUM CONTAINING SALIENT FEATURES OF PROSPECTUS ARE LIABLE TO BE REJECTED.
 
 

PAYMENT BY STOCK INVEST:

PLEASE NOTE THAT THE STOCKINVEST CAN BE USED ONLY BY INDIVIDUAL AND MUTUAL FUND APPLICANTS. USE OF STOCKINVEST IS RESTRICTED TO RS. 10.00 LACS PER STOCKINVEST. THE MAXIMUM AMOUNT, AN INDIVIDUAL INVESTOR CAN MAKE APPLICATION FOR IS RS. 50,000/- PER STOCKINVEST. THIS LIMIT OF RS. 50,000/- PER STOCKINVEST IS NOT APPLICABLE FOR MUTUAL FUNDS.

All conditions mentioned earlier for making an application through cheques/demand drafts will also apply to an application made through Stockinvest. Applicants may use the instrument termed " Stockinvest" for payment of application money. However this facility is available only to individual investors and mutual funds.Applicants utilising Stockinvests should submit them alongwith the applications to any of the Collection Centres/Bankers to the Issue mentioned in the Application Form. Stock invest is payable at par at all branches of the issuing bank and as such outstation Stockinvest can be attached to the Application Form.

1. Stockinvest of required denominations is issued to the applicant, to be used for applying for new issues of shares/debentures /bonds.
2. The investor shall give irrevocable authority to the issuer bank to mark a lien to the extent of the face value of the Stockinvest on his deposit account with the issuer bank.
3. Investors should use Stockinvest within 10 days from the date of issue of Stockinvest to ensure that it remains valid till the date of collection. For the purpose, the last day for use of Stockinvest for submitting share application to the bank should be indicated on the face of the Stockinvest with a notation "to be used before ......".
4. The investor shall provide necessary details such as payee's name, amount, number of shares applied for, Application Form number, etc. in the left hand portion of the Stockinvest and his name and address in box on the reverse of the Stock invest before depositing it with Banker/Collection Centre to the issue.


In case a box is not provided on the reverse of the Stockinvest for writing the name and address of the investor, an along may be obtained for the purpose and attached with the Stockinvest. The along should be used to write the investor's name(s) and full address alongwith application number to enable the Registrars to return the cancelled Stockinvests directly to the investors.

5. As far as possible, the investors should use only one Stockinvest along with each application for subscription to an issue. If Stockinvest of an odd amount is required and the same is not available in the printed form with the issuing bank, the investor should request the issuing bank to issue printed Stockinvest for the nearest value and the balance may be issued in the prescribed Stockinvest form by filling the amount manually.
6. Stockinvest should be crossed "Account Payee Only" and made payable only to the issuer Company.
7. 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 Share Application Form. Thus, if the signature of the purchaser on the Stockinvest and the signature of the first applicant on the Application Form does not tally, the application would be treated as having been accompanied by a third party Stockinvest. Investors may please note that applications along with third party stock invest are liable to be rejected.
8. In case of partial/full allotment, Stockinvest will be sent to issuing branch through the controlling branch of the Stockinvest issuing bank after collection.
9. Multiple applications under a single Stockinvest will be rejected as each application is required to be accompanied by a separate instrument.
10. Stockinvest is current for four months from the date of its issue indicated on its face and no amount can be claimed on the Stockinvest by the issuing bank branch unless it is presented to it within this period.
11. The Stockinvest duly completed should be submitted alongwith the Share Application Form to the concerned banks who are bankers to the issue. Stockinvest is payable at all branches of the issuing bank.
12. Stockinvest is valid for payment only when signed by the issuing banker at the appointed place on its face.
13. It is understood that at the explicit undertaking of the account holder an amount equivalent to the sum mentioned on the left hand side of the STOCKINVEST is either debited to his account or lien marked on his deposit account, from the date of its issue, till full liability under the STOCKINVEST is extinguished. The accountholder's instruction given in this regard is irrevocable.
14. Enquiries relating to Stockinvest may be addressed only to the Registrars and not to the issuing bank.
15. Applications accompanied by Stockinvest which are not encashable at par at Bangalore i.e. the issuer bank not having a branch at Bangalore shall be rejected.
16. The bank shall not be liable for any delay, error, fraud, forgery or any other lapse in the issue or encashment of the STOCKINVEST. It shall also be not liable for any losses/damages in case of death/insanity or insolvency of the drawer before actual allotment/delivery of the relative shares by the payee Company.

The above information is given for the benefit of investors and Microcon International Ltd. is not liable for any modification of terms of Stockinvest or procedure thereof by issuing banks.

In case of joint applications, refund orders, if any, will be made out in the first applicant's name and all communication will be addressed to the person whose name appears first on the Application Form.

Registrars to the Issue have been authorised by the Company through resolution of Board passed on _______ to sign on behalf of the Company to release the proceeds of the Stockinvest from the issuing bank or to affix non-allotment advice on the instrument or to cancel the Stockinvests of the non-allotted or partially unsuccessful allottees who have enclosed more than one Stockinvest. Such cancelled Stockinvest shall be sent back by the Registrars directly to the investors.

GENERAL INFORMATION

JOINT APPLICATIONS:

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

MULTIPLE APPLICATIONS:

An applicant should submit only one application (and not more than one) for the total number of Equity shares required. Two or more applications in single and/or joint names will be deemed to be multiple applications if the sole and/or first applicant is one and the same. The Board reserves the right to reject in its absolute discretion all or any multiple applications without assigning any reason. However employees may apply in the public offer.

APPLICATION UNDER POWER OF ATTORNEY OR BY LIMITED COMPANIES:

In the case of applications under Power of Attorney or by Limited Companies or Corporate Bodies, the relevant power of attorney or the relevant authority as the case may be, or a duly certified copy thereof must be attached to the application form or must be lodged separately at the office of the Registrars to the Issue, simultaneously with the submission of the application form mentioning the serial number of the application form and the bank branch where the application has been submitted, failing which the application is liable to be rejected.

Thumb impression or signature in languages other than the languages specified in the eight schedule must be attested by Magistrate or Notary Public or a special Executive Magistrate under his official seal.

APPLICATION (S) WILL NOT BE ACCEPTED BY THE LEAD MANAGERS OR REGISTRARS TO THE ISSUE

DISPOSAL OF APPLICATIONS AND APPLICATION MONEY:

No receipt will be issued for the application money. However, the bankers/collection centre to the issue and/or their branches receiving the applications will acknowledge the receipt of the applications by stamping and returning to the applicant the acknowledgment receipt at the bottom portion of each application form. The Company will inform the applicants in respect of allotments made or applications rejected by despatch of allotment letter or regret letter and/or pay orders of value over Rs.1500/-, if any, by Registered Post within 10 weeks of the date of closure of the subscription list. Refunds of value not over Rs.1500/- will be dispatched under Certificate of Posting. Such Cheques or Demand Drafts will be payable at par at all centers where the applications were received. Bank Charges, if any, for en-cashing refund pay orders/cheques at any other place will be payable by the applicant.

The Board reserves, at its sole, absolute and unqualified discretion, the right to reject any application in full or in part without assigning any reason. If an application is rejected in full, the whole of the application money will be refunded to the applicant and in case of Joint applications, to the first named applicant. Where an application is rejected in part, the excess application money will be refunded to the applicant in accordance with the provisions of Section 73 of the Act. In case of any delay in sending the refund orders by more than eight days beyond 10 weeks from the date of closing of the subscription list, interest will be paid at the rates prescribed under Section 73 of the Act, to such applicants. However the Company shall as far as possible despatch the Share Certificates & Refund Orders within 30 days.

The Company undertakes to make available to the Registrars to the issue, adequate funds for allotment letters/share certificates to be sent by registered post.

The sums received in respect of the Public Issue will be kept in separate Bank account(s) and the Company will not appropriate the funds unless approval of the Regional Stock Exchange at Bangalore is obtained for allotment and no utilisation shall be made till listing approval is available from each of the Exchanges where listing has been proposed.

DISPOSAL OF APPLICATIONS MADE BY STOCKINVESTS

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

1. In case of non-allotment, the Registrars to the Issue will return the Stockinvest to the investor without encashing. The Issuing Bank will lift the lien on the account on submission of the same by the applicant.
2. On allotment/partial allotment, the Registrars to the Issue will fill-in the amount which would be less than or equal to the amount filled in by the investor before presenting the stockinvest to the issuing banker for payment to the extent of allotment. The bank will lift the lien on the balance amount in the Investors account.

BASIS OF ALLOTMENT

Allotment will be made in consultation with the Bangalore Stock Exchange.

In the event of oversubscription, the allotment will be made on a proportionate basis in marketable lots as given below:

1. Applicants will be categorised according to the number of Shares applied for.
2. The total number of Shares to be allotted to each category as a whole shall be arrived at on a proportionate basis i.e. the total number of Shares applied for in that category multiplied by the inverse of the oversubscription ratio (number of applicants in the category x number of Shares applied for).
3. The number of Shares to be allotted to the successful allottees will be arrived at on a proportionate basis (i.e. Total number of Shares applied for into the inverse of the oversubscription ratio).
4. For applications where the proportionate allotment works out to less than 100 Shares the allotment will be made as follows:

1. each successful applicant shall be allotted 100 Shares; and
2. the successful applicants out of the total applicants for that category shall be determined by the drawal of lots in such a manner that the total number of Shares allotted in that category is equal to the number of Shares worked out as per (b) above.

5. If the proportionate allotment to an applicant works out to a number that is not a multiple of 100, the applicant would be allotted Shares by rounding off to the nearest multiple of 100.
6. If the Shares allocated 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 category, where the allocated 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 of applicants applying for the minimum number of Shares
7. If as a result of the process of rounding off to the nearest multiple of 100 results in the actual allotment being higher than the shares offered, the final allotment may be higher at the sole discretion of the Board, upto 110% of the size of the offering offer specified under Para E to the Capital Structure mentioned elsewhere in the prospectus.
8. Investors may note that in case of over-subscription, the allotment will be on proportionate basis as mentioned above, subject to the following conditions:

1. A minimum of 50% of the net offer of shares to the Public shall initially be made available for allotment to individual applicants who have applied for allotment of 1000 or less than 1000 shares.
2. The balance 50% of the net offer of shares to the public shall initially be made available for allotment to investors, including Corporate Bodies, Institutions and individual applicants who have applied for allotment of more than 1000 shares.
3. The unsubscribed portion of the net offer to any one of the categories specified in (i) or (ii) shall/may be made available for allotment to applicants in the other category, if so required.

Investors may note that in case of over - subscription allotment shall be on proportionate basis and will be finalised in consultation with The Bangalore Stock Exchange. If the issue is oversubscribed the Executive Director / Managing Director of the Regional Stock Exchange alongwith Lead Merchant Banker and Registrar to the Issue shall be responsible to ensure that the basis of allotment is finalised in a fair and proper manner.

DEMATERIALISATION

As per the provisions of the Depositories Act, 1996, the shares of a body corporate can be in a dematerialised form, i.e not in the form of physical certificates but be fungible and be represented by the statement issued through electronic mode. Many body corporates and their investors are now opting for this mode of Electronic accounts. The Company will also opt for this method subject to investors exercising their option to hold the shares in dematerialised form, for which necessary columns have been provided in the respective application forms.

An applicant has the option to seek allotment of shares in electronic and / or physical mode.

HOWEVER, INVESTORS SHOULD NOTE THAT TRADING IN SECURITIES OF THE COMPANY SHALL BE IN DEMATERIALISED FORM ONLY.

The Company is in the process of signing a tripartite agreement with Registrars of the issue and NSDL/CDSL.

Separate applications for electronic and physical shares by the same applicant would amount to multiple applications. Every applicant should make only one application either for physical holding or for electronic holding.

The applicant seeking allotment of shares in the electronic form must necessarily fill in the details (including the Beneficiary Account Number and Depository Participant’s ID Number) appearing under the heading "Request for shares in electronic form".

An applicant who wishes to apply for shares in the electronic form must have atleast one Beneficiary Account with any of the Depository Participant (DP) of NSDL/CDSL registered with SEBI, prior to the application.

Shares allotted to an applicant in the electronic form will be credited directly to the respective Beneficiary Account (with a DP).

For subscription in electronic form, names in the shares application form should be identical to those appearing in the account details in the Depository. In case of joint holders, the name should necessarily be in the same sequence as they appear in the account details in the Depository.

Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the present Issue,

M/s. BIGSHARE SERVICES PVT. LTD

J/12, Ansa Industrial Estate,

Sakivihar Road, Saki Naka, Andheri – East, Mumbai – 400 072

Tel : (022) 852 3541,Fax: (022) 852 5207

Sebi Regn No. : INR 000001385

Incomplete/ incorrect details given under the heading "Request for shares in electronic form" in the application form will be treated as an application for shareholding in the physical form.

The applicant is responsible for the correctness of the applicant demographic details given in the share application form vis-à-vis those with his/her DP.

It may be noted that electronic shares can be traded only on the stock exchanges having electronic connectivity with NSDL.
 
 
 
 

SECTION 269 SS OF INCOME TAX, 1961

In respect of all the categories eligible to apply in this issue, having regard to the provisions of Sec 269SS of the Income Tax Act, 1961 the subscriptions against these applications should not be effected in cash and must be effected by an Account Payee Cheques/Draft/Stock invest, if the amount payable is Rs. 20000/- or more. In case the payment is effected in contravention of this provision, the applications are liable to be rejected.

DISCLOSURE OF P.A.N. / G.I.R. NUMBER:

Where an application for allotment of securities is for a total value of Rs.50,000/- or more i.e., the total number of securities applied for multiplied by the issue price is Rs.50,000/- or more the applicant or in case of application in joint names, each of the applicants, should mention his / her 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. In case where neither the permanent account number nor 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.

Further to this, if the amount payable on application is Rs.20,000/- or more, such payment should not be effected in cash and must be effected only by way of an Account Payee cheque or an Account Payee draft, in terms of Section 269 SS of the Income Tax Act, 1961. Otherwise the application will be rejected and application money refunded without any interest.

PARTICULARS RELATING TO SAVING BANK / CURRENT ACCOUNT NUMBER:

The applicant shall have to mention particulars relating to his saving bank / current account number and the name of the bank with whom such account is held in the respective spaces provided in the application form, to enable the registrars to print the said details in the refund orders after the names of the payee to prevent fraudulent encashment of refund order(s). Application forms without this information will be considered incomplete and will be liable to be rejected.

ACCESS TO THE FUNDS :

Subscription received against this issue would be kept in a separate bank account and the Company will not have access to these funds so collected until it has received approval for allotment from the Stock Exchanges at Bangalore and listing and trading permission is received from all the exchanges where listing is proposed in terms of this prospectus.

ALLOTMENTS / REFUNDS

1. For applications made by Cheques / Drafts. Refunds, if any, will be made alongwith Allotment Letters / Share Certificates and / or regret letters by Refund Orders drawn on the Bank nominated for this purpose by the Company and will be dispatched within 10 weeks from the date of closure of Issue, by Registered Post if the amount of such refund exceeds Rs.1500/-. Such refund orders will be payable at par during their validity period at all centres where the applications are received or such places as may be approved by the Stock Exchange, Bangalore. In case of joint applications, Refund Orders, if any, will be made out in the First applicant’s name and all communication will be addressed to the person whose name appears on the Application form. However the Company shall as far as possible despatch the Share Certificate & Refund Orders within 30 days.
2. For Applications made by Stockinvest. The procedure for allotment / refunds for Applications made by Cheque or Bank Draft will apply mutatis mutandis to applications accompanied by Stockinvest except the following :

1. At the time of making the application, the applicant will authorise payment of the maximum sum payable towards application money for shares applied on the left hand side of Stockinvest. Once the basis of allotment is finalised, the Registrar will fill up the right side of the stockinvest form indicating the entitlement of the investor on the basis of allotment. There are three possibilities here :

1. Full allotment, in which the number of shares applied for on the left side of the instrument will be the same as on the right side of the instrument.
2. Partial allotment, when the entitlement will be less than the amount applied and
3. Non-allotment, when the amount on the right side will be nil.

2. In case of non-allotment, the Stockinvest will be cancelled and returned to the applicants by registered post within ten weeks from the date of closing of the issue. The issuing bank will lift the lien on the account on submission of the same by the applicant(s).

TAX BENEFITS TO THE COMPANY AND ITS SHAREHOLDERS

The Company has been advised by K.V.Narasimham & Company, the Auditors of the Company, vide their letter dated 25^th February,2000 that under the current provisions of Income Tax Act 1961 and the Wealth Tax Act,1957 the following benefits inter-alia will be available to the Company and its members

Benefits available to the Company:

Income Tax Act, 1961

• The Company is entitled to depreciation under the provisions of Section 32 of the Income Tax Act, 1961 (‘the Act’) at the rates applicable under the Income-Tax Rules, 1962.

• The Company is established in the Software Technology Park (STP), in accordance with Software Technology Park Scheme, notified by the Government of India, Ministry of Commerce. Accordingly, the Company has complied with the conditions stipulated in Sections 10A of the Act. Based thereon, the Company is entitled to tax holiday benefits as specified under section 10A of the Act. The said exemption is available to the Company upto the Assessment Year 2004-2005.

• After the expiry of the said Tax Holiday period provided under section 10A of the Act, the Company in accordance with and subject to the conditions, and to the extent specified in section 80HHE of the Act, would be entitled to deductions of the profits derived from the export out of India of computer software or its transmission from India to a place outside India by any means or providing technical services outside India in connection with the development or production of computer software.

• Shares held for a period of more than twelve months preceding the date of transfer will be treated s a long-term capital asset. Under the provisions of Section 48 of the Act, the capital gains arising out of long term capital assets will be computed after indexing the cost of acquisition / improvement and under section 112 of the Act, would be charged to tax at a concessional rate i.e., at the rate of 20% (plus surcharge of 10%) provided that where the tax payable thereon exceeds 10% (plus surcharge of 10%) of the amount of capital gains computed without indexing the cost of acquisition / improvement, then such excess shall be ignored, at the option of the assessee.

• Under the provisions of Section 10(33) of the Act any dividend income received by the Company on shares held in a domestic Company will be exempt from Income tax.

The Company is liable to pay wealth tax at the rate of 1% in respect of assets such as Lands other than industrial Lands, residential properties, motor cars etc., held by the Company subject to the basic exemption of Rs. 15 lakhs.

Benefits Available to the Members of the Company:

Income Tax Act, 1961 - Resident Indians:

• Under the provisions of Section 10(33) of the Act any dividend income received by the shareholders on shares held in a domestic Company is exempt from income tax.

• Shares held for a period of more than twelve months preceding the date of transfer will be treated as a long term capital asset. Under the provisions of Section 48 of the Act, the capital gains arising out of long term capital assets will be computed after indexing the cost of acquisition / improvement and under section 112 of the Act, would be charged to tax at a concessional rate i.e. at the rate of twenty percent (plus surcharge of 10%) provided that where the tax payable thereon exceeds 10% (plus surcharge of 10%) of the amount of capital gains computed without indexing the cost of acquisition / improvement, then such excess shall be ignored, at the option of the assessee.

• Under Section 54EA of the Act the long term capital gains arising on transfer of shares are exempt from tax entirely / proportionately, if the entire or part of the net consideration is invested within 6 months from the date of transfer, in securities specified by the Central Board of Direct Taxes (CBDT) in this behalf by notification. The amounts so invested are required to be held by shareholders for a minimum period of 3 years from the date of their acquisition.
• Under Section 54F of the Act the long term capital gains arising on transfer of shares are exempt from tax entirely / proportionately if the entire or part of the net consideration is invested in the purchase or construction of a residential house within the period and subject to the fulfillment of the conditions specified in the said section.

• Under the provisions of Section 10(33) of the Act any dividend income received by the shareholders on shares held in a domestic Company will be exempt from income tax.

• The Shareholders of the Company who are NRI’s are defined in Section 115C(e) of the Act have an option of being governed by the provisions of Chapter XII-A to the Act, which entitles them to the following benefits in respect of income from shares of the Company acquired out of convertible foreign exchange.

• Under Section 115E of the Act income from long term capital gains shall be charged to tax at the rate of 10%

• The long term capital gains are exempt from income tax entirely / proportionately, if the entire or a portion of the net consideration is invested in specified assets or in any savings certificates referred to in section 10 (4B) of the Act, within 6 months from the date of transfer in accordance with Section 115F of the Act. The amount so exempt shall be chargeable to tax if the new asset is transferred or converted into money within a period of three years from the date of its acquisition.

• Under Section 115G of the Act it shall not be necessary for NRI’s to furnish their return of income if their only source of income is investment income or long term capital gains or both, provided income tax been deducted at source from such income.

• Under the provisions of Section 115H of the Act where a person who is an NRI in the previous year becomes assessable as resident in India in respect of total income of any subsequent year, he has an option to be assessable under the provisions of Chapter XII-A to the Act. If he elects to be assessed under Chapter XII-A, the provisions of the said Chapter shall continue to apply to him in relation to such income for that assessment year and for subsequent assessment years until the transfer or conversion into money, of such assets. If he elects not to be governed by the above mentioned special provisions of Chapter XII-A to the Act, he will then be entitled to tax benefits in so far as they are applicable to resident shareholders.

Income Tax Act, 1961 - Foreign Institutional Investor :

• Under Section 115D (1)(b)(ii) of the Act, income by way of short term capital gains arising from the transfer of shares will be taxable at 30%.

• Under Section 115AD (1)(b)(iii) of the Act, Income by way of long term capital gains arising from the transfer of shares will be taxable at 10%.

• Under Section 10(33) of the Act any dividend income received by the shareholders will be exempted from income tax.

Under the provisions of Section 10(23D) of the Act all Mutual Funds registered with Securities and Exchange Board of India (SEBI) or regulations made there under or such other Mutual Funds set up by Public Sector banks or Financial Institutions, all Mutual Funds authorised by the Reserve Bank of India will be exempt from Income tax on all their income including income from investment in shares in the Company.

Wealth Tax Act , 1957 :

Equity Shares are outside the scope of the word "Asset" defined u/s. 2(ea) of the Wealth Tax Act, 1957 and are, therefore, not liable to Wealth tax.

Gift Tax :

Any gift made after 30^th September, 1998, including shares of the Company, does not attract Gift tax u/s 3(3) of the Gift Tax Act, 1958.
 
 
 
 

IV. PARTICULARS OF THE ISSUE

OBJECT OF THE ISSUE

1. The present issue of Equity Shares is being made to finance the cost of proposed expansion to

1. Strengthen the existing infrastructure by installing latest hardware & software.
2. Equip the centers with latest communication facilities, furniture & fixtures
3. Set up overseas offices at strategic locations.
4. Repay the existing debts.
5. Finance the working capital requirement of the Company.

1. To list the equity shares of the Company and to meet the issue expenses

The particulars of cost of project and means of finance as estimated by the Company are as follows:
 

COST OF PROJECT	Rs In Lacs
Furniture & fixtures and other assets	42.00
Computer Hardware, Software & Upgradation	464.00
Communication Facilities	50.00
Overseas Office	294.00
Repayment of Existing Debts	600.00
Preliminary Expenses	100.00
Working Capital	250.00
Total Cost Of Project	1800.00

 
 

MEANS OF FINANCE	Rs In Lacs
Public Issue Equity Share Capital  Premium	300.00 1500.00
Total Means Of Finance	1800.00

Note: Out of the means of finance an amount of Rs. 120 lacs representing 2,00,000 equity shares of Rs. 10/- each for cash at a premium of Rs. 50/- per share has already been received. The balance 28,00,000 equity shares of Rs. 10/- each for cash at a premium of Rs. 50/- per share aggregating to Rs. 1680/- lacs are now being offered to the public.
 
 
 
 

V.COMPANY, MANAGEMENT AND PROJECT

HISTORY, BACKGROUND & PRESENT ACTIVITIES OF THE COMPANY

The Company was originally incorporated as a Pvt. Ltd. Company on 29.06.1993 with registrar of Companies Tamilnadu at Chennai in the name of Microcon Instrument & Systems Pvt. Ltd. and was subsequently converted into a public limited Company on 28.07.1994. The registered office of the Company was transferred to Bangalore with effect from 26.02.1996

Mr. Ravi Narayanan, a technocrat set up a proprietary concern in 1983 in the name of Microcon Instruments & Systems as a systems & solutions provider to the Automobile and aerospace industry. The said proprietary concern was later converted into partnership firm during April 1992.

In July 1994 Microcon Instruments & systems Ltd. took over the said partnership firm and further changed its name to Microcon International Ltd. (Microcon) in July 1997

The Company started with primary focus on providing total solutions and systems in the fields of Embedded Systems, In-product Software, Control, Automation & Testing for the Manufacturing and Defense industry. Microcon has gained the experience in delivering proven custom application software development. Microcon is a technology Company, which has played a vital role in Indian Defense Establishments by successfully executing major technology projects/solutions. The Company registered an average growth rate of 20 % on profits upto 1996-97. Majority of the technological solutions are rendered to various DRDO (Defense Research and Development Organisations) labs and balance through exports to Indonesia.

Microcon was executing majority of DRDO orders with imported technology from USA through special permission from DRDO labs. Subsequent to Pokhran Nuclear Tests the US Government imposed sanctions on all Indian Defence establishments for importing such technologies which resulted in fore closure of high value added projects by Defence organisations during the year 1997-98. As a result the Company went through a difficult phase in 1998 combined with the economic slowdown and recession in the ASEAN Markets. The Company was forced to restructure and expand it's operations. The Company invested on simulation lab and started focusing on Internet Communication and Simulation apart from the traditional Intellectual Manufacturing groups., a step which has reaped good rewards.

During the past years Microcon has establish itself in the Niche areas. The major highlights of the Company during the period are:

• Pioneer in providing cutting edge technology solutions, services and systems for the Manufacturing and Defence industry.
• Developed state-of-the-art Computerized Integrated Manufacturing (CIM), Quality Assurance System (QAS) and Tube Tracking System (TTS) for the Tube Mill industry.
• Established in providing customized control, automation and testing systems to the Automotive industry.
• Designed and developed Manufacturing Execution System (MES) for management of process and maintenance, labour, quality, product tracking & geneology and performance analysis.
• One of the certified yellow banded approved supplier of Embedded systems, solutions and MIL grade hardware to the Indian Defense industry for the past 10 years in the private sector.
• STP / EHTP facilities
• Established a global presence with varied and esteemed clientele from France, Germany, UK, USA, Singapore and Indonesia.

• CTI (Computer, Telephony and Internet) Technologies
• iMES (Manufacturing Execution System)
• Net based Simulations

MAJOR CLIENTS

The major clients of the Company includes:
 

Anteve, Indonesia Autoliv, worldwide Bakrie Pipe Industries BHEL, India Lucas TVS Daimler Benz Aerospace DEBIS, Germany DRDO, India DMS, France ExceLAN Inc. Ford  Tata Johnson IFB Group, India IgT ITC ISRO Intersoft, Netherlands KPN, Netherlands

Krakatau Daya Listrik Mannesmann Demag OCE, Netherlands PTT, Netherlands QAD, Netherlands Racal Inc. Rane Group, India RHW Group Seamless Pipe Industries, Indonesia South East Asia Pipe Industries, Indonesia Surya Tobacco Company, Nepal TIP, Netherlands TIRA Machinbau, Germany Wheels India Ltd. Brakes India Ltd. VSSC, India VXI Tech, USA

 
 
 

MAIN OBJECTS OF THE COMPANY

The main objects of the Company as set out in the Memorandum and Articles of Association are:

1. To carry on the business as manufacturers, producers, designers, traders, dealers, importers, exporters, servicers, reconditioners, consultants, distributors and value added resellers for computers of every description, microprocessors, visual display devices, transducers and controls, automatic test equipments, test-rigs, floppy drives, hard disk drives, Winchester disk drives and any other form of uniformation storage and retrieval devices, disks, floppy diskettes and any other form of storage media, printed circuit boards, semi conductors, chips of every description and interface sub-system for computers, instrument controllers and robotics, computer aided manufacture, computer aided design, energy conservation systems / instruments / equipments and any other equipments used in defence, industrial, chemical laboratory, medical, scientific purposes, and computer peripherals, accessories, instruments of every kind and description.
2. To carry on business of computer services in all discipline to impart training in computer software and to develop, prepare print, alter, buy, sell import and export computer software of every kind and description.
3. To carry on in any part of the world the business of consultants, planners, designers, advisors in all or any of the activities of management, technical, industrial, financial accounting, taxation, commercial, marketing, advertising, personnel, labour, operation research, market survey, or project engineering, project appraisal, quality control, efficiency experts, publication of Articles, books and periodicals, journals, export marketing, issue of shares, debentures and other securities and stocks of all kinds and descriptions, processing, preparations, implementation and reviewing of project report, critical path analysis, option polls, organisation and method and other modern manager techniques and to establish and render any or all consultancy and other services of professional and technical nature of industries, firms, association, enterprises, institutions, bodies corporate and all other types of concerns and to enter into any contracts in relation thereto.
4. To carry on Research and Development Lab work of Hardware and Software testing for developing products, designs, process for companies in India and abroad and to produce various sub assemblies for defence applications.

FINANCIAL PERFORMANCE OF THE COMPANY

The financial performance of the Company as per the audited accounts is as follows:

EPS, RONW & NAV have been calculated after taking into account share application money received. Figures for 1999-2000 are annualised.

SIGNIFICANT ACCOUNTING POLICIES & NOTES TO ACCOUNTS

1. Significant accounting policies

1. Accounting Concept


The Company follows Mercantile System of accounting and recognises the income and expenditure on accrual basis.

2. Fixed Assets and Depreciation


Valuation of Fixed Assets are carried at historical cost less accumulated depreciation.

Depreciation has been provided according to rates provided in Schedule XIV of the Company's Act, 1956, under straight line method.

3. Valuation of Stock


Raw material - at cost

Work-in-progress - at estimated cost

4. The expenditure on the development of technology on ruggedisation, Air-Borne systems, Military approved MPRU design and control computer unit design for torpedo is shown under current assets as "product under Development" and is valued at cost.

1. Dividends


Since incorporation the Company has declared dividend only once @ 15% for the accounting period ended on 30.06.1997.

2. Bonus issue

DETAILS OF SUBSIDIARIES

1. Microcon SPM Private Limited

Names of Directors: Mr. Arunjatai Viswanathan, Mr. R Shanmuga Prasad, Mr. K Elango

The Company is engaged in business of manufacturing, servicing in special purpose production machines, testing machines, standard production machines, control panels, tooling and accessories, components, parts and other equipments used in defence, industrial, chemical laboratory, medical scientific purposes and computer peripherals accessories. The services of the Company includes test and measurement systems, process automation, image processing applications, quality tracking and manufacturing systems. The major clients of the Company includes Brakes India Ltd, Chennai, IFB Industries Ltd, Bangalore, Lucas TVS Ltd, Chennai, Rane Brake Linings Ltd, Chennai, Wheels India Ltd Chennai, PT Autoliv Indonesia, TIRA Machinenbau Gmbh Germany.

Financial performance of the Company since its incorporation is as follows:

(Rs in lacs)
 

Particulars	31.03.1998	31.03.1999
Income	63.11	174.02
Expenditure	62.75	172.03
Profit before Tax	0.36	1.99
Tax	0.12	1.62
Prior year adjustment	-	0.05
Profit after Tax	0.24	0.32

 

DETAILS OF OTHER VENTURES PROMOTED BY THE PROMOTERS OF THE COMPANY

1. Microcon IVS Private Limited

Names of Directors: Mr. S Ravi Narayanan, Mr Arunjatai Viswanathan, Mr. Narasimhan Srinivasan, Mr. Ram S Ramanathan

The Company was incorporated on 23^rd of January 1998 and incurred an expense of Rs. 16000/- in the nature of preliminary expenses. There has been no activity during the period ended 31.03.1999 and no profit and loss a/c has been prepared.
 
 

PROMOTERS AND THEIR BACKGROUND

Mr. S. Ravi Narayanan – (Promoter & Managing Director)

Mr S Ravi Narayanan (Age 41 yrs) obtained B.E in Electrical Engineering from University of Madras in year 1981. He has experience in the fields of testing, tracking and controls and has been a consultant to several companies in India and abroad. He has successfully nurtured and grown Microcon into a Global IT solution provider over the past 15 years. He has done pioneering work in embedded systems, testing for 15 years and on Internet for last three years. Presently working on B2B foundation components on Internet. He has acquired domain expertise in automotive, aerospace, discrete process verticals. He has served on the board of Indian Airlines and Air-India. In addition he is an IT consultant to National science and Technology Board NSTB, Singapore, Singapore Technologies and Bakrie & Brothers, Indonesia. He is on the Board of Advisor to US based 3D portal www.realitybuy.com and Indonesia based media portal www.nusanetwork.com. He has special interest in web casting, multimedia conferencing & convergent technologies.
 
 

DETAILS OF PERSONAL GUARANTEES

Mr. Ravi Narayanan, has given personal guarantees to the banks/financial institutions in the respect of various credit facilities sanctioned to the Company. The details are as follows:
 

Name of the Institution / Bank	Particulars of Facility
Centurion Bank	Credit Facilities to the extent of Rs. 800 lacs comprising of : Cash Credit - Rs. 250 lacs Bills Discounting - Rs. 50 lacs Guarantees - Rs. 200 lacs Letter of Credit - Rs. 300 lacs
Industrial Investment Bank of India	Medium Term Working Capital Loan of Rs 200 lacs

LITIGATION/DISPUTES/DEFAULTS:

In an application no. 1267 of 1998 before the Debt Recovery Tribunal, Chennai filed by Indian Bank, Kellys Branch, Chennai - 600 010 against M/s Genie Foods Pvt Ltd and others for recovery of certain dues Mr. Ravi Narayanan, Managing Director of the Company has been named as one of the defendants in respect of agreement of guarantee executed in the individual capacity for the due repayment of cash credit facilities awailed by M/s Genie Foods Pvt. Ltd.

Other than the above-mentioned case there are no litigations in which the promoters of the Company are involved.

There are no overdues, defaults to the Financial Institutions/Banks, Re-schedulement of loans to Banks/Financial Institutions by the Company.

There are no pending offences of non-payment of statutory dues by the promoters of the Company.

There are no cases of litigation pending against the Company or against any other Company whose outcome could have a materially adverse effect on the position of the Company. There are no pending litigation against the promoters/directors in their personal capacities and also involving violation of statutory regulations or criminal offences. There are no pending proceedings initiated for economic offences against the Directors, Promoters, Companies and firms promoted by the promoters.

There are no outstanding litigation, defaults etc., pertaining to matters likely to affect the operations and finances of the Company including disputed tax liability, prosecution under any enactment in respect of Schedule XIII of the Companies Act, 1956.

There are no litigation outstanding against the promoters/Directors in their personal capacity except those mentioned above. The Company, its promoters and other companies with which promoters are associated have neither been suspended by SEBI nor any disciplinary action has been taken by SEBI.

There are no prosecutions launched by Income Tax Authorities and no liability compounded by the promoters/Company/companies/ventures with which the promoters are associated is subsisting.

There are no cases of pending litigation / defaults in respect of the firms/Companies with which the Promoters are associated in the past but are no longer associated.

BOARD OF DIRECTORS
 

S.No.	Name, Designation, Address and Occupation	Other Directorships
1	Mr S Ravi Narayanan Managing Director 14/33, 37th Cross Road, Jayanagar, 8th Block, Bangalore - 560 082 Business	Microcon IVS Pvt. Ltd
2	Mr. Ram S Ramanathan Director 812, III Block, 10th Main, Koramangala, Bangalore - 560 034 Management Consultant	Pranchai Investments, BVI Pranchai Engineers and Consultants Pte Singapore Ltd Asia Microcon Singapore Pte Ltd Incubators Biz. Com Singapore Pte Ltd Microcon IVS Private Limited
3	Mr. Jacob Marten Bosma Director Snilen 1, 8467 SZ Vegelinsoord The Netherlands Consultant	Bosma Automatisering b.v Dex Software Distribution b.v IDOK Concepts b.v
4	Mr. K Elango Director 19/2, 2nd Cross, Marappa Garden, Bensen Town, Bangalore - 560 046 Consultant	Microcon SPM Private Limited
5	Ms. Girija Rajagopal Director 206, Srivalli, 11th Cross, Wilson Garden, Bangalore - 560 027 Consultant	Jupiter Computer Academy Pvt. Ltd,  Jupiter Informatics Pvt. Ltd Wisdom Computer Academy Pvt. Ltd. Shreyas Computers Pvt. Ltd. Jupiter Educational Services Pvt Ltd.

 
 
 

BACKGROUND OF OTHER DIRECTORS

Mr. Ram S Ramanathan (Age 52 yrs)

Mr. Ram S. Ramanathan is a Mechanical Engineer by profession and served as a CEO of two auto components companies Purolator and Gabriel of Anand Group in India. Prior to this he served as a senior executive in the Unilever Group in India and Indonesia. He also served as a CEO of Metals Group at Bakrie & Brothers, Indonesia where he developed new businesses and built its long-term strategies. He is a consultant to IFC, EDB and ADB. At present he is based in Singapore and is a consultant to IFC, EDB, ADB and start up companies.

Mr. Jacob Marten Bosma (Age 41 yrs)

Mr. Jaap Bosma is the founder member of European operations. He promotes and markets Company's products and services in European markets. He is also the CEO of Bosma Automatisering, Netherlands which markets and offers technical support for Exact and is a VAR for Baan, 3COM and Microsoft products. Primarily responsible for Microcon’s successful entry into European market like TIP, OCE and for executing projects for Dutch telecom giant PTT.

Mr. K Elango (Age 45 yrs)

K Elango is a BE in Mechanical Engineering from University of Madras. He started his career as an Assistant Engineer in Tamilnadu Electricity Board, and has subsequently spent twelve years in the Design & Marketing Sales Division of John Fowler (I) Ltd. He has successfully completed several projects for the ITC-ILTD Divisions, Rane Group, RHW Autoliv, LRDE & Wheels Ltd. He is currently involved in Marketing & Execution of Turnkey Projects in Microcon and specialised in MES, SPC and MSA technologies.

Mrs. Girija Rajagopal (Age 39 yrs)

Girija Rajagopal is a graduate from Madras University. She is an entrepreneur with excellent administration skills, manages two major centers of NIIT at Bangalore as Franchisee and has been awarded Privileged Business Partner status by NIIT,Delhi.

MANAGEMENT

The overall management of the Company is vested in the Board of Directors. The day to day affairs of the Company are managed by Mr.S.Ravi Narayanan Managing Director under the guidance and supervision of the Board. He is assisted by a team of experienced personnel in their respective functions.

KEY MANAGERIAL PERSONNEL

The profile of the senior management personnel is as follows:

R . Ramakrishnan - DGM Finance

A commerce graduate and a qualified Cost Accountant, he has over 11 years of experience in the fields of Finance, Costing &

Accounting. Well experienced in sourcing funds in various forms, budgeting, product pricing etc. Played a key role in arranging reasonable working capital facilities with Centurion bank and arranging intercorporate deposits
 
 
 
 
 
 

K Ananth Narayanan - DGM Administration

A Commerce graduate. He has over 15 years of experience in the field of Purchase, Logistics and commercial activities.

At present he heads HR, Admn. Activities of the Company.

Sukanya S - Manager Co-ordination Cell

An Engineering graduate, is the Manager of the Co-ordination Cell. Coordinates various activities related to the CEO’s Office. Coordinates all activities of Overseas operations. Involved in the business development activities including business plan and presentation of the Company. Plays a Key role in bringing out MicroNews, the official NewsLetter of Microcon.

A Vishwanathan - Chief Operating Officer

Has more than 30 years of rich experience in Automobile and Tooling industries mainly in NTTF, Lucas TVS and Mahindra & Mahindra. As a VP at NTTF, was responsible for Marketing, Design & Development of specialized tooling for Sheet metal & Plastic moulded components and was in charge of CNC division. Joined Microcon, as a chief CTO of intelligent manufacturing has successfully executed many prestigious projects in the fields of steel automobile and electronics. He is currently working on B2B automobile focus.

Dr. K. Sridharan - Consultant

Has a Ph.D from Stevens Tech, USA and was a member of the research team at IBM, New York & Quantum, California. Has special interest in Internet based technologies. Has executed several internet based portals and Vortals.Now a Consultant to the Microcon Group and is an adviser to Internet and Communication group.

Amitha Satish - Consultant

Has worked on Design & Development of software for special purpose machines for more than 8 years. Has rich experience in design and development of Internet communication modules Has successfully executed many portal projects. Has worked on computer graphics, MPEG, Java, VC++ for 3 years.Now a Consultant to the Microcon Group and an adviser to Internet and Communication group

R. Shanmugha Prasad - GM- Intelligent Manufacturing

At present he is incharge of design & development of statistical process control & measurement system analysis group of IM division. Has over 10 years of experience in automobile & mechanical design and has successfully executed turnkey projects for automobile & defense industries. Has implemented SPC project for Autoliv group worldwide

V Ramanujam - GM- Interactive Simulation

An Electronics graduate with vast experience in Industrial Systems Group of BHEL. Heading the simulation group of IM division. Has hands on experience in silicon graphics workstation. Has expertise in the fields of animation & simulation. Has over 13 years of experience in electrical, electronics design and simulation.

B. Vasan - Manager

An Engineering graduate in Electrical and Electronics, he has over 6 years of experience in the field of Control Engineering. Was a Project Leader and involved in designing, implementation, installation and commissioning of special purpose machines.
 
 

Banu Malali - Country Manager

Joined Microcon as a Trainee and has been with the Company for the past 10 years. Has been representing our overseas operations at Irvine, California for the past 3 years. Presently is the Country Manager and is in charge of all liasoning activities. While in India she is involved in Business Development and also in software development for various prestigious projects for Company's international customers like, BEST of Japan.

Erik J Abels - Country Manager

He is a Country Manager of Euro Microcon and has been associated with the Company since its inception. He has a background in Industrial control and automation systems and is also proficient in software development. He handles marketing and support for clients of the Company in Europe.

K Suresh Karanth - Country Manager

Has a degree in Engineering and Business Administration. Has over 11 years experience in Industrial Automation & Control Systems. Presently based in Indonesia with a proven track record of growing new business. Established Microcon well in the Far East with Indonesia as a base and brought in over $1 million orders. Has built good anchor customers.
 
 

Summary of other Key Managerial Personnel
 

Name	Designation	Skill Profile	Exp in years
Anuradha Sriram	VP-Technical	HTML, C, C++, Java, Oracle, MIIS, Windows 95	10 +
Suresh Kamath	VP -Business  Development	Focussed in Intelligent Manufacturing, In-charge of Business Development in the far east	10 +
Vageesh Lakshminarayan	Sr. Engineer S/W	Windows NT, Windows 95, ERP, C++, Access	10 +
Sengamalai Anand	Engineer S/w	HTML, DHTML, Java Script, Servlets, Java, VC++, C++, Java Beans, RMI, Oracle, MS SQL, MIIS, NT, Unix	3 +
Nadamuni Sarangapani Mahesh	Sr. Engineer S/w	Windows NT, Unix (Linux), Rational Rose, C, C++, Java, VB, VC++, CGI, Perl, XML, ASP, Access, Oracle, Sybase	4 +
Annamalai Muthuselvam	Engineer S/w	C++, VB, Oracle, Progress, Sql Server, Informix, Magic, Unix, NT, MS-Access, NT-Admin, ISS Admin, Labview, Lab Windows/CVI	5 +
Kasinathan Jagatheeswari	Engineer S/w	VB, C++, VSS, TCP/IP Protocol Stack, SQL Server, Magic, Unix, Intel 8086 Assembly, MS-Access	5 +
Gopal Vasantha	Engineer S/w	C++, VC++, Unix, MAC, Windows NT, Informix, UML	5 +
Kumar Periyasamy	Manager - Projects	Design & Development	10 +
Arugundram Somasundaram Sivakumar	Engineer S/w	C, C++, WINSTOCK Programming, Unix	3 +
Vijay Bharath S	Sr. Engineer S/W	Control circuit design, PLC Programming & MES Skills, VB Programming	6 +
Ravi J	Sr. Engineer S/W	Control circuit design, PLC Programming & MES Skills, VB Programming	6 +
Senthil Murugan S	Sr. Engineer S/W	Control circuit design, PLC Programming & MES Skills, VB Programming	6 +
Guruprasad Radhakrishnan	Engineer S/w	C, C++, Unix, VC++, VB, Sybase, SQL Server, Oracle 7	10 +
Thangavelu Santharaj	Engineer S/w	C++, VB, Unix, QSP, MS-Access	10 +
Subramanian Srinivasan	Sr. Engineer S/w	HTML, DHTML, Java Script, Perl, CGI, Servlets, Java, C++, Java Beans, Corba, RMI, MIIS, Apache, Netscape Enterprise Server, NT, Unix	4 +
Vijayakumar Gujarappa Hanumanthappa	Engineer S/w	Win 98, C, C++, VC++, Java, Access	5 +
Babu Srinivasan Vasan	Sr. Engineer S/w	Win 98, C, C++, VC++, Java, Access	5 +
Patelkhana Venkat Subbarao	Engineer S/w	VB, Oracle, C	5 +
Narayana Charylu	DGM- Customer Support	Technical support for the customers	20 +
Shyamala Deshpande	Manager - HRD	Human Resources and related activities	7 +
Krishnagiri Namodevrao Rajendran	Manager Technical	HTML, Micro media, Win 98, NT, Network Admn	8 +
Srinivasan S	Company  Secretary	Statutory and Company law related activities	20 +

CHANGES IN KEY MANAGERIAL PERSONNEL DURING PAST THREE YEARS

There has been no changes in the Key managerial personnel during the past three years.

THE PROJECT

The Company proposes to strengthen the existing infrastructure and setup by putting additional hardware & software, upgrading the systems, communication facilities, establish overseas offices at strategic locations. The Company also wishes to repay high cost debts and finance its working capital requirements through the present issue.

PRESENT INFRASTRUCTURE

1. REGISTERED OFFICE


The Registered Office of the Company was shifted from 15,Electronics City, Bangalore-561 229 to the present location at 722/22,10^th 'A' Main, 4^th Block, Jayanagar, Bangalore-560 011 for administrative convenience vide a resolution passed at the AGM held on 28^th January, 2000.

In this premises the Company has its Internet & Communication division

The Company has entered into a lease agreement dated 24^th February, 2000 for the said office. The broad terms and conditions of the agreement are as follows:

Name of the Lessor	:	Smt. D. A. Satyaprabha
Area	:	7500 Sq ft
Tenure	:	Two years commmencing on 1st March,2000
Deposit	:	Rs.6,00,000/-
Rent	:	Rs.60,000/- per month

2. OTHERS

The Company has entered into an agreement for sale with M/s Enertec Controls Limited for its property at 14/15, Electronics City, Hosur Road, Bangalore. This property is located at Software Technology Park and the Company has taken the possession of the said premises. The balance consideration in terms of the agreement is not yet paid and the Company is in the process of completing all the formalities in terms of the agreement. The broad terms and conditions of the agreement are as follows:

Area Land Building	:	3966 Sq. mt 6000 Sq. ft
Payment Schedule
Upon signing of the agreement	:	Rs.10.50 lacs
At the time of registration of the property in the name of Microcon (or not later than 31st March,1998)	:	Rs. 21.00 Lacs
Within one year from the date of registration with an interest of 18% p.a.(or not later than 31st March,1999)	:	Rs.22.50 Lacs
Total	:	Rs. 54.00 Lacs
Other conditions:		The present tenant Enertec will become a sub-lessee of Microcon and Microcon will collect rent for the property after allowing a waiver of four months.

The Company has entered into a Lease agreement for its property situated at 15/A, Electronic City ,Hosur Road, Bangalore 561 229. The broad terms and conditions of the agreement are as follows:

Lessor	:	M/S Micro Energy (India ) Limited
Area	:	9000 Sq ft
Tenure	:	Three years commencing from 1st February,1998
Deposit	:	Rs. 400000/-
Rent	:	Rs.15000/- per month

The Company has its Intelligent manufacturing system lab at Bommasandra, Bangalore.

The Company owns land and building admeasuring about 4045 Sq. mtrs and 13000 Sq. ft respectively at Bommasandra Industrial area Bangalore. The Company has entered into a deed for absolute sale dated 5^th August, 1998 with M/S Toughnuts (India ) Private Limited for its property located at 121 E, 13^th Cross, Bommasandra Industrial Area, Hosur Road, Hebbagodi Village, Attibele Hobli, Anekal Taluk, Bangalore. The broad terms and conditions of the deed are as follows:

Area	:	4045 Sq mts
Total Consideration	:	Rs. 24.00 Lacs

The Company has entered into a deed of absolute sale dated 21^st March 1997 for its property situated at Ravi Hill Layout, in Sy.No.44 of Ittemadu Village, Uttarahalli Hobli, Bangalore. The said property is a vacant land owned by the Company. The broad terms and conditions of the deed are as follows:

Area:
Site no. 6	:	2700 Sq ft
Site no. 7	:	3000 Sq ft
Site no. 8	:	2400 Sq ft
Total Consideration
Site no. 6	:	Rs.8.10 Lacs
Site no. 7	:	Rs. 9.00 Lacs
Site no.8	:	Rs7.20 Lacs
Total	:	Rs. 24.30 Lacs

BREAK UP OF COST OF PROJECT

1. FURNITURE & FIXTURES AND OTHER ASSETS

2. COMPUTER HARDWARE/SOFTWARE

3. COMMUNICATION

• Six Satellite Centers within Indian Boundaries enabling access to India’s best Software Professionals.
• Proven track record with more than 2000 man years of domain specific expertise.
• 64 KBPS Dedicated Leased Line, ISDN Line
• Desktop Video Conferencing
• Host of PCs running NT / Win95 / Unix

3. OVERSEAS OFFICE


The Company has estimated an amount of Rs. 294.00 lacs for setting up and maintenance of three overseas offices. The details are as follows:

Particulars	Amount (Rs in lacs)
Far East	69.00
Europe	120.00
USA	105.00
Total	294.00


 
 
 

4. REPAYMENT OF DEBTS

The present outstanding as on 31.12.1999 of the secured and unsecured loans of the Company are as follows:

Particulars	Amount  (Rs in lacs)
Secured Loans
Centurion Bank -Cash credit	280.47
Karnataka State Financial Corporation - Term loan along with the interest	4.65
Center for Technology Development - Term loan with interest	25.25
Industrial Investment Bank of India - Term Loan with interest	231.82
Total (A)	542.19
Unsecured loans
Intercorporate deposits	40.00
Bill discounting	46.80
Hire purchase finance	30.24
Total (B)	117.04
Total A+B	659.23

The Company proposes to repay the high cost debt in the following manner:

Particulars	Amount (Rs in lacs)
Industrial & Investment Bank of India	231.82
Centurion Bank	280.47
Center for Technology Development	25.25
Karnataka State Financial Corporation	4.65
Bill discounting	27.57
Hire purchase Loan	30.24
Total	600.00

6. PRELIMINARY EXPENSES


An amount of Rs 100.00 lacs has been estimated for issue expenses which includes appraisal fees, fees payable to lead managers, Registrars to the Issue, Bankers to the Issue, Brokerage, Stamp Duty, Stock Exchange listing fees, Advertising Expenses, Cost of Printing & Distribution, Legal Expenses and Other Miscellaneous Expenses.
 
 

7. WORKING CAPITAL

(Rs in lacs)

Particulars	Amount
Current Assets
Work in progress	106.67
Debtors	225.00
Other Current Assets	24.00
Total	355.67
Current Liabilities
Sundry Creditors for Expenses	45.58
Provisions	60.06
Total	105.64
Net Working Capital	250.03

Assumptions:

1. Work in Progress - 2 months total cost
2. Debtors - 3 Months
3. Sundry Creditors - 1 Month

RAW MATERIALS

The Company operates in the technology-oriented service Industry and as such does not require any raw materials. The main consumable items required are items like Floppy Disks, Magnetic Tapes, Other Data Storage Media, Printer Cartridges and Computer Stationery, all of which are easily available.

UTILITIES

1. Power: Additional power requirement for proposed expansion is estimated at 70 Kva and Back-up UPS required is estimated at 60 Kva with 3 Hrs Back-up. The Company is in the process of obtaining the additional facilities.
2. Water: The requirement of water is only for human consumption, which is being met through the municipal water supply.
3. Effluent Disposal: The Company’s operations do not generate any effluents / pollution. The Company is exempt from seeking a clearance from the Pollution Control Board as it belongs to a classified non-polluting Industry.
4. Manpower: The total manpower at present is 35. The Company additionally plans to recruit 120 Software professionals for the proposed expansion project

INDUSTRY AND MARKET ANALYSIS

In the past 15 years, growth of IT industry has been driven by companies automating their back offices and front offices .In the new wave of growth, companies are beginning to connect to their suppliers and customers. The concept and advent of a wired market place opens up several high growth areas such as internet/intranet products and services and increased usage of multimedia content. India's exports are likely to grow in areas of internet and e-commerce product & solutions. The overall size of the software industry in India is expected to be around Rs.780 bn by year 2000-03implying a CAGR of about 48%. Software exports are likely to exhibit a CAGR of over 42% (51% in Re. Terms) by year 2002-03.

Structural change, technological innovation and globalisation are just a few of the many broad forces fueling the increasing complex business and competitive environment that is driving the demand for information systems. A few of the key catalysts and growth drivers for the IT services industry can be summarised as follows:

Indian players have been trying to move up the value chain by increasing the contribution from niche and mass products and shifting from onsite to off shore activities. Concomitant with the increasing importance of information technology, which cuts across vertical markets and geographic boundaries, third party services related to design, integration and support of information systems have seen outsized growth. IT services, which today represents approximately 30% of the total investment in IT, is expected to represent an increasing proportion of IT investment over the next five years .
 
 

The figure below illustrates the industry pyramid which has become the common denominator used by industry research firms such as IDC and Gartner Group. Broadly this value oriented pyramid depicts a wide range of services from business and IT consulting at the top of the pyramid, through the middle layers, which includes systems integration,professinal services and education and training, and a base that is represented by traditional outsourcing. As can be seen, consulting represents the smaller of the markets, although its growth is expected to outpace the larger systems integration and outsourcing markets. Systems integration which represents the largest and most diverse segment of the market, is expected to see 19.7% CAGR through 2002,with networking integration, electronic commerce, and web-enabled applications, and implementation of enterprise applications experiencing dramatic growth. Whereas the outsourcing market overall is expected to lag the consulting and systems integration markets, the business process outsourcing market is expected to represent one of the fastest growing opportunities in the IT services space.
 
 

STRATEGIC BUSINESS

• Microcon has positioned itself as a specialized niche player with technology specific expertise to deliver rapid integrated services to meet evolving and growing needs of the customer.
• Microcon will operate in two vertical markets namely; Intelligent Manufacturing (IM) and Communication providing end to end products & services on a global scale.

• Intelligent Manufacturing has been core business of the Company for the last five years. Microcon looks at Internet & Communication and Interactive Simulation(IS) as the strategic business. Philosophy is to stabilise with the core business and improve and grow with the strategic business.

PRODUCTS AND SERVICES

The Company has restructured its business and established three independent business divisions namely:

1. Interactive Simulation Group
2. Internet and Communication
3. Intelligent Manufacturing

Microcon’s Interactive Visual Simulation Group develops and provides high performance customized, interactive simulation and virtual reality solutions.The Company's activities include developing virtual reality and interactive simulation based Products, Manufacturing and Simulation Based Training enabling the creation of interactive environments for a variety of applications; logistic-centric software, for flow and process evaluation and training applications for the training of sensitive and complex processes or procedures.

The Company has the competence to develop IS products, tools, building blocks & libraries for end user applications. It has the required software & instrumentation skill sets needed to achieve this goal. Microcon has skillful engineers trained in C, C++, 3D Studio, J++, OGL, EON, OXYGEN, Viscape, Superscapes, etc. to develop simulator products and applications using these tools. Our emphasis is mainly in the fields of automotives, aviation, space, defence, medicine and industrial processing.

Microcon has successfully developed the following products:

• ECS : Environmental Control System

ECS Controller Simulator is a PC based real time system simulating the ECS Controller. In addition to performing all the functions that are done by the actual ECS Controller it provides user interface for developing the control laws, on-line transient analysis facilities, plotting selected sensor values (on the screen), recording the data and off-line plotting of the recorded data. The ECS Simulator is developed on Windows environment using Borland C++.

• SBT: Simulation Based Training

Operation: It simulates the operation of the machine for movement of wheel along conveyor, loading & clamping of wheel & measurement cycle.

Assembly & Maintenance: The demo is meant for the virtual training of the assembly and maintenance of machine. The demo has three levels. Level 1 is an automatic sequence of the assembly. Level 2, assumes that the user is from a technical background and Level 3, assumes that the user is not aware of the technicalities of assembly. The intention of this package is to train the workers in assembling the machine, before they actually try them out physically on the shop floor.
 
 

2. INTERNET AND COMMUNICATION

2.1 Internet Group

The Company's focus in this high growth market is towards customised application development as well as standard products for the internet with special focus is on Electronic commerce with Internet becoming a significant form of shopping in the next decade.The Company provides interactive web presence, custom application development using Java, Client/server applications access over the internet, creation of 3D worlds & Electronic Commerce.

Some of the products developed by the Company are:

TIP - Virtual Internet Plaza

This product developed for TIP of Netherlands is a 3-D highly graphic intensive, interactive world, without bandwidth problems, with real time data fetching from a remote database via the Internet. Since it is combination of high quality graphics and latest technology interface, the virtual world is offerred on CD for accessing the database via the Internet. The rest of navigation and walkthrough in the plaza is done off line.

It has been created using Superscape Virtual Reality software. Real time access for data over the Internet is possible through our Java programs and scripts using JDBC / ODBC for accessing remote database. Since we have used JAVA which is platform independent, the operating system / platform of the Web server is not important provided it has a JDBC compliant database. The chat program and chat server have also been developed in Java.

• OCE - Print On Demand

The user can upload the files to be printed from their desktop to the remote server, create job tickets, see a preview & find out the status of their print job. This application which can be launched from the browser is being developed using the latest tools JDK 1.1.4 using Java beans & Remote Method Invocation (RMI).

• NUSA Network

STEE Portal

The Company has Designed & developed a customer portal for Singapore Technologies for auto bidding system. The portal has an auctioning module that enables the bidding & licensing process. In addition, the portal provides other standard features

• Doctor Service Provider

2.2 Communication and Protocols Group

The Company also provides "Networking" - products used to interconnect Computer systems in LAN (Local Area Network) or WAN (Wide Area Network) environment. With the advent of Intranet / Internet and the merging of Voice & Data facilities, computer Networking has assumed significant importance and will remain one of the fastest growing segments of the IT Industry.

The major focus in Technology is to achieve significant improvements in "Available Bandwidth & and its management". VLAN (Virtual LAN) products are one of the solutions to meet the demand for increased Bandwidth and manageability, in the enterprise network covering the SOHO ( Small Office / Home Office ) segment.

Microcon has undertaken and successfully completed several modules for the Networking product family through tie up with Integrated Telecom Technology Inc, USA (IgT) who are the prime members for the ATM forum. The following is a brief account of the projects done for IgT.

• WAC413-B:

• SESAR:

• SAR:

3. INTELLIGENT MANUFACTURING

Microcon Intelligent Manufacturing Group has been providing turn key solutions in Control & Automation for industries ranging from steel plant tube mills to Automobile industries to Tobacco & cotton mills to Electronic industries. Microcon has evolved as one of the premier providers of the test equipments and has the expertise in control & automation solutions ranging from distributed I/Os and SCADA systems to Product tracking and Video inspection systems. The Company has considerable experience in delivering robust, proven man machine interfaces and are specialises in custom application s/w development. The Company has delivered numerous solutions for control and communication involving PLC-PC interfaces. The Company's Control & Automation Systems include supply, integration and interfacing of sensors, actuators, motor control center, PLC, Data Acquisition Systems, Data Gathering Terminal, software for production, quality and management. We also provide and integrate MRP, Process Planning and Estimating Software.

3.1 Production & Planning Systems

Over the past few years companies spanning from heavy engineering to defence and electronics are finding methods to ensure the priorities of meeting delivery dates while controlling quality and cost through effective project management. Hence a need for MRP systems which monitors material supplies, inventory levels, capacity requirements, resource utilisation, on-going costs both specific to contract / business to be updated on-line dynamically so that decisions are always made on the latest information available.

Some of the products developed are:

Computer Integrated Manufacturing System (CIM)

Microcon has developed the tracking system for Mannesmann-Demag, Germany, which is an integral part of the tube mill plant Quality Assurance System. Product Tracking System is required to provide a unique identification mark on pipe either alpha numeric or Bar-code for easy tracking of the pipe during various stages of the production cycle. This unique code is printed on the pipe by a printer. At various process zones Bar-code readers are used for retrieving the plate, pipe data.

Quality Assurance System (QAS)

This is a distributed data collection system developed for Mannesmann-Demag, Germany, involving co-ordination among several workstations located at various processing zones in a tube mill plant. A central server furnishes all production and quality data while dedicated work stations attend to fault monitoring and maintenance. The Maintenance Management package is developed as a stand alone software package independently positioned as a product for different manufacturing industries. This is interfaced with the Fault monitoring system to collect faults from various machines and hence can schedule machines for preventive & breakdown maintenance. Maintenance Management package includes inventory control of the spare components, which enables the maintenance personnel to do effective breakdown maintenance. The preventive and breakdown maintenance information can be retrieved from the database of the server and displayed. Reports can be generated and hard copies of the same can be made. On- line help is also provided to aid the user.

Manufacturing Execution System (MES)

The emphasis on manufacturing has changed from being capacity driven to capability driven. Manufacturing Execution System has emerged as the information technology of shop floor bridging the gap between the planning systems (ERP / MRP etc.) and the shop floor control system (PLC, DCS etc.)

Manufacturing Execution Systems (MES) are information systems that reside on the shop floor between the planning systems in the offices and direct industrial controls at the process itself. It is here that the plans passed down from a corporate manufacturing system can be executed. Likewise MES applications turn the Data from control systems such as PLC and DCS to usable information. MES helps in converting real time data from the shop floor to usable information that can help manufacturers to improve productivity and remain competitive in the market.

Functions:

• Resource Allocation

• Operations / Detail scheduling
• Despatching Production Units
• Document control
• Data Collection Acquisition
• Maintenance
• Product Tracking and Genealogy
• Performance Analysis
• Management of:
• Labor
• Quality
• Process
• Maintenance
• Product Tracking and Genealogy

Knowledge Aided Planning & Estimation System (KAPES )

Microcon has developed this product in joint effort with PS Group of UK, which won the best IT product of the year in manufacturing category at UK. The system produces the manufacturing times and cost estimates for parts and product structures with full traceability and auditability.

3.2 Tracking Systems

• Tube Tracking System

• Generation of Pipe ID
• Product Coding
• Trace to production details viz. Time, People during production.
• Trace of the pipe in process location
• Trace of the pipe to lab reports
• Trace to quality parameters
• Trace to raw material supplier
• Trace to other on-line an off-line test reports

TECHNOLOGY

In order to leverage on the niche expertise in areas like Embedded systems, In-process software, Enterprise/Manufacturing Execution Systems, Microcon started Satellite Development Centres so that it would evolve into a scalable, copiable model. The business model followed was:

1. Execute projects on turn key contracts
2. Contract development/dedicated offshore development

To meet this requirement, Microcon has developed the concept of eXtended Development Centre (XDC) containing a suite of powerful tools that bring vast software engineering resources to the customer’s doorstep in a smart and efficient manner adding value, reducing cost and time
 
 

The XDC suite consist of the following modules:

• Krama Vision – An interactive client server engine that integrates voice, video and data communication over LANs, WANs and the Internet.
• Krama Virtual Technology Park (Krama VTP) – A centralised facility that enables companies registered with that VTP to share the resources that are available.
• Krama Virtual Interactive Training (Krama VIT) – A web based classroom development and management tool.

KRAMA VISION

Krama Vision is an interactive client/server engine that integrates Voice, Video and Data communication over LANs, WANs and the Internet. Krama Vision is also a set of libraries that implements a variety of the most commonly required features such as Chat, File transfer, White board sharing, Application sharing, one-to-one video conferencing and One-to-many multicast video conferencing.

KRAMA - VTP (VIRTUAL TECHNOLOGY PARK)

With the Software Industry placing emphasis on distributed development centers, it is inevitable that these development centers interact with each other to meet the technological and commercial performances expected of them.

The communication needs of these centers are, by and large, satisfied by separate applications that serve one or two purposes, but fail when it comes to providing a total solution. It is precisely this problem that Krama Virtual Technology Park (Krama VTP) product addresses the need for a total solution that is generic enough to be adopted by any industry and extensible enough to be customized and deployed in an organization. With Krama VTP, one can send messages to one or more clients / employees or even broadcast to all clients on the network, can conduct two way chat session in real time, can have audio/video conferencing and share one or more applications on line.

Krama VTP focuses on two main management divisions: Office management and Project Management

With the explosion of new technologies and with the increasing growth of student community, ‘remote learning’ has become a part of the modern training and is rapidly spreading across the world’s educational institutions and corporations. With this technology, experts of various fields from various parts of the world are available for the learning community.

Our product, Krama Virtual Interactive Training (Krama VIT) is a web based classroom development and management tool. Here, the instructor can directly post, modify or remove course-related information. Students can access this information via any port to the World Wide Web (Netscape, Internet Explorer etc.). The students and the lecturer can have on line chatting and Audio/Video conferencing. The lecturer can share his applications with his students. The lecturer as well as the students can point out, annotate or draw on the application to emphasize on what they are explaining.

Features

There can be no assurance that the Company will be able to compete effectively against future competitors, current or future, will not succeed in adapting more rapidly and effectively to changes in Technology, in the market, or in developing or marketing products and/or services that will be more widely accepted.

Regarding competition in the specific domain areas that are serviced by Microcon the following observations may be made:

• Intelligent manufacturing:

• Interactive Simulation

• Internet and Communication

In the area of communication, Microcon will provide service and solutions in this area of wireless communication using cutting edge technologies such as WAP, SMS, Blue Tooth etc. There are very few companies providing services in this market segment from India.

MICROCON INTERNATIONAL LTD - SWOT ANALYSIS

Strengths

1. Domain Expertise: The promoters of Microcon combine their domain expertise of 2000 man-years in Manufacturing and IT industry spread over 10 years to provide high-end technology solutions and services.
2. Technology: XDC and VTP are concepts that aid the delivery of cost effective quality solutions at the customer's doorstep worldwide.
3. Management Team having over 10 years of extensive and varied experience of operating businesses on a global scale.
4. Microcon's is in the niche areas of manufacturing, communications and Internet using fusion of convergent technologies.
5. Microcon over the last 10 years has built a wealth of re-usable modules and technology components, which can be readily used for foundation blocks.
6. Microcon traditionally has been a global player in providing solutions and services to the IT Markets. Microcon has been a consultant to prestigious organisations like National Science & Technology Board, Singapore (NSTB), Singapore Technologies (STEE), Bakrie & Brothers, Indonesia.

1. Dependence on key personnel: The success of the Company is dependent on certain key management and technical personnel who have played key roles in the founding, development of technology and promotion of the Company. Any inability to attract and retain qualified personnel would have a material adverse effect on the Company.
2. Dependence on the Continued Viability of the Infrastructure of the Internet: To the extent that the Internet and other online services continue to experience growth in the number of users and frequency of use by customers resulting in increased bandwidth demands, there can be no assurance that the infrastructure for the Internet and other online services will be able to support the demands placed upon them. The Internet and other online services have experienced outages and delays as a result of damage

1. Personalisation: Lifecycle personalization enables to attract and engage customers by presenting content appropriate at each stage of the customer lifecycle from initial visitor to long term customer.
2. Streaming Media: Streaming media technologies enable one to provide interactive multimedia contents across the net. Audio and Video on demand (AOD & VOD) enable media and entertainment companies to broadcast over the net. Digital delivery of art, music, books and movies will be the order of the day.
3. Web Casting: Push technologies such as point casting, unicasting and multicasting provide new interactive channel for disseminating information and innovative contents to geographically distributed audience. Applications include distance learning, entertainment and on-line training.
4. Wireless Communication: With the proliferation of wireless devices, newer technologies of sending and receiving information to and from mobile devices has opened up a whole new area of personalized services for the customer. WAP, Bluetooth and SMS are emerging technologies that have a vast potential to be exploited for wireless messaging and communications.
5. Virtual Reality & Visual Simulation: Virtual reality and 3D Visual simulation area cutting edge technologies that have revolutionized product development in a big way. With simulation we can meet the accelerating market demands for designing, analysis and prototyping in an artificial environment. Simulator software on high end machines are targeted towards the manufacturing industry using 3D graphics and building virtual plants, machinery etc.

Threats

1. Competition: The Company have to compete effectively against future competitors, or that any competitors, current or future.
2. Technology Performance and Obsolescence: The Company's services will depend on the operation of its own software, commercial software providers by others, computer and network hardware, telephone communications services, and computer network services.
3. Government Policies: Any adverse change in government policies in relation software industry may affect the performance and profitability of the Company.

K.V. Narasimhan & Co., Chartered Accountants and Auditors of the Company have verified the profit forecast for the year ended 30-06-2000 vide certificate dated 25-02-2000. The details are as follows:

We have reviewed the accounting policies, standards & calculations adopted by the Company in arriving at the forecast of the profit after taxation but before extraordinary items of Microcon International Limited for the year ending 30^th June, 2000 as set out in the section headed " Profit Forecast " in the prospectus of the Company for which the directors of the Company are solely responsible. The forecast has been prepared by the Directors of the Company based on the audited accounts of the Company for the six months ended 31-12-1999 and a forecast of the results of the Company for the remaining six months of the year ending 30-06-2000 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 & calculations are concerned, has been properly compiled in accordance with the assumptions made by the directors of the Company as set out in the prospectus / offer documents & 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 & losses of the Company for the years ended 31^st March 1995,31^st March 1996,period ended 30^th June1997, years ended 30^th June1998 , 30^th June 1999 and for the period 01-07-1999 to 31-12-1999, made by us and disclosed in the prospectus.

PROFIT FORECAST FOR THE YEAR ENDING 30-06-2000

(Rs in lacs)

Particulars		Amount
Income From Operation		900.00
Less :
Cost Of Operations	459.00
Depreciation	93.00	552.00
Profit Before Interest & Tax		348.00
Less :
Interest & Financial Charges	88.00
Income Tax	66.06	148.06
Profit after Tax		199.94

MAJOR ASSUMPTIONS

1. Sales

2) Cost Of Operations

The cost of operations are based on the recent experience & the values assume normal inflation . Selling & Administrative Expenses are also assumed to grow in proportion to the growth in sales volume & in line with the planned operations of the Company.

3) Contingencies

No major contingencies likely to have a bearing on forecast profits, are anticipated.

4) Interest and Finance Charges

In view of part prepayment of debts by the Company during the year, the interest will be lower.

Reduced usage of Non-funding limits will lower the Other Financial Charges.

STATEMENT OF TAXATION (As per Auditors Certificate dated 19.02.2000)

Rs. In lacs

Year Ended 31st March	1995	1996	1997	1998	1999
Net Profit as per P&L Account	85.47	247.63	5.65	41.90	(48.67)
Tax at Notional Rate	39.32	113.91	2.43	14.67
Adjustments:
a) Difference between tax depreciation and book depreciation	3.33	16.59	34.64	61.64	69.59
b) Other adjustments	29.94	176.05	(8.21)	(10.07)	(16.93)
Net Adjustments (a+b)	33.27	192.64	26.43	51.57	52.66
Tax savings thereon	15.30	88.61	11.36	18.05	18.43
Total taxation	24.02	25.30	0.83 *	3.90 *	--

* MAT

CAPITALISATION STATEMENT (As per Auditors Certificate dated 25.02.2000)

Note: The certificate is issued for inclusion of the above particulars in the Prospectus issued by the Company for the ensuing Public Issue.
 
 

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

Comparison of significant items of income and expenditure

(Rs in lacs)

Particulars	Year ended on 30th June
	1997	1998	1999	Dec 1999
	15 months
INCOME
Income from Operations	2000.48	557.07	797.16	350.20
Other Income	8.94	264.70	73.27	32.31
Total of A	2009.42	821.77	870.43	382.51
EXPENDITURE
(a) Operating & Other Exp.	1486.23	792.19	546.39	195.90
(b) Interest & Financial Charges	56.33	83.27	122.15	59.12
(c) Depreciation	18.41	25.84	98.68	26.56
Total of B	1560.97	901.30	767.22	281.58
PROFIT BEFORE TAX (A-B)	448.45	(79.53)	103.21	100.93
PROVISION FOR TAX	100.85	3.90
PROFIT AFTER TAX	347.60	(83.43)	103.21	100.93

Since incorporation in 1993 Company started with primary focus on providing total solutions and systems in the field of embedded systems, in-product software, control, automation and testing for the manufacturing and Defence industry. Microcon played a vital role in Indian Defence Establishments by successfully executing major technology projects/solutions. The Company has registered a average growth rate of 20.6% on profits upto 1996-97. Almost 70 % of the Company's technological solutions are rendered to various DRDO labs and 15 % are through exports to Indonesia.

The Company was executing majority DRDO orders with imported technology from USA through special permission from DRDO labs. Subsequent to Pokhran Nuclear Tests, the US government imposed sanctions on all Indian Defence Establishments for importing such technologies which resulted in fore closure of high value added projects by defence organisations during the year 1997-98. In the same year the Company had a set back due to South East Asian crisis affecting the exports of the Company substantially. On account of this factors Company suffered a loss of Rs. 79.53 lacs during the accounting year ended on 30^th June 1998.

The Company widened the customer base in other areas in IT apart from Defence. After the set back the operations of the Company were restructured mainly to focus on several niche technical groups and the Company evolved a strategy to focus primarily on IT business and markets. The restructuring has resulted in increasing the Company's profitability over 30 % on revenue during last 2 years.

Unusual and infrequent events or transactions

There are no unusual or infrequent events or transactions since incorporation.

Significant economic changes likely to materially affect the income from continuing operations

In the past due to American sanctions on the Indian defense establishment and downturn in Indonesian economy the Company's profits suffered. However, the operations have been restructured and Company do not foresee any problems in the near future.

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

There are no known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations

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.

There are no 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 extent to which material increase on net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales price.

There are no 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.

Total Turnover of each major Industry segment in which the Company operates.

The Industry showed a CAGR of 56.3 % (1993- 98) which has been steadily growing in the past few years. Products and packages have grown their share in the total market but services still remain the largest activity followed by training and consulting. Software Industry has recorded its highest ever growth rate of 58.3% in first half of 1999-2000 (Source : Economic Times dated 3/11/1999). According to the annual Industry survey by the National Association of Software and Service Companies (NASSCOM) the software Industry in India grossed a exports revenue of Rs. 8060 crores compared to Rs. 5090 Crores in the first half of the previous year (1998-99).

Status of any publicly announced new products or new segment.

The Company has not publicly announced new products or new segment.

The extent to which business is seasonal

Software Industry is non-seasonal in nature and business volumes are only dependent on the marketing efforts of the Company.

Dependence on single or few suppliers or customers

In the past Defence operations formed a big percentage of the Company's business and now the Company has restructured so that reliance on a single customer is minimised.

Competitive Conditions

There are a number of companies providing solutions and services to the IT industry. However, each one has it's own strengths and weaknesses and operate in different areas. Microcon has positioned itself as a global niche player in providing solutions and services to the IT markets worldwide. Microcon's strength lies in its varied and extensive domain expertise, technology, growth driven management team, scalability and global presence in over nine countries

SCHEDULE OF IMPLEMENTATION

The implementation schedule for the proposed project as estimated by the Company are as below:
 

Particulars	Commencement	Completion by
Furniture & fixtures and other assets	July 2000	August 2000
Computer hardware, software & upgradation	July 2000	August 2000
Communication facilities	July 2000	August 2000
Repayment of debts	March 2000	July 2000
Working capital	July 2000	July 2000
Overseas office	July 2000	September 2000

 

SOURCES & DEPLOYMENT OF FUNDS

The details of funds deployed and sources of funds as on 21.02.2000 as certified by K.V.Narasimham, Chartered Accountants and Auditors of the Company as per their certificate dated 21.02.2000 are as follows:

Details of funds deployed on the project

Details of Sources of funds

(Rs in lacs)
 

S.No.	Particulars	Amount
1	Subscription To Equity - Share Application	100.00
	Total

BASIS FOR ISSUE PRICE

1. QUALITATIVE FACTORS

1. Existing Company engaged in cutting edge technology solutions, services and systems for the manufacturing and defence industry.
2. The Company is promoted by technocrat professionals with domain expertise in manufacturing and IT industry spread over 15 years.
3. The Company is one of the yellow banded approved supplier of Embedded systems, solutions and MIL grade hardware to the Indian Defence Industry for the past 10 years
4. The Company is the member of Software Technology Park (STP) and Electronic Hardware Technology Park (EHTP) having Government of India approved Research and Development Laboratory.
5. The Company has been a global player in providing solutions and services to the IT Markets.
6. Proposed listing at The Stock Exchange, Mumbai (BSE), The National Stock Exchange of India Limited (NSE) and Bangalore Stock Exchange (BgSE).

The Company has already posted RONW to the extent of 9.92 % for the year ending 30^th June 1999 as against a minimum return on total net worth after the present issue is needed to maintain pre-issue EPS of 11.69 %. The present equity being offered at Rs. 60/- per share is discounted only by 17.44 times as against the industry composite PE multiple of 345.9. The Company does not foresee any problem in implementing the project as per schedule. Based on the above, in the opinion of the management the issue price is reasonable and justified.

COMPANIES UNDER THE SAME MANAGEMENT

There are no companies under the same management other than those mentioned elsewhere in the prospectus.

STOCK MARKET DATA

As the shares of the Company are yet to be listed on any Stock Exchange, no quotation for the market price of its shares are available

PROMISES VS PERFORMANCE

This is the first public issue of the Company. Hence the same is not applicable.

LITIGATION/DISPUTES/DEFAULTS:

In an application no. 1267 of 1998 before the Debt Recovery Tribunal, Chennai filed by Indian Bank, Kellys Branch, Chennai - 600 010 against M/s Genie Foods Pvt Ltd and others for recovery of certain dues Mr. Ravi Narayanan, Managing Director of the Company has been named as one of the defendants in respect of agreement of guarantee executed in the individual capacity for the due repayment of cash credit facilities awailed by M/s Genie Foods Pvt. Ltd.

Other than the above-mentioned case there are no litigations in which the promoters of the Company are involved.

There are no overdues, defaults to the Financial Institutions/Banks, Re-schedulement of loans to Banks/Financial Institutions by the Company.

There are no pending offences of non-payment of statutory dues by the promoters of the Company.

There are no cases of litigation pending against the Company or against any other Company whose outcome could have a materially adverse effect on the position of the Company. There are no pending litigation against the promoters/directors in their personal capacities and also involving violation of statutory regulations or criminal offences. There are no pending proceedings initiated for economic offences against the Directors, Promoters, Companies and firms promoted by the promoters.

There are no outstanding litigation, defaults etc., pertaining to matters likely to affect the operations and finances of the Company including disputed tax liability, prosecution under any enactment in respect of Schedule XIII of the Companies Act, 1956.

There are no litigation outstanding against the promoters/Directors in their personal capacity other than those mentioned. The Company, its promoters and other companies with which promoters are associated have neither been suspended by SEBI nor any disciplinary action has been taken by SEBI.

There are no prosecutions launched by Income Tax Authorities and no liability compounded by the promoters/Company/companies/ventures with which the promoters are associated is subsisting.

There are no cases of pending litigation / defaults in respect of the firms/Companies with which the Promoters are associated in the past but are no longer associated.

MATERIAL DEVELOPMENTS SUBSEQUENT TO LAST BALANCE SHEET

There are no material changes affecting the performance and prospects of the Company since the latest Balance Sheet for the period ending 30.06.1999.

THE DIRECTORS OF THE COMPANY HEREBY STATE THAT IN THEIR OPINION THERE IS NO MATEIRAL DEVELOPMENT AFTER THE DATE OF THE LAST FINANCIAL STATEMENTS DISCLOSED IN THE PROSPECTUS WHICH IS LIKELY TO MATERIALLY AND ADVERSELY AFFECT OR IS LIKELY TO AFFECT THE TRADING OR PROFITABILITY OF THE COMPANY OR THE VALUE OF ITS ASSETS, OR ITS ABILITY TO PAY ITS LIABILITIES WITHIN THE NEXT TWELVE MONTHS.

ADVERSE EVENTS

There has been no adverse event affecting the operations of the Company occurring within one year prior to the date of filing of the prospectus with the Registrar of Companies.

DEFAULTS

The Company has not defaulted in meeting any statutory dues, institutional dues or bank dues. The Company has not defaulted in making any payment/refunds for debentures, fixed deposits and interest on debentures and fixed deposits.

RISK FACTORS & MANAGEMENT’S PERCEPTION TO THE RISK FACTORS

FACTORS INTERNAL TO THE COMPANY

1. The Company is promoted by first generation entrepreneurs. The proposed project is the first major expansion of the promoters and the investors would be exposed to all the consequential risks associated.


Management Perception

The promoter of the Company Mr. S Ravi Narayanan is an electrical engineer and has done pioneering work in embedded systems, simulation, testing for 15 years and on Internet for last 3 years. He has considerable domain expertise in automotive, aerospace, discrete process verticals. He has been assisted by technocrat professionals from various fields. The Company having established itself in the line of activity is confident of achieving desired results.

2. The Cost of project and means of finance for the proposed expansion are not appraised by any bank or financial institution. The deployment of the funds will be at sole discretion of the promoters and the management


Management Perception

The Company has already developed infrastructure for the present activities. Based on past experience of the promoters and management Company has considered optimum level of fund requirements in the proposed cost of project. The management shall ensure the proper deployment of funds in the interest of the Company.

3. The implementation of the project is at a preliminary stage. Any delay in implementation of the proposed expansion may have an adverse impact on the financials of the Company.


Management Perception

For the purposes of proposed project furniture & fixtures, communication facilities, additional hardware and software are required to be installed. The Company already has sufficient space available within its existing premises to install additional work stations and manpower envisaged under the project. The management do not foresee any problem in completing the project as per the implementation schedule drawn by the Company.

4. The Company is yet to place orders for major plant & machinery required for the proposed expansion.


Management Perception

All the plant & machinery required for the proposed project is readily available and the management do not foresee any problem in obtaining the required quantity in time.

5. The Company is yet to identify locations for overseas offices to be set up and is yet to apply to Reserve Bank of India for obtaining their permission for the same.


Management Perception

The Company wishes to have its overseas offices in Far east, Europe & USA. The Company will initiate appropriate steps for obtaining RBI permission. The management do not foresee any problem in obtaining the same.

6. Any fluctuation in foreign exchange rates may have an impact on the financials of the Company.
7. The Company has reported a loss to the extent of Rs. 83.43 lacs for the year ended 30.06.1998.


Management Perception

The Company was executing majority DRDO orders with imported technology from USA through special permission from DRDO labs. Subsequent to Pokhran Nuclear Tests, the US government imposed sanctions on all Indian Defence Establishments for importing such technologies which resulted in foreclosure of high value added projects by defence organisations during the year 1997-98. In the same year the Company had a set back due to South East Asian crisis affecting the exports of the Company substantially. On account of this factors Company suffered a loss of Rs. 83.43 lacs during the accounting year ended on 30^th June 1998.

The Company widened the customer base in other areas in IT apart from Defence. After the set back the operations of the Company were restructured mainly to focus on several niche technical groups and the Company evolved a strategy to focus primarily on IT business and markets. The restructuring has resulted in increasing the Company's profitability over 30 % on revenue during last 2 years.

8. The working capital requirement of Company are not assessed by any Bank.


Management Perception

The Company has drawn working capital requirement on the basis of sanction from existing banker. The norms used by the Company in arriving at the requirements are identical to those used by the Bank.

9. In an application no. 1267 of 1998 before the Debt Recovery Tribunal, Chennai filed by Indian Bank, Kellys Branch, Chennai - 600 010 against M/s Genie Foods Pvt Ltd and others for recovery of certain dues Mr. Ravi Narayanan, Managing Director of the Company has been named as one of the defendants in respect of agreement of guarantee executed in the individual capacity for the due repayment of cash credit facilities availed by M/s Genie Foods Pvt. Ltd.

1. Any adverse change in government policies in relation to Software Industry may affect the performance and profitability of the Company.


Management Perception:

The government policies for the software industry in particular are highly progressive and encouraging with specific thrust on globalisation. The Company does not foresee any phenomenal changes in the government policies, which can adversely affect the software industries.

2. Selection, recruitment and retention of skilled high quality manpower is crucial for the success of the Company.


Management Perception:

The Company is proposing to put in place an attractive employee stock option plan (ESOP) to its employees aimed at retaining key and critical staff. The top management of the Company is highly experienced in this line of activity.

3. The IT Industry is prone to high risk of technological obsolescence.


Management Perception:

Continuous up-gradation of technical skills will enable the Company to set off the technological obsolescence.

4. The Company may face competition from established Companies and future entrants in the Industry.

A. GENERAL INFORMATION

CONSENTS

Consents in writing of the Directors, Auditors, Lead Managers to the Issue, Registrars to the Issue to act in their respective capacities have been obtained and filed with the Registrar of Companies, Karnataka, Bangalore as required under section 60 of the Act, and none of them have withdrawn the said consents upto the time of delivery of a copy of this Prospectus for Registration with the said Registrar of Companies, Maharashtra, Mumbai.

Mr. K.V. Narsimhan, Chartered Accountants, Auditors of the Company have also given their consent to the inclusion of their report as appearing hereinafter in the form and context in which it appears in this prospectus and also of the tax-benefits accruing to the Company and to the members of the Company and such consent and report have not been withdrawn upto the time of delivery of this Prospectus for Registration with the Registrar of Companies, karnataka, Bangalore.

EXPERT OPINION

Except for the various tax benefits available to the Company and its members expressed by the auditors of the Company given elsewhere in the prospectus, the Company has not obtained any other expert opinion.

CHANGE IN THE DIRECTORS AND AUDITORS OF THE COMPANY DURING THE LAST THREE YEARS.

The following changes in the Board of Directors have taken place during the past three years.
 

Name	Date of Appointment	Date of Ceasing	Reasons
Mr. Bosma Jacob Marten	24.09.1997	-	To broad base
Mr. K Elango	01.10.1997	-	To broad base
Mr. S.N. Ravichandra	01.10.1997	-	To broad base
Mr. S.N. Ravichandra	-	07.05.1999	Resigned due to pre-occupation
Mr..S Elango	31.12.1994	-	To broad base
Mr..S Elango	-	01.01.1998	Resigned due to pre-occupation
Mr. A K N Prasad	13.01.1998	-	To broad base
Mr. A K N Prasad	-	07.05.1999	Resigned due to pre-occupation
Mr. Ram S Ramanathan	01.04.1998		To broad base
Mr. Atur Srihari	01.04.1998	-	To broad base
Mr. Atur Srihari	-	30.01.1999	Resigned due to pre-occupation

AUDITORS

There has been no change in the auditors in the past three years.
 
 
 
 

AUTHORITY FOR THE PRESENT ISSUE

Pursuant to Section 81 (1A) of the Act, the present issue has been approved by a Special Resolution of the Company passed at the Extra Ordinary General Meeting of the Company held on 28^th January, 2000.

PROCEDURE FOR ALLOTMENT

1. The Board reserves, at its sole, absolute and uncontrolled discretion and without assigning any reason therefore, the right to accept or reject any application in whole or in part. If any application is rejected in full, the whole of the application money received will be refunded to the applicant. If an application is accepted in part, the excess application money received, if any, will be adjusted towards the allotment money payable and the balance, if any, thereafter will be refunded to the applicant in terms of section 73 of the Act (within 10 weeks from the date of closure of the subscription list).
2. Letters of allotment or share certificates and/or letters of regret alongwith refund cheques or pay orders of value over Rs.1500/-, if any will be despatched by registered post at the applicants' risk, within ten weeks from the closure of subscription list and if such money is not repaid within 8 days from the day the Company becomes liable to pay it, the Company and every Director of the Company who is an Officer in default, shall, on and from the expiry of the 8th day be jointly and severally liable to repay that money with interest @ 15% per annum as prescribed under Section 73 of the Act.
3. Refunds will be made by cheque or pay orders drawn on the Company's Bankers and Bank Charges, if any, for encashing such cheques or pay orders will be borne by the applicant. Such Cheques or pay orders will however be payable at par at all centers where applications are accepted. In case of Joint Applications, refund pay Orders, if any will be made out to the first name applicant and all communications will be addressed to the applicant whose name appears first at his/her address as stated in the application form. All Cheques, pay orders of value over Rs.1500/-, letters of allotment and share certificates (as the case may be) will be despatched to the applicant at his/her registered address and at the risk of the applicant by registered post. Refund Orders of value not over Rs.1500/- will be despatched under Certificate of Posting.
4. The subscription received against the Public Issue will be kept in separate bank accounts and the Company will not have access to such funds unless they have received an approval from the Bangalore Stock Exchange for allotment, no utilisation shall be made till listing approval in principle is available from each of the exchanges where listing has been proposed.
5. The Company undertakes to make available to the Registrars to the Issue, adequate funds for the purpose of despatch of refund orders/allotment letters/certificates by registered post.

The Equity Shares now being issued shall rank pari-passu in all respects with the existing Equity Shares except that the new Equity Shares shall be entitled to Dividends, if any, which may be declared or paid on the Equity Shares on pro-rata basis for the period for which such capital is paid up thereon. The Shareholders are entitled to receive dividend as and when declared, bonus and rights shares as and when made. The instrument holder shall also be entitled to the rights given under Section 206(A) of the Act and any other rights under the law.

INTEREST ON EXCESS APPLICATION MONEY:

Payment of interest at the rate upto 15% p.a. on the excess application money will be made to the applicants for the delay period beyond 78 days from the date of closure of the subscription list as per the guidelines issued by the Ministry of Finance vide their No.F-8/6/SE/79 dated 21^st July 1983 and as amended by letter No.F/14/2/SE/85 dated 27^th September 1985 addressed to the Stock Exchanges.

REDRESSAL OF INVESTOR GRIEVANCES

Investors grievances pertaining to the issue will be handled by the Registrar to the Issue namely M/s Bigshare Services Ltd. A fortnightly status report of the complaints received and redressed by them would be forwarded to the Company. The Company would also be co-ordinating with the Registrars to the issue in attending to the grievances of the investors.

The Company has appointed Mr. R. Ramakrishnan, as Compliance Officer who would directly deal with SEBI office with respect to implementation of various laws, rules, regulations and other directives issued by SEBI and matters related to investor complaints. The investors may contact the compliance officer in case of any pre issue / post issue related problems. The Compliance officer will be available at the corporate office of the Company.
 
 

BASIS OF ALLOTMENT

Allotment will be made in consultation with the Bangalore Stock Exchange.

In the event of over-subscription, the allotment will be made on a proportionate basis in marketable lots as given below :

1. Applicants will be categorised according to the number of Shares applied for.
2. The total number of Shares to be allotted to each category as a whole shall be arrived at on a proportionate basis i.e. the total number of Shares applied for in that category multiplied by the inverse of the oversubscription ratio (number of applicants in the category x number of Shares applied for).
3. The number of Shares to be allotted to the successful allottees will be arrived at on a proportionate basis (i.e. Total number of Shares applied for x the inverse of the oversubscription ratio).
4. For applications where the proportionate allotment works out to less than 100 Shares the allotment will be made as follows:

1. each successful applicant shall be allotted 100 Shares; and
2. the successful applicants out of the total applicants for that category shall be determined by the drawl of lots in such a manner that the total number of Shares allotted in that category is equal to the number of Shares worked out as per (b) above.

5. If the proportionate allotment to an applicant works out to a number that is not a multiple of 100, the applicant would be allotted Shares by rounding off to the nearest multiple of 100.
6. If the Shares allocated 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 category, where the allocated 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 of applicants applying for the minimum number of Shares
7. If as a result of the process of rounding off to the nearest multiple of 100 results in the actual allotment being higher than the shares offered, the final allotment may be higher at the sole discretion of the Board, upto 110% of the size of the net offer specified under Para C to the Capital Structure mentioned elsewhere in the prospectus.

1. A minimum of 50% of the net offer of shares to the Public shall initially be made available for allotment to individual applicants who have applied for allotment of 1000 or less than 1000 shares.
2. The balance 50% of the net offer of shares to the public shall initially be made available for allotment to investors, including Corporate Bodies, Institutions and individual applicants who have applied for allotment of more than 1000 shares.
3. The unsubscribed portion of the net offer to any one of the categories specified in (i) or (ii) shall/may be made available for allotment to applicants in the other category, if so required.

Investors may note that in case of over - subscription allotment shall be on proportionate basis and will be finalised in consultation with The Bangalore Stock Exchange, if the issue is oversubscribed the Executive Director / Managing Director of the Regional Stock Exchange alongwith Lead Merchant Banker and Registrar to the Issue shall be responsible to ensure that the basis of allotment is finalised in a fair and proper manner.
 
 

FOREFEITURE

Failure to pay the amount due on allotment on or before the appointed date will render to the allottee/(s) liable to pay interest thereon at the rate of 15% per annum on the amount outstanding from the date so appointed to the date of actual payment. It is to be noted that 30 days will be permitted for payment of allotment monies without interest. Failure to pay the amount as aforesaid shall also render the shares and the amount already paid(including premium) liable to forfeiture in accordance with the articles. The Board shall be at liberty to reissue the shares so forfeited to any other person/(s) on the terms and conditions as they deem fit.
 
 

ISSUE OF SHARE CERTIFICATES

Share Certificates will be delivered by registered post within three months from the date of allotment in exchange of Allotment Letters issued, if any, to be exchanged for the share Certificates.

UTILISATION OF FUNDS

The sums received in respect of the Issue will be kept in separate bank account(s) and the Company will not appropriate the funds unless approval of the Bangalore Stock Exchange is obtained for allotment, no utilisation shall be allowed till listing / trading approval is received from each of the exchanges where listing has been proposed.

REGD.OFFICE

722/22, 10^th 'A' Main, 4^th Block,

Jayanagar, Bangalore -560 011.

AUDITORS

K.V.Narasimhan & Co.

No. 25, 3^rd floor

Padmashree Mansions

1^st cross, Sampige Road

Malleswaram, Bangalore-560 003

Tel: 080 - 3366673

COMPLIANCE OFFICER

Mr. R Ramakrishnan
 

Microcon International Limited 722/22, 10th 'A' Main, IV Block, Jayanagar, Bangalore - 560 011. Tel: (080) 6654409,6654427 Fax: (080) 6654413

The investors may contact the aforesaid compliance officer for any pre-issue/post- issue related grievances.

COMPANY SECRETARY

Mr. Srinivasan S, BBA ACS

Company Secretary
 

Microcon International Limited 722/22, 10th 'A' Main, IV Block, Jayanagar, Bangalore - 560 011. Tel: (080) 6654409,6654427 Fax: (080) 6654413

 
 
 

LEGAL ADVISORS TO THE ISSUE

M/s N.C. Associates

16, Pycrofts Garden Road

Chennai-600 006