Management Discussion And Analysis
Basket size
For any business, success is derived from the ability to nurture a manageable product
basket; too large a product basket results in an inequitable resource allocation while too
small a product basket results in slow growth.
Challenges
At Geodesic, we created too large a product basket that was temporarily incompatible
with our managerial bandwidth. These are the challenges that emerged during the course of
our existence: the company was unable to allocate adequate resources -managerial,
financial or intellectual - to sustain the growth of these products. Some of the products,
even as they addressed attractive opportunities, were unrelated to most others and the
core objective of the company. The widening of the product basket also translated into a
larger team size translating into higher overheads even as most of these products were
only at the nascent end of their life cycle.
Counter-strategy
At Geodesic, we have embarked on an effective counter-strategy to correct the skew
between the size of our product basket and our existing managerial bandwidth, reflected in
the following initiatives:
• We have segregated our product basket into core and non-core areas streamlined
with our corporate priorities for the next few years. In line with this enunciated
direction, the company has selected to exit from the entertainment space marked by
optional consumer spending and will grow its presence in communication cum collaborative
technology niche marked by sustainable annuity revenues.
• In line with our decision to defocus on non-core product areas, we will
progressively rationalise our basket from 15 products to around eight through sale or
phase-out. This is expected to translate into one-time sale revenues on the one hand and
sustainable overheads reduction on the other, strengthening our overall viability.
• The company has selected to exit products that consume a disproportionate
allocation of resources
- financial, infrastructural and managerial
- without corresponding returns
Result
The projected decline in non-core product spending is expected to translate into a
stronger focus on select products that will progressively strengthen their revenues.
Besides, a planned reduction in product-related overheads is expected to strengthen
financial viability.
Product selection
For any business, success is derived from the ability to select the right products that
address unmet needs of customers, occupy spaces with high entry barriers and hold out
prospects for sustained year-on-year growth.
Challenges
At Geodesic, we invested in a number of varied products which required a combination of
hardware and software capabilities. The company is engaged in diverse (and hence risky)
applications across multiple platforms. Besides, the company backed these products by
making investments that were disproportionate to the respective potential within these
products.
Counter-strategy
At Geodesic, we have strengthened our prospects through a product selection process
that reconciles a number of attractive realities:
• The company has selected to work in only those spaces where needs critically
exist. The company will increase its attention on the selection of products that offer
pioneering features and conveniences.
• The company will increasingly select to create technologically-disruptive
products and services that represent a significant advantage (in terms of features,
convenience and costs) over existing alternatives.
• The companys products and services will be increasingly woven around a singular
premise - the ability to enhance customer value in a significant way whether through
ongoing cost reduction or negligible capex required to accommodate the companys products.
• The company has selected to be present only in those spaces where its product
offerings would be among the first three in the global market place, distinguishing it
from the me-too product clutter and reinforcing its positioning as technology leader. As
an extension, such a strategy will enable the company to create markets rather than fight
for market share.
• The company has selected to work with only those products with attractive
annuity or lumpy revenue implications.
• These products would represent global potential that could over time generate
economies of scale, knowledge and brand. Besides, these products would hold out attractive
year-on-year prospects, strengthening the overall return on their investments.
• The company will increasingly roll out products and services within the
communication and collaboration technology synergic with each other, making it possible to
bundle these products together into an integrated offering.
• The company will use a higher proportion of proprietary technology tools that
shrink the time-to-market on the one hand and strengthen the companys brand within that
global technology niche on the other.
• The company will increasingly outsource specialised non-core competencies
(marketing and branding), enabling it to strengthen its core technology focus.
Result
At Geodesic, the benefits of this enunciated strategy will become increasingly visible
from 2014-15 onwards, reflecting in revenue growth, increased average revenue per product
and sustained product and technology investments that accelerate our virtuous cycle of
growth and profitability.
Activity focus
For any business, success is derived from the ability to identify what one is most
competent at, graduating that focus into a centre of excellence and outsourcing all
non-core capabilities to specialised service providers.
Challenges
At Geodesic, most of our problems were derived from a focus to engage in every activity
across the managerial eco system - whether it was product identification, product launch,
product branding or product marketing. So even as the companys core competence lay
clearly in its ability to identify critical unmet customer needs and plugging them with
relevant products in the shortest time delivered at the lowest cost, it selected to spread
its resources (managerial and financial) across other areas as well. Over time, this
resulted in resource allocation incompatible with the needs of specific product segments,
resulting in sub-optimal returns.
Counter-strategy
At Geodesic, we recognise that a rapidly evolving technology company like ours needs
robust systemic discipline on the one hand coupled with strategic clarity on the other to
extend product potential into sustainable growth.
The company has embarked on the following course-correction initiatives:
• The company has rationalised its active product basket from 15 to eight, thereby
increasing managerial attention on each
• The company recognises that each of its products enjoys considerable potential
across an extended period; in line with this potential, the company has created an
SBU-like structure for each of its products with corresponding manning, targets and
accountability
• This restructuring will enable each product to be treated as a profit centre,
making it possible for each business line to drive its own growth and the company playing
the role of a supervising holding company
• The company has selected to progressively outsource non-core responsibilities
(marketing and branding) to specialised service providers in Indianan international
geographies
Result
The company has a reasonable foundation to build on. The companys decision to
outsource non-core competencies has helped rationalise its people strengthen from a peak
of 700 to 200. Besides, increased attention on the core business is expected to increase
the number of profitable products in the companys portfolio from two to eight. The
company also expects to scale its order book from B60 cr at the close of 2012-13.
Cash flow management
For any business, success is derived from the disciplined management of financials
leading to healthy and sustained cash flows that makes it possib le to cover overheads,
pay creditors, reward shareho lders and leave a surplus for onward re-investment.
Challenges
At Geodesic, a number of our problems were derived from a combination of unforeseen
investment reversals, decline in revenues arising out of the use of inappropriate
technologies, skewed inventory, resource misallocation, high overheads, inadequate due
diligence and inefficient treasury management.
Counter-strategy
At Geodesic, we recognise that a fast-growing company like ours needs stringent
financial discipline for our growth to be streamlined and sustainable.
The company has embarked on the following discipline-enhancing initiatives:
• The company filed claims against two multi-national banks for claims aggregating
B112 cr arising out of cheating related to derivative transactions.
• The company expects to unlock financial resources following the sale of non-core
products and manpower reduction.
• The company expects to focus singularly on products generating annuity revenues
as opposed to products generating no or lumpy revenues.
• The company expects to conserve a large part of its projected cash flow on
account of having already expensed much of the required capital expenditure in the last
few years.
• The company expects to moderate its overheads through a product-led SBU-like
organisational structure that enhances fiscal accountability.
• The company expects to outsource the best professional competencies rather than
recruit them full time.
Result
The company expects to make claims on commercial banks, has filed a criminal case for
fraud in the Economic Offences Wing against an international bank, expects its
restructured product basket to achieve breakeven point at low capacity utilisation and
exploit a significant operating leverage to grow revenues without increasing capital
expenditure.
Our enduring strengths
At Geodesic, we believe that a number of our competencies will soon return the company
to erstwhile health in a sustainable way.
Innovation: At Geodesic, 60 per cent of the revenues earned by the company in
2012-13 were derived out of products created within the company and launched in the
preceding three years, emphasising a culture of continuous innovation.
Product focus: Geodesic is a product-focused company where 100 per cent of the
companys revenues are derived from products (or outsourced systems).
Focus: Geodesic is a front-end technology company that touches the lives of people,
providing scalable opportunities.
Lifecycle management: Geodesic addresses the complete lifecycle of products -
product conception, launch, commercialisation and retaliations.
Mind-to-market: Geodesic has demonstrated a capability in being able to launch
products across a mind-to-market cycle that is considerably shorter than equivalent
international benchmarks.
Pioneering: Geodesic enjoys global respect for working in cutting-edge technology
areas. The products pioneered by the company in a challenging global marketplace comprised
the following: BBeep, Roundtable, GeoAmida and Mundu IM.
Captive use: Geodesic has demonstrated timely and cost-competitive development of
products through a growing use of proprietary technology tools.
Expensed: Over the last few years, Geodesic invested extensively in infrastructure,
systems and processes. Much of the companys capital expenditure needs have already been
expensed. As a result, prospective business growth is likely to be independent of fresh
capital expenditure.
Competence: Nearly 70 per cent of Geodesics employees are technology
professionals. The company has applied for 11 cutting-edge global technology patents.
Until a few years ago, the company was a reputed A-minus recruiter across the IIT campuses
of the country.
Global character: Geodesic is positioned as a global technology company that has
selected to be located out of India. Nearly 80 per cent of the companys revenues were
derived from foreign exchange earnings in 2012-13.
Customisation: Geodesics cutting-edge products are woven around a range of legacy
products belonging to customers, which entail negligible capital expenditure by these
customers to upgrade to cutting-edge capability.
Locational advantage: Geodesic selected to manufacture technology hardware products
in a fiscally-efficient location. The company has a unit in SEEPZ resulting in tax
holidays till 2017.
Maturity: Geodesic has demonstrated a high product development maturity for a
company like itself which is in the early life cycle development stage.
Technology: Geodesic possesses a deep understanding in the scalability of networks,
earning a rare global respect in this technology niche.
Segments: Geodesic addresses the growing technology spends coming out of large
downstream spaces like telecom, BFSI, large enterprises and system integrators.
Customers: Geodesic continues to work with large and visible customers like TCS,
HCL, Wipro and America Movil. The company delivered products to internationally-reputed
customers. The companys customer list is marked by repeat customer engagement with
annuity contracts.
Payout track record: Geodesic demonstrated its commitment to reward shareholders
through an aggregated dividend payment of B50.74 cr across eight years as against an FII
inflow of B96 cr.
Credibility: Geodesics transfer pricing commitment was treated as a case study by
the Indian income tax authorities.
Integrated: Geodesic possesses rounded capabilities addressing last mile delivery
requirements across diverse product areas (voice, text, video and processing).
Suite: Geodesic possesses a comprehensive suite of communication and collaborative
tools across the enterprise and retail (mobile) applications, which is a rare phenomenon
in a world where such competencies are rarely available jointly.
Geodesic in our everyday lives - Our product portfolio
Communication and collaboration space
BBeep
BBeep is a secure cross-platform messenger, which uses your existing data connection to
exchange messages and voice calls with your contacts for free. BBeep has features like
Privacy Control that let you choose who you can interact with; its Message Encryption
ensures data confidentiality.
BBeep uses industry standard encryption algorithms to secure all communication between
you and your contacts. This ensures that the message sent by you can only be read by the
recipient and no one else. BBeep gives you the ability to choose which friends you want to
add to your list. BBeep also sends you a request whenever a contact wants to add you to
their list. You can choose to either approve or ignore the request.
RoundTable
Round Table, the latest addition to our list of innovative products in the
communication and collaboration platform, is aimed to make Web conferencing hassle-free.
It enables users in diverse locations to collaborate, communicate and exchange information
without having to download any client.
Using RoundTable, customers can meet people one-on-one or virtually present information
to hundreds of participants. Customers can schedule meetings in advance or start an
instant online meeting and invite people to join by email, text message or an IM. The
product is easy to integrate into every aspect of ones business. One can share any type
of content and let meeting participants take control over the desktop for a truly
interactive, hands-on meeting experience. One can show documents, applications and desktop
to remote attendees in real time.
RoundTable saves costs, boosts employee productivity, reduces sales cycles, enhances
revenue and helps in conducting inexpensive training and seminars. Additionally,
RoundTable enables team members to communicate and collaborate more naturally anywhere,
anytime and across multiple platforms.
RoundTable seamlessly integrates a private/ public instant messaging service and a
comprehensive SMS solution to reach out to team members, participants and customers/
vendors across the globe keeping in line with our comprehensive unified communication and
collaboration suite.
RoundTable helps enterprises build more effective teams across corporate boundaries,
companies and continents across the globe. RoundTables high quality audio/ video
conferencing encourages individuals and enterprises to use online meetings more
frequently, resulting in enhanced productivity and a quicker return on investment.
Companies of all sizes have opened up their borders and are moving toward the vision of
becoming connected organisations. Employees, customers, partners and suppliers are all
important constituents of an organisations extended enterprise. Serving the communication
needs of a connected organisation means virtually anytime, just about anywhere access to
people and information coupled with the need to communicate faster and more
collaboratively over a variety of devices or desktop applications.
Mundu IM
Mundu IM is a real-time comprehensive messaging solution that provides multilingual,
text and multimedia messaging across seven major IM services. Mundu IM allows the
assurance to stay connected with your family, friends and colleagues round-the-clock.
Mundu IM values privacy and does not store usernames or passwords on its servers. Mundu
IM has a unique design for each mobile phone platform. Mundu IM is a robust product that
takes care of all messaging needs. In the rare eventuality of an issue, its support team
is geared to resolve queries in 24 hours.
Mundu SMS
An easy-to-use mobile and desktop messaging service, Mundu SMS is the ideal
cost-effective way to send local and international messages. It transmits messages using
the Internet, and delivers them as SMS messages to the customers recipients. Mundu SMS
provides significant cost savings compared to regular mobile phone plans, more so when you
are on roaming.
With simple yet powerful features that allow integration with desktop applications to
use lists, Mundu SMS is an indispensable communication choice for the customers business
and personal communication needs.
Spokn
There is a growing need to reduce prohibitive international roaming telephony - for
those making calls into the roaming number and also for those making calls from the
roaming number.
The complexity of the technology on the one hand and the need for convenience ease at
the customer end represented challenges.
Geodesics product addressed these challenges. This form of internet telephony (full
blown) facilitates audio and video streaming at the cost of a local call. Besides, it
enables a global traveler to become a local by providing a transparent local number in the
country being visited. The system can be set up in 30 seconds, generates telco income
against the incoming call, does not need internet connectivity, can be activated through
an SMS and provides this service at a fraction of Skype cost.
Geodesic enjoys a throughput of 20,000 minutes per day and based on the growing trend
expects to log 100,000 minutes per day in a quarter.
Financial products and services space
Wealth Console
Wealth Console is an enterprise-ready, client-server Portfolio Reporting and Analytics
product integrated with a high-end communications backend. The solution offers engaging
analytical views of an investors portfolio using a sophisticated user interface.
Interactive visualisation automatically categorises transactions and asset classes so
clients can see the big picture, up close and personal.
Wealth Console is a single-point, online source for providing clients advice on how to
grow their personal wealth. The enterprise can provide investment ideas, stock quotes,
charts, business news, market research, and can be a learning centre for all financial
information, with a special emphasis on investing.
Wallet WAP
Wallet WAP is the key to Anytime-Anywhere delivery of market and investment
information. Wallet WAP is compatible with all mobile devices and enables brokers and
financial institutions to reach their client base, irrespective of where they are.
Wallet WAP allows users to view portfolio, stock quotes, price charts, market news,
screeners, financial statements and results on any mobile device. It integrates seamlessly
with a financial institutions back-office to allow rich views of portfolio data. It is
the fastest and the most direct channel to keep clients informed about the latest
happenings in the markets.
Spyder
Spyder is an advanced Client Relationship Alignment Management System for the complex
needs of a financial institution which sells intellectual product(s) manifesting as
opinion (backed by research), market insight, know-how and capability.
Spyder incorporates specific concepts that transform the system from being just a
useful client database to an essential tool that helps identify and coordinate revenue
opportunities, reduce operational costs, and manage distributed resources.
Content delivery platform
Mundu Radio
Mundu Radio is an Internet radio solution that offers high quality digital audio music
on mobile handsets and desktops. Mundu Radio gives the customer access to over 35,000
Internet radio stations and other content such as news, sports, finance, talk shows and
much more on the mobile. The customer can manage the playlist, personalise, and tune into
the favorite genre whenever wanted.
Mundu TV
Mundu TV is a Live-Internet TV service that offers subscribers the opportunity to view
live television channels and archived content using wireless and broadband Internet on
mobile phones and desktops. During the fiscal period 2012, Mundu TV was launched on
Blackberry and Windows 7 phone platform.
Electronic computing space
GeoAmida - An innovation suite for reaching the unreached
In the last two decades, globalisation brought a plethora of opportunities even as some
people live under $2 a day. A number of opportunities cannot be realised due to a lack of
access to knowledge, capital, healthcare and even unique identification.
Geodesic, with GeoAmida, aims to provide enabling technologies to flatten this pyramid
with the following objectives:
• Bring access to banking within everyones reach
• Bring medical services at the doorstep of even the remotest hamlet
• Provide rightful social benefits to eligible people without leakage
• Many more such services
In short, we develop innovative technology to help governments, banks and enterprises
to deliver quality service to the right person at their doorstep profitably.
Technologies to implement these steps must meet the following key requirements:
• Uniquely verify the identity of individuals
• Perform secure online transactions
• Function reliably in the remotest corners of the country
• Flexibly handle multiple language needs, educational and literacy levels of the
end users GeoAmida, with its innovative technology, reaches out to transform their lives.
GeoAmida is the worlds first handheld, Linux-based, biometric, smart card-integrated,
multi-application platform that enables governments, financial institutions, enterprises
and NGOs, to reach their remotest customers.
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