sun infoways ltd Directors report
ANNUAL REPORT 1999-2000
SUN INFOWAYS LIMITED
DIRECTORS REPORT
To the Members,
Your Directors are pleased to present their report on the business and
operations of your company for the year ended 31st March, 2000.
OPERATIONS
Your Company changed the business focus from auction, consulting and
valuation business to a more vibrant and promising field of technology and
product development in telecom, wireless and convergence market segment.
Your Company during the last fiscal specifically second half of year
completely reshaped its business structure and model focusing on Product
Development - Wap based, E-Commerce Products, Portals, Internet Banking,
Web based Product and Software Developmental Services - Web and Wap
Migration Services, Wap based Software Development Services, Data
Warehousing, Data Mining, Embedded Java, Mobile Commerce with Research
Interests in Wap, GPRS, UMTS, G-3 etc.
For this purpose your company has made investment in research and
development to promising field of WAP and mobile telephony, developed
products in areas like Internet banking and trading, Internet security, WAP
based products, besides developing two revolutionary e-com products,
setting up and upgrading development centres at Mumbai and Bangalore.
During the year your company completed development contracts for overseas
clients besides sourcing contract worth 15 million USD from Australia, USA
and UK and is in the aggressive marketing for closing the WAP based
software development services contracts. Further the company is in the
process of completing in the second quarter of current fiscal B2B and B2C
shopping portals covering comprehensive length and breadth of e-trading.
The last year saw significant development with the induction of highly
skilled professionals to develop technology, R8D and product in promising
field of convergence, wireless and telecom domain. The application
development was initiated only during the last quarter of fiscal 1999-2000,
keeping in view the clients apprehensions or Y2K transition phase.
Your Company aspires to be a leading player in Wireless Application
Protocol technology and it is now planning to branch out to new areas of
Bluetooth, 3, GPRS and Edge, which will find greater application in the
years to come. Though these technologies are yet to take off in India, they
are increasingly used in the developed countries. The Company intends to
play a leading role in developing solutions in the segment. The Company is
also geared up to put in place the necessary infrastructure.
DIVIDEND
Your directors are pleased to recommend a dividend of 10% on the paid-up
capital of the Company for the fiscal 1999-2000.
Considering the performance of your company in first quarter of the current
fiscal, your Directors had declared an Interim dividend of 20% on the
Equity Capital of the Company in their meeting held on 8th July, 2000 for
the fiscal year 2000-2001.
PRODUCTS AND SERVICES
The following are the products and services segment wherein development
happens besides mainstream operations in wireless software development:
Data Warehousing
Your Company has developed data warehousing application on complete
management package for human resources of IT professionals. All future web-
sites and corporates will utilize this technology since new generation web-
sites are migrating towards database driven sites.
Large organisations have huge amounts of information collected over the
years. In the world of E.D.I. (Electronic Data Interchange) such data is
converted into a database using RDBMS applications such as Oracle or SQL.
Data warehousing facilitates maintenance of these huge databases in keeping
them up-to-date. It also involves a high level of security related issues
concerning database access permissions.
E-commerce Solutions
Your Company has conducted research on setting up complete E-commerce
solutions with provisions for accepting credit cards via payment gateways.
Your Company has also conducted research on embedded Java and Cyber mail
application projects. Company has recently developed Internet banking
product and Internet stock and derivative commodity trading product.
Internet Security
The Intemet poses a very huge, heterogeneous network with a variety of
servers and clients on various platforms connected over Physical, Optical
and/or Satellite media. This has created a vast pool of information
resource for various Public and Private entities to carry out Monetary and
non-Monetary transactions.
Security comes into play at every stage in protection and authentication of
information. There exists a threat to information, which are prone to being
tampered by hackers (people who gain unauthorized access to information and
have malicious intent).
To counter the ever present and increasing threat, various methods are
adopted and your company is working on different models:
* Secured Socket Layers (SSL), Secure Electronic Transaction (SET) is used
to transmit confidential information over the Internet.
* A high level of encryption is adopted for information such as Passwords
and Credit Card Information.
* Human or manual intervention is minimized.
* Fire walls or proxies are used to represent information to end-user and
simultaneously keep them far away from actual raw data.
WAP (Wireless Application Protocol)
WAP is the latest technology for new generation mobile users for accessing
Internet application through a mobile handset. This technology is new in
the IT industry and has a very vast scope for development project. WAP
application can also be designed for E-commerce and complete transaction
can be done through the mobile. The wireless application protocol is a new
standard in the way the Internet works. It consists of a WAP content,
consists of WAP gateway and a Web server that holds the WAP content. The
WAP content consists of WAP cards that display contents on the mobile
screen. A collection of more than one WAP card is called a deck. There can
be more than one deck and each deck could be a collection of WML (Wireless
Mark-up Language) and WML scripts. WML is the language for WAP and is
created using XML (Extensible Mark-up Languages). There are many more tags
that would be created using XML for WML to enhance the capabilities of WAP
and further open new vistas for WAD i.e. Wireless Application Development.
Your company is one of the players working on wireless technology and has
strong R&D, technology development, product development and application
development skill.
Java Embedded Solutions
Java is a very Yersatile programming language. It finds its application in
many areas as in applet programming, application programming, server side
programming, network programming, etc. Embedded Java programming is another
wide area of application of Java. It is wherein your company has
operational interest involved in the use of Java for programming of
intelligent devices. The Java programs can be embedded into the hardware of
these devices making them intelligent. This allows the device to be able to
do more what it could if it were just hardware.
Programs of Java can be embedded into ICs or micro controllers thus making
them Web enabled or responsive to client-server architecture. With this
kind of programming we could very soon realize the dream ot appliances like
a refrigerator ordering milk and your home being controlled by voice
messages through phone.
FUTURE OUTLOOK
Your company is growing in status as a significant player in telecom,
convergence and wireless solutions industry especially in latest
technologies like WAP, E-commerce, M-commerce and mobile telephony. Your
company is eyeing for the latest technologies in IT sector such as
Bluetooth, Edge, GPRS, UMTS and G-3. The Company is in the process of
setting up full-fledged subsidiary in Australia, USA, UK and Singapore to
provide adequate thrust to its International Marketing efforts. The Company
is also in talks with leading US based IT Company to strike a strategic
alliance to provide adequate push for launching its products through their
distribution network and getting Wap based Software Development orders etc.
MARKETING AND EXPORTS
Internationally the company is successful in marking its presence in
Australia, USA, UK, Middle East and Southeast Asian region. The Company has
been able to geographically increase presence by generating clients in wide
industry segments, different markets with different operational universe.
The export trend in the current financial year is most encouraging with
good pending order book position of USD 11 million from US, Australia and
other European countries. The combined order booked position of the company
in view of acquisition of ZAP Infotech would be USD 40 million.
GROWTH MODEL AND PATTERN
Your Company in view of expanding its business globally is in the process
of acquiring US based Intratech Inc., which will act as the marketing arm
for your company in USA markets.
During the current year your company had acquired Diginet Technologies, a
R&D entity based in Mumbai, in all cash deal worth Rs.6.75 crores. It will
help your company in specialising in wireless and telecom solutions market
in India. Diginet has a strong R&D capabilities an has recently developed
products based on wireless technology specifically in the voice over IP
market. Your company has taken over all the tangible and intangible assets
including product rights developed by the company. The Company has an
impressive list of customers, which includes S. Kumars, Crompton Greaves
and Bank of India etc.
Your Company during the current year acquired one of Indias leading
Infotech company - Zap Infotech in a record Rs. 475 Crores (USD 105.5
Million) all stock deal.
The deal envisages transfer / alignment of entire business of Zap Infotech,
as per Memorandum of Understanding, to your company in all stock deal
valued at Rs. 475 crores which the board approved in their meeting held on
16th August, 2000.
Now your company would undertake an equity expansion to accommodate the
newly inducted shareholders.
The Price of share is decided as Rs. 850/- per equity share or the price
arrived as per SEBI guidelines, whichever is higher, as decided by the
Board in their meeting held on 16th August,2000. The shares would be issued
under SEBI Preferential Issue of Shares Guidelines dated 4th August,1994.
As a result of the acquisition your company would get access to training
centres run by Zap Infotech imparting training in advanced technologies in
telecom wireless application all over India, 3 SDCs,1 R&D outpost,2000
strong employees base, & contracts worth $ 29 million etc. The Company has
appointed leading international consultant Deloitte & Haskin 8 Sell for Rs.
475 Crore deal structuring and conclusion.
The combined entity owing to its new found strengths is likely to achieve a
substantial growth both in its top line and bottom lines and will be a
significant player in the IT Industry.
This move is aimed at synergistic and consolidated operation enabling front
end lineage such as M-commerce, VOIP, UMTS applications and back end
integration of the state-of-the-art R&D base facilitating telecom solutions
leading to convergence. This charts a new path and provides a positive
signal towards consolidation in the Infotech industry),.
Your Company is in the process of appointing leading international
consultants for advising on post acquisition structuring and corporate
governance etc.
As you are aware, your company is a wireless technology company with
significant interest in WAP and effective research base in emerging
wireless technologies such as GPRS, G-3, UMTS, EDGE etc. While Zap Infotech
is an integrated software service provider with major focus on wireless
technology. The strength post acquisition would make your company a
significant player in wireless telecom sector solution market.
BUSINESS STRATEGY
The Company has decided to adopt inorganic growth model by acquiring a wide
spectrum of businesses in broad telecom convergence and market segments
with eye on technology marketing and R&D companies.
To meet all of its clients IT needs, the company strives to offer a
comprehensive range of services by continuously evaluating new and emerging
technologies. As a full service provider, the company believes that it can
increase Its revenues from existing clients as well as by attracting new
clients and markets.
A key objective of the companys growth strategy is to expand the nature
and scope of engagement with existing clients both by increasing the
companys understanding of the clients service offered. Establishing broad,
long-term relationships potentially increase the volume of its project and
by expanding the breadth of service offered. Establishing broad and long-
term relationships potentially increase the quality and efficiency of the
companys service to a particular client since each project performed for a
client increases the companys understanding of the client systems,
recruitment and business practices. For the same reason, establishing broad
long term relationship with the clients competitors.
The company pursues several new client development strategies first, the
company offers a broad array of managed software solutions that provide an
initial entry into a new client Second, Sun believes that it can leverage
the industry specific expertise it has developed in key market segments
like wireless, convergence, telecom, e-com and m-com, which will continue
to help Sun for design and develop re-usable software tools and processes,
which have specific applications to clients in these markets and which can
improve the companys efficiency and productivity.
STRATEGIC ALLIANCE
Your Company has entered into a Strategic Alliance with leading New Zealand
based Telecom Company E- Phone Limited for providing support base for
Research and Development in Wireless technology like WAP Edge, G-3.
Bluetooth, General Telecom Solutions and Services.
Your company would generate revenue of 2 million USD during two years
contract period with option to renew the contract. Further, your Company
would be providing all Research and Facilitation Inputs for E-Phone Ltd.
ongoing prOJect in wireless technology besides upgrading its existing set-
up to wireless enabled via new emerging technologies.
INFRASTRUCTURE
Your company currently has two SDCs at Mumbai and Bangalore and is in the
process of setting up state-of- the-art RD centre at NOIDA through an
investment of USD 1.5 million. In addition, the company plans to invest
overseas for setting up similar facilities in Australia and Europe. The
companys extensive network infrastructure and experience in CRM
application and WAP technology will be a major asset to handle these
focused areas. In view of acquisition of Zap Infotech your company would
get access to 3 more SDCs in Delhi, Hyderabad & Bangalore.
HIVE OFF OF VALUATION BUSINESS
Your company was incorporated in 1994 with its primary business of Auction,
Consultancy and Valuation. During the course of time your company achieved
ISO 9001 certification for its business. It had an impressive clients list
which included HLL, CCI, Hindustan Petroleum, Bombay Port Trust, Indian
Oil, etc. Your Company made immense progress by absorbing technology in its
current business model by setting up auction sites, hiving off its brick
and mortar business to a more vibrant internet e-com, m-com, convergence,
wireless technology and upgradation in its business model. Your Company has
drastically reshaped its revenue model by ensuring that technology based
services contribute major chunk of its revenue streams
RESEARCH AND DEVELOPMENT
With the advent o Internet, the global village has shrunk, particularly in
the economic sense. India is in the forefront of this IT revolution and is
considered to be the breeding ground for software professionals. The bottom
line in all the ventures is technology and technological innovations.
Therefore, the important ingredilent in this fast changing world of
business revolves around innovation. Companies would survive and flourish
only if they resort to research and development.
The future can be defined by three processes - the exploding nature of the
Internet, the transition from voice to digital and the demand for knowledge
and information. Communications is fast approaching incredibly at high
speeds in a digital age where all forms of communications merge in a single
digital stream with an insatiable demand for information. The high-speed
digital future will have a tremendous impact on the world. With digital
convergence, we are about to enter the world in which being a citizen of
the world will have a real meaning. The irresistible movement of technology
and the hard rocks of the old world regulatory structures and governing
systems will be rolled over. The sea-change in telecom applications both
wired and wireless is fuelled by the growth in the IT industry. Therefore
an R&D focus is inevitable in order to emerge as a long term player in this
sector.
The IT industry in itself is dynamic in nature with rapid technological
advances in processing and performance. It has an inherent need for updated
technical expertise and a large pool of knowledge, making it skilled
manpower intensive. Emphasis has to be laid on R&D in order to ride the
crest of the wave in the new age economy on a global platform. Research
should not be measured with a feasibility yardstick. Rather, the creative
applications that evolve could be assessed for developmental exercise.
Your Companys primary focus is integrated software solutions. Efforts in
the area of advanced wireless technologies such as GPRS, EDGE, Bluetooth,
Convergence etc., are in process in order to investigate them to facilitate
mass-market adoption. This would be for diversified wireless terminals,
networks, services and applications for the exploration of new business
frontiers. Particular emphasis is placed on the integration of such
technologies in future generation and broadband fixed radio access and
broadband wireless network.
Bluetooth, a new-generation technology that enables users to contact a wide
range of computing and telecommunication devices without the need to buy,
carry or connect cables. It delivers opportunities for rapid, adhoc
connections and in the future will provide automatic connections between
devices.
The most important aspect of General Packet Radio Switching (GPRS) is that
it allows data transmission speeds to be over 100 Kbps. This packet-based
device supports the worlds leading International communications protocols,
Internet Protocol and X.15.
With the advent of GPRS, the speed would increase to 100 Kbps with EDGE
technology enabling the mobile user to surf the net with ease, in addition
also provide content in the form of video, audio and data together In
simple terms, one can be conducting a face-to-face meeting with ones
associates from different parts of the world while driving to play golf.
The third generation (3G) wireless technology such as UMTS is scheduled to
begin by 2002 and multiplexed voice video data applications with data rates
at speeds of 2 Mbpswill enable seamless wireless video conferencing
incorporating both circuit and packet switched network.
For the RD centre, the company is organizing a work force of about 45
software and telecom professionals to carry out basic and applied research
not only for the company but also for alliance partners and commercial
application. It is also developing both front and back end capabilities in
the, development of various technologies by interacting with telecom
operators, manufacturers and end users in wireless technology market.
The R&D centre would help the company to stay ahead in the competitive
environment of designing and implementing e-commerce, m-commerce and
wireless technologies.
YEAR 2000
The Year 2000 transition has been smooth for both your company as well as
its clients. The financial impact of the transition was insignificant. Your
directors are happy to report that the transition was completed smoothly
and going forward, see no material financial impact arising from year 2000
issues.
INDUSTRY OVERVIEW
Worldwide use of wireless telecommunications has grown rapidly as cellular
and other emerging wireless communication services have become more widely
available and affordable for the mass business and consumer markets.
Advances in technology, changes in telecommunications regulations, the
allocation and licensing of additional radio spectrum have contributed to
this growth worldwide.
FIXED DEPOSITS
There are no overdue and unclaimed deposits at the end of the year.
DIRECTORS
Mr. Pravin Sonalkar, director of the company, retire by rotation at the
forthcoming Annual General Meeting and being eligible, offer himself for
re-appointment.
During the year Mr. S.P. Adarkar and Mrs. S.S. Joglekar resigned from the
post of directorship. Your directors place on record their appreciation for
the valuable services rendered during their tenure as directors of the
company.
AUDITORS
M/s. Nabera and Associates, Chartered Accountants, Auditors of the-Company
retire at the forthcoming Annual General Meeting and are eligible for re-
appointment.
AUDITORS REPORT
The Auditors Report is self-explanatory and therefore does not require any
clarification.
PERSONNEL
The Management-Employee relations remained very cordial and friendly
throughout the year. Your Company has already appointed leading
international consultant for working on ESOP Model.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO
The disclosures to be made pursuant to the provision of subsection (1) (e)
of Section 217 of the Companies Act,1956 read with Companies (Disclosures
of particulars in the report of Board of Directors) Rules,1988, are set out
in the annexure included in this report.
PARTICULARS OF EMPLOYEES
No particulars of employees are given as required under the provisions of
Section 217 (2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, as amended, as no employee has
drawn the salary as prescribed in the said Section.
ACKNOWLEDGEMENT
Your Directors would like to express their gratitude for the co-operation,
assistance, support and guidance extended by the Bankers, Central and State
Government, Local Authorities and other regulatory authorities. The Board
places on record its appreciation for the valuable patronage, co-operation
and goodwill received by it from clients, business associates and our most
valued shareholders. Your Directors also express their appreciation for the
whole-hearted contribution made by the employees and the workers for the
successful operations of the Company during the year.
For and on behalf of the Board of Directors
Place: Mumbai ANIL PUJARI
Dated: 1st August. 2000 Managing Director
Annexure to the Directors Report information under Section 217 (1) (e) of
the Companies Act, 1956 read with the Companies (Disclosure of Particulars
n the Report of the Board of Directors) Rule, 1988 and forming part of the
Directors Report.
1. Conservation of Energy:
The operation of your company does not consume high levels of energy and
adequate measures have been taken to conserve energy wherein your company
uses latest technology and energy efficient equipment. As energy cost forms
a very small part of total cost, the impact on cost is not material.
2. Technology Absorption, Adaptation and Innovation:
The Company has not imported any technology at any time during the last
year.
a) Research & Development :
R & D in WAP, G-3, GPRS, Edge and UMTS.
b) Benefit derived as a result of R & D action:
Technology Development, Product Development and Application Development
capabilities enhancement.
c) Future plan of action
Company plans to strengthen its R & D activity--with more focus on emerging
wireless technologies and research on new technologies to become a
significant player in the IT industry alongwith acquisition of technology
and product companies.
d) Expenditure on R & D
(Rs. in Lacs)
i) Capital 3.50
ii) Recurring 19.00
iii) Total 22.50
iv) Total R& D Expenditure 6% of Turnover
3. Foreign Exchange Earning and Outgo:
There is no Foreign Exchange outgo during the year under review. The
Foreign Exchange earned during the year is Rs. 359.87 Lacs.
For and on behalf of the Board of Directors
Place: Mumbai ANIL PUJARI
Dated: 31st August. 2000 Managing Director