Attention I.R.S.

Attention IRS:

Dear Sir or Madam:

Please check your records, I am the person who provided you information about a company called Ultralab instruments.
Your investigation of income tax evasion led to the prosecution and ultimately the owner served five years in federal prison.

As in that case the information I have presented about TEFL International warrants investigation.
I believe such an investigation will result in the not for profit status revoked and prison time for the owner and officers of this company.

Is it not illegal for a company that enjoys a not for profit status to sell franchises?

Taken from:

EVERONN SYSTEMS INDIA LIMITED
(The Company was incorporated as a “Public Limited Company” on 19th April 2000 under the Companies Act, 1956
at Oota and shifted its Registered Office from Oota to Chennai on 30th December 2005.)
Registered and Corporate Office: No. 82, IV Avenue, Ashok Nagar, Chennai – 600 083, Tamilnadu, India
Tel: +91-044-23718202-03, Fax: +91-044-24717845; Website: www.everonn.com
Contact person: Mr. K V Viswanathan - Company Secretary, Mr A V Sridhar - Compliance Officer, Email: ipo@everonn.com


Please contact me and I will provide the entire document.

Starting page 86:

4. BUSINESS CONTRACTS / AGREEMENTS – DEPT OF YOUTH RESOURCE & SPORTS GOVT OF NAGALAND
Everonn has entered into this MOU dated 9th November 2004 with Department of youth resources & Sports, Government
of Nagaland to assist undertaking necessary survey of avenues for employment opportunity, prepare training modules
and train youth to capture the employment.
The salient features of agreement are set out below
Clause Terms
General Covenants 􀁺 The Company may outsourcing the required hardware through a local
Company.
􀁺 Completion work ends with completion of placement of trained youth.
􀁺 The beneficiary will pay an advance of 50% alongwith work order
􀁺 The balance will be paid only after offering placement to the trained
youth.
􀁺 Majority of faculty should be appointed from Nagaland.
Operational Terms & Payments 􀁺 The Company shall use only licensed versions of the software.
􀁺 The complete infrastructure required to install will be provided by the
Company
􀁺 The number to be trained in a single batch will not be more than 15 or
20 participants.· First payment on submission of detailed project
report. The Company has to give bank guarantee for amount demanded
valid until the completion of that respective work order.
􀁺 The second payment will be made only on completion of training and
committed placement with proof for placement.
Arbitration & Force Majeure 􀁺 Any dispute/difference arising out of or in connection with this
agreement shall be referred to the arbitration forum. it will consist three
persons appointed by the party.
􀁺 Otherwise the dispute shall be submitted to the exclusive jurisdiction
of the court in Kohima in the state of Nagaland.
􀁺 Neither party shall be considered in default in the performance of their
obligations which implies acts of god, war, riots, civil commotions etc
and force not within the control of the parties.
5. BUSINESS CONTRACTS/AGREEMENT – CORPORATE CONTRACTS - COGNIZANT TECHNOLOGIES SOLUTIONS
PRIVATE LIMITED
We have received purchase order from Cognizant Technologies Solutions Private Limited for providing in- campus training
through VSAT.
The main terms of the Contract are as under:
Date of the Agreement & Period 13th January 2007 for 6 months
Services to be provided In campus training through V-SAT
Consideration ( in Rs) 6,80,000
Payment Terms 30 days from the date of Completion of services
6. BUSINESS CONTRACT/AGREEMENT – CORPORATE CLIENTS – TEFL EDUCATION (INDIA) PRIVATE LIMITED.
We have entered into a Business Agreement with TEFL EDUCATION (INDIA) PRIVATE LIMITED for transferring the
exclusive rights for operating and marketing the brand “TEFL INTERNATIONAL” along with all the existing franchisees for
the professional programs in languages, teachers Training and pre school for the area covering India including Andaman
and Nicobar Islands.
TEFL is a Company based in USA, conducting Pre school education, Teachers training and English language programs
in India through its Subsidiary Company called TEFL Education (India) Private Limited.
86
The Salient features of the agreement are set out below.
Date of the Agreement 6th November 2006
Terms & Conditions TEFL Education (India) Private Limited (TEIPL) would allow the usage of
its brands “TEFL International “ Language School”, “TEFL International
Pre School” and “TEFL international Teachers Training School”, along with
its existing franchisee.
TEIPL will Support Everonn by providing updated program curriculum,
program, program details, development of study materials, academic inputs,
training in newly developed curriculum in accordance with market demands.
Others:
􀁺 Everonn shall have no relation whatsoever with other activities of TEFL.
This agreement shall not be misconstrued as an agency agreement.
Everonn shall use the brand name of TEFL within the ambit of this
agreement.
􀁺 At the initial stage TEFL shall also give training to Everonn’s staffs
free of cost about their products.
􀁺 TEFL shall run one own center and will conduct training programme
for “ENGLISH LANGUAGE & TEACHERS TRAINING OF TEFL” and
this model will be used as research and development base of TEFL to
support Everonn. Everonn shall have no claim over the revenue earning
from the own center of TEFL.
7. FRANCHISEE AGREEMENT:
Before entering into business agreement with Everonn, TEFL had entered into a franchisee agreement with 11 centres
for marketing the TEFLs products. Now the franchisee agreements with 11 centers got transferred in the name of Everonn
through proper agreements and the details of the same are set out below.
SL. Name of the Franchises Product Date of Period of
No. Agreement Agreement
1 Franchisor International, Raipur. Pre- School 19/12/2006 Open
2 Prakash Ghosh, Murshidabad Pre- School 29/11/2006 Open
3 SMA Educe, Bhubaneshwar. Pre- School 29/11/2006 Open
4 Little Steps Montessori, Kolkatta. Pre- School 29/11/2006 Open
5 Mrs. Hema, Patna. Pre- School 19/12/2006 Open
6 Techno Global, Kolkatta. Language School 29/11/2006 Open
7 Pranab Banerjee – Burdhaman, Language School 29/12/2006 Open
West Bengal.
8 Amitava Nandi & Language School 19/12/2006 Open
Manatosh Dutta, Mangalpur.
9 Indiana Academy, Durgapur. Language School 29/12/2006 Open
10 Mrs. Shilpi Deb, Siliguri – West Bengal. Pre- School 19/12/2006 Open
11 Prakash Ghosh, Murshidabad. Language School 29/12/2006 Open
Note:
􀂾 The present franchisee agreement is drafted in order to transfer the franchisees from the name of TEFL to Everonn.
􀂾 The franchisee agreement is in the form of tri-party agreement i.e. between TEFL, Everonn and the franchisee.
87
􀂾 Pre-School – It is basically a course conducted for children before LKG level.
􀂾 Language School – It is course which teaches one the method of learning the ENGLISH language. It is applicable to
everyone.
􀂾 The terms and conditions of the agreement are almost similar to all the cases, except for consideration. Few of the
terms and conditions as set out below.
1. The Franchisee is willing to accept Everonn as the franchisor henceforth for all the purposes of the said agreement.
2. TEFL transfers all the rights & obligations to Everonn under the original franchisee agreement.
3. On the expiration of the original franchisee agreement between TEFL & FRANCHISEE, Everonn will have the
power to enter into a fresh franchise agreement with FRANCHISEE for a further period on the mutual agreement
between Everonn & FRANCHISEE.
4. All payments and royalties to be made by FRANCHISEE in their capacity as franchisee will be paid by them to
Everonn.
8. OTHER BUSINESS AGREEMENTS
Agreement between i2k Solutions and Everonn
Everonn has entered into an Agreement on 17th day of February 2007 with i2k, a Partnership firm located at Mumbai, as
a partner to offer courses and product offerings delivered over the internet and offline modes for the customers to access
it.
STRATEGIC PARTNERS
We do not have any Strategic partners
FINANCIAL PARTNERS
We do not have any other Financial partners other than as mentioned under the heading “Shareholders Agreement”.
88
MANAGEMENT
BOARD OF DIRECTORS
We are a professionally managed organization. Our Company functions under the control of Board consisting of professional
Directors. The day-to-day matters are looked after by qualified key personnel.
The details of the Board of Directors appear as under:
Name Date of Qualification Other Directorship Date of
appointment Expiration
of current term
of office
Mr. P. Kishore 19.04.2000 Diploma in 1. Mistair Realtys 31.03.2011
Managing Director Commerce Private Limited
S/o. Mr. P K
Padmanabhan 2. CelebrateIndia
No.1, Shalom Tourism Limited
Apartments, 3. Acorn Commodity
Josier Street, Exchange and Holdings
Nungambakkam, Private Limited
Chennai - 600 034.
Age – 45 yrs, DIN-00190586
Mr. R. Kannan 20.02.2002 B.Com., FCA 1. G.K.Management 31.03.2011
Director cum Consultant Services India Pvt Ltd,
S/o. Mr. N Ramanujam
5-G, Srivatsa Gardens, 2. Infratech Infrastructure
No.9, South Avenue, Services Pvt Ltd
Sri Nagar Colony,
Saidapet,
Chennai – 600 015
Age - 44 Yrs, DIN-00190637
Mrs. Susha John 05.03.2001 MS - Applied Nil 31.03.2011
Whole Time Director Science (IT)
W/o. Mr. John4-B,
Ryans Apartments,
8, West Mada Street,
Sri Nagar Colony,
Saidapet,
Chennai- 600 015
Age – 42 Yrs, DIN-00190693
Mr. Joe Thomas 20.02.2002 M. Sc. NOUS Systems Retirement by
Director Chemistry Private Ltd rotation
S/o. Mr. M E Thomas
Building No.6,
NO.A -305, Shobha
Garnet, Sarjapur Road,
Bangalore
Age – 49 Yrs, DIN-00468077
Dr. V. K. Vijayaragavan 10.07.2006 Phd Post Nil Retirement by
Independent Director Doctoral rotation
S/o Krishnaswamy Research
Old No.12, New No.23, Fellow – USA
East Spur Tank Road,
Chennai – 600 039
Age – 72 Yrs, DIN-00984456
89
Name Date of Qualification Other Directorship Date of
appointment Expiration
of current term
of office
Mr. R. Sankaran 10.07.2006 FCA 1. Kernex Microsystems Retirement
Independent Director (India) Limited by rotation
S/o RajagopalanFlat GB, 2. Amrita Lakshmi Realtors
“SIVEDHA” New (P) Ltd
No. 27, III Avenue, 3. G.K. Management
Besant Nagar, Services India (P) Ltd.,
Chennai – 600 090
Age – 73 Yrs, DIN-00076532
Mr. J. Kasi Viswanathan 10.07.2006 B.Com, MBA, 1. Salem Food Products Ltd., Retirement
Independent CAIIB by rotation
Director 2. OPG Industries Limited
S/o Jagannathan18,
5th Cross,Brindhavan 3. Canos Trading Private
Road, Fairlands, Limited
Salem – 636 016
Age - 66 yrs, DIN-00019324
Dr. K. M. Marimuthu 10.07.2006 M. Tech, Phd. Nil Retirement by
Independent Director rotation
S/o. Magudapathy
55 (Old No.26)First Main
Road, Indira Nagar,
Chennai - 600 020.
Age – 76 yrs, DIN-00983325
Brief Profile of Directors
􀁺 Mr P. Kishore, 45, is a first generation entrepreneur and has built a business model around computer education in
schools. He started Systems Int’l in 1987, which set up computer labs and delivered computer education in top private
schools in Nilgiris. P. Kishore sets Everonn’s Business mission and strategic vision and is also responsible for Corporate
communications.
􀁺 Mr R. Kannan, 44, is a Chartered Accountant having 19 years post qualification experience in Project Funding, Taxation
and Audit in different industries. He is overall responsible for Corporate Finance and Accounts and Virtual & Tech Enabled
Learning Solutions SBU.
􀁺 Ms Susha John, 41, is an MS – Applied Science (IT) from PSG Tech, having 17 years experience in managing IT
education businesses. Susha John is responsible for overall business operations and planning, Government and Private
Schools Contracts, Network operations and Tech. Support
􀁺 Mr R Sankaran, 73, is a Chartered Accountant and was a Senior Financial Advisor of Tata Iron and Steel Company Ltd.
He has over 40 years of experience in financial management and held the position of Joint Financial Advisor and Chief
Accounts Officer of Rourkela Steel Plant, financial advisor and Chief Accounts officer of Salem Steel Ltd and Hindustan
Steel Works Construction Ltd. Kolkatta.
􀁺 Mr Joe Thomas, 49, a Post Graduate in Chemistry. He has served in different capacities in Procter & Gamble and had
headed Marketing Division in South Asia. He is President – Strategic Business Development at Strides Arcolab Ltd.
􀁺 Mr J Kasi Viswanathan, 66, is a Banker who started his career with State Bank of India. He joined the Tamilnad Mercantile
Bank as General Manager Operations and was later appointed as Chairman & Chief Executive officer of the Bank for a
period of 3 years. He also served as Senior General Manager in Vysya Bank Limited. Later he was appointed as Chairman
of the Lord Krishna Bank, Cochin for a period of 5 years.
􀁺 Dr K M Marimuthu, 76, is an M.Tech from IIT Kharagpur and is a Ph. D in Genetics & Cytology from Mc Master, Hamilton,
Canada. He was formerly Vice Chancellor of Bharatiar University having the distinction holding the post for two terms.
Currently he is professor Emeritus at University of Madras, Chennai. He has served in many universities in India and
abroad. He has authored many books and research papers.
90
􀁺 Dr V K Vijayaragavan, 72, is a Ph. D from Bombay University and holds a Post Doctoral Research Fellowship from the
University of Notre Dame Indiana, USA. He was in the Pharmaceutical Division of Rallis India Ltd and later on was the
Executive Director of Protein Products of India. He was a Director - Fine Chemicals - Rallis India Ltd, a TATA Group
Company.
DETAILS OF BORROWING POWERS
Vide a Resolution passed at the Extra Ordinary General Meeting of the company held on Wednesday, 6th April 2006, the
members of the Company have passed the following resolution authorizing the company to borrow upto Rs. 150 Crores.
“Resolved that pursuant to Section 293(1)(d) and other applicable provisions if any of the Companies Act, consent of the
Company be and is hereby accorded to the Board of directors to borrow and raise such sums of money from time to time, as
may be required for the purpose of the business of the company notwithstanding that the moneys to be borrowed together with
the moneys already borrowed by the Company (apart from temporary loans obtained by the company from its Bankers in the
ordinary course of business) may exceed the aggregate of the paid up share capital of the Company and its free reserves that
is to say, reserves not set part for any specific purpose, provided however that the total amount that may be so borrowed shall
not exceed a sum of Rs. 150,00,00,000 (Rupees One Hundred and Fifty Crores only) at any point of time”.
REMUNERATION OF DIRECTORS
Terms of Appointment & Compensation of Whole time Director/Managing Director
1. Appointment of Mr. P Kishore as Managing Director (EGM dated 10.06.2006)
“Resolved that Subject to the provisions of Sec 198, 269, 309, 310 Schedule XIII and other applicable provisions if any, of
the Companies Act.1956, approval of the company be and is hereby accorded for the reappointment Mr. P. Kishore as
Managing Director of the Company for a period of 5 years from 1st April 2006 on the terms and condition agreed and on the
remuneration as detailed below;
Salary : Rs 1,00,000 per month
Medical reimbursement upto Rs.1250 per month
HRA: Rs 40,000
Other allowance: Rs 96,750
Leave travel allowance up to one month’s salary, which can be availed once in two years.
Contribution to super annuation fund will be as per the act or Companies policy in force.
In addition he is also entitled for the encashment of leave to One-month salary.
Personal accident insurance premium for a sum of Rs. 10.00 lacs and the premium not to exceed Rs.4,000.
Subscription for two clubs is allowed and not life subscription.
Company car with a driver, telephone at residence etc will be provided to him
Leave and other benefits as may be applicable to other employees of the company from time to time
“Resolved further that Board be and is hereby authorised to increase, vary or amend the terms of the appointment from
time to time subject to the condition that the revised remuneration shall also be in conformity with and within the ceiling of
Part II of Schedule XIII to the Companies Act, 1956 and other applicable guidelines on managerial remuneration issued
from time to time.”
2. Appointment of Ms. Susha John as Whole Time Director (EGM dated 10.06.2006)
Vide Resolution passed at the EGM dated 10.06.2006, subject to the provisions of Sec 198, 269, 309, 310 Schedule XIII
and other applicable provisions if any, of the Companies Act 1956, Ms Susha John was reappointed as Whole time
Director of the Company for a period of 5 years from 1st April 2006.
The Shareholders vide resolution passed at the Annual General Meeting held on 26th May, 2007 have revised the
remuneration which shall be effective from 1st April, 2007 and same has been mentioned below:
Salary: Rs 98,000 per month
HRA: Rs 49,000 per month
Medical reimbursement: Rs 8,167 per month with a total of Rs 98,000/-
91
Leave travel allowances: Rs 98,000 (One month’s salary for a year) Contribution to Provident Fund : Rs 11,760 per
month. Total monthly package : Rs 1,75,093/-
“Board of Directors is further authorised to increase, vary or amend the terms of the appointment from time to time subject
to the condition that the revised remuneration shall also be in conformity with and within the ceiling of Part II of Schedule
XIII to the Companies Act, 1956 and other applicable guidelines on managerial remuneration issued from time to time.”
3. Appointment of Mr. R. Kannan as Director – Consultant (EGM dated 10.06.2006)
“Resolved that subject to the approval of the shareholders at the General Meeting and the provisions of Sec 314 and other
applicable provisions if any, of the Companies Act 1956, remuneration payable as retainer for Mr R. Kannan, Director, as
Consultant of the Company at Rs. 2,50,000 per month on retainer basis with effect from 1st April 2007.
“Resolved further that Board be and is hereby authorised to increase, vary or amend the terms of the appointment from
time to time subject to the condition that the revised remuneration shall also be in conformity with and within the ceiling of
provisions of Companies Act, 1956 and other applicable guidelines on holding an office of profit issued from time to time.”
CORPORATE GOVERNANCE
The provisions of the Listing Agreement to be entered into with the Stock Exchanges with respect to corporate governance
will be applicable to us immediately upon the listing of our Equity Shares with the Stock Exchanges. We have complied
with the corporate governance code in accordance with Clause 49 (as applicable), especially in relation to broad basing
of our board, constitution of committees. The Company undertakes to take all necessary steps to comply with all the
requirements of Clause 49 of the Listing Agreement to be entered into with the Stock Exchanges.
The Company stands committed to good Corporate Governance – transparency, disclosure and independent supervision
to increase the value of the Company stakeholders. Accordingly, the Company has undertaken steps to comply with the
SEBI guidelines on Corporate Governance. The Corporate Governance framework is based on an effective independent
Board, separation of the Board’s supervisory role from the executive management and the constitution of the Board
Committees, majority of them comprising of independent directors. Committees of the Board have been constituted in
order to look into the matters in respect of compensation, shareholders/Investor Grievances, Audit, etc, details of which
are as follows:
The Company has undertaken steps to comply with SEBI guidelines on Corporate Governance to the extent set forth
below.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE
The terms of the Audit Committee comply with the requirements of Section 292A of the Companies Act and Clause 49 of the
listing agreement to be entered into with the Stock Exchanges. The Audit Committee of the Company currently comprises of
following three Directors as members;
Sl Name Designation Status
No
1 Mr. R Sankaran Chairman Non Executive and Independent Director
2 Mr. Joe Thomas Member Non Executive Director
3 Mr. J Kasi Viswanathan Member Non Executive and Independent Director
The principal functions of the Committee are to
􀁺 Review the Company’s financial statements, before submission to, and approval by the Board;
􀁺 Review the Company’s procedures for detecting fraud and whistle blowing and ensure that arrangements are in place by
which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial
control or other matters;
􀁺 Review management’s and internal auditor’s reports on the effectiveness of the systems for internal financial control,
financial reporting and risk management;
􀁺 Monitor the integrity of Company’s internal financial controls;
􀁺 Assess the scope and effectiveness of the systems established by management to identify, assess, manage and monitor
financial and non-financial risks;
92
􀁺 Review the internal audit program and ensure that the internal audit function is adequately rescued and has appropriate
standing within the Company;
􀁺 Receive a report on the results of the internal auditor’s work on a periodic basis;
􀁺 Review and monitor management’s responsiveness to the internal auditor’s findings and recommendations; and
􀁺 Monitor and assess the role and effectiveness of the internal audit function in the overall context of the Company’s risk
management system.
REMUNERATION COMMITTEE
The Remuneration Committee consists of Non-Executive Directors, with the Chairman of the Compensation Committee being
an Independent Director. The Remuneration Committee of the Company currently consists with the following Directors as
members;
Sr. Name Designation Status
No.
1 Mr. Joe Thomas Chairman Non Executive Director
2 Mr. R Sankaran Member Non Executive and Independent Director
3 Dr. K M Marimuthu Member Non Executive and Independent Director
The Committee determines and reviews the overall compensation structure including managerial remuneration and related
policies aimed at attracting, motivating and retaining personnel. The Committee has the authority to determine the compensation
packages of executive Directors and senior management and determine the parameters and supervise the operation of the
bonus schemes of the Company. The Committee will review recommendations made to it by the Company and others and is
authorized to investigate any activity within its terms of reference, seek any information from any employee of the Company
and obtain independent professional advice.
SHAREHOLDERS / INVESTOR GRIEVANCE AND SHARE TRANSFER COMMITTEE
The Shareholders / Investor Grievance and Share Transfer Committee of the Company comprises of the following Directors as
members;
Sr. Name Designation Status
No.
1 Mr. J Kasi Viswanathan Chairman Non Executive and Independent Director
2 Dr. V K Vijayaraghavan Member Non Executive and Independent Director
3 Dr. K M Mari Muthu Member Non Executive and Independent Director
The Investor Grievances and Share Transfer Committee looks into redressal of shareholder and investor complaints, issue of
duplicate/ consolidated share certificates, allotment and listing of shares and review of cases for refusal of transfer/ transmission
of shares and debentures and reference to statutory and regulatory authorities. The scope and functions of the Investor
Grievances and Share Transfer Committee are as per Clause 49 of the Listing Agreement.
SHAREHOLDING OF THE DIRECTORS
The Articles of Association do not require the Directors to hold any Equity Shares as qualification shares in the Company.
The following table details the shareholding of the Directors, as on the date of filing of this Red Herring Prospectus with SEBI:
Sr. Name of Number of
No. the Shareholder equity shares held
1 Mr P Kishore 15,51,410
2 Mr R Kannan 2,34,200
3 Ms Susha John 4,19,885
4 Mr Joe Thomas 1,71,365
93
INTERESTS OF DIRECTORS
Except as stated in “Related Party Transactions” on page 113 of the Red Herring Prospectus, and to the extent of shareholding
in the company, the directors do not have any other interest in the business. The Directors are interested to the extent of
shares allotted to them.
All Directors may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board
or a Committee there as to the extent of other remuneration, reimbursement of expenses payable to them under the Articles
of Association. The Directors will be interested to the extent of remuneration paid to them for services rendered by them as
officers or employees of the Company.
All Directors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into by
the Company with any company in which they hold Directorships or any partnership firm in which they are partners as
declared in their respective declarations.
CHANGES IN THE BOARD OF DIRECTORS IN THE LAST 3 YEARS
The following are the changes to the Company Board of Directors in the last 3 years and no changes thereafter have taken
place:
Sr. Name Date of Date of Reason
No. Appointment Cessation
1 Mr. Arun Kumar 16.01.2006 10.07.2006 Resignation
2 Mr. K R Ravishankar 20.03.2002 10.07.2006 Resignation
3 Mr J Kasi Viswanathan 10.07.2006 — Appointment
4 Dr K M Marimuthu 10.07.2006 — Appointment
5 Dr V K Vijayaragavan 10.07.2006 — Appointment
6 Mr. R. Sankaran 10.07.2006 — Appointment
MANAGEMENT ORGANISATION CHART
G.M General Manager
D.G.M Deputy General Manager
A.G.M Assistant General Manager
ViTELS Virtual & Tech Enabled Learning Solutions
KRDR Knowledge Resource Development & Research
SA & BD Strategic Acquisition and Business Development
PDD Product Development Department
94
KEY MANAGERIAL PERSONNEL OF THE COMPANY
The key managerial personnel and their designations are as under:
Sr. Name Designation Qualification Experience Date of Previous Gross Salary
No (Years) Joining Employment Paid during
2006-07 in Rs
1 Mr. M. Vice FCA 20 18.11.2005 M/s. Ghanati 9,75,000
Sivakumar President Couture (Dubai)
2 Dr. Vijayakumar Dean PhD in 24 15.05.2006 ICFAI 9,50,000
V S R Psychology
3 Mr. Chandra G.M– B.L. PG in HR 19 01.07.2000 Practising Lawyer 7,63,000
Banu Operations
4 Mr. A.V.Sridhar G.M – Finance Chartered 15 09.07.2001 Lovelock & Lewis 8,10,000
Accountant
5 Mrs. Bindu DGM– M.B.A 22 01.08.2005 Intex Designer 5,42,000
Dijendranath Corporate Tiles Private Ltd
Initiative
6 Mr. Narasimha DGM MBA 16 01.12.2000 Princeton 5,42,000
Bharathi Review
The persons whose name appears as Key Managerial Personnel are on our rolls as permanent employees.
BRIEF PROFILES OF KEY MANAGERIAL PERSONNEL
Mr. M. Sivakumar,43 – Vice President- ViTELS, formerly headed M/s. Ghanati Couture as its CEO in Dubai. He has over a
decade of experience working in Gulf countries, i.e. Muscat & Dubai and has a proven track record in running profit centres
with expertise in achieving marketing & operational excellence. He is a Fellow Member of Institute of Chartered Accountants
of India (FCA). He acted as consultant for various public limited companies in South India. He currently heads the Virtual &
Tech Enabled Learning Solutions, a Strategic Business Unit at Everonn.
Dr. Vijayakumar. V.S.R, 53 -Dean – Knowledge Resource Development & Research, Started his career as a Professor
with PSG Arts after obtaining his Doctorate in Psychology from the University of Madras in 1983. A complete academician, he
brings with him 24 years of experience in the areas of Research, Teaching and Content Development with reputed Institutions
& business schools. Expert in Designing specific products for the School & College segments. Held the position of Associate
Dean with ICFAI University. He is responsible and in charge of the content development and educational research at Everonn.
Mr. M. Chandrabanu, 41 – General Manager – Network Operations, is a law graduate and has practised for three years. He
holds a Management Degree from IIM(C). He has been with us since inception in April 2000 and has held various positions
and portfolios. He has more than 15 years of experience in personnel management and systematic implementation of procedures
and practices in the organisation. He is currently in charge of Institutional IT Education.
Mr. A.V.Sridhar, 42 – General Manager – Finance & Accounts, a Chartered Accountant having 15 years of post qualification
experience in Finance and Accounts. He worked for Banks and International Audit Firm – Lovelock & Lewes during his tenure
in various capacities. His expertise in mobilizing funds & financial planning capability is an advantage for the organization. He
has a functional experience in handling Finance and Accounts and also has overseas exposure.
Mrs. Bindu Dijendranath, 44 – Deputy General Manager - Corporate Initiatives, An MBA from Madras University with 22
years of experience in Customer Relations, Public Relations, Business Development, Market Support & Market Research,
Channel & Concept Sales in various capacity. In her capacity as Market Support Manager she was actively involved in all
promotional activities of Sify’s premier Women’s Portal Sitagita.com. She is currently looking after Corporate Initiative within
the VITELS Strategic Business Unit and is also responsible for Training and Placement programmes of Everonn.
Mr. Narasimha Bharathi, 39 – Deputy General Manager – Strategic Alliance & Business Development, is a MBA-Marketing
Management. He started his career as a Business Development Executive in Computer Education and Training Sector. He
has had successful stints with First Computers, Brilliant, Lakhotia, Princeton Review etc., and brings with him around 16 years
of experience in Institutional Marketing, Corporate Selling, Franchisee and Channel Management. He has a track record in
Building Strategic Alliances. He currently is in charge of building strategic partnerships with both public and private institutions
and heads the Post School Business & New Business Developments of Institutional Education – IT Infrastructure.
95
SHAREHOLDING OF THE KEY MANAGERIAL PERSONNEL
None of the key managerial personnel of the Company is holding any shares of the Company.
EMPLOYEE STOCK OPTION SCHEME
For details, please refer page no 18 of Red Herring Prospectus.
BONUS OR PROFIT SHARING PLAN FOR THE KEY MANAGERIAL PERSONNEL
We do not have any Bonus or Profit Sharing Plan for the key managerial personnel of our Company.
INTEREST OF KEY MANAGERIAL PERSONNEL
The key managerial personnel of our Company do not have any interest in our Company other than to the extent to which they
are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course
of business and to the extent of the Equity Shares held by them in the Company, if any.
CHANGES IN THE KEY MANAGERIAL PERSONNEL SINCE LAST THREE YEARS
S Name Designation Date of Joining Date of
No Resignation
1 Mr Ganesh.B Dy. General Manager – Products 05.01.2004 30.07.2005
2 Mr Balachandran.H General Manager - S R E 14.01.2004 30.09.2005
3 Mr Surendra Madhavan Dy. General Manager – Operations 07.05.2004 03.08.2005
4 Mr Karthikeyan.V Dy. G M-Education Initiatives 10.06.2004 30.07.2005
5 Ms. Swapna Abraham AGM Support Service 03.03.2005 03.06.2005
6 Mr Vijay Balakrishnan Manager - Education Initiative 27.06.2005 30.04.2006
7 Ms Bindu Dijendranath Dy General Manager 01.08.2005 —
8 Mr M Sivakumar Vice President 18.11.2005 —
9 Mr Vijayakumar V S R Chief General Manager 15.05.2006 —
PAYMENT OR BENEFIT TO OFFICERS OF THE COMPANY (NON SALARY RELATED)
There is no amount or benefit paid or given within the two preceding years or intended to be paid or given to any officer of the
Issuer Company and consideration for payment of giving of the benefit.
96
PROMOTERS
INDIVIDUALS
Mr. P. KISHORE – MANAGING DIRECTOR
Permanent Account Number AFRPK5443B
Passport Number F7484012
Bank Account Number Syndicate Bank – 60022010047472
Address: No 4, Shalom Apartments,
No 1, Josier Street, Nungambakkam,
Chennai – 600 034
Mr P. Kishore, 45, is a first generation entrepreneur with a Diploma in Commerce. After his schooling in Ooty he did his initial
college education in Coimbatore and stared his career in Synergistic Software and Management Consultants and after three
years embarked on pioneering an innovative project of taking Computer Education to schools in 1987. Systems International,
a Partnership Firm was born with one faculty and 4 students. Systems International grew to be in all top Public Schools of the
District of Nilgiris in two years. Over the next 10 years, Systems International spread its wings to other parts of Tamil Nadu,
Kerala and Karnataka. Mr P. Kishore sets Everonn’s Business mission and strategic vision and is also responsible for Corporate
communications and Government relations.
He was also involved in social activities as the Secretary of the Nilgiris Civil Rights Society and as the President of the Nilgiris
Deaf and Dumb Association for over 5 years.
He played a key role in attaining the contract for Systems International for implementing IT Education at all the 17 schools of
Nilgiris District in the year 1999.
Mr. P. SARVOTHAM
Permanent Account Number BFGPS0969L
Passport Number A8435209
Bank Account Number ICICI Bank - 007701509226
Address: 43, Belmont Terrace, Tiger
Hill Road, Ooty – 643 001
P. Sarvotham, 42, initially started his career in the field of Marketing with a Private Company in Ooty and rose to become the
backbone of Systems International. He was instrumental in getting school contracts in all the Southern States of India which
in course of time has taken giant strides. He has experience in marketing the real estate business in the Gulf Countries to NRI
clientele He was also the President of the social organization Round Table Of India at the National level.
Mr. P. K. PADMANABAN
Permanent Account Number AFOPP2817B
Passport Number A9332624
Bank Account Number SBI – 01190027125
Address: 43, Belmont Terrace, Tiger
Hill Road, Ooty – 643 001
P. K. Padmanabhan, 80, a high school pass out joined the Cincona Department controlled by the Central/ State Governments
as early in the 1940’s and put in a service of more than 5 decades ultimately retiring from service as Superintendent. He was
a driving force behind his sons Mr P. Kishore and Mr P. Sarvotham in inspiring them to become very successful entrepreneurs
and possesses a wide knowledge of administrative skills.
97
Mrs JAYALAKSHMI PADMANABHAN
Permanent Account Number AIDPP3554B
Passport Number A9332626
Bank Account Number 60022010055394 –
Syndicate Bank, Chennai
Address: 43, Belmont Terrace,
Tiger Hill Road, Ooty – 643 001
Mrs Jayalakshmi Padmanabhan, 69 is the wife of Mr.P.K.Padmanabhan (Promoter – Everonn Systems India Limited) and
mother of Mr P. Kishore (Managing Director of Everonn Systems India Limited). She is settled in Ooty for more than 5 decades.
DECLARATION
We confirm that the Pan No, Passport Number, Voter ID and Bank Account Number of Mr. P. Kishore, Mr. P. Sarvotham, Mr. P.
K. Padmanaban and Mrs Jayalakshmi Padmanabhan are being submitted to the Stock Exchanges on which Equity Shares are
proposed to be listed at the time of filing Red Herring Prospectus with them.
RELATIONSHIP BETWEEN THE PROMOTERS, DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr P K Padmanabhan and Mrs Jayalakshmi Padmanabhan are the parents of Mr P Kishore and Mr P Sarvotham. Mr P Kishore
and Mr P Sarvotham are brothers. Except as stated otherwise, there is no relation between any Promoters, Directors and Key
Managerial Personnel of the Company.
COMMON PURSUITS
There are no common pursuits in the business of the Company and other companies promoted by the Promoter.
FULL PARTICULARS OF THE NATURE AND EXTENT OF THE INTEREST, IF ANY, OF EVERY PROMOTER:
Save as stated in this Red Herring Prospectus neither the Promoters nor the firms or companies in which they are members
have any interest in the business of our Company, except to the extent of investments made by them and their group/ investment
companies in Everonn Systems India Limited and earning returns thereon. None of the Promoters or the firms or Companies
in which they are members has any interest in any property acquired by the Company within two years of the date of this Red
Herring Prospectus or proposed to be acquired by it. The promoters are also interested in the Company to the extent of their
shareholding, for which they are entitled to receive the dividend declared if any, by our Company.
PAYMENT OR BENEFIT TO PROMOTERS OF THE ISSUER COMPANY:
Other than the salary and remuneration of the Promoter Directors, referred to in the section titled “Compensation of Whole
Time Director / Managing Directors” on page no 90 of this Red Herring Prospectus, and dividend, if any declared on the Equity
Shares, there are no payment or benefit to promoters of the Company.
RELATED PARTY TRANSACTIONS
The details of related party transactions please refer of Annexure XIII of the Financial Statements on page 113.
CURRENCY OF PRESENTATION
In this Red Herring Prospectus, all references to “Rupees” and “Rs.” are to the legal currency of India, all references to “U.S.
Dollar”, and “US$” are to the legal currency of the United States Of America, and all references to “Dirham” are to the legal
currency of the Dubai and all references to “Singapore Dollar” are to the legal currency of Singapore.
Any percentage amounts, as set forth in “Risk Factors”, “Business”, “Management’s Discussion” and “Analysis of Financial
Condition and Results of Operations” and other headings in this Red Herring Prospectus, unless otherwise indicated, have
been calculated on the basis of financial statements prepared in accordance with Indian GAAP.
98
DIVIDEND POLICY
The declaration and payment of dividends will be recommended by the Board of Directors and the shareholders, at their
discretion, and will depend on a number of factors, including but not limited to the earnings, capital requirements and overall
financial condition. The Board may also from time to time pay interim dividend.
The Summary of dividends declared by us is as follows:
Year Ended 31.03.2003 31.03.2004 31.03.2005 31.03.2006 31.03.2007
Face value of Equity Share
(Rs. per share) 10.00 10.00 10.00 10.00 10.00
Dividend (in Rs. lakhs) 0.00 85.68 42.84 17.14 0.00
Dividend Tax (in Rs. lakhs) 0.00 12.23 6.01 1.92 0.00
Dividend per equity Share (Rs.) 0.00 5.00 2.50 1.00 0.00
Dividend Rate (%) 0.00 % 50 % 25 % 10 % 0.00 %
99
SECTION V: FINANCIAL STATEMENTS
We, the Lead Manager to the Issue confirm that all the Notes to Accounts, significant accounting policies as well as Auditor’s
qualification, if any, have been incorporated.
Auditor’s Report
To,
The Board of Directors,
Everonn Systems India Limited
82, IV Avenue,
Ashok Nagar,
Chennai – 600083
Dear Sirs,
A. We have examined the annexed financial information of Everonn Systems India Limited, (“the Company”) for the five
Financial Years ended March 31, 2003, 2004, 2005, 2006 and 2007 being the last date to which the accounts of the
Company have been made up and audited by us. The financial information has been approved by the Board of Directors
of the Company for the purpose of disclosure in the Offer Document being issued by the Company in connection with the
public issue of Equity Shares in the Company ( referred to as ‘ the issue ‘ ) in accordance with the requirements of
i. Part II of Schedule II of the Companies Act. 1956 ( “ the Act “ )
ii. The Securities and Exchange Board of India ( Disclosure and Investor Protection ) Guidelines, 2000 ( ‘ the SEBI
Guidelines ‘ ) issued by the Securities and Exchange Board of India ( ‘ SEBI ‘ ) on January 10, 2000 in pursuance to
Section 11 of the Securities and Exchange Board of India Act, 1992 and related amendments and
iii. Our terms of reference with the Company Letter dated July 28, 2006 requesting us to carry out work in connection
with the Offer Document as aforesaid.
B. We report that the restated assets and liabilities of the Company as at March 31, 2003, 2004, 2005 2006 and 2007 are as
set out in Annexure I to this report after making such adjustments and regrouping as in our opinion are appropriate and
are subject to the Significant Accounting Policies as appearing in Annexure IV and Notes to the Statements appearing in
Annexure V of this report.
C. We report that the restated profits of the Company for the Financial Years ended March 31, 2003, 2004, 2005 2006 and
2007 are as set out in Annexure II to this report. These profits have been arrived at after charging all expenses including
depreciation and after making such adjustments and regroupings as in our opinion are subject to the Significant Accounting
Policies as appearing in Annexure IV and Notes to the Statements appearing in Annexure V of this report.
D. We report that the Cash Flows from restated Financial Statements of the Company for the Financial Year ended March
31, 2003, 2004, 2005 2006 and 2007 are as set out in Annexure III to this report after making such adjustments and
regrouping as in our opinion are appropriate and are subject to the Significant Accounting Policies as appearing in Annexure
IV and Notes to the Statements appearing in Annexure V of this report.
E. We have also examined the following financial information relating to the Company and as approved by the Board of
Directors for the purpose of inclusion in the Offer Document.
i. Statement of Dividends paid for the last five Financial Years as appearing in Annexure VI to this report.
ii. Accounting Ratios as appearing in Annexure VII to this report.
iii. Details of Sundry Debtors as appearing in Annexure VIII to this report.
iv. Details of Loans and Advances as appearing in Annexure IX to this report.
v. Details of Secured Loans as appearing in Annexure X to this report.
vi. Capitalisation Statement as at 31st March, 2007 as appearing in Annexure XI to this report.
vii. Statement of Tax Shelters as appearing in Annexure XII to this report.
viii. Details of Related Party Transactions as appearing in Annexure XIII to this report.
ix. Details of Contingent Liabilities as appearing in Annexure XIV to this report.
100
In our opinion the above financial information of the Company as stated in Para B, C, D and E read with Significant Accounting
Policies enclosed in Annexure IV to this report, after making adjustments/restatements and re-grouping as considered appropriate
and subject to certain matters as stated in Notes to the Accounts enclosed in Annexure V to this report, has been prepared in
accordance with Part II of Schedule II of the Companies Act, 1956 and the SEBI Guidelines.
This report is intended solely for the information and for inclusion in the Prospectus in connection with the specific Initial Public
Offering of equity shares of the Company and is not to be used, referred to or distributed for any other purpose without our
written consent.
Thanking You,
Yours Faithfully,
For P.Chandrasekar
Chartered Accountants
Sd/
K Parthasarathy
Membership No.: 9574
Partner
Place: Chennai
Date: 16.05.2007
101
Annexure I : STATEMENT OF ADJUSTED ASSETS AND LIABILITIES
The assets and liabilities of the Company at the end of Financial Year /period i.e. March 31, 2007, March 31, 2006, March 31,
2005, March 31, 2004 and March 31, 2003 audited by us after making such adjustments and subject to the notes appearing
hereinafter are set out below:
Rs. In lakhs
As At March 31
PARTICULARS
2007 2006 2005 2004 2003
A. Fixed Assets
Gross Block 5,623.42 5,914.99 3,748.17 3,280.13 3,215.76
Less: Depreciation and amortization 1,971.28 2,711.17 2,254.82 1,667.12 1,141.49
Net Block 3,652.15 3,203.82 1,493.35 1,613.00 2,074.28
Add: Capital WIP – – – – –
Total Fixed Assets (A) 3,652.15 3,203.82 1,493.35 1,613.00 2,074.28
B. Investments : (B) 0.12 0.12 0.12 48.12 48.00
C. Current Assets, Loans and Advances :
Inventories 25.64 26.59 11.08 4.42 3.24
Sundry Debtors 2,796.50 1,734.50 806.78 395.80 556.79
Cash and Bank Balances 422.29 296.53 173.60 120.04 57.52
Loans and Advances 593.79 554.87 301.86 206.54 148.18
Total (C) 3,838.22 2,612.49 1,293.33 726.81 765.73
D. Liabilities and Provisions :
Secured Loans 2,354.21 2,688.72 1,045.67 924.17 1,380.24
Deferred Tax Liability 544.34 440.11 185.39 92.76 51.91
Current Liabilities 736.07 803.69 206.74 163.32 319.63
Provisions 196.46 103.01 67.57 73.49 (1.54)
Total (D) 3,831.08 4,035.52 1,505.37 1,253.73 1,750.23
E. Share Application Money Pending
Allotment (E) – – – – –
F. Miscellaneous Expenditure (F)
(to the extent not w/off) – 22.65 50.25 95.19 128.95
G. Net Worth (A+B+C-D-E) : 3,659.41 1,780.90 1,281.43 1,134.20 1,137.77
H. Represented by
Share Capital 1,027.82 171.37 171.37 171.37 171.37
Reserves and Surplus 2,631.59 1,632.18 1,160.31 1,058.03 1,095.35
Total (H) 3,659.41 1,803.55 1,331.68 1,229.40 1,266.72
I. Net Worth (H-F) 3,659.41 1,780.91 1,281.43 1,134.20 1,137.77
The accompanying significant accounting policies and notes are integral part of this statement.
102
Annexure - II RESTATED PROFIT AND LOSS ACCOUNT
Rs. In lakhs
PARTICULARS
Year Ended March 31
2007 2006 2005 2004 2003
Income :
Education and training income 4,033.98 2813.87 1942.94 1616.42 1601.54
Sale of hardware 270.49 279.15 0.00 0.00 0.00
Other Income – 0.01 0.01 – –
Total Income 4304.46 3093.03 1942.95 1616.42 1601.54
Expenditure:
Manpower 758.96 527.85 443.20 380.53 399.85
Education and training expenses 1,759.56 1100.09 458.65 376.92 427.33
Deferred revenue expenditure 22.65 27.60 44.95 41.80 41.80
Total expenditure 2,541.16 1,655.54 946.79 799.25 868.98
Earnings before interest, depreciation & tax 1,763.30 1,437.48 996.16 817.18 732.56
Interest and finance charges 233.99 155.49 143.96 180.37 171.97
Depreciation & amortisation 844.35 456.36 587.69 526.91 489.11
Less: Overheads transferred to fixed assets (23.52) – – – –
Earnings before tax and extra ordinary
items 708.48 825.63 264.50 109.89 71.48
Provision for taxation
Current tax 105.63 69.48 20.74 8.45 5.63
Deferred tax 104.21 254.72 92.63 40.85 25.01
Fringe benefit Tax 13.00 10.50 – – –
Profit before extra ordinary items 485.64 490.93 151.13 60.59 40.84
Extra ordinary items 0.00 0.00 0.00 0.00 0.00
Adjustment on account of prior period Items 0.00 0.00 0.00 0.00 0.00
Adjusted net profit 485.64 490.93 151.13 60.59 40.84
Balance brought forward from previous year 518.45 95.67 8.49 51.88 37.94
Dividend on shares – 17.14 42.84 85.68 0.00
Tax on dividend – 1.92 6.01 12.23 0.00
Transfer to general reserve 41.00 49.09 15.11 6.06 0.00
Deferred tax liability – 0.00 0.00 0.00 (26.90)
Balance carried to balance sheet 963.09 518.45 95.67 8.49 51.88
Note: Deferred Tax Liability calculated for the first time in the year ending 31.3.03, was a transitional provision and the
deferred tax liability accrued upto 31.03.2002 amounting to Rs. 26.90 lakhs was adjusted against the opening balance of the
Surplus in Profit and loss account.
103
Annexure - III CASH FLOW STATEMENT
Rs. In lakhs
PARTICULARS
Year Ended March 31,
2007 2006 2005 2004 2003
Cash Flows from Operating Activities
Net Profit Before Taxation 708.48 825.63 264.50 109.89 71.48
Adjustments for:
Depreciation 844.35 456.36 587.69 526.91 489.11
Overheads charged to fixed assets (23.52) – – – –
Interest/Dividend Income – 0.01 0.01 – –
Loss on Sale of Asset – 0.43 – 0.98 –
Profit on Sale of Asset – – – – –
Preliminary expenses Written off 22.65 27.60 44.95 41.80 41.80
Interest Paid 241.46 155.02 126.12 171.71 150.88
Exchange Gain – – – – –
Operating Profit before Working Capital
Changes 1,793.42 1,465.05 1,023.28 851.29 753.26
Change in Trade and Other Receivables (1,051.20) (1,142.53) (506.30) 102.63 (260.86)
Change in Inventories 0.95 (15.50) (6.66) (1.18) 58.39
Change in Other Current Assets
Change in Current Liabilities (53.30) 604.87 28.85 (142.78) 96.35
Income- taxes paid (70.20) (48.69) (23.91) (11.04) (0.34)
Net Cash Flow from Operating Activities 619.68 863.18 515.25 798.92 646.80
Cash Flow from Investing Activities
Purchase of Fixed Assets (1,269.10) (2,172.31) (468.04) (69.07) (867.97)
Sale of Fixed Assets – 5.05 – 2.45 0.58
Purchase of Investments – – – (0.12) (13.00)
Sale of Investments – – 48.00 – –
Pre Operative Expenses – – – (8.04) (87.57)
Net Cash Flow from Investing Activities (1,269.10) (2,167.26) (420.04) (74.78) (967.95)
Cash Flows from Financing Activities
Changes in Borrowings (334.51) 1,643.05 135.64 (456.07) 481.52
Share Capital Raised 1,370.21 – – – –
Share Application Money – – – – –
Interest Paid (241.46) (155.02) (126.12) (171.71) (150.88)
Exchange Gain – – – – –
Dividend Paid (19.06) (61.02) (51.17) (33.84) –
Net Cash Flow from Financing Activities 775.18 1,427.01 (41.65) (661.62) 330.65
Net increase in cash and cash equivalents 125.76 122.93 53.56 62.52 9.49
Cash and Cash Equivalents (Op. Balance) 296.53 173.60 120.04 57.52 48.03
Cash and Cash Equivalents (Cl. Balance) 422.29 296.53 173.60 120.04 57.52
104
Annexure IV
I. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1. Basis of accounting
Financial statements are prepared on an accrual basis following historical cost convention in accordance with the generally
accepted accounting principles and in compliance with the applicable Accounting Standards prescribed by the Institute of
Chartered Accountants of India.
2. Fixed Assets
Fixed Assets are carried at cost less accumulated depreciation. Cost includes related duties, taxes, freight installation and
other costs directly attributable to put the assets into use.
3. Intangible Assets
The company has implemented Accounting Standard 26 (dealing with Intangible Assets) issued by Institute of Chartered
Accountants of India, whereby amounts spent for creation and development of knowledge resource and course content has
been capitalized. Accordingly, the company has also formulated a policy to amortize this amount of intangibles over a period
of 5 years, in equal installments.
4. Depreciation and Amortization
Until the year ending March 31, 2006, depreciation on all fixed assets is provided on Straight Line Method at the rates and in
the manner specified in the Schedule XIV of the Companies Act, 1956. In order to follow the prudent accounting principles and
based on our past experience, during the year ended March 31, 2007, the Company has adopted change in depreciation
policy i.e. for assets installed at and used in Government Projects, by providing depreciation over the number of years of the
contract and for the rest of the assets depreciation is provided on straight line method as per the rates prescribed in schedule
XIV on the Companies Act 1956. Due to above change in policy, the additional depreciation amount provided during the year
amounted to Rs. 227.74 lakhs comprising of current year additional depreciation of Rs. 130.31 lakhs and that of earlier years
depreciation of Rs. 97.43 lakhs. Consequently Profit before tax is less by Rs. 227.74 lakhs.
5. Revenue Recognition
The Company generally follows mercantile system of Accounting and recognizes significant items of income on accrual basis.
Education and training income is recognized on rendering of services over the period of instruction.
In respect of fixed price contracts, revenue is recognized as per the proportionate completion method.
Revenue in respect of sale of courseware content and knowledge resource is recognized on the basis of dispatch/delivery to
the customers.
Revenue in respect of sale of hardware is recognized when substantial risks and rewards of ownership is transferred to the
buyer under the terms of the contact. / Revenue is recognized on the delivery of the hardware and fulfillment of the contractual
obligation.
Dividend income is recognized when the right to receive is established.
6. Inventories
Inventory as at year end consist of VSAT Equipments only. Inventories are valued at lower of cost or net realizable value.
7. Investments
Long-term investments are carried at cost.
8. Retirement Benefits
Contribution to defined contribution schemes such as PF is charged to the profit and loss account on accrual basis. The
company also provides for retirement benefits in the form of Gratuity and Leave Encashment, which are based on valuations
at balance sheet date.
9. Provisions and Contingent Liabilities
A provision is recognized when there is a present obligation as a result of a past event, it is probable that an outflow of
resources will be required to settle the obligation and in respect of which reliable estimate can be made.
Contingent liabilities are not provided for and are disclosed by way of notes.
105
10. Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying fixed assets are capitalized as part of the
cost of such assets till such time as the asset is ready for its intended use or sale. A qualifying asset is one that necessarily
takes substantial period of time to get ready for intended use or sale and other borrowing costs are recognized as an expense
in the period in which they are incurred.
11. Income-Tax
The accounting treatment for Income Tax in respect of the Company’s income is based on ‘Accounting for Taxes on Income’
(AS22) issued by the Institute of Chartered Accountants of India. The provision made for Income Tax in the accounts comprises
both, the current tax (including Fringe Benefit Tax) and deferred tax. The current tax (including fringe benefits tax) is determined
based on the provision of Income Tax Act, 1961. The deferred tax assets and liabilities for the year, arising on account of
timing differences, are recognized in the Profit and Loss Account; and the cumulative effect thereof is reflected in the Balance
Sheet. The major components of the respective balances of deferred tax assets and liabilities are disclosed in the Accounts.
12. Foreign Currency Translations
Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Gains and
losses resulting from the settlement of such transactions and from the translations of monetary assets and liabilities denominated
in foreign currencies are recognized in the profit and loss account.
13. Share Issue Expenses
Expenditure relating to issue of shares is adjusted against the Securities Premium Account.
14. Segmental Reporting
The Company has only one main line of business – imparting education and training through various modes of delivery.
Hence, segmental reporting as required by AS-17, issued by The Institute of Chartered Accountants of India is not applicable.
15. Impairment of Assets
The Company has not noticed any obsolescence as all the assets are fully in use and hence impairment as per AS 28 has not
been considered for the year.
106
Annexure V
SIGNIFICANT NOTES TO ACCOUNTS
1. Changes in Accounting Policies
There is a change in depreciation policy during the year ended March 31, 2007
Until the year ending March 31, 2006, depreciation on all fixed assets is provided on Straight Line Method at the rates and
in the manner specified in the Schedule XIV of the Companies Act, 1956. In order to follow the prudent accounting
principles and based on our past experience, during the year ended March 31, 2007, the Company has adopted change
in depreciation policy i.e. for assets installed at and used in Government Projects, by providing depreciation over the
number of years of the contract and for the rest of the assets depreciation is provided on straight line method as per the
rates prescribed in Schedule XIV of the Companies Act 1956. Due to above change in policy, the additional depreciation
amount provided during the year amounted to Rs. 227.74 lakhs comprising of current year additional depreciation of Rs.
130.31 lakhs and that of earlier years depreciation of Rs. 97.43 lakhs. Consequently Profit before tax is less by Rs. 227.74
lakhs.
The profit and loss account and statement of affairs have been restated adopting the changes made in the depreciation
policy. Due to the change in policy, the restated profit after tax for the following years is as follows:
Rs. Lakhs
Year Ended March 31
Particulars
2007 2006 2005 2004 2003
Restated profit after tax 485.64 490.93 151.13 60.59 40.84
Profit after tax before restatement 407.73 404.16 181.25 78.08 84.53
Change in profit after tax 77.91 86.78 (30.12) (17.49) (43.69)
There are no changes in Accounting Policies during the Financial Years ended March 31, 2003, 2004, 2005 and 2006.
2. Deferred Tax
The year-wise restated Deferred Tax Calculations are as under:
Rs. in Lakhs
COMPUTATION OF DEFERRED TAX LIABILITY (AS RESTATED)
31.03.2007 31.03.2006 31.03.2005 31.03.2004 31.03.2003
Deferred Tax Assets
On Account of Fiscal Differences – – – – –
Expenses Allowable for Tax Purposes
When Paid 5.03 1.01 2.48 0.91 –
Expenses Allowable for Tax Purposes
When Withholding Tax is Paid – 29.42 67.64 0.36 –
On Account of Carried Forward Losses – – – 272.40 330.18
Total 5.03 30.43 70.12 273.67 330.18
Deferred Tax Liability
On Account of Timing Differences 549.38 470.53 255.51 366.43 382.09
Total 549.38 470.53 255.51 366.43 382.09
Net Deferred Tax Liability 544.34 440.11 185.39 92.76 51.91
3. Estimated Value of contract remaining to be executed on Capital Account and not provided for is NIL for the financial
years 2002-03, 2003-04, 2004-05 & 2005-06.
4. Income of Rs. 46.01 Lakhs, which is an amount for maintaining hardware and systems at ELCOT Phase 2 Schools (332
Nos. spread over different districts of Tamil Nadu) has been recognized based on estimates by Management in the year
2005 – 2006.
107
5. The year-wise Remuneration to Directors including Perquisites is given below:
Rs. in Lakhs
Particulars Mar 31 2007 Mar 31 2006 Mar 31 2005 Mar 31 2004 Mar 31 2003
Managing Director 30.00 16.79 11.15 11.15 11.15
Whole Time Directors 28.28 23.78 15.89 15.22 16.32
Total 58.28 40.57 27.04 26.37 27.47
Annexure VI - DETAILS OF DIVIDEND POLICY
Rs in Lakhs
PARTICULARS
Year Ended March 31
2007 2006 2005 2004 2003
Share Capital 1027.82 171.37 171.37 171.37 171.37
Dividend Declared: % Amt. % Amt. % Amt. % Amt. % Amt.
Interim Dividend 0.00% 0.00 0.00% 0.00 0.00% 0.00 25.00% 42.84 0.00% 0.00
Final Dividend 0.00% 0.00 10.00% 17.14 25.00% 42.84 25.00% 42.84 0.00% 0.00
Total 0.00% 0.00 10.00% 17.14 25.00% 42.84 50.00% 85.68 0.00% 0.00
Annexure - VII Statement of Accounting Ratios
Earnings per share (Rs.)
Year Ended March 31,
Particulars
2007 2006 2005 2004 2003
Restated net profit as per profit and loss
account for computation of EPS
(Rs. in Lacs) (A) 485.64 490.93 151.13 60.59 40.84
Weighted average number of equity shares
outstanding during the period (B) 8,628,847 1,713,687 1,713,687 1,713,687 1,713,687
Weighted average number of equity shares
outstanding during the period for Adjusted
EPS* (C) 8,628,847 7,441,627 7,441,627 7,441,627 7,441,627
Basic earning per share of face value of
Rs. 10 Rs. (A / B) 5.63 28.65 8.82 3.54 2.38
Adjusted earning per share of face value of
Rs. 10 Rs. (A / C) 5.63 6.60 2.03 0.81 0.55
*Bonus shares issued during the year ended 31st Mar 2007 have been considered for computation of “Adjusted earning per
share” for previous years.
Net Asset value per share (Rs.)
Year Ended March 31,
Particulars
2007 2006 2005 2004 2003
Net Worth excluding revaluation reserve at
the end of the period/year (Rs. Lakhs) (A) 3,659.41 1,780.91 1,281.43 1,134.20 1,137.77
Weighted average number of equity shares
outstanding during the period (B) 8,628,847 1,713,687 1,713,687 1,713,687 1,713,687
Net asset value per share (Rs.) (A / B)
Rs. (A / B) 42.41 103.92 74.78 66.18 66.39
108
Return on Net Worth (%)
Year Ended March 31,
Particulars
2007 2006 2005 2004 2003
Restated net profit as per profit and loss
account for computation of EPS
(Rs. in Lacs) (A) 485.64 490.93 151.13 60.59 40.84
Net Worth excluding revaluation reserve at
the end of the period/year (Rs. in Lacs) (B) 3,659.41 1,780.91 1,281.43 1,134.20 1,137.77
Return on Net Worth (%) (A / B) 13.27% 27.57% 11.79% 5.34% 3.59%
Annexure - VIII STATEMENT OF SUNDRY DEBTORS
Rs. In lakhs
Particulars
Year Ended March 31,
2007 2006 2005 2004 2003
(Unsecured, considered doubtful)
- Outstanding for a period less than six months – – – – –
- Outstanding for a period exceeding six months 6.50 – – – –
(Unsecured, considered good)
- Outstanding for a period less than six months 1,956.05 1,323.35 671.10 358.64 511.79
- Outstanding for a period exceeding six months 840.45 411.15 135.68 37.17 45.00
Less: Provision for Doubtful debts 6.50 – – – –
Total 2,796.50 1,734.50 806.78 395.80 556.79
Note: There are no receivables due from promoters/Promoters’ group/Directors
Annexure - IX STATEMENT OF LOANS AND ADVANCES
Rs. In lakhs
Particulars Year Ended March 31,
2007 2006 2005 2004 2003
Advances Recoverable in Cash or in Kind
or for the value to be received
- From Directors – – – – –
- From Others 339.78 412.45 145.27 100.64 71.63
Tax Deducted At Source 101.36 95.45 77.99 51.71 20.99
Accrued Interest Income 13.46 9.86 0.75 8.03 9.39
Deposits 139.19 37.11 77.85 46.16 46.17
Total 593.79 554.87 301.86 206.54 148.18
Note: There are no loans and advances due form promoters/Promoters’ group/Directors
109
Annexure – X Details of Secured Loans Outstanding
Name of Facility Sanctioned Interest Outstanding Repayment Primary Collateral
the Bank Availed Amount as on Terms Securities Securities
(Rs in Lakhs) 31.3.2007 Offered Offered
(Rs in Lakhs)
Syndicate Term 747.00 12.50% 47.53 15 Qtrly Hypothecation Existing UREM
Bank Loan Instalments of Hardware, of immovable
beginning from Equipments property - at
Sept 03. and Fixtures at S.No.740 &
Instalment amt is 54 centres in 693, Loveade
Rs. 50.00 lakhs respect of Ap Road, Ooty
School Project. Municipal Limit,
Hypothecation of Admeasuring
hardware, 4.54 acres,
furniture, fixtures, belonging to
equipments etc M/S
at 9 centres in L. Loganathan,
respect of L. Jayalakshmi,
DIRECWAY L. Sarojini &
Project. L. Varalakshmi.
II Charge on the
immovable
properties
mortgaged to
IDBI and TIIC/
IOB and II
charge on the
hardware,
furniture,
fixtures and
equipment
hypothicated to
IDBI and TIIC/
IOB.
Syndicate Term 769.36 11% 485.91 16 Qtrly First Charge on Existing UREM
Bank Loan Instalments Company’s of immovable
beginning from entire Net Fixed property - at
June 05. Assets, ELCOT S.No.740,
Instalment amt is Project Assets Loveade Road,
Rs. 48.08 lakhs & RLD Project Ooty Municipal
Assets Limit,
Admeasuring
336.72 cents,
belonging to
M/S
L.Loganathan,
L.Jayalakshmi,
L.Sarojini &
L.Varalakshmi,
UREM of Land
and Building
Measuring app
5000 sq.ft at
Ooty bearing
S.No.1049/3
belonging to
Shri.P.Kishore,
managing
Director of the
Company.
UREM of Land
measuring 5.88
acres with
S.Nos,87, 90,
93, 94, 241, 242
110
and 238 at
Masinagudi,
Nilgiris,
belonging to
Ms.Indira Rajan
and
Ms.Anuradha.
UREM of
property
belonging to
M/s Tourism
Resorts Private
Ltd, Ooty
Syndicate Term 1031.00 11% 911.53 16 Qtrly First Charge on Existing UREM
Bank Loan Instalments Company’s of immovable
beginning from whole assets property - at
Sept 06. value & S.No.740 &
Instalment amt receivables 693, Loveade
is Rs. 67.68 lakhs Road, Ooty
Municipal Limit,
Syndicate Overdraft 52.00 11% 78.24 Admeasuring
Bank 336.72 cents,
belonging to
M/S
L.Loganathan,
L.Jayalakshmi,
L.Sarojini &
L.Varalakshmi,
UREM of Land
and Building
Measuring app
5886 ft at Ooty
bearing
S.No.1049/3
belonging to
Shri. P. Kishore,
managing
Director of the
Company.
UREM of Land
measuring 5.88
acres with
S.Nos,87,90,93,
94,241,242 and
238 at
Masinagudi,
Nilgiris,
belonging to
Ms.Indira Rajan
and Ms.
Anuradha.
UREM of
property
belonging to
M/s Tourism
Resorts Private
Ltd, Ooty
Admeasuring
0.75 acres
Syndicate Loan 19.00 11% 19.00 FD for Rs. 20.00 Lakhs
Bank against FD
Name of Facility Sanctioned Interest Outstanding Repayment Primary Collateral
the Bank Availed Amount as on Terms Securities Securities
(Rs in Lakhs) 31.3.2007 Offered Offered
(Rs in Lakhs)
111
Syndicate Loan 35.40 11% 38.74 FD for Rs. 37.50 Lakhs
Bank against FD
Syndicate Vehicle 5.20 11% 1.51 22 EMI beginning
Bank Loan from Nov 05. EMI
is Rs. 25391.27
Syndicate Vehicle 1.86 11.25% 1.62 60 EMI beginning
Bank Loan from Nov 05. EMI
is Rs. 4023.65
Syndicate Honda 12.3 10.75% 11.23 Repayable 36 EMI
Bank Civic beginning from
Oct 06. EMI is
Rs. 41252.98 at
10.75%
Kotak Business 20.00 17% 12.42 24 EMI beginning Corporate Guarantee by Everonn
Mahindra Loan from June 06. EMI
Bank is Rs. 98883
Indian Term 657.00 10.25% 608.51 18 Qtrly Hypothecation of Jharkhand
Bank Loan Instalments project assets ,Hypothecation of
beginning from book debts arising out of
May 06. Instalment Jharkhand project & Personal
amt is Rs. 39.75 guarantee of Mr. P.Kishore
lakhs
Indian Over 58 10.25% 53.98 Repayable in 18 Hypothecation of Book Debts
Bank Draft Qtrly Installments arising out of Jharkand project
beginning from
May 06.
Installment amt is
Rs. 3.25 lakhs at
10.25%.
ICICI Bank Business 83.98 15% 83.98 Repayable in 36 Hypothecation of Book Debts
Loan months beginning arising out of ETS project
from April 2007 at
interest 14%.
Name of Facility Sanctioned Interest Outstanding Repayment Primary Collateral
the Bank Availed Amount as on Terms Securities Securities
(Rs in Lakhs) 31.3.2007 Offered Offered
(Rs in Lakhs)
112
Annexure - XI CAPITALISATION STATEMENT
Rs. In lakhs
Particulars Pre-Issue as at Post Issue *
31.03.2007
Borrowings:
Long-term Debt 2354.21 [•]
Total Debt 2354.21 [•]
Shareholder’s Funds :
Equity Share Capital 1027.82 [•]
Reserves and Surplus 2678.18 [•]
Total Shareholder’s Funds 3706.00 [•]
Long-term Debt/Equity ratio (%) 63.52% [•]
*Note: Share capital and reserves and surplus post issue can be ascertained only on conclusion of the book building process.
Annexure - XII STATEMENT OF TAX SHELTER
Particulars Year Ended March 31,
2007 2006 2005 2004 2003
Tax Rate% 33.66% 33.66% 36.59% 35.88% 36.75%
Mat Tax % 11.22% 8.42% 7.84% 7.69% 7.88%
Profit/Loss before tax as per
restated accounts 708.48 825.63 264.50 109.89 71.48
Tax at Notional Rate (A) 238.48 277.91 96.78 39.43 26.27
Adjustments:
Export Profits – – – – –
Difference between Tax
Depreciation and Book
Depreciation 257.68 638.81 (242.76) (60.95) 79.12
Other Adjustments 137.01 (5.22) - (2.50) 0.00
Net Adjustments 394.68 633.60 (242.76) (63.45) 79.12
Tax on above (B) 132.85 213.27 (88.83) (22.77) 29.08
Net Tax (C) = (A- B) 105.62 64.64 185.61 62.20 (2.81)
MAT (tax) (D) 79.49 69.48 20.74 8.45 5.63
New Tax payable
(C or D which is higher) 105.62 69.48 185.61 62.20 5.63
113
Annexure - XIII RELATED PARTY TRANSACTIONS
Year Ended March 31,
Particulars 2007 2006 2005 2004 2003
Associate Tourism Tourism Tourism Tourism Tourism
Company Resorts (P) Ltd. Resorts (P) Ltd. Resorts (P) Ltd. Resorts (P) Ltd. Resorts (P) Ltd.
Nature of Transaction Corporate Corporate Corporate Corporate Corporate
Guarantee in Guarantee in Guarantee in Guarantee in Guarantee in
favour of the favour of the favour of the favour of the favour of the
Company for Company for Company Company for Company for
Rs. 50 Lakhs Rs. 50 Lakhs for Rs. 50 Lakhs Rs. 50 Lakhs Rs. 50 Lakhs
towards towards towards Collateral towards Collateral towards
Collateral to Collateral to to obtain Term to obtain Term Collateral to
obtain Term obtain Term Loan Loan from Loan from obtain Term
Loan from from Syndicate Syndicate Bank. Indian Overseas Loan from
Syndicate Bank. Bank. Bank /Syndicate Indian
Bank. Overseas Bank.
Key Managerial Mr. P. Kishore Mr. P. Kishore Mr. P. Kishore Mr. P. Kishore Mr. P. Kishore
Personnel Mr. R. Kannan Mr. R. Kannan Mr. R. Kannan Mr. R. Kannan Mr. R. Kannan
Ms. Susha John Ms. Susha John Ms. Susha John Ms. Susha John Ms. Susha John
Remuneration to Rs. 5827760/- Rs. 4057200/- Rs. 2703890/- Rs. 2637400/- Rs. 2747000/-
Key Managerial
Personnel
Annexure XIV DETAILS OF CONTINGENT LIABILITIES
Rs. In lakhs
Particulars Year Ended March 31,
2007 2006 2005 2004 2003
Guarantees Given by
Banks on Behalf of the Company 318.79 321.45 285.43 217.98 217.98
Total 318.79 321.45 285.43 217.98 217.98
114
FINANCIAL INFORMATION OF GROUP COMPANIES
None of the Group/ Associate Companies mentioned hereinafter have become sick company within the meaning of
the Sick Industrial Companies (Special Provisions) Act, 1995 or is under winding up.
For Outstanding Litigations and Defaults of Other Group Companies / Ventures of the Promoters, please refer Para on
Outstanding Litigations and Defaults on Page 124.
GROUP / ASSOCIATE COMPANIES
1. TOURISM RESORTS PRIVATE LTD
The Company was incorporated as a Private Limited Company on January 9, 1990. The Company was promoted by
Mr. P. Kishore. The main object of the Company is to establish hotels, Motels, Restaurants Houses, Boat houses, Guest
Houses, Holiday Resorts and to develop tourism in general.
The authorized share capital of the company is Rs. 40,00,000/- comprising 4,000 equity shares of face value Rs 1,000/-
each and paid up share capital is Rs 6,50,000/- comprising of 650 equity shares of Rs.1,000/- each:
BOARD OF DIRECTORS AS ON MARCH 31, 2007
Sr. No Name Designation
1. Mr. P. K. Padmanabhan Managing Director
2. Mr. P. Sarvotham Director
SHAREHOLDING PATTERN AS ON MARCH 31, 2007
Name of the Shareholder No. of Shares % Holding
Mr P. Kishore 325 50%
Mr P. Sarvotham 325 50%
Total 650 100%
Brief Financial Performance
(Rs. in Lakhs)
Particulars For the year ended as at 31st March
2006 2005 2004
Sales 22.96 149.63 470.70
Equity Share Capital 6.50 6.50 6.50
Reserves (Excluding Revaluation Reserve) – – –
Net Worth (5.80) (5.98) (5.78)
EPS (FV Rs 1000) 27.69 (29.30) (816.92)
PAT 0.18 (0.20) (5.31)
NAV per share in Rs – – –
The Company does not fall under the definition of a sick company within the meaning of the Sick industrial Companies
(Special Provisions) Act, 1995 or is under winding up.
The Company has incurred losses for the financial year ended March 2005, 2004 as stated above.
There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for economic
offences against the Company and its Directors.
115
The Company has the following bank facilities:
Nature of facility/loan availed Name of financial Amount availed
institution/bank (Rs. in Lakhs)
Term Loan South Indian Bank 32.07
As on 5th July 2006, the Company has repaid the loan fully.
2. MISTAIR REALTYS PRIVATE LTD
The Company was incorporated as a Private limited Company on October 28, 2005. The Company was promoted by Mrs.
Jayalakshmi Padmanabhan and Mr. Kishore. The main object of the company is to design, build, own, operate, lease,
service and offer consultancy and support services for all types of projects like hotels, serviced apartments, housing
complexes, resorts, spas, water and sewage treatment plants, roads and ways, tourism & health related activities,
laboratories, malls, hospitals, town ships, amusement park, Multilpexes, IT parks, Bio-parks and educational research
institutions etc.
The authorized share capital of the Company is Rs. 10,00,000/- comprising 1,00,000 equity shares of face value
Rs. 10/- each and paid up share capital is Rs. 1,00,000/- comprising of 10,000 equity share of Rs.10 each:
Name of the Shareholders Number of equity shares % holding
Mrs. Jayalakshmi Padmanabhan 5,000 50%
Mr. P.Kishore 5,000 50%
Total 10,000 100%
THE BOARD OF DIRECTORS COMPRISES:
S. No Name of the Director Designation
1 Mrs Jayalakshmi Padmanabhan Managing Director
2 Mr P Kishore Director
BRIEF FINANCIAL PERFORMANCE
Since the Company has not commenced any business operations, no financials have been prepared.
BANK FACILITIES
The Company has not availed of any Bank facilities
3. Acorn Commodity Exchanges and Holdings Private Limited
The Company was incorporated as a Private limited Company on February 21, 2007. The Company was promoted by
Mr. P Kishore and Ms Keerthi Kishore. The main object of the company is to carry on the business dealing, selling, buying
and trading of Commodities through the Commodity exchanges in India.
The authorized share capital of the Company is Rs. 10,00,000/- comprising 1,00,000 equity shares of face value
Rs. 10/- each and paid up share capital is Rs. 1,00,000/- comprising of 10,000 equity share of Rs.10 each:
Name of the Shareholders Number of equity shares % holding
Mr. P.Kishore 5,000 50%
Ms Keerthi Kishore 5,000 50%
Total 10,000 100%
116
THE BOARD OF DIRECTORS COMPRISES:
S. No Name of the Director Designation
1 Mr P Kishore Director
2 Ms Keerthi Kishore Director
BRIEF FINANCIAL PERFORMANCE
Since the Company was incorporated in Feb 2007 and has not commenced any business operations, no financials have
been prepared.
BANK FACILITIES
The Company has not availed of any Bank facilities
4. CELEBRATEINDIA TOURISM LIMITED
The Company was incorporated as a Public limited Company on February 21, 2007. The Company was promoted by
Mr. P Kishore and Ms Keerthi Kishore. The main object of the Company is to promote the Tourism in India at a low cost,
at all the major tourist centres by way of building, promoting low cost affordable tourist accommodation, boarding and
lodging facilities in all the major towns and villages important tourist, heritage and pilgrimages centres.
The authorized share capital of the Company is Rs. 1,00,00,000/- comprising 10,00,000 equity shares of face value Rs.
10/- each and paid up share capital is Rs. 5,00,000/- comprising of 50,000 equity share of Rs. 10 each:
Name of the Shareholders Number of % holding
equity shares
Mr. P.Kishore 20,000 40%
Ms Keerthi Kishore 7,500 15%
Mr P K Padmanabhan 5,000 10%
Mrs Jayalakshmi Padmanabhan 5,000 10%
Mrs Jansi Kishore 7,500 15%
Mr P Sarvotham 4,000 8%
Mrs K V Meenakshi 1,000 2%
Total 50,000 100%
THE BOARD OF DIRECTORS COMPRISES:
S. No Name of the Director Designation
1 Mr P Kishore Director
2 Ms Keerthi Kishore Director
3 Mr P K Padmanabhan Director
BRIEF FINANCIAL PERFORMANCE
Since the Company was incorporated in Feb 2007 and has not commenced any business operations, no financials have
been prepared.
BANK FACILITIES
The Company has not availed of any Bank facilities
DISASSOCIATION BY THE PROMOTERS
None of the promoters have disassociated themselves from any of the companies/firms during three years except
Mr P Kishore, having resigned from M/s Tourism Resorts Private Limited as Director w.e.f April 16, 2006. However, he still
continues to hold shares in the Company.
117
STATEMENT IN TERMS OF CLAUSE 6.10.3.5 OF DIP GUIDELINES
There are no sales or purchase between Companies in the Promoters’ group, wherein such sales or purchases exceed in
value in the aggregate 10% of the total sales or purchases of the Issuer Company. The material items of income or
expenditure arising out of transactions in the Promoters’ group are disclosed under “Related Party Disclosures” as mentioned
under Annexure XIII of the Auditors’ Report appearing on page 113 of this Red Herring Prospectus.
CHANGE IN ACCOUNTING POLICIES IN THE LAST THREE YEARS
In order to follow the prudent accounting principles and based on our past experience, during the financial year 2006-07,
we have adopted change in depreciation policy i.e. for assets installed at and used in Government Projects by providing
depreciation over the number of years till the completion of the period of the contract and for the rest of the assets,
depreciation is provided on straight line method as per the rates prescribed in Schedule XIV of the Companies Act 1956.
SUNDRY DEBTORS
None of the Sundry Debtors are related to the Issuer Company or its Directors or Promoters.
118
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with financial
statements included in this Red Herring Prospectus. You should also read the section titled “Risk Factors” beginning on page
x of this Red Herring Prospectus, which discusses a number of factors and contingencies that could impact our financial
condition and results of operations.
The following discussions are based on restated financial statements for the financial year ended March 31, 2003; March 31,
2004; March 31, 2005; March 31, 2006 and March 31, 2007 which have been prepared in accordance with Indian GAAP, the
Companies Act and the SEBI (DIP) Guidelines and on information available from other sources.
The Directors confirm that there have been no events or circumstances since the date of the last financial statements which
materially and adversely affect or are likely to affect the profitability of the Company or the value of its assets or its ability to pay
its liabilities within the next twelve months.
Overview
Everonn Systems India Limited was promoted as a Public Limited Company on 19th April 2000 in the State of Tamil Nadu
under the Companies Act, 1956
We are a fully integrated Knowledge Management, Education and Training company offering a range of services viz creating
knowledge resources, designing and delivering Learning and training programs and setting up infrastructure and delivery
platform for enabling the same.
We are a Lead partner of Hughes Escorts Communication Ltd (HECL) (now Hughes Communication India Ltd) for Hughes Net
(Direcway) Interactive learning where Management courses are offered.
We are developing and integrating content for Indian and global audience in the school, college, corporate and retail space.
We are an ISO 9000-2001 certified company and is a winner of National level computer literacy excellence awards and best
center awards from HECL for the last three years.
We have two Strategic Business Units (SBUs) viz.,
I. Institutional Education and Infrastructure Services and
II. Virtual and Technology Enabled Learning Solutions.
SBU I: Institutional Education and Infrastructure Services
This Division concentrates in,
• Setting up IT Education Infrastructure in institutions viz Schools and colleges and delivering IT education in Schools
• Offering Turnkey Education and software Solutions.
SBU II: Virtual and Technology Enabled Learning Solutions
ViTELS focuses on providing specialized content through an Interactive remote delivery mechanism
The target audiences are
• Institutions especially Colleges and Schools
• Working Professionals
• Corporates
Management Education from Premier Institutes on Hughes Net Platform is offered in ten centers.
Virtual learning through Zebra Kross and HughesNet is extended to 115 centers currently.
We are one of the leading providers of technology enabled education solutions for the K-12 (Kindergarten to Class 12)
institutions in the country. We are present across 13 states in the country through our Institutional IT Education and Virtual &
Technology Enabled Learning Solutions.
We started our business operations by capitalizing the Computer’s growing power and relevance in enhancing and aiding the
educational process right from the formative years of schooling. We first set up computer centres in a few of the prestigious
residential schools of Ooty, in the Nilgiri hills of Tamilnadu under the BOOT model - at a time when computers had just come
119
into the market and computers were taught only in State Engineering colleges. The success of the program enabled us to take
this Education model across Government Schools in Tamilnadu and other States in India.
Significant Developments after March 31, 2007 that may affect our future Results of Operations
In compliance with AS 4, to our knowledge no circumstances have arisen since the date of the last financial statements as
disclosed in the Red Herring Prospectus which materially and adversely affect or are likely to affect, the trading and Profitability
of the Company, or the value of our assets or their ability to pay their material liabilities within the next 12 months.
Factors that may affect Results of the operations
􀂾 Changes in Government spending policies on Education.
􀂾 Competition
􀂾 VITELS being a new concept, acceptance of the same by students.
􀂾 Borrowing Capacity
􀂾 Change in Hardware costs.
COMPARATIVE ANALYSIS OF FINANCIAL CONDITIONS & RESULTS OF OPERATIONS
Rs. In lakhs
PARTICULARS Year Ended March 31
2007 2006 2005 2004 2003
Income :
Education and training income 4,033.98 2813.87 1942.94 1616.42 1601.54
Sale of hardware 270.49 279.15 0.00 0.00 0.00
Other Income – 0.01 0.01 – –
Total Income 4304.46 3093.03 1942.95 1616.42 1601.54
Expenditure:
Manpower 758.96 527.85 443.20 380.53 399.85
Education and training expenses 1,759.56 1100.09 458.65 376.92 427.33
Deferred revenue expenditure 22.65 27.60 44.95 41.80 41.80
Total expenditure 2,541.16 1,655.54 946.79 799.25 868.98
Earnings before interest,
depreciation & tax 1,763.30 1,437.48 996.16 817.18 732.56
Interest and finance charges 233.99 155.49 143.96 180.37 171.97
Depreciation & amortisation 844.35 456.36 587.69 526.91 489.11
Less: Overheads transferred
to fixed assets (23.52) – – – –
Earnings before tax and extra
ordinary items 708.48 825.63 264.50 109.89 71.48
Provision for taxation
Current tax 105.63 69.48 20.74 8.45 5.63
Deferred tax 104.21 254.72 92.63 40.85 25.01
Fringe benefit Tax 13.00 10.50 – – –
Profit before extra ordinary items 485.64 490.93 151.13 60.59 40.84
Extra ordinary items 0.00 0.00 0.00 0.00 0.00
Adjustment on account of prior
period Items 0.00 0.00 0.00 0.00 0.00
Adjusted net profit 485.64 490.93 151.13 60.59 40.84
120
Comparison of FY 2007 with FY 2006
Income:
Our Income has risen by 39.16% to Rs. 4304.46 Lakhs in FY 2006-07 from Rs. 3093.03 Lakhs in FY 2005-06. The increase in
revenue was due to new contracts like Jharkhand and Delhi that were added only during the last quarter of FY 2005-06, being
operational for the full year in FY 2006-07. In addition, the projects at Goa and Andaman also had full year of operations during
FY 2006-07 as against FY 2005-06 during which they were operational only from the second half.
Further, new contract acquired from Government of Karnataka during the last quarter of FY 2006-07 has also contributed to
the growth in revenue.
Income has gone up as number of colleges under ViTELS division has increased significantly coupled with launching of new
courses. We have also generated additional revenue by leasing out our studio infrastructure. We also generated some revenue
from the sale of hardware to a corporate house. During the year, we have also entered into tie ups’ with Education Testing
Services (ETS) to conduct TOFEL & GRE tests.
Expenditure
Manpower Costs
Our manpower cost has increased by 43.78% to Rs. 758.96 Lakhs in FY 2006-07 from Rs 527.85 lakhs in FY 2005-06. The
increase was due to full year of operations in the contracts like Jharkhand, Delhi, Goa and Andaman. The rise was also due to
the induction of additional manpower to support our Virtual Learning initiatives. As per the contract, minimum of two faculties
for each school need to be provided by us together with the supervisory team including head of operations for each state.
There are about 1550 faculties supervised by about 60 co-ordinators guided by 4 Managers. Besides, there was an average
hike of 15% in the existing salaries. Increase in the number of colleges has also resulted in increase in manpower cost.
Education and Training Expenses
Education and Training expenses constitutes Course execution and delivery expenses and administration and other expenses.
Education Training Expenses increased by 59.95% to Rs. 1759.56 Lakhs in FY 2006-07 from Rs. 1100.09 in FY 2005-06. Due
to expansion of the points of presence, we have seen an increase across all Education and Training Expense.
Operating Margin (EBIDTA)
Operating Profits has risen by 22.67% to Rs. 1763.30 Lakhs in FY 2006-07 as against Rs. 1437.48 Lakhs in FY 2005-06 due
to strong increase in revenues. However, the EBIDTA margins have dropped to 40.64% in FY 2006-07 from 46.47% in FY
2005-06. A major contributor to the 550 basis point drop was the entire infrastructure cost pertaining to Karnataka Government
Schools’ contract being charged to revenue. Further, EBIDTA margins was under pressure as many of the new initiatives
taken under ViTELs division like opening of corporate initiatives, placement division to support the colleges and new school
division have been charged off to revenue as per Accounting Standard – 26. The margin on the sale of hardware has also
dwindled during FY 2006-07 which also had an impact on EBIDTA margins.
Interest Cost
We have also experienced an increase in our interest cost and financial charges, which was Rs. 233.99 Lakhs in FY 2006-07
as against Rs. 155.49 in FY 2005-06. The increase of 50.48% in interest cost and finance charges was due to the rising
interest rates during the current financial year and delays in receivables from the Government. The increase in the number of
points of presence and their geographical dispersion has also led to an increase in bank charges due to higher fund transfer
costs.
Depreciation
The depreciation has risen by 85% to Rs. 844.35 Lakhs from Rs. 456.36 Lakhs in FY 2005-06. The increase in depreciation
cost is attributed to the depreciation of assets of Government contracts viz Delhi, Goa, Jharkhand and Andaman& Nicobar
Islands that have been provided with full year of depreciation as against earlier years where they were operational only during
the later part of the year.
Profit after tax (PAT)
PAT has declined to Rs. 485.64 lakhs in FY 2006-07 from Rs. 490.93 lakhs in FY 2005-06. The 1.08% decline was due to the
additional operating expenditure and the increased depreciation during FY 2006-07.
Increase in Debtors: Debtors have increased from Rs 1734.50 lakhs in 2005-06 to Rs 2796.50 lakhs in 2006-07. This increase
was mainly due to addition of new contracts from Karnataka and West Bengal Governments amounting to Rs 733 lakhs.
121
Comparison of FY 2006 with FY 2005
Income
Our income in FY 2005-06 rose to Rs. 3093.03 Lakhs from Rs. 1942.95 Lakhs in FY 2004-05. This 59.19% increase in income
was primarily due to new contracts executed during the second half of FY 2005-06 in Goa, Jharkhand, Delhi, Andaman and
Uttar Pradesh. The ViTELS division also witnessed a full year of operations in FY 2005-06. The revenues from this division
were far higher during FY 2005-06 as compared to FY 2004-05 since the ViTELS division commenced operations during the
later half of FY 2004 – 2005.
Expenditure
Manpower
The manpower cost increased by 19.10% to Rs. 527.85 Lakhs in FY 2005-06 from Rs. 443.20 Lakhs in FY 2004-05. The
increased cost was due to additional manpower recruited for the new contracts for IT Education in schools with State
Governments like Goa, Jharkhand and Uttar Pradesh. Further ViTELS division saw an increase in number of personnel due to
full year of operation during FY 2005-06 as compared to half year operation of FY 2004-05.
Education & Training Expenses:
There was a significant increase in the Education and Training Expenses, by 139.85% to Rs. 1100.09 Lakhs in FY 2005-06
from Rs. 458.65 Lakhs in the FY 2004-05. The primary reason for the rise in expenditure during FY 2005-06 was the increase
in bandwidth charges because of a full year of operations for the ViTELS division. Further, course material cost supporting our
government contracts has also gone up with an increase in the number of students due to the new contracts in Goa, Delhi,
Jharkhand, Andaman, Uttar Pradesh. Our contract model in Uttar Pradesh does not involve any investment but the cost of
educational training is higher. We also incurred additional expenditure on the development of course material for students who
undergo Everonn courses in the colleges under ViTELS division. Further, increase in fee and revenue share paid out to
content partners and franchisee’s contributed to the increase in education and training expenses.
EBIDTA:
Operating profits grew by 44.30% to Rs. 1437.48 Lakhs in FY 2005-06 from Rs. 996.16 Lakhs in FY 2004-05. However, our
Operating Margin declined to 46.47% in FY 2005-06 from 51.27% in FY 2004-05. The 480 bps drop in operating margins was
due to negligible margins from the sale of hardware that is far lower than margins from our core business as well as contract
models such as UP.
Depreciation
Depreciation during FY 2005-06 declined to Rs. 456.36 Lakhs from Rs. 587.69 lakh. The reduction was due to the transfer of
assets from Elcot Project back to the schools.
Interest and Finance Charges
There was no significant change in the interest and finance charges incurred by us during FY 2005-06. It stood at Rs. 155.49
lakh in FY 2005-06 as compared to Rs. 143.96 lakh in FY 2004-05 since a significant increase in the loans took place only
during the last quarter of FY 2005-06. Besides, we have also enjoyed interest savings due to contract model adopted in UP.
Profit after Tax (PAT):
There has been a significant increase in PAT by 224.83% to Rs. 490.93 Lakhs in FY 2005-06 from Rs. 151.13 Lakhs in FY
2004-05. PAT has gone up due to increase in overall income by 59.19% and a reduction in depreciation caused by transfer of
the Elcot project assets back to the schools. Further, in some school contract projects, there was no need for investment that
resulted in saving of both interest and depreciation for us thereby having a positive impact on our PAT.
Increase in Fixed Assets: There was an increase in Fixed Assets from Rs 1493.35 lakhs in FY 2004-05 to Rs 3203.82 lakhs
in FY 2005-06, the same was on account of purchase of Computer equipments, furniture & fixtures for projects implemented
in the states of Goa, Jharkhand, Delhi for 206, 273 and 250 schools respectively.
Increase in Debtors: Debtors constitute mainly dues from various state Governments and institutions. The increase in debtors
from Rs 806.78 lakhs as on 31.03.05 to Rs 1734.50 lakhs as on 31.03.06 was due to increase in business and due to new
contracts implemented for the first time in Delhi, Goa and Jharkhand during last quarter of FY 2005-06 which resulted in
increase in debtor of Rs 712.26 lakhs coupled with increase in receivables from AP State Government.
Increase in Inventories: The increase in inventory from Rs 11.08 lakhs in FY 2004-05 to Rs 26.59 in FY 2005-06 was on
account of fresh purchase of VSAT Equipments.
122
Comparison of FY 2005 with FY 2004
Income:
The total income for the FY 2004-05 increased by 20.20% to Rs. 1942.95 Lakhs from Rs. 1616.42 Lakhs in FY 2003-04. We
have also generated some income from the ViTELS division which commenced operations during the second half of FY 2004-
05.
Expenditure
Manpower Cost
Manpower cost went up by 16.46% to Rs. 443.20 Lakhs in FY 2004-05 from Rs. 380.53 Lakhs in FY 2003-04. Our manpower
cost structure did not see any significant change during FY 2004-05. A part of this increase was due to addition in personnel
in the ViTELS division.
Education and Training Expenses:
Education and Training Expenses rose by 21.68% to Rs. 458.65 Lakhs in FY 2004-05 from Rs. 376.92 in FY 2003-04.
Education and Training Expenses increased almost in proportion to the revenue since there was no major change in our
operational cost structure. However, we incurred additional bandwidth and consultancy charges for setting up studios to
support our new ViTELS division in the second half of 2004-05.
EBIDTA:
Our Operating profits grew by 21.90% to Rs. 996.16 lakhs in FY 2004-05 from Rs. 817.18 lakhs. Our EBIDTA margins for FY
2004-05 was 51.27% which was marginally better than 50.55% earned in FY 2003-04. Our EBIDTA growth during FY 2004-05
was in line with the growth in revenues.
Depreciation:
Depreciation increased by 11.53% to Rs. 587.69 Lakhs in FY 2004-05 from Rs. 526.91 Lakhs in FY 2003-04. Depreciation
cost increased due to additions made to infrastructure for setting up a Studio to support the ViTELS division.
Interest and Financial Charges
Interest Cost decreased by 20.18% to Rs. 143.96 Lakhs in FY 2004-05 from Rs. 180.37 in FY 2003-04. The reduction in
interest cost was due to the repayment of significant portion of a higher interest loan taken for ELCOT contract with Tamil Nadu
Government. The overall secured loans increased due to fresh loan availed during the second half of 2004-05 for setting up
infrastructure for ViTELs division.
PAT
PAT stood at Rs 151.53 Lakhs in FY 2004-05 compared to Rs 60.59 Lakhs in FY 2003-04. This represents an increase of
149.43% over the previous financial year. The significant increase in PAT was due to Post School Business (PSB) with the
Government schools under contract. The PSB has significantly higher margin since it utilizes the existing infrastructure deployed
at Government schools i.e. no fresh investment is required. Further savings in interest cost also contributed to the rise in PAT.
Comparison of FY 2004 with FY 2003
Income:
The total income increased by a marginal 0.93% to Rs. 1616.42 lakhs in FY 2003-04 from Rs. 1601.54 lakhs in FY 2002-03.
Income was static since no fresh contracts were added during FY 2003-04.
Expenditure
Manpower Cost
Manpower costs decreased by 5.07% to Rs. 380.53 lakhs in FY 2003-04 from Rs. 399.85 lakhs in FY 2002-03. There was no
significant increase in manpower during FY 2003-04 since the business remained static.
Education and Training Expenses
We managed to bring about a significant decrease in operating expenses which fell by 11.79% to Rs. 376.92 lakhs in
FY 2003-04 from Rs. 427.33 lakhs in FY 2002-03 by adopting stringent cost control measures.
EBIDTA
Operating Profit increased by 11.55% to Rs. 817.18 lakhs in FY 2003-04 from Rs. 732.56 lakhs in FY 2002-03. EBIDTA
margins also improved to 50.55% in FY 2003-04 as against 45.74% in FY 2002-03. Increase in operating profits and improvement
in EBIDTA margins was due to significant savings made by us in manpower and operational costs.
123
Interest and Financial Charges
The interest and financial charges has seen a marginal rise to Rs. 180.37 lakh in FY 2003-04 as compared to Rs. 171.97 lakh
in FY 2002-03
Depreciation:
Depreciation has increased by 7.73% to Rs. 526.91 Lakhs in FY 2003-04 from Rs. 489.11 Lakhs in FY 2002-03.
PAT:
PAT has increased by 48.36% to Rs. 60.59 Lakhs in FY 2003-04 from Rs. 40.84 in FY 2002-03. PAT has increased due to
savings in manpower cost and in education and training expenses, as a result of better cost control mechanism brought in
during the period of operation.
INFORMATION REQUIRED AS PER CLAUSE 6.10.5.5 OF SEBI DIP GUIDELINES
Unusual or infrequent events or transactions
There are no unusual or infrequent events or transactions that have significantly affected our business.
Significant economic changes that materially affected or are likely to affect income from continuing operations:
The applicability of service tax in many areas like Bandwidth, Fees collection in Colleges, Schools, etc has increased our cost.
Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or
income from continuing operations
Delay in tender finalisation / release of Letter of Intent by the Government department will have adverse effect on our revenue.
Future changes in relationship between costs and revenue, in case of events such as future increase in labour or
material costs or prices that will cause a material changes are known
Our contracts are usually for a period of 4 / 5 years. Abnormal increase in employee costs will affect the profitability.
The extent to which material increases in net sales or revenue are due to increased sale volumes, introduction of new
products or services or increased sales prices
Sales have increased due to increase in number of contracts and increase in sign up of colleges under VITELS segment.
Total turnover of each major industry segment in which the Company operated
We being in a service industry, the same is not applicable.
Status of any publicly announced new products or business segment
We have launched curriculum programs in schools for classes IX and X. In the college segment, Placement Support Program
have been initiated.
The extent to which business is seasonal
Our business is closely linked to the academic cycle wherein a large part of revenue is accrued during the second and forth
quarter of the financial year. The summer vacation is considered to be a lean period. However, we try to make best use of the
period by launching various short term courses.
Any significant dependence on a single or few suppliers or customers
In the contract segment, previously our main share of revenue was from ELCOT, Tamilnadu Government. However, we have
spread geographically and now we have new contracts in Jharkhand, Goa, Delhi, Uttar Pradesh and Andaman and Nicobar.
Under the VITELs segment, with regard to Direcway, we are dependent on Hughes Communication India Ltd towards the
revenue. However the total revenue share is not significant to overall revenue of the Company. The percentage share is
approximately 3% of the total revenue.
Competitive conditions
We are one of the pioneers as far as VITELS segment is concerned. There is no significant competition currently. In the
Institutional Contract segment, there are only few players like NIIT, Aptech and Educomp at National level. However, the
opportunity is large and our competitiveness in terms of price, efficiency and quality would be a differentiator.
124
SECTION VI: LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENT
The Company certifies that except as mentioned herein below there are no:
• Pending litigations against the company.
• Outstanding litigations, defaults etc pertaining to matters likely to affect operations and finances of the company including
prosecution under any enactment in respect of Schedule XIII of the Companies Act 1956 (1 of 1956).
• Such cases of pending litigations, defaults etc in respect of Companies/firms/ventures with which the promoters were
associated in the past but are no longer associated, and their names continue to be associated with particular litigation
except as mentioned under the heading Outstanding Litigation of the Promoter/Director/Group Companies
• Disciplinary action/ investigation has been taken by Securities and Exchange Board of India (SEBI)/ Stock Exchanges
against the Company, its directors, promoters and their other business ventures (irrespective of the fact whether or not
they fall under the purview of section 370(1B) of the Companies Act 1956.
• Cases against the Company or its Promoters of economic offences in which penalties were imposed on promoters.
• Pending litigations, defaults, non payment of Statutory dues, proceedings initiated for economic offences/civil offences,
any disciplinary action taken by the Board /Stock Exchanges against the Company/Promoters and their business ventures/
Directors other than those mentioned in this Draft Prospectus and that no litigations have arisen after the issue of SEBI’s
Observation letter and the Company and its Directors take full responsibility of the information mentioned in the Prospectus.
• Promoters, their relatives (as per Companies Act, 1956), Issuer, Group Companies, Associated Companies are detained
as willful defaulters by RBI/Government Authorities.
• Violations of Securities Laws committed by the Promoters, their relatives (as per Companies Act, 1956), Issuer, Group
Companies, Associated Companies in the past or pending against them.




There are many more questions that should be asked about TEFL International.


Why does a not for profit company make a referral to FOR PROFIT company owned by the same person or his wife?

Please see the screen cap below:


+by+same+people.jpg" border="0" alt=""id="BLOGGER_PHOTO_I


Why is TEFL International registered in Thailand as a for profit business with the owners wife holding the major partnership?


Many questions remain, this should be more than enough to get started.