Zen Technologies.

8/10/2019 Zen Technologies.

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Draft Prospectu

ZEN TECHNOLOGIES LIMITED

(Originally incorporated on June 29, 1993 under the Companies Act, 1956 as

Zen Technologies and Computers Limited and renamed as

Zen Technologies Limited with effect from February 22, 1995 )

Registered Office:

Plot No. 40, Radhaswamy Colony, Sikh Road,Secunderabad-500 009, Andhra Pradesh, India.

Tel no.: 91-(40)-7843279/7818534;Fax no.: 91-(40)7843279 E-mail: [email protected]

Public Issue of 19,10,000 equity shares of Rs.10/- each for cash at par

aggregating Rs. 1,91,00,000

RISK IN RELATION TO THE FIRST ISSUE

This being the first issue of Zen Technologies Limited, there has been no formal market for the equity shares of Zen Technologies Limited. The Issu

price should not be taken to be indicative of the market price of the equity shares after the shares are listed. No assurance can be given regarding a

active or sustained trading in the equity shares of Zen Technologies Limited nor regarding the price at which the equity shares will be traded aftelisting. The present growth rates and valuation in the IT sector may not be sustained in future.

GENERAL RISK

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this issue unless they can afford t

take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. Fo

taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities hav

not beenrecommended or approved by Securities and Exchange Board of India nor does the Securities and Exchange Board of India guarantee th

accuracy or adequacy of this document. The attention of investors is drawn to the statement of Risk Factors appearing on Page No III of th

Prospectus.

ISSUERS ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Prospectus contains all information with regard to the

Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Prospectus is true and correct in all materia

respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no othe

facts, the omission of which makes this document as a whole or any of such information or the expression of any such opinions or intentions misleadin

in any material respect.

LISTING

The existing equity shares and equity shares being offered through this Prospectus are proposed to be listed on The Hyderabad Stock Exchange

Limited (Regional Stock Exchange).

LEAD MANAGERS TO THE ISSUE

Industrial Development Bank of India

IDBI Tower, WTC Complex,

Cuffe Parade, Mumbai 400 005

Telephone no.: (022) - 2189111

Fax no.: (022) -2181195

REGISTRARS TO THE ISSUE

Karvy Consultants Limited

Karvy House, 46, Avenue 4,

Street No 1, Banjara Hills

Hyderabad-500 034

Tel:040-3312454,3320251/751/752

Fax-040-3311968

email:[email protected].


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vsnl.net.in

ISSUE OPENS ON: .......................,2000

ISSUE CLOSES ON:.........................,2000

Table of Contents

Definitions and Abbreviations *

RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF*

HIGHLIGHTS *

A. PART I *

1. GENERAL INFORMATION *

II. CAPITAL STRUCTURE OF ZEN TECHNOLOGIES LTD *

III. TERMS OF THE PRESENT ISSUE *

IV. PARTICULARS OF THE ISSUE *

V. COMPANY, MANAGEMENT AND PROJECT *

VI. FINANCIAL PERFORMANCE OF THE COMPANY FOR THE LAST FIVE YEARS *

VII.FINANCIAL PROJECTIONS *

VIII. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF THE LAST FINANCIAL YEAR OF ZEN TECHNOLOGIES LTD *

IX. PARTICULARS OF ISSUES MADE BY COMPANIES UNDER THE SAME MANAGEMENT IN THE LAST THREE YEARS

............................................................................................................................49

X. OUTSTANDING LITIGATIONS, DEFAULT AND MATERIAL DEVELOPMENTS *

XI.RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF *

B. PART - II *

A. GENERAL INFORMATION *

B. AUDITORS REPORT *

C. STATUTORY AND OTHER INFORMATION *

D. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION *

E. MATERIAL CONTRACTS A ND DOCUMENTS FOR INSPECTION *

PART III *

DECLARATION *

Definitions and Abbreviations

Act The Companies Act, 1956

Articles The Articles of Association of Zen Technologies Limited

BDL Bharat Dynamics Ltd.

Board Board of Directors of Zen Technologies Limited

CDSL Central Depository Services (India) Limited
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DSIR Department of Scientific & Industrial Research

EPS Earnings Per Equity Share

HSE The Hyderabad Stock Exchange Limited

Issue Public Issue of 1910000 equity shares of Rs. 10/- each for cash at par

Issuer or Company or

ZTL

Zen Technologies Limited

IT Act Income Tax Act, 1961

MOU Memorandum of Understanding

Memorandum Memorandum of Association of Zen Technologies Limited

NRIs Non-Resident Indians

NSDL National Securities Depository Limited

PAN Permanent Account Number

Prospectus Prospectus issued by Zen Technologies Limited

RBI Reserve Bank of India

NOC No Objection Certificate

APTRANSCO Andhra Pradesh State Transmission Corporation

PCB Pollution Control Board

Registrars Registrars to the Issue

ROC Registrar of Companies, Andhra Pradesh at Hyderabad

SEBI Securities and Exchange Board of India

SIA Secretariat of Industrial Approval

RISK FACTORS AND MANAGEMENT PERCEPTIONS THEREOF

INTERNAL

1. The company has availed of rupee term loan of Rs.100 lakhs from IDBI out of which an amount of Rs.47.08 lakhs is outstanding as on January

01, 2000. At the option of IDBI, the loan is convertible into equity shares at par during the currency of the loan. Conversion of loan into equity

would result in dilution of equity capital.

Management Perception:This is a standard condition being stipulated by IDBI in all cases where assistance under Venture Capital Schem

is sanctioned. The above loan is likely to be fully repaid by January 01, 2002. The quantum of loan being small, conversion thereof is unlike thave any major dilution in the equity capital of the company.

2. For its proposed expansion project, the company has yet to

identify the premises

place orders for some of the items of plant & machinery

recruit suitable personnel

apply to APTRANSCO for power connection

obtain NOC from Pollution Control Board ( PCB )


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identify the overseas marketing office

Management Perception: The company is presently operating from leased premises and the product development work is already i

progress. The new premises are being acquired in order to have a well laid out integrated facility. The delay in acquisition of new premises

unlikely to have any significant impact on the product development work. The company has already placed orders for some of the items of plan

& machinery and orders for the rest of the items are proposed to be placed shortly. The company shall recruit suitable personnel at the

appropriate time. For product development, the company is using the services of existing personnel. The company shall take necessary steps fo

obtaining power connection and NOC from PCB at the appropriate time. As regards overseas office, the company has decided to open it

marketing office at London and is taking suitable steps in this regard.

1. The company has yet to receive the grant of Rs 60 lakh from DSIR for the proposed project. Non receipt/delay in receipt of the grant is likelyto impact the cost of the project and its timely implementation.

Management Perception : The company has already applied for the above grant and is confident of getting the same. In the unlikely event o

non receipt of grant, the shortfall would be met from additional contribution from promoters by way of unsecured loans. In view of the low deb

equity, company also has the option to borrow the amount.

2. The implementation of the original project of the company was delayed by about one year and commercial production commenced only in Apr

1998 as against April 1997 originally envisaged .

Management Perception:Implementation of the venture was delayed due to delay in obtaining orders for its products.

3. The company was granted reschedulement of principal, waiver of penal interest, liquidated damages, other charges, etc. by IDBI due to delay

implementation of the project.

Management Perception:There has been no change in the terminal date of repayment schedule of the principal installments. The compan

has no overdues to IDBI as on date.

4. The new products being developed by the company are still at preliminary stage and the commercial acceptability of the same is not known.

Management Perception: These products are being developed by the company based on the feedback received from the existing/prospectiv

customers. The company is confident about the commercial acceptability of these products.

5. There is expected to be a delay of about 3 months in implementation of the proposed expansion project. Delay in implementation of the projec

might to result in cost overrun and since the promoters are first generation promoters, the company may have to resort to borrowings for

meeting any major cost overrun.

Management Perception : Delay in implementation of the project is unlikely to have any major impact on the operations of the company sincthe product development work has already commenced at the existing premises. The company has comfortable debt equity ratio and can resor

to borrowings, if required, for meeting the cost overrun.

6. As the company's products are based on high-end technology, very high rate of obsolescence due to technological changes is likely to affect

company's operations.

Management Perception : The companyis consciousof the above risk and intends to upgrade the technology on a continuous basis.

7. The highly technical nature of the work makes the company dependent on its key personnel.

Management Perception : The company has been promoted by qualified promoters. The company has well defined Human Resourc

Development policies laying emphasis on career planning/development of the key management personnel by providing market relate

perquisites, incentives etc. The company does not envisage any major difficulty on this account.

8. The project has been appraised by IDBI and IDBI has agreed to subscribe to the equity capital of the company to the extent of Rs.100 lakhs.

However, the subscription amount is yet to be released.

Management Perception : The company is likely to enter into a subscription agreement shortly and does not envisage any difficulty i

obtaining the subscription.

9. The Book Value of company's equity share of Rs.10 each stood at Rs.8.02 per share as on February 15, 2000.

Management Perception : This was mainly on account of Misc. expenses not written off to the extent of Rs.112.85 lakhs representing the

& D and market development expenses which the company proposes to write off over a period of 10 years.

10. The company has yet to receive approval from competent authority for patenting of its Zen SATS.


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Management Perception :The company has already applied for the patents of its Zen SATS and is confident of getting the approval o

competent authorities.

11. Company's original project, which involved more than the normal risk, was sanctioned assistance by IDBI under its Venture Capital Scheme.

Management Perception :The company has completed the project and the product viz. Zen SATS has been successfully developed.

12. Company has been supplying its products to Government departments/agencies. The receipt of orders/dues from these departments/agencies

depends on the budgetary allocation/ availability of funds.

Management Perception :The company has been able to procure orders and recover its dues. No difficulty is envisaged by the company

this regard.

External

1. Competition from imports and future entrants into the software industry.

Management Perception: The Company has a track record of timely execution of the orders. The company proposes to upgrade it

products by incorporating latest advancements in the technology to stay ahead of its competitors

2. The present growth rates in the software industry are high and are not sustainable.

Management Perception:The Company has a niche market with sufficient growth potential

3. Any adverse change in the Government Policies towards the Software industry may affect the financial performance of the Company.

Management Perception:The company feels that govt. policies are unlikely to be detrimental to the interest of software industry.

Notes:

1. Investors are advised to refer to the paragraph on "Basis of Issue Price" appearing later in this Prospectus before making an investment decisio

in respect of this issue.

2. Investors are advised to refer to "Notes to Accounts" appearing on Pages 40, 42-44 before making an investment decision in respect of this

issue.

3. Investors may please note that in the event of over-subscription, allotment shall be made on a proportionate basis in consultation with The

Hyderabad Stock Exchange Limited, i.e. the Regional Stock Exchange.

4. The promoter directors do not have any business interest in Zen Technologies Ltd. except to the extent of sitting fees and remuneration, if any,

payable to them. The promoters will be interested to the extent of dividend paid on shares held by them and their relatives and friends and to th

extent of allotment of shares, if any, to their friends and relatives in the public issue.

HIGHLIGHTS

1. Existing profit making company engaged in manufacture of high-end multimedia weapons simulator used for training of police, paramilitary and

armed forces.

2. Promoted by qualified and experienced professionals.

3. Company has satisfied client base of state police organisations and paramilitary organisations, some of which are placing repeat orders for the

existing range of products.

4. Research & Development Center of the company recognised as in-house R & D unit by Department of Scientific & Industrial Research.

5. Project appraised by IDBI.

6. Equity participation to the extent of Rs.100 lakhs from IDBI for the proposed project.

7. Listing of equity shares proposed on Hyderabad Stock Exchange.

ZEN TECHNOLOGIES LIMITED

(Originally incorporated on June 29, 1993 under the Companies Act, 1956 as

Zen Technologies and Computers Limited and renamed as


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Zen Technologies Limited with effect from February 22, 1995 )

Registered Office:

Plot No. 40, Radhaswamy Colony, Sikh Road,Secunderabad-500 009, Andhra Pradesh, India.

Tel no.: 91-(40)-7843279/7818534;Fax no.: 91-(40)7843279 E-mail: [email protected]

A. PART I

1. GENERAL INFORMATION

Zen Technologies Limited is offering for subscription 19,10,000 equity shares of Rs.10/- each for cash at par aggregating Rs.1.91 crore.

CORPORATE STATUS

Zen Technologies Limited was originally incorporated on June 29, 1993, in the name of Zen Technologies and Computers Limited. The name of th

Company was subsequently changed to Zen Technologies Limited with effect from February 22, 1995 pursuant to Sections 21/22(1)(e)/22(1)(b) o

the Act.

AUTHORITY FOR THE PRESENT ISSUE

The present issue of equity shares is being made pursuant to the resolution of the Board of Directors of the Company passed at its meeting held o

September 27, 1999. In terms of Section 81(1-A) of the Act, the present public issue of equity shares has also been authorized vide a Specia

Resolution passed at the Extra-ordinary General Body Meeting of the members of Zen Technologies Ltd held on October 20, 1999.

GOVERNM ENT CLEARANCE

The company has already obtained SIA acknowledgement for manufacture of simulators vide letter No.4442/SIA/IMO/94 dated December 19, 199

from Department of Industrial Development, Ministry of Industry, Govt. of India. It may be distinctly understood that by acknowledging th

application of the company, Govt. of India does not certify the accuracy or completeness of this Prospectus and such acknowledgement should not b

construed as endorsement by Govt of India about the viability of the project.

The company has yet to apply for NOC from Pollution Control Board as also apply for power connection from APTRANSCO. The Company doe

not require any other permission and / or approval from the Government of India and / or its various agencies and / or RBI for proceeding with the

expansion project except from RBI, for setting up overseas branch / marketing office and from the local authorities of the concerned country / state

Except as otherwise stated in this Prospectus, no further approval from any Government Authority / RBI is required by the Company to undertake th

project, save and except those approvals, which may be required to be taken in the normal course of business from time to time.

DISCLAIMER CLAUSE

As required, a copy of this Prospectus has been submitted to the Securities and Exchange Board of India (hereinafter referred to a

SEBI). It is to be distinctly understood that the submission of the Prospectus to SEBI should not, in any way, be deemed or construe

that the same has been cleared or approved by SEBI. SEBI does not take any responsibility either for the financial soundness of any

scheme or the project for which the issue is proposed to be made, or for the correctness of any of the statements made or opinion

expressed in the Prospectus. Lead Manager, Industrial Development Bank of India has certified that the disclosures made in the

Prospectus are generally adequate and are in conformity with SEBI guidelines for Disclosure and Inves tor Protection for the time bein

in force. This requirement is to facilitate investors to take an informed decision for making investment in the proposed issue. It shoul

also, be clearly understood that, while the Issuer is primarily responsible for the correctness, adequacy and disclosure of all relevan

information in the Prospectus, the Lead Manager is expected to exercise due diligence to ensure that the Company discharges it

responsibility adequately in this behalf and towards this purpose, the Lead Manager, Industrial Development Bank of India ha

furnished to SEBI a Due Diligence Certificate dated March 30,2000 in accordance with SEBI (Merchant Bankers) Rules, 1992 an

SEBI (Merchant Bankers) Regulations, 1992, which reads as follows :

"(1) We have examined various documents including those relating to litigation like commercial disputes, patent disputes, disputes wit

collaborators etc. and other materials in connection with the finalization of the Prospectus pertaining to the said Issue;

(2) On the basis of such examination and the discussions with the company, its Directors and other officers, other agencies, independen

verification of the statements concerning the objects of the issue, projected profitability, price justification and the contents of th

documents mentioned in the Annexure and other papers furnished by the Issuer;

WE CONFIRM THAT:

a. The Prospectus forwarded to SEBI is in conformity with the documents, materials and papers relevant to the Issue;


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b. all the legal requirements connected with the said Issue as also the guidelines, instructions e tc.; issued by SEBI, the Government

and any other competent authority in this behalf have been duly complied with; and

c. the disclosures made in the Prospectus are true, fair and adequate to enable the investors to make a well-informed decision a

to the investment in the proposed Issue.

(3) We confirm that besides ourselves, all the intermediaries named in the Prospectus are registered with SEBI and that till date suc

registration is valid;

4. If underwritten, we shall satis fy ourselves about the worth of the underwriters to fulfill their underwriting commitments.

5. We certify that written consent from shareholders has been obtained for inclusion of their se curities as part of promoters'

contribution subject to lock-in and the securities proposed to form part of promoters' contribution subject to lock-in, will not be

disposed/sold/transferred by the promoters during the period starting from the date of filing the draft Prospectus with the Board

till the date of commencement of lock-in period as stated in the draft Prospectus. "

The filing of this Prospectus does not, however absolve Zen Technologies Limited from any liabilities under Section 63 of the Act, or from th

requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed Issue. SEBI, further, reserves the righ

to take up, at any point of time, with the Lead Manager to the Issue, any irregularities or lapses in the Prospectus.

Note: The issuer accepts no responsibility for statements made otherwise than in the Prospectus or in the advertisements or any other material issue

by or at the instance of the Issuer and that anyone placing reliance on any other source of information would be doing so at his/her risk.

DISCLAIMER CLAUSE OF THE HYDERABAD STOCK EXCHANGE (HSE)

Hyderabad Stock Exchange has vide its letter No REF/HSE/List/2000/1334 dated March 10, 2000, given permission to Zen Technologies Limited t

use its name in this Prospectus as the stock exchange on which this Company's equity shares are proposed to be listed. The HSE has scrutinized th

Prospectus for their limited internal purpose of deciding on the matter of granting the aforesaid permission to Zen Technologies Limited. HSE does no

in any manner

i. warrant, certify or endorse the correctness or completeness of any of the contents of this Prospectus, or

ii. warrant that Zen Technologies Limiteds equity shares will be listed or will continue to be listed on the Exchange, or

iii. take any responsibility for the financial or other soundness of Zen Technologies Limited, its promoters, its management or any scheme or

project of Zen Technologies Limited.

It should not, for any reason be deemed or construed that this Prospectus has been cleared or approved by the HSE. Every person who desires toapply for or otherwise acquires any equity shares of Zen Technologies Limited may do so pursuant to independent inquiry, investigation and analysi

and shall not have any claim against the HSE, whatsoever, by reason of any loss, which may be suffered by such person consequent to or i

connection with such subscription / acquisition, whether by reason of anything stated or omitted to be stated herein or for any other reaso

whatsoever.

DISCLAIMER IN RESPECT OF JURISDICTION

This offer is being made in India to persons resident in India and to NRIs on a non-repatriation basis. This Prospectus does not, however, constitute

an offer to sell or an invitation to subscribe to shares offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer o

invitation in such jurisdiction. Any person into whose possession this Prospectus comes is required to inform himself about and to observe any suc

restrictions. Disputes arising out of this Issue shall be subject to the jurisdiction of appropriate Court(s) at Hyderabad.

GENERAL DISCLAIMER

It should be noted that the Company accepts no responsibility for statements made otherwise than in the Prospectus or in the advertisement or any

other material issued by or at the instance of the Company and that anyone placing reliance on any other source of information would be doing so a

his/her own risk.

FILING

A copy of this Prospectus along with the documents required to be filed under Section 60 of the Act, has been delivered for registration to the

Registrar of Companies, Andhra Pradesh at Hyderabad. A copy of the draft Prospectus has also been filed with the Madras Office of SEBI.

LISTING

Initial Listing Application has been made by Zen Technologies Limited to the Stock Exchange at Hyderabad (regional stock exchange), for permissio


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to list the equity shares and for an official quotation of the equity shares of Zen Technologies Limited.

Hyderabad Stock Exchange vide its letter dated January 17,2000 had advised the company to enhance its authorised capital which has since been

complied with.

In case the permission to deal in and for an official quotation of the equity shares is not granted by the above mentioned stock exchange, the Issue

shall forthwith repay, without interest, all monies received from applicants in pursuance of this Prospectus and if such money is not repaid within eigh

days after the day from which the Issuer is liable to repay it, the Issuer shall pay interest as prescribed under Section 73 (2) of the Act.

IMPERSONATION

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

"Any person who-

a) makes in a fictitious name an application to a Company for acquiring, or

subscribing for, any shares therein, or

b) otherwise induces a Company to allot, or register any transfer of shares

therein to him, or any other person in a fictitious name,

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

MINIMUM SUBSCRIPTION

If the Company does not receive the minimum subscription of 90% of net offer to public on the date of closure of the issue or the subscription lev

falls below 90 % after closure of the issue on account of cheques having been returned unpaid or due to withdrawal of applications, the Company sha

forthwith refund the entire amount received. If there is a delay beyond 8 days after the company becomes liable to pay the amount, the Company shal

pay interest as per Section 73 of the Act.

UTILISATION OF ISSUE PROCEEDS

The sum received in respect of the issue will be kept in a separate bank account and the Company will not have access to such funds unless allotmen

of equity shares has been made in consultation with the Hyderabad Stock Exchange and listing/trading approval has been received from Hyderabad

Stock Exchange where listing has been sought.

The Board of Directors of the Company confirms and certifies that:

i. all monies received out of this Issue shall be transferred to a separate bank account other than the bank account referred to in sub-section (3) o

the Section 73 of the Act.

ii. details of all the monies utilised out of the proceeds of the Public Issue shall be disclosed under an appropriate separate head in the Annual

Report of the Issuer indicating the purpose for which such monies had been utilised, for all the financial years till all the monies are fully utilised ;

and

iii. details of all unutilised monies out of the issue, if any, referred to in sub-item (i) shall be disclosed in the Annual Reports of the Issuer indicating

the form in which such unutilised monies have been invested.

LETTERS OF ALLOTMENT/ SHARE CERTIFICATES / REFUND ORDERS

Letters of Allotment / Share Certificates /Letters of Regret / cancelled Stockinvests and / or Refund Orders, if any, will be despatched at th

applicant's sole risk to the sole/first applicant within 10 weeks from the date of closure of the Issue. The Issuer shall despatch refund orders, if any, o

value upto Rs. 1,500/- Under Certificate of Posting (UCP) and Refund Orders above Rs. 1,500/- and Letters of Allotment/Share Certificates b

Registered Post, within 10 weeks from the date of closure of the Issue, in accordance with the Act, stock exchange requirements and SEBI guideline

The issuer, as far as possible, will allot the equity shares within 30 days from the date of closure of the Issue and shall pay interest at the rate of 15%

per annum (except to the applicants applying through Stockinvest), if the allotment has not been made and refund orders are not despatched to th

investors within 30 days from closure of the Issue for the period of delay beyond 30 days. The Issuers would also make available adequate funds to

the Registrars to the Issue (hereinafter also referred to as "the Registrars") for this purpose.

ISSUE PROGRAMME

THIS ISSUE WILL OPEN AT THE COMMENCEMENT OF BANKING HOURS AND WILL CLOSE AT THE CLOSE OF BANKING

HOURS ON THE DAYS AS MENTIONED BELOW:


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Opening date: ,2000

Closing date: ,2000

Statutory Declarations

The Issuer accepts full responsibility for the accuracy of the information given in this Prospectus and confirm that to the best of it

knowledge and belief, there are no other facts the omission of which make any statement in this Prospectus misleading, and the Issue

further confirms that it has made all reasonable enquiries to ascertain such facts.

In the opinion of the Board of Directors of the company, there are no circumstances that have arisen since the date of the last financia

statement disclosed in the Prospectus that materially or adversely affect or are likely to affect performance or profitability of the

company or value of its assets or its ability to pay its liabilities within the next twelve months.

LEAD MANAGERS TO THE ISSUE

Industrial Development Bank of India

IDBI Tower, WTC Complex,

Cuffe Parade, Mumbai 400 005

Telephone no.: (022) - 2189111

Fax no.: (022) -2181195

REGISTRARS TO THE ISSUE

Karvy Consultants Limited

Karvy House, 46, Avenue 4,

Street No 1, Banjara Hills

Hyderabad-500 034

Tel:040-3312454,3320251/751/752

Fax-040-3311968

e mail:[email protected]

AUDITORS OF THE COMPANY

Prayaga & Co

Chartered Accountants

5-2-392/5,Hyderbasti,

Secunderabad 500 003, Andhra Pradesh, India.

Telephone no.: (040) 7543008, 7542721

LEGAL ADVISORS TO THE ISSUE

Mr. V.S. Raju,

High Court - Advocate,

103, Dhanunjaya Apartments,

Banjara Hills,

Hyderabad


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COMPANY SECRETARY

The Company is presently availing the services of a practicing company secretary on a retainership basis. However, the company is in the process o

recruiting a qualified company secretary on full time basis. The company undertakes to appoint a company secretary before filing the prospectus wit

ROC.

CREDIT RATING / TRUSTEES

This being an issue of equity shares, no credit rating or appointment of Trustees is required.

COMPLIANCE OFFICER

Mr. P. Bheema Reddy

Finance Manager,

Zen Technologies Limited

40 Radhaswamy Colony, Sikh Road

Secunderabad 500 009

Andhra Pradesh, India.

Telephone no.: (040) 7843279 / 7818534

Fax no.: (040) 7843279.

E-mail: [email protected]

BANKERS TO THE COMPANY

Global Trust Bank Limited

SMR Sartaz Complex, Sikh Road

Secunderabad 500 009

Andhra Pradesh, India.

Telephone no. : (040) 7810151

Fax no: (040) 7810184

BANKERS TO THE ISSUE

UNDERWRITING

The proposed issue of 19,10,000 equity shares of Rs. 10/- each for cash at par aggregating Rs. 1,91,00,000/- offered through this Prospectus is no

to be underwritten.

Undertaking by the Issuer

The company undertakes that :

i. the complaints received in respect of the Issue would be attended to by the company expeditiously and satisfactorily

ii. the company shall take necessary steps for the purpose of getting the shares, now being offered, listed on Hyderabad Stock Exchange within

the specified time

iii. the funds required for despatch of refund orders/allotment letters/share certificates by registered post shall be made available to Karvy

Consultants Ltd., the Registrar to the Issue

iv. that the promoters contribution in full shall be brought in advance before the Issue opens for public subscription


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v. that the share certificates/ refund orders to the applicants shall be despatched within the specified time.

vi. no further issue of securities shall be made till the shares offered through this Prospectus are listed or till the application moneys are refunded on

account of non-listing/under subscription etc.

II. CAPITAL STRUCTURE OF ZEN TECHNOLOGIES LTD

(As on March 30,2000)

Number of shares Description Nominal Value

(Rs)

A Authorised Capital

1,00,00,000 Equity Shares of Rs. 10/- each 10,00,00,000

B Issued, Subscribed and Paid-up Capital

34,45,600 Equity Shares of Rs. 10/- each

fully paid-up

3,44,56,000

C Present Issue through this prospectus


for cash at par

4,18,44,000

Out of which firm allotment to :

i) Promoters, their friends and relatives


for cash at par

1,27,44,000

ii) Industrial Development Bank of India


for cash at par

1,00,00,000

iii) Net Offer to the Indian Public

19,10,000 Equity Shares of Rs. 10/-

each for cash at par

1,91,00,000

D Paid-up Equity

Capital after the issue


fully paid-up

7,63,00,000

IDBI has agreed to subscribe to the equity shares of the company to the extent of Rs 100 lakhs out of which subscription upto Rs 70 lakhs would be

ensured before filing of Prospectus with ROC. The balance amount would be received at least one day before the issue opens for subscription

Necessary amendments would be carried out in the Capital Structure upon receipt of subscription from IDBI.

Notes forming part of the Capital Structure:

1. The authorised capital of the company was increased from Rs 4 crore to Rs 10 crore pursuant to resolution passed at Extra Ordinar

General Meeting of the members of the company held on 20-10-1999.

2. The capital history of Zen Technologies Limited is as follows:

Date of No of Face Value Total Paid- Issue Considera- Descrip-


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allotment Equity

Shares

per share

(Rs)

up capital

(Rs)

Price

(Rs)

tion tion

30-01-96 670100 10/- 6701000 10/- For cash Promoters&

Associates

31-05-96 380000 10/- 3800000 10/- For cash Promoters

&

Associates

24-11-97 170000 10/- 1700000 10/- For cash IDBI

2-02-98 200000 10/- 2000000 10/- For cash IDBI

22-4-98 130000 10/- 1300000 10/- For cash IDBI

15-02-00 1895500 10/- 18955000 10/- For cash Promoters

&

Associates

3. As on date, there are no pending warrants, options, rights to convert any debenture or bond or loan or any other instrument entitling the existin

shareholder to acquire any equity shares or voting rights. The company has availed of a rupee term loan of Rs.100 lakhs from IDBI out of

which an amount of Rs.47.08 lakhs is outstanding as on January 01, 2000. At the option of IDBI, the loan is convertible into equity shares at

par during the currency of the loan. Further, for part financing the original project, IDBI had agreed to subscribe to the equity capital of the

company to the extent of Rs 55 lakhs, out of which subscription upto Rs 50 lakhs has already been received. The company has applied for

cancellation of the balance amount of Rs 5 lakhs. Formal approval from IDBI is awaited.

4. The Company has 133 shareholders as on March 30,2000.

(a) The details of the ten largest shareholders as on 30-03-2000, the date of filing the Prospectus with SEBI are as under:

S No. Name of the shareholde r No of Sha re s he ld % of holding

1 Ashok Atluri 1364500 39.60

2 IDBI 500000 14.51

3 A Rama Devi 331700 9.63

4 A Tara Dutt 249500 7.24

5 Satish Atluri 164500 4.77

6 Anshu Bhargava 33000 0.96

7 N V Ramana 30000 0.87

8 VB Investments 30000 0.87

9 NLV Prasannam 30000 0.87

10 Beena Kilaru 30000 0.87

TOTAL 27,63,200 80.19

(b)The details of the ten largest shareholders as on 20-03-2000, ten days prior to the date of filing the Prospectus with SEBI are as under:

S No. Name of the shareholde r No of Sha re s he ld % of holding

1 Ashok Atluri 1364500 39.60

2 IDBI 500000 14.51

3 A Rama Devi 331700 9.63


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4 A Tara Dutt 249500 7.24


6 Anshu Bhargava 33000 0.96

7 N V Ramana 30000 0.87

8 VB Investments 30000 0.87

9 NLV Prasannam 30000 0.87

10 Beena Kilaru 30000 0.87

TOTAL 27,63,200 80.19

(c) The details of the ten largest shareholders as on 30-03-1998, two years prior to the date of filing the Prospectus with SEBI are as under:

S No. Name of the holder No of Shares held % of holding

1 IDBI 370000 26.05

2 Ashok Atluri 136000 9.58


4 Nandita Dutt 40000 2.82

5 Premalatha Atluri 30000 2.11

6 Ravi Kumar M 27600 1.94

7 Selwyn Samuel 27600 1.94

8 Kishore Dutt Atluri 26100 1.84

9 Mary Selwyn M 22710 1.60

10 Kotaiah Kamepalli 20700 1.46

TOTAL 775210 54.59

3. The Shareholding Pattern of the company as on March 30,2000 as well as after the public issue is as follows:

Sr No Category of the shareholders Existing

(as on

30/3/2000)

After the Issue

No of

equityshares

% No of

equityshares

%

1 Promoters/Directors, their

friends, relatives and associates

2945600 85.49 4220000 55.31

2 Industrial Development Bank

of India(IDBI)

500000 14.51 1500000 19.66

3 Public - - 1910000 25.03

Total 3445600 100.00 7630000 100.00


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4. The details of shares held by the promoters as on 30-03-2000 is as under:

Sr No Name of the Shareholder No of shares held ****

1 Ashok At luri 1364500

2 Satish Atluri 164500

3 Ravi Kumar M 27600

**** To be updated before ROC filing

5. Equity shares representing 20% of the post-issue capital of Zen Technologies Ltd will be locked- in as under:

Sr

No

No of

shares

Date of

allotment/

acquisition

Face Value

(Rs)

% of Post

Issue

Capital

Period of Lock in

1 2,51,600 15-02-

2000

25,16,000 3.30 3 years

2 12,74,400 To be

allotted

1,27,44,000 16.70 3 years

15,26,000 1,52,60,000 20.00

a. The above shares will be locked-in for a period of 3 years from the date of allotment of equity shares in the present issue.

b. The shares locked-in by the Promoters are not pledged to any party.

c. The equity shares held by the promoters under lock- in period shall not be sold/hypothecated/transferred during the lock-in-period.

d. All the shares subscribed/ to be subscribed to by the promoters are also subject to non-disposal undertaking furnished by the promoters to

IDBI in terms of the provisions of Loan Agreement/Subscription Agreement executed by the company. Prior approval of IDBI would hence be

required for disposal of shares by the promoters during currency of IDBI loan/till IDBI holds equity shares in terms of the Subscription

Agreement.

e. The share application money with respect to item C(i) and C(ii) above shall be brought in by the promoters and IDBI at least one day prior to

the date of opening of the public issue. In case the entire amount of subscription from firm allottee viz. IDBI is not received one day prior to the

date of opening of the issue, the promoters shall subscribe to the equity shares to the extent of shortfall in subscription from the firm allottee viz

IDBI. However, subscription to the extent of at least Rs 70 lakhs shall be ensured before filing the Prospectus with ROC.

3. In terms of the Subscription Agreement entered into with IDBI on January 18,1996 for Direct Subscription to Equity (DSE) of Rs 55 lakhs, th

promoters have furnished an undertaking to buyback the shares subscribed to by IDBI, at any time on the terms & conditions contained in the

Subscription Agreement . Further, as per IDBI's sanction letter dated March 2,2000 for DSE of Rs 100 lakhs, the promoters are also required

to buyback the shares from IDBI, if so required by IDBI, the equity shares subscribed to by IDBI .This option is exercisable by IDBI on or

before April 1,2004 . Except for these , there is no other buy back or standby arrangement for the purchase of equity shares offered through

this Prospectus by the promoters, Directors or Merchant Bankers.

4. The company has not raised any bridge loan against the proceeds of this public issue.

5. The company has not issued any shares for consideration other than cash. The company has not revalued any of its assets so far and it does no

have any revaluation reserve.

6. The allotment of equity shares, in case of over-subscription, will be on a proportionate basis as follows:

a. A minimum of 50% of the net offer of equity shares to the public shall initially be made available for allotment to individual applicants who have

applied for less than or equal to 1,000 equity shares.

b. The balance 50% of the net offer of equity shares to the public shall initially be made available for allotment to investors, including bodies

corporate / institutions and individual applicants who have applied for more than 1,000 equity shares.


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c. Any un-subscribed portion of the net offer to the public in any one of the above categories shall be made available for allotment to applicants in

the other category and the allotment shall be made on proportionate basis in terms of extant SEBI guidelines.

3. The allotment shall be made in market lot of 100 equity shares and in multiple of 100 equity shares. The allotment shall be on proportionate

basis and in the event of oversubscription, the basis of allotment shall be finalised in consultation with the HSE within the overall size of the issue

4. No single applicant can make an application for number of securities, which exceeds the securities offered. Firm allottees are not eligible to

apply for equity shares being offered to the public.

5. None of the promoters or directors of the company have directly or indirectly purchased any shares of the company during last 6 months.

III. TERMS OF THE PRESENT ISSUE

The equity shares now being issued are subject to the provisions of the Act, the Memorandum and Articles of Association of the Company, terms o

this Prospectus, the Application Form, the guidelines for listing of securities issued by the Stock Exchange and Government of India and/or othe

statutory bodies and the guidelines for Disclosure and Investor Protection issued by the Securities and Exchange Board of India (hereinafter als

referred to as "SEBI Guidelines"), and the Depositories Act, 1996, to the extent applicable.

AUTHORITY FOR THE ISSUE

The present issue of equity shares is being made pursuant to the resolution of the Board of Directors of the Company passed at its meeting held o

September 27, 1999. In terms of Section 81(1-A) of the Act, the present public issue of equity shares has also been authorized vide a Specia

Resolution passed at the Extra-ordinary General Body Meeting of the members of Zen Technologies Ltd held on October 20, 1999.

FACE VALUE / ISSUE PRICE

Equity shares of face value of Rs 10/- each are being offered at par i.e at a price of Rs 10/- each.

TERMS OF PAYMENT:

Application must be made for a minimum of 200equity shares and in multiples of 100 equity shares thereafter. The equity shares are being offered at

price of Rs 10/- per share and the entire amount is payable on application.

A single applicant under the Public category cannot apply for more than the total number of equity shares being offered to public.

INTEREST IN CASE OF DELAY IN ALLOTMENT/DESPATCH

The company agrees that :

a. as far as possible, allotment of securities offered to public shall be made within 30 days of the closure of the issue.

b. it shall pay interest @ 15 % p.a (except to the applicants applying through Stockinvest), if the allotment is not made and/or the allotment

letters/refund orders are not despatched within 30 days from the date of closure of the issue.

RANKING OF NEW EQUITY SHARES

The equity shares now being offered, shall rank pari-passu with the existing equity shares of the Company in all respects save and except that th

holders of the equity shares now being offered will be entitled to dividend, if any, which may be declared or paid on the equity shares from th

respective date of allotment and in proportion to the amount paid up thereon for the period during which such capital is paid up. The holders of equit

shares now being offered will not be entitled to dividend, if any, declared or paid prior to the date of allotment.

RIGHTS OF MEMBERS

a. Right to receive dividend, if declared and paid.

b. Right to attend general meetings and exercise voting rights, unless prohibited by law.

c. Right to vote either personally or by proxy.

d. Right to receive offer for rights issue and be allotted bonus shares, if declared.

e. Right to receive surplus on liquidation, if any.

f. Other rights available under the Act and amendments thereto from time to time.


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PROCEDURE FOR APPLICATION AND MODE OF PAYMENT

AVAILABILITY OF PROSPECTUS AND APPLICATION FORMS

The Prospectus and the Application Form (including the Abridged Prospectus containing the salient features of the Prospectus ) may be obtained from

the Registered Office of Zen Technologies Limited, the Lead Managers to the Issue and at the collection centres of the Bankers to the Issue, a

mentioned on the reverse of the Application Form. Copies of Application Forms and Prospectus can also be obtained from the members of the

recognised Stock Exchanges.

INSTRUCTIONS FOR FILLING OF FORMS

1. Applications must be :

Made in prescribed Application Form.

Made by

a. Indian Nationals resident in India who are adult individuals, in single or joint names (not more than three)

b. Hindu Un-divided Families (HUFs) in the individual name of the Karta of HUF

c. Companies, Corporate Bodies and societies registered under the applicable law in India and authorized to invest in the equity shares

d. Indian Mutual Funds registered with SEBI

e. Scientific and/or Industrial Research Organisations, which are authorised to invest in equity shares

f. Indian Financial Institutions, Commercial Banks, Regional Rural Banks and Co-operative Banks (subject to permission from RBI)

g. Trusts which are registered under the Societies Registration Act, 1860 or any other applicable Trust Law and which are authorized under their

constitution to hold and invest in equity shares of a Company

h. Non-resident Individuals of Indian Origin / Nationality (NRIs) only on a non-repatriable basis.

The applications from NRI applicants will be treated on par with applications made by Resident Indian Public, subject to relevant guidelines.

Note:Applications in the names of minors, foreign nationals, OCBs/FIIs, trusts not registered under the Societies Registration Act, 186

or any other applicable Trust Law, partnership firms or their nominees will be treated as invalid, except as above.

Completed in full, in BLOCK LETTERS, in ENGLISHas per the instructions contained herein and in the Application Form and are liable to

be rejected if not so made.

For a minimum of 200equity shares and in multiples of 100 equity shares thereafter.

In single or joint names (not more than three).

Thumb impressions and signatures other than in the languages specified in the Eighth Schedule of the Constitution of India must be attested by a

Magistrate or a Notary Public or a Special Executive Magistrate under his or her official seal.

PAYMENT INSTRUCTIONS

Payments may be made by way of cash, cheque, Stockinvest or demand draft drawn on any bank, including a co-operative bank which is

situated at and is a member or sub-member of the Bankers clearing house located at the center ( indicated in the application form) where theApplication Form is submitted. Money orders, postal orders, outstation cheques or demand drafts , cheques/bank drafts drawn on

banks not participating in the clearing process will not be accepted and applications accompanied with such instruments are liable

to be rejected.Applicants residing at places where no collection centres have been opened may submit/mail their applications at their sole risk

along with application money due thereon by way of a Demand Draft payable at Hyderabad alongwith the application form by Registered Post

to the Registrars to the Issue , superscribing the envelope " ZTL - Public Issue" so as to reach the Registrars to the Issue on or before the

closure of the Issue. The charges, if any, for purchases of demand drafts will have to be borne by the applicant.

All cheques/ demand drafts should be crossed "Account Payee Only" and must be made payable to any of the Bankers to the Issue and

marked " ZTL-Public Is sue"

A separate cheque / bank draft / Stockinvest must accompany each Application Form. Applicants are advise d to mention the Serial

Number of Application Form on the reverse of the instruments to avoid misuse.


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All applications duly completed in all respects must be submitted before the closure of the subscription list to any of the designated branches of

the Bankers to the Issue, accompanied by cash /cheque / bank draft / stockinvest drawn on any bank located at and which is a member of the

Bankers' Clearing House at the place where the Application Form is submitted. Applications should NOTbe sent to the registered office of

Zen Technologies Limited or the Lead Manager to the Issue or to the Registrars to the Issue ( except as stated above ) .

No separate receipt will be issued for the application money. However, the Bankers to the Issue or any of their authorised / approved collectin

branches receiving the duly completed Application Forms will acknowledge receipt of the application by stamping and returning to the

applicant, the acknowledgement slip attached at the bottom of the Application Form.

In terms of the provisions of Section 269SS of the I.T. Act, payment of application money of Rs. 20,000/- and above should not be effected in

cash and must be effected by a crossed account payee cheque / bank draft / Stockinvest.

Where an application for equity shares is for the total value of Rs.50000/- or more, i.e. for 5000 equity shares or more, the sole applicant, or

each of the applicants in case the application is made in joint names, should mention his/ her Permanent Account Number (PAN) allotted under

the Income Tax Act, 1961 or where the same has not been allotted, please mention

the GIR number and the Income Tax Circle/ Ward/ District. In case, neither the PAN nor the GIR number has been allotted, the applicant must

mention "Not Allotted" in the appropriate column in the Application Form. Application Forms without this information will be considered

incomplete and are liable to be rejected.

To Prevent fraudulent encashment of refund orders by third party, the applicants are advised to indicate the name of the bank branch and the

savings / current account number in the application form. In case of refund, the refund order will indicate these details after the name of the

payee and the refund orders will be despatched directly to the payees address. Application without this information would be considered

incomplete and is liable to be rejected.Also, the applicants should write the application number and name of the sole / first applicant on thereverse of the cheque / Demand Draft / Stock Invest.

Non-resident Indians ( NRIs) applicants wishing to apply for shares on non-repatriable basis may use the form meant for Resident Indian

Public. The remittance of application money must be made out of Non-resident Ordinary ( NRO )Account.

PROCEDURE FOR PAYMENT BY MEANS OF STOCKINVEST

The applicant has the option to use Stockinvest for applying for equity shares offered in terms of this Prospectus. Stockinvest can be obtained

from any bank issuing such instruments, by making the necessary application and depositing the amount with the bank. The applicant using

stockinvest should submit the Application Form alongwith the Stockinvest to any of the designated branches of the Bankers to the Issue

mentioned on the reverse of the Application Form, before closing of the subscription list. Stockinvest is payable at par at all the branches of the

issuing bank and as such should be made payable in favour of " Zen Technologies Limited".

Only individuals and Mutual Funds have the option to use Stockinvest. A ce iling of Rs.50,000/- per individual per stockinves t hasbeen imposed by the Banks and hence individual investors can use stockinvest upto Rs.50,000/- only. However, there is no such

ceiling on Mutual Funds. The above ceiling is subject to change from time to time.

Applicants using Stockinvest must note the following:

1. The prospective investor at the time of request for issue of Stockinvest of the issuing bank, may have to:

a. indicate that he/she agrees to abide by the terms of the Issue and encashment of Stockinvest;

b. give irrevocable authority to his/her bank to mark a lien for the value of Stockinvest against the balance held in his/her savings/current/other

deposit account;

c. agree to lifting of the bankers lien on expiry of the currency of the Stockinvest or in case of intimation of partial / non allotment of equity shares;

and

d. agree that the issuing bank will not be liable for any damages or other consequences arising out of the loss of these instruments;

e. The service charges, if any, for procuring Stockinvest shall be borne by the applicant.

2. Stockinvests issued by any scheduled commercial bank including co-operative bank (even where the issuing bank is not a collecting bank) will

be accepted. Stockinvest are to be used by the purchaser(s) within 10 days of its purchase . The last day for the use of Stockinvest for

submitting Application Form to the Bankers to the Issue should be indicated on the face of the Stockinvest with a notation "To be used on/or

before ______"

3. Stockinvest should be marked "Account Payee" and payable only to the Issuer i.e. " Zen Technologies Limited". The applicant shall provide

necessary details such as payee's name, amount and number of equity shares applied for, Application Form number etc., in the left hand side


18/77

portion of the Stockinvest and his/her address in the box on the reverse of the Stockinvest before depositing it with the Bankers to the Issue.

4. Stockinvest is valid for a period of 4 months from the date of issue .

5. Stockinvest will be issued to the applicant in blank format after authentication of the date of issue by the designated branch. Stockinvest duly

completed should be submitted along with the Application Form to the bank branch handling the issue.

6. Stockinvest should be signed and dated by the appropriate authority of the issuing bank. Applicants have to fill in the Stockinvest the following

a. Name of the company

b. Amount

c. Number of equity shares applied for

and submit the same to the collecting banker duly signed together with the Application Form.

2. Separate Stockinvest of suitable and appropriate denomination (wherever available) should be submitted with each Application Form for the

total number of equity shares applied for. In case of Stockinvest of fixed denomination, the applicant can fill an amount less than the

denomination depending upon the amount required to be paid on application for the equity shares applied for.

3. The applicant should not hand over Stockinvest taken against his or her own account to any third party. Stockinvest should be utilised by the

purchaser(s) and the purchaser's name / name of one of the purchasers should invariably be indicated as the first applicant in the Application

Form. Thus, if the signature of the purchaser on the Stockinvest and the signature of the first applicant on the Application Form do not tally, the

application would be treated as having been accompanied by a third party Stockinvest and shall be rejected.

Applicants should use only one Stockinvest along with each application form for subscribing to the issue.

4. In the interest of the investors, to avoid rejection of application on technical grounds, it is suggested that the applicant should ensure that:

a. the date of issue of the Stockinvest by the Issuing Bank is clearly mentioned on the instrument.

b. the instrument is duly signed by the authorised officer of the Bank, giving his code number.

c. any correction / alteration in the date of issue, amount, name of the Company (i.e. Zen Technologies Limited) etc. should be attested by an

authorised officer of the Issuing Bank.

d. the applicant has clearly written the name of the Company, the amount and signed the instrument. The signature on the instrument should tally

with the specimen signature of the first named applicant as appearing on the Application Form.

e. in case the Stockinvest is purchased in joint account, the names of both the account holders should be mentioned in the Stockinvest instrument

at the place mentioned for writing the name of the investor.

f. the amount written in the Application Form to be deposited and the amount of the Stockinvest instrument accompanying the Application Form

should be the same.

g. the Stockinvest is to be utilised by the purchaser(s) and the purchaser's name or name of one of the purchasers is invariably indicated as the firs

applicant in the share Application Form. Thus, if the signature of the purchaser on the Stockinvest and the signature of the first applicant on the

Application Form does not tally, the application would be treated as having been accompanied by a third party Stockinvest and is liable to be

rejected.

h. applications accompanied by Stockinvest, which are not payable at Hyderabad,are liable to be rejected.

The above information is given for the benefit of investors and the Issuer is not liable for any modification of terms of Stockinvest or procedure thereo

by issuing banks.

DISPOSAL OF APPLICATION MONEY IN CASE OF STOCKINVEST

In case of non-allotment, the Registrars to the Issue shall directly send back the cancelled Stockinvest to the applicant(s) along with the relative advice

The stockinvest would bear stamps such as "CANCELLED" and "NOT ALLOTTED" across the face of the instrument. The issuing bank will lift the

lien on the account on surrender of the same by the investor.

On allotment/partial allotment, the Registrars to the Issue shall fill in the amount (which will be equal to or less than the amount filled in by the investor

before presenting the Stockinvest to the respective issuing banker for payment to the extent of allotment. The bank will lift the lien on the balanc

amount if any, of the deposit.


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Inquiries relating to applications submitted with Stockinvest may be addressed only to the Registrars to the Issue and not to the issuing bank.

Registrars to the Issue have been authorised by "Zen Technologies Limited" to sign on behalf of the Issuer for realising the proceeds of the Stockinve

of the successful applicants or to affix non-allotment advice on the Stockinvest or to cancel the Stockinvest of the unsuccessful applicants or applicant

whose applications are accompanied by more than one stockinvest instrument . The cancelled instrument shall be sent back by the Registrars to the

applicants directly within 30 days of the closure of this Issue. All conditions mentioned earlier for making an application through cheque(s) / deman

draft(s) will also, mutatis mutandis, apply to applications made with Stockinvest.

For further instructions, please read the Application Form carefully.

GENERAL INSTRUCTIONS

Joint Applications

An application may be made in single or in joint names (not more than three). In the case of joint applications, refund orders, if any and dividend

warrants will be made out in favour of the first applicant. All communications will be addressed to the applicant, whose name appears first in the

Application Form and will be despatched to his/her address, as stated in the Application Form.

Multiple Applications

An applicant should submit only one application (and not more than one) for the total number of equity shares required. An application may be mad

in single or in joint names (not more than three). Two or more applications in single and/ or joint names will be deemed to be multiple applications,

the sole and/ or the first applicant is one and the same. The Issuer reserves the right to accept or reject in its absolute discretion any or all such multipl

applications.

Separate applications for dematerialised / electronic and physical equity shares by the same applicant shall be considered as multipl

applications and are liable to be rejected.

In case of application by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with

SEBI and that such applications will not be treated as multiple applications provided that the applications made by the Asset Management Company

Trustees / Custodian clearly indicate their intention as to the scheme for which the application has been made.

While the investor has the option to obtain shares in dematerialised or physical form, the trading of the shares shall only be i

dematerialised form for all the investors.

The company has entered into agreement both with NSDL and CSDL for offering the shares in dematerialised form. The investor has the option t

receive allotment of securities in dematerialised form through either of the depositories i.e. NSDL/CSDL.

Applications under Power of Attorney

In case of applications under Power of Attorney or by companies or corporate bodies, the relevant Power of Attorney or the relevant authority as th

case may be, or a duly certified copy thereof and a certified copy of the Memorandum and Articles of Association and/or bye laws, whereve

applicable, must be despatched by registered post with acknowledgment due separately to the Registrars to this Issue so as to reach them a

Hyderabad not later than seven days from the closure of the issue, simultaneously with the submission of the Application Form mentioning the Seria

Number of the Application Form and the name of the bank branch where the application has been submitted failing which the issuer reserves fu

unqualified and absolute right to accept or reject any application in whole or in part and in either case without assigning any reason thereof.

Disposal of Application Form and Application Money

The Issuer reserves full, unqualified and absolute right to accept or reject any application, subject to guidelines of SEBI and Stock Exchanges, i

whole or in part and in either case without assigning any reason thereof. In case, an application is rejected in full, the whole of the application mone

received will be refunded and where an application is rejected in part, the excess application money received will be refunded to the applicant within

30 days of the closure of the issue. If such money is not repaid within 8 days from the day the company becomes liable to pay, the company and every

director of the company who is an officer in default shall on and from the expiry of the 8 thday be jointly and severally liable to repay that money wit

interest @15% p.a. except in respect of applications accompanied with Stockinvest.

The issuer, as far as possible, will allot equity shares within 30 days from the closure of the issue and shall pay interest @ 15% p.a. (except to th

applicants applying through stockinvest) if the allotment is not made and the refund orders are not despatched to the investors within 30 days from th

closure of the issue, for the period of delay beyond 30 days.The issuer would also make available funds to the Registrars to the issue for the purpose

of despatch of refund orders. Refund will be made by cheque(s) / pay order(s) / demand draft(s) (only in case of applications not accompanied b

Stockinvest) and will be despatched at the applicant's risk to the first/sole applicant's address. Such cheques or pay order(s) or demand draft(s) wi

be payable at par at all the centres where the applications were accepted (subject to RBI regulations issued from time to time in this regard). In case o

joint applications, Refund Orders, if any, will be made out in the first applicant's name and all communications will be addressed to the person whos


20/77

name appears first in the Application Form.

Bank Details of the Applicant

The applicant must fill in the relevant column in the Application Form, giving particulars of savings bank/current account number and name of the bank

with whom such account is held, to enable the Registrars to the Issue to print the said details in the Refund Order after the name of the payee. This i

to ensure that the Refund Orders are credited to the correct account and obviate any scope for fraudulent encashment of the Refund Orders. It ma

be noted that provision of bank account details in the space provided for in the Application Form has now been made mandatory. Application Form

without the above details are liable to be rejected.

The applicants should write the application number and name of the sole/first applicant on the reverse of the cheque / demand draft / Stockinvest.

Depository Option to investors

As per the provisions of Depositories Act,1996 the shares of a company can be acquired in dematerialized form i.e. not in the form of physica

certificates but be fungible and be represented by the statement issued through Electronic mode. Many companies and their investors are now optin

for dematerialization of their securities. The company is also extending this facility to all those investors, who wish to avail the same in this context-

1. A tripartite agreement dated _________ has been signed between Zen Technologies Limited, Karvy Consultants Limited and National

Securities Depository Limited (NSDL) for offering the depository option to the investors. Another tripartite agreement dated ________ has

also been signed between Zen Technologies Limited, Karvy Consultants Limited and Central Depository Services India Limited (CDSL) for

offering the depository option to the investors.

2. The investor has an option to seek allotment of equity shares in electronic and/or physical mode.

3. Such an option, if exercised, should be indicated in the relevant blocks in the Application Form itself.

4. Separate applications for dematerialized / electronic and physical equity shares by the same applicant shall be considered as multiple

applications and are liable to be rejected. The applicants must indicate in the Application Form itself, the number of shares required in

dematerialised and physical form out of the total number of shares applied for. In case of partial allotment, shares will first be allotted in

dematerialised form and balance shares, if any, will be allotted in physical form subject to allotment of market lot of shares in physical form.

5. Investors who wish to apply for equity shares in electronic form need to have at least one Beneficiary Account with a Depository Participant

prior to the allotment.

6. The applicant's name in the Application Form should be the same as that appearing in his/her Beneficiary account. In case of joint applicants, in

addition to the name, the sequence of the names in the application form and the beneficiary account should be the same.

7. Letter(s) of Allotment / Refund Order(s) will be directly sent to the investors by the Registrars.

8. If incomplete / incorrect investor depository account details are given in the application Form, physical equity shares will be allotted to the

investor.

9. Responsibility for correctness of applicants demographic details given in the Application Form vis--vis those with his/her Depository

Participant, would rest with the investor.

10. Equity Shares in electronic form can be traded only on Stock Exchanges having electronic connectivity with NSDL/CDSL.

11. Trading in equity shares shall be in dematerialised form only for all the investors.

Applicants must indicate in the Application Form the number of equity shares they wish to receive in dematerialised / electronic form and physical form

out of the total number of equity shares applied for. After allotment, all investors who have opted for shares in the electronic mode will receive credfor these shares directly in their depository accounts and all investors who have opted for physical delivery of shares will receive the Share Certificate

from the Registrars to the issue.

SCHEDULE AND BASIS OF ALLOTMENT

The basis of allotment will be finalised in consultation with the Regional Stock Exchange. Investors may note that in the event of oversubscription

allotment will be on a proportionate basis. (For further details on basis of allotment please refer to Part II of Prospectus).

TAX BENEFITS AVAILABLE

M/s. Prayaga & Company, Chartered Accountants, have advised Zen Technologies Ltd vide their letter dated March 1,2000 that as per the curren

provisions of the Income Tax Act, 1961 (hereinafter referred to as "the Act") and the existing applicable tax laws for the time being in force, th


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following tax benefits, inter-alia, will be available to Zen Technologies Limited and to the members of the Company as given below:

TO THE COMPANY

Under the Income Tax Act, 1961

1. Should the company be liable to Income Tax on its profits, the following concessions/ benefits will be available.

i. The company, in accordance with and subject to the condition laid down in Section 10A of the Income Tax Act, 1961 shall be exempt from

Income Tax for 10 consecutive assessment years as stated in the said provision in respect of the Profits and Gains derived from 100% Export

Oriented Undertaking(EOU) registered with Software Technology Parks of India (STPI).

ii. Under section 80 HHC of the Income Tax Act, 1961 the company shall be entitled to deduction in respect of profits derived from export of

goods in accordance with and subject to the conditions specified therein.

iii. Under Section 80 HHE of the Income Tax Act, 1961 the company shall be entitled to deduction in respect of profits derived from export of

software in accordance with and subject to the conditions specified therein.

iv. The company will be entitled under section 35 D of the Income Tax Act,1961 to amortise certain specified preliminary expenses (including

expenses incurred for the issue of shares) over a period of 5 successive years beginning with the previous year in which the company

commences business, subject to compliance with the conditions specified in the section.

v. In terms of and subject to the provisions of the section 35(2AB) of the Income Tax Act, 1961, the company will be entitled to a deduction of

an amount equal to 125% in respect of expenditure on in-house research and development(other than the acquisition of land) incurred in

connection with the Company in the year in which such expenditure is incurred in accordance with and subject to the conditions specifiedtherein.

TO THE MEMBERS OF THE COMPANY

Benefit to Indian Share Holders:

a. Dividend income has been made exempt in the hands of share holders u/s. 10(33) of the Income Tax Act 1961.

b. By virtue of provisions of section 2(42A) and section 48 of the Income Tax Act, 1961 the gains arising to the investors from sale of shares of

the company, if held for more than 12 months, shall be considered as long term capital gains, and consequently be computed after indexation of

cost and be liable for taxation at the rate of 20% alternatively i.e without indexation, at the rate of 10 % which ever is lower.

c. In accordance with and subject to the conditions and to the extent specified in sections 54 EA/54EB of the Act, the share holders would be

entitled to exemption from long term capital gains.

d. In case of a shareholder being an individual or a Hindu Undivided Family with in accordance with and subject to the conditions and to the exten

specified in section 54 F of the Act, the shareholders would be entitled to exemption from long term capital gains.

Wealth Tax:

Total exemption from wealth tax would be available on investment in shares of the company.

IV. PARTICULARS OF THE ISSUE

Objects of the Issue

The present Issue of equity shares is being made to :

a. finance companys Expansion project envisaging development of two more simulators

b. meet software development and operating expenses including cost of hardware/software for two prototypes of iSATS and Tacsim and

marketing expenses including travel and business development expenses.

c. meet cost of setting up overseas office

d. augment the long-term working capital resources of the Company

e. list the equity shares of the Company on the recognised stock exchange in India

f. To meet the expenses of the Issue.


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The objects clause of the Memorandum of Association enables the Company to undertake the activities for which the funds are being raised throug

the Public Issue.

Cost of the Project :

The cost of the project, as appraised by IDBI in February 2000, is given hereunder:

(R

lak

Land and site development 48

Buildings and civil work 25

Plant and machinery *260

Miscellaneous fixed assets 40

Software development and operating expenses 90

Market development expenses *70

Preliminary & Public issue expenses 20

Contingencies 55

Additional margin money for working capital 60

Total 668

*includes cost to be incurred for setting up overseas office.

Means of Finance(as appraised by IDBI):

The cost of the project estimated at Rs.668 lakh is proposed to be financed as under:

(Rs.lakh)

Equity

- Promoters 317

- Direct Subscription to Equity (DSE)from IDBI 100

- Public issue 191

Grant from Department of Science and Industrial Research (DSIR) 60

Total 668

Notes:

1. IDBI has agreed to subscribe to the equity shares of the company to the extent of Rs 100 lakhs vide their letter dated March 2,2000

out of which subscription upto Rs 70 lakhs would be ensured before filing of Prospectus with ROC. The balance amount would b

received at least one day before the issue opens for subscription, failing which the promoters would bring in additional funds to meet th

shortfall, if any. .

2. The grant from DSIR is yet to be sanctioned and received. In the unlikely event of the grant not being received, the promoters have

agreed to bring additional funds by way of unsecured loans for meeting the shortfall, if any.

3. As certified by the auditors, the company has incurred an expenditure of Rs.122.97 lakhs on the Expansion Project upto Februar


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15,2000, the details whereof are given below :

(Rs lakh)

Advance towards plant and machinery 82.42

Miscellaneous fixed assets 12.93

Software development and operating expenses 15.20

Market development expenses 10.53

Preliminary and capital issue expenses 1.89

Total 122.97

*In addition, the company has cash/bank balance of Rs.66.58 lakh.

The above expenditure has been financed from the subscription towards share capital received from the promoters.

Proposed deployment of Issue proceeds pending utilisation for the project

Pending utilisation of Issue proceeds for the proposed project, the company proposes to deploy the same profitably keeping the best interest of th

shareholders in mind. The funds are proposed to be deployed in bank deposits, marketable securities etc.

PRINCIPAL TERMS OF LOAN SANCTIONED BY IDBI

Date of

sanction

Nature of

assistance

Agree-ment

date

Amount

sanctioned/

outstanding

(Rs lakh)

Rate of

interest

(p.a.)

Re pa yme nt sc he dule Se curi ty

03-04-95

Convertible

Rupee term

loan

12-02-96 100/47.08 20% 17 quarterly instalments

of Rs 5.88 lakhs each

commencing from

January 1,1998 and

ending on January

01,2002.

i)First

charge over

the fixed

assets of

company &

ii)Personal

guarantees

of

promoters

03-04-95 Direct

Subscription to

Equity

12-02-96 55* NIL NIL NIL

02-03-00 Direct

Subscription to

Equity

Yet to be

entered into

100 NIL NIL NIL

Notes:

1. Out of the sanctioned DSE of Rs 55 lakh, IDBI has subscribed to Rs 50 lakh as on date and the company has submitted a request for the

cancellation of the balance amount; the approval of which is awaited. The venture for which DSE was sanctioned has been completed and the

promoters have increased their stake to the extent of unsubscribed DSE of Rs 5 lakhs.

2. Outstanding amount of loan sanctioned by IDBI stood at Rs.47.08 lakh as on January 1, 2000.

3. As on date ,there are no overdues to IDBI.

4. Repayment of loan is guaranteed by the four original promoters viz. S/Shri Ashok Atluri, Ravi Kumar, Selwyn Samuel and A.V.Rao. Out of th

original promoters Shri A.V. Rao and Shri Selwyn Samuel stepped down from the Board of the company due to their pre-occupation and they

have divested their shareholding in favour of their friends and relatives.


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5. At the option of IDBI, the loan amount is convertible into equity shares at par any time during the currency of the loan.

WORKING CAPITAL ARRANGEMENTS

The company is not having a working capital account with any banker. The working capital requirement for the initial period form part of the projec

cost appraised by IDBI. The working capital requirement for the subsequent period is proposed to be met out of internal accruals and no bank

borrowings are envisaged for working capital requirements.

V. COMPANY, MANAGEMENT AND PROJECT

HISTORY OF ZEN TECHNOLOIES LIMITED

ZEN TECHNOLOGIES LIMITED (ZTL), incorporated in 1993, as a public limited company, is engaged in the manufacture and marketing of high-en

multimedia weapon simulators viz. small arms training simulator (SATS) used for training of police, paramilitary and armed forces. The manufacturin

process involves adaptation of latest hardware and software technologies. The company has so far supplied 22 SATS to various police and par

military organisations, notably The National Police Academy ,Hyderabad and all the SATS are working satisfactorily. The company was sanctione

assistance of Rs.155 lakh under Venture Capital Fund (VCF) Scheme of IDBI in April 1995 comprising convertible rupee term loan (RTL) of Rs.10

lakh and DSE of Rs.55 lakh for setting up the facilities for the manufacture of weapon training simulators at Hyderabad at an estimated cost of Rs.260

lakh. Implementation of the venture was delayed due to delay in obtaining orders for its products. Although the product development work wa

completed earlier, the commercial production commenced in April 1998 as against April 1997 originally envisaged. The company is presentl

operating from 2 premises in Hyderabad admeasuring about 4000 sft which the company has taken on lease basis. The 2 Lease Agreements effectiv

from April 6,1995 and May 15, 1995 are for a duration of 3 years and are renewable after every 3 years upon mutual agreement of both parties. T

ensure integrated operations and for smooth functioning, the company proposes to acquire new premises in Hyderabad, whereupon the compan

proposes to vacate the leased premises. However, the company has yet to identify the location of the proposed premises.

The company proposes to expand its existing activities by setting up facilities for the manufacture of advanced weapons training simulators viz. Tactica

Engagement Simulators (TacSim) and Interactive Small Arms Training Simulator (iSATS) at Hyderabad. The above simulators have been develope

as a result of extensive discussions with end users, who have expressed desire to have such advanced training simulators for comprehensive an

effective training of their personnel. The company feels that the addition of the proposed two products would offer its customers a complete range o

weapons training simulators and improve the overall profitability of the unit.

ZTL has entered into a Memorandum of Understanding (MOU) with Bharat Dynamics Ltd. (BDL), a public sector undertaking (under th

Department of Defence Production & Supplies, Ministry of Defence, Govt of India). BDL manufactures defence equipment and small arms to mee

the needs of the Indian Armed Forces and Paramilitary Forces. BDL also makes Trainer Simulators for the defence equipment. BDL would marke

the products of ZTL to Indian Army (IA), paramilitary organisations, police establishments and other Government organisations. BDL and ZTL hav

already undertaken several visits and demonstrated the products to various Govt. and police establishments and are hopeful of getting orders. Th

implementation of the proposed expansion scheme will enable the company to widen its product mix as also its client base.

MAIN OBJECTS OF THE COMPANY

The main objects of the Company, as stated in the Memorandum of Association, are as under:

a) To carry on the business of manufacture, buy, sell, import, export, assemble and maintain computers, electronic gadgets and allie

products including process control equipment, and provide expert advice and services on computer software and hardware packages

to individuals, firms, companies, societies, association of persons, charitable institutions, government bodies) both within and outside th

country.

b. To carry on the business of management consultancy services, market research and surveys, liaison with statutory bodies and organize or co-

ordinate training programmes such as workshops, seminars, symposiums and conferences to the Educational institutions, Professional

Association, Voluntary Organisations, Business Organisations and Industrial Establishments.

c. To act as commission agents, stockists, representatives, distributors and clearing & forwarding agents of all computers, electronic items proces

control equipment, and other allied products.To develop, construct, fabricate, transfer and sell Simulators, Training simulators, and Allied

Products including Weapons Training Simulators for use of Armed Forces, Security Agencies, Police and other similar bodies within and

outside the Country.

SUBSIDIARIES OF THE COMPANY

The Company has no subsidiary.

PROMOTERS AND THEIR BACKGROUND

The company was originally promoted by S/Shri Ashok Atluri, Ravi Kumar, Selwyn Samuel and A.V.Rao. Subsequently, Mr Selwyn Samuel and M


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A.V.Rao stepped down from the Board due to their pre-occupation and they have divested their shareholding in favour of their friends and relatives

Later in November 1999, Shri Satish Atluri was inducted as promoter of the company and acquired equity shares from the company. He was also

inducted on the Board of Directors of the company on November 20,1999. The company presently has 3 promoters viz. S/Shri Ashok Atluri, Satis

Atluri and M. Ravi Kumar.

Mr Ashok Atluriaged 35, is a commerce graduate with postgraduate diploma in applied computer science from CMC Ltd. He received Sma

Scale Entrepreneur of the Year award from Hyderabad Management Association for the year 1998. He is the Managing Director (MD) of th

company.

Mr Satish Atluriaged 31, brother of Shri Ashok Atluri is a post-graduate in computer science from North Carolina A & T State University. He i

having about 7 years of experience in Information Technology (IT) industry in USA. He worked in SAS Institute as developer (1993-94), AutomateAnalysis Corp. as project manager (1994-96), Object Design as senior consultant (1996-97). At present he is working as senior consultant fo

Mercury Interactive Corp.,USA, a leading consultant for global companies viz. IBM, Dell, Ernst & Young, Anderson, Price Waterhouse Cooper

Texas Instruments, KPMG, etc. He is one of the Directors of Zen Technologies Limited.

Mr M Ravi Kumaraged 41,is having 20 years of experience in software industry. He worked in Bureau of Data

Zen Technologies.

Documents

Transcript of Zen Technologies.