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MANAGEMENT OF FINANCIAL SERVICES ASSIGNMENT

[Type the document subtitle]

Submitted To: Prof. Seema C. (Asst. Professor)

Submitted By: Vinay Goel (1121328) Sudhanshu Garg (1121403) Swathi Ajayan (1121440) Rajat Kukreti (1121511) Kevin Isaac (1121530) Meenu Joseph (1121558)

Christ University Institute of Management

AN OVERVIEW: TAKSHEEL SOLUTIONS LTD.
Founded in 1999, Taksheel is a cutting-edge of technology driven company focused on providing innovative, highly robust, extensive scalability of investment for products and solutions offered. Taksheel focused vitally on business sectors such as Finance, Information Technology and Telecom. Entire offering supports customization and flexibility to customer‘s requirement and provides extensive support with pre-defined SLA‘s. Taksheel core management team from versatile background with decades of experience from industries such as BFSI, Telecom, IT as spine of company focused to build taksheel as market leader and to create bench mark as trendsetter. Taksheel‘s Wealth Management Technology Solutions is built on Service Oriented Architecture (SOA) enabling us to rapidly deploy a customized version of our solution to help them better manage their customers‘ assets, increase their sales, improve their service and generally lower their operating costs. In addition, our Financial Technology Solutions practice provides end-to-end cycle of designing, developing and implementing the clients' software applications in a wide variety of architectures and platforms. Wealth Management: Wealth management to financial institutions offerings such as Asset and Investment managers, Brokerage houses, Insurance, Hedge funds, Trusts and Family Offices. Telecom: Enterprise IP telephony Solutions, Carrier Switching & Billing Solutions, Contact Center Solutions, IVRS, SMSC, Voice & Video Conference solutions, Chat platforms, Content Delivery Platforms, Closed Private GSM network (CPMN) and more. Information Technology: Enterprise Network Implementation (LAN,WAN,MAN), OS migration to open source, Software Development, Application customization, Managed IT services (Desktop, Server, Network, NOC support) Server Implementation & Support (Windows, Unix, Sun, Linux) Data Storage Network (SAN, NAS) Network & Data Security Solutions, Network Monitoring System, NOC support Systems, Data center and Disaster recovery center implementation, CRM solution and more. Taksheel offers cost-effective solutions through its Onsite, Offsite and Offshore development methodology by leveraging its global delivery model and utilizing delivery centers based in Hyderabad, India, and New Jersey, USA. Some of our customers include Merryll Lynch and Bank of America.

Fundamental Information Net Sales (Rs. Mill) Net Profit (Rs. Mill) Net Worth (Rs. Mill) Total Debt (Rs. Mill) Total Assets (Rs. Mill)

Amount (Mar’12)

Technical Information

Amount (06/08/12) 242.30 5.54 1.67 10.00 0.09

1,721.45 Market Cap (Rs. Mill) 146.81 Book Value (Rs. Mill) 906.01 EPS (Rs. Mill) 85.91 Face Value (Rs.) 992.10 Debt Equity Ratio

subject to valid Bids being received from them at or above the Issue Price.EVALUATING TAKSHEEL’s IPO: IPO was evaluated using several following parameters: 1. Mr. . 150/. 130/. Is this a good promoter? Taksheel is promoted by Mr. The company decides the price and later the collective secondary market discovers the true price post-listing after more information inflows/ analysis. Pavan Kumar Kuchana. subject to valid Bids being received from them at or above the Issue Price. 2000. out of which 5% shall be available for allocation on a proportionate basis to 20 Mutual Funds only and the remaining QIB portion shall be available for allocation on proportionate basis to all QIB Bidders. Is this an IPO or an FPO? Taksheel Solutions Ltd.f.(Floor Price) and the maximum price of Rs. Ramaswamy Kuchana (―Individual Promoters‖) and Lexicon Private Limited (―Corporate Promoter‖). The Price Band of a minimum price of Rs. Further. not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders. Mauritius as ‗Kuchana Software Solutions Limited‘ and subsequently changed the name of our company as ‗Lexicon Private Limited‘ w. Lexicon operates as Global Business License Category 1. came out with their IPO (Initial Public Offer) for the very first time in 2011. Bid/Issue was opened on 29th Sept‘11 and closed on 24th Oct‘11.(Cap Price) and include revisions thereof.e. The final price at which equity shares will be issued and allotted in terms of the prospectus as determined by the company in consultation with book running lead manager on the Pricing Date. 1998 in Port Louis. Is this a fixed-price or a book-building issue? This Issue is being made in terms of Regulation 26 (1) of the SEBI ICDR Regulations and through the 100% Book Building process wherein up to 50% of the Issue shall be allocated on a proportionate basis to Qualified Institutional Buyer (‗QIB‘) Bidders. including Mutual Funds. October 17. 2. Lexicon Private Limited was incorporated on June 30. 3. as per Financial Services Commission of Mauritius.

he founded IBSS Inc. Pavan provides Taksheel with a track record in developing "go to market" models. Mr. and Republic of Mauritus. he became the Director of our Company and in the year 2006. as per Financial Services Commission of Mauritius. b) Corporate Promoter:  Lexicon Private Limited incorporated on June 30. in its formative years. Chairman and Managing Director of our Company. leveraging his skills in defining market opportunities. Mr. Pavan Kumar Kuchana. What is the promoter’s background and experience? a) Individual Promoters:  Mr.e.f. Ramaswamy was joined the forest department under the Government of Andhra Pradesh in 1964 and has put in more than three decades of service before retiring as Forest Range Officer. The Registered Office of our Company is located at Level 11. Lexicon operates as Global Business License Category 1. optimizing Company's resources to deliver solutions to these markets. Pavan has taken an active role to build a global organization with a focus on delivering value to customers. is the core promoter of our Company. and to build substantial barriers to entry. In the year 2000. 43 years. He was instrumental in setting up the offshore development center at Hyderabad. One Cathedral Squares. 2000. 68 years. Port Louis. in New Jersey in 1995. is a Chairman & Managing Director of our Company. Since inception of our Company. City University. India. Pavan has more than 16 years of experience in the industry. Mr. New York. Mr. Prior to joining Taksheel. His leadership skills and administrative experience were of immense help to our Company.  Mr. . Ramaswamy Kuchana. 1998 in Port Louis. Mauritius as ‗Kuchana Software Solutions Limited‘ and subsequently changed the name of our company as ‗Lexicon Private Limited‘ w. October 17. He is the father of Mr.4. and in procuring the land from Government of Andhra Pradesh. for construction of the proposed development center at Warangal. Pavan Kumar Kuchana. he was appointed as the Managing Director. He holds Bachelor‘s Degree in Electronics and Tele-communications from Nagpur University and Masters in Computer Science from City College of New York (CCNY).

NSE.  Financial Statements are prepared with going concern concept and in accordance with GAAP  Depreciation on the Fixed Assets of the Company is provided on straight line Method .49% 8. reliable? Taksheel‘s financial reports are audited every year and considered reliable. Are the financials. According to www. India is a Main company and its Holding company is a Mauritius based..23Cr (Market Cap)  Growth rate: CAGR 65. in F&O segment and ensure that no fresh positions are created 6.watchoutinvestor. Is the promoter a liability or an asset? It can be better understood from the past defaults/ complaints against the company. specially the recent ones.5. SEBI made following regulatory charges against Taksheel:   Misutilized issue proceeds Did not make proper disclosure and made mis-statements of related parties in prospectus SEBI made following regulatory actions/ date of order against Taksheel:      Prohibited from raising any further capital in any manner. How has been the performance of the company?  Number of years in the business: 13 years (1999 to 2012)  Size of the company: Rs.com. NSDL and CDSL to ensure that directions issued vide order are strictly enforce Directed BSE and NSE to permit members to square off their existing open positions if any. 24. Lexicon Private Limited. What is the status of the issuing company? Taksheel Solutions Ltd. 7. directly or indirectly from 28-dec-2011 till further orders Directed company to call back ICDS and/or other amounts and deposit the same in an interest bearing escrow account Debarred/restrained from buying/ selling/ dealing/ IPOs in securities/ specified SCRIPS directly/indirectly from 28-dec-2011 till further orders Directed BSE.

44 Mill and Rs. A higher EPS is regarded as better. than a low EPS as it means investors are earning bigger profits for every share they own. 60. 1.44% c) EBITDA & EV: EBITDA is a profit key ratio that looks at the Earnings before Interest. 177. installation and other borrowing cost attributable to bringing the assets to commercial production are capitalized and shown at net of accumulated depreciation.24 Mill and Rs. computed category wise. What are the key financial parameters/ ratios to look at? a) Earnings Per Share (EPS): EPS measures the earnings a company makes for each share in existence. It is calculated by taking a company‘s net earnings and dividing them by the number of shares in issue.  Long term Investments are carried at cost and provisions is made to recognize any decline.46 Mill at the end of 2011 10.67 Mill b) Return on Capital (ROC): ROC helps investors assess how hard a company is making its assets work. Current y-o-y EBITDA growth rate is 225. Investors look not only at the current EPS but also at estimates of future EPS to get an idea of the profits they will earn in future years.70 Mill and Nil thereafter  Loans & Advances: In 2010. 26. Its current ROC stands at 228. It can used to analyse companies that reinvest heavily in their businesses by taking the Enterprise Value dividing it by EBITDA. 121. Fixed Assets are stated at the cost of acquisition including incidental costs related to acquisition. Rs. It is calculated by taking profits before interest and tax are removed and dividing this figure by the capital employed. the higher the return on capital. Broadly speaking. 506. 121.09 . Rs. Current investments are carried at the lower of cost and quoted/ fair value.12 Mill at end of 2011  Cash Balance: In 2010. the more successful a company is. Rs. Tax.41% and its EV/EBITDA is 0. Its current EPS stands at Rs.  Taksheel generally follows mercantile system of accounting 9. 1. It is used to assess the operative profitability of a company. Rs. What to look for in the Balance Sheet?  Fixed Assets: In 2010.76 Mill at the end of 2011  Investments: In 2009.63 Mill and Rs. Depreciation and Amortization.

How are the Cash Flows? Cash flow of a Company is a key indicator to show the extent of cash generated from operations to meet capital expenditure. applicable Indian legal restrictions and other factors. What is the dividend track record? Taksheel has not paid dividends in the past three financial years. While the industry displayed tenacity and resilience. crossing significant milestones in terms of revenue growth. looking for severe pricing cuts and stretching the dollar. the Indian IT-BPO sector has become the country‘s premier growth engine. cash flows. pay dividends. The changing demand outlook. financial condition. If we are not able to generate sufficient cash flows. There can be no assurance that we will be able to paying dividends in future. went bankrupt while others renegotiated pricing. The amount of future dividend payments. in addition to becoming the global brand ambassador for India. it also commenced its journey to achieve its aspirations in view of the altered landscape. delayed payments and deals. it may adversely affect our business and financial operations. will depend upon our future earnings. cancelled deals. working capital requirements and capital expenditures. 13. repay loans and make new investments without raising finance from external resources. However. Investing activities and Financing activities in the past five fiscals.11. The details of which is summarized below: 12. . Taksheel had negative cash flows in Operating activities. customer conversations and requirements acted as a driver to build in greater efficiencies and flexibility within the service delivery and the business models – one which is here to stay 2009 was also instrumental for more ways than one for the industry. How has been the performance of the group companies? Over the past decade. employment generation and value creation. the industry performance was affected by these recessionary headwinds as the clients cut their IT budgets. if any.

As a proportion of national GDP. The cumulative figure of related party transactions for the last three financial years ended March 31. Its share of total Indian exports (merchandise plus services) increased from less than 4 per cent in FY1998 to 26 per cent in FY2011. entered into transactions with related parties that include entities forming part of our Promoter Group and Group Companies.1 billion in FY2011. there can be no assurance that we could not have achieved more favourable terms had such transactions not been entered into with related parties. individually or in the aggregate. with the IT software and services sector (excluding hardware) accounting for USD 76. During this period.1 billion of revenues.2 per cent in FY1998 to an estimated 6. while indirect job creation is estimated at 8. along with the emerging markets increasingly adopting outsourcing for enhanced competitiveness.4 per cent in FY 2011. There can be no assurance that such transactions. Key demand indicators in the last two quarters such as increased deal flow. stable pricing. and faster decision making has made the industry post good results.000 employees. . Furthermore.The advent of 2010 has signalled the revival of outsourcing within core markets. 2009. will not have an adverse effect on our financial condition and results of operations. it is likely that we will continue to enter into related party transactions in the future. 14. How significant are the related party transactions? Taksheel in the course of business. The sector is estimated to aggregate revenues of USD 88.5 million. 2010 and 2011 is as follows: While company believe that all such transactions have been conducted on an armslength basis and contain commercial terms. an addition of 240. volume growth. the sector revenues have grown from 1.3 million. direct employment is expected to reach nearly 2.

Analog and GSM Channel banks. Voice Loggers. Data Security Solutions. Signaling System 7(SS7). Telecom Signaling Integrated Standard Digital Network (ISDN). Who is on the Board of Directors? 16. Company majorly focused on providing customized solution in the area of Enterprise IP-Telephony. Our product portfolio covers enterprise IP-Telephony. NMS and other IT Solutions. Video Conferencing. Voice Loggers. What are the products/ services of the company? Taksheel‘s solutions/ services. IVRS. Channel Associated Signaling (CAS). Least Cost Routing system (LCR). . include the following:      Wealth Management Solutions Telecom Solutions Application Development & Maintenance Data Warehousing & Business Intelligence Offshore Outsourcing. Network Monitoring & Management. VOIP Integrated Wireless solutions. Unified Communication System. Video Conferencing. in general technical areas. Optimal Routing Solutions (ORS). Our products range covers Analog. Voice Mail Servers (VMS) and other Value Added Services (VAS) content delivery platforms. Unified Messaging System. Wireless VOIP solutions. Carrier Grade solutions for wholesale retail clients over VOIP. Digital & GSM PCI telephony Interface cards. Company is specialized in and developed products in IP multimedia subsystem(IMS). Carrier Grade solutions. Multi-functional IP Phones (Basic Executive and Advanced). Short Message Service Centre (SMSCs). IVRS.15.

This is also prompting customers to move from CAPEX to OPEX based models. and application development tools are proving to be game changers for an increasing set of customers. as technology creates virtual supply chains.6 trillion. and deal size reductions as buyers came to terms with new business models and budgetary constraints. customers will require a seamless experience across time zones and geographies. precipitated by the increased maturity of Indian providers. Hardware spends at USD 599 billion. include the following:  Verticalised Solutioning: A number of organization‘s have restructured themselves around verticals and Centre‘s of Excellences . . incremental set of enhancements imbibing best in class learning and practices in established service delivery processes also have the ability to create wide ranging transformation for clients. These Verticalised business units act as a source of innovation and development of proof of concept solutions. accounted for the balance 37 per cent of the worldwide technology spending. increasing demand for innovation and end-to-end transformation. creating products aimed at growing emerging markets and creating a substantial revenue impact for them. IT and BPO services continued to lead. Software products.  Process innovation/ re-engineering: Coupled with automation and six sigma skills. that go beyond lower-cost replication. What about customers? Customers will demand 'transformative' value propositions.so as to develop and deliver end to end services keeping in mind customer needs.17. accounting for over USD 1 trillion . The year saw wide ranging contract restructuring exercises. However. It has since than evolved to emerge as a specialized solutions provider offering Wealth Management Technology Solutions. cloud based products integrating business intelligence.  Technology enablement: Development of solutions around platforms. a growth of nearly 4 per cent over 2009. What about technology? 2010 was a year of steady growth for the technology and related services sector. Business Intelligence. It‘s in general technical areas. Application Development and Application Maintenance. Data Warehousing. multi-sourcing saw higher adoption. Telecom Solutions. Taksheel‘s vision is of simplifying Information Technology for business. 18.63 per cent of the total spend. with worldwide spending expected to exceed USD 1.

This company is being a smaller player.00.considering companies are currently trading in mid single digit PEs. What are the promoters holding after the issue? Holder's Name Promoters No of Shares 1106172 %Share Holding 5. or ―our company‖. savvy customers are constantly demanding more .1 times which is quite a stretch. [•] per equity share (including a share premium of Rs.08 on the upper band while on weighted average of EPS its calculated to be around 14.150 per share.66 Cr. [•] per equity share) aggregating to Rs. While cost and talent still remain essential considerations for global sourcing. renewed partnerships/alliances and new business models. flexibility and innovation.000 equity shares of Rs. With customers demanding more immediate value from IT and forward-looking strategies that support growth and innovation. The issue will constitute 25. 19.offer to public is being made at PE 9. [•] lakhs (―the issue‖). service providers are adopting agile methods focusing on operational excellence through ongoing innovation. What is the size of the issue? Public issue of 55.having registered a respectable topline only in the previous year doesn‘t deserve such high PEs . 20.06% 22) Is the price justified? The P/E has been calculated on recent years EPS as 9. What will be the public float after the issue? Number of outstanding shares of the company is around Rs.each of Taksheel Solutions Limited (the ―company‖. 10/. diversification.At upper end of price band of Rs.growth markets. 1.17 % of the fully diluted post issue paid-up capital of our company. or the ―issuer‖) for cash at a price of Rs.Recent global M&A activity in the sector indicates select acquisitions by established service providers to enhance skill and scale. 21.

24) Are any major government approvals pending for the company? The company has already received the necessary consents. 27) Is the company/ group company already listed abroad? The company has a corporate promoter namely Lexicon Private Limited which was incorporated on 30th june.23) What are the objectives of the issue? Objects of the issue look structured as the company plans to use Rs 22 crore for acquiring firms in a similar line of business.it can tap debt route to fund acquisitions as it had net debt on only rs 2. Chennai. . Lexicon Private Limited is not a sick company nor is it under winding up.Since the company has net worth of 91 crore.The acquisition target has not been finalised and just a chest is created for inorganic growth opportunities. permissions and approvals from the Government and various governmental agencies required for the present business (as applicable on date of the Red Herring Prospectus). namely tagline of the company and logo. no action has been taken against Icon by any stock exchange or regulatory authority.which will increase to over 160 crore .8 Crore and working capital needs of Rs 12.post IPO . 25) Are there any significant trademark/brand/copyright issue? At the time of the IPO they had applied for a trademark which was pending before the trademark registry. 1988 in Port Louis.8 crore.13 crores subscription. They had applied for registering trademarks.to set up 2 software development centers at SEZs in Hyderabad and Warangal for aggregate at Rs 17.5 crore. Lexicon Private Limited is a private company limited by shares and it has not made any public or rights issue in the preceding three years. The company logo and the tagline has been registered. Further. NSE and BSE with a combine turnover of around 9.e. licenses. 26) Where is the company listing? The company listed in both the major exchanges of India i. Mauritius as ―Kuchana Software Solutions Ltd‖.

Industry analysis: Over the past decade. All these measures. the industry performance was affected by these recessionary headwinds as the clients cut their IT budgets. customer conversations and requirements acted as a driver to build in greater efficiencies and flexibility within the service delivery and the business models – one which is here to stay 2009 was also instrumental for more ways than one for the industry. it also commenced its journey to achieve its aspirations in view of the altered landscape. in addition to becoming the global brand ambassador for India. subject to valid Bids being received at or above the Issue Price. The Issue was being made through the 100% Book Building method wherein up to 50% of the Issue to Public was available for allocation to Qualified Institutional Buyers on a proportionate basis (of which 5% shall be available for allocation on a proportionate basis to mutual funds only). innovate through research and development and drive inclusive growth in India by developing targeted solutions for the domestic market. cancelled deals. delayed payments and deals. However. along with India‘s game changing value proposition have helped India widen its leadership position in the global sourcing market. Further. The advent of 2010 has signalled the revival of outsourcing within core markets. the Indian IT-BPO sector has become the country‘s premier growth engine. It commenced working on its agenda to diversify beyond core offerings and markets through new business and pricing models. crossingsignificant milestones in terms of revenue growth. The changing demand outlook. specialises to provide end-to-end service offerings with deeper penetration across verticals transform the process delivery through re-engineering and enabling technology. along with the emerging markets increasingly adopting outsourcing for enhanced competitiveness. Key demand indicators in the last two quarters such as increased deal flow. not less than 15% of the Issue to Public was available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Issue to Public would be available for allocation on a proportionate basis to Retail Individual Bidders. looking for severe pricing cuts and stretching the dollar. While the industry displayed tenacity and resilience. employment generation and value creation. stable pricing.28) Is there any special reservation for shareholders of the company/group companies? The Company is eligible for the Issue in accordance with Regulation 26(1) of the SEBI ICDR Regulations. went bankrupt while others renegotiated pricing. volume growth. and faster decision making has made the industry .

Wealth management market is an attractive niche segment in financial services industry.Advantage of Early Entry The company is one of the few players that entered in the Wealth Management Solutions market in its early stages and remain focused on providing cutting edge technology solutions to the global clients in the market. Its share of total Indian exports (merchandise plus services) increased from less than 4% in FY1998 to 26% in FY11. Strengths: . improved efficiency and changing demand outlook signifies early signs of recovery. Least Cost Routing system (LCR). Optimal Routing Solutions (ORS). an addition of 240000 employees. development of new growth levers. . Voice Mail Servers (VMS) and other Value Added Services (VAS) content delivery platforms.3mn. while indirect job creation is estimated at 8. trusts and family offices. insurance companies. such as banks. Unified . With the cumulative experience and business process exposure the company is able to offer differentiated and customizable services to the clients.1bn of revenues. .Wide Range of Wealth Management Solutions The company provides wealth management technology solutions to global financial institutions in serving its clients. direct employment is expected to reach nearly 2. Wealth management solutions market is a high margin niche in BFSI sector. Channel Associated Signalling (CAS). brokerage firms.post good results. Its product portfolio covers enterprise IP-Telephony.4% in FY11.2% in FY98 to an estimated 6. Signalling System7 (SS7). As a proportion of national GDP. with the IT software and services sector (excluding hardware) accounting for $76. Versatile and State of the art Telecom products The company is specialized in IP multimedia subsystem(IMS). The sector is estimated to aggregate revenues of $88. During this period.1bn in FY2011. Telecom Signalling Integrated Standard Digital Network (ISDN). Short Message Service Centre (SMSCs).Unique. Though full recovery is expected in another two quarters.5mn. investment managers. the sector revenues have grown from 1. hedge funds. which is constantly improving the top-line as well as the bottom-line of the company.

The IT services market is characterized by rapid technological changes. reduced or deferred expenditures for IT services. IVRS. the services or technologies it develops may not be successful in the marketplace. Wireless VOIP solutions. However. Voice Loggers. This may result in cancelled. The future success of the company will depend on its ability to anticipate these developments and the company is successful in maintaining the same. . Investment Risks . resulting in lower gross and operating income of the Company. . evolving industry standards. .The company has negative operating cash flow for two out of last five years. if it is not able to generate sufficient cash flows. The company has the liability to buy back the shares & pays the said amount or else the investor can sell the shares to any other person by mutual agreement at any amount and the company has to pay the difference in the said amount. NMS and other IT Solutions. As per the terms. It has established competency centers. if company does respond.Discretionary spending on IT products and services in most parts of the world has significantly decreased due to a challenging global economic environment.Communication System. it may adversely affect the business and financial operations. the company has failed in doing so and the investor still has not exercise the option. going forward it may not be successful in anticipating or responding to these advances on a timely basis or. changing client preferences and new product and service introductions. .17Cr and also come up with an IPO within 18 months from the date of allotment. Video Conferencing. the company is required to buy back all the shares at Rs. Carrier Grade solutions. support and promote core businesses. product engineering and platform expertise that are cross-functional teams which develop capabilities to differentiate.Depth of experience and knowledge in targeted industry segments The company has invested in building a team of industry specialists who have an understanding of the industries in which customers operate and the competencies that they require.10Cr for acquiring 1mn shares of the company. However. across domain. .The company has entered into the agreement with one of the investor at the cost of Rs.

The Company doesn‘t own the premises where its registered office is situated and legal formalities for execution and registration of lease deed are yet to be completed. The only other vertical that the company focuses on is telecom. especially given that all asset classes — equity. mostly financial institutions that are into wealth management solutions. insurance. They do so by delivering services across retail and wholesale banking. If proposals such as increasing taxes for the rich. there are other challenges as well. except for the management’s capability to have a profitable sub-contracting model which does not seem sustainable. who generally avail of wealth management solutions. and the current volatile market conditions continue. wealth management business can swing in fortunes significantly. BUSINESS CONSTRAINTS Taksheel focuses on delivering services to clients. Any termination or dispute in relation to these leases may have a material adverse effect on the business operations and results thereof. investment banking. small players such as Taksheel may face find it difficult to compete with other entrenched players. In short the company has no unique differentiating factor. There are several software companies in the mid-sized category that focus on the BFSI segment and grow at a steady clip.. Not only does it present a concentration risk on a single vertical. go through. . The company also derives all its revenues from the US. capital markets. This vertical has been in the doldrums for large and mid-sized software companies for the past couple of years. The top 10 clients of Taksheel account for over 80 per cent of its revenues which exposes it to the vagaries of any ramp down and pricing reductions to a significant extent. Given the cyclical nature of investments. It is expected to turn around only after a couple of years. which means that this segment may not deliver significant revenue growth for the company. debt and gold — face challenging times. thus affecting the IT spends of clients significantly. This segment contributes over 70 per cent of the company's overall revenues. But to focus on a niche area even within BFSI is a risk for Taksheel. and so on. With clients across-the-board engaging in vendor rationalisation. The company has had negative cash flow from operations till FY10 as a result of high levels of sundry debtors and receivables and has only marginally positive cash flow in FY-11. clients would be faced with lower volumes. an economy that faces severe debt and growth challenges.

the unauthorized disclosure of confidential .. The IT Act further provides or civil and criminal liability including fines and imprisonment for various cyber crimes.Financial Technologies (India) Ltd. KEY INDUSTRY REGULATIONS AND POLICIES  INFORMATION TECHNOLOGY ACT. And Hexaware Technologies Ltd. 2000 The Information Technology Act. including unauthorized access to computer systems. 2000 (―the IT Act‖) was enacted with the purpose of providing legal recognition to electronic transactions and facilitating electronic filing of documents.PEER ANALYSIS: Some of the competitors to Taksheel Solutions Ltd include Ybrant Digital Ltd. damaging computer systems. unauthorized modification to the contents of computer systems.

attribution and security.Penalties are provided for cyber crimes which include tampering with computer source document and electronicpublishing of obscene information. The IT Act regulates Information Technology i. their use. 1970 The Patents Act. retention. such as India. While registration of a trademark is not compulsory it offers better legal protection. processing and communication. In additionto broadly requiring that an invention satisfy the requirements of novelty. 1970 (‗Patents Act‘) is the primary legislation governing patent protection in India. The term of a patent granted under the Patents Act is for a period of twenty years from the date of filing of application for the patent. The renewal is possible for further period of 10 years each. 1999 The Indian law of trademarks is enshrined in the Trade Marks Act. The term of a trademark registration is for a period of ten years. However. A party that files their first trademark application in a member state of the Convention. The Act provides legal recognition of electronic records and electronic signatures.  THE PATENTS ACT. The . The Trade Marks Act seeks to provide for the registration of trademarks relating to goods and services in India. If such a trademark is accepted for registration it will be deemed to have registered from the same date on which the application is made in the home country.e. Any person can apply for registration of a trademark to the Trademark Registry under whose jurisdiction the principal place of the business of the applicant in India falls. can within six months of that filing date file applications in other member countries claiming the priority of the first application. in addition to provision of compensation in certain cases  TRADE MARKS ACT. it governs information storage. utility and non obviousness in order for it to avail patent protection. the Patents Act further provides that patent protection may not be granted to certainspecified types of inventions and materials even if they satisfy the above criteria.information and computer fraud. Paris convention to which India is a party provides certain privileges to member countries in trademark registration. A trade mark means a mark used in relation to goods for the purpose of indicating a connection in the course of trade between the goods and the proprietor.There is no system as yet wherein a single trademark application is sufficient to protect the trademark right internationally.

Patents Act deems that computer programs per se are not ‗inventions‘ and are therefore. This position was diluted by The Patents Amendment Ordinance. not entitled to patent protection. expeditious and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export-led growth. Service Tax. The functioning of the SEZs is governed by a three tier administrative set up. Combinations of computer programs with the hardware. Operation and Maintenance of SEZ units and 100% Income Tax exemption on export income for SEZ units Section 10AA of Income Tax Act for first 5 years. 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years. and 2. Single window for central and state level approvals and Exemption from State sales tax and other levies as extended by the respective State Governments. 2004. The Board of Approval is the apex body and is headed by the Secretary. who is exofficio chairperson of the Approval Committee. External Commercial Borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels. Exemption from Central Sales Tax. Department of Commerce. The Approval Committee at the Zone level deals with approval of units in the SEZs and other related issues. which included as patentable subject matter: 1. 2000 with a view to provide an internationally competitive environment for exports. .  SPECIAL ECONOMIC ZONES SCHEME The Government of India had announced a SEZ scheme in April. The objectives of SEZs include making available goods and services free of taxes and duties supported by integrated infrastructure for export production. Each Zone is headed by a Development Commissioner. BENEFITS UNDER THE SEZ SCHEME The Duty free import / domestic procurement of goods for Development. Technical applications of computer programs to industry.

The market regulator has asked them to deposit the proceeds from the IPOs in escrow bank accounts and also call back the IPO proceeds to their cash credit accounts. the book running lead manager of IPO of Taksheel Solutions and Almondz Global Securities (PG Electroplast and Bhartiya Global Infomedia)". Their CEOs too have been barred from participating in the capital market till further order.POST IPO CONTROVERSY: Cracking whip against seven firms for not complying with the disclosure norms in their IPO prospectus. merchant bankers and other related entities from participating in the securities market till further order. . The merchant bankers who have been prohibited from participating securities market. their directors. Sebi on Tuesday barred the companies. include "PNB Investment Services.

797082 0.14 19.21 19.81 33.378 11.1 5. .408622 FCFF: The Share is currently under priced by 40%.6249 29.333 5.92 -39.643 5.1974 4.51 -17.46 4.67 0.73 -9.0973 261.048 0.15 0.058 0. A buy decision will be apt for this at present.402 256.06 2009 2.892794 0.64 6.593 51.87 -6.40507 453.17 -2.2663 6.23 -13.100075 257.747 0.817 6.503 7.108 2.71 % change Market Price 11.5 -6.94 2.32 2010 16.567227 -60.333 0.2525781 4.888 29.513 12.878 18.07 EBIT NOPAT( EBIT*(1-TAX)) Add: Depreciation Less: Working Capital Changes Less: CAPEX FCFF PV Factor PV FCFF Sum PV FCFF PV Terminal Enterprise Value Value of Debt Value of Equity Intrinsic Value 2008 8.635339 0.27941 13.348 24.84 0.04 54.7954 15.31 2011 Terminal 8.15 0.VALUATION: 2007 28.05699 15.19 11.8 -67.71163 0.378 11.

17 0.49 2.07 0.05 3.22 0.68 2007 99.68 -9.03 36.59 12.87 52.64 54.59 0.15 42.8 0.04 3.85 0.15 Assumed 0.87 0.87 3.068 0.45 -6.34 0.89 -6.06 0.23 27.36 6.02 0.17 2008 96.5 2009 79.64 5.87 .55 9.81 0.33 33.09 3.35 -2.07 13.05 2.73 0.12 Working Capital Changes: Current Assets Current Liabilities Working Capital Changes CAPEX: Total Assets Current Assets Fixed Assets CAPEX 2006 6.19 4.01 -39.03 31.082 0.85 54.54 0.Working Notes: Rm Rf Market Premium Beta Borrowings Interest Paid Debt Equity Cost Of Debt Cost Of Equity WACC 0.14 47.68 12.14 3.51 -17.83 8.8 3.62 3.08 4.67 3.18 42.36 56.99 42.11 0.51 0.58 37.92 2011 17.12 0.73 31.17 3.46 2010 65.21 42.81 4.

The EMA challenge this problem by putting more weight on the recent bars price.  One of the problems with SMA is that it is lagging the price. At present. I will suggest to sell the stock as short term perspective since we can see that shorter moving average is cutting is cutting the longer average from above and with that also we can see a bearish trend.Technical Analysis Simple Moving Average:  A SMA is created by calculating the average price of a stock over a certain amount of bars/periods. The EMA then adapt faster to the current rally or drop giving the trader a heads up. So a 20 SMA on a 5 min intraday chart shows the average price for the last 20 5 min bars. .

So it is advisable for the investors to buy stocks to assume short term gains.it tells us tht recent losses are bigger than recent gains ie it is in short term bearish environment. . Hence when it is just below 50 levels we need to sell.RSI is plotted between these ranges where 80 is overbought level and 20 is oversold level.  When RSI <50 . And vice versa As per the above chart the stock is at a oversold position.RSI Oscillator Interpretation:  RSI measures momentum by measuring the stock‘s recent gains and losses by forming this information into a number between 20-80.

After going through the above chart we can see that the stock price is closer to the lower band which suggests that the stocks is reaching an oversold position. .Bollinger bands Interpretation:  Bollinger bands are best used when the prices settle down and the range is moving side wards and distinctively upwards or downwards. so the stock may rise in the future.

The studies are showing that the stock will revive in the future. all the indicators are suggesting to buy the stock as per the studies if we take a short term approach as an investor. a discount of 73.50. a premium of 4. The stock debuted at Rs 157.76 crore shares were traded on the counter.85 on BSE Shares of Taksheel Solutions settled at Rs11.93% to the initial public offer (IPO) price. At Rs 11. On BSE.40. As per the trends shown in the above charts.MACD Interpretation:   MACD is a leading indicator and is calculated by subtracting the 26 EMA with 9 day EMA average . 3. When all the charts are showing positives for the momentum trader.77% over the initial public offer price of Rs 150. .85 on BSE. The stock hit a high of Rs 185 and low of Rs 10. Although the stock has devalued considerably from its position which it held around 6 months back and there hasn‘t been much volume trading in the stock but the study done above suggests that the stock will be a good bet for the coming 2-4 weeks. When the 12 day EMA is above the 9 day EMA we must BUY the shares and vice versa By going through the above chart we can see that Divergence line is cutting the 9 day average line from below ensuring a bullish trend for the future.