Wednesday, January 29, 2014

Glodyne Technoserve Ltd (Rs.8.25): Where are all the Profits Going?
Glodyne Technoserve Ltd came out with the following press release on June 10, 2011
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Glodyne Technoserve to acquire "Comat Technologies: Mumbai, June 2011: Glodyne Technoserve Ltd one of the largest technology infrastructure management services provider and a pioneer in e-governance managed services space in the country today announced the acquisition of Comat Technologies, a leading provider of e governance services in India.

Comat has created a strong niche the e-governance sector in the country having worked with governments in using technology to provide services that ensure reach to millions of people and bring efficiency in the processes.

Comat acquisition will help Glodyne expand its reach in new states and add several key partnerships and relationships with governments for providing citizen centric programs. Amongst others, Comat has a notable pipeline of projects addressing important and current areas such as UID services. It has also implemented PDS program which encompasses complete computerization of the Food and Civil Supplies department covering over 10 minion families across Karnataka. Glodyne intends to fully leverage these opportunities to continue to expand its presence in the e-governance space. With Comat's experience in the space Glodyne expects further improvements in efficiencies and delivery excellence as it continues to pursue large public-private partnership based projects.

"Glodyne has been a pioneer in implementing transformational e-governance projects. in the country. Comat brings on-the-ground experience of having worked on providing services for millions of rural citizens. Together with our technology and service offerings, we believe tremendous value can be created for all constituents' said Annand Sarnaaik, CMD of Glodyne Technoserve.

"As a leading social enterprise, Cornet has created huge impact on the ground serving millions of rural citizens. We believe that the philosophy we set out in building the enterprise has remained over the years and together with Glody:ne, we think we can increase our social impact foot print" said Ravi Rangan, Foander and Vice Che `rrman Comat Technologies.

With Glodyne' financial strengths, strong presence in the government sector and its experience of executing large public-private partnership based projects; it is confident of ensuring efficiencies improvement through backward integration as well as strengthens its position in the government space. 

Cornat has experience of providing e-governance services across eleven states in the country. Comat is a venture funded Company and includes premier investors such as Omidyar Network, Elevar Equity and Avigo Capitaf.

The acquisition will be done on cash basis and there would be no equity dilution for the same. The acquisition is subject to completion of the customary closing conditions. Post the closure Comat will operate as a subsidiary of Glodyne Prime Securities .Limited acted as the sole advisor to the transaction.

About Comat Technologies:
Comat Technologies Private Limited is a social enterprise in the business of delivering essential Government and Private services to rural India. Established in 1996, Comat has reached over 10 Million rural customers and provided first time employment to over 20,000 people in Rural India.

Comat has been a pioneer in e-governance services and ran a network of thousands of centers in rural areas for door step delivery of Government services. In addition to delivery of services, Cornet has worked with Government in re-engineering processes and using technology to bring efficiency and cost savings to the Government. Most recently, Comat has been involved with piloting and subsequently scaling the UID initiative in several states. Comat has been recognized for its work and over the years won several accolades including Leg&turn Fortune echnology Prize, NASSCOM Innovation Award and Deloifte Fast 50 award.

About Glodyne Technoserve Limited:
Glodyne Technoserve Limited is a leading Technology IMS company that has built rich experience in the geographies it serves while constantly exceeding delivery expectations of its customers. Glodyne leverages its comprehensive India and North America services footprint with a well established and well proven bouquet of managed infrastructure services offerings to improve availability and efficiency of its customer's IT assets. Glodyne has been implementing large technology-led social initiatives in the areas of MNREGS, financial inclusion, empowerment of the unorganized workforce, etc. Glodyne with its experience, expertise and strong IPRs has acquired a leadership position in this space. Glodyne's success is attributed to its unique business model, a focused approach and the strength of its people.

Glodyne has recently received the prestigious _Best under a BiUion' - Asia Pacific 2010 award by Forbes magazine. Glodyne has also received the 'Maharashtra IT Award 2010 for outstanding contribution to the State. It has been a consistent winner of Deloitte Technology Fast India and Asia Pacific 2010,2009,2008,2007 and 2005 Programs. It was ranked 5th in the Business Today 500 India's Most Valuable Companies list in the IO yrs profit performance category in 2010.

Conclusion: This is not the end of the sordid story of the shareholders of Glodyne Technologies Ltd, who are facing a substantial erosion of their invested capital. 

The company on December, 2012 announced that its wholly owned subsidiary DecisionOne Corporation signed an agreement with Vitera Healthcare Solutions to assume infrastructure and support operations for Vitera clients nationwide. Under the terms of the agreement, DecisionOne will provide comprehensive technology services and support with its technology expertise and highly credentialed national field service personnel. Glodyne Technoserve Ltd said, this is a multi million deal spread over multiple years. This partnership enhances Vitera`s ability to maintain industry-leading service levels while infusing expertise and optimizing resources dedicated to product innovation and development.

Moreover, Firstcall Research was so bullish on Glodyne Technoserve that it gave a target of Rs.438 in its April 19, 2012 research report. Firstcall said: “Glodyne Technoserve Limited is a leading Technology IMS company that has built rich experience in the geographies it serves while constantly exceeding delivery expectations of its customers. The company’s innovative delivery model helps to synchronize seamless and cost-effective solutions with assured quality to its valuable clients. It follows the best business practices that enable companies to operate more efficiently, have better ROI and help them focus on their core business. Glodyne leverages its comprehensive India and North America services footprint along with ITIL best-practice frameworks, tools and methodologies to improve availability and efficiency of its customer's Infrastructure assets.” “In India, Glodyne has built strong skills and capabilities to provide path breaking array of technology IMS services on a managed services model in high growth sectors. Glodyne with its experience, expertise and strong IPRs has acquired a leadership position in this space. Glodyne has a strong alliance program with technology market leaders in IT Products and Services who complement its expertise in Technology IMS outsourcing and projects business. Glodyne’s success is attributed to its unique business model, a sharp organizational focus and the strength of its people. At the current market price of Rs.384, the stock is trading at 7.67 x FY12E and 5.27 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.50.06 and Rs.72.83 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 71% and 47% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 3.22 x for FY12E and 2.45 x for FY13E. Price to Book Value of the stock is expected to be at 2.21 x and 1.54 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.438 for medium to long term investment". 

Similar was the call from Unicon Investment, who were also very bullish on Glodyne Technoserve Limited (GLTL) and recommended accumulate rating on the stock with a target price of Rs 440 in its March 30, 2012 research report.

THE QUESTION THEREFORE IS: HOW DID ALL THESE REPORTS WENT WRONG? Where is all the money coming from operations going? How is the sales falling, drastically Q-o-Q?  Can the regulators, take a look at Glodyne Technoserve Ltd (Rs.8.25), on the behalf of the shareholders?