quest softech (india) limited
TRANSCRIPT
QUEST SOFTECH (INDIA) LIMITED
The Company was incorporated as Quest Softech (India) Private Limited on 27th March, 2000 under
the Companies Act, 1956 and was converted into a public limited company on 18th March 2008 vide
Certificate of Incorporation issued by the Registrar of Companies, Mumbai, Maharashtra.
Regd. Office: 27, Maker Bhavan II, 18, New Marine Lines, Mumbai – 400 020. INDIA.
Tel No.: 022 – 6615 7700 / 03; Fax No.: 022 – 6615 7704; Website: www.questsoftech.co.in
Contact Person: Mr. Siluvairajan, Compliance Officer; e-mail: [email protected]
INFORMATION MEMORANDUM FOR LISTING OF 1,00,00,000 EQUITY SHARES OF RS. 10/-
EACH FULLY PAID UP, PURSUANT TO THE SCHEME OF ARRANGEMENT BETWEEN THE
COMPANY AND CONTINENTAL CONTROLS LIMITED AND THEIR RESPECTIVE
SHAREHOLDERS AND CREDITORS.
GENERAL RISKS
Investment in equity and equity related securities involve a degree of risk and investors should not
invest any funds in the equity shares of Quest Softech (India) Limited unless they can afford to take
the risk of losing their investment. Investors are advised to read the risk factors carefully before taking
an investment decision in the shares of the Company. For taking an investment decision, investors
must rely on their own examination of the Company including the risks involved. The securities have
not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does
SEBI guarantee the accuracy or adequacy of this document. Specific attention of investors is invited
to the statement of risk factors on page 5-6 of this Information Memorandum.
ABSOLUTE RESPONSIBILITY OF QUEST SOFTECH (INDIA) LIMITED
Quest Softech (India) Limited having made all reasonable inquiries, accepts responsibility for, and
confirms that this Information Memorandum contains all information with regard to the Company
which is material, that the information contained in this Information Memorandum is true and correct in
all material aspects and is not misleading in any material respect, that the opinions and intentions
expressed herein are honestly held and that there are no other 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 misleading in any material respect.
LISTING
The Equity Shares of Quest Softech (India) Limited are proposed to be listed on the Bombay Stock
Exchange Limited (BSE). The Company has submitted this Information Memorandum with BSE and
the same has been made available on the Company’s website viz. www.questsoftech.co.in. The
Information Memorandum would also be made available on the website of BSE viz.
www.bseindia.com.
REGISTRAR AND SHARE TRANSFER AGENT:
Purva Sharegistry (India) Pvt. Ltd.
33, Printing House, 28-D, Police Court Lane, Behind Old Handloom House, Fort, Mumbai 400 001.
Tel: 91-22-2262 6407 / 6634 8073;
Contact Person: Ms. Rajesh Shah;
e-mail: [email protected]
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
TABLE OF CONTENTS
Sr.
No.
Particulars Page No.
I. DEFINITIONS, ABBREVIATIONS AND INDUSTRY RELATED TERMS 1
II. RISK FACTORS 5
III. SUMMARY 7
IV. GENERAL INFORMATION 10
V. CAPITAL STRUCTURE 12
VI. SCHEME OF ARRANGEMENT 26
VII. TAXATION 29
VIII. BUSINESS 37
IX. HISTORY OF THE COMPANY 45
X. PROMOTERS 47
XI. MANAGEMENT 48
XII. MANAGEMENTS’ DISCUSSION AND ANALYSIS 53
XIII. FINANCIAL INFORMATION 54
XIV. GROUP COMPANIES 65
XV. OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS 70
XVI. GOVERNMENT APPROVALS 71
XVII. REGULATIONS AND POLICIES 72
XVIII. REGULATORY AND STATUTORY DISCLOSURES 74
XIX. MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION 77
XX. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 97
XXI. DECLARATION 98
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
1
I. DEFINITIONS, ABBREVIATIONS AND INDUSTRY RELATED TERMS
Act The Companies Act, 1956 as amended from time to time
AGM Annual General Meeting
Articles / AOA Articles of Association of Quest Softech (India) Limited
Appointed Date / Demerger
Appointed Date
Opening of business on 1st April 2008
Bankers to the Company Bankers of Quest Softech (India) Limited
Board Board of Directors of Quest Softech (India) Limited
BPO Business Process Outsourcing
BSE Bombay Stock Exchange Limited
CDSL Central Depository Services (India) Limited
Company / QSIL / Quest Softech
/ Resulting Company
Quest Softech (India) Limited
Continental Controls Limited /
CCL / Demerged Company
Continental Controls Limited having its registered office at 2
Siddharth Industrial Estate, Gala No 1, Sativali Road, Shailesh
Udyog Nagar, Opp Nicholas Garage, Waliv, Vasai E,Thane
401208
Demerger Transfer by way of demerger of the Demerged Undertaking of the
Demerged Company to the Resulting Company, and the
consequent issue of equity shares of the Resulting Company to
the shareholders of the Demerged Company as set out in the
Scheme
Depositories Act The Depositories Act, 1996 as amended from time to time
Depository A Depository registered with SEBI under the SEBI (Depositories &
Participants) Regulations, 1996 as amended from time to time
Directors Directors on the Board of Quest Softech (India) Limited
DP Depository Participant
EPS Earnings Per Share
{EPS = Profit After Tax / No. of Equity Shares}
Equity Shares Fully paid-up equity shares of Rs.10/- each of Quest Softech
(India) Limited
Equity Shareholders Equity Shareholders of Quest Softech (India) Limited
Effective date 26th September 2008, being the date of coming into effect of the
Scheme
FEMA Foreign Exchange Management Act, 1999 read with rules and
regulations there under and amendments thereto
FI Financial Institution
FII(s) Foreign Institutional Investor(s) registered with SEBI under
applicable laws
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
2
FY Financial Year (the 12 month period starting on 1st April in a year
and ending on 31st March of subsequent year)
Information Memorandum This Information Memorandum
IT Information Technology
IT Act Income Tax Act, 1961 as amended
ITES Information Technology Enabled Services
KPO Knowledge Process Outsourcing
MOA Memorandum of Association of Quest Softech (India) Limited
NA Not Applicable
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
P/E Ratio Price/Earnings Ratio
PAT Profit After Tax
RBI Reserve Bank of India
Record Date 3rd July 2009, being the date fixed by the Board of Directors of
Quest Softech (India) Limited and Continental Controls Limited
pursuant to Part – I Clause A of the Scheme
Registrar and Share Transfer
Agent / Registrars / Sharepro
‘Purva Sharegistry India Private Limited’ having its Registered
Office at 33, Printing House, 28-D, Police Court Lane, B/H Old
Handloom House, Fort, Mumbai – 400001
Resulting Company See “Company” above
ROC Registrar of Companies, Maharashtra, Mumbai
Scheme / Scheme of
Arrangement
Scheme of Arrangement under Section 391 to 394 and other
applicable provisions of the Companies Act, 1956 between Quest
Softech (India) Limited and Continental Controls Limited and their
respective Shareholders and Creditors for the Demerger of the
Software Services Division Undertaking of Continental Controls
Limited into Quest Softech (India) Limited (with Appointed Date
being 1st April 2008) and Reduction of the Issued, Subscribed and
Paid up share capital of Continental Controls Limited, as
sanctioned by the Hon’ble High Court of Judicature at Bombay
vide its Order dated 5th September 2008, which was filed with the
Registrar of Companies, Maharashtra on 26th September 2008,
which is the Effective Date of the Scheme.
SEBI Securities and Exchange Board of India
SEBI Act Securities and Exchange Board of India Act, 1992
SEBI (ICDR) RGULATIONS Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended,
including instructions and clarifications issued by SEBI from time
to time
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
3
Security(ies) Equity Share(s)
Share Certificate(s) Equity Share Certificate(s)
Software Services Division
Undertaking
Means and includes the Software Services Division Undertaking
of Continental Controls Limited transferred and vested in Quest
Softech (India) Limited as a going concern in terms of the Scheme
and more particularly defined in Part – I Clause A of the Scheme.
Stock Exchange Bombay Stock Exchange Limited
CURRENCY OF PRESENTATION
In the Information Memorandum, all references to “Rupees” or “Rs.” or “`” are to Indian Rupees, the
official currency of the Republic of India and the word ‘Lakh’ or ’Lac’ means ‘one hundred thousand’
and the word ‘million’ means ‘ten lakhs’ and the word ‘crore’ means ‘ten million’.
CERTAIN CONVENTIONS; USE OF MARKET DATA
Unless stated otherwise, the financial data in this Information Memorandum is derived from the
company’s audited financial statements. The fiscal year commences on April 1 and ends on March 31
of each year, and unless otherwise stated, references to a particular fiscal year are to the twelve-
month period ended March 31 of that year. In this Information Memorandum, any discrepancies in any
table between the total and the sums of the amounts listed are due to rounding. All references to
“India” contained in this Information Memorandum are to the Republic of India. All references to one
gender also refers to another gender. For additional definitions, please see the section titled
“Definitions, Abbreviations and Industry Related Terms” of this Information Memorandum.
Unless stated otherwise, industry data used throughout this Information Memorandum has been
obtained from the published data and industry publications. Industry publications generally state that
the information contained in those publications has been obtained from sources believed to be reliable
but that their accuracy and completeness are not guaranteed and their reliability cannot be assured.
Although we believe that industry data used in this Information Memorandum is reliable, it has not
been independently verified .
FORWARD- LOOKING STATEMENTS
This Information Memorandum may contain words or phrases such as “will”, “aim”, “will likely result”,
“believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, contemplate”, “seek to”,
“future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of
such expressions, that are “forward looking statements”. Similarly, statements that describe the
Company’s objectives, plans or goals also are forward-looking statements. Actual results may differ
materially from those suggested by the forward looking statements due to risks or uncertainties
associated with the Company’s expectations with respect to, but not limited to:
General economic and business conditions in India and other countries;
Regulatory changes and the Company’s ability to respond to them;
The Company’s ability to successfully implement its strategy, growth and expansion plans;
Technological changes;
The Company’s exposure to market risks, general economic and political conditions in India
which have an impact on its business activities or investments;
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
4
The monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest
rates, foreign exchange rates, equity prices or other rates or prices, the performance of the
financial markets in India and globally;
Changes in domestic and foreign laws, regulations and taxes and changes in competition in the
industry.
For further discussion of factors that could cause the actual results to differ, please see the section
titled “Risk Factors” of this Information Memorandum. By their nature, certain market risk disclosures
are only estimates and could be materially different from what actually occurs in the future. As a
result, actual future gains or losses could materially differ from those that have been estimated.
The Company does not have any obligation to, and does not intend to, update or otherwise revise any
statements reflecting circumstances arising after the date hereof or to reflect the occurrence of
underlying events, even if the underlying assumptions do not materialize.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
5
II. RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider all of the
information in this Information Memorandum, including the risks of uncertainties described below. If
any of the following risks actually occur, our business, financial condition and results of the operations
could suffer, the trading price of our Equity Shares could decline, and you may lose all or part of your
investment. The business operations of the Issuer could also be affected by additional factors other
than those mentioned below and that are not presently known to the Company or the Management of
the Company or that are currently considered to be immaterial to the business and operations of the
Company.
1. Technological breakthroughs may render existing infrastructure redundant
The BPO industry is a rapidly evolving sector witnessing new technological breakthroughs
which may render the existing technology/infrastructure redundant. The future success of the
Company would depend on its ability to anticipate these changes and develop new product
and service offered.
2. Risks relating to intellectual property infringement
The Company relies on a combination of trade secrets, confidentiality procedures and
contractual provisions to protect its intellectual property. There are currently no pending or
threatened intellectual property claims against the Company. However if it becomes liable to
third parties for infringing their intellectual property rights then the Company could be required
to pay substantial damages and be forced to develop non – infringing technology or obtain a
license.
3. Disruptions in telecommunications and basic infrastructure could harm the service
delivery model, which could result in client dissatisfaction and a reduction in the
revenues of the Company
The services the Company provides are often critical to the clients business and any failure to
provide those services on a timely manner could result in a claim for substantial damages
against the Company. Any temporary or permanent loss of equipments or systems or any
disruptions to basic infrastructure such as power and telecommunication would impede the
Company’s ability to provide services to the clients, could expose the Company to a liability
claims and could have a material adverse effect on the reputation, results of operation,
financial conditions and cash flows
4. Low availability of skilled manpower may impact the business of the company
The IT/BPO Industry is human-resource intensive and is dependent on individual skill sets,
which may or may not be readily available or replaceable. Low availability of skilled
manpower and high rate of employee turnover in the industry will lead to additional cost of
investing in employee’s retention and training.
5. Stiff Competition
The Company faces competition from large established players in the industry. The industry
structure is skewed with major part of the business being captured by few large players who
can command a premium for the services rendered. This is opposed to the increasing
competition and massive price cutting faced by the smaller players. This has rendered small
businesses unviable and is responsible for a major shakeout in the industry.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
6
6. Exchange Rate Fluctuation
The Company reports its financial results in Rupees, but a significant portion of income in
future would be denominated in US Dollar. The appreciation of the Rupee against the US
Dollar would have a material adverse effect on the results of operations.
7. Political Risk
Political Risk is an inherent risk faced by all the businesses operating on a global scale. Bills
passed by various states in the USA opposing the outsourcing of government contracts to
firms of developing countries. This is a matter of concern for companies operating in the ITES
segment as their profitability may be impacted.
8. Sensitivity to the economy and extraneous factors
The Company’s performance is highly correlated to the performance of the economy and the
financial markets. The health of the economy and the financial markets in turn depends on the
domestic economic growth, state of the global economy and business and consumer
confidence, among other factors. Any event disturbing the dynamic balance of these diverse
factors may directly or indirectly affect the performance of the Company.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
7
III. SUMMARY
INDUSTRY SUMMARY
INDIAN ITeS AND BPO INDUSTRY
The Indian ITeS-BPO industry has been consistently growing over the past few years, in spite of rising
competition from countries such as Philippines, China, Brazil, Mexico and Ireland. Its contribution to
the service sector and to the country’s GDP has also been increasing over these years. The revenue
of the sector (IT-BPO) has manifolded during the last decade from merely US$8.3 bn in 2000 to
around US$71 bn in 2009 at a CAGR growth of 27%1.
The ITeS/BPO notably is the fastest-growing segment within the IT-BPO sector, and during the last
decade it grew at a CAGR of 42.8%; the IT services and software revenue grew at a CAGR of 26.8%.
In the last 10 years, the domestic IT services and software products and engineering services market
grew by 21% annually and reached US$10.5 bn in 2009.
Going ahead, the challenge for the industry players lies in maintaining the level of competency and
offering high level customer satisfaction at an affordable price.
INDIAN ITeS-BPO INDUSTRY AND ECONOMIC GROWTH
The Indian ITeS-BPO industry has revolutionized global sourcing and has emerged as one of the
sunrise sectors for the country.
The Indian ITeS-BPO sector revenue notably recorded a CAGR growth of 42.8% during 2000-2009
and outpaced the growth of the IT services sector during this period, which grew by an average of
25.4%. In 2009, the ITeS-BPO export is estimated to have contributed over 86.8% to the total IT-BPO
revenue, though this contribution was lower than that made in 2002 at 93.8%. The decrease in
exports could be attributed to the growth of the domestic BPO over the last couple of years; during
2005-2009, the domestic BPO grew at a CAGR of 34.1%, ably supported by the BFSI and telecom
vertical.
INDIA CONTINUES TO DOMINATE GLOBAL OFFSHORE BPO MARKET
The global outsourcing market has been expanding at a rapid pace in the past few years as
outsourcing has become an integral function of every organization in the past 10 years or so.
Companies have been benefiting through global sourcing partnerships in terms of cost savings,
enhanced business efficiency, ability to explore new markets, reduction in time-to-market and
products and services among others.
India continues to dominate the global business process offshoring market by offering value added
services to its global clients. Global organisations are increasingly outsourcing their business needs
owing to rapidly changing business scenario, intense competition from peers, and rising globalisation,
to improve their performance. As mentioned earlier, India’s comparative advantage are its huge talent
pool, higher working population, improved infrastructure facilities, and innovative business processes,
which offer significant cost benefits to international clients. India’s share in global business process
offshoring increased steadily from 32% in 2004 to 35% in 2008, according to data from UNCTAD-
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
8
Everest Research Institute. In India, several cities are emerging as favourable destinations for US-
based and Europe-based companies to establish their delivery centres in cities such as Bengaluru,
Gurgaon, Hyderabad, Pune, Mumbai and Chennai.
ROAD AHEAD
The Indian ITeS-BPO industry is expected to continue its growth march in future as well in spite of the
expected rise in challenges. The industry is likely to gain further specialization in the KPO, EPO and
LPO arena. The BPO sector was the driving force behind the Indian ITeS-BPO industry during its
advent days like presently the KPO sector is the driving force for the industry because of the high
analytical services it offers global clients. The EPO and LPO segments are touted as the growth
drivers of the next wave of outsourcing.
However, given the current global recession, the ITeS-BPO industry is registering lower growth rate
as compared with the previous years. For instance, during 2004 to 2008, the sector registered an
average growth of around 39%, while in 2009, the growth declined sharply to 18.2%. Consequently,
the BPO export revenue also recorded a much lower growth of 17.5% during 2009 as compared with
an average annual growth rate of 37% between 2004 to 2008. It is important to mention that the
sector’s share in overall services exports has gone up remarkably over the past few years from 5.5%
in 2001 to 12.8% in 2009. The Indian ITeS-BPO exports alone provided direct employment to around
0.8 mn people, not including the indirect employment. The sector has massively developed the overall
economic and social landscape of the country.
However, the economic slowdown has opened up opportunities for the Indian ITeS-BPO companies,
as it is expected that the global companies would adopt outsourcing as an initiative to reduce cost.
The Indian companies have to be proactive to grab the opportunities and should venture into newer
markets, verticals and service line. Besides, the Indian ITeS-BPO companies should further explore
domestic market, which offers immense opportunities.
BUSINESS SUMMARY
HISTORY
Quest Softech (India) Limited was incorporated as Quest Softech (India) Private Limited on 27th
March 2000 under the Companies Act, 1956 and was converted into a public limited company on 18th
March 2008, and engaged in the business of IT/BPO Consultancy services related to the preparation
and maintenance of accounting information and reports.
QSIL TODAY
Our unique business process outsourcing methodology and approach work to optimize operations
across the full range of finance and accounting functions. We serve as a single window outsourcing
solution for all Finance, Accounting and Tax Related services. Our unique approach ensures a highly
professional, friendly, value for money service.
QSIL is able to offer a complete range of services for businesses and individuals. From individual tax
planning services to complex corporate consulting engagements, we are ready and able to be full
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
9
service accounting firm. Our skilled professionals offer both knowledge of technical financial topics
and experience in process operations.
Our services and concern for client satisfaction are reasonably priced, helping clients manage costs
while obtaining the services they need.
VISION
“To be a leading provider of financial services and knowledge based services to a global clientele by
offering value through innovative use of technology and harnessing the highest potential of its
people”.
CAPABILITIES
Multi Medium – Phone, Web, E-Mail, Print, Fax and Face-to-Face
Multi Process – Data Collection, Processing, Analytics, Presentation
Multi Industry – IT & Telecom, Healthcare & Pharma, FMCG/Consumer Goods, BFSI, Retail &
Manufacturing, Media, Others.
SERVICES
Accounting and Financial Services
Our Professionals handles Bookkeeping Services, Write-Up Services, Accounts Payable
Services, Financial Reporting Services and Account Reconciliation Services. Our Accounting
personnel can act as the back-office operation staff on behalf for clients however situated in our
office. We have an experienced team of CA's and Accounting personnel to efficiently manage
the Accounting processes.
o General Accounting and bookkeeping processes
o Fixed Asset and capital accounting processes
o Cost and Inventory Accounting processes
Tax Preparation Services
We provide all kinds of taxation related services including tax preparation and tax consulting.
We are updated with the latest technology, software and workflow processes to enhance on-
the-job efficiency for tax processing.
Financial Analysis Services
Our Financial Analysis services can be utilized to create a complete picture of the financial
performance and streamlining operations. This will help in formulating strategic decisions
regarding your business organization's financial matters.
Financial Budgeting & MIS Services
Our expertise in budgeting & MIS planning can protect from possible financial crises and help to
run the business smoothly. By utilizing a unique methodology, we assess the business risks
associated with the budget and forecast processes. We then analyze key performance
indicators through the data collection process and management review.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
10
IV. GENERAL INFORMATION
Quest Softech (India) Limited was incorporated as Quest Softech (India) Private Limited on 27th
March 2000 under the Companies Act, 1956 and was converted into a public limited company on 18th
March 2008 vide Certificates of Incorporation issued by the Registrar of Companies, Maharashtra,
Mumbai and the name was subsequently changed to Quest Softech (India) Limited.
Address of the Registered Office of the Company
27, Maker Bhavan No. 2, 2nd Floor, 18, New Marine Lines, Mumbai - 400 020.
Tel : +91 22 66157700–03 E-mail : [email protected]
Registration Number:
U72200MH2000PLC125359
Address of Registrar of Companies where the Company is registered:
100, Everest, Marine Drive, Mumbai- 400002.
Tel : 022-22812639 E-mail : [email protected]
Board of Directors as on the date of filing of the Information Memorandum
Sr. No. Name Designation
1 Mr. Dhiren B. Kothary Executive Director
2 Mr. Suresh S. Vishwasrao Non-Executive Director
3 Mr. Paresh Zaveri Independent Director
For further details of the Board of Directors of the Company, please see the Section titled
“Management”
Compliance Officer
Mr. Siluvairajan
27, Maker Bhavan No. 2, 2nd Floor, 18, New Marine Lines, Mumbai - 400 020.
Tel : +91 22 66157700–03 E-mail : [email protected]
Banker to the Company
HDFC Bank Limited
22-25, Ashoka Shopping Centre,
L T Road, Crawford Market
Mumbai – 400001
Auditors
M/s Ashok Gokani & Co., Chartered Accountants
J/4, ‘B’ Building, Mangal Kunj,
Opp. Indraprasth Shopping Center,
S. V. Road, Borivali (W),
Mumbai – 400 092
Phone: (022) 2899 3618
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
11
Registrar and Share Transfer Agent
Purva Sharegistry (India) Pvt. Ltd.
Unit no. 9, Shiv Shakti Ind. Estate,
J.R. Boricha Marg, Lower Parel (E),
Mumbai 400 011
Contact Person: Mr. Rajesh Shah
Tel : (022) 2301 6761
Fax : (022) 2301 2517
E-mail: [email protected]
Disposal of Investor’s Grievances
Complaints, if any, received in respect of the Shares will be attended to by the Registrar and Share
Transfer Agent in coordination with the Company expeditiously and to the satisfaction of the
shareholders.
Stock Market Data for Equity Shares of the Company
The Equity Shares of the Company are presently not listed on any stock exchanges. The Company is
seeking approval for listing of its shares on BSE only.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
12
V. CAPITAL STRUCTURE OF THE COMPANY
SHARE CAPITAL
Pre-Scheme of Arrangement:
Number Rupee
Authorised Capital
60,00,000 Equity Shares of Rs.10/- each 6,00,00,000
Total 6,00,00,000
Issued, Subscribed and Paid-up
55,78,744 Equity Shares of Rs.10/- each 5,57,87,440
Total 5,57,87,440
Post-Scheme of Arrangement:
Number Rupee
Authorised Capital
1,00,00,000 Equity Shares of Rs.10/- each 10,00,00,000
Total 10,00,00,000
Issued, Subscribed and Paid-up
1,00,00,000 Equity Shares of Rs.10/- each 10,00,00,000
Total 10,00,00,000
Notes to Capital Structure
1. Share Capital History of the Company
Authorised Share Capital
Sr.
No.
Particulars of Increase Date of Shareholder’s
Meeting
Type of Meeting
1 Rs. 2,50,000 On Incorporation
2 Rs. 2,50,000 to Rs. 6,00,00,000 March 01, 2008 EGM
3 Rs. 6,00,00,000 to Rs. 10,00,00,000 July 06, 2009 EGM
Issued, Subscribed & Paid up Share Capital
Sr.
No. Date of Allotment
Number
of Shares
Face
Value (Rs.)Basis of Allotment
Consider-
ation
1 On Incorporation 200 10.00 Subscribed to MOA Cash
2 September 30, 2000 7,300 10.00 Further Allotment Cash
3 December 3, 2002 2,500 10.00 Further Allotment Cash
4 January 2, 2008 40,000 10.00 Further Allotment Cash
5 March 29, 2008 55,28,744 10.00 Further Allotment Cash
6 July 06, 2009 44,21,256 10.00 Further Allotment Otherwise
than in Cash#
# 44,21,256 equity shares of Rs. 10 have been issued to the shareholders of Continental
Controls Limited (CCL) in terms of Scheme of Arrangement, approved by the Hon’ble High
Court of Judicature at Bombay vide their order dated 5th September 2008.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
13
The said order was filed with the Registrar of Companies, Maharashtra on 26th September 2008
for both the Companies. Accordingly, the Demerger is effective from 26th September 2008.
Pursuant to Clause 7 of the Scheme, the Board of Directors of the Company on 6th July 2009
issued and allotted 44,21,256 Equity Shares of Rs. 10/- each to the shareholders of the
Demerged Company whose names appeared in the Register of Members of the Demerged
Company on the Record Date viz 3rd July 2009 in the Demerger Share Entitlement Ratio of 1
(One) new equity share of Rs. 10/- each credited as fully paid up of the Company for every 2
(Two) equity shares of Rs.10/- each held by such member in the Demerged Company.
On allotment of 44,21,256 Equity Shares by the Company, the issued, subscribed and paid up
share capital of the Company increased from Rs.5,57,87,440/- consisting of 55,78,744 equity
shares of Rs. 10/- each fully paid-up to Rs. 10,00,00,000/- consisting of 1,00,00,000 equity
shares of Rs.10/- each fully paid-up.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
14
2. Pre - Scheme of Arrangement Shareholding Pattern of the Company (As on 3rd July
2009, being the Record Date)
2(a).
Category
code
Category of
shareholder
Number
of
sharehold
ers
Total
number of
shares
Number of
shares held
in
dematerializ
ed form
Total shareholding as a
percentage of total
number of shares
As a
percentage
of (A+B)1
As a
percentag
e of
(A+B+C)
(A) Shareholding of
Promoter and
Promoter Group2
(1) Indian
(a) Individuals/ Hindu
Undivided Family
003 43,51,944 Nil 78.01% 78.01%
(b) Central
Government/ State
Government(s)
--- --- --- --- ---
(c) Bodies Corporate --- --- --- --- ---
(d) Financial
Institutions/ Banks
--- --- --- --- ---
(e) Any Other
(specify)
--- --- --- --- ---
Sub-Total (A)(1) 003 43,51,944 Nil 78.01% 78.01%
(2) Foreign
(a) Individuals (Non-
Resident
Individuals/ Foreign
Individuals)
--- --- --- --- ---
(b) Bodies Corporate --- --- --- --- ---
(c) Institutions --- --- --- --- ---
(d) Any Other (specify) --- --- --- --- ---
Sub-Total (A)(2) --- --- --- --- ---
Total
Shareholding of
Promoter and
Promoter Group
(A)= (A)(1)+(A)(2)
003 43,51,944 Nil 78.01% 78.01%
(B) Public
shareholding3
(1) Institutions
1 For determining public shareholding for the purpose of Clause 40A. 2 For definitions of “Promoter” and “Promoter Group", refer to Clause 40A. 3 For definitions of “Public Shareholding”, refer to Clause 40A.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
15
(a) Mutual Funds/ UTI --- --- --- --- ---
(b) Financial
Institutions/ Banks
--- --- --- --- ---
(c) Central
Government/ State
Government(s)
--- --- --- --- ---
(d) Venture Capital
Funds
--- --- --- --- ---
(e) Insurance
Companies
--- --- --- --- ---
(f) Foreign Institutional
Investors
--- --- --- --- ---
(g) Foreign Venture
Capital Investors
--- --- --- --- ---
(h) Any Other (specify) --- --- --- --- ---
Sub-Total (B)(1)
(2) Non-institutions
(a) Bodies Corporate --- --- --- --- ---
(b) Individuals -
i. Individual
shareholders
holding nominal
share capital up
to Rs. 1 lakh.
ii. Individual
shareholders
holding nominal
share capital in
excess of Rs. 1
lakh.
---
003
---
12,26,400
---
Nil
---
21.98%
---
21.98%
(c) Any Other (specify)
(a) Directors &
Employees
004 400 Nil 0.01% 0.01%
Sub-Total (B)(2) 004 400 Nil 0.01% 0.01%
Total Public
Shareholding (B)=
(B)(1)+(B)(2)
007 12,26,800 Nil
21.99% 21.99%
TOTAL (A)+(B) 010 55,78,744 Nil 100.00% 100.00%
(C) Shares held by
Custodians and
against which
Depository
Receipts have
been issued
--- --- ---
--- ---
GRAND TOTAL
(A)+(B)+(C)
010 55,78,744 Nil 100.00% 100.00%
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
16
2b. Statement showing Shareholding of persons belonging to the category “Promoter
and Promoter Group”
Sr.
No. Name of the shareholder
Number of
shares
Shares as a percentage of total number of
shares {i.e., Grand Total (A)+(B)+(C)
indicated in Statement at para (I)(a) above}
1. Mr. Dhiren B. Kothary 15,48,000 27.75%
2. Mrs. Nita Dhiren Kothary 19,01,500 34.08%
3. Mr. Sesha Srinivas Malladi 9,02,444 16.18%
TOTAL 43,51,944 78.01%
2c. Statement showing Shareholding of persons belonging to the category “Public” and
holding more than 1% of the total number of shares
Sr.
No.
Name of the shareholder Number of
shares
Shares as a percentage of total number of
shares {i.e., Grand Total (A)+(B)+(C)
indicated in Statement at para (I)(a) above}
1. Mr. Amit Sheth 9,50,000 17.03%
2. Mr. Bhavesh Koradia 1,38,200 2.48%
3. Mrs. Sonal Koradia 1,38,200 2.48%
TOTAL 12,26,400 21.99%
2d. Statement showing details of locked-in shares
Sr.
No.
Name of the shareholder Number of
locked-in
shares
Locked-in shares as a percentage of total
number of shares {i.e., Grand Total
(A)+(B)+(C) indicated in Statement at para
(I)(a) above}
1. --- --- ---
TOTAL --- ---
2e. Statement showing details of Depository Receipts (DRs)
Sr.
No.
Type of
outstanding
DR (ADRs,
GDRs, SDRs,
etc.)
Number of
outstanding
DRs
Number of
shares
underlying
outstanding DRs
Shares underlying outstanding DRs
as a percentage of total number of
shares {i.e., Grand Total (A)+(B)+(C)
indicated in Statement at para (I)(a)
above}
1. --- --- --- ---
TOTAL --- --- ---
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
17
3. Post - Scheme of Arrangement Shareholding Pattern of the Company (As on 6th July
2009)
3(a).
Category
code
Category of
shareholder
Number of
shareholde
rs
Total number
of shares
Number of
shares held
in
demateriali
zed form
Total shareholding as a
percentage of total
number of shares
As a
percentage
of (A+B)4
As a
percentage
of (A+B+C)
(A) Shareholding of
Promoter and
Promoter Group5
(1) Indian
(a) Individuals/ Hindu
Undivided Family
003 44,09,752 57,768 44.10% 44.10%
(b) Central Government/
State Government(s)
--- --- --- --- ---
(c) Bodies Corporate --- --- --- --- ---
(d) Financial
Institutions/ Banks
--- --- --- --- ---
(e) Any Other
(specify)
--- --- --- --- ---
Sub-Total (A)(1) 003 44,09,752 57,768 44.10% 44.10%
(2) Foreign
(a) Individuals (Non-
Resident Individuals/
Foreign Individuals)
--- --- --- --- ---
(b) Bodies Corporate --- --- --- --- ---
(c) Institutions --- --- --- --- ---
(d) Any Other (specify) --- --- --- --- ---
Sub-Total (A)(2) --- --- --- --- ---
Total Shareholding
of Promoter and
Promoter Group
(A)= (A)(1)+(A)(2)
003 44,09,752 57,768 44.10% 44.10%
(B) Public
shareholding6
(1) Institutions
(a) Mutual Funds/ UTI --- --- --- --- ---
(b) Financial
Institutions/ Banks
001 13,926 13,926 0.14% 0.14%
(c) Central Government/ --- --- --- --- ---
4 For determining public shareholding for the purpose of Clause 40A. 5 For definitions of “Promoter” and “Promoter Group", refer to Clause 40A. 6 For definitions of “Public Shareholding”, refer to Clause 40A.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
18
State Government(s)
(d) Venture Capital
Funds
--- --- --- --- ---
(e) Insurance
Companies
--- --- --- --- ---
(f) Foreign Institutional
Investors
--- --- --- --- ---
(g) Foreign Venture
Capital Investors
--- --- --- --- ---
(h) Any Other (specify) --- --- --- --- ---
Sub-Total (B)(1) 001 13,926 13,926 0.14% 0.14%
(2) Non-institutions
(a) Bodies Corporate 126 6,16,837 1,88,012 6.17% 6.17%
(b) Individuals -
i. Individual
shareholders
holding nominal
share capital up to
Rs. 1 lakh.
ii. Individual
shareholders
holding nominal
share capital in
excess of Rs. 1
lakh.
5598
29
22,29,130
27,20,856
18,16,563
10,95,118
22.29%
27.21%
22.29%
27.21%
(c) Any Other (specify)
(a) Directors &
Employees
1 100 - 0.00% 0.00%
(b) N.R.I. (Repat &
Non – Repat)
023 9,399 6,149 0.09% 0.09%
Sub-Total (B)(2) 5777 55,76,322 31,05,842 55.76% 55.76%
Total Public
Shareholding (B)=
(B)(1)+(B)(2)
5778 55,90,248 31,19,768 55.90% 55.90%
TOTAL (A)+(B) 5781 1,00,00,000 31,77,536 100.00% 100.00%
(C) Shares held by
Custodians and
against which
Depository
Receipts have
been issued
--- --- ---
--- ---
GRAND TOTAL
(A)+(B)+(C)
5781 1,00,00,000 31,72,536 100.00% 100.00%
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
19
3b. Statement showing Shareholding of persons belonging to the category “Promoter
and Promoter Group”
Sr. No. Name of the shareholder Number of
shares
Shares as a percentage of total number
of shares {i.e., Grand Total (A)+(B)+(C)
indicated in Statement at para (I)(a)
above}
1. Mr. Dhiren B. Kothary 15,48,000 15.48%
2. Mrs. Nita Dhiren Kothary 19,01,500 19.02%
3. Mr. Sesha Srinivas Malladi 9,60,252 9.60%
TOTAL 44,09,752 44.10%
3c. Statement showing Shareholding of persons belonging to the category “Public” and
holding more than 1% of the total number of shares
Sr. No. Name of the shareholder Number of shares Shares as a percentage of total
number of shares {i.e., Grand
Total (A)+(B)+(C) indicated in
Statement at para (I)(a) above}
1. Mr. Amit Sheth 9,50,000 9.50% 2. Narayani Finance Limited 3,97,125 3.97%
3. Mr. Navin G Thakkar 3,60,119 3.60%
4. Mrs. Sonal Koradia 3,09,164 3.09%
5. Mrs. Sarojben N Thakkar 2,40,253 2.40%
6. Mrs. Sameer N Thakkar 1,59,085 1.59%
7. Mr. Bhavesh Koradia 1,38,200 1.38% TOTAL 25,53,946 25.53%
3d. Statement showing details of locked-in shares
Sr.
No.
Name of the shareholder Number of
locked-in shares
Locked-in shares as a
percentage of total number of
shares {i.e., Grand Total
(A)+(B)+(C) indicated in
Statement at para (I)(a) above}
1. --- --- ---
TOTAL --- ---
3e. Statement showing details of Depository Receipts (DRs)
Sr.
No.
Type of
outstanding DR
(ADRs, GDRs,
SDRs, etc.)
Number of
outstanding
DRs
Number of
shares
underlying
outstanding DRs
Shares underlying outstanding DRs
as a percentage of total number of
shares {i.e., Grand Total (A)+(B)+(C)
indicated in Statement at para (I)(a)
above}
1. --- --- --- ---
TOTAL --- --- ---
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
20
4. Shareholding Pattern of the Company as on date of Information Memorandum
4(a).
Category
code
Category of
shareholder
Number of
shareholde
rs
Total number
of shares
Number of
shares
held in
dematerial
ized form
Total shareholding as a
percentage of total
number of shares
As a
percentage
of (A+B)7
As a
percentage
of (A+B+C)
(A) Shareholding of
Promoter and
Promoter Group8
(1) Indian
(a) Individuals/ Hindu
Undivided Family
003 43,51,944 --- 43.52% 43.52%
(b) Central Government/
State Government(s)
--- --- --- --- ---
(c) Bodies Corporate --- --- --- --- ---
(d) Financial
Institutions/ Banks
--- --- --- --- ---
(e) Any Other
(specify)
--- --- --- --- ---
Sub-Total (A)(1) 003 43,51,944 --- 43.52% 43.52%
(2) Foreign
(a) Individuals (Non-
Resident Individuals/
Foreign Individuals)
--- --- --- --- ---
(b) Bodies Corporate --- --- --- --- ---
(c) Institutions --- --- --- --- ---
(d) Any Other (specify) --- --- --- --- ---
Sub-Total (A)(2) --- --- --- --- ---
Total Shareholding
of Promoter and
Promoter Group
(A)= (A)(1)+(A)(2)
003 43,51,944 --- 43.52% 43.52%
(B) Public
shareholding9
(1) Institutions
(a) Mutual Funds/ UTI --- --- --- --- ---
(b) Financial
Institutions/ Banks
001 13,926 13,926 0.14% 0.14%
(c) Central Government/
State Government(s)
--- --- --- --- ---
7 For determining public shareholding for the purpose of Clause 40A. 8 For definitions of “Promoter” and “Promoter Group", refer to Clause 40A. 9 For definitions of “Public Shareholding”, refer to Clause 40A.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
21
(d) Venture Capital
Funds
--- --- --- --- ---
(e) Insurance
Companies
--- --- --- --- ---
(f) Foreign Institutional
Investors
--- --- --- --- ---
(g) Foreign Venture
Capital Investors
--- --- --- --- ---
(h) Any Other (specify) --- --- --- --- ---
Sub-Total (B)(1) 001 13,926 13,926 0.14% 0.14%
(2) Non-institutions
(a) Bodies Corporate 123 2,17,262 1,88,012 2.17% 2.17%
(b) Individuals -
i. Individual
shareholders
holding nominal
share capital up to
Rs. 1 lakh.
ii. Individual
shareholders
holding nominal
share capital in
excess of Rs. 1
lakh.
5594
31
2,217,620
3,189,749
18,16,563
11,52,886
22.17%
31.90%
22.17%
31.90%
(c) Any Other (specify)
(a) Directors &
Employees
1 100 --- 0.00% 0.00%
(b) N.R.I. (Repat &
Non – Repat)
023 9,399 6,149 0.09% 0.09%
Sub-Total (B)(2) 5772 56,34,130 31,63,610 56.34% 56.34%
Total Public
Shareholding (B)=
(B)(1)+(B)(2)
5773 56,48,056 31,77,536 56.48% 56.48%
TOTAL (A)+(B) 5776 1,00,00,000 31,77,536 100.00% 100.00%
(C) Shares held by
Custodians and
against which
Depository
Receipts have
been issued
--- --- ---
--- ---
GRAND TOTAL
(A)+(B)+(C)
5776 1,00,00,000 31,77,536 100.00% 100.00%
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
22
4b. Statement showing Shareholding of persons belonging to the category “Promoter
and Promoter Group”
Sr. No. Name of the shareholder Number of
shares
Shares as a percentage of total number
of shares {i.e., Grand Total (A)+(B)+(C)
indicated in Statement at para (I)(a)
above}
1. Mr. Dhiren B. Kothary 15,48,000 15.48%
2. Mr. Dhiren B. Kothary 9,02,444 9.02%
3. Mrs. Nita Dhiren Kothary 19,01,500 19.02%
TOTAL 43,51,944 43.52%
4c. Statement showing Shareholding of persons belonging to the category “Public” and
holding more than 1% of the total number of shares
Sr. No. Name of the shareholder Number of shares Shares as a percentage of total
number of shares {i.e., Grand
Total (A)+(B)+(C) indicated in
Statement at para (I)(a) above}
1. Mr. Amit Sheth 9,50,000 9.50%
2. Mr. Nimesh Shah 3,99,488 3.99%
3. Mrs. Nikita Shah 3,97,125 3.97%
4. Mr. Navin Thakkar 3,60,119 3.60%
5. Mrs. Sonal Koradia 1,38,200 1.38%
6. Sonal Kalpesh Koradia 1,70,964 1.71%
7. Mr. Bhavesh Koradia 1,38,200 1.38%
TOTAL 25,54,096 25.54%
4d. Statement showing details of locked-in shares
Sr.
No.
Name of the shareholder Number of
locked-in shares
Locked-in shares as a
percentage of total number of
shares {i.e., Grand Total
(A)+(B)+(C) indicated in
Statement at para (I)(a) above}
1. --- --- ---
TOTAL --- ---
4e. Statement showing details of Depository Receipts (DRs)
Sr.
No.
Type of
outstanding DR
(ADRs, GDRs,
SDRs, etc.)
Number of
outstanding
DRs
Number of
shares
underlying
outstanding DRs
Shares underlying outstanding DRs
as a percentage of total number of
shares {i.e., Grand Total (A)+(B)+(C)
indicated in Statement at para (I)(a)
above}
1. --- --- --- ---
TOTAL --- --- ---
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
24
8. Details of the shareholding of the Promoters and Promoter Group
(A) Pre - Scheme of Arrangement, as on 3rd July 2009, (being the Record Date)
Sr. No. Name of the Shareholder No.of Shares % of Holding
1. Mr. Dhiren B. Kothary 15,48,000 27.75%
2. Mrs. Nita Dhiren Kothary 19,01,500 34.08%
3. Mr. Sesha Srinivas Malladi 9,02,444 16.18%
TOTAL 43,51,944 78.01%
(B) Post- Scheme of Arrangement, as on 6th July 2009.
Sr. No. Name of the Shareholder No. of shares % of Holding
1. Mr. Dhiren B. Kothary 15,48,000 15.48%
2. Mrs. Nita Dhiren Kothary 19,01,500 19.02%
3. Mr. Sesha Srinivas Malladi 9,60,252 9.60%
TOTAL 44,09,752 44.10%
(C) As on the date of this Information Memorandum
Sr. No. Name of the Shareholder No. of shares % of Holding
1. Mr. Dhiren B. Kothary 24,50,444 15.48%
2. Mrs. Nita Dhiren Kothary 19,01,500 19.02%
TOTAL 43,51,944 43.51%
9. The list of top 10 shareholders of the Company and the number of Equity Shares held by
them
A. Top 10 shareholders as on the date of the Information Memorandum
Names No of shares held % of paid-up Capital
1. Mr. Dhiren B. Kothary 24,50,444 24.50%
2. Mrs. Nita Dhiren Kothary 19,01,500 19.02%
3. Mr. Amit Sheth 9,50,000 9.50%
4. Mr. Nimesh Shah 3,99,488 3.99%
5. Mrs. Nikita Shah 3,97,125 3.97%
6. Mr. Navin Thakkar 3,60,069 3.60%
7. Mrs. Sonal Koradia 3,09,164 3.09%
8. Mr. Bhavesh Koradia 1,38,200 1.38%
9. Enpee Enterprises Pvt Ltd 85,000 0.85%
10. Mr. Sunil Jagdish Sachade 75,000 0.75%
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
25
B. Top 10 shareholders on the Record Date, being 3rd July, 2009
Name of the Shareholder No of shares held % of paid-up
Capital
1. Mr. Dhiren B. Kothary 15,48,000 28.64%
2. Mrs. Nita Dhiren Kothary 19,01,500 33.19%
3. Mr. Amit Sheth 9,50,000 17.03%
4. Mr. Sesha Srinivas Malladi 9,02,444 16.18%
5. Mr. Bhavesh Koradia 1,38,200 2.48%
6. Mrs. Sonal Koradia 1,38,200 2.48%
7. Mr. Suresh S. Vishwasrao 100 0.00%
8. Mr. Vilas Darji 100 0.00%
9. Mr. M. Chandrashekhar 100 0.00%
10. Mr. J A Kotian 100 0.00%
C. Top 10 shareholders two years prior to the date of this Information Memorandum
Name of the Shareholder No of shares held % of paid-up
Capital
1. Mr. Dhiren B. Kothary 15,48,000 28.64%
2. Mrs. Nita Dhiren Kothary 19,01,500 33.19%
3. Mr. Amit Sheth 9,50,000 17.03%
4. Mr. Sesha Srinivas Malladi 9,02,444 16.18%
5. Mr. Bhavesh Koradia 1,38,200 2.48%
6. Mrs. Sonal Koradia 1,38,200 2.48%
7. Mr. Suresh S. Vishwasrao 100 0.00%
8. Mr. Vilas Darji 100 0.00%
9. Mr. M. Chandrashekhar 100 0.00%
10. Mr. J A Kotian 100 0.00%
10. The face value of the Equity Shares is Rs.10/- per share and there shall be only one
denomination for the Equity Shares of the Company, subject to applicable regulations and the
Company shall comply with such disclosure and accounting norms specified by SEBI, from time
to time.
11. The number of shareholders is 5,776 as on the date of this Information Memorandum.
12. None of the Equity Shares of the Company were under lock-in prior to the Scheme.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
26
VI. SCHEME OF ARRANGEMENT
Background and Rationale of the Scheme of Arrangement
CCL was incorporated on March 02, 1995 with the Registrar of Companies, Maharashtra, Mumbai.
CCL was engaged in the business of Electrical Controls and Software Services each of which were
being carried out as two separate business divisions. Both the divisions of CCL were being run
independently with different characteristics, distinct fixed assets, non-overlapping revenue streams
and separately identifiable customers. The nature of risks and competition involved in the business of
Electrical Division Undertaking is different from that of the business Software Services Division.
The software services business of the Company was started in the year 2000 and in the year 2003,
Continental Softech Limited, a Group Company engaged in the business of Software Services was
amalgamated with CCL to strengthen the Software Services business. However, due to increased
competition this Division was passing through a tough phase and the management was unable to
spare sufficient time and effort to put the Software Services Division Undertaking on the path of
efficiency and growth. Thus, infrastructure created for the Software Services Division was not being
utilized to its fullest potential and proving to be a drag on the overall working of the Company.
QSIL was incorporated on 27th day of March 2000 with the Registrar of Companies, Maharashtra,
Mumbai. QSIL is engaged in the business of providing software and BPO Services to both domestic
and international clients. However, its growth is constrained due to lack of infrastructure and
resources commensurate with the business development potential the management has. The
infrastructure and resources transferred from CCL by the demerger would enable QSIL to expand its
business substantially, the fruits whereof can be enjoyed by the shareholders of the Company.
The restructuring has resulted in segregation of the Software Services Division Undertaking from
CCL, leading to operational efficiencies and synergies and enable exploitation of growth opportunities
of both the CCL and the QSIL. Since the shares of both companies are proposed to be listed, the
entire investment of all the shareholders will continue to remain tradeable on the Stock Exchanges,
thereby not jeopardizing their interests in any manner.
The Salient Features of the Scheme are:-
i. The Scheme envisages the demerger of the Software Services Division Undertaking of the
Applicant Company to the QSIL pursuant to Sections 391 to 394 and other relevant provisions
of the Act in the manner provided for in the Scheme, and the consequent issue of equity shares
by the QSIL to the shareholders of the Applicant Company in the Share Entitlement Ratio (as
defined hereinafter).
ii. The Scheme provides that the "Appointed Date" shall be April 1, 2008.
iii. The "Effective Date" for the Scheme means the last of the dates on which the conditions and
matters referred to in Clause 12 of the Scheme occur or have been fulfilled or waived.
iv. "Software Services Division Undertaking " as described in Clause A of Part I of the Scheme
means the software services business carried on by the Applicant Company, which shall
include the following:
a. All the properties and assets, investments, stocks, debtors, receivables, loans, advances,
all rights, powers, interests, authorities, privileges and liberties, whether or not recorded in
the books of account and/or appearing in the balance sheet of the Applicant Company
pertaining, or relating, to the Software Services Business.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
27
b. All liabilities, including all the financial commitments / obligation present and future,
contingent or otherwise, whether or not recorded in the books of account and/or
appearing in the balance sheet of the Applicant Company pertaining, or relating to the
Software Services Business.
c. Such of the general or multi-purpose borrowings of the Software Services Business as
identified by the Board of Directors of the Applicant Company.
d. All books of account, registers, records, files, papers and all other documents of whatever
nature relating to the above assets, properties and liabilities.
e. Without prejudice to the generality of sub-clauses (a) and (b) hereinabove, the Software
Services Division Undertaking shall include all the assets and properties of the Applicant
Company pertaining or relating to its Software Services Business, whether real corporeal
and incorporeal, in possession or reversion, present and contingent, all other assets
(whether tangible or intangible) and liabilities of whatsoever nature, and wheresoever
situate, investments, stocks, other rights, powers, authorities, allotments, approvals,
consents, exemptions, letters of intent, licences, permits, registrations, contracts,
engagements, arrangements, agreements with clients, rights, titles, interests, benefits,
and advantages of any nature whatsoever and wheresoever situate of, belonging to, or in
the ownership, power or possession and in the control of, or vested in, or granted in
favour of, or enjoyed by, the Software Services Business of the Applicant Company,
including all intellectual properties and rights of any nature whatsoever and licences,
assignments, grants in respect thereof, privileges, liberties, easements, contracts,
advantages, benefits, goodwill, , approvals, authorisations, right to use and avail of
telephones, facsimile and other communication facilities, connections, equipments and
installations, utilities, electricity and electronic connections and all other services, of every
kind, nature and descriptions whatsoever, benefits of all agreements, contracts,
arrangements, deposits, advances, recoverables and receivables whether from
government, semi-government, local authorities or any other customers, etc., and all
other rights, interests, claims and powers of every kind, nature and description of, and
arising to, Software Services Business of the Applicant Company and cash and bank
balances, all earnest moneys or deposits including security deposits, if any, paid by the
Software Services Business of the Applicant Company.
f. All permanent employees of the Software Services of the Applicant Company
substantially engaged in the Software Services Business and those permanent
employees that are determined by the Board of Directors of the Applicant Company to be
substantially engaged in, or in relation to, the Software Services Division Undertaking.
v. "Electrical Division Undertaking" means all the businesses, activities and operations of the
Applicant Company other than Software Services Division Undertaking.
vi. The Scheme of Arrangement provides that though it shall become effective from the Effective
Date, the provisions of the Scheme of Arrangement shall be applicable and come into operation
from the Appointed Date.
vii. The Scheme also provides for:
a. the manner of vesting and transfer of the assets of the Applicant Company relating to the
Software Services Division Undertaking in the QSIL;
b. the transfer of contracts, deeds, bonds, agreements, schemes, arrangements and other
instruments of whatsoever nature relating to the Software Services Division Undertaking
from the Applicant Company to the QSIL;
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
28
c. the transfer of all consents, permissions, licenses, certificates, clearances, authorities,
powers of attorney given by, issued to or executed in favour of the Software Services
Division Undertaking from the Applicant Company to the QSIL;
d. the transfer of all debts, liabilities, duties, and obligations of the Software Services
Division Undertaking from the Applicant Company to the QSIL;
e. the transfer of all suits, actions and proceedings by or against the Applicant Company
relating to the Software Services Division Undertaking to the QSIL;
f. the manner in which the Applicant Company shall be deemed to have been carrying on
all business and activities relating to the Software Services Division Undertaking for and
on account of, and in trust for, the QSIL;
g. the transfer of employees engaged in the Software Services Division Undertaking of the
Applicant Company to the QSIL on terms and conditions not less favourable than those
on which they are engaged in the Applicant Company;
h. provisions for the Software Services Division Undertaking to continue in the Applicant
Company;
i. the issuance of 1 (One) share of face value of Rs. 10/- by the QSIL to the shareholders of
the CCL whose names are recorded in the Register of Members of the Applicant
Company on the Record Date for every 2 (Two) share of face value of Rs. 10/- credited
as fully paid-up held by such shareholder and matters related thereto;
j. the reduction of paid-up capital of the Applicant Company by half, consequent to the
transfer of Software Services Undertaking to QSIL and the allotment of shares by QSIL in
lieu thereof and the matters related thereto.
k. The treatment of fractional entitlements in view of (i) and (j) above.
l. that the QSIL shall apply for the listing of the shares issued by the QSIL pursuant to the
Scheme to the Bombay Stock Exchange Limited (BSE), on which the equity shares of the
Applicant Company are listed;
m. that the shares allotted and issued pursuant to this Scheme of Arrangement shall remain
frozen in the depositories system till listing/trading permission is given by the Bombay
Stock Exchange;
n. the accounting treatment for the arrangement in the books of the Applicant Company and
the QSIL respectively.
viii. The Scheme is conditional upon and subject to:
a. the Scheme being agreed to by the respective requisite majorities of the Shareholders
and creditors (where applicable) of the Applicant Company and the QSIL as required
under the Act and the requisite orders of the High Court being obtained;
b. such other sanctions and approvals including but not limited to in-principle approvals,
sanctions of any Governmental Authority or any stock exchanges as may be required by
law in respect of the Scheme being obtained; and
c. the certified copies of the orders of the High Court referred to in the Scheme being filed
with the Registrar of Companies, Mumbai.
The Shareholders of the Transferor Company have accorded their approval for the Scheme of
Arrangement at the Court Convened meeting on 24th May, 2008. Subsequently, Scheme of
Arrangement has been approved by the Honourable High Court of Judicature at Bombay on
September 5, 2008. The Copy of order of High court along with the Scheme of Demerger is available
at the registered office of the Company.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
29
VII. Taxation
The information provided below sets out the possible tax benefits available to the shareholders of
an Indian company in a summary manner only and is not a complete analysis or listing of all potential
tax consequences of the subscription, ownership and disposal of the Equity Shares, under the
current tax laws presently in force in India. Several of these benefits are dependent on our
shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of any
shareholder to derive the tax benefits is dependent upon fulfilling such conditions, which based on
business imperatives it faces in the future, it may not choose to fulfill. The following overview is not
exhaustive or comprehensive and is not intended to be a substitute for professional advice. You are
advised to consult your own tax consultant and advisors with respect to the tax implications of an
investment in the Equity Shares, particularly in view of certain recently enacted legislation which may
not have a direct legal precedent or may have a different interpretation on the benefits which you can
avail.
STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO OUR SHAREHOLDERS UNDER
THE INCOME TAX ACT, 1961 (“IT ACT”) AND OTHER DIRECT TAX LAWS PRESENTLY IN
FORCE IN INDIA TAX BENEFITS AVAILABLE TO OUR SHAREHOLDERS
• This statement sets out below the possible tax benefits available to our shareholders under
the current tax laws presently in force in India. Several of these benefits are dependent on
such shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the
ability of our shareholders to derive the tax benefits is dependent upon fulfilling such
conditions, which based on the business imperatives, the shareholders may or may not
choose to fulfil;
• This statement sets out below the provisions of law in a summary manner only and is not
a complete analysis or listing of all potential tax consequences of the subscription,
ownership and disposal of Equity Shares. This statement is only intended to provide
general information to the investors and is neither designed nor intended to be a substitute
for a professional tax advice. In view of the individual nature of tax consequences and the
changing tax laws, each investor is advised to consult his or her or their own tax consultant
with respect to the specific tax implications arising out of their participation in the issue;
• In respect of non-residents, the tax rates and the consequent taxation, mentioned in this
section shall be further subject to any benefits available under the Double Taxation
Avoidance Agreement, if any, between India and the country in which the non-resident has
fiscal domicile; and
• The stated benefits will be available only to the sole/first-named holder in case the Equity
Shares are held by joint shareholders.
I. Benefits under the IT Act
A. Resident Shareholders
1. Under Section 10(32) of the IT Act, any income of minor children clubbed in the total income of the
parent under Section 64(1 A) of the IT Act, will be exempt from tax to the extent of Rs. 1,500
per minor child whose income is so included.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
30
2. As per Section 10(34), read with Section 115-O(6) of the IT A, any income by way of dividends
referred to in Section 115-O (i.e. dividends declared, distributed or paid on or after 1 April
2003 by the domestic companies) received on the Equity Shares is exempt from tax. However it
is pertinent to note that Section 14A of the IT Act restricts claims for deduction of expenses
incurred in relation to exempt income. Thus, any expense incurred to earn the dividend income is
not an allowable expenditure.
3. As per Section 2(29A), read with Section 2(42A), Equity Shares held in a company are treated as
long term capital asset if the same are held by the assessee for more than twelve months
period immediately preceding the date of its transfer. Accordingly, the benefits enumerated
below in respect of long term capital assets would be available if the Equity Shares are held for
more than twelve months.
4. As per Section 10(38) of the IT A, long term capital gains arising from the transfer of a long term
capital asset being an Equity Share, where such transaction is chargeable to securities
transaction tax, will be exempt in the hands of the shareholder.
5. As per Section 54EC of the IT A and subject to the conditions and to the extent specified therein,
long-term capital gains (in cases not covered under Section 10(38) of the ITA) arising on the
transfer of a long-term capital asset will be exempt from capital gains tax to the extent such
capital gains are invested in a “long term specified asset” within a period of 6 months after the
date of such transfer. It may be noted that investment made on or after April 1, 2007 in the
long term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs.
However, if the assessee transfers or converts the long term specified asset into money within a
period of three years from the date of its acquisition, the amount of capital gains exempted
earlier would become chargeable to tax as long-term capital gains in the year in which the long
term specified asset is transferred or converted into money.
A “long term specified asset” means any bond, redeemable after three years and issued on or
after the 1st day of April 2007 by the:
• National Highways Authority of India constituted under Section 3 of the National
Highways
Authority of India Act, 1988; or
• Rural Electrification Corporation Limited, a company formed and registered under the
Companies
Act, 1956.
6. As per Section 54F of the ITA, long term capital gains (in cases not covered under Section
10(38)) arising on the transfer of the Equity Shares held by an individual or Hindu Undivided
Family (HUF) will be exempt from capital gains tax if the net consideration is utilised, within a
period of one year before, or two years after the date of transfer, in the purchase of a residential
house, or for construction of a residential house within three years. Such benefit will not be
available:
if the individual or Hindu Undivided Family -
• owns more than one residential house, other than the new residential house, on the date
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
31
of transfer of the Equity Shares; or
• purchases another residential house within a period of one year after the date of
transfer of the Equity Shares; or
• constructs another residential house within a period of three years after the date of
transfer of the Equity Shares; and
the income from such residential house, other than the one residential house owned on the date
of transfer of the original asset, is chargeable under the head “Income from house property”.
If only a part of the net consideration is so invested, so much of the capital gain as bears to the
whole of the capital gain, the same proportion as the cost of the new residential house bears to the
net consideration, will be exempt.
If the new residential house is transferred within a period of three years from the date of
purchase or construction, the amount of capital gains on which tax was not charged earlier, will
be deemed to be income chargeable under the head “Capital Gains” of the year in which the
residential house is transferred.
7. As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against
short-term as well as long-term capital gains of the said year. Balance loss, if any, could be
carried forward for eight years for claiming set-off against subsequent years' short term as well as
long-term capital gains. Long-term capital loss suffered during the year is allowed to be set-off
against long-term capital gains. Balance loss, if any, could be carried forward for eight years for
claiming set-off against subsequent years' long-term capital gains.
8. As per Section 111A of the IT A, short term capital gains arising from the sale of Equity Shares
transacted through a recognised stock exchange in India, where such transaction is chargeable to
securities transaction tax, will be taxable at the rate of 15% (plus applicable surcharge and
education cess).
9. As per Section 112 of the IT A, taxable long-term capital gains, if any, on sale of listed securities
will be charged to tax at the rate of 20% (plus applicable surcharge and education cess) after
considering indexation benefits or at 10% (plus applicable surcharge and education cess) without
indexation benefits, whichever is less. Under Section 48 of the IT A, the long term capital gains
arising out of sale of capital assets excluding bonds and debentures (except Capital Indexed
Bonds issued by the Government) will be computed after indexing the cost of acquisition/
improvement.
B.1 Non-Resident Shareholders - Other Than Foreign Institutional Investors
1. Under Section 10(32) of the IT Act, any income of minor children clubbed with the total income
of the parent under Section 64(1A) of the IT Act, will be exempt from tax to the extent of Rs.
1,500 per minor child whose income is so included.
2. As per Section 10(34) read with Section 115-O(6) of the ITA, any income by way of dividends
referred to in Section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003
by the domestic companies) received on the Equity Shares is exempt from tax.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
32
3. As per Section 2(29A) read with Section 2(42A), Equity Shares held in a company are treated
as long term capital asset if the same are held by the assessee for more than twelve months
period immediately preceding the date of its transfer. Accordingly, the benefits enumerated
below in respect of long term capital assets would be available if the Equity Shares are held
for more than twelve months.
4. As per Section 10(38) of the ITA, long term capital gains arising from the transfer of long term
capital asset being an Equity Share, where such transaction is chargeable to securities
transaction tax, will be exempt in the hands of the shareholder.
5. As per first proviso to Section 48 of the ITA, in case of a non-resident shareholder, the capital
gain/loss arising from transfer of Equity Share, acquired in convertible foreign exchange, is to
be computed by converting the cost of acquisition, sales consideration and expenditure
incurred wholly and exclusively incurred in connection with such transfer, into the same foreign
currency which was initially utilized in the purchase of Equity Shares. Cost Indexation benefit
will not be available in such a case. As per Section 112 of the ITA, taxable long-term capital
gains, if any, on sale of Equity Shares is chargeable to tax at the rate of 20% (plus applicable
surcharge and education cess).
6. As per Section 54EC of the ITA and subject to the conditions and to the extent specified
therein, long-term capital gains (in cases not covered under Section 10(38) of the ITA) arising
on the transfer of a long-term capital asset will be exempt from capital gains tax to the extent
such capital gains are invested in a “long term specified asset” within a period of 6 months
after the date of such transfer. It may be noted that investment made on or after April 1, 2007
in the long term specified asset by an assessee during any financial year cannot exceed Rs.
50 Lacs.
However, if the assessee transfers or converts the long term specified asset into money within a
period of three years from the date of its acquisition, the amount of capital gains exempted
earlier would become chargeable to tax as long-term capital gains in the year in which the long
term specified asset is transferred or converted into money.
A “long term specified asset” for making investment under this Section on or after 1st April 2007
means any bond, redeemable after three years and issued on or after the 1st April 2007 by:
• National Highways Authority of India constituted under Section 3 of the National
Highways Authority of India Act, 1988; or
• Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act.
7. As per Section 54F of the IT A, long term capital gains (in cases not covered under Section
10(38)) arising on the transfer of the Equity Shares held by an individual or Hindu Undivided
Family (HUF) will be exempt from capital gains tax if the net consideration is utilised, within a
period of one year before, or two years after the date of transfer, in the purchase of a residential
house, or for construction of a residential house within three years. Such benefit will not be
available:
if the individual or Hindu Undivided Family -
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
33
• owns more than one residential house, other than the new residential house, on the date
of transfer of the Equity Shares; or
• purchases another residential house within a period of one year after the date of
transfer of the Equity Shares; or
• constructs another residential house within a period of three years after the date of
transfer of the Equity Shares; and
the income from such residential house, other than the one residential house owned on the date
of transfer of the original asset, is chargeable under the head “Income from house property”.
If only a part of the net consideration is so invested, so much of the capital gain as bears to the
whole of the capital gain, the same proportion as the cost of the new residential house bears to the
net consideration, will be exempt.
If the new residential house is transferred within a period of three years from the date of
purchase or construction, the amount of capital gains on which tax was not charged earlier, will
be deemed to be income chargeable under the head “Capital Gains” of the year in which the
residential house is transferred.
8. As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against
short-term as well as long-term capital gains of the said year. Balance loss, if any, could be
carried forward for eight years for claiming set-off against subsequent years' short term as well as
long-term capital gains. Long- term capital loss suffered during the year is allowed to be set-off
against long-term capital gains. Balance loss, if any, could be carried forward for eight years for
claiming set-off against subsequent years' long-term capital gains.
9. As per Section 111A of the IT A, short term capital gains arising from the sale of Equity Shares
transacted through a recognised stock exchange in India, where such transaction is chargeable to
securities transaction tax, will be taxable at the rate of 15% (plus applicable surcharge and
education cess).
10. As per Section 115E of the IT A, in the case of a shareholder being a Non-Resident Indian, and
subscribing to the Equity Shares in convertible foreign exchange, in accordance with and subject
to the prescribed conditions, long term capital gains arising on transfer of the Equity Shares (in
cases not covered under Section 10(38) of the ITA) will be subject to tax at the rate of 10% (plus
applicable surcharge and education cess), without any indexation benefit.
11. As per Section 115F of the ITA and subject to the conditions specified therein, in the case of a
shareholder being a Non-Resident Indian, gains arising on transfer of a long term capital asset
being Equity Shares will not be chargeable to tax if the entire net consideration received on such
transfer is invested within the prescribed period of six months in any specified asset or savings
certificates referred to in Section 10(4B) of the ITA. If part of such net consideration is invested
within the prescribed period of six months in any specified asset or savings certificates referred to
in Section 10(4B) of the ITA then such gains would not be chargeable to tax on a proportionate
basis. Further, if the specified asset or savings certificate in which the investment has been made
is transferred within a period of three years from the date of investment, the amount of capital
gains tax exempted earlier would become chargeable to tax as long term capital gains in the year
in which such specified asset or savings certificates are transferred.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
34
12. As per Section 115G of the ITA, Non-Resident Indians are not obliged to file a return of income
under Section 139(1) of the ITA, if their only source of income is income from specified
investments or long term capital gains earned on transfer of such investments or both, provided
tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the
ITA.
13. As per Section 115H of the ITA, where Non-Resident Indian becomes assessable as a resident in
India, he may furnish a declaration in writing to the Assessing Officer, along with his return of
income for that year under Section 139 of the ITA to the effect that the provisions of Chapter XII-A
shall continue to apply to him in relation to such investment income derived from the specified
assets for that year and subsequent assessment years until such assets are converted into
money.
14. As per Section 115I of the ITA, a Non-Resident Indian may elect not to be governed by the
provisions of Chapter XII-A for any assessment year by furnishing a declaration along with his
return of income for that assessment year under Section 139 of the ITA, that the provisions of
Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for
that assessment year will be computed in accordance with the other provisions of the ITA.
For the purpose of aforesaid clauses “Non-Resident Indian” means an Individual, being a citizen
of India or a person of Indian origin who is not a “resident”. A person shall be deemed to be of
Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India.
Provisions of the ITA vis-à-vis provisions of the Tax Treaty
15. In respect of non-residents, the tax rates and consequent taxation mentioned above will be further
subject to any benefits available under the Tax Treaty, if any, between India and the country
in which the non resident is resident. As per the provisions of Section 90(2) of the ITA, the
provisions of the ITA would prevail over the provisions of the Tax Treaty to the extent they are
more beneficial to the non-resident.
B.2 Non-Resident Shareholders - Foreign Institutional Investors
1. We are required to pay a “dividend distribution tax” currently at the rate of 16.995% (including
applicable surcharge and education cess) on the total amount distributed or declared or paid
as dividend. Under Section 10(34) of the IT Act, income by way of dividend referred to in
Section 115-O received on our Equity Shares is exempt from income tax in the hands of
shareholders. However it is pertinent to note that Section 14A of the IT Act restricts claim for
deduction of expenses incurred in relation to exempt income.
2. As per Section 10(34) read with Section 115-O(6) of the ITA, any income by way of dividends
referred to in Section 115-O (i.e. dividends declared, distributed or paid on or after 1 April 2003 by
the domestic companies) received on the Equity Shares is exempt from tax.
3. As per Section 2(29A) read with Section 2(42A), Equity Shares held in a company are treated as
long term capital asset if the same are held by the assessee for more than twelve months period
immediately preceding the date of its transfer. Accordingly, the benefits enumerated below in
respect of long term capital assets would be available if the Equity Shares are held for more than
twelve months.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
35
4. As per Section 10(38) of the IT A, long term capital gains arising from the transfer of long term
capital asset being Equity Shares, where such transaction is chargeable to securities transaction
tax, will be exempt to tax in the hands of the FIIs.
5. As per Section 54EC of the ITA and subject to the conditions and to the extent specified therein,
long-term capital gains (in cases not covered under Section 10(38) of the ITA) arising on the
transfer of a long-term capital asset will be exempt from capital gains tax to the extent such
capital gains are invested in a “long term specified asset” within a period of 6 months after the
date of such transfer. It may be noted that investment made on or after April 1, 2007 in the long
term specified asset by an assessee during any financial year cannot exceed Rs. 50 Lacs.
However, if the assessee transfers or converts the long term specified asset into money within a
period of three years from the date of its acquisition, the amount of capital gains exempted
earlier would become chargeable to tax as long-term capital gains in the year in which the long
term specified asset is transferred or converted into money.
A “long term specified asset” for making investment under this Section on or after 1st April 2007
means any bond, redeemable after three years and issued on or after the 1st April 2007 by:
• National Highways Authority of India constituted under Section 3 of the National
Highways Authority of India Act, 1988; or
• Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956.
6. As per Section 74 Short-term capital loss suffered during the year is allowed to be set-off against
short-term as well as long-term capital gains of the said year. Balance loss, if any, could be
carried forward for eight years for claiming set-off against subsequent years' short term as well as
long-term capital gains. Long-term capital loss suffered during the year is allowed to be set-off
against long-term capital gains. Balance loss, if any, could be carried forward for eight years for
claiming set-off against subsequent years' long-term capital gains.
7. As per Section 111A of the ITA, short term capital gains arising from the sale of Equity Shares
transacted through a recognised stock exchange in India, where such transaction is chargeable to
securities transaction tax, will be taxable at the rate of 15% (plus applicable surcharge and
education cess).
8. As per Section 115AD of the ITA, FIIs will be taxed on the capital gains that are not exempt under
the provision of Section 10(38) of the ITA, at the following rates:
Nature of income Tax Rate (%)
Long term capital gains 10
Short term capital gains (other than referred to in Section 111A) 30
The above tax rates have to be increased by the applicable surcharge and education cess.
In case of long term capital gains, (in cases not covered under Section 10(38) of the ITA), the tax
is levied on the capital gains computed without considering the cost indexation and without
considering foreign exchange fluctuation.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
36
9. As per Section 196D, no tax is to be deducted from any income, by way of capital gains arising
from the transfer of Equity Shares payable to Foreign Institutional Investor.
Provisions of the ITA vis-à-vis provisions of the Tax Treaty
10. The tax rates and consequent taxation mentioned above will be further subject to any benefits
available under the Tax Treaty, if any, between India and the country in which the FII is resident.
As per the provisions of Section 90(2) of the IT A, the provisions of the ITA would prevail over the
provisions of the Tax Treaty to the extent they are more beneficial to the FII.
II. Benefits Available Under the Wealth-Tax Act, 1957
Asset as defined under Section 2(ea) of the Wealth tax Act, 1957 does not include shares in
companies and hence, Equity Shares are not liable to wealth tax in the hands of shareholders.
III. Benefits under the Gift Tax Act, 1958
Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of
Equity Shares will not attract gift tax.
IV. Benefits available to Mutual Funds
As per Section 10(23D) of the ITA, any income of Mutual Funds registered under the Securities and
Exchange Board of India Act, 1992 or Regulations made there under, Mutual Funds set up by public
sector banks or public financial institutions and Mutual Funds authorized by the Reserve Bank of India
will be exempt from income tax, subject to such conditions as the Central Government may, by
notification in the Official Gazette, specify in this behalf.
V. Tax Deduction at Source
No income-tax is deductible at source from income by way of capital gains under the present
provisions of the IT Act, in case of residents. However, as per the provisions of section 195 of the IT
Act, any income by way of capital gains, payable to non residents (except long-term capital gains
exempt under section 10(38) of the IT Act), may fall within the ambit of with-holding tax provisions,
subject to the provisions of the relevant tax treaty. Accordingly income tax may have to be deducted
at source in the case of a non- resident at the rate under the domestic tax laws or under the tax treaty,
whichever is beneficial to the assessee unless a lower withholding tax certificate is obtained from the
tax authorities.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
37
VIII. BUSINESS
INDUSTRY OVERVIEW
INDIAN ITES AND BPO INDUSTRY
The Indian ITeS-BPO industry has been consistently growing over the past few years, in spite of rising
competition from countries such as Philippines, China, Brazil, Mexico and Ireland. Its contribution to
the service sector and to the country’s GDP has also been increasing over these years. The industry
has come a long way from just offering traditional outsourced data entry work to providing high-end
knowledge services to global clients. Yet there is a vast untapped universe in the Indian ITeS-BPO
industry, which represents tremendous growth opportunities for the industry players.
The impressive growth of the Indian IT and BPO industry has contributed significantly towards the
socioeconomic development by generating employment opportunities, foreign exchange reserves et
al. Besides, the sector has facilitated other industries such as real estate, transportation, catering
services, and has thus generated many employment opportunities in the country. The revenue of the
sector (IT-BPO) has manifolded during the last decade from merely US$8.3 bn in 2000 to around
US$71 bn in 2009 at a CAGR growth of 27%1.
The ITeS/BPO notably is the fastest-growing segment within the IT-BPO sector, and during the last
decade it grew at a CAGR of 42.8%; the IT services and software revenue grew at a CAGR of 26.8%.
The small and medium-sized enterprises have recently had ample avenues to explore in terms of IT
services and business process solutions. Due to the boom in the banking, telecom, retail, logistics
sector and several initiatives taken by the Central government and other state governments, the IT
spending in the domestic market has increased impressively. In the last 10 years, the domestic IT
services and software products and engineering services market grew by 21% annually and reached
US$10.5 bn in 2009.
Nonetheless, the global economic slowdown has put a brake on the growth run of the sector’s
performance during 2009 as the clients in the western countries are either delaying or cutting their IT
spending, or re-negotiating the prices.
Going ahead, the challenge for the industry players lies in maintaining the level of competency and
offering high level customer satisfaction at an affordable price. The current economic slowdown has
changed the business scenario across the globe. The changes in macroeconomic fundamentals,
protectionism measures are also few important risks looming large on the sector. Players need to
adopt an innovative approach to tackle the situation by finding out alternative markets, adopting
different business models, improving the quality of services, diversi20ing service line, and most
importantly, focusing on other emerging verticals.
INDIAN ITES-BPO INDUSTRY AND ECONOMIC GROWTH
The Indian ITeS-BPO industry has revolutionized global sourcing and has emerged as one of the
sunrise sectors for the country. The success of the outsourcing of IT services was followed by global
sourcing of business processes which in turn has increasingly become an absolute value addition for
the global companies, and India with its large skilled manpower and favourable government policy
initiatives has grabbed the opportunities by both hands.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
38
Apart from aiding the socioeconomic development of the country, the ITeS-BPO sector has also
driven the rapid growth of other sectors such as organized retail, automobile, aviation, real estate,
banking and financial sector. The Indian ITeS-BPO sector revenue notably recorded a CAGR growth
of 42.8% during 2000-2009 and outpaced the growth of the IT services sector during this period,
which grew by an average of 25.4%. In 2009, the ITeS-BPO export is estimated to have contributed
over 86.8% to the total IT-BPO revenue, though this contribution was lower than that made in 2002 at
93.8%. The decrease in exports could be attributed to the growth of the domestic BPO over the last
couple of years; during 2005-2009, the domestic BPO grew at a CAGR of 34.1%, ably supported by
the BFSI and telecom vertical.
Highlights of ITeS-BPO performance in 2009
The Indian ITeS-BPO market grew by over 18% and its revenues totaled US$ 14.8 bn. The
growth of the sector was largely affected by the global economic slowdown.
The BPO exports market was around US$ 12.8 bn, having recorded a growth rate of 17.5%
much lower than 30% growth in the previous year.
The domestic ITeS-BPO market grew by over 23.0% to US$ 1.94 bn as compared with the
previous year’s growth of 43.7%.
The ITeS-BPO export segment added 90,000 employees during the year, which took the total
head count to 790,000
Customer Interaction Services (CIS) continues to be mainstay of the BPO services offered by
India as it contributed over 44% to the total revenues generated by exports.
ITeS-BPO revenues contributed 1% to India’s GDP and 4% of exports
Tech & BPO generated 45% of the total urban employment in India, BPO has created over a
third of those jobs.
INDIA CONTINUES TO DOMINATE GLOBAL OFFSHORE BPO MARKET
The global outsourcing market has been expanding at a rapid pace in the past few years as
outsourcing has become an integral function of every organization in the past 10 years or so.
Companies have been benefiting through global sourcing partnerships in terms of cost savings,
enhanced business efficiency, ability to explore new markets, reduction in time-to-market and
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
39
products and services among others. Leading global organisations have realized the importance of
outsourcing and offshoring and are increasingly outsourcing their non-core activities to low-cost
countries such as India, China, Ireland, and Philippines among others. India has taken centre stage in
the global outsourcing arena and Indian vendors are progressively adopting more new business
models with a blend of onshore, offshore and near-shore operations that gratify their clients and help
them to increase their top line and bottom line;
Share Of Market For Business Process Offshoring 2004-2008
India continues to dominate the global business process offshoring market by offering value added
services to its global clients. Global organisations are increasingly outsourcing their business needs
owing to rapidly changing business scenario, intense competition from peers, and rising globalisation,
to improve their performance. Offshoring of business services are done in different ways, such as
moving the production from parent company by establishing a foreign captive affiliate, which is also
known as captive offshoring. Besides, it also involves outsourcing of business activities to a third party
service provider – either domestic or foreign owned. As mentioned earlier, India’s comparative
advantage are its huge talent pool, higher working population, improved infrastructure facilities, and
innovative business processes, which offer significant cost benefits to international clients. India’s
share in global business process offshoring increased steadily from 32% in 2004 to 35% in 2008. In
recent times, however, the Philippines has been emerging as a business process offshore destination;
in 2008, it had a 15% share in the global business offshoring up from 9% in 2004. In India, several
cities are emerging as favourable destinations for US-based and Europe-based companies to
establish their delivery centres in cities such as Bengaluru, Gurgaon, Hyderabad, Pune, Mumbai and
Chennai.
ROAD AHEAD
The Indian ITeS-BPO industry is expected to continue its growth march in future as well in spite of the
expected rise in challenges. The industry is likely to gain further specialization in the KPO, EPO and
LPO arena. The BPO sector was the driving force behind the Indian ITeS-BPO industry during its
advent days like presently the KPO sector is the driving force for the industry because of the high
analytical services it offers global clients. The EPO and LPO segments are touted as the growth
drivers of the next wave of outsourcing.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
40
However, given the current global recession, the ITeS-BPO industry is registering lower growth rate
as compared with the previous years. The financial crisis in the US and the Europe has affected the
overall IT spending of majority companies. It is important to highlight that exports constitute over 86%
of overall industry revenue and therefore, any crisis in the international market in general, and the US
in particular, will have a large impact on the sector. The slowdown has dried up volumes of the BPO
companies, which in turn has affected the profitability; therefore, the companies are taking innovative
initiatives to improve their bottom-line and also to open up delivery centres in non-metros, that is, tier
II, III and even smaller cities/towns, which help them to survive at the current juncture. These cities
are offering good infrastructure facilities and skilled manpower at a much lower price. However, the
governments should also step into the system by creating robust eco-system through public-private
partnership by investing in developing employable human resource, and adequate infrastructure
facilities to cater to the domestic market as well as the international market. In addition, companies
are also looking for mergers and acquisitions in high-end analytical space to offer superior knowledge-
based solutions to their global clients.
The current contraction in overall growth is the one of the most severe crises ever since the one
witnessed during World War II. The subprime-triggered crisis in the US during end of 2007 gradually
spread across other parts of the world; as fallout of this crisis, credit availability dropped sharply in
advanced economies and their GDP growth contracted incessantly during the last quarter of 2008. It
is clearly evident that recession has taken a toll on overall growth of the sector. For instance, during
2004 to 2008, the sector registered an average growth of around 39%, while in 2009, the growth
declined sharply to 18.2%. Consequently, the BPO export revenue also recorded a much lower
growth of 17.5% during 2009 as compared with an average annual growth rate of 37% between 2004
to 2008.
The Indian ITeS-BPO industry has revolutionized global sourcing and has emerged as one of the
sunrise sectors for the country. The success of the IT services outsourcing was followed by global
sourcing of business processes, which has become an absolute value addition for the global
companies. India with its large skilled manpower and favorable government policy initiatives has
grabbed these opportunities with both hands. It is important to mention that the sector’s share in
overall services exports has gone up remarkably over the past few years from 5.5% in 2001 to 12.8%
in 2009. The Indian ITeS-BPO exports alone provided direct employment to around 0.8 mn people,
not including the indirect employment. The sector has massively developed the overall economic and
social landscape of the country.
However, the economic slowdown has opened up opportunities for the Indian ITeS-BPO companies,
as it is expected that the global companies would adopt outsourcing as an initiative to reduce cost.
The Indian companies have to be proactive to grab the opportunities and should venture into newer
markets, verticals and service line. Besides, the Indian ITeS-BPO companies should further explore
domestic market, which offers immense opportunities.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
41
BUSINESS OVERVIEW
Quest Softech (India) Limited was incorporated as Quest Softech (India) Private Limited on 27th
March 2000 under the Companies Act, 1956 and was converted into a public limited company on 18th
March 2008. The main business is of IT/BPO services related to the preparation and maintenance of
accounting information and reports.
We seek to elevate our clients’ finance and accounting functions from transactional requirements into
tools that can be used to effectively manage the business. Our unique business process outsourcing
methodology and approach work to optimize operations across the full range of finance and
accounting functions. We serve as a single window outsourcing solution for all Finance, Accounting
and Tax Related services.
We have a unique combination of a highly qualified and enthusiastic team in India with a complete
understanding of all aspects of the Internal Revenue Code, Taxation Laws and rules and regulations.
Our unique approach ensures a highly professional, friendly, value for money service. We present our
services as an invaluable and highly cost effective alternative to staffing and funding in-house
equivalents. We offer our client-partners valuable benefits from improved financial operations
including increased efficiency, flexibility, and transparency, while minimizing risks and costs.
From individual tax planning services to complex corporate consulting engagements, we act as a full
service accounting firm. Our skilled professionals offer both knowledge of technical financial topics
and experience in process operations. This elevates our capabilities above typical business process
outsourcing, and allows for the outsourcing of complex, high-end financial and accounting processes.
Our services and concern for client satisfaction are competitively priced, helping clients manage costs
while obtaining the services they need.
We provide references on request, from existing clients to determine our quality, competence and
promptness in providing services. We guarantee complete confidentiality and privacy of information
and we sign a service level agreement with clients.
VISION
“To be a leading provider of financial services and knowledge based services to a global clientele by
offering value through innovative use of technology and harnessing the highest potential of its
people”.
MISSION
We will ensure the highest standards of social responsibility in everything we do.
We will provide solutions that meet and exceed our customer's business challenges and deliver
only the highest quality of service.
We will marshal talented, committed people and create an environment in which they can
achieve and grow.
We will generate dependable and growing revenues, earnings, and returns to our shareholders.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
42
QUALITY POLICY
QSIL is committed to provide quality and specialised solutions consistently, using state of the art
technology, at affordable cost, in a secure environment, assuring value to our customers through a
competent, well trained and motivated team pursuing the finest industry practices.
CORE VALUES
Humility, Humanity and Integrity are the values that drive QSIL. All our staff is committed to live these
values. Our services and solutions, apart from adding value to the customer, will complement these
values that the organization stands for.
CAPABILITIES
Multi Medium – Phone, Web, E-Mail, Print, Fax and Face-to-Face
Multi Process – Data Collection, Processing, Analytics, Presentation
Multi Industry – IT & Telecom, Healthcare & Pharma, FMCG/Consumer Goods, BFSI, Retail &
Manufacturing, Media, Others.
SERVICES
Accounting and Financial Services
Our Professionals handle Bookkeeping Services, Write-Up Services, Accounts Payable
Services, Financial Reporting Services and Account Reconciliation Services. Our Accounting
personnel can act as back-office operation staff on behalf of clients however situated in our
office. We have an experienced team of CA's and Accounting personnel to efficiently manage
the Accounting processes.
General Accounting and bookkeeping processes
o Updating Chart of Accounts
o Maintaining ledger accounts
o Generating Trial Balance and closing accounts
o Bank and Account reconciliation
o Preparation of Financial Statements- Income & Expenditure statement, Balance Sheet
and Cash-Flows statement.
Fixed Asset and capital accounting processes
o Compute depreciation tables and schedules and record depreciation
o Account for write-offs and valuation adjustments
o Maintain work in progress accounts
o Reconcile fixed asset accounts and ledger entries
Cost and Inventory Accounting processes
o Maintain inventory records
o Develop and update costs
o Perform variance analysis
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
43
Our Write-up services are an important factor for good financial reporting as it is the base for all
analyses and financial reporting in an organization. Based on data inputs like sales and
purchase invoices, checks and receipts and payroll details, our skilled team prepares the ledger
accounts and financial statements with total compliance to statutory regulations applicable..
Our Accounts Payable Service provide the advantages of cutting edge technology and skilled
staff without having to invest in these or buying and maintaining expensive software. Our
Services include utility bill management, travel and expenses processing, tax reporting, supplier
management, special project reports, and customer service.
Our Financial Reporting Services can help you gain a perspective of where does organization
stands. We provide Income Statement, Income statement by month, Balance Sheet, Statement
of Cash Flow, Bank Reconciliation Report, Payroll Register, Journal Entry and Check Register,
Detail General Ledger Report, Business Analysis Report, Financial Analysis Report and
Operations Analysis Report.
Account Reconciliation Services entails a detailed check of an organization's financial records,
bank statements, client and vendor bills and all supporting documents to detect discrepancies,
address them and reconcile the final balance. It accounts for checks outstanding, deposits in
transit and reveals errors in the records.
Tax Preparation Services
We provide all kinds of taxation related services including tax preparation and tax consulting.
Our Professional tax preparation provides CAs and Tax service providers of almost any size
with a great new way of handling their tax compliance workload and meeting filing timing
deadlines.
We examine client's data and balance sheets and classify each item in appropriate place or
form. We also classify analyses and interpret profit and loss items, and interpret the taxability
and treatment to various accounts during tax return processing and preparation services. We
are updated with the latest technology, software and workflow processes to enhance on-the-job
efficiency for tax processing.
Financial Analysis Services
Our Financial Analysis services can be utilized to create a complete picture of the financial
performance and streamlining operations. We will provide financial recommendations on the
basis of in depth analysis of business trends. This will help in formulating strategic decisions
regarding the business organization's financial matters.
We possess state of the art infrastructure, technological capability, and a competent group of
professionals to meet its esteemed your Financial requirements efficiently, timely, and cost
effectively. Our services are affordable when compared to most of the similar service providers
in the industry. This is made possible by leveraging infrastructural and professional self-
sufficiency.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
44
Financial Budgeting and Analytics Services
Budgeting is the most effective way to keep the business - and its finances - on track. Budget
planning is an important aspect of business. Improper budgeting can put a company into
financial crises. Our expertise in budgeting can protect from possible financial crises and help to
run the business smoothly. By utilizing a unique methodology, we assess the business risks
associated with the budget and forecast processes. We then analyze key performance
indicators through the data collection process and management review.
Benefits of our Budgeting services:
o Helps to focus on business priorities
o Helps to prepare for contingencies or unforeseen expenses
o Helps in taking secure financial strategies and decisions
o Creates additional resources to invest in core business activities
o Develop better financial planning
o Gives a clear focus on decision-making
THE OUTSOURCING ADVANTAGE
Cost savings upto 50%;
Cost structure becomes variable;
Investment in assets is lowered;
Accurate, fast, efficient and timely results;
Benefits of outsourcer's standardized processes and advanced technology;
Helps companies streamline and improve business processes;
Inside resources are freed for other purposes;
Increases management's valuable time and thus an improvement in productivity;
Helps companies focus on their core capabilities & businesses;
Off-site backup of data;
Get organized globally along business lines.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
45
IX. HISTORY OF THE COMPANY
Brief History and changes in Memorandum of Association
The Company was incorporated as Quest Softech (India) Private Limited on 27th March 2000 under
the Companies Act, 1956 with an authorized share capital of Rs. 25,00,000 divided into 2,50,000
Equity Shares of Rs. 10/- each and an issued, subscribed and paid up capital of Rs. 2,000 divided into
200 Equity shares of Rs. 10/- each. The Registered Office of the Company has been situated in the
state of Maharashtra. At the time of incorporation, the main objects of the Company were to carry out
activities relating to software & hardware consultancy & consulting services business.
The issued, subscribed and paid up share capital of the Company was increased from Rs. 2,000
divided into 200 Equity Shares of Rs. 10/- each to Rs. 75,000 divided into 7,500 Equity Shares of Rs.
10/- each on 30th September 2000.Further on 3rd December 2002, the issued, subscribed and paid
up share capital of the Company was increased from Rs. 75,000 divided into 7,500 Equity Shares of
Rs. 10/- each to Rs. 1,00,000 divided into 10,000 Equity Shares of Rs. 10/- each.
Further on 2nd January 2008, the issued, subscribed and paid up share capital of the Company was
increased from Rs. 1, 00,000 divided into 10,000 Equity Shares of Rs. 10/- each to Rs. 5,00,000
divided into 50,000 Equity Shares of Rs. 10/- each.
The authorised share capital of the Company was increased from Rs. 25,00,000 to Rs. 6,00,00,000,
divided into 60,00,000 Equity Shares of Rs. 10/- each, by resolution passed by the members on 1st
March 2008. The Company was converted into a public company on 18th March 2008 vide
Certificates of Incorporation issued by the Registrar of Companies, Maharashtra, Mumbai. The
issued, subscribed and paid up share capital of the Company was increased from Rs. 5,00,000
divided into 50,000 Equity Shares of Rs. 10/- each to Rs. 5,57,87,440 divided into 55,78,744 Equity
Shares of Rs. 10/- each on 29th March 2008.
The Hon’ble High Court of Judicature at Bombay vide Order dated 5th September 2008 approved the
Scheme of Arrangement for Demerger of the Software Services Division Undertaking of Continental
Controls Limited into the Company. Pursuant to the Scheme becoming effective on 26th September
2008 (the Appointed Date of the Scheme being 1st April 2008), the business of Continental Controls
Limited stands transferred to, and is being carried out by the Company. As per the requirements
under the Scheme, the authorised share capital of the Company was increased from Rs. 6,00,00,000
to Rs. 10,00,00,000, divided into 1,00,00,000 Equity Shares of Rs. 10/- each, by a resolution passed
by the members on 6th July 2009. On 6th July 2009, the Board of Directors of the Company issued
and allotted 44,21,256 Equity Shares of Rs. 10/- each to the shareholders of Demerged Company
whose names appeared in the Register of Members of the Demerged Company on the Record Date
viz.3rd July 2009 in the Demerger Share Entitlement Ratio of 1 Equity Share of Rs. 10/- each credited
as fully paid up of the Company for every 2 equity shares of Rs.10/- each held by such member in the
Demerged Company.
After allotment of 44,21,256 equity shares by the Company, the issued, subscribed and paid up share
capital of the Company was increased to Rs. 10,00,00,000 divided into 1,00,00,000 Equity Shares of
Rs. 10/- each fully paid-up.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
46
Main Objects of the Company
To carry on the activities in India or abroad, either on own or in collaboration with or technical know-
how from any organisation or person in India or abroad of providing software and hardware
consultancy and consulting services related to the preparation and maintenance of accounting,
statistical, scientific or mathematical information and reports, data processing, programming,
collecting, storing, processing and transmitting information and data of every kind and description,
systems analysis, and machine services for solving or aiding commercial, industrial scientific and
research problems and for all other related business., to develope, manage, run, establish, execute or
undertake to do all and anything required in connection with manufacture, sell, assembly, integration
and operating by computers, software and hardware programming, data processing, computer
hardware and software projects, systems integration services, project management, development and
execution, provide manpower in information technology and applications, develope software computer
programmes and applications, data base management, to develop, design, manufacture, process,
fabricate, assemble, install, alter, modify, repair, buy, sell, re-sale, import, export or otherwise deal in
any other manner computer software and hardware operating system and products which posses an
internal intelligence for recognition and correlating and type of data or information to be processed
recognition and memory systems, systems, transmission equipment processing equipments
networking internet system, display devices, word processing devices printing devices, software and'
hardware integrated circuits, micro circuits, peripherals, floppy, discs and other devices and
accessories.
Subsidiaries of the Company and their businesses
The Company does not have any Subsidiary Company.
Shareholders’ Agreement
There is no separate Shareholders’ Agreement executed between any shareholder and the Company.
Strategic / Financial Partners and Other Material Contracts
Other than the contracts mentioned in the section “Documents for Inspection”, the Company does not
have any material contracts other than in the ordinary course of business, nor does it have any
strategic / financial partners.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
47
X. PROMOTERS
Mr. Dhiren B. Kothary
The Company is Promoted by Mr. Dhiren B. Kothary. He is a Chartered
Accountant by profession and has more than 20 years of experience in
financial and corporate advisory services. He has experience in executing
Investment Banking transactions ranging from Project Finance to Initial
Public Offering. He is on the Board of Glodyne Technoserve Limited.
PAN No: AAHPK0621J
Driving License No: MH03 / 95 / 57783
Passport No: H5625968
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
48
XI. MANAGEMENT
The overall management of the Company is vested in the Board of Directors, comprised of qualified
and experienced persons.
Board of Directors as on the date of the Information Memorandum is as follows:
Sr. No. Name, Age, Designation, Father’s Name, Address,
Occupation, Shareholding in the Company
Other Directorships in
public companies in India
1 Mr. Dhiren B. Kothary
Age : 47 years
Designation: Director
Father’s Name: Mr. Bhogilal V. Kothary
Address: 62-A, Harmony, Ram Nagar, off Sai Baba
Nagar, Borivali (West), Mumbai – 400 092
Occupation: Business
Shareholding in the Company: 24.50%
1. Quest Fincap Ltd
2. Glodyne Technoserve
Ltd
2 Mr. Suresh S. Vishwasrao
Age: 64 years
Designation: Non-Executive Director
Father’s Name: Mr. Shankar B. Vishwasrao
Address: B/9, “Dream” SBI Staff Housing Ltd., Babhai,
Borivali (West), Mumbai – 400 092
Occupation: Business
Shareholding in the Company: 0.001%
1. Bombay Rayon Fashions
Ltd.
3 Mr. Paresh Zaveri
Age: 42 years
Designation: Independent Director
Father’s Name: Mr. Chandulal Zaveri
Address: 3, Siglap Road, #06-23, Mandarin Gardens,
Singapore – 448907. Singapore.
Occupation: Business
Shareholding in the Company: NIL
1. Aurionpro Solutions Ltd.
Brief Biographies of the Directors
1. Mr. Dhiren Kothary
A Chartered Accountant by profession, he has more than 20 years of experience in financial
and corporate advisory services. He is on the Board of Glodyne Technoserve Limited.
2. Mr. Suresh S. Vishwasrao
He is an ex-banker having more than 35 years of experience in banking and finance with a long
stint with State Bank of India. He is well networked with various Government agencies and
financial institutions. During his tenure in the Bank, Mr. Vishwasrao had held various positions
both at the operational areas as well as at the corporate centre. He was on deputation for over
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
49
5 years at the Bank’s New York office. He heads the corporate finance department at Quest
and facilitates debt syndication for our clients.
3. Mr. Paresh Zaveri
Mr. Paresh Zaveri is an Engineer and Management Graduate, with over 15 years of experience
in the area of corporate finance, supply chain and general management.
Borrowing Powers
Subject to the provisions of the Act and the Articles, and without prejudice to the other powers
conferred by the Articles, the Directors shall have the power from time to time at their discretion to
borrow any sum or sums of money for the purpose of the Company, provided that the total amount
borrowed at any time together with the moneys already borrowed by the Company (apart from
temporary loans obtained from the Company’s Bankers in the ordinary course of business) shall not
without the consent of the Company in General Meeting exceed the aggregate of the paid-up capital
of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose.
Subject to the provisions of the Act and the Articles, the Directors may raise and secure the payment
of such sum or sums in such manner and upon such terms and conditions, in all respects as they
think fit and particular by the issue of bonds, perpetual or redeemable, debentures or debenture-stock
or any mortgage or charge or other security on the undertaking of the whole or any part of the
property of the Company (both present and future) including its uncalled capital for the time being.
Compensation of Managing Director / Whole Time Directors
None of the directors of the Company received any compensation from the Company.
Corporate Governance (Clause 49 of the Listing Agreement)
Compliance Report on Corporate Governance as on_11th October, 2010
Particulars Clause of
Listing
Agreement
Compliance
Status
Yes/No
Remarks
I Board of Directors 49 I Yes
(A) Composition of Board 49(IA) Yes
(B) Non-executive Directors’
compensation & disclosures
49 (IB) Yes
(C) Other provisions as to Board and
Committees
49 (IC) Yes
D) Code of Conduct (49 (ID) Yes
II. Audit Committee 49 (II)
(A)Qualified & Independent Audit
Committee
49 (IIA) Yes
(B)Meeting of Audit Committee Yes
(C)Powers of Audit Committee 49
(IIC)
49 (IIB) Yes
(D)Role of Audit Committee 49 II(D) Yes
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
50
(E)Review of Information by Audit
Committee
49 (IIE) Yes
III. Subsidiary Companies 49 (III) No
V. Disclosures 49 (IV)
(A)Basis of related party transactions 49 (IV A) Yes
(B)Board Disclosures 49 (IV B) Yes
(C)Proceeds from public issues,
rights issues, preferential issues etc.
49 (IV C) Yes
(D)Remuneration of Directors 49 (IV D) Yes Will be Complied with in the
Annual Report 2010-11
(E)Management 49 (IV E) Yes Will be Complied with in the
Annual Report 2010-11
(F)Shareholders 49 (IV F) Yes Will be Complied with in the
Annual Report 2010-11
V.CEO/CFO Certification 49 (V) Yes Will be Complied with in the
Annual Report 2010-11
VI. Report on Corporate Governance 49 (VI) Yes Will be Complied with in the
Annual Report 2010-11
VII. Compliance 49 (VII) Yes Will be Complied with in the
Annual Report 2010-11
Independent Directors
The Company has appointed Mr. Paresh Zaveri as Independent Director of the Company on 1st April
2009. He is also chairman of Audit Committee.
Audit Committee
The company has formed audit committee as per clause 49 of the listing Agreement and section 292A
of the companies Act 1956 with Chairman and members as follows:
1. Mr. Paresh Zaveri, Chairman 2. Mr. Dhiren B. Kothary 3. Mr. Suresh S. Vishwasrao
The Audit Committee shall comply with the following: 1. The Audit Committee shall have meetings periodically as it may deem fit with at least four
meetings in a year and not more than four months shall elapse between two meetings, viz., one meeting before finalization of annual accounts . `
2. The Quorum shall be either two members or one third of the members of the audit committee which is grater, but there should be a minimum of two independent members present.
3. The Audit Committee shall invite such of the executives (and particularly the head of the finance function), to be present at the meetings of the Committee whenever required by it.
4. The finance Director, head of internal audit and the auditors of the Company shall attend participates at the meeting without right to vote.
The Audit Committee has the following powers:
It shall act in accordance with terms of reference to be specified in writing by the board To investigate any activity within its terms of reference. To seek information from any employee. To obtain outside legal or other professional advice.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
51
To secure attendance of outsiders with relevant expertise, if it considers necessary.”
The Role of the Audit Committee includes the following:
Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
Recommending to the Board, the appointment, the re-appointment and if required, the
replacement or removal of the statutory auditor and the fixation of audit fee and also approval for payment for any other services.
Reviewing, with management the annual financial statements before submissions to the
Board, focusing primarily on :
- Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of Section 217 of the Companies Act,1956
- Change, if any, in accounting policies and practices and reasons for the same.
- Major accounting entries involving estimates based on exercise of judgment by
management.
- Significant adjustment made in the financial statement arising out of Audit finding
- Compliance with listing and other legal requirement relating to financial statements - Qualifications in draft audit report.
- Disclosure of any related party transaction.
Reviewing with the management, performance of statutory and internal auditors, and the
adequacy of internal control systems. It shall have authority to investigate in to any matter in relation to the items specified in this
section or referred to it by the board and for this purpose, shall have full access to information contained in the records of the company and external professional advice if necessary
Reviewing with the management, the quarterly financial statements before submission to the
board for approval.
Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
Discussions with internal auditors any significant findings and follow up thereon.
Reviewing the finding of any internal investigations by the internal auditors into matter where
there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.
Discussions with Statutory auditors before the audit commences, about the nature and scope
of audit as well as to have post-audit discussion to ascertain any area of concern.
To look into reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders, (in case of non-payment of declared dividends) and creditors.
To Review the functioning of the whistle Blower Mechanism, in case the same is existing
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
52
Approval of appointment of CFO ( the Whole Time Finance Director or any other person heading the fiancé function or discharging that function) after assessing the qualification, experience & background, etc of the candidate
Carrying out the function as is mentioned in the terms of reference of the audit Committee
It shall have discussion with the auditors periodically about internal control systems, the
scope of audit including the observations of the auditors and review the quarterly, half-yearly, and annual financial statements before submissions to the Board.
It shall ensure compliance of internal control systems.”
The audit Committee mandatorily reviews the following information:
Management Discussion and Analysis of financial conditions and results of operations; Statement of significant related party transactions (as defined by the audit Committee),
submitted by the management; Management letters / letters of internal control weaknesses issued by the statutory Auditors; Internal Audit Reports related to internal control weakness; and The appointment, removal and terms of remuneration of the Chief Internal auditor.”
Shareholders / Investors Grievance Committee
The company has formed Shareholders / Investors Grievance Committee as per clause 49 of the
listing Agreement and section of the companies Act 1956. With Chairmen and members us follows
1. Mr. Suresh Vishwasrao, Chairman 2. Mr. Dhiren B Kothary
It will look into matter of the redressing of shareholders and investors complaints like,
a. non receipt of shares, b. transfer/transmission/transposition of shares, c. non receipt of balance sheet, d. non receipt of declared dividends e. and other demat related queries
Change in the Board of Directors of the Company since Incorporation
Name of the Director Date of Appointment/
Resignation
Reason / Remarks
Mr. Navin S Jagesha 30.09.2010 Resigned
Mrs. Nita D. Kothary 02.01.2008 Resigned
Mr. Suresh S. Vishwasrao 02.01.2008 Appointment
Mr. Paresh Zhaveri 01.04.2010 Appointment
Mr. Sesha Srinivas Malladi 01.04.2010 Resigned
Interest of Directors
Other than their respective shareholdings in the Company and reimbursement of expenses incurred
as stated above, the directors of the Company have no other interest in the Company.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
53
XII. MANAGEMENT DISCUSSION AND ANALYSIS
The management of Quest Softech (India) Limited presents the analysis of the performance of the
company for the year 2009-10 and its outlook for the future. This outlook is based on an assessment
of the current business environment. It may vary due to future economy and other developments both
in India and Abroad.
Industry Structure
The BPO Industry has and will be witnessing growth due to its intrinsic strength. In the Competitive
global environment, India continues to be one of the major players in the BPO industry and for skills
relating to software & its training.
Financial Performance
During the year under review, your Company recorded Income from Operations aggregating to Rs 141.87 Lac as against Rs.114.11 Lac in the previous year, registering a growth of 24.33%. The Loss before tax has been Rs. 121.26 Lac as against Rs. 169.35 Lac in previous year, thereby recording a decrease in loss by 28.40%.
Future Outlook
The Indian ITeS-BPO industry is expected to continue its growth in future as well in spite of the
expected rise in challenges. The economic slowdown has opened up opportunities for the Indian
ITeS-BPO industry, as it is expected that the global companies would adopt outsourcing as an
initiative to reduce cost. With the rise in the demand for the outsourcing, the growth rate for the BPO
Industry is expected to be on the upward trend.
Opportunities and Threats
Rising demand for the BPO development in the overseas market will provide more impetus and
opportunities for the growth of this industry.
Internal Control Systems and Adequacy
The Company has adequate internal control procedure commensurate with the size and nature of its
business. These business control procedures ensure efficient use and protection of resources and
compliance with policies, guidelines, authorizations and approval procedures. The Board has also
constituted an Audit Committee which meets periodically to review the financial performance and the
accuracy of the financial records.
Human Resources/ Industrial Relations
The Company believes that the successes of an organization largely depends on the quality of its
work force and hence have always recognized people and its key work force. Employee relations
have remained cordial and peaceful throughout the year.
Cautionary Statement
Statements in the Management Discussion and Analysis, describing the Company’s objectives,
projections and estimates are forward looking statements and progressive within the meaning of
applicable security laws and regulations. Actual results may vary from those expressed or implied,
depending upon the economic conditions, government policies and other incidental/ related factors.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
54
XIII. FINANCIAL INFORMATION Financial Information presented in this Information Memorandum has been extracted from the Audited Annual Report of our Company for the Financial Years 2007-08, 2008-09 and 2009-10.
BALANCE SHEET
PARTICULARS Schedule
As at 31.03.2010 Rs. in Lacs
As at 31.03.2009 Rs. in Lacs
As at 31.03.2008 Rs. in Lacs
SOURCES OF FUNDS
Shareholders Funds:
Share Capital 1 1,000.00 1,000.00 557.87
Reserves & Surplus - - 0.29
Loan Funds 2 373.25 403.41 29.45
Deferred Tax Liability 3 2.61 8.11 1.56
TOTAL 1,375.86 1,411.52 588.88
APPLICATION OF FUNDS
Fixed Asset 4
Gross Block 280.02 280.02 10.18
Less: Depreciation 253.93 209.69 2.29
Net Block 26.08 70.33 7.89
Investments 5 57.77 537.77 530.00
Current Assets, Loans And Advances
Inventories 158.90 72.15 66.86
Sundry Debtors 6 30.27 150.79 36.28
Cash & Bank Balances 7 0.89 22.05 23.88 Loans & Advances 8 851.95 510.67 140.34 1042.02 755.66 267.36
LESS: Current Liabilities & Provisions 9 208.31 301.69 220.40
Net Current Assets 83.37 453.97 46.96
Miscellaneous Expenditure 10 - 6.91 4.32
Profit & Loss Account (Debit Balance) 458.30 342.54 -
TOTAL 1,375.86 1,411.52 588.88
Notes to Accounts 12
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
55
PROFIT & LOSS ACCOUNT
Sche
dule For the Year
ended 31.03.2010
For the Year ended
31.03.2009
For the Year ended
31.03.2008
Rs. in Lacs Rs. in Lacs Rs. in Lacs
I. INCOME Income from Operations 141.87 114.11 34.52 Other Income 0.80 0.01 4.28 Increase/Decrease in
Stock 86.76 5.29 66.86 TOTAL 229.42 105.66 105.66
II. EXPENDITURE Operating Expenses 11 297.03 119.32 99.43 Financial Charges 9.40 125.18 4.30 Depreciation &
Amortization 44.25 44.25 1.65 TOTAL 350.68 288.75 105.38
III Profit before Tax (121.26) (169.34) 0.28
IV. Less: Provision for Income Tax - - -
Deferred Tax (5.50) 6.55 0.70 Fringe Benefit - - -
V. Profit after Taxes (115.76) (175.89) (0.42)
VI. Add: Balance b/f from previous year (342.54) 0.29 0.71
Debit Balance b/f on Demerger of
Continental Controls Limited - Software Services Division - (166.93) -
VII. Balance c/f to Balance
Sheet (458.30) (342.54) 0.29
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
56
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS AS ON
31.03.2010 31.03.2009 31.03.2008
Rs. in Lacs Rs. in Lacs Rs. in Lacs
SCHEDULE "1"
SHARE CAPITAL:
AUTHORISED CAPITAL
Equity Shares of Rs. 10/- each 1,000.00 600.00 600.00
ISSUED, SUBSCRIBED & PAID UP CAPITAL
Equity Shares of Rs. 10/- each Fully Paid 1,000.00 557.87 557.87
Share capital pending allotment in terms of the scheme of Arrangement approved by Bombay High Court. - 442.13 -
1,000.00 1,000.00 557.87
SCHEDULE "2"
UNSECURED LOAN
Inter corporate Deposit 373.25 403.41 29.75
373.25 403.41 29.45
SCHEDULE "3"
DEFFERED TAX LIABILITY
Deferred tax 8.11 1.56 0.86
Add: During the year (5.49) 6.55 0.75
2.61 8.11 1.56
SCHEDULE "5"
INVESTMENTS
In Shares (Other than Listed Companies) 57.77 537.77 530.00
57.77 537.77 530.00
SCHEDULE "6"
SUNDRY DEBTORS
More than Six Months 11.76 26.64 -
Others 18.51 124.14 36.28
30.27 150.78 36.28
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
57
SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS AS ON 31ST MARCH, 2010 Schedule 4: Fixed Assets
(Rs. in Lacs)
GROSS BLOCK DEPRECIATION NET BLOCK
Particulars
As on 01st April 2009
Additions
during the year
As on 31st
March 2010
As on 01st April 2009
Additions during the year
Total As on 31st March 2010
As on 31st
March 2010
As on 1st
April 2009
Tangible Assets
Computers 268.91 268.91 203.04 43.59 246.63 22.27 65.86
Electrical Installation 1.10 1.10 0.74 0.05 0.80 0.30 0.36
Furniture & Fixture 8.60 8.60 5.31 0.54 5.86 2.74 3.28
Intercom Service 1.41 1.41 0.58 0.07 0.65 0.77 0.83
Total 280.02 280.02 209.69 44.25 253.93 26.08 7.89
Previous Year 10.18 280.02 2.30 44.25 209.68 70.34 7.89
SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS AS ON 31ST MARCH, 2009 Schedule 4: Fixed Assets
(Rs. in Lacs)
GROSS BLOCK DEPRECIATION NET BLOCK
Particulars
As on 01st April 2008
Additio
ns during
the year
As on 31st
March 2009
As on
01st April 2008
Additions during the year
Total As on 31st March 2009
As on 31st
March 2009
As on 1st
April 2008
Tangible Assets
Computers 10.18 - 10.18 2.29 - 3.94 6.24 7.89
Computer System - 258.73 258.73 - 157.16 199.10 59.63 - Electrical Installation - 1.10 1.10 - 0.69 0.74 0.36 -
Furniture & Fixture - 8.60 8.60 - 4.77 5.31 3.28 -
Intercom Service - 1.41 1.41 - 0.51 0.58 0.83 -
Total 10.18 269.84 280.02 2.29 163.13 209.69 70.33 7.89
Previous Year 10.18 - 10.18 0.64 - 2.29 7.89 9.54
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
58
SCHEDULE ANNEXED TO AND FORMING PART OF THE ACCOUNTS AS ON 31ST MARCH, 2008 Schedule 4: Fixed Assets
(Rs. in Lacs)
GROSS BLOCK DEPRECIATION NET BLOCK
Particulars
As on 01st April 2007
Additio
ns during
the year
As on 31st
March 2008
As on
01st April 2007
Additions during the year
Total As on 31st March 2008
As on 31st
March 2008
As on 1st
April 2007
Tangible Assets
Computers 10.18 - 10.18 0.64 1.65 2.29 7.89 9.54
Total 10.18 10.18 0.64 1.65 2.29 7.89 9.54
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS AS ON
31.03.2010 31.03.2009 31.03.2008
Rs. in Lacs Rs. in Lacs Rs. in Lacs
SCHEDULE "7"
CASH AND BANK BALANCES
Cash in Hand 0.04 0.03 0.15
Balance in Current Account 0.86 22.02 23.73
HDFC Bank Ltd 0.90 23.88 23.88
0.90 22.05 23.88
SCHEDULE "8"
LOANS AND ADVANCES:
Advance Received in Cash or Kind 843.73 506.31 136.68
Deposit 7.71 3.22 2.62 1.14 1.14 1.14
851.94 510.67 140.34
SCHEDULE "9"
CURRENT LIABILITIES & PROVISIONS:
Sundry Creditors 207.49 288.22 205.03
Provisions 0.83 0.83 0.83
Deposits - 12.65 14.55
301.70 301.69 220.41
SCHEDULE "10"
Miscellaneous Expenditure
Preliminary Expenses - 3.56 4.32
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
59
Amalgamation Expenses - 3.35 -
- 6.91 4.32
SCHEDULE "11"
Operating Expenses Loss on Sale of Shares 56.00 - -
Software Procured 223.64 112.23 97.07
Staff Cost 5.02 4.86 1.68
Administrative, Selling & Other Expenses 12.37 2.24 0.68
297.03 119.33 99.43
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
60
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS
SCHEDULE 12
A. Significant Accounting Policies
1. Basis of Accounting
The financial statements have been prepared on accrual basis following the historical cost convention
in accordance with the Accounting Standards referred to in section 211 (3C) and other requirements of
the Companies Act, 1956
2. Use of Estimates
The preparation of financial statement requires estimates and assumptions to be made that affect the
reported amount of assets and liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference between the results and
estimates are recognized in the period in which the results are known / materialized.
3. Revenue Recognition
(i) Revenue from sale of products is recognized when the risk and reward of ownership of the
product is passed on to the customers, which is generally on dispatch of goods. Sales are
stated inclusive of Sale/Trade tax
(ii) Revenue in respect of other income is recognized when no significant uncertainty as to its
determination or realization exists.
4. Fixed Assets
Fixed Assets are stated at cost, which comprises of purchase consideration and other directly attributable
cost of bringing the assets to its working condition for the intended use.
5. Depreciation
Depreciation on fixed assets is provided on straight-line method over useful life of assets at the rates and
in the manner as prescribed in Schedule XIV to the Companies Act, 1956. Subsequent upgrades of
hardware are entirely charged off to revenue in the year of purchase.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
61
6. Inventories
Cost of inventories comprises all costs of purchase, conversion and other costs incurred in bringing the
inventories to their present location and condition. Inventories are valued at Cost or Net Realizable Value,
whichever is less.
7. Accounting for Taxes on Income and Deferred Tax
Deferred tax resulting from timing differences between accounting and tax profits is accounted for under
the liability method, at the current rate of tax, to the extent that the timing differences are expected to
crystallize. Deferred tax assets are recognized and carried forward only if there is a virtual/ reasonable
certainty that they will be realized and are reviewed for the appropriateness of their respective carrying
values at each balance sheet date. Where there is Unabsorbed Depreciation or carry forward loss under tax
laws, Deferred Tax Asset are recognized only if there is virtual certainty of realization of Assets.
8. Foreign Exchange Transactions
Transactions in foreign currency are generally recorded at the exchange rate prevailing on the date of
transaction. Monitory items denominated in foreign currency and outstanding at the Balance Sheet
date are translated at the exchange rate ruling at that date. Exchange differences on foreign exchange
transactions are recognized in the profit and loss account.
9. Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that any asset may be
impaired. If any such indication exists, the carrying value of such assets is reduced to its recoverable
amount and the amount of such impairment loss is charged to profit and loss account. If at the balance
sheet date there is an indication that a previously assessed impairment loss no longer exists, then such loss
is reversed and the asset is restated to that effect.
10. Provisions and Contingencies
The Company recognizes a provision when there is a present obligation as a result of a past event that
probably requires outflow of resources, which can be reliably estimated. Disclosures for a contingent
liability is made, without a provision in books, when there is an obligation that may, but probably will not,
require outflow of resources.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
62
11. Investments
Investments are classified into long-term investments and current investments based on the management’s
intention at the time of purchase. Long-term investments are carried at cost and provision is made to
recognize any decline, other than temporary, in the value of such investments, determined separately for
each investment. Current investments are carried at the lower of the cost and fair value and provision is
made to recognize any decline in the carrying value. The comparison of cost and fair value is done
separately in respect of each category of investments.
12. Accounting of Employee Benefits
The Company has for its employees in India, benefits such as Gratuity and Provident Fund. Provision for
gratuity is made on the basis of actuarial valuation and charged to Profit and Loss account. The
Company’s contribution to the provident fund along with the employee share of provident fund deducted
from the salary is paid into Employee Provident Fund of Government of India. The Company’s
contribution to EPF is charged to revenue.
A. Notes to Accounts
1. The Previous year’s figures have been regrouped and rearranged wherever found necessary.
2. The balances of sundry debtors and creditors are subject to confirmation and reconciliation.
3. In the opinion of the Board of Directors, the Current assets, loans & advances are approximately
of the value stated, if realized in the ordinary course of business and Provisions for all known and
determined Liabilities are adequate and not in excess of the amount reasonably stated
4. The software services division undertaking of Continental Controls Limited was demerged in to
the Company alongwith its assets and liability as per the Scheme of Amalgamation approved by
the Bombay High Court on 5th September 2008. Thus in terms of the Scheme of Arrangement, the
Company has allotted 4,421,256 equity shares of Rs. 10/- each to the share holders of Continetal
Controls Limited during the year.
5. Auditors Remuneration
Particulars 2009-10 2008-09 2007-08
For Statutory Audit (Rs.) 7,500 7,500 7,500
For Tax Audit (Rs.) 2,500 2,500 --
Total 10,000 10,000 7,500
6. Transactions in Foreign Currency
The Company has not entered in any foreign currency transactions during the year
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
63
7. Deferred Tax :
The Company has recognized deferred tax arising on account of timing differences, being the
difference between the taxable incomes and accounting income, that originates in one period and
is capable of reversal in one or more subsequent period(s) in compliance with Accounting
Standard (AS 22) – Accounting for Taxes on Income issued by Institute of Chartered Accountants
of India.
8. Disclosure under Micro, Small and Medium Enterprises Development Act 2006 (MSMED)
As per information available with the company, none of the Suppliers have been identified under
the meaning of the Micro, Small and Medium Enterprises Development Act 2006 (MSMED)
which came in to Force from 2nd October, 2006
9. Quantitative Detail
The company is primarily engaged software Services. Hence, it is not possible to give the
quantitative details of sales and other information as required under paragraphs 3, 4C and 4D of
part II of Schedule VI of Companies Act, 1956
10. Related Party Transactions (in respect of related parties as of the date of this report):
A. Name of the related parties:
Key Managerial Personnel:
1. Dhiren B. Kothary – Director
Enterprises controlled by Key Management personnel and Individual having significant
influence:
1. Quest Profin Advisor Private Limited
2. Quest Fincap Limited
3. Quest (East India) Advisory Private Limited
4. Quest Finlease Private Limited
B. Transactions with related parties :
1. Refund of Advance Received : Rupees 86,55,150/-
2. Repayment of Unsecured Loans : Rupees 10,00,000/-
11. Segment Reporting
A. The company operates only in one segment IT & ITES.
2009-10 2008-09 2007-08
Opening Deferred Tax Liability (Rs) 8,11,157 1,56,184 86,000
Addition During the year (Rs) (5,49,832) 6,54,973 70,000
Closing Deferred Tax Liability (Rs) 2,61,326 8,11,157 1.56,000
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
64
B. During the year, the company has catered mainly to the needs of the Indian market and
thus there are no reportable geographical segments.
12. Earnings per share has been computed as under :
(Amount in Rupees)
For the year For the year For the year
2009-10 2008-09 20007-08
Net Profit after Tax available for the Equity Shareholder (1,15,76,407) (1,75,89,473) (42,292)
Weighted average number of Equity Shares (in nos.) 88,37,149 55,78,1.744
55,78,744
Nominal/Face Value of Equity Share 10 10 10
Basic and Diluted Earnings Per Share (1.31) (3.15) 0 .0075
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
65
XIV. GROUP COMPANIES
QUEST PROFIN ADVISOR PRIVATE LIMITED
Date of Incorporation: 08th
April 2004
Registration Number: U67190MH2004PTC145608
Registration with: Registrar of Companies, Mumbai, Maharashtra
Nature of Activities: Financial & Advisory Services
Main Objects of the Company:
1. To carry on the business of consultancy in project finance including syndication of term loan
and working capital from banks and financial institutions advising clients on issues of capital /
debt rising, structuring or raising funds by way of venture capital.
2. To carry on the business as financial advisers and to advise and assist in all financial costing,
accounting, internal control and other similar matters to advise and assist in the preparation of
all revenue and capital budgets, deployment of funds, short, long term planning of utilization of
resources for rehabilitation, renewal, expansion and diversification, procuring bank and
institutional finance including foreign finance cash credit facilities, overdraft facilities,
subscription of debentures and term loans to assess the needs for short and long term credit
facilities and raising of resources, to advise and assist in formulation of internal control,
procedure for the maintenance and presentation of all assets and prevention of fraud, wastage,
financial and cost accounting procedure and other connected matters to advise and assist in
formulating short, long term financial policies and control of their execution; and generally to
advise and assist in all financial, fiscal capital and revenue matters.
Shareholding:
Name No. of Shares % of the Holding
Dhiren B Kothary 95,000 47.82%
White Rose Trading Private Limited 40,000 20.13%
Nita D Kothary 20,000 10.07%
Themis Investment Pte. Ltd. 12,435 6.26%
Amit Sheth 10,548 5.31%
Kalpesh Koradia 4,500 2.26%
Sonal Koradia 4,500 2.26%
Bhavesh Koradia 4,500 2.26%
Ishita Koradia 3,681 1.85%
Jagdish Tanna 3,516 1.71%
TOTAL 1,98,680 100.00%
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
66
Brief Financial Information:
(Rs in lacs)
Year 2009-10 2008-09 2007-08
Paid-Equity Capital 15.50 15.50 11.00
Reserves 741.85 663.67 569.47
Sales 324.50 319.06 239.96
Profit after Tax 75.48 74.53 52.74
EPS (Rs.) 48.70 48.08 48.85
Book Value per Share (Rs) 488.67 438.17 527.70
Board of Directors:
Mr. Dhiren Kothary
Mr. Suresh S. Vishwasrao
Mr. Uday Sankar Roy
QUEST FINCAP LIMITED
Date of Incorporation: 10th October 1994
Registration Number: U65990MH1994PLC081898
Registration with: Registrar of Companies, Mumbai, Maharashtra
Nature of Activities: Member of Saurashtra & Kutch Stock Exchange
(SEBI registration No: INB181105934)
Main Objects of the Company:
1. To do the business as investment company by way of acting and operating as the share
brokers agents, dealers in India or abroad.
2. To carry on the activities of finance, leasing, hire purchase, factors securitization, financial and
negotiable instruments in any field of capital market, money and finance market, investment
market and others in any industrial, commercial, governmental enterprises and consumer fields.
Shareholding:
Name No. of Shares % of the Holding
Quest Softech (India) Limited 40,000 40.00%
Rashmi B. Kothary 16,500 16.50%
Quest Profin Advisor Pvt Ltd 15,000 15.00%
Bhogilal V. Kothary 11,800 11.80%
Bhogilal V. Kothary HUF 5,000 5.00%
Vipul N. Chauhan 4,100 4.10%
Ashish B. Kothary 3,500 3.50%
Deepa Kothary 3,500 3.50%
Dhiren B. Kothary HUF 400 0.40%
Kalpesh R. Karodia 100 0.10%
Nikita N. Shah 100 0.10%
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
67
TOTAL 1,00,000 100.00%
Brief Financial Information:
(Rs in lacs)
Year 2009-10 2008-09 2007-08
Paid-Equity Capital 10.00 10.00 10.00
Reserves 4.85 6.00 5.48
Sales 0.28 0.75 1.51
Profit after Tax 0.01 0.51 0.67
EPS (Rs.) 0.02 0.51 0.67
Book Value per Share (Rs) 14.85 16.00 15.48
Board of Directors:
Mr. Dhiren Kothary
Mr. Kalpesh Koradia
Mrs. Nita Kothary
QUEST (EAST INDIA) ADVISORY PRIVATE LIMITED
Date of Incorporation: 06th Jan 2010
Registration Number: U74140MH2010PTC198596
Registration with: Registrar of Companies, Mumbai, Maharashtra
Nature of Activities: Advisory Services
Main Objects of the Company:
To carry on the business of financial consultancy and to advise and assist in all financial costing,
accounting, internal control and other similar matters to advise and assist in the preparation of all
revenue and capital budgets, deployment of funds, short, long term planning of utilization of resources
for rehabilitation, renewal, expansion and diversification, procuring bank and institutional finance
including foreign finance cash credit facilities, overdraft facilities, subscription of debentures and term
loans to assess the needs for short and long term credit facilities and raising of resources, to advise
and assist in formulation of internal control, procedure for the maintenance and presentation of all
assets and prevention of fraud, wastage, financial and cost accounting procedure and other
connected matters to advise and assist in formulating short, long term financial policies and control of
their execution; and generally to advise and assist in all financial, fiscal capital and revenue matters.
Shareholding:
Name No. of Shares % of the Holding
Quest Profin Advisor Private Ltd 99,999 99.99%
Dhiren B. Kothary 1 0.01%
TOTAL 1,00,000 100.00%
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
68
Brief Financial Information:
The Company was incorporated on 6th January 2010 and has not completed full year of operations.
Board of Directors:
Mr. Dhiren Kothary
Mr. Suresh Vishwasrao
Mr. Uday Sankar Roy
QUEST FINLEASE PRIVATE LIMITED
Date of Incorporation: 25th June 2010
Registration Number: U65999MH2010PTC204859
Registration with: Registrar of Companies, Mumbai, Maharashtra
Nature of Activities: NBFC (Financing & Investments)
Main Objects of the Company:
1. To carry on in India or elsewhere the business of financing and advancing short term or long
term loans, advances or providing margin trade financing or credits to individuals, companies or
association of individuals or any other person by whatever name called for any purpose and
either on security such as shares, debentures, bonds, government securities, stock certificates,
land, building or part thereof, machinery, plants, vehicles, life insurance policies, stock in trade,
bullion, other precious metals, commodities or any other security or on guarantee or to finance
or give loan, advances or credit in any other form.
2. To carry on business of an investment Company, and to invest the capital and other moneys of
the Company in the purchase or upon the security of shares, stocks, units, debentures,
debenture-stock, bonds, mortgages, obligations and securities of any kind issued or guaranteed
by any company, corporation or undertaking of whatever nature, whether incorporated or
otherwise and wheresoever’s constituted or carrying on investment business, and shares,
stocks, debentures, debenture-stock, bonds, notes, mortgages, obligations and other securities
issued or guaranteed by any government, sovereign ruler, commissioners, trust, municipal,
local or other authority or body of whatever nature in India or abroad.
Shareholding:
Name No. of Shares % of the Holding
Quest Profin Advisor Pvt Ltd 19,99,999 99.99%
Dhiren B. Kothary 1 0.01%
TOTAL 20,00,000 100.00%
Brief Financial Information:
The Company was incorporated on 25th June 2010 and has not completed full year of operations.
Board of Directors:
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
69
Mr. Dhiren Kothary
Mr. Suresh Vishwasrao
NIYAMAK CONSULTANCY PRIVATE LIMITED
Date of Incorporation: 20th March 2010
Registration Number: U74900MH2010PTC201097
Registration with: Registrar of Companies, Mumbai, Maharashtra
Nature of Activities: Consultancy Services
Main Objects of the Company:
To carry on the business as providing services of accountancy and consultancy for book keeping to
various type of clients & other related activities marketing consultants, advertising market research
and survey, consultancy in marketing of financial products, getting foreign collaboration and technical
collaboration investment consultants, stock broking, management consultants, health care
consultancy, financial consultants, project consultants, loan consultants, loan processing, insurance
consultant, insurance broker, sub broker, outsourcing, call centre, mutual fund, agents, managers and
provide advise service, consultancy on matters relating to administration, management, investments,
finance, import, export, organisational structure, commercial, legal, economic, labour, Industrial,
technical, material, accounts, internal checks, internal audit & internal control system, direct or Indirect
taxes, secretarial, corporate and other laws, man power planning, selection and training of personnel,
career counselling, communication, computer hardware and software, metrimonial consultants,
educational consultants, medical consultants.
Shareholding:
Name No. of Shares % of the Holding
Dhiren B Kothary 5,000 50.00%
Nita D Kothary 5,000 50.00%
TOTAL 10,000 100.00%
Brief Financial Information:
The Company was incorporated on 20th March 2010 and has not completed full year of operations.
Board of Directors:
Mr. Dhiren Kothary
Mrs. Nita Kothary
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
70
XV. OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS
The Scheme provides that upon the coming into effect of the Scheme, all legal or other proceedings
relating to the operations of the Software Services Division Undertaking on and from the Appointed
Date shall be continued and enforced by or against QSIL only.
The Scheme further provides that, all other legal proceedings shall be continued and enforced by or
against CCL and if any such proceedings are taken against QSIL, QSIL will defend on notice or as per
advice of CCL at the costs of CCL and CCL will indemnify and keep indemnified QSIL from and
against all liabilities, obligations, actions, claims and demands in respect thereof.
Save as stated herein, there are no outstanding or pending material litigation, suits, criminal or civil
prosecution, proceedings initiated for any offence (irrespective of whether specified in paragraph (I) of
Part I of Schedule XIII of the Companies Act, 1956) or litigation for tax liabilities against the Company,
its promoters, directors, subsidiaries, group companies and there are no material defaults, non
payments or overdue or statutory dues, institutional or bank dues or dues towards holders of
debentures, bonds and fixed deposits.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
71
XVI. GOVERNMENT APPROVALS
Pursuant to the Scheme, all the permissions, approvals, licenses etc. granted by the Government and
Government agencies in connection with or relating to the Software Services Division Undertaking
have been transferred to and vested in and/or deemed to be transferred to and vested in the
Company.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
72
XVII. REGULATIONS AND POLICIES
The following description is a summary of the relevant regulations and policies as prescribed by the
Government. The information detailed in this chapter has been obtained from the various legislations
that are available in the public domain. The regulations set out below are not exhaustive, and are only
intended to provide general information to the investors and are neither designed nor intended to be a
substitute for professional legal advice. In this section, unless the context requires otherwise, any
reference to the Company refers to the Company and its Subsidiaries.
Information Technology Act, 2000
The Information Technology Act, 2000 (“the IT Act”) was enacted with the purpose of providing legal
recognition to electronic transactions and facilitating electronic filing of documents. The IT Act further
provides for civil and criminal liability including fines and imprisonment for various cyber crimes,
including unauthorized access to computer systems, unauthorized modification to the contents of
computer systems, damaging computer systems, the unauthorized disclosure of confidential
information and computer fraud.
The Act regulates Information Technology i.e. it governs information storage, processing and
communication. The Act provides legal recognition of electronic records and electronic signatures,
their use, retention, attribution and security. Penalties are provided for cyber crimes, which include
tampering with computer source document and electronic publishing of obscene information, in
addition to provision of compensation in certain cases. The Act also provides punishment for offences
committed outside India if the Act involves a computer system or computer network outside India.
Labour laws
India has various labour laws to protect the rights and interest of the ‘employees’ and ‘workman’. The
definition of the ‘employees’ and ‘workman’ have been defined in various legislations, and such
people are entitled to various statutory benefits including provident fund, bonus, pensions, maternity
benefits, insurance etc.
a. The Minimum Wages Act, 1948 provide for the fixation of a minimum wage payable by the
employer to the employee.
b. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 provides for the
institution of compulsory Provident fund, pension fund and deposit linked insurance funds for
the benefit of eligible employees. A liability is placed on the employer and employee to make
certain contributions to the funds.
c. The Payment of Gratuity Act, 1961 provides for payment of gratuity to (a) the legal heirs of
employees on the demise of the employees; and (b) to the employees employed in factories,
shops and establishments who have put in a continuous service of 5 years, in the event of their
superannuation, retirement, resignation or disablement. Gratuity is calculated at the rate of 15
days wages for every completed year of service with the employer, subject to the maximum
gratuity of Rs. 3,50,000.
d. The Maternity Benefits Act, 1961 provides inter alia for paid leave of upto 12 weeks, to pregnant
women.
e. Labour Welfare Fund: Contributions need to be paid by an employer as required under the
provisions of the applicable labour welfare fund, if the relevant state government has enacted
such legislation.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
73
Profession Tax: Some states require the payment of profession tax by a company and by the
employees of the company. The contribution of the employees is deducted by the company from the
wages of the employees and remitted to the relevant statutory authority. The rates of profession tax
are specified in the relevant legislation governing the payment of profession tax.
Termination of Services: Any termination of employment of a person (other than workman) would be
governed by the terms of the relevant employment contract, and would be subject to applicable Shops
and Commercial Establishments Act, if there are provisions thereunder for the same. As regards a
‘workman’, the Industrial Disputes Act provides for the procedure of removal and termination of
services.
Other Provisions: The applicable Shops and Commercial Establishments Act inter alia regulate the
conditions of work and employment in shops and commercial establishments and generally prescribe
obligations in respect of inter alia registration, opening and closing hours, daily and weekly working
hours, holidays, leave, health and safety measures and wages for overtime work.
Intellectual Property
Intellectual property rights in India are protected by the following Acts and the rules and regulations
framed there under:
Patents Act of 1970;
Copyright Act of 1957;
Trade Mark Act of 1999; and
Design Act of 2000.
The above enactments provide for protection of intellectual property by imposing civil and criminal
liability for infringement. There are no special legislations, which protect “trade secrets” or “confidential
information”, the same are protected under common law.
In addition to the above domestic legislations India is a party to several international intellectual
property related instruments including the Patent Co-operation Treaty, 1970, the Paris Convention for
the Protection of Industrial Property, 1883, the International Convention for the Protection of Literary
and Artistic Works signed at Berne in 1886 (the Universal Copyright Convention of 1952), the Rome
Convention for the Protection of Performers, Producers of Phonograms and Broadcasting
Organizations 1961 and as a member of the World Trade Organisation is a signatory to the
Agreement on Trade Related aspects of Intellectual Property Rights, 1995 (the TRIPS Agreement).
Foreign Investment
100% foreign investment is permissible under the automatic route in the information technology
structure, provided that the foreign investor satisfies and complies with the requirements as specified
in the Foreign Exchange Management Act, 1999 and the relevant Rules and Regulations framed
there under and the various notifications and press notes issued by the Department of Industrial
Policy and Promotion, Ministry of Commerce and Industry. Pursuant to any foreign investment, a
company would be required to make filings with the Reserve Bank of India and the authorized dealer
informing them of the foreign investment and the allotment of shares of the company.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
74
XVIII. REGULATORY AND STATUTORY DISCLOSURES
Authority for Listing
The Company entered into the Scheme of Arrangement 391 to 394 and other applicable provisions of
the Companies Act, 1956 with Continental Controls Limited and their respective Shareholders and
Creditors (“Scheme”) for the demerger of the Software Services Division Undertaking of Continental
Controls Limited into the Company on a going concern basis. The Appointed Date for the demerger
as per the Scheme was 1st April 2008. The Scheme was sanctioned by the Hon’ble High Court of
Judicature at Bombay vide its Order dated 5th September 2008, which was filed with the Registrar of
Companies, Maharashtra on 26th September 2008, which is the Effective Date of the Scheme.
Accordingly, with effect from 1st April, 2008 (being the Appointed Date), the Software Services
Division Undertaking of Continental Controls Limited stands transferred to and vested in the Company
as a going concern.
Clause 7.2 of Part II of the Scheme, as sanctioned by the Hon’ble High Court of Judicature at Bombay
provides that the equity Shares of the Resulting Company, viz. Quest Softech (India) Limited shall be
listed and / or admitted to trading on the Bombay Stock Exchange Limited. Further, Clause 7.7 of Part
II of the Scheme provides that the shares so allotted and issued pursuant to the Scheme of
Arrangement shall remain frozen in the depositories till the listing / trading permission is given by the
BSE.
There being no initial public offering or rights issue, the eligibility criteria in terms of Regulation 3 of
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2009 does not become applicable. However, SEBI has vide its letter SEBI/CFD/SCRR/01/2009/03/09
dated September 3, 2009, issued Guidelines for considering application for seeking relaxation from
strict enforcement of clause (b) to sub-rule (2) of rule 19 thereof. The Company has submitted its
Information Memorandum, containing information about itself, making disclosure in line with the
disclosure requirement for public issues, as applicable to BSE for making the said Information
Memorandum available to public through their websites viz. www.bseindia.com.
The Company has also made the said Information Memorandum available on its website viz.
www.questsoftech.co.in.
The Company will publish an advertisement in the newspapers containing the details in line with the
details required as per Clause 5 of Part A of Annexure of SEBI Circular No. SEBI/CFD/SCRR/01/
2009/03/09 dated September 3, 2009. The advertisement will draw a specific reference to the
availability of aforesaid Information Memorandum on the Company’s website www.questsoftech.co.in
Prohibition by SEBI
The Company, its directors, its promoters, other companies promoted by the promoters and
companies with which the Company’s directors are associated as directors have not been prohibited
from accessing the capital markets under any order or direction passed by SEBI.
General disclaimer from the Company
The Company accepts no responsibility for statements made otherwise than in the Information
Memorandum or in the advertisements to be published in terms of Clause 5 of Part A of Annexure of
SEBI Circular No. SEBI/CFD/SCRR/01/2009/03/09 dated September 3, 2009 or any other material
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
75
issued by or at the instance of the Company and anyone placing reliance on any other source of
information would be doing so at his or her own risk. All information shall be made available by the
Company to the public and investors at large and no selective or additional information would be
available for a section of the investors in any manner.
Disclaimer Clause of BSE
A copy of this Information Memorandum has been submitted to BSE. BSE has vide its letter
DCS/AMAL/SKS/24(f)/2988/2007-08 dated 27th March 2008 approved the Scheme of Arrangement
under clause 24 (f) of the Listing Agreement and by virtue of that approval, BSE’s name in this
Information Memorandum as the Stock Exchange on which the Company’s securities are proposed to
be listed is appearing. BSE does not in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of this Information Memorandum; or warrant that this Company’s
securities will be listed or will continue to be listed on the BSE; or take any responsibility for the
financial or other soundness of this Company; and that it should not for any reason be deemed or
construed to mean that this Information Memorandum has been cleared or approved by BSE. Every
person who acquires any securities of this Company may do so pursuant to independent inquiry,
investigation and analysis and shall not have any claim against the BSE whatsoever by reason of any
loss which may be suffered by such person consequent to or in connection with such
subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any
other reason whatsoever.
Filing
Copies of this Information Memorandum have been filed with the BSE.
Listing
Applications have been made to the BSE for permission to deal in and for an official quotation of the
Equity Shares of the Company. The Company has nominated the BSE as the Designated Stock
Exchange for the aforesaid listing of its Equity Shares. The Company has taken steps for the
completion of necessary formalities for listing and commencement of trading at the Stock Exchanges
mentioned above.
Stock Market Data for Equity Share Capital
Equity shares of the Company have not been previously listed on any Stock Exchanges. The
Company is seeking for approval of listing of its shares through this Information Memorandum.
Demat Credit
The Company has executed agreements with CDSL and NSDL for admitting its Securities in demat
form. The ISIN of the Company’s Equity Shares is INE989J01017. The allotment of Equity shares was
made on 6th July 2009 and the demat accounts of the members were credited on 16th and 17th
September 2009. In terms of Clause 7.7 of Part II of the Scheme, the shares so allotted and issued
pursuant to the Scheme of Arrangement shall remain frozen in the depositories till the listing / trading
permission is given by the BSE.
Dispatch of share certificates
Equity Shares that were allotted in physical certificate form were dispatched to the members on 17th
August 2009.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
76
Expert Opinions
Save as stated elsewhere in this Information Memorandum, the Company has not obtained any
expert opinions.
Previous rights and public issues
The Company has not made any public issue since incorporation.
Commission and brokerage on previous issues
Since the Company has not issued shares to the public in the past, no sum has been paid or has
become payable as commission or brokerage for subscribing to or procuring or agreeing to procure
subscription for any of the Equity Share since its inception.
Capital Issues by Group Companies
No capital issues have been made in the last three years.
Revaluation of assets
The Company has not revalued its assets during the last five years.
Companies under the same Management
There are no companies under the same management within the meaning of Section 370(1B) of the
Companies Act, other than the ones disclosed elsewhere in the Information Memorandum.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
77
XIX. MAIN PROVISONS OF THE ARTICLES OF ASSOCIATION
SHARE CAPITAL, INCREASE AND REDUCTION IN CAPITAL
4) The Authorised Share Capital of the Company shall be as per paragraph V of the Memorandum
of Association of the Company with rights to alter the same in whatever way as deemed fit by
the Company. The Company may increase the Authorised Capital which may consist of Equity
and/or Preference Shares as the Company in General Meeting may determine in accordance
with the law for the time being in force relating to Companies with power to increase or reduce
such capital from time to time in accordance with the Regulations of the Company and the
legislative provisions for the time being in force in this behalf and with power to divide the shares
in the Capital for the time being into Equity Share Capital or Preference Share Capital and to
attach thereto respectively and preferential, qualified or special rights, privileges or conditions
and to vary, modify and abrogate the same in such manner as may be determined by or in
accordance with these presents.
5) The Company in General Meeting may, from time to time, increase the capital by the creation of
new shares. Such increase to be of such aggregate amount and to be divided into shares of
such respective amounts as the resolution shall prescribe. Subject to the provisions of the Act,
any shares of the original or increased capital shall be issued upon such terms and conditions,
and with such rights and privileges annexed thereto, as the General Meeting resolving upon the
creation thereof shall direct, and if direction be given, the directors shall determine accordingly
and in particular, such shares may be issued with a preferential or qualified right to dividends,
and in the distribution of assets of the company, and with a right of voting at General Meetings
of the Company in conformity with provisions of the Act. Whenever the capital of the Company
has been increased under the provisions of this Article, the Directors shall comply with the
relevant provisions of the Act.
6) Except so far as otherwise provided by the conditions of issue or by these Articles, any capital
raised by the creation of new shares shall be considered as part of the existing capital, and shall
be subject to the provisions herein contained, with reference to the payment of calls and
instalments, forfeiture, lien, surrender, transfer and transmission, voting and otherwise.
7) The Company may (subject to the applicable provisions of the Act) from time to time by Special
Resolution, reduce its capital and any Capital Redemption Reserve Account or Securities /
Share Premium Account in any manner for the time being authorised by law; and in particular,
capital may be paid off on the basis that it may be called up again or otherwise. This Article is
not to derogate the company from any power which it would have, if it was omitted.
8) Subject to the applicable provisions of the Act, the company in General Meeting may from time
to time, sub-divide or consolidate its shares, or any of them and the resolution whereby any
share is sub-divided, may determine that, as between the holders of the shares resulting from
such sub-division, one or more of such shares shall have same preference or special advantage
as regards dividend, capital or otherwise over or as compared with the other or others. Subject
as aforesaid, the Company in General Meeting may also cancel shares which have not been
taken or agreed to be taken by any person and diminish the amount of its share capital by the
amount of the shares so cancelled.
MODIFICATION OF RIGHTS
9) Whenever the capital, by reason of the issue of Preference Shares or otherwise, is divided into
different classes of shares, all or any of the rights and privileges attached to each class may,
subject to the applicable provisions of the Act, be modified, commuted, affected or abrogated, or
dealt with by agreement between the Company and any person purporting to contract on behalf
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
78
of that class, provided such agreement is ratified in writing by holders of at least three-fourths in
nominal value of the issued shares of the class or is confirmed by a special Resolution passed
at separate General Meeting of the holders of shares of that class.
POWER TO ISSUE SWEAT EQUITY SHARES
10) Notwithstanding anything contained in Section 79 or other applicable provisions of the Act,
a Company may make issue of sweat equity shares or of a class of shares/other securities
already issued if the applicable provisions of the Companies Act, 1956 or any other statutory
modification(s) for the time being in force in this regard be fulfilled.
FURTHER ISSUE OF SHARES
11) Where at any time after the expiry of two years from the formation of the company or at any time
after the expiry of one year from the allotment of shares in the Company made for the first time
after its formation, whichever is earlier, it is proposed to increase the subscribed capital of the
Company by allotment of further shares, whether out of unissued Share Capital or out of
increased Share Capital, then such further Shares shall be offered to the persons who, at the
date of the offer, are holders of the equity shares of the Company, in proportion, as nearly as
circumstances admit to the capital paid-up on these shares at that date. Such offer shall be
made by a notice specifying the number of shares offered and limiting a time not being less than
fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to
have been declined. The amount to be paid-up on application and allotment on the shares so
offered shall be equal in all respect for all the share-holders. After the expiry of the time
specified in the notice aforesaid or on receipt of earlier intimation from the person to whom such
notice is given that he declines to accept the shares offered, the Board may dispose of them in
such manner as they think most beneficial to the Company.
12) Notwithstanding anything contained in the immediately preceding clause, the Company may:
(i) by a Special Resolution; or
(ii) where no such Special Resolution is passed, if the votes cast (whether on a show of
hands or on a poll, as the case may be) in favour of the proposal contained in the
resolution moved in that General Meeting (including the casting vote, if any, of the
Chairman) by Members who, being entitled so to do, vote in person, or where proxies are
allowed, by proxy, exceed the votes, if any, cast against the proposal by Members so
entitled and voting and the Central Government is satisfied, on an application made by the
Board in this behalf, that the proposal is most beneficial to the Company, offer further
shares to any person and such person need not be at the date of such offer, a holder of
equity shares.
(iii) Notwithstanding anything contained in the above para, but subject, however to the
applicable provisions of the Act, the Company may increase its subscribed capital on
exercise of an option attached to the debentures issued or loans raised by the company to
convert such debentures or loans into shares, or to subscribe for shares in the Company.
POWER OF COMPANY TO PURCHASE ITS OWN SECURITIES
33) The Company shall have power, subject to and in accordance with Section 77A, 77AA, 77B and
other applicable provisions of the Act, to purchase any of its own shares or other securities, (i.e.
buy-back) whether or not redeemable, from out of the sources as permissible under the Law. As
regard to the financing for subscribing or investing in its own shares or securities by the
Company, the statutory provisions for the time being applicable to the Company shall be
observed.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
79
UNDERWRITING AND BROKERAGE
POWER TO PAY CERTAIN COMMISSION AND PROHIBITION OF PAYMENT OF ALL OTHER
COMMISSIONS DISCOUNTS ETC.
34) (A) The Company may pay a commission to any person in consideration of :-
(i) his subscribing or agreeing to subscribe whether absolutely or conditionally, for any shares
in or debentures of the Company, subject to the restrictions specified in sub-section (4A)
of Section 76 of the Act, or
(ii) his procuring or agreeing to procure subscriptions, whether absolute or conditional for any
shares in or debentures of the Company, if the following conditions are fulfilled, namely:
(a) the commissions paid or agreed to be paid does not exceed in the case of
shares, five percent of the price at which the shares are issued and in the case of
debentures, two and half percent of the price at which the debentures are issued.
(b) The amount or rate percent of the commission paid or agreed to be paid on
shares or debentures offered to the public for subscription, is disclosed in the
Prospectus, and in the case of shares or debentures not offered to the public for
subscription, is disclosed in the Statement in lieu of Prospectus and filed before
the payment of the Commission with the Registrar, and where a circular or notice,
not being a Prospectus inviting subscription for the shares or debentures is
issued is also disclosed in that circular or notice.
(c) The number of shares or debentures which such persons have agreed for a
commission to subscribe, absolutely or conditionally is disclosed in the manner
aforesaid and
(d) A copy of the contract for the payment of commission is delivered to the Registrar
at the time of delivery of the prospectus or the statement in lieu of prospectus for
registration.
(B) Save as aforesaid and save as provided in Section 75 of the Act, the Company shall not
allot any of its shares or debentures or apply any of its moneys, either directly or indirectly,
in payment of any commission, discount or allowance, to any person in consideration of :-
(i) his subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares
in, or debentures of the Company or
(ii) his procuring or agreeing to procure subscriptions, whether absolute or conditional for any
shares in or debentures of the Company whether the shares, debentures or money be so
allotted or applied by, being added to the purchase money of any property acquired by the
Company or to the contract price of any work to be executed for the Company or the
money be paid out of the nominal purchase money or contract price, or otherwise.
(C ) Nothing in this Article shall affect the power of the Company to pay such brokerage as it
has hereto before been lawful for the Company to pay
(D) A vendor to, promoter of, or other person who receives payment in shares, debentures
or money from the Company shall have and shall be deemed always to have had power
to apply any part of the shares, debentures or money so received for payment of any
commission, the payment of which, if made directly by the Company would have been
legal under Section 76 of the Act,
(E) The commission may be paid or satisfied (subject to the provisions of the Act and these
Articles) in cash, or in shares, debentures or debenture-stock of the Company.
INTEREST OUT OF CAPITAL
35) Where any shares are issued for the purpose of raising money to defray the expenses of the
construction of any work or building, or the provision of any plant, which cannot be made
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
80
profitable for a lengthy period, the Company may pay interest on so much of that share capital
as is for the time being paid-up, for the period, at the rate and subject to the conditions and
restrictions provided by the Act, and may charge the same to capital as part of the cost of
construction of the work or building, or the provision of plant.
CALLS
DIRECTORS MAY MAKE CALLS
36) The Board may, from time to time, subject to the terms on which any shares may have been
issued and subject to the conditions of allotment, by a resolution passed at a meeting of the
Board (and not by a circular resolution) make such calls as it thinks fit upon the Members in
respect of all moneys unpaid on the shares held by them respectively, and each Member shall
pay the amount of every call so made on him to the person or persons and at the times and
places appointed by the Board. A call may be made payable by instalments.
NOTICE OF CALL
37) Thirty days' notice in writing of any call shall be given by the Company specifying the time and
place of payment, and the person or persons by whom such call shall be paid.
38) A call shall be deemed to have been made at the time when the resolution authorising such call
was passed at a meeting of the Board.
39) A call may be revoked or postponed at the discretion of the Board.
LIABILITY OF JOINT HOLDERS OF SHARES
40) The joint-holders of a share shall be jointly and severally liable to pay all calls in respect thereof.
DIRECTORS MAY EXTEND TIME
41) The Board may, from time to time at its discretion, extend the time fixed for the payment of any
call, and may extend such time as to all or any of the Members for any reason which the Board
may consider satisfactory but no Member shall be entitled to such extension save as a matter of
grace and favour.
WHEN INTEREST ON CALL OR INSTALMENT PAYABLE
42) If any Member fails to pay any call due from him on the day appointed for payment thereof, or
any such extension thereof as aforesaid, he shall be liable to pay interest on the same from the
day appointed for the payment thereof to the time of actual payment at such rate as shall from
time to time be fixed by the Board, but nothing in this Article shall render it obligatory for the
Board to demand or recover any interest from any such Member.
43) Any sum, which by the terms of issue of shares becomes payable on allotment or at any fixed
date, whether on account of the nominal value of the share or by way of premium, shall for the
purposes of these Articles be deemed to be a call duly made and payable on the date on which
by the terms of issue the same becomes payable, and in case of non-payment, all the relevant
provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall
apply as if such sum had become payable by virtue of a call duly made and notified.
PROOF ON TRIAL OF SUITS FOR MONEY DUE ON SHARES
44) On the trial or hearing of any action or suit brought by the Company against any Member or his
representatives for the recovery of any money/claim to be due to the Company in respect of his
shares, it shall be sufficient to prove that the name of the Member in respect of whose shares
the money is sought to be recovered is alleged to have become due on the shares in respect of
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
81
which such money is sought to be recovered; that the resolution making the call is duly recorded
in the Minute Book; and that notice of such call was duly given to the Member or his
representatives issued in pursuance of these Articles; and that it shall not be necessary to prove
the appointment of the Directors who made such call, nor that a quorum of Directors was
present at the Board at which any call was made was duly convened or constituted nor any
other matters whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of
the debt.
PARTIAL PAYMENT NOT TO PRECLUDE FORFEITURE
45) Neither the receipt by the Company of a portion of any money which shall from time to time be
due from any Member to the Company in respect of his shares, either by way of principal or
interest, nor any indulgence granted by the Company in respect of payment of any such money,
shall preclude the Company from thereafter proceeding to enforce a forfeiture of such shares as
hereinafter provided.
PAYMENT IN ANTICIPATION OF CALLS MAY CARRY INTEREST
46) The Board may, if it thinks fit, agree to and receive from any member willing to advance the
same, all or any part of the amounts of his respective shares beyond the sums actually called -
up and upon the moneys so paid in advance, or upon so much thereof from time to time, and at
any time thereafter, as exceeds the amount of the calls then made upon and due in respect of
the shares on account of which such advances are made, the Board may pay or allow interest,
at such rate as the Member paying the sum in advance and the Board agree upon. The Board
may agree to repay at any time any amount so advanced or may at any time repay the same
upon giving to the member one month’s notice in writing. Provided that moneys paid in advance
calls shall not confer a right to dividend or to participate in profits.
47) No member paying any such sum in advance shall be entitled to voting rights in respect of the
moneys so paid by him until the same would but for such payment become payable.
LIEN
COMPANY’S LIEN ON SHARES/DEBENTURES
48) The Company shall have a first and paramount lien upon all the shares (other than fully paid-up
shares) registered in the name of each Member (whether solely or jointly with others) and upon
the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable
at a fixed time in respect of such shares and no equitable interest in any shares shall be created
except any contrary provisions in these Articles. Any such lien shall extend to all dividends from
time to time declared in respect of such shares. Unless otherwise agreed, the registration of a
shares shall operate as a waiver of the Company's lien, if any, on such shares.
AS TO ENFORCING LIEN BY SALE
49) For the purpose of enforcing such lien, the Board may sell the shares subject thereto in such
manner as they shall think fit, and for that purpose may cause to be issued a duplicate
certificate in respect of such shares and may authorise one of their number to execute a transfer
thereof on behalf of and in the name of such Member. No sale shall be made until such period
as aforesaid shall have been served on such Member or his representatives and default shall
have been made by him or them in payment, fulfilment, or discharge of such debts, liabilities or
engagements for fourteen days after such notice.
INFORMATION MEMORANDUM QUEST SOFTECH (INDIA) LIMITED
82
APPLICATION OF PROCEEDS OF SALE
50) The net proceeds of any such sale shall be received by the Company and applied in or towards
payment, of such part of the amount in respect of which the lien exists as is presently payable
and the residue, if any, shall (subject to a like lien for sums not presently payable as existed
upon the shares before the sale) be paid to the persons entitled to the shares at the date of the
sale.
FORFEITURE OF SHARES
IF CALL OR INSTALMENT NOT PAID NOTICE MUST BE GIVEN
51) If any Member fails to pay any call or instalment of a call on or before the day appointed for the
payment of the same or any such extention thereof as aforesaid, the Board may at any time
thereafter, during such time as the call or instalment remains unpaid, give notice to him requiring
him to pay the same together with any interest that may have accrued and all expenses that
may have been incurred by the Company by reason of such non-payment.
FORM OF NOTICE
52) The notice shall name a day (not being less than fourteen days from the date of the notice) and
a place or places on and at which such call or instalment and such interest thereon at such rate
as the Directors shall determine from the day on which such call or instalment ought to have
been paid and express as aforesaid are to be paid. The notice shall also state that, in the event
of the non-payment on or before the time and at the place appointed, the shares in respect of
which the call was made or instalment is payable, will be liable to be forfeited.
IN DEFAULT OF PAYMENT SHARES OR DEBENTURES TO BE FORFEITED
53) If the requirements of any such notice as aforesaid shall not be complied with, every or any
share in respect of which such notice has been given, at any time thereafter, but before
payment of all calls or instalments, interest and expenses due in respect thereof, be forfeited by
a resolution of the Board to that effect. Such forfeiture shall include all dividends declared or any
other moneys paid before the forfeiture.
ENTRY OF FORFEITURE IN REGISTER OF MEMBERS/DEBENTURES HOLDERS
54) When any share shall have been so forfeited, notice of the forfeiture shall be given to the
Member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture,
with the date thereof, shall forthwith be made in the Register of Members, but no forfeiture shall
be in any manner invalidated by any omission or neglect to give such notice or to make any
such entry as aforesaid.
FORFEITED SHARE/DEBENTURES TO BE PROPERTY OF COMPANY AND MAY BE SOLD
55) Any share so forfeited shall be deemed to be the property of the Company and may be sold,
reallotted or otherwise disposed off, either to the original holder thereof or to any other person,
upon such terms and in such manner as the Board think fit.
SHAREHOLDERS STILL LIABLE TO PAY MONEY OWING AT TIME OF FORFEITURE AND
INTEREST
56) Any Member whose shares have been forfeited shall notwithstanding the forfeiture, be liable to
pay and shall forthwith pay to the Company on demand all calls, instalments, interest and
expenses owing upon or in respect of such shares at the time of the forfeiture until payment, at
such as the Board may determine and the Board may enforce the payment thereof, if it thinks fit.
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EFFECT OF FORFEITURE
57) The forfeiture of a share shall involve extinction at the time of the forfeiture, of all interest in and
all claims and demands against the Company, in respect of the share and all other rights
incidental to the share, except only such of those rights as by these Articles are expressly
saved.
CERTIFICATE OF FORFEITURE
58) A declaration in writing that the declarant is a Director or Secretary of the Company and that a
share in the Company has been duly forfeited in accordance with these Articles on a date stated
in the declaration, shall be conclusive evidence of the facts therein stated as against all persons
claiming to be entitled to the share.
VALIDITY OF SALES
59) Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers herein
before given, the Board may appoint some person to execute an instrument of transfer of the
shares sold and cause the purchaser's name to be entered in the Register of Members in
respect of the shares sold, and the purchaser shall not be bound to see to the regularity of the
proceedings, or to the application of the purchase money, and after his name has been entered
in the Register of Members in respect of such shares, the validity of the sale shall not be
impeached by any person and the remedy of any person aggrieved by the sale be in damages
only and against the Company exclusively.
CANCELLATION OF SHARE CERTIFICATE IN RESPECT OF FORFEITED SHARES
60) Upon any sale, re-allotment or other disposal under the provisions of the preceding Articles, the
certificate or certificates originally issued in respect of the relative shares shall (unless the same
shall on demand by the Company have been previously surrendered to it by the defaulting
Member) stand cancelled and become null and void and of no effect, and the Directors shall be
entitled to issue a duplicate certificate or certificates in respect of the said shares to the persons
or persons entitled thereto.
61) The Board may at any time before any share so forfeited shall have been so sold, re-allotted or
otherwise disposed off, annul the forfeiture thereof upon such conditions, as it thinks fit.
TRANSFER AND TRANSMISSION OF SHARES
REGISTER OF TRANSFERS
62) The Company shall keep a "Register of Transfers" and therein shall be fairly and distinctly
entered particulars of every transfer or transmission of any share.
INSTRUMENT OF TRANSFER
63) The instrument of transfer shall be in writing and all the provisions of section 108 of the Act and
of any statutory modification thereof for the time being shall be duly complied with in respect of
all transfers of shares and registration thereof.
64) The instrument of transfer duly stamped and executed by the transferor and the transferee shall
be delivered to the Company in accordance with the provisions of the Act. The instrument of
transfer shall be accompanied by such evidence as the Board may require to prove the title of
transferor and his right to transfer the shares, and every registered instrument of transfer shall
remain in the custody of the Company until destroyed by order of the Board. The transferor shall
be deemed to be the holder of such shares until the name of the transferee shall have been
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entered in the Register of Members in respect thereof. Before the registration of a transfer, the
certificate or certificates of the shares must be delivered to the Company.
DIRECTORS MAY REFUSE TO REGISTER TRANSFER
65) Subject to the applicable statutory provisions of the Act, the Board of Directors may refuse
whether in pursuance of any power of the Company under the Articles or otherwise to register
the transfer of, or the transmission by operation of law or the right to any shares or interest of a
member in, or any security of the Company, the Company shall within one month from the date
on which the instrument of transfer, or the intimation of such transmission, as the case may be,
was delivered to the Company, send notice of the refusal to the transferee and the transferor or
to the person giving intimation of such transmission, as the case may be, giving reasons for
such refusal.
Provided that registration of a transfer shall not be refused on the ground that the transferor
being either alone or jointly with any person or persons is indebted to the Company on any
account whatsoever, except the outstanding allotment/call money/any interest on the same.
66) Where, in the case of partly paid shares, an application for registration is made by the
transferor, the Company shall give notice of the application to the transferee in accordance with
the provisions of the Act.
TRANSMISSION OF SHARES
70) Subject to the provisions of these presents, any person becoming entitled to shares in
consequence of death, lunacy, bankruptcy, or insolvency of any Member, or by any lawful
means other than by a transfer in accordance with these Articles may, with the consent of the
Board (which it shall not be under any obligation to give) upon producing such evidence that he
sustains the character in respect of which he proposes to act under the Article, or such title, as
the Board thinks sufficient, either be registered himself as the holders of the shares or elect to
have some person nominated by him as approved by the Board registered as such holder;
provided, nevertheless, that if such person shall elect to have his nominee registered, he shall
testify the election by executing in favour of his nominee as instrument of transfer in accordance
with the provisions herein contained, and until he does so, he shall not be freed from any liability
in respect of the shares.
71) The Board shall have the same right to refuse to register a person entitled by transmission to
any shares or his nominees as if he were the transferee named in the case of a transfer of
shares presented for registration.
PERSONS ENTITLED MAY RECEIVE DIVIDEND WITHOUT BEING REGISTERED AS MEMBER
74) A person entitled to a share by transmission shall, subject to the right of the Directors to retain
such dividend or money as herein provided, be entitled to receive, and may give a discharge for
any dividend or money as herein provided, be entitled to receive, and may give a discharge for
any dividend or other moneys payable in respect of such share.
75) No fee shall be charged for the registration of a transfer or transmission of any share.
THE COMPANY NOT LIABLE FOR DISREGARD OF A NOTICE PROHIBITING REGISTRATION OF
TRANSFER
76) The Company shall incur no liability or responsibility whatsoever in consequence of its
registering or giving effect to any transfer of shares made or purporting to be made by any
apparent legal owner thereof (as shown or appearing in the Register of Members) to the
prejudice of persons having or claiming any equitable right, title of interest to or in the said
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shares, notwithstanding the Company may have had notice of such equitable right, title or
interest or notice prohibiting registration of such transfer and may have entered such notice, or
referred thereto, in any book of the Company; and the Company shall not be bound or required
to regard or attend or give effect to any notice which may be given to it of any equitable right,
title or interest, or be under any liability whatsoever for refusing or neglecting so to do, though it
may have been entered or referred to in some books of the Company, but the Company shall
nevertheless be at liberty to regard and attend to any such notice and give effect thereof, if the
Board shall so think fit.
POWER TO ISSUE SHARE WARRANTS
77) Subject to the provisions of Section 114 and 115 of the Act and subject to any directions which
may be given by the Company in General Meeting, the Board may issue share-warrants in such
manner and on such terms and conditions as the Board may deem fit. In case of such issue
Regulations 40 to 43 of table "A" in Schedule 1 to the Act, shall apply.
COPIES OF MEMORANDUM AND ARTICLES TO BE SENT TO MEMBERS
78) Copies of the Memorandum and Articles of Association of the Company and other document
referred to in Section 39 of the Act shall be sent by the Company to every member at his
request within seven days of the request on payment of such sum as may be prescribed by the
Act for each copy.
BORROWING POWERS
79) Subject to the provisions of Section 58A, 292, 293 and other applicable provisions of the Act,
the Board may, from time to time at its discretion, by a resolution passed at a meeting of the
Board, accept deposits from Members, either in advance of calls or otherwise and generally
raise or borrow or secure the payment of any sum or sums of money for the purpose of the
Company.
80) Subject to the provisions of these presents, the payment or repayment of moneys borrowed as
aforesaid may be secured in such manner and upon such terms and conditions in all respects
as the Board may think fit, by resolution passed at the meeting of the Board (but not by
circulation) and in particular, by the issue of bonds, debentures, debenture stock or other
security of the Company either unsecured or secured by a mortgage or charge over all or any
part of the property of the Company (both present or future) including its uncalled capital for the
time being, and debentures, debenture-stock, bonds and other securities may be made
assignable, free from any equities between the Company and the person to whom the same
may be issued.
81) Any debentures, debenture-stock, loan stock or other securities may be issued at a discount,
premium or otherwise and may be issued on condition that they shall be convertible into shares
of any denomination, and with any privileges and conditions as to redemption, surrender,
drawing, allotment of shares and attending (but not voting) at General Meeting, appointment of
Director and otherwise. Debenture with the right to conversion into or allotment of shares shall
be issued only with the consent of the Company in General Meeting accorded by a Special
Resolution.
82) The Board shall cause a proper Register to be kept in accordance with the provisions of the Act,
of all mortgages, debentures and charges specifically affecting the property of the Company;
and shall cause the statutory requirements of the Act in that behalf to be duly complied with, so
far as they are required to be complied with by the Board.
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83) The Company shall, if at any time it issues debentures, keep a Register and Index of
Debenture-holder in accordance with Section 152 of the Act. The Company shall have the
power to keep in any state or country outside India a branch Register of debenture-holders
resident in that state or country.
84) Debenture, debenture stock and other securities of the Company shall be transferable,
transmitted and consolidated in the same manner and to the same extent and be subject to the
same restrictions and limitations as in the case of shares in the Company and the provision
contained in these Articles of Association relating to transfer and transmission, split and
consolidation of shares, shall apply mutates mutandis, to the transfer and transmission, split and
consolidation of debentures and debenture-stock.
MEETINGS OF THE MEMBERS
87) The Company shall in each year hold a General Meeting as its Annual General Meeting in
addition to any other meeting in that year. All General Meetings other than Annual General
Meeting shall be called Extra-Ordinary General Meetings. An Annual General Meeting shall be
held within six months after the expiry of each Financial Year. Provided that not more than
fifteen months shall elapse between the date of one Annual General Meeting and that of the
next. Nothing contained in the foregoing provisions shall be taken as affecting the right
conferred upon the Registrar under the provisions of the Act extend the time within which any
Annual General Meeting may be held. Every Annual General Meeting shall be called for a time
during business hours, on a day that is not a public holiday, and shall be held at such place as is
permissible by the Act and as the Board may determine. The notice calling the meeting shall
specify it as the Annual General Meeting. Every member of the Company shall be entitled to
attend either in person or by proxy and the Auditor of the Company shall have the right to attend
and to be heard at any General Meeting which he attends on any part of the business which
concerns him as Auditor. At every Annual General Meeting of the Company there shall be laid
on the table the Directors' Report and Audited Statement of Accounts, Auditors' Report (if not
already incorporated in the Audited statement of Accounts) and the Register of Directors'
Shareholdings which register shall remain open and accessible during the continuance of the
Meeting.
POWERS OF DIRECTOR’S TO CALL EXTRA ORDINARY GENERAL MEETING AND CALLING
OF EXTRA ORDINARY GENERAL MEETING ON REQUISITION
88) The Board may, whenever it thinks fit, call an Extra-Ordinary General Meeting and it shall do so
upon a requisition in writing by Member or Members holding in the aggregate not less than the
prescribed proportion of the paid-up Capital as at that carries the right of voting in regard to the
matter in respect of which the requisition has been made.
89) Any valid requisition so made by Member or Members must state the object or objects of the
Meeting proposed to deposit at the office PROVIDED that such requisition may consist of
several documents in like form, each signed by one or more requisitionists.
90) Upon receipt of any such requisition, the Board shall forthwith call an Extra-Ordinary General
Meeting, and if they do not proceed within 21 days from the date of the requisition being
deposited at the Office, to cause meeting to be so called on a day not latter than forty-five days
from the date of deposit of the requisition the requisitionist, or such of their number as represent
either a majority in value of the paid-up share capital held by all of them or not less than one-
tenth of such of the paid-up share capital of the Company as is referred to in Section 169 (4) of
the Act, whichever is less, may themselves call the meeting, but in either case any meeting so
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called shall be held within three months from the date of the deposit of the requisition as
aforesaid.
91) Any Meeting called under the foregoing Articles by the requisitionist shall be called in the same
manner, as nearly as possible, as that in which meetings are to be called by the Board.
QUORUM FOR MEETING
96) Five Members present in person shall be quorum for a General Meeting.
97) A body corporate being a Member shall be deemed to be personally present if it is represented
in accordance with Section 187 of the Act.
IF QUORUM NOT PRESENT MEETING TO BE DISSOLVED OR ADJOURNED
98) If, at the expiration of half an hour from the time appointed for holding a meeting of the
Company, a quorum shall not be present, the meeting, if convened by or upon the requisition of
members, shall stand dissolved, but in any other case the meeting shall stand adjourned to the
same day in the next week or if that day is a public holiday, until the next succeeding day which
is not a public holiday at the same time and place or to such other day and at such other time
and place in the city or town in which the office of the Company is for the time being situate, as
the Board may determine, and if at such adjourned meeting a quorum is not present at the
expiration of half an hour from the time appointed for holding the meeting, the Members present
shall be a quorum and may transact the business for which the meeting was called.
CHAIRMAN OF GENERAL MEETING
99) The Chairman (if any) of the Board shall be entitled to take the chair at every General Meeting,
whether Annual or Extra- Ordinary. If there be no such Chairman of the Board or if at any
meeting he shall not be present within fifteen minutes of the time appointed for holding such
meeting or if he shall be unable or unwilling to take the chair, then the Members present shall
elect another Director as Chairman, and if no Director be present or if all the Directors present
decline to take the chair, then the members present shall select one of them to be Chairman.
DEMAND FOR POLL
102) Before or on the declaration of the result of the voting on any resolution on a show of hands, a
poll may be ordered to be taken by the Chairman of the meeting of his own motion, and shall be
ordered to be taken by him on a demand made in that behalf by any member or members
present in person or by proxy and holding shares in the Company to the extent prescribed.
103) The demand for a poll may be withdrawn at any time by the person or persons who made the
demand. Unless a poll is demanded, a declaration by the chairman that a resolution has on a
show of hands, been carried or carried unanimously or by a particular majority, or lost and on
entry to that effect in the Minute Book of the Company shall be conclusive evidence recorded in
favour of or against that resolution.
CASTING VOTE
104) In the case of an equality of votes, the Chairman shall both on a show of hands and at a poll (if
any), have a casting vote in addition to the vote or votes to which he may be entitled as a
Member.
TIME OF TAKING POLL
105) If a poll is demanded as aforesaid, the same shall, subject to any provisions of these presents,
be taken at such time (not later than forty-eight hours from the time when the demand was
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made) and place in the city or town in which the Office of the Company is for the time being
situate, and either by open voting or by ballot, as the Chairman shall direct, and either at once or
after an interval or adjournment, or otherwise, and the result of the poll shall be deemed to be
the resolution of the meeting at which the poll was demanded. The demand for a poll may be
withdrawn at any time by the person or persons who made the demand.
SCRUTINEERS AT POLL
106) Where a poll is to be taken, the Chairman of the meeting shall appoint two scrutineers to
scrutinise the votes given on the poll and to report thereto, to him. One of the scrutineers so
appointed shall always be a Member (not being an officer or employee of the Company) present
at the meeting, provided such a Member is available and willing to be appointed. The Chairman
shall have power at any time before the result of the poll is declared to remove a scrutineer from
office and fill vacancies from such removal or from any other cause.
107) Any poll duly demanded on the election of a Chairman of a meeting or any question of
adjournment shall be taken at the meeting forthwith.
108) The demand for a poll except on the question of the election of the Chairman and of an
adjournment shall not prevent the continuance of a meeting for the transaction of any business
other than the question on which the poll has been demanded.
VOTES OF MEMBERS
RESTRICTIONS ON EXERCISE OF VOTING RIGHTS OF MEMBERS WHO HAVE NOT PAID
CALLS
109) No Member shall be entitled to vote either personally or by proxy at any General Meeting or
Meetings of a class of shareholders either upon a show of hands or upon a poll in respect of any
shares registered in his name on which any calls or other sums presently payable by him have
not been paid or in regard to which the Company has, and has exercised, any right of lien.
110) Subject to the provisions of these Articles and without prejudice to any special privileges or
restrictions as to voting for the time being attached to any class of shares for the time being
forming part of the Capital of the Company, every Member, who is not otherwise disqualified,
shall be entitled to be present, and to speak and vote at such meeting, and on a show of hands,
every Member present in person shall have one vote and upon a poll, voting right of every
Member present in person or by proxy shall be in proportion to his share of the paid-up equity
share capital of the Company. Provided, however, a preference Shareholder of the Company,
save as provided in clause (b) of sub-section (2) of Section 87 or other applicable provisions of
the Act, shall have a right to vote only on resolutions placed before the meeting which directly
affect the rights attached to his preference shares.
111) On a poll taken at a meeting of the Company, a Member entitled to more than one vote, or his
proxy or other person entitled to vote for him, as the case may be, need not, if he votes, use all
his votes or cast in the same way all the votes he uses.
112) A member of unsound mind or in respect of whom an order has been made by any Court having
jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or
other legal guardian; and any such committee or guardian may, on poll vote by proxy. If any
member be a minor, the vote in respect of his share or shares shall be by his guardian, or any
one of his guardians, if more than one, to be selected in case of dispute, by the Chairman of the
meeting.
113) If there be joint registered holders of any shares, any one of such persons may vote at any
meeting or may appoint another person (whether a member or not) as his proxy in respect of
such shares, as if he were solely entitled thereto, but the proxy so appointed shall not have any
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right to speak at the meeting and, if more than one of such joint-holders be present at any
meeting, that one of the said persons so present whose name stands higher on the Register of
Members shall alone be entitled to speak and to vote in respect of such shares, but the other or
others of the joint-holders shall be entitled to be present at the meeting. Several executors or
administrators of a deceased Member, in whose name shares stand shall for the purpose of
these Articles be, deemed joint-holders thereof.
PROXIES
114) Subject to the provisions of these Articles, votes may be given either personally or by proxy. Any
member of the Company entitled to attend and vote at a meeting of the Company shall be
entitled to appoint any other person (whether a member or not) as his proxy to attend and vote
instead of himself. A member (and in the case of joint holders all holders) shall not appoint more
than one person as proxy. A proxy so appointed shall not have any right to speak at the
meeting.
REPRESENTATION OF BODY CORPORATE
115) A body corporate being a member may vote either by a proxy or by a representative duly
authorised in accordance with the provisions of the Act and such representative shall be entitled
to exercise the same rights and powers (including the right to vote by proxy) on behalf of the
body corporate which he represents as that body could exercise if it were an individual Member.
116) Any person entitled to any share upon transmission or nomination may vote at any General
Meeting in respect thereof in the same manner as if he were the registered holder of such
shares, provided that at least forty-eight hours before the time of holding the meeting or
adjourned meeting, as the case may be, at which he proposes to vote, he shall satisfy the
Directors of his right to transfer such shares and give such indemnity (if any) as the Directors
may require or the Directors shall have previously admitted his right to vote at such meeting in
respect thereof.
117) Every proxy (whether a Member or not) shall be appointed in writing under the hand of the
appointor or his attorney, or if such appointor is a Corporation, under the common seal of such
Corporation, or be signed by an officer or any attorney duly authorised by it, and any committee
or guardian may appoint such proxy. The proxy so appointed shall not have any right to speak
at the meeting.
118) An instrument of proxy may appoint a proxy either for the purpose of a particular meeting
specified in the instrument and any adjournment thereof, or of every meeting to be held before a
date specified in the instrument and every adjournment of any such meeting.
119) A Member present by proxy shall be entitled to vote only on a poll.
120) The instrument appointing a proxy and the power of attorney or other authority (if any), under
which it is signed or a notarised certified copy of that power of authority, shall be deposited at
the office not later than forty-eight hours before the time for holding the meeting at which the
person named in the instrument proposes to vote, and in default the instrument of proxy shall
not be treated as valid.
121) Every instrument of proxy whether for a specified meeting or otherwise shall, as nearly as
circumstances will admit, be in any of the forms set out in the Act.
122) A vote given in accordance with the terms of an instrument of proxy shall be valid
notwithstanding the previous death or insanity of the principal, or revocation of the proxy or of
any power of attorney under which such proxy was signed, or the transfer of the share in
respect of which the vote is given, provided that no intimation in writing of the death or insanity,
revocation or transfer shall have been received at the office before the meeting.
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123) No objection shall be made to the validity of any vote, except at any meeting or poll at which
such vote shall be tendered, and every vote whether given personally or by proxy, not
disallowed at such meeting or poll shall be deemed valid for all purposes of such meeting or poll
whatsoever.
SITTING FEES AND OTHER EXPENDITURE PAYABLE TO DIRECTORS
144) The fees payable to the Directors for attending a meeting of the Board or a Committee thereof
shall be such sum, as shall be prescribed by law or by the Central Government from time to
time. The Company may allow and pay to any Director such reasonable expenditure as may
have been incurred by him or such sum as may be considered fair and reasonable for attending
such meetings.
QUALIFICATION SHARES
147) A Director shall not be required to hold any shares in the Company to qualify for the office of a
Director of the Company.
MANAGING DIRECTOR(S) AND WHOLE-TIME DIRECTOR(S)
169) Subject to the applicable provisions of the Act and of these Articles, the Board shall have power
to appoint from time to time any of its numbers as Managing Director or Managing Directors of
the Company for a fixed term not exceeding five years at a time and upon such terms and
conditions as the Board thinks fit, and subject to the provisions of these presents, the Board
may by a resolution vest in such Managing Director or Managing Directors such of the powers
hereby vested in the Board generally as it thinks fit and such powers may be made exercisable
for such period or periods upon such conditions and subject to such restrictions as it may
determine. The remuneration of a Managing Director or Managing Directors may be by way of
monthly payment, participation in profits or by any other mode not expressly prohibited by the
Act. Subject to the provisions of the Act, a Managing Director shall not, while he continues to
hold that office, be subject to retirement by rotation and he shall not be reckoned as a Director
for any purpose of determining the rotation of retirement of Directors or in fixing the number of
Directors to retire, but (subject to the provisions of any contract between him and the Company)
he shall be subject to the same provisions as to resignation and removal as the other Directors
and he shall, ipso facto and immediately cease to be a Managing Director if he ceases to hold
the office of Director from any cause.
170) Subject to the applicable provisions of the Act and of these Articles, the Board shall have power
to appoint from time to time any of its number as whole-time Director or whole-time Directors of
the Company for a fixed term not exceeding five years at a time and upon such terms and
conditions as the Board thinks fit, and subject to the provisions of these presents the Board may
by resolution, vest in such Whole-time Director or Whole-time Directors such of the powers
hereby vested in the Board generally as it thinks fit, and such powers may be made exercisable
for such period or periods, and upon such conditions and subject to such restrictions as it may
determine. The remuneration of Whole-time Director or Whole-time Directors may be by way of
monthly payment, fee for each meeting or participation in profits, or by any or all of these
modes, or any other mode not prohibited by the Act.
171) The Managing Director or Managing Directors or Whole-time Director or Whole-time Directors
shall not exercise the powers to:
(i) make calls on shareholders in respect of money unpaid on the shares in the Company.
(ii) issue debentures;
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and except to the extent mentioned in the resolution passed at the Board Meeting under Section
292 of the Act.
(iii) borrow moneys, otherwise than on debentures;
(iv) invest the funds of the Company; and
(v) make loans.
172) Subject to the provisions of the Act, the Company shall not appoint or employ, or continue the
appointment or employment of, a person as its Managing Director or Whole-time Director who -
(i) is an undischarged insolvent or has at any time been adjudged an insolvent;
(ii) suspends, or has at any time suspended payment to its creditors or makes, or has at any
time made a composition with them; or
(iii) is, or has at any time been, convicted by a Court of any offence involving moral turpitude.
173) A Managing Director or Whole-time Director shall ipso facto and immediately cease to be a
Managing Director or Whole-time Director if he ceases to hold the office of a Director.
POWERS OF DIRECTORS
CERTAIN POWERS TO BE EXERCISED BY THE BOARD ONLY AT MEETING
189) (a) Without derogating from the powers vested in the Board of Directors under these Articles,
the Board shall exercise the following powers on behalf of the Company and they shall do so
only by means of resolutions passed at meetings of the Board.
(i) The power to make calls on shareholders in respect of money unpaid on their shares
(ii) The power to issue debenture
(iii) The power to borrow moneys otherwise than on debentures
(iv) The power to invest the funds of the Company and
(v) The power to make loans
Provided that the Board may be resolution passed at the meeting, delegate to any committee of
Directors, the Managing Director, the Manager or any other principal officer of the Company or
in the case of a branch office of the Company, a principal officer of the branch office, the powers
specified in sub-clauses (iii), (iv) and (v) to the extent specified in clauses (b), (c) and (d)
respectively on such condition s the Board may prescribe.
(b) Every resolution delegating the power referred to in sub-clause (iii) of clause (a) shall specify
the total amount outstanding at any one time upto which moneys may be borrowed by the
delegate.
(c ) Every resolution delegating the power referred to in sub-clause (iv) of clause (a) shall
specify the total amount upto which the funds of the Company may be invested and the nature
of the investments which may be made by the delegate.
(d) Every resolution delegating the power referred to in sub-clause (v) of the clause (a) shall
specify the total amount upto which loans may be made by the delegates, the purpose for which
the loans may be made and the maximum amount upto which loans may be made for each
such purpose in individual cases.
(e) Nothing in this Article shall be deemed to affect the right of the Company in general Meeting
to impose restrictions and conditions on the exercise by the Board of any of the powers referred
to in sub-clauses (i), (ii), (iii), (iv) and (v) of clause (a) above.
RESTRICTIONS ON POWERS OF BOARD
190) The Board shall not, except with the consent of the Company in General Meeting:-
(i) sell, lease or otherwise dispose off the whole, or substantially the whole, of the
undertaking of the Company, or where the Company owns more than one undertaking of
the whole, or substantially the whole of any such undertaking;
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(ii) remit, or give time for the repayment of, any debt due by a Director;
(iii) invest otherwise than in trust securities, the amount of compensation received by the
Company in respect of the compulsory acquisition of any such undertaking as is referred
to in clause (a), or of any premises or properties used for any such undertaking and
without which it cannot be carried on or can be carried on only with difficulty or only after a
considerable time;
(iv) borrow moneys, where the moneys to be borrowed together with the moneys already
borrowed by the Company (apart from temporary loans obtained from the Company's
bankers in the ordinary course of business) will exceed the aggregate of the paid-up
capital of the Company and its free reserves, that is to say, reserves not set apart for any
specific purpose. Provided further that the powers specified in Section 292 of the Act shall,
subject to these Articles, be exercised only at meetings of the Board, unless the same be
delegated to the extent therein stated; or
(v) contribute to charitable and other funds not directly relating to the business of the
Company or the welfare of its employees, any amounts the aggregate of which will, in any
financial year exceed fifty thousand rupees or five percent of its average net profits as
determined in accordance with the provisions of the Act during the three financial years
immediately preceding, whichever is greater.
GENERAL POWERS OF THE COMPANY VESTED IN DIRECTORS
191) The Board may exercise all such powers of the Company and do all such acts and things as are
not, by the Act, or any other Act or by the Memorandum or by the Articles of the Company
required to be exercised by the Company in General Meeting; subject nevertheless to these
Articles, the provisions of the Act, or any other Act or to any regulations being not inconsistent
therewith, as may be prescribed by the Company in General Meeting but no regulation made by
the Company in General Meeting shall invalidate any prior act of the Board which would have
been valid if that regulation had not been made.
192) Without prejudice to the general powers conferred by the preceding Articles and so as not in any
way limit or restrict those powers, and without prejudice to the other powers conferred by these
Articles, but subject to the restrictions contained in the last preceding Article, it is hereby
declared that the Directors shall have the following powers, that is to say, power :-
TO MORTGAGE, CHARGE PROPERTY
(i) At their discretion and subject to the provisions of the Act to pay for any property, rights or
privileges acquired by or services rendered to the Company, either wholly or partially in
cash or in shares, bonds, debentures, loan, stocks, mortgages, or other securities of the
Company, and any such shares may be issued either as fully paid up or with such amount
credited as paid up thereon, as may be agreed upon and any such bonds, debentures,
loan stocks , mortgages or other securities may be either specifically charged upon all or
any part of the property of the Company and its uncalled capital or not so charged.
(ii) To secure the fulfilment of any contracts or engagements entered into by the Company by
mortgage or charge of all or any of the property of the Company and its uncalled capital for
the time being or in such manner as they may think fit.
DIVIDENDS
DIVISION OF PROFITS
198) The profits of the Company, subject to any special rights relating thereto created or authorised
to be created by these Articles, and subject to the provisions of the Act and of these Articles,
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shall be divisible among the members in proportion to the amount of capital paid-up or credited
as paid-up on the shares held by them respectively.
199) The Company in General Meeting may declare dividends to be paid to Members according to
their respective rights, but no dividends shall exceed the amount recommended by the Board,
but the Company in General Meeting may declare a smaller dividend.
DIVIDENDS ONLY TO BE PAID OUT OF PROFITS
200) No dividend shall be declared or paid otherwise than out of profits of the Financial year arrived
at after providing for the depreciation in accordance with the provisions of the Act or out of the
profits of the Company for any previous financial year or years arrived at after providing for
depreciation in accordance with these provisions and remaining undistributed or out of both.
Provided that:
(i) If the Company has not provided for depreciation for any previous financial year or years it
shall, before declaring or paying a dividend for any financial year, provide for such
depreciation out of the profits of the financial year, or out of the profits of any other
previous year or years.
(ii) If the Company has incurred any loss in any previous financial year or years, the amount
of the loss or an amount which is equal to the amount provided for depreciation for that
year or those years, whichever is less, shall be set off against the profits of the Company
for the year for which the dividend is proposed to be declared or paid or against the profits
of the Company for any previous financial year or yeas arrived at in both cases after
providing for depreciation in accordance with the provisions of sub-section (2) of Section
205 of the Act or against both.
(iii) Notwithstanding anything contained herein, no dividend shall be declared or paid by the
Company for any financial year out of profits of the Company for that year arrived at after
providing for depreciation in accordance with the provisions of Section 205 of the Act,
except after the transfer to the reserves of the Company of such percentage of its profits
for that year, not exceeding ten percent , as may be prescribed. Provided that nothing in
this sub-clause shall be deemed to prohibit the voluntary transfer by the Company of a
higher percentage of its profits to the reserves in accordance with the prescribed rules in
this behalf.
(iv) Where, owing to inadequacy or absence of profits in any year, the Company proposes to
declare dividend out of the accumulated profits earned by the Company in previous years
and transferred by it to the reserves, such declaration of dividend shall not be made
except in accordance with prescribed rules in this behalf, and, where any such declaration
is not in accordance with the prescribed rules, such declaration shall not be made except
with the previous approval of the appropriate authority.
INTERIM DIVIDENDS
201) Subject to the provisions of the Act, the Board may, from time to time, pay to the Members such
interim dividend as in their judgement the position of the Company justifies.
CAPITAL PAID UP IN ADVANCE WILL NOT CARRY DIVIDEND
202) Where capital is paid in advance of calls, such capital may carry interest but shall not in respect
thereof confer a right to dividend or participate in profits.
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94
DIVIDENDS IN PROPORTION TO AMOUNT PAID UP
203) All dividends shall be apportioned and paid proportionately to the amounts paid or credited as
paid on the shares during any portion or portions of the period in respect of which the dividend is
paid; but if any share is issued on terms providing that it shall rank for dividend as from a
particular date, such share shall rank for dividend accordingly.
204) Subject to the provisions of the Act, the Board may retain the dividends payable upon shares in
respect of which any person is under any provisions of these presents is entitled to transfer, until
such person shall become a Member in respect of such shares or shall duly transfer the same.
DIVIDEND TO JOINT HOLDERS
205) Any one of several persons who are registered as the joint holders of any share may give
effectual receipt for all dividends or bonus and payments on account of dividends or bonus or
other moneys in respect of such shares.
DEBT MAY BE DEDUCTED FROM DIVIDEND
206) No Member shall be entitled to receive payment of any interest or dividend in respect of his
share or shares, while any money may be due owing from him to the Company in respect of
such share or otherwise, howsoever, either alone or jointly with any other person or persons and
the Board may deduct from the interest or dividend payable to any Member all sums of moneys
so due from him to the Company.
207) A transfer of shares shall not pass the right to any dividend declared thereon before the
registration of the transfer.
208) Where any instrument of transfer of shares has been delivered to the Company for registration
and the transfer of such shares has not been registered by the Company, it shall:
(i) transfer the dividend in relation to such shares to the Special Account referred to in
Section 205A of the Act unless the Company is authorised by the registered holder of such
shares in writing to pay such dividend to the transferee specified in such instrument of
transfer and
(ii) keep in abeyance in relation to such shares any offer of rights shares under clause (a) of
sub-section (1) of Section 81 and any issue of fully paid-up bonus shares in pursuance of
sub-section (3) of Section 205 of the Act.
DIVIDEND HOW REMITTED
209) Unless otherwise directed, any dividend may be paid by cheque or warrant or by a payslip or
receipt having the force of the cheque or warrant sent through the post to the registered address
of the Member or person entitled or in case of joint-holders to that one of them first named in the
Register of members in respect of joint-holding. Every such cheque or warrant shall be made
payable to the order of the person to whom it is sent. The Company shall not be liable or
responsible for any cheque or warrant or payslip or receipt lost in transmission, or for any
dividend lost to the Member or person entitled thereto by the forged endorsement of any cheque
or warrant or the forged signature of any payslip or receipt or the fraudulent recovery of the
dividend by any other means.
UNPAID DIVIDEND WILL NOT CARRY INTEREST
210) Subject to the provisions of the Act, no unpaid dividend shall bear interest as against the
Company.
211) Where a dividend has been declared by the Company but has not been paid or claimed within
such time as may be prescribed from the date of declaration to any shareholder entitled to the
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payment of the dividend, the Company shall deal with the same in the manner as directed by
the Act.
212) In the above para, the expression "dividend which remains unpaid" shall mean any dividend the
warrant in respect whereof has not been encashed or which has otherwise not been paid or
claimed.
213) Any General Meeting declaring a dividend may, on the recommendation of the Directors make a
call on the Members of such amount as the meeting fixes, but so that the call on each Member
shall not exceed the dividend payable to him and so that the call be made payable at the same
time as the dividend, and the dividend may, if so arranged between the Company and the
member, to set off against the calls.
CAPITALISATION OF PROFITS AND RESERVES
214) The Company in general meeting may resolve that any moneys, investments or other assets
forming part of the undivided profits of the Company standing to the credit of the Reserve Fund,
or any Capital Redemption Reserve Account, or in the hands of the Company and available for
dividend (or representing premium received on the issue of shares and standing to the credit of
the Share Premium Account) or other reserves or funds permissible for this purpose be
capitalised and distributed amongst such of the shareholders as would be entitled to receive the
same if distributed by way of dividend and in the same proportions on the footing that they
become entitled thereto as capital and that all or any part of such capitalised fund be applied on
behalf of such shareholders in paying up in full either at par or at such premium as the
Resolution may provide, any unissued shares or debentures or debenture-stock of the Company
which shall be distributed accordingly or in or towards payment of the uncalled liability on any
issued shares or debentures or debenture-stock and that such distribution or payment shall be
accepted by such shareholders in full satisfaction of their interest in the said capitalised sum.
Provided that a Share Premium Account and a Capital Redemption Reserve Account may, for
the purpose of this Article, only be applied in the paying of any unissued shares to be issued to
Members of the Company as fully paid bonus shares.
215) A General Meeting may resolve that any surplus moneys arising from the realising of any capital
assets of the Company, or any investments representing the same, or any other undistributed
profits of the Company not subject to charge for income-tax be distributed amongst the
members on the footing that they receive the same as capital.
216) For the purpose of giving effect to any relevant resolution under the above Articles the Board
may settle any difficulty which may arise in regard to the distribution as it thinks expedient, and
in particular may issue fractional certificates, and may fix the value for distribution of any specific
assets, and may determine that such cash payments shall be made to any Member upon the
footing of the value so fixed or that fraction of less value than Rs. 10/- may be disregarded in
order to adjust the rights of all parties, and may vest any such cash or specific assets in trustees
upon such trusts for the person entitled to the dividend or capitalised fund as may seem
expedient to the Board. Where required, a proper contract shall be delivered to the Registrar for
registration in accordance with the provisions of the Act, and the Board may appoint any person
to sign such contract on behalf of the persons entitled to the dividend or capitalised fund, and
such appointment shall be effective.
WINDING UP
234) The liquidator on any winding-up (whether voluntary, under supervision or compulsory) may,
with the sanction of a Special Resolution, but subject to the rights attached to any preference
share capital, divide among the contributories in specie any part of the assets of the Company
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and may, with the like sanction, vest any part of the assets of the Company in trustees upon
such trusts for the benefit of the contributories, as the liquidator, with like sanction shall think fit.
INDEMNITY AND RESPONSIBILITY
235) (a) Subject to the provisions of Section 201 of the Act, every Director, Managing Director,
Wholetime Director, Manager, Secretary and other officer or employee of the Company shall
be indemnified by the Company against and it shall be the duty of the Directors, out of the
Funds of the Company to pay all costs, losses and expenses (including travelling expenses)
which such Director, Manager, Secretary and Officer or employee may incur or become liable
to by reason of any contract entered into or act or deed done by him as such Director,
Manager, Secretary, Officer of Servant or in any way in the discharge of his duties including
expenses and the amount for which such indemnity is provided, shall immediately attach as a
lien on the property of the Company and have priority between the members over all other
claims.
(b) Every officer or agent for the time being of the Company shall be indemnified out of the
assets of the Company against all liability incurred by him in defending any proceedings,
whether civil or criminal, in which judgement is given in his favour or in which he is acquitted
or discharged or in connection with any application under section 633 or other applicable
provisions of the Act in which relief is granted to him by the Court or other Appropriate
Authority.
INSPECTION OF REGISTERS ETC.
236) Where under any provisions of the Act any person, whether a Member of the Company or not, is
entitled to inspect any register, return, certificate, deed, instrument or document required to be
kept or maintained by the Company, the person so entitled to inspection shall be permitted to
inspect the same during business hours, for such periods not being less in the aggregate than
two hours in each day as the Directors may determine.
SECRECY CLAUSE
237)
(i) Every Director, Manager, Auditor, Treasurer, Trustee, Member of a Committee, Officer,
Servant, Agent, Accountant or other person employed in the business of the Company
shall, if so required by the Directors, before entering upon his duties, sign a declaration
pledging himself to observe strict secrecy respecting all transactions and affairs of the
Company with the customer and the state of the accounts with individuals and in matters
relating thereto, and shall be such declaration pledge himself not to reveal any of the
matters which may come to his knowledge in the discharge of his duties except when
required so to do by the Directors or by law or by the persons to whom such matters relate
and except so far as may be necessary in order to comply with any of the provisions as
these presents contained.
(ii) No Member shall be entitled to visit or inspect any works of the Company without the
permission of the Directors or to require discovery of or any information respecting any
details of the Company's trading, or any matter which is or may be in the nature of a trade
secret, mystery of trade, secret process or any other matter which may relate to the
conduct of the business of the Company and which in the opinion of the Directors, it would
be inexpedient in the interest of the Company to disclose.
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97
XX. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
1. Memorandum and Articles of Association of the Company
2. Certificate of Incorporation dated 27th March 2000
3. Fresh Certificate of Incorporation Consequent upon Change of Name on Conversion to Public Limited Company dated 18th March 2008
4. Scheme of Arrangement under Section 391 to 394 and other applicable provisions of the Companies Act, 1956 between Quest Softech (India) Limited, Continental Controls Limited and their respective Shareholders and Creditors for the Demerger of the Software Services Division Undertaking of Continental Controls Limited into Quest Softech (India) Limited
5. Order dated 05th September 2008 of the Hon’ble High Court of Judicature at Bombay approving the Scheme of Arrangement.
6. Copies of Audited Annual Report for Financial Years 2007-08, 2008-09 and 2009-10.
7. Copy of Tripartite Agreement entered into with NSDL & CDSL.
8. Memorandum Of Understanding Signed with Purva Sharegistry (India) Pvt. Ltd. (Registrar & Transfer Agent)
9. No-Objection letter of BSE (letter no. DCS/AMAL/SKS/24(f)/2988/2007-08 dated 27th March 2008)
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XXI. DECLARATION
All the relevant provisions of the Companies Act, 1956, and the Guidelines issued by the Government
of India or the Regulations issued by the Securities and Exchange Board of India, established under
Section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been
complied with and no statement made in this Information Memorandum is contrary to the provisions of
the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or rules or
Regulations made there under or guidelines issued, as the case may be. We further certify that all the
disclosures made in this Information Memorandum are true and correct.
SIGNED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
Sd/-
Director
Place: Mumbai
Date: 11/10/2010