>GEODESIC LIMITED (BONANZA)

Company Background
The Company is an innovator in software products focused on Information, Communication and Entertainment for mobile phones and desktop computers under the 'Mundu' brand name for the retail segment. Geodesic Limited derives a major portion of its revenues in the enterprise segment from the integrated content, Customer Alignment and Relationship Management (CARM), real-time communication and collaboration suite. Geodesic offers a variety of services like Instant Messenger (IM), Internet Radio, and Voice over Internet Protocol (VoIP), remote desktop, etc., on the smart phone. The company has subsidiaries in USA, Hong Kong, Sweden and Singapore in addition to Indian Subsidiary ChandaMama Ltd.

Investment Rationale
■ Continuous Top line and Bottom-line growth: - The Company has reported a topline and bottom-line growth of over 95% in the last five years. The topline increased at CAGR of nearly 100% from Rs 40Cr in FY 05 to Rs 642 Cr in FY09. Bottom-line has grown from Rs 19.09 Cr to Rs 282 Cr at a CAGR of 96%. With a niche product line we believe that the company would continue to post a growth in topline in the coming years. The company had acquired 8 new clients in the last quarter. However, due to pricing pressures the sales and bottom-line to remain flat for FY10 but a significant uptick in both topline and bottomline from FY11 onwards is expected as pricing parity is restored.

■ Focus on developing economy to yield growth in topline: - India is adding close to 8-10 Million subscribers in the telecom Sector every month. At present, India has close to 1.6 Cr internet enabled cell phone user. Tele density is increasing at a fast pace and so is the mobile device Industry. Similar trend exists in other developing economies such as China, Africa, Latin America and Middle East. Company is actively involved in increasing its presence in these economies. The company in last quarter had bagged clients in Latin America. The company plans to intensify focus on these geographies as it believes that these areas would give company incremental growth in the coming years.

■ Technology Convergence between IP, GSM and CDMA channels:- A constraint on spectrum would push GSM and CDMA companies to adopt IP based telephony. More over, to serve the ever increasing subscriber base, particularly in India, Africa and Latin America . VOIP,which is still awaiting approval, would provide the necessary impetus for the company’s growth

■ Constant product Research, Development and Launch: - The Company has been constantly developing new products. The company was the first to come out with IM for I-Phone, the Instant Manager (IM) was well received. The company has constantly upgrading its products and launching new products. The company is launching SPOKN, a completely new branded retail VOIP service in the month of September and this is expected to be a major revenue earner for Geodesic going forward.

■ Planned Capex ahead and acquisition in the offing- The Company plans to set up a facility for Simputer and push forward for acquiring new products. The management has stated that it is in talks to acquire a company in Europe for a consideration of USD 15-16 Mn. The targeted company is in the social networking space. The deal is expected to close down by Dec in Q3FY10.

■ Inorganic growth from FCCB proceeds worth Rs 500 Cr for Acquisition: - The Company had raised USD 125 Mn through FCCB in Jan 2008 for acquisitions abroad. It had also bought back FCCB worth 8.5 Mn at a discount. The company has USD 113.5 Mn worth of FCCB outstanding conversion in 2013 at a price of Rs 256 per FFCB and a maturity yield of 6.6%. Geodesic has a past track record of acquiring companies, like E-dot, Picopeta and Chandamama, and improving their performance substantially, post-acquisition. Company has utilized some of these funds for investment in Subsidiaries and product marketing. Going forward, we expect the company to scout and acquire companies abroad. This would aid the company in reporting a growth in topline and Bottomline.

■ Dividend history: - The management has stated that it proposes to step up the dividend payout to 10% from 5% at present.

■ Cash and Bank Balance:-Company has cash and bank balance worth Rs 84 per share. If cash from proceeds of FCCB are not considered, Company has nearly Rs 30 per share of cash on its books.

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