Geodesic Ltd Management Discussions

Basket size

For any business, success is derived from the ability to nurture a manageable product basket; too large a product basket results in an inequitable resource allocation while too small a product basket results in slow growth.

Challenges

At Geodesic, we created too large a product basket that was temporarily incompatible with our managerial bandwidth. These are the challenges that emerged during the course of our existence: the company was unable to allocate adequate resources -managerial, financial or intellectual - to sustain the growth of these products. Some of the products, even as they addressed attractive opportunities, were unrelated to most others and the core objective of the company. The widening of the product basket also translated into a larger team size translating into higher overheads even as most of these products were only at the nascent end of their life cycle.

Counter-strategy

At Geodesic, we have embarked on an effective counter-strategy to correct the skew between the size of our product basket and our existing managerial bandwidth, reflected in the following initiatives:

• We have segregated our product basket into core and non-core areas streamlined with our corporate priorities for the next few years. In line with this enunciated direction, the company has selected to exit from the entertainment space marked by optional consumer spending and will grow its presence in communication cum collaborative technology niche marked by sustainable annuity revenues.

• In line with our decision to defocus on non-core product areas, we will progressively rationalise our basket from 15 products to around eight through sale or phase-out. This is expected to translate into one-time sale revenues on the one hand and sustainable overheads reduction on the other, strengthening our overall viability.

• The company has selected to exit products that consume a disproportionate allocation of resources

- financial, infrastructural and managerial

- without corresponding returns

Result

The projected decline in non-core product spending is expected to translate into a stronger focus on select products that will progressively strengthen their revenues. Besides, a planned reduction in product-related overheads is expected to strengthen financial viability.

Product selection

For any business, success is derived from the ability to select the right products that address unmet needs of customers, occupy spaces with high entry barriers and hold out prospects for sustained year-on-year growth.

Challenges

At Geodesic, we invested in a number of varied products which required a combination of hardware and software capabilities. The company is engaged in diverse (and hence risky) applications across multiple platforms. Besides, the company backed these products by making investments that were disproportionate to the respective potential within these products.

Counter-strategy

At Geodesic, we have strengthened our prospects through a product selection process that reconciles a number of attractive realities:

• The company has selected to work in only those spaces where needs critically exist. The company will increase its attention on the selection of products that offer pioneering features and conveniences.

• The company will increasingly select to create technologically-disruptive products and services that represent a significant advantage (in terms of features, convenience and costs) over existing alternatives.

• The companys products and services will be increasingly woven around a singular premise - the ability to enhance customer value in a significant way whether through ongoing cost reduction or negligible capex required to accommodate the companys products.

• The company has selected to be present only in those spaces where its product offerings would be among the first three in the global market place, distinguishing it from the me-too product clutter and reinforcing its positioning as technology leader. As an extension, such a strategy will enable the company to create markets rather than fight for market share.

• The company has selected to work with only those products with attractive annuity or lumpy revenue implications.

• These products would represent global potential that could over time generate economies of scale, knowledge and brand. Besides, these products would hold out attractive year-on-year prospects, strengthening the overall return on their investments.

• The company will increasingly roll out products and services within the communication and collaboration technology synergic with each other, making it possible to bundle these products together into an integrated offering.

• The company will use a higher proportion of proprietary technology tools that shrink the time-to-market on the one hand and strengthen the companys brand within that global technology niche on the other.

• The company will increasingly outsource specialised non-core competencies (marketing and branding), enabling it to strengthen its core technology focus.

Result

At Geodesic, the benefits of this enunciated strategy will become increasingly visible from 2014-15 onwards, reflecting in revenue growth, increased average revenue per product and sustained product and technology investments that accelerate our virtuous cycle of growth and profitability.

Activity focus

For any business, success is derived from the ability to identify what one is most competent at, graduating that focus into a centre of excellence and outsourcing all non-core capabilities to specialised service providers.

Challenges

At Geodesic, most of our problems were derived from a focus to engage in every activity across the managerial eco system - whether it was product identification, product launch, product branding or product marketing. So even as the companys core competence lay clearly in its ability to identify critical unmet customer needs and plugging them with relevant products in the shortest time delivered at the lowest cost, it selected to spread its resources (managerial and financial) across other areas as well. Over time, this resulted in resource allocation incompatible with the needs of specific product segments, resulting in sub-optimal returns.

Counter-strategy

At Geodesic, we recognise that a rapidly evolving technology company like ours needs robust systemic discipline on the one hand coupled with strategic clarity on the other to extend product potential into sustainable growth.

The company has embarked on the following course-correction initiatives:

• The company has rationalised its active product basket from 15 to eight, thereby increasing managerial attention on each

• The company recognises that each of its products enjoys considerable potential across an extended period; in line with this potential, the company has created an SBU-like structure for each of its products with corresponding manning, targets and accountability

• This restructuring will enable each product to be treated as a profit centre, making it possible for each business line to drive its own growth and the company playing the role of a supervising holding company

• The company has selected to progressively outsource non-core responsibilities (marketing and branding) to specialised service providers in Indianan international geographies

Result

The company has a reasonable foundation to build on. The companys decision to outsource non-core competencies has helped rationalise its people strengthen from a peak of 700 to 200. Besides, increased attention on the core business is expected to increase the number of profitable products in the companys portfolio from two to eight. The company also expects to scale its order book from B60 cr at the close of 2012-13.

Cash flow management

For any business, success is derived from the disciplined management of financials leading to healthy and sustained cash flows that makes it possib le to cover overheads, pay creditors, reward shareho lders and leave a surplus for onward re-investment.

Challenges

At Geodesic, a number of our problems were derived from a combination of unforeseen investment reversals, decline in revenues arising out of the use of inappropriate technologies, skewed inventory, resource misallocation, high overheads, inadequate due diligence and inefficient treasury management.

Counter-strategy

At Geodesic, we recognise that a fast-growing company like ours needs stringent financial discipline for our growth to be streamlined and sustainable.

The company has embarked on the following discipline-enhancing initiatives:

• The company filed claims against two multi-national banks for claims aggregating B112 cr arising out of cheating related to derivative transactions.

• The company expects to unlock financial resources following the sale of non-core products and manpower reduction.

• The company expects to focus singularly on products generating annuity revenues as opposed to products generating no or lumpy revenues.

• The company expects to conserve a large part of its projected cash flow on account of having already expensed much of the required capital expenditure in the last few years.

• The company expects to moderate its overheads through a product-led SBU-like organisational structure that enhances fiscal accountability.

• The company expects to outsource the best professional competencies rather than recruit them full time.

Result

The company expects to make claims on commercial banks, has filed a criminal case for fraud in the Economic Offences Wing against an international bank, expects its restructured product basket to achieve breakeven point at low capacity utilisation and exploit a significant operating leverage to grow revenues without increasing capital expenditure.

Our enduring strengths

At Geodesic, we believe that a number of our competencies will soon return the company to erstwhile health in a sustainable way.

Innovation: At Geodesic, 60 per cent of the revenues earned by the company in 2012-13 were derived out of products created within the company and launched in the preceding three years, emphasising a culture of continuous innovation.

Product focus: Geodesic is a product-focused company where 100 per cent of the companys revenues are derived from products (or outsourced systems).

Focus: Geodesic is a front-end technology company that touches the lives of people, providing scalable opportunities.

Lifecycle management: Geodesic addresses the complete lifecycle of products - product conception, launch, commercialisation and retaliations.

Mind-to-market: Geodesic has demonstrated a capability in being able to launch products across a mind-to-market cycle that is considerably shorter than equivalent international benchmarks.

Pioneering: Geodesic enjoys global respect for working in cutting-edge technology areas. The products pioneered by the company in a challenging global marketplace comprised the following: BBeep, Roundtable, GeoAmida and Mundu IM.

Captive use: Geodesic has demonstrated timely and cost-competitive development of products through a growing use of proprietary technology tools.

Expensed: Over the last few years, Geodesic invested extensively in infrastructure, systems and processes. Much of the companys capital expenditure needs have already been expensed. As a result, prospective business growth is likely to be independent of fresh capital expenditure.

Competence: Nearly 70 per cent of Geodesics employees are technology professionals. The company has applied for 11 cutting-edge global technology patents. Until a few years ago, the company was a reputed A-minus recruiter across the IIT campuses of the country.

Global character: Geodesic is positioned as a global technology company that has selected to be located out of India. Nearly 80 per cent of the companys revenues were derived from foreign exchange earnings in 2012-13.

Customisation: Geodesics cutting-edge products are woven around a range of legacy products belonging to customers, which entail negligible capital expenditure by these customers to upgrade to cutting-edge capability.

Locational advantage: Geodesic selected to manufacture technology hardware products in a fiscally-efficient location. The company has a unit in SEEPZ resulting in tax holidays till 2017.

Maturity: Geodesic has demonstrated a high product development maturity for a company like itself which is in the early life cycle development stage.

Technology: Geodesic possesses a deep understanding in the scalability of networks, earning a rare global respect in this technology niche.

Segments: Geodesic addresses the growing technology spends coming out of large downstream spaces like telecom, BFSI, large enterprises and system integrators.

Customers: Geodesic continues to work with large and visible customers like TCS, HCL, Wipro and America Movil. The company delivered products to internationally-reputed customers. The companys customer list is marked by repeat customer engagement with annuity contracts.

Payout track record: Geodesic demonstrated its commitment to reward shareholders through an aggregated dividend payment of B50.74 cr across eight years as against an FII inflow of B96 cr.

Credibility: Geodesics transfer pricing commitment was treated as a case study by the Indian income tax authorities.

Integrated: Geodesic possesses rounded capabilities addressing last mile delivery requirements across diverse product areas (voice, text, video and processing).

Suite: Geodesic possesses a comprehensive suite of communication and collaborative tools across the enterprise and retail (mobile) applications, which is a rare phenomenon in a world where such competencies are rarely available jointly.

Geodesic in our everyday lives - Our product portfolio

Communication and collaboration space

BBeep

BBeep is a secure cross-platform messenger, which uses your existing data connection to exchange messages and voice calls with your contacts for free. BBeep has features like Privacy Control that let you choose who you can interact with; its Message Encryption ensures data confidentiality.

BBeep uses industry standard encryption algorithms to secure all communication between you and your contacts. This ensures that the message sent by you can only be read by the recipient and no one else. BBeep gives you the ability to choose which friends you want to add to your list. BBeep also sends you a request whenever a contact wants to add you to their list. You can choose to either approve or ignore the request.

RoundTable

Round Table, the latest addition to our list of innovative products in the communication and collaboration platform, is aimed to make Web conferencing hassle-free. It enables users in diverse locations to collaborate, communicate and exchange information without having to download any client.

Using RoundTable, customers can meet people one-on-one or virtually present information to hundreds of participants. Customers can schedule meetings in advance or start an instant online meeting and invite people to join by email, text message or an IM. The product is easy to integrate into every aspect of ones business. One can share any type of content and let meeting participants take control over the desktop for a truly interactive, hands-on meeting experience. One can show documents, applications and desktop to remote attendees in real time.

RoundTable saves costs, boosts employee productivity, reduces sales cycles, enhances revenue and helps in conducting inexpensive training and seminars. Additionally, RoundTable enables team members to communicate and collaborate more naturally anywhere, anytime and across multiple platforms.

RoundTable seamlessly integrates a private/ public instant messaging service and a comprehensive SMS solution to reach out to team members, participants and customers/ vendors across the globe keeping in line with our comprehensive unified communication and collaboration suite.

RoundTable helps enterprises build more effective teams across corporate boundaries, companies and continents across the globe. RoundTables high quality audio/ video conferencing encourages individuals and enterprises to use online meetings more frequently, resulting in enhanced productivity and a quicker return on investment.

Companies of all sizes have opened up their borders and are moving toward the vision of becoming connected organisations. Employees, customers, partners and suppliers are all important constituents of an organisations extended enterprise. Serving the communication needs of a connected organisation means virtually anytime, just about anywhere access to people and information coupled with the need to communicate faster and more collaboratively over a variety of devices or desktop applications.

Mundu IM

Mundu IM is a real-time comprehensive messaging solution that provides multilingual, text and multimedia messaging across seven major IM services. Mundu IM allows the assurance to stay connected with your family, friends and colleagues round-the-clock.

Mundu IM values privacy and does not store usernames or passwords on its servers. Mundu IM has a unique design for each mobile phone platform. Mundu IM is a robust product that takes care of all messaging needs. In the rare eventuality of an issue, its support team is geared to resolve queries in 24 hours.

Mundu SMS

An easy-to-use mobile and desktop messaging service, Mundu SMS is the ideal cost-effective way to send local and international messages. It transmits messages using the Internet, and delivers them as SMS messages to the customers recipients. Mundu SMS provides significant cost savings compared to regular mobile phone plans, more so when you are on roaming.

With simple yet powerful features that allow integration with desktop applications to use lists, Mundu SMS is an indispensable communication choice for the customers business and personal communication needs.

Spokn

There is a growing need to reduce prohibitive international roaming telephony - for those making calls into the roaming number and also for those making calls from the roaming number.

The complexity of the technology on the one hand and the need for convenience ease at the customer end represented challenges.

Geodesics product addressed these challenges. This form of internet telephony (full blown) facilitates audio and video streaming at the cost of a local call. Besides, it enables a global traveler to become a local by providing a transparent local number in the country being visited. The system can be set up in 30 seconds, generates telco income against the incoming call, does not need internet connectivity, can be activated through an SMS and provides this service at a fraction of Skype cost.

Geodesic enjoys a throughput of 20,000 minutes per day and based on the growing trend expects to log 100,000 minutes per day in a quarter.

Financial products and services space

Wealth Console

Wealth Console is an enterprise-ready, client-server Portfolio Reporting and Analytics product integrated with a high-end communications backend. The solution offers engaging analytical views of an investors portfolio using a sophisticated user interface. Interactive visualisation automatically categorises transactions and asset classes so clients can see the big picture, up close and personal.

Wealth Console is a single-point, online source for providing clients advice on how to grow their personal wealth. The enterprise can provide investment ideas, stock quotes, charts, business news, market research, and can be a learning centre for all financial information, with a special emphasis on investing.

Wallet WAP

Wallet WAP is the key to Anytime-Anywhere delivery of market and investment information. Wallet WAP is compatible with all mobile devices and enables brokers and financial institutions to reach their client base, irrespective of where they are.

Wallet WAP allows users to view portfolio, stock quotes, price charts, market news, screeners, financial statements and results on any mobile device. It integrates seamlessly with a financial institutions back-office to allow rich views of portfolio data. It is the fastest and the most direct channel to keep clients informed about the latest happenings in the markets.

Spyder

Spyder is an advanced Client Relationship Alignment Management System for the complex needs of a financial institution which sells intellectual product(s) manifesting as opinion (backed by research), market insight, know-how and capability.

Spyder incorporates specific concepts that transform the system from being just a useful client database to an essential tool that helps identify and coordinate revenue opportunities, reduce operational costs, and manage distributed resources.

Content delivery platform

Mundu Radio

Mundu Radio is an Internet radio solution that offers high quality digital audio music on mobile handsets and desktops. Mundu Radio gives the customer access to over 35,000 Internet radio stations and other content such as news, sports, finance, talk shows and much more on the mobile. The customer can manage the playlist, personalise, and tune into the favorite genre whenever wanted.

Mundu TV

Mundu TV is a Live-Internet TV service that offers subscribers the opportunity to view live television channels and archived content using wireless and broadband Internet on mobile phones and desktops. During the fiscal period 2012, Mundu TV was launched on Blackberry and Windows 7 phone platform.

Electronic computing space

GeoAmida - An innovation suite for reaching the unreached

In the last two decades, globalisation brought a plethora of opportunities even as some people live under $2 a day. A number of opportunities cannot be realised due to a lack of access to knowledge, capital, healthcare and even unique identification.

Geodesic, with GeoAmida, aims to provide enabling technologies to flatten this pyramid with the following objectives:

• Bring access to banking within everyones reach

• Bring medical services at the doorstep of even the remotest hamlet

• Provide rightful social benefits to eligible people without leakage

• Many more such services

In short, we develop innovative technology to help governments, banks and enterprises to deliver quality service to the right person at their doorstep profitably.

Technologies to implement these steps must meet the following key requirements:

• Uniquely verify the identity of individuals

• Perform secure online transactions

• Function reliably in the remotest corners of the country

• Flexibly handle multiple language needs, educational and literacy levels of the end users GeoAmida, with its innovative technology, reaches out to transform their lives.

GeoAmida is the worlds first handheld, Linux-based, biometric, smart card-integrated, multi-application platform that enables governments, financial institutions, enterprises and NGOs, to reach their remotest customers.