abm knowledge ware ltd (code 531161) - hbj capital's (mps unit) - business insight penny stock...

8/6/2019 ABM Knowledge Ware Ltd (Code 531161) - HBJ Capital's (MPS Unit) - Business Insight Penny Stock Reco for Aug'10

http://slidepdf.com/reader/full/abm-knowledge-ware-ltd-code-531161-hbj-capitals-mps-unit-business 1/59

ABM Knowledgeware LtdABM Knowledgeware Ltd promoted by Mr. Prakash B. Rane, is one of the few IT companies in India withexclusive focus on E-Governance since 1998. Within a short span of time it has attained a leadership positionin the niche space of E-Governance. The company has conceptualized various pioneering and successfulstrate ic solutions in E-Governance which have become benchmark in the industr . ABM was recentl

HBJ Capital, IndiaWeb: www.hbjcapital.com

E-Mail: [email protected]

Call: +91 98867 36791

awarded the "NASSCOM Emerge 50 Leaders 2009", which acknowledges ABM's achievements as top 10emerging companies in India.

HBJ Capital’s “Business Insight” stock for the month of August 2010



Best Buying Price…

2 Phase Buying Strategies Suggested [Always buy in SIP ways]

1st Phase : Buy at the current price range Rs 65-68 [60% of investment]

2nd Phase : Add if the price falls down to Rs 50-55 [40% of investment]

>>>Expect at least 10-12 times returns in next 3 years time frame!!!

Note:- The above Best buying price is based on the E-mail communication sent to the“Penny Stock Package” subscribers on 19th Aug’10.



HBJ Cap is growingfaster than ever.

HBJ Capital can be your50x in 3yearsinvestment.Ask how?

Aim to become #1 -E uit Research

What Next?HBJ Capital – “Specialists in discovering multibagger stocks” is

launching more & more innovative products & services withsingle focus on long term wealth creation!!!

Company in Indiaby 2012, the same

year we have planned to get it listed at BSE/NSE.



Table of Contents

From the Desk of CEO, HBJ Capital – (Page – 5 )

Overview : ABM Knowledgeware Ltd – (Page – 7) E-Governance – (Page – 10)

The $10 Billion Indian E-Governance Market – (Page – 15)

EIC Framework – (Page – 26)

ABM Knowledgeware Ltd – (Page – 27)

Pro ects of ABM – Pa e – 32

Ingredients of ABM – (Page – 39)

Intellectual behind ABM – (Page – 43)

Peer Comparison – (Page – 46)

Financial Analysis – (Page – 48)

Investment Rationale – (Page – 53)

Risks Involved – (Page – 56)



Flow of information is must todevelop a nation. If E-

Governance in India is well

organized, no one can stopIndia to become ‘Super Power‘by 2020. E-Gov will be in full

swing by 2014. Govt. isplanning to invest 40K crores

in the years to come.Companies operating in this

sector will reap benefits out ofthis opportunity.

From the desk of CEO, HBJ CapitalDear Investors,

In the past, service delivery mechanisms of thegovernment departments left much to be desired in India.

Cramped spaces; shabby ambience; discourteous dealingpersonnel and their chronic absenteeism; demands ofgratification; inefficiency in work; long queues; procrastinatingofficials; procedural complexities; etc., were some of theundesirable features of the working of the governmentdepartments.

Consequently, a visit to government department by

a citizen to make use of any service used to be a harrowingexperience. With the rising awareness amongst the citizens ande r e er exper ences w e pr va e sec or – e eman

for better services on the part of government departmentsbecame more pronounced.

E-governance, which is a paradigm shift over thetraditional approaches in Public Administration, meansrendering of government services and information to the

public using electronic means. It has ushered in transparencyin the governing process; saving of time due to provision ofservices through single window; simplification of procedures;better office and record management; reduction in corruption;and improved attitude, behavior and job handling capacity ofthe dealing personnel.



Contd..Applying for local government services and accessing official data may soon become easier, with theinformation technology department looking to roll out an NeGP, e-District etc. All of India's 626 districtswill have to automate 6-10 services, such as pensions, ration cards, filing of cases in revenue courts,

issuance of caste, marriage, income and employment certificates, etc. E-district is one of the 27 missionmode projects being executed as part of India's push towards e-governance.

In all, the total outlay for all projects together is almost INR 40,000 crore, inclusive of both capitalexpenditure and the operational expenditure. Almost INR 10,000 crore has already been done, andanother INR 30,000 crore will be incurred during the remaining project life.

MPS is proud to bring you the “Business Insight” pick of the month – ABMKnowledgeware Ltd.

ABM Knowledgeware Limited is the fastest emerging company in the E-Governance space. Companyhas recently bagged order worth 60 crore. It has to replicate its software in 231 locations in Maharashtra.ABM has already started witnessing opportunities in other cities and states. Looking forward it is tryingto capture the market of commonwealth countries. This is an opportunity for ABM to make its strongfooting in industry and investors should take a long term perspective to get the best return from this

stock.

Regards,

Kumar Harendra, CEO, HBJ Capital, www.hbjcapital.com & www.multibaggerpennystocks.com

#912, 1st "F" Main Road, Girinagar 2nd Phase, BSK 3rd Stage, Bangalore – 85

Call : 098867 36791, 080 6568 1134 or Mail : [email protected]



Overview



ABM Knowledgeware Ltd – Overview



Some key stats.. PE = 9.95 On the basis of annualized forward earningsthe stock is available at a PE of 5-6 which is a discount compared to the industry standards.

Book Value = Rs 26.00 - The current stock price at Rs84.50 is trading at about 3.45 times its book value price.

Shareholdings : No Of shares [% Share Holding ] Total FII: 3.2 lakhs [3.22%] Total Non-Institution: 18.67 lakhs [18.67%] Total Bodies Corporate Holding: 18.11 lakhs

[18.11%] Total Promoters: 60 lakhs [60%]

CMP = Rs 84.50 (August 27th 2010) – The stockwas suggested on 19th August’10 when it wastrading at Rs 66.95. Since then the stock hasappreciated by almost 26%, while it touched a

peak of Rs 98.45

52 week’s high/low = Rs 98.45/40.60 – The stockrecently made a new 52 week high. As it is inthe strong bullish phase it can continue to makenew highs.

Peak share price = Rs 98.45 (24th August ‘10) – Total Outstanding Shares : 100 lakhs [100 %]

Debt/Equity = 0 [Mar’10] ROCE = 44.5% [Mar’10] RONW = 29.5%[Mar’10] Current Ratio = 2.31[Mar’10] Delivered Volume per day = 45.87% BSE Code 531161

The stock scaled a ew high ust a few daysback. The stock deserves a re-rating and we maysee ABM continue making new highs.

Trading volume = Avg. 1.42 lacs shares

(approx) per day –Earlier the volume was lowhowever in the last few days the liquidity hasimproved with investors rushing in.

EPS = Rs 8.71 – Company has recorded an EPSof Rs 8.71 on trailing twelve months basis.



E-Governance



What is E-Governance???E‐Governance is slowly becoming a buzzword in the corridors of power. What actually then is E- governance?

In simple terms Electronic Governance can be defined as giving citizens the choice to accessgovernment information and services wherever & whenever they want.

There are three aspects to the E-Governance –1. IT enabling the government functions - something similar to back-office automation,2. Web-enabling the government functions so that the citizens will have a direct access, and3. Improving Government processes so that openness, accountability, accuracy, speed of operations,

effectiveness and efficiency may be achieved.

Typically, this would mean web-enabled applications, but E-Governance would also cater toautomated applications for the government sector, which helps in achieving SMART governancewhich some define as:

Moral Accountable/ Accurate Responsive and Transparent Governance

ICT (Information, Communication & Technology ) model helps to develop strong and healthyrelationship between:

G2C (Government & Citizens),

G2B (Government & Business Enterprises) and

G2G (between Governments).



Benefits by E-Governance.. The government to government (G2G) sector:

It is felt that governments at the union, state and local level must enhance and update their owninternal systems and procedures before electronic transactions with citizens and business areintroduced. There are number of advantages with G2G initiatives:

1. Cost Savings,2. Increasing the speed of the transactions,3. Reduction in the number of personnel necessary to complete a task,4. Improving the consistency of outcomes and5. Improvement in the management of public resources.

The Government to citizen (G2C) sector:Facilitates citizen interaction with government, which is primary goal of e-government.

Government to citizen initiatives also strives to enhance access to public information through the useof websites and kiosks. There are number of advantages with G2C initiatives:

1. Single Window replaces various departments,2. Improves efficiency,3. More reliable outcomes,4. Direct contact with concerned persons &5. No agents\ brokers required.

Transactions, such as payment of taxes, renewing licenses and applying for certain benefits, will beless time consuming and easy to carry out. Citizens can carry out variety of tasks, especially those thatinvolve multiple government departments, without initiating contacts with each governmentdepartment individually.



Contd… Government to Business (G2B) sector:

Includes both the procurement of goods and services by the government as well as the sale ofsurplus government goods to the public online.

There are two motivating forces behind G2B:

1. The business community prefers to carry out its activities such as sales, procurement, and hiringthrough electronic means. There are large numbers of software companies, which are producingnumber of products focusing on performing routine business activities on line.

a) It benefits to extend the cost savings realized through Business to Business (B2B) transactions totheir business with union, state and local level governments.

b) It helps to improve the efficiency of the operations in G2B & B2B.

2. The second reason for the growth of G2B is the demand for cost cutting and efficient procurementsin the government. Developing countries, where there is great pressure to minimize costs due toshortage of funds, G2B are being encouraged by the governmental agencies.



Benefits of E-governance..

Externally

1. ‘Single Window’ for various

Internally

1. Greater coordination &

ICT-enabled connected governance

contributes to:

.2. Faster service delivery3. Greater efficacy4. Increased flexibility of service

delivery

5. Innovation in service delivery6. Greater participation7. Greater citizen empowerment8. Better control & management

2. Avoidance of duplication3. Reducing transaction costs4. Simplifying bureaucratic procedures5. Greater efficiency

6. Enhanced transparency7. Information sharing between

agencies8. Security of information management



The 10 Billion Dollar IndianE-Governance Market !!!



E-Governance: Structure



The Government of India had approved the NeGP in May 2006 with the vision: "Make allGovernment services accessible to the common man in his locality, throughout common servicedelivery outlets, ensure efficiency, transparency & reliability of such services at affordablecosts to realize the basic needs of the common man".

The NeGP currently consists of 27 Mission Mode Projects (MMPs) and 8 Support Components tobe implemented at the Central, State and Local Government levels. These include Projects such as

Income Tax,Passport/VISA

Company Affairs Central Excise

..National e-Governance Plan

Pensions Land RecordsRoad Transport Property RegistrationAgricultureMunicipalitiesGram Panchayats (Rural) Police Employment Exchange E-Courts



Contd…

Government has already spent about INR 10,000 crore ($2.91 billion) on such projects & is expectedto pump in another INR 30,000 crore in other various projects under the National e-GovernancePlan (NeGP) in the next few years.

14 major E-Governance projects, including some high-profile ones such as MCA-21, have alreadygone live. The Indian government aims to have all 27 mission mode projects envisaged under theE-Governance blueprint ready by end 2014.

State Wide Area Network (SWANs): Government has approved the scheme for establishing StateWide Area Networks (SWANs) in 29 States and 6 UTs across the country at a total cost of Rs 3334

crore.

Common Services Centre's (CSCs): The CSC scheme envisages the establishment of 100,000broadband Internet - enabled kiosks in rural areas, which would deliver government and privateservices at the doorstep of the citizens.

An additional 10,000 CSCs would be set up in the semi-urban/urban areas.

The bid process for selection of the Service Centers has been completed for a total of 92560 CSCs in19 States.

80,000 Common Services Centre's have been set up across India; the number is expected to reachone lakh by the end of the fiscal year.



Contd…

State Data Centers (SDCs): State Data Centers are proposed to be established across 29 States & 6Uts in the country along with Disaster Recovery (DR) in order to provide shared, secured andmanaged infrastructure for consolidating and securely hosting State level data and applications.

The SDC scheme was approved by the Government in January 2008 at a total cost of Rs 1633crore.

DIT has sanctioned SDC proposals of 23 States at a total cost of 1077 crore.

Government of India has approved a Capacity Building Scheme for setting up State e-Mission

Teams (SeMT) at a total cost of Rs 313 crore in January 2008.

Over 600 e-government services are now available electronically.



E-District…

E-District has been selected as a National MMP under the NeGP and is to be implemented by theDIT. E-Districts are the de facto front-end of government where most Government-to-Consumer or

G2C interaction takes place. The E-District project was conceptualized to improve this experienceand enhance the efficiencies of the various Departments at the district-level to enable seamlessservice delivery to the citizen.

Front-ends under the scheme, in the form of citizen facilitation centers, are envisioned to be built atDistrict-, Tehsil-, Sub-division- and Block- levels. Village-level front-ends would be establishedthrough Common Services Centre's (CSCs) for delivery of services.

More than 55 services will be delivered through this medium to the citizens. Few of them arementioned below:-

Certificates: Creation and distribution of certificates for income, domicile, caste, Birth, Death etc. Licenses: Arms Licenses etc. Public Distribution System (PDS): Issue of Ration Card, etc. Social Welfare Schemes: Disbursement of old-age pensions, family & widow pensions, etc. Complaints: Related to unfair prices, absentee teachers, non-availability of doctor, etc. RTI: Online filing and receipt of information relating to the Right to Information Act. Linking with other e government projects: Registration, Land Records, and Driving Licenses, etc. Information Dissemination: About government schemes, entitlements, etc.Assessment of taxes: Property tax, and other government taxes.Utility Payment: Payments relating to electricity, water bills property taxes etc.



MCA-21

The MCA 21 project is an outcome of the MCA's quest for simplifying forms, making forms e-

centric, promoting online transactions, and reaching out to stakeholders in an economy that isgrowing fast and adjusting to the demands of globalization.

MCA 21 services are available 24X7 anytime and anywhere through MCA Portal.

With more than 8 Lakhs registered entities, the MCA has over 60 million pages of corporateinformation in its database.

Procedures relating to sorting, storage and retrieval of paper-based records were cumbersome and

time-consuming. The portal registered an average of 17 Lakh hits per day. The e-filings till then

totaled 23.77 lakhs.

The MCA 21 has obtained the Excellence in Government Process Re-engineering Category Award

2007-08 (gold).



E-Government Initiative @ State Level

Project JEEVAN in Delhi.

Project SAMPARK in Chandigarh.

Project BHOOMI in the state of Karnataka.

Project ASHA, SANWAD in the state of Assam.

Project E- MITRA service centre's in the state of Rajasthan.

Project GYANDOOT, ROGI KALYAN SAMITIS, in the state of Madhya Pradesh.

Project KOSHVAHINI, WARANA "WIRED VILLAGE“ in the state of Maharashtra.

Project SUSTAINABLE ACCESS IN RURAL INDIA (SARI) in the state of Tamil Nadu.

Project JANANI SUVIDHA YOJANA, AKSHAYA, SWIFT, PEARL, ASRAYA in the state ofHaryana.

Project E-SEVA, BHU BHARATI, E-VILLAGE CHILUVURU, UNPAN virtual library & smartgovernment in the state of Andhra Pradesh.

Project JAN SEVA KENDRAS, THE CHIRANJIV YOJANA, NIRMAL GUJARAT, SWANTAHSUKHAY in the state of Gujarat etc.



Challenges for E-Government in India:

The governments both –the Union and the states must make earnest efforts to complete the daunting, butformidable task of quicker and effective E-government programs by:

1. Making a policy choice in favour of computerization to overcome radically.

2. Serious efforts would be required to mobilize resources for this arduous job. One way to deal withthe situation could be that governments enter into arrangements for leasing of computers.

3. Establishing complete connectivity between various ministries and departments so that transfer offiles and papers could be done through Internet thereby choosing efficacious speed as an alternative

to manual labour.

4. Supplying information to the public in a language that they understand and are comfortable with,and generally, it is the local language. As technology is available by which transliteration fromEnglish into other languages can be made, therefore, the problem is manageable provided there isenough motivation to do this onerous task.

5. Changing the mindset of the government employees who are used to working only in the manualmode. This is a big task and needs patience and careful planning. Workshops, seminars, and trainingprogrammes are required to be organized to spread awareness among the employees at all levels.

6. Build supporting infrastructures of power and all weather surface transport system to bridge thedigital divide between the rural and urban India.



Statistics after few E-Governance Projects…

State Project Ease of Use Total

Assam 10 10 10 10 10 8.9

WB Land Records – Hoogli 9 7 9 10 9 7.6

WB Tele-Medicine Midnapore 10 9 10 10 10 8.8

WB Gram Panchayat Kanaipur 10 7 9 9 9 8.6

WB 8 10 10 5 10 8

Sikkim CIC – Temi 10 9 10 8 10 8.9Sikkim Land Records – Namchi 10 8 10 10 10 8.1

Simplicity of

procedure

Time Savings

compared to

manual

Affordable

cost of

service

Reduction in

Corruption

Rajiv Gandhi Computer Literacy Program

Computer Literacy and

Training Program

AP Rural e-seva – West Godavari 10 8 10 10 9 8.9

Delhi Transport – IP Estate 10 8 10 10 8 8.1

HP 9 9 9 10 8 8.2

HP Land Records – Suni 9 8 9 5 9 7.6

Punjab Suvidha – Kapurthala 10 8 10 9 9 8.9Punjab Property Registration – Sang 9 8 9 10 4 7.4

Punjab Transport – Ropar 10 9 9 10 7 7.7

Center IT in Judiciary – NIC 10 9 10 10 9 8.9

Center Customs – NIC 8 8 9 10 6 7.6

Average 9.5 8.4 9.6 9.1 8.6 8.3

Property Registration – Simla

rural



Key Ingredients of Govt Transformation..

• Processorientation

• DepartmentCentric

CustomerCentric

ServiceOrientation

• DepartmentView

• OutputBased

Assessment

IntegratedView

OutcomeBased

Assessment

-



EIC Framework..

Expected GDP is 8.6

Total Spending for FY2010-11 is Rs.11.87 trillion. Thetotal FII inflow in equity

during January to May 2010

Government spending for E-Governance sector is

projected to be 40,000 Crore

and this gives boost to ITCompanies operating in this

ABM has bagged an order of60 crore and it grabbed a

project in 2008 worth Rs. 116

crore from MCGM. was . m on

while it was US$ 5931.80million in debt.

sector. Govt has already spent10,000 crore.

order book.

In such a bullish Economy, and with a huge investment in e-Governance sector, ABM hasvery good future prospects. The results of June 2010 are telling the growth story of ABM.

ABM has been selected to replicate the KDMC solution at 231 locations in Maharashtra.



ABM Knowledgeware Ltd



Basic Details..

ABM Knowledgeware Ltd., (ABM) is an IT Company listed on Bombay Stock Exchange. By a roughestimate, ABM’s e-Governance Solutions altogether are delivering 4.2 Million G2C and G2B services per

year.

ABM has developed a thorough insight in implementing and institutionalizing e-Governance in theIndian context, which is evident from the various projects implemented by ABM so far.

NASSCOM recognized it as one of “The Top 10 Emerging IT Companies in India” in 2009 which amplydemonstrates the capabilities and the growing stature of ABM in the IT space.

ABM’s Product MAINet ™ has been adopted by Govt. of Maharashtra for roll out in all the 231 UrbanLocal Bodies (ULBs) across the State of Maharashtra.

Recognitions such as 13th and 120th fastest growing Technology Company in India and Asia-Pacificrespectively by Deloitte in their Fast 50 and Fast 500 programme in 2008.



Basic Details..

ABM has grown over 600 percent in terms of revenues and human assets in the last 5 years.

Current business focus is on niche domains such as

Providing e-Governance solutions to Municipal Bodies (G2B & G2C);

CRM solution for Electricity Distribution Companies (G2C) and

Automation of Billing, Accounting and Collection for Water Distribution Authorities (G2B,G2C).

The company first came to the public’s notice when it was doing a project called “SETU” for ThaneCollector ate.

ABM has a business partner called Seven Seas Computers in Dubai and this entity has been working

closely with ABM to promote its UAE business.

Solutions are mostly in use in the Western states of India and now ABM is looking at scaling to other partsof India.

Company is also planning to grow inorganically and it is looking at various options in the UK.

il



Few Milestones.. In 1998, Empanelment in the Turn Key Solution Providers in IT (TSP) panel of Government of

Maharashtra with the first ever 15 IT Companies.

Successful and path breaking Pilot Projects of e-governance in Housing Department Mantralaya (1999),

Municipal Corporation of Greater Mumbai (Citizen Facilitation Center – CFC) in 2000, Thane Collector ate(Setu ®) in 2000 which were subsequently replicated on mass scale by govt.

CSI-YITP Award for ABM’s e-Gov products: ABM CARE ®and ABM MOIS 2000®.

A largest Municipal Body in Asia replicated ABM CFC ®in all their 24 Municipal Wards as the first CitizenCentric e-Gov initiative in 2002.

Govt. of Maharashtra announced Rajiv Gandhi Award for Administrative Reforms for ABM’s Setu ® at

CSI Award for Best Citizen Centric Project for Setu ® at Thane Collect orate in 2003.

Launched ABM’s prestigious e-Governance Solutions viz. ABM MAINet ® in Kalyan Dombivli MunicipalCorporation (KDMC) as the first Comprehensive e-Governance solution for Urban Local Bodies in India.

KDMC’s e-Governance Project bagged "Intelligent Enterprise Award" for MAINet ™ by India ExpressGroup at Colombo.

Entry into Consumer Relationship Management(CRM) Space for Power Sector through a multi-crore orderfor ABM CFC ® from an Electricity Distribution Company for roll out of ABM CFC ® all overMaharashtra.

F Mil



Few Milestones.. KDMC was awarded with "e-Governance Champion Award" for outstanding contribution in the domain

of e-Governance by Dataquest, where ABM’s software solution –MAINet ™ has been implemented.

Empanelment with State Governments of Goa, Punjab, Haryana, Uttar Pradesh and National Institute of

Smart Governance.

Won the prestigious "Wisitex India Urban Development Lead Organization of the Year-InformationTechnology" award, conferred by Minister Urban Development ,Govt of Goa.

Received "Deloitte Technology Fast 500" award as120th Fastest Growing Technology Company in Asia-Pacific.

Received "Deloitte Technology Fast50" award as13th Fastest Growing Technology Company in India.

Bagged a single order of Rs. 116 Crores from Municipal Corporation of Greater Mumbai for SAPOptimization, enhancements, change management etc.

Winner in " NASSCOM EMERGE 50 LEADERS " in recognition of ABM's outstanding work in domesticmarkets as TOP 10 emerging IT companies in India

Ministry of Urban Development, Govt. of India has awarded National Urban Water Awards (NUWA) onMunicipal Corporation of Greater Mumbai (MCGM) for ABM’s Water Billing & AccountingSoftware viz. : ABM AQUA ®, which is being used across their 24 municipal wards.

ABM has been awarded E-Government contracts worth Rs. 60.03 Crores for implementing its e-Governance Software - ABM MAINet ® in 231 Municipal bodies all over the state of Maharashtra.



Projects of ABM

P j t @ KDMC



Project @ KDMC Objective of creating a system driven Municipal Corporation with highest levels of Transparency,

Accountability and Citizen Servicing Standards, Kalyan Dombivli Municipal Corporation (KDMC),initiated its journey into e-Governance in 1999. KDMC took a decision for total computerization of theCorporation with a holistic approach. The entire e-Governance solution was conceptualized, designed,

developed and implemented by ABM Knowledgeware Ltd. This was implemented to re-design the entire400 process which was carried out by KDMC.

Hon. Chief Minister of Maharashtra, Shri Vilasrao Deshmukh, dedicated this e-governance project to thecitizens of KDMC on 24th of September 2002 & expressed that this pattern could be replicated in otherMunicipal Corporations.

Today, with total 7 CFCs, located in various ward offices of KDMC, connected by Leased Lines, Fiber' -, ,

computerization project in Maharashtra and perhaps across India, and has set an example of goodgovernance for all Government Organizations in India.

Government of Maharashtra has taken decision to roll out this software across all the ULBs inMaharashtra. Ministry of Urban Development, Govt of India has short listed this solution for

recommendation to ULBs covered under funding for JNNURM scheme which is meant for up gradation ofthe urban infrastructure and urban governance .

‘This project gave a rise to ABM and it was one more to add on the kitty of Mr. Rane. ABM got severalorders due to this projects. ABM started making mark in e-governance sector and played a vital role toimprove the Government.’

j



Projects..

It was focused on the Decentralization and

Computerization of entire Assessment, Billingand Collection of Property Tax for all 24 wardsoffices at MCGM.

MCGM serves over 1.27 crore (12.7 MN) citizenswith the help of approximately 1,17,000 staffdeployed over 68 departments spread across 437

square kilometers span.

The MCGM (Municipal Corporation of Greater

Mumbai) project has gone live in April 2007. Thiswould cover core functions like Finance,Materials Management, Project Systems, HumanResource, Funds Management, PlantMaintenance and Real Estate. Apart from this, itwould also cover a specific Public Sector functioni.e. Citizen Portal and Ward Management.

Initially the value of this contract was US$ 10Mn,

Property Tax Assessment and CollectionDepartment (A & C) is one of its largestdepartments that contribute more than 25% ofrevenue to Municipal Corporation of Mumbai.

The key functionalities of this department areAssessment of Properties, Billing and Collection.Approximately 2500 staff contributes towardsfulfilling the activities of this department from 24ward offices across Mumbai.

which includes engagement with MCGM for 5years, after implementation during the term ofthe project.

ABM bagged this because of its Quality Service

and creditability in MCGM.

ABM provided Subject Matter Expertise, softwarelicenses and entire post-implementation supportto MCGM.

P j t



Projects..

Citizen Facilitation Centre (CFC) is named Setu

(means Bridge) signifying a bridge of facilitationbetween citizens and the government.

Objective: Time Bound Service Delivery tocitizens by establishing a computerized CFC forrendering various Citizen Services in a phasedmanner but with more convenience, speed and

measurable performance without compromisingthe credibility of the process.

ABM presented a comprehensive proposal, which

also involved high degree of BPRs and newmethods of inter-departmental collaborations forover 20 departments and agencies.

It was decided to first implement first phase ofthe project with the help of Thane BelapurIndustries Association (TBIA).

This center was named as “Ud o Setu”. ABM

“Setu®” was designed, developed andimplemented by ABM in year 2000.

This project was rolled out by the state Govt in

the entire state after its initial success in ThaneDistrict.

This project went on to win several awards atstate and national level.

commissioned the center within 3 months ofreceiving the work order in August 2004.

It provided more than 5000 services in initial 2years period.

The initial scope was limited to direct servicesprovided by DCI and MIDC. Later 3 services ofMaharashtra State Pollution Control Board(MPCB), were also added to the kitty.

P j t



Projects..

MCGM serves over 1.27 crore citizens.

MCGM provides are almost 100+ services and itgives immense scope for ABM in near future.

ABM implemented the entire solution for water

billing and accounting at MCGM.

ABM has successfully implemented Birth &Death, Property Tax Assessment and Billingsoftware and Water Billing modules at MBMC.

For Market License, Accounts, Complaint AndRedressal Monitoring (CARE) are also in demandby MCGM

Database is centralized, so consumers can make

payment of AQUA bills in any of 24 wards ofMCGM spread across the entire city .

In near future, this solution can be in demand as

others are and can be asked to replicate it overother Municipal Corporation.

Around 1.5 Lakhs properties are assesses byMBMC under this e-Governance implementation.

MBMC is evaluating possibility of increasing thescope of existing e-Governance solution by

opting for comprehensive solution for e-Governance as implemented by KDMC(MAINet ™ –Municipal AdministrationInformation Network)

P j t



Projects..

Based on the evaluation of bids andrecommendations from Delloitte, MSEDCLselected ABM Knowledgeware Ltd. in 2005, forproviding the application software and forproviding manpower for to operate the CFCs.

ABM delivered the application software, ABMCFC® as per the envisaged scope of CFC

Major area of revenue generation for any ULB isfrom the property tax collected.

To tap on this department UMC wanted toimplement a solution for property assessmentand billing.

UMC has approved the project of implementationunc on ng. opera e e p o s

March 2010.

Thus, the 50 pilot CFCs were operational forvarying periods, ranging from thirty six monthsto fifty one months.

ABM is aiming at all the 500 divisions toimplement its software.

o more compre ens ve scope o e- overnance asa next step and the project is underimplementation under the JNNRUM scheme ofGovt. of India.

UMC has chosen MAINet ™ for this project.

Total properties being assessed by UMC isapproximately 1.6 Lakhs

P j t MAI t™ R li ti



Projects.. MAI et ™ ReplicationGovt. of Maharashtra has undertaken an ambitious

project of rolling out e-Governance in 231 municipalbodies across the state.

Around 42% percent of the urban population inMaharashtra will get better citizen services as a result of

this project.

Citizen centric e-Governance will be in place for all theULBs b coverin all the Citizen services Revenue De tAccounts, Portal, MIS and integration with GIS.

ABM has been selected as the Software ImplementationPartner (SIP) for this project.

ABM has targeted to complete it by 2012 whereas the duedate for completion is March 2013.



Ingredients of ABM

Bu i e Ve ti al



Business Verticals..1. ERP practice in Govt segment has 3

distinct segments, viz. Supply ofLicense, Implementation and PostImplementation support for extended

periods for Institutionalization of ERP.

2. In Urban Local Bodies segment, ABM isoffering its ABM MAINet &Implementation of SAP with andwithout integration with ABMsolutions.

3. ABM offers solutions like ABM CFC ®,ABM AQUA ®, ERP Solutions fromMNCs like SAP bundled with ABM’sSubject Matter Expertise IT Services forimplementation & post-implementation .

These verticals are having ample of scope topenetrate and the government is on the bullto improve its services, which gives anopportunity for ABM to explore revenue andvalue.

Products



Products..

ABM MAINet ®

ABM

CARE ®

CRM

Solutions PRODUCTS

1. MAINet ™ Enterprise is an integratedsuite of application products to managethe complete working of a typicalmunicipal corporation of any size. This

is the key product for revenuegeneration in coming years.

2. ABM CARE ® is browser-based, whichcan be installed at a citizen/consumerinterface like CFC (Citizen FacilitationCenter) or on a Website for acceptingcomplaints from citizens. Fordevelopment of an economy, a citizen

ABM MOIS 2000®

as o e sa s e y s governmenand its services.

3. ABM MOIS 2000® is powerful toolwhich facilitates the Herculeantask done by any government or semi-

government organization of having tomanage and work on a large number ofletters and cases/files every dayinvolving complex work-flows.

4. CRM Solutions is similar to CFCmodel.

Trademarks



Trademarks..

Trademarks helps to protect the business and the product.

It protects from piracy and duplication.

Give recognition to the product and space in the market.



Intellectual behind ABM

Management



Management..

Mr. Prakash BRane,

ManagingDirector

Mrs. SupriyaRane, Director& Member of

Auditcommittee

Mr. GovindSingh

Chauhan, VicePresident

Mrs. VimlaVarghese,

ProjectDirector

Mr. M. N.Ahmed,

Chairman ofAudit

committee

Dr. AjitKulkarni,

Member ofAudit

committee

“KeyMan” of the company, Mr. Prakash Rane is on the driving seat and he is planning exceptionally wellor e company. e was con erre a ona n repreneurs p awar n y ara am er o ommerce.

The Company has benefited from vast experience of over a decade in IT of Mrs. Supriya Rane.

Mr. Govind is responsible for Large account acquisition, increasing account penetration and account growthand Expansion of the business in newer Geography.

Project Director Mrs. Vimla is having international exposure & 28 years of experience in Business

Development. Mr. M. N. Ahmed is the Chairman of Audit Committee and Shareholders Grievance & Share TransferCommittee of the Company.

Since Inception the management is unchanged. This gives them better understanding of the business &future prospects of the company.

Share Holding Pattern



Share Holding Pattern..

Promoter holding is more than 60% in the company.

More than 1% of total shares of the company are held by following entities:

The Indiaman Fund (Mauritius) Ltd 3.20%

Balini Properties Pvt Ltd 1.20%

Lipsita Properties Pvt Ltd 6.91%

Computer Digital Network Ltd 2.50%

New Computer Era Ltd 5%

.

Most of the above entities have been holding stocks of ABM for more than 5years whichreflects their confidence in the better future and better growth prospects.

The total holding (Promoter & these entities) comes nearly to 82% indicating the confidenceof promoters and investors of the company.

The Indiaman fund (Mauritius) Ltd recently purchased 3.2% of the total shares.



Peer Comparison

Peers Comparison



Peers Comparison

There are many companies in the listed space which proclaim themselves as the companies into E-Governance sector, however most of them hardly derive any revenue from E-Governance.

Vakrangee software (VS) is one of the companies which is specifically in the space of E-Governance.

Comparison of both the companies will give a conclusion about the right pick.

ABM is in the state of Maharashtra and recently Vakrangee Software also entered the zone but could notbag any major projects from Maharashtra.

ABM commands a lower P/E, higher margins and nil debt in comparison to Vakrangee Software’s higher

PE, lower margins and some Rs 60 crore debt.

ABM V S

CMP 84.50 195.60

MCAP 85 crore 440 crore

P/E 9.70 14.50EV/

EBITDA4.41 4.95

NPM% 18.18% 5.74%

EPS 8.71 13.48

In terms of MCAP, ABM is a perfect fit for a multibagger & thecompany is sitting on a good order book.

On the basis of annualized forward earnings the P/E comes at 5-6,which gives a potential to the stock to perform much better.

With the type of penetration in the market, its leadership in E-Governance space will continue for a very long period.



Financial Analysis

Income Statement Last 4 years



Income Statement – Last 4 years

ABM has been a consistentperformer for the last 4 yearswith a 24% CAGR in revenue

and more than 70% CAGR inNet profit

In FY 2009-10, revenue hasdecreased but the net profit hasincreased because of the cutdown in expenses.

enomena grow nover last four years (6.41% to18.18%).

Company has various orders inthe Pipeline and it is expected

that it will increase its revenueby 40-50% for FY 11 over FY 10.

Income Statement – Quarterly



Income Statement – Quarterly

The imminent growth of ABM can be gauged from the fact that it has increased its revenue by 60% from

Mar-10 to Jun-10. During Mar’10 quarter, the company has posted an EPS of 1.93, whereas in Jun-10 it is 2.94. almost 50%

increase in EPS on QOQ basis.

The Net profit margins of the company have been steady at 17-18%.

Since Jun-09 company is increasing its revenue QOQ and the Sep-10 quarter is also expected to follow theincreasing trend.

Balance Sheet



Balance Sheet..

The company has a very clean balancesheet with zero debt on it’s books.

Cash balance is more than 20 crore andthe company has made an investment of1.2 crore in Mutual fund of Reliance andpurchased shares of Canara bank. Theinvestment is very much liquid.

With more than Rs 20 crores in cash and

liquid investments, the company has avery comfortable working capitalsituation.

The company enjoys regular paymentsfrom the Government, as can beobserved from the Sundry Debtorsfigure going down from Rs 18.67 crore to

Rs 15.07 crore.

With so much cash, the company canlook at acquiring small players invarious states and get a head start invarious locations.

Contd



Contd..

The company has been able to grow it's revenue from Rs 5.55 crore at the end of Mar'06to Rs 38 crore at the end of Mar'10.

The company has seen an exponential growth in it's bottom-line from Rs 0.24 crore atthe end of Mar'06 to Rs 6.87 crore at the end of Mar'10.

In the first quarter ending Jun'10, ABM has come out with a stellar performance. Therevenue for the quarter ending Jun'10 stands at Rs 17 crore, a 57% increase on QOQ

basis and 107% increase on YOY basis.

The net profit for the quarter ending Jun'10 stands at Rs 2.94 crore which is a 52%increase on QOQ basis and 167% increase on YOY basis.

The company maintains a cash reserve of Rs 21 crore which brings down the enterprisevalue of the company down to Rs 45-46 crore approximately.

The EV/EBITDA multiple of the company is around 4.5 which is one of the lowestacross the industry.



Investment Rationale

Near Lifetime high



Near Lifetime high…

Strong support @ 60

Large volume

The stock is in the uptrend phase & is looking strong on charts as it is making new (top) highs. Asillustrated in the chart , the stock price of ABM Knowledgeware Ltd was dull & underperformed for along period of time.

The recent highs scaled by the company have been backed by larger volumes, thus validating the recentupward move.

We expect the rally to continue on account of undervaluation and the upcoming Projects & FutureEarnings.

Investment Rationale



Investment Rationale.. The company is one of the few companies in the E-Governance space and has already established a name

for itself.

The Government of India has planned an outlay of Rs 40,000 crore for the E-Governance sector. ABMbeing a renowned player will be a big beneficiary of the same.

ABM's product for computerization of mid-sized urban local bodies has been adopted by Ministry ofUrban Development, Government of India for recommendation to other ULBs in India. The same shallhelp ABM to procure orders from other state governments besides Maharashtra.

The recent recognition of the company by NASSCOM shall help it bag further orders in consortium withe arger p ayers.

ABM is available at a PE multiple of 5.5 based on it's annualized forward earnings, while the other listedcompany like Vakrangee Software's Ltd is available at a PE multiple of 15.

The management has been maintaining their stake in excess of 60%, while we believe that they holdanother 10% through indirect holding.



Some Key Issues..

Some Key Issues..



Some Key Issues..

Issues:- The following are the key issues involved with the E-Governance & thus with ABM

Funding – Funding for the projects that are already underway is secured. But for large scaleroll out of e-Gov, funding can become a foremost issue. The e-governance initiatives can befunded either through the government sector or through the private sector. Private sectorfunding is possible for certain project that have the feasibility of creating a service that ischargeable to citizen.

Privacy – The privacy of the citizen also needs to be ensured while addressing the issues.

Whenever a citizen gets into any transaction with a government agency, he shells out lot ofPersonal Information, which has possibility of misuse by any vested interest. Thus, thecitizen should be ensured that the information flow would pass through reliable channels.

Delay in Decisions – ABM is largely dependent on government projects and governmentdecisions can be delayed due to election or change in government.

Standardization – Defining the standards for the various Government services is anotherissue that needs to be addressed. The standards need to be worked out not only for thetechnologies involved but also for issues like naming of websites to creating E-Mailaddresses.

Disclaimer..



Disclaimer..

I don’twant 2

read this!!

This document is not for public distribution and has beenfurnished to you solely for your information and must not bereproduced or redistributed to any other person. Persons intowhose possession this document may come are required to observethese restrictions. This material is for the personal information ofthe authorized recipient only.

The recommendation made herein does not constitute an offer tosell or solicitation to buy any of the securities mentioned. No

representation can be made that recommendation contained herein.obtained is deemed to be reliable but do not guarantee its accuracyand completeness. Readers using the information contained hereinare solely responsible for their action.

HBJ Capital, or its representative will not be liable for the

recipient’s investment decision based on this report. HBJ Capital,officers, directors, employees or its affiliates may or may not holdpositions in the companies /stocks mentioned herein.

abm knowledge ware ltd (code 531161) - hbj capital's (mps unit) - business insight penny stock...

Documents