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Directors Report of IZMO Ltd.

Mar 31, 2014

Dear Shareholder,

The Directors have pleasure in presenting the Nineteenth Annual Report together with the Audited statements of accounts for the year ended 31st March, 2014.

MANAGEMENT DISCUSSION AND ANALYSIS :

Financial Highlights: (Rs. in Lakhs)

Particulars 2013-14 2012-13

Revenue from Operations 1,605.41 1,693.55

Other Income 243.84 457.71

Total Revenue 1,849.25 2,151.26

Direct cost of Operations 122.72 156.26

Increase/(Decrease) in Stocks/WIP (0.96) (1.63)

Employee Benefit Expenses 611.20 730.28

Financial Expenses 184.60 148.29

Depreciation 550.56 62.67

Other Expenses 343.83 313.90

Total Expenses 1,627.35 1,409.77

Profit before Tax & Exceptional Item 37.30 741.49

MAT Credit Adjustment (9.71) -

Reversal of Interest Receivable as Doubtful - (230.04)

Rebate on Export - (398.97)

Profit before Tax 27.59 121.47

Profit after Tax 19.68 74.30

Perfomance

The Company''s sales have shown a slight drop as compared to the previous year. This is mainly on account of the slowdown in the domestic market due to which sales of Enterprise Connectivity products have fallen as compared to the previous year. Most companies have cut back on their capital expansion programs due to tight liquidity situation in the domestic economy. As a result of this, domestic sales have been affected.

The other income has shown a sharp fall primarily on account of the INR remaining quite stable against the US Dollar.

Analysis of Expenses

The direct cost of operations in FY 13-14 are significantly lower than FY 12-13. This is primarily on account of the lower sales of Enterprise Connectivity product.

The company has reduced its employee headcount substantially in FY 13-14 as compared to the previous year. This has resulted in the sharply lower employee costs for the company. The company is continuing to reduce its employee strength by increasing productivity within the company.

Financial costs have increased slightly as compared to the previous year. This is on account of an increase in interest rates charged by the bank on the company''s working capital limits. However, this should reduce substantially in the current year.

Other expenses have shown a slight increase over the previous year. This is due to inflationary cost increases in areas such as rent, electricity charges and other overheads. The company is trying its best to control costs in every area to the maximum extent possible.

Profitability

The overall profitability of the company has reduced as compared to the previous year. This is mainly on account of the significant increase in depreciation charges. The company has purchased substantial IP assets which are essential for future new product development and current product enhancements. The company had been deferring this purchase for the last 2-3 years due to the tight liquidity situation. Since that has considerably eased out in the current year, the company has been able to purchase these critical software IPs.

The company expects the profitability to further improve in the current year as a result of its European operations becoming profitable for the 1st time since inception. The turnover of the European operations in the 1st quarter of the current year has already crossed last full year''s turnover.

The company''s focus on growing its content sales business is also paying off. The Company has the world''s largest database of automobile pictures and animations covering car models from USA, Mexico, Continental Europe and India. The Company is adding Brazil and China automobile models to its content database.

The company is the only supplier of images to the world''s leading portals like Yahoo, AOL and MSN. It is the only company in the world having such extensive model coverage.

Business Overview North America USA

Its show-time again at the world''s largest automotive market.

The U.S automotive industry shifted into top gear in 2013, generating $730 billion in business revenue and employing more than 1 million people in their local communities.

In 2013, U. S automotive dealerships sold or leased more than 15.5 million new cars and light trucks, up 7.5 % from the year before, along with 3,51,737 new medium and heavy-duty trucks, up 1.7%. Total dealership revenue crossed $730 billion, an 8.8% increase from the previous year. For the average dealership, new-car sales were up 10.5% and used-car sales, up 7.3%.

With a stronger housing market, improved job prospects and continued low interest rates to bolster auto sales further, NADA expects new car and light-truck sales to reach 16.4 million in 2014.

However, the gross margin on new-vehicle sales continued downward, falling to 3.8 % in 2013 from 4.2 % the previous year. Revenue from F&I, service contracts and other products accounted for 38.8% of gross profit, up from 36.9 % the previous year, nudging dealers towards web marketing, CRM and Service management solutions that help optimize resources as well as tap into other sources of revenue.

Even as izmo continues to serve US dealers with Automotive Websites, SEO and Social Marketing, CRM, Service Management and Email Marketing Services the time is now ideal to re-launch the izmo suite of products in the U S markets and negotiations are at an advanced stage with prospective channel partners.

Being the first mover in Mexico has paid rich dividends for izmo. Our company continues to be the only retail website provider for Nissan Mexico, the largest Automotive OEM in the country with a 24.8% market share. Izmo dealer websites and portals also drive the sales of Renault, Volkswagen, Chrysler Ram Dodge Jeep and Suzuki vehicles as well as used cars.

Directors'' Report

European Union

The downward trend in EU car sales during 2013, with sales dropping to 11.80 million new cars, about 200,000 fewer than in 2012, proved to be a powerful catalyst driving dealers in large numbers to adopt online marketing solutions that not only reduce costs but deliver measurable results. As a result, your company was able to make important breakthroughs in several European countries, including France, Belgium, Spain, Portugal and Italy.

The izmo solution suite for EU auto dealers include "Virtual Showroom" Websites, Online Marketing and Social Media, Automotive CRM and ILM, Accessories, Service Management and Dealership Performance Consulting, as well as image processing services.

In order to address culturally diverse national markets, izmo has identified and engaged with well established channel partners in France, Spain, Portugal and Italy.

During the same period, the European division of izmoStudio made impressive gains in the automotive visual media segment, adding MSN in France, Germany, UK, Spain, Italy and Netherlands as part of a global agreement, as well as ISUZU, Avis, Multilease, VPN, Cartrawler, Individual Cars and Stickout. The izmoStudio client list in Europe also includes MeinAuto, Elite, Hertz, Terberg Leasing, Mobile DE, ASV and Europcar.

France

An unprecedented downturn in French car sales during 2013, with sales dropping to its lowest levels in 15 years, helped izmo make important breakthroughs in the market.

We were able to add HESS, the largest Automotive Dealer Group in France to our French portfolio. The dealer portfolio of your company in France now includes the French Brands Peugeot, Citroen and Renault, as well as Audi, Alfa Romeo, Abarth, Chrysler, Chevrolet, Dacia, Dodge, Fiat, Fiat Professional, Hyundai, Jeep, Jaguar, Land rover, Kia, Lancia, Lexus, Nissan, Opel, Saab, Seat, Skoda, Subaru, Suzuki, Toyota, Volkswagen and Volvo.

Izmo also launched 3 prominent automotive portals in France for HESS.

Other prominent clients in the French market include the Lamirault Group, Metin Group and Kayser Group.

Sales finally picked up during the second half of the year, with a 9.4 % increase in December 2013. The market has been steadily recovering ever since, and is expected to close 2014 with single digit sales gains.

Spain

Your company made inroads in the Spanish automotive market by adding new Audi and Volkswagen websites for the Vilamobil group. Significant sales negotiations are now in the pipeline.

Portugal

Izmo was able to make an important breakthrough in the service segment in Portugal, with hundreds of dealers signing up for an innovative service solution which is to be launched shortly.

ASIA

India

For the first time in 12 years, the domestic sale of Indian private vehicles dropped 6% in 2013. Car sales stood at 17,86,899 vehicles, down 4.65%, while SUV/ utility sales were down to 5,25,942 vehicles, a 5.01% decline.

Maruti Suzuki led the market selling 10,53,689 cars, a 0.25% improvement over last year. Hyundai retained their number 2 position but declined 0.88% with a sales of 3,80,253 vehicles, with improvement in sales of Hyundai''s smaller cars compensating for the decline in Verna sales.

The silver lining in an otherwise bleak market was Honda, the biggest gainer of the year with 1,34,339 vehicles sold, a staggering 82% improvement, led by Brio and Amaze sales which accounted for 97,205 units. Fiat India increased sales by 86%, selling 11,980 units. Ford India sales increased by 9.38% to 84,469 vehicles, with strong demand for the EcoSport compensating for a sharp fall in Figo sales. Renault also managed to increase sales by 9.35%, selling 57,368 vehicles with the Duster alone accounting 46,786 units. Nissan also bucked the trend with a 3.28% improvement in sales.

Indian SUV exports had an impressive year with a 298% increase. During the period, Indian OEMs exported 41,550 vehicles.

Tata Motors was hit with a 36.78% drop in sales and Toyota sales declined 22.17% to 1,28,811 vehicles. Skoda sales dipped 31.33% to 19,959 cars. Mahindra & Mahindra sales was down 18.14% to 2,54,344 vehicles and Volkswagen had a disappointing year with sales at 52,528 units, a 19.77% drop. GM sales fell 8.24% to 80,890 vehicles.

Sales is finally picking up in the first months of 2014, but dealers are still coping with diminishing profits from new vehicle sales. As a result, they are increasing turning towards web based initiatives to generate revenue from multiple resources, with the used vehicles, accessories, service, finance and insurance departments increasingly getting attention.

Carazoo, the only Automotive solutions provider in the Indian market to provide 360° auto retail solutions, from the motortrend.in Auto Portal to Virtual Dealer Showrooms complete with virtual vehicle walk-arounds and interiors, is now experiencing fast-paced growth. The Carazoo suite of solutions also include online marketing, Accessories Sales and CRM and Lead Management solutions.

On average, U S dealerships spent 33% of their advertising dollars on the Internet in 2013, up from 26.5% last year. The change was primarily driven by the cost-efficiency of websites and online marketing, the high cost of traditional advertising, as well as OEM initiatives to take dealerships online.

In the same period, dealers spent only 15.5% on newspaper advertisements, a drop of 30%. Radio advertising fell to 14.5%, from 15.9% and television advertising increased marginally to 20.8%, from 20.2%.(Source: NADA Statistics)

As a result of web centric advertising and marketing, average ad expense per new-vehicle sold fell to $616, down 0.8%. The increased efficiency of web based advertising resulted in dealers spending even more on advertising and dealership advertising increased 6.1% to $7.6 billion.

As of 2013, the online advertising business is a market opportunity worth 2.5 billion dollars.

Your company is presently offering the entire suite of online solutions including dealer websites, mobile websites, online marketing and social media, email marketing, CRM, service management to U S dealers.

The time is now opportune to re-launch the izmo web platform and products in the U.S. market. Discussions with prominent channel partners are at an advanced stage.

European Union

European car sales rose 4.3% in May, the ninth consecutive monthly gain, as a recovery in consumer confidence encouraged purchases of new models.

After a six-year market slump, registrations increased to 1.13 million vehicles from 1.09 million a year earlier, according to European Automobile Manufacturers'' Association (ACEA). Five-month sales gained 6.6% to 5.62 million cars.

Among the top 10 OEMs in Europe, Renault sold the most vehicles in May, gaining 18%. Market leader Volkswagen gained 9.5% and second placed PSA Peugeot Citroen 4.2%.

With the region well on its way to recovery, izmo''s early entry in Europe is now paying off and your company and its channel partners are gaining traction in France, Spain, Belgium, Italy and Portugal.

India

Carazoo, a 51% - 49% joint-venture between Motortrend, a leading global automotive portal and publications group and Logix Microsystems, has achieved impressive growth in the last fiscal. The motortrend.in portal clocked 1.2 million page views as of July 2014, up from 4,10,604 page views in June 2013. The Motortrend Google Plus page views have crossed 1 million and youtube views are nearing the half-million mark.

Motortrend.in is India''s only Car portal that provides a multi-brand Online Showroom experience to prospective car buyers. Visitors can request to test drive any car and also get car dealers to chase their business.

izmoWeb is your interactive online dealership designed to differentiate your unique brand from the competition and help you increase sales.

izmoWeb uses visually rich interactive tools, making the visitor experience engaging, informa- tive and fun.

izmoWeb''s interactive animations encourage your prospects to easily connect with the "right car". A prospect using an izmoWeb site will "fall in love" with the car!

The result is increased time spent on your website, which in turn results in a higher percentage of leads and increased conversions.

izmoMobi is a mobile website solution, bringing automotive websites into the hands of millions of consumers worldwide through their mobile phones. izmoMobi provides advanced function- ality, allowing viewers to search for vehicles and contact the dealer with a single-click.

izmoMobi incorporates a complete website delivery and flexible management system, allowing you to work the way you want.

izmoMobi helps dealers get access to the largest growing consumer base in the world. Dealers can now stay in touch with prospects even when they are on the road and Increase website coverage to include more consumers.

Direct lead generation with mobile phone contact information is another unique advantage of izmoMobi.

izmoRainmaker is a comprehensive, interactive, Internet marketing solution developed exclu- sively for the automotive retail industry by online marketing experts. Every izmocars customer works with a dedicated Rainmaker team, whose job is to increase your traffic, market your brand online through Search Engine Marketing (SEM) for car dealers, Social Media Marketing (SMM) and Search Engine Optimization (SEO).

izmoRainmaker Offers:

- Creative Services

- Social Media Marketing - Facebook, Twitter, Linkedin...

- Interactive Marketing Campaigns

- Organic Search Engine Optimization

- Website Optimization

- Online Brand Marketing

- Research & Data Analysis

iCRM is an enterprise class Customer Relation- ship Management solution for the Automotive industry.

iCRM is delivered as a service, is completely Web- based and contains the following core functionalities:

- Sales Force Automation

- Finance & Insurance

- Campaign Management

- Service Management

- Business Development Center (BDC)

iCRM is certified by Ford, Jaguar, Lincoln, Volvo, Land Rover, Mercury, GM brands including Buick, GMC, Pontiac, Cadillac, Hummer, Saturn, Honda, Acura, Nissan, Infiniti, Mercedes Benz, Chrysler, Subaru, Saab and Mazda.

iService is the automotive Industry''s first compre- hensive online vehicle service management solution for auto dealers. This innovative service manage- ment solution allows service customers to schedule their service appointments online and dealer service departments to efficiently manage service appoint- ments and optimize shop loading, resulting in better revenue and loyal customers.

iService Helps dealers achieve:

- Better Service Management

- Higher Profitability

- Increased CSI Scores

- Higher Service Department Productivity

- Reduced Loaner Expenses

www.izmostudio.com

izmoStudio is world leader in Digital Imagery and Interactive Media Solutions for the Automotive vertical, since 2002. izmoStudio produces High Quality Photographic images and Digital Anima- tions for the North American and EU markets, covering all major makes and models.

Large Automotive Photography Studios strategically located in Long Beach, USA and Brussels, Belgium combined with state-of-the-art post-production facilities in Bangalore, enables izmoStudio to quickly produce large volumes of work, covering about 500 automotive models.

Presently, the izmoStudio client list includes leading portals like Yahoo!, AOL, AutoUSA and Jato Dynamics as well as OEMs like GM, Ford and Mitsubishi Motors.

Carazoo was the first to introduce the concept of Online Showrooms for Car Dealers in India. Carazoo is also offering Online Marketing Solutions to Auto Dealers. Google acknowledged the online advertising prowess of Carazoo in a case- study.

On a strategic evaluation, Cap Gemini named Carazoo as one of the 7 Global entities that will influence Auto Retailing along with Yahoo, EBay, Wal-Mart and Edumunds.com.

With 149 online showrooms currently live and several in various stages of production, Carazoo is the dominant player in the car dealer website space. The Carazoo website portfolio includes Maruti Suzuki, Volkswagen, Hyundai, Honda, Mahindra, FIAT, Chevrolet, Ford, Renault, Tata Motors, Nissan, ISUZU and Skoda, besides Bajaj, Hero, Suzuki and Honda websites in the 2-wheeler segment, group websites and Trucks & Tractors websites.

Some of these Carazoo-powered online showrooms are: Bimal Auto, NBS Mahendra, Landmark Group, PPS Group, Sai Service Group, Sagar Auto, Mody Auto Group, Kataria Automobiles, Fortpoint Automotive, Trident Automotive Group and Shaman Auto Group.

Growth Paths

Izmo''s early entry into new markets are now creating positive results for your company. We are now the market leader in Mexico, and the front runner in France. Major initiatives are underway in Italy, Portugal and Spain, and we expect to make positive announcements soon.

Growth Strategies

Izmocars is uniquely positioned as the innovation leader globally in automotive retail, providing end-to-end solutions ranging from a web platform to mobile websites, online marketing & Social Media, Email Marketing, CRM, Lead Management and Service Management, apart from market-leading interactive selling tools and automotive photography. izmocars aims to consolidate market position and thought leadership as the only end-to-end Automotive e-Solutions Provider globally.

The company is also consolidating its market leadership in the OEM space for high-end imaging, automotive animation and web solutions. A major addition to the image portfolio is MSN global, covering USA, Canada, UK, France, Germany, Russia, Spain, Italy, Netherlands, Mexico, Brazil, Australia, China and Japan. Izmo is also expanding its OEM portfolio of GM, Ford, Toyota, Lexus, Mitsubishi, Nissan, Renault, ISUZU and Hyundai.

Other prominent companies in the visual solutions portfolio include: AOL, YAHOO, AutoTrader, DATAONE, Jato , DME, AmFam, ImageSpan, SIM, MeinAuto, Elite, Hertz, Terberg Leasing, Mobile DE, ASV, Europcar, Dominion, Avis, Multilease, VP , Cartrawler, Individual Cars , Dealer E Process and Stickout.

Negotiations are at an advanced stage with several OEMs and prominent dealer groups.

Subsidiaries:

As required under Section 212 of the Companies Act, 1956 the audited statements of accounts along with the Directors'' Reports thereon of the Company''s subsidiaries for the year ended March 31, 2014 are to be annexed with this Report as Annexure A. However as per Ministry of Corporate Affairs'' General Circular no. 2/2011 dated 8th February, 2011 the Ministry has granted general exemption from attaching the audited account of subsidiaries to Holding Company''s Annual Report to all the Companies subject to certain disclosures to be made in the Annual Report of the Holding Company. The same disclosures have been made in the prescribed format and forms part of this Report.

Change in Name:

During the year, the Company''s name has been changed from Logix Microsystems Limited to ''IZMO Limited'' and necessary approvals were taken from the authorities concerned.

Dividend:

In order to augment the ongoing expansion programmes, the Directors have decided to plough back the profits into the system and regret inability to recommend dividend.

Fixed Deposits:

Your Company has not accepted any deposits.

Human Resources:

As on March 31, 2014 the employee strength was 131. This includes staff in India and in overseas offices.

Directors:

In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Mr. Sanjay Soni, Director of the Company retires by rotation and is eligible for re-appointment.

Mr. RN Chawhan, Non Executive and Independent Director on the Board of the Company resigned with effect from 30th May 2014.

With the resignation of the Mr. RN Chawhan, the Board presently is constituted as follows:

a. Mrs. Shashi Soni - Chairperson

b. Mr. Sanjay Soni - Managing Director

c. Mr. Vijay Kumar D Gupta - Non Executive and Independent Director

Pursuant to provisions of Sections 149, 152, 160 and other applicable provisions, if any, of the Companies Act, 2013 and rules made thereunder, your Board recommends the appointment of the following suitable individuals as Independent Directors of the Company for five consecutive years for a term upto September 30, 2019

a. Mr. Ramanujam Krishnamurthy

b. Mr. P. Phaneendra

c. Mr. Vijay Kumar D Gupta

Details of the proposals are provided in the explanatory statement u/s 102 of the Companies Act, 2013 of the Notice of the Nineteenth Annual General Meeting.

With the appointment of the aforesaid three Independent Directors, majority of the Board would be Independent Directors.

Committees of the Board of Director:

Following Committees of the Board as required to be constituted under the provisions of Companies Act, 2013 and the Clause 49 of the Listing Agreement to be effective from October 1, 2014:

a. Audit Committee

b. Nomination and Remuneration Committee

c. Stakeholders Relationship Committee

d. Risk Management Committee

With the appointment of the three Independent Directors by the shareholders at the Nineteenth Annual General Meeting of the Company, all the aforesaid Committees of the Board would be duly constituted.

Auditors:

Mr. R Vijayananda, Chartered Accountant, the Statutory Auditor of the Company, hold office till the conclusion of the Nineteenth Annual General Meeting and is eligible for re-appointment. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder, it is proposed to appoint Mr. R Vijayananda, Chartered Accountant as Statutory Auditor of the Company from the conclusion of the Nineteenth Annual General Meeting till the conclusion of the Twenty Second Annual General Meeting to be held in the year 2017, subject to ratification of his appointment at every Annual General Meeting.

As regards the comments of the Auditors in their Report dated 30 th May 2014 relevant notes on accounts are self explanatory.

Director''s replies to the qualifications/observations of the Auditors are as follows:

Auditors Qualifications :

1.Attention is drawn to Note No 23.13(b) as regards remuneration paid to the managing director is in excess of limits prescribed under the Companies Act, 1956. The Company had applied for the requisite approval from the Central Government which had not been granted.

Directors Reply :

1.The Company had applied for the requisite approval from the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same. Pending outcome of the same, these amounts continue to be considered as an expense.

Auditors Qualifications :

2.Short Term Loans and advances as at 31st March 2014 includes a sum of Rs. 51.42 lacs of accrued interest on Inter-Corporate Deposits (ICD), which is long overdue and pending confirmation. Management is of the opinion that the same would be recovered in full and accordingly no provision towards possible non- recovery has been made in respect of the same. In the absence of confirmation for the same, I am unable to comment on the recoverability of the aforesaid amounts.

Directors Reply :

2.During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte.Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

During the financial year 2013-14, the Company received the allotment of50,000 equity shares on 15th April 2013 from its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries against Share Application Money pending allotment as on that date. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, the step- down subsidiaries of Logix Americas Inc.

Auditors Qualifications :

3.Attention is drawn to Note No 23.18 as regards Investment in Subsidiaries including Share Application Money pending allotment, Long term investments as at the Balance Sheet date include Rs.160.30 crores in wholly owned subsidiaries, including share application pending allotment from Izmo Europe BVBA, Rs.8.89 Crores, which are carried at cost. In the absence of independently reviewed / audited financial statements in respect of these subsidiaries (including their step down subsidiaries), I am unable to carry out necessary procedures to reliably examine if there has been any decline in the carrying value of the stated investments. I am therefore unable to comment on the impact, if any, on the Profit & Loss account as at the Balance Sheet date.

Directors Reply :

3.The Company has invested in Midrange Software Pte Ltd, Singapore. Midrange has incurred losses during recent years. However, based on the management''s perception of the growth prospects and the performance of Midrange, in the opinion of the management there is no permanent diminution in value of the investment.

The Company has invested in its subsidiary Logix Americas Inc, which is the holding company of Homestar Systems Inc. The management had obtained an independent valuation of its operating enterprises in the US. Based on the same and further based on the management''s view on the prospects in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix America Inc as well.

The Company has invested in its subsidiary Izmo Europe BVBA Belgium. Izmo Europe BVBA has incurred losses during the recent years. However, based on the management''s perception of the growth prospects and the performance of Izmo Europe, in the opinion of the management there is no permanent diminution in value of the investment.

Auditors Qualifications :

4.The Company has granted loans to a party covered under Section 301 of the Act and since the terms and conditions of such a loan are not stipulated, I am unable to comment as to whether the rate of interest or other terms and conditions are prejudicial to the interest of the Company.

Directors Reply :

4.The Company is confident of recovering the loans granted to the related parties, hence the same is not prejudicial to the interest of the Company.

Auditors Qualifications :

5.In respect of loans granted, the terms of repayment of the principal amount and the payment of the interest have not been stipulated and hence I am unable to comment as to whether receipt of the principal amount and the interest is regular.

Directors Reply :

5.The Company is confident of recovering the loans granted by the Company.

Auditors Qualifications :

6.Where overdue amount in respect of a loan granted is more than one lakh, reasonable steps have not been taken by the Company for recovery of the principal amount and interest.

Directors Reply :

6.The management took note of the same and have formulated scheme of recovery for realizing over dues.

Auditors Qualifications :

7.Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, have not been regularly deposited with the appropriate authorities and there have been significant delays in a large number of cases.

Directors Reply :

7.The Management of the Company took note of the same and have taken appropriate steps to prevent the same in forthcoming years.

Auditors Qualifications :

8.As regards provision for current year taxation the company is in the process of makingpayment towards TDS on Non-Resident dues of Rs. 16,05,745/- under the provisions of Income Tax Act,1961 and provident fund dues of Rs. 58,60,750/- under the provisions of Provident Fund Act,1952.

Directors Reply :

8.Management is of the opinion that Dues with respect to withholding taxes and Provident fund dues shall be paid in full before the due date of filing of Income tax returns and accordingly no disallowance under the provisions of Income Tax Act,1961 shall be attracted in respect of the same.

Auditors Qualifications :

9.The Company during the year has not made remittance towards Withholding tax dues with respect to Non residents under the provisions of Income tax Act,1961. Further provisions for interest on account of the above dues have not been provided for in the books of account.

Directors Reply :

9.The management took note of the same and have taken steps to include the same in forthcoming financial years.

Auditors Qualifications :

10.We did not audit the financial statements of the subsidiaries. Financial statements of the subsidiaries are as furnished and certified by the management reflecting total net worth of Rs 177.19 crores as at 31st March, 2014 and total revenue from operations of Rs.29.07 crores for the year ended are unaudited and have been certified by the management.

Directors Reply :

10.The Management has provided true and fair financial statements of the subsidiaries to the Auditors.

Auditors Qualifications :

11.The financial statements of subsidiary of Logix Americas Inc i.e. Get Logix L.L.C., USA, has not been considered for the purpose of this consolidated financial statements.

Directors Reply :

11.The financials of the subsidiary is under the process of finalization and were unavailable for consolidation.

Auditors Qualifications :

12.Attention is drawn to Note No.23.2, in respect of non-uniformity of accounting policies adopted; and Note No. 23.1 (g) in respect of the revenue items being translated at average rates as at the year end instead of average rates during the year; changes arising from re- statement of opening balances of subsidiaries, Note No 23.13 regarding non-reconciliation of inter-company balances; the effect of which on the consolidated financial statements has not been quantified.

Directors Reply:

12.The financial statements of the Indian company are prepared in accordance with the Accounting Standards followed in India. The financial statements of the subsidiary in Singapore are prepared in accordance with the Singapore Statement of Accounting Standards. The financial statements of the US subsidiaries are prepared in accordance with the accounting practices in the US. The financial statements of the subsidiary in Belgium are prepared in accordance with the accounting practices in Belgium. The Management has taken note of the same and have taken steps to implement Global Accounting Practices to meet the requirements in future.

Auditors Qualifications :

13.The impact of minority interest on net income and also on net assets of subsidiaries has not been identified. Accordingly, related adjustments and disclosures required to the consolidated financial statements have not been carried out.

Directors Reply :

13.The Management has taken note of the same and has taken steps to resolve the same.

Auditors Qualifications :

14.The Consolidated Cash Flow statement has not been compiled.

Directors Reply :

14.The Management has taken note of the same and has taken steps to resolve the same.

Auditors Qualifications :

15.Attention is drawn to Note No 23.5 (b) as regards remuneration paid to the managing director is in excess of limits prescribed under the Companies Act.

Directors Reply :

15.The Company had applied for the requisite approval from the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same. Pending outcome of the same, these amounts continue to be considered as an expense.

Particulars of Employees:

Details of employees as required under Section 217(2A) of the Companies Act, 1956, is as follows:

Directors'' Responsibility Statement:

The Directors have fulfilled their responsibility in preparation of the accompanying financial statements by taking all reasonable steps to ensure that:

(I) that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii that the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for the financial year ended 31st March, 2014;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors had prepared the annual accounts on a going concern basis.

Management Discussion & Analysis Report:

Pursuant to the provisions of Clause 49 of the Listing Agreement, Management Discussion & Analysis Report is annexed as part of this report separately as Annexure B.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The particulars as prescribed under Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars of Board ofDirectors) Rules, 1988 are as follows:

A. Conservation of Energy

The operations of the Company are not energy intensive. Adequate measures have been taken to conserve and optimize the use of energy through improved operational methods.

B. Technology Absorption and Research & Development (R&D)

The Company uses the latest technology available in modern technology applications. Indigenous technology available is continuously being upgraded to improve overall performance. The Company has a dedicated team of technically competent personnel who relentlessly work on technology up gradation and development related fields.

Research and Development continues to be given very high priority in Software Technology in the area of telecommunications and hardware technology in the area of embedded systems.

C. Foreign Exchange Earnings & Outgo

During the year, the details of Foreign Exchange transactions were:

Earnings — Rs 1,425.56 (PY - Rs.1,451.87 Lakhs)

Outgo - Rs 135.29 (PY - Rs.536.07 Lakhs)

Corporate Governance:

The report on Corporate Governance together with the Auditor''s Certificate regarding the Compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report as Annexure C.

Acknowledgment:

Your Directors place on record their deep appreciation for the support extended by the business associates, customers and vendors. Your Directors place on record their gratitude of the significant contribution made by employees at all levels who have been instrumental in enabling your Company to make rapid progress during the year. Your Directors also thank Bankers, Government and Quasi Government Agencies, STPI Authorities, Capital market, media and the shareholders fraternity for their support during the year.

By order of the Board For IZMO Limited

Place: Bangalore Sd/- Sd/- Date: 3rd September, 2014 Sanjay Soni Shashi Soni Managing Director Chairperson and DIN: 00609097 Wholetime Director Address: Flat No. 9, DIN: 00609217 Prestige Casablanca Address: Flat No. 9, 12/1, Old Airport Apartments,Prestige Road Bangalore-560017 Casablanca Apartments, 12/1, Old Airport Road, Bangalore-560017


Mar 31, 2013

The Directors have pleasure in presenting the Eighteenth Annual Report together with the Audited Statements of accounts for the year ended 31st March, 2013.

MANAGEMENT DISCUSSION AND ANALYSIS:

Financial Highlights: Rs. in Lakhs

PARTICULARS 2012-2013 2011 -2012

Revenue from Operations 1,693.55 1,786.62

Other Income 457.71 340.08

Total Revenue 2,151.26 2,127.70

Direct Cost of operations 156.26 283.06

Increase/(Decrease) in Stocks/WIP (1.63) 2.24

Employee Benefit Expenses 730.28 871.73

Financial Expenses 148.29 283.06

Depreciation 62.67 82.78

Other Expenses 313.90 356.84

Total Expenses 1,409.77 1,879.72

Profit before Tax 8cExceptional Item 741.49 247.97

Reversal of Vested Stock Option 238.63

Reversal of Interest receivable as Doubtful (230.04)

Rebate on Export (398.97) (399.40)

Profit before Tax 121.47 87.40

Profit After Tax 74.30 40.65

Performance:

The Company''s sales have shown a slight drop as compared to the previous year. This is mainly on account of the slowdown in the domestic market due to which sales of Enterprise Connectivity Products have fallen as compared to the previous year. Most companies have cut back on their capital expansion programs due to tight liquidity situation in the domestic economy. As a result of this, domestic sales have been affected.

The other income has shown an increase primarily on account of the foreign exchange gains accruing on account of the fall in INR. Since 90% of the company''s income is derived from exports, the continued depreciation in the INR is positive for the company.

Analysis of Expenses:

The direct cost of operations in FY 12-13 are significantly lower than FY 11-12. This is primarily on account of the lower sales of Enterprise Connectivity Products.

The company has reduced its employee headcount substantially in FY 12-13 as compared to the previous year. This has resulted in the sharply lower employee costs for the company. The company is continuing to reduce its employee strength by increasing productivity within the company.

Financial costs have nearly halved as compared to the previous year. This is on account of better working capital management and improvement in the receivables cycle. This should reduce further in the current year. Other expenses have also fallen by 10% over the previous year. This is a healthy trend and as the company keeps the focus on cost reduction, this will continue to show a declining trend.

Profitability:

The company''s Profit Before Tax and exceptional items has recorded an increase of more than 200% over the previous year. The Company has written back unrecovered interest of Rs. 2.30 crores as a matter of abundant caution. A one-time rebate on exports has been given to the company''s US subsidiary due to the precarious state of the economy in the US and EU regions.

The Company''s Profit After-tax has increased by more than 160% over the previous year. This has been achieved despite the company''s major markets US and Europe facing severe headwinds on the economic front. The company hopes to improve the performance further in the current year.

Business Overview:

A ComScore report on the online performance of Mexican Automotive brands says it all. Among the top five most visited automotive brands, Nissan came first with a growth of 150%, which is about 10 times more than the other top 5 brands in the list.

What the ComScore report did not mention was the fact that Nissan''s online growth was driven entirely by izmocars, which powers 155 Nissan dealer websites in Mexico. With 206 automotive dealer websites in various production stages, izmocars is the leader in the Mexican market.

Back in the United States, Add On Auto, the virtual Accessories Company of izmocars and the #1 accessories sales solution in the country, was signed up by 3M and BESTBUY, both Fortune 500 companies, to provide virtual selling solutions, marking izmo''s entry into the big ticket aftermarket accessories space. The company has already tied up with Nissan and Toyota to provide interactive accessories marketing, as well as directly providing dealers the AOA virtual accessories sales solution that helps sell millions of dollars worth of accessories every year.

In the Automotive imagery and interactive marketing space, izmocars continued serving AOL, Yahoo, Microsoft, GM, Toyota, and Mitsubishi Motors, as well as US News, JATO, Data One, DME, Evolio, Auto 123, Auction 123, Automations, HighGear Media, ADS, Dealer process, Vincentia, Go Moto, Auto Bytel, Source Interlink, CostCo, American Family, JDPA, Image span, SnapSort, Mojo, AutoNet, KUKUI, Car qualifier (Autobid), Media One Utah, and App Soft Development.

v* In France, izmoEurope went live with 30 automotive websites for the Lamerault Group, 19 websites for the Metin Group, and 4 websites for the Kayser Group. With more than a 100 websites in the making for another prominent European auto dealer chain, izmoEurope is the fastest growing Online Solution Provider in the French market, with a brand portfolio including Audi, Citroen, Dacia, FIAT, KIA, Nissan, Peugeot, Renault, Skoda, Suzuki, Toyota, and Volkswagen.

With North American markets well on their way to pre-2007 sales levels and Western European markets showing clear signs of recovery, izmocars is well positioned to capitalize on the emerging opportunities in both continents.

USA:

Leaving a torturous half-decade of depressed sales and struggling dealerships behind, US Automotive retail has finally arrived, and is all set to close the year in the vicinity of 16 million vehicle sales. The industry''s sales pace for July is on track for its best year since 2007, when 16.1 million vehicles were sold. An encouraging trend about the recovery is that it rides on true innovation, and not incentives, according to J.D. Power and Associates. During the first six months of the year, prices on new vehicles rose 3%, as a result of new and exciting vehicles entering the market. True to the trend, OEMs are now disinclined to offer lavish incentives that hurt resale values.

In July alone, the US automotive industry sold 6,57,404 cars, an increase of 12.6% over the same month last year. GM deliveries rose 16% in July, with all four of its brands advancing. Honda sales increased 21% and Toyota sales by 17%, overtaking Ford Motor Co. for the third place in vehicle sales. Light vehicle sales for Ford, Chrysler, and Nissan gained 11%.

Light-duty truck sales, including SUVs and Crossovers, stood at 6,57,790, an increase of 15.4% over July 2012. SUV sales rose to 1,23,719 units, an increase of 17.1%, and Crossover sales touched 283,130 units, an increase of 15.3%. American pick up sales is also increasing by leaps and bounds. Sales of Ford''s F-Series trucks climbed 23 % to 60,449. GM''s Chevy Silverado truck sales surged 45% to 42,080 units, and Chrysler''s Ram pickup sales increased 31 % to 31,314 units.

Traditionally, Trucks and SUVs are the most accessorized vehicles in the US and the sales surge in these categories is expected to drive demand for Add On Auto, the market leader in interactive accessories sales.

Results Driven Growth at Dealerships:

The sustained growth of automotive sales was reflected in dealerships as well. There was a net increase of 95 dealerships in 2012, bringing the total to 17,635 dealerships, according to NADA State of the Industry Report 2013. On Average, dollar sales increased 9.5%, and 2 employees were added to the workforce at dealerships.

With the automotive industry driving in top gear and taking the lead in pulling USA out of recession, the present growth in the number of dealerships is expected to go up significantly by the end of the year.

Again, new vehicle net profit rose to $111 from $23 in 2011. For the average dealer, dealership revenue grew by 9.20% and new-vehicle revenue by 12.80% in 2012. The new-vehicle department profitability as a percentage of gross profit increased to 30.40% from 28.80% in 2011 and the used-vehicle department profitability as a percentage of gross profit rose to 25.60 % from 25.40 % in 2011. The share of gross profit held by the service and parts department fell to 44 % from 45.80 % in 2011, but the share held by F&I and service contracts rose to 36.90 % from 33.80 % in 2011.

Dealers are now keeping a tight leash on expenses, spending money only in areas that deliver measurable results and pruning down drastically in areas where returns are sluggish or cannot be effectively measured. Dealer advertising is a case-in-point.

* New-vehicle dealers spent nearly $7.2 billion on advertising in 2012, up from $6.4 billion in 2011. However, the average ad expense per new vehicle sold fell to $621, down 1.10% from 2011. Dealer budgets for newspapers dropped by nearly 30 percentage points over the last decade, with the average dealership spent 26.50% of advertising dollars on Internet ads, up from 24.80% in 2011. Radio had a 15.90% share, which is the same as 2011, while television increased slightly to 20.20% from 20.10%.

The shift in industry outlook from "sales at any cost" to revenue and profit focused operations have opened up tremendous opportunities for online solution providers like izmocars, to lead with innovative solutions that will drive workforce productivity, customer centric dealer operations increasingly driven by online customer interactions, and revenue diversification focused on optimizing profit per car sale, by adding value in terms of accessories, service, parts and insurance, and customer references.

Take profit diversification, for instance. Dealerships across the country are prioritizing on adding value to new car sales, since new car margins are wafer thin.

Enter accessories, which is a huge profit multiplier in dealerships which are equipped and trained to sell accessories. The 150 dealerships across the country who participated in the Add On Auto Trend Report 2013 study sold $56 million in accessories in 2012. Using the AOA Virtual Accessories Con fugarator, these dealers sold more than 50% of the customers who were presented with accessories. Profits were astounding: with gross profits averaging 48.40%.

Increasingly, a larger share of revenues and profit are also coming from service, body shop, long term customer relationship cycles, and referrals.

Customer Centric Business Innovation:

Connected and empowered customers continued to drive US auto retail, with more than 85% of prospective buyers researching cars on the Internet and more than 80% going on Facebook before stepping into a dealership. As a result, dealerships are now focused on building long-term relationships with customers and prospects that create value for both. The new revenue opportunities in these dealerships are mainly in accessories, service, and customer relationship management.

Your company is ideally positioned to leverage these business opportunities. AOA (AddOnAuto), the Accessories sales solution of izmocars, the wholly owned subsidiary of your company, is the Industry leader in the accessories market. izmoWeb, the izmocars dealer website platform, as well as iCRM and iLM, the izmocars automotive Customer Relationship Management and Lead Management Solutions, are ideally positioned to gain from the market consolidation, since izmo solutions have enterprise management capabilities built in - something which is critical in a multi-brand, multi-dealer, multiple-geographical environment.

izmocars is the only solutions provider in the US who can provide the entire suite of solutions required by dealers to profit from the new impetus. The izmo solution suite for auto dealers include "Virtual Showroom" Websites, Online Marketing and Social Media, Automotive CRM and ILM, Accessories Sales, Service Management, and Dealership Performance Consulting.

Toyota and Nissan had already opted for AOA, and the company made a recent breakthrough by converting 3M and BESTBUY, both Fortune 500 companies. Automotive manufacturers are increasingly evincing strong interest in izmo solutions. Negotiations are on with several automotive OEMs.

AOA is a Virtual In-Dealership Accessories Store, incorporating a high-quality Visual Configurator with a Virtual Inventory System, enabling dealers to sell accessories efficiently.

Visual Accessories Configurator

- Using AOA''s advanced CGI technology, customers can virtually add or remove accessories, instantly viewing them on their vehicle of choice, and make their decision in minutes.

Virtual Inventory

- AOA gives clients access to their own Virtual Inventory system of accessories, enabling them to sell them without the need to hold a physical inventory.

- It connects clients directly to a large vendor database, which is constantly updated, giving them sales power without the expense.

- Web is your interactive online dealership designed to differentiate your unique brand from the competition and help you increase sales.

izmoWeb uses visually rich interactive tools, making the visitor experience engaging, informative, and fun.

izmoWeb''s interactive animations encourage your prospects to easily connect with the "right car". A prospect using an izmoWeb site will "fall in love" with the car!

The result is increased time spent on your website, which in turn results in a higher percentage of leads and increased conversions.

izmoMobi is a mobile website solution, bringing automotive websites into the hands of millions of consumers worldwide through their mobile phones. izmoMobi provides advanced functionality, allowing viewers to search for vehicles and , contact the dealer with a single-click.

izmoMobi incorporates a complete website delivery and flexible management system, allowing you to work the way you want.

izmoMobi helps dealers get access to the largest growing consumer base in the world. Dealers can now stay in touch with prospects even when they are on the road and Increase website coverage to include more consumers.

Direct lead generation with mobile phone contact information is another unique advantage of izmoMobi.

izmoRainmaker is a comprehensive, interactive, Internet marketing solution developed exclusively for the automotive retail industry by online marketing experts. Every izmocars customer works with a dedicated Rainmaker team, whose job is to increase your traffic, market your brand online through Search Engine Marketing (SEM) for car dealers, Social Media Marketing (SMM), and Search Engine Optimization (SEO).

izmoRainmaker Offers:

- Creative Services

- Social Media Marketing - Facebook, Twitter, Linkedin...

- Interactive Marketing Campaigns

- Organic Search Engine Optimization

- Website Optimization

- Online Brand Marketing

- Research & Data Analysis

www.izmocars.com/solutions/izmorainmaker.html

iCRM is an enterprise class Customer Relationship Management solution for the Automotive industry.

iCRM is delivered as a service, is completely Web- based and contains the following core functionalities:

- Sales Force Automation

- Finance & Insurance

- Campaign Management

- Service Management

- Business Development Center (BDC)

iCRM is certified by Ford, Jaguar, Lincoln, Volvo, Land Rover, Mercury, GM brands including Buick, GMC, Pontiac, Cadillac, Hummer, Saturn, Honda, Acura, Nissan, Infiniti, Mercedes Benz, Chrysler, Subaru, Saab, and Mazda.

www.izmocars.com/solutions/icrm. html

iService is the automotive Industry''s first comprehensive online vehicle service management solution for auto dealers. This innovative service management solution allows service customers to schedule their service appointments online, and dealer service departments to efficiently manage service appointments and optimize shop loading, resulting in better revenue, and loyal customers.

iService Helps dealers achieve:

- Better Service Management

- Higher Profitability

- Increased CSI Scores

- Higher Service Department Productivity

- Reduced Loaner Expenses

izmoStudio is world leader in Digital Imagery and Interactive Media Solutions for the Automotive vertical, since 2002. izmoStudio produces High Quality Photographic images and Digital Animations for the North American and EU markets, covering all major makes and models.

Large Automotive Photography Studios strategically located in Long Beach, USA and Brussels, Belgium, combined with state-of-the-art post-production facilities in Bangalore, enables izmoStudio to quickly produce large volumes of work, covering about 500 automotive models.

Presently, the izmoStudio client list includes leading portals like Yahoo!, AOL, AutoUSA, and Jato Dynamics, as well as OEMs like GM, Ford, and Mitsubishi Motors.

Europe - On the Path to Recovery:

The European car market grew 5% in July, supporting a recovery in the second half of 2013. Registrations of new cars in Europe rose 4.80 % compared to the same month a year ago to 1.02 million vehicles, according to data published by that German Auto Industry Association VDA. Passenger car registrations increased in Germany, UK, France and Spain lar month.

Sales in Germany, the region''s biggest economy, were up 2%.

UK registrations increased by 13% and industry association SMMT raised its forecast for the full year, predicting growth of 8% to 2.22 million vehicles instead of the 3% increase foreseen earlier. UK sales have risen by 10% in the first seven month'', helped by 0% financing and price discounts. Demand in the UK continued to expand because of improvements in both private and fleet sales in July.

French car sales rose 1 %, the first increase in almost two years, as new models and dealer discounts attracted customers. G)r sales in Spain rose 15%, supported by a government-backed scrappage program. On the other hand, Italian car sales fell by 2%, which is the smallest contraction in almost two years.

The sustained downtrend in the market has resulted in web focused business restructuring in dealerships across Western Europe, with traditional marketing practices giving way to a more efficient web-centric, customer-focused sales and business retention strategy.

As a result, izmoEurope, the European subsidiary of your company, was able to achieve a breakthrough in France. Lamirault, a prominent dealer group in France is now powered by izmoEurope, with 30 websites currently live. Izmo is serving the Metin group with 19 websites, and the Kayser Group with 4 websites. More than a 100 dealer websites are now in various . stages of design and production for another prominent automotive group in France. izmoEurope is already powering a premium Aston Martin dealership in Belgium, and negotiations are in advanced stages with several OEMs.

The izmo interactive visual marketing division in conjunction with the izmo automotive studio located in Brussels is currently serving JDPA, EUCON, EUROPCAR, EUROTAX (Global), HERTZ (France, UK, Italy, Spain and German'' , Orange Wheels, Tusker Direct (UK), MEINAUTO (Germany), ELLITE, ACHETER SA VOITURE, AUTOREDUC Lamerault, Metin, Kayser (France), CAREVILLE, Click Your Car (Belgium) andTerberg Leasing (Netherlands).

Indian Automotive Industry at the crossroads:

For the first time in the last 12 years, the Indian auto industry registered a domestic sales slide of 8% in July, and the twowheeler market remained more or less flat. Fluctuating fuel prices and high interest rates remain huge impediments to fast-paced growth in retail auto sales.

Market leader Maruti Suzuki managed to sell 83,299 vehicles in July, registering a growth of 1.3% over July 2012. I ivundai Motor India Limited, the country''s second largest car manufacturer and the largest passenger car exporter :;old 48,704 vehicles in the same month, a marginal decrease over the 52,845 vehicles sold during the same month last year. Mahindra &Mahindra registered a sales volume of37,096 vehicles, a drop of over 21.17%.

With 14,470 vehicles sold during July,Toyota Kirloskar Motor reported a 10% decrease in sales, against 16,062 vehicles sold in the same month last year. Tata Motors has reported sales of 87,566 vehicles, less than 14% over the same month last year.

To cope with the downturn and fierce competition, car dealers are now increasingly turning to web-based technology solutions. Carazoo, the only Automotive solutions provider in the Indian market to provide 360 degree auto retail solutions, from the motor trend. in Auto Portal to Virtual Dealer Showrooms complete with virtual vehicle walk-abounds and interiors, is now experiencing fast-paced growth. The Carazoo suite of solutions also include online marketing, Accessories Sales, CRM and Lead Management Solutions.

Market Opportunity and Growth Strategy:

USA ''

The Total dollar sales at US new-car dealerships increased by 9.20% in 2012, the third full year of post-recession growth. New car sales showed a 12.80% increase in revenue, while used car sales registered a 7.10% increase in revenue, a 1.60% increase in transaction prices, and a 12% gross margin on retail used-car selling prices.

Online, Connected and Networked:

The average dealer in the US is now enthusiastic about online sales and dealer operations, thanks largely to the high cost of traditional advertising as well as OEM initiatives to take dealerships online. New-vehicle dealers spent nearly $7.2 billion on advertising in 2012, up from $6.4 billion in 2011. In 2012, the average dealership spent 26.50% of advertising budgets on online advertising and promotions, up from 24.80% in 2011.

As a result of restructured advertising expenses, the average ad expense per new vehicle sold fell to $621, down 1.10%

1 from 2011. It is not a coincidence that in the past 10 years, dealer budgets for newspapers have dropped by 30%.

Even as dealers are scrambling to drive revenue and profits from multiple sources, solutions like AOA, the izmocars accessories sales solution, is seeing exponential growth, and we expect this trend to further gain steam, with dealer consolidation demanding enterprise capabilities, something which our competitors lack to a great extent.

With an average internet advertising spend to the tune of $90,106 per dealer, this represents an annual market opportunity of approximately US $ 1,589,019,310 in recurring high margin revenue.

4 European Union:

By 2013, izmocars Europe BVBA has been able to expand its client-base to include JDPA, EUCON, EUROPCAR, EUROTAX (Global) HERTZ (France, UK, Italy, Spain and Germany) Orange Wheels, Tusker Direct (UK), MEINAUTO (Germany), Lamerault, ELLITE, ACHETER SA VOITURE, AUTOREDUC, Metin, Kayser (France), CAREVILLE, Click Your Car (Belgium) and Terberg Leasing (Netherlands). Services now being offered i nclude studio services, custom photography, interactive virtual dealership websites, retouched used car image portfolio, lead management, and accessories sales.

Carazoo:

Carazoo, now a 51%-49% Joint Venture between Motortrend, a leading global automotive portal and publications group and Logix Microsystems Limited, has achieved impressive growth in the last fiscal. Inside just 3 months of launch, the rebranded motor trend. in portal clocked 554,317 page views in July 2013, up from 410,604 page views in June motor trend. in is India''s only Car Portal that provides a multi-brand Online Showroom experience to prospective car buyers. Visitors can request to test drive any car and also get car dealers to chase their business.

Carazoo was the first to introduce the concept of Online Showrooms for Car Dealers in India. Carazoo is also offering Online Marketing Solutions to Auto Dealers. Google acknowledged the online advertising prowess of Carazoo in a case-study.

On a strategic evaluation, Cap Gemini named Carazoo as one of the 7 Global entities that will influence Auto Retailing along with Yahoo, eBay, Wal-Mart, and Edumunds.com.

With 117 online showrooms currently live and several in various stages of production, Carazoo is the dominant player in the car dealer website space. The Carazoo website portfolio includes 37 Maruti Suzuki dealer websites, 16 Volkswagen dealer websites, 11 Hyundai dealer websites, 9 Honda websites, 9 Mahindra websites, 7 Chevrolet websites, 5 Ford websites, 4 Renault websites, 3 Tata Motors websites, 3 Nissan websites, 2 Skoda websites, and a Jaguar and Landrover website, besides Bajaj, Hero and Honda websites in the 2-wheeler segment, group websites, and Trucks & Tractors websites. Some of these Carazoo-powered online showrooms are: Mody Group, WC Mahindra (Hyderabad),, Kun Group (Chennai), Bimal Auto, KHT Group (Bangalore), Premier Group (Kolkata) and Asset Group (Pune).

Growth Paths:

The increase in US consumer demand for new cars resulted in enhanced spends on innovative marketing solutions and platforms where results were attractive and measurable. Consequently, izmocars saw rapid growth in segments like accessories sales.

Forays into other high-potential markets like Europe and Asia have started producing results for izmocars, since all of izmocars solutions can be adopted across geographies.

The India advantage of high-end support services at a relatively modest cost is a strategic advantage that greatlv supports the organic growth of the company. Unlike other players, the India component is not merely another cost-cutting measure for izmocars - it is integral to the very corporate structure of the company, built into its corporate DNA.

Growth Strategies:

* Izmocars is uniquely positioned as the innovation leader in US automotive retail, providing solutions like AddOnAuto, an accessories sales solution which is now the market leader in the US; apart from market-leading interactive selling tools and automotive photography, izmocars aims to consolidate market position and thought leadership as the only end-to-end Automotive e-Solutions Provider in the US automotive retail, capable of providing the entire range of digital services now required to run a profitable dealership, ranging from dealer websites, mobile websites and portals to online marketing, social media, social media connected CRM and ILM systems, accessories sales, service management, integrated telephony and dealer performance consulting.

The Company is also consolidating its market leadership in the OEM space for high-end imaging, automotive animation and web solutions by expanding its OEM portfolio of GM, Ford, Toyota, Mitsubishi, Nissan, Aston Marti i, Renault and Hyundai. Negotiations are at an advanced stage with several OEMs and dealer groups in Western Europe and Latin America.

SUBSIDIARIES:

As required under Section 212 of the Companies Act, 1956, the audited statements of accounts along with the Directors'' Reports thereon of the Company''s subsidiaries for the year ended March 31,2013, are to be annexed with this Report. However, as per Ministry of Corporate Affairs'' General Circular no. 2/2011 dated 8th February, 2011 the Ministry has granted general exemption from attaching the audited account of subsidiaries to Holding Company''s Annual Report to all the Companies subject to certain disclosures to be made in the Annual Report of the Holding Company. The same disclosures have been made in the prescribed format and forms part of this Report.

DIVIDEND:

I n order to augment the ongoing expansion programmes, the Directors have decided to plough back the profits into the system and regret inability to recommend dividend.

MXED DEPOSITS:

our Company has not accepted any deposits.

IIUMAN RESOURCES:

As on March 31,2013 the employee strength was 167.This includes staff in India and in overseas offices.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and the Company''s Articles of Association, Mr. R N Chawhan, Director of the Company retires by rotation and is eligible for reappointment.

Mr. Sanjay Soni was appointed as Managing Director of the Company for a period of three years with effect from 1st April 2010 to 31st March 2013. The Board at its meeting held on 6th February 2013 reappointed him as Managing Director for a further period of three years commencing forms April 2013 till 31st March 2016 subject to the approval not the members of the Company and the Central Government (since his remuneration exceeds the limits prescribed in the Schedule XIII).

The term of Chairperson as Whole time Director of the Company expires on 30th September 2013. It is recommended to appoint her as Whole time Director for three years with effect from 1st October 2013.

AUDIT COMMITTEE:

Audit Committee constituted by the Board of Directors with requisite composition to fall in line with the prevailing laws continued to discharge its functions during the year under report.

AUDITORS:

Mr. R Vijayanand, Chartered Accountant, the retiring Auditors of the Company hold office until the conclusion of the forthcoming Annual General Meeting and is eligible for reappointment. The Company has received a certificate from him that his reappointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956

AUDITORS''REPORT:

As regards the comments of the Auditors in their Report dated 2nd September, 2013, relevant notes on accounts are self explanatory.

PARTICULARS OF EMPLOYEES:

Details of employees as required under Section 217(2A) of the Companies Act, 1956,is as follows:

Age Designation & Remuneration

Name Qualification (Yrs) Nature of Duties Per annum

Sanjay Soni 45 Managing Rs.60,00,000/-* MBAfrom years Director



Name Experiance Date of Joining Details of last

Sanjay soni 19 years 18-09-1995 Business

''includes all allowance and perquisites

DIRECTORS'' RESPONSIBILITY STATEMENT:

The Directors have fulfilled their responsibility for the preparation of the accompanying financial statements by taking all reasonable steps to ensure that:

a. These statements have been prepared in conformity with generally accepted accounting principles and appropriate accounting standards.

b. Judgments and estimates that are reasonable and prudent have been made where necessary.

c. The accounting policies selected and applied consistently give a true and fair view of the financial statements.

d. The Company has implemented internal controls to provide reasonable assurance of the reliability of its financial records, proper safeguarding and use of its assets and detection of frauds and irregularities. Such controls are based on established policies and procedures, and are implemented by trained, skilled, and qualified personnel with an appropriate segregation of duties.

e . The Company''s Statutory Auditors, Mr. R Vijayanand, Chartered Accountant, have audited the financial statements in accordance with generally accepted auditing standards and practices as indicated in his report.

GOING CONCERN:

In view of the initiative taken in development of diversified products, which promise potential business, the Directors consider it appropriate to adopt the financial statements on a going concern basis.

C. Foreign Exchange Earnings & Outgo:

During the year, the details of Foreign Exchange transactions were:

Earnings - Rs.l451.87Lakh(PYRs.l,377.97Lakh)

Outgo - Rs.536.07 Lakh (PYRs.508.77 Lakh)

ACKNOWLEDGMENT:

Your Directors place on record their deep appreciation for the support extended by the business associates, customers and vendors. Your Directors place on record their gratitude of the significant contribution made by employees at all levels who have been instrumental in enabling your Company to make rapid progress during the year. Your Directors also thank Bankers, Government and Quasi Government Agencies, STPI Authorities, Capital market, Media and the Shareholders fraternity for their support during the year.

By order of the Board

for Logix Microsystems Limited

Place: Bangalore Shashi Soni

Date: 2nd September, 2013 Chairperson


Mar 31, 2012

Dear Shareholder,

The Directors have pleasure in presenting the Seventeenth Annual Report together with the Audited statements of accounts for the year ended 31st March, 2012.

Financial Highlights:

Amount in Lakhs Rs.

Year ended Year ended

Particulars March 31, 2012 March 31, 2011 (Audited) (Audited) Stand-alone Stand-alone

Net Sales/Income from Software Services 1,787.62 4,058.61

Other Income 340.08 219.54

Total Revenue 2,127.70 4,278.16

Expenditure

A)Direct costs 283.06 2,166.19

B)Decrease/(Increase) in Work in Process 2.24 195.15

C)Employee Benefit Expenses 871.74 1,134.20

D)Financial Costs 283.06 58.36

E)Depreciation/Amortisation Expenses 82.78 116.29

F)Other Expenses 356.84 451.13

Profit Before Tax & Exceptional Item 247.98 156.83

Provision for diminution in the value of Investment - 4.23

ESOP balance written off 238.83 -

Rebate on Export (399.41) -

Profit Before Tax 87.40 152.61

Profit from continuing operation before tax 61.70 140.83

Tax Expenses

Current Tax (11.34) (32.11)

Less: MAT Credit Adjustment (13.03) 30.00

Deferred Tax 3.31 0.21

Profit/(Loss) for the year from Continuing Operations (A) 40.65 138.93

Profit/(Loss) for the year from discontinuing Operations (B) 25.70 11.77

Total Expenses for discontinuing operations (C) (4.90) (2.34)

Profit/(Loss) for the year from discontinuing operations after tax (D) 20.80 9.42

Net Profit 61.45 148.36

PERFORMANCE

The performance for the year has shown a de-growth as compared to the previous year in terms of total revenues of the Company. This is primarily due to the slowdown in the Indian economy as a result of the high interest rates and complete standstill on the governmental front. As a result, the total income has decreased by more than half over 2010-11. The main reason for the reduction in revenues is the drop in sales of Enterprise Connectivity Solutions, which exhibited a sharp reduction from Rs. 232 million in FY 2010-11 to Rs. 41 million in FY 11-12, International sales of Izmocars products recorded a drop of approx. 20% as compared to FY 2010-11. Other income has shown a substantial increase as compared to the previous year. This is mainly on account of income from rental and foreign exchange fluctuation gains.

SUBSIDIARIES

The Ministry of Corporate affairs, Government of India has issued a circular no. 2/2011 dated 8th February 2011 granting general exemption to Companies under Section 212 (8) from attaching documents referred to in section 212(1) pertaining to it is subsidiaries, subject to approval by the Board of Directors of the Company and furnishing of certain financial information in the annual report.

DIVIDEND

In order to augment the ongoing expansion programmes, the Directors have decided to plough back the profits into the system and regret inability to recommend dividend.

FIXED DEPOSITS

Your Company has not accepted any deposits.

HUMAN RESOURCES

As on March 31, 2012 the employee strength was 203. This includes staff in India and in overseas offices.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956, and the Company's Articles of Association, Mr. Vijay Kumar D Gupta, Director of the Company retires by rotation and is eligible for re-appointment.

Your Director regret to report that Dr. Devindra Kumar Bhatia, senior Economist who had an enviable track record and a renowned Economics, breathed is last on 13 th October, 2011 and hence ceased to be Director. Your Directors whilst placing on record deep appreciation for the services rendered by Dr. Bhatia during the tenure of his office, also convey condolences to the family. Your Board will indicate suitable person in place of Dr. Bhatia as a Director.

AUDIT COMMITTEE

Audit Committee constituted by the Board of Directors with requisite composition to fall in line with the prevailing laws continued to discharge its functions during the year under report.

AUDITORS

Messrs Vasan & Sampath, Chartered Accountants, Auditors of the Company retire at the end of forthcoming Annual General Meeting and have intimated their intention not to seek re-appointment. Based on the recommendation of the Audit Committee and in line with the provisions of the Companies Act, 1956, the Board recommends the appointment of Messrs R. Vijayananda & Co., Chartered Accountants, Bangalore as Auditors to hold office up to the date of the next Annual General Meeting.

AUDITORS' REPORT

As regards the comments of the Auditors in their Report dated September 4th 2012 relevant notes on accounts are self explanatory.

PARTICULARS OF EMPLOYEES

A Statement of particulars of employees as required under Section 217(2A) of the Companies Act, 1956, is annexed and forms part of this Report.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors have fulfilled their responsibility for the preparation of the accompanying financial statements by taking all reasonable steps to ensure that:

These statements have been prepared in conformity with generally accepted accounting principles and appropriate accounting standards. Judgments and estimates that are reasonable and prudent have been made where necessary.

The accounting policies selected and applied consistently give a true and fair view of the financial statements.

The Company has implemented internal controls to provide reasonable assurance of the reliability of its financial records, proper safeguarding and use of its assets and detection of frauds and irregularities. Such controls are based on established policies and procedures, and are implemented by trained, skilled, and qualified personnel with an appropriate segregation of duties.

The Company's Statutory Auditors, Messrs Vasan & Sampath, Chartered Accountants, have audited the financial statements in accordance with generally accepted auditing standards and practices as indicated in their report.

GOING CONCERN

In view of the initiative taken in development of diversified products, which promise potential business, the Directors consider it appropriate to adopt the financial statements on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars of Board of Directors) Rules, 1988, are as follows:

A. Conservation of Energy

The operations of the Company are not energy intensive. Adequate measures have been taken to conserve and optimize the use of energy through improved operational methods.

B. Technology Absorption and Research & Development (R&D)

The Company uses the latest technology available in modern technology applications. Indigenous technology available is continuously being upgraded to improve overall performance. The Company has a dedicated team of technically competent personnel who relentlessly work on technology upgradation and development related fields.

Research and Development continues to be given very high priority in Software Technology in the area of telecommunica- tions, and hardware technology in the area of embedded systems.

ACKNOWLEDGMENT

Your Directors place on record their deep appreciation for the support extended by the business associates, customers and vendors. Your Directors place on record their gratitude of the significant contribution made by employees at all levels who have been instrumental in enabling your Company to make rapid progress during the year. Your Directors also thank Bankers, Government and Quasi Government Agencies, STPI Authorities, Capital market, media and the shareholders fraternity for their support during the year.

Place : Bangalore By Order of the Board

Date : 4th September, 2012 For Logix Microsystems Limited

Shashi Soni

Chairperson

 
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