ABM Knowledgeware Ltd promoted by Mr. Prakash B. Rane, is one of the few IT companies in India with exclusive focus on E-Governance since 1998. Within a short span of time it has attained a leadership position in the niche space of E-Governance. The company has conceptualized various pioneering and successful strategic solutions in E-Governance, which have become benchmark in the industry. ABM was recently awarded the "NASSCOM Emerge 50 Leaders 2009", which acknowledges ABM's achievements as top 10 emerging companies in India.
Dear Investors,
In the past, service delivery mechanisms of the government departments left much to be desired in India. Cramped spaces; shabby ambience; discourteous dealing personnel and their chronic absenteeism; demands of gratification; inefficiency in work; long queues; procrastinating officials; procedural complexities; etc., were some of the undesirable features of the working of the government departments.
Consequently, a visit to government department by a citizen to make use of any service used to be a harrowing experience. With the rising awareness amongst the citizens and their better experiences with the private sector – the demand for better services on the part of government departments became more pronounced.
E-governance, which is a paradigm shift over the traditional approaches in Public Administration, means rendering of government services and information to the public using electronic means. It has ushered in transparency in the governing process; saving of time due to provision of services through single window; simplification of procedures; better office and record management; reduction in corruption; and improved attitude, behavior and job handling capacity of the dealing personnel.
Applying for local government services and accessing official data may soon become easier, with the information technology department looking to roll out an NeGP, e-District etc. All of India's 626 districts will 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 mission mode 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 capital expenditure and the operational expenditure. Almost INR 10,000 crore has already been done, and another INR 30,000 crore will be incurred during the remaining project life.
¨ PE = 9.95 On the basis of annualized forward earnings the 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 Rs 78 is trading at about 3 times its book value price.
¨ Trading volume = Avg. 1.42 lacs shares (approx) per day –Earlier the volume was low however in the last few days the liquidity has improved with investors rushing in.
¨ EPS = Rs 8.71 – Company has recorded an EPS of Rs 8.71 on trailing twelve months basis.
¨ 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%]
¨ 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
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 access government 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, and
3. 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 to automated applications for the government sector, which helps in achieving SMART governance which some define as:
v Speed
v Moral
v Accountable/Accurate
v Responsive and
v Transparent Governance
ICT (Information, Communication & Technology ) model helps to develop strong and healthy relationship between:
v G2C (Government & Citizens),
v G2B (Government & Business Enterprises) and
v 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 own internal systems and procedures before electronic transactions with citizens and business are introduced. 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 and
5. 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 use of 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 be less time consuming and easy to carry out. Citizens can carry out variety of tasks, especially those that involve multiple government departments, without initiating contacts with each government department individually.
Government to Business (G2B) sector:
Includes both the procurement of goods and services by the government as well as the sale of surplus 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 hiring through electronic means. There are large numbers of software companies, which are producing number 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 to their 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 procurements in the government. Developing countries, where there is great pressure to minimize costs due to shortage of funds, G2B are being encouraged by the governmental agencies.
National e-Governance Plan…
The Government of India had approved the NeGP in May 2006 with the vision: "Make all Government services accessible to the common man in his locality, throughout common service delivery outlets, ensure efficiency, transparency & reliability of such services at affordable costs to realize the basic needs of the common man".
The NeGP currently consists of 27 Mission Mode Projects (MMPs) and 8 Support Components to be implemented at the Central, State and Local Government levels. These include Projects such as
v Income Tax,
v Passport/VISA
v Company Affairs
v Central Excise
v Pensions
v Land Records
v Road Transport
v Property Registration
v Agriculture
v Municipalities
v Gram Panchayats (Rural)
v Police
v Employment Exchange
v E-Courts
Þ Government has already spent about INR 10,000 crore ($2.91 billion) on such projects & is expected to pump in another INR 30,000 crore in other various projects under the National e-Governance Plan (NeGP) in the next few years.
Þ 14 major E-Governance projects, including some high-profile ones such as MCA-21, have already gone live. The Indian government aims to have all 27 mission mode projects envisaged under the E-Governance blueprint ready by end 2014.
Þ State Wide Area Network (SWANs): Government has approved the scheme for establishing State Wide Area Networks (SWANs) in 29 States and 6 UTs across the country at a total cost of Rs 3334 crore.
Þ Common Services Centre's (CSCs): The CSC scheme envisages the establishment of 100,000 broadband Internet - enabled kiosks in rural areas, which would deliver government and private services at the doorstep of the citizens.
Þ An additional 10,000 CSCs would be set up in the semi-urban/urban areas.
Þ The bid process for selection of the Service Centers has been completed for a total of 92560 CSCs in19 States.
Þ 80,000 Common Services Centre's have been set up across India; the number is expected to reach one lakh by the end of the fiscal year.
Þ State Data Centers (SDCs): State Data Centers are proposed to be established across 29 States & 6 Uts in the country along with Disaster Recovery (DR) in order to provide shared, secured and managed infrastructure for consolidating and securely hosting State level data and applications.
v The SDC scheme was approved by the Government in January 2008 at a total cost of Rs 1633 crore.
v DIT has sanctioned SDC proposals of 23 States at a total cost of 1077 crore.
v 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.
MCA-21
v 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 is growing fast and adjusting to the demands of globalization.
v MCA 21 services are available 24X7 anytime and anywhere through MCA Portal.
v With more than 8 Lakhs registered entities, the MCA has over 60 million pages of corporate information in its database.
v 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.
v The MCA 21 has obtained the Excellence in Government Process Re-engineering Category Award 2007-08 (gold).
E-Government Initiative @ State Level
v Project JEEVAN in Delhi.
v Project SAMPARK in Chandigarh.
v Project BHOOMI in the state of Karnataka.
v Project ASHA, SANWAD in the state of Assam.
v Project E- MITRA service centre's in the state of Rajasthan.
v Project GYANDOOT, ROGI KALYAN SAMITIS, in the state of Madhya Pradesh.
v Project KOSHVAHINI, WARANA "WIRED VILLAGE" in the state of Maharashtra.
v Project SUSTAINABLE ACCESS IN RURAL INDIA (SARI) in the state of Tamil Nadu.
v Project JANANI SUVIDHA YOJANA, AKSHAYA, SWIFT, PEARL, ASRAYA in the state of Haryana.
v Project E-SEVA, BHU BHARATI, E-VILLAGE CHILUVURU, UNPAN virtual library & smart government in the state of Andhra Pradesh.
v Project JAN SEVA KENDRAS, THE CHIRANJIV YOJANA, NIRMAL GUJARAT, SWANTAH SUKHAY 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, but formidable 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 with the situation could be that governments enter into arrangements for leasing of computers.
3. Establishing complete connectivity between various ministries and departments so that transfer of files 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 from English into other languages can be made, therefore, the problem is manageable provided there is enough motivation to do this onerous task.
5. Changing the mindset of the government employees who are used to working only in the manual mode. This is a big task and needs patience and careful planning. Workshops, seminars, and training programmes 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 the digital divide between the rural and urban India.
Few Milestones…
v In 1998, Empanelment in the Turn Key Solution Providers in IT (TSP) panel of Government of Maharashtra with the first ever 15 IT Companies.
v 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.
v CSI-YITP Award for ABM's e-Gov products: ABM CARE ®and ABM MOIS 2000®.
v A largest Municipal Body in Asia replicated ABM CFC ®in all their 24 Municipal Wards as the first Citizen Centric e-Gov initiative in 2002.
v Govt. of Maharashtra announced Rajiv Gandhi Award for Administrative Reforms for ABM's Setu ® at Thane Collect orate CSI Award for Best Citizen Centric Project for Setu ® at Thane Collect orate in 2003.
v Launched ABM's prestigious e-Governance Solutions viz. ABM MAINet ® in Kalyan Dombivli Municipal Corporation (KDMC) as the first Comprehensive e-Governance solution for Urban Local Bodies in India.
v KDMC's e-Governance Project bagged "Intelligent Enterprise Award" for MAINet ™ by India Express Group at Colombo.
v Entry into Consumer Relationship Management(CRM) Space for Power Sector through a multi-crore order for ABM CFC ® from an Electricity Distribution Company for roll out of ABM CFC ® all over Maharashtra.
v 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.
v Empanelment with State Governments of Goa, Punjab, Haryana, Uttar Pradesh and National Institute of Smart Governance.
v Won the prestigious "Wisitex India Urban Development Lead Organization of the Year-Information Technology" award, conferred by Minister Urban Development ,Govt of Goa.
v Received "Deloitte Technology Fast 500" award as120th Fastest Growing Technology Company in Asia-Pacific.
v Received "Deloitte Technology Fast50" award as13th Fastest Growing Technology Company in India.
v Bagged a single order of Rs. 116 Crores from Municipal Corporation of Greater Mumbai for SAP Optimization, enhancements, change management etc.
v Winner in " NASSCOM EMERGE 50 LEADERS " in recognition of ABM's outstanding work in domestic markets as TOP 10 emerging IT companies in India
v Ministry of Urban Development, Govt. of India has awarded National Urban Water Awards (NUWA) on Municipal Corporation of Greater Mumbai (MCGM) for ABM's Water Billing & Accounting Software viz. : ABM AQUA ®, which is being used across their 24 municipal wards.
v 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.
Project @ KDMC
v 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 the Corporation 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 entire 400 processes, which were carried out by KDMC.
v Hon. Chief Minister of Maharashtra, Shri Vilasrao Deshmukh, dedicated this e-governance project to the citizens of KDMC on 24th of September 2002 & expressed that this pattern could be replicated in other Municipal Corporations.
v Today, with total 7 CFCs, located in various ward offices of KDMC, connected by Leased Lines, Fiber Optics or Radio Frequency, KDMC's e-Governance is by far, the most comprehensive & successful computerization project in Maharashtra and perhaps across India, and has set an example of good governance for all Government Organizations in India.
v Government of Maharashtra has taken decision to roll out this software across all the ULBs in Maharashtra. 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 of the urban infrastructure and urban governance .
v 'This project gave a rise to ABM and it was one more to add on the kitty of Mr. Rane. ABM got several orders due to this projects. ABM started making mark in e-governance sector and played a vital role to improve the Government."
Projects…
Property Tax Information System
v It was focused on the Decentralization and Computerization of entire Assessment, Billing and Collection of Property Tax for all 24 wards offices at MCGM.
v MCGM serves over 1.27 crore (12.7 MN) citizens with the help of approximately 1,17,000 staff deployed over 68 departments spread across 437 square kilometers span.
v Property Tax Assessment and Collection Department (A & C) is one of its largest departments that contribute more than 25% of revenue to Municipal Corporation of Mumbai.
v The key functionalities of this department are Assessment of Properties, Billing and Collection. Approximately 2500 staff contributes towards fulfilling the activities of this department from 24 ward offices across Mumbai.
SAP @ MGGM
v The MCGM (Municipal Corporation of Greater Mumbai) project has gone live in April 2007. This would cover core functions like Finance, Materials Management, Project Systems, Human Resource, Funds Management, Plant Maintenance and Real Estate. Apart from this, it would also cover a specific Public Sector function i.e. Citizen Portal and Ward Management.
v Initially the value of this contract was US$ 10Mn, which includes engagement with MCGM for 5 years, after implementation during the term of the project.
v ABM bagged this because of its Quality Service and creditability in MCGM.
v ABM provided Subject Matter Expertise, software licenses and entire post-implementation support to MCGM.
SETU @ Thane
v Citizen Facilitation Centre (CFC) is named Setu (means Bridge) signifying a bridge of facilitation between citizens and the government.
v Objective: Time Bound Service Delivery to citizens by establishing a computerized CFC for rendering various Citizen Services in a phased manner but with more convenience, speed and measurable performance without compromising the credibility of the process.
v "Setu®" was designed, developed and implemented by ABM in year 2000.
v This project was rolled out by the state Govt in the entire state after its initial success in Thane District.
v This project went on to win several awards at state and national level.
UDYOG SETU
v ABM presented a comprehensive proposal, which also involved high degree of BPRs and new methods of inter-departmental collaborations for over 20 departments and agencies.
v It was decided to first implement first phase of the project with the help of Thane Belapur Industries Association (TBIA).
v This center was named as "Udyog Setu". ABM commissioned the center within 3 months of receiving the work order in August 2004.
v It provided more than 5000 services in initial 2 years period.
v The initial scope was limited to direct services provided by DCI and MIDC. Later 3 services of Maharashtra State Pollution Control Board (MPCB), were also added to the kitty.
AQUA
v MCGM serves over 1.27 crore citizens.
v MCGM provides are almost 100+ services and it gives immense scope for ABM in near future.
v ABM implemented the entire solution for water billing and accounting at MCGM.
v Database is centralized, so consumers can make payment of AQUA bills in any of 24 wards of MCGM spread across the entire city .
v In near future, this solution can be in demand as others are and can be asked to replicate it over other Municipal Corporation.
MBMC
ABM has successfully implemented Birth & Death, Property Tax Assessment and Billing software and Water Billing modules at MBMC.
For Market License, Accounts, Complaint and Redressal Monitoring (CARE) are also in demand by MCGM
Around 1.5 Lakhs properties are assesses by MBMC under this e-Governance implementation.
MBMC is evaluating possibility of increasing the scope of existing e-Governance solution by opting for comprehensive solution for e-Governance as implemented by KDMC (MAINet™ –Municipal Administration Information Network)
MSEDCL
v Based on the evaluation of bids and recommendations from Delloitte, MSEDCL selected ABM Knowledgeware Ltd. in 2005, for providing the application software and for providing manpower for to operate the CFCs.
v ABM delivered the application software, ABM CFC® as per the envisaged scope of CFC functioning. ABM operated the 50 pilot CFCs till March 2010.
v Thus, the 50 pilot CFCs were operational for varying periods, ranging from thirty six months to fifty one months.
v ABM is aiming at all the 500 divisions to implement its software.
UMC
Major area of revenue generation for any ULB is from the property tax collected.
To tap on this department UMC wanted to implement a solution for property assessment and billing.
UMC has approved the project of implementation of more comprehensive scope of e-Governance as a next step and the project is under implementation under the JNNRUM scheme of Govt. of India.
UMC has chosen MAINet™ for this project.
Total properties being assessed by UMC is approximately 1.6 Lakhs.
MAINet™ Replication
v Govt. of Maharashtra has undertaken an ambitious project of rolling out e-Governance in 231 municipal bodies across the state.
v Around 42% percent of the urban population in Maharashtra will get better citizen services as a result of this project.
v Citizen centric e-Governance will be in place for all the ULBs by covering all the Citizen services, Revenue Dept, Accounts, Portal, MIS and integration with GIS.
v ABM has been selected as the Software Implementation Partner (SIP) for this project.
v ABM has targeted to complete it by 2012 whereas the due date for completion is March 2013.
Business Verticals…
1. ERP practice in Govt segment has 3 distinct segments, viz. Supply of License, Implementation and Post Implementation support for extended periods for Institutionalization of ERP.
2. In Urban Local Bodies segment, ABM is offering its ABM MAINet & Implementation of SAP with and without integration with ABM solutions.
3. ABM offers solutions like ABM CFC ®, ABM AQUA ®, ERP Solutions from MNCs like SAP bundled with ABM's Subject Matter Expertise IT Services for implementation & post-implementation .
These verticals are having ample of scope to penetrate and the government is on the bull to improve its services, which gives an opportunity for ABM to explore revenue and value.
Products…
1. MAINet ™ Enterprise is an integrated suite of application products to manage the complete working of a typical municipal corporation of any size. This is the key product for revenue generation in coming years.
2. ABM CARE ® is browser-based, which can be installed at a citizen/consumer interface like CFC (Citizen Facilitation Center) or on a Website for accepting complaints from citizens. For development of an economy, a citizen has to be satisfied by its government and its services.
3. ABM MOIS 2000® is powerful tool which facilitates the Herculean task done by any government or semi-government organization of having to manage and work on a large number of letters and cases/files every day involving complex work-flows.
4. CRM Solutions is similar to CFC model.
Investment Rationale…
v The company is one of the few companies in the E-Governance space and has already established a name for itself.
v The Government of India has planned an outlay of Rs 40,000 crore for the E-Governance sector. ABM being a renowned player will be a big beneficiary of the same.
v ABM's product for computerization of mid-sized urban local bodies has been adopted by Ministry of Urban Development, Government of India for recommendation to other ULBs in India. The same shall help ABM to procure orders from other state governments besides Maharashtra.
v The recent recognition of the company by NASSCOM shall help it bag further orders in consortium with the larger players.
v ABM is available at a PE multiple of 5.5 based on it's annualized forward earnings, while the other listed company like Vakrangee Software's Ltd is available at a PE multiple of 15.
v The management has been maintaining their stake in excess of 60%, while we believe that they hold another 10% through indirect holding.
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 scale roll out of e-Gov, funding can become a foremost issue. The e-governance initiatives can be funded either through the government sector or through the private sector. Private sector funding is possible for certain project that have the feasibility of creating a service that is chargeable 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 of Personal Information, which has possibility of misuse by any vested interest. Thus, the citizen should be ensured that the information flow would pass through reliable channels.
Delay in Decisions – ABM is largely dependent on government projects and government decisions can be delayed due to election or change in government.
Standardization – Defining the standards for the various Government services is another issue that needs to be addressed. The standards need to be worked out not only for the technologies involved but also for issues like naming of websites to creating E-Mail addresses.
2 Phase Buying Strategies Suggested [Always buy in SIP ways]
1st Phase : Buy at the current price range Rs 72-78 [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!!!
CMP 277 :)
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