Soffina
IPO Infoline
31st December, 1999 INDUS NETWORKS LIMITED
For prospectus, go to:
http://www.sebi.gov.in/dp/indusnetwork.html
On the basis of the information collected by us, we had send the following questions to the company and the lead managers. We had also mentioned to them that we will be sending out the same this week. Since the replies are still not answered, we leave the answers to you.
Our recommendation: The questions do raise a doubt on the long term commitment of the promoters (considering their personal guarantees are at stake) and the employees (on whom any IT business depend on) do not have a stock option. So, if I was to invest, I would look at more long term committed companies. However, considering the sentiments of the IPO market, we feel that the initial investor will profit if he sells immediately after the allotment and listing of the share. Long term holders will lose.
| Our comments:
|
| 1. |
When IDBI, and IIBI have stake in the above companies, why did Indus go to CBI for Loans? Are the records of repayment OK? |
| 2. |
What is the position of the steel companies now? |
| 3. |
Are they public listed? |
| 4. |
Why it the cc interests rate as high as 16.83 %? |
| 5. |
Why are no shares in the ESOP (employees stock option plan)? |
| 6. |
The CBI appraisal is very very optimistic. We doubt the integrity of the figures |
| 7. |
What are the number of people employed now? |
|
|
For prospectus, go to:
http://www.sebi.GOV.in/dp/indusnetwork.html
| The past:
|
| •
|
The Company was originally incorporated as Indus Networks Private Limited on 6th May, 1996 and subsequently converted into a Public Limited Company on 29th October, 1998 and consequently changed its name to Indus Networks Limited vide special resolution in terms of Section 31(1)/44 of the Companies Act, 1956.
|
| •
|
In the year 1997 the Company decided to focus on Training, Overseas Placements, Software Development and Onsite-Consulting. It added to its management strength by taking on experienced professionals from the IT industry. It also commenced contact building with potential clients and partners abroad with the objective of obtaining business and technical participation
|
| •
|
In 1998 IBM Business Partner Agreement was signed between Indus and Tata IBM. Two new divisions, Software Development & Services, and Overseas Placements - were commissioned. The company was retained by American software consulting firms to source computer professionals for direct employment in the USA.
|
| •
|
In 1999, the Company decided to concentrate on the high growth area, that is, Software Services and Exports. Auxiliary lines of business are also being pursued
| •
|
Medical Transcription emerged as a new line in addition to the earlier activities.
|
| •
|
Training and Development in e-Commerce and Digital Transcription also are currently contributing to the main stream activity of the Company.
|
|
FINANCIAL PERFORMANCE OF THE COMPANY
The financial performance of the Company as per the audited accounts since the date of incorporation is as follows:
| |
Rs.
in lacs |
|
Particular |
31.03.97 |
31.03.98 |
31.03.99 |
|
Sales |
29.22 |
152.06 |
221.72 |
|
Other
Income |
2.25 |
11.59 |
8.70 |
|
Cost
of Goods Sold |
28.30 |
137.30 |
158.54 |
|
Administrative & Selling Cost |
2.97 |
21.21 |
41.27 |
|
PBIDT |
0.20 |
5.14 |
30.61 |
|
Interest |
- |
3.89 |
5.31 |
|
Depreciation |
0.04 |
0.43 |
3.69 |
|
PBT |
0.15 |
0.82 |
21.61 |
|
Income Tax |
0.02 |
- |
4.00 |
|
PAT |
0.13 |
0.81 |
17.61 |
|
Equity Share Capital |
7.52 |
9.82 |
10.00 |
|
Share Application Money |
- |
0.18 |
82.50 |
|
Reserves & Surplus |
0.13 |
0.94 |
18.54 |
|
Net Worth |
6.31 |
9.86 |
110.21 |
|
EPS
(Rs.) |
0.17 |
0.81 |
3.40 |
|
RONW (%) |
2.06 |
8.22 |
15.97 |
|
NAV
(Rs.) |
8.40 |
9.86 |
21.48 |
| |
|
|
|
Note :
1. Net worth has been shown excluding miscellaneous expenditure. (why)
2. EPS, RONW and NAV are calculated including share application
money (OK)
Main Promoter
Mr T P Siripurapu aged 39 years is a Graduate in Electrical Engineering from Regional Engineering College, Warangal has an M.S Degree in Computer Science from Wayne State University in U.S.A. He has two decades of experience in Information Technology, Project Development and Business Management.
He was a Senior Consultant at Burroughs Inc., U.S.A ( Presently Unisys Inc.,) for several years and has gained rich experience in design and implementation of IT solutions for a variety of Government, Audit and Business Applications. He moved to India in the late eighties and as consultant-authored solutions for clients in the A.P Government Departments as well as in the Private Sector
Details of guarantees given by Mr. Sripurapu
| Institution / Bank |
Particulars of Facility |
Company
Name |
|
|
|
| IDBI |
Term Loans of Rs. 2700 lacs |
Sujana Steels Ltd |
| IDBI |
Working Capital Loans of Rs. 2200 lacs |
Sujana Steels Ltd |
| IREDA |
Term Loan of Rs. 590.40 lacs |
Sujana Steels Ltd |
| IDBI |
Term Loan of Rs. 1800 lacs |
Padmini Corporation Ltd |
| IIBI |
Term Loan of Rs. 800 lacs |
Padmini Corporation Ltd |
The IP0
| No |
Dates of
Allotment |
Face Value Rs. |
No of shares |
Nominal
Value Rs. |
%
to post issue |
Consideration |
|
|
|
|
|
|
|
| 1. |
To
be allotted to promoters, friends, relatives and
their associates. |
10 |
4375000 |
4375000 |
67.31 |
Cash
at premium of Rs. 10/- |
| 2. |
Public
Issue |
10 |
1625000 |
1625000 |
25.00 |
Cash
at premium of Rs. 10/- |
| |
Total |
|
6000000 |
6000000 |
92.31 |
|
OBJECT OF THE ISSUE
| 1. |
To part finance the cost of expansion of its present line of operations and to set up infrastructure facilities in related areas.
|
| 2. |
To meet the expenses of the present issue.
|
| 3. |
To list the shares of the Company on the Hyderabad & Pune Stock Exchanges.
|
COST OF THE PROJECT
The total cost of the project has been estimated at Rs.1491.00 lacs by Central Bank of India, Corporate Finance Branch, Bank Street, Hyderabad vide their appraisal letter HYD:CRE:99-2000:446 dated 15/10/1999 and provided financial assistance by way of term loan for the expansion of proposed software development and training activities. The particulars of the cost of the project and proposed means of finance as appraised by Central Bank of India are as follows.
| PARTICULARS |
Rs. in lacs |
| Plant and Machinery
|
695.00
|
| Space & Interior Furnishings
|
240.00
|
| Miscellaneous Fixed Assets
|
105.00
|
| Deposits
|
78.00
|
| Preliminary & Pre-operative expenses
|
140.00
|
| Margin money for working capital
|
200.00
|
| Contingencies
|
33.00
|
| Total
|
1491.00
|
| |
|
| MEANS OF FINANCE |
Rs. in lacs |
| Equity Share Capital |
650.00 |
| Share Premium |
640.00 |
| Term Loan |
150.00 |
| Unsecured Loans |
51.00 |
| Total |
1491.00 |
Note : Central Bank of India, Bank Street, Hyderabad
The company proposes to go into web hosting and internet related services with specific reference to
e-commerce. On the basis of their business plan, the numbers as appraised by Central Bank of India, stand out as follows:
| |
Rs. In lacs |
| Particular |
31.03.2000 |
31.03.2001 |
31.03.2002 |
| Income |
930.03 |
2688.59 |
3469.11 |
| Expenditure |
459.40 |
1455.51 |
1830.25 |
| Gross Profit |
470.63 |
1233.08 |
1638.87 |
| Administration & Other Expenses |
160.00 |
420.00 |
480.00 |
| Operating Income
(EBIDT) |
310.63 |
813.08 |
1158.87 |
| Interest |
19.13 |
38.52 |
40.64 |
| Depreciation |
48.58 |
97.16 |
148.86 |
| Pre-operative Expenses Written Off |
14.00 |
14.00 |
14.00 |
| Earnings Before Tax |
228.92 |
663.40 |
955.36 |
| Tax |
25.01 |
79.64 |
111.52 |
| Earnings After Tax |
203.92 |
583.76 |
843.84 |
| Equity Share Capital |
650.00 |
650.00 |
650.00 |
| EPS
(Rs.) |
13.48 * |
8.98 |
12.98 |
| Dividend (%) |
10 |
40 |
50 |
|
