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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (8046)	10/10/1999 9:31:00 PM
From: Mohan Marette	Read Replies (2) \| Respond to of 12475

Economy watch: SOFT-Surge Software surge Infotech shares hog the limelight at the bourses By P.A. Seshan (The Week) The Indian software industry is witnessing hectic activity with several companies with foreign collaboration entering the scene. Quite a few low-profile companies are tapping the market for raising resources for expansion schemes and acquisitions. The top 10 infotech companies have been registering a 50% rise in their turnover since the mid-nineties. It has become necessary to mobilise fresh funds for incurring heavy expenditure on fixed assets and acquisitions. Booming exports The forex earnings from software exports have been rising phenomenally. In 1998-99 the forex earned was $2.65 billion (Rs 11,260 crore), up from $1.70 billion (Rs 6,800 crore) in 1997-98. It is projected that exports will rise to $4.02 billion (Rs 17,500 crore) in 1999-2000 and $6.09 billion (Rs 26,500 crore) in 2000-2001.The volume of business in the domestic market, too, is expanding and currently has a value of Rs 6,000 crore ($1.34 billion). In the coming two years the domestic market is expected to touch Rs 13,500 crore ($3 billion). Expansion and acquisitions spree The Indian companies are not registering a spectacular increase in turnover as many of their subsidiaries are functioning in different regions. The National Association of Software Service Companies (NASSCOM) reckons that acquisitions may require an investment of $3 billion in a short period of 18 months.The resources will have to come through GDRs or ADRs, and NASSCOM is setting up an office in Silicon Valley, USA, to assist Indian companies in completing acquisitions. Software issues in demand All the new software issues saw an overwhelming response even at high rates of premium. The established software enterprises, too, are planning to mobilise large funds through GDRs or ADRs. Infosys Technologies has already issued its ADRs, and now Satyam Computers is reported to have obtained the clearances for its ADR issue. Pentafour Software is also finalising arrangements for acquiring existing companies in several foreign countries and is raising $60 million through ADRs and GDRs. Silverline Industries is seeking the approval of shareholders for an ADR issue. It is allotting equity shares of the company on a preferential basis to Silverline Holding Corporation, US, for acquiring the shares of Silverline Technologies Inc., USA. Similar developments will be a distinct feature in the coming months and the investors will be benefiting considerably by the increase in turnover and profits as well as dividend payments. While the equity shares of existing companies have been registering handsome gains, the equities of new companies are being avidly absorbed by institutional as well as retail investors. Memorable debut by Polaris Polaris Software Lab has made rapid progress since its inception in 1993. Its spectacular growth made it possible to issue bonus shares twice in 1995. Another bonus issue was made in 1997. The latest bonus issue in March this year was in the ratio 1:1 by capitalising Rs 6.78 crore out of reserves. The paid-up capital has doubled to Rs 13.56 crore. For raising additional resources, 35.13 lakh equity shares of Rs 10 each were offered to the public at a premium of Rs 200 per share. Simultaneously, the promoters offered for sale 8.53 lakh shares at the same price. After listing, the shares were quoting at Rs 780. The company has three subsidiaries and its total income was Rs 60.54 crore in 1998-99 against Rs 31.13 crore in 1997-98. The net profit after taxation was Rs 14.65 crore against Rs 4.70 crore in 1997-98. The dividend was maintained at 20% though it was payable on an enlarged capital due to the earlier bonus issues. The total income is estimated to double to Rs 116.50 crore and the net profit after taxation to Rs 25.28 crore in 1999-2000. The paid-up capital has risen to Rs 17.06 crore after the public issue. Kale Consultants' good show Kale Consultants has specialised software for banks and airlines apart from other activities. It has bagged orders for computerising many nationalised and some private banks. The company's two subsidiaries are located in New Zealand and USA. To augment working capital and for expansion, fresh funds have been raised through an issue of 31.88 lakh equity shares of Rs 10 each at a premium of Rs 110 per share. The equity shares offered to the public on September 17 were heavily oversubscribed. The company's total income was Rs 21.49 crore in 1998-99 up from Rs 12.44 crore in 1997-98. While the net profit after taxation has doubled to Rs 5.22 crore from Rs 2.41 crore in 1997-98. The dividend has been raised to 20% from 12%. The existing paid-up capital of Rs 8.31 crore has increased from Rs 60 lakh, with the issue of bonus shares in the ratio 1:1 in 1996. This year bonus shares (in the ratio of 5:2) were allotted utilising an amount of Rs 541.25 lakh out of reserves. After the public issue, the paid-up capital has risen to Rs 11.50 crore. The prospects for 1999-2000 are reassuring with the total income estimated to rise to Rs 35 crore and the net profit to Rs 8.75 crore. The equity shares are to be listed in the Bombay and Pune stock exchanges. Hughes Software's new venture Hughes Software Systems (HSSL) is getting into Internet and e-commerce applications related software development at its Bangalore centre. The company's progress since 1992 has been spectacular with its income touching Rs 87.27 crore and the net profit Rs 22.40 crore in the 15 months ended March 31, 1999. A modest dividend of 10% was paid for 1998-99. The paid-up capital has risen to Rs 15.75 crore with the issue of equity shares at par at regular intervals. It stood at Rs 6.30 crore on March 31, 1999. With the bonus issue in the ratio of 3:2 in June-July this year, the paid-up capital has risen to Rs 15.75 crore. The residual reserves amounted to Rs 37.94 crore. To finance expansion schemes, the company is going in for a public issue of 8.75 lakh equity shares of Rs 10 each at a premium of Rs 630 per share. Out of the 8.75 lakh equity shares, 4.38 lakh shares have been offered for public subscription. The promoters¥Hughes Electronics Corporation, USA, HNS India and HNS Mauritius¥have offered for sale 35 lakh equity shares of Rs 10 each at a price of Rs 630 per share. Thus the stake of the promoters will decline to 56.14% from 76.19% because of the dilution of ownership and the issue of additional capital by the company. While the promoters will secure Rs 220.50 crore through the offer for sale, the company will be raising Rs 55.13 crore. The paid-up capital will increase to Rs 16.63 crore from Rs 15.75 crore and the reserves to Rs 92.19 crore including a premium of Rs 54.25 crore. ....