The company, which got the shareholders nod for the proposal at its extraordinary general meeting held here on Tuesday, also got the sanction to hike the authorised equity capital from Rs 25 crore to Rs 50 crore to pursue the option to offer equity to FIIs and others.

The plan is to offer the 85 lakh shares at a premium. The original proposal was to offer 75 lakh shares but a further 10 lakh shares are to be made available as the company expects to get a good price above the minimum price of Rs 248 per share fixed for this purpose.

Funds raised from this private placement/preferential offer will be, according to company managing director Dinesh Dalmia, deployed to write off its total debt of Rs 110 crore.

Dalmia, reappointed for a period of five years effective August 1, 1998, said the new equity placements will enable the company to bring about savings in interest payments of around Rs 28 crore per year once the borrowings are prepaid. Funds raised are expected to be in place before March-end this year.

Dalmia told shareholders that in future higher profits, if not deployed for expansion, will be distributed among them as higher dividends.

He said the company is targeting a 100 per cent growth in sales this year and about 80 to 100 per cent growth next year.

Company's unaudited quarterly results released on Tuesday reflected his optimism. For three months ended December 31, 1998, the company posted net sales of Rs 63.36 crore, a significant jump from Rs 30.55 crore realised in the corresponding period of the previous year. Interest rose to Rs 1.98 crore from Rs 1.85 crore. Gross profit after interest but before depreciation and tax shot up to Rs 16.90 crore from Rs 8.25 crore. Depreciation accounted for Rs 3.24 crore (Rs 1.75 crore). After nil provision for taxation, net profit has more than doubled at Rs 13.66 crore from Rs 6.50 crore in the previous period.

Stocks may be less attractive: Following the cue of Pentafour Software, DSQ Software has followed suit. The companies are coming out with a preferential issue to retire their entire debt. As the valuation of software companies are one of the best in the bourses, both these companies are capitalising on the oppurtunity.

However, the incremental equity is being picked up by FIIs. This means that these stocks are likely to be less attractive in the near future as the demand from FIIs will be dried off through the preferential offer. This was reflected in the price of Pentafour today, which fell inspite of all software stocks zooming on the BSE. Further, the software companies penchant' for issuing new paper is also likely to affect their companies valuation.