However, the answer is not too far to seek. Although the first-half net profit has shot up to an impressive Rs 5 crore from Rs 15 lakh last year, the equity base of the company has more than doubled. This translates into an extremely low annualised earning per share of 80 paise.

Worse, the company's reserves stand at a paltry Rs 5.7 crore.

The company's equity has bloated to Rs 124.2 crore from Rs 44.2 crore due to the allotment of 80 million shares of Rs 10 each as well as 144 million optionally convertible preference shares to the erstwhile owners of Sillicon Valley Infomation Technology Corporation. The money accruing to the company will be used to set up the SRG Institute of Engineering andInfomation Technology instead of ploughing it back into business operations. This, analysts say, is one of the reasons for the stock being battered on the bourses.

For the full-year, the company hopes to better its performance. The company is embarking on a major expansion in the Internet and Web-based solution business to boost its bootmline. It is in the process of setting up its own search engine on Internet and proposes to start various value-added services like free E-mail, free softwares, virtual shopping mall, free placement, etc. To expand its area of business, SRG Infotech has taken over Code India Systems along with its clientele and running business of automated data capture, data management systems, bar coding technology, networking technology and client server technology.

SRG Infotec, which was one of the top share registrars and transfer agents in the country, shifted its focus to software after business in the primary market dwindled. With fewer issues hitting the market and increased sharedematerialisation, business almost came to a standstill. The company faced a severe financial crunch and was on the verge of being sold. However, the decision to re-orient its focus and expands its software business has helped SRG Infotec survive the tough times.

Now, the company is thinking big. It plans to go for more acqusitions in order to increase its business. However, with a poor reserves position, SRG may find the going very tough. Sources, however, say, the promoters could look at offloading a part of their stake in the company and use the proceeds to acquire companies. With a very large equity base, SRG will find it tough to tap the equity route in the near future.