The company is offering 10 lakh equity shares of Rs 10 each for cash at a premium of Rs 70 per share aggregating Rs 8 crore along with an offer for sale from Gujarat Venture Finance Ltd (GVFL) of 3.3 lakh equity shares at Rs 80 aggregating Rs 2.64 crore. After the public issue, the company's paid up capital will increase from Rs 4 crore to Rs 5 crore. Akshay Software is engaged in the business of software services and products. The software services include client/server architecture tointernet and intranet technology to legacy systems, RDBMS (Mature applications), ERP practices (enterprise-wide applications) and legacy applications (maintenance, re-engineering, Y2K and Euro-currency). The company has a presence in the US, Germany, UK and the UAE.

However, the track record of the company does not speak of either a good global exposure or domestic presence. For the 15-month period ended June 30, 1997, the company posted sales of Rs 4.37 crore (which includes Rs 2.57 crore from services and Rs 1.66 crore from trading). Net profit was only Rs 16 lakh. In the following fiscal (June 30, 1998), sales hardly showed any growth, although the proportion of trading income in turnover showed a sharp decline.

The company posted a turnover of Rs 4.59 crore (Rs 3.88 crore from services and Rs 41 lakh from trading). Net profit after extraordinary item rose to Rs 58 lakh compared with Rs 16 lakh in fiscal 1997. The company has changed its accounting period in fiscal 1999. For the nine-month period endedMarch 31, 1999, sales turnover rose to Rs 4.71 crore (Rs 4.23 crore from services and Rs 40 lakh from trading). Net profit also showed a sharp rise to Rs 1.28 crore. On a low equity base of Rs 4 crore, EPS works out to Rs 4.53.

The company is forecasting a sharp rise in sales turnover for the year ended March 31, 2000. The company expects its turnover to double to Rs 9.31 crore in the current fiscal against Rs 4.71 crore in the last fiscal. However, this seems to be a little optimistic as the company does not have any firm orders on hand. Net profit is expected to more than double to Rs 3.68 crore, according to the company estimates.

The proposed IPO is to finance the establishment of software development facilities at SEEPZ, Mumbai, to meet additional working capital requirements, investments in the wholly owned subsidiary (Akshay Software International Inc), to enhance and strengthen international marketing and working capital. Of the total issue proceeds of Rs 8 crore, a major portion of Rs 6 crorewill go towards investment in its US subsidiary, Rs 58 lakh is earmarked as capital expenditure for the software development centre, Rs 57 lakh for working capital requirements and Rs 85 lakh for enhancing international market.

The company is wholly depending on Akshay Software International Inc for sourcing export business in USA and Europe and a poor performance of the subsidiary will have a direct bearing on the company's performance. This assumes significance as a major portion of the IPO proceeds is proposed to be invested in the subsidiary.

The company also plans to underwrite the proposed IPO, although the underwritters are yet to be finalised. The company, incorporated on June 4, 1987, has been promoted by C V Anantapadmanabhan, K P Ramanadham, K Raghunathan and R Ananthakrishnan. Apart from this venture, some of the key promoters hardly have any exposure to IT industry. Their holding will come down from 39.24 per cent to 31.39 per cent after the public issue.

The equity shares are proposed tobe listed at Pune Stock Exchange, Ahmedabad Stock Exchange and Bangalore Stock Exchange. As the shares are proposed to be listed at smaller exchanges, investors may face a problem of liquidity.