Kaashyap Radiant Systems is offering 57 lakh equity shares of Rs 10 each for cash at par aggregating Rs 5.7 crore. The offer is at a price-earning multiple of 8.92 which seems to be high considering that the company came into existence in just two years back. Importantly, prior to this venture, the key promoters (except Radiant Systems, USA) have no exposure to the field of software and have been into the field of finance. Moreover, their performance in the field of finance has been below par. Besides, the promoters' other companies into the field of finance have failed tohonour loan payment and fixed deposits to both corporates and retail depositors.

Incorporated in May, 1997 as Kaashyap Institute of Information Technology Pvt Ltd, the company had changed its name to Kaashyap Radiant Systems Ltd September 8, 1998. The company is into the business of software development and consultancy and software education and training. For the 17-month period ended September 30, 1998, the company generated Rs 48 lakh income from software development and Rs 3.1 crore from software education and training.

The corresponding figures for the five-month period ended February 28, 1999 are Rs 55.95 lakh and Rs 138.72 lakh respectively.

The company is tapping the public to part finance the setting up of 2 ERP training cum software development and consultancy centres and eight non-ERP education and training centres. The company has estimated the total project cost at Rs 10 crore. Of this, Rs 6.17 crore is earmarked for plant and machinery, Rs 1.36 crore furniture and fixtures, Rs 1.15 crorefor electrical equipment, Rs 48.5 lakh for miscellaneous fixed assets, Rs 25 lakh for public issue expenses, Rs 15 lakh for working capital and Rs 48.5 lakh as lease deposits. The project cost will be met from promoters' equity contribution of Rs 1.6 crore, the public issue of Rs 5.7 crore and Rs 2.7 crore from IDBI.

IDBI had earlier sanctioned a loan of Rs 6 crore for the project and the company was planning to issue fresh equity to the tune of Rs 3 crore. However, as IDBI only disbursed Rs 2.7 crore, the company was forced to revise its resource mobilisation plans and it increased the size of the equity issue to Rs 7.3 crore.

The company is setting up two ERP training centres in Chennai and Bangalore and eight training centres for non-ERP software in cities like Coimbatore, Hyderabed, Pune, etc. However, the company is yet to identify the locations for setting up six of its education and training centres. The promoter companies have defaulted on various payments. A promoter company Ram KaashyapInvestments Ltd (RKIL) has failed to honour fixed deposits to the tune of Rs 1.91 crore and has overdue secured bonds of Rs 5.06 lakh. RKIL has also interest overdue to its consortium of bankers to the tune of Rs 1.85 crore. Another promoter company Kaashyap Foundations has an overdue of Rs 1.04 crore payable to State Bank of India. The two promoter companies had incurred losses for fiscal 1998.

One of the promoters, Radiant Systems Inc USA, is into the business of computer training and also undertakes software development and consultancy projects. Radiant is an accredited implementation partner of SAP in the US. The company posted a net profit of $0.49 million on a total income of $7 million for the year ended December 31, 1998.

The company has entered into a tieup with Component Management Group (CMG) for setting up a component academy and has entered into an `education and training franchising' agreement with Competency Centre for Java (India) (CCJI). The five of the company's training centres havebeen authorised as `Education Partners' by CCJI. The company has a network of 12 training centres (5 own and 7 franchise) in Tamil Nadu and Karnataka and is in the process of setting up centres in other states also. The company has entered into business development alliances with overseas companies to promote its software development and consulting activities.

Of the public issue of Rs 5.7 crore, Rs 1.85 crore is reserved for FIs/MFs/banks, Rs 1.85 crore for FIIs/NRIs/OCBs and Rs 57 lakh for employees. The net public offer is low at Rs 1.42 crore. Of the post-issue paid up capital of Rs 10.3 crore, the promoters will hold 44.64 per cent and employees 5.53 per cent. A major portion of 35.96 per cent will be held by FIIs/FIs/OCBs/banks/NRIs/MFs, provided they subscribe to the reserved portion. The retail public will hold only 13.84 per cent.

For the success of its IPO, the company seems to be heavilly banking on its profitability projections. The company is projecting a major turnaround in its fortunes forthe current fiscal 2000. The company is projecting a total income of Rs 25.81 crore and a net profit of Rs 2.21 crore for the year 2000 against its 17-month performance of Rs 3.58 crore and Rs 73 lakh, respectively.

The income from education and training is projected at Rs 10.55 crore and Rs 15.26 crore is from software development consultancy and projects. The projections seem to be on the higher side as the company is yet to set up its proposed educational centres and has no firm orders on hand. The issue is lead managed by Ind Global Financial Trust and the shares will be listed at Madras and Bombay stock exchanges.