Out of the total number of shares on offer, there is no reservation for banks/mutual funds/financial institutions etc. Also, going against the trend in the recent software IPOs, the promoters have not opted for any underwritting arrangements.

During the fiscal ended March 31, 1999, the company earned a net profit of Rs 2.23 crore. On an equity base of Rs 2.50 crore, this gives an earnings per share of Rs 8.92 and this discounts the offer price of Rs 55 by a multiple of 6.17. However, there is a catch. On March 31, 1999, the promoters had made a bonus issue in the ratio of 1:2 which bloated the equity capital to Rs 3.75crore. On the enhanced equity capital, the EPS works out to Rs 5.95 and this gives a P/E of 9.24 for the offer price of Rs 55. Yet, the issue is competitively priced when compared with the other software IPOs in the pipeline.

The Amex IPO is primarily aimed at expanding the company's software development facility at Mumbai, investing in its subsidiaries in the UK, Germany and the USA to support its marketing activities and to augment the working capital requirements.

The total project cost is estimated at Rs 761.68 crore of which Rs 2.40 crore is to be spent for setting up overseas subsidiaries, Rs 2.33 crore to go for augmenting the working capital requirements and another Rs 2 crore towards the expansion of the software development centre. While Rs 6.88 crore is coming through the IPO route, the balance Rs 74.18 lakh is being internally accrued. The project is scheduled to be completed by March 2000.

AITL's current activities include on-site consulting services and offshore project execution. Theareas of operation include re-engineering, migration, data warehousing and product development. In fiscal 1999, 80 per cent of the company's total revenue originated in the UK and 93 per cent came from its operations in Europe.

The company has already received the requisite RBI clearance for setting up its wholly owned subsidiaries in the UK and Germany, while the clearance for the US subsidiary is awaited. Setting up of overseas subsidiaries augurs well for the company. With a subsidiary in place, rather than a representative office, gives overseas clients a sense of security and confidence while dealing with a foreign company. And for the company, they can deal with overseas clients directly rather than doing the sub-contracting jobs which often take a layer off the company's revenue. However, this holds good for every Indian software company.

For fiscal 1999, AITL recorded a total income of Rs 8.49 crore and a net profit of Rs 2.23 crore. Year-on-year basis, while the growth in total income was 144 percent, the growh in net profit was almost ten times over its fiscal 1998 net profit of Rs 23.79 lakh.

For fiscal 2000, the company projects a 88 per cent jump in total income to Rs 15.98 crore and net profit to more than double to Rs 4.79 crore. On an enhanced equity base of Rs 5 crore, the projected EPS works out to 9.84.Post-issue, promoters' holding in the company would come down to 48.56 per cent from the current 64.75 per cent. While the public holding in the company would be limited to 25 per cent, non-promoter shareholders would hold the balance 26.44 per cent.

Most of the software companies offer employees stock option plan (ESOP) to nullify the high turnover percentage observed in the IT industry. At present, AITL does not have any ESOP, but does not rule out such a possibility in the future.

The issue, lead managed by Prime Securities, is likely to open in the middle of this month. The requisite clearance has already been obtained from the Securities and Exchange Board of India. As has beenobserved in the majority of the recent software IPOs, the shares of AITL are to be listed on the stock exchanges at Pune, Ahmedabad and Bangalore.

Partha Pratim Sinha