Following liberal bonus announcements from its peers, Maars Software plans to take up the bonus issue at its borad meeting scheduled for September 6. The bonus expectations has driven the stock in the last five trading sessions from Rs 387 to a high of Rs 511, before it took a breather on Monday at Rs 503. the risein stock has been accompanied by a surge in trading volumes as well.

Assuming a 1:1 bonus announcement, the company's book value would drop from Rs 85 per share to Rs 65 per share. As a result, the capitalisation of reserves by Maars Software to reward its shareholders through a bonus issue may not enthuse investors, unless the company reports exceptional growth in the coming months. The company fared well in the first quarter ended March 1999, with a net profit of Rs 2.5 crore as against Rs 1.1 crore in the corresponding period last year. Turnover almost doubled from Rs 5.7 crore to Rs 11 crore. But it remains to be seen whether the company will be able to maintain its profitability to match the bloated equity in order to maintain a fair EPS.

On the other hand, since the market has already driven the stock through the roof in expectation of a liberal bonus, a tight or a low bonus would affect the stock very badly. The company has recently issued fresh shares to non-resident Indians, domestic funds, FIIsand other strategic investors. Prior to this placement, the company hardly had enough free reserves to even afford a bonus. On an equity of Rs 5.1 crore, reserves stood at a meagre level of Rs 8.7, which have now gone up to Rs 53.4.

The company recently got RBI's permission to set up a subsidiary in the United Kingdom. Maars already has a wholly-owned subsidiary in the US called Hi-Tech Software Services Inc.

Maars began by providing systems integration and turnkey solutions for manufacturing industries and has now consolidated itself in implementing ERP solutions, especially in SAP R/3 and is expecting a significant growth in this area in the current year as well.

Maars is expanding its overseas operations by setting up wholly-owned subsidiaries in the United Kingdoms, Singapore and Australia. The company has already obtained the consent of shareholders at the recent extraordinary general meeting for investing in these ventures. Maars proposes to invest $ 0.15 million in the UK subsidiary and $ 0.1million each in the other two arms.

The funds will mainly go into creation of infrastructure. The new subsidiaries will help the company to forge tie-ups with international firms for taking up more projects.