A dubious and nondescript company which made it to the bourses at the tail end of the previous boom in the mid-nineties, BIL was a confirmed backbencher, with absolutely no trading history worth mentioning, till the other day. But, not any longer. Recently, propelled by a takeover of sorts, the scrip caught the fancy of market operators resulting in a skyrocketing price line backed by surging volumes. The BIL scrip, which had not witnessed any trading since August 1997, suddenly sprang to life in April this year.

The scrip owed its resurgence to two IT upstarts, VV Subrahmanyam, a chartered accountant, and Dr Neeraj Raj, a physician, who entered into a memorandum of understanding (MoU) with BIL's original promoters on April 9 for taking over the company through a negotiated purchase of 55.28 per cent stake at par. Immediately thereafter, BIL counter became alive with an unusual volume of about 10 lakh shares changing hands in less than 100 trades.

What followed in June was an open offer by the acquirers for 18 lakh shares at par to the general shareholders of BIL. However, since the BIL price line remained comfortably above the par value during the offer period, apparently, the offer did not attract many tenders. Soon after its closure, the BIL scrip started posting handsome gains on the back of increasing volumes. In July, the trading volume lifted manifold to 5.23 lakh shares in 831 trades, which quadrupled to 20.91 lakh shares in 4785 trades in August.

Thanks to the volume growth, BIL's market price improved from Rs 20 at the end of the open offer period to Rs 72 by end-August. According to market sources, in April this year, Mumbai-based stock broker Ketan Parikh and associates had acquired from the promoter group more than 10 lakh shares around par value! Along with Ketan, Canbank Mutual's Himalayan Fund too had grabbed a sizeable quantity at par value which is said to have been offloaded in the market between Rs 120 and Rs 150. It was learnt that Jardine Fleming too was recommending this scrip to its clients for investment even at a price of Rs 235! All these were good enough to take the scrip to Rs 278 on October 12 when the scrip was rechristened as "Sriven Multi".

How does one justify the frenzied trading in the BIL counter? A close look at both BIL's history as well as the potential of its new promoters certainly do not inspire much confidence in the company's future. Indeed, just what the takeover duo found attractive enough at BIL still remains a mystery. For, BIL's 4-year track record was, to put it mildly, an unqualified disaster.

The company, which came out with a Rs 2.5 crore par public issue in 1996 to part-finance the manufacture of ball bearings and taper bearings, never put up the project. What more, the company didn't even prepare a profit and loss account after the public issue! Even the successive balance sheets had gaping holes large enough to let elephants pass! For instance, BIL, which had Rs 4.05 crore under `capital work-in-progress' at the end of fiscal 1996 shifted the amount almost in its entirety to `current assets, loans and advances' in the very next year! By the end of fiscal 1998, about Rs 7.45 crore of debts or over 85 per cent of total current assets had become `non-recoverable'! Considering that BIL's pre-1998 net worth consisted mainly of its equity capital of Rs 9.53 crore, hardly was any charm left in the company for the predators.

Perhaps the only attraction for the `takeover tycoons' was BIL's status as a listed company. But then, why should any entrepreneur touch such a company even with a barge pole? Would it not be prudent for any prospective entrant to attain better discounting on the bourses by starting on a clean slate? Well, ordinarily yes. But, if BIL's new promoters do not appear materially different from their predecessors, what else can one expect?

On paper, BIL's acquirers are stated to be five `entities', Sriven Infotech Ltd (SIL), Dr Neeraj's Multi Media Studios Pvt Ltd (DNMM), Sriven Employees Foundation Trust (SEFT), VV Subrahmanyam and Dr Neeraj Raj. But, in reality, SIL and SEFT are more or less `family concerns' of Subrahmanyam, while DNMM belonged to Neeraj Raj's family. Right since 1992 when he promoted Sriven Financial Services P Ltd (SFSPL), VV Subrahmanyam had been displaying deftness of foot by aligning with the flavour of the period.

With the stock market losing its charm in 1997, Subrahmanyam dumped the registrars and transfer agents business which SFSPL was carrying out, and jumped on to the software bandwagon by promoting Pragma Infotech P Ltd (PIPL).

PIPL later metamorphosed into Sriven Infotech Ltd (SIL), which now claims to be the first to put the `touch screen' technology to good use. Under the MOU between the acquirers and BIL's erstwhile promoters, the financial obligations of the former amounted to Rs 5 crore, made up of 50 lakh shares at par. As against this requirement, at the end of fiscal 1999, SEFT did not even exist while the combined net worth of the other 4 acquirers stood at Rs 4.27 crore.

Though SIL's net worth, put at Rs 2.84 crore, topped the list, even this figure had to be taken only with a pinch of salt. For, it had just witnessed a quantum jump from Rs 0.85 crore to Rs 2.84 crore in fiscal 1999, on the back of almost matching increments in equity as well as current assets, loans and advances.

Surprisingly, SIL's obligations under the MOU were minimal at just Rs 50 lakhs while those of the other acquirers clearly exceeded their stated net worth. More astonishingly, SEFT, which was formed only on April Fool's day this year, was to acquire 10 lakh shares at Rs 1 crore, even though its initial corpus was just Rs 15 lakhs! In fiscal 1999, BIL, which had by then inducted Subrahmanyam and his relative into its Board, `restructured' its capital base to pave way for the takeover.

At the time of its 1996 public offer, BIL's original promoters held 75 per cent of the post-issue equity of Rs 10 crore while 25 lakh shares were offered to the public. In the public float, Rs 5 per share was collected as application money and the balance Rs 5 was to be called on allotment. Though the issue apparently went through, a substantial portion of the public investors holding about 10 lac shares later failed to pay up the allotment money, as BIL's low market price proved unattractive. Thus, in fiscal 1999, BIL forfeited these shares resulting in the shrinking of equity base to Rs 9.04 crore. Post- restructuring, public investors held only about 15 lakh fully paid equity shares.