Interestingly, when IDBI appraised Kaashyap Radiant Systems' project (to setup a training-cum-software development and consultancy centres) last year,the equity portion was pegged at Rs 3 crore. But, the craze for infoetchstocks provided the perfect incentive to the promoters for raising theequity component of the project cost to Rs 7.30 crore, thereby paving theway for a `timely' public offer.

After successfully playing on the IT craze of investors, how did the scripscrip perform on listing? Thanks largely to the Ajay Kayan factor, the scripopened trading two weeks ago at the Chennai stock exchange at more thanthree times the offer price. The stock continued it's upward journey to peakat Rs 49.90 before the sliding Sensex brought the stock down with to Rs 33.Volumes have been inconsistent, with excessive activity on some days anddull trading on others. Although the company's stock price may look robustat first glance, the track record of Kaashyap group advises caution.

The performance of Ram Kaashyap Investment and Kaashyap Foundations havebeen pathetic, to say the least. Ram Kaashyap Investment's default list hasbeen growing. At last count, it had an overdue fixed deposits of Rs 2.16crore, secured bonds of Rs 0.54 crore and overdue interest to consortiumbanks of Rs 2.32 crore. The company's fixed deposit rating was recentlydowngraded by CARE to default category. Kaashyap Foundations did not fareany better. At the time of finalising Kaashyap Radiant Systems's prospectus,Kaashyap Foundations owed an overdue amount of Rs 0.97 crore to State Bankof India. No wonder that Ram Kaashyap Investment as well as KaashyapFoundations have not been traded on the bourses in the last 18 months!Intriguingly, however, the promoters continued to thrive.

In Ram Kaashyap Investment, the promoters pruned their holding from about 53per cent to the present 22.64 per cent, one-third of which was held by theVideocon group company which could not exit due to the lock-in provision. InKaashyap Foundations, too, the promoters' holding has come down from 54 percent to less than 34 per cent. Although the promoters are said to holding 45per cent in Kaashyap Radiant System, it does not provide any comfort.

Moreover, Wipro, whose finance arm was involved in bringing to the publicthe twin disasters from the Kaashyap stable, will have certainly learnt alesson from Videocon's plight. Therefore, it can be expected to exit fromthe company at the first opportunity. As for Ajay Kayan, he will flirt withKaashyap Radiant System for a while before making a profitable exit soon,that is if he has not done so partly. And, the other `associates' of thepromoters may not want to lag behind the aforesaid. Perhaps, a hot race isalready on between Kaashyap Radiant System's promoters and associates forexiting the counter.

On the basis of fundamental factors,too, the Kaashyap Radiant System scripdeserves to be treated with contempt. Believe it or not, none of thepromoters or any of the company's four directors were present at the newissue press meet, at least in Mumbai! What's more, the senior executives,who were asked to perform the role of the directors during the issuecampaign, did not own any share in the company. The 5-month period endedFebruary 1999 could only produce a net profit of Rs 0.43 crore on a Rs 1.95crore revenue. But, for the current fiscal, Kaashyap Radiant System hasprojected a bottom line of Rs 2.21 crore, gross income being Rs 25.82 crore.

With a number of segments of the IT industry experiencing a slow down, asevidenced by the poor performance of Tata Infotech, KPIT Systems, etc., howan upstart like Kaashyap Radiant System will achieve its tall projections inthe years to come is anybody's guess. Leaving Goldstone for better Fortune!Another company that has made its secondary market debut recently is theSecunderabad-based Fortune Informatics Ltd, This Rs 2.10 crore par publicoffer, which closed on September 4, logged a muhurat quote of Rs 51.40 onthe Hyderabad Stock Exchange on October 21. Subsequently, the scrip moveddown in sympathy with the falling Sensex. A scrutiny of Fortune Informaticsbasis of allotment indicates reasonable response from both retail and bulkinvestors to the public offer. However, though the public issue augmentedthe shareholder population by about 12,000, significant amongst the ownersare organised investors like Karvy Investor Services Ltd (1 lakh shares),the lead managers to the issue, and Reliance Capital Mutual Fund (1.50 lakhshares). Also, of the promoters' holding of 66.5 per cent in an equity of Rs7.17 crore, the core promoters account for only 31 per cent. Therefore, inthe near term, the scrip's price line will be determined by the attitude ofthe bulk investors towards the company. Qualitatively, Fortune Informatics'core promoters do not have an experience in the planned line of activity.While Y V Prasad was earlier with Goldstone Engineering, C K Shastri and BSunil Kumar were previously with Modi Xerox. What's more, till recently, thecompany did not have any experienced personnel in software development. Fortechnical expertise, Fortune Informatics has pinned disproportionate faithon two qualified and experienced software specialists, who are presently onits board. However, with the experts not appearing to hold any significantstake in Fortune Informatics, this seems to be a risky gamble.

Interestingly, Fortune Informatics was incorporated in 1990 as FortuneOffice Systems. The company, which was hitherto trading in computer hardwareand office automation equipment, shifted its focus to software developmentand services recently. It's name was changed in February this year. ThoughFortune Informatics has made a small beginning in product development with`Papyrus', a document management software, with a revenue of just Rs 1 crorein fiscal 1999 from this activity, it still has a long way to go. In otherwords, the current market premium of around 300 per cent over the offerprice of Rs 10 can hardly sustain for long.

Arranged by INVESTAR - The Aarthik News & Research SyndicateE-mail feedback to: investar@bol.net.in