The entire stake of the promoters and other family members has been offered for lock-in, against the stipulated mandatory lock-in of 25 per cent of promoters' stake.

At the issue price of Rs 110 and its first-half fiscal 2000 earnings per share of Rs 17.01, the price-earning multiple works out to 10.17. The issue is being lead managed by SBI Capital Markets. Post-issue, the Zenith Infotech scrip will be listed on the Bombay and National stock exchanges.

The main objectives of the issue are to finance the building of a software-development center, to finance the cost of strengthening the company's infrastructure, to invest in establishing overseas offices/subsidiary companies, to finance long-term marketing expenses, and to finance working-capital requirements.

The company's international clientele include, among other, companies like the Development Bank of Singapore, JP Morgan, Compaq, Sony, and Oracle. Its major business comes from areas like banking software, e-commerce, and web technology. The company also has access to a large client base of Zenith Computers. One of the products of the company -- Super Banker -- has been installed in more than 250 branches of various banks.

To meet the objectives of the issue, the company estimates that the funds requirement will amount to Rs 45.05 crore, of which funding will be as follows: asset acquisition -- Rs 20.2 crore, investment in overseas offices, subsidiary companies and GDC -- Rs 6.50 crore, and working capital -- Rs 7.82 crore.

While Rs 39.12 crore will come from the IPO route and Rs 93 lakh through internal accrual, the balance is being met by a term loan from Exim Bank.

During the first half of fiscal 2000, the company earned a net profit of Rs 3.14 crore from a gross income of Rs 11 crore. During fiscal 1999, the company had earned a net profit of Rs 2.53 crore from a gross income of Rs 8.04 crore.

Between 1997 and 1999, the company has shown a 22 per cent rise in sales. But during the first half of fiscal 2000, the sales growth was 86 per cent. According to the draft offer document filed with Sebi, the low rate of growth between 1997-98 and 1998-99 was due to a shift in focus from network-integration services to software development. The percentage of network integration to total sales in 1997-98 was 75 per cent, which has come down to 30 per cent in 1998-99, and subsequently to 6 per cent in the first half of 1999-2000.