According to the prospectus, around 61 per cent of the revenue is expected to come from the existing telecom operations, while 38 per cent will be through the software business. While Avantech Softech has a natural synergy in communication software, the other target area -- enterprise resource planning -- has been witnessing a slowdown in rcent years. The forays into Internet, e-commerce and embedded technologies should, however, stand the company in good stead.

Besides, considering the fancy for telecom software stocks on the bourses, Avantech's initial public offer is likely to attract considerable attention.At present, Avantel Softech has three business divisions - wireless products, network access products as well as software products/services.

Avantel began by producing RF/microwave components for Defence labs and later forayed into multi-access rural radios for DoT. Recently, the company has also developed an Insat-based C band mobile satellite services - this hand-held device can transfer information from any remote location, the first of its kind in the country. With the onset of Internet and demand for increased band-width, the company ventured into HDSL modems - which has found ready accepatbility from DoT, MTNL and a host of private operators. The company is in the process of developing a new SDH product and high-speed datalines.

While these segments are witnessing high-growth, competition is intense. The presence of players like HFCL and Shyam-Essel in wireless products as well as MNCs like Cisco in network access products, make the going tough for a small player like Avantel. Besides, price under-cutting by the companies as well as the complex bidding system for DoT only adds to the woes.

In the software sector, Avantech has decided to focus on four major areas - ERP, communication software, internet solutions and e-commerce. In ERP, the company offers customised services and has developed a product for the SMEs. However, there has been a slowdown in the ERP business and Avantech will be impacted to that extent.

In communication software, the company focusesn on network management and embedded software. In Internet, the company is in the relatively low-end business of web enabled databases. Avantech is also into e-commerce, wherein it focuses on vertical segments banking and finance and retail distribution.

In FY 1998-99, the company posted a turnover of Rs 8.29 crore and a profit of Rs 44 lakh. In the first-half of FY 2000, the company's turnover stood at Rs 1.78 crore and considering that it has orders in hand from DoT, MTNL and others amounting Rs 8 crore, the full-year figure should be around Rs 10-11 crore. The projected turnover of Rs 28.15 crore for FY 2001, seem to be on the higher side given the current business operations.

The contribution of the software business may, however, tilt the balance in Avantech's favour. But it must be borne in mind that software will contribute less than 40 per cent of total turnover. The company is offering 12.9 lakh shares to the public, while 48,500 shares have been reserved for NRIs and 56,500 shares for the promoters. Post-IPO, the equity will go up to Rs 5.15 crore.