However, the fixed price portion of 3 lakh shares was oversubscribed only one time by around 2,200 small investors. To the investors' surprise, TIL, which closed its offer on October 3, finalised the basis of allotment with in just nine days, on October 12! But, the hurry shown in finalising the allotment was totally missing in complying with the listing formalities.

After the allotment, the shareholders had to wait for 39 days for trading the scrip. After allotment, issuers generally wait for an auspicious period for their muhurat trading. Did TIL wait for the right time? Perhaps, yes.

Nonetheless, the `delayed listing' has not helped TIL's scrip in any manner. Though it hovered above the offer price of Rs 325 on its muhurat day (November 20) on both the BSE and the NSE, the scrip has now fallen below Rs 300, losing nearly 12 per cent of the offer value. The immediate future of the scrip now depends on the ten institutional bidders who were allotted 15 lakh shares (50 per cent of the public float).

Fundamentally, TIL's bottom line, which was at Rs 7.46 crore in fiscal 1999, shot up to Rs 23.57 crore on the eve of the public issue in 2000. For the current year, the company has projected a profit of more than Rs 35 crore against a capital base of Rs 12 crore. Though the profit projections do make the current market price look very cheap, unless and until the promoters redeem their image, not many genuine investors could be attracted by the scrip.

Steel to entertainment
The Mumbai-based Galaxy Multimedia Ltd (GML) floated a small public issue of Rs 2.55 crore at par in the month of September. The issue, lead-managed by UTI Securities Exchange, reportedly attracted 3,500-odd investors and was oversubscribed by 0.7 times. GML allotted the shares within three weeks, on October 18. Nearly a month later, on November 16, the scrip was listed on its regional exchange in Mumbai (BSE). Six days later, on November 22, the scrip also got listed on the Hyderabad Stock Exchange (HSE). Though the GML scrip had its muhurat at 10 per cent discount on its regional exchange about two weeks ago, it is currently commanding a premium of more than 25 per cent on both the BSE and the HSE. As if sensing some trouble, BSE has now even imposed a special margin of 25 per cent on this scrip. Where does the scrip go from here? Originally incorporated as Galaxy Digi Systems Ltd towards the end of March 1999, the company changed its name after seven months, in October 1999. GML now claims to havecompleted its Rs 12.57 crore project consisting of "state of the art multimedia and post production facilities as well as production of television softwares". As per the offer document, the "plant and machinery" alone were to cost Rs 6.41 crore (51 per cent). The figure is, indeed, very impressive. But, what's the promoters' track record?

The promoter-chairman and managing director, Vipin Bhayana, is indeed not new to the investing public. He was presented as the `plant-in-charge' when Uttam Steel Ltd went public last in 1993. Mr Bhayana's association with Uttam Steel goes back to 14 years and he still continues as a director, though he claims to have no say in the day-to-day affairs of the steel company for past one and a half years. Mr Bhayana has no proven financial record to speak about in the entertainment industry though he is reportedly associated with the industry for the last three years. Will he entertain the investors better in the new field than what he did in his traditional steel business?

Credentials speak
During the `finance boom' in mid-nineties, the Calcutta-based merchant banker Ashika Credit Capital associated with many a finance IPO as "Advisors to the Issue". Most of these scrips are now untraceable. However, this has not deterred Ashika from associating with IPOs of dubious nature in the current `infotech boom'. In fact, in the current boom, it plays the role of "Lead Managers to the Issue". Interestingly, Ashika-lead managed IPOs are getting listed at a premium, though their credentials are far from satisfactory.

A classic example is, the recently listed Akshay Fiscal Services Ltd (AFSL) which has been quoted above the offer price of Rs 10 on the Calcutta Stock Exchange (CSE). AFSL was originally promoted ten years ago by Govind Ram Khandelwal. In 1992, it was taken over by Shrawan Kumar Drolia.

Unable to handle the business, Mr Drolia entrusted the company with Dilip Kumar Minny in 1997 "without any controlling interest". Mr Minny brought in Anup Kumar Dharnidharka as director in 1998 "to strengthen its management operations". Mr Dharnidharka later on acquired a stake in the company "as promoter" and inducted his `former employer' Mr Minny as "co-promoter" in 1999. The eight-year-old AFSL's annual profit, or accumulated surplus, was not even Rs 1 lakh until fiscal 1998. But, in November 1998, they merged six `khokha' trading companies with AFSL and created an "amalgamation reserve" of Rs 2.45 crore of which Rs 2.15 crore was issued as bonus shares on the eve of the public issue! With such credentials, AFSL would not have been able to convince any worthwhile merchant banker. But, when merchant bankers like Ashika are willing to oblige, why should companies like AFSL bother about their credentials?

Master stroke
How many companies in this country could float a public issue within just six months of incorporation? The Ashika Capital lead managed Master.Com Software Ltd (MCSL) from `Cyberabad' has done it. Incorporated only in April this year, MCSL successfully completed its public issue in the month of September. Nevertheless, the company did not have the same speed in listing the scrip. Though MCSL's small issue of Rs 2.50 crore at par closed on September 15, the scrip was listed even on the regional HSE only after 67 days, on November 21. On Ahmedabad, Calcutta and Pune exchanges where it was also to be listed, one is yet to hear any quote. On HSE, after opening at just Rs five, the scrip shot up to Rs 18 before closing the day at Rs 9.85.

After languishing around par value on the second day, the scrip has now gone into oblivion even on the HSE. As regards the track record of MCSL's promoters, of the seven "original signatories to the Memorandum of Association", four were ladies who had no technical qualification. Three of them were actually doctors! MCSL was formed on April 7. The very next day, the company entered into an MoU with Dolphin Information Solutions, USA.

Incidentally, the initials of the promoter of Dolphin (B Sunita) and the ladies who were the "original signatories" of MCSL are the same. Moreover, if the Hyderabad companies were to resort to an infamous merchant banker like Ashika who is registered at Calcutta, what standing do the promoters have locally?

Following Suchinfotech? When most of the new IT scrips are currently languishing around or below par, the Aryaman Financial lead managed Twin Cities Infotech Ltd (TCIL) from `Cyberabad' is commanding a capital appreciation of more than 90 per cent over its offer price. Its worth noting here that TCIL's small investor portion of 7 lakh had been subscribed to an extent of only 0.69 times when the company went public in September.

It was with the help of a handful of large investors the issue sailed through. How come an IPO which was virtually rejected by genuine investors and which could not attract more than 925 investors to its public offer even at par value commands such a hefty premium on listing? The behaviour of TCIL's scrip reminds one of another `Cyberabad' scrip, Suchinfotech. This IPO too had met with very poor response from the retail investors but, got listed with a premium of 50 per cent over the issue price. Currently, it is going abegging below par! Incidentally, Suchinfotech was floated by the `original' promoters of TCIL. They say, there is no connection between these two companies now. But, the fact is, both the IPOs were lead managed by Aryaman, and both companies have their registered office in the same hotel, of course, at different suites! What's more, Karwa Salt Refinery, now known as Saroh Infotech, who was one the largest shareholders of Suchinfotech was also a large shareholder in TCIL at the time of goingpublic.

(Arranged by Investar - The Aarthik News & Research Group) [e-mail feedback to: fernando@bol.net.in (or) feedback@investaronline.com]