The company apparently managed to get help from `known circles' and closedthe IPO on November 8, as per schedule. However, after a quick allotment (in21 days), CIL took 48 long days for listing, which gave enough indicationwhat was going on, post-issue.

As per the offer document, the Chennai company was to be listed on the stockexchanges at Mumbai (BSE) and Kolkata (CSE) besides its regional exchange(MSE). Sixty-nine days after the issue closure, on January 16, the Rs 10paid-up CIL stock made its debut on BSE at a whooping Rs 500!But, the next quote was at only Rs 11 before closing at Rs 25.05.

Interestingly, on the first day, there were five trades for a volume of just5 shares! It seemed that some one was testing the waters with just oneshare per trade. After an erratic muhurat, the CIL stock has now settledfor a price of around Rs 30 (200 per cent appreciation over the offerprice), though the volume is insignificant (in single digits).

Meanwhile, more than 12 weeks (85 days) have passed since the closure of theissue but, the stock is yet to be traced on both MSE and CSE. It is indeed amystery that while the local (Chennai) investors are completely ignorantabout CIL, someone in Mumbai is `creating' quotes for the stock under thenoose of hapless BSE authorities.

Fundamentally, CIL has nothing great to boast about. The core promotersclaim to contribute about Rs 4 cr, out of the total equity of Rs 10 cr.

Nonetheless, the four promoters (of which one is 30 years old and the rest27 years) have no worth while professional record to support their equitycontribution. Also, in fiscal 2000, CIL's top line has shot up from Rs 1.45cr to Rs 22.67 cr. But, they could not earn more than just Rs 11 lakh at thenet level.

In other words, though its name sounds like a software company, CILpredominantly deals in hardware whose stock market sentiment is generallyvery poor.

Unsafe proposition
A seven-year-old `infotech' trading company from the Pennar stable changedhands last year. Re-christened as Saven Technologies Ltd (STL), this`Cyberabad' company hit the Indian capital markets in the month of Decemberwith a Rs 3.6 cr par IPO. The small investors' portion of 18 lakh shares wassubscribed 1.4 times by 3,436 people. The other half of the issue wassubscribed 4.5 times by 686 large investors. Overall, the issue wassubscribed 3 times and the company completed the allotment within 25 days.

Ten days later the scrip was also listed on both HSE and BSE. The stock hadits muhurat on January 16 at Rs 15 on the regional HSE and closed the daylower at Rs 10.20. Same day, it opened at just Rs 7 on BSE and closed higherat Rs 9.70. Though the stock always commanded a higher price on the regionalexchange as compared to BSE, the volume on HSE was far lower than BSE.

As a matter of fact, for the past three days, the stock was not at alltraded on HSE which speaks of local investors' perception about the stock.

Perhaps, on the face of it, STL at below par (around Rs 7.50 on BSE) maylook attractive. But, a close scrutiny reveals that it is an unsafeinvestment proposition. Though its name sounds like a software developer,STL's top line till August 2000 was derived from `trading activities.'

Further, a major component (Rs 2.24 cr) of STL's project cost of Rs 7.59 cris earmarked for setting up of joint ventures in USA and UK with companiesthe main promoter is having interest. Surprisingly, STL's offer documentdidn't reveal the financial track record of these joint venture partners.

Moreover, if STL's prospects were so good, why did its US-based mainpromoter stake in only 6.82% in an equity of Rs 10 cr?

Experience sans profit?
It may sound strange but, it is a fact that a Rs 10 paid-up `Cyberabad'stock, which `discovered' its issue price equivalent to just par value (Rs10) a few days earlier through the `book- building route', has commanded 200per cent premium on listing. Moschip Semiconductor Technology Ltd (MSTL),which fixed the IPO price at par after its book-building exercise, closedits issue on January 5 and within 14 days the company finalised theallotment.

What's more, in the next 6 days the company completed all the listingformalities too. On the regional HSE, the MSTL scrip made its debut onJanuary 25 at Rs 30 and closed the day at Rs 23.25 after setting a high ofRs 40 and a low of Rs 16. Next working day, on January 29, the stock somewhat stabilised on HSE with two-way quotes of Rs 23 and Rs 21.40. Same day,the stock began its innings on BSE at Rs 18 and closed at Rs 17.50 afterscaling a peak of Rs 24, and touching a bottom of Rs 11.

Currently, whereas it is placed around Rs 17 on HSE with minuscule volume,it is priced lower at Rs 15 on BSE but, with heavy volume. Where does thestock go from here? MSTL was set up in 1999 with a main object of providing"Application Specific Integrated Circuits" (ASICs) to meet diverse marketneeds. Nevertheless, in its project cost of Rs 10.50 cr, `plant andmachinery' amounted to only Rs 3 cr.

Interestingly, the promoter's US company, engaged in similar business, isyet to make profit! What's more, the loss-making US company is supplyingmachinery worth more than a crore of rupees to MSTL!! With such credentials,how can Moschip instill confidence in the minds of investors?

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