Press Review >>> April 2000




Appraisal's fine but no equity please - The Economic Times - April 19, 2000

THE ECONOMIC TIMES (April 19, 2000)

Consider this. A company, ostensibly into IT, gets incorporated in November, 1999 and is already itching for an IPO to raise Rs 2.55 crore. And what do the promoters have to show for? A construction business, as far removed from IT as Jane Fonda from obesity. More interestingly, the promoters have purchased a property for Rs 16 lakh in December 1999 which they have transferred to the new born company for Rs 50 lakh. The Oriental Bank of Commerce has not only appraised the project and sanctioned it a term loan, but has also projected a very exciting future for the company.

If you don't think that's jarring enough, listen to this one. A Mumbai-based 'IT' company, set up on January 24, 2000, as a private company and converted four days later intoa public limited one, is planning an at par IPO to raise Rs 3.50 crore. The company proposes to acquire premises, valued at Rs 3.59 crore from two of the company's directors which constitutes the lion's share of the total project cost of Rs 11.85 crore.

This time, Syndicate Bank has appraised the project and projected future incomes in crores. Close to 40 IT companies, many of the kind mentioned above, have approached the Bangalore and Hyderabad stock exchanges for listing of shares. Interestingly, a large number of IT companies that are planning IPO's are based in Hyderabad/Secundrabad.