``At our annual general meeting (AGM) in March we propose to table a resolution seeking to raise funds to the tune of Rs 80-85 crore by way of a rights issue,'' he said. Although the offer price is yet to be decided, the official said he is hopeful of an attractive premium. Given Shyam Telecom's small equity base of Rs 7.2 crore, the official said a 1:1 rights issue could be considered.

The rights issue couldn't have been better timed. The stock has zoomed by over 125 per cent to Rs 33.75 since its December level of Rs 14.70; this will enable the company to command a good premium in the market.

Financially, too, Shyam Telecom has fared well in fiscal 1998-99. In the first-half, the company earned a netprofit of Rs 1.65 crore as against a full year PAT of Rs 1.73 crore in 1997-98. Backed by good orders and turnkey projects, Shyam Telecom's first-half turnover has almost doubled to Rs 51.07 crore from Rs 28.11 crore in the corresponding period last year. For the full-year, the company posted sales of Rs 55.66 crore.

Shyamal Telecom has come a long way from being a TV receiver antenna producer to manufacturing telecom equipment like the mutli-access rural radio system, multiplexes, data acquisition systems, V-SAT and DAMA systems.

The company is also gradually moving into operations and has formed joint ventures for operation of cellular services in Rajasthan. The foray into operations will help Shyam Telecom improve its margins. With a high proportion of traded goods in its portfolio, the company's operational profit margins are low.

In case of a 1:1 rights issue, Shyam Telecom's equity will bloat to Rs 14.4 crore. However, with the company expected to more than double its net profit in fiscal 1998-99,earnings would not be diluted. This augurs well for the company, which seems to be stressing on R&D for remaining on the high-growth track. To finance its huge investment in the basic and cellular services, Shyam Telecom is also reportedly scouting for a buyer for a major portion of its stake in Telelink.