Mumbai-based Parca Paper Industries (PPI), Sicom and MSFC have sponsored more than half of the Rs 11.89-crore duplex and kraft board project cost, has opened its innings far away on the trading floors of the Jaipur exchange with a premium of Rs 1.15 a share. Having found its maiden quote at Rs 11.15 for its fully paid-up share after 79 days of closing its issue, PPI has gone out of the trading floor thereafter.

On the Pune and Ahmedabad exchanges also, the scrip is listed but there is no trade. The Rs 2.69-crore public issue at par, lead managed by Prudential Capital Markets, was subscribed 0.98 times, with 1,570 shareholders of whom 72 form the promoter group.

The company has been prompt in allotting the shares by May 9, 1997, exactly within a month from closing the issue. A majority of the 1,477 public shareholders have paid up only 25 per cent. The shares will become fully paid up by July 31, 1997, confirms a company spokesman.

For the first full year of operation, at 75 per cent capacity, PPI has projected a turnover of over Rs 15 crore and a profit of Rs 1.5 crore. But, when will this be achieved? The 9,900 tpa packaging paper project, packaged by Sicom, was originally slated to start production in July 1996.

It was later rescheduled to June 1997, and now to September 1997. In that case, the company cannot have a tangible bottomline before 1999! Will the share price hold on the trading floor till then?

It is worth noting here that, though the promoters' stake in the company is put at around 53 per cent, the core promoters hold only 32 per cent of the equity and only the mandatory 25 per cent is under lock-in. Should the price look up in the short run, a substantial portion of the promoters' stake may find its way to the secondary market, thereby raising the floating stock considerably.

Not right on time: Behind time, 83 days after the closing of its Rs 2.70-crore issue, Jayna Mefa India Ltd (JMIL) is listed on its regional stock exchange in Delhi. After its maiden quote at Rs 10, like its counterpart of the week Parca, watchmaker Jayna too has vanished. The PICUP assisted, appraised and lead-managed Rs 10.40-crore Jayna project at Noida, near Delhi, is for the manufacture of watch cases, watch dials and assembling of quartz analog watches.

According to the appraisal, the project should have started commercial production from April 1997. For fiscal 1998, at 60 per cent capacity, they had projected an EPS of Rs 2.72 on the post-issue equity of Rs 5.40 crore, though dividend had been envisaged only from 1999 onwards.

The impressive projections coupled with the promoters' equity stake of 50 per cent are appealing enough. But, can the company fulfill the issue time promises?

Another company of the promoters, MH Watches (MHW), can perhaps provide the answer. Incorporated in November 1994, MHW claims to be engaged in the business of designing, manufacturing and marketing of various types of watches.

The company generated a turnover of just Rs 8 lakh on which it incurred a loss of Rs 5 lakh in 1995-96. Listed at Ahmedabad, MH Mills, the main promoter of JMIL, has not been traded since October 1995. Jayna Time Industries of Jayco brand fame, another group company, has a modest EPS of Rs 1.80, after 37 years of laborious ticking. Considering such a dismal track record of the group, surely one cannot be optimistic about JMIL's success.

Moreover, the risk factor of the prospectus contained that the company was yet to place orders for plant and machinery worth Rs 1.99 crore out of the total plant and machinery of Rs 4.44 crore.

The cost of raw materials, bought out components, consumables and packing materials worked out to almost Rs 13 crore, of which Rs 7.51 crore was to be imported.

But, no tieup had been concluded by the company for assured supply of the raw materials at competitive rates. Also, despite the claim that JMIL would import technology and buy components from its collaborators, namely, Mei Hua of Taiwan, the collaboration agreement was yet to be approved by the RBI.

The media had, in fact, pointed out all these as clear signs of an impending delay in the project. Already, late comers to Jayco in the watch industry, like Titan, have clocked ahead with an unassailable lead in the crowded wrist watch market, afflicted by a marked craze for the imported.

But, instead of re-grouping under one manufacturing roof with common devotion and commitment to take the competition head-on, the promoters of JMIL seem to persist with a splintered and scattered production strategy.

(Arranged by INVESTAR -- The Aarthik News & Research Syndicate)

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.