The Indian Express The Financial Express Latest News Express Investment Week Market Indicators Screen Express Computers Travel & Tourism Advertisers Forum Daily Horoscope Information Technology Drumbeat: Ad Buzzaar Astrosurf Gems &Jewellery Banking Update Career India Business Forum Match Maker Express Properties

Corporate Economy Expressions Markets Leisure   29 December, 1997 Public Offering  FE Investor Bureau   Risky venture Calcutta-based Allied Stock Investors Ltd (Allied) is tapping the public with its maiden offer aggregating Rs 30 lakh. Almost Rs 27 lakh at Rs 10 is for the general public and the shares will be listed on the OTCEI. The main objects of the present issue are to consolidate the company's capital base, to further augment its long-term resources and to improve its net worth. The promoters of Allied have drawn a Rs 85-lakh plan to expand its business and the entire fund requirement is being met through the issue proceeds (including the promoters' contribution). A zero-debt company, it plans to make a foray into the ICD market, and also into loan syndication. Incorporated in 1992, Allied at present is engaged the investment activities and short-term financing. Given the conditions under which the small NBFCs operate -- fierce competition, wafer thin margin and small capital base -- the company could report some marginal profits only during the past five years of its operation. For the year-ended March 1997, net profit was Rs 5,282. However, after fresh capital infusion to the tune of Rs 64 lakh by the promoters, Allied has earned a net profit of Rs 78,000 for the three-month ended June 1997. EPS stood at a low of Rs 0.12. The investment decisions of the company does not look prudent. Of the total fund worth Rs 78 lakh currently deployed, the whole of the investments in shares and securities, aggregating Rs 14.50 lakh, is in unquoted stocks and are virtually illiquid (Rs 13 lakh is deployed in short-term loans and Rs 50 lakh is in fixed deposits with Canara Bank). The promoters are first generation entrepreneurs, and this is their maiden venture. One of the promoters was a sub-broker with the Bhubaneswar Stock Exchange. The funds requirements are not appraised by any bank or financial institution. The company is yet to be registered with RBI as an NBFC. Post-issue promoters' stake would stand at 85 per cent. The issue opens on December 29 and is being lead managed by Prudential Capital Markets Limited. Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.