As a result of the proposed preferential allotment of 4.5 lakh equity shares, the company's equity would swell to Rs 5.19 crore from Rs 4.74 crore, and the promoters' stake would reduce marginally from 40 per cent to around 36.5 per cent. According to a source, the company is on the lookout for a buyer to place 4.5 lakh shares at a price determined on the basis of SEBI guidelines. The deal is being managed by Caspian Securities, another FII outfit.

The recent surge in Software Solution's scrip in the past one month augurs well for the company as it will be able to charge a much higher premium. There has been hectic activity in the scrip. In the last one month, Software Solution's stock price has more than doubled to the current level of Rs 364 from Rs 147 on March 19 this year. The volumes have surged from a dailyaverage of 5,000-8,000 shares to around 80,000-1,00,000 shares a day on the Bombay Stock Exchange (BSE).

Volumes on April 22 further zoomed to around four lakh shares with the price dropping marginally to Rs 327. A drop in the market pulled down the stock to Rs 295 with a volume of 65,000 shares on BSE.

According to the SEBI guidelines, a company can place equity on a preferential allotment basis at an average price of the last 26 weeks' high and low. On that basis, if the company goes for the allotment in May-June, it will be able to charge a price of around Rs 250-300, which would mean a cash inflow of around Rs 13 crore. The company's board met on Thursday to take up the proposed preferential allotment of shares to FIIs.

Software Solution is engaged in training software professionals and providing consultancy and knowledge-based services. The company also has plans to spin off its software development, sales and support divisions into separate entities. Software Solution will retain its identity as atraining firm. Currently, close to 85 per cent of the company's revenues accrue from its training division. The company, which has about 15 branches in the country, plans to open branches in centres like Delhi, Mumbai and Ahmedabad.

IT has also set up a wholly-owned subsidiary in the US with an investment of around $0.2 million. The company has already invested $50,000 towards equity participation in its US operation Clientsoft Inc, California. The company incorporated in the US will focus on providing quality software professionals on a contractual basis to its clients in the US.

Software Solution registered a turnover of Rs 16.3 crore for the half year ended December 31, 1997 as against a turnover of Rs 8.6 crore in the corresponding half of the previous year. After a provision of Rs 1.4 crore and Rs 1.2 crore towards tax and depreciation respectively, the company reported a net profit of Rs 3.8 crore as against Rs 2.4 crore in the previous year.