The Rs 14.45 crore joint venture project has been set up in technical and financial collaboration between Alok Textile Inds Ltd and Grabal, Albert Grabher Gesellschaft MBH & Co of Austria. While the former's post-issue equity holding in GAEL will stand at 60 per cent, the latter will hold 15 per cent. Apart from the public issue, the comapny has taken a Rs 4.75 crore loan from IDBI and the promoters have, through the equity route, contributed Rs 3.89 crore. There was a Rs 28 lakh cost overrun on the project.

From a total sales of Rs 6.14 crore in its first full year of operation ended March 1998, GAEL earned a net profit of Rs 75.83 lakh. On an equity of Rs 4.19 crore, its earnings per share stood at Rs 2.14.

Though the company has under EPCG scheme an exportobligation of Rs 31 crore over a 5 year period, during fiscal 1998 its export turnover was only Rs 58.11 lakh. Given the absence of any foreign buy-back arrangement of its products, meeting EPCG commitments could be a problem.

The company's products find application in the garments industry and the project is strategically located near Mumbai. Also, GAEL is in the process of expanding its embroidery manufacturing capacity. Four of its group companies had incurred loss during fiscal 1997 and nine of its group companies are yet to commence operations after their incorporation.

Given that the shares are proposed to be listed on stock exchanges at Pune and Ahmedabad, liquidity in the stock will be a problem. Lead managed by Fortune Financial Services Ltd and Tata Finance Ltd, the issue opens on June 8.