The equity shares of SOL are, however, already listed on the Hyderabad, Mumbai and Coimbatore stock exchanges. The SOL scrip opened for trading on the NSE on November 11 at Rs 210 and firmed up to Rs 225 before easing to close the day at Rs 219. The volume witnessed was, however, low at just 700 shares in 7 trades. The next day the scrip shed a few rupees to close at Rs 212.50.

On the BSE, the onset of the software boom in recent times had catapulted the SOL scrip from Rs 80 at the end of March this year to an all-time high of Rs 236 towards end-September. Currently, the share is placed at Rs 213.60 apiece.

Promoted by technocratentrepreneurs, SOL made a humble capital market debut in July, 1995. The company offered the public 16.5 lakh shares at par in order to part-finance a self-appraised expansion programme of Rs 2.82 crore. Of the post-issue equity base of Rs 3.30 crore, the promoters were to collectively hold 50 per cent. Prior to its public foray, SOL had a balance sheet size of just Rs 57 lakh at the end of January, 1995. The turnover for the 10-month period up to January 1995 was Rs 59 lakh. Post-issue, the company has turned in profitable operations, achieving most of the promises held out at the time of the public offer. SOL achieved sales of Rs 2.48 crore, Rs 4.68 crore and Rs 9.13 crore, respectively, in fiscal 1996 (14 months), 1997 and 1998 as against projected sales of Rs 2.05 crore, Rs 3.35 crore and Rs 4.50 crore, respectively.

On the profitability front, too, the company exceeded the targets, recording net profits of Rs 0.90 crore, Rs 1.53 crore and Rs 2.34 crore, respectively as against the pre-issue promise ofRs 0.84 crore, Rs 1.36 crore and Rs 1.89 crore, respectively. Meanwhile, the current fiscal too has seen consistent improvement in SOL's performance. While the first quarter turnover and profit after tax stood at Rs 3.07 crore and Rs 0.88 crore respectively, the corresponding second quarter figures have turned out to be better at Rs 3.64 crore and Rs 1.02 crore.

Thus, SOL has already surpassed the promised turnover of Rs 6.20 crore for the current fiscal in the first half itself while it is definitely poised to better the projected net profit of Rs 2.69 crore. Assuming that the second-half performance is as good as the first half's, SOL could post a Rs 3.80-crore net profit for the whole year, which would translate into an earnings per share (EPS) of Rs 11.50.

The current market price of Rs 214 thus discounts the earnings about 19 times as against the industry average of 16 times. SOL appears to be a typical small software outfit promoted by professionally qualified persons. While the professionalcompetence of the people behind the venture cannot be doubted, from a corporate standpoint it has to be noted that SOL does not boast of any product of significance. In spite of the lack of branded products, SOL's current market capitalisation stands at nearly Rs 70 crore as against its recent half-year turnover of just Rs 6.71 crore.

Further, during fiscal 1998, one of the `main promoters', Moti Jiandani, quit the company citing personal pre-occupation. All factors considered, it is difficult to justify the high market discounting accorded to SOL. Performance and valuation apart, just what could have induced SOL to seek listing on the NSE? Certainly not visibility, since the scrip is already listed on the BSE. And not liquidity either, since the last few months have witnessed mounting volumes in the SOL counter at the BSE. Could it be that SOL's promoters desired their shareholders to experience the `casino effect'? Or, is there more to it than meets the eye?

As per NSE stipulations, for listing existingsecurities, an applicant should have a paid-up capital of at least Rs 10 crore and a market capitalisation of Rs 20 crore. However, an exception to the rule provides that if the paid-up equity of a company falls short of Rs 10 crore, the shares can be listed if its market capitalisation exceeds Rs 40 crore. The market capitalisation criterion is computed based on the average of the weekly high and low of the closing prices of the shares during the last six months preceding the application for listing on any recognised stock exchange where the shares are frequently traded. SOL, whose equity capital stands at Rs 3.30 crore, has secured NSE listing solely on the basis of its market capitalisation on BSE, which exceeds Rs 40 crore.

Yet another condition prescribed by NSE for listing is that the aspiring company must be already listed on another recognised stock exchange for at least the last three years. Alternatively, the applicant's project must have been appraised by certain specified agencies and (a) theapplicant must also have a dividend record in at least two out of the last three financial years immediately preceding the listing application, or (b) a net worth of at least Rs 50 crore.

As SOL's project was not appraised by any outside agency stipulated by NSE, the company appears to have qualified for NSE listing purely on the basis of its 3-year listing record. Incidentally, SOL completed three years on the BSE only in the first week of October, 1998. The board of SOL does not boast of anyone with a capital market background. SOL's prompt recourse to NSE listing by making use of the fine prints in the listing guidelines clearly indicates the company has been apparently advised by market specialists.

Listening to the `market specialists' is not bad in itself, unless the company is coaxed into serving their own ends.