The 1999-earnings discount the offer price of Rs 80 and Rs 95 by a multiple of 16.49 and 19.59, respectively. Considering the high discounting enjoyed by software scrips on the bourses, one can expect good returns in the short-to-medium term. SoftSol India, a subsidiary of Softsol Technologies Inc., USA, has chalked out an expansion plan at a total cost of Rs 46.92 crore.

The company provides offshore software development for Softsol Resources Inc., a US-based company promoted by Srinivasa Rao Madala who is also the promoter of SoftSol India. SoftSol India is now investing Rs 9.9 crore in its existing facility at Infocity, Madhapur (Hyderabad); Rs 12.75 crore for setting up development centres and marketing offices in UK, Middle East, Singapore, Japan and Australia and Rs 6.75 crore development of new e-commerce solutions. However, the company is yet to approach the regulatory authorities to obtain the necessary approvals for its overseas investments.

Of the IPO proceeds, Rs 12 crore is earmarked for long-term working capital requirements, Rs 2.26 crore for contingencies and Rs 3.26 crore for issue expenses. The funds requirement will be met through issue proceeds and internal accruals. The company, which was established on September 20, 1990, in the name of Napier Software Services, changed its name to SoftSol India in 1999. However, SoftSol started its operations only in1996 for providing technical support and executing the projects in the area of offshore software development for SoftSol Resources Inc, USA.

Income from software development for SRI has increased from Rs 1.81 crore in fiscal 1997 to Rs 6.58 crore in fiscal 1999. Profit from operations has increased from Rs 1.76 crore in fiscal 1997 to Rs 4.99 crore in fiscal 1999. SoftSol India is in the process of developing software products and tools that are required to offer e-commerce solutions to clients worldwide. The products help minimise future development costs for clients. These solutions enable the deployment of new applications and the extension of legacy applications across a variety of computing environments like the internet, client-server and mainframe systems. Also, the products allow web browsers to access and integrate with mainframe/client services system date and applications.

The company currently employs 83 people and proposes to increase the number to 535. The company has been operating on higher margins. Net revenues have grown at a CAGR of 90 per cent and net operating profit has grown at a CAGR of 68 per cent. From Rs 3.32 crore in fiscal 1998, total income increased to Rs 6.58 crore. During period of April-November 1999, the company recorded an income of Rs 8.12 crore. Net profit increased from Rs 3.35 crore in fiscal 1998 to Rs 5.22 crore in fiscal 1999.

For the eight-month period of fiscal 2000, the company recorded a net profit of Rs 4.99 crore. The company is projecting a total income of Rs 16.51 crore for fiscal 2000. Of this, Rs 13.26 crore is coming from onsite development and Rs 3.25 crore from offshore development. Operating profit is projected at Rs 9.74 crore and other income is around Rs 36.84 lakh. Net profit is projected at Rs 9.99 crore.