It may be recalled that the Pune-based Suryoday twins, promoted by a journalist-turned-businessman, Sanjay Sonawani, went public about four years ago, that is during the unprecedented IPO boom that swept the Indian capital markets in the mid-nineties. As if in a great hurry, the first generation promoter floated the two public issues of Rs 2.5 crore and Rs 3.5 crore at par in 1996, with a gap of just two months. Known as Tirupati Allo-Metal Powders Ltd until last year, SAMPL started manufacturing electrolytic ironpowder in the year 1995 at Gadchiroli, a notified backward area in Maharashtra enjoying income tax, sales tax and power subsidy.

Initially, the company had a capacity of 1,800 tones which was increased to 2,400 tones during fiscal 1997 with the help of internal accruals. Using the public issue proceeds, the company proposed to expand its capacity to 5,760 tones.

Despite apprehension from certain quarters at the time of the public issue that the company would not be able to compete with the Swedish multinational Hoganas, SAMPL has not only achieved its pre-issue projections but, it has also created a much larger capacity than projected. At the end of March 1999, SAMPL's capacity stood at 8280 tones, which is reportedly being expanded to over 20,700 in the current fiscal, as the minimum economic size of a metal powder plant is globally put at 20,000 tones.

Today, SAMPL is said to be the only Indian company having indigenous technology catering to the iron powder market in India. Also, SAMPL is claimed tobe the fastest growing metal powder company in the country. Since it went public, the company's turnover and profit have been improving year after year.

Moreover, even at a production level of around 6500 tones, the company achieved a turnover and profit of Rs 13.65 crore and Rs 2.60 crore respectively last year. What's more, post-issue, without enlarging its capital base of Rs 5.61 crore, the company has quadrupled its production capacity. Also, despite heavy investment in the expansion project, the company paid a dividend of 10 per cent last year. In spite of having such impressive fundamentals, the scrip is currently priced at around only Rs 17 which discounts the company's last fiscal's EPS of Rs 4.60 just 3.7 times.

The promoter blames poor liquidity for the scrip's present dismal showing. According to him, more than a half of the equity is held by the promoter and his associates, and 48 per cent of the capital is closely held by about only 2,600 public shareholders. Nevertheless, contrary to thepromoter's claim, the scrip finds liquidity with regular trading and decent volume.

If market sources were to be believed, the SAMPL scrip was languishing below par until the end of 1998 and, in the second half of last year, when certain market operators suddenly pushed up the price. The original investors who had been waiting for an opportunity simply pounced on the price. According to market sources, though the company's performance is nothing to adversely comment about, some of the large investors are still selling the shares as they have waited for more than three long years. Another major reason for SAMPL scrip's downfall could be the promoter's newfound love for software.

In 1996, the promoter claimed to have floated SSPL as a forward integration of SAMPL as the former had proposed to set up a Rs 6.9 crore project for manufacturing of sintered products from the high purity metal powder manufactured by the latter. But, immediately after the public issue, the company went into oblivion. Its promoternow has to say that SSPL could not collect more than the application money of Rs 87 lakh, that is Rs 2.50 per share! Consequently, the company could not complete the project.

According to the promoter, SSPL's sintered products project was finally sold off for a consideration of about Rs 2 crore last year and, with this money, the company entered into the business of software development in June last year! The company claims to employ 32 software professionals and a team of 11 mechanical design engineers. It also boasts of having appointed a full-time director with ten years of experience in the software industry. The company claims to focus on developing software solutions to engineering projects. During the last quarter, it also claims to have achieved a turnover of Rs 42.5 lakh from software business.

Interestingly, SSPL has already changed its name to Washington Softwares Ltd (WSL) since the month of September! The promoter claims to have already notified the change of name to the three stock exchangesat which the shares are listed. Yet, BSE hasn't amended its records. Perhaps, BSE may not want to give a software tag to the `sintered products' company before the company reports a tangible performance from software.

However, notwithstanding BSE's stand, the market seems to have sensed what's in store for a software scrip with an all visible American tag! The Suryoday group shareholders themselves may switch their loyalties from SAMPL to SSPL (now rechristened as WSL). But, who is currently selling SSPL's shares in the secondary market, especially when the public shares are claimed to have been paid-up to the extent of only 25 per cent?

(Arranged by INVESTAR - The Aarthik News & Research Syndicate) [E-mail feedback to investar@bol.net.in]