Eider group formed Eider e-Commerce Ltd just two months back by acquiring an eight-year old Bangalore-based IT company, Citi Wide Computers and Communication (India) Ltd. Interestingly, according to a senior company official, the acquisition cost was just around Rs 5 crore.

Ahead of its IPO, Eider e-Commerce has also offered 50 lakh shares to its existing shareholders, employees and associates of the Eider group at a lower price of Rs 90 against the IPO offer price of Rs 170 through a negotiated deal with Eider Financial. According to the company official, the issue of shares at a price of Rs 90 to existing shareholders was to reward the shareholders. Importantly, the shares issued through the negotiated deal are freely transferable and do not carry any lock-in period. The company is also considering an employee stock option plan (ESOP), but details of the scheme are yet to be worked out. The company's paid up capital at present stands at Rs 22 crore and this will be expanded to Rs 32 crore after the proposed IPO. The equity shares are proposed to be listed at the National Stock Exchange, the Bombay Stock Exchange, the Ahmedabad Stock Exchange, the Delhi Stock Exchange and the Ludhiana Stock Exchange.

Eider Infotech, the flagship company of the Eider group, is currently holding 78 per cent in Eider e-Commerce. Eider Infotech also has plans to list on Nasdaq. Eider Infotech, which has been on a dream run on the bourses after its new avatar into a software company, is at present holding 78 per cent in Eider e-Commerce. Its holding will come down to 51 per cent after the proposed IPO.

EEL has chalked out a major expansion plan which will be part-financed by the proposed IPO. The company is in the business of communication software and network and is now foraying into web/internet/e-commerce solutions for a number of domestic as well as international clients. The company is now focussing on two major e-commerce business streams including Eider e-commn card and payment gateway project and a net consumer distribution and service model (www.Indiasales.net/indiahomeservice.net) initialy for 12 major cities of India which will be expanded to 100 cities in future. Besides, 03Portal Web Sites are also being launched. The projects require an investment of Rs 305 crore and expects to generate a revenue of Rs 316 crore, Rs 610 crore and Rs 820 crore in the first, second and third years respectively.

On this, net profit is expected to be around Rs 27 crore, Rs 75 crore and Rs 119 crore for these respective years. The project is expected to be financed through the IPO proceeds to the tune of Rs 170 crore, internal accruals of Rs 25 crore, Rs 45 crore through the negotiated deal and Rs 65 crore through bank finance for the e-commerce credit card project to be implemented in their collaboration on BOT/BOM/BOS basis. The e-comm credit card alone accounts for Rs 200 crore. For the nine-month period ended December 31, 1999, the company recorded a net profit of Rs 2.05 crore on sales of Rs 22.94 crore.