Mega Channel, which was established in 1996, is offering equity shares at a price-earning multiple of 11.84 based on the 1999-earnings. However, promoters of Mega Channel hardly have exposure to the software development field. Mega Channel is now setting up a Rs 9.79-crore project to expand its software development facilities. The company will focus on the development of industry-specific software solutions. The project will be entirely financed from the IPO proceeds. Although Mega Channel was established some four years back, it is yet to have an office of itsown. The company has earmarked Rs 2.1 crore for this purpose. Of the Rs 9.79-crore project, only Rs 3 crore is for software developmentand Rs 2 crore for setting up infrastructure. Also, Rs 1 crore has been earmarked for meeting working capital requirements.

Mega Channel has started developing application software for clients in the areas of internet and e-commerce. At present, Mega Channel has one development centre in Chennai which houses 40 software professionals.

Mega Channel has four divisions - projects division, products division, engineering consultancy division and e-commerce division. Projects division provides industry specific solutions by reformulating business processes in line with the e-business paradigm. The division also provides support in implementation of ERP and customer relationship management (CRM) solutions. Products division specialises in developing and marketing of flexible products for various vertical markets like hotel management, library management, educational institution management, etc.

Engineering consultancy division provides computer aided design (CAD) related services like product design, tooldesign, reengineering, reverse engineering, finite element analysis, structural analysis, thermal analysis for a wide range of mechanical, automobile and aerospace applications.E-commerce division provides services like internet strategy formulation - overseeing integration of web servers, mail servers, application servers, network boxes, extranet, workflow application, management e-mail tracking, streaming media content and providing competitive analysis. The division is also into web architecture development.

The past performance of Mega Channel has not been very impressive. For fiscal 1999, it reported a net profit of Rs 21 lakh on total income of Rs 78 lakh. For the 10-month period ended January, 2000, Mega recorded a net profit of Rs 26 lakh on total income of Rs 82 lakh. Mega Channel gives a return on networth of 0.08 per cent, which is very low for a software company. For fiscal 2001, Mega Channel is projecting an operating profit of Rs 1 crore on total income of Rs 4.2 crore.

Although Infobahn wasestablished almost five years back, the company is yet to establish itself in the field. There is nothing to cheer about the past performance of Infobahn Technologies. For the nine-month period ended December 31, 1999, the company recorded a net profit of Rs 4.29 lakh on total income of Rs 63.75 lakh. According to the prospectus, the company is currently involved in development of internet and e-commerce related software (Unix systems) and consultancy services. The issue objective is to set up a software development centre in Hyderabad and an overseas marketing office in USA, for which the company has set aside Rs 91.46 lakh. The project cost of Rs 6.78 crore will be financed through the equity route and a term loan of Rs 70 lakh by Global Trust Bank. For fiscal 2001, GTB has projected a net profit of Rs 1.65 crore on total income of Rs 6.99 crore.

Kanika Infotech under its new avatar as a software company is also going public with a Rs 3.78-crore par issue. The company was established in February, 1995 asKanika Overseas and in June 1999, it attached the software tag to itself.