Although many of these small companies offer shares at par, most of them demand only Rs 5 on application. If an investor applies for 200 shares of these companies, he has to fork out only Rs 1000 on application. This is also a way to lure investors, thus ensuring full subscription to their IPOs.

The latest to line up par issues are e.star infotech, Sark Systems India and Online Media. While e.star infotech has only filed the draft prospectus with Sebi, the other two companies are hitting the market in June. Besides, Telephoto Entertainments, Kirloskar Multimedia and Kals Information Systems are tapping the market with par IPOs in this month. Many more IT IPOs are expected to hit the market this month.

e.star infotech
e.star infotech was established in December, 1999 under the name, Starwar Infotech Pvt Ltd. On January 19, 2000, the company re-christened itself as e.star infotech. The company is offering 40 lakh equity shares of Rs 10 each at par, aggregating Rs 4 crore. Of the total shares on the offer, six lakh shares are reserved for NRIs/OCBs/FIIs, four lakh shares to Indian mutual funds, two lakh shares to development institutions and 12,000 shares to employees. Hence, net offer to the public is 27.88 lakh shares. The company is demanding Rs 5 on application and Rs 5 on allotment.

Promoted by first generation entreprenuers, e.star infotech is setting up a Rs 11.15-crore project. Through the implementation of this project, the company plans to start its operation in the field of software.

The project has been apprised by the Bank of Rajasthan which has also sanctioned a term loan of Rs 1.15 crore (the mandatory requirement of 10 per cent).

The company is now setting up software development and training centers. Of the total project cost, Rs 1 crore is going towards setting up an office space, Rs 75 lakh for furniture and fixtures, Rs 2.25 crore for computer hardware, Rs 4.5 crore for software and Rs 1.15 crore is earmarked as working capital. The project is located in Millennium Business Park, Navi Mumbai and registered with Software Technology Parks of India (STPI).

Except for the term loan, the entire project is being financed through the equity to the tune of Rs 10 crore. The company has bagged export orders worth Rs 2.5 crore, according to the draft prospectus.

Sark Systems
Sark Systems is offering 14.65 lakh shares at par. Lead managed by Aryaman Financial Services, the IPO opens for subscription on June 12 and closes on June 17. The shares are proposed to be listed at Hyderabad and Bangalore.

Sark is embarking on a Rs 4.44-crore project which involves setting up a software development centre and a marketing office in USA at a total cost of Rs 45 lakh.

State Bank of Hyderabad has apprised the project and has sanctioned a term loan of Rs 65 lakh. Of the project cost, a major portion of Rs 1.88 crore is going towards purchasing hardware and software.

Promoted by first generation entreprenuers, Sark commenced operation in January 1999. The company has developed softwares like share management system, mini ERPs, fleet management and consignment tracking, retailing solution and central warehouse management solution. The company has also developed Intranet portal which is being marketed under the brand name, INTOUCH. The company has catered to seven customers in India and three clients in USA. For the 10 month period of fiscal 2000, Sark reported a net profit of Rs 12.34 lakh on total income of Rs 99.23 lakh. For the current fiscal, net profit is projected at Rs 26 lakh on total income of Rs 8 crore.

Online Media
Online Media is offering 27 lakh shares at par. Lead managed by CIL Securities, the IPO opens on June 19 and closes on June 26. The shares are proposed to be listed at Hyderbad and Mumbai.

Incorporated in February 1999, Online Media is yet to start operation even on a small scale. Promoters hardly have any exposure to the software field and they are not technically qualified.

The key promoter, K Srinivasa Rao, has exposure to only gold and silver trading. For the 11-month period ended February 2000, Online incurred a net loss of Rs 12.17 lakh on total income of Rs 3.7 lakh. For fiscal 2001, net profit is projected at Rs 5.5 crore on total income of Rs 19 crore.

The company is in the process of setting up basic infrastructure. Central Bank of India has put the total cost at Rs 11.8 crore, which has also sanctioned a term loan of 1.3 crore. Of the total project cost, Rs 6.45 crore is going towards buying hardware, Rs 90 lakh for setting up an overseas office, Rs 16 lakh for buying vehicles and 97.8 lakh for furnitures. The company has only eight software engineers and proposes to increase the number to 20.

The company now proposes to undertake activities like Internet/Intranet/Extranet network solutions, multimedia digital graphic studio and electronic business commerce centres and software development.