A month after the allotment, on June 21, the share was listed on its regional stock exchange at Bangalore (BgSE) at Rs 27. After registering a high and low of Rs 30 and Rs 23.15, the scrip closed the day at Rs 26.40 with a total volume of 62,673 shares in 259 trades. Next day, volume on BgSE dropped substantially down to 18,146 shares, number of trades being 76, and the price, after peaking at Rs 28.50, closed the day at Rs 24.30. On the third day, volume dropped further down to 8,200 with number of trades declining to 15 and price was almost static at Rs 22.35.

Same day, the scrip had its muhurat at `Cyberabad' exchange (HSE) at Rs 23.60 with a total volume of 11,401 shares in 25 trades. On the first day of this week, whereas HSE saw the scrip recording the lowest volume of just 900 shares in 4 trades with a solitary quote of Rs 20.65, BgSE recorded a huge volume of 73,073 shares in 90 trades. However, despite the surge in volume, the price on the regional exchange hit a low of Rs 15 during the day.

What was the cause for the sudden rise in volume? Well, on the same day of June 26, the scrip was listed on the Mumbai stock exchange (BSE). After opening at Rs 18.90 on BSE, the scrip hit a high and low of Rs 20 and Rs 14.65 respectively before closing the day at Rs 15.05. While the price ruled easy, volume mounted at 1,05,404, number of trades being 445. On June 27, the scrip had a lower number of trades of 293 on BSE. But, the day's volume was higher at 1,19,954 shares. Same day, BgSE recorded a lower volume of shares on a higher number of trades as compared to the previous day.

Next two days, the scrip's volume moved southward but, interestingly, the price inched northwards! According to knowledgeable sources, the volatility in GSL's counter is largely due to the presence of a couple of silent market operators who picked up a small stake in GSL at par just before the public issue. These non-promoter firm allotments are free from lock-in. It is worth noting here that, though the promoters' stake is put at 36.89% on the equity of Rs 11.45 crore, the core promoters hold only about 20%. The balance 16%, held by `relatives and associates', is not locked-in. Now, what's the future scope of GSL? The company is centred around three promoter-directors.

The 31-year-old main promoter, GD Reddy, after obtaining his BE., has worked with three organisations where his exposure to software development was limited. The 30-year-old second promoter-director, D Ravi Kumar, who is also an engineer by profession, had hardly worked in a software set-up. The third engineer-promoter, 32-year-old K Varadarajan, has worked with a an industrial automation systems manufacturer and claims to have managed a team of 30 software engineers. But, this `knowledgeable' promoter has staked in just 0.17% in the core promoters total stake of 20.99%!

As regards financial performance, for the year ended June 1999, GSL posted an income of Rs 98 lakh and profit of Rs 12 lakh. For the seven months up to January 2000, it has reported a profit of Rs 97 lakh on a gross income of Rs 3.87 cr. After completion of the current project, the company promises an EPS of Rs 3.65 for the year ending June 2001. The projections may, perhaps, justify the current market price of GSL. But, what will happen to the mushroom of software companies that have recently cropped up when the current euphoria dies down? Surely, what happened to the finance companies that mushroomed during the mid nineties give enough indication.And, what's the commitment of GSL's promoters to the company? Just one aspect of their dealings should give an answer.

The public company, GSL, has agreed to buy 19560 sq ft land near Bangalore for Rs 88 lakh from the mother of the main promoter, GD Reddy.

Interestingly, the same land was acquired by her in 1981 and 1892 for a total consideration of just Rs 62,000! They say, the land is surrounded by leading information and technology companies. Here, the question is, will the land value remain the same after the current infotech euphoria fades out? No prudent promoter would sink public company's money in real estate when the rates are at their peak.

-- Arranged by Investar - The Aarthik News & Research Group) [E-mail feedback to:investar@bol.net.in (or) fernando@bol.net.in]