The company has put the total funds requirement for its proposed expansion project at Rs 36.91 crore. Of this, a sizeable portion of Rs 15 crore is earmarked for working capital requirements.

Although MRO-TEK is offering 51.09 lakh shares, the company is issueing fresh equity of only 25.09 lakh. In order to finance the entire project cost of Rs 36.91 crore, the company should get a price of at least Rs 147 for its equity offer. If the company settles for a lower floor price, it has the option of ploughing back internal accruals.

The balance of 26 lakh shares is an offer for sale. Nandi Investments Ltd, a 100 per cent arm of Commonwealth Development Corporation, is offering 24 lakh shares and Development Investment Trustee Company Ltd is making an offer for sale of 2 lakh shares. Former had acquired these shares in March 1997 at a price of Rs 25 and the latter had bought the equity shares in October 1999 at a price of Rs 60. The bookbuilding portion is of 38.31 lakh shares and the fixed price portion is of 12.77 lakh shares. The equity share has a face value of Rs 5. If the floor price is at around Rs 150 and the face value is taken at Rs 10 (instead of Rs 5), the company would be charging an effective premium of around Rs 290. Geometric Software had also charged a premium of Rs 290 for its IPO.

The Rs 36.91-crore project involves expansion of manufacturing capacity at Electronic City, Bangalore, to create additional marketing facilities and set up new corporate office in Bangalore and augment the long-term working capital resources of MRO-TEK. The expansion of the manufacturing facility is at a total cost of Rs 4.61 crore. The company is also setting up an additional marketing and corporate office in Bangalore at a total cost of Rs 12.8 crore. Of this, Rs 3.4 crore is going towards promotional activities.

Incorporated in 1984, MRO-TEK is into networking computing. The company is into trading as well as manufacturing and offers a range of sophisticated and state-of-the-art WAN and LAN products. These products enable MRO-TEK offer complete end-to-end networking solutions and it has an installed base of more than 2.5 lakh data communications devises covering major public and private sector companies. The company has around 37 channel partners in India.

MRO-TEK, which provides solutions for Internet based virtual private networks, network encryption technologies for leased lines, frame relays, and ATM, fireall protection and client encryption, offers products like ASM series, HDSL products, wireless products, 56K modem, ISDN products, VPN, NASRAQ, Cube 2, Protocol Analyzer, Onsite POP, Layer-3 Switches and Server Directors.

The company has entered into a joint venture with globally established player, RAD for manufacture of RAD products and has marketing and distribution alliance with Zyxel Communications, Breezecom Ltd, Cobalt Networks, Extreme Networks, Globaloop Ltd and the RAD group. For fiscal 1999, the company had earned a net profit (before EOI) of Rs 1.96 crore on turnover of Rs 35.52 crore. For the following fiscal, the company had staged a major turnaround in performance by recording a several fold jump in net profit to Rs 15.98 crore on turnover of Rs 106.04 crore. For the first quarter of the current fiscal, MRO-TEK recorded a net profit of Rs 6 crore on turnover of Rs 36 crore, said the company official. For the current fiscal, the company is targetting to double net profit to Rs 32.02 crore on turnover of Rs 200 crore.