New Delhi : Faced with a shortfall in its public issue mobilisation, IT&T seems pulling out all the stops to fill the gap. According to a market source, the underwriters are likely to bail out the Rs 31.67-crore initial public offer (IPO) as it is facing a sizeable shortfall in subscription.Although Mr Hemant Kohli, CEO of IT&T, admits that the IPO is facing a shortfall in subscription, he denies that the issue is devolved on the underwriters. ``We are facing a shortfall in subscription, but the lead managers are working on how the shortfall can be made good. As the issue is fully underwritten, we may not have to return the money back to the investors,'' he says.Interestingly, according to an issue manager's version, the picture will be clear only after a day's time. The problem is at the end of the registrars as few applications are not recorded, the lead manager says. In fact, the issue had closed for public subscription on October 24.
Almost the entire IPO has been underwritten. The lead managers of the public issue, JM Morgan Stanley and Enam Financial Consultants, have underwriting commitment of Rs 13.04 crore and Rs 11.02 crore, respectively. Besides, Anand Rathi Securities has underwritten the IPO to the tune of Rs 49 lakh, Enam Securities Rs 1.46 crore, Khandwala Securities Rs 1.9 crore, Karvy Investor Services Rs 1 crore, Jyantilal Khandewala Rs 53 lakh, Jagdish N Master Rs 49 lakh, Sushil Finance Consultants Rs 50 lakh, LKP Shares & Stock Brokers Rs 25 lakh and Tarun Sethia Rs 24 lakh.
The poor response to the IPO is understandable, as primary market investors are slowly, but surely fleeing the market, according to a merchant banker. The company offered shares at a price-earning multiple of 5.99 (based on annualised EPS for fiscal 2000).
The company demanded Rs 50 on application and the balance of Rs 31 on allotment. IT&T is into systems integration and infrastructure management. Lately, the company has also forayed into e-transition services or web enabled software development. Two generic engines in the domain of e-commerce and telecom billing have been developed by the company.
E-transition and infrastructure management is expected to bring most of IT&T's business in the near future. The company is setting up a Rs 32.88-crore project which involves investments of Rs 28.27 crore in emerging Internet technologies and Web-enabled services and Rs 2.41 crore in e-modeling and incubation of Internet related activities. The company proposed to meet the entire funds requirement from the public issue proceeds.
For fiscal 2000, the company recorded an income from operations of Rs 19.4 crore against Rs 17.01 crore in fiscal 1999. Net profit zoomed from Rs 43 lakh in fiscal 1999 to Rs 3.56 crore in fiscal 2000. For the first quarter of fiscal 2001, the company earned a net profit of Rs 2.84 crore on an income of Rs 8.93 crore. According to IT&T's estimates, it is expected to record a net profit of Rs 13.68 crore on an income of Rs 40 crore (excluding other income).
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.