The HTIL scrip, which was offered to public in September at Rs 12, got listed on the country's premier stock exchange, the BSE on October 26 at a marginally discounted rate of Rs 11.50. It closed the day slightly higher at Rs 11.95, after fluctuating between Rs 10.75 and Rs 12.20, the number of trades and volume being 642 and 4.64 lakh respectively.

Same day, the scrip began its innings on the more speculative National Stock Exchange (NSE) at the offer price Rs 12 and moved between Rs 10.75 and Rs 12.20 before finally closing at Rs 11.60, number of trades and volume being much higher at 3,661 and 20.95 lakh. Currently, on both exchanges, the scrip is placed around Rs 10.50 and the trades and volume too have ranged down to around 600 and three lakh respectively.

Why such a lackadaisical market debut by a high profile Indian banner of a foreign company? Perhaps, as compared to HTIL's impressive profile, the scrip's performance on listing may be depressing. But, if one were to look at the response to the "Fixed Price Portion" of HTIL's public issue, the scrip's performance can hardly be surprising. Though HTIL's "Book Building Portion" of 56.19 crore shares was claimed to have been oversubscribed by 67 per cent, the much smaller fixed price portion of 6.24 crore shares was under subscribed by as much as 77 per cent. This was finally thrust upon the three unlucky underwriters namely ICICI Securities, IDBI and the nascent Infrastructure Development Finance Corporation (IDFC), who had to shell out about Rs 16 crore each.

No doubt, considering the present pathetic plight of the Government controlled MTNL subscribers in Mumbai, the business scope for a private telephone company like HTIL is tremendous. However, given a long gestation for such infrastructure projects, HTIL can't think of a decent bottom line at least for the initial three years.

In these circumstances, the immediate prospects of the scrip largely depend on the mood of the investors who are unintentionally saddled with a large quantity of shares through the public issue. As a matter of fact, as much as 54 crore shares (86 per cent) of HTIL's public issue of 63.43 crore shares went to just 28 institutional investors who have staked a whopping Rs 648 crore. These large investors would probably decide the future course of HTIL's scrip.

NRI student-director!
The other new listing, the Secunderabad-based Pragnya Software Systems Ltd (PSSL), has now almost frozen at Rs 8.15 after making debut on its regional Hyderabad exchange (HSE) at Rs 10.50 on October 31. This Aryaman Financial lead-managed small IPO of Rs 1.70 crore was offered to public in the month of August at par value. Certainly, for an issue, whose small investors' portion of Rs 85 lakh was subscribed only about a half by 1,200-odd people, one would not have expected a better performance from the scrip. In fact, but for the four large applications which amounted to Rs 48 lakh (equivalent to more than 28 per cent of the total issue size), the IPO would not have sailed through!

Any scope for the scrip in the immediate future? Well, formerly known as Pragnya Systems Ltd, PSSL claims to have been in so software development since 1991. But, the company's bottomline could reach double digits only in the year 2000, that too after extending the year by three months! Further, promising to complete its Rs 7.20 crore project by June 2000, PSSL has projected a turnover of Rs 8.59 crore in the first year. But, as per the offer document dated July 8, 2000, the company had spent only Rs 86 lakh (less than 12 per cent of the project cost)!

The nine-year-old company's profit of Rs 17 lakh for the 15-month period ended June 2000 is too small to support its post-issue equity of Rs 6.55 crore. And, the progress of the project does indi indicate that the company's immediate projections are beyond one's imagination. What's more, some of PSSL's disclosures would even make mockery of prospectus drafting.

Of PSSL's pre-issue capital of Rs 2.10 crore, the "core promoters" claimed to hold Rs 1.11 crore (53 per cent) and the balance Rs 0.99 crore (47 per cent) was reportedly held by "immediate relative of promoter (spouse, parent, child, brother, sister)" (sic). The offer document presents two people, G.Murali Krishna and G.Venkata Krishna, as "chief promoters."Do the `immediate relatives' of these two core promoters really add up to 93 people as claimed in the offer document? Another interesting aspect of PSSL is, six years ago, the company's auditors declined to offer themselves for re-appointment. Still more interesting is, the hitherto domestic software compa company, which aspires to join the big league in software exports, has appointed a USA-based 21-year-old student, (Miss) G Ooha, as an `NRI Director'!

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