Entering a Specialised arena
(Financial Wizard 14.02.1994)

Advanced Synergic Microsystems Ltd. Is entering the capital market with a public issue of 1,85,00,000 equity shares of Rs.10 each for cash at per aggregating Rs.1.85 Crore. The issue opens on 18th February for public subscription.

Project

The company is setting up facilities to develop and market a wide range of computer software and hardware products for domestic as well as global market. The activities include systems engineering and value added reselling through distributorships of leading hardware and software systems, software development, consultation and training for the turnkey solutions in CAD/CAM, finite element analysis and services including modal analysis, computer aided drafting and digitizing of drawing maps, etc.

The company has entered into a value added reseller agreement with Silicon Graphics Inc of USA for their engineering workstations. The company is a world leader in visual computing with revenues in excess of US $ 1 billion and a fortune 500 company, defence establishments, research and development organizations, educational institutions etc. The company has tied up with Computer Vision, USA for distributing their products in Indian market.

Besides, the company has distributor agreements with foreign companies like Structural Research and Analysis Corporation, USA, Data Physics Corporation, USA and a few Indian Board, the day to day operations of the company are looked after by S.Rabindra and K.Sundar, the Managing Directors, rating 10/20.

Profitability

The company, during 1993-94 will post a lower sales turnover than that projected by IDBI because of the delay in the implementation of the project. However, it maintains that the delay has not affected the costs. Infact it claims to have benefited from the various duty reductions introduced in the last budget.

For the year 1994-95, the company hopes to post a sales turnover of Rs. 9.85 crore, with a net profit of Rs.64 lakh. During the two subsequent years, it is estimated to notch a net profit of Rs.71 lakh and Rs.67 lakh on a sales turnover of Rs.12.68 crore. The EPS for the three years works out to Rs. 2.13, Rs 2.36 and Rs 2.23, Rating 9/20.

Market Fancy

The promoters are well qualified as far as manufacturing the software is concerned. The only factor is that they are entering in an extremely competitive arena, where the market factor has to be taken care of. This has to be taken care of to a certain extent by their tie-ups with computer vision and Silicon Graphics.

The company's past performance has been satisfactory. However, if one discounts the projected EPS of Rs. 2.13 with a conservative PE multiple of 10 against the industry PE of 22, the script has potential to command a reasonable premium on listing. Rating 8/20.