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SQL plans to raise Rs 240 million on the bourses

SQL Star International, a Hyderabad based software company, is exploring the possibility of a public issue at a premium.

SQL, which has drawn up a Rs 240-million expansion plan, is also weighing the

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option of taking the private placement route to raise equity funds.

According to a senior official of SQL, the company has the option of private placement or a public issue. "We don't rule out the possibility of a public issue at a premium, though we have not taken a final decision on the means of financing,'' he pointed out.

"The public issue will help us get listing and also enable us to go in for an employees stock option scheme,'' he added.

Of the Rs 240 million required for expansion, internal accruals of the company will contribute Rs 110 million. Another Rs 20 million will come in the form of loans from financial institutions.

The company will have to tap either the public or investors in the private placement market for the balance of Rs 110 million. "The promoters will also contribute to the capital infusion,'' he added.

SQL has an equity capital of Rs 70 million. If it goes in for a public issue, it will have to increase the paid-up capital to at least Rs 100 million to seek listing on the major exchanges.

In which case, the company will be issuing 3 million shares worth Rs 30 million and the balance will have to come in the form of a premium.

"It is too premature to comment on the premium,'' said the official, who added that the picture would be clear in a couple of weeks.

SQL has targeted a turnover of Rs 270 million in the current financial year compared to last year's Rs 187.5 million. For the first of the current financial year, the company expects a turnover of Rs 115 million and net profit of Rs 13.5 million.

SQL is setting up a hi-tech city in Madhavpur in Andhra Pradesh. It has already acquired the land and construction is on. The expansion also includes a software education centre in Singapore and four metros in India.

The attractive discounting for IT stocks in the secondary market is expected to see some companies tapping the IPO market. Sonata Software, a Bangalore based company, has already filed its draft prospectus for a public issue at a premium in the range of Rs 65-80 a share.

The company plans to raise around Rs 190 million to Rs 230 million from the public.

SQL is engaged in high-end education, consultancy and professional services for the overseas markets. Dr Ashok Agarwal is one of the promoters of SQL Star International.

Y2K conversion is one of the key areas of SQL's software business including overseas clients.

- Compiled from the Indian media

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