C S Software Enterprise

Score: Below average

Krishnan Thiagarajan

THE untested ability of CS Software Enterprise to scale-up software operations from the domestic to the overseas arena, focus on key projects executed mainly in data management vis-a-vis pure software service and the heightened competition levels make this IPO, at an offer price of Rs. 20, unattractive from the risk-return criterion.

C S Software Enterprise is making a public offer to part-finance the setting up of infrastructure for software development, training and maintenance. The company has executed most of the data management and software projects for government undertakings and public utilities rather than private sector companies, where quality requirements and tight deadlines are of a relatively higher order.

Except for the latest financial year, (1998-99), the company's financial performance has hardly been impressive. For the financial year ended December 31, 1999, it recorded revenues of Rs. 5.53 crores and post-tax earnings of Rs. 1.18 crores. The ability to achieve revenue projections of Rs. 9.08 crores and post-tax earnings projections of Rs. 1.61 crores will hinge entirely on the network of alliances and partnerships which the company has forged with players such as Wisconsin Physicians Service Insurance Corporation for data management services and IBM, Inteliant Corporation and AES Business Solutions for software development services.

However, given the stiff competition levels in the software development and training segment, low scale of operations and demanding clients at the international level, the company may find it difficult to achieve these projections. The risks associated with this IPO at an offer price of Rs. 20 may outweigh the returns on the investment. This IPO opens on May 15 and closes on May 18. Karvy Investor Services are the lead managers of this issue.