Ashika Credit Capital: Below Average

Score: Below Average

BL Research Bureau

ASHIKA Credit Capital has approached the primary market with a public issue of 12.50 lakh equity shares at an offer price of Rs. 10 per share. The issue aims to raise Rs. 1.25 crores as equity capital.

Investors may consider avoiding an exposure to the issue for the following reasons.

An investment in Ashika Credit does not promise adequate liquidity. The shares are proposed to be listed only at the Calcutta Stock Exchange (CSE), thereby rendering exit a tedious task for investors elsewhere. Also, the promoters will hold about 75 per cent of the equity after the public issue which does not leave much scope for liquidity.

The primary object of the issue is to make an investment in Ashika Stock Broking, an associate company of Ashika Credit. The stock broking arm is a dealer on OTCEI and the issue is to achieve the objective of a membership on National Stock Exchange (NSE) and CSE.

Ashika Stock Broking is a loss making entity at present. A move into NSE and CSE does not necessarily translate into better prospects because stock broking is a low-margin business where the costs charged for business has been driven down by competition all the time. And with the advent of on-line broking, the market seems to be set for another round of declining charges.

Ashika Credit by itself does not have a financial track record that stands out. The company's business has been largely confined to primary market activities and trading in shares. In this backdrop, investors may avoid the issue because of the prospects of low returns and the danger of illiquidity.

The issue opens on August 5 and closes on August 11. The lead manager is Financial and Management Services.