Suchinfotech: Below Average

Score: Below Average

Suresh Krishnamurthy

SUCHINFOTECH is a start-up company, accessing the capital market for funds. The risks involved in an investment are considerable and as such investors can avoid the offer.

What the company says: Suchinfotech plans to provide e-commerce solutions, off-shore software development in the areas of object-oriented programming, client/server solutions, graphical user interface, relational database management systems and web-based technologies.

The project cost is estimated at Rs. 5.70 crores, to be funded with equity of Rs. 5 crores and a term loan of Rs. 0.70 crore.

The company has entered into a memorandum of understanding with Magma Consulting Inc., of the US for providing marketing support for securing software development business. A similar MoU has been entered with Web Solutions Inc., of the US.

Prospects: The prospects for software companies at the global level are quite bright. However, Suchinfotech does not appear to possess the right ingredients now to establish a footing in the export market for software services. The promoters are first-generation entrepreneurs with scarce experience in the field of software services. Even in the earlier ventures floated by the promoters, they do not appear to have met with any significant degree of success.

This apart, the risks of investing in an IT start-up, even if it has the right ingredients, are considerable. The risks stem mainly from stabilising operations and minimising risks, as the operations are scaled-up. Such risks do not appear appropriate for a retail investor.

Given this backdrop, investors should avoid this offer. The issue opened on August 18 and closes on August 22. The lead manager is Aryaman Financial Services.