Geekay Imaging: Below average

Score: Below average

Krishnan Thiagarajan

GIVEN the relatively low scale of operations in the digital imaging business, the high risks associated with project execution, stiff competition and optimistic financial projections, the initial public offer of Geekay Imaging at Rs 20 may be ignored.

Though Geekay Imaging has been in the business of digital imaging/digital colour separation, graphic designing and multimedia for the last five years, its past track record has not been impressive. For the year-ended March 31, 2000, the company recorded turnover of Rs 2 crore and post-tax earnings of Rs 0.21 crore.

As a part of this public offer, Geekay Imaging is setting up a software development centre at Bangalore to undertake software projects and develop products in the field of e-commerce solutions in factory automation, multimedia solutions and Internet-based projects. It also plans to set up overseas marketing offices at the US, the UK and Singapore.

Even taking into account software development orders of Rs 5.41 crore (from Directlink UK and SWA Germany), scaling up revenues from the current level of Rs 2 crore to Rs 11.96 crore in 2000-01 and Rs 15.90 crore in 2001-02 may be difficult for the company. Except for IROPS (Internet Remote Order Processing System) developed by Geekay, its project execution abilities in the software arena remain untested. The risks involved in this IPO outweigh the returns from a medium-term perspective. The IPO opens on September 25 and closes on 29. The lead manager to the offer is Canara Bank.