Fortune Infotech: Below Average

Score: Below Average

S. Vaidya Nathan

INVESTMENTS in the public offer of Fortune Infotech can be avoided.

An IT start-up, Fortune Infotech is yet to establish itself in the industry. Scaling-up operations for a small-sized company involves considerable risks, and earnings may be volatile. In this context, the company's and the promoters' track record do not appear inspiring.

Moreover, the listing at the regional exchanges is likely to reduce liquidity for a prospective investor. In this backdrop, the risks involved in the offer appear high and the returns may not be commensurate with such risks.

What the company says: The total cost of the project is Rs 7.37 crores, to be funded almost entirely by equity.

The company is now involved in providing medical transcription services to US hospitals, training and software development. The company now has 85 medical transcriptionists working with the company.

The offer for shares at Rs 10 is to finance expansion of the medical transcription facilities and provide funds for software development facilities.

The company's total income for the period-ended March 2000 was Rs 0.35 crore and profits Rs 0.05 crore.

The company has set up a wholly-owned subsidiary in the US. Through its subsidiary, the company has also signed a letter of understanding with Arrendale Associates of the US.

Industry: Computer Software

Issue Type: Equity at Rs 10

Issue size: Rs.1.90 crores

Project cost: Rs 7.37 crores

Debt-Equity: 0.1:1

Post-issue Equity: Rs 5.40 crores

Listing: Ahmedabad and Vadodara

Lead Manager: Doogar & Associates

Promoters: Kantilal K Patel and associates