Hifunda.com: Below Average

Score: Below Average

INVESTMENTS need not be contemplated in the initial public offer of Hifunda.com.

This dotcom company is making an initial public offer for setting up a portal and e-commerce shopping mall. Business-to-consumer commerce over the Internet has not proved to be a profitable experience even in the US where the penetration of computers is fairly high. The scope for such enterprises in India is quite infinitesimal, given the extremely low penetration of the personal computers.

Also, B2C e-commerce ventures require a high level of financing, the infrastructure for which is not entirely developed in India. In this backdrop, further rounds of financing this venture may face considerable roadblocks. In short, B2C ventures in India are facing hurdles that appear insurmountable for a majority of the players in that arena. In this backdrop, investments in the offer of Hifunda.com do not appear to make sense and retail investors, especially, can avoid the same.

What the company says: The company is making an offer at Rs 10 to mobilise Rs 5.90 crore. The post-issue equity would be Rs 14.85 crore.

The project cost is Rs 18.05 crore and is to be financed predominantly with equity and a term loan component of Rs 1.20 crore.

The company has estimated the portal development costs to be Rs 3.78 crore, to be financed through this equity issue. The portal Hifunda.com would provide a variety of services such as auctions, employment information, real estate information, e-mail services and will also host a shopping mall. Hifunda.com has tied up with a few vendors for hawking their products through its portal.

The offer opens on November 27 and closes on December 4. The shares are to be listed in Calcutta and Hyderabad Stock Exchanges. The lead manager is Ashika Credit Capital. The promoters are Mr Vijay Jain and associates. The amount payable on application is Rs 2.50 per share.