Saven Technologies: Below Average

Score: Below Average

Suresh Krishnamurthy

Investments need not be contemplated in the initial public offer of Saven Technologies.

Although the company is not a start-up, it appears to be still in the development stage, given the level of operational activity. Also, the risks involved in scaling-up the operations and diversifying the client base are fairly high. As such, retail investors need not consider investing in the firm, given that they lack access to information necessary to manage the risks of investing in a technology company which is yet to establish itself.

What the company says: Saven Technologies was initially incorporated as Pennar Infotech. The Pennar group relinquished control to Mr Sridhar Chelikani and the company was subsequently renamed Saven.

Saven is engaged in the business of software development, consultancy and training. It reported revenues of Rs 6.95 crore and profits of Rs 1.15 crore for the year-ended March 2000. For the five months ended August 2000, the company reported revenues of Rs 3.56 crore and profits of Rs 0.44 crore.

The offer at Rs 10 aggregates to Rs 3.60 crore and the post-offer equity is Rs 10.01 crore.

The project cost has been estimated at Rs 7.59 crore and is to be financed completely with equity. The funds raised through this offer would used to expand existing software development facilities, finance the cost of enhancing infrastructure facilities and establish joint ventures in US and the UK.

The company's business strategy is to focus on e-services for the financial sector, object-oriented distributed computing technology, e-business solutions and embedded technologies in wireless applications.

The company has entered into a joint-venture agreement with Sridhar Chelikani and associates and Saven Technologies Inc., in the US. Saven would invest Rs 1.89 crore and hold a 70 per cent stake.

The company has also entered into a joint venture agreement with Saven Technologies (UK) and Hasting Direct Software. Saven would invest Rs 0.35 crore in this joint venture.

The company is promoted by Mr Sridhar Chelikani and associates. The shares are to be listed in Hyderabad and Mumbai. The lead manager is SMIFS Capital Markets. The offer opens on December 7 and closes on 12.