Ontrack Systems Limited

Oasis Infotech Limited

Issue Opens : 04th Oct., 2000 Issue Price: Rs. 10/- per share (FV Rs.10/-) Issue Size: 20,00,000 shares amounting to Rs.200 lakhs Registrars to the Issue:Aarthi Consultants Pvt. Ltd.	Issue Closes: 11th Oct., 2000 Minimum Application: 200 shares @ Rs.5/- each Post-issue promoter’s stake: 65.61% Lead Managers: Aryaman Financial Services Limited
Recommendation : Average

Listing on: Hyderabad, Bangalore and Ahmedabad Stock Exchanges

Executive Summary

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Business

Industry Scenario

Financials

Project Analysis

Critical Success Factors

Competitive Position

Market Scenario

Recommendation

Business

The company was originally incorporated as M/s. Oasis Infotech Pvt. Limited in November 1997 and was converted into public in December 1999 and the name was changed to Oasis Infotech Limited. The company is involved in software development and especially internet enabled services.

The Company ‘s main thrust of business is in the following areas:

Software development
E-Commerce related services such as Web designing and Hosting
Software development for E-commerce products
IT enabled services – Document management
Development of Software products
E-Banking
Software Training

Vemulapalli Srikanth, Vijay Anand and V.S.R.Ch. Murthy are the main promoters of the company.

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Industry Scenario

The competition in the dot.com sector is increasing by the day. Even leading dot com ventures that are more than 3 years old, are yet to break even. Every niche of this market faces stiff competition and only ventures with clear cut USPs are likely to survive. These companies can survive only on a strong revenue model.

Information technology industry as such is characterized by rapidly changing technologies, intense competition from existing players and new entrants.

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Financials

OIL is a profit making company with increasing income and profits every year. The net profit of the company stood at Rs.9.87 lakhs in FY2000.

Financial Performance(in Rs. lakhs)
Particulars	1997-98	1998-99	1999-2000
Total Income	5.97	74.03	140.87
Net Profit	0.17	1.6	9.87
EPS (Rs.)	0.45	0.92	1.78

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Project Analysis

The Present issue of equity shares is being made :

To Fund the cost of proposed project of software Development and to set up infrastructure facilities in related areas.
To Set Up overseas offices at Singapore and USA.
To meet the expenses of the present issue.

The project has been appraised by APIDC, which has extended a loan of Rs.63 lakhs. APIDC has also participated in equity to the extent of Rs.7 lakhs.

Fund Requirements
Particulars	Cost (Rs in lakhs)
Site Development & Interiors	61.93
Plant & Machinery	173.65
Misc. fixed Assets	57.39
Contingencies	22.77
Overseas Office Expenses	68.20
Deposits	23.00
Preliminary & Preoperative expenses	62.48
Working Capital	144.55
Total	673.14

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Critical Success Factors

The company needs to concentrate on product development, which is the key for survival in the IT market. In the ecommerce area, Oasis has to build good tie-ups and a customer base that will ensure revenue inflows. The training business it is into, can only be a support business, where the margins are quite low in the market.

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Competitive Position

The company is three years old but now is into a business which is facing very stiff competition. Ecommerce is the buzz word today but it is now very obvious that companies with clear business strategies and revenue models are the ones that will survive. The company is presently into the low end of business, which makes its competitive position very weak.

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Market Scenario

The primary market had witnessed a boom at the beginning of this year when many companies came out with public issues at high premiums. The market has however now learnt to identify the good and high growth companies from the entire lot. While companies offering at par are still sailing through, the ones charging a premium need to be more careful. Companies like SIP Technologies have called off their IPOs due to poor response.

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Recommendation

The young entrepreneurs are well educated but their exposure to the industry is quite less. How far the company can succeed in the ecommerce business is not assured. On the whole, the issue can only be an average recommendation. Investors are advised to be cautious.

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