Issue Summary

Type Equity Size Rs 59 m price Rs 10 Face value Rs 10 per share Issue Opens 27th Nov 2000 Issue Closes 1st Dec 2000 Shares on offer 5.9 m

Min. subscription 200 shares Lead Managers Ashika Credit Capital Listing Calcutta and Hyderabad Stock Exchanges Promoters Mr. Vijay Jain and Mr. S. K. Sultania Promoters post     issue holding 60%

Background

	Business
	Hifunda.com is currently engaged in developing and upgrading its portal, which was acquired from M/S Vishraj Marketing & Services Pvt. Ltd. the present company is under the same management for a total consideration of Rs 155 Lacs. M/S Vishraj Marketing & Services Pvt. Industries Ltd. has in turn paid Rs 80 Lacs and Rs 70 Lacs to Web Development Company Ltd. and Appu Industries Ltd. respectively for the development of the Portal The portal Hifunda.com consists of various features and reaches out to give a variety of services. The services include auction, aspiring models, buy-sell, barter, matrimonial, employment, education, real estate, travel and others like e-games and e-greeting cards. The company has tied-up with various vendors and shops that include K. C. Das Sweets and Goodricke. It has also tie-ups with cinema theatres in Calcutta for on-line booking of tickets. The main objectives of the issue are To set-up web portal and E-Commerce Shopping Mall. To upgrade existing hardware & software and install latest equipment's for facilitating E-Commerce & web-based businesses with supportive payment gateway. To provide funds for marketing and brand development. To meet the working capital requirement. To meet the expenses of the present Issue.
	Promoters
	Mr. Vijay Jain, aged 42, is the Managing Director of the company. He has more than 20 years of experience in various businesses that include textiles and chemicals. He has also been providing industrial services to major chemical companies like Berger Paints and ICI India. Mr. S. K. Sultania, aged 35, is a chartered accountant by profession with more than 12 years of experience in the field of finance and management. He is also a Law graduate and is a Member of Institute of Company Secretaries of India. He is the Director of the company and is involved in administering financials of the company.
	Sector
	As per preliminary findings by NASSCOM, the total volume of E-Commerce transactions in India was about Rs 1,310 m in the year FY99. Out of this volume, about Rs 120 m was contributed by retail Internet or business-to-consumer transactions (B2C), and about Rs 1,190 m was contributed by business-to-business transactions (B2B). The NASSCOM survey also revealed that E-Business transactions in India are expected to exceed Rs 3,000 m during FY00. Out of this, about Rs 500 m could comprise of retail transactions.

Reasons to apply

For B2B transactions, the online penetration is expected to touch 8% in FY08 with total value of transactions estimated at US$ 1 bn. According to a survey conducted by NASSCOM, E-Commerce transactions worth Rs 1,310 m were recorded in FY99, which is expected to touch Rs 100 bn by FY03.

Reasons not to apply

	The company expects to earn total revenue of Rs 30 m (Rs 22.5 from commission on product selling and Rs 7.5 m by way of shop selling) from E-commerce in FY01. This may not materialise given the fact that only 10% of the Internet users have done buying or selling as of now. Besides, there are other constraints like bandwidth and security of transactions. Therefore, it is very clear as to how the company has projected a net profit of Rs 3 m in FY01 itself.
	The company has allocated Rs 45 m (25% of total project cost) towards advertising and brand building, which may not yield desired return because tangible assets are not created. Proposed brand building expenses Particulars (Rs m) Hoardings 22.0 Press advertisement & Seminars 6.5 Television advertisement 5.0 Sponsorship, brochure & mail expenses 2.0 Banners, pamphlets & wall paintings 1.3 Ads on on-line websites 1.0 Travelling and conveyence 1.1 Total 38.9
	The B2C market is a highly competitive segment. The company has to compete with established players like rediff.com and sify.com who have national presence unlike hifuda.com, which caters mostly to the Calcutta population at present.
	The company is yet to set up necessary infrastructure for the project to go in full stream. Further, the project basically depends on the money to be raised via public issue. Any delay
	The present manpower of the company is just 21, which it expects to increase to 81 by FY01. Out of this 81, 36 employees would be core web-professionals. Thus, any delay in manpower recruitment would affect company's growth in the future.
	The promoters of the company do not have adequate experience in the business-to-consumer segment or rather in the software industry.

Financial Performance

(Rs m)	FY01	FY02	FY03
Sales	47.0	89.3	125.0
Other Income	-	-	-
Total Income	47.0	89.3	125.0
Expenditure	33.2	40.5	48.4
EBIDTA	13.8	48.8	76.6
GPM (%)	29.4%	54.7%	61.3%
Depreciation	3.2	4.3	3.0
Interest	2.1	1.8	1.4
Profit before tax	8.5	42.7	72.2
Extraordinary item	-	-	-
Less: Tax	5.9	15.8	27.6
Net Profit	2.6	26.9	44.5
NPM (%)	5.5%	30.1%	35.6%
Issued shares (m)	14.9	14.9	14.9
EPS (Rs)	0.2	1.8	3.0
P/E (x)	57.7	5.5	3.3

Funding

Where the money comes from... (Rs m) (%) Share capital 90 49.6% Premium 20 11.1% Public issue 59 32.7% Term loan 12 6.6% Total 181 100.0%

Where the money will go... (Rs m) (%) Office building 20 11.1% Computer & systems 10 5.5% Portal development cost 71 39.5% Furniture and Fixtures 3 1.7% Investments 13 7.2% Marketing & brand building 45 24.9% Long term working capital 12 6.7% Preliminary & Pre-operative exp. 6 3.3% Total 181 100.0%

Shareholding

Particulars	Pre-Offer	Post-Offer
Promoter group	100.0	60.3
Employees	-	2.0
FI/Mutual Funds	-	3.4
NRI/OCB	-	6.7
Public	-	26.3
Lead Manager	-	1.4
Total	100.0	100.0