Query: Is Intergrated digital info services ltd going to become multibagger in future. Wipro Finance, Karnataka Financial Services & L&T Finance are holding stake in this company?
Our response....
Chennai based Intergrated digital services was incorporated in 1990 as a private limited company in the name of Integrated Computer Services Private Limited, it was working towards development of indigenous E-Mail implementation. Initially the company used to provide e-mail services to corporates with its over 1500 employees. The Company was converted into a public limited in 1992, the name of the Company was changed to ICNET Ltd. The Company met its requirements of funds by making a public issue of 22,10,000 Equity Shares of Rs. 10/- each for cash at part aggregating Rs. 221 lacs in February 1993. But, in 1997 the company had shut down its operation after the telecom department withdrew its connectivity. Trading in the company's scrip was suspended in 1998, after the company went into liquidation because of mounting debts. It went into liquidation in 1998 after one of the creditors, Gujarat Lease Financing Ltd, filed a winding up petition in the Madras High Court.
In 2005 IDS (ICNET) which had gone bankrupt in 1998, later on transformed itself into a healthcare product company using a Rs 50-lakh revival package sourced from three of its unsecured creditors. The total claim of the unsecured creditors was Rs 18.73 crore. Some of the unsecured creditors include Wipro Finance, Karnataka Financial Services, L&T Finance, Garden Finance, Sowbhagya Advertising and Travel Corporation (I) Ltd. Soon after come-back, the company launched electronic medical records (EMR) service, a subscription-based healthcare product in India. This service offered by IDS provides value additions like assistance in emergency anywhere, in-patient procedure, pre-natal and post-natal guidance, infancy management, and general healthcare. One of the activities of the company is Manufacturing and Marketing Hardware Products.
It had commenced marketing MASSMAN GENIE a Mobile Assets Management System in 2006. The company is also operating a Call center that would service the users of MASSMAN GENIE. This would generate recurring revenue in the form of annual subscription. To come out of bankruptcy, IDS has converted some of its unsecured debt to equity, and also promised to repay a portion of secured debt over a seven-year period. The company had converted Rs 14.97 crore of unsecured debt into equity valued at Rs 10 per share and a premium of Rs 20 on the directive of the Madras High Court. The unsecured creditors include Wipro Finance and L&T Finance. One of the secured creditors, Tamil Nadu Industrial Investment Corporation Ltd (TIIC), has waived an outstanding of Rs 27 crore to it from IDS (Icnet). However, this is subject to IDS (Icnet) repaying Rs 3.3crore in the next seven years - starting July, 2005. Post the revival package, the promoter’s stake is reduced from 43.87 to 39.34 per cent and the public’s stake from 49 per cent to 31 per cent, while the rest is held by the unsecured creditors. To make the company debt free promoters has approached TIIC. The proposal with them is under active consideration. TIIC have signified that the amount to be paid by the company under One Time Settlement (OTS) is Rs.2.00 crore. However, the Company has contended that the amount of principal outstanding is only Rs. 1.00 crore.
As the company at present is like dusting the machines and cranking them up with lubricants to make them fit for their journey, and we know that the dusting of rusty components and cranking them up is a slow process. It also means removing impediments such as dust and rust so that the machinery, when ready, will run smoothly and produce results as it is intended. So my advice is to wait for the time when all this rust is removed and proper lubrication is done in simple words let first wait for the company to become debt free or wait for some good announcement by company on healthcare product services.
But at present seeing all aspects of the company, it should be AVOIDED.
- Hitesh, Equity Research Analyst, HBJ Capital Services Pvt. Ltd [Hitesh@hbjcapital.com]
Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.
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