FatPipe Networks India Files DRHP
December 30, 2009 by admin
Filed under Latest Stock Market news
Fatpipe Networks India is coming out with an initial public offering (IPO) of Rs 49 crore. It has filed a DRHP (draft red herring prospectus) with SEBI.
Fatpipe’s core technology – router clustering, involves patented and patent-pending methods that provide the highest levels of optimization, reliability, security and acceleration of Wide Area Networks (WANs) and enable high-speed data transfer through multiple lines, multiple ISPs, and backbones over WANs with seamless re-assembly of data streams. The company manufactures a range of appliances based on its technology for data transmission over multiple lines that provides highly reliable and redundant Internet/Intranet access solution available.
The company also offers data security with encryption protocols making it more secure. Fatpipe sells its products worldwide through a network of 2 authorized distributors and over 500 resellers.
The objects of the issue are to expand the product line with enhanced Research and Development activities, specifically for development of new product-lines (Rs 6.76 crore); to establish 16 new marketing offices across the globe including additional offices in the USA (Rs 10.08 crore); for strategic acquisition of business/company (Rs 15 crore); to meet margin money for working capital requirement (Rs 7.2 crore); to meet the public issue expenses (Rs 3.55 crore) and general corporate purposes (Rs 6.41 crore).
For the year ended March 31, 2009, it has reported profit after tax of Rs 3.99 crore on total income of Rs 42.3 crore. For the period from April-September 2009, it has posted profit after tax of Rs 4.61 crore on total income of Rs 29.57 crore; for the same period – it has debt of Rs 90.27 lakh.
The book running lead manager to the issue is Keynote Corporate Services Ltd and Karvy Computershare Private Limited is the registrar.
Source: Moneycontrol
Don’t Buy
The company earned a net profit after tax of Rs 399.37 lacs for the year 08-09, which was transferred to General Reserve. The balance at the end of the previous year in General Reserve was Rs 49.97 lacs. If you add, the profit transferred this year, to this figure, it should be Rs 449.34 lacs. Simple arithmetic. However, as per the statement of accounts as furnished in the DRHP, filed with SEBI, the figure is Rs 2103.04 lacs. For the difference, the corresponding entry shown in the balance sheet is Intangible assets.
Some of the comments made by the readers of First Choice IPO analysis on the above IPO are hereby reproduced.
DO NOT BUY!! Failure to report multiple litigation as well as challenges to its patents. Currently under federal investigation of its labor practices. Financials would not stand up to a US SEC audit, hence the probable reason to change from a U.S. company to an India company and run the IPO there. Numbers are perceived to be misleading and inaccurate.
Dr.Raghula Bhaskar and Ms Sanchaita Datta are the promoters of the company. They take in excess of $400,000USD of income on a VC supported venture. They claim profit, but no listing of dividends to its investors. If you scrutinize some of the other ventures such as their India based programmers company BOX, you will find the company is listed as being based out of their home. Makes one wonder whether the VC’s are even aware they may have financed these other entities. This begs to question: Is this IPO merely a sham to pay back the VC who by now must be impatient for a return?
Bottom Line: Fat Pipe years ago was at the right place at the right time. However, it has failed miserably to stay up with the ever-changing technology and marketplace. Other companies, new technologies, have sprung up bringing with them new technologies and innovation. Sorry Fat Pipe, you are OBSOLETE!!! Do you remember Iomega with the zip drive…? IOmmm who? A bet in Las Vegas would be a better risk