Our grading is tempered by the company's unfavourable working capital position that has deteriorated over the past two years. The grading also takes into consideration the limited management bandwidth available to the company in view of the expected strong growth in existing business. The grading also reflects the inadequate corporate governance structure that could lead to a potential area of conflict.
The issue consists of fresh issue of 3.5 million shares and the offer for sale of 1 million shares aims to raise Rs 1,125 million - Rs 1,350 million.
About the company and the issue
Formed in 1993, Nu Tek India Ltd (NTIL) is a telecom infrastructure service provider, offering services related to the infrastructure roll out, primarily for the wireless telecom network. The company's range of services includes conceptualisation, design, construction, installation, commissioning, integration, testing, operation and maintenance of wireless telecom infrastructure (both active as well as passive). In addition, it also provides services in relation to laying of optic fibre network. The Delhi-based company derives a major portion of its revenues from the northern region of India.
NTIL was promoted by Mr. Inder Sharma and his wife Mrs. Sumati Sharma in 1993, as a company providing maintenance services for Alcatel's E-10B switches to ITI Ltd. In 1996, the company started offering technical manpower outsourcing services for telecom projects and in 1999, the company expanded its operations by offering services related to installation and integration of active telecom infrastructure. In 2002, the company ventured into telecom turnkey projects for the construction and installation of passive telecom infrastructure. Finally, in 2005, NTIL started offering services in relation to the operation and maintenance of telecom infrastructure. NTIL has recently set up a subsidiary in Turkey to carry on the existing business of telecom infrastructure services in Turkey.
In 2006-07, the company reported a net profit of Rs 127 million on a turnover of Rs 637 million. In 2006-07, the company's return on capital employed (RoCE) and return on equity (RoE) was 48.7 per cent and 41.1 per cent, respectively. For the six-month period ended September 2007, NTIL reported a net profit of Rs 74 million on a turnover of Rs 386 million.
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