Foreign investor to take 30% stake in DSQ

BANGALORE: DSQ Software Ltd. indicated that a foreign strategic investor was

likely to pick up close to 30 per cent stake in the company soon through a

preferential allotment. The company is holding an extraordinary general meeting

soon, to obtain shareholder approval for issue of 10 million equity shares of Rs

10 each, constituting about 30 per cent of DSQ's post-issue equity capital, on a

preferential basis.

The investors with whom negotiations are on include BankAm Equity Partners

and a consortium of institutional investors. DSQ managing director Dinesh Dalmia

expressed his preference for BankAm and also exuded enormous confidence that a

deal would be struck soon. If the issue goes through, DSQ would raise about Rs

275 crore, since the price per share according to the SEBI formula works out to

Rs 275. A good portion of this is expected to be used to pay off the company's

debt of Rs 175 crore and the remainder would be used to meet acquisition of

additional assets and other working capital needs. Mr Dalmia also claimed the

quality of the company's customers had improved and that it had taken a major

initiative in product development in the area of e-business and Internet

applications.

Mr Dalmia further said the current year should see a 25 per cent increase in

sales, as also improved profit margins. Incidentally, in the first six months

ended September 30, 1999, DSQ had witnessed a 5.6 per cent rise in sales to Rs

100.25 crore and a 40 per cent decline in net profit to Rs 12.36 crore compared

to the corresponding period last year.