Porwal Auto Components is entering the capital market on 17^th December 07, with a public issue of 50 lakh equity shares of Rs.10 each in the band of Rs.68 to Rs.75 per share.

The financial performance and financial state of the company is pathetic, to talk least of it. The shares of the company were listed on OTCEI and were last traded at Re.1.20 on 7^th July 98. FY 07 EPS of the company was at 74 paise. Book value per share on 31^st March 07 was at Rs.11.24 with net worth of Rs.11.35 crores as on 31-03-07 and Rs.11.39  crores on 30-09-07. The bottomline of the company never crossed Rs.1 crore, with topline, inspite being at Rs.35 crores for FY 07.

With this background, the company aims to collect Rs.37 crores form the public, having taken an expansion programme of Rs.55 crores. The present capacity of CI and SG Castings is being raised from 6,600 TPA to 27,600 TPA as also setting up a 1.5 MW wind mill. The company presently has debt of over Rs.20 crores, of which Rs.12 crore has been availed for proposed expansion. Promoters issued 80 lakh equity shares of Rs.10 each at par to themselves on 25-01-06 for proposed expansion.

Post issued, equity of the company would rise to Rs.15.10 crores, of which promoters stake would be just 36%. Obviously, equity servicing would always be a question mark as EPS may not be able to exceed Rs.2, post expansion. Presently 90% of the production is supplied to Eicher Motors Ltd.

Considering the industry perception and financial health, as also past performance, its clearly advised to just remain away from the issue.