Magnum Ventures Limited is entering Indian primary market with a Public issue of 1, 76, 40,750 equity shares of Rs.10 each. The issue is a 100% Book Built. Below are the salient features of this issue:
Business of the Company
Magnum Ventures Limited is a company which has business interest in multiple fields. It is involved in trading and manufacturing of paper for more then 25 years. The existing manufacturing capacity includes writing and printing paper, and duplex boards with the total annual capacity at 85,000 MT. Company has 3 manufacturing units located at Sahibabad, UP.
Promoters
The company is promoted by the Jain family. The key promoters of the company are Mr. Praveen Kumar Jain, Mr. Pradeep Kumar Jain, Mr. Parmod Kumar Jain and Mr. Vinod Kumar Jain. There are more members of the Jain family in the promoter group. Rose Corner Trading Company LLC., Dubai; Delhi Paper Company (Partnership Firm) are the other group companies.
Financials
Magnum Ventures Ltd. has shown consistent profits in last 5 years. For the FY ended March 31, 2006, the company clocked a turnover of Rs. 74 crores. The restated net profit for the same period was about Rs. 8.10 crores. For FY 2007, till September’2006, company had already clocked a turnover of Rs.59 crores and a net profit of Rs.4.7 crores. For FY 2005 and FY 2004, the top line was Rs. 61.59 and Rs. 58.36 crores approximately. The net profit for FY 2005 was Rs.2.31 crores and for FY 2004 was Rs. 1.14 crores.
Particulars of the Issue
Magnum Ventures Ltd. IPO is a fresh 100% Book Building issue of 1,76,40,750 equity shares. Issued, Subscribed and Paid up Capital before the Issue is 1, 99, 60,700 Equity Shares of Rs.10/- each. Paid up Share Capital after the Issue will be 3,76,01,450 Equity shares of Rs.10/- each.
Basis for Issue price
Magnum Ventures Limited is a 26-year-old Company engaged in the Paper industry. The Company is strategically located in close proximity to the source of raw materials and main customers for supply of finished products. Company has captive power plant and a de-inking plant to manufacture better quality paper. The proposed hotel is near to Delhi. Plus, the promoters believe that they have more then 2 decades of experience.
Objects of the Issue
The primary purpose is to modernize its production facilities of its Paper Unit II and III by technological upgradation including replacement of plant and machinery with regard to manufacturing of duplex board, writing and printing paper, and allied sections such as chemicals and Fibre Recovery Section, Recycling of Backward System etc., at a project cost of Rs. 50 crores. The other main purpose is to venture into hospitality industry by setting up a 4 Star Business Hotel with 212 rooms, conference halls, food & beverages and other facilities, at a project cost of Rs. 102.63 crores.
Risks
Following are the key risks which can impact company’s performance:
a. Paper industry is a cyclical and labor intensive industry.
b. Both paper and hotel industry are highly competitive sectors.
c. Government tax benefits changes, economic growth changes, foreign exchange rates are some other external risk factors to be considered before applying for this IPO.
d. Company is fighting various tax related cases. Disputed tax amount totals up to around Rs.3.30 crores.
e. License agreement between the company and Country Inn & Suites by Carlson is non-exclusive.
