Mundra Port and Special Economic Zone Limited is entering Indian primary market with a Public issue of 40,250,000 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
Mundra Port and Special Economic Zone Limited is the developer and operator of Mundra Port, located in Kutch district of Gujarat. Company has exclusive rights to develop and operate the same for 30 years. Company has also received rights to develop a multi-product SEZ at Mundra and its surrounding areas. The port is primarily engaged in providing bulk cargo services, container cargo, crude oil cargo and value-added port services, including railway services. Partial commercial operations commenced in Oct, 2001.
The company is promoted by the famous Adani group. The group is engaged in commodities trading, power trading & generation, coal mining, real estate development, agro processing & logistics and shipping.
For the FY ended March 31, 2006, the company clocked a turnover of Rs. 397 crores. The restated net profit for the same period was about Rs. 75 crores. For FY 2007, till September’2006, company had already clocked a turnover of Rs.246 crores and a net profit of Rs.126 crores. For the six months ended 30th Sept, 2006, Company’s P/L statement, as in the Red Herring prospectus, shows Tax credit of Rs.38 crores. For FY 2005 and FY 2004, the top line was Rs.277 and Rs.173 crores approximately. The net profit for FY 2005 was Rs.70 crores. In FY 2004, company had a net loss of about Rs.10 crores.
Particulars of the Issue
Mundra Port and Special Economic Zone Ltd. IPO is a fresh 100% Book Building issue of 40,250,000 equity shares. After keeping aside 150,000 shares for its employees, the net issue for public is 40,100,000. The net Retail portion is a minimum of 30% of total equity shares. For retailers, full bid amount needs to be paid while bidding.
Basis for Issue price
Mundra Port and Special Economic Zone Ltd. claims that its strategic location serving the landlocked Northern India and North Western India will give it huge amount of business. Land with port back-up area and infrastructure will help future expansion and SEZ advantages are other basis for issue price. The adjusted EPS for FY 2006 stands at Rs.1.98. There are no listed companies in India which can be compared with Mundra Port and SEZ.
Objects of the Issue
The primary purpose is construction and development of basic infrastructure and allied facilities in the proposed Mundra SEZ. Construction of a south basin terminal for coal and other cargo at Mundra Port is the other objective of issue. Company also intends to fund group companies like Adani Petronet (Dahej) Port Pvt. Ltd; Adani Logistics Ltd; and Inland Container Pvt. Ltd.
Following are the key risks which can impact company’s performance:
a. Government’s volatile policies on SEZs remain the biggest risk.
b. Company heavily depends on concessions and licenses from government and quasi-government organizations.
c. Company has agreement with P&O Ports (Mundra) Pvt. Ltd. for container handling services. P&O Ports got acquired by Dubai Ports World. Hence, the agreement is reviewed again by Gujarat Maritime Board.
d. Many contracts with its customers contain provisions which if exercised by the customers can adversely affect the company.
e. Company relies on small number of customers for a large proportion of its revenues.
f. Company in the past has entered into related party transactions and will continue to do so in future.
g. Severe weather conditions can adversely impact its operations.
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