Things To Know For The Prospective Investors of Manakamana Engineering Hydropower: IPO Opens From Today For Locals and Nepalese Employed Abroad
Tue, Jul 4, 2023 9:11 AM on IPO/FPO News, Company Analysis, Latest,
Company Profile:
Manakamana Engineering Hydropower Limited is a public limited company, incorporated on July 18, 2010, as a private limited company and later converted to a public limited company on July 10, 2021. It is promoted by individual promoters having experience in hydropower and other sectors for setting up Hydroelectric Projects (HEP) in Nepal. The company is involved in the operation of a 5 MW run–of–the–river Ghattekhola Small Hydropower Project (GKHP) in the Dolakha district of Nepal by utilizing the available head and flow from Ghatte Khola (river). The project started commercial operation on November 08, 2020.
About the issue:
Manakamana Engineering Hydropower Limited will be issuing its IPO to the project-affected locals of Dolakha District and Nepalese citizens working abroad from today i.e. on 19th Ashad and close on 2nd Shrawan, 2080. Note that for the locals of Dolakha District, if the issue is not subscribed by the early closing date, the issue can be extended till the 17th Shrawan. However, the issue will not be extended from the early closing date for Nepalese citizens working abroad.
The issued capital of the company is Rs. 80 Crores of which 10% i.e. 800,000 unit shares worth Rs. 8 Crores have been allocated to project-affected locals of Dolakha District. Meanwhile, 25% of the company's issued capital i.e. 20,00,000 unit shares will be issued later for the general public. Of this public issue, 10% of the shares totaling 200,000 units shares have been allocated for Nepalese citizens working abroad, the issue of which will open today.
For the project-affected locals, the minimum application quantity is 10 units while the maximum quantity is 100,000 units. Meanwhile, for Nepalese citizens working abroad, the minimum application quantity is 10 units while the maximum quantity is 50,000 units.
B.O.K Capital Markets Limited has been appointed as the issue manager. The promoter-public share ratio will be 65: 35 after this IPO.
Click here for the offer letter
| Manakamana Engineering Hydropower Limited | |||
|---|---|---|---|
| Particulars | Percentage | Units | Amount |
| Total Capital | 100% | 8,000,000.00 | 800,000,000.00 |
| Total Issue (Project-affected Locals) | 10% | 800,000.00 | 80,000,000.00 |
| Total Issue (Nepalese citizens working abroad) | 2.50% | 200,000.00 | 20,000,000.00 |
| Issue Manager | B.O.K Capital Market | ||
| Issue Open Date | 19th Ashad | ||
| Issue Closing Date (earliest) | 2nd Shrawan | ||
| Issue Late Closing Date (for locals only) | 17th Shrawan | ||
| Minimum Application (Project-affected Locals) | 10 | ||
| Maximum Application (Project-affected Locals) | 100,000 | ||
| Minimum Application (Nepalese citizens working abroad) | 10 | ||
| Maximum Application (Nepalese citizens working abroad) | 50,000 | ||
Capital Structure:
| Authorized Capital | 800,000,000.00 |
| Issued Capital | 800,000,000.00 |
| Current Paid-Up Capital | 520,000,000.00 |
| Capital after IPO Issuance | 800,000,000.00 |
Shareholding Structure:
| Number of Shares | Amount | Percentage | Remarks | |
|---|---|---|---|---|
| Promoters Shareholders | 5,200,000.00 | 520,000,000.00 | 65.00% | Already issued |
| Project-Affected Locals | 800,000.00 | 80,000,000.00 | 10% | To be issued |
| General Public (Including Nepalese citizens working abroad) | 2,000,000.00 | 200,000,000.00 | 25.00% | To be issued |
Project Information:
| Name of Project | Ghatte Khola Jalbidhyut Yojana |
| Type of Project | Run-of-River |
| Installed Capacity | 5 MW |
| Electricity Generation License received | Ashad 24, 2072 |
| Generation Valid Date | Ashad 24, 2107 |
| RCOD | Poush 13, 2077 |
| Total Cost | Rs. 1.39 Arba |
| Cost per Megawatt in Rs. | Rs. 27.87 Crores |
Board of Directors:
| Name | Position |
|---|---|
| Mr. Krishna Bahadur Upreti | Chairman |
| Mr. Ram Hari Bajagain | Director |
| Mr. Narayan Dhatt Timalsina | Director |
| Mr. Radheshyam Khadka | Director |
Financial Statement:
| Financial Highlights Amount in 000' | |||||||
|---|---|---|---|---|---|---|---|
| Particulars | Actual | Estimated | |||||
| 2076/77 | 2077/78 | 2078/079 | 2078/079 (Q3) | 2079/80 | 2080/81 | 2081/82 | |
| Total Paid-Up Capital | 60,000.00 | 60,000.00 | 60,000.00 | 520,000.00 | 800,000.00 | 800,000.00 | 800,000.00 |
| Advance Share Capital | 290,353.33 | 328,369.00 | 460,000.00 | - | - | - | - |
| Reserve & Surplus | - | (89,761.25) | (134,104.12) | (163,792.25) | (155,378.64) | (133,002.41) | (105,371.94) |
| Debt | 799,691.23 | 868,619.67 | 861,272.90 | 857,401.90 | 701,075.00 | 685,075.00 | 666,575.00 |
| Revenue | - | 43,629.96 | 94,153.80 | 73,870.64 | 122,823.47 | 156,096.86 | 160,439.64 |
| Interest Expenses | - | - | - | - | - | - | - |
| Net Profit | - | (89,761.25) | (44,342.86) | (29,688.13) | (22,093.59) | 22,376.24 | 27,630.46 |
| Earnings per share (Rs.) | - | (23.11) | (8.37) | (5.71) | (2.76) | 2.8 | 3.45 |
| Net worth per share (Rs.) | 100.00 | 77.00 | 74.00 | 69.00 | 81.00 | 83.00 | 87.00 |
| Debt-Equity (times) | 2.28 | 2.91 | 2.2 | 2.41 | 1.09 | 1.03 | 0.96 |
| Return on Equity (%) | - | 30.16 | 5.98 | (0.83) | (0.34) | 0.34 | 0.40 |
Positive Aspects:
1) Insuring the structures, machines, tools, and equipment of the hydroelectric project is a prudent step to minimize risks. By having insurance coverage, the company can mitigate potential financial losses in the event of damage or accidents. This ensures that any necessary repairs or replacements can be carried out without causing significant disruptions to the project.
2) The company's success in developing and constructing hydropower projects in Nepal can be attributed to its skilled young workforce. Having a team of talented and capable individuals allows the company to effectively tackle the challenges associated with hydropower projects. Their expertise, combined with their energy and enthusiasm, contributes to the company's achievements in this sector.
3) This company's future looks promising due to its systematic approach in studying, researching, and developing hydropower projects. By investing in these activities, the company is able to enhance its understanding of the field and stay at the forefront of technological advancements. This positions them well to take advantage of emerging opportunities and overcome potential obstacles in the hydropower industry.
4) The company's future appears bright since it has already commenced production. The start of production indicates that the project has progressed from the planning and construction stages to the operational phase. This achievement suggests that the company has successfully overcome various challenges and is now generating electricity. As a result, the company can expect a positive outlook as it begins to generate revenue and contribute to the energy sector.
Care Ratings Nepal:
CARE Ratings Nepal Limited (CRNL) has assigned a rating of ‘CARE-NP BB (Is)’ to Manakamana Engineering Hydropower Limited. Issuers with this rating are considered to have a moderate risk of default regarding the timely servicing of financial obligations in Nepal.
Key Rating Strength
- Experienced promoters and management team.
- The power purchase agreement with sufficient period coverage.
- Favorable Government policies towards the power sector.
Key Rating Weaknesses
- Below average financial performance during initial years of operations due to challenges in power evacuation.
- Relatively high project cost leads to a high payback period.
- Hydrology risk associated with run-of-the-river power generation.
- Exposure to volatile interest rate risk.
- Exposure to regulatory risk.
