Our Market Bureau

New Delhi, April 16: Manush Distributors Ltd, a non banking finance company, is planning to enter the market with a Rs 2.1 crore issue. The company is offering 21 lakh equity shares of Rs 10 each at par.

This is probably the first initial public offer (IPO) from an NBFC after a long time. Investors had burned their fingers in the NBFC IPO boom in 1994-1996. The issue is lead managed by Financial & Management Services Ltd and the shares are proposed to be listed only the regional stock exchange, CSE.

While promoters are pumping in Rs 54.18 lakh, Rs 2.1 crore will be raised from the public. After the issue, promoters’ stake will go down to 58.8 per cent. Of the funds to be raised, a major portion of Rs 1.35 crore is proposed to be invested in shares and securities and Rs 1.15 crore in inter-corporate deposits. Both these businesses are associated with high risks and Manush’s track record in this field has been poor.

The company has a five-year profit track record, which is just enough to clear the hurdle of the Sebi entry norm. Hence, the funds requirement have not been apprised by any financial institution or bank.

Since 1997, the company has been operating on a very small scale. For fiscal 2000, the company recorded a net profit of just Rs 13,000 on a total income of Rs 1.43 crore. For the eight-month period ended November 2000, net profit was Rs 3 lakh on turnover of Rs 1.29 crore.

The offer document highlights factors like lack of experienced professionals on the board, promoters and directors of the company are first generation entrepreneurs and it is yet to receive registration as NBFC from the Reserve Bank of India.