Euro Multivision

Euro Multivision is entering the capital market on 22nd September 09, with a public issue of 88 lakh equity shares, of Rs. 10 each, in the band of Rs. 70 to Rs. 75 per share.

It is very much essential for us to first understand and take call on the public issue made by its group company Euro Ceramics, which went public on 07-02-07, with a public issue of 56,21,500 shares of Rs. 10 each, in the band of Rs. 150 to Rs.180 per share, and share having allotted at Rs. 180. This stock is now ruling at Rs. 48 with its 52 week high / low of Rs. 64 and Rs. 22. Apart from this, its disclosure in the RHP, of proposed IPO is pathetic, misleading, suppressing and confusing. On page 150, it has neither given number of shares issued nor the rate at which they were made. Even financial performance is wrong and contrary. On page (xviii) loss for year ending 31st March 2008 were shown as Rs. 22.82 crores, but infact, it is for 31st March 09, and that too, on standalone basis. Also, it does not say whether it is net loss or at what stage? Even page 150, states the financial performance for FY09, on standalone basis and not on consolidated basis. Net loss on standalone for FY09 is shown at Rs. 22.82 crores, while it is at Rs. 30.16 crores, on consolidated basis. This increases net loss per share to Rs. 17.64 and not at Rs. 13.34, as stated. Can you really trust such promoters with such disclosure norms and corporate governance as also, erosion of wealth, by 74% in last 30 months, on principal basis.

Now coming to this company, it is setting up a 40 MW per year Photovoltaic Solar Cell manufacturing unit at Kutch with a project cost of Rs. 178.03 crores. Strangely, project cost of the same is stated at Rs. 167.56 crores on page 69 of RHP. This is proposed to get financed with term loan of Rs. 100 crores and proposed IPO proceeds of Rs. 66 crores (considering upper band of Rs. 75 per share). Shortfall of Rs. 12 crores, is proposed to get sourced from internal accruals. As at 31-03-09, total debt of the company is at Rs. 192 crores on net worth of Rs. 31 crores resulting in a debt equity ratio of over 6:1. So, existing reserves and surplus of Rs. 16.47 crores, being referred as internal accruals, is already utilized for the existing operations of the company. So how the same can get allocated to the new project?

Existing financial performance of the company is also pathetic to say least, with FY09 topline at Rs. 74 crores with PAT at Rs. 1.84 crores, resulting in an EPS of Re. 1.22. Also, Solar Cell business is high technology and high capital intensive, where, even established and large players are finding it difficult to succeed. Even Reliance Industries have been talking to foray in this but not yet done any headway and Moser Baer is struggling to succeed.

For such incorrect and inadequate disclosures, SEBI should initiate strict action as the interests of public money is involved. Considering all these, issue does not deserve any merit and attention and should be avoided under any and all the circumstances.