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Manakamana Development Bank to issue IPO from Feb 25, 2010

Published by Octron on February 25, 2010

Manakamana Development Bank Ltd. has issued 30,00,000 units of share to public including 90,000 units to its employees from 25th February 2010 (2066 Falgun 13). The issue will be closed on 2nd march (sooner) if the issued units will be entirely demanded by the general investor or 11 March 2010 (Latter) if the demand will not meet the supply units.

The IPO of Manakamana has been issued in a stage where stock market is on huge doldrums and investors are disappointed with the stock performance hence standing on protests. The supply of share in the market is enormous vis-à-vis the demand side, as a result the market turned downhill. The increase in the supply of shares is primarily due to the issue of right share, bonus share and foremost the Initial Public Offering. The IPO has hit the market very frequently taking huge sum of money from investors and letting idle to invest until allotment date.

Though the nation’s economic situation is fragile, the secondary market has nosedived or the political situation is almost destructive, investors’ willingness to demand the shares from IPO has not fallen down. This has been proved by the previous offering and the amount of subscription exceeding more than 25 times. In such scenario, the IPO issue of Manakamana Development Bank is on focal point to invest with whatever we can and expect to allot in our favor for lucrative profit in short span of time.

General Overview of Manakamana Development Bank

Licensed: “B” class Financial Institutions

Registered Central Office: Bagmati Zone, Kathmandu District, Kamladi (Heritage Plaza)

Banking Operation: Kathmandu and can be extended to other venues as per the rule of NRB.

Issue Manager: NIDC Capital Markets Ltd.

Capital Structure and Ownership Composition after Allotment:

Authorized Capital: Rs.4,00,00,00,000 (40000000 @ Rs. 100)

Issued Capital: Rs. 2,00,00,00,000 (20000000 @ Rs. 100)

Paid-up Capital: Rs. 70,00,00,000 (promoter share 70%)

Public Issue: Rs. 30,00,00,000 (public share 30%)

Total Paid-up Capital after Primary Issue: Rs. 1,00,00,00,000 (. 1,00,00,00,0 @ Rs. 100).

IPO Date:

Opening Date: 25 February 2010 (2066 Falgun 13)

Closing Date: 2nd March 2010 (2066 Falgun 18) (Sooner)
11 March 2010 (2066 Falgun 27) (Later)

Minimum Units to apply: 50 units

Maximum units to apply: 2,00,000 units

Board of Directors:

Name	Designation	Share Units
Laxman Babu Shrestha	Chairman	383000
Biddhya Krishna Shrestha	Member	99000
Parasar Prasai	Member	208103
Rameshwor Thapa	Member	125000
Arjun Prasad Sharma	Member	150000
Khuma Prasad Aryan	Member	366000

History & Expert’s Comments

Manakamana Development Bank was previously known as CSID BANK, which was almost bankrupt due to heavy corruption. Previous Chairperson and board members were alleged to have mismanged the bank funds. Though, previous chairperson has been replaced with new one, there are still some old promoters which creates the doubt in bank’s future, looking its history.

Another question pointed out by some experts is that EPS is positive from very beginning year but networth is negative from beginning. This means very heavy preliminary expenses that is amortized after making net profit each year? Or the accumulated loss is made when its old name was CSID bank? (Courtesy: Keshavji, Jamb Forum)

Verdict: The financial performance of the bank appears to be reasonable as the earning per share for the fiscal year 2066/67 (after IPO issue) is stipulated of Rs. 23.22. However, the EPS was very marginal for the first three month of current fiscal year of just Rs. 1.24. The profit in last year 2065/66 was Rs. 109.406 million nevertheless it has just Rs. 8.672 million in the first three month of current fiscal year. The expectation for the end of fiscal year is Rs. 232.150 million which is bit aggressive. Hence there is a point to think about, will the company be able to use all its resources to generate huge profit and maximize the investor’s wealth. NOT WORTH IT.

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