Note: There is very little information about this company available in public sources.
IKAB Securities is into purchasing of shares of listed companies.
Mr Madhusudan Kela (veteran stock market investor) is taking over control and has become a promoter through share purchase agreement and open offer 
Share purchase agreements were at Rs 47 and open offer was at Rs 51
No shares were tendered in the open offer
Old promoters have resigned
Company name is to be changed to MK Ventures Ltd
Address of registered office is changing
Interestingly, this is the address of MK Ventures (Mr Madhusudan Kela’s family office) and Invexa Capital LLP
Disc- have a tracking position
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I failed to understand what is the special situation here. If anything, the special situation is long gone. Share price is ruling above Rs 900 level. It would have been very interesting during the open offer period.
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The right issue meeting got postponed to 20th March
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The following terms and conditions of the Rights Issue:
Total number of Rights Equity Shares and Rights Issue size: 4,27,050 Rights Equity Shares of â‚ą 10 each at an issue price of â‚ą 936/- aggregating up-to â‚ą 39,97,18,800/-.
Issue Price: â‚ą 936
Issue period:
a. Issue Opening Date: April 17, 2023
b. Issue Closing Date: April 25, 2023
Rights entitlement ratio: 1:8
Record Date: Tuesday, April 04, 2023
Sharp fall in price occurred after announcement. At Current price ₹ 1028 after dilution of 1:8 the new price will be ₹ 913 which is lower than the issue price. Promoter has 83.66% holding so he will most probably not participate in the issue. If the issue price is not changed I don’t see how it will get subscribed.
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I couldn’t get information on the business of MK Ventures post promoter change. What was the idea behind acquisition?
Also, I see that the loan book has grown from 23 cr to 134cr in Sep YoY. Is it into lending and, if so, can please someone share details about it?
Thanks.
@Abhinav.kumar AR has answers. Sharing one excerpt:
Disclosure: I am invested in M.K.Ventures. This is not a buy/sell recommendation. I may sell/add/ exit anytime in the future
Thank you for sharing. However, we don’t know the lending segments and what is actually non lending business.
I am unable to understand the business model of this company. It borrowed 249 cr in FY 23 and repaid the loan in FY24. Is this company only on the abilities of Mr Madhu Kela and if it is so then Why Jio Finance with a stronger hand is not a better option. Let’s hope some clarity comes out after the AR 24.
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Hi, trying to get answers to a few questions. If anyone has worked out the details or has a understanding that helps address these, please share.
- Madhusudan Kela (MK) acquired 83.66% in Ikabi Securities, later renamed as MKVentures Capital Limited. MKVentures has entered into various Related Party Transactions (“RPTs”) with Chartered Finance & Leasing Limited (“CFL”)
- MKVentures is proposed to carry out various transactions with CFL in excess of the aforesaid limits during the financial year 2023-24 in such a manner that the maximum value of the related party transactions with CFL, in the aggregate, does not exceed Rs 1,000 crores
Problem: Mr. Madhusudan Kela is the Significant Beneficial Owner (“SBO”) of Sound Capital Markets Limited, which has a significant shareholding in CFL.
Chartered Finance & Leasing has:
- Open borrowings/credit lines of about 315 Crores as per what is reported on Zauba Corp > Charges.
- Also has bond issues of 256 Crores as per Wint Wealth.
Questions:
- Why is MK using one of his company to lend money to another of his own company and in the process make money because the lent money would of course not be free.
- Why is MK borrowing through a related party and then lending to himself as opposed to borrowing directly through the main entity (MKVentures)?
- Why MK does not sell out his stake in Sound Capital Markets or have Sound Capital Markets disinvest from CFL - basically work towards making MKVentures Capital Ltd RPT list cleared off such large RPTs assuming his intention is to grow this business to which he has given his own name (MK)? This is all the more important because RBI (the regulator) is known to not look kindly at such governance related concerns even if the concerns are ambiguous in nature.
From Standalone financial statements:
- Interest Income: 10.3 Cr, Processing Fees: 9.86 Cr and Syndicate Fees: 6.6 Cr - Management says they are working on identifying new areas of business lending / alternative asset management, etc. So as of now, pure interest income is only 38% of total income. But no explanation as to how this is working out.
- In transactions with related parties, Borrowings received from CFL: 322.25 Cr and Borrowings repaid 224.4 Cr - That translates to net borrowings of 97.85 Cr. The interest for the financial year is mentioned as 3.34 Cr, that is 3.4% of net borrowings (borrowings received - borrowings repaid). That feels like a reason for red flag (not at arm’s length?)
– Additionally, there is also total interest outstanding of 97.85 Cr (which is strangely similar to net borrowings (received - repaid)
Seeing all this, I stopped looking any further. Either the business is too hard to understand (which I doubt as various other financial companies/banks financial statements are usually understandable) or perhaps the management just doesn’t want a naive know-nothing investor to be able to understand it.
If anyone has been able to dig deeper into this, please do share your observations.
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