Markobenz Ventures RI review - (Avoid)

•    The company that was incorporated for textile segment has now turned as a trader in agri commodities.
•    It had no activities for FY22 and FY23, but modest activities reported for H1-FY24.
•    The company has carried forward losses and four-fold increase in its paid-up equity may face servicing issues. 
•    Though this RI is at par value, there is no harm in skipping it. 

ABOUT COMPANY:
Markobenz Ventures Ltd. (MVL) - erstwhile known as Evergreen Textiles Ltd.) was originally incorporated as Maharashtra Fur Fabrics Limited then it kept changing its name to Podar Knitex Limited to "Evergreen Textiles Limited" and finally as "Markobenz Ventures Limited" vide fresh certificate of incorporation upon name of name dated December 5, 2023

The Company was originally engaged in manufacturing, bleaching, dyeing, printing, knitting, in High Pile Fur Fabrics, cloth and other fabrics made from acrylic, polyester, cotton silk, artificial silk, wool and other suitable materials. The operations of the activities were closed for the last few years. Subsequently our Company was taken over by the current management on 16 June, 2023.

The company has restarted operations in the business of trading of agriculture commodities. Currently, Markobenz Ventures Limited, headquartered in Mumbai, operates in the B2B space, focusing on the trading of organic agro commodities. The company, led by an experienced management team, capitalizes on extensive industry connections to facilitate transactions within Mumbai's spices market. Engaging in bulk trading, the company maintains an offline presence, predominantly dealing with prominent merchants in the region. Specializing in loose packaging, the company's core offerings include organic fennel seed, organic jeera (cumin), cotton, and turmeric. 

Transactions are executed with precision, leveraging the established network to streamline sourcing, trading, and distribution processes. The business strategy prioritizes localized operations, emphasizing relationships and efficiency within the Mumbai market. Compliance with organic certification standards ensures adherence to quality and ethical practices. Markobenz Ventures Limited's market approach centers on reliability, transparency, and leveraging its Promoters' industry experience to sustain a prominent position in the agro commodities trading sector. The company's operations are oriented toward practicality, responsiveness to market demands, and maintaining a stronghold in the competitive Mumbai spices market.

As of the date of filing this offer document, it had just 3 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 14400000 equity shares of Rs. 10 each at a par value to mobilize Rs. 14.40 cr. The RI opens for subscription on April 15, 2024, and will close on April 22, 2024. The company is offering RI in the ratio of 3 for 1 to its eligible stakeholders as of the record date of March 27, 2024. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.30 cr. for this RI and from the net proceeds, it will utilize Rs. 7.40 cr. for working capital, Rs. 4.54 cr. for adjustment of business advances and inter-corporate deposits, and Rs. 2.16 cr. for general corporate purposes. 

The RI is self-managed by the company and Purva Sharegistry (I) Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 4.80 cr. will stand enhanced to Rs. 19.20 cr. Based on RI pricing, the company is looking for a market cap of Rs. 19.20 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, the company has no activities for the last two fiscals and as such it had no income. It reported losses of Rs. - ( 0.11) cr. for FY22 and - (0.17) cr. for FY23. For H1 of FY24 ended on September 30, 2023, it posted a net profit of Rs. 0.59 cr. on a total income of Rs. 0.41 cr. The net profit includes exceptional income of Rs. 0.28 cr. This set of financial data appears to have been window dressed.

The four-fold post-RI equity will face servicing issues for the coming few years. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 514060 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 153.00 on March 26, 2024, and opened on an ex-right basis at Rs. 44.85 on March 27, 2024. Since then, it has marked a high/low of Rs. 55.44 / Rs. 44.85. The scrip last closed at Rs. 55.44 as of April 10, 2024. For the last 52 weeks' it has posted a high/low of Rs. 55.44 / Rs. 5.94. The counter is currently under GSM: State 0 / ESM: Stage 2. From the pricing movement point of view, this counter is operated by vested interest and kept at a hefty valuation with thin volume. 

The promoters' holding has declined drastically from 74.01% as of June 30, 2023, to just 1.08% as of December 31, 2023. Though the RI is at par, it is a biggest concern as the counter is manipulated by the vested interest to tempt investors at large.