Things To Know For The Prospective Investors of Menchhiyam Hydropower; IPO Opens From Today For Project-Affected Locals and Nepalese Employed Abroad

Wed, Feb 22, 2023 9:52 AM on IPO/FPO News, Company Analysis, Latest,

Company Profile:

Menchhiyam Hydropower Limited is a public limited company, incorporated on November 08, 2017, as a Private Limited company, which was then converted into a public company on July 15, 2021. The company is involved in setting up of a 4.72 MW run-of-river, Upper Piluwa Khola-II Small Hydropower Project (UPKHP) in the Sankhuwasabha district of Nepal by utilizing the available head and flow from Piluwa Khola (river). The project is constructed under BOOT (Build, own, Operate, and Transfer) mechanism.

About the issue:

Menchhiyam Hydropower Limited will be issuing its IPO to the project-affected locals of Sankhuwasabha District and Nepalese citizens working abroad from today i.e. on 10th Falgun and will conclude on 25th Falgun, 2079. Note that for the locals of Sankhuwasabha District, if the issue is not subscribed by the early closing date, the issue can be extended till 9th Chaitra. However, the issue will not be extended from the early closing date for Nepalese citizens working abroad.

The issued capital of the company is Rs. 54.25 Crores of which 10% i.e. 5,42,583 unit shares worth Rs. 5.42 crores have been allocated to project-affected locals of Sankhuwasabha District. Meanwhile, 20% of the company's issued capital i.e. 10,85,167 unit shares will be issued later for the general public. Of this public issue, 10% of the shares totaling 108,517 units shares have been allocated for Nepalese citizens working abroad, the issue of which will open today.

The minimum application quantity to be applied for both project-affected locals and Nepalese citizens working abroad is 10 units while the maximum quantity is 10,000 units. NIC Asia Capital Limited has been appointed as the issue manager. The promoter-public share ratio will be 70: 30 after this IPO.

Click here for the offer letter

Menchhiyam Hydropower Limited
Particulars Percentage Units Amount
Total Capital 100%          5,425,833.00       542,583,300.00
Total Issue (Project-affected Locals) 10%             542,583.30          54,258,330.00
Total Issue (Nepalese citizens working abroad) 2.00%                   108,517          10,851,666.00
Issue Manager NIC Asia Capital    
Issue Open Date 10th Falgun    
Issue Closing Date (earliest) 25th Falgun    
Issue Late Closing Date (for locals only) 9th Chaitra    
Minimum Application 10    
Maximum Application 10,000    

Capital Structure:

Authorized Capital     550,000,000.00
Issued Capital     542,583,300.00
Current Paid-Up Capital     379,808,300.00
Capital after IPO Issuance      544,053,400.00

Shareholding Structure:

  Number of Shares Amount Percentage Remarks
Promoters Shareholders                  3,798,083.00     379,808,300.00 70% Already issued
Project-Affected Locals                      379,808.30       37,980,830.00 10% To be issued
General Public (Including Nepalese citizens working abroad)                        1,085,167     108,516,700.00 20% To be issued

Board of Directors:

Name  Position
Mr. Deepak Khadka  Chairman
Ms. Binita Thapa Director
Mr. Hari Shankar Puri Director
Mr. Bikal Thapa Chhetri Director
Mr. Sevak Pokharel Director
Mrs. Devi Thapa Chhetri Director

Financial Statement:

Financial Highlights
Particulars Actual Estimated
2076/77 2077/78 2078/79 2079/080 (Q1) 2079/80 2080/81 2081/82
Total Paid-Up Capital ('000)       160,000.00    379,808.00     379,808.00         379,808.00       5,425,833.00     5,968,416.30    5,968,416.30
Reserve & Surplus ('000)       (64,198.00)    (75,390.00)     (85,656.00)                           -      (1,072,090.00)      (444,630.00)    1,946,921.00
Debt ('000)                        -                       -                        -                             -                              -                            -                           -  
Revenue ('000)                        -                       -                        -                             -            589,113.41     1,490,330.76    1,534,159.58
Interest Expenses ('000)                        -              134.00               88.00                    18.00          260,362.25         286,931.01        316,257.94
Net Profit ('0000)         (8,934.00)    (11,192.00)     (10,266.00)            (5,825.00)          (21,553.00)           62,746.00          63,932.00
Earnings per share (Rs.)                 (3.04)              (2.95)               (2.70)                    (1.53)                     (3.97)                   10.51                  10.71
Net worth per share (Rs.) 78.15              80.15               77.45                           -                       80.24                   92.55                103.26
Debt-Equity (times)                        -                       -                        -                             -                              -                            -                           -  
Return on Equity (%)                 (0.93)              (0.37)               (0.35)                    (0.15)                     (0.05)                      0.11                     0.08

CARE Ratings:

CARE Ratings Nepal Limited (CRNL) has reaffirmed the issuer rating of ‘CARE-NP BB (Is)’ assigned to Menchhiyam Hydropower Limited. Issuers with this rating are considered to offer a moderate risk of default regarding the timely servicing of financial obligations, in Nepal

Credit strengths

  • Experienced board members and management team.
  • A Power Purchase agreement with a sufficient period of coverage.
  • Lower Power evacuation risk.
  • Favorable Government policies towards the power sector.

Credit challenges

  • Operations stabilization risk as debt service burden remains high in the initial years of operations owing to the high cost of a project.
  • Hydrology risk associated with run-of-the-river power generation.
  • Exposure to regulatory risk.
  • Exposure to volatile interest rates.