The Lowdown - MobME DRHP; Total Revenue Rs 23.1Cr In FY12, Subsidiaries Part I

Kerala based mobile VAS company, MobME has filed its Draft Red Herring Prospectus for an IPO with the NSE SME Stock exchange to raise a capital close to Rs. 25 crores through 705,600 shares of face value of Rs.10.

The object of raising this capital is to implement mobile digital signature pilot project in Kerala. The capital will be largely spent around the license fee to Valimo, procurement of Crypto SIM cards from Gemalto Digital Security Pvt. Ltd., 4000 mobile phones and other related expenses for the project. Although MobME is raising only Rs.25 crores, they plan to raise more on success of its pilot project.

MobME is a telecom solutions company specializing in providing products and services using mobile  communications technology. They offer their products and services to TSPs, State Governments, enterprises and  financial institutions across India. Their products and services are classified into (i) VAS segment providing solutions  over text, voice and data to TSPs and their subscribers; and (ii) Enterprise  Solution segment. They implement m-governance projects for the states of Kerala, Goa and Nagaland. They work very closely with the state government of Kerala with involvement in over 90 of their state departments.

Subsidiaries and Group Companies

MobME also has two  subsidiaries Getz Shoppe & Exim Private Limited and Forward Media Private Limited. Getz Shoppe & Exim Private  Limited operates in the trading of consumer durable goods.
Forward Media Private Limited operates in the  print and digital media industry. Shareholdings in Forward Media Pvt Ltd is as follows:

Financials of Forward Media Private Ltd:

Shareholdings in Getz Shoppe & Exim Private Limited

Financials:

There are 43 companies listed under their group of companies including Torque Technology Solutions Private Limited in which Union Defence Minister A.K.Antony’s son, Anil Antony was one of the founding members (reported the Hindu). Of the 43 companies, 33 of them including Torque Technology Solutions Pvt Ltd have been reporting loss in the last three financial years. Promoters of MobME hold 66% of Red Splash Media Solutions Pvt Ltd, another group company. 

MobSHARE Mobile Systems India Private Limited is another group company that has been declared as a company with similar or related business interest in MobME’s DRHP. This may lead future conflict of interest. Sanjay Vijayakumar, promoter and CEO of MobME holds 50% stake in this company.

Shareholdings and Financials of MobSHARE Mobile Systems India Pvt Ltd:

Share Purchase Agreement:

MobME has entered into a share purchase agreement with Waybeo Technologies Solutions Private Limited dated February 25, 2012. By the agreement, MobME has purchased 115,000 equity shares of Waybeo Technologies Solutions Private Limited of face value of  Re.1 each at a premium of Rs.16.39 each per share, for a total consideration of Rs. 20 lacs

Financials of MobME: 

The company reported unconsolidated total income of Rs.23.10 crores for the Financial year ended March 31, 2012 and has grown at a  CAGR of 185.75% over their total income of Rs.34.65 lacs for the period ending March 31, 2008. They also reported unconsolidated net  profit of Rs.5.59 crores for the Financial year ended March 31, 2012 as compared to  Rs. (1.06) crores for the period  ending March 31, 2008.

As of September 30, 2012, the Company reported a net worth of Rs17.25 crores in accordance with the restated and  audited consolidated financial statements and Rs.1,790.48 lacs in accordance with the restated unconsolidated  financial statements.  As of September 30, 2012, the net asset value per Equity Share was Rs.86.27 in accordance with the restated and  audited consolidated financial statements and Rs.89.52 in accordance with the restated unconsolidated financial  statements.

Unconsolidated Net Profit/Loss in Crores

Net Profit/loss	March 31, 2009	March 31, 2010	March 31, 2011	March 31, 2012	September 30, 2012
Net Profit after Tax	(0.03)	0.76	6.75	5.59	2.13

Consolidated Net Profit/Loss in Crores

Net Profit/Loss	March 31, 2012	September 30, 2012
Net Profit after Tax	5.13	1.94

Segment revenues in Crores:

Segment	March 31, 2009	March 31, 2010	March 31, 2011	March 31, 2012	September 30, 2012
VAS	0.82	2.67	16.17	19.13	9.62
Enterprise	0.50	1.06	3.14	3.39	0.87

MobME has experienced negative cash flows in the recent past (unconsolidated in crores)

Promoters:  

The average cost of acquisition of Equity Shares of the Company by each of its Promoters

Mr. Sanjay Vijayakumar – Rs.11.88

Mr. Sony Joy Rs. 12.48

Mr. Vivek Steve Francis Rs. 14.92

Mr. Jose Thomas Pattara Rs. 10.00

Shareholders & Directors  

Mr. George Brody – Chairman, Non-Executive and Independent Director

Mr. Jose Thomas Pattara – Non-Executive and NonIndependent Director

Mr. Sanjay Vijayakumar – Executive and NonIndependent Director

Mr. Sony Joy – Executive and NonIndependent Director

Mr. Aynampudi Subbarao – Non-Executive and Independent Director

List of shareholders holding more than 1% stake in the company:

Allotment to employees as performance incentive

129,854 Equity Shares were issued to some of the employees as performance incentive on April 27, 2012 at a price of  Rs.10 per Equity Share  Subsequently, through a special resolution passed in the EGM on December  31, 2012, the allotment  price of 129,854 Equity Shares were revalued to Rs.42.73 per Equity Shares,  being the fair value based on the valuation report obtained by the Company.

Note: On April 2012, the Company had made an allotment of 400,000 Equity Shares comprising of  270,146 Equity Shares to three of the  promoters as well. The EDM on December 31, 2012 had decided to retain the valuation of these equity shares at Rs. 10 per equity share.

Equity held by the promoters as of ten days and two years prior to the Draft Red Herring Prospectus:  

As of date, the promoters hold an aggregate of  73.63 % of the Company’s issued and paid-up  equity share capital.

Related: Why is MobMe raising only close to $4.5 million in its IPO?