MITCON To Tap Primary Market

MITCON Consultancy & Engineering Services Limited (MITCON) proposes to enter the capital markets on Tuesday, 15^th October 2013 with a fixed price public issue of 41,00,000 equity shares of Rs 10 each at a premium of Rs 51 per share, aggregating to Rs 25,01,00,000 out of which 2,06,000 equity shares are reserved for subscription by market maker to the issue, leaving a net issue of 38,94,000 equity shares for the public. The issue closes on 18^th October 2013. The equity shares are proposed to be listed on the 'EMERGE' – the SME platform of the National Stock Exchange (NSE) of India. The objective of this issue is to acquire property for setting up new offices in Bangalore, Hyderabad, Chennai, New Delhi and Ahmedabad (1,613.80 lacs). The other objectives being purchase of office equipment for new offices (57.70 lacs), purchase of furniture and fixtures and carrying out interior designing for the new offices (291.19 lacs), purchase of equipment for environment testing laboratory at Ahemadabad and Bangalore (101.50 lacs), general corporate purposes (81.33 lacs) and to meet the issue reated expenses (355.48 lacs). Some of the key financials to be noted are –

1. MITCON's operating income grew at a CAGR of 27.1% ove FY 08-12 to Rs 538 million led by strong growth across all the four segments- consulting, vocatiobal training, IT training and laboratories. However, revenues declined by 13.3% to Rs 467 million in FY 13 owing mainly to slowdown in investment spending activity in the economy.

2. EBITDA grew at a five-year CAGR of 17.1% to Rs 136 million in FY 13. EBITDA margin declined marginally to 29% in FY 13 from 29.9% in FY 08 owing to the high costs associated with the vocational training business.

3. Profit after tax increased at a five-year CAGR of 21% to Rs 99 million in FY 13. MITCON recorded an average PAT margin of 18.4% over FY 08-13.

4. Over the past five years, MITCON reported healthy RoE of 25.4% on average. RoE declined to 18% in FY 13 from 31.2% in FY 11 owing to a marginal drop in PAT margin and decline in revenues.