The initial public offering (IPO) of PKH Ventures, which is engaged in the business of construction and development, hospitality, and management services, opens today and will close on July 04, 2023.
PKH Ventures IPO opens today: Here's all you need to know about GMP, Price band, Lot size, and other key details
PKH Ventures is engaged in the business of construction and development, hospitality, and management services. Incorporated in 2000, the company began its journey by managing and operating various hospitality establishments across airports in the country.
The issue consists of a fresh issue of equity shares worth ₹270 crore and an offer for sale (OFS) of up to 73,73,600 equity shares by the promoters and shareholders of the company. Post-issue, the promoter and promoter group stake in the company drops to 68.84% from the current stake of 100%.
The price band for the offer has been fixed at ₹140–148 per equity share with a face value of ₹5 each. The net offer will be reserved for qualified institutional buyers at 50% of the total offer size, retail investors at 35%, and non-institutional investors at 15%. Retail investors may submit bids for up to 13 lots, with each lot containing 100 shares. Retail investors must make a minimum investment of ₹14,800.
Ahead of the IPO, the company's shares in the grey market are trading at a premium of ₹5–9, as per media reports.
Let's delve into the company's operations, expansion plans, and objectives of the issue, as well as an overview of its current financial position.
PKH Ventures is engaged in the business of construction and development, hospitality, and management services. Incorporated in 2000, the company began its journey by managing and operating various hospitality establishments across airports in the country. This experience laid the foundation for the company's Hospitality vertical. In FY 2015, PKH Ventures developed and started owning, managing, and operating two hotels in Mumbai: Golden Chariot Hotel & Spa in Vasai and Golden Chariot, The Boutique Hotel near Mumbai International Airport.
Expanding further into the hospitality sector, PKH Ventures entered the restaurant space in Mumbai in 2013, opening restaurants under the brand names Golden Chariot and Balaji. In 2017, they commenced operations at Casablanca, a restaurant located in Sahara Star, Mumbai. In the same year, PKH Ventures launched the QSR business with brands like Zebra Crossing, Hardy's Burger, and Mumbai Salsa.
In November 2021, PKH Ventures expanded its hospitality offering by taking over the management and operations of Juvana Resort and Spa, a luxurious resort at Aamby Valley, Lonavala. This resort was developed by Golden Chariot Retreats and Infra Private Limited, a group company of PKH Ventures.
Building on the knowledge and experience gained from developing the Mumbai Hotels, PKH Ventures ventured into the civil construction business through its subsidiary, Garuda Construction. Since April 2, 2020, Garuda Construction has been providing end-to-end construction services for residential and commercial buildings, including concrete and composite steel structures, as well as MEP and finishing works.
It also provides Civil Construction services to third-party developers for their residential real estate projects and has been awarded two Government Projects-Hydro Power Project, Nagpur Project and three Government Hotel Development Projects - Rajnagar Garhi Project, Pahadikhurd Project and Tara Resort Project. As of March 10, 2022, the Garuda Construction’s third-party developer order book was ₹55,975.26 lakhs.
Under the Management Services vertical, the company has in the past managed airport entry ticket counters, retail outlets at airports, and toll management services. Presently, there are no such active contracts of these Management Services. Presently, the company offers miscellaneous MEP works services, such as annual maintenance of their projects and certain third-party O&M contracts, under the Management Services vertical.
While the company continues to focus on Construction and Development as part of its growth strategy, it intends to diversify into and continue to bid for high-margin DBFOT and HAM projects.
Notably, it has been awarded the Nagpur Project by the Maharashtra Tourism Development Corporation (MTDC), which operates on the Design-Build-Finance-Operate-Transfer (DBFOT) model. Furthermore, the company has successfully secured a hydropower project based on the Build-Own-Operate-Transfer (BOOT) model.
Looking beyond, the company is also venturing into the food processing industry. It plans to establish a state-of-the-art food park in the Jalore district of Rajasthan. In addition to the food park, the company aims to develop a multi-commodity cold storage facility in the Khargone district of Madhya Pradesh.
Additionally, the company plans to develop a Wellness centre and Resort in Chiplun, Maharashtra, utilizing a land parcel owned by its Promoter. Capitalizing on its extensive hospitality experience and reputable brands, PKH Ventures also intends to expand its restaurant operations in prominent locations such as malls, entertainment zones, and high-street areas.
"The development of these projects will establish our Company as a diversified Construction & Development company with special abilities to undertake varied and specialised projects," the company said in its DHRP report.
The company is in the process of acquiring an NSE- and BSE-listed public company, Amar Remedies, through the IBC process for a lump sum consideration of ₹3,159 lakhs. The NCLT, Mumbai, has already approved the company resolution plan, and the Resolution Professional ("RP") has also handed over the physical possession of the immovable assets of the target company to PKH Ventures.
Objectives of the Issue
The company plans to use issue Rs. 124.11 crore from issue proceeds for equity investment in the Halaipani Hydro Power Project and Rs. 80 crore towards equity investment in a subsidiary company, Garuda Construction, to fund its working capital requirements.
Further, the company plans to use Rs. 40 crore for pursuing inorganic growth opportunities through acquisitions, other strategic initiatives, and general corporate purposes.
During the nine months of FY23, the company achieved a total revenue from operations of ₹155 crore, along with a net profit of ₹28.64 crore. in FY22, the company generated revenue from operations of ₹245.41 crore, with a net profit of ₹40.52 crore.
During FY21 and FY20, the company recorded revenue from operations of ₹264.66 crore and ₹169 crore, respectively. During the same period, the company reported a net profit of ₹30.57 crore and ₹14.09 crore, respectively.
The company has limited experience in developing and operating hydropower plants, and some of the businesses/projects may fail in executing and operating projects, affecting the results of operations and financial condition, said brokerage firm HDFC Securities.
The Hydro Power Project faces weather-related risks like floods, cloudbursts, landslides, and other environmental risks that may lead to partial or full damage or destruction of the Hydro Power Project, it added.
As PKH receives significant revenues from the Construction & Development vertical, failure to obtain new civil construction contracts or termination of its current civil construction contracts may materially and adversely affect its financial condition, as per the brokerage.
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