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Note: The artciles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

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Saturday, February 20, 2010

Finaventure Capital Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Finaventure Capital Ltd
Code:512219
Cmp:50

Story:The above mentioned company is one which we need to be very very very careful in terms of investing. It has no operations and thus no income at this point.Everything seems to be hazy as of now and only when its future becomes clear,investors will have a chance to make money.

Timeline
2007 – BSE listed Aridhi Hi-tech changes name to Indusvista Ventures
2008 – Finaventure Advisory Services takes over Indusvista through a share purchase
agreement, followed by an open offer of Rs 25.50
2009 – In Feb, Indusvista was renamed as Finaventure Capital
2009 – In Aug, open offer made by Mr.Kannan Vishwanath at Rs40 per share

Open Offer
The details of the latest open offer are very interesting.
• Finaventure Capital at its board meeting held on August 07, 2009, had approved to buy out 100% shareholding of Aanjaneya Biotech Private Limited (ABPL), The acquisition was to be made by fresh issue of shares to the promoters of ABPL
• The shareholders of ABPL are
Mr. Kannan Vishwanath : 67.62%
Universal Medicament Private Limited : 14.00%
Universal Medikit Private Limited : 18.38%
Universal Medicament Private Limited and Universal Medikit Private Limited are group companies of Unijules Life Sciences Ltd. (http://www.unijules.com/)
• Finaventure Capital Limited would be issuing 70,00,000 new equity shares on a
preferential basis at a price of Rs.40/- per share for the above acquisition

• Further, Mr. Kannan Vishwanath has entered into a MOU on August 07, 2009 with Finaventure Advisory Services (promoter), to acquire 7,50,000 shares representing 7.10% of equity share capital of Finaventure Capital at Rs.40/
• As per MOU Finaventure Advisory Services will step down as promoter and its
shareholding will be in categorized as public
• Post allotment and post acquisition. Mr Kannan Vishwanath will hold 51.90% of
the 1,05,65,490 equity shares of the company, thus open offer was triggered.

We assumed that the above process was done to get a listing in BSE through the backdoor. A lot of companies have done that successfully to get the benefits of a listedcompany at the same time avoiding the process of IPO.Usually companies buy shell companies and then reverse merge their own company.The above transaction is a bit more complex considering the fact that the residence address of the new promoter and the registered office of Finaventure Advisory are same.Considering the above fact and the nature of transaction we would have skipped the company except for the new promoters and ABPL.Aanjaneya Biotech (http://www.aanjaneya.com/) is promoted by Mr. Kashi Vishwanathan and his son Mr, Kannan Vishwanath. The company was set up in 2006 for manufacturing anti-malarial & anti cancer APIs (Active Pharmaceutical Ingredients) from natural extracts. The company commenced manufacturing on October 2008.Aanjaneya extracts anti-malarial APIs such as quinine sulphate and quininehydrochloride from the bark of cinchona ledgeriana trees.Mr Kashi Vishwanathan started “VISHWAM & CO” a pharmaceutical trading company in 1964.He then started Benzochem LifeSciences Pvt Ltd in 1978 for manufacturing basic chemicals and bulk drugs. He sold 70% stake in Benzochem to Arch Pharmalabs Ltd in 2008 for apparently Rs 100 crore. Benzochem’s top line was Rs 150 crore then.

Products:-
The products of ABPL are
APIs
• Anti Malarials
• Expectorant
• Emitic
• ACE Inhibitor
• Erectile Dysfunction
• Animal Health Products
• Anti Cancer
Finished Dosage Forms
• Analgesics
• Anti Malarials
• Anti TB
• Anti Obesity
• Expectorants
• Erectile Dysfunction
• Hormone Replacement
• Lozenges
• Topicals
• Multi-Vitamins
• Animal Health Products

Facilities:-
API
Mahad MIDC: Spanning 20000 sq. metres
Awarded the following certifications by BSI
• ISO 14001 (Environment Management System)
• ISO 9001:2008
• ISO 220000 certifications
Compliant with
• UK MHRA (Medicines and Healthcare products Regulatory Agency)
• EUGMP (Good Manufacturing Practices)
Finished Dosages Facility
Perungut Pune: Area about 4 acres
Certifications
• ISO 9001
• ISO 14001
• OHSAS 18001 (Occupational Health and Safety Management System)
Compliant with
• WHO
• cGMP (current GMP)
• MHRA
• TGA (Therapeutic Goods Administration)
Awards
• "Business Excellence Award” received from the Institute of Economic Studies
(IES) India in Feb 2009
• "Quality Award” received from the European Business Assembly in Dec 2008

Financials:-
Being a private company, we were not able to get much information. The details we have are
Year Net Sales (Rs Cr) PAT (Rs Cr)
2007-2008 21.9 2.3
2008-2009 90.1 5.1
Debt: Rs.11.7 Cr Long-Term Loan and Rs.24.4 Cr Cash Credit.

SWOT Analysis:-
Strengths
• Proven Management who have expertise and experience in running a similar
business in the past
• Profit making company
Weakness
• CRISIL has downgraded its ratings on the bank facilities of Aanjaneya Biotech
Pvt Ltd to ‘D’ from ‘B+/Stable
• Debt of Rs 37 crores
• Very low trading volume
Opportunity
• Demand for Anti Malarial API
• If the company can settle its debt by equity dilution, there will be direct impact on bottom line
Threat
• The basis for looking at Finaventure is based on the MOU and takeover of ABPL.If any of the above does not hold good, Finaventure currently will not warrant a
second look.
Source:Trinity.

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