We would like to continue being a cash rich company: Mahesh Shetty, MT Educare Pvt. Ltd

Mahesh Shetty, MD, MT Educare Pvt. Ltd., in an interview with ET Now, speaks about the comapny's IPO. Excerpts:-


ET Now: What is the purpose of this issue? Do you really require this money to expand in other centres? The business by itself is of a nature which throws up a lot of cash in order to expand why the need for the IPO?

Mahesh Shetty: The IPO is for the construction of the PU College which we are constructing in Mangalore that is the reason for the IPO.

ET Now: How much money do you need for that?

Mahesh Shetty: Rs 20 crore is what we are raising from the IPO and Rs 8 crore will be from the internal accruals.

ET Now: There is of course opinion in the market that you have venture capital funding in your business that is the reason to really go into the primary markets is more from a valuation perspective so that they can exit than really need cash to expand because it is a very self funding business?

Mahesh Shetty: Yes, to a certain extent it may be right but what we need is funds to grow our business as well as we need cash. We have always been cash rich and would like to continue being cash rich for further future acquisitions may be.

ET Now: What is the kind of revenue size or revenue growth that you have seen till FY11 until last year, I am guessing you cannot talk about FY12, but FY11 on a YoY basis, what is the kind of growth rate that you have had let say for the last two years?

Mahesh Shetty: It has been around CAGR of 25% on the top line.

ET Now: And what about the bottom line?

Mahesh Shetty: Bottom line we ended year 10-11 at Rs 8 crore and the year six months ended was Rs 9.7 crore.

ET Now: What is the cash on the books as of now since we were talking about it?

Mahesh Shetty: Roughly it should be in the six months ended it should be around Rs 40 crore.

ET Now: From the cash that you have is it not possible to fund this expansion or this college set up?

Mahesh Shetty: It is possible but as I told you there are few reasons for getting into IPO one is basically seen that we want to continue with the cash and secondly, visibility is also important for our company. We do not want to be at a zero cash situation that has been the main idea of being there.

ET Now: What does your promoter shareholding come down to post this issue?

Mahesh Shetty: It will be 42%.

ET Now: And the pre-issue promoter shareholding is?

Mahesh Shetty:48%.

ET Now: You are not worried about the promoter shareholding not being above the 50% mark?

Mahesh Shetty: Not actually, it is quite a good number.

ET Now: So there is no case of further fundraising happening in the next 12 months?

Mahesh Shetty: Yes, actually.

ET Now: But you would be fine with this fundraising, there would not be another round of fundraising in next 12 months?

Mahesh Shetty: Yes, Absolutely. Not at all.

ET Now: When does this college come on stream?

Mahesh Shetty: This June.

ET Now: It is already 70% complete you are saying?

Mahesh Shetty: Yes.