Fitch assigns grading 4 to Mahindra Holidays & Resorts India IPO

Mahindra Holidays & Resorts India Ltd (MHRIL) is entering the Capital Market with an Initial Public Offering of 92,65,275 Equity Shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The Bid/Issue opens on June 23, 2009 and closes on June 26, 2009. MHRIL has filed a Red Herring Prospectus with the Registrar of Companies.

The issue comprises a fresh issue of 58,96,084 Equity Shares and an Offer for Sale of 33,69,191 Equity Shares by Mahindra & Mahindra Ltd. The issue would constitute 11.0% of the fully diluted post-issue paid-up capital of MHRIL.

The issue has been assigned 4 out of 5 IPO grading by Fitch Ratings India Pvt Ltd reflecting 'above average fundamentals' of the issue relative to other listed equity securities.

The proceeds from MHRIL's proposed issue are expected to be deployed in the setting up of new projects and expansion of some of the existing resorts, to provide a larger range of resorts, and hence a wider choice of holiday destinations to members.

Mr. Arun Kumar Nanda, Chairman, MHRIL, said, "It is a proud moment that the Mahindra & Mahindra Group's leisure hospitality and vacation ownership company with an integrated business model is poised to tap the capital markets. The business of MHRIL has been supported by changing demographics, strong economic growth and increasing disposable incomes in India over the last three years. We believe MHRIL's brands, inventory, distribution of resorts and its integrated model, combined with the company being an early mover in the industry, will give it significant competitive advantage.

MHRIL, one of the leading players in the leisure hospitality industry, offers quality family holidays primarily through vacation ownership memberships. MHRIL's flagship brand is Club Mahindra Holidays, which has been selected as Superbrand 2009. MHRIL has also introduced new vacation ownership offerings such as Zest and Club Mahindra Fundays, Mahindra Homestays, travel and holiday related services through clubmahindra travel. The cumulative member base increased to 92825 in fiscal 2009 from 38691 in fiscal 2006. As of May 31, 2009, MHRIL has 96067 members and 27 resorts across India and Thailand. About 35.18% of new member additions in FY09 came from referrals by existing members.

Source : Equity Bulls

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