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Marathon Nextgen


Marathon Nextgen is in the business of real estate construction and sale.

This is an 80-year old company with 2nd generation management and has four projects running currently with 125cr committed to one project.  The business model is largely focused on eventual sale of constructed properties.

The company has reported somewhat erratic performance numbers as a result of its business model (see above). It reported 75cr of operating profits on total income of 130cr in the last financial year.  However, it employed only moderate debt to accomplish this.

The business is highly competitive and is primarily exposed to the interest rate cycle where customers are unwilling to pay up in a high interest rate/high EMI environment resulting in a real lack of pricing power under tight money conditions. 

The company was a BIFR case in 2003 as a result of unbearable debt burdens and accumulated losses.  This is a major adverse factor against management competence.

In addition to the above, management have made significant related party investments including 280cr worth of loans to group companies (economic viability unknown) and 125cr in redeemable preference shares in another privately owned company that is loss-making.  This is another red flag to minority shareholders about management honesty/competence.  They should consider if they would entrust their money to management that have taken such actions with shareholders’ money in the past.
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