Alan Scott Rights Issue review - (Avoid)

•    ASIL which was primarily engaged in the designer socks business destroyed completely under fire incidence. 
•    Thereafter, it tried various modes of operations and business models but failed. 
•    Now under the new management it is planning to enter into health and hygiene products with a subsidiary route. 
•    It has carried forward loss and future plans hinge on its successful implementation.
•    There is no harm in skipping this "High Risk/No Return" bet.

ABOUT COMPANY:
Alan Scott Industries Ltd. (ASIL) erstwhile known as Suketu Fashions Ltd. is The company that primarily manufactured designer socks. Due to a fire in their plant, it was completely destroyed. Meanwhile, it tried to enter in film distribution and entertainment business, but could not succeed. Now under the new management, the company is entering into the business of manufacturing and distribution of various health and hygiene products and retail trade. To manage the show, it preferred to follow the subsidiary's incorporations. Currently, it has 1 office and 4 retail stores to manage entire operations including its subsidiaries. As of the date of this document filing, it had 11 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 1825377 equity shares of Rs.10 each at a fixed rate of Rs. 30 per share to mobilize Rs.5.48 cr. The issue is opening for subscription on June 30, 2023, and will close on July 13, 2023. The company is asking for Rs. 10 per share on application and the balance of Rs. 20 per share in one or more calls from time to time. It is issuing RI in the ratio of 1 for 1 to eligible stakeholders as of the record date of June 16, 2023. Post allotment, shares will be listed on BSE. ASIL is spending Rs. 0.23 cr. for this RI process and from the net proceeds, it will utilize Rs. 0.33 cr. for repayment/prepayment of certain borrowings, Rs. 2.71 cr. for investment in additional equity of subsidiary Alan Scott Retail Ltd., Rs. 0.95 cr. for investment in additional equity of subsidiary Alan Scott Nanoveu India Ltd., and Rs. 1.26 cr. for general corporate purposes.

The RI is self-managed by the company itself and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue. 

Post RI, ASIL's current paid-up equity capital of Rs. 1.83 cr. will stand enhanced to Rs. 3.65 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 10.95 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, ASIL has (on a consolidated basis) posted a turnover/net profit - (loss) of Rs. 1.91 cr. / Rs. - (0.06) cr. (FY22), and Rs. 5.42 cr. / Rs. - (2.08) cr. (FY23). 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 539115 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 67.06 on June 15, 2023, and opened on an ex-right basis at Rs. 47.58 on June 19, 2023. Since then, it has marked a high/low of Rs. 47.58 / Rs. 46.63. The scrip last closed at Rs. 46.63 as of June 26, 2023. For the last 52 weeks, it has posted a high/low of Rs. 151.32 / Rs. 23.60. This counter is not traded regularly and has a thin volume.

The promoters' holding has been constant at 46.45% for the last three quarters ended on March 31, 2023. The counter is well-managed above the RI price to lure investors.