Bannari Amman Spg RI review - (May apply)

•    BASML is a flagship company of the Bannari Amman group.
•    It has emerged as a fully vertically integrated textile company. 
•    For FY21 it suffered a setback on account of the pandemic, but is now back on track. 
•    Right issue is reasonably priced based on its financial parameters. 

ABOUT COMPANY:
Bannari Amman Spinning Mills Ltd. (BASML) is one of the flagship companies of Bannari Amman Group located in South India which offers a wide spectrum of manufacturing, trading, distribution and service-related activities in sectors like textiles, food processing, automobile distribution, etc. It has emerged as a fully vertically integrated textile company engaged in the business of manufacturing, spinning, weaving and processing cotton yarn. It is also engaged in the business of manufacturing woven and knitted fabrics, garments and wind power generation. 

BASML's principal line of business is manufacturing and marketing of cotton yarn, woven and knitted fabrics, home textile products, knitted garments along with the processing of fabrics and retailing of knitted garments. The Company manufactures cotton yarn and fabrics which are in turn used as a raw material in the manufacturing of knitted and woven garments. Moreover, all its manufacturing units and facilities are situated in the state of Tamil Nadu, India. Apart from manufacturing products for direct sale to customers, to ensure the full utilization of the installed capacity of manufacturing units, it also engaged in carrying out various textile processes for third parties on a job work basis. 

BASML procures cotton bales from domestic and international markets and market and sell cotton yarn, finished woven and knitted fabrics, knitted garments and home textiles to various garment manufactures. The company exports its products to countries including China, England, Israel, Cameroon, Tanzania, United States of America, Germany, Spain, Japan, Italy, Korea, Thailand, Myanmar, Portugal, Egypt, Canada, Indonesia, Australia, Bangladesh, Hong Kong, Vietnam, Kenya, Sri Lanka, Poland, etc. The Company is an integrated textile company and offers a diverse set of products that cater to various segments of the textile industry such as spinning, weaving, knitting, processing, home textiles and garments. The Company has also installed wind power generators to augment the power requirements of the aforesaid manufacturing facilities thereby reducing the usage of fossil fuel.

ISSUE DETAILS:
To part finance its plans for repayment/prepayment of intercorporate deposits (Rs. 39.00 cr.), repayment/prepayment of certain borrowings (Rs. 59.00 cr.), BASML is coming out with a rights issue of 33333333 equity shares of Rs. 5 each in the ratio of 21 shares for every 20 shares held as of the record date of September 09, 2021. It has fixed a price of Rs. 30 per share for this issue. The company hopes to mobilize Rs. 100 cr. with this rights issue. It opens for subscription on September 20, 2021, and will close on October 04, 2021. Post allotment, shares will be listed on BSE and NSE. The issue is solely lead managed by Saffron Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. The company is spending Rs. 2 cr. for this rights issue process. 

Post issue, BASML's current paid-up equity capital of Rs. 15.75 cr. will stand enhanced to Rs. 32.42 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, BASML has posted a loss of Rs. 10.55 cr. on a turnover of Rs. 859.64 cr. for FY21. For the first quarter ended on June 30, 2021, it has reported a turnover of Rs. 206.81 cr. with a net profit of Rs. 12.21 cr. 

SCRIP PERFORMANCE ON BSE:
BASML scrip turned ex-right on September 08, 2021, at Rs. 64.90 and the last cum-right closing was at Rs. 97.00 per share on September 07, 2021. Since then it has marked the high and low of Rs. 69.50 and Rs. 59.45 till September 17, 2021. The scrip has marked the last 52 weeks high/low of Rs. 72.89 / Rs. 25.17 (on an ex-rights basis) and the last traded price is Rs. 60.95 per share. Based on this quote, the company's market cap comes to Rs. 395.21 cr. whereas based on the rights issue price, its market cap mulled at Rs. 194.53 cr. The current promoter's holding is 55.55% in the total paid-up capital and this ratio will remain the same or may increase in case of undersubscription to the rights issue. (All quotes here are as per the BSE website).