Franklin Ind. BSE RI - June 25 issue review - (Avoid)

•    This is the 2nd RI from the company since May 2024.
•    The company is engaged in trading of agri products, gold and silver on a B2B platform.
•    It posted bumper top and bottom lines from FY24 onwards raising eyebrows, as it is operating in a highly competitive and fragmented segment.
•    The counter is fully under the control of vested interest parties as there is no promoter’s holding.
•    The counter is well managed above the par value to temp investors.
•    There is no harm in skipping this “High Risk/Low Return” at par bet.

PREFACE:
The company is coming out with its RI to mobilize Rs. 48.20 cr., and is opening for subscription on June 12, 2025, and its offer document is dated June 03, 2025, with a record date was of June 04, 2025, but the offer document was not uploaded on the designated exchange till noon of June 11, 2025. Thus, delayed submission of offer documents for RI is unabatedly going on.

ABOUT COMPANY:
Franklin Industries Ltd. (FIL) is engaged in the business of trading of agricultural commodities such as wheat, rice, maize, vegetables including capsicum, tomato etc., and fruits including mango, watermelon, grapes and other agricultural products. The company is engaged in contract manufacturing for agricultural products. Along with that the company is also engaged in the wholesaling and supplying of the gold and silver.

FIL sources the agricultural products from the manufacturers by paying an advance payment or as per agreed terms and then these products are sold to its network of distributors. Owing to its presence in the market, the company has built strong relationships with both the farmers as well as with the wholesaler/retailers ‘community. 

In contract manufacturing, it leases an agricultural land on lease and cultivate various crops for meeting the demand in the market. This gives the company control over the entire process and getting the agricultural produces at better rates as compared to the market. A part of the yield is shared with the farmers working on contractual basis on the leased land, which further helps the local farmers ‘community.

Company is currently operating primarily on a B2B business Model in trading of commodity like gold. As it is currently operating under a B2B business Model, it focuses on operations relating to quality control, inventory management and business development. It is operating in a highly competitive and fragmented segment. As of the date of this offer document, it had just 7 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 482000000 equity shares of Re. 1 each at par value to mobilize Rs. 48.20 cr. This is the 2nd RI from the company since May 2024. The RI is opening for subscription on June 12, 2025, and will close on June 30, 2025. The company is offering RI in the ratio of 5 for 3 to its eligible stakeholders as of the record date of June 04, 2025. The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on BSE and CSE. The company is spending Rs. 0.30 cr. for this RI process, and from the net proceeds, it will utilize Rs. 37.36 cr. for working capital, and Rs. 10.54 cr. for general corporate purposes. 

The RI is self-managed by the company itself, and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. 

Post RI, company’s current paid-up equity capital of Rs. 28.92 cr. will stand enhanced to Rs. 77.12 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 77.12 cr. Quantum jump in its post-RI paid-up capital may have its servicing issue. There is a garble in capital structure page data of the offer document.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total revenue/ net profit of Rs. 20.52 cr. / Rs. 0.21 cr. (FY23), Rs. 50.96 cr. / Rs. 10.46 cr. (FY24).  For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 10.84 cr. on a total income of Rs. 83.88 cr. Boosted top and bottom lines from FY24 onwards raise eyebrows and concern over its sustainability. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. 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: 540190 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 1.95 on June 03, 2025, and opened on an ex-right basis at Rs. 1.49 on June 04, 2025. Since then, it has marked a high/low of Rs. 1.97 / Rs. 1.43. The scrip last closed at Rs. 1.70 as of June 11, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 2.37 / Rs. 1.17. The counter is currently under ASM ST: Stage 1.

The promoters’ holding has been constant around 0.00% for the last two quarters ended with March 31, 2025. The counter is well managed above the par value to lure investors.