Himalaya Food RI review - (Avoid)

•    The company is engaged in the production and marketing of products like Mushrooms, French Fries, Fried and Frozen Potato products, Indian Sweets and snacks.
•    It was classified as NPA in Marcy 2018.19, and got OTS approval in April 2025.
•    It is a liability of Rs. 43 cr. with a consortium of banks and has to clear the same by September 30, 2025.
•    It posted mega loss for FY23 and some profits for FY24. However, its FY25 financial data is missing from offer document.
•    Let the dust settle and slate turned clear, till then, it’s a risky bet.
•    There is no harm in skipping this “High Risk/Low Return” pricey bet.

PREFACE:
The company is coming out with its RI to mobilize Rs. 39.93 cr., and is opening for subscription on June 03, 2025, and its offer document is dated May 15, 2025, with a record date was of May 23, 2025, but the offer document was missing on the designated exchange till June 02, 2025 noon. Thus, delayed submission of offer documents for RI is unabatedly going on.

ABOUT COMPANY:
Himalaya Food International Ltd. (HFIL) is engaged in the production of different range of products, including mushrooms, French fries, fried and frozen potato products, appetizers, canned mushrooms, as well as Indian sweets and snacks. Its primary market is North America, where the company supplies its products through promoter group company, Himalaya International Inc. (doing business as Global Food Trade) based in Cheyenne, Wyoming, USA. In the domestic Indian market, it offers fresh and canned mushrooms. HFIL has been one of the leading Mushroom Grower and processor in the country.

Currently, Company production lines for Mushrooms, French Fries, Baked Potato skins, Hash Browns & Burger Patties, Garlic Toast, French Toast sticks, Indian sweets & samosas. Its products are manufactured at its facilities located in Vad Nagar Gujarat, and Paonta Sahib Himachal Pradesh. The Vad Nagar facility is equipped with advanced technology to grow and process mushrooms, with a capacity of 30 metric tons per day, which can be expanded to 50 metric tons through automation upgrades. This facility features 180,000 square feet of insulated growing houses, ensuring year-round production. The strategic location of the Vad Nagar plant offers logistical advantages, being close to shipping ports and agricultural regions that provide essential raw materials. 

Its French Fry facility which was heavily destroyed by Fire in May 22, it has replaced it with a new facility of 54000 mtpa which will be operational by October 2025. This unit will cater to global demands. 

The consortium of banks classified it as NPA in FY2018-29, but with a OTS arrangements arrived, the company is now gearing to clear some dues partly with the incoming funds, and clear the entire outstanding by September 30, 2025.  As of the date of this offer document, it had 41 employees on its payroll and it also hires contract workers as and when needed.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 28936442 equity shares of Rs. 10 each at a fixed price of Rs. 13.80 per share to mobilize Rs. 39.93 cr. The RI is opening for subscription on June 03, 2025, and will close on June 18, 2025. The company is offering RI in the ratio of 1 for 2 to its eligible stakeholders as of the record date of May 23, 2025. The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.62 cr. for this RI process, and from the net proceeds, it will utilize Rs. 20.00 cr. for partial payment of one-time settlement to banks, Rs. 15.00 cr. for conversion of loan from promoters., and Rs. 4.31 cr. for general corporate purposes. 

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

Post RI, company’s current paid-up equity capital of Rs. 57.87 cr. will stand enhanced to Rs. 86.81 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 119.80 cr. Post-RI, higher equity base may pose its servicing issue.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has (on a consolidated basis) posted a total income/ net profit/ - (loss) of Rs. 97.51 cr. / Rs. – (24.20) cr. (FY23), Rs. 47.25 cr. / Rs. 4.90 cr. (FY24).  As per BSE filing, for FY25, it earned a net profit of Rs. 3.90 cr. on a total income of Rs. 40.74 cr. For the last two fiscals, it top and bottom lines has reported de-growth. However, its FY25 financial data is missing from the offer document.

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: 526899(FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 18.21 on May 22, 2025, and opened on an ex-right basis at Rs. 16.51 on May 23, 2025. Since then, it has marked a high/low of Rs. 17.80 / Rs. 15.75. The scrip last closed at Rs. 16.52 as of June 02, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 25.68 / Rs. 9.29. The counter is currently under ESM: Stage -1.

The promoters’ holding has been around 46.35% for the last quarters ended with March 31, 2025, against 46.32% for quarter ended December 31, 2024. The counter is well managed above the RI price to tempt investors.