Virtualsoft (Kati Patang LIfe) BSE RI review - (Avoid)

•    The company is currently engaged in serving draft beer based on third party supply.
•    The company does not have its own manufacturing unit.
•    It posted erratic financial performance with losses for reported periods.
•    Considering losses, the RI appears aggressively priced at a negative P/E.
•    It is operating in a highly competitive and fragmented segment.
•    There is no harm in skipping this “High Risk/Low Return” pricey bet.

ABOUT COMPANY:
Virtualsoft Systems Ltd. (VSL) now known as Kati Patang Lifestyle Ltd. (KPLL) is missing its business data in the offer document in the usual format. As mentioned on page no. 18 of the offer document, the Company was in the business of Broadband, Virtual Event & providing Mobile Roaming Servicing & Solutions till FY 2024, which it was operating primarily through its subsidiary M/s Roam 1 Telecom Ltd (“Roam 1”). However, due to fast changes in technologies and market developments, this business was suffering, resulting in depleted revenues and operating assets. 

The Company decided to divest from its mobile roaming services business through sale of its holdings in its subsidiary M/s Roam 1 Telecom Ltd vide its Board Meeting dated June 25, 2024. Further, the Company decided to make a shift and enter into alcoholic spirits and associated lifestyle business, and vide its Board Meeting dated June 25, 2024, decided to acquire 100% holding in M/s Empyrean Spirits Private Limited, (“ESPL”), a Private limited company incorporated under the Companies Act, 2013 (CIN: U15549DL2017PTC313380) and having its registered office at present at 504, Savitri Cinema Complex, Greater Kailash-2, New Delhi-110048. ESPL operates under the brand name of “Kati Patang” and is an Indian craft beer brand that brews in traditional style with a flavoring twist. Post completion of above-mentioned divestment from “Roam 1” and acquisition of “ESPL” the Company shifted from Roaming Services business to alcoholic spirit business. In continuation of this shift of operations the Company changed its name w.e.f. December 24, 2024, from M/s Virtualsoft Systems Ltd. to M/s Kati Patang Lifestyle Limited.

Kati Patang Lifestyle Ltd, the holding company operates its business through subsidiary ESPL which deals mainly in craft beer & other alcoholic beverages & other lifestyle products. The company operates under the brand name “Kati Patang” wherein it manufactures beers with different Indian flavors. As on date it does not have any of own manufacturing facility and gets it done through contact manufacturing. As of the date of this offer document, it had 30 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 10256651 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 20.51 cr. The RI is opening for subscription on July 17, 2025, and will close on July 25, 2025. The company is offering RI in the ratio of 2 for 7 to its eligible stakeholders as of the record date of Jully 10, 2025. 

The company is asking for Rs. 10 per share on application for number of shares applied, and the balance by final call as determined by it from time to time. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.40 cr. for this RI process, and from the net proceeds, it will utilize Rs. Rs. 13.10 cr. for working capital, and Rs. 7.01 cr. for general corporate purposes and funding unidentified acquisitions and investments. In the issue expenses table given on page no. 54 of the offer document, it amounts to Rs. 0.80 cr. expenses. But estimated total shows only Rs. 0.14 cr. This needs clarification.

The RI is self-managed by the company itself, and MAS Services Ltd. is the registrar to the issue. Corporate Professionals (India) Pvt. Ltd. is the advisors to the company.

Post RI, company’s current paid-up equity capital of Rs. 35.90 cr. will stand enhanced to Rs. 46.15 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 92.31 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has posted a total revenue/ net profit/ - (loss), of Rs. Rs. 3.59 cr.  / Rs. – (4.15) cr. (FY23), Rs. 5.14 cr. / Rs. – (2.41) cr.  (FY24), Rs. 18.37 cr. / Rs. – (4.80) cr. (FY25). Its NAV stood at Rs. 3.48 per share as of March 31, 2025. The company reported losses for all these years, and that remains major concern.

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 531126 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 24.19 on July 09, 2025, and opened on an ex-right basis at Rs. 22.12 on July 10, 2025. Since then, it has marked a high/low of Rs. 24.00 / Rs. 21.42. The scrip last closed at Rs. 22.35 as of July 16, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 41.54 / Rs. 5.88. The counter is currently under ESM: Stage 1.

The promoters’ holding has been constant around 49.06% for the last three quarters ended with March 31, 2025. The counter is currently trading just above the RI price to tempt the investors.