LA TIM Metal RI review - (May apply)

•    LMIL is engaged in the manufacturing of pre-painted iron, steel and cold roll sheets.
•    It suffered heavy setback for FY23 with declined top line and huge loss. 
•    It marked turnaround for H1-FY24 and is back on track.
•    Well-informed investors may park funds for the long term rewards.

ABOUT COMPANY:
LA TIME Metals and Industries Ltd. (LMIL) erstwhile known as Drillco Metal Carbides Ltd., is in the manufacturing sector, specializing in the production of pre-painted galvanized iron steel, pre-painted galvalume steel, and pre-painted cold roll sheets. An innovative stride in this journey is the unveiling of a series of designer coated steel coils meticulously crafted at its advanced Colour Coating Plant situated in Umargam, Gujarat. 

At La Tim, it takes pride in offering a range of products that encompasses a broad spectrum, ensuring a comprehensive solution for diverse customer needs. This commitment is complemented by its streamlined processes that enable swift and efficient delivery to meet customer timelines. One of the cornerstones of LMIL's offerings is the exceptional corrosion resistance embedded within products. This attribute significantly enhances the longevity and reliability of products, setting them apart in terms of enduring quality. Its products are meticulously designed to provide a prolonged lifespan, thereby delivering sustained value to clients.

Its devotion to superior performance extends to rigorous quality testing. La Tim's commitment to quality is exemplified through a meticulous testing regimen for its Colour Coated Coils. The raw materials used in crafting these coils undergo rigorous assessments, including tests for hardness, heat resistance, and flexibility.

LMIL's production process leverages advanced paint technology. It involves a meticulous sequence, beginning with a cold-rolled steel sheet, followed by AI-Zinc Coating, pre-treatment Chromate Coating, Primer Coating, Top (Finish) Coating, and an optional Guard Film. This ensures not only an appealing finish but also a robust foundation for enduring performance.

In accordance with the NCLT order dated 4th August 2023, La Tim Sourcing (India) Private Limited has successfully merged with La Tim Metal and Industries Limited. This strategic merger aims to boost operational efficiency, capitalize on economies of scale, optimize cash flow, expand the asset base, unlock growth opportunities, and maximize shareholder value. The consolidation will eliminate inter-corporate dependencies, reduce overheads (administrative, managerial, and other costs), rationalize operations, improve organizational efficiency, and optimize resource utilization by eliminating unnecessary duplications and related expenses. Its manufacturing process is centralized, equipped with a color-coated line boasting a robust monthly capacity of 90,000 tonnes. As of August 25, 2023, it had 66 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with Rights Issue (RI) of 44157150 equity shares of Re. 1 each at a fixed price of Rs. 8.50 per share to mobilize Rs. 37.53 cr. The issue opens for subscription on January 10, 2024 and will close on January 29, 2024. The company is offering RI in the ratio of 1 for 2 to eligible stakeholders as of the record date of January 02, 2024. The company is asking payment of 50% (i.e. Rs. 4.25 per share) money on application for the number of shares applied and the rest by one or more subsequent calls as determined by the company from time to time. Post allotment, shares will be listed on BSE. LMIL is spending Rs. 0.83 cr. for this RI process and from the net surplus, it will utilize Rs. 36.17 cr. for working capital, and Rs. 0.53 cr. for general corporate purposes.

This RI is self-managed by the company and Skyline Financial Services Pvt. Ltd. is the registrar of the issue. NNM NextGen Advisory Pvt. Ltd. is the advisor to the issue. 

Post RI, company's current paid-up equity capital of Rs. 8.83 cr. will stand enhanced to Rs. 13.25 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 112.60 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total income/net profit/- (loss) of Rs. 569.76 cr. / Rs. 17.98 cr. (FY22), Rs.  273.32 cr. / Rs. - (7.50) cr. The offer document is missing current fiscal performance data. However, as per the exchange filing, as per unaudited results, the company has posted a net profit of Rs. 2.62 cr. on a total income of Rs. 183.41 cr. for the H1 of FY24 ended on September 30, 2023. Thus after a severe setback for FY23, it has turned the corner as indicated by H1 of FY24 performance. 

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. It last paid a dividend of 5% in September 21 (Final) as well as in August 21 (interim). Thereafter it skipped.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 505693 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 21.68 on January 01, 2024, and opened on an ex-right basis at Rs. 17.00 on January 02, 2024. Since then, it has marked a high/low of Rs. 19.26 / Rs. 14.55. The scrip last closed at Rs. 18.35 as of January 09, 2024. For the last 52 weeks' it has posted a high/low of Rs. 19.26 / Rs. 4.30. The counter is currently under ASM ST: Stage 1. 

The promoters' holding has been constant at 62.43% for the last two quarters ended with Sept. 30, 2022. The counter is well managed above the par value to lure investors.