Mercury Trade RI review - (Avoid)

•    The company is simply in trading business and till FY23 had posted listless performances.
•    The counter is dormant since February 2021 and the last trade was at Rs. 3.10 per share.
•    The asking price is exorbitant and financial performance for H1-FY24 has no match. 
•    Simply stay away from such offers.

ABOUT COMPANY:
Mercury Trade Links Ltd. (MTLL) is engaged in the business of trading the of agricultural commodities such as wheat, rice, maize, vegetables including capsicum, onion, tomato, potato etc. and other agricultural products. The company 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. 

Main objects of the company have shifted from aiming to sellers, traders, merchants, importers, exporters, brokers, agents, investors, Stockists, distributors, and dealers of and in all kinds of Engineering, agricultural, produces, food articles, forest products, paper products, minerals, metals, gold, silver, platinum, industrial and other wastes spare parts and accessories commercial natural and manmade fibres glass fibers, and glass fibre products textiles of all kinds all types of yarn and yarn products, Jute and Jute products cement, chemicals, building materials, vehicles, vehicle, parts, automobile parts, machine parts, industrial components plastics and electronic parts & devices bullion, precious stones, work of art antique, curios, Jewellery and ornaments to carry on in India or elsewhere the business to manufacture, buy, sell, import, export, develop, process, market, supply and to act as agent, distributor, Stockists, wholesales, dealers, retailer or marketers or otherwise to deal in all types, tastes, uses, descriptions of agro products, such as fertilizers, manures, plant or animal foods, pesticides, including insecticides, herbicides or weedicides and fungicides and all types of rice, maize, milo, seeds, cotton seeds, soya beans, ground nuts, castors, linseeds, sunflower, coconut, rapeseed, almond, sesame, mustard, sea seed, grapeseed and to carry on all activities to develop Agriculture and forest resources based industrial and also plant grow, cultivate, product and raise plantations of various agriculture corps, forest and other plantation, horticultural crops, Green house, net house, medical and aromatic plants in their own farms and /or taken on lease and to carry on the business as manufacture, importer and exporter, whole seller, retailer and dealers of all type of agricultural and other commodities. Thus it has shifted its focus and model of business.

As of the date of this offer document, it had 7 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 2475000 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 9.90 cr. The issue opens for subscription on March 11, 2024, and will close on March 21, 2024. The company is offering RI in the ratio of 10 for 1 to its eligible stakeholders as of the record date of March 01, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.16 cr. for this RI process, and from the net proceeds, it will utilize Rs. 7.40 cr. for working capital, and Rs. 2.34 cr. for general corporate purposes.

The issue is self-managed by the company and Link Intime India Pvt. Ltd. is the registrar of the issue. Universal Capital Securities Pvt. Ltd. is the RTA for the company. 

Post-RI, company's current paid-up equity capital of Rs. 0.25 cr. will stand enhanced to Rs.2.72 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 10.89 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total revenue/net profit/ -(loss) of Rs. 0.03 cr. / Rs. - (0.10) cr. (FY22), and Rs. 0.48 cr. / Rs. 0.01 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 0.64 cr. on a total revenue of Rs.6.73 cr. Thus the sudden boost is marked in current fiscals so far, which raise eyebrows and concern over its sustainability. 

DIVIDEND POLICY:
The company has not declared any dividends for any years so far. 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: 512415 (FV Rs. 10).
There are no trades for this counter since February 25, 2021 and the last quote was Rs. 3.10 as of the said date. It's really surprising that how their offer documents got clearances from concerned authorities and that to at a fancy price of Rs. 40 per share. It appears to be a best example of mockery of the markets. The counter posted 52 weeks' high/low of Rs. 3.10/ Rs. 3.10. 

The promoters' holding of 8.08% as of June 30, 2023 had become 0% in the last two quarters ended at December 31, 2023. The counter is dormant since February 2021.