Onesource Industries RI BSE Issue review - (Avoid)

•    The company is engaged in the business of trading in seeds and other agri products.
•    It posted minuscule financial performance till FY24 and posted bumper numbers for 9M of FY25.
•    It is operating in a highly competitive and fragmented segment.
•    Over 16 times post-RI equity base may face its servicing issue.
•    There is no harm in skipping this at par RI as it is a “High Risk/Low Return” bet.

PREFACE:
OIVL’s Right Issue (RI) is opening on April 30, 2025, and its offer document is dated April 07, 2025, but it was made available on designated exchange only by late eve of April 28, 2025. Thus, late submission of offer document move is continuing unabatedly violating the compliances in that regard. This kind of attitude irks investors at large. 

ABOUT COMPANY:
OneSource Industries and Ventures Ltd. (OIVL) – erstwhile known as OneSource Ideas Venture Ltd. – operates in trading of Agricultural Commodities. The Company is broadly engaged in the primary business of trading of seeds, agricultural produces mainly Rice, Cereals and Pulses on verge of expansion of the existing business of the Company.

Agriculture is the primary sector of the economy. Apart from being the source of food, agricultural produce serves as the raw materials for several industries. Mainly Rice is an integral part of the Indian diet, serving as the staple food for the majority of the population. As the second-largest producer of rice globally, India plays a significant role in the world rice market. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, cotton, and sugar. Agriculture sector in India holds the record for second-largest agricultural land in the world generating employment for about half of the country’s population. 

Thus, farmers become an integral part of the sector to provide with means of sustenance. The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry. The Indian food processing industry accounts for 32% of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. Rice is the leading staple food crop cultivated across the country. It contributes to over 41 percent of India’s food grain production. Rice is the main staple cereal for almost two-thirds of India’s population. More than 4,000 rice varieties are grown across the country under varying agri-climatic conditions and catering to local consumer preferences. The offer document is silent on its employees’ strength.

ISSUE DETAILS:
The company is offering Rights Issue (RI) of 4889250000 equity shares of Rs. 1 each at par to mobilize Rs. 48.89 cr. The RI opens for subscription on April 30, 2025, and will close on May 21, 2025. The company is offering RI in the ratio of 159 for 10 to its eligible stakeholders as of record date of April 15, 2025. The company is asking full money on application for number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.35 cr. for this RI process, and from the net proceeds, it will utilize Rs. 47.00 cr. for working capital, and Rs. 1.54 cr. for general corporate purposes.   

This RI is self-managed by the company it-self, Skyline Financial Services Pvt. Ltd. is the registrar to the issue and Turnaround Corporate Advisors Pvt. Ltd. is the advisor to the issue. 

Post-RI, company’s current paid-up equity capital of Rs. 3.08 cr. will stand enhanced to Rs. 51.97 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 51.97 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company posted a total revenue/net profit of Rs. 0.39 cr. / Rs. 0.14 cr. (FY23), Rs. 8.34 cr. / Rs. 0.04 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 1.20 cr. on a total revenue of Rs. 51.98 cr. It posted boosted results for FY25, that raises eyebrows. It is operating in a highly competitive and fragmented segment.

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: 530805 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 9.24 on April 07, 2025, and opened on an ex-right basis at Rs. 1.42 on April 15, 2025. Since then, it has marked a high/low of Rs. 1.42 / Rs. 1.29. The scrip last closed at Rs. 1.29 as of April 28, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 2.42 / Rs. 0.85. The counter is currently under GSM: Stage 4 with restricted trades.

The promoters’ holding has reduced to 28.98% for the quarter ended March 31, 2025 against 65.00% fir quarter ended September 30, 2024, and that raises concern. The counter is well managed above the par value to lure investors.