Saboo Sodium RI review - (Avoid)

•    SSCL is in the business of salt refinery, power generation and resort (hospitality).
•    It has perhaps diversified in non-related business. 
•    Its financial data is non-impressive.
•    Declining promoter's holding raises concern.
•    There is no harm in skipping this at par RI.

ABOUT COMPANY:
Saboo Sodium Chloro Ltd. (SSCL) was primarily incorporated to set up North India's first and the largest fully integrated salt refinery with a capacity of 1 LTPA. Currently, SSCL is engaged in the manufacturing of Iodized salt, solar power generation and operating resort. 

It is marketing its salt under three brands i.e. Surya Salt, Saboo Salt and Tota Salt. It is also manufacturing industrial salt used by textile, cattle feed and other industries. Its resort is operated near Jaipur under the name and style "Samskara Resort & SPA" having 50 rooms capacity. Currently, it has 19 employees on its payroll. 

ISSUE DETAILS:
To part finance its need for working capital (Rs. 17.12 cr.) and general corporate purposes (Rs. 0.35 cr.), SSCL is offering rights issue (RI) of 17895050 equity shares of Rs. 10 each at par to mobilize Rs. 17.90 cr. It is offering RI in the ratio of 74 for 100 to shareholders registered with it on the record date of June 16, 2022. The issue opens for subscription on June 27, 2022, and will close on July 26, 2022. Post allotment, shares will be listed on BSE. Rs. 2.50 per share is to be paid on application and the balance on one or more calls from the company from time to time. SSCL is spending Rs. 0.43 cr. for this RI process.

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

Post RI, SSCL's current paid-up equity capital of Rs. 24.18 cr. will stand enhanced to Rs. 42.08 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 42.08 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, SSCL has posted a turnover/net profit (loss) of Rs. 29.00 cr. / Rs. 0.11 cr. (FY20), Rs. 30.76 cr. / Rs. - (0.69) cr. (FY21) and Rs. 79.28 cr. / Rs. 0.02 cr. (FY22). While it has posted inconsistency in its financial performance, the super top line with minuscule profit for FY22 is perhaps to tempt investors for RI support. 

DIVIDEND POLICY:
The offer document is silent on the Dividend policy. I presume it will adopt a prudent dividend policy post listing of RI based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 530461:
The scrip last closed on cum-right basis at Rs. 22.70 on June 14, 2022, and opened on an ex-rights basis at Rs. 16.95 on June 15, 2022. Since then it has marked high/low of Rs. 17.30 / Rs. 13.45. The scrip last closed at Rs. 14.70 as of June 17, 2022. Based on this quote, its post-RI market cap stands at Rs. 61.85 cr. The scrip has posted the last 52 weeks high/low of Rs. 24.23 / Rs. 5.81. Promoters' holding is down at 45.67% for March 22 quarter against 55.51% for September 21 quarter. The counter is well operated around RI timings despite poor liquidity as the counter is thinly traded.