Satyam Silk RI review - (Avoid)

•    The company that was originally incorporated for the textile business is now a realty company.
•    For FY22 it has posted other income from the sale of property with commensurate profits.
•    Low promoter holding is a major concern. 
•    Scrip is not traded on BSE since July 2005 but is coming out with this RI.
•    There is no harm in skipping this fishy RI offer. 

ABOUT COMPANY:
Satyam Silk Mills Ltd. (SSML) originally incorporated for doing textile-related business is currently engaged in the business of real estate renting. Thus it has nothing to do with the textile segment as expressed in its name.

ISSUE DETAILS: 
To part finance its needs for incremental working capital (Rs. 2.72 cr.) and general corporate purposes (Rs. 0.70 cr.), SSML is coming out with at par rights issue of 3675000 equity shares of Rs. 10 each to mobilize Rs. 3.68 cr. The company is offering 5 shares for every 1 share held as of the record date of June 06, 2022. The RI opens for subscription on June 16, 2022, and will close on July 01, 2022. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE. SSML is spending Rs. 0.26 cr. for this RI process. 

The issue is self-managed by the company while Link Intime India Pvt. Ltd. is the registrar to the issue. 

Post RI, SSML's current paid-up equity capital of Rs. 0.74 cr. will stand enhanced to Rs. 4.41 cr. Based on RI pricing, the company is looking for a market cap of Rs. 4.41 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, SSML has posted a turnover/net profit (loss) of Rs. 0.06 cr. / Rs. - (0.29) cr. (FY20), Rs. 0.03 cr. / Rs. - (0.33) cr. (FY21) and Rs. 8.40 cr. / Rs. 6.83 cr. (FY22). For FY22 it has shown other income of Rs. 8.40 cr. (including Rs. 8.11 cr. profit from the sale of the property) while income from operation was NIL. 

DIVIDEND POLICY: 
The company has not declared any dividend since 2002. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 503893:
The scrip is not traded since July 2007 and its last quote is Rs. 3.80 as of July 04, 2005. Since then it has marked high/low of Rs. 3.48 / Rs. 3.48. The scrip last closed at Rs. 3.48 as of July 04, 2005. Based on this quote, its post-RI market cap stands at Rs. 1.54 cr. The scrip has posted the last 52 weeks high/low of Rs. 3.48 / Rs. 3.48 as it is not traded since July 2005. Promoters holding is at 30.37% for the last three quarters. It is really surprising how this company is permitted to float its rights issue when it has had no trades since July 2005.