Shree Rama Multi RI review - (May apply)

•    SRML is engaged in providing primary packaging solutions to the FMCG segment.
•    It has posted inconsistent top and bottom lines for the reported periods.
•    For FY23 it has posted improved performance. 
•    Well-informed/cash surplus investors may park funds for long-term rewards.

ABOUT COMPANY:
Shree Rama Multi-Tech Ltd. (SRML) is an ISO 9001:2015, ISO 15378:2017 and DMF-type III certified Company engaged in providing primary packaging solutions. It currently manufactures a wide and diverse range of packaging products such as laminated tubes ("Lami Tubes"), tube laminates and flexible laminates. Its products are primarily used for oral care, pharmaceuticals, cosmetics and fast-moving consumer goods (FMCG) sectors. 

SRML's products are available in different sizes, diameters and circular shapes as per the specifications of customers. Its manufacturing facility is located in Moti Bhoyan, Dist. Gandhinagar, Gujarat and has installed capacity to manufacture Lami Tubes of 9,574 Lakhs Nos. per annum and laminates (tube & flexible) of 15,000 metric tons per annum. Its manufacturing facility is a fully integrated facility with processes starting from plastic granules to films, laminates, printing, injection moulding and Lami Tube, as required, equipping it to manage products from the stages of design to dispatch. This fully integrated environment and well-defined processes provide it with competitive advantages in terms of maintenance of quality. 

It sells products to customers situated in India as well as overseas. Its customer base is spread across various markets which include Belarus, Bulgaria, Indonesia, Nepal, Saudi Arabia, Singapore, Switzerland, Shri Lanka, Slovenia, Tanzania, Tunisia, UAE, USA etc. SRML's customers majorly consist of medium and large-scale manufacturers of oral care, pharmaceuticals, cosmetics and FMCG products. During the nine months ended December 31, 2022, Fiscal 2022 and Fiscal 2021 its exports were 26.99%, 20.23%, and 26.08% of its total revenue respectively. As of March 31, 2023, it had 350 employees on its payroll and employ additional contract labours as and when required. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 70000000 equity shares of Rs. 5 each at a fixed price of Rs. 9 per share to mobilize Rs. 63.00 cr. The issue opens for subscription on June 12, 2023, and will close on June 26, 2023. The full amount is to be paid along with the application for the number of shares applied. It is offering RI in the ratio of 11 shares for 10 shares held as of the record date of May 30, 2023, to the eligible stakeholders. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 1.08 cr. for this RI process and from the net proceeds, it will utilize Rs. 61.72 cr. for repayment of certain borrowings, and Rs. 0.20 cr. for general corporate purposes. 

Vivro Financial Services Pvt. Ltd. is the sole lead manager and KFin Technologies Ltd. is the registrar of the issue. 

Post-RI, SRML's current paid-up equity capital of Rs. 31.73 cr. will stand enhanced to Rs. 66.73 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 120.12 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, SRML has posted a turnover/net profit -(loss) of Rs. 136.00 cr. / Rs. 3.43 cr. (FY21), Rs. 150.74 cr. / Rs. - (4.92) cr. (FY22).
For 9M of FY 23 ended on December 31, 2022, it earned a net profit of Rs. 1.26 cr. on a turnover of Rs. 149.24 cr. 

As per the exchange filing, it has posted a turnover of Rs. 196.26 cr. with a net profit of Rs. 5.04 cr. (on an unaudited basis) for FY23. 

DIVIDEND POLICY:
The company last paid a dividend for FY2001 and thereafter it skipped. 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: 532310 (FV Rs. 5).
The scrip last closed on cum-right basis at Rs. 11.80 on May 29, 2023, and opened on an ex-right basis at Rs. 11.51 on May 30, 2023. Since then, it has marked a high/low of Rs. 11.55 / Rs. 9.87. The scrip last closed at Rs. 10.91 as of June 09, 2023. For the last 52 weeks, it has posted a high/low of Rs. 15.94 / Rs. 7.27. The promoters' holding has been constant at 42.51% for the last three quarters ended on March 31, 2023. The counter is well managed above the RI value to lure investors.