Suraj Ind. RI review - (May apply)

•    The company is engaged in trading of agri products, oil etc. and has also ventured in to manufacturing and marketing of IMFL.
•    It marked inconsistency in its top and bottom lines for the reported periods.
•    Sharp decline in its bottom line for FY24 raises concern.
•    Well-informed investors may park moderate fund for medium term. 

ABOUT COMPANY:
Suraj Industries Ltd. (SIL) is into the business of (i) trading edible oils and other products, which consist Palm Oil, Soybean Oil, Rice flakes, Malt & Empty Glass bottles and (ii) processing and bottling of Liquor. During the year 2021, the Company ventured into Liquor business through acquisition of a running Bottling Plant at Ajmer, Rajasthan. Presently, the Company is manufacturing Rajasthan Made Liquor (RML) for Rajasthan State Ganganagar Sugar Mills Limited (RSGSM), a Government of Rajasthan undertaking having exclusive wholesale rights for Country Liquor and RML in the State of Rajasthan.

Currently, the business line of the Company is divided into two parallels: 1. Trading of edible oils and other products, which consist Palm Oil, Soybean Oil, Rice flakes, Malt, Empty Glass bottles; and 2. Processing and Bottling of Liquor of Rajasthan Made Liquor (RML) for Rajasthan State Ganganagar Sugar Mills Limited (RSGSM), a Government of Rajasthan undertaking having exclusive wholesale rights for Country Liquor and RML in the State of Rajasthan. As of December 31, 2023, it had 35 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 2997375 equity shares of Rs. 10 each at a fixed price of Rs. 65 per share to mobilize Rs. 19.48 cr. The RI opens for subscription on July 2, 2024, and will close on August 05, 2024. The company is offering RI in the ratio of 7 for 30 to its eligible stakeholders as of the record date of July 10, 2024. The company is asking for 50% (i.e. Rs. 32.50 per share) on application and the rest by one or more calls at the discretion of the company from time to time. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.30 cr. for this RI process, and from the net proceeds, it will utilize Rs. 7.50 cr. for repayment/prepayment of certain unsecured loans, Rs. 7.50 cr. for granting loan to its subsidiary Carya Chemicals & Fertilizers Pvt. Ltd., and Rs. 4.18 cr. for general corporate purposes. 

This RI is self-managed by the company itself, and Beetal Financial & Computer Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 12.85 cr. will stand enhanced to Rs. 15.84 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 102.98 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 41.29 cr. / Rs. 3.07 cr. (FY22), Rs. 68.23 cr. / Rs. 4.77 cr. (FY23), and Rs. 51.77 cr. / Rs. 1.55 cr. (FY24).

DIVIDEND POLICY:
The company has not declared any dividends since 2001. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. The offer document is silent on its dividend policy. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 526211 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 111.15 on July 09, 2024, and opened on an ex-right basis at Rs. 104.90 on July 10, 2024. Since then, it has marked a high/low of Rs. 105.00 / Rs. 89.51. The scrip last closed at Rs. 94.35 as of July 18, 2024. For the last 52 weeks' it has posted a high/low of Rs. 136.12 / Rs. 62.72. 

The promoters' holding has been constant at 53.32% for the last two quarters ended with March 31, 2024. The counter is well managed above the RI price to lure investors.