Sandur Manganese RI review - (Apply)

•    SMIOL is a private sector mining company producing iron ore.
•    It has a good financial track record except for FY21 (a pandemic year).
•    At par right issue is a "Mini Bonus" from this company.
•    A golden opportunity to grab shares at par value in a dividend-paying company.

ABOUT COMPANY: 
The Sandur Manganese & Iron Ores Ltd. (SMIOL) was incorporated with a vision to develop the manganese and iron ore mines in a scientific manner. Over the decades, the Company's operations have expanded to cover mining, and downstream facilities of ferroalloy, coke and energy. The Company believes in integrating across its value chain and consolidating its business, to ensure that the Company adds value in each stage and the operations are complementary to each other.

The Company is a private sector merchant miner and commodity producer with an operational track record spanning nearly seven decades. The cornerstone of its business still lies in environmentally friendly, systematic, safe and scientific mining. The Company believes it is one of the largest Manganese Ore miners in India. The Company is engaged in the mining of manganese and iron ores in the Deogiri village of Sandur taluk, Bellary District, Karnataka. The Company is also engaged in the manufacture of ferroalloys & coke.

At present, the Company's operations span over three business segments i.e., Mining (Manganese & Iron Ores), Ferroalloys and Coke & Energy. Together, these assets work in conjunction with each other to leverage the benefits of being an integrated Company in the metals and mining industry. As on 31 March 2022, the Company has 2288 permanent employees on the rolls and 852 on contracts.

ISSUE DETAILS:
To part finance its needs for investment in the proposed SPV - Renew Sandur Green Energy Pvt. Ltd. (Rs. 17.50 cr.), SMIOL is coming out with a right issue (RI) of 18003882 equity shares of Rs. 10 each at par value to mobilize Rs. 18.00 cr. The company is issuing RI in the ratio of 2 shares against 1 share held by the eligible stakeholders as of the record date i.e. July 27, 2022. The issue opens for subscription on August 08, 2022, and will close on August 29, 2022. The full amount is payable on the application. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.50 cr. for this RI process. 

The issue is solely lead managed by Finshore Management Services Ltd. and Venture Capital & Corporate Investments Pvt. Ltd. is the registrar to the issue.

Post RI, SMIOL's current paid-up equity capital of Rs. 9.00 cr. will stand enhanced to Rs. 27.01 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 27.01 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, SMIOL has posted turnover/net profits of Rs. 764.36 cr. / Rs. 153.93 cr. (FY21) and Rs. 2283.97 cr. / Rs. 675.11 cr. (FY22). 

As of March 31, 2022, its current paid-up equity capital of Rs. 9.00 cr. is supported by reserves worth Rs. 1650.00 cr. 

DIVIDEND POLICY:
The company is a dividend-paying company with the last dividend paid at 100% in September 2021. 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: 504918:
The scrip last closed on cum-right basis at Rs. 3116.65 on July 25, 2022, and opened on an ex-right basis at Rs. 1107.00 on July 26, 2022. Since then it has marked a high/low of Rs. 1232.00 / Rs. 990.00. The scrip last closed at Rs. 1019.45 as of August 04, 2022. Based on this quote, its post-RI market cap stands at Rs. 2753.11 cr. The scrip has posted the last 52 weeks high/low of Rs. 1700.13 / Rs. 519.59 (post adjustment of Ex-RI impact). Promoters holding is around 73.2% for last three quarters. The counter is operating well with the current quote above Rs. 1000 per share.