Vikas Lifecare RI review - (Avoid)

•    This is the second rights issue from the company after May/June 2021.
•    Previous issue was for Rs. 49.10 cr. at Rs. 1.85 per share.
•    This time the issue size is the same but the asking price is higher.
•    Skipping role for Lead Manager and shift for registrar too raised eyebrows.
•    Promoters' holding has declined to just 

PREFACE: 
The offer documents from the company have unclear pages on financial data as the attached documents are blurred. For May 2021 RI the company appointed Mark Corporate Advisors Pvt. Ltd. as the lead manager while its registrars were Alankit Assignments Ltd. For the current RI, VLL has removed LM and appointed another registrar. However, for both RIs the overall size remains almost the same, but the asking price is hiked by Rs. 0.95 per share. Promoters' holding which was at 20.09% as of June 30, 2021, declined to 14.81% as of September 30, 2021. 

ABOUT COMPANY:
Vikas Lifecare Ltd. (VLL) (erstwhile known as Vikas Multicorp Ltd.) is principally engaged in the business of' Recycling Plastic Waste (Recycling Materials) and trading of Polymer Compounds. Until 2019, the business of the Company was engaged in the trading of various Polymer Compounds such as Ethylene-vinyl acetate (EVA Compounds), Polyvinylchloride resins (PVC resins), chlorinated Parrafin, Polyethylene Compound (PE Compounds) and Thermoplastic Rubber Compounds (TPR Compounds). 

However, subsequent to the acquisition of 'Recycled and Trading Compounds Division' of group concern 'Vikas Ecotech Limited' under the scheme of arrangement approved by National Company Law Tribunal, Principal Bench, New Delhi, it also started manufacturing Polymer Compounds such as PE Compound, Polyvinyl Chloride Compound (PVC Compounds), V blend SOE Compound, Polypropylene Compounds (PP granules), TPR Compounds from FY 2019-20 onwards.

During 2020-2021, VLL initiated trading in raw and finished cashew nuts and trading of rice to pursue one of its business strategies to venture and expand into the FMCG industry.

In the year 2021, the Company has ventured into other infra products businesses and has started trading of food-grade piping systems for drinking water under the Jal Jeevan Mission initiated by the Department of Drinking Water & Sanitation, Ministry of Jal Shakti, Government of India and also initiated trading of steel pipes, steel pipes fittings and bars. 

Despite so many diverse activities, its total headcount on payroll was 20 as of September 30, 2021.

ISSUE DETAILS:
The company is coming out with its second rights issue post-May 2021. It will be issuing 176932132 equity shares of Re. 1 each at a fixed price of Rs. 2.80 per share to mobilize Rs. 49.54 cr. The issue opens for subscription on November 10, 2021, and will close on November 24, 2021. Post allotment, shares will be listed on BSE and NSE.  Applicants will have to pay Rs. 1.10 per share on application and the balance Rs. 1.70 on calls by the company. VLL is spending Rs. 0.79 cr. for this RI process. From the residual portion, Rs. 7.50 will be adjusted for unsecured loans from the promoters and the balance of Rs. 41.25 cr., Rs. 9.00 cr. will be utilized on Capex for land acquisition for Agro product division, Rs. 20.00 cr. for working capital and Rs. 12.25 cr. for general corporate purposes. Thus it is collecting over Rs. 32 cr. for grey areas. 

The company is issuing RI in the ratio of 4 shares for every 21 shares held on the record date i.e. as of November 01, 2021. 

The issue is managed by the company and Hexaxis Advisors Ltd. is the advisors to the issue, while Bigshare Services Pvt. Ltd. is the registrar.

Post RI, VLL's current paid-up equity capital of Rs. 92.89 cr. will stand enhanced to Rs. 110.58 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 309.63 cr. 

FINANCIAL PERFORMANCE: 
On a consolidated basis, VLL has posted a turnover of Rs. 84.17 cr. with a loss of Rs. - (3.50) cr. for FY21. For the first half of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 2.83 cr. on a turnover of Rs. 97.10 cr. Thus it has shown improvement in its working for the reported periods. 

SCRIP PERFORMANCE: (As per BSE website) (Scrip code: 542655)
VLL closed cum-rights at Rs. 3.75 on October 28, 2021, and opened ex-right at Rs. 3.52 on October 29, 2021. Since then it has posted a high/low of Rs. 3.74. / Rs. 3.36 and closed at Rs. 3.43 per share on November 09, 2021. Based on its last traded price, the market cap on post RI amounts to Rs. 379 cr. The scrip has marked the last 52 weeks' high/low of Rs. 9.34. / Rs. 2.25.