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Vikas Lifecare RI review (Avoid)

Vikas Lifecare Limited Logo

•    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. 


Conclusion / Investment Strategy

The company has been shifting its focus to non-related areas and raising funds from the market. Its declining promoters’ holding raises eyebrows. Second RI within a year also raises concerns. The company has changed its registrar for this RI and has altogether skipped the Lead Manager’s mandate. According to market sources, this is an operator based counter. Only risk seekers may consider investment, others can just avoid it.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Nov 9, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

More Vikas Lifecare Limited RI Views / Analysis / Recommendations ...

The Vikas Lifecare Limited Rights Issue Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Vikas Lifecare Limited Rights Issue worth investing. The Vikas Lifecare Limited Rights Issue Note sets the Rights Issue expectations in systematic way which tells you if Vikas Lifecare Limited Rights Issue good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Vikas Lifecare Limited Rights Issue by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


4 Comments

4. sanjay bhojraj chute  Dec 2, 2021 12:52:33 AM I Like It. | Report Abuse Reply
Hello, I had applied Vikas life care RE shares @1.10 total 5400 shares. Now already amount deducted and still waiting for the shares in my portfolio.
Please let me know when the RI shares will be deposit in my portfolio.
3. GAJENDHRAN  Nov 26, 2021 10:46:32 AM I Like It. | Report Abuse Reply
I purchase Vlife re share 20000 18-11-2021 but not show the axis direct app vlife re share open date pls
2. GAJENDHRAN  Nov 26, 2021 10:45:15 AM I Like It. | Report Abuse Reply

I purchase Vlife re share 20000 18-11-2021 but not show the axis direct app
1. Mahendra Kumar tiwari  Nov 23, 2021 3:15:13 PM I Like It. | Report Abuse Reply
Sir mera vikas likas life re.1 ka ka 4700 share hai apply nhi ho pa raha hai kal last date mai kya kru please help me