VSF Proj. RI review - (Avoid)

•    The company kept entering into non-related segments since incorporation and has failed to reward its stakeholders. 
•    The company marked average minuscule financial performance. Its boosted bottom line for FY24 is due to exception income of Rs. 35.50 cr.
•    The counter is well operated above RI price by vested interests to temp investors.
•    Skip this risky bet which is aggressively priced. 

PREFACE:
This company is listed since 1993, but has not rewarded its stakeholders with any dividend payouts since incorporation. It kept changing its business model with no firm stand. Currently it is engaged in aqua culture, construction work and planning to enter in SEZ warehousing service. It posted minuscule performances till FY23 and posted bumper net with exception income of Rs. 35.50 cr. 

ABOUT COMPANY:
VSF Projects Ltd. (VPL) erstwhile known as Vijaya Shrimp Farms and Exports Ltd. was originally incorporated as cultivator of Black Tiger Variety (P. Monodon) aqua culture as an 100% EOU in 1993. Later on in 2005 it ventured into executing many civil works with Roads and Buildings, and worked with Karnataka State PWD. In 2011, it proposed setting up of a 350 MW supercritical thermal power plant, which could not take off and was ultimately shelved in 2016.

Now the company has proposed a Multi-Product Free Trade Ware Housing Zone in the land purchased for its shelved power plant. Currently the company is engaged in Aqua Culture and Construction business and will add warehousing services in SEZ. As of the date of filing this offer document, it had 28 employees on its payroll. 

ISSUE DETAILS:
The company is offering Rights Issue (RI) of 9865121 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 49.33 cr. The RI has already opened for subscription on June 05, 2024, and will close on June 20, 2024. The company is offering RI in the ratio of 3 for 2 to its eligible stakeholders as of the record date of May 24, 2024. The company is asking 50% (i.e. Rs. 25 per share) on application and the balance 50% by way of two or more subsequent calls as may be determined by the company.  Post allotment, shares will be listed on BSE. The company is spending Rs. 0.50 cr. for this RI process, and from the net proceeds, it will utilize Rs. 27.22 cr. for capex on construction of multi product free trade warehousing zone with inland container depot, Rs. 10.78 cr. for adjustment of unsecured loans from the promoters, and Rs. 10.83 cr. for general corporate purposes.

This RI is self-managed by the company itself and Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up capital of Rs. 6.58 cr. will stand enhanced to Rs. 16.44 cr. Based on the RI price, the company is looking for a market cap of Rs. 82.21 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit of Rs. 1.63 cr. / Rs. 0.01 cr. (FY23), and Rs. 0.26 cr. / Rs. 35.35 cr. (FY24). Thanks to exception income of Rs. 35.50 cr. for FY24 that boosted its bottom line. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. 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: 519331 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 127.37 on May 23, 2024, and opened on an ex-right basis at Rs. 72.91 on May 24, 2024. Since then, it has marked a high/low of Rs. 72.91 / Rs. 50.34. The scrip last closed at Rs. 53.11 as of June 06, 2024. For the last 52 weeks' it has posted a high/low of Rs. 82.78 / Rs. 25.44. Currently the counter is under ESM:  Stage 1. 

The promoters' holding has been constant around 43.38% for the last three quarters ended with March 31, 2024. The counter is well managed above the RI price to tempt investors.