WeP Solutions Rights Issue review - (May apply)

•    WSL is engaged in managed and retail printing services with digital solutions.
•    It has been posting losses since FY19.
•    This rights issue is at par and hence may be considered from a long term perspective.

ABOUT COMPANY:
WeP Solutions Ltd. (WSL) is in the business of managed printing services, digital services and retail printing services. It was incorporated as Datanet Corporation Ltd., in 2010 it acquired the managed printing services business from WeP Solutions India Ltd., and renamed the company to the current one. In 2012 it acquired the printing business division of WeP Peripherals Ltd. Thus it finally reached to its current status. It currently operates with 112 employees.

ISSUE DETAILS:
The company is offering a rights issue in the ratio of 3 shares for every 8 shares held to the shareholders whose names were appearing in the register of the company as of March 12, 2021. WSL will be issuing 9868640 equity shares of Rs. 10 each at par to mobilize Rs. 9.87 cr. The issue opens for subscription on March 24, 2021, and will close on April 19, 2021.  Post allotment, shares will be listed on BSE.

The company will be spending Rs. 0.60 cr., for this rights issue process. Out of net proceeds, it will utilize Rs. 6.76 cr. for reduction of its borrowings, Rs. 1.50 cr. for additional working capitals and Rs. 1.01 cr. for general corpus funds.

The Promoters vide their letters dated February 11, 2021, have undertaken to fully subscribe for their Rights entitlement in the Issue. The Promoter reserves the right to subscribe to their entitlement in the Issue by subscribing for renunciation if any made in their favour. The Promoter may also apply for additional Equity Shares in the Issue. As a result of this subscription and consequent allotment, the Promoter may acquire shares over and above their entitlement in the Issue, which may result in an increase of their shareholding above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoter, if any, shall be made in compliance with the applicable provisions of the SEBI SAST Regulations.

The issue is solely lead managed by Arihant Capital Markets Ltd., while Cameo Corporate Services Ltd. Is the registrar to the issue.

Post issue, WSL's current paid-up equity capital of Rs. 26.32 cr., will stand enhanced to Rs. 36.19 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, WSL has (on a consolidated basis) posted turnover/net profits (loss) of Rs. 77.56 cr. / Rs. - (3.14) cr. (FY19) and Rs. 69.27 cr. / Rs. - (2.12) cr. (FY20). Thus it has been making a loss for the last two fiscals. For the first nine months of the current fiscal ended on December 31, 2020, it has posted a loss of Rs. - (2.05) cr. On a turnover of Rs. 40.10 cr. Thus it continued to be in red for all these periods.

SCRIP MOVEMENT:
WAL last quoted on cum-right at Rs. 25.60 on March 09, 2021, and it turned ex-right on March 10, 2021, at Rs. 19.95 (at close). The company has marked the last 52 weeks high/low of Rs. 23.45 /Rs. 10.35. It last traded at Rs. 15.50 (as of March 19, 2021). With the rights issue pricing, it is looking for a market cap of Rs. 36.19 cr. Whereas with the last traded price, it has a market cap of Rs. 56.09 cr.