Anjani Portland Cement has announced a Rs 249.06 crore rights issue. The subscription for the rights issue will open on December 30, 2022, and close on January 19, 2023. The company will issue 12,642,848 equity shares with a face value of Rs 10 per share at Rs 197 per equity.
Let’s begin by understanding: ‘what is a rights issue?’
What is a rights issue?
The rights issue is an offer to the existing shareholders to buy additional shares. Cash-strapped companies can release rights shares when they need to raise additional funding. The offer gives the right to the shareholders but not the obligation to buy new shares of the company at a discounted price.
The rights offer gives shareholders securities called rights. With the rights, the shareholders can buy new shares at a lower rate than the current market price on a fixed future date/period. Individuals can increase their exposure to the company by committing to the rights issues.
Before subscribing to the rights issue, investors should know a few things, like the rights issue ratio. Rights issues are shared on a pro-rata basis at a fixed rate. Anjani Portland Cement rights issues will be available at a ratio of 2:1. For 2 shares, shareholders will receive 1 rights issue at Rs 197.
Anjani Portland Cement company overview
The company is a part of the Chettinad Group which is a major business house in South India. It operates two cement production lines – the first being set up in 1999 with an installed production capacity of 400,000 MT per annum and the second one set up in 2010 with a capacity of 7,60,000 MT per annum. Both lines comprise a 5-stage preheater and pre-calcinator. The company primarily produces Ordinary Portland Cement (OPC), Composite cement and Portland Pozzolana Cement. The stock is listed on NSE and BSE.
Objectives of the rights issue
The company proposes to utilise the fund for repayment and prepayment of inter-corporate deposits availed by the company from the promoters.
Hence the company is spending around Rs. 6 lakhs for the RI. Once the process is over, the company will have a paid-up equity capital of Rs. 37.93 cr (currently, the figure is Rs. 25.29 cr).
Eligibility for the rights issue
Rights issues are released in the primary market. But unlike initial or follow-on public offerings, rights issues are not open for general shareholders. It is available only to the existing shareholders.
To participate in the rights issue, the shareholder must own the company’s share as on the record date. The shares become ex-rights one day before the record date. If you buy shares on or after the ex-date, you can’t apply for the rights shares. It is because it takes t+2 days to deliver the equities to the investors’ Demat, and you’ll not qualify as an existing shareholder on the record date.
Anjani Portland Rights Issue Allotment and Terms of Payment
The terms of payment are not known as of now. The entitlement is 1 equity share for every 2 equity shares held on record date.
Anjani Portland Rights Issue Dates
|Record Date||December 16, 2022|
|Credit of Rights Entitlements||December 26, 2022|
|Bid/Offer Opens On||December 30, 2022|
|Renunciation of Rights Entitlements||January 13, 2023|
|Bid/Offer Closes On||January 19, 2023|
|Deemed Date of Allotment||January 25, 2023|
|Credit Date||January 27, 2023|
|Listing Date||February 1, 2023|
How to apply for Anjani Portland Cement rights issue
Once you know the Anjani Portland rights issue date price etc. you will need to know how to apply for the same. Here is a step-by-step guide to applying for the rights issue.
- Eligible shareholders will receive rights entitlement (RE) in their Demat account before the issue opens. The RE is a temporary form of securities in the Demat and not the actual shares.
- Demat account holders can apply for the rights issue through ASBA. You can also apply online if your bank supports online applications.
- You’ll need to provide the following details.
- Cheque/DD details (non ASBA)
- Depository participant’s IP
- PAN number
- DP details – DP Id and beneficiary number
- Signature -in the case of a joint account the form should contain the signatures of both parties
- In case you want to split your rights issue, you need to fill in Part D of the application form.
The registrar for the offer is KFin Technologies Ltd. while the lead manager is Saffron Capital Advisors Pvt. Ltd.
Should you subscribe?
Subscribing to the rights share is a personal investment decision – you can choose to let your rights expire. However, if you ignore the offer, your shareholding will get diluted due to the extra shares issued by the company.
The company has been making profits, despite the covid pandemic and its impact on the real estate sector. In fact, IT made a jump in revenue by nearly 100%, from Rs. 407 cr to Rs 801 cr from FY21 to FY22. However its profit has fallen by half in 2021 to 2022 (from Rs. 84 cr to Rs. 41 cr) and has, in fact, made losses to the tune of over Rs. 27 cr in the first half of FY2023.
The company has a promoter holding of 75% which is a good sign for any retail investor.
As on December 26, 2022, Anjani Portland Cement share Price at NSE stock exchange was Rs 205.65, meaning the rights issues will be available at a discounted price. It announced to use the Rs. 249.06 crore to reduce its repayment/prepayment obligations. In the last 3 years overall, its stock price has risen by 55.62%, despite the fall in price by 26% last year.
Keep following Angel One’s website for more market updates. You can start buying shares by opening a free Demat account on Angel One’s mobile app.
Disclaimer: This blog is exclusively for educational purposes. The securities quoted are exemplary and are not recommendatory.