Corporate Feature     

Published: May 31, 2024
Updated: May 31, 2024

Franklin Industries Ltd

Rs. 38.83 cr. rights opened on May 24 to close on June 11

Rs. 38.83 crore rights issue of Gujarat based Franklin Industries Ltd (BSE – 540190) engaged in the trading of agriculture commodities and providers of contract farming services has opened for subscription on May 24, 2024. The funds raised through the issue will be utilised to fund company’s expansion plans including working capital requirements and general corporate purposes. Right issue of the company is offered at a price of Rs. 3.58 per share as compared to the closing share price of Rs. 7.50 per share on 24 May, 2024. Rights issue will close on 11 June, 2024.

Highlights:-

• The company will issue 10.84 crore fully-paid equity shares at an issue price of Rs. 3.58 per share
• Shares in Rights issue priced at Rs. 3.58 per share as compared to the closing share price of Rs. 7.50 per share on 24 May 2024; Rights Issue will close on June 11, 2024
• Right Issue funds will be utilised to meet the working capital requirements, fund company’s expansion plans, and for general corporate purpose
• The rights entitlement ratio for the proposed rights issue is 3:1, i.e. 3 rights equity shares of Rs. 1 each for every 1 fully-paid up equity shares held by the eligible equity shareholders
• For FY23-24, Total income rise 148% Y-o-Y of Rs. 50.96 crore; Net Profit grows multi-fold to Rs. 10.46 crore

Out of the issue proceeds of Rs. 38.83 crore, the company intends to use Rs. 29.26 crore towards working capital requirement and Rs. 9.31 crore towards general corporate purpose Incorporated in 1983, Franklin Industries Ltd is engaged in the business of trading of agricultural commodities, such as wheat, rice, maize, vegetables (including capsicum, tomato, etc.), fruits (including mango, watermelon, grapes, etc.), and other agricultural products. The company has recently announced its strategic initiative to diversify its business operation in contract farming business. Contract farming offers significant potential for expansion and innovation within its business framework. This initiative aligns with the company’s vision to optimize agricultural practices, leverage technological advancements, and establish mutually beneficial partnerships with local farmers and agricultural stakeholders.

The company practices contract manufacturing by leasing agricultural land where they cultivate cucumbers, onions, and castor. The company shares a part of the yield with the farmers who work on a contractual basis on the leased land, thereby supporting the local farmers’ community.

The company also provides contract manufacturing services for agricultural products such as cucumber, onion, and castor. The company sources these products from manufacturers by making advance payment or according to agreed terms, and then sell them to its network of distributors. Through our presence in the market, the company have developed strong relationships with both farmers and the wholesaler/retailer community.

For FY23-24 ended March 2024, the company has reported a total income of Rs. 50.95 crore, rise of 148% as compared to the total income of Rs. 20.52 crore. Net profit of the company for the year ended March 2024 was reported at Rs. 10.46 crore, multi-fold growth from net profit of Rs. 21.43 lakh in the corresponding period last year. The company has completed a stock split from Rs. 10 per share to Rs. 1 per share in January 2024.

Assuming full subscription, post issue outstanding equity shares will increase to 14.46 crore equity shares from existing 3.61 crore equity shares.