Shree Rama Multi-tech at Rs 8+~ Do not get too excited because Nirma lost in the Supreme Court and will have to honour an Open Offer at Rs 18.60

Nearly Five Years ago on July 21,2008 I had covered Nirma refusing to honour their committment of an Open Offer to Shree Rama Multi-tech Shareholders and that the matter was before the Supreme Court

Nirma disallowed to withdraw offer for Shree Rama Multi-tech

Monday, July 21st, 2008

I have posted this Update on the above blog post but for easier access and viewing have repeated it as a new blogpost now

Latest Update Sunday,May 12,2013 

After years  finally Supreme Court upheld SAT and Nirma will have to make the Open Offer to Shree Rama Multi-tech Shareholders to pick up 20% Equity at Rs 18.60

http://www.business-standard.com/article/companies/sc-dismisses-nirma-plea-in-shree-rama-open-offer-113050900201_1.html

Shree Rama consequently hit 20% upper circuit at Rs 5.74 on Thursday,May 9,2013 and another 10% on Friday,May 10,2013 at Rs 7.56 to give a market cap of Rs 44 crs

Nirma of course has delisted at Rs 260 in March 2012

However Dont get too excited and expect Shree Ram Multi-Tech to rise to Rs 18+ as only 20% of the Equity of Rs 31.76 crs (FV Rs 5) is the Offer Burden and so all shares will not be accepted  and post offer scenario the Share Price may drop below par of Rs 5 again

Shree Rama Multi-tech boasts of top Clientele but continues to make Operating Losses though in FY 13 it has recorded a Profit of over Rs 8 crs for the 9mFY 13  because of  Exceptional Item that relates to a settlement with a lender of less than 1/3 the amount (see below)

The accumulated Loss remains huge and Networth remains negative at @ Rs 90 crs with Long term Borrowings yet above Rs 200 crs

The company has filed fresh scheme of compromise and arrangement u/s 391 of The Companies Act, 1956 vide petition no.401 of 2008 in Gujarat High Court and the same is pending before the Hon’ble High Court

During the first quarter ended June 30,2012 in FY 13 the company has entered into settlement with one of the lenders and principle amount of Loans and Borrowing of Rs 72.63 crs was settled for Rs 22.57 crs. The resultant gains were credited to the P & L A/c by Rs 24.39 crores and to Capital Reserves by Rs 25.66 crs as per the end use of the Loans

Will be interesting to see if Shree Rama Multi-tech can be reborn again after  Scheme of Compromise and Arrangement is passed by the Court and further settlements take place with lenders to bring down Debt significantly ~ After all the Company  did notch Sales of Rs 72 crs in FY 12 and Rs 64 crs for the 9m FY 13

One thought on “Shree Rama Multi-tech at Rs 8+~ Do not get too excited because Nirma lost in the Supreme Court and will have to honour an Open Offer at Rs 18.60

  1. Gaurav, Thanks for covering SRMT and providing your insights. Could you also please comment on Goldstone infra open offer. what could we expect post judgement if SEBI wins and SC mandates open offer at 43 rupees with interest

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