Suncity Synthetics to Raise ₹3 Crore via Preferential Issue

Introduction

Suncity Synthetics Limited's board has approved a plan to raise ₹3 crores through a preferential issue of equity shares. The decision was made during a board meeting on March 20, 2026, and marks a significant step in the company's capital restructuring efforts. This move will see the issuance of 30 lakh equity shares at a price of ₹10 per share, subject to shareholder approval.

Details of the Board's Approval

The board meeting, which took place at the company's registered office, concluded with the approval of the fundraise. The issuance will be conducted in compliance with Chapter V of the SEBI (ICDR) Regulations, 2018. The company has set March 30, 2026, as the relevant date for determining the price of the equity shares. The primary objective of this capital infusion is to strengthen the company's financial position and provide necessary working capital.

Allotment Plan

The preferential issue will be made to a group of 12 allottees, comprising one promoter and eleven non-promoters. A significant portion of the issue is allocated to the company's Managing Director, Sumita Mishra, who falls under the promoter category. She is set to receive 15.14 lakh shares, which amounts to an investment of ₹1.51 crores and constitutes 50.31% of the total issue. The remaining shares are distributed among eleven other investors.

Here is a detailed breakdown of the proposed allottees:

Shareholder Approval and EGM

The proposal is now subject to the approval of the company's shareholders. To seek this approval, Suncity Synthetics will convene an Extraordinary General Meeting (EGM) on April 30, 2026, at 2:00 p.m. The meeting will be held virtually via video conference. The company has arranged for e-voting facilities through the CDSL platform to ensure broad participation. CS Suprabhat Chakraborty has been appointed as the scrutinizer to oversee the voting process.

Context of Capital Reduction

This preferential issue comes at a time when the company is also pursuing a capital reduction. Suncity Synthetics has a pending petition before the National Company Law Tribunal (NCLT) for a significant reduction of its share capital. The plan, approved by the board in late 2024, proposed to reduce the paid-up share capital from ₹4.84 crores to ₹10 lakhs to write off accumulated losses. The company has clarified that the current preferential allotment is a separate corporate action and is not contingent on the outcome of the capital reduction petition.

Regulatory and Valuation Compliance

To ensure the preferential issue adheres to regulatory standards, Suncity Synthetics commissioned a valuation report. The report was prepared by CA Jay Ashok Shah, an IBBI Registered Valuer. Additionally, the company obtained a certificate under Regulation 163(2) of the SEBI (ICDR) Regulations from CS Suprabhat Chakraborty. These steps confirm that the issue price of ₹10 per share is based on a formal valuation process.

Recent Change in Management Control

The current Managing Director, Sumita Mishra, became the promoter in 2024. This followed a Share Purchase Agreement dated April 16, 2024, where she agreed to acquire 22.48 lakh shares, representing a 45.46% stake in the company, from the previous promoters at a price of ₹7.00 per share. This transaction triggered an open offer to public shareholders to acquire an additional 26% stake, solidifying her control over the company. Her substantial participation in the current preferential issue underscores her commitment to recapitalizing the business.

Financial Health and Market Performance

Suncity Synthetics operates in the textiles sector with a market capitalization of approximately ₹8.39 crores. The company has faced challenging market conditions in recent years, leading to losses that eroded its capital base. Historical stock performance reflects this volatility, with a one-year return of -38.70%, although the five-year return stands at +186.32%. The infusion of ₹3 crores is expected to provide necessary working capital and improve the company's financial stability.

Conclusion

The board's approval of the ₹3 crore preferential issue is a strategic move by Suncity Synthetics' new management to inject fresh capital into the company. The funds are crucial for navigating the company's turnaround. The next key event is the EGM on April 30, 2026, where shareholders will vote on the proposal. The outcome of this meeting will be critical in shaping the company's financial future.