Suncity Synthetics Board OKs ₹3 Crore Preferential Allotment

Introduction

Suncity Synthetics Limited's board of directors has approved a proposal to raise ₹3 crores through a preferential issue of equity shares. The decision, made during a board meeting on March 20, 2026, is a significant step in the company's capital restructuring efforts under its new management. The fundraising initiative aims to strengthen the company's financial position.

Details of the Fundraise

The board has greenlit the issuance of up to 30 lakh equity shares, each with a face value of ₹10, at an issue price of ₹10 per share. This allotment will aggregate to a total of ₹3 crores. The process will be conducted in compliance with Chapter V of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. The finalization of this issue is contingent upon receiving approval from the company's shareholders and other necessary regulatory bodies. The relevant date for determining the issue price has been set as March 30, 2026.

Allocation to Promoters and Non-Promoters

The preferential issue is proposed to be allocated to a group of 12 investors, comprising one promoter and eleven non-promoters. A substantial portion of the issue is earmarked for the company's Managing Director and promoter, Sumita Mishra. She is set to receive 15.14 lakh shares, valued at ₹1.51 crores, which constitutes 50.31% of the total issue. The remaining shares will be distributed among the eleven non-promoter allottees.

Here is a breakdown of the proposed allottees:

Background on Capital Restructuring

This fundraising initiative comes at a crucial time for Suncity Synthetics. The company has been navigating financial challenges, having incurred losses in recent years that eroded its capital base. In response, a plan for a 98% reduction of share capital was approved by the board on September 5, 2024. A petition for this reduction is currently pending before the National Company Law Tribunal (NCLT). The company has clarified that the current ₹3 crore preferential issue is a separate strategic move and is not subject to the outcome of the capital reduction petition. This move also follows a recent change in management control, which was finalized on August 13, 2024, placing Mrs. Sumita Mishra at the helm.

Valuation and Regulatory Compliance

To ensure transparency and adherence to regulatory norms, Suncity Synthetics commissioned a valuation report from CA Jay Ashok Shah, an IBBI Registered Valuer. Additionally, a certificate under Regulation 163(2) of the SEBI (ICDR) Regulations was obtained from CS Suprabhat Chakraborty. These professional assessments formed the basis for determining the issue price of ₹10 per share, aligning the process with established regulatory standards.

Next Steps: Extraordinary General Meeting

The final approval for the preferential issue now rests with the shareholders. The board has scheduled an Extraordinary General Meeting (EGM) for April 30, 2026, at 2:00 p.m. The meeting will be conducted virtually via video conferencing. To facilitate shareholder participation, the company will provide an e-voting facility through the CDSL platform. CS Suprabhat Chakraborty has been appointed as the scrutinizer to oversee the voting process and ensure its fairness.

Market Performance and Financials

Suncity Synthetics' stock has shown mixed performance recently. While it gained 4.92% in a single day and 9.57% over five days leading up to the announcement, its one-year return stands at -38.70%. However, the five-year return is a strong 186.32%, indicating long-term value creation despite recent volatility. Financially, the company reported a profit of ₹12.86 lakhs in the fiscal year 2023-24 but incurred a loss of ₹12.22 lakhs in 2024-25. The company also made a significant addition of ₹11.78 crores to its fixed assets during the year, suggesting investments for future growth.

Summary of Key Meeting and Issue Details

Analysis and Outlook

The preferential allotment is a clear move by the new management to inject fresh capital into Suncity Synthetics. By allocating a majority of the new shares to the promoter, the leadership is signaling strong confidence in the company's turnaround potential. This fund infusion is expected to provide necessary liquidity to support operations and future growth initiatives, separate from the larger balance sheet restructuring being pursued through the NCLT. The upcoming EGM will be a critical event, as shareholder support is essential for the company to proceed with its recapitalization plan.