S M Gold Limited, a company listed on the Bombay Stock Exchange (BSE) under scrip code 542034, announced a significant corporate development through an official filing dated 19th May, 2025. In a board meeting held at its registered office in Ahmedabad, the company approved the preferential allotment of 32,00,000 fully paid-up equity shares to two non-promoter entities. This capital-raising effort totals Rs. 6.72 crore, aimed at strengthening the financial base of the company.

The shares have been issued at a price of Rs. 21/- per share, which includes a face value of Rs. 10/- and a premium of Rs. 11/-. This transaction aligns with the provisions of Chapter V of the SEBI (ICDR) Regulations, 2018, governing preferential issues by listed companies.

Who Are the Allottees?

The two companies receiving the allotment are:

• Veeram Vendors Private Limited: Allotted 16,00,000 shares

• Veeram Barter Private Limited: Allotted 16,00,000 shares

Both entities fall under the non-promoter category and are presumably affiliated with the Veeram group, although no direct promoter relationship with S M Gold has been disclosed.

Financial Impact

The aggregate value of the transaction stands at Rs. 6,72,00,000/-. Following this allotment:

• The paid-up equity share capital of S M Gold has risen from Rs. 10,03,75,120/- to Rs. 13,23,75,120/-

• The total number of equity shares increased from 1,00,37,512 to 1,32,37,512, each with a face value of Rs. 10/-

• The new shares will rank pari-passu with the existing equity shares, meaning they will carry the same rights as current shares including voting rights and dividend entitlements.

Regulatory Compliance

The preferential allotment was carried out in full compliance with the regulatory framework laid down by the Securities and Exchange Board of India (SEBI). Under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, companies are required to disclose material events and outcomes of board meetings.

This allotment qualifies as a material event and has accordingly been disclosed to BSE Limited, as part of the official communication process.

Purpose and Rationale

While the specific purpose of the capital infusion has not been publicly detailed in the filing, preferential issues are generally undertaken for the following:

• Working capital requirements

• Business expansion plans

• Debt reduction

• Strategic investments

Given the size of the issue and the involvement of non-promoter entities, it is plausible that the funds will be used to enhance operational capacity or support strategic initiatives in the coming financial year.

Market Implications

The equity dilution due to the preferential allotment will slightly reduce the stake of existing shareholders unless they participate in any follow-up offerings. However, the premium of Rs. 11/- per share indicates investor confidence and suggests a fair valuation by the company.

Investors and analysts may view this development as positive, given that:

• It improves the capital structure of the company.

• It indicates institutional or group-level interest in the company’s long-term prospects.

• The funds are raised without increasing debt, thereby maintaining a healthy balance sheet.

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