Organic Recycling Systems Invests in Sonu Infratech via Convertible Warrants

Organic Recycling Systems Limited (ORS) has announced a strategic investment in Sonu Infratech Limited (Sonu) through the acquisition of convertible warrants. This move is aimed at enhancing ORS’s ability to compete in large-scale projects that require significant resources, which ORS cannot manage independently.

Sonu Infratech Limited operates in the construction sector, specialising in mechanical and civil work. Sonu Infratech reported a turnover of ₹9,039.82 lakh in FY 2024, ₹6,405.16 lakh in FY 2023 and ₹5,317.88 lakh in FY 2022.

The strategic investment in Sonu is intended to bolster ORS’s capabilities by providing access to additional manpower and equipment necessary for large-scale construction projects. This will enable ORS to meet the commercial criteria required for bidding on substantial projects and optimise project execution. The partnership with Sonu is expected to lead to significant cost reductions in civil works and improve ORS’s competitive edge in the market.

Under the proposed investment, ORS will acquire 3,00,000 convertible warrants, each convertible into one fully paid-up equity share of face value ₹10. The issue price for these warrants is ₹67 each, amounting to a total consideration of ₹20,100,000. The payment for these warrants will be made in stages: 25% of the total consideration will be paid at the time of issuance of the warrants, while the remaining 75% will be paid upon the exercise or conversion of the warrants within 18 months from the date of allotment.

After the conversion of these warrants, ORS will hold a 2.30% shareholding in Sonu Infratech Limited on a fully diluted basis, given that Sonu will be issuing 5,200,000 equity shares under a preferential allotment. This acquisition will strengthen ORS’ market position and enhance its ability to secure new projects by making competitive bids in the construction sector.

This strategic investment underscores ORS’s commitment to expanding its operational capabilities and market presence through strategic partnerships and investments.

On July 24, 2024, the share price of Organic Recycling Systems Ltd opened at ₹274.50, touching the day’s high at ₹296.00, as of 11:42 AM on the BSE.

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