Sikko Industries Board Approves 1:10 Stock Split and 1:1 Bonus Issue

The board of Sikko Industries Limited, a player in the agro-chemical and fertilizer sector, has recently announced major corporate actions that are expected to significantly impact the company’s capital structure and share market accessibility. The company’s board considered and approved a stock split and a bonus share issue in a crucial meeting, subject to securing shareholder approval at an upcoming Extraordinary General Meeting (EGM).

The announcement was met with a positive reaction from the market, with the company’s share price seeing an immediate surge, reflecting strong investor interest in the twin corporate actions.

Detailed Breakdown of Corporate Actions

The key decisions taken by the board involve a two-pronged approach to enhance liquidity and reward existing shareholders:

1. Stock Split (Sub-division of Shares)

Sikko Industries has proposed a significant 1:10 stock split (sub-division). This means that one existing equity share of the company, which currently has a face value of ₹10 each, will be sub-divided into ten equity shares with a revised face value of ₹1 each, fully paid up.

• Rationale: The primary objective of a stock split is to reduce the market price per share, thereby making the stock more accessible and affordable for retail investors. This move is typically aimed at increasing the overall number of shares outstanding, which, in turn, is expected to boost the stock’s liquidity and market participation.

2. Bonus Issue

In addition to the stock split, the board has also recommended the issuance of bonus equity shares in a 1:1 ratio. This translates to the issuance of one new equity share of ₹1 face value for every one existing fully paid-up equity share of ₹1 face value held by the shareholders after the stock split has taken effect.

• Rationale: A bonus issue is a corporate reward to existing shareholders, distributing additional shares free of cost by capitalizing the company’s reserves. It indicates the company’s financial health and its intention to share prosperity with its investors. By increasing the number of shares held by investors, it also complements the stock split’s goal of improving market liquidity.

Shareholder Approval and Next Steps

Both the proposed stock split and the 1:1 bonus issue are contingent upon receiving approval from the company’s shareholders.

• Extraordinary General Meeting (EGM): The company has scheduled an EGM to be held on Thursday, November 13, 2025, to seek the necessary approvals for these corporate actions.
• Record Date: The Record Date, which is the cut-off date for determining the eligibility of shareholders to receive the benefits of the split and bonus, will be fixed by the Board or its Committee after the shareholder approval is secured at the EGM.

Impact on Investors

The combined effect of a stock split followed by a bonus issue fundamentally alters the investment landscape for Sikko Industries’ shareholders, without changing the intrinsic value of the company immediately:

Corporate Action	Change in Face Value (FV)	Change in Number of Shares (Approx.)
Pre-Split (FV ₹10)	One share of ₹10 FV	1
Post-Split (FV ₹1)	Ten shares of ₹1 FV	10
Post-Bonus (FV ₹1)	Twenty shares of ₹1 FV	20

Example: An investor holding 100 shares (FV ₹10) before the corporate actions will first have their holding converted to 1,000 shares (FV ₹1) after the 1:10 split. Subsequently, they will receive 1,000 bonus shares (FV ₹1) under the 1:1 bonus issue, resulting in a total holding of 2,000 shares (FV ₹1).

While the number of shares held increases significantly, the total value of the investment remains theoretically the same immediately after the corporate actions, as the market price per share is adjusted proportionally. However, the anticipated increase in trading activity and broader market participation following the enhanced affordability could drive long-term value creation for the company and its investors.