Dost Steels Limited, a Pakistani steel manufacturer, plans to raise Rs4.45 billion (USD 15.6 million) through a rights issue to fund the installation of a melting furnace.
The listed company disclosed the development in its filing to the Pakistan Stock Exchange (PSX) on Monday.
The quantum of the right issue is approximately 100% of the existing paid-up capital of the company, i.e. approximately 100 right shares for every 100 ordinary shares held by the company’s shareholders.
As per the filing, the company shall issue 444,695,577 ordinary shares, at par, that is at a price of Rs 10/- per right share, aggregating to Rs4.45 billion.
The steel maker said that the purpose of the rights issue is to raise funds for the installation and commissioning of a melting furnace to produce billets. Additionally, the funds will be used to meet the company’s working capital requirements.
Dost Steels secures Rs2.08bn investment
DSL shared that by setting up the melting furnace, the company will be producing billets, which are essential raw materials for producing the end product.
“This will significantly reduce raw material costs, leading to improved profit margins,” it said.
Moreover, the project will boost operational efficiency, provide enhanced supply chain control, and support the business’s long-term sustainability. “These improvements are anticipated to result in increased profitability and shareholder value, thereby strengthening the company’s financial position and competitive standing in the market,” it said.
The company was of the view that the right issue is being carried out at a price, which is near the current market price, and hence, there is no major risk associated with it.
However, normal risks associated with the business will remain.
On Monday, the share price of DSL settled at Rs7.24, a decrease of Re0.18 or 2.43%.
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