Dost Steels to Secure Rs4.45 Billion Through Rights Issue for Furnace Installation

Dost Steels Limited, a steel manufacturing company based in Pakistan, is set to generate Rs4.45 billion (USD 15.6 million) through a rights issue. These funds will be allocated to finance the setup of a melting furnace.

The publicly listed firm communicated this development in a notification submitted to the Pakistan Stock Exchange (PSX) on Monday.

The rights issue is equivalent to approximately 100% of the company’s existing paid-up capital, meaning around 100 right shares for every 100 ordinary shares held by current shareholders.

According to the filing, the company plans to issue 444,695,577 ordinary shares at a price of Rs 10 per right share, which will total Rs4.45 billion.

The steel producer stated that the primary goal of the rights issue is to accumulate capital for the installation and operational launch of a melting furnace designed for producing billets. The capital will also address the company’s working capital needs.

DSL indicated that the melting furnace will enable the production of billets, a crucial raw material for manufacturing the final product.

“This enhancement will significantly decrease raw material expenses, resulting in greater profit margins,” the company stated.

Furthermore, the project is expected to enhance operational effectiveness, improve supply chain management, and foster long-term business sustainability. “These improvements are projected to increase profitability and shareholder value, thereby bolstering the company’s financial health and competitive position in the market,” it added.

The company believes that the rights issue is being conducted at a price close to the existing market price, thereby minimizing potential risks.

Standard business-related risks will still be present.

On Monday, DSL’s share price concluded at Rs7.24, reflecting a decrease of Re0.18 or 2.43%.