Pioneer Cement Limited has decided to issue right shares in the ratio of 50 ordinary shares for every 100 ordinary shares held (50 percent) at par value of Rs 10 each.
According to a dispatch of Pioneer Cement to Lahore Stock Exchange, the board of directors of the company in its meeting has approved the issue of right shares. It added that the share transfer book of the company would remain closed from July 27 to August 04, 2004 for the purpose of the entitlement of right shares.
Explaining the necessity of decision to issue right shares, the company has said that it wants to enhance the existing capacity of the plant. It added that the capacity of the plant is 2,000 tones per day (TPD) of clinker. However, by the way of optimisation and with no significant capital expenditure, the company has already enhanced its capacity to 2,350 TPD. It pointed out that now the company intends to increase its capacity to 6,350 TPD of clinker or over two million tones cement per annum from existing rated capacity of 630,000 tones per annum.
It further said that normally installation of new plant takes two to three years but the company has planned to put up another production line of 4,000 TPD capacity.
Except few items, all other items of the plant will be brand new like Clinker Grate Cooler which is being manufactured in Turkey on the basis of designing carried out by FL Smith Denmark. The second hand equipment is expected to cost Rs 328 million, which forms 24 percent of the total cost of machinery of Rs 1,350 million.
This scheme, according to the company, will facilitate the company to plan completion of the project within 16 months time. The second production line will commence commercial production from second quarter of next financial year.
This will help the company to enormously enhance its profitability by increasing its market share, the company claimed.
Pioneer Cement has also resolved to issue, subject to approval of the Securities & Exchange Commission of Pakistan (SECP), 1.16 million ordinary shares of Rs 10 each at the premium of Rs 13 on each shares ie Rs 23 per share to National Bank of Pakistan as debt equity.
The company has conveyed to the three stock exchanges that the resolution will be passed at the extraordinary general meeting of the company to be held in Lahore on August 04, 2004.