KARACHI, June 26: Fazal Cloth Mills Limited proposes to raise Rs33 million from the issue of right shares at 30 per cent (three-for-10) at a premium of Rs5 per share.

The company stated that the decision to issue right shares had been made at the meeting of the Board on June 20.

The proceeds from right issue (Rs42.8 million including premium) would make up only a part of the company’s planned investment of Rs277.3 million on the Balancing, Modernization & Replacement (BMR) of the project. The company expects to raise the remaining Rs243.8 million through debt.

In order to determine the entitlement of shareholders to the right shares, the share transfer register of the company would remain closed from July 16 to 22 (both days inclusive).

Fazal Cloth Mills furnished a certificate from company’s auditors, Hameed Chaudhri & Co., which worked out the amount of ‘free reserves’ as defined in the Companies (Issue of Capital) Rules, 1996. As per the audited balance sheet at September 30, 2001, the amount of ‘free reserves’ stood at Rs279.2 million.

“The company, as allowed by the Rules, may charge premium on right shares up to the free reserves per share”, the auditors observed, and calculated the free reserves per share at Rs29.38 (free reserves of Rs279.2 million divided by number of paid-up shares, i.e, 9.5 million).

Fazal Cloth Mills had made pre-tax profit of Rs52.1 million on net sales of Rs1.9 billion in the financial year 2001. The company projected sales to cross Rs2 billion mark for 2002 and reach Rs3 billion by end 2004. The pre-tax profit has been projected at Rs60.0 million for the on-going year, which the company expects would amount to Rs110m in 2004.