Shadab Textile Utilises 79% of Right Issue Proceeds
Shadab Textile Mills Limited (PSX: SHDT) has utilised nearly four-fifths of the funds raised through its recent Shadab Textile right issue, with the company investing the proceeds in machinery upgrades, renewable energy infrastructure and working capital to strengthen its operations.
According to the company’s first quarterly progress report on the utilisation of right issue proceeds, covering the period from April 13, 2026, to June 30, 2026, SHDT had utilised Rs197.59 million, representing 79.04% of the Rs250 million net proceeds raised through the issue.
The report has been submitted in line with regulatory requirements to keep shareholders informed about how the company is deploying the funds raised from investors.
Right Issue Completed Successfully
The Shadab Textile right issue was successfully completed on April 13, 2026, after the company’s Board of Directors approved the allotment of right shares. The transaction generated Rs250 million in net proceeds, providing the company with additional capital to support operational expansion and improve efficiency.
According to the report, the subscription proceeds became available in two stages after being released by the company’s banker and the Central Depository Company (CDC).
The banker transferred the funds on April 16, 2026, while the CDC released the remaining proceeds on April 22, 2026. The company stated that utilisation of the funds began immediately after they became available.
Machinery Upgrades Receive the Largest Allocation
SHDT had previously outlined three major objectives for the use of the proceeds in its offer document: investment in plant and machinery, installation of a solar power system and strengthening working capital.
The largest allocation was made for the purchase of new plant and machinery, reflecting the company’s focus on improving manufacturing capacity and operational efficiency.
Out of the Rs131.5 million earmarked for machinery purchases, the company utilised Rs79.09 million during the reporting period.
This represents 60.14% of the amount allocated for machinery investment, leaving an unutilised balance of Rs52.41 million, which the company is expected to spend in the coming months as planned.
The report indicates that the remaining machinery-related investments are progressing according to schedule.
Solar Project Completed and Working Capital Strengthened
Another major component of the Shadab Textile right issue proceeds was the installation of a solar energy system.
The company allocated Rs47.5 million for the project and confirmed that the entire amount had been utilised by June 30, 2026.
The successful completion of the solar investment is expected to help reduce electricity costs, improve energy efficiency and lessen the company’s dependence on conventional power sources amid rising energy prices.
Like many manufacturers in Pakistan, textile companies have increasingly turned to renewable energy solutions to manage production costs and ensure more reliable electricity supplies.
The third area of investment involved strengthening the company’s working capital position.
SHDT had allocated Rs71 million for working capital requirements, and the report confirmed that the full amount had been utilised during the reporting period.
The additional working capital is expected to support the company’s day-to-day business operations, improve liquidity and facilitate smoother procurement of raw materials and production activities.
Company Confirms No Deviation in Use of Funds
Overall, the company utilised Rs197.59 million out of the total Rs250 million raised through the right issue by the end of June.
This leaves an outstanding balance of Rs52.41 million, which remains allocated exclusively for the purchase of plant and machinery.
Importantly, the company confirmed that there has been no deviation or variation in the utilisation of funds compared with the objectives disclosed in the right issue offer document.
The confirmation provides assurance to shareholders that the proceeds are being spent exactly as approved when the company sought additional capital from investors.
Maintaining transparency in the use of right issue proceeds is a key regulatory requirement for companies listed on the Pakistan Stock Exchange (PSX), ensuring investors receive regular updates on how their funds are being utilised.
The quarterly utilisation report demonstrates SHDT’s compliance with these disclosure obligations while providing investors with visibility into the progress of its capital expenditure plans.
Remaining Machinery Investment to Complete Expansion Plan
The company’s investments in machinery and renewable energy also reflect broader trends within Pakistan’s textile sector, where manufacturers are increasingly focusing on modernising production facilities, improving productivity and reducing operating costs to remain competitive in both domestic and export markets.
Energy efficiency has become an important priority for textile exporters as electricity tariffs and fuel prices continue to affect manufacturing costs.
Similarly, investments in modern machinery can improve product quality, increase production capacity and enhance operational efficiency, helping textile companies strengthen their market position.
With nearly 80% of the proceeds from the Shadab Textile right issue already deployed, the company has made significant progress in implementing its investment plans.
The remaining Rs52.41 million will be utilised for additional machinery purchases, completing the objectives outlined in the right issue and supporting SHDT’s long-term strategy of expanding production capacity, improving operational efficiency and strengthening its financial position.