Crescent Star Insurance Claims 60% Stake in Dost Steel in Pakistan
BOL News reported that the Crescent Star Insurance Limited has claimed 78 million shares, representing 60 per cent stakes in Dost Steel Limited, with an aim to revive the company lying idle with a name plate steel production capacity of 350,000 tonnes. CSIL informed Pakistan Stock Exchange “The Crescent Star Insurance Ltd in addition to the interest claimed for PKR 225 million, has a stake amounting to PKR 354 million in Dost Steels Ltd, which according to the shareholders agreement, is entitled to 78 million shares of DSL.”
CSIL had already approached the Lahore High Court, seeking directives to DSL for the issuance of shares as per the agreement.
The Crescent Star would also approach the regulator for necessary approval of the strategy for the issuance of shares, against advances, which will possibly revive DSL, as well as present a clearer reflection of the assets, liabilities and affairs of DSL.
Dost Steel Ltd was incorporated in March 2004, and then converted into a public limited company from 2006, and listed on the Pakistan Stock Exchange Limited in 2007. Dost Steel manufactures steel, direct reduced iron, sponge iron, hot briquetted iron, carbon steel, pig iron, special alloy steel in different forms. Its head office is in Lahore, while its plant is in Phoolnagar. The company started defaulting on debt obligations during international markets turmoil of 2008, which led to detoriation of relationship with lenders. Sindh High Court passed an order for the liquidation of the company, based on a petition filed by one of the creditors of the company. But the Supreme Court of Pakistan accepted the appeal filed by the company’s directors, and dismissed the case. The company then failed to commence operations, up until February 2018. But the company had been accruing losses for so long, that even the sales it did make never seemed to be able to bring it out of what seemed like a permanent slump. It had stopped production altogether in 2019, and its number of employees dropping from 131 in 2019, to just 33 in 2020. By 2020, Dost Steel had accumulated astonishing losses of PKR 1,240 million. The liabilities of the company exceeded its current assets by PKR 408 million, and liquid assets by PKR 466 million. Dost Steels posted a net loss of PKR 131.89 million for the quarter ended March 31, 2021. Dost Steels CEO Mr Jamal Iftikhar noted in the company’s last financial statement “The company is exploring various options and feasibility to overcome the working capital shortage and achieve capacity enhancement through potential investments, joint venture, strategic alliance & partnership to resume the operations of the company.”