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Malek Spinning Mills has approved a Tk 238.3 million capital injection into its long-dormant subsidiary --- Newasia Synthetics --- as part of a restructuring initiative aimed at strengthening the subsidiary's financial position and facilitating further strategic land acquisitions.
The decision was taken at a board meeting on Wednesday, according to a disclosure filed with the stock exchanges on Thursday.
Under the plan, Newasia Synthetics will increase its paid-up capital to Tk 900 million from Tk 660 million through the issuance of additional ordinary shares. As the majority shareholder, Malek Spinning will subscribe to shares worth Tk 238.3 million from its internally generated funds, allowing it to maintain its 99.29 per cent ownership in the subsidiary.
The company said the fresh capital would be used to acquire additional strategic land, finance ancillary investments and settle various liabilities of the subsidiary.
According to the company, the proposed capital restructuring and settlement of outstanding obligations are expected to improve financial discipline and support more efficient economic operations within the subsidiary.
The move comes as Malek Spinning is also set to receive nearly Tk 240 million in interim cash dividends from its subsidiary J. M. Fabrics Ltd., providing a significant liquidity cushion for the planned investment.
The payout comes at a time when Malek Spinning is strengthening its balance sheet and pursuing strategic investments.
The latest capital injection comes despite the fact that the Newasia Synthetics project has remained shelved for more than a decade.
The synthetic fibre project was originally suspended after shareholders approved its deferment at Malek Spinning's annual general meeting in December 2010 due to the non-availability of gas connections from Titas Gas Transmission and Distribution Company, the company said.
Despite the project's prolonged inactivity, Newasia Synthetics continued acquiring land surrounding the project site over the years. The company said several contracted land purchases had to be completed because of the strategic importance of the properties, citing geographical continuity, location advantages and security considerations.
Although the fresh capital injection is unlikely to generate immediate earnings growth, it reflects management's commitment to preserving strategic assets and keeping the project viable for future implementation.
The use of internally generated funds instead of external borrowing is also expected to reduce financing costs while strengthening the subsidiary's balance sheet.
Malek Spinning has not disclosed any timeline for reviving the Newasia
Synthetics project. However, the latest restructuring suggests that the company remains committed to preserving the project and positioning the subsidiary for eventual implementation should operating conditions become favourable.
Meanwhile, following the disclosure, the stock of Malek Spinning climbed 6.23 per cent to Tk 32.4 on Thursday on the Dhaka Stock Exchange.
The textile manufacturer reported a 30 per cent year-on-year decline in profit to Tk 782 million during the nine months ended March this year.
However, it had posted an annual profit of Tk 1.43 billion in FY25, marking a 0.43 per cent increase from the previous year, and disbursed a 10 per cent cash dividend to shareholders for FY25.
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