Padam Cotton Yarns plans rights issue of up to Rs 27 crore after March fund raise

Padam Cotton Yarns has approved a proposed rights issue of equity shares aggregating up to Rs 27 crore, marking another planned Equity Fund raise less than seven months after the company completed a Rs 18.71 crore rights issue in March 2026.

The board cleared the proposal at its meeting held on October 9, 2026. The issue will comprise equity shares with a face value of Rs 1 each and will be offered to eligible shareholders as on a record date that is yet to be fixed.

The company has not disclosed the issue price, number of shares, entitlement ratio, use of proceeds or the record date. These terms will be decided subsequently by the board or a committee constituted for the purpose. Padam Cotton Yarns has also approved the Draft Letter of Offer and said it is preparing to submit an in-principle application to the exchange under the applicable listing regulations.

The proposed fund raise is subject to statutory and regulatory approvals and will be undertaken under Chapter III of the Securities and Exchange Board of India's Issue of Capital and Disclosure Requirements Regulations, 2018, along with provisions of the Companies Act and the listing regulations.

The latest proposal is 44.3 per cent larger than the Rs 18.71 crore rights issue completed on March 16, 2026, when the company allotted 9.04 crore shares at Rs 2.07 each. The fresh issue could further alter the company's equity base, though the eventual dilution effect for shareholders who do not participate cannot be assessed until the pricing and share entitlement are announced.

The company's audited standalone accounts for FY2025-26 showed a profit after Tax of Rs 10.93 crore, compared with Rs 10.60 crore in the preceding year. However, its operating cash flow was negative at Rs 17.99 crore during the year, primarily reflecting a sharp rise in trade receivables and inventory.

Trade receivables stood at Rs 67.95 crore as of March 31, 2026, against Rs 13.28 crore a year earlier, while inventories were Rs 9.04 crore. The proposed equity raising therefore comes after a period in which the company's reported profitability was accompanied by substantial working-capital absorption.

Padam Cotton Yarns' annual report describes lending and investment as a new business, and its segment note says it does not have a trading or industrial business at present. At the same time, the audited accounts include inventories, trade receivables and trade payables, while the auditor identifies sale of goods as the primary source of revenue. The differing disclosures limit visibility on the company's underlying operating model and the deployment of fresh capital.

The stock was trading at Rs 0.94 as of 3:29 p.m. on October 9, 2026. It was unchanged for the day, but remained about 80.3 per cent below its 52-week high of Rs 4.78 and only around 3.3 per cent above its 52-week low of Rs 0.91. Over the past year, the share has declined 80.82 per cent, compared with a 6.73 per cent fall in the BSE 500.

Separately, the board noted the appointment of Anshu Kalra as Company Secretary and Compliance Officer with effect from October 6, 2026. The company said the required disclosure on the appointment had already been submitted to the exchange.

Disclaimer: The article is for informational purposes only and not investment advice.