Agarapatana Plantations seeks shareholder nod to redirect Rs. 643 m in unutilised IPO proceeds

• Company has used only Rs. 29.4 m  of Rs. 672.6 m allocated for factory modernisation objective
• Seeks EGM approval to redeploy  balance toward mechanisation, renewable energy amid labour shortages
• Rs. 75 m allocated for loan settlement already fully utilised

Agarapatana Plantations PLC said yesterday it will seek shareholder approval to redirect the bulk of unutilised proceeds from its Initial Public Offering (IPO) toward mechanisation and renewable energy initiatives, citing labour shortages and evolving strategic priorities within the plantation sector.

The company’s prospectus had set out two objectives for the IPO proceeds: Rs. 672.6 million for the purchase of modern equipment to develop its factories into “state of the art” processing centres, and Rs. 75 million for the settlement of high-cost term loans.

The company said it has already completed utilisation of the funds allocated for the loan settlement objective. However, of the amount earmarked for factory modernisation, only Rs. 29.4 million has been utilised within the timeline stipulated in the prospectus, which lapsed on 31 March, 2025, leaving a balance of Rs. 643.2 million.

The company said utilisation of the remaining funds had been deferred pending an evaluation of how they could be optimally deployed, taking into account strategic developments relevant to its business, including the need to counter labour shortages, an emphasis on mechanisation due to an unanticipated high rate of migration affecting the industry, the need for additional machinery, market demand for orthodox leafy teas, and renewable energy opportunities offering higher guaranteed returns.

Having evaluated these options, the Board of Directors has decided, subject to shareholder approval by special resolution, to utilise the remaining Rs. 643.2 million balance under a revised allocation plan. The company will also seek shareholder approval to extend the utilisation timeline to 30 September, 2028, noting that most of the required machinery has to be imported, with selecting suppliers, importing and installing the equipment expected to take time without disrupting ongoing operations.

Under the revised allocation, funding for driers and heaters has been reduced from Rs. 399.6 million to Rs. 297.7 million, while allocations for rollers, automation and conveyorisation have been raised from Rs. 66 million to Rs. 145 million, and colour sorters from Rs. 27 million to Rs. 65 million. 

Batch weighers have been reduced marginally from Rs. 36 million to Rs. 34 million, while allocations for de-stoners, energy savings fan units and variable speed drive units, amounting to Rs. 32 million, Rs. 16 million and Rs. 40 million respectively, have been removed entirely. A new allocation of Rs. 88 million has been introduced for renewable energy.

The revised allocation totals Rs. 649.7 million, against Rs. 643.2 million in unutilised funds, resulting in a shortfall of Rs. 6.5 million, which the company said will be funded through its internally generated funds.

Shareholder approval for the revised utilisation plan and the extension of the timeline will be sought by special resolution at an Extraordinary General Meeting of the company.

The company’s shares ended down 60 cents yesterday at Rs. 14.10. As of end-June 2026 Lankem Developments PLC was the top shareholder with a 57.65% stake followed by Senthilverl Holdings with 22.68%.