Energypac Power faces Tk35cr loss in Q1 amid rising loan expenses

Energypac Power Generation, a publicly listed company in the power sector, reported a Tk35 crore loss for the first quarter of the current fiscal year, primarily driven by a significant increase in finance costs from the previous year, along with a sharp rise in interest rates.

For the July to September period, power engineering company's loss per share rose to Tk1.85, compared to a profit per share of Tk0.05 in the same period of the previous fiscal year, as per its price-sensitive information.

The full report for the first quarter has yet to be published, so the exact finance costs incurred remain unconfirmed. However, the company attributed the decrease in earnings per share to the higher finance charges compared to last year and the impact of increased interest rates.

Just four years after being listed on the bourses in 2021, Energypac Power reported a loss of Tk98 crore FY24, and for the first time since its listing, it did not pay any dividends to its shareholders.

According to its auditor report, Energypac's total loans and borrowings stood at Tk1,287cr representing approximately 80% of total liability at the end of June 2024. Interest rates for loans and borrowing significantly increased in recent times and now the rates jumped over 12%. 

As a result, finance costs of Energypac Power increased. Last fiscal, it had paid Tk124 crore as finance cost against the costs of Tk63.84 crore in the same time of the previous fiscal. 

According to its annual report, the power engineering company had reported a significant fall in revenue. Its annual revenue for FY24 declined to Tk280.28cr against Tk544.14 crore in FY23.

The auditor, commenting on the company's business downturn in FY24, said the company has adequate resources to continue operations for the foreseeable future. According to management's assessment, there are no significant uncertainties or conditions that would cast doubt on the company's ability to continue as a going concern.

"However, the current global economic challenges, including slower-than-expected post-pandemic recovery, geopolitical tensions such as the Russia-Ukraine conflict, interest rate hikes, rising fuel prices, and persistent inflation, have significantly impacted the company's performance and profitability," the auditor explained.

Besides, the auditor said economic challenges specific to Bangladesh, such as currency depreciation, supply chain disruptions, and rising import costs due to depleted foreign reserves, have further exacerbated the situation, leading to lower profits and higher borrowing costs.

To finance the procurement of an LPG carrier and accessories, as well as to import LPG cylinders and repay loans, Energypac raised Tk150 crore from the capital market through a share issuance in FY21.

Following its listing on the stock exchanges, the company paid a 10% cash dividend for both the 2020-21 and 2021-22 fiscals, and a 5% cash dividend for FY2022-23.