Renata to raise Tk850cr thru bond, preference shares
The company experienced an overall increase in the cost of raw materials by 20% to 25% year-on-year due to the inflation caused by dollar appreciation
Renata Limited, one of the country's leading pharmaceutical companies, has decided to raise Tk850 crore through a bond and preference shares to pay off debt to banks and non-bank financial institutions.
At a board meeting on Saturday, the board of the company decided to issue non-convertible and non-participative preference shares for Tk350 crore and a zero-coupon bond for Tk500 crore for the next five years.
Jubayer Alam, company secretary at Renata Limited, told The Business Standard, "We need around Tk700 crore to pay off the short-term loans. That is why we will apply for the bond as it is not required for shareholders' approval. After receiving the securities regulator's nod, we will raise Tk500 crore through bonds first and then we will go to preference shares for raising the rest amount."
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"Currently the lending rate in banks is increasing. Hence, we do not want to incur additional costs for our debt. The debt will be paid off by the bonds. And with the issuance of bonds and preference shares, our finance cost can be locked to a limit," he said.
According to its July-September quarterly financial statement, Renata has Tk925 crore loans as current liabilities.
Meanwhile, its net profit dropped over 54% to Tk231 crore in the fiscal year 2022-23 compared to the previous. And, its earnings per share came down to Tk20.21 in FY23 from Tk44.56 in FY22.
Due to the lower profit, it recommended a lower dividend than the previous year. It declared a 62.5% cash dividend for the fiscal year 2022-23, which was 140% cash and 7% stock a year ago.
The company experienced an overall increase in the cost of raw materials by 20% to 25% year-on-year due to the inflation caused by dollar appreciation.
Jubayer Alam said, "The cost of energy increased by 72% in the last fiscal year, narrowing our profit. This was due to a combination of factors, including a 15.7% compounded increase in the price of electricity, a 37% increase in the price of diesel, and a 41.4% increase in the price of furnace oil. Increased usage also contributed to the increase in cost."
Besides, its declining trend of profit continues in the July-September quarter of this fiscal year.
During the first quarter, its net profit was Tk101 crore, which was 18% lower than the previous year.
