Renata's financial health to improve within next one to two years: MD

Renata PLC, one of the country's leading drug makers, expects a visible improvement in its financial position within the next one to two years, as it works to reduce debt and restore the strong profit margins it once enjoyed, said its Managing Director and Chief Executive Officer Syed S Kaiser Kabir.

He made the remarks today (15 December) while speaking at the inauguration ceremony of trading of Renata's preference shares, marking the first-ever launch of preference share trading on the Dhaka Stock Exchange (DSE).

However, no preference shares are not traded on the debut day.

Renata raised Tk325 crore through non-cumulative, non-participative, fully convertible preference shares priced at Tk1,900 each. The shares have a six-year tenure from 19 October 2025, with conversion into ordinary shares beginning after the third year in four annual phases at a conversion price of Tk475 per share. Preference shareholders will be entitled to a 15% annual dividend on the unconverted portion, subject to the availability of sufficient post-tax profits.

"At one time, Renata was a debt-free company with strong net margins, which was a matter of pride for us. Our goal now is to regain that position," Kaiser Kabir said, expressing confidence that the company is on the right path to financial recovery.

The event also marked the signing of a listing agreement between the DSE and Renata PLC at the DSE Training Academy, formalising the commencement of trading of the company's preference shares on the DSE's Alternative Trading Board (ATB).

Explaining the background to Renata's recent financial strain, Kaiser Kabir said the company's planned investments were severely affected by a sudden and sharp depreciation of the local currency. While the initial investment outlay was estimated at around Tk1,000 crore, the cost escalated to nearly Tk1,500 crore due to currency devaluation, an increase that was both unexpected and unavoidable.

"This depreciation happened within a very short time, forcing Renata to rely on bank borrowing, even though the company had remained virtually debt-free for many years," he said. As debt levels rose, management found itself increasingly focused on reducing liabilities rather than investing in innovation and long-term growth.

Due to the high debt burden, the company's annual profit came down to Tk200 crore from Tk500 crore, he added.

To ease the debt burden, Renata opted for an alternative financing structure by issuing preference shares, raising Tk325 crore through private placement. The proceeds were used primarily to repay outstanding loans.

He also pushed back against negative perceptions surrounding corporate borrowing, saying that while a small number of businesses fail to repay loans, the vast majority of entrepreneurs responsibly meet their obligations. "It is unfair that the entire industry is judged based on the actions of a few," he said.

Highlighting the broader role of the capital market, Kaiser Kabir stressed that entrepreneurs should have multiple financing options beyond initial public offerings and rights issues. He called for the introduction of more diversified and innovative financial instruments to help companies build healthier and more sustainable capital structures.

DSE Chairman Mominul Islam, speaking at the event, said the stock exchange is working to strengthen trust-based and customer-centric relationships with both companies and investors. He noted that Renata's strong compliance record, corporate governance standards and organised shareholding structure enabled quicker regulatory approvals, although the combined approval process of the BSEC and DSE still took time. We are working for digitalising the approval process which will be reduced the time.

DSE's Acting Managing Director Asadur Rahman said the listing of preference shares as equity securities on the ATB sets an important precedent for Bangladesh's capital market.