Salvo Chemicals to reapply to BSEC for capital increase

Highlights

• Plans to issue 64 lakh new shares
• Each new share price will be Tk16 including Tk6 premium
• It wants to use Tk4.20 crore as working capital
• Tk2.20 crore to be used for machinery purchase via LC 
• Sponsors and directors jointly hold 25.18% of shares

Salvo Chemicals Industries Ltd has announced plans to reapply to the Bangladesh Securities and Exchange Commission (BSEC) for approval to increase its paid-up capital by issuing new shares to its sponsors and directors.

In a disclosure to the stock exchange today (8 December), the company proposed a new price of Tk16 per share, which includes a Tk6 premium, compared to its previous proposal of Tk10 per share.

Today, the share price of the company closed at Tk24.30 on the Dhaka Stock Exchange.

Earlier in October, the BSEC had rejected Salvo Chemicals' request to raise Tk6.40 crore by issuing 64 lakh shares to its existing sponsors and directors at Tk10 per share. 

In May this year, Salvo Chemicals, a producer of basic industrial chemicals, had aimed to raise its paid-up capital by issuing the shares to its existing sponsors and directors through a private placement for cash consideration.

When the company decided to issue fresh shares at face value, share prices at the secondary market were Tk50 each. Later, its share prices gradually declined below Tk30 each.

According to the DSE, as of 30 November 2024, the sponsors and directors jointly hold 25.18% of the company's shares, while institutional investors hold 7.54%, and general investors hold the rest 67.28%.

In February this year, the BSEC granted Salvo Chemicals one year to achieve a minimum holding of 30% in the company.

Salvo Chemicals intended to use the funds raised to increase working capital by Tk4.20 crore and to modify production by importing machinery valued at Tk2.20 crore via LC, ensuring uninterrupted and smooth operations for the company.

In the first quarter of FY25, Salvo Chemicals reported revenue of Tk60.27 crore, up from Tk53.50 crore during the same period in the previous fiscal year. 

Additionally, its net profit after tax stood at Tk0.87 crore, compared to Tk4.82 crore for the same timeframe in FY24. 

Its earnings per share stood at Tk0.13, up from Tk0.74 a year ago. At the end of September 2024, its net asset value per share stood at Tk16.39.

Salvo Chemicals specialises in the production of sulphuric acid and battery-grade water, and it has established a strong presence in the country's bulk chemical market. 

According to its website, Salvo Chemicals is now one of the leading manufacturers of sulphuric acid in Bangladesh.