GPH Ispat, a listed rod and steel producer, has made plans to raise Tk 967.77 crore from the stock market to repay a segment of its existing bank debts. The decision was made during a recent board meeting where the company disclosed its intention to issue rights shares through the Dhaka Stock Exchange (DSE).
Through a rights share issuance, GPH Ispat aims to raise fresh capital by offering new shares to its current shareholders in proportion to their existing holdings. The company plans to issue two rights shares for every one ordinary share held, priced at Tk 10 each. This would result in the issuance of 96.77 crore new shares, pending approval from shareholders at the annual general meeting and regulatory bodies.
The market price of GPH Ispat was recorded at Tk 15.70 per share, indicating that the rights shares are being offered at a discounted rate of Tk 5.70, approximately 36 percent lower than the market price. A record date will be set to determine the entitlement of shareholders to the new shares once approval is obtained from the Bangladesh Securities and Exchange Commission.
Despite an increase in sales in recent years, GPH Ispat has faced challenges with escalating finance costs due to a rise in loans, impacting its profitability. The company experienced its first loss in fiscal year 2024-25 after a decade of operation and continued to operate at a loss during the initial nine months of the subsequent fiscal year.
In the financial year 2020-21, the company generated profits exceeding Tk 166 crore while incurring finance costs of Tk 110 crore. However, its total bank loans, encompassing short-term borrowings, amounted to Tk 3,651 crore at that time.
As of fiscal year 2024-25, the loans had surged to Tk 6,281 crore, accompanied by finance costs of Tk 577 crore. The heightened interest expenses diminished profits, resulting in a loss of Tk 24 crore that year. During the initial nine months of the fiscal year 2025-26, finance costs were recorded at Tk 387 crore, with a loss of Tk 10 crore incurred by the company.
Various factors, including increased raw material prices, currency depreciation, and reduced demand in the construction industry, have contributed to the financial strain on GPH Ispat. Nevertheless, the primary drag on its financial performance has been the escalation of finance costs.
The company’s financial results for fiscal year 2025-26 show an improvement in profitability, with earnings per share increasing to Tk 0.07 compared to a loss per share of Tk 0.51 in the previous year. Additionally, the net operating cash flow per share rose to Tk 15.73 from Tk 5.78 in fiscal year 2024-25.
The board has proposed a 2 percent cash dividend for general shareholders, excluding sponsors and directors, for the fiscal year 2025-26, amounting to Tk 6.75 crore. Sponsors and directors currently hold 14.62 crore shares, representing 30.22 percent of the company’s shares as of August 31, with the remainder held by institutional investors and the general public.
GPH Ispat secured long-term loans to finance the establishment of plants in Chattogram, boasting annual production capacities of 8.4 lakh tonnes of mild steel billet and 6.4 lakh tonnes of mild steel rod. The company’s current total annual production capacity stands at 10.5 lakh tonnes of mild steel billet and 7.9 lakh tonnes of mild steel rod, as well as medium-section products like beams, angles, channels, and flat bars.
