GPH Ispat to raise Tk 968cr through rights shares

GPH Ispat has decided to raise Tk 967.77 crore from the stock market to repay a portion of its outstanding bank loans.

In a board meeting yesterday, the listed rod and steel producer decided to raise the fund by issuing rights shares, according to a disclosure to the Dhaka Stock Exchange (DSE).

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A rights share issue allows a company to raise fresh capital by offering new shares to its existing shareholders in proportion to their current holdings.

The company will issue two rights shares for every one ordinary share held at Tk 10 each. This will result in the issuance of 96.77 crore new shares, subject to approval from shareholders at the annual general meeting and regulatory authorities.

GPH Ispat’s market price stood at Tk 15.70 yesterday, meaning the rights shares are being offered at a discount of Tk 5.70, or about 36 percent, to the market price.

A separate record date will be fixed to determine which shareholders are entitled to the new shares after the company obtains approval from the Bangladesh Securities and Exchange Commission.

The Chattogram-based steelmaker has been struggling with rising finance costs as its loans increased, putting pressure on its profitability despite higher sales in recent years, an analysis of its financial reports shows.

The company, incorporated in 2006, incurred a loss in fiscal 2024-25 for the first time in at least a decade and remained loss-making during the first nine months of the following fiscal year.

In FY2020-21, GPH Ispat posted a profit of more than Tk 166 crore while its finance costs were Tk 110 crore. Its bank loans, including short-term borrowing, stood at Tk 3,651 crore at the time.

By FY2024-25, its loans had risen to Tk 6,281 crore and finance costs had surged to Tk 577 crore. The higher interest burden eroded its profits, leaving the company with a loss of Tk 24 crore that year.

In the first nine months of FY2025-26, finance costs stood at Tk 387 crore, while the company incurred a loss of Tk 10 crore.

Higher raw material prices, the depreciation of the local currency and weak demand in the construction sector also weighed on the company’s finances. But the rise in finance costs has been a major drag on its bottom line.

The company’s full-year results for FY2025-26, however, show an improvement in profitability. It reported earnings per share of Tk 0.07, compared with a loss per share of Tk 0.51 a year earlier.

Its net operating cash flow per share also increased to Tk 15.73 from Tk 5.78 in FY2024-25.

The board has recommended a 2 percent cash dividend for general shareholders, excluding sponsors and directors, for FY2025-26. The company paid a 5 percent cash dividend the previous year. The proposed dividend payable to general shareholders amounts to Tk 6.75 crore.

Sponsors and directors hold 14.62 crore shares in the company. As of August 31, they held 30.22 percent of its shares, while institutional investors and the general public held the rest.

GPH Ispat took long-term loans to finance the construction of plants in Chattogram with annual production capacities of 8.4 lakh tonnes of mild steel billet and 6.4 lakh tonnes of mild steel rod.

Its total annual production capacity currently stands at 10.5 lakh tonnes of mild steel billet and 7.9 lakh tonnes of mild steel rod and medium-section products such as beams, angles, channels and flat bars.

Its total annual production capacity currently stands at 10,50,000 tonnes of mild steel billet and 7,90,000 tonnes of mild steel rod or medium section products such as steel beam, angle, channel, flat bar, etc.