Photo: Messenger
Sonali Aansh Industries Limited, a listed entity in the capital market, maintains a paltry paid-up capital of Tk 5 crore, but carries a staggering bank loan amount of Tk 93 crore.
Market analysts and experts have raised question over the presence of this huge loan burden. They are of the view that excessive debt can constrain a company's flexibility and potentially discomfortable investors.
The prevailing sentiment among the insiders is that companies should avoid overreliance on debt to sustain their operations and growth trajectory.
The financial snapshot of the company as of June 30, 2022, reveals a juxtaposition of substantial debt and paid-up capital. The company, established in 1985, holds a paid-up capital of Tk 5,42,04,000, while its total debt amounts to Tk 93,84,06000. This debt comprises short-term loans of Tk 50 crore, 52 lakh, and 3 thousand, and a long-term loan of Tk 43 crore, 32 lakh, and 3 thousand.
Despite the significant debt load, the company exhibits financial resilience, boasting reserves and surplus totaling Tk 56,57,00,000. This strength allowed the company to distribute a 10 percent cash dividend to its shareholders for the fiscal year ending June 30, 2022. Notably, the company generated an actual profit after tax of Tk 2,12,62,000 in that fiscal year.
Moreover, the unaudited report for the first quarter of the fiscal year 2023-2024 reveals encouraging figures, with the company recording revenue of Tk 2,48,96,160.
According to the facts disclosed by the country’s main bourse Dhaka Stock Exchange (DSE), the company has shown consistent profitability since 2010 and continues to exhibit robust performance, including a profitable first quarter in the new fiscal year. Moreover, it boasts surplus reserves, underscoring its ability to generate profits and accumulate retained earnings over time.
When asked, Company Secretary Habibur Rahman Khan said that the issue of running the company with loans is the decision of the board of directors. “We are following the company's decision.”
While talking to The Daily Messenger, Managing Director of Chittagong Stock Exchange (CSE), Shaifur Rahman Mazumdar, FCA, FCMA, told The Daily Messenger that no company should run it without taking loans. It reduces the capacity of the company. Investors also get less profit, because the company has to pay the loan with added interest.
The company, with a paid-up capital of Tk 5,42,4000, has decided to increase its authorised capital by another Tk 50 crore by issuing 5 crore shares of Tk 10 each. 54,24,00 shares of the company were traded on January 2 at Tk 592. This resulted in the market value of the company being Tk 319 crore 96 lakh.
The authorised capital of jute-sector companies is Tk 50 crore. The entrepreneurs and directors of the company hold 50.78 percent of the shares. Institutional investors hold 5.63 percent, and general investors hold 43.59 percent.
According to DSE data, the company's earnings per share (EPS) in 2022 stood at Tk 3.92. EPS in 2021 was Tk 1.13. EPS in 2020 was Tk 0.62. EPS in 2019 was Tk 1.01, and EPS in 2018 was Tk 1.71.
It has paid a 10 percent cash dividend to shareholders for the last 5 years. Not only that, the company has also given a 10 percent cash dividend from 2011 to 2017. Prior to that, in 2010, the company paid 15 percent in cash to shareholders.
Messenger/Sun Yath
