GPH Ispat Plans to Raise Nearly Tk 968 Crore from Stock Market to Reduce Bank Loan Debt
GPH Ispat, a listed manufacturer of rods and steel, has decided to generate Tk 967.77 crore through the stock market to repay a portion of its existing bank loans. The decision was made during a recent board meeting, where it was agreed that the company would issue rights shares to raise the funds, as disclosed to the Dhaka Stock Exchange (DSE).
A rights share offering enables a company to secure fresh capital by providing new shares to its current shareholders based on their existing holdings. GPH Ispat plans to issue two rights shares for each ordinary share held at Tk 10 per share, resulting in the issuance of 96.77 crore new shares, pending approval from shareholders at the upcoming annual general meeting and regulatory bodies.
The current market price of GPH Ispat was Tk 15.70 per share, indicating that the rights shares are being offered at a discount of Tk 5.70, approximately 36 percent lower than the market price. A specific record date will be set to identify which shareholders are eligible to receive the new shares once approval is granted by the Bangladesh Securities and Exchange Commission.
The steel producer based in Chattogram has been facing challenges due to escalating finance expenses linked to its growing loan portfolio, which has strained its profitability despite increased sales in recent years, as per financial analyses. The company, established in 2006, recorded a loss in fiscal year 2024-25 for the first time in over a decade and sustained losses during the initial nine months of the subsequent fiscal year.
In FY2020-21, GPH Ispat achieved profits exceeding Tk 166 crore, while incurring finance costs of Tk 110 crore. Its total bank loans, inclusive of short-term borrowings, amounted to Tk 3,651 crore at that time. However, by FY2024-25, the loans had surged to Tk 6,281 crore and finance expenses had risen to Tk 577 crore, resulting in a loss of Tk 24 crore for the company that year.
During the initial nine months of FY2025-26, finance costs reached Tk 387 crore, with the company recording a loss of Tk 10 crore. Factors such as higher raw material prices, currency depreciation, and weak construction sector demand have impacted the company’s financial performance, with finance costs particularly exerting pressure on its bottom line.
Despite these challenges, the company’s full-year results for FY2025-26 indicate an improvement in profitability. It reported earnings per share of Tk 0.07, a positive shift from 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 FY2024-25.
The board has proposed a 2 percent cash dividend for general shareholders (excluding sponsors and directors) for FY2025-26, compared to a 5 percent cash dividend paid out in the prior year. The recommended dividend for general shareholders totals Tk 6.75 crore. Sponsors and directors hold 14.62 crore shares in the company, representing 30.22 percent of total shares as of August 31, while institutional investors and the public hold the remaining shares.
GPH Ispat had secured long-term loans to support the establishment 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. The company’s current total annual production capacity is 10.5 lakh tonnes of mild steel billet and 7.9 lakh tonnes of mild steel rod, along with medium-section products like beams, angles, channels, and flat bars.