Intraco wants 6 more months to utilise IPO funds

Publicly-held company Intraco Refueling Station Limited wants another six months to implement its initial public offering (IPO) project.

The company is soon going to apply to the securities regulator for the time extension, according to a company official.

Intraco, which is engaged in the fuel business through oil pumps, raised Tk30 crore from the stock market in 2018 in order to establish a bottling plant at Chattogram's Patenga.

However, the company later changed the project and decided to purchase a newly-built liquefied petroleum gas (LPG) cylinder manufacturing factory located at Sadar Dokkhin in Cumilla.

As a result, it did not complete the project by the deadline.

A senior officer of Intraco said a large number of their staff members, amid the Covid-19 pandemic, have been infected with the virus and are maintaining self-isolation at home. So, the company was unable to continue the IPO utilisation process.

The company's IPO utilisation period expired on May 31 this year.

Why Intraco shifted to LPG cylinder production

The country's LPG market is growing exponentially. The Bangladesh Petroleum Corporation (BPC) data says that LPG use has increased by a staggering 397% over the last four years.

In the 2017-18 financial year, 5.37 lakh tonnes of LPG were bottled although the sale of LPG in 2014-15 was just 1.30 lakh tonnes. LPG cylinders are mainly imported from China.

Locally, the LPG market is dominated by: Bashundhara LPG Limited, BM Energy (BD) Limited, Omera LPG Limited, TK Cylinder Limited, Petromax Cylinder Limited, G-Gas LPG Limited, Navana LPG Limited, Jamuna Spacetech Limited, Universal LPG and Cylinder Limited, Fresh LPG Limited, Delta LPG Limited, Unitex LPG Limited, and GMI LPG Limited.

However, the gap between demand for LPG cylinders and local production is huge and the Intraco official said they "want to take the chance."

The company official also said, after the completion of the LPG bottle production unit, they will be able to manufacture 2,000 cylinders per day.

Meanwhile, the company has also applied to the High Court, seeking permission for merging its five subsidiaries, including: Abbas & Elias Enterprises, East End Automobiles Ltd, M Hye & Co CNG Refueling Station Ltd, Good CNG Refueling Station Ltd, and Nessa & Sons Ltd.

The merger will help Intraco avail a corporate tax waiver by 10%. And the subsidiaries will be able to float their shares on the stock market too.

Currently, companies that are listed with the bourses enjoy a 10% tax waiver while subsidiaries have to pay 35% corporate tax.

Intraco's revenue decreased by 5% to Tk77 crore in the first three quarters of the last financial year. Its net profit also came down by 22% to Tk4.61 crore during this period.

The price of Intraco Refueling's share was Tk53.60 in 2018. Now, the closing price of its shares was Tk15 on Monday.

The company recorded a 72% price fall on its shares in the last two years.