KDS Accessories to invest Tk14.45cr to boost production
The company may generate an approximate additional sales revenue of Tk25 crore annually
Highlights
Key takeaways:
- Capacity utilisation to go up by 15% per year
- Approx. additional revenue of Tk25 crore
- 77% yearly revenue comes from carton sales
- KDS recommended 15% dividends for FY2019-20
- Share price rose 6.1% on Wednesday after dividend declaration
- Raised Tk24 crore from IPO in 2015
KDS Accessories Ltd, a sister concern of Chattogram-based KDS Group, will install automation technologies at a cost of Tk14.45 crore to increase its production capacity.
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According to sources at the company, after automation, the overall capacity utilisation can be increased by 15% per year.
The company, which manufactures cartons, buttons, elastics, labels, and papers, may generate an approximate additional sales revenue of Tk25 crore annually.
This project will be financed through a combination of bank loan and the company's own source.
Biplob Kanti Banik, chief financial officer (CFO) of the company, told The Business Standard that almost 77% of revenue comes from the selling of cartons yearly.
"And its demand is increasing day by day. So, the company has opted for the latest technology to enhance its competitive ability."
Earlier in 2019, the company had upgraded its factory machines by using its own resources, and without the help of any bank loan financing.
Meanwhile, the board of directors of the company also recommended 7.50% cash and 7.50% stock dividends for the 2019-20 financial year.
It set November 19 this year to hold the annual general meeting and November 4 as the record date.
After the dividend declaration, its share price rose by 6.09% to Tk54 at the Dhaka Stock Exchange (DSE) on Wednesday.
It also posted a revenue of Tk192.23 crore, net profit of Tk14.46 crore, and earnings per share of Tk2.18 for the last financial year.
However, in the fourth quarter of the last financial year, the company incurred a 47% loss in revenue due to the countrywide shutdown put in place to curb the spread of novel coronavirus.
Its net profit also dropped by 35% in the fourth quarter of the last financial year.
Biplob said, "We could not achieve an expected growth due to the pandemic. But, the business has now made a turnaround."
The company got listed on the stock market in 2015. At the time, it raised Tk24 crore from the market through an initial public offering (IPO). It sold 1.20 crore shares of Tk20 each that included a premium of Tk10.
KDS Accessories has two factories in Gazipur and Chattogram. Using the funds collected from the IPO, the company has established the third unit of its Gazipur factory.
