How merger brings blessing for Kay & Que's business
Its profit surges largely driven by inclusion of revenue from its IT unit
Kay & Que (Bangladesh), a publicly listed company primarily engaged in CNG refuelling and stone sales, has undergone a remarkable transformation since its merger with MultiSourcing Limited, an IT firm.
The merger, finalised in July 2023, has significantly bolstered the company's profitability, shifting its focus toward a more diversified and sustainable business model.
In the July-September quarter of the current fiscal year, Kay & Que recorded a post-tax profit of Tk79 lakh, a sharp increase compared to just Tk3 lakh in the same period last year. This surge was largely driven by the inclusion of revenue from its IT unit, which began contributing to the company's financials in August 2023.
The merger decision was rooted in the company's struggle with its previous ventures. Kay & Que faced challenges in the carbon rod, coal tar, and pesticide businesses, leading to their eventual closure.
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The carbon rod unit shut down after the supplier ceased operations, making it impossible to source spare parts. This led to a decline in product quality and eventual financial losses.
The coal tar unit, launched in 2002, faced a significant drop in demand and lacked a robust marketing network, forcing its closure. The pesticide unit also succumbed to market challenges.
Recognising the need for a strategic pivot, the management decided in February 2022 to diversify its operations. The focus shifted to its operational CNG refuelling stations and the newly merged IT unit, marking a new chapter for the company.
Kay & Que's IT unit, formed through the merger, offers a wide range of services, including quality content, value-added services, interactive voice response solutions, text-based services, GPRS content, and enterprise-scale software and hardware solutions. The company's primary clients are telecom operators, which provide a steady revenue stream.
According to company officials, the IT unit's contributions have significantly enhanced overall profitability, providing stability and growth prospects. This diversification has not only improved the company's financial health but also positively impacted shareholder value.
Under the merger agreement approved by the High Court, Kay & Que issued 17.1 lakh ordinary shares to the shareholders of MultiSourcing at Tk10 each. This raised the company's paid-up capital from Tk5.16 crore to Tk6.86 crore.
As of 31 October 2024, Kay & Que's ownership structure consisted of 35.24% held by sponsors and directors, 18.19% by institutional investors, and 46.57% by general investors.
The company also recommended a 3% cash dividend and a 2% stock dividend for FY24, reflecting its improved financial performance. During the fiscal year, its earnings per share stood at Tk0.67.
Kay & Que's share price has seen consistent growth, driven by the merger and its potential. The share price closed at Tk239.70 on the Dhaka Stock Exchange yesterday.
The anticipation and realisation of benefits from the merger contributed to repeated surges in share prices from 2018 to 2024.
While the merger has brought significant benefits, some challenges remain. The company's natural sand and stone business is currently suspended due to unfavourable market conditions. However, with the operational CNG refuelling stations and the growing IT unit, the company seems to be in well-positioned for sustained growth.
The merger with MultiSourcing Limited has proven to be a game-changer for Kay & Que. By integrating a robust IT business, the company has not only overcome the setbacks of its previous ventures but also established a strong foundation for future growth. With diversified operations and a strategic focus on technology-driven solutions, Kay & Que is on a promising path to long-term success.
