Raw material shortage eats into Energypac Power's business in Jul-Sep
The company has published its un-audited financial statement for the first quarter in a board meeting held on 4 January.
Publicly listed Energypac Power Generation PLC, in the July-September quarter of the ongoing 2023-24 fiscal year, reported a significant year-on-year decline in both its revenue and profit owing to a raw materials crisis.
The company has published its un-audited financial statement for the first quarter in a board meeting held on 4 January.
According to the financial statement, Energypac Power's revenue fell by 62% to Tk69.78 crore in the first quarter of FY24 and net profit by 47% to Tk0.99 crore, compared to the same quarter of the previous fiscal.
Lutfor Rahman, chief financial officer (CFO) at Energypac Power, told The Business Standard, "We couldn't import enough raw materials to meet the demand because of LC opening complexities."
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Consequently, the company's production dropped, resulting in a lower revenue during the quarter. Also, the company faced a working capital shortage because of the government's overdue payments for electricity for six to seven months, he added.
"Therefore, keeping the interest of investors in mind, we opted to divest from our loss-making subsidiary. Hopefully, the company's financial health will improve in the coming years, enabling it to pay good dividends," the CFO said.
In FY23, the company reported a consolidated loss of Tk68.94 crore, while on a solo basis, it made a profit of Tk14.34 crore. Consolidated revenue also declined by 60.61% year-on-year to Tk800.83 crore.
Owing to this huge loss, the company halved its dividend compared to the previous fiscal year and paid a 5% cash, that too only for its general shareholders, for FY23.
As a result, Energypac's stock was downgraded from 'A' category to 'B' category at the Dhaka Stock Exchange (DSE).
Recognising the potential for further losses in its power subsidiary, Energypac Power has sold off Energypac Power Venture to Sonargaon Leather & Rexine Cloth Industries, another entity of the Energypac Group.
The parent Energypac Power Generation held a 99% stake in Energypac Power Venture, which operates two independent power plants and two joint venture ones.
Officials said the parent company decided to offload the subsidiary owing to a possibility of further losses because of factors like difficulties in opening letters of credit (LCs) for fuel imports, and dollar price fluctuation.
Energypac Power enlisted on the stock exchange in 2021 by offloading shares through an initial public offering (IPO) under the book-building method.
It raised Tk150 crore through IPO mainly to expand its liquefied petroleum gas business. Its shares closed at Tk34.5 each on Thursday at the DSE.
Energypac Power has diverse businesses such as trading of standby and base load generators, JAC brand automobiles, John Deere brand Agro machinery and equipment, JCB brand construction machinery and material handling equipment, and operation of CNG stations along with aftermarket service.
