Nagad Ltd, the operator of the mobile financial service of the Bangladesh Post Office, saw its accumulated loss rise to Tk 625 crore at the end of the financial year of 2022. 

The financial data was shared in the draft information of the memorandum of a bond that the company plans to issue.

Nagad has been incurring losses since its inception in March 2019 and the accumulated loss has piled up.

In the last fiscal year of 2021-2022, the company's net revenue soared 49 per cent year-on-year to Tk 517 crore, while its loss surged 40 per cent to Tk 262 crore.

The widening losses have prompted Nagad to decide to raise Tk 510 crore by issuing a zero-coupon bond from eligible investors.

A zero-coupon bond is a debt instrument that does not pay interim coupons but instead trades at a deep discount, rendering profit at maturity, when the bond is redeemed for its full face value.

The unsecured bond's tenure would be five years, and it would be non-convertible.

Of the bond proceeds, Nagad would repay loans of Tk 400 crore and the rest Tk 110 crore would be utilised as working capital.

Nagad has a short-term loan of Tk 617 crore, according to the prospectus on the bond.

"This is very natural that companies, especially startups, incur losses in their growth stage. That has also happened to Nagad," said Muhammad Zahidul Islam, head of public communication at the company.

He said Nagad has secured the loan to contribute to the country's financial inclusion drive.

"And the result is: within four years of our journey, Nagad has onboarded more than 7.5 crore customers."

Nagad is the second-largest MFS operator in a market that boasted 19.81 crore subscribers in March. More than Tk 108,467 crore were transacted in the month, Bangladesh Bank data showed.  

The company plans to move to the next phase and is going to introduce new services that will contribute to transforming Bangladesh into a cashless society.

"We have already cemented our position and we are very hopeful that within a very short time, Nagad will be a profitable company," said Islam.

Nagad expects to log a profit from the financial year of 2024-2025 and the projected profit would be Tk 28 crore. In the same year, its net revenue is forecast to grow to Tk 1,324 crore.

In 2022, Nagad's cost of services was Tk 415 crore, operating and administrative cost stood at Tk 292 crore, marketing and promotional expenses amounted to Tk 157 crore, and the interest cost was Tk 28 crore, according to the prospectus.