Western Marine to spend Tk 500cr on expansion
Western Marine Shipyard, the leading shipbuilder of Bangladesh, has decided to invest Tk 500 crore in expansion.
The board of directors of the company approved the shipbuilder's expansion plan to build special types of vessels, according to a disclosure posted on the Dhaka Stock Exchange website yesterday.
Md Sakhawat Hossain, managing director of the shipbuilder, told The Daily Star that the company would issue rights shares to raise a portion of the funds to be invested.
The remaining funds will come from the company's own sources and new loans from banks and financial institutions, he said.
“We prefer the stockmarket to raise funds as the shipbuilding industry requires long-term investment,” he said.
This will allow the company to generate an additional revenue of Tk 150 crore per annum, enabling it to make 11 percent additional profit, according to the disclosure.
Western Marine is now making 38 ships for four countries, according to the company. It exported 14 vessels to three countries in the last one year.
Bangladesh's shipbuilders exported 43 vessels in the last eight years, of which 33 were from Western Marine. Western Marine owes about Tk 700 crore to various banks, according to its company profile.
It rescheduled its default loans with two banks earlier this year and started to repay instalment regularly as the shipbuilding industry overcame the global recession in the last four years, said Hossain.
The board also decided to offer 1.25 rights shares for 1 existing share at Tk 20 each, including Tk 10 premium for the expansion of the shipyard's capacity, according to the post.
Hossain said the importance of water transport in the local market is growing to carry raw materials needed to set up infrastructure projects such as power plants and bridges.
As a result, the income of the shipbuilding industry will get a boost soon, he hoped.
Western Marine raked in Tk 213.62 crore in revenues in the first nine months of fiscal year 2016-17, up 2 percent from Tk 209.44 crore recorded in the same period a year ago, according to the company's statement.
Yesterday, the board recommended 3 percent cash and 12 percent stock dividend for the year ended on June 30, 2017.
The share of the company improved to 'A' category status from 'Z' category on November 1 after it disbursed 10 percent stock dividend for 2014-15 and 12 percent for 2015-16.
The company had taken a stay order from the High Court in 2015 over dividend declaration as it could not complete its financial statement, according to Hossain.
The crisis arose after the company's export orders to Germany were cancelled in 2013 because of the fallout of the global recession, he said.
The company held two years' annual general meetings in one session in October this year with permission from the High Court after finalising the financial statement.
Earnings per share of the company increased to Tk 2.14 at the end of June this year against Tk 2.01 in the same month last year.
The company topped the turnover list yesterday with its shares worth Tk 26.53 crore changing hands. It, however, lost Tk 2.4 or 5.85 percent to close at Tk 38.60.