HR Textile gets nod to raise Tk80cr via bonds
With per unit price set at Tk1 lakh, the bonds will mature in three to seven years
Highlights
- It plans to use the money to expand capacity
- Interest rate will be 9-9.6% per annum
- Annual turnover will rise by Tk140 crore
- 1,500 fresh jobs will be created
- Net profit rose by 116% in 3rd quarter of FY21
The Bangladesh Securities and Exchange Commission (BSEC) recently approved HR Textile's plan to raise Tk80 crore through zero-coupon bonds.
The company got a letter of consent from the regulator last week.
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With per unit price set at Tk1 lakh, the bonds will mature in three to seven years. The interest rate will be 9-9.6% per annum.
The total face value of the bonds will be Tk126.29 crore when they will mature. The bond units will be sold to potential investors, such as banks, insurance firms, financial institutions, corporate houses, non-resident Bangladeshis, and the general public, through private placements.
Sandhani Life Insurance Company will act as the trustee and AAA Finance and Investment will be the lead arranger of the bonds.
A zero-coupon bond is a debt security that does not pay interest but trades at a deep discount, rendering a profit at maturity when it is redeemed for its full face value.
The company will use the fund to purchase capital machinery and for loan repayment, factory expansion, and retrofitting.
As per the projection of its board of directors, the new facility will increase the annual turnover to Tk365 crore from Tk225 crore at present.
Besides, it will help create about 1,500 fresh jobs. Around 2,500 people are currently employed at the company.
Talking to The Business Standard, H.R Textile spokesperson Abu Amar Naheel said, "We plan to expand our capacity in sustainable production, as global buyers are moving towards more environmentally friendly products in terms of consumption of energy, water, and chemicals."
In this regard, the textile factory has a plan to convert its existing chemical effluent treatment plant (ETP) to a biological ETP to make it more environment-friendly, he added.
"We also have plans to install some latest technologies and machinery to make it a more efficient production centre", said Naheel.
The factory produces women's wear for European markets – mainly for the Spanish fashion giant Inditex Group – and some buyers in the German and French markets.
The textile company can meet 100% of buyers' requirements by producing high-value products for summer and winter with its own fabrics.
The company posted a 41% increase in profit as its earnings from garment exports rose in the July-March period of the fiscal year 2020-21.
It also posted a 116% increase in profit in the January-March period of that fiscal year, according to its latest financial statement.
The company paid a 10% cash dividend to its shareholders for the last fiscal year.
It got listed on the Dhaka Stock Exchange in 1997.
