Power Grid to issue preference shares against share money deposit

Power Grid Company of Bangladesh (PGCB) Ltd, the only state-owned power transmission company in the country, wants to issue preference shares against a government fund collected as share money deposit for project implementation.

The Ministry of Power, Energy and Mineral Resources recently took the decision at a meeting to comply with a circular issued by the accounting super regulator Financial Reporting Council (FRC).

According to PGCB's audited financial statement for FY21, the company received Tk7,180 crore from the government as share money deposit.

Share money deposit is the money paid in exchange for shares that have not been acquired yet.

Sources said, as per the ministry's decision, PGCB will issue irredeemable and non-cumulative preference shares in the name of the Power Division secretary at 0.5% dividend for the first year and at 1% from the next year.

Preference shares, more commonly referred to as preferred stock, are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued.

PGCB's Company Secretary Md Jahangir Azad told The Business Standard, "The power ministry gave consent to the company's proposal and sent it to the finance ministry for approval. We will publish the detailed information after obtaining the approval."

The FRC circular, issued in February last year, said share money deposits must be converted into the company's capital within six months.

It also said companies must include the share money deposits while calculating earnings per share and dividend as soon as the money is deposited, even before the securitisation.

But the company did not calculate the earnings per share and dividend by considering share money deposit for the last two fiscal years.

Meanwhile, in FY21, PGCB posted a profit of Tk377 crore, a 38% increase from the previous fiscal year. The company registered a 16.62% growth in its revenue.

It also continued upward growth in revenue and profit by 7% and 49%, respectively, in the July-September quarter of the current fiscal year.

Despite its significant profit growth, the company recommended a 20% cash dividend for FY21 like the previous fiscal year.

Power Grid Company of Bangladesh got listed on local stock exchanges in 2006 by offloading its 15.36% share.

As per the government decision, its corporate sponsor Bangladesh Power Development Board has offloaded another 9.64% shares recently.

Institutional investors hold 14.90%, foreign investors 0.06% and general investors 10.04% shares of the company.

From 30 November to 2 December this year, its share price jumped 16% to Tk61.3 each at the Dhaka Stock Exchange. On Sunday, its share price closed at Tk60.6 each, which was 1.62% lower than the previous trading day.