Hakkani Pulp & Paper to issue 16m shares for working capital

Hakkani Pulp & Paper Mills will raise Tk 160 million by issuing ordinary shares at Tk 10 each to sponsors and directors to enhance its production quality and fulfill the working capital shortage.
At present, it is operating with only two machines, one of which is used to produce tissue paper and another to manufacture writing and printing papers.
Company officials said they would be able to compete with other paper producers on completion of some modifications for uninterrupted and smooth operation.
They said a technical team from India had already visited the company to lay out a work plan for the purpose of the factory renovation.
Company secretary Mohammad Musa said around Tk 100 million might be required to complete the renovation job. The remaining Tk 600 million will be utilised as working capital.
The capital to be raised through ordinary shares will also help comply with the regulatory requirement of a minimum paid-up capital worth Tk 300 million for small-cap companies.
The existing paid-up capital of Hakkani Pulp is Tk 190 million, which will increase to Tk 350 million after the release of the ordinary shares.
The company is now able to produce 20-22 tonnes of paper a day. If the product quality is ensured through renovation, revenue generated will go higher boosting the profit, said the company secretary.
Hakkani Pulp incurred a loss of Tk 24.61 million and Tk 24.31 million for FY22 and FY21.
Officials said the company had been in distress since the Covid outbreak.
Due to country-wide lockdowns, schools, colleges and universities had remained closed in 2020. The company's production was also suspended at the time, which eroded its profit in FY21.
A hike in raw materials' prices and a shortage of working capital played a role behind the loss in FY22.
Hakkani Pulp reported a profit of Tk 16.91 million for FY23, overcoming the loss of the previous two fiscal years, mainly riding on increased sales. Its revenue jumped 101 per cent year-on-year to Tk 1.08 billion in FY23.
The company saw a steep growth because of a rise in the demand as the pandemic waned. Moreover, the prices of the products also increased significantly.
The stock, meanwhile, experienced a steep rise since March 19 and peaked at Tk 73.40 on July 9. Later, it exhibited ups and downs before closing at Tk 64 each on Tuesday.

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