S.S. Steel is set to acquire fixed assets of two non-listed steel makers -- Super Steel and Peninsula Steel Mills, located at Sitakunda in Chattogram -- as part of its business expansion.
The fixed assets -- land (164 decimal), steel structure shed, building, capital machinery, and utility connection -- will be bought at an expense of Tk 1.30 billion, said the company in a stock exchange filing on Monday.
This acquisition is part of the company's commitment to enhancing production capacity, and it will result in an additional annual capacity of 62,400 tonnes MS Rod, raising the total yearly capacity to 442,800 tonnes MS Rod.
The company expects to have a boost to its revenue to Tk 30 billion, supported by the capacity expansion. That in turn will improve profitability of the company.
The investment will partially come from retained earnings and from financial institutions and bank borrowings.
SS Steel, which began its journey in 2001, produces MS billet and MS Rod from scrap.
"As part of our sustainable business plan, we are focusing on increasing our production capacity," said Javed Opgenhaffen, chairman of SS Steel, in a statement on Monday.
"We have found that Super & Peninsula Steel is the right choice for us, as it has a ready factory setup and great potential."
Steel-producing companies have been focusing on increasing production, inspired by the implementation of mega projects, development of economic zones, and an increase in the construction of buildings in the rural area.
Meanwhile, the Bangladesh Securities and Exchange Commission has expressed concerns over the rising liabilities of SS Steel in recent years.
The regulator recently issued a letter to SS Steel, seeking all the documents related to bank loans and other liabilities along with relevant price sensitive information as per the latest audited financial statements.
The company's bank borrowings and other liabilities stood at Tk 9.74 billion until FY23, which was Tk 608.3 million five years back.
The mounting debt has left the company unable to make handsome profit and declare good dividends to shareholders, though the sales revenue increased.
In FY23, its sales almost doubled to Tk 14.86 billion, while costs of sales soared 122 per cent to Tk 13.13 billion.
Company secretary Md Mostafizur Rahman said they had acquired two companies after the stock market listing in January 2019, which was why the loan burden escalated.
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