The upgrades, set to transform the company’s bottom line, will be financed entirely from its own funds.
Hakkani Pulp and Paper Mills PLC is set to boost its profitability with an operational overhaul that will see it invest Tk80 lakh in two new energy-efficient projects, expected to generate an additional Tk95.50 lakh in annual profit.
At a board meeting held yesterday (6 September) at its registered office, the company’s Board of Directors approved the installation of a hot water generation system machine and an industrial exhaust gas boiler (EGB).
The upgrades, set to transform the company’s bottom line, will be financed entirely from its own funds.
Infographic: TBS
These technologies will allow the company to recycle waste heat from its existing gas generator and reduce its reliance on conventional gas consumption, a strategy that has already been adopted by several textile millers in recent years to curb soaring utility costs, according to the company’s officials.
The first project, the hot water generation system machine, comes with an estimated cost of Tk40 lakh, including installation. Once operational, the machine will capture hot water produced by the existing gas generator and convert it into extra steam.
This process will cut down the monthly gas bill of the current boiler system by approximately Tk3.16 lakh. The board estimates that this project alone will contribute around Tk38 lakh in additional annual profit.
The second project, the industrial EGB, also costing Tk40 lakh, will harness exhaust gas released from the generator. By harnessing the exhaust gas, this boiler is expected to produce nearly 24 tonnes of steam each month based on 24 working days.
The company anticipates a reduction of Tk4.60 lakh in its monthly gas expenses, translating into an annual profit boost of Tk55.50 lakh.
Together, the two machines will reduce gas costs by an estimated Tk7.77 lakh every month, or Tk93.50 lakh annually, strengthening the company’s margins at a time when energy expenses have been a major burden.
“Following the gas price hike, our utility costs increased alarmingly, which reduced profitability,” said Mohammad Musa, company secretary of Hakkani Pulp, in a statement to The Business Standard.
“These machines have already been tested by textile millers over the past two years and proved effective in saving gas consumption. The decision to install them is aimed at safeguarding our profitability,” he added.
Signs of recovery
The investment comes as Hakkani Pulp shows signs of financial recovery.
For the July-March period of FY25, the company reported revenue growth of 8% to Tk88.27 crore. Net profit soared 830% to Tk53.17 lakh, compared to the same period a year earlier. Earnings per share (EPS) rose to Tk0.28, while net asset value per share stood at Tk24.45.
The company attributed the sharp increase in EPS to higher sales volume.
In contrast, FY24 was a difficult year for Hakkani Pulp. Net profit plunged 95% year-on-year to Tk7.8 lakh, prompting the company to distribute only a 2% cash dividend for FY24.
Because the dividend payout fell short of the 5% threshold, the company continues to trade under the B category on the stock exchanges.
Despite these challenges, investor confidence in Hakkani Pulp has strengthened in recent months. The company’s shares closed 1.82% percent higher at Tk89.40 yesterday, reaching their highest level in over two years.
Since August, the share price has jumped by 34%.
On 14 August, the company responded to a query from the Dhaka Stock Exchange (DSE) regarding the unusual rise in share price and trading volume. Hakkani Pulp clarified at the time that there was no undisclosed price-sensitive information behind the surge.
According to Company Secretary Musa, the machinery purchase plan had been under preliminary consideration for months, but the board could not disclose it before formal approval on 6 September.
“The decision was materialised only at the board meeting,” Musa explained. “We were still analysing the output and benefits of the machines in earlier stages. That is why we did not share any information before the official resolution.”
The strategic investments in energy-efficient machinery are expected to have a significant long-term impact on the company’s financial health.
By cutting recurring gas expenses and boosting annual profit by nearly Tk1 crore, Hakkani Pulp aims to stabilise earnings and improve shareholder returns in the coming years, Musa added.
Source: The Business Standard
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