Why is Api Power Company issuing right shares from Kartik 14? Know the full story

Api Power Company Limited is issuing the right shares in the ratio 1:0.476 to its shareholders.

The right shares totaling 56,70,000 units will open from 14th Kartik and conclude on 4th Mangsir, 2077.

The company had previously promised that it would provide a dividend of double-digit for the fiscal year 2076-77 and had urged its shareholders to fully subscribe to the upcoming right shares.

As of now, the company's paid-up capital is Rs. 119.07 crores. After this issue, the paid-up capital will be Rs. 175 crores. Api Power Company has informed that it won’t be issuing earlier proposed 5% bonus shares for FY 2075/76 before floating its right shares.

According to the unaudited financial report, the total net worth of the company is Rs. 136 crores, reserve fund/ accumulated profit is Rs. 17 crores. The earnings per share stands at Rs. 8.04.

The company has completed the construction of 8.5 MW capacity Naugad Gadh Hydropower Project as the first project using the water of Naugad Gadh river flowing in the Darchula district of Far Western Province. This is the first hydropower project in the far west to be constructed and operated within 17 months with private investment.

The company has also been supplying electricity to the national grid by using the water of the same river as the second project with 8 MW capacity Upper Naugadh Gadh Hydropower Project.

Now, the company is issuing the right shares to generate capital for the construction of the third project, the Upper Chameliya Hydropower Project with 40 MW capacity. The project will generate 26.41 crores units of electricity annually. Of the electricity generated, 30 percent will be generated in six months of winter and the remaining 70 percent in six months of rains. In the first year, Rs. 162 crores revenue will be earned.

A total of Rs. 740 crore is estimated to be the cost of the project. The company will cover 30% of the total cost by issuing rights shares to its shareholders in two stages. The rest 70% will be borrowed.