Tess Agro Plc concluded its rights issue recently. The company’s managers to the issue Ms. Business Intelligence reported that they had received applications for 97,425,543 non-voting shares which was equivalent to 9.7 times the shares offered for subscription, and 59,461,579 application for the voting shares offered for subscription.
With the conclusion of the rights issue, the company looks forward to increasing its revenue and profits during the years to come.
The gross profit for the year ended March 31, 2018 was Rs 41.8 million, a 7 percent increase in spite of the revenue declining by 7 percent from Rs. 333 million to 310 million.
Although the reinstatement of the GSP plus was in June 2017, the company was able to make use of this only in the last two quarters where it was able to increase its purchases of raw materials from Sri Lanka due to the non availability of fish as a result of the two-year ban imposed by the EU.
During the third and fourth quarters of the year 2017/18 the gross profit margin averaged at 17% while the previous two quarters of the same year it was 10%. This is a direct result of the GSP plus being granted to Sri Lanka.
The company in envisaging that if this trend continues it has the ability to increase revenue by a further 30% during the year. The rights issue proceeds will help the company to go for higher volumes of purchases from Sri Lanka to boost its exports and make use of the GSP concession for Sri Lanka Exports to the EU.