The net loss of Karachi Electric Supply Company (KESC) has declined to Rs 5.615 billion in the quarter ended September 30, 2009 as compared to Rs 6.587 billion recorded in the corresponding period last year. The loss per share (basic) of the company stood at Re 0.43 in the period under review against Re 0.50 in the same period a year back.
The board of directors of the company in its meeting held on Wednesday approved to issue 14.50 percent right shares, subject to approval of SECP, ie twenty-nine ordinary rights shares for every two hundred ordinary shares held by the shareholders at par ie Rs 3.50 per share. The rights issue shall rank pari passu with the existing ordinary shares of the company in all respects.
According to the financial results, the net earning from sale of energy increased to Rs 18.080 billion in this quarter against Rs 16.271 billion, from tariff adjustment increased to Rs 6.401 billion against Rs 4.161 billion while rental of meters and equipment's stood at Rs 51.449 million against Rs 51.112 million.
In the expenditure account, the company paid Rs 12.498 billion in purchase of electricity against Rs 11.149 billion while consumption of fuel and oil stood at Rs 11.659 billion against Rs 11.547 billion. Regarding the purpose of the right issue, the company said that the right shares are being issued to provide fresh equity which will support the capital expenditure requirements, improve debt equity and liquidity ratios, reduce finance cost and will improve profitability of the company to benefit all the stakeholders.
The company said that the injection of economic and efficient generation in KESC system and implementation of system improvement and loss reduction projects will improve operational and financial viability and profitability of the company. Partial funding the said projects through additional equity will reduce financing cost and positively contribute to future financial results of the company.
The fund generated through right shares will be utilised to partly finance equity component of new generation projects and capex requirement to augment and expand dilapidated transmission, distribution network, system improvement and loss reduction projects and to meet working capital deficit to reduce bank borrowings and resultant financing cost.