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Usmania Glass Sheet Factory Limited (UGSFL), the country’s first glass manufacturing company, has been experiencing a steep decline in sales for a long time due to old technology, the shutdown of a production unit, high production costs, uneven market competition, indifference of policymakers, and inefficient management.
The 63 years old government-owned glass manufacturing company has been facing a continuous drop in sales over the past few years and failed to come out of the vicious circle of loss. The global Coronavirus pandemic also deepened its financial crisis much further.
As a result, the company incurred around Tk 65 crore in the last few years which is more than three and a half times of the paid-up capital.
UGSFL Managing Director Kh Shahidul Islam said making glass sheets with 63-year-old technology and dilapidated machinery, increase in raw material and gas prices, increase in sales commission and decrease in demand for glass caused the persistent loss of UGSFL.
The UGSFL started its journey before the independence of Bangladesh in 1959. The company was a profitable entity until fiscal 2013-14, but since then it incurred losses for eight years up to fiscal 2020-21, according to UGSFL sources.
The sources said the company has two plants for manufacturing glasses: furnace-1 and 2. Furnace-1 has been stopped for the past four years while furnace-2 resumed production in August last year, after remaining closed for one year after being affected by a fire accident. The company also failed to produce glass sheets in FY 2020-21.
“Sale of the company dropped significantly due to the crisis of dollar and fuel which is also hindering the operation of the company”, Shahidul Islam said, adding, “The production of the company will continue for the next six months as a loan has been secured from the Chemical Corporation for LC payments.”
He observed that the company is mainly being operated for the sake of employment of a few people; otherwise it would have been shut down completely.
According to the statistics, the UGSFL incurred losses worth Tk 7.91 crore, Tk 7.88 crore, Tk 2.38 crore, Tk 10.82 crore, Tk 12.54 crore, Tk 10.62 crore, Tk 4.63 crore in FY 2015-16, FY 2016-17, FY 2017-18 and FY 2018-19, FY 2019-20, FY 2020-21 and FY 2021-22 respectively.
The total accumulative loss is now around Tk 64.68 crore and the company failed to fetch any profit for the past four years. According to the first marginal report of FY 2022-23, UGSFL made sales worth Tk 8.12 crore and posted Tk 50,000 net loss after covering all other costs related to production and distribution.
Meanwhile, the company that got listed on the capital market in 1987 has not paid any dividends to the shareholders for the last four years.
A number of investors of the company said that Usmania’s present condition was induced by the long-term negligence of the management. Usmania, a once profitable glass sheet factory, has not been able to recover from its losses due to inefficient management, nepotism in recruitment, corruption, and inability to make timely decisions, they alleged.
To get out of this dire situation, the factory of the company, situated on 9.8 acres of land, should be equipped with modern technology by handing it over to the private sector or through Public-Private Partnership. Otherwise, the company is fated to be doomed, the investors said.
They said the price of each share of the company was Tk 100, and now the price has declined to Tk 74.60.
Officials of UGSFL said Usmania produces glass sheets with 60-year-old equipment and no new equipment was added. Although the quality of the product is low, the cost of production is high.
As a result, the company has suffered losses for several years due to the constant price reduction competition by competing companies, they said.
The officials said the company is not even utilising 40 per cent of its production capacity due to low sales, low demand, and high inventories. At the same time, it also suffers from technological issues.
Now if the government does not provide cash and install new and advanced technology machinery, it will be impossible for the company to survive, they added.
Meanwhile, in July this year, Usmania and Bangladesh Chemical Industries Corporation (BCIC) approved converting the Tk 18.77 crore debt taken from BCIC into Share Capital for increasing the minimum paid-up capital to Tk 30 crore to comply with the requirement of Bangladesh Securities and Exchange Commission (BSEC).
Before that, on December 11, 2021, the BSEC directed that the listed companies with a paid-up capital of more than Tk 20 crore must increase their capital to Tk 30 crore by June 30, 2022, and those with a capital of less than Tk 20 crore by December of the same year.
