Home ›› 04 Sep 2021 ›› Stock
When most of the private companies are making profits defying the pandemic-induced adversities, three state-owned engineering companies have been suffering huge losses for several years.
The companies are - Atlas Bangladesh, National Tubes and Eastern Cables, all operated by the Bangladesh Steel and Engineering Corporation (BSEC).
Among them, Atlas Bangladesh has been incurring losses since financial year 2015-16, while National Tubes from 2016-17 and Eastern Cables from 2018-19.
Now, an uncertainty has been created over the listed companies’ comeback to business as the authorities have made no apparent moves to bring a change in the scenario.
Analysing the financial reports of the companies, it was seen that the three publicly traded companies have been disbursing dividends regularly to their shareholders, despite being in continuous losses.
Asked about the loss-making companies, Abu Ahmed, a capital market analyst and former Economics Department professor at Dhaka University, blamed the authorities’ inefficiency and corruption for the companies’ current state.
“The companies are in losses due to the authorities’ inefficiency, irregularities, and corruption. They are being ruined due to the wrong decisions taken by the government. It is still possible to make them profitable if the government turns sincere in this regard,” he told The Business Post.
Atlas Bangladesh
Atlas Bangladesh limited has been incurring losses since financial year 2015-16.
The motorcycle importer and manufacturer reported about Tk 22 crore in losses in total five years until FY20. It retained the lose streak in the first nine months of the financial year 2020-21 as its losses during the period amounted to Tk 5 crore.
Despite the fact, the company’s share price increased by Tk 30 at the Dhaka bourse last year and crossed Tk 130.
Atlas Bangladesh has paid a cash dividend of 5 per cent for the fiscal years 2019-20 and 2018-19.
The dividend disbursement squeezed the company’s reserve and forced it to shrink down to Tk 386 crore.
Contacted, the company secretary of Atlas Bangladesh, Sanjay Kumar Datta, told The Business Post that the company, as per direction of the Ministry of Trade, suspended production of motorcycles last year, to reduce the operating cost.
He also disclosed that the situation is not going to change soon as the ministry did not approve the company’s recently proposed projects.
National Tubes
National Tubes Limited has been incurring losses since financial year 2016-17, except for FY20.
The metal pipe manufacturing company returned to profit in FY20, but the good time did not sustain as it reported a loss of around Tk 85 lakh for the first nine months of FY21.
The company mainly manufactures API pipes used in oil and gas supply. Titas Gas, Bangladesh Oil, Gas & Mineral Corporation (Petrobangla), and Dhaka WASA are the main buyers of National Tubes.
M Ziaul Huq, managing director (in-charge) of the company, told The Business Post that the sale of National Tubes’ API pipes fell sharply since last year when the government announced to minimize gas supply.
On the other hand, the suspension of gas connection to the industrial sector has also affected the sales, he said.
“The market for our products is very small. This is why the losses could not be recovered,” he added.
Asked about measures to recover the losses, he said, “We are trying our best. Raw materials are being bought at cheap rates as part of cost reduction. In addition, product diversification and marketing systems are being strengthened.”
Despite the loss, the share price of National Tubes gone up by more than Tk 36 last year.
Like Atlas, National Tube has also been disbursing regular dividends. It paid a 3 percent cash dividend and a 10 per cent stock dividend for the previous year. The company has its own reserves of Tk 520 crore.
Eastern Cables
The electric cables manufacturer has been in a comparatively better position than the previous two companies.
Eastern Cables Limited did suffer any losses from 2015-16 to 2017-18. But it started to report losses from financial year 2018-19 and retained the downward trend until the third quarter of 2020-21.
Asked about the losses, Md Abul Kalam Azad, managing director (in charge) of Eastern Cables, refused to make a comment.
The company had not declared any dividend for the fiscal year 2019-20. However it paid a 5 per cent cash dividend for the 2018-19 fiscal year.
The company also paid dividends from its reserves despite being in loss.
Its current reserves amounted to Tk 13.48 crore. The share price of the loss-making company has risen by Tk 63 in last one year and stood at Tk 187.
