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Prime Textile Spinning Mills Limited, a cent per cent export-oriented yarn producer, is facing a massive setback in exports, thanks to the global economic slowdown and raw materials crunch.
This fallout forced the publicly traded company to sell products in the local market to meet the factory expenses.
The company posted a net loss of Tk 0.31 crore in the first quarter of the fiscal year 2022–23 against a net profit of Tk 0.52 crore in the same period of the last fiscal.
Despite sales in the local market, the company’s revenue fell year-on-year in the July-September period of FY23.
The yarn producer’s total revenue stood at Tk 27.8 crore in the first quarter of the current fiscal year which was Tk 39.76 crore in the same period last fiscal year.
Out of the total revenue earned, a total of Tk 11.86 crore came from the domestic market, while Tk 15.86 crore was generated from exports, according to the company’s latest quarterly report.
When asked about why a cent per cent export-bound company was selling products in the local market, a senior official of Prime Textile told The Business Post that they were now doing that in face of the unwanted global economic slowdown created by the Russia-Ukraine war.
“With fewer export receipts, we were even failing to meet the factory expenses. But once the exports become normal, we will stop the local sales,” he said.
The company’s financial reports released for the first quarter of FY22 and FY21 did not mention any earnings information about domestic sales.
Talking to The Business Post, Company Secretary Manzurul Hassan said their overall business condition was now in a fragile state.
“Due to the cotton prices hike in the global market following the lack of supply, we were forced to cut production on a large volume. And owing to this reason we were failing to bear our factory expenses,” he added.
“Besides, due to a lack of investment in balancing, modernisation, rehabilitation, and expansion (BMRE) project, old machinery could not be replaced with modern ones, limiting our production capacity as well,” Manzurul Hassan continued.
He said cotton, a required material to produce the yarn, is heavily reliant on imports, as it is hardly available in the local market.
The company earned Tk 39.59 crore from yarn exports in the first quarter of the fiscal year 2021–22 and Tk 31.27 crore in the previous fiscal.
Its loss per share for the first quarter of FY23 stood at Tk 0.08 against earnings per share of Tk 0.14 for the corresponding period last fiscal.
Sponsors and directors jointly own a 50 per cent stake in the company, while institutional investors hold 4.75 per cent, foreign investors 0.25 per cent, and the general public represents 45 per cent.
Prime Textile Spinning Mills is a concern of Prime Group of Industries, a leading industrial group in the country.
Currently, there are 35 industrial and commercial organisations under this business conglomerate.
The group is heavily involved in textile, garments, engineering, steel, ship-breaking, captive power production, poultry, dairy, fisheries, real estate, clearing & forwarding, coal-based power plants, shipbuilding, and others.
The board of directors of Prime Textile Spinning Mills recommended a 2 per cent cash dividend to its shareholders for the year ending in June 2022.
Its shares have been stuck at the floor price of Tk 41.2 per share on the DSE trading floor since August 28 this year.
