Loss-hit GQ Ball Pen to sell property to pay off debt

GQ Ball Pen Industries, the maker of the once popular ballpoint pen – Econo – has long been in losses, while debt liabilities have added a burden to the loss-incurring firm.

The listed company has now decided to sell part of its property to repay bank loans, according to a filing posted on the Dhaka Stock Exchange (DSE) website on Sunday.

The pen maker, as per the DSE disclosure, is set to sell 7.67 katha of land located in Agrabad of the port city Chattogram at a price of Tk 3.45 crore.

Out of the amount, the company will spend Tk 1.16 crore for the repayment of bank loans.

Uzzal Kumar Saha, company secretary of GQ Ball Pen Industries Limited, told the Business Post that the land to be sold has no longer been in commercial use. As a result, the company’s board approved the sale of the land to repay part of the debt taken from Southeast Bank Limited.

After the loan repayment, some capital would be in hand which would be added to the company’s cashbook as income, he added.

The company blamed the Covid-19 backlash for its earnings fall, though it had been in losses in the past five fiscal years.

The company incurred an annual average loss of around Tk 5 crore in the last five fiscal years, according to the company’s disclosed financial reports.

As per the FY22 financial report, the company’s short-term debt to Southeast Bank was Tk 3.17 crore, which was Tk 3.27 crore in FY 21.

The company, according to a recent revaluation, had an asset value of Tk 85.27 crore till January this year.

Before the revaluation, it mentioned an asset value of Tk 96.25 crore in its latest annual report.

Incorporated in 1981, GQ Ball Pen reined the local ballpoint pen industry with its flagship product ‘Econo’.

“Econo is the oldest and a very popular ballpoint pen brand in the country, but many big players emerged in the industry, leading us to face stiff competition. Our efforts are underway to regain a strong foothold in the market,” Uzzal Kumar Saha said.

The ball pen maker has been in losses since the fiscal year 2016-17.

Since then, the highest loss was reported as Tk 6.82 crore in FY20. It registered a loss of Tk 2.36 crore in FY22.

The company secretary said their losses came down significantly due to new investments and cost-cutting measures to reduce the production cost.

In the first half of the fiscal year 2022-2023, the company reported a net loss of Tk 1.99 crore, which was Tk 1.50 crore for the same period of the last fiscal.

Despite constant losses, the company paid a 2.5 per cent cash dividend to its shareholders for FY22.

The dividend, however, were distributed among general, institutional, and foreign shareholders, excluding sponsors and directors.

Alongside ball pen manufacturing, the company also operates a plastic unit.

After a fire incident that destroyed its plastic unit in 2017, it was later reopened.

According to industry insiders, around 25 lakh ballpoint pens are produced daily by local pen manufacturers which include Matador, GQ Ball Pen, Olympic, Pran-RFL, Janani, and Kumu, with Matador dominating the market.

GQ Ball Pen got listed on the capital market back in 1986.