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NTC’s profits fall as worker’s wages, fuel prices rise

Shakhawat Hossain Sumon
30 May 2023 00:00:00 | Update: 30 May 2023 00:11:45
NTC’s profits fall as worker’s wages, fuel prices rise

Capital market-listed National Tea Company Ltd.’s expenses are higher than its income due to an increase in the wages of tea workers and a rise in fuel prices.

As a result, the company has counted huge losses at the end of the nine-month period of the fiscal year 2022-23 with its reserves decreasing.

A perusal of the latest financial report shows that during this nine-month period, the company earned Tk 84.28 crore from sales of tea while it spent Tk 88.77 crore on ancillary sectors, including tea production, where expenditure has been 5 per cent higher than income.

The company has to rely on its reserves and surplus to meet this shortfall.

It was observed that the company had reserves and a surplus of Tk 47.83 crore in the nine months of FY23 compared to Tk 48.35 crore in the same period of the previous fiscal year. But in the same period of FY20, reserves and surplus were Tk 107 crore,

During the July-March period, the company’s losses rose 48 per cent compared to the same period of the previous fiscal year as expenses outpaced revenue.

The company posted a net loss of Tk 30.37 crore in the nine-month period of FY23 compared to a loss of Tk 20.54 crore in the same period of the previous fiscal year.

The company said as the reason for the higher cost in this quarter, auction sale of tea decreased due to a drop in both volumes by 2.96 lakh kgs and average price by Tk 3.42 per kg compared to last year’s same period.

Pricing in an independent auction sale is beyond the control of the company. Local sale of tea decreased due to a fall in volume of 0.40 lakh kg despite an increase in price of Tk 4.58 per kg compared to the same period last year, according to the company report.

“These consist of labour wages paid to the workers engaged in various cultivation works and the cost of chemicals and fertilisers. These expenses rose due to an increase in labour wages of Tk 50 per labour per day and an increase in the cost of chemicals and fertilisers, which are also the reasons behind decreased earnings.”

This consists of the cost of electricity, gas and diesel used in manufacturing at the factory. This cost went up due to an increase in the cost of electricity and diesel, as well as increased use of generators due to frequent power outages, according to the company’s last quarter report.

As the reason for the previous year’s loss, the company said, this consists of labour wages and allowances, which increased as incremental wages are changed for the full period, which was changed only for five months last year due to timing of the new agreement.

The company earned Tk 92.24 crore from sales of tea in the July-March period of FY22 against Tk 89.36 crore spent on tea production.

Besides, the turnover of the company in the same period of FY21 was Tk 85.69 crore compared to Tk 79.45 crore in the same period of the previous fiscal year. Net loss was Tk 21.06 crore and Tk 23.24 crore respectively.

BSEC, the regulatory body, approved the placement share issue in April this year to raise the paid-up capital of this small-cap company.

Although the company has already approved it through their Extraordinary General Meeting (EGM), it has not started operations yet.

In this process, the company will issue 2.34 crore of ordinary shares with a face value of Tk 10 each. The shares, however, would be offered at an issue price of Tk 119.53 each, including a premium of Tk 109.53.

In this regard, BSEC Executive Director and Spokesperson Rezaul Karim told The Business Post that the placement share issue of the company has been approved after considering legal aspects. The company has already held its EGM.

Now it depends on them when they will start the process, he said.

Molla Golam Mohammad, secretary of the company, could not be reached over phone for his comment in this regard.

Currently, National Tea has a paid-up capital of Tk 6.6 crore. After the issue of placement shares, the paid-up capital of the company will stand at Tk 30 crore.

Incorporated in 1978 and listed on the stock exchange in 1979, NTC engages in the plantation, cultivation, manufacturing, and sale of tea and rubber in Bangladesh.

Each share of the company rose by 8.74 per cent to close at Tk 491.20 on the DSE on Monday.

The sponsor-directors owned a 44.90 per cent stake in the company while the government held a 4.33 per cent, institutional investors 14.75 per cent, and the general public 36.02 per cent until April 30, 2023.