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Global recession chokes GQ Ball Pen recovery aspirations

Shakhawat Hossain Sumon
02 Dec 2023 21:49:09 | Update: 02 Dec 2023 21:54:14
Global recession chokes GQ Ball Pen recovery aspirations

With the introduction of its ECONO ballpoints in 1981, GQ Ball Pen Industries Ltd completely transformed the writing instrument market in Bangladesh. However, the iconic brand has been struggling for the last five years.

Though the company started branching out to manufacturing plastic products and renting commercial buildings alongside producing pens, these ventures did little to improve the company finances.

In a recent financial statement available publically, GQ Ball Pen Industries attributed its negative profit incurred during the first quarter of FY24 to the skyrocketing prices of raw materials and other materials, and a steady rise in USD exchange rate.

The company did not comment on why the losses did not go down even after it began producing plastic products. Moreover, GQ Ball Pen Industries decided to sell the unused land to pay back bank loans at the beginning of 2023.

It however mentioned that even after paying off the bank loan with money from the land sale, there will be an opportunity to use about Tk 1.5 crores as the company's capital. By which it will be possible to increase the production and take the company to a profitable state.

The company added that it sold 7.67 katha of unused land in Agrabad of the port city Chattogram, for Tk 3.45 crore. Of the amount, Tk 1.15 crore will be used to repay a short-term loan taken from Southeast Bank Ltd.

The remaining capital will be spent to install modern machinery at its factory. However, instead of making profits, the company is now incurring losses consistently. The loss posted in Q1 of FY24 was the highest in the last two years.

The company posted a net loss of Tk 0.97 lakh for the July-September period of FY24. It had posted losses of Tk 0.93 and Tk 0.81 in FY23 and FY22 respectively.

GQ Ball Pen Industries’ Earnings Per shares (EPS) was negative Tk 1.09 for July-September of FY24, compared to negative Tk 1.04 for July-September year-on-year.

GQ Ball Pen Company Secretary Uzzal Kumar Saha told The Business Post, “Starting a business is not where profits are made overnight. Every venture needs time to be profitable. Our company has been incurring losses for a long time.

“If a company wants to return to making profits, it has to spend more time.”

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.

Kumar added, “Though there is a loss in the first quarter of FY24, we hope that through our various investments and initiatives, it will be possible to take the company to a better position by the end of this year.

“GQ Ball Pen's turnaround efforts are getting bogged down by the global recession.”

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.

In 1981, GQ Ball Pen set out to satisfy regional needs. For the first thirty years, business was going well. However, following 2012, the business started to lose market share due to a myriad of complications.

The corporation is counting losses as a result of diminishing sales and growing operating expenses. These days, GQ Ball Pen Industries' only sources of income are stock market and fixed deposit investments.

As of October 2023, sponsors and directors held 41.88 per cent of the company's shares, institutional investor's held 1.47 per cent, overseas investors held 0.05 per cent, and general investors held 56.60 per cent.