A once-thriving state-run behemoth, Bangladesh Steel and Engineering Corporation (BSEC), shrinks into atrophy with financial loss for the first time, officials say.
The state steelmaker had been profitable until the financial year (FY) 2019-2020 despite various operational challenges but saw a reversal of its fortune in FY 2020-2021 when the corporation incurred a loss of over Tk 100 million.
Officials at BSEC say the corporation somehow managed to maintain a healthy balance sheet thanks largely to the profits earned by its best-performing unit - Pragati Industries Limited.
But the coronavirus-induced shocks made a strong bite on the earnings of the automobile assembler by badly affecting its production and sale. And it was reflected in the balance sheet, according to them.
The profit margin of the key corporation of the government was over Tk 833 million even in FY'17 but the figure kept waning continuously with the net profit shrinking to Tk 786 million, Tk 806 million and Tk 541 million in FY'18, FY'19 and FY'20 respectively.
And the end-result of the slide is obvious: the corporation continues losing its market share because of the emergence of vibrant private enterprises.
According to official statistics, the corporation incurred a financial loss of Tk 102 million in FY'21.
The loss-incurring units are Eastern Cables Limited (Tk 100 million), Atlas Bangladesh Limited (Tk 97.9 million), Bangladesh Blade Factory Limited (Tk 32.7 million) and Eastern Tubes Ltd (Tk 17.7 million).
Its profit-makers are Pragati Industries Limited (Tk 51 million), General Electric Manufacturing Company Ltd (Tk 47 million), Gazi Wires Ltd (Tk 25.40 million), Dhaka Steel Works Ltd (Tk 18.2 million) and National Tubes Ltd (Tk 5.1 million).
Seeking anonymity, a senior official at the ministry of industries which controls the corporation said the ministry was dealing with four major public corporations-BCIC, BSEC, BSCIC and BSFIC.
Only BSEC was making profit, but, unfortunately, it also joined in the league of other losing corporations. "This is probably the first time the corporation made loss," he said.
A BSEC official, who also preferred to remain anonymous, said Pragati Industries Limited, which meets government demand for automobiles in development budget, played a major role in making BSEC balance sheet healthy but the government completely stopped purchasing for a year as part of its austerity measure during the first two waves of Covid-19.
Later, the government resumed its purchase as the covid situation improves but the volume is much lower than the pre-Covid time, he said.
"This severely affected the performance of Pragati. Look at the profit margins of the automaker-it earned profit of Tk 1.01 billion in FY'19 and it declined to only Tk 51 million in FY'21," he said.
The official also mentions that the corporation has 30-percent stake in Honda. "If we calculate the profit, then we are profitable," he says.
Asked whether the corporation made loss for the first time, the official said he joined the corporation more than 15 years ago but never experienced it.
When contacted, BSEC chairman Md. Shahidul Hoque Bhuia, who took charge of the corporation after the FY'21, said he took various initiatives to bring back its glory through enhancing productivity of the running units.
"I am sure, people will see a massive change once the balance sheet of the just-past financial year (FY'22) is finished as the reviving steps started giving outputs," he said.
He said the pandemic-induced economic shocks, volatility in global supply chain and unavailability of raw materials during Covid-time badly impacted its production.
Mr. Bhuia pointed out several challenges - strengthening the existing marketing policy, replacing key positions of the units with individuals having sound knowledge about business, accounts and commercial operations and replacing decades-old machinery in the units.
"I am focusing on these areas to make a turnaround," he said, citing example of struggling Eastern Cables Limited that restarted exporting products after a long break.
In the previous financial year, it exported products in a little volume and signed an agreement on Monday to export products amounting to US$ 4.2 million to China.
"You will see more in coming days, inshallah," he adds, on an upbeat note.