Usmania Glass Factory now BCIC's burden

Usmania Glass Sheet Factory Ltd (UGSFL) has become an albatross around the neck of Bangladesh Chemical Industries Corporation (BCIC) owning to its gross mismatch between earnings and expenditures, officials said.
The UGSFL, which got listed with the country's stock exchanges in 1987, is the government's lone manufacturing plant producing glass sheets since 1959.
As situation of the state-owned lone glass sheet manufacturing unit is worsening fast failing to compete with private peers, the corporation is now considering closing down operations of the factory.
But, the country's largest corporation has planned to install fresh container glass making plant where the competition with private enterprises is comparatively lesser, according to UGSFL sources.
The company was profitable until fiscal year 2013-2014 but since then things went wrong as financial health of the decade's old plant kept worsening.
Simultaneously, production capacity with outmoded machinery continues decline and now it stands only 20 tonnes a day against daily production of 400 tonnes to 800 tonnes by the private enterprises.
According to official statistics, the volume of net loss was calculated to Tk 1.21 million in FY'15 and since then it failed to came out of the vicious circle of loss.
It incurred cumulative loss worth Tk 7.91 million, Tk 7.88 million, Tk 2.38 million and 108 million in FY'16, FY'17, FY'18 and FY'19 respectively, according to the statistics.
When contacted, managing director (MD) of the UGSFL Bidyut Kumar Biswas said they have been trying hard to continue production with machinery the life of which expired many years ago.
Because of outdated technology, both gas consumption rate and production cost is too high, which dented its competitiveness, he said.
"It becomes really tough to compete with the private peers. So, things are going against us," said Mr Biswas, who recently joined in the ailing unit as its MD and chief executive officer (CEO).
Seeking anonymity, another official of the unit said the cost for producing each square foot of glass sheet by the UGSFL rose to Tk 20.19 against its price of Tk 14.51.
The production cost for each square foot of glass sheet was Tk 13.80 in FY'14 when its price was Tk 14.37, he said.
"Another key aspect that badly hurts us is private sector's aggressive marketing policy. Whenever we reduce prices of our products, the private peers reduce prices still further. So we kept losing market," he added.
He also said the UGSFL had two furnaces to make the glass sheets but the factory management was forced to shut one of them to avert growing costs last year.
"The only furnace that remains now can produce glass till upcoming December. After that, it needs to be replaced, which is costly. So, I guess the factory could shut from that time," he added.
Talking to the FE, line director of UGSFL Md Amin Ul Ahsan said the UGSFL has become a serious concern of the corporation because of its growing mismatch in earnings and expenses.
He said they have planned to initiate new project involving around Tk 4.0 billion for installing container glass making plant there at the corporation's own costs.
"We will soon issue order for conducting feasibility study there. We hope things will improve once the new plant is built there," Mr Ahsan, also director (commercial) at the BCIC, said.
The company's earnings per share (EPS) stood at negative Tk 2.40 for July-December 2019 period as against negative Tk 1.48 for July-December 2018.
Its net operating cash flow per share (NOCFPS) was negative Tk 3.13 for July-December 2019 period as against Tk 0.04 for July-December 2018.
The net asset value (NAV) per share was Tk 97.24 as on December 31, 2019 and Tk 99.65 as on June 30, 2019.
Each share of the Usmania Glass closed at Tk 51.60 on Thursday last. The company declared 'no' dividend for the year ended on June 30, 2019. It disbursed 10 per cent stock dividend in 2018.
The company's paid-up capital is Tk 174.11 million and authorised capital Tk 500 million while total number of securities is 17.41 million.
The sponsor-directors own 2.0 per cent stake in the company, while the government owns 51 per cent stake, institutional investors 9.39 per cent and the general public 37.61 per cent as of January 31, 2020, the DSE data showed.

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