Mohammad Mufazzal
Two associations of motorcycle assemblers and manufacturers have sought a financial support worth Tk 20.6 billion from the government to help protect the motorcycle industry.
They have sought the support from the fund worth Tk 777.50 billion recently announced by the government under a stimulus package as the automobile companies are reeling from the shock of Covid-19.
The manufacturers said the onslaught began at the end of March and is prevailing still now following the prolonged lock down.
The manufacturers and assemblers have predicted a loss of Tk 6.0 billion from the sales of motorcycles during one month closure amid public holiday.
"Beyond the impact of coronavirus, it is envisaged that the market will not recover by next two to three years," according to Motorcycle Manufacturers & Exporters Association of Bangladesh (MMEAB) and Bangladesh Motorcycle Assemblers and Manufacturers Association (BMAMA).
They said the motorcycle industry will have to absorb a huge loss before resumption of normalcy.
The local automobile companies manufactures and assembles motorcycles, buses and trucks.
Hafizur Rahman Khan, chairman of Runner Automobiles said they are still unable to know when the situation will improve to create a breathing space for automobile companies.
"We are bearing the losses with our capitals," said Mr. Khan, also the president of MMEAB.
In their proposal sent to the secretary of Industries Ministry, the MMEAB and BMAMA have requested the government to consider a special stimulus package for the motorcycle industry.
The allocations of the proposed package includes: an amount of Tk 600 million with 2.0 per cent service charge to pay salary and wages and an amount of Tk 20 billion to support the working capital at a subsidized interest rate of 4.0 per cent.
The business of the automobile companies is related to transports and communications.
As a result, the operations and distributions almost came to a standstill following the lockdown enforced across the country to contain the spread of COVID-19.
The chairman of Runner Automobiles Mr. Khan said the government has announced the stimulus package under which the automobile companies will get loans at lower interest.
"But, there are complexities in case of disbursing the loans. The complexities should be resolved soon to make our industry viable," Mr. Khan said.
Presently, there are five automobile companies listed on the stock exchanges.
The companies are Runner Automobiles, Aftab Automobiles, Ifad Automobiles, NAVANA CNG and Bangladesh Autocars.
According to manufacturers, the productions, distributions and sales of automobile companies almost remained halted since March 25.
As a result, the collections of the companies were hampered seriously.
Md. Moniruzzaman, managing director at IDLC Investments, said "The automobile companies may get a scope to overcome the losses by this time if the situation improves soon."
Following the erosion in revenues, the earnings per share (EPS) of all listed automobile companies also declined for October-December, 2019 compared to same period of the previous year.
Of the listed companies, Aftab Automobile reported its revenue of above Tk 537.77 million for October-December, 2019 against above Tk 708.14 million reported for same period of the previous year.
The company's net operating cash flow was also negative (Tk 0.47) for July-December, 2019 against Tk 0.15 for July-December, 2018.
The EPS of Ifad Autos, Runner Automobiles, Bangladesh Autocar, and NAVANA CNG also declined for October-December, 2019 compared to same period of the previous year.
The chief financial official of Runner Automobiles said automobile companies have been passing a tough period as their operations, distributions and sales remain totally closed for last more than one month.
"The companies' ongoing non-productivity will leave a serious impact on their financials at the year ending," Mr. Islam said.
The consolidated EPS of IFAD Autos declined to Tk 0.96 for October-December, 2019 from Tk 1.61 for same period of the previous year.
Talking to the FE, some manufacturers said the loss of their companies is much higher than that of any other industries following the closure of transports across the country.
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