Bangladesh Steel and Engineering Corp reports losses for the first time

According to official statistics, the corporation incurred a financial loss of Tk10.2 crore in FY21

A once-thriving Bangladesh Steel and Engineering Corporation (BSEC) is now reporting losses.

The state steelmaker was profitable until FY20, despite various operational challenges but saw a reversal of its fortune in FY21 when the corporation incurred a loss of over Tk10 crore.

Officials at BSEC said that the corporation somehow managed to maintain a healthy balance sheet thanks largely to the profits earned by its best-performing unit - Pragati Industries.

But Covid-19-induced shocks took a big bite out of the earnings of the automobile assembler, badly affecting its production and sales. This is now reflected in the balance sheet, according to them.

The profit margin of the key corporation of the government was over Tk83.3 crore even in FY17 but the figure kept waning continuously with the net profit shrinking to Tk78.6 crore, Tk80.6 crore and Tk54.1 crore in FY18, FY19 and FY20 respectively.

According to official statistics, the corporation incurred a financial loss of Tk10.2 crore in FY21.

The loss-incurring units are Eastern Cables Limited (Tk10 crore), Atlas Bangladesh Limited (Tk9.79 crore), Bangladesh Blade Factory Limited (Tk3.27 crore) and Eastern Tubes Ltd (Tk1.77 crore).

Its profit-makers are Pragati Industries Limited (Tk5.1 crore), General Electric Manufacturing Company Ltd (Tk4.7 crore), Gazi Wires Ltd (Tk2.54 crore), Dhaka Steel Works Ltd (Tk1.82 crore) and National Tubes Ltd (Tk51 lakh).

Seeking anonymity, a senior official at the Industries Ministry said that they were 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 loss making corporations.

This is probably the first time the corporation made a loss, he also 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 pandemic situation improved but the volume was 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 Tk101 crore in FY19 and it declined to only Tk5.1 crore in FY21, he said.

The official also mentioned that the corporation had a 30% stake in Honda.

Asked whether the corporation made a loss for the first time, the official said in his 15 years in the company he has never seen it make a loss.