Ifad Autos, the sole distributor of Indian commercial vehicle giant Ashok Leyland, is going full steam ahead with its expansion plans even though its profit took a beating for the pandemic.
The publicly-traded company on Sunday announced buying additional 33 decimals of land at Tejgaon Industrial Area in Dhaka for Tk 19.84 crore for business expansion, according to a posting of the website of the Dhaka Stock Exchange.
“Investments are being planned here. This will benefit the shareholders,” Md. Sazzad Hossain Talukder, company secretary of Ifad Autos, told Dhaka Tribune.
The future investment on the land will be carried out with the company's own fund, he added.
Last year, the company acquired 49 per cent holding of Gulf Oil (BD), a subsidiary company of Gulf Oil International (UK) that sells lubricants, grease and car care products, for about Tk 11.9 crore to give a backward linkage.
But yesterday’s disclosure would go some way towards reassuring the shareholders after news last week that Iftekhar Ahmed Tipu, a sponsor-director of Ifad Autos and chairman of Ifad Group, has decided to sell two crore of his 8.28 crore shares in the company at the prevailing market price in the block market.
The disclosure lifted the company's share price, which closed 1.6 per cent higher at Tk 51.8 yesterday.
While the company’s profit tumbled 79.9 per cent in its 2019-20 financial year that ended on June 30, it picked up from July.
Between July and September, Ifad Autos's profit leapt 37.6 per cent year-on-year to Tk 172.4 crore.
The significant rise in profit was due to higher sales volume after the countrywide shutdown due to the Covid-19 outbreak from March, Taskeen Ahmed, managing director of Ifad Autos, told Dhaka Tribune.
During the period, the company -- which imports buses, covered vans, trucks, minivans, tippers, tractors and other heavy-duty commercial vehicles from India -- logged in sales of Tk 187.8 crore, up 4.4 per cent year-on-year.
The lockdown had dealt a heavy blow to the commercial vehicle business as freight transport and truck utilisation levels remained muted.
“People could not place orders or buy during the lockdown. Besides, many could not invest in the transport sector. They bought our products post-lockdown.”
An increase in consumption of essential and fast-moving consumer goods, perishable items like fruits, vegetables and other agricultural produce, poultry; e-commerce; an uptick in industrial production, export and import activities, and intercity travel were the reasons behind Ifad Autos' solid showing in the first quarter of its 2020-21 financial year.
Sales of long-haul trucks would pick up once the demand for cement and steel revives completely.
Ahmed is optimistic about the future even though the rogue virus is nowhere close to leaving the shores.
“We are getting a good response,” he said, adding that small cars are piquing customers’ interest a lot of late.
The company’s share price has been on descent since January 9, 2019: before then, Ifad Autos shares were trading at upwards of Tk 100.
The solid first-quarter showing helped claw back some of the lost ground: in the past two months, its stock gained about 21 per cent.
Ifad Autos, which was listed in 2015, has recommended a total of 11 per cent dividend -- 9 per cent cash and 2 per cent stock -- for the year ended on June 30. In the previous year, it gave 10 per cent cash dividend.
