Bashundhara Paper Mills Ltd is losing its monopoly in tissue and paper business as the sales of the company are decreasing consistently in the face of stiff competitions from its competitors.
Though the business of Bashundhara Paper had been rising steadily from 2014 to 2018, the sales of the company fell by 14 percent in the first three months (July-September) of the current fiscal, following an eight percent decrease in fiscal year 2018-19.
Replacing the sole domination of Bashundhara Paper, the businesses of "Fresh Tissue" of Meghna Pulp and Paper, and "Bangla Tissue" of East Asia Group are on the rise.
M Naseemul Hye, company secretary of Bashundhara Paper Mills told The Business Standard, "Competition in the market has stiffened. Bashundhara has 25 years of experience in paper and tissue business. Though the company is going through a tough time, it will overcome the predicament soon."
Paper and tissue market
The per capita use of tissue in Bangladesh is 145 grams. The average annual growth of the tissue market is 13 percent whereas the average growth in the world is 4.90 percent. At present, the demand for tissue is 26,400 tonnes in Bangladesh.
Meanwhile, the overall demand for paper in the country is 15 lakh tonnes, of which about six lakh tonnes are imported.
As per the data of the Bangladesh Paper Mills Association, each of more than one million families in the country uses one toilet roll a week and one tissue box per month. Some 25,000 restaurants use one crore pieces of table napkins.
In the first quarter (July-September) of the fiscal year 2019-20, Bashundhara Paper's sales amounted to Tk255 crore. During the same period in the previous year, the amount was Tk297 crore.
During the period, the company's net profit fell by 33 percent. In the first quarter of the current fiscal year, the company made a net profit of Tk12 crore and its Earnings Per Share (EPS) was Tk0.68. During the same period in the previous year, its net profit was Tk18 crore and the EPS Tk1.04.
In the fiscal year 2018-19, the sale of Bashundhara Paper also decreased. In the last accounting year, its sale was about Tk1,000 crore. In the accounting year 2017-18, the sale was Tk1,082 crore.
In the last fiscal year, Bashundhara Paper's net profit was Tk29 crore and EPS Tk1.68. In the previous year, its net profit was Tk69 crore and EPS Tk4.63.
In the last fiscal year, the company recommended giving a 15 percent cash dividend to its shareholders. However, the directors and sponsors of the company will not take the dividend. Only the general shareholders will get it.
The record date for the dividend is December 2. The company will hold its Annual General Meeting (AGM) on December 24.
In the accounting year 2017-18, the company provided a 20 percent cash dividend to its shareholders.
Bashundhara collected Tk200 crore in 2018 by selling each share of Bashundhara Paper at Tk80 to the eligible investors, and at Tk72 to general investors through Initial Public Offering (IPO) in book building method.
The transaction of the shares of Bashundhara Paper started in the Dhaka Stock Exchange on July 2, 2018, at Tk130 per share. At present, the share of the company is being traded at a rate 38 percent lower rate than its issue price.
The closing price of the company's share at the Dhaka Stock Exchange on Monday was Tk44.70.