Two listed companies of the BSRM Group – BSRM Limited and BSRM Steels – have posted the highest ever revenue and profits for 2020-21 thanks to increased demand for construction rods, their capacity to raise prices to offset the escalating costs and a significant drop in interest expenses.
The annual revenue of BSRM Steels Ltd grew to over Tk5,498 crore from Tk3,868 crore the previous year.
BSRM General Manager for Finance and Accounts Shekhar Ranjan Kar told The Business Standard the companies' annual sales in terms of volume grew by more than one-third as the market leader successfully retained its edge in catering to the growing market demand.
He added that the price hike resulted in higher growth than volume growth over the same period.
Since the first lockdown ended on 31 May last year, construction has been on the rise both in public infrastructure and real estate sectors.
According to the BSRM finance chief, the raw material cost of the steel industry nearly doubled since September 2020, while international maritime freight grew over 2.5 times over the last year.
BSRM's construction rods were sold at an annual average rate of Tk63,000 per tonne in 2020-21 fiscal, which was Tk61,000 in the previous fiscal.
At present, the price has already shot to Tk76,000 per tonne as the company still needs to match prices with the increased cost.
BSRM Ltd, the other listed company of the group registered Tk6,987 crore in annual revenue till the end of June, up from Tk4,572 from the previous fiscal year.
Finance cost has dropped by up to 75%, which helped the companies post strong profits, said Kar.
Average interest expense against loans was 11% in 2019, which dropped to 9% in the early 2020 and to 4% in late 2020, he added, thanking the government for its stimulus loan package given to industries for working capital financing amid the pandemic.
BSRM Steels' annual net profit grew to nearly Tk305 crore from the previous year's Tk74 crore, resulting in an earnings per share (EPS) to jump to Tk8.1 from Tk1.97. The annual EPS of BSRM Ltd grew to Tk18.96 from Tk3.9.
Both the companies make billets from imported raw material and consume the semi-finished raw material to manufacture construction rods.
BSRM Ltd's profit jump was partly contributed by the merger of its associate company BSRM Steel Mills Ltd in the last fiscal year, said the finance chief.
The merged company produces billets and its 45% shares were being held by BSRM Ltd. After the merger all its income belongs to the listed company now.
Following the highest ever profits in the group's history, the two listed companies announced record cash dividends for their shareholders.
BSRM Steels which already has given 10% interim cash dividends for the last fiscal will give 30% more against each share having the face value of Tk10.
BSRM Ltd shareholders would get 50% cash dividends.