Advanced Chemical Industries (ACI) Ltd has posted a consolidated loss for the fifth consecutive quarter. The net loss for October-December quarter surpassed that in the previous three months.
For July-December period, the conglomerate posted a net consolidated loss per share of Tk12.2 against a face value of Tk10 each share, while the mother company alone secured a net profit per share (EPS) Tk14.6.
The deepening loss is mainly because of the increased allocation from profits to repay debts alongside the interest, said the company's statement. Besides, an increase in operating expenses is also blamed for that.
In the first half of the current fiscal year, ACI managed to secure an operating profit of Tk193 crore from consolidated revenue of Tk3,345 crore, reveals the consolidated statement.
But a 42 percent hike in finance cost that reached Tk223 crore has taken away more than the total profit in all the businesses, thus the net loss only extended the trail.
Over one year till December 31, 2019, the company's combined interest-bearing liabilities had a mere double-digit growth to cross Tk4,500 crore.
In the same period, its cost for debt servicing increased 42 percent to push the company into a net half-yearly loss of Tk82 crore, which was Tk5 crore for the same period of the previous year.
ACI shares plunged more than 7 percent yesterday at the Dhaka Stock Exchange to close at Tk182.9, which was more than Tk225 even in December 2019.
In the past week, some large local manufacturing companies have reported dire situation blaming tax and interest adversities that dragged investors' confidence and stock price down.
The Business Standard tried to reach ACI Chief Financial Officer Pradip Kar Chowdhury over telephone. But he did not respond to the phone calls despite several attempts.
An ACI official, seeking anonymity, told The Business Standard that increasing interest against bank loans and underperformance of a few subsidiaries was the main reason behind the deteriorated financial performance.
He also mentioned that the mother company and some of the subsidiaries have done well in business.
The mother company secured a net profit after tax of over Tk83 crore in the first half of the fiscal year, which was Tk65 crore a year ago, he said.
Despite incurring a loss of Tk74 crore in the last fiscal year, ACI Ltd has paid 100 percent cash and 15 percent stock dividends from the retained earnings to its shareholders.
It made a profit of Tk288 crore in 2015. Analysts say the high net profit was a blessing of low bank interest back then.
But the company is still aggressive in business expansion into diversified fields, and most of that is sponsored from debt instead of equity.
Its retail chain subsidiary, ACI Logistics Ltd, alone accounts for around one-fourth of the interest-bearing liabilities of the group, while it is still adding to aggregated losses each year.
And, a number of capital market investors have been vocal against the ongoing expansion model of ACI Ltd with high debt and low equity. Some of them have sought the regulator's intervention even to make the board flexible to give an ear to the general shareholders.
ACI Chairman M Anis Ud Dowla, in the last annual general meeting however, praised the company's growth in terms of revenue and business fields.
He also said that the extremely leveraged retail chain business is under plans for fresh equity injection from private equity investors.
The ACI Ltd, as a legacy of British multinational Imperial Chemical Industries, came under the control of local entrepreneurs in 1992 following a divestment. It was renamed as the ACI Ltd from the ICI Bangladesh Ltd.
Now the conglomerate produces over 5,000 products with the help of a workforce of around 10,000 people and it was listed with the stock market in 1976.
Its paid-up capital is yet to cross Tk58 crore. And, it is the key to the skyrocketing debt to equity ratio.