Quasem Industries Limited has reported an impressive profit thanks to compensation the government paid to the country's largest dry cell battery manufacturer for its land acquisition.
It has reported an 80% jump in net profit, despite a 22% drop in revenue, in the first nine months of the current fiscal year.
The company said the net profit rose significantly in the July-March period only for the government compensation for the acquisition of land and a portion of the factory premises in Gorai of Tangail for constructing roads.
The revenue declined due to the Covid-19 stagnation coupled with the discontinuation of the trading relationship with its sister concern Quasem Lamps.
The mother company, Quasem Industries, earned from services to its sister concerns.
Industry sources said, owing to the expansion of the technology in the country, the demand for dry cell batteries has been on the wane for recent years.
Taking the concern into its consideration, Quasem Industries has diversified its business and is entering the consumer products sector.
In recent years, the company has marketed Wave deodorants, air fresheners, butane gas, and shaving foam.
"The government acquired some land and the factory premises along the road in Tangail and we got compensation from this. As a result, the company's net profit increased," Md Zakaria, the chief financial officer of Quasem Industries, told The Business Standard.
"The net revenue fell slightly due to the pandemic, but the shock was not much as expected for the good marketing policy in both the rural and urban areas."
According to its financial statement, the company has received Tk4.58 in compensation from the government for land and factory premises acquisition.
Including the government compensation, its net profit after tax stood at Tk8.33 crore in the first nine months of the current fiscal year.
Without compensation, its net profit stood at Tk3.74 crore in July 2020-March 2021 period.
And this profit is 19% lower than Tk4.60 crore in the same period of the previous fiscal year.
In the January-March period, its net profit rose by 58% but its revenue fell by 18% compared to the same period of the previous year.
The revenue in the third quarter stood at Tk25.72 crore, while its net profit rose to Tk95.86 lakh, from Tk60.60 lakh a year ago.
According to its financials, the profit rose due to the decrease in administrative expenses and finance costs. The profit has also increased due to a rise in service income from its sister concerns.
On the contrary, its product selling and distribution expenses rose due to the pandemic.
Quasem Industries started its journey in the 1980s as the first ISO-certified dry cell manufacturer.
Now it is the market leader with the popular brand - Sunlite - with 75% over market shares.
Also, the company diversified its business to manufacture metal cans, flashlights, gas lighters, potato chips, and shaving foams.
In fiscal 2019-2020, its net revenue fell by 26% and net profit by 9.44% compared to the previous year.
The company declared 5% cash and 5% stock dividends for its shareholders for FY20.
It got listed on the stock exchanges in 1988.