GPH Ispat, a steel manufacturing company, posted an impressive growth of 218% in revenue in the third quarter of this fiscal year amid the pandemic, thanks to the new plant's production as well as growing exports.
The company revealed the quarterly financial result on the stock exchanges website on Sunday.
In the January-March quarter of this fiscal year, its revenue stood at Tk776.05 crore, which was Tk244.20 crore at the same time in the previous fiscal year.
During that period, its net profit jumped by 859% to Tk45.20 crore and earnings per share stood at Tk1.14.
In the first nine months of this fiscal year, the company posted revenue growth of 136% to Tk1,900 crore and its net profit grew by 209% to Tk114.85 crore.
During this period, its earnings per share stood at Tk2.89.
The company explained the reason for a significant change in financial results to the Dhaka Stock Exchange (DSE) that new products from the trial production of the new expansion plant significantly increased the market share.
Moreover, the company has started the export of billet (steel's raw material) that has created the opportunity to grab a new market. The combined effects of all contributed to a positive impact on revenue and profit.
But in the DSE, the significant quarterly growth slightly impacts the company's share price. Its share price increased by 1.17% to Tk34.70 each on Sunday.
However, before revealing the quarterly financial result, its share price had jumped by 38% within one month.
In September 2020, the new plant went into trial production and sales of goods began from the plant, which was built using quantum technology – the first in Asia and the second in the world– at a cost of Tk2,500 crore.
The annual production capacity of the expanded plant is 840,000 tonnes of billets and 640,000 tonnes of rods and medium section products – steel BIM, angle, channel, flat bar, etc. – which is the additional production capacity of the company.
When it goes into full production, the company will see its market share triple in steel and its production will increase fivefold.
After starting the full commercial production of the plant, the annual production capacity of the company will become 1,008,000 tonnes of billets and 760,000 tonnes of rod and medium section products.
The production of the plant will take the market share of GPH in the steel industry to around 10% from the existing 3-4%.
The company sources said the new plant could not run commercially at full capacity as the foreign experts could not reach the new factory due to the pandemic. Besides, local experts are not familiar with quantum technology.
Sources also said business could not reach the expected level for the pandemic. The company is also suffering from a shortage of raw materials and a price hike.
In October 2020, the company started exporting billets to China, which was the first of such export in the country's history.
Sources said the company exported 1 lakh tonnes of billets to China in the last six months and earned above Tk350 crore that helped post significant growth.
But in the export market, the company is facing several problems such as a lack of logistic support and high production cost. If the government supports the potential sector like the garment industry, it will rake in a handsome foreign currency to the country.
Md Shahidullah, secretary general of the Bangladesh Steel Manufacturers Association, told The Business Standard that the steel business could not get a respite from the pandemic hit. But the companies could post positive growth in sales because steel's price hike triggered by an increase in production cost. However, the volume is still lower than in the normal situation. Now, the steel price stands at Tk72,000-77,000 per tonne, which was Tk55,000 a few months back.
The steel industry is fully dependent on imported raw materials such as ship scrap. But due to the coronavirus pandemic, raw material is not available and also becomes costly.
"In this situation, in the upcoming budget, we are seeking a waiver from the advanced income tax and source tax to buy raw materials," Shahidullah, also managing director of Metrocem Ispat Ltd, added.