Investors pull out as National Feed loses edge

Beset with numerous challenges, National Feed Mill Limited is falling behind its competitors in the market, causing investors to lose funds. 

As a result, investors are now withdrawing their investment.

The leading feed production company was listed on both bourses with a face value of Tk10 per share.

The price of its share reached Tk18.10 on August 5, 2018, but has been going down ever since. 

On January 6 (Monday), the company's stock price on the Dhaka Stock Exchange closed at Tk9.50, which is almost 48 percent less than the August 2018 price.

Sponsors and directors of the company jointly hold 30.40 percent share, and general investors 45.75 percent.

The company's board of directors has recommended a one percent stock dividend for the financial year that ended on June 30 last year.

The company's net profit was Tk1.26 crore at the end of the last fiscal year, which was Tk4.53 crore less than that in the previous financial year. 

In the last fiscal year, the company's gross profit was Tk9.07 crore, which was Tk14.19 crore in the previous year.

Also, in fiscal year 2018-19, earnings per share was Tk0.15, and the net asset value was Tk12.71.

The company's revenue comes from five segments. In fiscal year 2018-19, the company earned Tk36.93 crore from Broiler Feed, Tk32.27 crore from Layer Feed, Tk5.44 crore from Fish Feed, Tk1.24 crore from Cattle Feed, and Tk1.88 crore from Floating Feed.

Plagued by problems

The company sometimes has to keep production in some units suspended, and this problem persists throughout the year. 

This is because it cannot always sell its products on schedule. If products are left unsold but production continues, the company will face losses.   

The yearly turnover has been decreasing for the last four years in a row. Revenue was Tk225.04 crore in 2016, Tk150.13 crore in 2017, Tk119.79 crore in 2018, and Tk77.76 crore in 2019.

Akther Hossain Babul, managing director of National Feed Mill Limited, told The Business standard the rising prices of raw materials in the global market has hit the company hard.

"Even though prices of raw materials went up, we could not increase the prices of our products. Also, because we need to often keep partial production closed, sales declined more than 40 percent last year," he explained. 

Babul said aggressive marketing policies of competitors have also put his company at a disadvantage.  

"Other companies are offering dealers various incentives in the form of gifts and credit facilities. That is why dealers are more interested in selling their products than ours," he said.  

"Now, we have adopted some policies to increase sales and improve our marketing technique. We hope that our sales and revenue will increase in the next period," added Babul. 

Md Ihtesham B Shahjahan, president of the Feed Industries Association of Bangladesh and managing director of Quality Feeds Limited, told The Business Standard the feed industry is facing challenges since the end of the last fiscal year. 

"This is because VAT has increased from five to fifteen percent, and a five percent advance tax has been imposed on imported raw materials. Besides, the rising prices of raw materials have hampered the growth of the industry," he added. 

National Feed Mill Limited was incorporated as a private limited firm on December 22, 1999.

The company started commercial operation on October 27, 2003. It manufactures, processes, buys, sells and converts feed of poultry, fishery, cattle and pet animals.

Currently, the company's reserves and surplus stand at Tk84.74 crore, and its paid-up capital is Tk40 crore. The number of its shares is 8.47 crore with a face value of Tk10 each.

The company has a short-term loan of Tk24.07 crore, and a long-term loan of Tk15.14 crore.