Gas price hike eats profit of Global Heavy Chemicals

The net profit of Global Heavy Chemicals Ltd (GHCL), a company listed in both the Dhaka and the Chattogram stock exchanges, decreased by 45.43 percent in the first half of the current fiscal year.

The decrease in profit can be attributed to the increase in gas prices, said Khondoker Ahaduzzaman, secretary of the company. 

"Our gas expense has increased by 47.25 percent," Khondoker Ahaduzzaman said, adding that the money cannot be redeemed from customers because the price of the products cannot be increased. 

"Earlier, we use to buy one cubic metre of gas for Tk9.62, but now, we have to spend Tk13.85 for each cubic metre of gas," he said.

He added that the company's performance also declined last year because of gas supply shortage. 

"Our production plants could not operate smoothly last year because of an acute gas shortage," he said.  

Financial performance of GHCL

After the first six months of the current fiscal year, GHCL's net profit dropped to Tk1.79 crore, which is 45.43 percent less than it was in the previous six months. 

In addition, its selling & distribution expenses rose by 5 percent, while office and administrative expenses advanced by 6 percent.

However, during this period, the company's net sales was Tk29.42 crore, which was 13.24 percent higher than that in the previous six months. 

The company's net profit was Tk6.30 crore in FY 2018-19, 23.26 percent lower than 2017-18 FY's net profit of Tk8.21 crore. 

During 2018-19 FY, GHCL's earning per share was Tk0.88 and net asset value per share was Tk55.21. 

In the 2017-18 FY the earnings per share was Tk1.14, while the net asset value per share was Tk 54.65. 

In addition, in FY 2018-19, the company's raw material procurement dropped to Tk10.85 crore, which was 9.21 percent lower than that in the previous fiscal year.  

The company's bank loan jumped to Tk15 crore in the 2018-19 fiscal year, up from Tk3.33 crore in the previous fiscal year.

Investor losing fund by investing

The company recommended 5 percent cash dividend for FY 2018-19 for its shareholders, which was 10 percent for the previous year. The share prices have declined gradually over the years. 

On July 25, 2018, each share of the company was traded for Tk54.30 in the Dhaka Stock Exchange. From that day onwards, its share prices have been declining. 

On January 14, 2020, the price of each share of the company was Tk22.50, a drop of 58.56 percent in the last one and a half years.

The company's sponsors and directors jointly own 69.03 percent shares, institutional investors own 20.53 percent, and general investors own 10.44 percent.

The journey of GHCL

GHCL is a concern of the Opsonin Group, and was incorporated on September 19, 2000. GHCL started off at the beginning of the 21st century as the first private sector chlor-alkali industry in Bangladesh. 

The company has been producing import substitute industrial chemicals like caustic soda, hydrochloric acid, bleaching powder, chlorine and sodium hypochlorite & Chlorinated Paraffin Wax (CPW). GHCL also regularly exports chlorine to India.

The demand for industrial chemicals is increasing rapidly because Bangladeshi industries are booming in every sector.