Ifad Autos Limited, the Bangladeshi dealer for Indian automotive company Ashok Leyland, saw a 39 percent fall in vehicle sales in the last fiscal year.
Previously, after a slight fall in FY2015-16, sales had bounced back during the 2016-17 and the 2017-18 fiscal years.
Managing Director of Ifad Autos Taskeen Ahmed said they have sold only 230 vehicles this year though the company was seating on 1,000 orders.
"Banks are not providing loans to the corporate customers due to acute liquidity crisis in the sector," he stated.
Taskeen added that businesses, including garments, cement and steel, are going through a tough time. "We are also facing the same problem."
Ifad Autos Limited imports vehicles including heavy trucks, dump trucks, medium sized trucks, light commercial vehicles, double-decker buses, luxury buses, mini-buses and tractors to Bangladesh from neighbouring India.
The company's sales fell to nearly half in the 2018-19 accounting year – as it sold only 3,918 motor vehicles – compared 6,435 in the previous accounting year.
Even in 2017 and 2016, Ifad Autos had steady sales of 5,620 and 3,821 automobiles, respectively.
However, 2015 was an exception for the company as its sales dropped slightly that year. Ifad Autos sold 2,521 vehicles in 2015, down from 3,957 automobiles in 2014.
At the Dhaka Stock Exchange, the price of Ifad Autos shares fell by 5.36 percent on Sunday. Share prices closed at Tk40.60 on that day.
Its share prices peaked at Tk115.50 in January 2019.
Profits also stumble
Income of Ifad Autos declined by 27 percent in the 2018-19 fiscal year, as sales kept falling.
The income of the company stood at Tk1,102 crores in the last fiscal year, down from Tk1,500 crores in the 2017-18 fiscal year.
Net profits also declined by 27 percent in the 2018-19 fiscal year, standing at Tk114 crores. The earnings per share (EPS) of Ifad Autos was Tk4.59 in the last fiscal year.
In the 2017-18 fiscal year, the company posted a net profit of Tk152 crores, while its EPS was Tk6.27.
Profits are still dropping in the 2019-20 accounting year, as Ifad Autos posted a 67 percent fall in net profits in the first quarter of this fiscal year.
Ifad Autos' net profit in the first three months of this fiscal year was Tk13 crores while the EPS stood at Tk0.51. The year-on-year net profit and EPS were Tk39 crore and Tk1.57, respectively.
Dues on the rise
Dues owed by customers to Ifad Autos also rose by 117 percent in the last six years. The customers owed the company Tk2,164 crores in FY2018-19 – a significant rise from Tk998 crores in the 2014-15 fiscal year.
Over the last six months of the last accounting year, dues rose to a total of Tk1,935 crores. The amount was Tk1,482 crores during the corresponding period in the 2017-18 fiscal year.
Officials of the company said that sales on instalments are jacking the dues up. The company hopes to realize those from the customers soon.
What the local auto market looks like?
Few players dominate the Bangladesh automobile industry. They are: Nitol Motors Limited, IFAD Autos Limited, and Runner Motors Limited.
Nitol Motors Limited is leading the market currently. Nitol, the largest distributor of TATA Motors in Bangladesh, held 38 percent of the market share as of 2017.
Ifad Autos Limited secured the second position, capturing 30 percent of the market share.
Runner Motors Limited has 10 percent of the market share under its belt. The company is an authorised distributor of Eicher trucks in Bangladesh.