Sonargaon Textiles turning around

Overcoming the crisis resulting from the Covid-19 pandemic, Sonargaon Textiles Limited returned to profit in the first nine months of FY22.

In the July to March period of the 2021-22 fiscal year, the company made a profit of Tk79.81 lakh, which was a loss of Tk3.66 crore in the same period of the previous fiscal.

During that period, its revenue jumped by 251% to Tk35.92 crore from Tk10.24 crore in the July-March period of FY21.

Due to the pandemic, the company's operation was halted for eleven months till 30 May 2021. After resuming operation, its sales started increasing gradually.

When the firm was non-operational, its share price was declining, but after returning to profit, it started soaring rapidly.

According to the Dhaka Stock Exchange (DSE), its share price jumped by 116% to Tk71.5 from Tk31.1 each on 16 May this year.

Asadullah Mahmud, company secretary of Sonargaon Textiles Limited, told The Business Standard, "The company's business has been improving gradually as the Covid-19 situation has become normal. We hope it will be better in the coming days."

However, the company was in a crisis and incurred losses even before the Covid-19 pandemic started. Consequently, it did not pay any dividend to shareholders since FY12, except for FY19.

The company had paid a 3% cash dividend for FY19. After that, it failed to pay dividends for the last two fiscal years.

Sonargaon Textiles Limited – a concern of Khansons Group – operates a textile spinning mill comprising three units. The company got listed on the stock exchanges in 1995.

It mainly manufactures 100% cotton yarn of different counts.

After the Covid-19 pandemic started, its factory closed down in April 2020 as its skilled and essential staff members moved elsewhere, and it took the company about a year to bring back the workers to gradually restart the mill, said Sonargaon Textiles Limited in its latest annual report for FY21.

 A big loss in FY21

According to its annual report for FY21, Sonargaon Textiles Limited incurred Tk35.33 crore loss, which is the highest in recent years.

The company posted Tk9.85 crore loss in FY20.

It incurred losses as its cotton stock rotted and became unusable for manufacturing standard yarn.

The stock value of the cotton was Tk15.52 crore. Its salvage value was realised at Tk65.50 lakh, while the rest of the amount of cotton worth Tk14.87 crore was lost.

It also said a consignment of raw cotton worth Tk15 crore was completely damaged and its value was totally written off.