Factory closure for a year piles up Standard Ceramics losses
Despite efforts to resolve the outstanding dues, the factory remains closed as the power lines have not been restored
Standard Ceramics Industries – listed on the capital market since the 1990s – is grappling with financial challenges and has been unable to reopen its factory, which has been closed for over a year while losses continue to mount.
The ceramic products manufacturer temporarily shut down the factory in January last year due to the disconnection of both gas and electricity lines for non-payment of overdue bills, according to its annual report for fiscal year 2023-24.
Despite efforts to resolve the outstanding dues, the factory remains closed as the power lines have not been restored.
As of 30 June 2024, the company's accumulated losses amounted to Tk34.99 crore, following a loss of Tk14.87 crore in FY24.
Keep updated, follow The Business Standard's Google news channel
Data from the Dhaka Stock Exchange (DSE) shows that the company's share price has almost halved since January 2024.
After peaking at Tk191 per share on 12 December 2023 – the highest in two years - the share price has been on a steady decline, hitting its lowest point to date.
When the factory was shuttered in January 2024, the share price stood at Tk126 per share. On Thursday, the price closed at Tk70.10 per share.
When asked, the company's secretary Jamal Uddin Bhuiyan told The Business Standard, "The power crisis, which began a year ago, remains unresolved due to financial difficulties. As a result, the company has been incurring losses from fixed costs and salaries."
Standard Ceramics, which manufactures ceramic stoneware and tableware for both local and foreign markets, was listed on the stock exchanges in 1996.
The blow of factory closure
Due to the closure of its factory since the latter half of the fiscal 2023-24, Standard Ceramics experienced a significant 60% drop in revenue and incurred a loss of Tk14.87 crore, according to its annual report.
When the company shut down, it informed that the decision was due to the post-corona financial crisis, the current global economic downturn, a shortage of raw materials, and the disruption of gas and electricity supply.
Despite being non-operational, the ceramic manufacturer continues to incur losses in the first quarter of the current fiscal year due to ongoing salary payments and other fixed costs.
No revenue was earned between July and September 2024, and the company recorded a loss of Tk4.61 crore, primarily due to full salary payments and other fixed costs, according to its stock exchange filing published on Thursday.
The company's previous data also shows that its revenue has been gradually declining since the fiscal 2021-22, with consecutive losses and no dividends provided to shareholders.
In FY21, its revenue was around Tk32 crore, but in FY24, its revenue dropped to Tk9.63 crore, resulting in a loss of Tk14.87 crore.
Its auditor, ARTISAN Chartered Accountants, in their qualified opinion for FY24, said retained earnings had increased to Tk34.99 crore by 30 June 2024. Additionally, a bank liability of Tk9.06 crore has been classified as sub-standard and bad debt out of a total bank loan amount of Tk20.27 crore.
The company has been unable to conclude renegotiations or secure replacement financing, which has placed it in distress due to acute financial difficulties, creating significant obstacles to the BMRE (Balancing, Modernization, Rehabilitation, and Expansion) of the operational unit.
Due to its failure to pay dividends, Standard Ceramics was downgraded to the Z category from the B category in February 2024. Its shares are now trading in the Z category.
As of November, out of its total shares, sponsor-directors held 28.24%, institutional investors held 7.52%, and the general public held 64.24%, according to the DSE.
