GQ Ball Pen under BSEC scanner

Infographic: TBS

The Bangladesh Securities and Exchange Commission (BSEC) has formed a three-member inquiry committee to investigate GQ Ball Pen's financial statements and investments of its sister concerns to ensure compliance, transparency, and accountability.

The committee was asked to submit a detailed report to the commission within 60 days, according to an office order, dated 11 November.
The committee consists of BSEC officials, including Additional Director Md Faruq Hossain, Assistant Director Md Amirul Islam, and Assistant Director Binoy Das.

Once a popular brand of ballpoint pens, Econo, is now disappearing from the market as its owning company GQ Ball Pen has failed to modernise the product for the highly competitive environment.

Starting its business in 1981, the company has been witnessing sales decline and incurring losses over the past decade. Its close competitor Matador Ballpoint Pen, which started business in 1998, dominates the market at present.

The share price of the company closed at Tk130.90 on the Dhaka Stock Exchange on Wednesday.

According to the BSEC order, the inquiry committee will thoroughly investigate GQ Ball Pen's financial statements as of the end of June 2023. This includes a detailed examination of the company's assets, liabilities, equity, profits, and cash flows.

Additionally, the committee will scrutinise non-performing investments by the company's sister concerns, amounting to Tk9.56 crore, as well as Tk8.35 crore held in the tax holiday reserve.

A senior official of the company, on condition of anonymity, told TBS that they had received a letter regarding the investigation. The official said that the company is prepared to cooperate fully with the inquiry committee and will provide all necessary documents as requested.

The official added that the company is currently operating at around 30% to 40% capacity due to ongoing BMRE (Balancing, Modernisation, Rehabilitation, and Expansion) activities at its existing factory.

In May of this year, the company announced its temporary halt in production to modernise its factory, aiming to strengthen its position in the highly competitive market. The production suspension, announced for 12 months, began on 30 June.

According to a disclosure on the Dhaka Stock Exchange, the company has been facing operational losses since 2014. To address these losses and improve product quality, the company believes it is crucial to modernise its factory. This decision was driven by the declining performance of its "Econo" brand, as its parent company failed to modernize the product to stay competitive in the market.

The GQ Ball Pen official said that most of the machinery needed for the factory modernisation was supposed to be imported from India. However, following the fall of the Awami League government on 5 August, the company management has been unable to secure visas from India, causing delays in the machinery import process.

In GQ Ball Pen's 2019-20 financial report, its independent auditor Mahfel Huq & Co. said the company's financial condition indicates that there is significant doubt about its ability to continue the business.

In the July-September quarter of 2024, the revenue of the company stood at Tk59 lakhs, which was Tk1.87 crore in the same period of the previous year. During this quarter, its net loss stood at Tk59 lakhs, which was Tk98 lakhs in the same period of the previous year.

Its per-share loss stood at Tk.66, which was the loss of Tk1.09 one year ago.

In FY23, the company recommended a 2.5% cash dividend for their shareholders.

In May 2023, GQ Ball Pen sold off the unused land located at Chattogram to repay a portion of its loan taken from Southeast Bank.
GQ Ball Pen is one of the oldest listed companies in the capital market. It was listed on the stock exchanges in 1986.

Although the company incurred losses for years, it regularly paid cash dividends to shareholders from retained earnings.

According to industry insiders, one crore students buy one crore ballpoints every four days. Numerous offices also buy ballpen's regularly. However, the total market size is not available, as the business is mainly dominated by imported pens.

Among the local companies, Pran-RFL, Janani, and Kumu produce 25 lakh ball pens every day. Meghna Group entered the ballpoint pen business in 2019 and is selling the products under the "Fresh" brand.

Olympic Industries and Rose Heaven have closed ballpoint pen production as the market has become highly competitive due to imported products.