Why Ifad Autos selling its Tongi land

Ifad Autos Ltd board of directors has decided to sell out a 90 decimal land at the Himardhighi area in Tongi, Gazipur for Tk16.5 crore.

The land, once bought cheaper, was not in sufficient use that could help generate revenue. That's why the company was in efforts to sell such assets off and use the cash in higher revenue generation, Ifad Autos Managing Director Tanveer Ahmed told TBS.

Other properties outside the office or factory were being used as truck sheds or something relevant to the company's commercial vehicle business, which was not the case for the Tongi land, according to Ahmed.

Ifad's commercial vehicle making plant is at Dhamrai while its consumer products factory is at Ashulia.

The sales proceeds would help strengthen the company's capital needs to generate higher revenue in coming days, Ahmed said declining to share any particulars.

The company that is assembling and building bodies of Ashok Leyland commercial vehicles, has suffered big losses in two consecutive quarters throughout September last year mainly because of the foreign exchange losses and now it has been recovering from the dent.

Importing vehicle chassis, raw materials, and parts while dollar was available at Tk86-90, and selling vehicles based on that cost indicates it had higher revenue initially.

However, during the settlement of the letter of credit against the imports later, dollars became dearer and the entire excess was a loss for the company, like most other importers.

For the last nine months of 2022, Ifad incurred more than Tk70 crore in foreign exchange losses, which came down to Tk3.2 crore in the January-March quarter this year as the dollar was not as volatile as before.

Tanveer Ahemd said bus business was outperforming the truck segment as the newly opened routes after the Padma Bridge connected the South Western districts to the capital in the middle of last year.

"We have more orders for buses and we are catering to 80% of the market demand now," he said.

On the other hand, truck sales dipped due to the reluctance of fleet owners to invest more while their revenue was down amid an import slowdown for months.

According to the Bangladesh Road Transport Authority (BRTA), a total of 1,311 buses were registered across the country in the first four months of the year which was nearly half of the annual number of 2022.

On the other hand, truck registration dropped to 584 for the four months, from 4,528 in 2022.

"Truck orders started to pick up, but are yet to get back the previous rhythm," Ahmed said.

He informed both the other businesses, the company had invested for less than half stake, were profitable till March.

Ifad got regulatory nod to issue a Tk300 crore bond later last year and Tk225 crore of the bond proceeds was set to be invested in its associated company Ifad Multiproducts Ltd to double its stake to 80%. The rest of the money was to be kept for the automobile business.

The consumer product company that produces flour, biscuits, noodles and mineral water is going through a transformation for a stronger presence in both the local and export markets, according to Ahmed.

Ifad also owns 49% stake at Gulf Oil Bangladesh, a joint venture with Gulf Oil International (UK).

The bond will be issued within the stipulated period of one year from the date of approval by the Bangladesh Securities and Exchange Commission, according to Ahmed.

Ifad Autos shares, having a face value of Tk10 apiece, were stuck at the floor price of Tk44.1 at the Dhaka Stock Exchange (DSE) on Sunday.