National Tubes to start pre-fabricated steel business

State-owned National Tubes Ltd is planning to launch its pre-fabricated steel structure business after setting up a new unit in its Tongi factory with an estimated cost of Tk1.33 crore.

Initially, the company will invest Tk64 lakh and the new unit will be installed in three phases.

"We are launching this business to get government projects. Besides, we will participate in private businesses as well," Md Abul Kalam Azad, company secretary of National Tubes told The Business Standard.

"Basically, our management board has decided to get involved in this business so that diversification in businesses is ensured," Azad added.

The top officials of the company said, the new unit will be launched next year.

 The unit will complete fabrication works of around 100 metric tonnes in a year that can bring a profit worth Tk50 lakh for the company, they added.

The company mainly manufactures and sells various types of galvanized iron (GI) pipes. Besides, the company is also involved in galvanising, that is coating of steel with a protective layer.

Market almost doubled in 5 years

The pre-engineered building (PEB) industry in Bangladesh has grown considerably in the last decade riding on rapid economic growth and industrialisation.

The manufacturing sector's contribution rose to 35 percent of the country's GDP in the last fiscal year, up from around 25 percent a decade ago.

Along with the manufacturing sector, the steel structure business also saw rapid growth. According to the Steel Building Manufacturers Association of Bangladesh, the market almost doubled in the last five years.   

The size of the market was around Tk2,500 crore in the 2017-18 fiscal year.

Now, the local companies hold around 85 to 90 percent of the market share, and foreign firms make up the rest.

According to industry insiders, around 100 PEB companies are now providing PEB solutions in Bangladesh among which at least 20 companies have entered the industry in the last five years.   

Financial performance

National Tubes has experienced losses from 2016-17 to 2018-19 financial years.

However, in 2017, the company did not provide any dividend to the shareholders but it provided 10 percent stock dividends in the next two years.

The reduction in sales of pipes has increased the amount of losses of the company, said the company officials. They also claimed that it happened because Titas Gas Transmission and Distribution Company stopped providing new gas connections in residential areas which resulted the demand for pipes to go down.   

Consequently, the company opted for galvanising and that has helped it to turn the wheel of the business.

In the first half of this current fiscal year (July - December), the company had revenue worth Tk19.39 crore. The net profit of the company was Tk84 lakh.

Earnings per share for the company was Tk0.24 during this period.

After the end of 2019 fiscal year, the company reserve was Tk520 crore.     

The paid-up capital of National Tubes, listed in stock market in 1989, was Tk34.82 crore. The government owns 51 percent of the share while the rest is owned by the ordinary shareholders.

The share price of the company has increased by 2.94 percent on Wednesday with a closing price of Tk116.70 per share.  The highest price of the stock was Tk205.90 per share in last one year.