Usmania Glass to invest Tk300 crore for factory modernisation

FT ONLINE

The state-owned Usmania Glass Sheet Factory Ltd is losing business to other companies because of its failure to meet the increasing demand for float glass sheets.

In order to survive the competition, Usmania Glass has decided to produce container glass along with glass sheets and is investing Tk300 crore to build a new plant for this.

Usmania Glass Sheet Factory has already floated a tender to appoint an adviser for market research and a feasibility study for container glass.

Company Secretary Md Shahadath Hossain said the company will take the next step based on the recommendations of the advisory company.

He also said the government will provide a portion of the required investment. The company is also planning to raise money by issuing bonds.

Container glass is mainly used for making items such as water containers and bottles.

At present, Usmania Glass Sheet Factory produces glass sheets with a 59-year-old machine using the Fourcault process, which is comparatively costlier than other methods. Meanwhile, in the private sector, PHP Float Glass and Nasir Glass are using the modern float process to produce superior quality float glass sheets.

Meanwhile, AB Glass Industries is producing high-quality float glass by using the Colburn process, which enables them to sell the product at a lower price than that of other producers.

In this situation, Usmania Glass was forced to sell its products for less than their production cost to survive in the market. Consequently, the company has been running at a loss for the last five years.

Usmania Glass made a net profit of Tk4 crore in the 2013-2014 accounting year, but in the following four years, it suffered losses amounting to Tk19 crore. During this period, the company's sales of glass sheets decreased by 32 percent. In the 2017-2018 accounting year, it sold Tk21 crore worth of glass sheets but still made a loss.

In the 2018-2019 accounting year, the company could not make any profit. During the first nine months of the last accounting year, the company made a net loss of Tk6 crore.

Once, the Usmania Glass Sheet Factory gave its shareholders 40 percent cash dividends. But during the last four years, the company gave its shareholders only a 10 percent stock dividend, and that was provided from the company's reserve fund.

Bangladesh Chemical Industries Corporation owns 51 percent share of Usmania Glass Sheet Factory Ltd, a company with a paid-up capital of Tk17 crore. Institutional investors own 9.93 percent and general investors own 37.07 percent share of the company.

On Tuesday, the price of Usmania Glass Sheet Factory Ltd's share in the Dhaka Stock Exchange decreased by 6.36 percent. The closing price of the company's share on that day was Tk79. During the last one month, the price of its share decreased by 28 percent.