BSRM firms nosedive to losses in Sept quarter

Infograph: TBS

In a year of posting record sales and profits, both the listed firms of the steel market leader Bangladesh Steel Re-rolling Mills (BSRM) fell into losses in the July-September quarter.

The soaring prices of raw materials and the disrupted power supply did not let BSRM Steels and BSRM Ltd enjoy their continuous sales growth, according to the stock exchange filings of both firms. 

The mother entity  — BSRM Ltd — registered a sales growth to over Tk2,075 crore in the July-September quarter of FY23, from Tk1,539 crore a year ago. 

Despite impressive sales, the company incurred a loss of Tk164 crore in the quarter, while in the same quarter last year it posted Tk128 crore in after-tax profits.

The other company BSRM Steels, engaged in the same business of making various construction rods, registered Tk1,682 crore in quarterly sales, up from Tk1,318  a year ago. Its Tk108.5 crore net profits in the July-September quarter last year turned into a Tk35 crore quarterly loss this year.

Chartered Accountant Shekhar Ranjan Kar, who is heading the finance and accounts of the BSRM Group, blamed the adverse exchange rate for the losses.

While talking to The Business Standard on Tuesday, he said the letters of credit (LC) opened for raw material imports had to be settled at a dollar rate around 20% higher a few months later and this was enough for the narrow-margin industry to incur the losses.

Besides, the raw material price was higher for the July-September quarter and due to the market situation, none of the companies succeeded in steel price hikes accordingly.

Both globally and locally, steel prices have been soaring since late 2020 and were still high despite some corrections and spikes.

The pre-Covid price of Tk65,000 per ton construction rod soared to nearly one lakh and still is above Tk90,000.

Further price hike might have resulted in a slowdown in the steel market to hurt the development work, said Shekhar Ranjan Kar.

The pent up demand and the industry's ability to transfer the soaring costs then helped companies book hefty profits.

National steel consumption in the first 11 months of the year was slightly higher compared to the corresponding period of 2021, he said.

Raw material prices eased a bit in the recent months, but a dollar shortage in banks is depriving companies of the opportunity as they cannot open LCs for the needed imports, said Kar.

If LC issues are not resolved sooner, the steel market might face supply scarcity and a price destabilisation, he expressed his warning.

Also, there emerged a need for uninterrupted energy supply in the mills, he added.

BSRM Ltd shares, having a face value of Tk10 each, closed at the floor price of Tk90 in the DSE on Tuesday, while BSRM Steels shares closed at Tk63.9.