ACI gets first US FDA approval

Advanced Chemical Industries (ACI) received the first-ever US Food and Drug Administration (FDA) approval for any of its drug manufacturing facilities, paving its way to better position itself in the world's most stringent and profitable pharmaceuticals market.

ACI Ltd in its public disclosure on Wednesday said its subsidiary ACI Healthcare Ltd, established at Tripordi, Sonargaon of Narayanganj, got the US FDA approval to manufacture the anticonvulsant capsule Gabapentin and export it to the USA.

The healthcare facility is a state-of-the-art one and ACI invested $100 million there targeting exports to the most stringent markets of the world.

Few years back, ACI was selling its drug in the US market through toll manufacturing arrangements with Indian facilities.

"Our plant got US FDA approval and we expect more products will follow Gabapentin to enter the US market," said Mohammad Muhsin Mia, director (marketing and operation) for pharmaceuticals at ACI.

ACI Group continues growing with a mixed bag portfolio

ACI, the baton-bearer of British Imperial Chemical Industries that divested in the 1990s, has emerged as one of the largest conglomerates in the country in the last three decades.

The publicly listed firm now has 15 subsidiaries and five associate joint venture companies to run its wide business portfolio containing pharmaceuticals, consumer brands, agro machinery and automobile, agrochemical and animal care, retail, food, salt, plastic, electronics and many others.

Focusing on portfolio and top-line growth, ACI nearly doubled its annual turnover in the last five years and for the first nine months of this fiscal year, the net turnover of the group stood at Tk6,936 crore, signalling to well surpass that of the previous year in 12 months.

In the January-March quarter, ACI posted 20% consolidated revenue growth year-on-year, while net profit attributed to shareholders grew by 45% compared to that in the same quarter last year.

Except for operating cash flow, the conglomerate improved in almost all fields including cost control.

Operating cash flow decreased due to the higher deployment of working capital to facilitate revenue growth in the coming months.

However, compared to the previous quarter both the consolidated revenue and profits declined in the January-March period as the previous quarter was a high-growth one.

The company posted consolidated earnings per share (EPS) of Tk0.44 for the third quarter of the current fiscal year, which was Tk0.3 a year ago. 

For the first nine months of the fiscal year, consolidated EPS which includes the calculation of all subsidiary and associate companies stood at Tk5.95, up from Tk3.07 over the same period a year ago.

ACI in its latest quarterly statements thanked its increased revenue for the year-on-year growth in consolidated profits.

ACI was suffering consolidated losses in the two pre-pandemic years due to higher finance costs and its top-line growth priority for a stronger future in the competitive market.

However, a decline in finance costs in line with the interest rates, alongside the emergence of more of its businesses as money-making ones helped ACI post consolidated net profits from fiscal 2020-21.

For example, ACI's plastics segment which sells both household and industrial packaging items is now making money in the industrial segment and the shrimp business is cashing in on a good demand abroad, according to Dr FH Ansarey, a president at the group mainly leading the agribusinesses and automobiles.

Agricultural machinery, Yamaha motorcycles and Foton commercial vehicles all are selling a lot with an increased profit while fertiliser made a significant 50% year-on-year business growth in the nine months.

ACI logistics which owns and operates Shwapno, the largest supermarket chain in the country enjoying its first-ever operating profits in 2021 managed to slightly reduce its losses compared to the preceding period, according to financial statements.  

Turnover growth and profitability mostly depend on the industry situation, while ACI always prepares itself to best serve the market in any given situation with sustained profitability, FH Ansarey told The Business Standard.

The animal care business is growing its top line but with a tighter profit margin this year, he said. 

Consumer and household items businesses, except ACI Salt which widely leads the market, appear to pay the toll through incurring losses or sacrificing profit margins amid the continuous cost hikes while no company in the competitive market is being able to transfer it all to consumers at a time.

According to the third quarterly statement, ACI Consumer Brands, ACI Logistics and ACI Healthcare Ltd continued business with losses, while Premiaflex Plastics again faced losses in the first nine months of this fiscal year.

ACI Pharmaceuticals, the mother company, continues its growth in sales and profits that always tends to help the group offset dents in other units.

The mother company's net asset value per share (NAVPS) at the end of March stood at Tk279.24 while the lossmaking subsidiaries dragged the consolidated NAVPS to Tk140.61.

The same story exists in the case of EPS too and that has long been frustrating analysts. 

ACI Ltd shares having a face value of Tk10 each closed at Tk289.2 on Thursday on the Dhaka Stock Exchange.