Bangladesh Autocars shuts down CNG conversion unit amid falling revenue

Bangladesh Autocars Limited has announced the closure of its CNG conversion business under Unit 3, citing a continuous decline in revenue and profitability. 

The decision marks the end of an operation that had been part of the company's portfolio for over two decades.

In a price-sensitive disclosure filed with the Dhaka Stock Exchange (DSE), the company said that Unit 3, which had been incurring business losses, will be discontinued. Fixed assets of the unit, valued at Tk96.08 lakh at written-down value, will be partially transferred to Unit 2 (CNG Sales Unit), with the remaining assets to be disposed of.

Additionally, the unit's inventory worth Tk30.19 lakh will be sold. All other assets, liabilities, and equity will be transferred to Unit 2.

Following the announcement, Bangladesh Autocars' share price fell 3.91% yesterday to close at Tk98.20. The stock has already lost about 25% so far in October.

Established in 1979, Bangladesh Autocars is one of the country's oldest automobile companies, renowned for manufacturing three-wheeler auto tempos in technical collaboration with Italy's Piaggio, the maker of the iconic Vespa.

However, the company had to halt its three-wheeler production in 1999 after the government banned two-stroke engines.

In 2003, the company diversified into CNG conversion and refueling, setting up a workshop and station in Tejgaon. Despite initial success, the conversion business has seen shrinking margins in recent years.

For the fiscal year 2023-24, the company's earnings per share (EPS) dropped by 76% to Tk0.15, down from Tk0.63 a year earlier. It paid a 2% cash dividend for that year. 

The company said the decline in profit was largely driven by reduced income from its CNG conversion unit, which had been one of its higher-margin operations.