Higher costs throw ACI Limited into losses again

After posting profits for two back-to-back fiscal years, publicly listed ACI Limited has incurred a loss of Tk49 crore in the fiscal 2022-23, owing to rising costs.

In a price sensitive statement, the company blamed higher borrowing costs, energy prices, inflation, and the strengthening of the dollar against taka for its loss in FY23.

Back in fiscal 2018-19, ACI Limited tasted a loss for the first time and incurred a Tk77.5 crore loss because of higher borrowing cost and inadequate income from its subsidiaries.

The next fiscal, the underperforming subsidiaries extended the loss and it deepened to Tk105.9 crore. But the company bounced back to profits in the 2020-21 fiscal year, thanks to the government's imposition of a 9% interest rate ceiling.

In the last fiscal year, the government's raising of gas and fuel prices, coupled with the weakening of the taka against the dollar fuelled by the Russia-Ukraine war are the two main reasons behind ACI's loss in FY23.

In the price sensitive statement, the company stated despite a remarkable revenue growth during the last fiscal year, consolidated profit experienced a decline which is primarily attributed to rising cost driven by unfavourable currency exchange rates, a significant increase in energy expenses, higher borrowing cost and the overarching challenges posed by the macro-economic environment.

The Business Standard tried to reach the company's Chief Financial Officer Pradip Kar Chowdhury over phone but the calls were left unanswered.

Seeking anonymity, an official at ACI told The Business Standard that the company could not cope up with the higher costs because of underperformance of a few subsidiaries.

However, some of its subsidiaries, notably the pharmaceutical segment, did well in FY23 and secured an after-tax net profit of more than Tk175 crore, the official added.

The company is still all in for diversifying its business, but most of it is sponsored through debt instead of equity.

Its retail chain subsidiary, ACI Logistics Ltd, alone accounts for around one-fourth of the interest-bearing liabilities of the group, while it is still adding to aggregated losses each year.

Despite incurring a loss in the last fiscal year, ACI Ltd has recommended a 40% cash dividend from the retained earnings to its shareholders.

The ACI Ltd, as a legacy of British multinational Imperial Chemical Industries, came under the control of local entrepreneurs in 1992 following a divestment.

Now, the conglomerate produces over 5,000 products with the help of a workforce of around 10,000 people and it was listed on the stock market in 1976.

ACI Ltd shares, with a face value of Tk10, closed at the floor price of Tk260.2 apiece on the Dhaka Stock Exchange (DSE) on Thursday.

The company is going to form a manufacturing joint venture with the world's largest oral care player Colgate.

In continuation of its exploration for new business windows, ACI Ltd invested Tk10 crore to the digital bank "Kori Digital Plc", which got approval from the Bangladesh Bank last week.

Besides, in July this year, the ACI board of directors decided to open a subsidiary company, "ACI Avionics and Airlines Services Limited," to operate with both helicopters and aeroplanes.

ACI Ltd would provide 77% of the initial paid-up capital of Tk1 crore while the authorised capital of the proposed company would be Tk50 crore, said the company in its price-sensitive disclosure.