Miracle’s production closed due to working capital crunch

Due to a shortage of working capital, the Miracle Industries Limited has shut down its production unit in October this year. 

"The clients are not paying the due, while we had to repay loans taken from the directors. This has prompted the working capital crunch," Managing Director of the company Rafiqul Murshed told The Business Standard. 

The managing director said, they are trying to overcome the crisis. He hoped to resume production resume in January next year.   

How Miracle stepped into the crisis 

Miracle used to produce packaging material like polybags, which were sold at the local and foreign markets. 

The local buyers owed a total of Tk22 crore to the company in the 2018-19 fiscal year. 

Meanwhile, Miracle had a debt of Tk31 crore to the corporate sponsors and directors. The company repaid Tk15 crore debt this year, which prompted the working capital crunch. 

In a bid to ease the crisis, the company decided to issue 1.5 crore shares with the face value of Tk10 each for the sponsors and directors. Although the company got the nod from its shareholders at an extraordinary general meeting, the Bangladesh Securities and Exchange Commission did not allow Miracle to issue those shares.

Miracle's journey since 1997                        

The Miracle Industries Company was established in 1995 in a joint venture agreement with the Bangladesh Chemical Industries Corporation.

Miracle Industries went in commercial production on January 1, 1997. Its production unit is located at Gazipur.         

The paid-up capital of the company stands at Tk33.86 crore. Corporate sponsors, the Bangladesh Chemical Industries Corporation, the TSP Complex Limited, the Chhatak Cement Company Limited and the Pavarton

Securities Limited hold respectively 5.28 percent, 8.84 percent, 5.88 percent and 2.27 percent share of the company.     

Individuals and general investors hold the remaining shares.  

Miracle had a diverse product portfolio including woven polypropylene bags and flexible intermediate bulk container (FIBC) bags. The manufacturer had an annual capacity to produce 2.50 crore pieces of woven polypropylene bags and 23.4 lakh pieces of FIBC bags. 

The FIBC bags were mainly exported, while polypropylene bags were sold at local market.

Financial performance       

The company has been experiencing a business slump since the beginning of 2019. It posted a loss of Tk5 crore in the first nine months of this year.    

Previously, the company had been posting profits and offered dividends to its stockholders. 

The company recommended 4 percent stock dividend for its shareholders in the 2018-19 fiscal year. The annual general meeting of Miracle is slated for December 21.         

The Earnings Per Share (EPS) of the company was Tk0.23 in last fiscal year while the year-on-year EPS was Tk1. 

Sale of the company dropped by 82 percent in the first quarter of the current fiscal year. Sale of the company stood at Tk3.82 crore while it incurred a loss of Tk4.21 crore in the first quarter.    

The like-for-like sale and profit respectively were Tk20.91 crore and Tk88 lakh. 

The company's Managing Director Rafiqul Murshed said, their sales edged down as production shrank to the minimum since the beginning of 2019.

Share performance

Miracle's share price leapt 10 percent on Tuesday even after its production was suspended. The closing price of Miracle share was Tk20.60 at the Dhaka Stock Exchange on Tuesday.

The highest price of Miracle share rose to Tk41 while the lowest was Tk13.50 in last one year.       

The market of woven polypropylene bag

According to the Polaris Market Research, the annual demand for woven polypropylene bag across the globe is 6.20 crore tonnes. The main customers of the product are electrical goods manufacturers, who use nearly 30 percent of the total.           

Equipment manufacturers consume 13 percent, household appliances 10 percent and construction materials 5 percent of woven polypropylene bags.