The last fiscal year was a rough ride for Titas Gas, according to officials, thanks to a drop in gas distribution charges while the cost of sales and administrative expenses surged.
These factors have eaten into the profit of the gas transmission and distribution company for FY22, forcing Titas to announce the lowest cash dividend since 2015 at 10% to its stakeholders for the last fiscal year.
"Apart from prompting financial crises for us, reduced gas distribution charge will make the company vulnerable in the stock market," a finance wing official of Titas Gas told The Business Standard on condition of anonymity.
In June this year, the Bangladesh Energy Regulatory Commission (BERC) reduced the distribution charge to Tk0.13 per cubic metre gas from Tk0.25. But the authorities raised the gas prices in that month.
But the price hike could not ease the pressure on the company as Titas officials say distribution charge is their main source of earning.
In FY22, the gas distributor posted a Tk317 crore profit, which is 8.21%, or Tk28.43 crore, less than in the previous year. Titas officials attributed the distribution charge drop mainly for the profit fall.
"Distribution charges were reduced in the last month of the fiscal year. But the one-month shake-up was strong enough to negatively affect overall profit. The situation may get worse in the coming days," commented the Titas finance wing official.
In FY22, Titas also witnessed the cost of sales – the cost required to manufacture or purchase a product that is then sold to a customer – and administrative expenses rising.
Besides, the volume of sales ticked down last year on the back of supply crunch.
In FY21, Titas Gas Transmission and Distribution Company Limited offered a 22% cash dividend to the shareholders. The news about Titas's profit and revenue drop pulled the company's share price by 2.39% to Tk40.90 each on Thursday.
In FY22, the company posted Tk1,8370 crore in revenue from gas sales and other sources, Tk504 crore or 2.82% more than in the previous year, due to around a 22% hike in gas price.
Till 30 June 2021, Titas had 28.76 lakh clients, of whom 28.56 lakh were household customers. Besides, the company had 12,076 commercial customers.
According to the company's annual financial statement, it sold 15,858.26 million cubic metres (mmcm) of gas in FY21. In FY22, sales plummeted to 15,657 mmcm thanks to a supply crunch.
Titas Gas Transmission and Distribution Company Limited was established in 1964.
After the emergence of Bangladesh, the company was nationalised and its overall activities were placed under the supervision and control of the Bangladesh Oil, Gas & Mineral Corporation (Petrobangla).
It got listed on the stock exchanges in 2008 under direct listing by offloading 25% of its shares. Petrobangla holds the remaining 75% shares of the company.