Atlas Bangladesh continues to bleed
According to sources in the company, it is unable to maintain competitiveness with the private sector even though it fared well once
Once a market leader in the two-wheeler industry, Atlas Bangladesh – a state-owned enterprise – has been losing business for the last seven years owing to a lack of proper planning for business diversification and maintaining competitiveness with the growing private sector.
According to the company, it has been incurring heavy losses since fiscal 2016-17 and accumulated losses in these years stood at Tk36.96 crore in total as of FY22.
Atlas has now plunged to the bottom of the industry list from its previous position despite the significant growth in the local two-wheeler industry.
Although its motorcycle sales jumped three-fold in fiscal 2021-22, the company incurred a loss of Tk4.86 crore and its board has decided not to pay any dividend to its shareholders.
In FY21, it incurred a loss of Tk10.22 crore owing to the Covid-19 pandemic.
The auditor of the company said the increasing net loss year after year, loss of principal supplier/business relationship and emergence of a highly successful competitor indicated material uncertainty exists that may cast significant doubts on the company's ability to continue as a going concern.
According to sources in the company, it is unable to maintain competitiveness with the private sector even though it fared well once.
Basically, the company is not able to move forward in product diversification because of its procrastination in formulating a plan. On the other hand, even though production and sales have dropped, the company is counting losses through paying the salaries and allowances of its officers and employees.
Government institutions are the main buyers of motorcycles manufactured by Atlas Bangladesh. Due to the reduced purchase of motorcycles by various government organisations during the Covid-19 period, the company suffered a collapse in product sales.
Now due to the government's austerity plan, the sale of motorcycles has decreased. As a result, the company cannot post a profit.
Azibor Rahman, managing director of Atlas Bangladesh, told The Business Standard, "The business situation is bad. Motorcycles are sold mostly to government institutions, but now sales have almost stopped. Due to the economic slowdown, government institutions have stopped buying motorcycles."
"ZONGSHEN-ATLAS brand motorcycles have no demand now. There are no individual buyers. The company has a product shortage. However, the number of products cannot be increased, which has created a crisis."
In 2013, Atlas Bangladesh discontinued its agreement to assemble the "Hero Honda" brand motorcycle with Hero Honda Motors Limited.
It has led to trouble for the state-owned company as both the Indian brand Hero and the Japanese brand Honda began running their separate plants and marketing channels in Bangladesh.
Honda began a joint venture with the government, while Hero joined hands with the local automobile house Nitol-Niloy.
Atlas' annual motorcycle sales declined to 1,000 units in fiscal 2020-21, which was 2,844 units in the previous financial year because of the Covid-19 pandemic.
With the departure of Honda, Atlas also lost its older business of two-wheelers from non-Indian plants of the Japanese firm, as Honda itself started marketing those in Bangladesh.
In 2016, the company entered into a two-year contract with the Chongqing Zongshen Group, one of the top five two-wheeler manufacturers in China, for importing, assembling and marketing their motorcycles.
However, the market did not welcome Zongshen motorcycles.
After that, Atlas Bangladesh signed a memorandum of understanding in 2018, and after that signed an agreement for five years in 2019 with TVS Auto Bangladesh Limited as a corporate partner.
Now the company is engaged in assembling and marketing TVS brand motorcycles to the corporate sector.
Sales jump in FY22
According to officials of the company, it witnessed a significant jump in sales in FY22 and still it incurred losses.
The company incurred a massive loss in the first three months of fiscal 2021-22 but posted a profit in the final three months owing to higher sales.
And, finally, the company posted a loss of Tk4.84 crore in fiscal 2021-22.
Seeking anonymity, an official of the company's finance department said total sales in fiscal 2020-21 amounted to around Tk9.90 crore. And in fiscal 2021-22, sales were around Tk36 crore.
In 1966, Atlas began its journey as a venture of the privately-owned Siraji Group in technical collaboration with Japan's Honda Company.
After Bangladesh's emergence, it was nationalised.
In 1988, the government shared minority ownership of the company with general stock market investors.
