Quasem Industries Ltd – the market leader in the dry cell battery industry – is still bearing the brunt of the pandemic-hit economy, while the Russia-Ukraine war, soaring dollar, and inflation fanned the flame.
The company reported a 4.68% fall in revenue to Tk27.07 crore in the July-September quarter of 2022, compared to the same quarter of the previous year. Its net profit shrank 46% to Tk34.57 lakh.
In its financial statement for the first quarter of fiscal year 2022-23, the company said its revenue declined because the purchasing power of dry cell batteries – a non-essential commodity – reduced, which resulted in lower sales.
Also, rapid advancement in technology played a major role in the drying up of the business of dry cell batteries.
Russia-Ukraine war, dollar appreciation, and inflation were key players behind the increase in the company's cost of production, which in turn, dragged down its quarterly net profit, the company said.
As the demand for dry cell batteries is fading away, Quasem Industries decided to diversify and start the business of consumer products and artificial quartz.
Artificial quartz is a building material, most commonly used for kitchen and bathroom countertops, but now it is used more as a decorative wall or floor tile.
In February 2020, the company established an artificial quartz plant and planned to finish it by June 2021. But because of the pandemic, the implementation got delayed by a year.
The new plant is being successfully built with a cost of Tk91.99 crore in collaboration with China and US-based partners, Sunstone International for 100% export to the USA and other parts of the world.
In its quarterly statement, the company said it has received Tk5.76 crore advance against export proceeds from Sunstone International LLC, USA regarding a purchase order for Artificial Quartz products.
In July this year, the company's Tk91.99 crore plant went into operation. But owing to the war, demand from foreign buyers was declining.
Quasem Industries Company Secretary Darul Awam Tuhin told The Business Standard, "The global economy being affected by the Russia-Ukraine war is a reason why there were not many sale orders. Foreign buyers are following a cautious approach due to recession."
"Although the new plant started production, the factory is still not utilising its full capacity. With exports, we are simultaneously working on our development in the local market."
The business will take a turn once sales start in local and foreign markets, he said, adding that there is ample demand for this new product.
Quasem Industries was incorporated in the 1980s and has been publicly listed as a blue-chip stock since 1988.
In FY22, its revenue declined 7.32% to Tk107.66 crore and profit 62% to Tk3.54 crore. Based on the earnings, it recommended a 1.5% cash dividend for the shareholders.