Company officials report facing disruptions in production, but not complete closure
Steep gas crisis and working capital shortage have pushed Hamid Fabrics to halt its production recently, according to industry insiders.
Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, while speaking at a press conference on Saturday, said textile millers are facing challenges as a severe gas crisis has pushed them to run their factories at low capacity.
At the same time, he mentioned that Hamid Fabrics has already stopped production in this given situation.
When contacted, Kazi Nasimuddin Ahmed, chief financial officer of Hamid Fabrics, told The Business Standard, “Our business has not been running well over the past couple of years due to a lack of demand. Besides, we are also suffering a gas crisis as others are facing.”
“Additionally, high inflation in purchasing raw materials and utility charges has pushed the company into losses, making it difficult to pay back bank loan instalments on time. This has caused disruptions in production, but not a complete closure,” he added.
Abdullah Al Mahmud, managing director of Hamid Fabrics, could not be reached over the phone as he did not respond to repeated calls.
Its company secretary ASM Mijanur Rahman said, “We have no news about the closure of the factory. If there is any information on halting operations, we will disclose it publicly through the stock exchanges first as we are a listed company.”
Hamid Fabrics’ factory is located in Narsingdi. It has three production units. The woven fabric unit has an installed capacity to produce 32.40 million yards annually, while the weaving units have an annual capacity of 9.88 million yards, and the dyeing unit has about 1.37 million kg yarn capacity.
A senior official of the BTMA told TBS that the factory closure of Hamid Fabrics was reported verbally. However, the company has not yet officially informed the BTMA.
The official added that for several years, the company’s business has not been going well, which has led to delays in paying bank loans on time. The company is short of working capital, and this situation is not unique to them; many factories in Narsingdi are in bad condition.
He further said that companies are getting fewer orders, and among them, the orders that are coming in are not being fulfilled on time due to the gas crisis. A factory needs at least 10 PSI gas to run, but not even 1 PSI of gas is available. So, most of the companies are struggling.
Business deterioration
Hamid Fabrics reported that its revenue dropped over 40% to Tk128 crore in the July-March period of the fiscal year 2023-24 compared to the same time of previous year.
During the period, it incurred a loss of Tk7.90 crore.
At the end of March, its earnings per share stood at Tk0.87 negative.
The company said in its price-sensitive statement filed on the stock exchanges that the revenue has significantly decreased during the period due to a reduction in orders from buyers caused by global economic instability. As a result, profitability has deteriorated severely, which has affected the profit.
According to the July-March period’s financial statement, its long-term loan stood at Tk22 crore and the short-term loan was Tk62.54 crore.
Hamid Fabrics listed on the stock exchanges in 2014. It raised Tk105 crore through issuing shares at Tk35 each including a premium of Tk25.
It spent Tk30 crore for repaying loans from the public fund, while Tk72 crore for business expansion.
Its highest dividend payout was 20% in FY2014 and FY2015. Since then, the dividend payout has gradually decreased. In the last three years leading up to FY2023, it has only paid a 5% cash dividend to its shareholders.
Hamid Fabrics shares closed at Tk14.20 on Sunday at the Dhaka Stock Exchange.
