Rangpur Foundry’s tube-well business shrinks in pandemic

KEY FINANCIALS OF RANGPUR FOUNDRY

• Tube-well sales sales by 6% during Q4 of FY20
• Pran-RFL's sales fell by 5% to Tk127.95 crore in FY20
• Sales rose 2% to Tk37.72 crore after the 66-day holidays
• Paid-up capital is Tk10 crore
• Paid a 23% cash dividend to its shareholders in the last four fiscal years
• Closing price was Tk123.90 per share on Tuesday at the DSE

The tube-well business of Rangpur Foundry Ltd, widely known as Pran-RFL, slowed down during the novel coronavirus pandemic, with tube-well sales falling by 6% during the fourth quarter of fiscal year 2019-20. 

Ahsan Khan Chowdhury, chairman of Pran-RFL Group, said in the company's annual report that they expected growth in sales but that did not happen due to stiff competition, consumers' choices, and the impacts of the pandemic.

Pran-RFL's sales fell by 5% to Tk127.95 crore in fiscal year 2019-20. Moreover, sales declined by 23% in the fourth quarter of FY20 due to the 66-day general holiday announced to contain the spread of coronavirus.

In that period, tube-well and water pump sales fell by 6% and 58% respectively. 

After the holiday was over, the company posted a 2% growth in sales that reached Tk37.72 crore. 

Tube wells are mainly used in rural areas across the country. Pran-RFL and Gazi Group dominate this market.

Pran-RFL also has a water pump business, and water pump use declined as well during the pandemic.

Ahsan said, "We are trying to reach the undeveloped areas to ensure that our products are available in each and every corner in the country."

According to the Department of Public Health Engineering, only 105 people on average use a tube-well in the country's rural areas.

In January this year, the government took up a Tk8,850 crore project to ensure safe water in rural areas. It is supposed to be completed between January 2020 and June 2025. 

The project is aimed at bringing down the number of average users of a tube well to 50 from 105. 

Under the project, the government will set up 90,636 shallow tube-wells, 123,877 deep tube-wells, 206,664 shallow tube-wells with submersible pumps and tanks, and 170,222 deep tube wells with submersible pumps.

Stock performance 
Rangpur Foundry was listed on the stock exchanges in 1999. Its paid-up capital is Tk10 crore.

It paid a 23% cash dividend to its shareholders in the last four fiscal years.

The closing price of the company's each share was Tk123.90 on Tuesday at the Dhaka Stock Exchange.

Sponsors and directors of the company hold 49.89% of shares, while institutional investors and general investors own 16.35% and 33.76% respectively.