Usmania Glass stopped giving shareholders cash dividends from 2014-2015 FY, and bonus shares from 2018-2019 due to losses. It has incurred losses of around Tk30 crore over the last five years
Despite the rising demand for glass in the country, the first glass manufacturing company in the country, Usmania Glass, has been running at a loss since 2014.
At one time the Usmania Glass Sheet factory, established in Chattogram's Kalurghat area in 1959, used to be one of the main glass suppliers in the country. It used to be a profitable organisation and give bonus shares and dividends to its shareholders every year.
But it stopped giving cash dividends from the 2014-2015 fiscal year and bonus shares from 2018-2019 due to losses. Over the last five years, it had incurred losses of around Tk30 crore. Meanwhile, one of the two units of the company one was closed down in 2018.
The company has already encashed fixed deposits (FDR) worth Tk4.78 crore to cover losses, and is left with Tk7.90 crore in FDRs. The company needs new investment and modern technology for revival, otherwise it may shut down in the near future and its 300 employees will lose their jobs.
According to people involved in the glass-manufacturing sector, the use of glass in buildings has increasing now. So the demand for glass in the country is rising by about eight to 10 per cent per year. The raw material – sand and gas – needed to manufacture glass are available in the country. That is why this sector has seen more new investments.
The market for glass is now Tk1,500-Tk2,000 crore in the country. The annual demand for glass is 25 crore square feet, and the annual production capacity of private and public glass manufacturers is 32 crore square feet.
Private glass companies like PHP, Nasir and MEB manufacture high-quality glass by using modern machinery that also helps them improve production capacity.
However, Usmania manufactures glass sheets with 60-year old machinery, so the production cost is high and the product quality is low. This has made it difficult for the company to survive in the competitive market.
Usmania Glass Factory's production also reduced to 70,000 square feet from 1.40 lakh square feet after the company shut down one of its two units.
The company's losses are increasing every year. It made a loss of Tk1.20 crore in the 2014-2015 fiscal year, Tk7.91 crore in 2015-2016, Tk7.88 crore in 2016-2017, Tk2.38 crore in 2017-2018 and Tk10.82 crore in the 2018-2019 fiscal year, according to the 2018-19 audit report of the company.
Inefficient management, nepotism in recruitment, corruption and production of low quality glass are responsible for the poor condition of Usmania Glass, according to CBA (Collective Bargaining Agent) leaders and shareholders of the company.
Abdul Khaled, general secretary of the Usmania CBA, said, "Once there used to be a good demand for Usmania's glass across the country. But the company is now sinking because of negligence by the management. In 2014, the company recruited relatives of the people managing the company."
Akter Kabir Chowdhury, president of the Chattogram unit of Socheton Nagorik Committee (a citizens' forum), said that new glass manufacturing factories were being set up in the country. While private companies were increasing their production capacity, Usmania's losses were on the rise, he added.
"There is irregularity and corruption, and people understand this. Otherwise, an organisation cannot face such losses continuously. Monitoring should be strengthened. If steps are not taken promptly, the company may shut down," said the CBA leader.
However, the officials of Usmania Glass reject the allegation of mismanagement. Engineer Bidyut Kumar Biswas, managing director of the company, said, "Now many private companies manufacture glass. They reduce the price of glass quite frequently, so it makes it difficult for us to survive in the market. The price of raw material and gas is increasing day by day, but sales of our glass have decreased in the market. So the losses are increasing every year."
He said the prices of company shares were falling because no dividend was given to the shareholders last year.
"But the hope is that new investment is coming. The work on installing a modern technology container plant in the factory will start soon. The company will revive when the quality of glass improves," said Bidyut.
Amin Ul Ahsan, director (commercial) of the Bangladesh Chemical Industries Corporation, said, "New machinery will be installed in Usmania Glass. Around Tk300 crore is going to be invested for this purpose. Usmania will be able to manufacture good quality glass very soon."