The company has lost profits because of the novel coronavirus pandemic
The net profit of Western Marine Shipyard Ltd, the country's largest shipbuilder, has dropped by 78 percent in the third quarter of the last financial year.
The company posted a net profit of Tk3.21 crore and earnings per share of Tk0.14 in the January-March quarter of 2019-2020 financial year.
In the first three quarters of the last financial year, its net profit decreased by 43 percent to Tk24.78 crore and earnings per share stood at Tk1.08.
Wishing not to be named, a senior officer of the company said, the company has lost profits because of the outbreak of the novel coronavirus pandemic. Moreover, shipbuilding costs have increased with the rise in raw material prices.
He also added that the company has huge loans from different banks. So, despite the gradual rise in finance cost, there was no significant increase in business.
According to LightCastle Partners research, Bangladesh has over 200 shipbuilding companies, largely concentrated in Dhaka, Chattogram, and Narayanganj.
Western Marine dominates the market, with an 89 percent share of the exports. Major export destinations include African countries like Mozambique and Gambia, as well as countries like Germany, New Zealand and Pakistan.
Despite being marked by the government as a strategic industry for growth, the shipbuilding industry has not been meeting performance expectations.
A slowdown in the global economy combined with infrastructural limitations have restrained the growth of the industry, added the research.
Earlier, the Ministry of Industries drafted the Shipbuilding Industry Development Policy 2019, including policies such as a 10-year tax break, cheaper financing and cash incentives.
The government has also been considering the development of a Tk5,000 crore special fund dedicated to the advancement of the industry.
Moreover, with the aid of the Asian Development Bank, the government has trained over 7,500 workers in three years to add to the manpower and productivity of the sector.
Western Marine Shipyard workers, in April this year, staged demonstrations in front of its main entrance in Chattogram, demanding their four months' arrear salaries and overtime pay for 17 months.
"We have not been paid since December last year. We were protesting at the factory gate as no one from the management responded regarding our payment," said Kamrat Jhulan Barua, a staff of the mechanical logistics section at the shipyard.
Western Marine's net profit had increased gradually in the last five years.
In 2019, the company has planned to increase paid up capital of Tk99 crore through issuing right shares to repay high cost debt.
However, the securities regulator is yet to approve the right shares proposal.
The company had paid a 15 percent stock dividend to its shareholders for the 2018-19 financial year.
Western Marine was listed on the Dhaka Stock Exchange (DSE) in 2014 and its paid up capital is Tk229.46 crore.
The closing price of the company's shares was Tk12 each on Monday on the DSE.
Out of total shares, the sponsors and directors of the company hold 30.01 percent shares jointly, institutional investors have 16.85 percent shares and general investors hold 53.14 percent shares.