Wata Chemical turns around in March quarter

Wata Chemical Limited, a producer and seller of a variety of acids, turned around its business despite challenges in raw material procurement.

In the first three quarters of the current fiscal year, the firm has been able to increase its turnover by recovering from pandemic impacts.

Moreover, its sales have increased in the post-pandemic period after the economy reopened.

In the July-March period, the company posted a net profit of Tk4.79 crore, which was Tk7.10 crore in the same period of the previous fiscal year.

According to a company statement, the price of raw materials especially Sulphur has increased massively in the global market. Although the crisis started due to the Covid-19 pandemic, the ongoing Russia-Ukraine war has driven the situation to its worse turn.

As the raw material is a petroleum by-product, the war between Russia and Ukraine caused prices to rise further, said the statement.

The price of raw materials imported from the Middle East and Russia has increased much more than the previous year due to a shortage of containers, and freight ships, an increase in charges of domestic and transhipment ports, and the unavailability of regular liner vessels.

The average price of main raw material sulphur has increased by about 143% over the previous year which increased the firm's cost of goods sold.

Ali Ahsan, chief financial officer at Wata Chemical, said the company could not achieve the expected returns due to the global price hike of raw materials.

The sales of the company's three major products decreased during the pandemic, which has been recovered in the last quarter, he added.

Wata Chemical produces aluminium and zinc sulphate, magnesium sulphate, sulphuric acid, basic chrome powder, and linear alkyl benzene sulfonic acid.

From the January-March quarter of 2022, the revenue of the company was Tk21 crore, which was Tk14 crore in the same period of the previous year.

During the period, its earnings per share were Tk0.71 and the net asset value per share was Tk60.39.

The company also declared a 30% cash dividend for its shareholders in the last fiscal year. 

Wata Chemical Limited was incorporated in 1981 and got listed on the capital market in 1992.

But due to non-compliance with listing regulations, it was relegated to the over-the-counter (OTC) market.

After returning to the mainboard, it made good profits.

As of 31 March 2022, sponsors and directors jointly held 36.41%, institutions 36.20%, and the general public 27.39% shares in the company.