The Bangladesh Steel and Engineering Corporation (BSEC), once a public sector behemoth, has shrunk almost to a non-entity.
The units under its control have weakened fast and lost their competitive edge over the private peers, officials said.
The corporation, however, is still profitable, thanks to the Pragati Industries Limited and three other units, they said. The profit margin of the BSEC has been shrinking unabatedly and it may not take too long a time for it to be in the red.
Over the last six fiscal years, the profit margin of the key public corporation dropped by almost 60 per cent, while its liabilities kept soaring. As a result, the corporation was struggling to maintain a healthy balance sheet.
The BSEC was established in 1976 through amalgamation of then Bangladesh Steel Mills Corporation and Bangladesh Engineering and Shipbuilding Corporation with some 63 enterprises under its control.
Over the past decades, the units under it kept losing their competitiveness with the emergence of a vibrant private players . Now the number of active enterprises under the corporation has come down to only nine.
Of the active units, five were incurring losses while three others were making marginal profits. Only Pragati Industries Limited earned some profits but the volume of its profit has also been declining.
According to the official statistics, the BSEC made pretax profit amounting to Tk 1.07 billion in the fiscal year (FY) 2014-2015. But the volume of profits dropped to Tk 511 million in the FY'20.
The loss-making units are Eastern Cable Limited (Tk 169 million), Atlas Bangladesh Limited (Tk 42.1 million), Bangladesh Blade Factory Limited (Tk 48.7 million), Eastern Tubes Ltd (Tk 40 million) and Dhaka Steel Works Ltd (Tk 2.3 million).
While the profit makers are Pragati Industries Limited (Tk 760 million), General Electric Manufacturing Company Ltd (Tk 40.05 million), Gazi Wires Ltd (Tk 10.01 million) and National Tubes Ltd (Tk 3.4 million).
Seeking anonymity, a senior official at the industries ministry which controls the corporation said the ministry was dealing with four major public corporations-BCIC, BSEC, BSCIC and BSFIC.
"Only the steel and engineering corporation is making some profits. But the most unpleasant part is that the profit margin has been on the decline. If the trend continues, it will join the group of losers," he said.
Overall liabilities of the corporation was calculated at Tk 8.08 billion in FY'19 and the amount increased further in the last fiscal, said the official who could not provide the actual data.
"The corporation keeps losing its market share because of the emergence of vibrant private enterprises."
When contacted, BSEC chief engineer Nazmul Haque Prodhan said they have drawn up a revival plan for the struggling enterprises but the Covid-19 pandemic has dealt a blow to the corporation like others that delayed execution of the plans.
Few enterprises, as per the corporation's revamping plan, could have reached the breakeven level had there been no outbreak of Covid-19, he said.
At the same time, he said, the government's changed policy to spend less in the wake of the pandemic was also hurting them.
"We could not deliver our products ordered by the government agencies because of the policy. Our ready products remained stuck for months," he said.
Mr Prodhan, who is also discharging the responsibility of the corporation's secretary as additional charge, blamed the factors like weak marketing system, reduced government orders and decades-old machinery in many units for its sorry state.
"Quality is our asset. There are many private enterprises, which produce low-cost and low-quality products that we cannot do. Even we cannot properly market our products because of many complexities."
He said the lengthy decision-making process is another obstacle that hurts its operations.
Research director at the Centre for Policy Dialogue (CPD) Khondaker Golam Moazzem said among the government corporations, the steel corporation was making profit but its margin was squeezing fast.
Excepting a few, most of its units had not been able to generate profits for the last several years. This had prompted the corporation to cross-subsidize the loss-making units, he said.
"The government can shut costly production of items where the private sector is strong enough to meet the demand," he added.