Business & Finance
GPH Ispat’s Revenue Falls 29% to Four‑Year Low as Cash Shortage Halts Production
GPH Ispat Limited, a leading steel producer in Bangladesh, reported a 29% drop in net revenue to Tk3,940 crore in fiscal 2025‑26, down from Tk5,606 crore a year earlier. The decline follows a sharp fall in production and difficulties in procuring raw materials, which have weakened the company’s market presence. Revenue from MS rod sales fell 29% to Tk4,038 crore, while MS billet generated no revenue during the year. Ancillary industrial gas revenue fell 37% to Tk22.72 crore, and export earnings dropped 55% to Tk8 crore. Net profit fell to Tk3.54 crore, giving a profit margin of just 0.08%, largely due to lower management expenses and income tax.
A senior company official, speaking anonymously to The Business Standard, said the crisis is caused by an escalating cash crunch. The liquidity shortage has prevented the company from opening letters of credit to import scrap metal and other raw materials, leaving factories operating well below capacity and key products such as MS rod and billet largely absent from the market. The company is also under pressure to meet regular debt instalments.
The financial strain follows heavy debt‑financed expansion over the past decade. In 2016, GPH Ispat launched a major capacity expansion using Quantum Electric Arc Furnace and Winlink technologies, raising annual capacity to 10.50 lakh tonnes of MS billet and 7.90 lakh tonnes of MS rod and structural products. Commercial production from the expanded facilities began in 2021, followed by the launch of specialised high‑grade rebar in 2022. The expansion was financed largely through commercial bank loans and capital market rights issues. As borrowing costs rose amid sluggish sales, long‑term loans increased 40.43% to Tk4,088 crore, taking total liabilities to Tk8,319 crore. Major credit exposures include Pubali Bank at Tk559 crore, Trust Bank at Tk506 crore, United Commercial Bank at Tk436 crore, Dutch‑Bangla Bank at Tk426 crore and NCC Bank at Tk284 crore. The company also has Tk705 crore in syndicated term loans and Tk601 crore in foreign currency loans.
The liquidity crisis has been compounded by a broader slowdown in Bangladesh’s steel sector. Installed steelmaking capacity stands at 13–15 million tonnes a year, while effective demand has fallen sharply since FY24‑FY25, reducing industry capacity utilisation to 30%–40%. Weak construction activity, volatility in global scrap prices and foreign exchange restrictions have further worsened conditions. Although demand for high‑quality steel remains relatively resilient, GPH Ispat’s difficulty securing raw materials has limited its ability to capture market share.
To address the crisis, the company is pursuing a two‑pronged revival strategy involving debt restructuring and fresh capital. It is negotiating loan rescheduling with lenders to avoid default and has sought policy support from Bangladesh Bank, which is considering the matter. GPH Ispat also plans to raise nearly Tk968 crore through a rights share issue, with most of the proceeds earmarked for repaying high‑cost bank debt and strengthening its balance sheet.