Page 48 - IBT December 2020

package was offered within the
At the onset of the
coronavirus pandemic
the import of raw
materials and production
was disrupted. What was
the coping strategy that
KSRM deployed in the
first 3 months? How has
KSRM adapted to the
pandemic?
Whenever there is a dip in the raw
material prices internationally, we
try to buy in bulk and maintain a
buffer stock which gives us a
safety net in case there is a
shortage of supply. During the
pandemic slow down we were
able to rely on this stock and
continue production as much as
possible. Our primary intention
was to continue production even
through the pandemic. A
slowdown in production will
mean a rise in overhead which in
turn would increase our per-unit
manufacturing cost. Even though
it was challenging due to the
restriction of movement of
vehicles, we were still able to
continue production as the
government very prudently gave
the decision to keep industries
which are not human-intensive
running.
The most challenging part of the
pandemic was the drastic drop in
sales. The first two months it was
almost non-existent when the
lockdown was put in place. Our
inventories shot up to the extreme
46
The fundamental of
income tax is that the
tax is imposed on the
profit made. Hence,
any additional
income tax that is
taken at the import
stage should be
adjusted. The steel
industry so far has not
had any adjustments
of AIT which is
creating a serious
capacity and we had to utilize all
the available storages we have impediment to the
around the country to its growth of this
maximum capacity. We had to industry.
make sure the products which
started to rust were delivered at
the first opportunity, again,
something extremely difficult for tax at 5%. As the tax is deducted
heavy products such as steel. at the import stage as a
As the sales dropped and cash percentage of the value of the raw
flow halted, we needed to focus material, the amount becomes
on cutting any cost that we could
do without. We undertook almost 60-70% of the actual profit
extensive deep dive into our we make. There is VAT on top of
expenses and singled out this. Such taxation is unheard of
whatever we could do without. anywhere in the world. The
The positive side to this was the fundamental of income tax is that
fact that the entire KSRM family the tax is imposed on the profit
as a whole got a renewed sense of made. Hence, any additional
the need for extracting ultimate income tax that is taken at the
import stage should be adjusted.
efficiency in every avenue of our The steel industry so far has not
operations. This experience will
had any adjustments of AIT which
help the entire team to approach is creating a serious impediment
any task in the future with the
to the growth of this industry.
need for ultimate efficiency in Every single company is suffering
mind.
from a liquidity crunch because of
The industry suffered an this capital tied up with NBR.
estimated loss of Tk3,000 Steel is an industry that operates
crore in March and April, at large volumes but with narrow
margins. The price of steel
and it could rise to as internationally also fluctuates
much as Tk15,000 crore quite drastically and hence losses
by December. What kind can be incurred quite heavily too.
of policy support does the If the NBR does not take these
sector require to combat things into consideration the
these dire projections? growth of this sector will be
The steel sector has been hampered quite heavily. Actions
subjected to heavy tax burdens in must be taken as early as possible
recent years. At the import stage, to ensure that capital is not tied
we have to pay advance income up from the imposition of AIT.
The pandemic, it seems,
was particularly harsh
for steel makers,
eviscerating demand for
their products like
never before and profits
tumbling in the
financial year that
ended on June 30. How
has KSRM managed to
sustain its position as a
lead contender in the
sector?
An unwavering focus on quality
and obsessing on user’s needs
have propelled KSRM to the
leading position in this fiercely
competitive market. We make
sure to attend to a customer
with the utmost diligence in the
case of a complaint in any
aspect of the purchase. Even in
extreme cases such as theft or
loss of product during the
shipment, we take the
responsibility to resend the
shipment and we deal with the
existing credit limit the company
had and not as an additional limit.
Even then the reduced rate of
interest allowed breathing space
for this capital-intensive sector.
Almost all the banks extended this
facility and it was a welcome move
by the government.
Can you tell us what kind of
initiatives will strengthen the
sector to become
business-friendly? What is the role
that VAT and Supplementary Duty
can play to allow the sector to
remain sustainable?
issue ourselves. The It is of utmost importance that the
idea is that once the
customer has made a stance of NBR towards the steel
sector changes. The imposition of
transaction with KSRM, AIT should be withdrawn. It is now
he can sit back and treated as a minimum tax for this
have the peace of mind
that his requirement sector. They have assumed that we
will be executed by the make at least a 5 % profit of the
company by any value of the raw materials. This is
means. Such far from reality. We pay AIT on the
experiences keep them additional chemicals needed to
coming back to KSRM manufacture steel. Then there are
and thus the vast loyal rising energy costs in this already
customer base it has energy-intensive industry. Gas and
electricity prices are surging as we
acquired over the all know. Under such
years. We focus on the service and circumstances, income tax should
quality; the customers reward us be imposed on an actual basis, or
with their trust. So even after the over time the sector will recede to
devastation of the pandemic when grow when the country needs this
the market opened, the consumers sector at this crucial stage of
turned to KSRM. We made sure our growth.
partners and dealers were not
heavily affected by the losses by Please share some
extending their credit lines and examples of CSR
allowing more time to settle the initiatives taken by KSRM
dues. recently?
BSMA sought Tk 30 billion KSRM stood by the needy in the
as loan from the time of lockdown in alliance with
government's COVID-19 the administration and provided
stimulus package for steel food support for the low-income
manufacturers to help segment that was affected the
them continue their most. We provided food for over
business. With the central forty thousand families during the
bank providing 30% of a first three months of the pandemic
company’s existing in addition to a vast number of
working capital from the PPEs and oxygen concentrators to
fund, was the stimulus the hospitals and front liners. In
addition to this, last year we
package effective? Where provided all the steel necessary to
were the shortcomings? build several schools, most notably
The stimulus package was a sigh the Zainul Abedin primary school
of relief for this sector. The in Satkania.