The Bangladesh Shipping Corporation (BSC) has announced it will begin repaying the government for vessels previously acquired with state funding. The corporation also plans to purchase two additional ships using its own resources, highlighting its financial strength after consecutive years of profit growth since 2019.

Record Profits and Shareholder Dividends

Founded in 1972, just months after Bangladesh’s independence, BSC achieved a record profit of Tk250 crore last fiscal year, marking its highest earnings in 52 years. The board recommended a 25% cash dividend for shareholders during a recent meeting.

These strong profits reflect the impact of new initiatives by current management, according to BSC’s managing director, Commodore Mahmudul Malek. “Expanding our business by adding new routes has led to historic profits,” he said.

Self-Funded Expansion for Future Growth

In a significant move, BSC will use its own funds, rather than relying on government support, to buy more ships. “Our financial capacity allows us to self-finance these new ships, which will help expand our fleet and enhance operations,” Malek added.

The planned vessels are estimated to cost Tk750 crore to Tk800 crore, with exact costs to be finalized in the project proposal.

Initiating Government Debt Repayment

In the past, BSC bought six ships through a government-to-government agreement between Bangladesh and China. Due to limited financial capacity, the corporation had postponed repayment. Now, strengthened by rising profits, BSC has approved an initial repayment of Tk475 crore to the government, to be paid in phases.

Currently, five of the six government-funded ships are operational. The sixth, Banglar Samriddhi, sustained damage during the Russia-Ukraine war but was insured, and BSC received compensation.

Key Factors Behind Profit Growth

BSC’s profits rose from Tk17 crore in FY18-19 to Tk250 crore in FY24, a nearly 1,370% increase in six years. Four main factors contributed to this growth:

1. Higher Freight Rates: Freight rates surged following the Russia-Ukraine conflict, boosting BSC’s revenue.
2. Enforcement of Flag Vessel Act: With the Bangladesh Flag Vessels (Protection) (Amendment) Act, government entities such as the Bangladesh Petroleum Corporation now import goods through BSC, increasing the corporation’s business.
3. Increased Fixed Deposit Rates: Higher interest rates on fixed deposits also contributed to BSC’s earnings.
4. Dollar Appreciation: BSC charges in dollars, and the rise in dollar value from Tk82-86 to Tk120 has significantly increased profit margins upon conversion to taka.

Future Prospects

BSC’s strong financial performance showcases its resilience in a volatile global market. With new ships on the way and a government repayment plan in progress, BSC is positioned for sustained growth and profitability, ready to further establish its role in Bangladesh’s maritime industry.

Source: The Business Standard