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Another fall of a construction company

In recent past construction companies in our country is struggling due to political unrest, construction material price hike, fuel price hike and most of all lack of working environment. We have experienced many small investors / entrepreneurs have lost their interest in this industry as even bank loan has been extremely difficult. We have interviewed an entrepreneur who have recently closed his companies operation to know the actual facts of construction industry in recent times.

Company information

Company name                  : Construction 101 Ltd.

Company starting date  : July 07, 1996

Company closing date    : January 17, 2013

Construction 101 limited has started their journey on July 07, 1996. When they emerged as a construction company they were mainly working as construction contractors of different real estate vendors in Dhaka city area. After the year 2000 the telecom industry started tower construction widely all over the country due to competition of some newly joined Telecom Company in the industry. At that time Construction 101 Ltd has got many contracts of construction of tower bases and BTS rooms all over the country. Many small investors has invested in telecom industry at that time for tower construction who have perished at the time of 2006-07 due to saturation of tower construction all over the country. But Construction 101 Ltd could continue their operation as tower construction was not their main business area. They have continued in real estate industry and also worked in some government project as a sub-contractor. But after the year 2011 construction 101 limited started the process to close their operation due to some reason.

The owner of the company says “Political unrest in recent past has affected our economy and there are very less clients then before and also the market price reduced. Real estate companies has slowed down their building construction and many of our contracts were terminated. In this circumstances we were losing business and it was difficult for us to survive.” The political situation is not getting even worse in recent times and we are experiencing strike in every single week. It is difficult to transport construction material at site due to strike. Workers also cannot come to the working site due to transport strike. It is really difficult for smooth operation. And as the contract value is lesser than before it is impossible to profit without smooth operation.

Another comment from the owner, “Price hike is a major issue. Every construction material price has been increased 10-60% from 2009 to 2011. Our contract value did not give us that room to accommodate this price hike. We were losing money.” The below table will show some price comparison of materials in 2009 and 2011

Sl No.

Material

2009 price in BDT

2011 price in BDT

Percent increase

1

Cement

350 / Bag

465 / Bag

33%

2

Stone chips

100 / cft

155 / cft

55%

3

Sand

28 / cft

36 / cft

29%

4

Steel

55000 / Ton

73000 / Ton

33%

 

The above table clearly shows how much the price has been increased. The main reason of price hike is raw material import is difficult, manufacturer operation cost increased and increased transport cost. Fuel price has been increased 5 times last year. It has also affected much and construction price is much higher than before.

The investor of construction 101 Ltd. says, “We have tried for bank loan for several times. But we were refused and finally we closed our operation. It was not possible to continue business in so many adverse situation.” Bank loan is also difficult. In 2009 and 2010 there were bankrupt cases of thousand crore BDT. Halmark company limited has withdrawn 2600 crore BDT with the help of dishonest bank staffs. There are many cases like this which is affecting small investors who are not getting any bank loan against their investment.   

Construction 101 Ltd. is an example of our recent economic scenario of our country. Like this company many small investors has closed their companies in construction industry. Many people are getting unemployed. We are humbly requesting our political leaders to understand the actual scenario of our country and hope that they will take necessary steps to stop the destruction politics which is harming both country and people. We want to see a better future for the people of this country.

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