Econo, a once-dominant force in Bangladesh’s ballpoint pen market, is pressing pause. The company, owned by GQ Ball Pen, will halt production for 12 months starting June 30th, 2024, to modernize its factory and hopefully stage a comeback.
Econo has struggled for years, experiencing operational losses since 2014. The company blames its aging factory and inability to compete with modern products for the slump. To address these issues, Econo will invest Tk 9 crore in a Balancing, Modernization, Rehabilitation, and Expansion (BMRE) project. This factory revamp is expected to take a minimum of 12 months.
Despite the production halt, Econo assures shareholders dividend payments will continue during the year, using income from other sources like rent. GQ Ball Pen owns a nearly-completed 14-story commercial building in Uttara, expected to generate rental income. Additionally, the company claims an ability to earn Tk 3 crore annually from existing rental properties.
The company’s decline has worried shareholders. At the last annual general meeting, they urged management to prioritize the BMRE project and release non-essential staff to prevent further losses.
Econo’s struggles reflect a broader market trend. In the past decade, the company’s sales have plummeted from Tk 30 crore to a mere Tk 5 crore in 2022-2023. Meanwhile, competitor Matador Ballpoint Pen, established in 1998, now dominates the market. The ballpoint pen market is largely dominated by imported products. While local companies like Pran-RFL, Janani, Kumu, and the Meghna Group’s “Fresh” brand are present, the total market size remains unclear.
With its brand recognition still holding value, some believe Econo can turn things around. However, successful recovery hinges on the effectiveness of the BMRE project and the company’s ability to compete in a market saturated with imports.
Founded in 1981 and listed on the stock exchange in 1986, Econo is one of the oldest listed companies in Bangladesh.
Despite financial losses, Econo has a history of paying cash dividends from retained earnings, a factor contributing to its “B” category listing on the Dhaka Stock Exchange. Econo’s share price saw a significant jump in 2020 due to acquisition rumors that never materialized.
The upcoming year will be crucial for Econo. The success of the factory modernization project and the company’s ability to adapt to market realities will determine whether Econo can recapture its past and write a new chapter in its history.