The Maddhapara Granite Mining Company Ltd (MGMCL) finds itself in a dire financial situation as its sales continue to plummet throughout the current year.

Despite selling hard rock at Tk 500 lower than the average production cost per tonne, the country's lone underground hard rock mining company under Petrobangla has failed to clear its massive stockpile.

Now the company is relying on loans to continue operations.

Currently, the MGMCL has around Tk 430 crore worth of unsold hard rock stored in its yards, with production continuing to exceed demand.

Efforts to increase sales have been sluggish, and the company has resorted to borrowing funds to meet its financial obligations, including payments to contractors and employee salaries.

In September, Maddhapara Granite Mining secured a Tk 30 crore loan from the Barapukuria Coal Mining Company Limited (BCMCL), another company of Petrobangla, to pay its contracted production partner, Germania Trust Consortium (GTC).

However, the company has failed to repay the loan within the promised two-month period.

Recently, the MGMCL has sought an additional Tk 40 crore loan from Petrobangla to manage its escalating financial crisis.

Both MGMCL and BCMCL are located in Parbatipur upazila of Dinajpur.

Maddhapara Granite Mining produces about 15 lakh tonnes of hard rock annually, against a national demand of 2.16 crore tonnes.

Despite its efforts, only a fraction of the production is sold to various government and non-government developers.

As of now, nearly 11 lakh tonnes of stone remain unsold.

The company attributed its declining sales to an inability to compete with cheaper stone imports from India and Bhutan, as well as to inadequate marketing and high production costs.

The high production costs are driven by different factors, including a 100 percent value-added tax (VAT) on explosive imports, additional VAT on spare parts, consumables, and equipment, as well as new levies on materials like ammonium nitrate.

Furthermore, fluctuations in the US dollar exchange rate have increased costs, as payments to contractors are paid in dollars.

Md Fazlur Rahman, who joined MGMCL as managing director in September, said he has been trying to boost sales.

Over the past three and a half months, Rahman, who will remain in the post until December this year, has held meetings with various government and private organisations, including the Local Government Engineering Department, Roads and Highways Department, and Khulna Development Authority.

The Bangladesh Railway has agreed to purchase 250,000 tonnes of ballast on credit, the proposal of which is still pending for ministry's approval, according to a close source at MGMCL.

However, Rahman's ambitious sales target of 1.06 lakh tonnes per month remains unmet, leaving the company to rely heavily on loans.

MGMCL's financial woes are compounded by the non-approval of new government construction projects, non-payment of funds for ongoing projects, and reduced tariffs for imported stone.

With a large stockpile and insufficient sales, production may face a shutdown if the situation does not improve soon.

For MGMCL, loans have become a short-term solution to a long-term problem, said an official of the company.

Without immediate intervention to boost sales and address the cost disparities between domestic and imported stones, the company risks facing deeper financial distress, which could potentially jeopardise its operations and workforce.

Stakeholders and industry experts are calling for policy adjustments, including higher tariff values on imported stone, to create a competitive market environment for MGMCL's products.

Accommodating hard rocks is now the biggest challenge for MGMCL as it does not have sufficient space to accommodate them.

During a recent visit, the correspondent found that MGMCL is making arrangements to store the produced hard rock in an area outside its boundary.