Despite downturn 3 dozen listed firms plan Tk7,500cr investment in Bangladesh

[Bilal9]

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Infographic: TBS

Infographic: TBS

Despite domestic and external economic headwinds, some three dozen manufacturing companies listed on the Dhaka Stock Exchange are sticking to their guns and going ahead with expansion plans announced in 2022.

While demand and growth have both dampened, these companies have made it clear that they aren't going to turn back from the combined investments of nearly Tk7,500 crore – up by 104% from 2021, according to data from the Dhaka bourse analysed by The Business Standard.

With an eye on the future, as most of these investments will pay dividends a few years from now, businesses are optimistic about the economic gloom being lifted and want to be prepared for a demand surge.

Eight of these companies will invest at least Tk100 crore each or more to expand their operations.

These new investments will also create employment for several thousand people.

RAK Ceramics (BD) Limited, a UAE-Bangladesh joint venture, is investing Tk902 crore in building two new factories – for tiles and faucets – to meet growing market demand in the future.

"Work is going on in full swing in our faucet plant and we expect to launch commercial production in quarter two or three of the next year," Sadhan Kumar Dey, chief operating officer of RAK Ceramics, told The Business Standard.

He, however, said they are proceeding carefully with the tiles plant considering the present situation, including the high price and supply shortage of gas and the geopolitical situation.

"Still, we are working as per our project plan. We are supposed to go into operation by 2026," Sadhan said.

"At the same time, we are observing the present situation carefully."

Around 1,500 people will be employed in the tiles factory, producing 15,000 square metres of premium category tiles a day.


Infographic: TBS

Infographic: TBS

In a posting on the Dhaka Stock Exchange (DSE) last year, RAK said the new factory would initially generate an average of Tk.93 crore profit annually.

Another company, Berger Paints Bangladesh, a multinational, is investing Tk.480cr to set up a factory on a 40-acre land at the Bangabandhu Sheikh Mujib Shilpa Nagar to strengthen further its market share, which is currently about 50%.

Rupali Haque Chowdhury, managing director of Berger Paints Bangladesh, said work in the new factory is progressing as per the plan.

She said it is expected to be up and running by April 2025.

Berger has planned to use the new factory to produce decorative paint, industrial paint, marine coatings, wood coatings, construction chemicals, adhesives, and automotive paints – all of which are in increasingly high demand.

Fu-Wang Ceramic has also moved to invest Tk.650 crore to build a new tiles factory in Gazipur to meet the growing demand for construction materials in the country.

"Fu-Wang Ceramic wants to increase its daily production capacity by 15,000 square feet of tiles through establishing a greenfield factory," Company Secretary A Halim Thakur said.

"That is why it will purchase more land adjacent to its existing factory and will set up a three-line production unit."

The investments aren't restricted to the construction sector.

In 2022, Mozaffar Hossain Spinning Mills, a concern of the SIM Group, announced to invest Tk.90 crore. As part of a second phase, the expansion would lead to installing new machines and setting up a captive power plant at its factory premises to produce yarns for import substitution.

Haris Alam, company secretary of Mozaffar Hossain Spinning, told TBS, "We expect the project to go into production in the next one-and-a-half years. It will add 30% to the company's total revenue."

He said the demand for high-value yarns is increasing in the country, while most are imported from abroad. "So, we have emphasized on producing high-value yarns."

Of the other major firms, the British American Tobacco Bangladesh (BATBC) will invest Tk574 crore to expand its Savar factory and Ifad Tk.300 crore, Associated Oxygen Tk.250 core and Mir Akhter Tk.250 crore.

Besides, Envoy Textiles announced to invest $11.2 million (loan from ADB) to support and finance the purchase and installation of energy-efficient spinning machinery and other equipment to expand sustainable textile production.

Intraco Refueling Stations Limited kicked off commercial operations of two gas stations by investing Tk.8 crore. The firm has already announced plans to gradually set up five liquefied petroleum gas (LPG) stations and five mother-daughter CNG stations to expand its business.

The state-owned Bangladesh Shipping Corporation (BSC) also announced plans to purchase two crude oil mother tankers and two multipurpose mother bulk carriers at the cost of $242 million. According to a senior official of BSC, the proposal has been sent to the shipping ministry for approval, but it still needs to be greenlit.
Downside risks

In some cases, project implementation may be delayed because of the evolving domestic and external situations, according to some of these firms.

For example, Sadhan Kumar Dey, COO of RAK Ceramics, said they are moving carefully with their tiles plant as gas, which is a must fuel for making ceramics, has become dearer alongside being short in supply.

A senior official of Fu-wang also said they were moving in phases as the "economic situation and dollar crisis are getting difficult."

He said that if the dollar crisis gets acute, the opening of Letters of Credit (LCs) for machinery and raw material imports will be delayed.

What does DSE say about investment announcements?

Saifur Rahman, managing director of DSE, said they follow the price-sensitive information announced by the listed companies. Still, they do not have complete oversight due to a shortage of manpower and capacity.

"If we see a company change the time for new investment or any other deviation, we call them and seek an explanation," Rahman told The Business Standard.