Jasim Uddin Haroon
Deshbandhu Sugar Mills Limited (DSML), a leading refinery, wants to float shares worth Tk 1.0 billion later this year aiming at mobilise fund for expansion, its chairman Golam Mostafa told the FE.
“We’ve taken move to raise fund worth Tk 1.0 billion for expansion. We’ve already appointed issue manager for this purpose,” Mr Mostafa, told the FE in an exclusive interview recently.
Mr Mostafa said pre-placement which will begin shortly to the tune of Tk 600 million and the IPO (initial public offering) worth Tk 400 million subject to the approval of the SEC.
“This fund will be utilised to raise capacity of my refinery,” he added.
Currently, the DSML has capacity worth 300 tonnes a day and it is planned to make double at 600 tonnes a day.
DSML, a member of prestigious RSA (Refined Sugar Association), is located at Kawadi area of Palash in Narsingdi.
Mr Mostafa who is also secretary general of Bangladesh Sugar Refiners’ Association (BSRA) said sugar market remains volatile in many times mainly because of its distribution system.
“The traditional DO (delivery order) system to distribute sugar from mills is a major reason behind the price hike of the essential item,” Mr Mostafa added.
He claimed that the capacity of the country’s seven sugar refineries is much more higher than that of the country’s consumption.
BSRA sources said Bangladesh’s sugar demand is around 1.4 million tonnes a year and the capacity of the seven refineries is 2.4 million tonnes.
Deshbandhu chairman said sugar distribution through dealers will help stabilise the market.
He said there are 4000 dealers under the BSFIC (Bangladesh Sugar and Food Industries Corporation).
“If the dealers registered with the BSFIC involve with us (private refineries), proper distribution of sugar will be ensured and market will remain stable most of the time,” Mostafa added.
“I can assure you that the dealers will get at least Tk 300,000 a year if they (dealers) come with us and their experiences will help ensure smooth distribution,” he added.
Currently, BSFIC dealers get around Tk 20,000 a year by depositing security money worth Tk 100,000 with the state-owned corporation.
Mr Mostafa said the refiners’ association proposed to the government to form a committee comprising representatives of commerce ministry, industries ministry, BSFIC, national board of revenue, BSRA, and dealers to monitor the sugar market.
The committee will also determine the prices at mill gates after revision of the international market each two months, he added.
“Our association has already appealed the government to introduce the dealer-based distribution system and form a committee to ensure smooth supply and keep stable the prices of sugar,” Mostafa added.
Mr Mostafa, who hailed from Rangpur began his business through trading.
He has another venture Deshbandhu Polymar Limited (DPL), also a leading plastic bag manufacturer in the country.
The DPL is located at Polash in Narsingdi and it mainly produces woven bags and other kinds of bags needed mainly in poultry feed plants, fertiliser factories, cement, food grains and chemical factories.
DPL is also going to float IPO within next month (August).
The DPL has planned to raise Tk 100 million through issuing a total of 10 million primary shares with a face value Tk 10 each.
SEC (Securities and Exchange Commission) has already approved the DPL IPO.
Mr Mostafa who is also chairman of the DPL said it will manufacture large size bags, which have potential export market.
“Our foreign buyers want to import jumbo bags and we have planned to manufacture this kind of bag after realisation of money from public.”
DPL, the third largest bag manufacturer, will repay bank loans as well from the money to be realised through IPOs.
DPL currently produces 55,000 bags a day, and its major customers in the country are Bangladesh Chemical Industries Corporation, Kafco and Kazi Farms.
Source: The financial express, 27 July, 2010