BSRM’s big push

BSRM Steels Ltd is set to invest Tk700 crore in a new plant to produce an additional 5 lakh tonnes of re-rolling products per year, aiming to catch up with growing market demand.

The new manufacturing unit of the company is expected to go into operation by the middle of 2023.

Tapan Sengupta, Deputy Managing Director of BSRM Group, told The Business Standard that they have decided to arrange the investment fund from bank loans and the company's own resources.

"Our business almost ceased amid the pandemic. During the countrywide shutdown in April and May this year, our production came down to a minimal level. 

"However, the situation is improving. Our factories have resumed full operation by now and our business also is getting better. We feel it's necessary to increase our production capacity to meet the growing demand for steel products in the country."

According to industry insiders, the implementation of mega development projects across the country has given a boost to the steel industry, prompting investors to expand their businesses.

They pointed to the fact that the leading steel manufacturers in the country have moved to expand their businesses in recent times as the per capita steel consumption has increased in line with economic development.

Bangladesh's combined annual installed capacity of producing steel in 2018 was 8.5 million tonnes, while the total consumption was 7 million tonnes.

Per capita steel consumption in the country almost doubled over the past eight years, standing at over 45kg in 2018.

Industry people expect that the implementation of government projects would add 217kg to this figure in the next few years.

The current size of the domestic steel market is around Tk45,000 crore, industry insiders say, adding that around 400 companies in this sector employ roughly 3,00,000.

Recently, GPS Ispat has opened a new plant that has the annual capacity to produce 8,40,000 tonnes of MS billet and 6,40,000 tonnes MS rod and medium section products, such as support beams and flat bars.

Besides, Chinese steel giant Kunming Iron and Steel Holdings Company has announced to invest $2.3 billion in a steel manufacturing project along with a power plant at Mirsarai in Chattogram.

A consortium of 17 private players named Star Infrastructure Development Consortium Ltd is acting as the local partner of Kunming.

The company aims to produce 2 million tonnes of integrated iron and steel products annually. The operation of this consortium is expected to start by 2022.

BSRM Group is currently producing 2 million tonnes of MS billet and 1.6 million tonnes of re-rolling steel per annum. Once the new factory goes into operation, the total production of the company will reach 4.1 million tonnes per annum.

BSRM Steel is listed on both Dhaka and Chattogram stock exchanges. The company recommended a 15% cash dividend for its shareholders for the year ending on 30 June 2020.

According to the last audited financial statement, the company's net profit had decreased by 57.04% year-on-year to Tk74.23 crore in FY20. In the previous year, the company made a profit of Tk172.81 crore.

In FY20, the company's revenue was Tk3,868 crore, down from Tk6,106 crore in the previous year.

At the same time, the company's earnings per share (EPS) was Tk1.97, and net asset value per share was Tk56.84 crore.

The company got listed with the stock market in 2009. Sponsors and directors hold 70.53% share in the company, while the share of institutional investors is 17.81%, foreign investors 0.37%, and that of general shareholders is 11.29%.

Bangladesh Steel Re-Rolling Mills Ltd, another company of the group, got listed on the stock exchanges in 2015. This company also recommended a 15% cash dividend for its shareholders for the year that ended 30 June 2020.

The company's consolidated net profit was Tk92.18 crore in FY20, down by 50.46% from Tk186.06 crore in the previous year.

During the period, the company's revenue was Tk4,819.47 crore, which was Tk8,311.53 crore in the previous year.

At the same time, the company's EPS was Tk3.90, and net asset value per share was Tk99.89 crore.