ACI to invest Tk50cr in a joint venture to produce Colgate toothpaste
ACI Limited is going to form a manufacturing joint venture with the world's largest oral care player Colgate, according to a regulatory filing by the conglomerate.
It will invest Tk50 crore in the next three years to hold 24% of the proposed company Colgate-Palmolive ACI Bangladesh Pvt Limited. Its joint venture partner will be Singapore-based Colgate-Palmolive (Asia) Pte, an arm of American consumer products multinational Colgate-Palmolive.
"The joint venture is a part of ACI's ambition for a complete portfolio of healthcare products, and its commitment for quality products at reasonable prices," said Pradip Kar Chowdhury, executive director and group chief financial officer (CFO) at ACI.
According to him, ACI has long been marketing the imported Colgate products in Bangladesh and the local manufacturing venture would help strengthen the world's largest oral care brand's market presence.
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Colgate, in the early 2000s, had around 20% market share in Bangladesh. Later, due to high duties and taxes, the company kept losing market share because of the imported products, while its competitors were locally manufacturing toothpastes to grab more market share, Chowdhury said.
Right now, Colgate is serving around 9% of the Bangladesh oral care market.
"The local plant would allow the brand to reduce duties and taxes significantly and the cost benefit would translate to price benefits for consumers," he further said.
With its over 200-year history, Colgate serves around 46% of the global market, according to the ACI CFO.
In its Dhaka Stock Exchange (DSE) disclosure on Thursday, ACI said, "The agreement with Colgate is subject to the usual condition precedents and other regulatory formalities."
ACI was listed on the DSE in 1976 in the pharmaceutical and chemicals sector.
In the 2021-22 fiscal year, ACI's consolidated profit stood at Tk89.30 crore, and the company paid 50% cash and 5% stock dividends to its shareholders.
On Thursday, its shares were stuck on the floor price at Tk260.20 each at the DSE.
In November last year, ACI Ltd decided to hand over its 50% stake at Tetley ACI (Bangladesh) Limited to the UK-based Tata Consumer Products Overseas Holdings, its joint venture (JV) partner which is a concern of Indian-origin Tata.
Advanced Chemical Industries, a legacy of British Imperial Chemical, has emerged as one of the largest conglomerates in Bangladesh under the local ownership and management.
The one pharmaceutical company having made aggressive ventures into a wide range of verticals, its growth strategy has already emerged as a top-tier local conglomerate that grew its annual turnover to around Tk10,000 crore.
It operates across the country through its four diversified strategic business units such as ACI Pharmaceuticals, ACI Consumer Brands, ACI Agribusinesses and ACI Retail Chain.
Alongside its core business of pharmaceuticals, it expanded into consumer products including toiletries, homecare, hygiene, electrical, electronics, mobile, salt, flour, foods, rice, tea, edible oil, paints, agribusiness, farm mechanisation, automobile, plastics, retail chain and many other with strong market leadership in many segments.
The company has 15 direct subsidiaries to handle the empire while following the announced divestments this year, ACI will have two JVs - ACI Co-Ro Bangladesh and ACI Godrej Agrovet Pvt Ltd.
