BCIC to source 50% of its required bags from Miracle Industries

The Bangladesh Chemical Industries Corporation (BCIC) will now purchase 50% of its total requirement for woven polypropylene and polyethylene bags from publicly listed Miracle Industries Ltd. This is expected to boost the company's orders and gradually expand its business.

In the first week of September, the Ministry of Industries issued a directive — obtained by TBS — making it mandatory for BCIC, which operates under the ministry, to procure this share from Miracle Industries. Previously, in December last year, only 20% of BCIC's requirement was allocated to the company.

Following the announcement, Miracle's share price surged 27% over 11 trading sessions, closing at Tk33.90 on Monday. However, the company has yet to issue an official disclosure. 

Md Omar Faruk, company secretary, told TBS they had not received any official letter from the authorities.

Historically, Miracle supplied 100% of BCIC's bags, but the government ended that arrangement in 2007, requiring companies to compete through open tenders. Orders resumed in December last year. 

Production is still carried out on machines that are around 30 years old, so fresh investment is necessary to expand operations, Faruk said, adding that the new management has already made several investments in the company.

According to BCIC officials, the demand for such bags largely depends on the production and import of fertiliser. The exact quantity to be purchased will be determined by the government's final decision.

For FY25, BCIC has estimated the total demand for urea fertiliser at around 27 lakh tonnes. To meet this requirement, it has set a production target of about 10 lakh tonnes and an import target of 17 lakh tonnes.

Founded in 1995 as a joint venture between state-owned BCIC and four entrepreneurs, Miracle Industries manufactures a range of bags for cement, fertiliser, salt, feed, sugar, food grains, and chemicals.

The company operates two manufacturing units in Sreepur and Gazipur — one serving the local market and the other producing for export.

Under its original shareholders' agreement, Miracle has two groups of shareholders: Group A (including BCIC) with a 20% stake and Group B (the four entrepreneurs) with a 10% stake.

In August 2023, Mehmood Equities Ltd took control of Miracle Industries from the family of Lutfozzaman Babar and others, according to sources. The following month, Miracle announced that Mehmood Equities, as the new owner, had appointed three directors to its board and planned to invest the required funds to restart operations.

Mehmood Equities then appointed its chairman, AKM Sahabub Alam, as managing director of Miracle, while Showkat Mehmood and Nayan Mehmood were appointed directors.

Miracle Industries was profitable until FY19, when it posted revenue of Tk60 crore and a net profit of Tk0.77 crore. The company achieved its highest-ever revenue and profit in FY17.

However, in FY20, it suffered a record loss of Tk12 crore, with revenue plunging by 85% to Tk9 crore due to a conflict between Group A and Group B shareholders. The company also halted exports after FY19, when it had earned Tk23 crore from overseas sales.

In the January–March quarter of FY25, the company posted a loss of Tk2.26 crore, compared to a loss of Tk2.24 crore in the same period of the previous fiscal year. Loss per share in this quarter stood at Tk0.64.