Deshbandhu Polymer plans to issue Tk500cr Sukuk

Deshbandhu Polymer Limited – a manufacturer of polypropylene (PP) woven bags for the local market and exports – plans to raise Tk500 crore by issuing a Sukuk bond for repaying loans and business expansion.

The board of directors of the company approved the plan at a meeting on Thursday evening.

It is also going to sign agreements with Islami Bank Capital Management Limited and LankaBangla Investments Limited to appoint the merchant banks as issue managers.

"It is in an initial stage. Now we have to examine the interest of investors in the Sukuk," Golam Rahman, managing director of the company, told The Business Standard.

But he declined to make any comments on the purpose of issuing Sukuk as it is price-sensitive information.

A senior officer at the company, seeking anonymity, said Deshbandhu Polymer wants to undertake a new project on polymer-related products which needs a big investment.

"But the new project is not possible with only bank loans," he added.

The PP woven bag industry insiders say around 100 firms are engaged in this business and the market size was Tk3,000 crore in 2020.

Currently, the sector is growing at 20% yearly.

Deshbandhu Polymer is a sister concern of Deshbandhu Group, which started its journey in 1989, with trading and importing fertiliser. Since then, it has been moving forward for 32 years.

At present, Deshbandhu Group has everything from sugar mill, cement industry, fertiliser factory, shopping mall, shipping, textile mill, readymade garment factory, beverage, captive power plant, housing, and logistics to media. Its annual turnover is Tk2,400 crore.

Deshbandhu Polymer has started its commercial journey in 2007 and got listed on the capital market in 2011.

Its shares are traded under the "B" category at the Dhaka Stock Exchange (DSE). "B" category means the company failed to pay at least 10% dividend to its shareholders.

The company has paid only 5% cash dividends to its shareholders for the last three consecutive years.

In FY21, it recommended the same amount of dividend for the general shareholders – excluding the sponsors and directors.

According to its financials, in FY21, the earnings per share (EPS) stood at Tk0.20, which was Tk0.10 in the previous year.

In the last six months, its share price jumped 178% to reach Tk26.7 and on Thursday its shares closed at Tk23.10 each at the DSE.

In March this year, Deshbandhu Group declared a plan to raise $250 million (more than Tk2,100 crore) from international investors through a Sukuk bond as the conglomerate looks to expand its business and repay its local debts.

London-based Al Waseelah PLC, which is the issuer of the Sukuk bond offering, mandated Bedford Row Capital (BRC) for the offering of $250 million.

The group will invest part of the $250 million funds in establishing a fibre factory in Sirajganj to produce Polyester Chips (PET chips) and Polyester Staple Fibre (PSF), which will be exported to the European and American markets.