Deshbandhu Sugar Mills to double capacity with Tk1000cr investment
Officials said the group is moving ahead with various projects to increase its business and create jobs
Deshbandhu Sugar Mills Ltd – the country's pioneering sugar producer – is going to invest Tk1,000 crore with a plan to double its production capacity to meet growing local demand.
Incorporated in 1932 and privatised in 1999, the firm wants to go public to raise Tk100 crore from the country's stock market to finance the expansion project, the rest of the money would be arranged through loans.
The sugar refinery has already appointed local investment bank City Bank Capital Resources Ltd as a corporate adviser and issue manager for the planned initial public offering (IPO).
"Now we want to purchase modern machinery from the European market at an estimated cost of Tk1,000 crore," said Engineer ABM Arshad Hossain, resident director of the group.
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Owing to exchange rate volatility, the total cost of the expansion project is yet to be finalised, he added.
Engineer ABM Arshad Hossain stated that already around Tk100 crore has been invested for the factory's modernisation in 2022.
At present, the factory has a raw sugar storage of 1,200 tonnes, said the company officials, adding that the total raw sugar storage capacity is 50,000 tonnes.
Bangladesh's sugar market has grown at an average annual rate of 10% in the last two decades to around 26 lakh tonnes a year before the Covid-19 pandemic and it has now slowed down to around 22 lakh tonnes as people have been consuming it less due to the pandemic and later the high inflation, said Golam Mostafa, chairman of Deshbandhu Sugar Mills.
Deshbandhu tried to continue the legacy of producing sugar from local sugarcane in the early 2000s, but raw material shortages and the high cost of sugarcane production in the country forced the company to opt for refining imported raw sugar.
"Local farmers are not interested in producing sugarcane as it takes more than a year to harvest, and importing raw sugar is the wise way for the country," he added.
In 2022, Deshbandhu Group reinvested Tk850 crore in its sugar, food, beverage, sweater, denim, and polymer factories, which generated 5,000 new jobs in its factories.
Officials of the group said the company is moving ahead with various projects to increase its business and create jobs.
The annual turnover of the group has increased from Tk2,400 crore to Tk2,800 crore with around 17% growth, said Brig Gen (retd) Md Zakir Hossain, director (admin) of the group.
He said despite the increase in investment and employment, the expected production and sales activities could not be achieved due to the Russia-Ukraine war as well as existing complexities in opening letters of credit because of volatility in the US dollar market.
A higher value of the dollar is a big shock for the factories, as it has been hurting the import process of raw materials, he added.
Gas, fuel, and electricity crises have also been random, affecting production. But facing all such odds, no company under Deshbandhu has witnessed any closure, he added.
