Olympic invests Tk360cr in six years for business diversification

Infographic: TBS

Olympic Industries, the country's leading branded biscuit manufacturer, has invested around Tk360 crore over the past six years in factory expansion, aiming to diversify its business and establish a strong presence across the entire confectionery industry.

According to price-sensitive information filed with the Dhaka Stock Exchange (DSE), the company has invested a total of Tk181 crore in land acquisitions. This includes Tk111.26 crore for a plot in Bashundhara, Tk52.62 crore in Tejgaon, Tk8.91 crore in Purbachal, and Tk8.59 crore in Narayanganj.

Additionally, it has invested Tk178 crore in expanding its factory operations. This includes Tk22.71 crore for chanachur production, Tk24.75 crore for noodles, Tk12 crore for chocolate, Tk25.65 crore for cakes, Tk64 crore for biscuits, and Tk28.50 crore for infrastructure and packaging.

Olympic Industries Chairman Aziz Mohammad Bhai and Managing Director Nurjehan Hudda could not be reached as their phones were switched off.

A senior officer of the company, speaking to The Business Standard on condition of anonymity, said over the past six years, competition in the confectionery industry has intensified. Major conglomerates such as Meghna Group, TK Group, Bashundhara, Akij, New Zealand Dairy, and Paragon Group have entered the market, significantly raising the level of competition.

"In response, Olympic has made significant investments to maintain its position as a leading company in the industry," he said.

He further mentioned that the company has acquired land in Bashundhara to construct its own corporate office and purchased land in Purbachal to develop residential facilities for its employees. The Tejgaon plot, on the other hand, will be used for commercial purposes.

He added that most of the land acquired in Narayanganj is adjacent to the company's existing factory and is being utilized for the factory's expansion.

EBL Securities, in its equity note on Olympic, stated that the company has made significant investments to enter various major segments such as instant noodles, dry cakes, soft cakes, chocolate-enrobed wafers, filled candies, toffees, toasts, rusks, and savory snacks. 

These investments clearly point to the company's expansion strategy, the equity note added.

A researcher at a brokerage firm previously mentioned that investors regarded Olympic as a fundamentally strong stock. However, from 2021 to mid-2022, its share price dropped by over 50%, driven by bearish market sentiment caused by economic uncertainties.

Despite the economic crisis, Olympic's business remained largely unaffected. In fact, the company continued investing in business expansion during the crisis, which helped restore investor confidence, the researcher added.

According to the Bangladesh Auto Biscuit and Bread Manufacturers Association and the Bangladesh Bread Biscuit-O-Confectionery Prostutkarak Samity, Olympic ranks first among its peers, holding a 22% market share in the snacks industry and approximately a 25%-30% share in the auto biscuit manufacturing industry.

Meanwhile, the company's business diversification strategy enabled it to achieve a record revenue of Tk2,578 crore for the fiscal 2022-23, marking a nearly 100% increase in revenue over the past six years. It also distributed a record 60% cash dividend to its shareholders for FY23.

In the first nine months of FY24, Olympic reported a slight decline in revenue but showed profit growth compared to the same period in the previous fiscal year.

From July to March of FY24, its revenue fell to Tk1,941 crore, down from Tk1,978 crore in the same period of FY23. However, its profit increased to Tk157 crore, up from Tk145 crore between July and March of FY23.

Aziz Mohammad Bhai's second generation enters Olympic board

Aziz Mohammad Bhai's father, Mohammad Bhai, started the company in 1979 with a battery business called Bengal Carbide Limited. Later, the company's name was changed to Olympic Industries Limited. In 1996, it entered the biscuit manufacturing business.

Mohammad Bhai brought his sons, Aziz Mohammad Bhai and Raja Mohammad Bhai, along with his daughters, into the company's ownership. He also appointed his brother, Mubarak Ali, as managing director to run the company.

In June 2023, the second generation of businessmen from the family entered the board of Olympic Industries with the appointment of Aziz Mohammad Bhai's son and nephew as directors. Mubarak Ali's son, Munir Ali, had already joined the company as a director earlier.

According to company sources, Asar Aziz M Bhai, son of Aziz Mohammad Bhai, has been nominated by Ambee Limited, which holds a 3.29% stake in Olympic Industries, while Ahad Mohammad Bhai, son of Aziz's late brother Raja Mohammad Bhai, has been appointed as a shareholder director.

In July of last year, the company appointed Aziz Mohammad Bhai as its chairman. Additionally, his sister, Nurjehan Hudda, was appointed as the managing director. These two posts had been vacant following the deaths of Olympic Industries' chairman, Mohammad Bhai, in 2018, and managing director, Mubarak Ali, in 2023.

In April this year, Aziz Mohammad Bhai acquired 27 lakh shares of Olympic Industries as part of a strategy to increase his ownership stake in the company. He now holds a substantial stake of around 18%.

As of July this year, the sponsors and directors owned 46.75% of the company, general shareholders held 11.09%, foreign investors 23.96%, and institutional investors held 18.20% of the company's shares.