Deshbandhu Group plans to merge its food and polymer businesses

Infographic: TBS

Deshbandhu Group, one of the largest conglomerates in the country, is going to merge its three separate business entities with its publicly listed subsidiary company — Deshbandhu Polymer Ltd — to strengthen its fundamentals.

Deshbandhu Polymer, which raised funds from the stock market in 2011, is engaged in manufacturing polypropylene (PP) woven bags for the packaging of wheat flour, food grains, animal feeds and fertiliser.

Now, the group is going to merge Deshbandhu Sugar Mills, Deshbandhu Food & Beverage, and Deshbandhu Packaging with Deshbandhu Polymer through the acquisition of shares.

The meeting of the board of directors of Deshbandhu Polymer will be held on 16 October to consider, among others, carrying out a feasibility study for the merger of three firms with it through the acquisition of shares, according to a disclosure published on the stock exchanges.

The officials of the group and the listed company declined to comment beyond the public disclosure when contacted by phone.

They said details of the merger plan would be notified after the board meeting.

Golam Rahman, managing director of Deshbandhu Group, told The Business Standard, that the merger plan, which is at the initial stage now, has been taken to strengthen the listed firm. 

"After the acquisition of the firms, the business, assets, and capital of the listed firm will be increased. To implement the merger, we have to get creditors, shareholders, court and stock market regulator approval," said Golam Rahman, also the managing director of Deshbandhu Polymer.

After the merger announcement, on Wednesday, the share prices of Deshbandhu Polymer at the Dhaka Stock Exchange (DSE) increased by 9.85%, which is the highest limit to increase prices of shares in a day.

Not only that, its share prices at DSE jumped around 74% in the last nine working days from Tk22.3 on 1 October to Tk36.8 on 11 October.

Sources said that when the non-listed entities merge, the business of Deshbandhu Polymer will be diversified, which will significantly impact its revenue and profitability.

In the 2021-22 fiscal year, Deshbandhu Polymer earned over Tk100 in revenue and made a profit of Tk2.91 crore. In FY21, the company's revenue stood at Tk77.38 crore and profit at Tk1.21 crore.

In the 2022-23 fiscal year, the company made a Tk3.62 crore profit and recommended a 2.5% cash dividend for its shareholders.

Details of firms to be merged

At present, the Deshbandhu Group has a presence in the country's food and allied industry, textile and apparel industry, real estate and building materials industry and service industry.

The group operates seven separate business entities in the food and allied sector, of which sugar mills, food and beverage, and packaging entities may merge with the Deshbandhu Polymer.

Deshbandhu Sugar Mills is the country's pioneering sugar mill that started its journey in 1932 and was privatised in 1999.

In the last year, the sugar mills had planned to go public to raise an estimated capital of Tk100 crore to finance its capacity expansion.

Deshbandhu Food & Beverage (DFB) was launched in 2014 as the latest effort from the Deshbandhu Group to serve the ever-growing demand for quality consumer goods in Bangladesh.

The company exports its products to more than 15 countries in Europe, Africa, Middle East and Asia.

It has a presence in Greece, Libya, Saudi Arabia, Qatar, Jordan, and the United Arab Emirates with the label of the product released in three different languages, according to its website.

Deshbandhu Packaging is a producer of flexible intermediate bulk containers (FIBC), WPP bags, PE bags for fertiliser, rice, salt, sugar, chemicals, block bottom bags and biaxially oriented polypropylene laminated bags.

The company has been operating its business since 2006 with a production capacity of 750 tonnes per month.