The company now must secure approval from its domestic and foreign shareholders
The Runner Automobiles Ltd has decided to build a new plant in Mymensingh with a budget of Tk63 crore for manufacturing three-wheelers running on compressed natural gas and liquid petroleum gas.
According to senior company officials, the budget was collected through the initial public offering under the book building method.
Earlier this year, the Runner automobiles collected the fund to establish a modern factory and a research centre to boost motorcycle production in Bangladesh.
However, the company now must secure approval from its domestic and foreign shareholders, including the Brummer Frontier PE II (Mauritius) Ltd to change the plan.
Responding to a query, Runner Automobiles Ltd Chief Financial Officer Md Nazrul Islam said, "The funds collected through the initial public offering will be used for building a new three-wheeler plant. Meanwhile, the construction of the new motorcycle plant will be self-funded.
"After securing approval from the shareholders and the Bangladesh Securities and Exchange Commission, the construction of the three-wheeler plant will be completed within the next two years."
The company will announce at a later date whether the three-wheelers will carry the Runner Automobile Ltd branding.
The company has scheduled an extraordinary general meeting with the shareholders to seek their approval on the plan on December 17 this year. The record date was set at November 19.
Sources at the company said Bangladesh depends on imports for three-wheelers and it is quite costly. If these vehicles are manufactured domestically, the price will go down. Three-wheelers have a high demand in both urban and rural areas, and the Runner automobiles is optimistic about doing a good business.
Under the company's plans for the new three-wheeler plant in Mymensingh, Tk12 crore will be invested for installing a chassis welding line, Tk7 crore for a body welding line, Tk28 crore for a paint booth and Tk16 crore for assembly and testing units.
The Runner automobiles plans on an initial production of 3,000 vehicles per month and 30,000 vehicles per year.
Of the Tk100 crore fund Runner Ltd collected earlier this year, the company paid off Tk33 crore in bank loans and spent Tk4 crore on the initial public offering process. The remaining Tk63 crore will be invested in building the new three-wheeler plant in Mymensingh.
The company is presently marketing motorcycles and scooters from the 50cc to 150cc range under its own brand. The Runner automobiles is also the country representative of Indian automobile giant Bajaj's cargo vehicles and three-wheelers.
In the first quarter of the current fiscal year, the earning per share of the Runner Automobiles reached Tk1.47 from Tk1.45 in the same period last year.
During the 2018-19 fiscal year, the company also recommended giving its shareholders 10 percent in cash dividend and 5 percent in stock dividend. In that period, the company's earning per share was Tk5.07, and it was Tk4.90 in the previous year.
On May 21, 2019, the company began trading at the Dhaka Stock Exchange with the initial price of Tk100 per share. The closing price of its shares was Tk61.90 on Tuesday.
The share price of the company decreased by 38 percent in the past five months.
The Runners Automobile Ltd has a paid-up capital of Tk108 crore and around 50 percent of the company's shares belong to sponsors and directors. Institutional investors own 25.70 percent and general investors own 24.27 percent.