Bangladesh Building Systems will invest Tk16 crore in modernising its factory – complying with the requirements of its foreign buyers who want to build factories in the country.
The company, which is listed on stock exchanges, will set up new machinery and a shed at the factory.
However, the production capacity will remain the same, according to an official of the company.
The investing amount will come from bank loans and its own sources.
"We have made several agreements with foreign investors. They will build factories in various economic zones of the country. We will supply prefabricated steel for those factories," the official told The Business Standard.
"However, they have a requirement of maintaining global standards of the prefabricated steel for use in their factories. Now we have to do this to meet their conditions," he added.
The official did not mention the names of the foreign investors.
Market almost doubled in 5 years
The pre-engineered building or prefabricated steel structure industry in Bangladesh has grown considerably in the past decade – riding on rapid economic growth and industrialisation.
The manufacturing sector's contribution rose to 35 percent of the country's GDP in the last fiscal year, a significant increase from around 25 percent a decade ago.
Along with the manufacturing sector, the steel structure business also saw rapid growth. According to the Steel Building Manufacturers Association of Bangladesh, the market almost doubled in the last five years.
Now, local companies hold around 85 to 90 percent of the market share, and foreign firms make up the rest.
According to industry insiders, around 100 companies are now manufacturing prefabricated steel in Bangladesh. At least 20 of them have entered the industry in the last five years.
Bangladesh Building Systems incurred a loss in the third quarter of the 2019-20 financial year due to the economic fallout brought on by the Covid-19 pandemic.
In the January-March quarter, the company posted a loss of Tk0.02 per share.
The company official said, "We could not import raw material due to worldwide lockdowns during the novel coronavirus pandemic. It pushed up the cost of business."
Meanwhile, in the three quarters of the last financial year, the company posted earnings of Tk0.97 per share, which was 37 percent lower than the previous year during the same time period.
It has paid 10 percent stock dividends to its shareholders for the 2018-19 financial year.
The company's closing price per share was Tk16.20 on Monday at the Dhaka Stock Exchange. The highest price of the stock was Tk28.30 per share within the last year.
Sponsors and directors jointly hold 30.01 percent, institutional investors 36.01 percent, foreign investors 0.10 percent, and general investors 33.88 percent of shares in the company.