Bashundhara plant to cater for 12% of edible oil demand

One of the largest conglomerates Bashundhara Group is setting up the country's largest seed crushing plant to produce edible oil in Narayanganj'sSonargaon with an investment of Tk1,023 crore. 

Bashundhara on its own puts 35% of the money, while state-run Agrani Bank in collaboration with Janata Bank, has arranged a syndicate loan to provide the rest 65%. 

The plant is expected to produce 14.8 lakh tonnes of crude soybean oil and 0.6 lakh tonnes of crude sunflower oil per annum, which can yield approximately 2.77 lakh tonnes of finished (refined) oil – a 12% of the total consumption in the country.

Currently, Bangladesh needs over 23 lakh tonnes of edible oil annually, of which some 20  lakhtonnes come from imports and 3 lakh tonnes from local manufacturers.

"The country is still heavily dependent on imports for the edible oil. Our new project is good news for the local market as well as the overall economy," said Redwanur Rahman, general manager of Bashundhara Multi-Food Products, the conglomerate's subsidiary which develops the facility. 

It would be the largest seed cruising mill in the country, he added. "Currently, we are just refining crude edible oil, importing from different countries. The new seed crushing facility would help people get edible oil at an affordable price," said Redwanur Rahman.

Located at Pirojpur village, the plant is expected to go into operation soon and generate 2,000 jobs.  

According to the project document, Bashundhara acquired 14.8 acres of land with Tk118.4 crore. Besides, it spends Tk206.6 crore to prepare the required infrastructure.

Meanwhile, the company opened letters of credits worth Tk408 crore with Agrani Bank and Tk176 crore with Islami Bank to import machinery. Besides, some machines worth Tk24 crore would be purchased from local suppliers.  

The site that progressed 90% has so far received machinery worth Tk230 crore, it reads. 

Bashundhara Group Vice-Chairman SafiatSobhan holds the lion's share of the plant,  74.89% to be exact, followed by Sadat Sobhan's 9%, Sonia FerdousSobhan 8%, Ibrahim Sobhan 8% and Moynal Hossain Chowdhury 0.11%. 

The 665cr syndicate loan

Agrani Bank played the lead arranger and agent bank role of the Tk665.27 crore syndicate loan and provided Tk350 crore on its own, while the other syndicate member Janata Bank lended Tk315.27 crore.  

In a recent programme in the capital's Bashundhara Residential area, the two state-run banks signed the loan agreement with Bashundhara Multi-Food Products Limited. 

"Bashundhara Group has no default loan. Even, they have no record of loan rescheduling or interest exemption," Shams-Ul Islam, managing director of Agrani Bank.

"We [Agrani and Janata] have been financing different projects of the Bashundhara Group since 1993. They are compliant,"  he added. 

Shams-Ul Islam said syndicate loans were highly beneficial for megaprojects of the country as a single lender alone could not finance big. He is hopeful that the seed crushing plant would largely contribute to fulfilling the demand for edible oil in the country.

Bashundhara Group Chairman Ahmed Akbar Sobhan was present at the event.

"We are committed to work for the people by establishing new manufacturing facilities as the government is providing us [manufacturers] huge policy support," he said.

Sobhan believes that Bangladesh set a unique example in development, among others across the globe. 

Meanwhile, Agrani Bank is also arranging another syndicate loan of Tk4,300crore for Bashundhara Group's under-construction gold refinery facility. More than five lenders would join the syndicate. 

The edible oil market

Due to heavy dependence on import, Bangladesh edible oil market see ups and down often depending on global prices. Over the last year, the market witnessed an upward trend, and the prices reached a historic high in the last month, with the beginning of the Russia-Ukraine war.

Market data showed soybean, the most consumed edible oil, took over the market in the 1990s. Imported from different countries, it used to be refined in the country. 

In 2007, City Group first established a soybean processing plant, followed by Meghna Group and Bashundhara Group. Meanwhile, Globe Pharma diversified its business to the sector in 2018. 

All of them currently produce only 3 lakh tonnes of edible oil.