From losses to big profit, Deshbandhu Polymer about-turns

Deshbandhu Polymer Limited – a manufacturer of polypropylene (PP) woven bags for local markets and exports – posted a surprise profit in the April-June quarter although the industry has been struggling to ride out the pandemic shock.

The fourth quarter profit helped the Deshbandhu Group's enterprise regain losses it had incurred in the first nine months of fiscal 2020-2021.

Finally, the company reported a profit of Tk1.21 crore – a 95% increase, from Tk62 lakh in the previous fiscal year.

Deshbandhu Polymer, which got listed on the capital market in 2011, has recommended a 5% cash dividends for its shareholders – excluding sponsors and directors – for FY21.

According to officials at the company, raw material imports faced disruptions during the pandemic and it met the demand from local sources.

Due to an increase in raw material prices in the local market, the PP woven bag manufacturer incurred a loss of Tk2 crore during the July-March period.

"As imports remained halted for the pandemic, to meet the demand, we purchased raw materials from local sources but the price was very high. As a result, the costs went up," Golam Rahman, managing director of Deshbandhu Polymer, told The Business Standard.

"However, as raw materials are now being imported, the cost has come down. It has led to an increase in profits, enabling the company to pay dividends." 

According to its financials, in FY21, the earnings per share (EPS) stood at Tk0.20, which was Tk0.10 in the previous year.

The net assets value (NAV) per share stood at Tk18.07, from Tk10.48 in the previous fiscal year.

The company said its annual general meeting (AGM) will take place on 15 December through a digital platform while 28 October has been fixed as the record date.

The factory of Deshbandhu Polymer, which started its commercial operation in 2007, has been set up to produce 100% PP woven bags for packing sugar, fertiliser, and cement industries as well as all types of food grain, white flower, chemical, cattle feed, fish feed, rice, and many more things that need packing.

Its consumers include Kafco (BCIC), Zia Fertiliser Company, Jamuna Fertilizer Company and Deshbandhu Sugar Mills.

 Industry scenario

Industry sources said the PP woven bag manufacturing sector has been struggling to recover its businesses after the pandemic shock.

A number of these firms have been able to continue their operations partially to meet local demands because export is still very low.

During the pandemic, most companies' exports have halved while some others have to halt their operations after losing buyers.

Additionally, last year raw material prices and shipping costs increased by more than 50% compared to the normal times.

Market insiders said the overall investment in the sector, with around 100 firms involved, is approximately Tk3,000 crore.

Currently, the sector is growing at 20% yearly.