MJL Bangladesh to invest Tk325cr for new LPG tanker

MJL Bangladesh PLC, a publicly listed lubricant company, is set to purchase a new liquefied petroleum gas (LPG) tanker worth $32.5 million from a Japanese shipbuilding company.

Considering Tk100 for each dollar, the cost of the 11,000 cubic metre tanker stands at Tk325 crore in local currency. The new vessel will be used for chartering, according to company sources.

Alongside this investment, the company will additionally spend $1.5 million or Tk15 crore as fees for ship building supervision, consultancy, and legal affairs, and as expenses for modification, takeover, operations, and travelling, according to the company's disclosure on the Dhaka Stock Exchange (DSE) website.

The lubricant blender decided on this investment move in a time when the demand for bottled LPG is growing and private sector entrepreneurs are concentrating their investment focus in this industry.

Rokibul Kabir, company secretary at MJL Bangladesh, told The Business Standard, "When the ship will finally be handed over and good to go for operations, our revenue and profitability will increase."

"The board has taken this investment decision for future prospects. Source of the fund is yet to be decided," he added.

In October last year, MJL Bangladesh announced its plan to purchase a 115,000 DWT oil tanker worth $75 million, equivalent to nearly Tk800 crore, from a Korean shipbuilding company. The two parties have already signed an agreement in this regard.

Both the Japanese and Korean tankers are scheduled to arrive by 2026.

Meanwhile, in August this year, MJL Bangladesh decided to acquire a 50 bigha plot of Taj Jute Mills in Narayanganj at Tk95 crore for future expansion.

Financial performance

In the 2022-23 fiscal year, the net revenue of MJL Bangladesh grew 25% year-on-year to Tk3,071 crore, and net profit by 46% to Tk276 crore.

The company has recommended a 50% cash dividend for FY23, which is up for approval by general shareholders in the annual general meeting scheduled to be held on 20 December.

According to the company's un-audited financial statement for July to September quarter of the ongoing fiscal, its revenue grew 15% year-on-year to Tk916 crore, and net profit by 53% to Tk59.31 crore.

Till September 2023, the company's long-term loan stood at Tk27 crore, and short-term loan Tk1,156 crore.

On Monday, its shares closed at Tk86.70 each at the DSE.

About MJL Bangladesh

MJL Bangladesh PLC is a joint venture company between EC Securities Limited, a subsidiary of East Coast Group, and the state-owned Jamuna Oil Company.

The journey of blending world-class lubricants in Bangladesh started in 1998 when Mobil Corporation, later known as Exxon Mobil Corporation, decided to set up Mobil Jamuna Lubricants Limited in partnership with Jamuna Oil.

The company's self-operated core business of Mobil and Omera-branded lubricants and shipping, the liquefied petroleum gas (LPG) cylinder manufacturing business operated by a subsidiary.

MJL Bangladesh entered the stock market in 2011.

East Coast Group owns more than half of the firm, while Jamuna Oil holds nearly one-fifth of the company's shares.

At present, MJL has the capacity to produce around 150,000 barrels of blended lube a year and imports about the same quantity of finished lube oil, which are mostly absorbed by the domestic market.

MJL products are mainly divided into two categories: locally blended products and imported finished products.

The company caters to the demands of a wide range of customers from different sectors by providing 17 types of product lines.

Other than Mobil-branded products, MJL has been establishing its own brand, Omera, in other categories where Omera products will not be in direct competition with Mobil products.