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The Capital Market Stabilisation Fund (CMSF) has decided to disburse loans of Tk2 crore to each applicant stock market intermediary, enabling them to make investments in the capital market.

The loan disbursement amount was finalised at the fund’s board meeting held on 11 October, where the loan interest rate was set at 9%.

In May this year, the Bangladesh Securities and Exchange Commission (BSEC) had set loan disbursement targets not less than Tk5 crore and not more than Tk20 crore for each intermediary.

But the CMSF will disburse Tk2 crore loans on a pilot basis. After successful implementation of the test case, the CMSF will increase lending as per demand from the intermediaries.

The CMSF, which was formed in 2021, acts as a custodian of undistributed cash and stock dividends, non-refunded public subscription money and un-allotted rights shares from the issuer of listed securities. It has around Tk250 crore in its Special Notice Deposit account allotted for loan disbursement to intermediaries.

Now, the CMSF seeks applications from intermediaries interested to avail the loan.

After scrutiny, the eligible intermediaries will be able to avail the loan within 21 working days. The tenure of the loan will be 180 days, renewable upon successful use of the loan amount and full payment of loan interest to CMSF.

The CMSF will give preference to intermediaries who are involved in the financial literacy program, providing training to small investors, involved in social welfare activities, working with disabled people, protecting the environment, and following other corporate social responsibilities.

Any stock broker or intermediary, which has deficiency in consolidated customers’ account (CCA), not compliant with risk based capital adequacy and/or has had any punishment from the authorities in the last five years, will not avail the loan.

Also, an intermediary or any director of intermediary, who is a loan defaulter through CIB report, will not be eligible for the loan.

The market intermediaries — stock brokers, dealers — can use their borrowing from CMSF to invest in stocks that have been in the ‘A’ category for five consecutive years.

Also, they can provide margin loans to their clients as per policy. The single borrower exposure will be a maximum 5% of the total available fund for loan.

Officials at CMSF said the decision of lending will help the intermediaries to invest fresh funds in the capital market, when the market really needed a fresh investment.

Seeking anonymity, a brokerage house official said the market is currently almost stagnant due to the floor price. There is negligible price movement observed in fundamental stocks, while certain junk stocks are soaring.”

“The decision to disburse loans is undoubtedly positive. However, the lingering question is how intermediaries will manage to repay this high-interest loan amidst the bleak market outlook,” he added.

Bangladesh Steel Re-Rolling Mills (BSRM) Limited has joined the group of listed companies having annual revenues over Tk10,000 crore, thanks to the government’s mega projects – completed and ongoing.

The leading steelmaker is the fourth among 392 listed firms to join the list of four with Titas Gas, Grameenphone and British American Tobacco Bangladesh Company Limited (BATBC).

According to the company’s financial statement, in the fiscal year 2022-23, the BSRM earned Tk11,506 crore in revenue, which was 44% higher than the previous fiscal year, despite the ongoing tough times, such as unavailability of foreign currency, gas price hike and supply disruption and the raw material cost hike.

“We have got a big income from the mega projects of the government in the past years. But since last year, government projects are going slow. However, private sector demand has increased which has helped us grow our business,” Aameir Alihussain, Managing Director of BSRM Limited, told The Business Standard on Saturday.

The company reported that its revenue in FY23 was the highest in its six-decade journey, though its profit shrank to Tk291 crore from Tk308 crore the year before.

Aameir Alihussain, Managing Director of BSRM Limited, told The Business Standard, “Inflation puts pressure on us to increase the product price that helped us to achieve the record revenue. Besides, inter-company sales have increased slightly compared to earlier.” He added that the  volume of rod and billet sales did not go in line with the revenue growth.

He stated how they struggled because of the dollar crisis, problems in opening LCs affecting supply of raw materials in time. “Due to these we are facing problems in production. We are not crisis free now. And within this problem we are trying to keep up the growth,” the managing director said.

Supplying high grade steel to mega projects

The leading steelmaker provided high grade rod to mega projects including the Padma Bridge, Rooppur Nuclear Power Plant, Bangabandhu Tunnel and Dhaka Elevated Expressway.

According to the company’s website, BSRM Limited introduced its products when there was no graded steel in Bangladesh. It was a major change in the steel industry of the country. It is also the first steel brand that passed 5 million cyclic loading fatigue testing in the UK.

Despite the heavy competition in this sector, BSRM could secure a 159% growth in revenue over the past five years.

Of the three other listed companies with over Tk10,000 crore annual revenue, BATBC counts the highest Tk36,000 crore in 2022, Titas Gas Tk18,000 crore in FY2021-22 and Grameenphone earned Tk15,000 crore in 2022.

In the last fiscal year, MS Rod prices increased around 15-17% than the last year. Steel companies sold their rod at Tk90,000-94,000 per tonne, which was Tk80,000 a year ago.

However, BSRM Limited could not achieve growth in profit despite the record revenue. Business cost hike ate its profit in the FY2022-23.

It reported Tk291 crore profit, which was 5.51% lower over the previous fiscal year.

In January this year, the gas price for captive power plants rose to Tk30 from Tk16 (88% jump). For large industries, the price goes up to Tk30 from Tk11.98 (150% jump).

The company started the fiscal year by incurring loss. In the first quarter (July-September) of FY2022-23, it incurred a loss of Tk168 crore. After that, it recovered the loss and could post profit throughout the rest of the quarters.

According to the Bangladesh Steel Manufacturers Association (BSMA), the country currently has an annual demand of 70-75 lakh tonnes of MS rods. About 55 auto steel re-rolling mills and more than 100 semi-auto and manual mills in the country supply these rods, though a few large companies dominate the market of higher-grade quality steel products gradually reducing import dependence.

The BSRM produced 50mm rods for Padma Bridge, demands for such rods were met from import until the 1990s.

Import of raw materials a concern

Company secretary of BSRM Shekhar Ranjan Kar said, now, there was no disruption in providing power and gas. But we are facing difficulties to open LC for importing raw materials. And because of this we are still not crisis free.

To consolidate its strong presence in the country’s steel market, the BSRM plans to enhance its annual capacity of rolling by 6 lakh tonnes and melting 2.5 lakh tonnes to cater the growing market demand for quality steel products, according to the company website.

Meanwhile, BSRM Limited recommended a 25% cash dividend to its shareholders for the last fiscal year at a board meeting held on Thursday evening.

In the fiscal year 2021-22, it had paid a 35% cash dividend to its shareholders.

Its shares have been stuck on the floor price at Tk90 each since October 2022 on the Dhaka Stock Exchange (DSE).

Besides, BSRM Limited’s sister concern BSRM Steels Limited, which is also being listed on the stock exchanges, also recommended to pay a 25% cash dividend to its shareholders for the last fiscal year.

During the fiscal, its revenue grew by 26% to Tk8,452 crore, compared to the previous fiscal year.

But its net profit fell by 9% to Tk297 crore over the last fiscal against the previous year.

Petromax Refinery Ltd — a subsidiary of the publicly listed Shahjibazar Power Company Ltd — has recently signed an agreement with Mongla Port Authority for leasing a 13-acre land for business expansion.

The tenure of the lease agreement will be 30 years, according to a stock exchange filing by Shahjibazar Power on Sunday.

Petromax shall utilise the land to install storage tanks for the expansion of its existing storage facility, and to enhance its refining capacity as per the market demand, the disclosure added.

Petromax Refinery produces petroleum products like liquid petroleum gas, special boiling point solvent, mineral turpentine, high speed diesel, octane, kerosene and fuel gas, and supplies them to the Bangladesh Petroleum Corporation. It owns a hydrocarbon plants fractionation facility, which is situated at the Mongla industrial area.

The listed Shahjibazar Power produces electricity and supplies to the Bangladesh Power Development Board. The company operates 86 MW power plants. It holds a 90% stake in Petromax.

Shahjibazar Power got listed on the stock market in 2014. According to its un-audited financial statement, the company’s revenue grew 7.65% year-on-year in the first nine months of the fiscal 2022-23.

But despite seeing higher revenue, the company reported a whopping 95% year-on-year decline in profit to Tk4.31 crore.

In the last 2021-22 fiscal, the company has paid a 16% cash and 4% stock dividends to its shareholders.

Its shares are stuck at the floor price of Tk65.5 each on the Dhaka Stock Exchange.

Infographic: TBS

Techno Drugs Ltd plans to raise Tk100 crore through an initial public offering (IPO) under the book-building system.

According to company sources, they intend to allocate Tk25 crore for upgrading and renovating their Narsingdi factory, Tk15 crore for construction works at its factory in BK Bari, Gazipur, Tk27 crore for machinery procurement, Tk30 crore for loan repayment, and Tk3 crore to cover IPO expenses.

In Bangladesh, when a company wants a premium, institutional investors set a reference price for the shares through bidding and general investors will be able to purchase the primary shares at a discount rate.

As per the book-building criteria, Techno Drugs will arrange a roadshow on 14 October in Dhaka, where it will introduce the company to institutional investors.

Institutional investors including merchant bankers, portfolio managers, asset managers, mutual funds and collective investment schemes and stock dealers will take part in the roadshow.

EBL Investments Ltd and Imperial Capital are acting as issue managers for the company, while BMSL Investment Ltd is the registrar to the issue.

According to the company’s financial report 2022-23 FY, the drug manufacturer made a revenue of Tk273.35 crore which was Tk502.85 crore in the same period of the previous year. Its net profit after tax stood at Tk19.55 crore, which was Tk47.98 crore a year earlier.

In the 2022-23 FY, its earnings per share was Tk2.08 which was Tk5.10 in the previous year.

Its net asset value per share with revaluation was Tk27.74, and Tk22.57 without revaluation at the end of June 2023.

The company, one of the fastest-growing drug makers in the country, started its journey in 1996 with the manufacturing of essential veterinary medicine which was not available locally at that time.

It has prioritised the availability of locally manufactured, high-quality medicines, leading to steady growth in the market. With the increasing number of cancer patients in Bangladesh and dependency on imported oncology medicines, the company started production of anti-cancer medicines for the first time in the country in 2010.

Within a very short period, Techno Drugs Ltd won the healthcare market through quality products, strong distribution channels, and doctor-patient acceptance.

Techno Drugs Ltd began by introducing a significant number of anti-cancer molecules to the Bangladeshi market. In 2015, to meet the increased demand, the company established its state-of-the-art factory in BK Bari, Gazipur.

The company is also a major manufacturer of hormonal medicines, the biggest injectable hormonal medicine supplier to the government, and the fifth contraceptive implant manufacturer in the world and the first of its kind in Bangladesh.

Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubayat Ul Islam has urged stock market investors to invest for the long term to get good returns from the capital market.

“If you [investors] want to be a day trader [who executes buy-sell of shares within a short time for securing quick gain] in the market, you cannot expect good returns on investments,” he said at a programme titled “Investors Resilience: Initiatives by Regulator” on Saturday.

The Capital Market Stabilisation Fund (CMSF) organised the event in its office at Motijheel in the capital as a part of celebrating World Investors Week, 2023.

“The BSEC is trying to provide maximum protection for investors. We want investors protected so that they do not lose their money in the market,” Shibli Rubayat said, adding that the stock market is the best place for long-term investment.

“We are trying to bring some new and innovative products to the capital market. We are not ready to bring crypto assets at this moment but we are focusing on green products,” he said.

“Any green factory and LEED-certified factories in the ready-made garments (RMG) sector will get preference in getting approval for initial public offering (IPO) or bonds,” the BSEC chairman added.

Addressing the event, BSEC Commissioner Shaikh Shamsuddin Ahmed said there are many opportunities to work on sustainable finance and the government also has a lot of thoughts on it.

“Technology adaptation is very important to make investors resilient. If we cannot use technology, we cannot be resilient. For that, the brokerage firms of the capital market have to adapt the technology, so that the safety of the investors can be protected,” he said.

Referring to the CMSF, Shamsuddin said, “Focus should not be only on fund collection for CMSF but also on the utilisation of funds. This fund should be used to play a role in market stabilisation. Besides, it should also be ensured that returns are given to the shareholders from the income of the CMSF fund.”

AKM Nurul Fazle Bulbul, a member of the board of governance of CMSF and vice-president of Central Depository Bangladesh Limited, Asif Ibrahim, chairman of Chittagong Stock Exchange also spoke at the event presided by CMSF Chairman Md Nojibur Rahman.

Dhaka University Professor Dr Mohammad Tareq delivered the keynote at the event.

DSEX, the key index of the Dhaka bourse, witnessed an upturn session as investors poured funds into the insurance shares on Monday.

Although in the first hour of the day, the market observed sell pressure which plunged the key index of the Dhaka Stock Exchange (DSE).

After that, bargain hunters came into the market and injected their funds into the insurance shares, which helped the index turn around from its downfall.

Market insiders said, due to investors’ quick gaining mood, insurance shares were absorbed selling pressure in the last two weeks. Now, these shares are in a buying position and investors are choosing it in hopes of capital gain.

That is why, six insurance companies took place on the top ten gainers list. Republic Insurance led the table with a 9.96% share price hike on Monday at the DSE.

Meanwhile, at the end of the Monday session, DSEX gained 8 points to reach 6,272.

However the turnover value of the DSE fell by 12% to Tk465 crore against the previous session.