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Volume 10 l Issue 12 l December 2014

in this issue

c o n t e n t s

COVER STORY

Rice Milling in Bangladesh: Staging


Spectacular Rise
Rice production in Bangladesh is a crucial part of the
national economy. Rice is the staple for the 160 million
Bangladeshis who obtain more than 70% of their total
calorie from rice. The per capita rice consumption in
Bangladesh is higher than that in any other country
where rice is the staple. Bangladesh is the worlds sixth
largest rice-producer and one of the highest per capital
consumer of rice (about 170 kg annually). Rice is deeply
rooted in Bangladeshi culture and way of life.

Research in focus

The overall impact of the readymade garment exports


is certainly one of the significant in social and economic
developments in contemporary Bangladesh. With over
one and a half million women workers employed in semiskilled and skilled jobs producing clothing for exports,
the development of the apparel export industry has had
far-reaching implications for the society and economy of
Bangladesh.

ECONOMY

Bangladesh has average level of monetary


inequality

20

WB approves over USD 1 billion for three projects 20


TRADE

BD, Sri Lanka proceed to free trade agreement


RMG to grow export earnings by 5% despite all
odds in 2014

22
22

Dhaka Apparel Summit 2014: Analysis of the


prospects & impediments of the 2021 goals

IDLC CSR NEWS

31

IDLC distributes over 3,500 blankets


this winter

REGULATORY NEWS

BB to allow non-residents to make outward


remittance from NRTAs

NBR eases taxation for cooking oil traders

25
25

MARKET ROUNDUP

Major Currency Roundup


Commodity Market Roundup

26
27

INTERNATIONAL

Philips expands to medical devices with


USD 1.2 billion Volcano deal

28

WTO complaint

28

Design & Printing nymphea

China oddments quotas on rare earths after


MONTH IN REARVIEW

Business-firm specific

30

CAPITAL MARKET REVIEW

Market Commentary

32

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IDLC MONTHLY BUSINESS REVIEW

Rice Milling in Bangladesh


Staging Spectacular Rise

- Md. Kamrul Islam

ice is the most important food crop of the developing world. It is the staple food of about half the worlds population. Roughly, 1.60
billion of the worlds poor depend on rice as producers or as consumers. On average, rice accounts for nearly half of the food expenses
of poor people and a fifth of their total household expenses. It is well established that the rapid productive growth of rice resulting from
the use of improved varieties, fertilizers, and irrigation (popularly known as the Green Revolution) increased production and led to a long-term
decline in rice prices. This has been the major factor helping to reduce poverty in Asia over the past several decades.
A rapidly growing world population and the onset of global warming via climate change have caused pessimistic expectations regarding
food, water and energy availability. Global food productivity gains have fallen from 2.0% between 1970 and 2000 to 1.1% in 2012 today and
all indications point to a continued downward trend. Startlingly, a previous National Intelligence Councils (NIC) report shows that the world
has consumed more food than it has produced in seven of the last eight years. The NIC is an organization that produces National Intelligence
Estimates, which are intelligence community-wide forecasts of issues and challenges facing the security of the United States. In contrast,
in the next 15 to 20 years, the NIC document sees demand for food rising by more than 35%. As a result, the long-term trend of decreasing
food prices would decline with staple food consumption expenditure for middle and low-income economy households rising significantly.
National Intelligence Council (NIC) has strongly stressed food inflation, as a source of social disharmony.

Rice Processing in Bangladesh


Bangladesh is the worlds sixth largest rice-producer and one of the
highest per capita consumer of rice (about 170 kg annually). Rice is
deeply rooted in Bangladeshi culture and way of life. It is the staple
food of about 160 million people in Bangladesh. In 2011-2012, total
consumption of rice was about 34.5 million tons against national
production of 34 million tons. Rice production currently accounts
for 77% of agriculture land use maintained by some 13 millionfarm families. Such magnitude of concentration and involvement
for a single crop is quite rare in the world. This massive industry has
been experiencing a technological transformation in recent years.

Long gone are the days of dheki (a wooden device for husking
paddy to make rice) and chatals (traditional sun-drying husking
mills) are following suit. Automatic Rice-processing Mills (ARMs)
have already become the prominent players in the rice processing
industry of Bangladesh. New ARMs are emerging at an increasing
rate than ever, leaving small and medium husking mills (chatals) in
a tight corner. As rice is the staple cereal in Bangladesh and with
the increase of both the population size and life expectancy at
birth (69 years now), it has given the rice processing industry a
stable outlook.

IDLC MONTHLY BUSINESS REVIEW

Through rice processing industry, more than 16% of our labor


force earns their living by producing rice directly and 9% of our
labor force earns their livelihood by rice indirectly. Rice processing
industry of Bangladesh depends on the seasons very much
because some areas produce rice in certain specific seasons and
some areas produce rice throughout the year. The rice processing
industry of Bangladesh depends mainly on the seasons.

farmers. Previously, the commission agents mostly got payment


in advance (commonly known as dadon) to procure and ensure
smooth supply of paddy. More recently, the millers have also been
able to procure paddy in credit from such aratdaars. Millers process
the paddy in the following usual steps:

After processing, the millers sell rice to wholesalers. The final


consumers get the supply mostly from grocery shops, which
purchase the rice from aratdaars/wholesalers.

Moving towards Automation:

Source: Bangladesh Bureau of Statistics

Rice processing industry provides 65% of the poultry feeds of


Bangladesh. Bangladesh currently is sixth in the production of
rice around the whole world. The poultry firms depend on the rice
processing industry very much because the foods of the poultry
firms come mostly from the byproducts of rice.
Around 22% of the worlds agricultural workforce depends on the
production of rice. Rice processing industry contributes an average
of more than 10% of the economy of the rice depending countries
of the world.
Rice processing industry in Bangladesh and around the world has
two divisions. They are:

Due to rise in income levels, people now prefer processed rice,


which is less costly, looks glossy, takes less time to cook, is free
from stones & dead rice, and has longer shelf life. To match with the
demand of the people, the rice-processing sector in Bangladesh is
undergoing a change. New automatic rice mills are being set up at a
growing rate. Over the last decade, several hundred automatic and
semi-automatic rice mills commenced, in various rice producing
zones. Naogaon, Chapainawabganj, Dinajpur, Kushtia and Noapara
of Jessore are some districts that have attracted investment to set
up big automatic rice mills. The demand for automated rice mills
becoming larger because it ensures better quality. Presently, there
are approximately 16,400 chatals, 420 semi-automatic rice mills and
less than 400 fully automatic rice mills operating in Bangladesh. In
2005, there were only 200 semi-automatic and automatic rice mills.
Automated rice mills and semi-automated rice mills can process
five times more rice than traditional rice processing mill at a certain
time that acts as a motivation for the investment in the automated
rice mills.

Traditional rice processing


Automated rice processing
In Bangladesh, most of the rice processing depends on the
traditional rice processing system. More than 60% of the processed
rice in Bangladesh comes from traditional rice processing system.
Traditional rice processing system contributes more in Bangladesh
because most of the rice producers in Bangladesh still use traditional
agricultural systems.

The value chain- Production process


Rice millers are the key players in this industry. They purchase paddy
in large quantities from aratdaars (rice commission agents), who in
turn procure paddy from various small roaming traders or from large

Source: USDA

IDLC MONTHLY BUSINESS REVIEW

The cost of setting up husking mills, semi-automated and automated


rice mills:
Manual
Husking Mill

Semi Auto

Capacity

22 ton/day

90 ton/day

Boiler

N/A

N/A

Dryer

N/A

N/A

Parboiling

N/A

N/A

Milling

150,000

1,000,000 - 1,200,000

Color Sorter

N/A

N/A

Land
yard

(550
/

50

maund

per

decimal

for 3,000,000

the domestic demands but also fulfilling the demands of foreign


markets. In last three years, the contribution of automated rice mills
in exporting is going high.

5,000,000

automatic plant)
50,000
Power Station
Total
approximate
3,200,000
cost for 5 Ton /per hour

500,000 -700,000
5,650,000-5,800,000

Source: Bangladesh Bureau of Statistics

Source: Bangladesh Rice Research Institute

The establishment costs of automated rice processing mills:


Automatic
Satake (Japanese)

Buhler (European) Other Chinese Brand

Capacity

100 ton/day

100 ton/day

100 ton/day

Boiler

USD 62,000 65,000

USD 105,000

USD 62,000 65,000

Dryer

USD 175,000

Parboiling

USD 200,000 250,000

Milling

USD 450,000 500,000 USD 710,000

USD 200000 250000

Color Sorter

USD 150,000

110,000 pound

USD 65000 75000

BDT 5,000,000

BDT 5,000,000

BDT 5,000,000

Power Station

BDT 2,200,000

BDT 2,850,000

BDT 2,200,000

Total approximate

BDT 9,016,000 -

BDT 135,300,000 - BDT 45,760,000 -

USD 620,000

USD 55000 65,000


USD 100,000 120,000

Land (550 maund per


yard/ 50 decimal for

Export of rice considering both automated and traditional mills


According to the Export Promotion Bureau of Bangladesh, the
percentage of exporting of processed rice by the automated mills
is growing. Above statistics, we can shows that percentage of
rice export by the automated rice mills is growing on a high rate.
Therefore investment is increasing in automated rice processing
mills because of more rice processing mills are setting up.
Traditional Mills versus Modern Automatic Rice Mills:

automatic plant)

cost for 5 Ton /per hour 98,400,000

150,000,000

53,200,000

Source: Bangladesh Rice Research Institute

From the tables we can see that Chinese Brands requires low cost than
any other products. Because of that reason most of the investors of
automated rice processing mills prefers Chinese brands than Indian
and any other brands. Although the investment is very high, the
output from the automated rice processing is also high. Automatic
mill provides more amount of processed rice than traditional mills.
Type of Mill

Capacity of
production

Power
requirement

Husking

.6 to 1 ton per
30-40 HP
hour

Automatic

At least 2 ton
per hour

Hulling/
polishing

Bran
separation
and Grading

Requires 2 to
Manually
3 operations
Separately
All activities
65-100 HP
from different are done
devices
mechanically
Source: Bangladesh Rice Research Institute

From the table excogitate that automatic rice-processing mills can


provide more than double processed rice then traditional mills.
Because of all that reasons the rice processing industry in going
towards automation. Automated rice processing is not only fulfilling

Traditional rice mills can produce 0.6 to 1 ton of rice per hour.
Whereas automated rice mills can produce more than 2 tons
of rice per hour. Traditional rice processing mill requires
30-40 horsepower where automated rice mills take 65-100
horsepower. Traditional rice mills need 2 to 3 operations for the
cutting and drying of the processed rice. Whereas automated
rice processing mills does cutting and drying in only one process.
In traditional rice mills, grading and brand separation are
manual. In automated rice mills, grading and brand separation
are ready automatically. Traditional rice mills are not able to
cut the rice into different sizes but automated rice mills can
cut the rice into different sizes, for example- Miniket, Nazirshail,
etc. The processed rice from automated rice mills requires
12-15 minutes to cook whereas rice processed in traditional
mills required 20-25 minutes to cook. The rice processed in
automated rice mills is cleanest & finest than rice processed
in traditional rice mills. Automated processing involves less
stones than traditional processing. Traditional mills cannot
produce more than 3 tons of rice whereas automated rice mills
can produce more than 5 tons on an average. The by-products
of automated rice mills comes after a number of processing
because of that bran oil can be produced and the by-product is
also good poultry feed. The by-product of traditional rice mills
can only be used for poultry feed.

IDLC MONTHLY BUSINESS REVIEW

Process Flow of Modern Automatic Rice Mills:

Configuration refers to how the components are sequenced. The flow


diagram below shows a modern commercial mill catering to the higher

The modern automated rice milling facility comes in various configurations,

end market. It has three basic stages, the husking stage, the whitening-

and the milling components vary in design and performance.

polishing stage, and the grading, blending, and packaging stage.

The total process flow of modern automated rice milling facility


consists of following stages.

Problems faced by automated rice millers:

Stage

Function

Pre-cleaning

Removing all impurities and unfilled grains from the paddy

De-stoning

Separating small stones from the brown rice

Husking

Removing the husk from the paddy

Husk aspiration

Separating the husk from the brown rice/unhusked paddy

Paddy separation

Separating the unhusked paddy from the brown rice

Whitening

Removing all or part of the bran layer and germ from the brown rice

Grading

Separating small and large broken pieces from the unbroken rice

Polishing

Improving the appearance of milled rice by removing remaining ran


particles and by polishing the exterior of the milled kernel

Sorting

Removing foreign materials such as colored, broken, immature and


infected grains from milled rice

Weighing and
bagging

Preparing milled rice for transport to the customer


Source: Bangladesh Rice Knowledge Bank

The main problem faced by automated rice millers is the problem


of continuous supply of electricity. A research of Bangladesh
Agricultural Bureau found that, if the automated rice processing
mills get uninterrupted supply of electricity then the percentage of
production would go up by more than 35% of current production.
Another problem faced by the automated rice millers is the proper
amount of price of per K.G. of processed rice from both government
and commissioning agent. In 2010, government purchased per K.G.
rice from automated rice mills at a rate of 29.50 taka per kilogram
whereas at that time the purchase price of per kilo paddy was 27.50
taka from the farmers. Government procurement rate of rice became
BDT 31 & BDT 32 for 2013 & 2014 respectively. BDT 18 & BDT 20 rate
for per kg paddy for the same period.
Therefore, the rate that government purchased from the automated

IDLC MONTHLY BUSINESS REVIEW

rice millers was at break-even point and for some automated rice
millers they had to sell at loss. A very crucial problem faced by the
automated rice millers is from the commissioning agents from
whom the millers buy the paddy. As the rice millers have to depend
on the commissioning agents for the uninterrupted supply of paddy
because of that reason, the commissioning agents charge a high rate
for the paddy that eventually affects the rice market.

Rice bran from Automatic Rice Mills has better quality and price
advantage.

1 ton of bran oil costs USD 900 at international market.

Bran oil also sells in the domestic market at 70000 taka per ton.

If Bangladeshi Bran oil of is used domestically then the import


of oil will be reduced by 12%-13%.

Statistical overview of Major food grains Import

Source: Bangladesh Bank


From the graph, it is evident that the import of rice as well as wheat
has been decreasing in recent years showing positive signs though
the overall import has been following upward trend.
201314R
July-Oct

201415R
July-Sep

201415P
July-Oct

B. Agricultural
products

189.31

186.82

230.48

21.75

1. Vegetables

50.58

32.43

39.94

-21.04

2. Tobacco

26.36

23.63

34.30

30.12

3. Cut flower

16.96

3.71

4.24

-75

4. Fruits

7.69

26.45

26.49

244.47

Items

%
Changes
4 over 2

Source: Bangladesh Bank

In case of commodity-wise export, there is no update of exporting


rice and wheat. Very recently, Bangladesh has approved of exporting
50,000 metric ton of rice to Sri-Lanka and Philippines have showed
its interest to import rice from Bangladesh.

New Prospects including by products processing:


Bran Oil:

The byproduct of rice is Bran Oil.

Export of bran oil is very much profitable.

Poultry feed:

Largest Supplier in poultry feed saving BDT 1200-1300 crore


from importing poultry feed

Exports 1200-1400 MT of Poultry feed every year

Since setting up of mills is easy so low entry barrier prevails

The poultry sector accounts for 1% of the GDP of Bangladesh, as


per Trading Corporation of Bangladesh.

At present, around 60,000 poultry farms, 70 parent stock farms


and six grandparent stock farms in the country.

2nd largest employment generator sector of the economy

IDLC MONTHLY BUSINESS REVIEW

Importance of rice industry to Bangladesh economy:


Rice is the staple for about 160 million people of Bangladesh. As
the national food of our country rice processing industries will very
surely play an important role in the economy. About 75% of total
people of Bangladesh live in the rural areas. Rice industry directly and
indirectly provides 48% of the rural employment that is quite a big
amount of labor force.
Rice industry contributes 50% to the total agricultural GDP of
Bangladesh and one-sixth of the national income of the country. 13
million families earn their livelihood directly or indirectly from rice
industry. Bangladesh earns BDT 2,500-3,000 crore from exporting the
by-products of rice, which is the help from rice processing industry.
Government earns an amount of BDT 250 crore from the taxes of
rice processing industry. In 2014, population growth is about 1.37%.
If this rate continues in upcoming days, there will be an intensified
need of habitation that will reduce the amount of cultivable land.
Bangladesh will require around 27.26 million tons of rice in 2020.
Within the mean time, total cultivable area will decline to 10.28
million hectors. This industry has created ways to evade from
the cruel grasp of Poverty and provided the workforce with selfemployment, self-security and self-esteem.

Rank

Country

Annual Production in 2012


(million Metric Ton)

1.

China

204.3

2.

India

152.6

3.

Indonesia

69

4.

Vietnam

43.7

5.

Thailand

37.8

6.

Bangladesh

33.9

7.

Philippines

33

8.

Brazil

11.5

9.

Japan

10.7

10.

Pakistan

9.4

a) Availability of food: The Bangladesh economy has made


respectable progress in rice, tripping production from 11 million
ton in 1971 to 33 million in 2012. The per capita rice production has
increased substantially over the level at independence. The growth
of production achieved by fast adoption by farmers of higher
yielding crop varieties developed by scientists, supported by rapid
expansion of irrigation infrastructure through private investment in
tube wells. Bangladesh used to receive substantial amount of wheat,
the secondary staple food, as food aid from developed countries.
Commercial import of wheat has however increased despite
growth in domestic production until the 1990s, mainly due to the
discontinuation of food aid and stagnation of domestic production
after a rapid growth in the 1980s. The import has recently exceeded
three million tons. It appears that even if Bangladesh achieves selfsufficiency in rice production or becomes a rice exporting country,
the import of wheat will continue.
Notable progress achieved in the production of potatoes and
vegetables. The growth has been particularly impressive in the
last decade. The major problem faced by potato and vegetable
production is the volatility in prices leading to large year-to-year
fluctuations in production. The production of most other food crops
pulses, oilseed and sugarcane has remained stagnant or has
declined. The production of oilseeds has picked up in recent years
due to favorable prices, some progress in the development of higher
yielding varieties, and identification of favorable agro-ecological
niche. The dependence of Bangladesh on the world market for the
availability of pulses, edible oil and sugar and milk has been growing,
along with wheat.

Food Security Issues

b) Access to food: In Bangladesh, 70% of the people live in rural


areas where agriculture is the major occupation. Almost 60% of the
rural households are engaged in farming. The farming household
can access their food from self-production and can trade the
surplus with other foods available in the local market. However,
the landownership is unequally distributed, and so is the access to
food from self-production. Almost 30% of the households do not
own any land and another 30% own only up to half an acre. Such
tiny landownership is insufficient to meet the food needs of four
to five-member households, whatever advanced technology the
farmer use. A tenancy market is in operation, which provides access
to land to landless and marginal landowners for farming. However,
the terms and conditions of tenancy do not favor tenants. Therefore,
a large proportion of marginal farmers go the market to access food,
as their own production (after payment of rent and interest for loans)
is inadequate to meet the household needs. The income is very
unevenly distributed and the disparity has been growing. As a result,

One of the fundamental rights of the citizens stipulated in the


Bangladesh Constitution is food security for all. Food security exists
when all people, at all times, have access to sufficient, safe and
nutritious food to maintain healthy and productive lives. The key
elements of food security are:

c) Utilization of food: The acceleration in economic and agricultural


growth has made a positive impact on the diversity of food intake
away from the rice and vegetable based diet in favor of quality food.

Source: Food and Agriculture Organization

nearly one-third of the people still live below the poverty line, with
inadequate income to access food from the market.

IDLC MONTHLY BUSINESS REVIEW

The change in per capita consumption of different items in the food


basket for the rural and urban people, as estimated by the Household
Income and expenditure surveys (HIES) of the BBS shows that the
per capita consumption of rice and wheat has been declining, while
the consumption of vegetables, fruits and fish and meat has been
growing. However, the level of consumption of other food items,
hardly meets the requirement for balance diet as specified by the
National Nutrition Council and FAO. Average level of consumption
has reached the adequacy level for rice and vegetable, and reached
for fruits and fish, but serious deficiency persists for quality food such
as pulses, oil, and livestock products. For all the other food items,
consumption for all income groups have increased, marginally
for the bottom 40 % but substantially for the top 20 %. A recent
IFPRI study shows that nearly 20 % of the population is still calorie
deficient and the gender disparity in calorie intake persists.
Challenges for achieving food security: The main challenge for
achieving and sustaining food security comes from continuing
growth of population. However, the population is still increasing by
1.8 million every year. Rice production has to increase by four lakh
tons every year to meet the need for staple food for the growing
population. The increase in domestic production at that rate would

be difficult due to several supply side factors.


The arable land has been shrinking by 0.6 % every year due to
demand from housing and industries, and infrastructure, as
well as loss of land from river erosion. With global warming and
climate change, another one-sixth of the land submerged with
brackish water due to rising sea levels. The on-going climate has
made the monsoon more erratic, raising risks in food production.
The soil fertility has been declining due to overexploitation of soil
nutrients, and imbalanced use of fertilizers. Due to all these factors,
the potential for further increase in production is getting limited.
Rice production can further be increased with intensification of
land use with the use of shorter maturity varieties and adoption
of submergence tolerance, drought tolerance, and saline
tolerance varieties in adverse agro-ecological environments such
the southern coast and the Haor areas in the Northeast, and the
flood-prone areas in the river and coastal chars. The diffusion of
hybrid rice could further increase the rice yields, and the yield
gaps of existing varieties reduced with the adoption of finer crop
management practices, such as the System of Rice Intensification
(SRI). Indeed, with all these potentials exploited, Bangladesh could
become a rice exporting country.

From overall analysis, we can conclude that the numbers of automating rice mills have been increasing over the last few years and
would continue to grow. In addition, Bangladesh is going toward achieving self-sufficiency in food. In upcoming days, the main
challenge would be to enhance the production of food grains having the burden of teeming millions of population. The country
expects that with the growth of food production, the food processing industry would also expand in a greater extent
(Mr. Md. Kamrul Islam is a Senior Executive Officer of IDLC Finance Limited and currently works at IDLCs Bogra Branch)

IDLC MONTHLY BUSINESS REVIEW

ANALYSIS MONITOR
Dhaka Apparel Summit 2014: Analysis of the prospects & impediments
of the 2021 goals

he tremendous success of readymade garment exports from Bangladesh over the last two decades has surpassed the most optimistic
expectations. Today, the apparel export sector is a multi-billion-dollar manufacturing and export industry in the country. The overall
impact of the readymade garment exports is certainly one of the most significant social and economic developments in contemporary
Bangladesh. With over one and a half million women workers employed in semi-skilled and skilled jobs producing clothing for exports, the
development of the apparel export industry has had far-reaching implications for the society and economy of Bangladesh.

Overview
The Bangladesh Garment Manufacturers and Exporters Association
(BGMEA) organized the first-ever summit titled Bangladesh RMG
2021: USD 50 Billion on the 50th Anniversary of Bangladesh, at
the Bangabandhu International Conference Centre in the city. The
program aimed at devising ways of facing challenges to reach USD 50
billion RMG export landmark by 2021 when Bangladesh will celebrate
the golden jubilee of her independence. The Dhaka Apparel Summit
was organized with the objective of opening and furthering such
dialogue to frame a sustainable road map on building responsible
supply chains in the textiles and garment sector that contribute to its
sustainable development and inclusive growth of the economy.
The summit featured a number of sessions about Infrastructure,
Environmental Sustainability, Future of Workers, Remediation
Financing for Transforming Bangladesh Garment Industry,
Reinventing the Apparel Model, Assuring Workplace Tranquility,
Partnering Media in Development and Social Impact, for more
than two days the panels participated by representatives of
governments of home and partner countries, international
organizations, employers, private sectors, workers representatives,
civil society organizations, brand representatives and buyers,
academics and media.
The global demand for apparel products is worth USD 450 billion,
which is expected to reach USD 650 billion by 2021. To achieve the
USD 50 billion apparel export earnings target, Bangladesh needs to
increase its share to 8% from the existing 5%. The entrepreneurs
benefited from the summit enriching their knowledge about latest
apparel technologies and also help domestic apparel makers build a

bridge with the global buyers and experts. Bangladesh earned USD
24.49 billion from RMG export in the fiscal year of 2013-14.
The summit discussed the present business and investment trend,
global sourcing dynamics and potential for Bangladesh, priority
issues to support the growth potential, compliance issues, supportive
policies and coordination between different government agencies,
product and market diversification, according to the organizers. The
summit conferred how important physical infrastructure, power, gas
and energy are to secure the Vision 2021 set for Bangladesh. The
discussions focused on devising a strategic action plan to overcome
the existing challenges and tap the potential.

Infrastructure
Bangladesh needs between USD 74 billion and USD 100 billion in the
next decade that is around 7.4% to 10% of GDP in the next ten years
to improve infrastructure which, coupled with political stability, is key
to attaining USD 50 billion in annual apparel exports in seven years
from now. Currently, the government is spending about 2-3% of GDP
for infrastructure development; financing and implementation are the
constraints. The summit ran a mobile SMS poll where more than half of
the participants expressed that better infrastructure is mostly needed
for an efficient business supply chain. Maintaining political stability
came in second followed by gas and power and industrial engineering.
According to a World Bank study on infrastructure requirements in
South Asian states, Bangladesh needs to improve six key areas of
infrastructure namely transportation, electricity, water supply and
sanitation, solid waste management, telecoms and irrigation.

IDLC MONTHLY BUSINESS REVIEW

Source: Dhaka Apparel Summit

Factory relocations

Source: Dhaka Apparel Summit

Workplace safety
Bangladesh can become the largest garment exporter in the world
if it overcomes certain challenges, including worker safety, which
came to the forefront since the Tazreen Fashions fire and Rana
Plaza collapse. The tragedies have created an opportunity to take
Bangladeshs garment sector to international standards in fire safety,
structural soundness of factories and worker rights. The Alliance
for Bangladesh Worker Safety, a platform of 26 retailers from North
America, stated remediation of factories is a complex process and
takes years to complete.
According to Bangladesh Fire Service and Civil Defense, unplanned
industrialization, unregulated building construction, lack of fire
stations in industrial areas, narrow roads and inadequate awareness
on fire safety are some of the major challenges in the garment sector.
Besides inspection, remediation and training, it is also necessary to
change the mindset of factory owners. Now our focus is on training.
We also focus on building capacity of workers representatives,
supervisors and managers so that they can continue training
themselves and others. International Labor Organization stated
that education and investment are important for capacity building
of government, regulatory agencies, young entrepreneurs, workers
and young professionals, which are the key to ensuring long-term
sustainable safety.

The apparel sector needs around USD 3 billion to relocate factories


from the capital, as stated by the experts. According to Policy Research
Institute, the government should discuss the matter with global
lenders, such as the World Bank, Asian Development Bank and Japan
International Cooperation Agency to find a finance mechanism with
low interest rates to transform the garment industry. Around 1,000
factories need to be relocated from the capital, according to BGMEA.
The summit ran a mobile SMS poll at the summit where more than
half the participants expressed that access to low-cost finance is the
first challenge to factory relocation, followed by sharing remediation
costs, lack of lands, high costs, value added taxes on import of safety
equipment, and lack of certification for safety items.
Additionally, garment entrepreneurs demanded a reduction in
lending rates along with other measures to help manufacturers grab
a larger slice of the global apparel market. The interest rates range
between 14% and 18% for exporters, stated BGMEA, adding banks
charge 6% to 9% in India, 6% in China, 9% in Cambodia, 5.9% in
Pakistan, 6.9% in Sri Lanka and 7.9% in Thailand.

Source: Dhaka Apparel Summit

The apparel garments industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in
Bangladesh, which experienced phenomenal growth during the last 25 years. The industry plays a key role in employment generation
and in the provision of income to the poor. To remain competitive in the post-MFA phase, Bangladesh needs to remove all the
structural impediments in the transportation facilities, telecommunication network, and power supply, management of seaport, utility
services and in the law and order situation. The government and the RMG sector would have to jointly work together to maintain
competitiveness in the global RMG market. Given the remarkable entrepreneurial initiatives and the dedication of its workforce,
Bangladesh can look forward to advancing its share of the global RMG market to reach USD 50 billion export landmark by 2021.

10

IDLC MONTHLY BUSINESS REVIEW

ANALYSIS MONITOR
Global oil price falls to 5 year low
The sharp fall in crude over the past three months has produced an

Four things are now affecting the picture. First of all, demand is

unusual amount of concern that, with inflation already dangerously

low because of weak economic activity, increased efficiency, and

low across much of the developed world, cheaper oil would worsen

a growing switch away from oil to other fuels. Second, turmoil

the problem. Yet, while the lower oil prices would have a one-off

in Iraq and Libyatwo big oil producers with nearly 4 million

arithmetic effect on the price level and hence reduce inflation that

barrels a day combinedhas not affected their output. The

should boost growth rather than retarding it. The lower oil prices

market is more optimistic about geopolitical risk. Thirdly, America

may hurt capital-intensive extractive industries in the medium term,


but they benefit households almost immediately through cheaper
petrol and other fuels.

has become the worlds largest oil producer. Though it does not
export crude oil, it now imports much less, creating a lot of spare
supply. Finally, the Saudis and their Gulf allies have decided not
to sacrifice their own market share to restore the price. They

The oil price has fallen by more than 40% since June, when it was
USD 115 a barrel. It is now below USD 70. This comes after nearly
five years of stability. At a meeting in Vienna on November 27th
the Organization of Petroleum Exporting Countries (OPEC), which
controls nearly 40% of the world market, failed to reach agreement
on production curbs, sending the price tumbling. Moreover, hard hit
are oil-exporting countries such as Russia (where the ruble has hit
record lows), Nigeria, Iran and Venezuela.

could curb production sharply, but the main benefits would go


to countries they detest such as Iran and Russia. Saudi Arabia can
tolerate lower oil prices quite easily. The country has USD 900
billion in reserves. Its own oil costs very little (around USD 5-6 per
barrel) to get out of the ground.
The main effect of this is on the riskiest and most vulnerable bits
of the oil industry. These include American frackers who have
borrowed heavily on the expectation of continuing high prices. They

Source: International Energy Agency

Source: Bloomberg

The oil price is partly determined by actual supply and demand,

also include Western oil companies with high-cost projects involving

and partly by expectation. The demand for energy is closely related


to economic activity. It also spikes in the winter in the northern
hemisphere, and during summers in countries which use air
conditioning. The supply for oil can be affected by weather (which
prevents tankers loading) and by geopolitical upsets. If producers

drilling in deep water or in the Arctic, or dealing with maturing and


increasingly expensive fields such as the North Sea. However, the
greatest pain is in countries where the regimes are dependent on
a high oil price to pay for costly foreign adventures and expensive
social programs. These include Russia (which is already hit by

think the price is staying high, they invest, which after a lag boosts

Western sanctions following its meddling in Ukraine) and Iran (which

supply. Similarly, low prices lead to an investment drought. OPECs

is paying to keep the Assad regime afloat in Syria). The optimistic

decisions shape expectations: if it curbs supply sharply, it can send

expert states that economic pain may make these countries more

prices spiking. Saudi Arabia produces nearly 10 million barrels a

amenable to international pressure. However, the pessimists fear

daya third of the OPEC total.

that when cornered, they may lash out in desperation.

11

IDLC MONTHLY BUSINESS REVIEW

ENTREPRENEURS CORNER
Aebnit: Answer to all your shopping needs
Aebnit is a store at Ahammed Complex,
Shafipur, Gazipur. The outlet is basically
a departmental store with separate
sections for clothing, footwear, dry food, cosmetics, jewellry, etc.
The outlet also sells a wide range of imported ladies purse and bags,
shoes etc. In 2004, Mrs. Ismat Ara Asha started an outlet, Reblye of
mid and high end RMG items at Shafipur. Later on, the store Aebnit
was inaugurated in 2006.

Owner

Mrs. Ismat Ara Asha

Year of
Establishment

2004

Website

No

Main Product

Clothing for ladies, gents and kids,


Leather goods, Toys, Cosmetics,
Jewelry, etc.

Number of Outlets

Space

7000 square feet.

Number of
Employees

22

I mostly tried to communicate with my customer in a friendly


manner and try to know their feedback and specific demand
for goods. I always try to fulfill their demand and make them
happy. Thats the biggest power of success.
Interview with

Mrs. Ismat Ara Asha


Owner
Aebnit
MBR: How did you come up with the idea of opening a
departmental store at Shafipur?
Though I lived in Dhaka, my in-laws are from Shafipur, thus
I thought if I start a new business, why not do it in the area I
somehow belong to. I always wanted Shafipur to grow and
develop, moreover, after 10 years I can see a positive change in
the area. Now, many new entrepreneurs started departmental
stores like mine at Shafipur.
MBR: How did you start this business and what was the
motivational aspect which led you towards entering into this
venture?
I used to do a government job, however, when my husband
went to do PhD so I had to go along with him to Switzerland for

12

a few years. In 2003, we returned to Bangladesh and I planned


to start my career. However, returning to my previous career
was not possible. Also, doing other corporate jobs would have
taken my time which I wanted to spend for my little twins. I
thought being an entrepreneur can have flexible. So, the first
thing that came to my mind was to start retailing clothes in a
fashion I saw in Europe. Since Shafipur was a growing urban
centre, a very modern sales store must have a future. I just took
that challenge.
MBR: What are the important factors which should be
considered while opening a new departmental store?
In order to open a new departmental store, it is very important
to have some space accessible to its potential customers and
also one should understand the tastes and the purchasing

IDLC MONTHLY BUSINESS REVIEW

capacity of the people in that area. I saw no shops in Gazipur like


the ones in Dhaka, so it turned out quite well as I have a large
showroom with huge lightening which people preferred with
much appreciation.
MBR: Do you have any plan to open outlets in Dhaka city?
Yes, I have plans to open new outlets in Dhaka. I wish to open
more outlets consequently with the growth of my business.
However, my next venture will be in Savar and then in Dhaka.

MBR: How do you ensure customers satisfaction level?


I mostly tried to communicate with my customer in a friendly
manner and try to know their feedback and specific demand for
goods. I always try to fulfill their demand and make them happy.
Thats the biggest power of success.
MBR: How many employees are operating in your outlets?
Currently, I have twenty-two employees. However, during the
Eid festivals I hire some part-timers to manage the rush.

MBR: How do you think of such unique name like Aebnit?


To be honest, most people wonder what Aebnit is and how did
I think of giving such unique name of my shop. Actually it is the
name of a small village in the area of Emmental in Switzerland
where I lived in with my family. My twins were also born there.
To remember all those sweet memories in that village I used
the name.
MBR: Do you have any plan to diversify your stores product?

MBR: Where do you see Aebnit in the next 5 years?


In the next five years, I wish to open new outlets in Dhaka and
also in area surrounding Dhaka like Savar for instance.
MBR: What kind of challenges did you face while operating in
this line of business and how did you overcome them?

Yes, initially I began with clothes only. Now I sell leather goods,
cosmetics, jewelry and toys etc.

Frankly speaking, I did not face that many challenges as a women


and people actually helped me and they appreciated my efforts
in setting up the business and thought I was brave enough to be
able to do such an outlet. Usually, people are friendly in general.

MBR: Being a successful business person, how do you manage


your family along with running your business?

MBR: What are your advices to someone who wants to start a


similar business?

Everybody needs to manage family. One cannot just ignore


family for the sake of doing business. I need to plan my
time for my kids, other members and relatives. Mutual
understanding with the husband and the kids is important in
order to manage both.

My advice is to understand the demands of the locality, their


needs and what will satisfy them if a new business is commenced
there. Customer care should be the top most priority for any
business to get more satisfied customers. Finally, innovation is
really important for starting a new business.

13

IDLC MONTHLY BUSINESS REVIEW

Buzzword
Startup

company that is in the initial stage of its operations is a startup company. These companies are often initially bank rolled by their
entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand.
Moreover, due to limited revenue or high costs, most of these small scale operations are not sustainable in the long term without
additional funding from venture capitalists. In the current economy, a lot of people around the world are unable to find jobs and are turning
to entrepreneurship and starting their own companies instead. The dream of entrepreneurship has become more motivating than the goal of
working for 40 years and living out their final years on retirement savings.
A startup company or startup is a company, a partnership or temporary organization designed to search for a repeatable and scalable business
model. These companies, in general are newly created, are in a phase of development and research for markets. The term startup became
popular internationally during the dot-com bubble when a great number of dot-com companies were founded.
Evolution of a startup company
In the late 1990s, the most common type of Startup Company was
a dotcom. To speculate on the emergence of these new types of
businesses, venture capital was extremely easy to obtain during
that time due to competition among investors. Unfortunately,
most of these internet startups eventually went bust due to major
oversights in their underlying business plans, such as a lack of
sustainable revenue. However, there were a handful of internet
startups that did survive when the dotcom bubble burst. Internet
bookseller Amazon.com and internet auction portal eBay are
examples of such companies.
Startup companies can come in all forms and sizes. A critical task
in setting up a business is to conduct research in order to validate,

14

assess and develop the ideas or business concepts in addition


to opportunities to establish further and deeper understanding
on the ideas or business concepts as well as their commercial
potential. The business models for startups are generally found
via a bottom-up or top-down approach. A company may cease
to be a startup as it passes various milestones, such as becoming
publicly traded in an IPO, or ceasing to exist as an independent
entity via a merger or acquisition. The companies may also fail
and cease to operate altogether.
Back in the 90s, the investors were generally most attracted to
those new companies distinguished by their risk/reward profile and
scalability. To be precise, they have lower startup costs, higher risk,
and higher potential return on investment. Some of the successful
startups are typically more scalable than an established business, in

IDLC MONTHLY BUSINESS REVIEW

the sense that they have the potential to grow rapidly with limited

Amazon started with the idea that you should be able to buy books

investment of capital, labor or land.

easily online.

Startups encounter several unique options for funding. Angel

The companies we know today exist because their founders

investor helps startup companies begin operations, exchanging


seed money for an equity stake. In practice though, many startups
are initially funded by the founders themselves. Factoring is
another option, though not unique to startups. Some new funding

built businesses around those ideas. And the ideas were so


groundbreaking that they turned billion-dollar industries on their
heads. Microsoft ended the era of the typewriter with the personal
computer. Amazon makes it easier to shop from your living room.

opportunities are also developing in crowd funding.


These companies used technology to shorten the distance between
Startup ideas
Startups start with an idea about how the world should be different
in a very significant way. Uber started with the belief that it should
be easier to call a cab from your smartphone. Zipcar started with the
idea that you should be able to have access to a car without paying

two points, and therefore create a new, more efficient way for people
to live and work. Using a PC was more efficient than a typewriter,
which means Microsoft opened up billions of dollars of productivity
by shortening the distance between writers and writing. Uber
shortens the distance between passengers and drivers. Zipcar
shortens the distance, in terms of dollars spent on car ownership,
between people and their destination. Shortening the distance

the full cost of ownership. PayPal started with the idea that it should

between two points with technology is called disruption, because

be easy to make a payment with a credit card online. Microsoft

it upsets the pre-existing balance in the market, often the result

started with the idea that everyone needed a personal computer.

releases billions of dollars of productivity into the economy.

The goal of every startup is to change the way the world works in a meaningful way, and in the doing, to create a massive amount of
value for the founders, their investors, their employees, and the markets they disrupt. The process of creating that value is risky and
unstable, but the risk is in direct proportion to the potential rewards. Startup founders stand to make millions if they successfully grow
their startups into companies.
The final element of a startup is the people who step up and join the battle since startup life is volatile and risky. The hours are long and
grueling. One of the bigger challenges is the constant changes that the company is undergoing in their rapid growth. Each change in
the company requires that every employee, from the founders and the executive team on down, be willing to evolve and adapt to the
changing needs of the company. This requires a high degree of introspection and adaptability. In addition to the huge markets and
the disruptive products, one of the biggest products of a startup is its people. A successful startup will generate a cadre of battlehardened people capable of achieving great things.

15

IDLC MONTHLY BUSINESS REVIEW

ENTREPRENEURS assistance tool


Trade License

To run any business, a permission of the Government is required.


Trade license or business licenseis the first steps to start a business in
any place all over the world. In general, trade license is usually issued
by local business authorities, hence, in Bangladesh, trade License
of an entity is issued from the office of respective City Corporation
or Union Council. In City Corporation area or urban area, ward
Commissioner is mainly liable for issuing trade license. In rural area,
Union Council issue trade license for doing any kind of business in
the respective Union Council area.

Most of the business requires the following


documents for trade license:
For proprietorship business:

Photographs of proprietor

Copy of rent receipt or rental agreement

Trade License for industries:

16

Photographs of proprietor

Copy of rent receipt or rental agreement

No objection declaration from nearby area

Location map of the industry

Fire certificate copy

Trade License for Limited Company:

Memorandum of Association and Article of Association

Incorporation Certificate

For Residential Hotel/Printing Press: Permission require from


Deputy Commissioner
For Recruitment Agency: Need earlier license from Manpower
Export Bureau
For Travel Agency: Need prior approval from Civil Aviation Authority
Process of getting Trade License from Dhaka City Corporation
Trade License Fees
For getting trade license you must pay stipulate fees and also the
fees depend on the business activities.

For instance, for import business trade license, one needs to


pay only the stipulated fees for import business.

For trade license of export business, one should pay fees


stipulated for export business.

IDLC MONTHLY BUSINESS REVIEW

For export and import business, one should pay both export
and import business fees (export business trade license fees +
import business trade license fees).

Additionally, signboard charges should be paid which equal


30% of respective trade license fees.

The fees also vary between City Corporation area and rural area.

For limited company, fees depend on paid up capital.

The fees should be paid at any bank as designated on the trade


license form.

Trade License Renewal Process:


Trade license should renew every year by paying requires fees.
The fee is same as first time trade license collection fee. Also, 30%
signboard fee should to be paid.

A demand bill should be taken from the trade license book. The
licensing supervisor would check the expiring date and fill up the
particulars of demand bill and gives the booklet to the business.

The required fee should be deposited to designated bank


through demand bill. In this way license is generally renewed.

Process of getting Trade License from Dhaka City Corporation


Steps

Trade License for Commercial Firm

Collect KA Form from respective zonal office of Dhaka City


Corporation.
First Step
* KA Form is mandatory to use for a commercial firm. All of
the zonal offices use same KA Form for Commercial Firm.
Second
Step

Complete the KA Form and submit it to local ward


commissioner office for justification.

Trade License for Manufacturing Firm


Collect I Form from respective zonal office of Dhaka City
Corporation.
* I Form is mandatory to use for a manufacturing firm. All of
the zonal offices use same I Form for Manufacturing Firm.
Complete the I Form and submit it to local ward commissioner
office for validation.

Collect Trade License Book by paying BDT 50/- and submit Collect Trade License Book by paying BDT 50/- and submit
Third Step application to Dhaka City Corporation Zonal office with application to Dhaka City Corporation Zonal office with
supporting documents.
supporting documents.
Fourth
Step

After submission of the application, licensing supervisor


After submission of the application licensing supervisor visit the
would visit the business entity to verify provided information. business entity to verify provided information.

When verification is complete, the business should go to


the Dhaka City Corporation office to pay the require fees
Fifth Step
to collect Trade License. The fee depends on the business
categories.
Sixth Step

For collection of trade license one should pay signboard fee.


Signboard fee is applicable 30% of license fee.

When verification has completed, the business should go to the


Dhaka City Corporation office to pay the require fees and collect
Trade License. The fee depends on the business categories.
For collection of trade license one should pay signboard fee.
Signboard fee is applicable 30% of license fee.

A developed nation is
a prosperous nation.
At IDLC, we help you
contribute
to
this
process.
We are in the business
of financing happiness.

17

18

19

IDLC MONTHLY BUSINESS REVIEW

ECONOMY
Inflation rate hits two-year low
The inflation rate declines to 6.21% in November which was around
6.60% in October, which is the lowest in 24 months. Conversely
in 2012, inflation increased to 6.55% in November from 5.16 % in
October in the same year.

festivals took place at the beginning of the month and in November


rise in non-food inflation was caused by said a recent surge in bank
loans suggested by Central bank officials.

According to the Bangladesh Bureau of Statistics (BBS) data, food


inflation was the biggest driver behind the drop in overall inflation
last month which slide to 6.44% from 7.16% in October 2014.
However, due to a rise in house rent, transportation costs, education
and medical expenses and other non-food items inflation reached
5.84 % in November from 5.74 % in the previous month.
The declining inflation trend facilitates the government to meet the
fiscal current fiscal 2014-2015s target of 6.5 %. Inflation declined in
both urban and rural areas last month. In rural areas, it dropped to
6.05 % from 6.49 % in October, and in urban areas to 6.51 % from
6.79 %. In October, non-food inflation went up as two major religious

Source: Bangladesh Bureau Statistics (BBS)

Germany to provide EUR 60 million for power transmission development


In order to improve power transmission in the countrys western
region, Germany would provide assistance worth EUR 60 million
to Bangladesh. Meanwhile, Germany has provided USD 1788.1
million foreign aid to Bangladesh since the countrys independence,
including USD 1520.2 million in grants and USD 267.9 million in
loans, according to the flow of external resources for 2012-13 fiscal
year released by the Economic Relations Division (ERD).
The German government through KfW Development Bank is one
of the major implementing agencies of German Development
Cooperation would lend its support for the first time in the countrys
power sector under the Improvement of Power Transmission. KfWs

activities in Bangladesh focus on energy efficiency - renewable


energy, health sector including family planning and governance and
local development.
The ERD stated that the German government would provide EUR 45
million as loan, while the rest EUR 15 million would come as grant
and it was also added that Power Grid Company of Bangladesh
(PGCB) would implement the project after the feasibility study is
completed. Additionally, Kfw is expected to provide EUR 138 million
in 2016 to improve countrys power transmission lines as well as also
likely to provide another EUR 20 million to Bangladesh in 2016 for
urban development in Barisal and Satkhira.

Bangladesh has average level of monetary inequality


According to a World Bank report titled Addressing Inequality in South Asia, Bangladesh along with other South Asian countries has moderate
level of monetary inequality. The country has ranked third among the countries in the region in terms of level of low inequality. Afghanistan
and Pakistan have performed better than Bangladesh while Nepal, India, Sri Lanka, Maldives and Bhutan have achieved lower position.
The monetary inequality in South Asia was not too high but it was increasing, and if standard monetary indicators are considered, South Asia has
modest level of inequality stated World Bank. As per the report, in consumption inequality, performance of the South Asian countries remained
between 0.28 and 0.40 out of 1 in Gini coefficients, a method of inequality measurement. Bangladeshs score is around 0.30 and Bangladesh has
also secured third position in terms of the share of the poorest 40% of households in the total consumption.
Bangladesh should accelerate growth and increase expenditure in the public sectors including education and health to reduce inequality.
Land reform and imposition of wealth tax could reduce inequality, stated Bangladesh Institute of Development Studies. According to
the experts, quality education in the primary and secondary level should be ensured that would play role in reducing inequality.

20

IDLC MONTHLY BUSINESS REVIEW

WB approves over USD 1 billion for three projects


According to an agreement among Economic Relations Division
(ERD) Additional Secretary and World Bank Lead Economist and
Acting Country, the World Bank would provide USD 60 million to
modernize Bangladeshs value added tax (VAT) administration and to
boost tax revenue and will support the VAT administration system to
become fully compliant with Bangladeshs Right to Information (RTI)
Act. The project facilities the ratio of VAT to Gross Domestic Product
(GDP) to increase by 3.7% in 2012-13 and at least one percentage
point of GDP by 2019.
As stated by an ERD, the project will improve taxpayer services,
encourage better compliance and increase tax revenue by
automating the VAT system. In order to raise awareness of the need
to register and file for VAT, the project will embrace a campaign

that would introduce modern business processes and Information


Technology systems as well as a more transparent service-oriented
tax administration, registration, return processing, and online tax
payment. The project would seek to increase the number of active
registered taxpayers to 85,000 within the next five years compared
to around 35,000 VAT payers.
(in millions of
USD)

Three Projects funded by WB


Third Primary Education Development Programme

400

Multipurpose Disaster Shelter Project

375

Income Support Programme for the Poorest


Project

300

Source: Bangladesh Bank

Germany to lend EUR 50 million RMG compliance fund


With regard to cope with global standard, the German government
would lend EUR 50 million compliance fund for the countrys textile
industry. A Memorandum of Understanding (MoU) was signed at
secretariat between the Federal Ministry for Economic Cooperation
and Development and ministry of commerce from their respective
sides. It was also stated that the ministry would request the German
buyers to raise the price of each pair of jeans by one euro on top of
the existing price.
The German government would give financial assistance to the first
10 textile factories to make them fully compliant and this would help
to draw the attention of big buyers from Germany which has already

provided Bangladeshi export items with duty-free and quota-free


access to its market, according to the ministry of commerce.
Germany would be the first destination of our export products
that will topple the US market and on the other hand, the
visiting German Economic Cooperation and Development
minister considered the MoU to be the second stage of funding
program through German GIZ, as stated by ministry of commerce.
Additionally, the German government would launch a website
early next year which would explain details of import goods and
the way they would be manufactured in accordance with social
and environmental issues.

Selected Economic Indicators


Item

Period/As of

Value/ bn

Period/ As of

Value/ bn

+/(-)%

Foreign Exchange Reserve (USD)

December'14

17.83

November'14

21.53

-17.20%

Workers Remittances (USD)

November'14

1.06

October'14

1.01

5.02%

Revenue Collection (BDT)

October'14

89.14

September'14

113.55

-21.50%

Broad Money (M2) (BDT)

October'14

7250.03

September'14

7250.03

0.00%

Reserve Money (RM) (BDT)

October'14

6403.17

September'14

1436.33

345.80%

Total Domestic Credit (BDT)

October'14

5938.93

September'14

6582.19

-9.77%

Credit to Private Sector (BDT)

October'14

4684.67

September'14

5223.99

-10.32%

Source: December 2014, Selected Economic Indicator, Bangladesh Bank

21

IDLC MONTHLY BUSINESS REVIEW

TRADE
Export continues to grow in Bangladesh l
According to the Ministry of Commerce, the countrys exports
would continue to grow, although Bangladesh does not enjoy any
duty benefit on export of garment items to the USA. It was also
stated that the countrys export volume was USD 30.19 billion in
2013-14, which is expected to grow to USD 33.2 billion in the next
fiscal year.
Bangladesh is economically well ahead among 48 least developed

countries in the world, and has been termed as one of the 11


emerging nations, at an opening of Bangladesh International Trade
and Export Fair at Halishahar in the port city of Chittagong. The
port city is the gateway of Bangladesh and the development of the
country hinges on the connectivity development among Chittagong
and other parts of the country and also that the government is
working to develop Chittagong as a commercial hub of the country,
according the ministry of land.

Bangladesh proposes tender to import 50,000 tons of wheat l


With intent to boost reserves, the countrys state grain buyer issued a new international tender to import 50,000 tons of wheat. Since the
current financial year, this is the third international wheat purchase tender issued by Bangladesh. The imports are crucial for the South Asian
nation to feed its poor and keep domestic prices stable. The Directorate General of Food wants to import 900,000 tons of wheat in the current
fiscal year.
The country received the lowest offer at USD 270 a ton from Glencore in its first tender. Another tender is due to open on December 14. The
state grain buyer has also agreed to buy 250,000 tons of Ukrainian wheat at USD 297.50 a ton including cost, freight, insurance and other portrelated expenses in a government-to-government deal with Ukraine.
In contrast, strong output and good reserves have prompted the Bangladesh government to come up with a rice export pact with Sri Lanka,
where rice prices have turned up after production dropped due to an 11-month drought, which experts consider to be the worst in recent
history. Rice is the staple food for Bangladeshs 160 million people while wheat consumption is rising, with domestic production having
stagnated at nearly 1 million tons.

BD, Sri Lanka proceed to free trade agreement l


In order to make a free trade agreement (FTA) between Bangladesh
and Sri Lanka, an extensive progress has been completed by both
countries. During a meeting, ICCB assured the minister for extending
possible cooperation from the private sector and requested the Sri
Lankan minister to expedite the FTA process for expanding trade
between the two countries.

Department of Commerce has already completed the trade


agreement study report on their side and has exchanged their
respective reports. On September 23, 2014, Sri Lanka and Bangladesh
inked their second bilateral joint Working Session in Colombo and
bilateral trade between the two countries was jumped by 67% in
2013 to USD 139.23 million from USD 83.19 million in 2012.

RMG to grow export earnings by 5% despite all odds in 2014 l


The export earnings from the RMG sector rose by nearly 5% to USD 22.25 billion in January-November in 2014 compared to 2013 despite
facing several challenges. According to the Export Promotion Bureau (EPB), Bangladesh fetched USD 22.25 billion in 11 months of 2014, which
was USD 21.22 billion in the previous year.
As stated by Export Promotion Bureau, the knitwear export stood at USD 11 billion with a rise of 6.723% from the previous years USD
10.4 billion and woven products earned USD 11.15 billion growing at 3.05% as the previous years figure was USD 10.8 billion. Bangladesh
government has set an export target of USD 26.9 billion from the RMG sector for the fiscal year 2014-15. As per BGMEA data, over 40 lakh
workers are employed in the industry and 80% of them are women mostly from the rural area. But Bangladeshs RMG sector faced several
accidents due to intensified political violence and repeated labor unrests in 2013.
In order to be more competitive, Bangladeshi RMG sector needs cash incentives and policy support from the government and BGMEA has set
an export target of USD 50 billion by 2021 to mark the 50 years of Bangladesh Independence.

22

IDLC MONTHLY BUSINESS REVIEW

Category wise Export

Import LC statistics
USD in million

JulyNovember
2014-15

JulyNovember
2013-14

Change

Knitwear

4,997.78

4,899.82

2%

Woven RMG

4,693.47

4,753.53

-1%
-7%

Item

USD in million

Items

Foot Wear

201.81

172.34

17%

Engineering Products

180.61

153.17

18%

Agricultural Products

282.51

229.48

23%

Raw Jute

43.21

49.47

-13%

Others

853.42

844.68

1%

Capital Machinery
Textile Fabrics (B/B & Others)
Rice and Wheat
Chemicals & Chem. Products
Petroleum & Petro Products
Edible Oil & Oil Seeds
Raw Cotton
Scrap Vessels
Pulses
Cotton Yarn
Paper and Paper Board
Synthetic Fibre & Yarn
Sugar and Salt
Others

12,070.08

11,959.61

1%

Total

Frozen Food

300.76

324.81

Home Textile

298.61

297.78

0%

Leather

173.49

194.39

-11%

44.41

40.14

11%

Chemical Products

Total

Source: Export Performance for December FY2014-15; Export


Promotion Bureau, Bangladesh Bank

July- October, 2014


July- October, 2013
FLCO
SOLC
OSTLC
FLCO
SOLC
OSTLC
1,044
917 4,278 971.67
715 3,266
2,123 1,869 2,832 1,961 1,905 2,790
627
415
439
483
561
421
1,321 1,201 1,803 1,109 1,038 1,411
1,417 1,556 1,389 1,767 1,152 1,709
311
327
636
318
405
727
674
744 1,013
600
763
902
210
274
275
293
293
361
143
130
129
83
169
169
400
437
549
304
330
499
102
100
111
119
106
102
215
216
262
158
167
270
294
253
405
231
210
584
5,096 4,500 7,628 5,053 3,834 5,926
13,978 12,941 21,750 12,478 11,649 19,136

FLCO= Fresh LC Opening, SOLC= Settlement of LC, OSTLC= Outstanding LC


Source: Major Economic Indicators; Monthly Update, July 2014, Bangladesh Bank

INVESTORS CORNER
Export Processing Zones Statistics l

Cumulative export in eight EPZs at the


end of July-September FY 2013-14 was
USD 42390.06 million as compared to USD
34,502.37 mn at the end of FY 2013-14.

Cumulative investment in eight EPZs at


the end of September 2014 for the FY
2013-2014 was USD 3330.17 million as
compared to USD 2,785.49 mn at the end
of FY 2013-14.

Cumulative employment in eight EPZs


at the end of September 2014 for the FY
2013-2014 was 401,759 employees while
in FY 2013-14, it was 374,008 employees.

Source: Bangladesh Export Promotion Zone Association

23

IDLC MONTHLY BUSINESS REVIEW

BUSINESS
Printing industry in festive optimism l
With intent to obtain privileged sales of calendars, diaries and greeting cards, the printing industry is looking forward to the New Year and
Christmas. As stated by Bangladesh Mudran Shilpa Samity (BMSS), the organization expect to raise 50-60% in sales of calendars, diaries and
greeting cards this year compared to the previous year due to an improvement in political environment.
According to industry insiders, market size of printing, including textbooks, stands at around BDT 3,500 crore and sales of calendars and diaries
run into about BDT 270 crore annually. Nowadays, more and more people are engaged in sending digital cards to greet near and dear ones
and e-cards now accounts for 30% of the total demand for greeting cards in the country.

Baby diaper creates new business era l


According to the industry experts, the market size of baby diapers
in Bangladesh is around BDT 400 crore, of which 70% are totally
captured by the multinational companies. The usages of the
baby diaper are increasing day by day due to more womens
involvement in jobs, enhancement of purchase capacity and
health awareness. Baby diapers have been emerged as a new
business opportunity for the local manufacturers to capture
domestic market through substituting imports.
As most of the working women choose to use the diapers for
their babies, the demand for nappies is on the upswing. As stated
by local manufacturers, around 70% of its total demand is met
by imports while the local manufacturers contribute the rest.
Only four brands are locally manufactured while 14 brands are
imported from abroad.
As stated by a banker, a service holder has no other option for his
kid, rather than using diapers as it helps me to remain tension-

24

free whenever he leaves his child to domestic help. Nowadays


in Bangladesh, the use of baby diapers is not a luxury one,
rather a necessity. As the 100% raw materials are imported, the
government should lower tariff to help the local industry growth.

IDLC MONTHLY BUSINESS REVIEW

REGULATORY NEWS
Bangladesh Bank increases focus on large borrowers l
In order to ensure the loan situation of the sectors large borrowers,

loans with the help of the banks that prevents their default loan

Bangladesh Bank is set to embark on a two-step program. As stated

portfolios from ballooning. Top 20 borrowers account for around

by BB official, the large borrowers have proved as a threat to the

BDT 43,000 crore and of them, one borrower owes around BDT

health of most banks and the central bank is set to form a dynamic

7,000 crore.

panel to closely monitor the performance of the large borrowers and


devise a mechanism to restructure their risky loans.

According to central bank statistics the total defaults stood at BDT


57,290 crore and BDT 40,583 crore at the end of September and

As reported by BB, the sectors capital adequacy ratio may

December respectively. They also reported that loan defaults have

drop 2.69% to take it below the critical 10%. Many of the large

swelled by BDT 16,708 crore in the first nine months of the year,

borrowers have been lobbying for long-term restructuring of their

which has put the central bank in a state of great concern.

Central bank plans to introduce Islamic bond l


In order to increase the prospects of Islamic

activity. Unlike the conventional bonds it is

considering introduction of the Sukuk in the

finance in the country, Bangladesh Bank

an Islamic equivalent to a bond, which merely

market, however the bond will be local, not

(BB) stated that the central bank is actively

represents ownership of a debt; Sukuk grants

sovereign. The central bank is also preparing

considering introduction of Sukuk Islamic

the investor a share of an asset, along with

guidelines for Islamic banks of the country.

bond. Sukuk is a certificate representing

the commensurate cash flows and risks.

The guidelines would inspect the Shariah


compliance of the Islamic banks of the

ownership of tangible assets or assets of


a particular project or special investment

According to BB, the central bank is actively

country and Islamic finance products.

BB to allow non-residents to make outward remittance from NRTAs l


The central bank would allow the non-residents to make outward remittance from their non-resident taka accounts. Bangladesh Bank (BB)
took the move as part of its foreign exchange liberalization program. The BB issued a circular to all banks, non-bank financial institutions and
stakeholders stating that from now on the non-residents would be allowed to make outward remittance from their NRTAs maintained with
the local banks after taking approval from the central bank.
According to BB, the taka accounts maintained with banks in Bangladesh by individuals, firms and companies stationed outside the country
are known as non-resident taka accounts. The circular states that the non-residents would be able to make outward remittance from the
NRTAs to maintain their emergency expenses in the foreign countries. The non-residents would be allowed to procure permissible goods and
services by using their NRTAs and they will be able to bring the products to their respective countries.
The central bank had earlier imposed embargo on outward remittance from NRTAs to tackle excessive pressure on the foreign exchange
reserve and to contain money laundering. The NRBs are now sending around USD 15 billion inward remittance in a financial year. Therefore,
the BB has opened the window for the NRBs to encourage them to use the legal banking system.

NBR eases taxation for cooking oil traders l


With intent to make the payment of value-added tax at one stage

According to processors, private sector processors import nearly 15

instead of three, the National Board of Revenue (NBR) is ready

lakh tons of palm and soybean oil a year to feed the domestic market

to make simpler taxation for soybean and palm oil processors.

that requires 18 lakh tons. After paying a portion of the 15% VAT at

According to NBR, the cooking oil processors will pay 15% VAT at the

the import level and 4% VAT at the dealers level, the processors have

import level only and now they pay 10% VAT at the time of import,

to pay BDT 4,110 and BDT 3,700 for each ton of soybean and palm oil,

mainly from Indonesia, Malaysia, Brazil and Argentina.

respectively, at the refining stage.

25

IDLC MONTHLY BUSINESS REVIEW

MARKET ROUNDUP
Currency Market Roundup
December, 2014

Money Market l

The Bangladesh interbank call money rate was around 7.50% 8.50% on 28 December, 2014.

Foreign Exchange Market l


Local: The USD/BDT rate was slightly up as on 30 December, 2014 as it was last business day of the year. Trading volume was steady with more
cross currency transactions.
International: The yen gained sharply against both the dollar and euro on 30 December 2014 as investors sought the traditional safety of
the Japanese currency amid end-of-year nerves over economic risks ahead. The prospect of Greece dropping the euro returned to haunt the
single currency after a failed effort to elect a new Greek president on Monday, but there are broader concerns over growth and the effects of
six years of money-printing heading into 2015. Concerns over global demand have shown up in a collapse in oil to less than USD 60 a barrel
and crude prices were heading lower again on 30 December 2014, dragging stock markets and the dollar with them.

Treasury Bill/Bond Auction Information l


Auction Date

Tenure & Name of the Securities

Sale Value (in BDT mn)

Weighted Average Yield (%)

17/11/2014

30-day BB Bill

99.57

5.25

29/12/2014

91 days T.Bill

7579.118

7.35

29/12/2014

182 days T.Bill

5536.986

7.75

22/12/2014

364 days T.Bill

5021.384

8.21
8.59

03/12/2014

2 yr T.Bond

5000

10/12/2014

5yr T.Bond

7000

9.66

17/12/2014

10yr T.Bond

4000

10.92

24/12/2014

15yr T.Bond

297.7

11.47

24/12/2014

20yr T.Bond

125

11.98

* Sale value not applicable, Face Value used.

Source: Bangladesh Bank

Financial Sector Prices l


The spread of weighted average lending and deposit rate declined to 5.09% in December 2014 which was 5.10% November 2014.
The weighted average call money rate in the interbank market went up from 7.77% in November 2014 and stood at 7.46% at
December, 2014.
Bangladesh Bank has changed repo and reverse repo rate at 7.25% and 5.25% respectively, following a declining revision by 50 basis point
effective from February 1, 2013.

Exchange and Forward Rates l (As of December 30, 2014)


Major Currency Exchange Rates

Major Currency Exchange Rates

BC Sell
BDT

TT Buy
BDT

BC Sell
BDT

TT Buy
BDT

USD

78.95

77.95

CAD

70.04

66.67

EUR

97.00

93.00

HKD

10.12

9.70

INR

63.77

1.23

GBP

124.10

120.10

SGD

59.79

56.83

PKR

100.99

0.78

AUD

66.30

63.11

AED

21.56

20.50

LKR

131.40

0.60

JPY

0.68

0.64

SAR

21.73

20.69

THB

32.97

2.38

CHF
SEK

81.92
10.16

77.96
9.66

DKK

12.92

12.28

KWD

270.42

257.03

MYR

3.50

22.40

Currency

26

Currency

Exchange Rate of Some Currencies


Currency

Currency Per
USD

BDT per
Currency

Source: Standard Chartered Bank.

IDLC MONTHLY BUSINESS REVIEW

Commodity Market Roundup


Global food price remained steady for the third consecutive month l
Global food price in November 2014 were virtually unchanged from
October, but 13 points or 6.4% below November 2013.While the
price indices of both cereals and vegetable oils rose last month, they
fell markedly in the case of sugar and dairy products and remained
stable in the case of meat.
Cereal Price averaged 183 points in November which was up by 4.7
points or 2.6% from October, but still 11.3 points or 5.8% down yearon-year. The November increase marked the first significant monthly
gain since March 2014, as large supplies and prospects of another
good production in 2014 continued to weigh on prices.
Price of oils & fats augmented to 164.9 points in November, which was
up 1.2 points or 0.7% month-on-month, but 16.9% below November
2013. Last months rise was mainly driven by an improvement in palm
oil prices, following production slowdowns in Malaysia and Indonesia
and steady global import demand. Quotations for sunflower oil also
remained firm on lower than anticipated global production.

types of meat, in particular bovine meat, are at historic highs, and


the Index stands 24.8 points 13.3% above its corresponding level in
2013. The quotations for all types of meat were stable in November,
with the exception of ovine meat which moved moderately higher.
Sugar price decreased in November to an average 230 points which
was down 7.6 points or 3.2% from October 2014.Last months decline
reflected a return of rainfalls in the main sugar producing region
in Brazil, the worlds largest sugar producer and exporter, which
reduced concerns over the potential effect of a prolonged drought
that had affected the country. Against a backdrop of ample supplies,
international sugar prices remained about 8 percent below their
level in November 2013.
FAO Food Price Index

Dairy products saw a rapid fall of 6.2 points or 3.4% over October
and 72.7 points or 29% less year-on-year; the substantial fall in
international milk product prices over the past 12 months compares
with a more modest year-on-year decline for the FAO Food Price
Index overall. Since the beginning of the year, when prices were
exceptionally high, quotations for dairy products have fallen, mainly
as a result of increased export availability and a reduction in the pace
of importation by some of the major markets, especially China and
the Russian Federation.
Meat price remained unchanged from its revised value for October
and averaged 210.4 points in November. The quotations for most

Source: Food and Agricultural Organization

International Commodity Prices l


Commodity

Unit

Price 28 December 2014 (USD /unit)

Price 28 November 2014 (USD /unit)

Change +/(-)

Crude Oil

Barrel

56.52

66.15

-0.15

Gold

Ounce

1177.00

1182.75

0.00

Silver

Ounce

15.77

15.97

-0.01

Nickel

Tonne

15275.00

16325.00

-0.06

Tin

Tonne

18795.00

20375.00

-0.08

Lead

Tonne

1847.50

2065.00

-0.11

Aluminium

Tonne

1834.00

2099.00

-0.13

Zinc

Tonne

2152.50

2270.50

-0.05

Copper

Tonne

6361.00

6621.50

-0.04
Source: LBMA; Worldal; WTRG.

27

IDLC MONTHLY BUSINESS REVIEW

INTERNATIONAL
Philips expands to medical devices with USD 1.2 billion Volcano deal l
Philips has settled to acquire US-based medical device maker Volcano Corp for USD 1.2 billion including debt, which is the largest healthcare
acquisition in seven years. Philips stated the acquisition of Volcano makes equipment that allows doctors treating heart disease to see inside
patients veins and measure blood flow that would lead to synergies in research and development and in sales and expects to add to Philips
earnings per share. Volcano makes catheters that can slide into veins to make ultrasound scans of the interiors of blood vessels, allowing
doctors to treat without putting patients under the knife.
As stated by the experts, Philips made an expensive acquisition which would make strategic sense in the long term. Philip, a diversified
conglomerate that made everything from televisions to light bulbs to X-ray machines, is turning to its historic lighting division to focus on its
higher-margin healthcare business. Minimally invasive surgery is the way forward where the patient goes home the next day with having less
complication. Philips expects to grow in the portion of healthcare spending 5% of budgets.

China oddments quotas on rare earths after WTO complaint l


China has scrapped its quota system restricting exports of rare earth
minerals after losing a World Trade Organization (WTO) case. In 2009,
Beijing imposed the restriction while the country tried to develop its
own industry for the 17 minerals, which are crucial to making many
hi-tech products, including mobile phones. Last year, a WTO panel
ruled that China had failed to show the export quotas were justified.
China dominates in rare earth production. It is estimated to be

responsible for 90% of its production, despite only having a third of


the worlds deposits. Under the new guidelines, rare earths would still
require an export license but the amount that can be sold abroad will
no longer be covered by a quota. The United States, the European
Union and Japan had complained that China was limiting exports
in a bid to drive up prices. The complaint, upheld by the WTO, also
said the quota was designed to gain market advantage for domestic
producers with cheaper access to the raw materials.

International Economic Forecast


Year on year percentage
change

GDP
2015

2014

2016

CPI
2015

2014

2016

Global (PPP Weight)

3.2%

3.5%

3.7%

3.7%

3.7%

3.7%

Advanced Economies

1.9%

2.2%

2.5%

1.4%

1.4%

1.9%

Euro Zone

0.8%

1.1%

1.8%

0.5%

0.8%

1.3%

Developing Economies

4.5%

4.7%

4.9%

5.9%

5.8%

5.5%

Forecast as of December 2014


Source: Wells Fargo Securities, LLC

28

IDLC MONTHLY BUSINESS REVIEW

Insight Analysis l
The price of making a plastic bottle
Plastic bottles are ubiquitous but the cost of producing them
varies dramatically around the world, thanks mainly to differences
in raw-material costs and energy prices. The main type of plastic
used, polyethylene terephthalate (PET), is made from naphtha,
an oil derivative, which can be partly substituted with ethane, a
natural-gas derivative. Very little ethane is traded internationally,
so only places where natural gas is cheap and abundant use it
to make PET. Because of its shale-gas boom, these now include
America as well as the Middle East. Europe and Asia rely only on
expensive naphtha. In these places the higher cost of fuel and
electricity also push up production costs for plastic bottles.

Source: IEA World Energy Outlook 2014

International Market Movement l


% Change on
Markets

Index Dec 16th

United States (DJIA)


United States (S&P 500)
United States (NAScomp)
China (SSEA)
Japan (Nikkei 225)
Britain (FTSE 100)
Canada (S&P TSX)
Germany (DAX)
Hong Kong (Hang Seng)
India ( BSE)
Pakistan (KSE)
Singapore (STI)

One Week

17068.9
1972.7
4547.8
3165.3
16755.3
6331.8
13861.5
9563.9
22670.5
26781.4
30876.3
3215.1

-4.1
-4.2
-4.6
5.8
-5.9
-3.0
-2.4
-2.3
-3.5
-3.7
-3.8
-3.2

Dec 31st, 2013


In Local currency
In USD
3.0
3.0
6.7
6.7
8.9
8.9
42.9
39.8
2.8
-7.8
-6.2
-10.9
1.8
-7.1
0.1
-9.1
-2.7
-2.7
26.5
23.3
22.2
28.0
1.5
-1.6
Source: The Economist

Selected Economic & Financial Indicators l


Global domestic product
Country
United States
China
Japan
Britain
Canada
France
Germany
Russia
Hong Kong
India
Singapore
Brazil
Mexico

Consumer prices

% change on year-on-year

Latest

qtr

2015

latest

2014

Unemployment
rate, %

2.4
7.3
-1.3
3.0
2.6
0.4
1.2
0.7
2.7
5.3
2.8
-0.2
2.2

3.9
7.8
-1.9
2.8
2.8
1.1
0.3
0.0
6.8
8.1
3.1
0.3
2

3.0
7.0
1.1
2.6
2.4
0.8
1.3
-1.0
2.6
6.5
3.9
0.8
3.3

1.7
1.4
2.9
1.0
2.4
0.3
0.6
9.1
5.2
4.4
0.1
6.6
3.9

1.7
2.1
2.7
1.5
2.0
0.6
0.9
7.6
4.3
7.3
1.1
6.3
4.7

5.8
4.1
3.5
6.0
6.6
10.5
6.6
5.1
3.3
8.8
2.0
4.7
4.8

*% change on previous quarter, annual rate. 


** The Economist poll or Economist Intelligent Unit estimate/forecast.

Current account balance


Latest 12
months, $bn
-389.2
206.0
6.8
-147.5
-41.2
-38.0
289.6
60.3
4.6
-23.4
58.9
-84.4
-25.4

% of GDP
2014
-2.3
2.4
0.3
-4.5
-2.5
-1.5
7.0
2.6
1.7
-2.0
20.7
-3.8
-1.9

Interest rates,
% 10-year govt
bonds, latest
2.07
3.64
0.37
1.85
1.75
0.88
0.60
15.80
1.79
7.99
2.16
12.8
6.16
Source: The Economist.

29

IDLC MONTHLY BUSINESS REVIEW

MONTH IN REARVIEW
Business-firm Specific l

With intent to buy tickets, people often have to spend a considerable amount of time jostling with traffic and travelling to bus counters.
However, the days of waiting in queues for bus tickets seem over. As stated by a website, www.shohoz.com, the website would enable
travelers to buy tickets online. In order to sell both SMS tickets and paper tickets, they accept payments by cash, mobile banking or
credit cards. The company charges BDT 21 for each ticket sold online or offline and BDT 50 for home delivery. The website now sells
tickets of major routes such as Dhaka to Chittagong, Khulna, Sylhet, Barisal, Coxs Bazar, Magura and Jhenaidah and travelers can also
buy tickets from them by making phone calls to a designated number or via messages. Shohoz has ticketing software that is being
used at bus counters and is synchronized with the website, enabling buyers to see which seats are available. The portal has provided
partner operators with an online booking system which helps them manage their inventory and prevent dubious or duplicate bookings,
ultimately saving costs and improving workflow efficiencies.

With intent to capitalize on the growing traffic on the route, local United Airways is all set to increase its flight frequency between Dhaka
and Kuala Lumpur. Listed in 2010, United Airways remains the lone airline in the countrys stock market, with its market capitalization
come to BDT 511 crore. The airline now has 11 aircraft, two Airbus 310-325, five MD-83, three ATR 72 and one DASH-8 100. At present,
the airline would operate international flights to London, Dubai, Kuala Lumpur, Kathmandu, Kolkata, Jeddah, Bangkok, Muscat and
Singapore and on the domestic flights; the airlines flies to Chittagong, Sylhet, Jessore, Coxs Bazar, Barisal, Rajshahi, Saidpur and Ishwardi.

With intent to provide cost-effective cardiac care service and educate masses to follow a healthy lifestyle, Indias Fortis Escorts Heart
Institute opened its Bangladesh unit. Fortis would control and operate the 42-bed centre set up by AFC Health Ltd with a cost of around
BDT 30 crore. The costs in the centre will be 15 percent lower compared with other such hospitals in Bangladesh. It has 23,000-squarefoot centre will offer diagnostic services such as angiography to detect heart diseases as well as varied treatment options, including
artificial pacemaker, coronary artery bypass, valve replacement and periphery bypass surgery . AFC Health and Fortis have been working
on the project for more than a year and signed an agreement in July 2014.

Fully Furnished Ltd, one of the oldest furniture companies, has opened its showroom in Dhaka to sell high-quality home and office
furniture and interior solutions. As stated by Fully Furnished, a unit of Touchwood has been importing furniture for its discerning
clientele of private patrons and corporate partners for last three decades. The boutique-type store has been offering premium products
for those who value class and quality. A full-floor has been dedicated to showcasing and selling products from Merryfair, a Malaysiabased office chair solution company, where over 50 models from the Malaysian company are available. Products such as high-end
brands like Lorenzo, Firenze, Multay, Techni, Bolusi, Marcoco, New PK, Intergo and Fiori are available at the store.

Management Change l
Banks, Fis and Other Organizations
Name
Masih Malik Chowdhury
Sumanta Pandit
Ahmed Kamal Khan Chowdhury
Biru Paksha Paul

30

Position

Organization

President

Institute of Chartartered Accountants (ICAB)

Chief Executive Officer

Holcim Cement Bangladesh

Managing Director

Prime Bank

Chief Economist

Bangladesh Bank

IDLC MONTHLY BUSINESS REVIEW

IDLC CSR NEWS


IDLC distributes over 3,500 blankets this winter l

IDLC has distributed over 3,500 blankets this winter across different areas of North Bengal, Southwestern Region and Chittagong. The distribution
was carried out by officials at IDLCs Bogra, Jessore, Khulna, Chittagong and Natore branches, together with IDLC clients and local NGOs.
Around 40 locations were covered this year, including Bogra, Gabtoli, Sherpur, Shariakandi, Nandigram, Shantahar, Noagaon, Mohadevpur,
Joypurhat, Jamalganj, Bibirpukur, Shahjahapur, Sirajganj, Nilphamari, Kishoreganj, Dinajpur, Birol, Setabjganj, Birgong, Fulbari, Syedpur, Rangpur
Sadar, Natore, Ishwardi, Chanchkoir, Rajshahi and Chapanababganj in North Bengal; Jessore, Khulna, Kushtia, Chuadanga, Jheinaidaha, Kaligonj
and Norail in the Southwestern Region; Chittagong Sadar; and Moksehdpur village in Gopalganj.
IDLC distributes blankets and warm clothes every year, helping the underprivileged section of the community in braving the bitter cold of winter.
It is part of IDLCs CSR commitment to give back to the community through capacity development projects and philanthropic contributions.

31

IDLC MONTHLY BUSINESS REVIEW

CAPITAL MARKET REVIEW


Last month of 2014 remained moribund where investors followed

were most focused in Pharmaceuticals while Fuel & Power and

a wait and see policy amid low turnover, while market remained

Engineering also caught investors eyes.

almost flat. Ahead of the year end, both institutional and retail
investors remained cautious and tried to minimize portfolio loss.

However, as both month-end as well as year-end was looming,

On the political landscape, uncertainty prevailed and there were a

investors became more defensive and in the latter half of the month

couple of nation-wide general strikes. The whole situation frightened

market lost a total of 13.7 points while turnover also bottomed to an

the investors, even more. Despite that, market moved ahead slightly

average of BDT 2.3 bn. Among the major sectors, Telecommunication

while average turnover was down by 47.9% in comparison to the last

(+13.0%) posted the highest return, followed by Cement (+8.8%)

month. Mini Cap (+6.1%) provided the best performance followed

and Miscellaneous (+7.9%). QSMDRYCELL (+30.5%) was the highest

by Large Cap (+5.3%) and Small Cap (3.5%). DSEX closed the month

gainer of the month followed by PREMIERLEA (+24.4%) and ALLTEX

advancing a mere 95.5 points at 4,864.9, while blue chip index DS30

(+23.9%). At the same time, BXPHARMA (-3.9%) captured the highest

gained a total of 43.0 points, closing at 1,803.1. By the end of the

turnover by the end of the month.

month, turnover averaged slightly above BDT 3.0 bn.


A several IPOs were approved during December. Bangladesh
The month observed a total of twenty trading sessions whereas

Securities and Exchange Commission (BSEC/Commission) approved

nine closed in positive. The first session started in green with strong

the IPO of Sajib Knitwear and Garments Ltd and Bangladesh Re-

turnover; however, initial enthusiasm faded away gradually. The

Rolling Mills Limited under fixed price method. Besides, Commission

prime index DSEX advanced a total of 109.2 points over the first

also approved the issuance of BDT 500.0 mn Cumulative Redeemable

half of the month where turnover averaged around BDT 3.6 bn. As

Preference Share of Union Capital Limited. A number of brokerages

Bangladesh is an oil importing country, a staggering 40.0% slump in

and individuals were also charged due to breach of regulatory

international oil price was well received by the investors. Investors

bindings.

Monthly Market Statistics l


Advance/Decline (December, 2014)

Index Movement (December, 2014)


Index Point

Change

% Change

YTD change

DSEX

4,865.0

95.53

2.0%

14.0%

DS30

1,803.1

43.00

2.4%

23.0%

DSES*

1,150.2

43.45

3.9%

22.0%

Top Ten Gainers List (December, 2014)


Gainers

30-Dec-14

30- Nov-14

All Category

Advanced

Declined

Unchanged

175

107

11

Top Ten Losers List (December, 2014)


% Change

Losers

30-Dec-14

30- Nov-14

% Change

QSMDRYCELL

71.8

55.0

30.5%

SONALIANSH

110.1

140.9

-21.9%

PREMIERLEA

10.2

8.2

24.4%

KEYACOSMET

23.3

28.5

-18.2%

ALLTEX

24.9

20.1

23.9%

JAMUNAOIL

205.9

250.0

-17.6%

JUTESPINN

53.0

43.1

23.0%

MPETROLEUM

211.0

254.2

-17.0%

SHYAMPSUG

8.7

7.1

22.5%

SAFKOSPINN

27.8

30.8

-9.7%

BEACONPHAR

18.0

14.8

21.6%

ICB1STNRB

20.9

23.1

-9.5%

1,425.1

1,180.0

20.8%

CVOPRL

506.5

559.7

-9.5%

ANWARGALV

40.2

33.4

20.4%

AFTABAUTO

67.2

74.1

-9.3%

MEGCONMILK

8.4

7.0

20.0%

SPCL

202.3

221.5

-8.7%

82.9

70.1

18.3%

NTC

697.5

760.0

-8.2%

BERGERPBL

SAPORTL

*% change includes post record date effects

32

IDLC MONTHLY BUSINESS REVIEW

Top Ten by Value (December, 2014)


Top Ten (Value)

30-Dec-14

BXPHARMA

30- Nov-14 % Change

58.7

61.10

-3.9%

2,022.8

258.5

251.90

2.6%

1,754.5

GP

361.9

318.70

13.6%

1,714.2

KEYACOSMET

23.3

28.50

-18.2%

1,658.4

SAPORTL

82.9

70.10

18.3%

1,621.0

123.0

107.40

14.5%

1,474.3

36.8

56.10

-34.4%

1,394.6

227.3

216.70

4.9%

1,310.2

WMSHIPYARD

52.9

60.50

-12.6%

1,283.7

BEXIMCO

36.4

39.10

-6.9%

1,151.5

HFL*
OLYMPIC

*% change includes post record date effects

Lowest P/E and Lowest P/BV ratio


Lowest P/E

USD in mn

DSE Turnover and DSEX

BDT in mn

Value

SQURPHARMA

LAFSURCEML

Market Capitalization

Lowest Price/NAV

SOUTHEASTB

5.9x

AIBL1STIMF

44.8%

TRUSTBANK

6.7x

MBL1STMF

44.8%

FAMILYTEX

6.7x

GREENDELMF

45.5%

UNITEDAIR

7.1x

DBH1STMF

45.9%

ABBANK

7.2x

PHPMF1

46.0%

ALARABANK

7.4x

POPULAR1MF

46.2%

ALLTEX

7.6x

EBLNRBMF

47.3%

IFIC

7.7x

1JANATAMF

48.3%

UCBL

7.8x

LRGLOBMF1

48.3%

MTB

7.8x

IFIC1STMF

48.7%

Market Cap Class wise Stock Movement

Top Ten Market Capitalization (December, 2014)


Top Ten Mkt Cap

BDT mn

% Change

GP

488.7

13.6%

BATBC

159.0

-3.5%

SQURPHARMA

143.3

2.6%

LAFSURCEML

142.8

14.5%

TITASGAS

78.8

4.0%

ICB

58.1

-5.6%

RENATA

43.4

1.5%

ISLAMIBANK

37.7

-4.3%

OLYMPIC

36.1

4.9%

MARICO

35.4

2.7%

Market Statistics (December, 2014)


Market Stat
Mcap (All)
Mcap (Equity)
Turnover

Unit

30-Dec-14

30- Nov-14

3,259.2
42.1

40.9

3.0%

Bn BDT

2,703.7

2,579.7

4.8%

34.9

33.3

4.8%

3,006.6

5,774.7

-47.9%

38.8

74.6

-47.9%

Mn BDT

3,164.4

% Change

Bn BDT

3.0%

Recent Corporate Declaration l


Company name
Eastern Cables Limited

AGM
Date

Record
date

26.02.15 05.01.15

SD

CD

Rights
10%

*SD = Stock Dividend **CD =Cash Dividend.

33

IDLC MONTHLY BUSINESS REVIEW

Sector Indicators (December, 2014) l


Sectoral Indicators
Sector

Value in BDT mn

% of Total Trade

Industry Cap

Forward PE

Trailing PE

93.1

3.1%

19.3%

23.0x

25.1x

13.03%

Bank

334.1

11.1%

15.7%

10.1x

6.4x

0.92%

Fuel & Power

377.8

12.6%

12.8%

12.0x

11.7x

0.71%

Pharmaceuticals & Chemicals

458.1

15.2%

12.7%

22.5x

23.2x

1.68%

Food & Allied

170.8

5.7%

8.1%

28.7x

28.0x

-2.06%

Cement

105.9

3.5%

7.6%

35.5x

32.8x

8.82%

NBFI

220.0

7.3%

5.7%

14.9x

14.0x

0.79%

Engineering

370.1

12.3%

4.4%

23.7x

25.9x

0.21%

Textile

332.3

11.1%

3.4%

16.9x

18.5x

2.47%

Miscellaneous

116.6

3.9%

2.6%

33.0x

37.4x

7.88%

Life Insurance

43.5

1.4%

2.2%

N/A

N/A

1.91%

Non Life Insurance

23.7

0.8%

1.5%

12.6x

13.0x

-1.19%

Travel & Leisure

34.2

1.1%

1.1%

15.4x

15.8x

1.35%

Ceramics

34.5

1.1%

0.9%

34.8x

36.8x

7.27%

Tannery

24.1

0.8%

0.9%

23.3x

21.1x

3.39%

127.5

4.2%

0.9%

24.0x

19.3x

11.81%

IT

82.5

2.7%

0.2%

19.2x

19.1x

7.92%

Paper & Printing

16.0

0.5%

0.1%

14.5x

12.7x

4.83%

4.3

0.1%

0.0%

N/A

N/A

-8.49%

37.1

1.2%

0.3

0.0%

3,006.6

100.0%

100.0%

17.2x

15.2x

Telecommunication

Services & Real Estate

Jute
Mutual Funds
Corporate Bond

Price/BV

Sector Performance
December

Weekly (Dec 21 - Dec 24, 2014) Mutual Funds Update l


Following table exhibits the Open-End Mutual Funds (7) in order of YTD change in NAV.
Sl
No

Initial Fund Re-Purchase


Size (BDT mn)
Price
50000
108.0

Selling
Price
111.0

Effective
Date*
28-Dec-14

Bangladesh Fund

107.7

% Change in NAV
from last week
-0.2%

Prime Financial First Unit Fund**

200

99.0

102.0

31-Dec-14

112.9

0.5%

3.3%

PAMC

ICB AMCL Converted First Unit


Fund***

500

11.1

11.4

28-Dec-14

11.1

0.0%

0.0%

ICB AMCL

ICB AMCL Unit Fund

100

256.0

261.0

28-Dec-14

255.8

0.0%

0.0%

ICB AMCL

MTB Unit Fund

1000

10.1

10.4

28-Dec-14

10.5

-0.5%

-2.0%

ACAML

ICB AMCL Pension Holders' Unit Fund

100

205.0

210.0

28-Dec-14

204.8

0.0%

-5.9%

ICB AMCL

Shandhani Life Unit Fund****

500

N/A

N/A

N/A

N/A

N/A

N/A

Alif AMCL

7
*

**
***

Name of Mutual Funds

NAV

YTD Change
Fund
in NAV
Manager
5.9%
ICB AMCL

For ICB AMCL and ACAML, effective date is the date from which repurchase price, selling price and NAV are applicable.
For PAMC and Alif AMCL, effective date is the date until which repurchase price, selling price and NAV are applicable.
Sale and repurchase of Prime Financial First Unit Fund remains closed each Thursday.
The fund is initiated in February, 2014

Weekly Change (%) of NAV of Closed-end Mutual Funds in 2014 l


Following table exhibits the Closed-End Mutual Funds (41) in order of YTD change in NAV based on latest NAV/unit as on December 24 2014.
On the basis of Price/NAV, 40 Mutual Funds out of 41 were traded below their respective NAV. GREENDELMF and AIBL1STIMF had the lowest
Price/NAV and both were traded at 56% discount. 1STPRIMFMF was traded at higher multiple than others, 43% premium. Last week, NAV of
27 Mutual Funds decreased and 14 Mutual Funds increased. On the other hand, price of 18 Mutual Funds decreased, 15 increased while 8
remained unchanged. On an average, price of Mutual Funds increased by 0.53% while NAV decreased by 0.23% from previous week, against
a 0.68% decline in DSEX over the week. In terms of price changes, 24 Mutual Funds outperformed DSEX over last week. Among all the asset
managers, RACE outperformed most in terms of change in NAV of its funds, adding an additional 0.86% on an average over Mutual Funds
managed by it.

34

IDLC MONTHLY BUSINESS REVIEW

DSE Code

Name of Mutual Funds

Price (June Latest NAV/ Price/


26, 2014)
unit
NAV

%Change of %Change in
YTD Change Performance against "Redemption
Price from NAV from last
Year"
in NAV
DSEX (YTD)
last week
week

"Fund
Manager"

3RDICB

3rd ICB M.F.

236.0

322.3 73.2%

0.4%

-2.3%

63.2%

Outperformed

2014

ICB

1STICB

1st ICB M.F.

1125.5

1516.4 74.2%

2.4%

-1.3%

47.7%

Outperformed

2014

ICB

5THICB

5th ICB M.F.

190.0

246.9 77.0%

0.0%

-0.5%

46.1%

Outperformed

2014

ICB

2NDICB

2nd ICB M.F.

278.0

294.9 94.3%

-1.2%

-0.7%

42.9%

Outperformed

2014

ICB

8THICB

8th ICB M.F.

64.1

72.6

88.3%

-1.8%

-0.3%

38.2%

Outperformed

2014

ICB

4THICB

4th ICB M.F.

209.0

283.9

73.6%

-4.4%

-0.9%

37.1%

Outperformed

2014

ICB

6THICB

6th ICB M.F.

56.1

60.8

92.2%

-1.6%

0.0%

31.8%

Outperformed

2014

ICB

7THICB

7th ICB M.F.

91.9

108.5 84.7%

-0.8%

-0.4%

26.9%

Outperformed

2014

ICB

GRAMEEN1

Grameen Mutual Fund One

22.6

30.3

74.5%

-0.4%

0.3%

26.2%

Outperformed

2015

AIMS

GRAMEENS2 Grameen One : Scheme Two

12.0

18.6

64.6%

0.0%

0.1%

24.6%

Outperformed

2023

AIMS

SEBL1STMF

7.4

12.2

60.6%

0.0%

0.2%

21.9%

Outperformed

2021

VIPB

Southeast Bank 1st Mutual Fund

PRIME1ICBA

Prime Bank 1st ICB AMCL Mutual Fund

4.3

8.4

51.1%

-2.3%

-0.5%

21.3%

Outperformed

2019

ICB AMCL

IFILISLMF1

IFIL Islamic Mutual Fund-1

5.5

9.7

56.8%

1.9%

-1.2%

21.3%

Outperformed

2019

ICB AMCL

ICBISLAMIC

ICB AMCL Islamic Mutual Fund

15.1

18.1

83.3%

-1.9%

-1.4%

20.7%

Outperformed

2014

ICB AMCL

NLI1STMF

NLI First Mutual Fund

7.8

12.5

62.3%

1.3%

0.1%

20.6%

Outperformed

2022

VIPB

PF1STMF

Phoenix Finance 1st Mutual Fund

4.4

8.0

55.3%

-2.2%

-0.9%

20.4%

Outperformed

2019

ICB AMCL

ICBEPMF1S1 ICB Employees Provident MF 1: Scheme 1

4.5

8.3

54.2%

-2.2%

-0.7%

19.8%

Outperformed

2019

ICB AMCL

1JANATAMF

First Janata Bank Mutual Fund

5.1

10.6

48.3%

-1.9%

1.1%

18.3%

Outperformed

2020

RACE

POPULAR1MF Popular Life First Mutual Fund

4.9

10.8

45.3%

0.0%

1.0%

16.2%

Outperformed

2020

RACE

PHPMF1

4.6

10.2

45.1%

-2.1%

1.7%

15.6%

Outperformed

2020

RACE

ICBAMCL2ND ICB AMCL Second Mutual Fund

4.7

8.8

53.3%

4.4%

-0.8%

15.3%

Outperformed

2019

ICB AMCL

AIMS1STMF

Aims 1st M.F.

27.8

36.5

76.2%

6.1%

-0.2%

15.3%

Outperformed

2015

AIMS

ICB3RDNRB

ICB AMCL Third NRB Mutual Fund

4.3

7.8

55.0%

-2.3%

-0.9%

15.0%

Outperformed

2019

ICB AMCL

PHP First Mutual Fund

ABB1STMF

AB Bank 1ST Mutual Fund

6.0

11.8

51.0%

1.7%

0.1%

15.0%

Outperformed

2022

RACE

RELIANCE1

RELIANCE ONE MUTUAL FUND

7.0

12.4

56.4%

-1.4%

-0.4%

13.7%

Outperformed

2021

AIMS

4.0%

1.6%

13.3%

Outperformed

2019

RACE

IFIC1STMF

IFIC Bank 1st Mutual Fund

5.2

10.7

48.7%

TRUSTB1MF

Trust Bank 1st Mutual Fund

5.3

10.6

49.8%

1.9%

1.3%

13.0%

Underperformed

2019

RACE

ICB2NDNRB

ICB AMCL 2nd NRB Mutual Fund

7.8

11.1

70.1%

-1.3%

-1.0%

12.9%

Underperformed

2018

ICB AMCL

ICB1STNRB

ICB AMCL 1st NRB Mutual Fund

21.0

24.9

84.4%

3.4%

-1.0%

12.6%

Underperformed

2017

ICB AMCL

EBL1STMF

EBL First Mutual Fund

5.2

10.1

51.4%

0.0%

0.9%

11.2%

Underperformed

2019

RACE

0.3%

10.4%

Underperformed

2022

RACE

FBFIF

First Bangladesh Fixed Income Fund

6.8

10.8

63.3%

6.2%

EBLNRBMF

EBL NRB MUTUAL FUND

4.7

10.4

45.4%

6.8%

1.0%

9.8%

Underperformed

2021

RACE

ICBSONALI1

ICB AMCL Sonali Bank Limited 1st Mutual Fund

6.3

9.8

64.0%

0.0%

-0.6%

9.1%

Underperformed

2023

ICB AMCL

EXIM1STMF

EXIM Bank 1st Mutual Fund

6.6

10.8

61.1% 11.9%

0.7%

8.7%

Underperformed

2023

RACE

GREENDELMF Green Delta Mutual Fund

4.4

10.1

43.5%

-2.2%

-0.6%

7.2%

Underperformed

2020

LR Global

AIBL1STIMF

AIBL 1st Islamic Mutual Fund

4.4

10.1

43.8%

-4.3%

-0.4%

6.0%

Underperformed

2021

LR Global

MBL1STMF

MBL 1st Mutual Fund

4.4

10.0

43.8%

4.8%

-0.6%

4.6%

Underperformed

2021

LR Global

NCCBLMF1

NCC Bank Mutual Fund 1

5.6

10.5

53.3%

-3.4%

-0.2%

3.4%

Underperformed

2022

LR Global

DBH1STMF

DBH First Mutual Fund

4.5

10.0

44.9%

0.0%

-0.5%

2.2%

Underperformed

2019

LR Global

1STPRIMFMF Prime Finance First Mutual Fund

16.6

11.6

143.4%

0.0%

-1.1%

1.3%

Underperformed

2015

ICB AMCL

LRGLOBMF1 LR Global Bangladesh Mutual Fund One

4.7

10.4

45.4%

2.2%

-0.3%

-2.1%

Underperformed

2021

LR Global

YTD Change in DSEX

13.1%

35

IDLC MONTHLY BUSINESS REVIEW

INVESTMENT INSIGHT: Bata Shoe Company (Bangladesh) Ltd.


Bata Shoe Company (Bangladesh) Ltd. (DSE : BATASHOE)
Current Price (January 1, 2015)

1,165.00

Total Number of Share (mn)

13.68

Free Float (%)

30.00%

Annualized PE BATASHOE1

22.00x

Trailing PE BATASHOE 1

19.55x

Forward PE Tannery

23.20X

Based on annualized earnings of the latest declared quarter

Financials (BDT mn)

2013

2014

Revenue
Gross profit
Operating profit
Net profit after tax
Total assets
Total equity

7,385
2,666
1,006
672
3,980
1,854

7,879
3,021
1,207
813
4,610
2,257

9M, 20142
(Unaudited)
6,099
2,398
812
543
4,792
2,653

Accounting year Jan-Dec

9M, 2014

Growth (%)

2013

2014

Net revenues

11%

7%

2%

Net profit after tax

16%

21%

0%

Per Share (BDT)

2013

2014

9M, 2014
(unaudited)

Restated EPS
49.12
Restated Book Value per Share 135.53

59.44
164.96

39.72
193.95

Others (%)

2012

2013

Gross profit margin


Operating profit margin
Net profit margin
ROA
ROE
Stock Dividend
Cash Dividend

36%
14%
9%
18%
39%
275%

38%
15%
10%
19%
40%
300%

(unaudited)

9M, 2014
(unaudited)
39%
13%
9%
-

Source: Financial Statements of BATASHOE and APEXFOOT; Research, IDLC


Investments Limited.

Terminologies
Free Float: % of total shares not owned by Sponsors/ Directors, and Govt.
Forward PE: Based on Annualized Earnings of the latest declared quarter
Trailing PE: Based on Latest 12 Months Earnings

Company Profile
Bata Shoe Company (Bangladesh) Limited (DSE: BATASHOE) is
the largest company in the local footwear and leather accessories
market. The company is operating since 1962 .The company has two
production units in Tongi and Dhamrai, with a capacity to produce
36 mn pair of shoes per annum.
BATASHOE has an exhaustive delivery channel made of around 280
retail stores and 1,000 dealers and wholesalers. BATASHOE has recently
entered into collaboration with Jita Social Business (formerly CARE
Bangladesh) to make its products reach door to door in rural areas.

Key Revenue Drivers & Company Insight


BATASHOE primarily produces and markets shoes from processed
leather and sale it to the local market. It sources basic raw material
leather from tanneries in Hazaribagh. Other accessories and synthetic
raw materials are imported from abroad. The final products are sold
mostly to the local market, while an insignificant portion is exported.
The company is also experimenting with branded apparel.
It produced around 30 mn shoes in 2013, generating a top line of BDT
7.5 bn. Majority of the revenue came from its local shoe business, while
its export business and apparel products complemented marginally.

Financial Performance
Revenue grew by 7% in 2013, compared to 11% growth in 2012.
With 2% growth in volume, the revenue growth has been resulted
from higher average price. Margin improvement continued in 2013,
with Gross, Operating and Net Profit margins reaching 38%, 15% and
10%, respectively.
During last 3 years, BATASHOE with 12% revenue CAGR
underperformed APEXFOOT having 16% CAGR in revenue. However,
NPAT grew at 14% for BATASHOE, compared to 5% for APEXFOOT,
during the same period.
Recently, the company has reported consolidated net profit after
tax (excluding non-controlling interests) of Tk. 543.43 million with
consolidated EPS of Tk. 39.72 for the period of nine months (Jan14
to Sep14) as against Tk. 541.14 million and Tk. 39.56 respectively for
the same period of the previous year.

DISCLAIMER
This Document has been prepared and issued by IDLC Finance Limited on the basis of the public information available in the market, internally developed
data and other sources believed to be reliable. Whilst all reasonable care has been taken to ensure that the facts & information stated in the Document are
accurate as on the date mentioned herein. Neither IDLC Finance Limited nor any of its director, shareholder, and member of the management or employee
represents or warrants expressly or impliedly that the information or data of the sources used in the Document are genuine, accurate, complete, authentic
and correct. Moreover, none of the director, shareholder, and member of the management or employee in any way is responsible about the genuineness,
accuracy, completeness, authenticity and correctness of the contents of the sources that are publicly available to prepare the Document. It does not solicit
any action based on the materials contained herein and should not be construed as an offer or solicitation to buy sell or subscribe to any security. If any
person takes any action relying on this Document, shall be responsible solely by himself/herself/themselves for the consequences thereof and any claim or
demand for such consequences shall be rejected by IDLC Finance Limited or by any court of law.

36

38