Quiet develops the club of profit makers Tk500cr
Grameenphone burst into the country’s nascent mobile phone market in 1997 and took the market lead within a few years.
In just 12 years, the Telenor joint venture became the first publicly traded company to report an annual profit of over Tk 500 crore as it successfully entered the market and continued to dominate the industry.
This was made possible by the policy of the government of the day to open up the telecommunications sector to competition from the private sector, which facilitated the national penetration of cellphones at the time and the Internet revolution today.
Soon, the telecommunications giant was joined by a dozen listed companies from various industries – including pharmaceuticals, banking, technology, telecommunications, power generation and tobacco – in the 500 million club. Tk of annual profits. Five of them have already crossed the 1,000 crore Tk mark.
But the journey was not the same for everyone.
For tobacco multinational British American Tobacco (BAT), it took 65 years of its trip to this country to earn Tk 500 crore in annual profit for the first time in 2014, as it increased with tobacco consumption and with its edges has gradually captured more market share from competitors.
Local businesses now dominate the table, with the high-tech manufacturing and energy sectors doing wonders at the fastest pace, aided by political support from the government, the vision of entrepreneurs and of course the boom in the market. .
The scenario reflects a strong decade for the private sector which represents 81% of the country’s economy.
Analysts predict that the Tk500 crore profit club could have 100 publicly traded members by the end of the decade, while many more in the fast-moving consumer goods (FMCG) and textiles sectors are not. accounted for due to non-registration.
Beximco Limited, a local conglomerate that began its journey as a commodities trading company soon after the country’s independence, achieved annual turnover of Tk 500 crore in 2010 following several mergers of sister and higher income entities.
After witnessing declining profits, the conglomerate has rebounded to the Tk500 crore profit stage this year as all of its businesses including textiles and IT earn more and the pandemic has helped it to earn a lot from exports of personal protective equipment.
Beximco Pharmaceuticals, one of the flagship of the country’s pharmaceutical industry, also joined the club this year.
Thanks to good government policy four decades ago, which helped the country become self-sufficient in drugs, as major companies export their drugs around the world, including to the strictest markets like the United States and Europe.
Square Pharmaceuticals, which started with a small base in 1964, is now the industry leader and has also been part of the Giants Club since 2015. Through continued growth, the company’s annual profit has increased to Tk 1,594 crore. This year.
Renata, the descendant of Pfizer Bangladesh, is another story of growth. Bangladeshi entrepreneurs placed the drugmaker on the list of top profit makers this year, following continued business growth each year.
The company was making around Tk 10 crore in net annual profits in the early 2000s.
All of these companies took decades to develop, more or less in step with the growth of their industry, and gradually increased their investments for more capacity.
Fastest take-off in the last decade
The fastest take-off appears to have taken place in the last decade, even more in the areas of power generation and high-tech manufacturing since the government facilitated the sectors to meet the growing needs of the economy and population.
For example, United Power Generation and Distribution Ltd, which in 2007 began supplying quality electricity directly to factories in the export processing zones of Dhaka and Chattogram for a higher profit margin, is currently the local listed company paying the highest dividend.
In addition to the unique business model of its two independent commercial power plants, United Power has amalgamated several of its sister power generating entities over the years and achieved its goal of Tk 500 crore in 2019 and now earns over 1,000. crore of Tk.
Summit Power, which started operations in 1997, as soon as the government adopted the policy of private sector power generation, has proven to be the largest power producer in the country as it has won numerous contracts for production and supply of electricity with the government.
Merging new power-generating companies while securing the necessary return on investment, Summit Power entered the Tk500 crore profit club in 2019 and recorded more profits this year.
The fastest rise has been that of electronics and home appliance giant Walton Hi-Tech Industries Ltd.
Starting in 2008 with a mere capital of Tk 10 million, it has significantly gained the local market for refrigerators, television and other electronic products as a result of supporting government policies aimed at boosting localization of manufacturing. high technology.
Widely beating foreign brands in the local market of a rapidly growing middle class with their growing purchasing power, Walton now aims to be a leading global player in electronics.
After exporting refrigerators by a lakh, winning contracts for more and more bulk exports of a wide range of products and electronic equipment such as compressors, employing local and global talents in its new offices abroad, the company appears to be on track to achieve ambition.
As the size of the national economy grows faster, investments, trade finance, savings and borrowing – all grow faster and the country’s banks are also emerging as big sources of profit.
However, high provisioning against overdue loans and portfolio investment risks over a decade has not helped them maintain earnings consistency.
National Bank, having increased its paid-up capital more than any other in the industry, posted its first annual profit of Tk 500 crore in 2011 and slipped below that level in subsequent years.
Islami Bank Bangladesh Ltd, the country’s largest private sector bank, joined the club in 2018 but fell again.
Both banks have hovered around the 500 crore profit mark in recent years.
Dutch-Bangla Bank Ltd, which started its journey as a joint venture between local and Dutch entrepreneurs in 1996, made its first annual profit of Tk 500 crore in 2020.
With the construction sector booming in the country, the leading steelmaker BSRM Ltd is also knocking on the door of the elite club. The publicly traded company which started operations in 1960 has posted profits of Tk 497 million this year.
More than 100 more in preparation
Asset manager Shahidul Islam, former president of CFA Society Bangladesh, estimates the number of Bangladeshi companies making Tk 500 crore in annual profit is already well above the official figure, as very few large companies are listed. on the stock exchange to disclose their business data publicly.
For example, in the pharmaceutical industry, two-thirds of the top ten companies are private while most of the FMCG giants are still a long way from the stock market. In addition, the largest textile exporters operate as unlisted companies.
Shahidul Islam, Managing Director and CEO of VIPB Asset Management, also predicts that the number of companies listed on Tk 500 crore will cross 100 even before the end of this decade, as many listed companies are growing from from their existing base of several hundred Taka crore. annual profits as well as stock exchanges are expected to attract large non-public companies in the coming days.
“The time it took for a business to earn its first Tk500 crore in annual profit will be less than a decade for its next Tk500 crore if it just grows in line with the economy each year.” , did he declare.
FMCGs, banking, building materials and technology would be the main sectors to produce listed companies making gigantic profits, he added.
He also estimates that the banking industry, after some consolidation, will have many companies listed in the Tk500 crore earnings list.
“Tomorrow we will be talking about 1,000 to 1,500 crore Tk,” he added.