JMI investing Tk 620cr to build LPG plant | The Daily Star
12:00 AM, March 01, 2019 / LAST MODIFIED: 12:06 AM, March 01, 2019

JMI investing Tk 620cr to build LPG plant

JMI Group, a manufacturer of medical devices, is set to invest Tk 620 crore to build an LPG (liquefied petroleum gas) plant at Sitakunda in Chattogram to supply the energy to households.

“We will import and distribute LPG through cylinders and bottles manufactured by us,” said Md Abdur Razzaq, managing director of the group.

The commercial operation of the plant will begin in May.

Of the project cost, Tk 380 crore has already been raised through a syndicated financing by four banks and two non-bank financial institutions, according to the project proposal.

Mutual Trust Bank (MTB) was the lead arranger of the loan and Agrani Bank the co-arranger.

The LPG project consists of four plants, including LPG bottling, LPG cylinder, auto tank, and valve and bung. Auto tank is the LPG cylinder for vehicles whereas valve and bung is the kit used for cylinder.

The bottling plant will have a storage capacity of 6,000 tonnes. The production capacity of LPG cylinder plant will be 823,000 pieces per year. JMI Group will manufacture auto tanks with an annual production capacity of 524,000 pieces, according to the project proposal.

The entry of JMI into the country's LPG scene came at a time when the demand for the energy is increasing fast due to the shortage of natural gas. The market is growing at 10 to 15 percent annually, according to a market analysis of MTB.

In 2018, the net industry supply of LPG was 6.21 lakh tonnes against the demand of 10.74 lakh tonnes. The demand-supply gap has been widening every year because of the rising consumption.

The government is giving priority to LPG projects to minimise the pressure on natural gas. A total of 55 LPG projects have received primary licence, of which 18 are in operations, according to the bank.

A staggering 95 percent market share belongs to the private sector with only four companies holding 78 percent share. Bashundhara LP Gas is leading the pack with 28 percent share, according to the analysis.

Some 45 lakh cylinders were injected in 2016 and 2017.

“Many companies are in pipeline to import LPG to supply cooking gas to households," said Anis A Khan, managing director of MTB.

Although JMI Group is largely involved in the health sector, it plans to invest in the energy sector as gas shortage is a big problem for the economy, Razzaq said.

The group had suffered badly because of the gas and electricity shortage, prompting it to take a plan to build its own gas plant, he said.

Some existing LPG companies are not doing well because of high transportation costs, so JMI Group is setting up the plant in Chattogram to reduce the cost. Most plants are located in Mongla, Razzaq added.

The group started its journey in 1999 by manufacturing syringe and other medical devices under the name of JMI Syringes & Medical Devices Ltd.

Later, it expanded into pharma-ceuticals, kidney dialysis, printing and packaging, construction, and industrial gas.

The group's turnover was Tk 710 crore in 2017 and net profit was Tk 37.46 crore, according to the project proposal.

Listed on the Dhaka Stock Exchange, shares of JMI Syringes traded Tk 365.40 on February 27, up 0.36 percent from the previous session.

It declared 30 percent cash dividend in the year that ended in June 2018.

Stay updated on the go with The Daily Star Android & iOS News App. Click here to download it for your device.

Grameenphone:
Type START <space> BR and send SMS it to 22222

Robi:
Type START <space> BR and send SMS it to 2222


Banglalink:
Type START <space> BR and send SMS it to 2225

Leave your comments

Top News

Top News

Top