Local motorcycle maker Runner Automobiles has joined hands with Bajaj Auto, a global market leader based in India, to set up a Tk 300 crore manufacturing plant for CNG and LPG-run three-wheelers in Mymensingh.
"We want to contribute towards the development of Bangladesh's automobile industry by providing safe, high quality vehicles to our customers at an affordable price," said Reazul Chowdhury, managing director and CEO of Runner Automobiles.
The company, which recently got listed with the country's bourses, plans to finish development of the new state-of-the-art facility within 12 to 15 months.
On the plant's production capacity, Chowdhury said, "We have just signed the contract and are working on some details."
Runner always keeps the needs of the present and future in mind, so there is scope for operations to expand, he added.
Runner's board of directors gave the nod to get into this agreement, the specifics of which were disclosed on the Dhaka Stock Exchange (DSE) website yesterday.
Under the agreement, Runner will manufacture and distribute Bajaj RE 4S three-wheelers in Bangladesh.
It will take necessary technical support from Bajaj Auto for localisation of parts and components, assembling and manufacturing of vehicles, the disclosure read.
"This will be the first ever international three-wheeler manufacturing plant to be set up in Bangladesh," it added.
"Bajaj's line of three-wheelers are the market leaders in Bangladesh and so, our objective is not so much about grabbing market share but to expand it instead," Chowdhury said.
In answer to a query on the sector's potential, the managing director said it was very difficult to estimate the current market size.
"However, we see a good prospect for safe and affordable three-wheel passenger and cargo vehicles in the country thanks to the growing economy," he added.
To set up the international standard manufacturing plant, Runner, with a reserve and surplus fund of Tk 391 crore, will need to invest Tk 300 crore, 30 per cent of which will be funded through equity while the rest will come from debt financing.
The company went public on May 21, 2019, raising a Tk 100 crore fund from the stock market which will be a part of the equity finance for this project.
As of yesterday, the company's shares rose by 0.51 per cent to trade at Tk 59.50 at the DSE.
Runner, with a paid-up capital of Tk 113 crore, provided 10 per cent cash and 5 per cent stock dividends for the year that ended on June 31, 2019.
This project is a very important and crucial step towards expanding Bangladesh's automobile manufacturing capabilities while also developing local expertise, including vendors, said Hafizur Rahman Khan, chairman of Runner Automobiles.
This initiative is in line with the government's vision of making the light engineering sector a top priority, he added.
Bangladesh depends on imports to meet its demand for three-wheelers and so, if the manufacturing plant is set up, the price of such vehicles will be reduced, the company's officials hoped.
Runner Automobiles has played a pioneering role in the local manufacture of motorcycles. Besides, it has also been working to develop and promote local vendors to produce parts and motorcycle components in the country.