Stocks with high exposure to Bangladesh. What stocks do you own?

adminAugust 10, 2024

Increased competition has led to a fierce battle to remain competitive in the business world, forcing companies to explore various ventures. Now, with globalization, companies around the world are looking for potential to set up factories in specific regions. Despite the growth prospects, some countries are looking to expand and diversify their businesses to limit economic downturn.

This has led to growth across countries in a number of ways. One of them is Bangladesh, which has witnessed growth and is strategically important to many Indian companies. In this article, we will look at some of the Indian companies that have exposure to Bangladesh.

Why do Indian companies prefer Bangladesh? What are the factors involved in diversification?

Indian companies prefer Bangladesh because of its business environment. Low labor costs can lead many Indian companies to look for cost-effective manufacturing options. Bangladesh also offers a growing market with increasing consumer demand, which provides opportunities for Indian companies to expand and generate revenue.

The geographical location of Bangladesh and India makes logistics and supply chain management easier. Most companies will benefit from lower transportation costs and shorter delivery times. These benefits will increase operational efficiency and strengthen business ties between the two countries.

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These advantages make it attractive for Indian companies to set up operations there. The supportive regulatory framework helps companies navigate the local market with ease.

Bangladesh’s manufacturing sector is improving compared to India’s GDP, which is much higher. Women’s contribution to the national economy is another positive factor for higher growth and is associated with higher consumption.

What have been the recent events in Bangladesh’s political turmoil that have led to instability?

Prime Minister Sheikh Hasina’s Awami League (AL) party won Bangladesh’s recent elections in January 2024. She won the elections with a 74% margin of parliamentary seats, and Hasina began her fifth term as prime minister.

There have been clashes with the opposition. There have been uprisings over a job quota bill that would have restricted 56% of quotas to Bangladeshi freedom fighters, women, families from certain groups and heirs from backward areas.

This led to violent protests by students across the country, fueled by a variety of factors. In August 2024, Hasina resigned and left the country due to unrest and public demands.

This situation threatens Bangladesh’s internal stability, international relations and economy, and highlights the urgent need for reforms to restore confidence in the system.

Presence, Development and Exposure of Indian Enterprises in Bangladesh

VIP Industry

VIP Industry We are engaged in manufacturing luggage headquartered in India. VIP’s main segment is marketing and manufacturing of luggage, luggage and accessories. Geographically, most of the revenue is derived from India.

VIP deals in luggage and carries various brands such as VIP Bags, Carlton, Aristocrat, Skybags, Caprese, Alfa, etc. Among them, they sell backpacks, trolleys, duffel bags, backpacks, travel accessories, laptop bags, etc.

The company owns 10 manufacturing facilities, two of which are in India and eight in Bangladesh. VIP recently shared in its annual report FY24 that it has restructured its Bangladesh facility due to the declining demand for luggage. In a recent investor presentation, the company said it has restricted fresh purchases of raw materials and is closely monitoring the situation.

VIP has four subsidiaries in Bangladesh. VIP Luggage Pvt Ltd had a turnover of Rs 406.32 crore and a net asset value of Rs 46.56 crore. VIP Industries BD Manufacturing Pvt Ltd had a turnover of Rs 178.57 crore and a net loss of Rs 1.04 crore. VIP Accessories BD Pvt Ltd had a turnover of Rs 28.59 crore and a net asset value of Rs 5.96 crore in FY24.

Mariko

Mariko is a marketer and manufacturer of health care, food and skin care. Its portfolio consists of hair serums, coconut oil, edible oils, value-added hair oils, body lotions, anti-aging creams, etc. They manufacture and market their products under the brands Nihar Uttam, Hair Code, Black Chic, Caivil, Revive, Livon, Parachute, Saffola, Set Wet, etc.

They sell their products through e-commerce, retail stores and modern trade. Marico exports its products to the Middle East, South Africa, Egypt, Malaysia, Bangladesh and Vietnam. They are headquartered in Mumbai.

The company has subsidiaries Marico Bangladesh Limited and Marico Bangladesh Industries Limited. Marico generates revenue from Bangladesh, which contributed 11.42% in FY24, down 4.83% YoY.

The company’s revenue from product sales in FY24 was 50.95% from food products, 21.16% from hair oils, 16.50% from personal care and the remaining 11.39% from others in FY24. Bangladesh’s contribution to international business in FY24 was 44% and the company plans to reduce its exposure to 40% by FY27.

Adani Power

Adani Power It is engaged in the operation and maintenance of solar and thermal power projects. In India, APL is one of the largest private sector independent power producers (IPPs). Through long-term PPAs with state power distribution companies, the company supplies electricity to central and state utilities.

The company’s interests are in various plants under development or in the development stage. They operate in Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra, Karnataka and Rajasthan in India. The company’s head office is in Ahmedabad.

Adani Power supplies 100% of its power generation to Bangladesh from the Godda Ultra Super Critical Thermal Power Plant. In 2017, APL signed a PPA with the Bangladesh Power Board to supply 1,496 MW from Godda.

The plant belongs to Adani Power Jharkhand Limited and recorded a total revenue of Rs 7,515 crore with a PBT of Rs 1,242 crore in FY24. The company’s electricity generation contributed 10.49 per cent to power exports and 14.64 per cent to exports, based on total revenue.