BM Special Report

A fertilizer sack-producing company, ‘Miracle Industries Limited, previously owned by former State Minister for Home Lutfozzaman Babar and his family members, is showing miracles in the market, although it has numerous hurdles for going full operation.

Since the DSE announced the share transfer information on August 21, 2023, the company’s shares have started to become valuable, with its share price jumping by 60 percent in the last 15 trading sessions until Tuesday, as per the DSE data.

Although the share transfer deal stuck three years ago, the new management of Mehmood Equities Limited’ recently announced that the company will go into operation on September 30, 2023.

‘Mehmood Equities Limited, a UK registered equity company, is owned by legendary chartered accountant Dr. AKM Sahabub Alam, who bought the 10 percent share (35,22,900 shares) from Lutfozzaman Babar and his other family members, as well as took responsibility for the huge debt liabilities of Shahjalal Islami Bank and some other personal debtors.

At present, Miracle Industries’ board has seven directors, including a chairman nominated by the BCIC, TSP Complex Limited, and Chhatak Cement Company, which hold 5.28%, 8.84%, and 5.88% of the shares, respectively.

The company faced its first setback in 2008 when the army-backed caretaker government arrested Mr. Babar and scrapped a deal with Bangladesh Chemical Industries Corporation (BCIC) under which it bought polypropylene plastic bags for BCIC from Miracle Industries Ltd. under a direct purchase agreement.

The new management has been continuing to pay salaries to most of the employees and workers of the factory located in Gilarchala, Gila Beraid, Sreepur, and Gazipur.

But the company will not be able to import the necessary raw materials required for producing propylene plastic bags as it has a debt burden of around Tk 60 crore from Shahjalal Islami Bank, sources said.

Mehmood Equities Limited already paid Tk 6 crore to the bank, but the bank management did not manage to regularize the company despite the bank’s mortgage on the entire property of the factory.

When asked, newly appointed Company Secretary Omar Faruk FCMA told Business Mirror that the hurdle for the company is to resume the agreement with the BCIC so that they can further buy a portion of the bag from Miracle.

“We are fully ready to go for operation by September 30, 2023, with around 2.5 million bags a day. But what we necessarily need is that the BCIC resume their purchase agreement, Omar Faruk, FCMA, said.

The company management placed their demand at a recent board meeting of the BCIC that the corporation buy a total of 3 crore bags from Miracle out of their annual demand of 8 crore bags, where BCIC Chairman MD Saidur Rahman was present.

The company recently nominated Dr. AKM Sahabub Alam as Miracle Industries’ managing director; Showkat Mehmood as director; and Nayan Mehmood as director, the company said through the DSE disclosure.

Miracle Industries has two groups of shareholders, with the BCIC in Group A holding 20 percent ownership in the company and the four shareholders in Group B holding a 10 percent stake, as per the original shareholders’ agreement.

Founded in 1995 as the Bangladesh Chemical Industries Corporation (BCIC)-Miracle Industries joint venture, the company used to produce and export a complete range of polypropylene woven sacks and value-added FIBCs (Flexible Intermediate Bulk Containers).

According to its latest annual report for 2017-18, Miracle Industries’ permanent workers were 454.

In the fiscal year 2017–2018, the listed firm produced 7.3 lakh pieces of various types of bags of unit-l and 1.55 crore pieces of WPP bags of unit-2.

According to the Dhaka Stock Exchange data, the company has a paid-up capital of Tk35 crore and belongs to the bourse’s category B.

Sponsor-directors held 30 percent of the company’s total shares, while general investors owned 70 percent as of May 31 this year.

The plastic packaging manufacturer paid only a 1 percent cash dividend to its shareholders for the fiscal year 2019–20. In the last three fiscal years, the company has not published any financial statements. In FY20, it incurred a loss of Tk 13 crore and posted a loss per share of Tk 3.62.

It was a profitable company until the fiscal year 2018–19. In that year, its revenue was Tk 60 crore and its net profit was Tk 0.77 crore. According to its financials, Miracle earned its highest-ever revenue and profit in FY17.

But in FY20, it incurred a record loss of Tk12 crore and also witnessed a record fall in revenue by 85% to Tk9 crore due to a conflict that arose between Group A and Group B shareholders.

The company could not conduct its annual general meeting in FY20, and the company’s production remained halted until 2022.

It exported products until FY19 and earned Tk 23 crore that year. Since then, it has not been able to earn from the export market.

Miracle Industries could not disclose any updates about its business situation and financials after the July–March period of 2021.