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Loss-making drug manufacturer Indo-Bangla Pharmaceuticals has announced a plan to export medicines to Afghanistan for what it claims is to overcome difficulties to access dollars to import raw materials.
If the plan is translated into action, Afghanistan will be the first export destination of products made by Indo-Bangla Pharmaceuticals.
According to a stock exchange filing on Wednesday, the company's board of directors had already approved the signing of an agreement with a firm based in Afghanistan. When contacted by the FE correspondent, company secretary Mohi Uddin said the deal would likely be signed next week.
Meanwhile, in the first nine months of FY25, the company's revenue plunged 53 per cent year-on-year to Tk 76.92 million and loss escalated nearly 35 per cent year-on-year to Tk 19.7 million.
Listed in 2018, annual profit of the company had been on the decline since FY21 before it went into the red.
It saw its revenue fall from Tk 374.5?million in FY23 to Tk 176.6?million in FY24. Indo-Bangla Pharma endured a loss of Tk 40.98?million in FY24 as opposed to a profit of Tk 8.41?million gained the year before.
The company secretary said the business performance was poor because of the company's inability to open Letters of Credit at First Security Islami Bank (FSIB), the bank with which the drug maker had been maintaining financial accounts.
"Our main financing is done by First Security Islami Bank. They have a financial crisis. We had an agreement with the bank to open LCs with a 10 per cent margin. But they failed to open LCs even after we paid full money.
"We could not even change the bank. We have failed to import raw materials and so we have failed to boost revenue," said the company secretary.
The Shariah-based bank is one of the banks decided to be merged with other poor performers in a move by the central bank to save the financial institutions that have been suffering from an acute liquidity shortage following loan scams.
Indo-Bangla Pharma says it is heavily dependent on imported raw materials.
Between July and December 2024, it could open LCs only twice and the production continued with limited supply of raw materials from local markets.
The company anticipates that the export will help overcome the dollar crisis. That, however, raises questions about the supply of materials to manufacture products for the initial exports.
The auditor of the company has already expressed doubts over the company's business sustainability.
As per the plan, Indo-Bangla Pharma will export medicines to Afghanistan for a minimum of 15 years -- from 2025 to 2040. The deal can be renewed if both sides agree on that.
The Afghan partner is Salar Yousafzai Pharma Ltd that will have "exclusive export rights" as the sole agent in Afghanistan of Indo-Bangla Pharmaceuticals.
According to the deal, which, the company says, will be signed next week, the minimum order value per shipment will be $0.15 million.
Exports, as planned, will be carried out on a "Free on Board (FOB) Chittagong basis", meaning Indo-Bangla Pharmaceuticals will bear all costs and risks up to the point the goods are loaded onto a shipping vessel at the port of Chittagong. After the cargo is loaded, responsibility for transportation, insurance, and any subsequent risks will transfer to the buyer in Afghanistan.
In the disclosure, Indo-Bangla Pharma said this strategic collaboration was expected to strengthen the company's financial position through export revenue and foreign currency earnings for the long run, thereby improving the value of the shares.
While the announcement seems to be good news, investors are left to ponder why the sponsor-directors of the company have not yet met the regulatory obligation to have at least a 30 per cent joint stake in the company.
The Dhaka Stock Exchange shows that the sponsor-directors together had 24. 43 per cent shares of the company as of June this year.
Investors seem to be wary of the business recovery plan as the stock of Indo-Bangla Pharma fell 0.70 per cent to Tk 14.10 per share on Wednesday on the DSE.
Earlier, the stock witnessed a significant surge of 58 per cent to Tk 14.2 per share on the DSE between June 15 and July 8 this year.
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