Deshbandhu Group to set up $110m plastics factory with foreign loans

Deshbandhu Group to set up $110m plastics factory with foreign loans

Deshbandhu Group, one of the leading conglomerates in Bangladesh, plans to set up a gigantic plastics plant at a cost of $103-110 million in Khulna.

To capture the fast growing plastics market at home and abroad, the plant will have a capacity of producing 720 tonnes of plastic chips per day.

“Currently China alone holds one-third of the world’s plastics market, but the strained relationship between it and the United States has dealt a blow to its dominance in the market. Besides, Europe has imposed a 7.5% tax on Chinese products. So we can grab the market easily,” said Bashir Ahmed, deputy managing director of Deshbandhu Group.

He also said, “We want to reduce the country’s dependence on imports for plastic chips. This will enable us to keep our money inside the country.”

Deshbandhu Group, which has 21 subsidiaries, has sourced funding from two banks in Switzerland and Germany to set up the plastics plant in Khulna. 

“There is no investment-friendly bank in Bangladesh. The local banks provide loans for a very short period and charge high interest rates. This puts a burden on investors as they have to repay the money in big installments,” said Bashir

“On the other hand, foreign banks provide investment loans for a long period – 15-25 years. Their interest rate is small too – 1.6%-2%. That’s why the borrower gets room to repay comfortably,” he added.

A green venture

Deshbandhu Group’s plastics factory – envisioned as a green company – will use 120 tonnes of recycled plastic and 600 tonnes of virgin chips as its raw material for daily production.

It will manufacture Polyethylene terephthalate (PET), which is used in packaging, fabrics, automotive parts, electronics, and many other products people use every day. It will also produce textile standard Polyester Staple Fibre (PSF) chips, used as a base of plastics and polymer.

The company will collect used plastics primarily through the existing process, where scrap buyers, and ragpickers collect discarded plastics and sell them to wholesalers.

“We also plan to set up collection centers in each district to buy used plastics from the primary collectors at an appropriate rate,” said Bashir.

Employment opportunity for 2,000 people

The conglomerate will set up its gigantic plastics plant in the Mongla Export Processing Zone.

“We have taken a lease of 100 bighas of land from the Sikder Group for 40 years to set up this state-of-the-art plant in Mongla EPZ. We are bringing the machineries and technology from Germany and Switzerland,” said the deputy managing director of Deshbandhu Group.

The company applied for clearance from the Department of Environment in Khulna in December last year.

The business conglomerate aims to start constructing the plastics plant in January this year and go into production by the end of 2023.

“Revenue from the plant will start coming in during the first quarter of 2024. We expect to get a $500-600 million yearly turnover from the plant, which will employ at least 2,000 people,” said Bashir.

He further said, “After meeting local demand, we will try to enter the European market to sell our plastic chips.”

According to the Bangladesh Bureau of Statistics, the global demand for plastic products has been growing by 20% every year since 2007. The average use of plastics is 50 kg per capita globally, while it is 9 kg in Bangladesh.