Jute Alliance gives Tk300cr revival shot to Bangladesh Jute Mills
The mill went into partial production on 26 February
Nearly 20 months after its shutdown, the state-owned Bangladesh Jute Mills has been given a new lease of life as the Jute Alliance Ltd, a joint venture of five local and foreign companies, stepped up to sew up the demised jute factory.
On 26 February, the mills came into operation on a limited scale, thanks to a joint initiative of its two major shareholders – Bay Group and TK Group.
Three other companies of the jute alliance include Hong Kong-based Bestla Limited, Taiwan Shoe Materials and BN Trading.
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They will primarily invest Tk300 crore in the mill and will increase investment step by step, said sources familiar with the matter.
In early February, the Bangladesh Jute Mills Corporation (BJMC) leased out the factory for 20 years to Bay Group, which owns a maximum stake in the alliance, as part of its endeavour to modernise the state-run enterprises dealing with the golden fibre. The BJMC will get Tk40 lakh per month from the lessee.
Bay Group has businesses in several industries, including leather, footwear and construction, while TK Group, another shareholder, has businesses in edible oil, consumer goods, cement, chemicals, textile, leather, etc.
Bangladesh Jute Mills, which is situated in Narsingdi, is one of the 25 state-run jute factories that were shut down by the government in July 2020 because of heavy losses and excessive production costs.
The jute alliance has restarted production in the jute mill to cash in on the growing potential of exports to the United States, the Middle East, African countries and others.
They will mainly manufacture 100% export-oriented food grade jute bags, said officials at the jute alliance.
The condition of machines inside the age-old factory was very poor; they could manage to repair 50% of them, they noted.
The partial production has begun with 300 employees. The factory will go into manufacturing on a full scale after new machines are imported, which will create jobs for 2,500-3,000 people, the officials also said.
Hasan Arif, coordinator at Jute Alliance Ltd, told The Business Standard, "We have started production within a short time, considering a great demand for jute goods globally. We will manufacture food grade jute bags only for exports."
As per plan, the factory will produce 100 tonnes of goods per day for which Bay Group will import modern machinery, he noted.
Hasan Arif said there is a demand for eco-friendly products all over the world now. Especially, the western world does not want to receive any food products if not packaged with food grade jute bags.
Food grade jute bags are manufactured from the yarn processed with soybean or palm or vegetable oils instead of kerosene or mineral oil, and these are also called vegetable oil treated jute bags.
They will also manufacture different diversified products, Hasan Arif said, without specifying the types.
Govt move to privatise jute mills
In April 2021, the government decided to lease out 17 of the 25 state-run jute mills to the private sector for 5 to 20 years, along with the possibility of extending this period at a later time. Later, the BJMC floated an international tender so that local, foreign and partnership firms could participate in the bidding process.
In response, 24 firms, including two Indian and one British, submitted 59 proposals against 14 mills.
Three mills in Khulna did not get any proposals from private companies.
After a more-than-six-month process, the BJMC has zeroed in on five private companies to lease out five state-owned jute mills that have been shut since 2020.
The five private entities are Unitex Group, Saad Musa Group, Mimu Jute Mills, Jute Alliance Limited, a joint venture of Bay Group, and the UK's Jute Republic.
Jute Alliance Limited and Unitex Group signed a final deal with the BJMC to take over Bangladesh Jute Mills Ltd in Narsingdi and KFD Jute Mills in Chattogram respectively. The lease period is 20 years.
KFD Jute Mills has three units – Karnafuli Jute Mills, Furat Karnafuli Carpet Factory, and Diversified Decorative Fabrics.
The other two organisations have not yet finalised the lease-out agreement with the BJMC.
The BJMC handed over the mills to Unitex Group. The group will also produce 100% export-oriented products in it. It also has a plan for large investments. However, TBS could not confirm whether the mills went into production.
