I-Mart Engineering eyes expansion with Tk20cr stock market raise

Infographics: TBS

Recognising the significant potential and growth prospects in Bangladesh's steel building sector, I-Mart Engineering Ltd, a developer of pre-engineered steel structures, plans to enhance its capacity by securing Tk20 crore from the stock market through a Qualified Investors Offer (QIO).

Bimal Chandra Biswas, chairman of I-Mart Engineering, told the Business Standard, "With the increasing demand for pre-engineered steel structures, we are observing a steady growth. Hence, we have devised plans to expand our current capacity. To execute this expansion initiative, we require additional funds, which is why we are seeking to raise capital from the market."

Currently, its paid-up capital stands at Tk25.36 crore. The company plans to issue two crore fresh shares at Tk10 each, amounting to Tk20 crore. Subsequently, it will be listed on the SME board of the stock exchanges.

Incorporated in 2011, I-Mart Engineering specialises in constructing pre-engineered steel structures, encompassing various facilities such as factories, warehouses, garment and spinning sheds, convention centres, workshops, aircraft hangars, commercial showrooms, distribution centres, multi-story buildings, and more.

It also provides services in terms of designing, fabricating and installation of steel buildings to its clients.

A pre-engineered metal building system is a building that is constructed with a steel frame system that supports a metal roof and wall panels.

Bimal Chandra said, "The lion's share of the raised funds will be used for the capacity expansion, procuring machinery, land purchase, and with the funds, a portion of the loan will be repaid."

According to its prospectus, which has been submitted to the stock market regulator, its total assets including current and non-current is Tk55.83 crore till 30 June 2023.

In the 2022-23 fiscal year, its revenue was Tk54.63 crore, and its net profit was Tk5.77 crore.

The company's net profit declined by 32% in FY23 compared to the previous year owing to the increasing cost of goods sold for the pricy dollar that resulted in raw materials price hikes for the local and international markets.

A year ago, in the 2021-22 fiscal year, I-Mart Engineering posted a 95% growth in revenue to Tk51.41 crore and a growth in profit by 123% to Tk8.53 crore.

Regarding such an increase, the company said, the revenue increased substantially compared to the previous year as the company has achieved a few more new contracts.

Uses of proceeds

According to its prospectus, I-Mart Engineering PLC will use around 65.95% of the raised funds for installing new machinery, land purchase and working capital.

Around 32% or Tk5 crore of the funds will be used for repaying loans. At present, the company owes Tk17.58 crore on short-term loans. 

According to the Dhaka Stock Exchange (DSE), at present, two companies, engaged in pre-engineering steel building manufacturing, are listed on the main board.

The companies are — Dominage Steel Building Systems and Bangladesh Building Systems. Both firms are listed in the engineering sector.

Also, I-Mart's non-listed competitors are — PEB Steel Alliance, McDonald Steel Building Products, NDE Steel Structures, Steelmark Buildings and Akij Steel Mills.

Bimal Chandra Biswas said, "The business opportunity in the industry is huge, and it is continuously growing. So, we hope the demand for steel engineering buildings in future will expand more."

"The per capita steel consumption at present in Bangladesh is around 40.42 kg per annum. But in the developed country, the consumption is very high, and most of the high-rise buildings in the developed country are being built on steel structures," he said.

"Bangladesh has remained lagging behind in terms of using steel and steel structured building. After the 2000s, the number of steel-structured buildings increased. So, many local companies are investing in this sector," he added.