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FROM THE
EDITOR
The Promising Dairy Industry
I will try to spend the money as irrationally as
possible.
A perfect response by Richard H. Thaler, the newly
Noble Laureate of Economics, when asked how
he would like to spend the USD 1.1 Million prize
money. Thaler won the Noble Prize in Economics
for his contribution to Behavioral Economics, a
field of Economics which implies that mass people
may not always act as rationally as economists
models assume.
Regarding this months cover story of MBR, milk
production in Bangladesh witnessed a modest
growth of 21% annually over last 6 years. Dairy
products have always been an integral part of
Indian cuisine, which spilled over to Bangladesh in
1970s. With our current capacity, we are touching
only half of the market demand (250ml- 125ml
INDUSTRY & EQUITY ANALYSIS TEAM
ASIF SAAD BIN SHAMS ADNAN RASHID
Email: shams@idlc.com Email: adnan@idlc.com
per day). Therefore, the opportunity is enormous.
Evidence from Bangladesh suggests that for every
100 litres of milk traded, 1.2- 5.7 full time jobs are
created.
India, the worlds largest milk producer, is fraught
with a great challenge: deficiency in meeting
local demand, hence, import remains the only
solution. To lessen dependency on import, Project
Mooo, an initiative by an Indian edutech startup
UDAY, is planning to empower dairy farmers with
technology by creating an app. Now is the time
for policymakers and top-notch dairy players of
Bangladesh to co-ordinate and come up with apt
measures to fulfill the promises of dairy industry.
Adnan Rashid
Assistant General Manager
IDLC Finance Limited
SUSHMITA SAHA
Email: sushmita@idlc.com
 contents

04
Research In Focus
18-19
IDLC News
30
Tribute to
Addressing to SME finance IDLC Inaugurates Its 35th Richard H. Thaler Noble Prize
Branch in Rajshahi Winner

06
IDLCs 9 months Performance in Economics, 2017
Disclosure

Cover Story
Dairy Industry Making Strides
20-21 32
Exploring the White Potential Industry Update
PERFORMANCE ANALYSIS OF
Pharmaceuticals
TOP 10 COMMERCIAL BANKS*
Dairy products are not only treat to the taste Construction Materials
buds, but also adds value to all slabs of economic WITH IDLC
empowerment, ranging from grass-root level cattle- Frozen Food
rearers to small dairy farmers to manufacturers and

22
the labors. Like any other promising industry to Mobile Telephony
thrive, it is just the government initiatives the dairy
industry is shying away in a bid to move to the next

34
level of growth.

Economy At A Glance

14 24 Month In Brief
Design & Printing: nymphea l www.nymphea-bd.com

EXPERT OPINION
CREATING VALUE
FOR DAIRY FARMERS
Mohammad Anisur Rahman
Spotlight on Startup
Chaldal
36
Director, BRAC Dairy & Food For the Record

17 28
Youth Leadership 38
ENTREPRENEURS CORNER
Queens Confectionary IBA Communication Club (IBACC) Capital Market Review
All rights reserved. No part of this journal may be reproduced in any form, by print, photoprint, microfilm or any other means without written permission from the publisher.
RESEARCH IN FOCUS ADDRESSING TO SME FINANCE
ADDRESSING TO SME FINANCE
The SMEs Finance Problem
Small and Medium entrepreneurs play cardinal role
in a countrys economy. SMEs provide employment
to a large share of the labor-force in developed and
developing countries. But SMEs receive limited
external funding compared to large firms and face a
financing gap. According to the World Bank Enterprise
Survey, SMEs are less likely to have a formal bank loan
or other lines of credit compared to large firms. The
International Finance Corporation (IFC) estimates that
in aggregate across developing regions, the credit gap
to formal SMEs ranged from USD 900 to USD 1,100
billion in 2011.These values represented between 26
and 32% of total credit to formal SMEs.
The Supply-Demand issue
Both supply and demand factors can explain the low
observed use of banking services by SMEs. A supply-
side problem occurs when SMEs have profitable
investment projects but cannot get sufficient external
funds to finance them. Market imperfections, such as
information asymmetries
Or weak creditor protection, could make it more
difficult for financial intermediaries to assess the
creditworthiness of SMEs, monitor their actions, and
enforce repayment. Although demand-side problems
occur, supply-side constraints are much more prevalent.
Obstacles to SME Finance
There are several roadblocks on the way of SME
finance. SMEs typically are more opaque than
large firms because they have less publicly available
information. As a result, banks have more difficulties
in assessing the creditworthiness of SMEs, which can
discourage lending to these firms. Lending depends
more on soft information gathered by loan officers
through personalized contacts. Relationship lending
can discourage loans by large and foreign banks, which
ABOUT THE RESEARCH
Addressing to SME Finance is a report published
by The World Bank which provides an insight of the state of global
SMEs and how to accelerate SME Finance.
4 of 40
maintain more impersonal relations with clients.
Lenders can substitute the lack of information on SMEs
with higher requirements for collateral. But banks will
be willing to provide collateralized loans only when
appropriate institutions exist to enforce contracts. These
institutions need to clearly establish which assets can be
collateralized, protect creditors rights, and guarantee
swift judicial procedures, among other provisions. As
a result, when property rights are weak, SMEs will be
more financially constrained than large firms.
Innovative Initiatives to Increase SME
Finance
Public Credit Guarantees
Credit guarantee schemes are mechanisms through
which an external third party, known as the guarantor,
promises to repay the lender all or part of the loan if
the borrower defaults. When a credit is guaranteed, the
creditor faces lower risk, and can offer better lending
conditions and require lower collateral. Governments
often get involved in these schemes in two different ways:
by supporting private guarantee schemes (with direct
funding, counter-guarantees, and/or tax incentives)
or directly administering their own schemes. The
impact of credit guarantees is mixed. Although it can
increase loans and enhance financing conditions to
targeted firms but it can also be associated with lower
creditworthiness and higher defaults.
Online Platforms for Reverse Factoring
Online platforms for conducting reverse factoring
transactions are facilitating supply-chain finance to
SMEs. Online platforms allow SMEs to shorten the
maturity of these payments by making it easier for firms
to sell their account receivables to financial institutions
in exchange for cash.
Movable Collateral
Movable assets (such as machinery, and accounts
receivables) account for most of a firms assets,
particularly for SMEs. However, due to weak legal and
regulatory environments, banks are often reluctant to
USE OF FORMAL CREDIT BY FIRM SIZE
66
63
55 56
54
44
43 43 44
38
30
27
East Asia and Europe and High-Income Latin America
Pacific Central Asia non-OECD and the Caribbean
accept these assets as collateral, especially in developing
countries. In this context, banks prefer immovable
assets, which are more difficult to hide and are less
likely to be subject to ownership disputes, as collateral.
In this context, several countries have pursued reforms
of their secured transactions systems, that is, the legal
and institutional structures that govern how agents can
create security interests over movable assets.
Credit Bureaus and Credit Registries
Mechanisms that allow creditors to share information
about the creditworthiness of borrowers have also
been used to promote SME finance through different
channels. By allowing lenders to share relevant
information from borrowers with other lenders, these
mechanisms reduce information asymmetries in SME
lending. Furthermore, they increase bank competition
because they reduce lenders monopoly on credit
information. Credit information sharing mechanisms
can take the form of credit registries and credit bureaus.
Credit registries are managed by the public sector
(typically, bank supervisors or central banks) and collect
information from supervised financial institutions.
By contrast, credit bureaus are private businesses that
collect information required by commercial lenders.
Capital Markets Tailored to SMEs
Markets offer listing and regulatory requirements
tailored to smaller firms such as lower fees, lower
profitability requirements, and smaller issuances.
Despite the initial enthusiasm to promote these
markets worldwide, these markets seem to be reaching
5 of 40
Small
Medium
Large
53 54
43 43 45
42
36 34
29
21 22
17
Middle East OECD South Asia Sub-Saharan
and North Africa Africa
a small number of firms. Asia provides a good example
of these difficulties. Since the late 1990s, various
countries throughout the region have set up specific
capital markets targeted at smaller firms. However,
these markets have generally only appealed to a small
number of SMEs. For example, as of 2014, only 4 firms
were listed in SME capital markets in the Philippines,
88 in India, 107 in Malaysia, and 111 in Thailand.
Similar patterns can be observed in developing
countries from other regions (WFE 2015). In the midst
of these unsuccessful experiences, the case of China
is worth analyzing, given its undergoing efforts to
establish these markets. These markets have also had
difficulties attracting institutional investors, which are
the main participants in capital markets but favor large,
liquid companies, whose securities can be disposed of
on short notice without affecting their price (OECD
2015).
Understanding the SME finance problem is critical
because difficulties in obtaining finance can hamper
the ability of established smaller firms to invest and
grow and of new firms to launch operations, hindering
overall growth in economic activity and employment.
The initiatives discussed illustrate the different tools
that countries around the world have at their disposal
to try to unlock SME finance. These initiatives
complement other government efforts to support SMEs,
such as the provision of technical assistance to enhance
their business practices. Designing effective policy
interventions requires having accurate and extensive
information on the state of SME finance and the nature
of the SME finance problem in each country.
DAIRY INDUSTRY
MAKING STRIDES
EXPLORING THE
WHITE POTENTIAL
Dairy products are not only treat to the
taste buds, but also adds value to all slabs of
economic empowerment, ranging from grass-
root level cattle-rearers to small dairy farmers
to manufacturers and the labors. Like any
other promising industry to thrive, it is just
the government initiatives the dairy industry
is shying away in a bid to move to the next
level of growth.
BY

MAHIR SHEFATH UL
TAZWER ISLAM

6 of 40
 DAIRY INDUSTRY MAKING STRIDES
COVER STORY EXPLORING THE WHITE POTENTIAL
Roots of Dairy Industry in Bangladesh
During 17th century, milk selling and purchasing in
the East Bengal (present Bangladesh) started after the
arrival of Ghosh Dynasty. They migrated from parts
of India to East Bengal at the middle of 17th century.
By tradition, Ghosh dynasty purchased milk from
farmers and sold the milk and milk products like fresh
milk, sweetmeat, chana, whey, curd, cream and ghee
(butter oil) to the city consumers. The Ghosh colonies
in Shatkhira, Sirajgonj and Chittagong are still engaged
in the dairy business. In 1830, the Ghosh of Chittagong
used to market milk and milk products for Chittagong
Metropolitan areas. The local Red Chittagong cows were
used for this purpose. The cows were yielding 2-4 liter
milk per day/cow. Milk Vita was established in 1974
at Baghabarighat at Sirajgonj district. The cultivation
of leguminous forage and feeding cattle with that at
Shahjadpur, prominent area of Sirajgonj district has a
long history. At the beginning of 1990, farmers adapted
the cultivation of high yielding fodder (Napier and
others). Artificial insemination centers were extended
to different districts and sub-districts in 1974. Mostly,
Shahiwal bull semen was used. Farmers started rearing
Friesian cross bred cows from the beginning of the
1980s.
Up until the early 1990s, BMPCUL used to be the only
formal sector that processed and marketed milk from
the producers of Bangladesh. Liberalization and market
reforms in the 1990s along with increasing demand
for milk and milk products accompanying per capita
income growth and urbanization and improvements of
infrastructure have brought about greater private sector
participation in the dairy sectors. However, much of the
potential of the dairy industry in Bangladesh remained
unexplored with regard to input service delivery to
farm activities and involvement of industries in post-
harvest processing and marketing of milk.
Present Status and Potential for Dairy Industry
Development
Bangladesh primarily consist of low, flat and fertile land.
A network of rivers and their tributaries flow down to
the Bay of Bengal. It has a sub-tropical monsoon climate.
Bangladesh has a suitable environment for the survival
7 of 40
of cattle. Moreover, recent trials have also shown that
rapid improvement of the local cattle in the tropics
can be attained by cross-breeding, using semen from
high quality animals. Such crossbred animals produce
satisfactorily, survive well under the local conditions
and have the necessary heat tolerance.
In Bangladesh, cattle, buffalo and goat are considered as
dairy animals. Out of total milk production, about 90%
is coming from cattle, 8% from goat and the remaining
2% from buffalo (DLS 2015). According to a research,
among the total cattle population, about 6 million are
dairy cattle of which about 85-90% are indigenous and
10-15% are crossbred.
Indigenous cattle consists Non-descript Deshi, Red
Chittagong cattle, Pabna cattle, North Bengal Gray and
Munshigonj White cows.
Crossbred Cattle are the results of crossing between
local with different exotic breeds like Holstein, Friesian,
Sindhi, Shahiwal, and Jersey at different level.
Black Bengal, the only dairy goat breed comprises 90%
of the total population. Buffalo in Bangladesh is mainly
indigenous in origin and most of them are riverine type
with exception of some swamp type in Eastern part
and have low productivity. Also, some cross breed with
Murrah, Nili-Ravi, Surti and Jaffrabadi are available on
the surrounding of Indian border.
IN BANGLADESH,
CATTLE, BUFFALO AND
GOAT ARE CONSIDERED
AS DAIRY ANIMALS.
OUT OF TOTAL MILK
PRODUCTION, ABOUT
90% IS COMING FROM
CATTLE, 8% FROM GOAT
AND THE REMAINING
2% FROM BUFFALO.
DAIRY COUNTER
2013-14 (Number in Million) 2014-15 (Number in Million) 2015-16 (Number in Million)

Buffalo Buffalo Buffalo

1.5 1.5 1.5

Goat Cattle Goat Cattle Goat Cattle

25.4 23.5 25.6 23.6 25.8 23.8

DAIRY ANIMALS IN SAARC COUNTRIES

BANGLADESH INDIA PAKISTAN NEPAL

CATTLE 23.8 190.9 29.6 7.2

GOAT 25.8 135.2 53.8 9.5

BUFFALO 1.5 108.7 27.3 5.0

73
70
What Is The Demand For Milk?
2015-16

250 ML/DAY/HEAD
2014-15

61 (AS ON JULY 2016)

2013-14

51 How much milk is available to

2012-13

meet the demand?

125.59 ML/DAY/HEAD
35
2011-12

30 Level of Deficiency:
27
2010-11

24 23 23 124.41 ML/DAY/HEAD
2007-08

45.8%
2009-10

2006-07
2008-09

Milk Production In Bangladesh ranked

Bangladesh
(Lakh Metric Ton)
15TH
IN TOP 15 DAIRY COW
POPULATIONS IN THE WORLD

8 of 40
Milk production in Bangladesh grew at an average
rate of 15% annually since 2006 to 2016. Of late, in a
discussion on the challenges and opportunities of Dairy
Industry, it has been revealed that every day around 18
million litres of milk are produced all over the country.
This growth is attributed to higher milk production by
an increasing number of cross-bred dairy cows, more
institutional investment in dairy, rising market demand
for processed dairy products and the implementation of
other similar dairy development programs.
Consumption of milk and milk products in the
country is carried out in different ways: directly
from the producers, from the vendors and from the
commercial milk processors and manufacturers. An
adult person requires at least 250 ml milk every day, but
the availability is only about 108.66 ml/h/d. This figure
indicates that the industry is in shortage of milk. Total
milk production of the country is 7.27 MT/year (2015-
16), however, the requirement is about 14.69 MT/year.
The high growth rate in the sector has the potential to
get millions of smallholder producers and others to get
involved in milk processing and marketing business.
The industry has created an opportunity for poverty
reduction through employment and income generation.
Dairy generates more regular cash income, and dairy
production, processing and marketing generate more
employment per unit value added compare to crops.
Import of powdered milk shooting up
Bangladesh has almost doubled its import of powdered
milk, driven by increased industrial use and home
consumption. In the three years to 2015-16, average
annual import rose to 104,000 tonnes, up 86% from
56,330 tonnes in the same time-span till 2009-10,
according to the Bangladesh Bureau of Statistics (BBS).
Bangladeshs annual average consumption of skimmed
milk was 35,000 tonnes in 2013-15. It is projected to
increase to 49,000 tonnes by 2025, according to the
OECD-FAO Agricultural Outlook 2016-2025. Average
whole milk powder consumption was estimated at
43,000 tonnes during 2013-2015, which is estimated to
grow to 60,000 tonnes by 2025.
Imports are rising at a time when local farmers are
demanding curbing entry of foreign milk, citing that
commercial farming of cattle at home for milk and
meat has increased and that higher imports affect the
development of the local dairy farming and industry.
9 of 40
Growth drivers:
One of the highest cattle density in the world: 145
large ruminants per square kilometers in 2010.
Rising demand for milk-based food products in
daily consumption and as beverages.
Low cost of input (raw materials, human resources
etc.).
Introduction of UHT milk, milk powder, yogurt,
flavored milk products and other popular product
varieties by dairy enterprises.
Introduction of aseptic milk packaging leading to
longer shelf life.
Market share of private dairy enterprises
Since 1973, cooperatives of smallholder dairy farmers
have existed in Bangladesh, first as a dairy development
program, the Co-operative Dairy Complex, with
financial assistance from Denmark, and later as the
Bangladesh Milk Producers Co-operative Union
Ltd. (BMPCUL), which was formed in 1977. Today,
approximately 40,000 smallholder dairy farmers have
become members of primary dairy cooperatives. About
345 of these cooperatives are in existence, covering
close to 925 villages in 15 districts of Sirajgonj, Tangail,
Manikganj, Takerhat, Baghabarighat, Sree Nagar,
Rangpur, Bhairob, and Raipur, supplying over two
million liters of milk daily.
Many private and cooperative enterprises and NGOs
are working for development of livestock resources
since long time following the government initiated
breeding policy. Government also encourages the
private sectors and entrepreneurs to take part in the
development process of livestock sector of the country.
Milk Vita (Bangladesh Milk Producers Cooperative
Union Limited, BMPCUL)
Milk Vita, the trade name of BMPCUL is the largest dairy
cooperative in Bangladesh, started dairy business based on
genetic improvement of dairy cattle through AI services
of their cooperative farmers in 1972. In 2012-13, they
produced 91,000 doses frozen semen and inseminated
100,000 cows (including previous frozen semen stock).
BRAC Dairy & Food
Bangladesh Rural Advancement Committee (BRAC),
an international NGO started cattle breeding program
MILK POWDER IMPORT
130
(in thousand tonnes)

105 105

85
79
74 74
66

48 47

24

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
(July-May)

with AI services using government liquid semen in 1985 Visit other dairy farms
in Manikganj district of Bangladesh using trained AI
technicians. BRAC has started trial semen production At-least five other established dairy farms should
(from 19 bulls) from May, 2000. However, this NGO be visited
has established its own bull station and started actual
frozen semen production from November, 2000. In Select a location
2013, they produced 13, 00,000 doses frozen semen and
Better to choose a vast rural area for better feeding
inseminated 1,324,000 cows (including previous frozen
and movement of the cows
semen stock) throughout the country.
Choosing a cow breed
Apart from Milk Vita and BRAC Dairy, who owns
more than 70% of the market share collectively, there Some famous cow breeds are Austrian Mountain,
are several other private enterprises who are engaged in American cattle, Australian Charbray, Ayrshire,
dairy business. Dutch Belted, New Zealand dairy etc.

Dairy supply chain in Bangladesh Feeding

Both informal and formal milk-marketing channels Clean and fresh water
coexist in Bangladesh. Smallholder milk producers Less green food to the cows to get more milk.
supply all the milk for the informal traditional market
and three quarters of the milk for formal processing Management
market. Cooperatives and institutional dairy enterprises Preparation for sufficient medicines and equipment
collect milk from smallholders through primary village
cooperatives and then process and distribute the milk Marketing
to all major cities in the country. The cooperative model
has especially been successful in creating jobs, reducing Using appropriate channels dairy demand is quite high
collection and distribution costs and improving the Possible costing
quality of milk. Depends on the size of the farm.
BDT 4 lacs to start with 5 cows
How to start a dairy farming business in
Bangladesh Cost of the construction general depends on area

Probable earning
Business plan
Roughly about BDT 50K from 18-20 milk
Having proper concept about the aspects of dairy farm producing cows.

10 of 40
 DAIRY SUPPLY CHAIN

Informal/Local Market Formal Value Chain

Sweet producers, Tea

shops, Restaurants Processing Plants

Traders & Wholesalers Chilling Plants

Inputs

Collectors
Feed & Medicine

Veterinary Services

Household Dairy
Producers Artificial Insemination

Financial Services

Business dynamics and Investment opportunities
related to dairy
Despite being one of the highest dense livestock in
the world, the productivity of cattle in Bangladesh is
far below the world average. The sector offers many
investment opportunities in increasing milk yield and
preserving dairy products.
Core aspects
A discrepancy between the supply and demand
of dairy milk is prevalent in Bangladesh.
Hence, there is an opportunity to be successful
by starting dairy business.
Once the milking cow stops giving milk, it can
be sold to the flesh market. Moreover, one can
be profitable by selling the skins as well to the
leather market.
If a cow gives birth to a bull, then it can be
raised and sold during the Eid-Ul-Adha, one
of largest festivals for the Muslims when the
demand for bull is pretty high.
Cattle feed production
Quality fodder increases the yield and fat
content in milk. To improve milk productivity of
improved breeds of cattle, it is important to feed
them a balanced diet with sufficient nutrients.
In Bangladesh, rice straws and natural grass
constitute traditional feeding of dairy cattle
supplemented with a little or no concentrates.
Commercial cattle feed produced from agro-
industrial wastes and by-products, herbal feed
additives, concentrates and other nutrient
supplements present potential investment
opportunities.

11 of 40
 Cold chain
Milk is a highly perishable item. In a country
like Bangladesh with high ambient temperature,
pasteurized milk can only be marketed with cold
chain support. Lack of cold chain support limits
the scope of marketing pasteurized milk only to
urban areas. Cold storages in Bangladesh are used
mostly for storing potato and have inadequate
space and facilities for milk preservation.
Dairy producers require pre-cooling facilities
near dairy farms, and refer trucks to transport
dairy produce from collection centers to the
centrally located cold storages, to processing
plants, and finally to retailers.
The Board of Investment (BOI) of Bangladesh has
identified cold storage as a special opportunity
for further investment.
Artificial Insemination (AI)
Majority of the AIsare performed by the
Department of Livestock Services of the
Government of Bangladesh and also by BRAC,
a non-profit organization.
About 2.5 to 3 million cows are naturally
bred which presents an untapped investment
opportunity.
AI projects are generally implemented by trained
AI workers who provide door-to-door services
with supplied semen.
Business Incentives for the dairy investors
Dairy feed is exempted from VAT Added Tax (VAT)
Import of dairy equipment is exempted from VAT
and customs duty
Provision for 100% foreign equity

Artificial insemination (AI) is a technique

to bring about genetic improvement in farm
animals.

WHITE REVOLUTION IN INDIA

Over the span of four decades, India has transformed from a country of acute milk shortage to the worlds leading milk
producer, with production amounting to 160.35 million tonnes. During the last 10 years, the annual growth rate in Indian
dairy industry is 4.6% as compared to the global growth rate of 2.2%. Led by Amul- the dairy cooperative brand managed by
Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), all leading players in the organized dairy industry have been
growing at a fast clip.

A key characteristic of Indian dairy industry is that it is largely unorganized, according to a report by CRISIL Ratings. Organized
dairy sector represents milk that is processed using modern infrastructure and marketed through organized channels under
their own brands, such as Amul, Mother Dairy etc. Even though the organized dairy segment has been growing 22% for the last
seven fiscal years, it has the potential do better in the upcoming fiscals. However, India is a marginal exporter, since most of its
exported products are powdered milk.

Private and cooperative sector dairies in India are increasingly adopting the latest tagging and tracking technologies to
supervise the productivity of individual milking animals and dairy farmers to monitor milk supplies and take corrective steps
quickly to suit market demands. Through the latest technologies of tagging with smart chips of unique identity, these dairies
are constantly registering the productivity and health records of individual animals.

12 of 40
 Favorable loan facilities for entrepreneurs. Banks and
NBFIs gets fund at a lower rate (5%) from Bangladesh
Bank, hence, they can provide loans at a lower rate to
the dairy investors.
In the national budget of FY 2013-2014, duty
structures were changed to accommodate more
investment in local dairy production. Customs
duty for powder milk import was increased from
5% to 10%. At the same time, concessionary benefit
was given by Statutory Regulatory Order (SRO) for
insulated road milk tanker (decreased from 5% to
2%), for animal feed (decreased from 5% to 0%), for
raw milk preservatives (decreased from 12% to 0%),
and also for different spare parts required for AI;
supplementary duty (SD) on skimmed milk powder
at the manufacturing stage has also been withdrawn.
In the national budget of FY 2014-2015, SD rate is
reduced from 20% to 15% for butter and other fats
and oils derived from milk and dairy spreads, and
duties and taxes on many raw materials, such as cow
pregnancy test kits, universal syringe for AI, NaCl
solution special grade used in AI, are fully exempted.
Role of Bangladesh Bank in promoting dairy
entrepreneurs
In 2015, Bangladesh Bank (BB) had launched a BDT
200 crore refinancing scheme to help boost the countrys
dairy farming. Under the scheme, a total of 13 banks
and financial institutions will provide dairy farmers
with easy and cheaper loan for rearing milking cows
and their artificial breeding. Each dairy farmer will get
the highest Taka two lakh for procuring maximum four
heifers. Female and marginal farmers will get preference
for receiving the loan, which is repayable in 54 months
with 5% interest. The participating banks and financial
institutions will get necessary money from the BBs
refinancing scheme besides getting additional 5%
interest against their disbursed loans.
Scope, opportunities and limitations
The dairy industry of Bangladesh holds great potential
for sustainable development of the country. The
government alone cannot ensure growth of this
industry. It needs support from all the operators
(farmers, collectors, milk traders, dairy processors) and
supporters (livestock health workers, input suppliers,
and government and non-government institutions) of
the dairy value chain. An ecosystem needs to be created
where all the stakeholders can smoothly interact
and support each other. Bangladesh government is
Mahir Tazwer is a Senior Officer in Credit Risk Management department in IDLC Finance Limited and he can be reached at Mahir@IDLC.com.
Shefath Ul Islam is a Senior Executive Officer in Credit Risk Management department in IDLC Finance Limited and he can be reached at Shefath@IDLC.com
13 of 40
imposing high import taxes to reduce the import of
milk, which is also creating possibility for the domestic
milk producers so there is still good possibility to do
business in Bangladesh dairy market.
Every day around 18 million liters of milk are produced
all over the country, but only 7% of it is sold to milk
processing companies and the rest at local markets.
Every year, Bangladesh imports 65-70 thousand
metric tons powder milk, equal to 17 lakh liters of
liquid milk, worth BDT 2 to 2.5 thousand crore.
Therefore, there is a good opportunity for the local
dairy industries to contribute to this gap. Even if the
local processing industries triple their output it would
only offset the import. Pran Dairy has established dairy
hubs in various districts to collect and preserve milk.
It is playing a significant role in strengthening our
marketing channel. The government support is critical
for sustaining these initiatives. Gas and electricity
connections need to be made available and affordable.
At present, the companies are paying the utility bill of
chilling plants as a commercial business unit rather
than SME where as they are running those as small
enterprises. Pran has established a dairy academy for
creating human resources. There should be more such
institutions to train dairy farmers. The existing import
duty on dairy products is very low. It is a barrier for
the robust growth of local industry. The importers are
not interested in investing in local dairy industry. There
must be a link between importers and local producers.
There is no single contact point for processing and
commercialization which is critical for ensuring proper
coordination among various operators of the dairy value
chain. There is also confusion in setting standard for
dairy products. BSTI is followed currently. But the Safe
Food Act requires a different standard. It often creates
confusion and hassles for the processing industry.
There should be a single standard testing mechanism
for dairy products, considering the importance of
knowledge management, the government has taken
various initiatives to provide training to dairy farmers
at the grassroots level. With the support of Bangladesh
Bank the farmers are getting low interest loan for cow
rearing. Our farmers mostly suffer from lack of proper
marketing facility. An organized milk marketing
system to address this problem. Private sector has a
big role to play in this regard. Quality breed of cow is
among the vital issues in the dairy sector, rearing the
local variety costs comparatively more due to different
complications.
 MOHAMMAD ANISUR RAHMAN
EXPERT OPINION DIRECTOR, BRAC DAIRY & FOOD

CREATING VALUE FOR DAIRY FARMERS

BRAC Dairy & Food provides has a holistic approach towards dairy farming.
Their concentration starts from training the farmers and then empowering
them. As part of the Dairy Industry study, MBR had the opportunity of a one-
to-one conversation with Mohammad Anisur Rahman, Director, BRAC Dairy &
Food to have an idea about the dairy industry and ins-and-outs of BRAC Dairy.

Mohammad Anisur Rahman

Director, BRAC Dairy & Food
MBR: BRAC Dairy, one of the largest dairy processing Products and Services Department, which concentrates
companies in Bangladesh, started its journey in 1998. on training the farmers. The members visit the farmers,
Could you please share how the company evolved and train them the basic elements of dairy e.g. breed, m cross
came up with new strategies to meet market demand? breed, health and nutation, cows food, cows treatment
and also preservation of milk.
Mohammad Anisur Rahman: BRAC Dairy started as
an independent project under BRAC in 1998. Later,
this project covert into social enterprise. The motto of
CURRENTLY, WE ARE DIRECTLY
BRAC Dairy is to create a bridge between the farmer and WORKING WITH AROUND
market and cut out the involvement of the middlemen in
the process. Our key concentration was the development
28,000 FARMERS AND
of farmers with adequate knowledge and know-hows. CONNECTED WITH ANOTHER
While developing them, we discerned that farmers also
encounter difficulties on how to sell the milk.
30,000 FARMERS INDIRECTLY.
Mostly, they relied on third parties. At
We provide all production related services to the 28,000
that juncture, BRAC came up with the
directly-connected farmers, however, the
idea of purchasing the milk from the
indirectly connected ones are deprived
farmers. Now, we collects milk from
of this facility due to lack of resources.
the farmers, process them in our own
However, we are making endeavors
plants, make the packaging ready for
to increase our resources to catch
the end consumers, distribute them via
up with those indirectly-connected
proper channels.
farmers in a better way. The
farmers are paid twice a week, as
Initially, BRAC Dairy used to sell milk
per the quantity of milk they sell. The
through own centers, however, later we
calculation of the payment depends fat
added distributors as a part of expansion of
percentage of the milk. Therefore, we are
market reach. Gradually, we came up with milk
facilitating the farmers with a 360-degree range of
products like butter, yogurt, clarified butter, flavored
services: equip them with expertise and then financially
yogurt and so forth.
empower them. Thats the sustainable means of running
the business model.
MBR: What initiatives BRAC Dairy undertake to train
the farmers?
MBR: How is the value chain process of BRAC Dairy?
Mohammad Anisur Rahman: BRAC Dairy provides
Mohammad Anisur Rahman: The dairy value chain
training to the farmers on better farming and for increased
process of BRAC Dairy starts much before the milking.
milk production. We have a separate wing which is called
BRAC Artificial Insemination (BRAC AI) is a social

14 of 40
BRAC DAIRY
AT A GLANCE
28,000 (Directly connected)
Total number of farmers
30,000 (Indirectly connected)

Male-female ratio (workers) 69% - 31%

Male-female ratio (milk collection) 79% - 21%

Average Milk Production/year 1,40,000 Litres

Pick season November- June

Dead Season July-October

Market Reach 40,000 retailers /day

Dhaka, Narayangonj, Gazipur, Savar, Comilla, Chittagong

Coverage
and Sylhet Metro.

enterprise under BRAC, where we have our own bull distribution channels.
station in Mymensingh for the production of bull
semen. The, we disseminate the semen for cross-breed MBR: What marketing strategies you undertake for
production all over Bangladesh. At present, we have 2700 better market penetration?
AI worker who got 3 months training from Bangladesh
Agriculture University. The AI workers have to pass Mohammad Anisur Rahman: BRAC Dairy believes in
the written and practical exams held at Bangladesh direct marketing. We communicate with our consumers
Agriculture University, in order to be qualified for the directly, understand their needs and demand, ask for
position. Out of this 2700, currently 10 are female and their feedback and then promote our products. We do
we are trying to increase the female participation to 50 local campaigns for consumer awareness in a particular
within 2018. The BRAC AI workers facilitate farmers to area. We also do campaigns in school, amusement parks
choose right kind of cross breed for maximum output. and places like these, where we can get to connect to a
wide array of people.
After that, the farmers get production services. There
MBR: What are the growth opportunities for the
the farmers are trained on breed selection, cow feeding
industry?
and milk preservation. We have 187 milk collection
centers across Bangladesh in which 120 centers are
Mohammad Anisur Rahman: We believe that the
owned by us and another we got 67 from SDVC Project
industry has a tremendous opportunity to grow.
of Care Bangladesh. From the centers, we collect milk
People are not aware of the need of milk. Few people
on regular basis. After collecting milk, we chill the milk
consume milk on a daily basis. There is a notion amoung
in our chilling plant at Gazipur. After that, BRAC dairy
Bangladeshis that milk is only for sick, kids and old folks,
tanker goes to collect the chilled milk and then brings
which is entirely not true. If we start drinking a glass of
to our processing center at Gazipur. In the processing
milk every day then we required 160 million milk or
center, milk is convert into different milk items, like
40 million liter milk every day, where the whole dairy
powder milk, pasteurized milk, clarified butter, butter,
industry is producing only 1 million liter milk in every
yogurt, flavored yogurt drink. Then, we get done with
day. Therefore, the rest 39 million liter indicates the
the packaging in different formats. At the last stage, the
growth opportunity of the industry.
milk/milk products are distributed to retailers via our
Also, a huge quantity of powder milk is imported.

15 of 40
Around 2 million liter milk are imported as powdered
milk. If we convert the use of imported powder milk into
local powder milk, then also the opportunity is huge.
MBR: What are the challenges the industry is dealing
with?
Mohammad Anisur Rahman: Firstly, Dairy industry
doesnt have any policy or regulatory body. Although
there are many stakeholders, but there is not a single
contact point to solve dairy issues. The industry
drastically lacks guidance and support. As international
powdered milk is less-priced than our local industry
price, it hampers the profitability of the local industry.
The National Dairy Policy was about to roll out and I was
one of the member of the committee. However, it didnt
get approval yet. The, there is tanker transportation
problem. Like in north Bengal area, our milk tanker has
to wait for a long time to cross the Jamuna bridge, which
poses risk for us since milk can be rotten on the mid-way.
MBR: What is your take about other players of Dairy
Industry?
Mohammad Anisur Rahman: There are 10 big players
in the dairy processing industry but in case of trading,
then there are about 10 to 12 players. Among the 10 big
players in dairy, 25% market shares are hold by BRAC
Dairy, 35% market shares by Milk Vita, 30% by Pran
dairy and other 10% by other players. (Source: Quantity
of milk collection of the market players, according to
BRAC Dairy)
16 of 40
MBR: What is your take about other players of Dairy
Industry?
Mohammad Anisur Rahman: Dairy industry is a very
slow return industry. Where the other industry payback
period ranges from 3-4 years, the same for dairy industry
is 7 to 10 years. Financial institutions always want to invest
in secured sector. Because of this long payback period,
dairy is not an attractive industry for financial intuitions
for investment. Although Government encouraged the
local FIs to provide agriculture loan, but local FIs dont
consider dairy as a part of agricultural sector(according
to them the only cultivation farmers are approved for
agricultural loans).
Furthermore, cattle are not considered to be collaterals.
FIs came up with a solution to this problem that, if the
collateral animals have the insurance coverage, they can
be kept as collaterals. Yet, dairy farmers dont get much
financial assistance. Dairy is a sensitive and complex
industry and hence, not much people are interested to
venture into this sector because the entry barriers as well
as exit barriers are very high.
MBR: What is vision regarding BRAC Dairy?
Mohammad Anisur Rahman: BRAC Dairy wants to
accelerate the breeding and distribution at competitive
price so that we can ensure our existence in the market
as international market players are offering products
in lower price. Within next 5 years, we want to double
our processing capacity and connect with more farmers.
In future, we also plan to add new product lines to add
variation.
ENTREPRENEURS CORNER QUEENS CONFECTIONERY
QUEENS CONFECTIONERY
Entrepreneurial Aspirations
Queens Confectionery started its journey in 2012.
Arif Hossain, one of the three partners of Queens
Confectionery started the business under the banner
of Queens Confectionery Limited along with three
other partners named Md. Zia Uddin, Abul Kalam
Mohammad Golam Mostafa and Md. Robiul Islam. Arif
orked as a flood supervisor in Kings Confectionery,
Malaysia for 7 years. As he had enriched experience
about this sector and worked for a long time abroad,
the idea of a much-alike confectionery in Bangladesh
popped up in his mind.
Product offering
Queens Confectionery is a manufacturer and supplier
of bakery and confectionery items. Most of their raw
materials are imported from Malaysia. Although, it
becomes costly for them, however, they dont intend to
compromise their quality. The product variety ranges
from bakery items like cakes, pastries, flavored pies to
spicy snacks like sandwich, patties, buns and so forth.
They wholesale the buns and breads to departmental
shops like Shwapno, Agora, One stop etc. Besides, the
client wholesales the products to the retail bakery shops
around Uttara, Mirpur and Dhanmondi. Currently, the
client is maintaining four outlets and one factory-cum-
godown.
Queens Confectionery provides snacks, bakery, sweets
and beverage to the customers. By giving the high
17 of 40
quality food and snacks Queens Confectionery wants
to capture the customers loyalty. They maintain high
level of hygiene standard and quality control on our
manufacturing processes, storage procedures, packing
and product freshness. Freshly baked products are
delivered in covered refrigerated. The factory is located
on Khilkhet where 48 employees are employed. The
production capacity of the concern is BDT 1,00,000
per day. Also, the client has a pickup van of 1.5 ton for
distribution purpose.
Queens Confectionery also offers customized birthday
cake as like other competitors are providing.
Challenges
High competition is one of the major challenges for
Queens Confectionery. As there are many franchiser
in the market, who are already capturing the consumer
base, it is very difficult to capture the market and
retain customers. Althoguh, according to Atik, bakery
business is quite booming now-a-days.
Investment and capital was also another challenge
for Queens Confectionery. They just completed two
showrooms at Badda for which a good amount of
investment was required. Along with their personal
savings, they availed a bank loan from IDLC which
facilitated them to get the outlets running, Initially
they had difficulties in attracting customers because
everybody would like to go the well-known brand
bakery but the flow of customers is increasing day by
day via words of mouth.
Plans down the line
Queens Confectionery is successfully running their
business with the customers demand. Since, they
already expanded their outlets, they may not go for
another heavy investment for the time being. However,
they are contemplating expanding the factory space in
order to accommodate the higher demand. Recently
they are looking for place to expand their factory space.
Also, they are working on their distribution channels to
book more customers. Also, they are planning to start
home-delivery as a part of providing better service to
customers.
IDLC NEWS IDLC NEWS
IDLC Inaugurates Its 35th Branch in Rajshahi
IDLC Finance Limited, the largest non-bank financial
institution inaugurated its 35th branch in Rajshahi on
October 29, 2017. With a commitment to serve the
people with better financial service and contribute
significantly in the socioeconomic development of the
country the company has started its operation in its
new branch.
As a progressive and responsible brand IDLC has
been creating new milestones of achievements. We
will continue our success in Rajshahi by facilitating the
people with faster and reliable financial services. said
Aziz Al Mahmood, Chairman of IDLC Finance Limited
during inaugurating the branch as the chief guest of the
event.
Arif Khan, CEO and Managing Director of IDLC
Finance Limited said, Being the countrys largest
non-bank financial institution we aspire to reach the
individuals and business segments and improve their
lives by offering the best and most value-added financial
solutions- SME loan, home loan, car loan and deposit
services. With that aspiration we have inaugurated our
new branch in Rajshahi, one the most crucial parts of
the country.
18 of 40
Md. Moniruzzaman, President, Chamber of Commerce
and Industry, Rajshahi was present as the special guest
in the inauguration program.
Successful local entrepreneurs were awarded by
IDLC for their mentionable contribution in the local
economy. IDLC also took the initiative to promote some
entrepreneurs in different media to inspire the young
lot of the nation. IDLC believes this initiative is very
essential for the economic development of the country.
The IDLC Group is a leading financial institution with
more than BDT 9,600 crore in assets. Companys after
tax net profit was BDT 180.9 crore until September this
year.
IDLC employs 1,400 people in its 35 branches across
the country. IDLC Finance, the groups parent company,
maintains equal focus on SME, consumer and corporate
segments.
IDLC Finance, which was listed on the stock market
in 1993, also has three subsidiaries -- IDLC Securities,
IDLC Investments and IDLC Asset Management -- to
carry out stock brokerage, merchant banking and asset
management activities.
IDLC NEWS IDLC NEWS

IDLCs 9 months Performance Disclosure

Net Profit After Tax of Taka 1,809mn, 35% year on

year growth
Earnings Per Share (EPS) is Taka 4.90 against Taka
As deposit-advances margins
4.14 in the same period last year remain compressed and
Customer assets grew by 13% in 2017 to reach Taka competition becomes even
70.61bn
stiffer, the success of any
In these 9 months IDLC acquired 8,563 new customers financial institution in the
and grew the Customer Assets portfolio by 13% or Taka
8,341mn to end September 2017 with a loan book of
coming years will depend
Taka 70.61bn. The growth in customer assets was driven on how they can improve
primarily by the SME Loans, which experienced a customer service, portfolio
healthy 20% growth in this period. SME loans currently
stand at taka 31.31bn and comprise 46% of the total
quality and operating
loan book of IDLC. Consumer loans also grew 11% in efficiency. We, at IDLC, have
the corresponding period to stand at Taka 23.8bn. undertaken several initiatives
In the reported period, IDLCs annualized ROA and to improve in all these areas
ROE figures stood at 2.75% and 22.90% respectively, and hope that these initiatives
compared to 2.38% and 21.98% respectively, in the
will set us apart from the
same period last year. The NPL (Non-performing Loan)
ratio stood at 2.83% as at September 30, 2017 compared competition in the coming
to 2.98% as at December 31, 2016. years.
The companys operating income rose by 29% year on
year to Taka 4,863mn. The company also continues
its focus on people development, which is reflected in Arif Khan
6,493 man hours of training arranged during the third CEO & Managing Director
quarter. IDLC Finance Limited

19 of 40
PERFORMANCE ANALYSIS OF
TOP 10 COMMERCIAL BANKS* WITH IDLC
TOP 10 COMMERCIAL BANKS*
BRAC Bank Limited National Bank Limited * Considerations
Dutch-Bangla Bank Limited One Bank Limited 1. Period of the financials:9m, 2017
Eastern Bank Limited Southeast Bank Limited
2. Based on two criteria :Loan
Islami Bank Bangladesh Limited The City Bank Limited
PortfolioandNet Profit after taxes
Mercantile Bank Limited United Commercial Bank Limited

RETURN ON ASSETS (ROA) 9-month annualized

2.7% 1.8% 1.5% 1.4% 1.3% 1.2%

IDLC Finance BRAC Bank Eastern Bank The City Bank Mercantile Bank One Bank
Limited Limited Limited Limited Limited Limited

1.0% 1.0% 0.9% 0.9% 0.5%

Southeast Bank United Commercial Dutch-Bangla National Bank Islami Bank Bangladesh
Limited Bank Limited Bank Limited Limited Limited

RETURN ON EQUITY (ROE) 9-month annualized

IDLC Finance Limited 22.9% United Commercial Bank Limited 13.3%

BRAC Bank Limited 21.2% The City Bank Limited 13.2%
One Bank Limited 19.9% Southeast Bank Limited 11.8%
Mercantile Bank Limited 17.8% Islami Bank Bangladesh Limited 9.1%
Eastern Bank Limited 15.4% National Bank Limited 7.5%
Dutch-Bangla Bank Limited 14.9%

LOAN AND ADVANCES (IN BILLION) as of Sep 30, 2017

683.1

234.9 239.8
176.8 188.3 194.5 194.7 196.8 217.7
157.9
70.6
IDLC Finance One Bank Eastern Bank BRAC Bank The City Bank Mercantile Dutch-Bangla Southeast National United Islami Bank
Limited Limited Limited Limited Limited Bank Limited Bank Limited Bank Bank Commercial Bangladesh
Limited Limited Bank Limited Limited

20 of 40
LOAN PORTFOLIO GROWTH Y-T-D, (%)

26.4% 19.5% 13.5% 13.5% 13.4% 13.1%

Mercantile One Bank Southeast Bank Dutch-Bangla IDLC Finance Eastern Bank
Bank Limited Limited Limited Bank Limited Limited Limited

11.7% 10.5% 9.8% 7.1% 6.9%

Islami Bank Bangladesh The City Bank National Bank BRAC Bank United Commercial
Limited Limited Limited Limited Bank Limited

COST TO INCOME 9m, 2017

Southeast Bank Limited 34.5% Islami Bank Bangladesh Limited 50.0%

IDLC Finance Limited 35.6% United Commercial Bank Limited 56.4%
One Bank Limited 42.6% The City Bank Limited 57.0%
Eastern Bank Limited 42.9% BRAC Bank Limited 60.9%
Mercantile Bank Limited 46.8% Dutch-Bangla Bank Limited 71.3%
National Bank Limited 49.7%

DEPOSIT GROWTH Y-T-D (%)

25.0%

16.9%

13.0%
11.3%
10.3% 9.6%
7.7% 7.6% 7.0%
5.5%
2.4%
IDLC Finance Mercantile One Bank Dutch-Bangla National Southeast BRAC Bank Eastern Bank United Islami Bank The City Bank
Limited Bank Limited Limited Bank Limited Bank Bank Limited Limited Commercial Bangladesh Limited
Limited Limited Bank Limited Limited

NET PROFIT AFTER TAX (IN BILLION) 9m, 2017

3.8 3.4 2.7 2.6 2.5 2.4

BRAC Bank Islami Bank Bangladesh The City Bank United Commercial Eastern Bank Southeast Bank
Limited Limited Limited Bank Limited Limited Limited

2.3 2.1 2.1 1.9 1.8

Mercantile National Bank Dutch-Bangla One Bank IDLC Finance

Bank Limited Limited Bank Limited Limited Limited

21 of 40
 KEY
INFO
TRADE GAP INFLATION HITS
STANDS AT
TWO-YEAR-
USD 1.81 BILLION HIGH AT 6.12%
IN JULY-AUG

IMPORT MONETARY AND

CREDIT DEVELOPMENTS
15% 17% Industrial raw materials 32%
2666.97
Intermediate goods 8% Net Foreign Assets of banking system
6% 8%
Consumer goods 17%
Others 15% 7493.79
Net Domestic Assets of banking system
13% Petroleum & petro.prodts. 6%
32% Machinery for misc. inds. 13% 1375.318
Currency outside banks
9% Capital machinery 9%
8785.442
Deposits

Monetary and credit developments as of June 2017 (in Billions of BDT)

REMITTANCE 2016-17 2015-16

1.09 Apr 1.19

1.26 May 1.21

1.21 Jun 1.46

1.11 July 1.00

1.42 Aug 1.18

0.85 Sep 1.06

22 of 40
 ECONOMY AT
FDI HIT AN ALL-TIME
HIGH OF A GLANCE
USD 2.45
billion in FY SEEING ECONOMIC
TREND IN DATA
2016-17

SPREAD OF LENDING LIQUIDITY POSITION OF

& DEPOSIT RATE THE SCHEDULED BANKS
0.63%

7.53%
Specialised Banks
10.92% State owned Banks
4.76 Private Banks
40.81% (Other than Islamic)
4.7 4.73 4.72
4.71 4.72 Private Banks (Islamic)
4.65 4.69 4.69 4.62
Foreign Banks
4.65
4.53
4.65 40.11%

Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Total liquidity assets for December 2015 was BDT 2577.94 billion

INFLATION EXPORT

Non-Food Inflation (point to point) Food Inflation (point to point)

2% 39%
7.87%
5.58% 5.33% 7.37% 7.51% 7.32%
4.49% 6.94% 3.53%
6.84% 6.89%
6.53%
JUTE WOVEN GARMENTS
3.30% 3.44% 3.67% 6.95% 3.75% 3.44%
5.56% 5.41% 3.10% 3.07% 3.18%
5.38%

43% 2% 13%
19%

Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 KNITWEAR FROZEN FOOD OTHERS
Inflation rate in August2017 increases as food inflation creeps up

23 of 40
SPOTLIGHT ON STARTUP CHALDAL
CHALDAL
Launched in 2013, Chaldal is the leading e-grocery store in Bangladesh. MBR had a one to one conversation with
Waseem Alim, Co-founder & CEO of Chaldal to get an idea about the inception and vision of the venture.
Doing Doable E-commerce
Three friends, Waseem Alim, Zia Ashraf and Tejas
Viswanath, thought of getting into e-commerce space.
E-commerce requires substantial financing, that is to
say, almost half-a billion dollar. Hardly any venture in
this country raised this level of financing. Holding on to
that thought, they decided to do e-commerce in a viable
style: venturing into online grocery business.
Why grocery and not any other area in e-commerce
space? In cases of electronic items, consumers
frequency of purchasing a phone or a gadget is low.
On the flipside, logistics is an issue in delivering
expensive items like phone, that too in a country where
e-commerce landscape just
began to breathe-in. What if
the delivery-guy carrying 2
phones, 1 tab gets mugged on
the way to delivery? That would
be a tremendous financial loss,
even may cost life. The friends
were searching for a nature
of business where customers
would drop by 2-3 times every month and nothing else
could fit the bill other than grocery items.
The nailing phase & stream of realizations
Initial days were hard-hitting. The three friends, one
photographer and a table were all the chattels of Chaldal.
They bought 100 items from market, clicked photos and
uploaded on the website. The items were returned if no
order received on a particular day. Starting like this was
somewhat peculiar for people like Waseem, Zia and
Tejas, who had decent careers. People perceived that
they would give up soon and very naturally, nobody
presumed their idea to be valid. Finally, they go the an
order and the first order was 100 batteries.
By then, they started to receive orders and having
realizations on how to move to the next level in terms
of service providing and product offering. The idea of
selling fresh vegetables dawned upon them and also
they realized to shift their delivery lead time from the
24 of 40
next day to the same day. Back in 2013, selling fresh was
not common, not even in the global landscape, let alone
in Bangladesh. Only two online groceries, Instacart and
Bigbasket were doing it.
TECHNICALLY, THEY STARTED
THE TREND AT THE JUNCTURE
WHEN THE GLOBAL KEY
GROCERY PLAYERS WERE
CONTEMPLATING ON THE
IDEA.
They have been in the forefront
of technology. E-commerce, by
then, was witnessing sweeping
changes; the e-commerce
ballgame was whole different
from what it was 10 years
ago. Again they realized that
the inventory management in grocery chain was not
efficient. How would the customers demand be met
who orders for 2 Kg red kidney beans, when only
half-a kg is available in store? Could it be delivered
within an hour as promised or should a sorry message
to be delivered to the customer? How customers can
be retained this way? Many questions popped up in
their minds. The ecosystem hinged upon a system that
was fundamentally broken so, perfect service was far
from reality. From that thought, they decided to have
a warehouse.
How the products are sourced?
Initially, they used to stock very few items since 80% of
the products were sourced from the market. Gradually,
the sourcing shifted to suppliers and manufacturers
from market and currently, they source only 5%-
6% products from the market, which are extremely
perishable and extremely expensive, e.g. chicken, beef
or any kind of meat. Perishables like meat or even
CHALDAL
AT A GLANCE

TEAM SIZE HIT ON WEBSITE AVERAGE ORDER

350 20,000/DAY 1,000/DAY

WAREHOUSES NEXT WAREHOUSE DESTINATIONS

KALLYANPUR MIRPUR RAJARBAGH BADDA DHANMONDI

BANANI UTTARA BASHUNDHARA

AVERAGE INVENTORY ANNUAL SALES

BASKET SIZE TURNOVER DAYS GROWTH

BDT 1,400 24-26 DAYS 4X

milk are too costly to waste. Hence, these are sourced THE GIANT SUPERSHOPS
on daily basis. There also have been a massive shift in
consumers food intake. They demand fresh products HAVE INVENTORY TURNOVER
manufactured/sourced on the same day. The perishable
products, fresh vegetable and fruits are sourced from DAYS AROUND 100 DAYS,
the big wholesale market at Kawranbazar. Chicken
and meat are collected from local vendors. They get IF ANALYZED THEIR FINANCIAL
minimum credit period (7 days/ 15 days).
STATEMENTS. SO, CHALDAL IS
Inventory Management
HAVING SOME GOOD
From the historical purchase data of last four years, they EXPERTISE IN MANAGING ITS
get an idea what products to order from the suppliers
on a particular day. Even they get an insight of weekly INVENTORY.
grocery prediction. Currently, they have 5 warehouses
located at Kallyanpur, Mirpur, Rajarbagh, Banani WASEEM ALIM
and Uttara. From these warehouses, they deliver the Co-founder, Chaldal
nearby orders within 1-hour timeline. However, with
our current coverage, they are not able to achieve the
Every warehouse got liaison with the local vendor from
1-hour delivery lead time at Dhanmondi, Badda and
who they collect products aligning to the demand. A
Bashundhara. Hence, our next points of warehouse
destination will be these three areas. quality manager is placed in every warehouse to ensure
proper maintenance of the commodities. It is the
Online grocery chain should have utmost command over responsibility of the Quality Manager to confirm that
efficient inventory management. The inventory turnover vegetables are stored in a room having cool temperature.
days of Chaldal ranges from 24-26 days, which implies they Chaldal believes in utilizing real-estate in an efficient
have a good control over working capital management. manner since real-estate is scarce in the capital.

25 of 40
From store to customers doorstep
Chaldal, influenced by some early mishaps, makes it a
point to give special emphasis on packaging. In first the
first business week, they got their largest order worth
of BDT 4,000 grocery items. In context of consumer
purchasing power in 2013, BDT 4,000 was quite a
lucrative order. However, the delivery could not take
place since the products were ruined in heavy rain.
From that incident, they learned the tactics of packaging
products to save them from rain.
They are constantly coming up with new processes for
safe delivery. For instance, they may charge BDT 10
more for a dozen of egg for providing the egg-box as
a protection. Customers realize that the eggs can be
damaged without the egg-box, so they are ready to pay
for the extra money. Around 97% of our products are
delivered within an hour.
How does the market react?
Chaldal is receiving a good response from the
consumers. Every day, almost 20,000 individuals hit
the website, in which 1000 individuals on average place
order. The average basket size is BDT 1400.
The tech-savvy e-grocery store
Chaldal invested substantially on tech-front, in a
bid to ensure better service quality and inventory
management. They have created a software that records
the daily orders (products and size) location-wise, the
status of each order (prepared/unprepared/assigned),
26 of 40
the delivery status (picked-up, cancelled). Also, they get
a clear insight on what products to purchase the next
day in what quantity to meet their customer demand.
Their tech team consists of 5 employees.
E-grocery vs. Supershops
As Waseem perceives, supershop and e-grocery have
little scope of comparison. Supershops are initiating
e-stores of late, however, Chaldal will always get the first
mover advantage in this realm. Given the horrendous
traffic in the capital, consumers seek for convenient
shopping, which is aligned with Chaldals motto.
Alongside, even if a consumer doesnt like the product
after the delivery, s/he can refuse to take it instantly.
Growth over the years
Chaldals growth for the past few years is 4 times annually.
They are having a gross margin around 13%- 14%.
Challenges
Consumers take comfort in F-commerce shopping.
The shift from F-commerce to E-commerce is
more necessary for this time since E-commerce
shopping is more authentic.
Lack of uniform regulation is a challenge since they
have to pay tax on house rent but, IT firms enjoy
the tax exemption facility. They are deprived of this
facility since they are registered as grocery store.
The phenomena results in paying high income tax
which ultimately erodes their profitability.
 Access to financing is another drawback. The
financial institutions are less interested to financing
in this sector.
Strategy & plans down the line
Chaldals prime strategy is to retain one of the two
consumers for the next two years. The statistics
reveals, out of 50,000 shoppers of Chalal, 14,000
shopped in last one month. The retention rate
picked up in recent times, however, they are
working towards having a better rate down the line.
The total team size is around 350. They dont
plan to expand beyond the capital for the time
27 of 40
being. According to Waseem, grocery market
has huge potential and scope in Dhaka. Dhaka,
the dense capital, is a USD 4 to 5 million market
with higher purchasing power. Many areas in the
city, e.g. Bashudhara, is still untapped. Another
reason being not expanding beyond the capital is,
e-grocery stores fit the bill for a city full of hustle-
bustle like Dhaka, where people are on constant
rush. The towns are quite laid-back for having an
e-grocery store for their convenience.
Of late, they are on the way to launch exclusive
products like Doi of Bogra, which are famous for
their taste an appeal and Dhaka-dwellers hardly get
any time to visit these places to savour the Bengali
delicacies.
Glimpse of Warehouse
Inventory Management software
YOUTH LEADERSHIP IBA COMMUNICATION CLUB (IBACC)
IBA COMMUNICATION
CLUB (IBACC)
IBA Communication Club (IBACC) is the most active club in IBA which is dedicated to youth development,
and youth empowerment by means of various informative and challenging events, seminars and workshops. MBR
recently had an opportunity to have a one-to-one conversation with Meftahul Hasan, President, IBACC.
MBR: Tell us about the start of the club.
IBACC: Since its very inception in 2002, the students
body of IBA, which was formerly known as IBA
Debating club, has always functioned with a vision
to keep the students of IBA as well as the other
participating organizations in pace with the rapidly
advancing world of business. All these efforts were
recognized when IBACC was awarded the best club of
the country in the year 2008. It can be deemed as the
students body of IBA and the support and endeavor of
every person and organization associated with the club
has made it a success and one of the most prestigious
ones in the country. 15 years apart, we stand here today
looking back and proud that our mission and principles
remain the same.
MBR: Briefly share the activities (competitions,
workshops, seminars) that the club.
IBACC: Over the years, IBACC has organized
numerous editions of IBA National English Debate
Championship, IBA Quiz, HSBC IBACC Business Case
competition and its flagship event, BRANDWITZ.
IBACC has recently launched FINWITZ, the first ever
finance based business competition from IBACC that
will focus on Investment Management.
In addition to this, IBACC is also the proud host of
numerous workshops and seminars which enable
the students to interact with the esteemed speakers
from different industries. All of these competitions
and workshops have taken place regularly and
revolutionized the ECA circuit at the Business schools
of Bangladesh and have become ideal examples for
other clubs to follow.
28 of 40
MBR: How is the recruitment process? What qualities
do you look for in potential members?
IBACC: Students who are willing to be part of IBACC
start to get involved in various event-organizing based
activities. Based on their performance, they are given
the post of Coordinator in their second year. By the very
end of their third year, they are announced as part of the
Executive Committee. This is done by corresponding to
the profile sought for a particular post in the Committee
and this ensures that there is a collaboration of all the
required skills for the Club to function at its best.
MBR: How do you groom up the members to be fit
for the corporate world?
IBACC: We provide members with the resources and
the exposure that will enable them to make a more
informed choice of a major or career. We groom them
further in their areas of expertise and provide contacts
with business professionals regarding how members
can best prepare for the job market, as well as take up
leadership roles in their respective fields.
MBR: What challenges do you face? How do you
overcome them?
IBACC: One of the main challenges that we often
tend to face is managing the clubs finances. Hosting
events and competitions often require a hefty amount
of sponsorship money and it is imperative to efficiently
manage those finances. But we overcome this by making
sure that all of our members have an understanding of
the best methods of fundraising and managing funds.
We provide a complete breakdown of all the expenses
and cash outflows so that it is easier for the sponsors
to take it into consideration and hence provide us with
the required financing accordingly. By implementing a
sales-like model that includes prospect-specific tactics
and proficient data tracking, we create opportunities for
advancement and enhanced recognition, not only at the
campus but also with our alumni and other corporate
networks.
MBR: Please share the clubs achievements.
IBACC: As mentioned previously, IBACC was awarded
the best club of the country in 2008. We are extremely
proud of the various accolades from competitions that
we have won on national and International levels. All
the individuals are member of IBACC.
IBA became the first ever team from Bangladesh
to win the Asian British Parliamentary Debate
Championship this 2017. The team consisting of
Rawnak Zaheen Wasi from BBA 22ND AND Sajid
Khandakar from BBA 25TH.
Team Poriborton consisting of Sameem Shahriyar
and Mustafid Raiyan Khan for winning Gold
Award in the University Division at PolyU Global
Student Challenge 2017 and Placing Bangladesh at
the Top of the Podium.
Team El Patron consisting of Sameem Shahriyar,
Nafisul Abrar, Mustafid Raiyan Khan and Shahriar
Sharif successfully represented Bangladesh,
advanced to the finals and achieved 4th place
in the HSBC HKU Asia Pacific Business Case
29 of 40
Competition 2017. This is the best result for a team
representing Bangladesh in this competition.
IBA students teamed up with Dhaka University
students won the Asia-Africa regional final for
Global Social Venture Competition in 2011,
beating 86 business schools and universities across
two continents.
Gaushey Shahriar, won the Best Film Award for
his Short film Hartal in 6th International Inter
University Short Film Festival organized by Dhaka
University Film Society, the biggest student film
festival of Bangladesh.
It is clearly evident that IBA - ites have always strived
to reach the peak of their latent talent, in terms of
academics as well as co-curricular activities. Keeping
in mind the necessity to adopt with the spinning world
of business and unlock their true potential in the ever
changing business scenario, IBACC is organizing
FINWITZ which is in accordance with the goal of the
club.
MBR: What are the clubs plans for the future?
IBACC: We plan to invest in fields where we can give
life to our motto of leaders and best, in areas that
leverage the phenomenal breadth of excellence. This
is a commitment IBACC makes, to its members, all
IBA-ites students, to our respective disciplines, to our
societies and to the country at large.
TRIBUTE TO
RICHARD H. THALER
Human beings like to believe that they are smart,
rational creatures, always acting in their best
interests. Dominant economic theories also assume
that human being will act in a rational manner.
What was left of this illusion was further dismantled
by the The Royal Swedish Academy of Sciences,
who awarded the Nobel prize in economics to
Richard Thaler, an American economist at the Richard H. Thaler
University of Chicago, for his pioneering work in right after receiving the Noble Prize
behavioral economics, which examines humanitys Photo: University of Chicago Booth
flawsnamely, why human beings always dont School of Business
make rational decisions.
on Behavioral Economics, Towards a Positive
Thaler is the third behavioral scientist to win the Theory of Consumer Choice and the paper was
prize, following Daniel Kahneman (2002) and rejected by six major journals.
Robert Shiller (2013). Thaler is, in many ways,
a traditional economistnot surprising for All throughout his life, Thaler broke the stereotype
someone who has spent so much time in American and tried to imply one thing:
economics departments. In his book Misbehaving,
Thaler gave the readers a tour on how eccentric
human mind works at times, his bonding with two ECONOMIC THEORY
psychology maestros- Amos Tversky and Daniel
Kahneman ( Noble Prize Winner in Economics,
2002), his struggle to establish the essence of
SHOULD BE FOR
Behavioral Economics in teeth of utter pessimism
from veteran economists like Milton Friedman
EVERYONE, NOT
(Noble Prize Winner, Economics, 1976) and
many other leading Economics Professors. The ONLY FOR EXPERTS.
veteran Economists were not interested in Thalers
survey results, which showed difference from The List
what economic theory suggested, albeit they never Some real facts, inconsistent with economic
presented their own data. theories got stuck in young Thalers mind.

Torn with the negative remarks of the renowned Real Fact: In a dinner of close friends, the
economists, Thaler wrote his first academic paper hungry souls were waiting for something

30 of 40
 roasting in oven. Meantime, one friend
brought a large bowl of cashew nuts to nibble
on. Within five minutes, the bowl got almost
empty and their appetite was in danger. Thaler
removed the bowl and everyone was happy.
Inconsistency: To Econs, more choices are
always preferred to fewer. In this case, choices
have been curtailed.
Real Fact: Sajed mows his lawn weekly. When
asked if he would hire someone for BDT 200
for doing the same for him, he responded
negative. When asked if he would do the same
for his neighbor for BDT 400, he responded
negative.
Inconsistency: Sajed is violating the precept
that buying and selling price should be about
the same.
The list continued to grow and Thaler didnt
know what to do with them, except publishing
an academic paper, Dumb Stuff People Do with
absolute belief that no reputed/semi-reputed
journals would publish this paper.
Richard Thaler has spent his career studying the
notion that humans are central to the economy
- and that humans are error-prone individuals,
not Spock-like automatons. Whether buying an
alarm clock, selling football tickets, or applying
for a mortgage, everyone succumbs to biases and
make decisions that deviate from the standards of
rationality assumed by economists. In other words,
they misbehave. Dismissed at first by economists
as an amusing sideshow, the study of human
miscalculations and their effects on markets now
drives efforts to make better decisions in their lives,
their businesses, and their governments.
In his recent academic paper, Thaler wrote: It is
time stop thinking about behavioral economics
31 of 40
as some kind of revolution. Rather, behavioral
economics should be considered simply a return
to the kind of open-minded, intuitively motivated
discipline that was invented by Adam Smith and
augmented by increasingly powerful statistical
tools and datasets.
Coupling recent discoveries in human psychology
with a practical understanding of incentives and
market behavior, Thaler enlightens how to make
smarter decisions in an increasingly mystifying
world. He reveals how behavioural economic
analysis opens up new ways to look at everything
from household finance to assigning faculty offices
in a new building, to TV quiz shows, sports transfer
seasons, and businesses like Uber.
Thaler describes his own career as a struggle against
the prevailing orthodox model of rational choice.
The book lists anomalies, findings that appear to
contradict the rational model, from fields as far
apart as game shows and pension savings. These
findings were clearly not received warmly by many
economists. Thaler talks of running the gauntlet
at seminars, where opponents said the evidence
was irrelevant because it is still possible to assume
people behave as if they were following the
rational choice model. His stories suggest that many
econs display the very human trait of confirmation
bias, which is not surprising given the radical way
behavioral insights challenge traditional theories.
Today, behavioral economics is still considered
a somewhat separate subject within the broader
discipline. But if Thaler has it his way, the field of
study that just won him a Nobel prize wont exist for
long: If economics does develop along these lines
the term behavioral economics will eventually
disappear from our lexicon. All economics will be
as behavioral as the topic requires.
INDUSTRY

UPDATE
INDUSTRIAL PARK FOR PHARMACEUTICALS
INGREDIENTS FINALLY TAKING SHAPE

The Active
PHARMACEUTICALS Pharmaceutical
Ingredients (API) industrial park is finally
taking shape nearly a decade after the scheme
was taken up with the view to facilitating a steady
supply of raw materials of drugs to reduce import
dependency. Recently, the developer of the
park, Bangladesh Small and Cottage Industries
Corporation, has asked the 27 pharmaceutical
companies, which include Square, Incepta, Globe,
Opsonin, Beximco and Eskayef Bangladesh, to
complete all procedures and take possession of the
41 plots allotted to them in August. The companies
will start construction of their plants once taking
handover of the plots. Originally supposed to be
complete within five years, the construction of
the complex was delayed for land acquisition and
addition of new components to the project.

CONSTRUCTION MATERIALS
PRICES OF BUILDING MATERIALS
REGISTER SIGNIFICANT RISE

The prices of key construction materials, including steel

rods and bricks, have marked a significant rise in the recent
times, triggering anxiety among the realtors. The price of
rods has constantly been increasing for last several months
mainly due to high cost of raw materials. Congestion of
cargoes at Chittagong seaport, increased transport cost
and disruptions in gas supply to some steel mills were also
responsible for the price hike, they added. Talking to the FE,
traders at the old Dhaka said the price of rods increased by
a range between BDT 4,000 and BDT 5,000 per tonne in
last three to four months. Another trader Tanim Rahman,
proprietor of Dewan Traders at English Road, said the price
started rising before placing the national budget for the
fiscal year (FY) 2017-18, when the new Value Added Tax
(VAT) law was supposed to be implemented.

32 of 40
FROZEN FOOD SECTOR TO GET
ALLOCATION OF AMMONIA GAS

The government has

FROZEN FOOD agreed in principle to allocate
ammonia gas to frozen foods exporters as the sector
has been facing an acute shortage of the item due
to a syndicate of a section of exporters. Countrys
frozen fish exporters have been facing difficulties
since the last week of August as the biggest supplier
of the ammonia gas, Jamuna Fertilizer Company,
stopped its delivery and a supply shortage took
place at the market. Cashing in on the situation,
a quarter increased the prices of the gas delivered
by Shahjalal Fertilizer Company Limited that cast
a negative impact on the production of frozen fish
across the country, the sector people said. The
Bangladesh Frozen Foods Exporters Association
sent a letter to industries Minister Amir Hossain
Amu, seeking allocation of ammonia gas in favour
of the trade body as the price of the item increased
to BDT 30,000-35,000 a cylinder (50 kilograms)
from the company rate of BDT 1,632 a cylinder.

MOBILE TELEPHONY
BANGLADESH 6TH LARGEST
UNCONNECTED MARKET
Broadband Commission for Sustainable
Development has ranked Bangladesh as the worlds
sixth largest unconnected market in terms of mobile
telephone users with its 46.2 per cent population
being deprived of getting connected through mobile
phone. As per the report of BCSD, of the total 163.8
million people of the country, 75.7 million are yet to get
connected through mobile handset. The Bangladesh
Telecommunication Regulatory Commissions data,
showed that the number of active mobile phone
subscribers was126.3 million at the end of December,
2016 and that increased to 135.9 million in June this
year. India with 1,134.6 million population has been
ranked as the worlds largest unconnected market with
its 49.5 per cent or 660.1 million population remaining
unconnected. China and Nigeria became second and
third largest unconnected market respectively with the
countries 362.2 million and 101.6 million people not
enjoying mobile phone services. Pakistan and Brazil
were fourth and fifth.

33 of 40
 MONTH IN BRIEF

Industrial Bangladesh The World Bank According to the

imports increased (WB) is going to latest survey, the
by more than 21st most raise the interest rate upper-line poverty

26% or USD attractive on its International was alleviated at

Development the fastest pace
1.54 billion in the offshoring Association (IDA) loan in rural areas
first two months of destination for Bangladesh from as it was cut to
current FY due to 9th best-outsourcing hub
a surge in capital in Asia.
the next fiscal year.
26.4% in
machinery
2016 from
35.2% in
2010
INDUSTRIAL CREDIT GROWTH Industrial loan Bangladesh
(gures in %, Source: BB) disbursement signed a long-term
sales and purchase
growth falls to
30.14 30.23 agreement with
13.51% in the an Indian refiner
20.77
last FY compared to import gasoil to
15.59 meet the countrys
13.51 to 20.77 % Y-O-Y energy demand.

FY13 FY14 FY15 FY16 FY17

Source :Bangladesh Bank

Global credit Private Services sector Southeast

rating agency exports hit USD
sector credit Bank,
Moodys Investors 619.97 million in the
Service said that the growth hit first two months of Trust Bank,
institutional strength a 58-month the FY, overshooting Prime Bank
and susceptibility high in its target for the
and Uttara
to event August, period by 6.28%
risk of Finance: 3
Bangladesh 17.84% banks and
is very low 1 NBFI are
(VL+). permitted to
issue bonds

34 of 40
 MONTH IN BRIEF

EZ industries
SALES OF SAVINGS TOOLS
(rst quater in crores of taka)
Dhaka
now to pay duty,
11,650
12,694
taxes on imports slips one
6,821 6,681
on selling goods in rank in Doing
domestic market Business
2,097
FY2014 FY2015 FY2016 FY2017 FY2018 Report 2018:
Net sales of savings certificates moved down
increased 8.91% year-on-year to
BDT 12,694 crore in the first quarter
to 177 from
of the FY. 176

FDI hit an all- Bangladesh Losses caused Bangladesh

time high of and China signed by two spells of Bank to launch
USD 2.45 recent floods in interoperability
a USD 550 the country is of digital finance
billion in million framework estimated to be by June next
fiscal 2016-17 agreement for BDT 150.1 Billion: to facilitate
on the back of a loan that will be CPD Study transactions
surge in equity between core
used to implement
investment by banking solutions
a petroleum and mobile
mobile phone
project. financial services
operators.

General Bangladesh
imports drop Bank lowers
interest rate
by 8% to USD further for long-
315.2 Billion term private sector
in September loans
Paypal, the US online payment firm New Rate:
despite higher
started its operation in Bangladesh
import of food LIBOR plus
from October 19
grain to cool 3%
an overheated Previous
market Rate: LIBOR
plus 3.5%

35 of 40
 For the Record

IT WILL NOT Our competitors like India,

Vietnam, and Cambodia are giving
ONLY SAVE US many incentives to the garment
sector for raising exports.
TIME BUT ALSO FARUQUE HASAN, Senior Vice-President,
Bangladesh Garment Manufacturers and

USD 100 MILLION

Exporters Association (BGMEA) on the drop of
USD 2.03 billion last month, which is around
10% less than the same month last year.

A YEAR Bangladesh has

NASRUL HAMID, State Minister For Power, Energy
And Mineral Resources, at the agreement signing
good prospects
ceremony Bangladesh and China of USD 550
million framework agreement which will be used to of becoming a
implement a petroleum project
regional trade
We see a huge We have hub, if the
opportunity in countrys transport
witnessed
Bangladesh.
strong GDP infrastructure
We are willing
and waiting growth but can be improved
to invest in it is not to bring down
network to offer transport costs and
reflected
the service. But make the sector
the terms and in the job more competitive,
conditions to market DONG KYU LEE, unit head of
make money ZAHID HUSSAIN, Lead project administration in ADBs South
Economist, World Bank Asia Department. For the second
from it have to Bangladesh, during the phase of up gradation of the Dhaka-
briefing of the observation by Northwest international trade corridor
be clear. the World Bank came in its in Bangladesh, where The Asian
Bangladesh Development Development Bank (ADB) approved
Sigve Brekke, CEO of the Update September 2017 approved USD1.2 billion
Norwegian multinational
telecom company during
the interview with The
Daily Star express THE BANKS MAY RAISE THEIR INTEREST
thatTelenor Group, the
majority shareholder
RATES ON LENDING TO MINIMIZE THEIR
in Grameenphone, is
keen to invest heavily in
COST OF FUNDS
Bangladesh to broaden ALI REZA IFTEKHAR, Managing Director (MD) and Chief Executive Officer
its digital services (CEO), Eastern Bank Limited on the rect increase of interest rates on deposits

36 of 40
37 of 40
CAPITAL MARKET REVIEW MONTHLY MARKET STATISTICS

Monthly Commentary l
Market started the month of October in upbeat tone
with broad index, DSEX, gathering 112.7 points
within first five trading sessions of the month. The
gaining trail could not prolong later on as selling
spree intensified, pushing DSEX below 6,000.0
points level during mid-October. By the end of the
month DSEX settled at 6,019.6 points with 73.3
(-1.2%) points loss. Blue-chip index DS30 closed
flat at 2,168.0 points with 9.6 (-0.4%) points loss.
During October, average turnover amounted to
BDT 7.1 bn (USD 88.2 mn), which was 32.0% lower
than that of the last month. Bank continued to be
the turnover leader, contributing 40.9% to the
months average turnover. However, the sector,
top gainer of last month, faced correction during
October and lost 1.3%. Among the other major
sectors, Telecommunication (+5.3%) yielded the
highest return as market large cap GP appreciated
by 5.5%. NBFI followed on the list with 2.1% gain.
On the other hand, Cement and Textile were the
worst performer of the month each losing 2.5%.
Meanwhile, MSCI Frontier Markets Index increased
by 3.1% this month. Among the regional peers,
Vietnam and Srilanka outperformed Bangladesh
increasing by 7.0% and 3.5%, respectively; while
Pakistan faced correction of 3.9%.

Monthly Market Statistics l

Index Movement

Indices Index Point, Oct 2017 1M Return 3M Return YTD Return 3Y Return

Bangladesh

DSEX 6,019.6 -1.2% 2.7% 19.5% 16.4%

DS30 2,168.0 -0.4% 1.1% 19.7% 11.2%

DSES 1,316.2 -2.2% 0.1% 10.4% 7.9%

Peer Countries

Pakistan (KSE 100) 39,617.2 -3.9% -13.9% -17.1% 30.4%

Sri Lanka (CSE - All Share) 6,617.4 3.5% -0.3% 6.2% -9.7%

Vietnam (VNI) 837.3 7.0% 6.9% 25.9% 39.4%

563.7 0.4% 4.9% 12.9% -18.7%

MSCI Frontier Markets Index 612.5 3.1% 6.7% 22.7% -8.5%

All returns are Holding Period Return

Market Statistics (October, 2017) Graph: DSE Turnover and DSEX

Market Statistics 31-Oct-17 28-Sep-17 % change

Mcap All (USD mn) 50,559.5 50,334.8 0.4%

Mcap Equity (USD mn) 43,169.9 42,939.4 0.5%

Daily Avg. Turnover (USD mn) 88.2 129.8 -32.0%

38 of 40
Top Twenty Market Cap (October, 2017)
Daily Avg. Turnover
DSE Code Sector Mcap1 (USD Mn) 1M Return 3M Return YTD Return 3Y Return
(USD Mn)

GP Telecommunication 7,315.7 0.6 5.5% 15.5% 58.7% 32.6%

SQURPHARMA Pharmaceuticals & chemicals 2,521.6 0.9 -2.8% 5.2% 19.4% 35.5%

BATBC Food & Allied 2,299.8 0.3 3.6% 2.7% 27.9% 19.7%

ICB NBFI 1,452.6 0.4 3.8% -4.4% 77.7% 30.6%

BRACBANK Bank 1,061.7 2.4 17.1% 14.6% 90.4% 290.2%

RENATA Pharmaceuticals & chemicals 901.9 0.1 2.9% 5.5% 10.8% 64.6%

LAFSURCEML Cement 849.9 0.8 -3.4% -2.3% -27.3% -54.4%

UPGDCL2 Fuel & Power 773.0 0.5 3.4% -5.4% 21.7% N/A

ISLAMIBANK Bank 656.7 0.6 -4.3% -7.0% 14.5% 38.4%

OLYMPIC Food & Allied 632.9 0.3 -5.7% -10.8% -16.8% 70.9%

BERGERPBL Miscellaneous 598.4 0.0 -0.7% -1.3% -7.4% 77.8%

TITASGAS Fuel & Power 571.0 0.2 -1.9% -7.9% -5.5% -43.0%

CITYBANK Bank 488.3 1.6 5.3% 14.5% 89.7% 187.7%

SUMITPOWER Fuel & Power 520.7 0.2 -5.1% -2.3% 8.8% 10.2%

BXPHARMA Pharmaceuticals & chemicals 493.7 0.4 -8.8% -12.8% 20.5% 70.3%

MARICO Pharmaceuticals & chemicals 431.5 0.0 1.6% 10.6% 23.7% 9.0%

MJLBD Fuel & Power 442.3 0.6 -2.8% -4.3% -3.0% 10.2%

EBL Bank 408.7 0.1 4.2% 19.7% 82.0% 133.3%

IDLC NBFI 383.9 0.9 1.9% 9.1% 60.9% 110.3%

DUTCHBANGL Bank 322.0 0.5 0.7% 19.1% 36.9% 82.4%

All returns are holding period return

Mcap as on last trading session of the month
1

2
3Y return of UPGDCL is unavailable as it was listed in 2015

Top Ten Gainers List (October, 2017) Top Ten Losers List (October, 2017)
DSE Code 31-Oct-17 28-Sep-17 % Change DSE Code 31-Oct-17 28-Sep-17 % Change

AAMRANET 118.6 35.0* 238.9% HAKKANIPUL 49.3 81.2 -39.3%

STYLECRAFT 2,613.3 1,406.9 85.7% ARAMITCEM 25.8 38.8 -33.5%

GEMINISEA 950.3 593.2 60.2% MITHUNKNIT 30.0 44.4 -32.4%

EASTRNLUB 1,097.9 881.7 24.5% NORTHERN 408.3 589.2 -30.7%

METROSPIN 10.3 8.5 21.2% STANCERAM 80.0 109.1 -26.7%

WATACHEM 198.2 164.8 20.3% BDCOM 31.6 42.8 -26.2%

BRACBANK 100.6 85.9 17.1% ALLTEX 9.9 12.9 -23.3%
TRUSTBANK 42.6 37.0 15.1% FINEFOODS 31.4 40.2 -21.9%
DAFODILCOM 52.0 45.9 13.3% UNIONCAP 16.7 21.2 -21.2%
SONARBAINS 20.6 18.4 12.0% ICBAGRANI1 8.0 10.0* -20.0%
*Offer price of AAMRANET BDT 35 *Offer price of ICBAGRANI BDT 10

39 of 40
Top Ten Closed End Funds based on 5 years (CAGR) performance:
"Price1 "NAV1 "Price/ "Dividend2 NAV Return3 Redemption
DSE Code Fund
(BDT)" (BDT)" NAV" Yield (%)" 2017 YTD 2016 2014 2012-16 Year

NLI1STMF VIPB 16.0 16.42 97.2% 9.4% 25.7% 20.0% 17.7% 15.7% 2023
SEBL1STMF VIPB 13.8 15.39 89.7% 9.8% 25.3% 19.3% 16.5% 14.2% 2021
GRAMEENS2 AIMS 14.8 19.63 75.4% 7.4% 21.9% 15.1% 13.6% 12.1% 2021
RELIANCE1 AIMS 10.5 14.23 73.8% 9.5% 20.0% 17.1% 10.7% 11.8% 2027
IFILISLMF1 ICB AMCL 8.1 9.77 82.9% 11.1% 11.1% 14.0% 12.9% 11.0% 2023
1JANATAMF RACE 6.6 11.86 55.6% 3.0% 18.4% 6.5% 12.2% 9.8% 2020
ABB1STMF RACE 6.5 12.39 52.5% 4.6% 18.8% 8.9% 9.9% 9.8% 2019
FBFIF RACE 6.2 11.93 52.0% 3.2% 16.6% 9.1% 9.3% 8.8% 2018
POPULAR1MF RACE 6.3 11.76 53.6% 5.6% 19.2% 8.2% 11.1% 8.7% 2019
PHPMF1 RACE 6.8 11.69 58.2% 3.7% 21.1% 7.4% 10.9% 8.0% 2019

1 Price as on October 30, 2017; NAV as latest published

2 On latest cash dividend declared
3CAGR computed for respected periods, except for 2017, adjusted for dividend. YTD returns of funds debuting within the year represent return generated since debut, hence is not
directly comparable with return of funds that operated throughout the year.

Fund Managers Performance Summary

Fund Managers
Dividend NAV Return
Fund Manager AUM (BDT mn) P/NAV Ranking by Return1
Yield (%)
2017 YTD 2016 2014-16 2012-16 2016 2014-16 2012-16
RACE 32,437 55.3% 3.2% 18.5% 8.5% 9.9% 8.1% 5 4 3
LR Global 10,619 71.7% 6.4% 16.4% 4.2% 5.6% 5.3% 6 5 5
ICB AMCL 8,263 82.1% 8.3% 15.6% 13.8% 10.1% 5.6% 4 3 4
AIMS 4,440 75.1% 7.7% 21.5% 15.5% 12.7% 11.7% 2 2 2
VAML 3,401 76.6% 3.0% 18.5% - - - - - -
VIPB 2,362 92.3% 9.6% 25.4% 19.5% 16.9% 14.7% 1 1 1
SEML 1,518 89.6% 5.5% 5.5% - - - - - -
ATCP AMCL 827 83.7% 13.8% 20.2% 14.4% - - 3 - -
CAPM 525 78.2% 0.0% 6.4% - - - - - -
AMC Industry 64,392 66.7% 5.3% 17.8% 9.6% 9.7% 7.9% - - -
1Position of the respective fund manager in the ranking of 6 managers by return in respective horizon

Graph: Sector Return October, 2017)

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