Kolkata-based jute bags and jute products maker Gloster Ltd is looking to invest ₹500 crore to set up a manufacturing unit in Bangladesh.
According to Hemant Bangur, Executive Chairman, work on the project is likely to commence in the next six to eight months, while commercial operations could begin within the next two years. The company has already appointed consultants to prepare a project report on its proposed expansion plan.
“We have appointed consultants and they will be submitting their project report soon. We could look at taking over an existing unit and turning it around or setting up a new manufacturing unit with a capacity of producing 150 tonnes a day of jute textiles and products,” Bangur told BusinessLine.
Gloster has two business units in West Bengal with an annual capacity of producing 50,000 tonnes of jute textiles and products.
The Bangladesh unit, once operational, will be able to employ nearly 3,200 people.
The easy availability of the fibre – raw jute – and a ‘conducive’ land and labour policy are some of the key reasons for the company looking at setting up its manufacturing unit in Bangladesh, he said.
“Inflexible land and labour policy pose major hurdles for expanding business in India. On the other hand, in Bangladesh, the fibre is easily available, government policy is more conducive and cost of doing business is also lower,” he said.
Its inability to expand its capacity within the country could pose a problem. The demand for jute products has been robust particularly from international markets and the company has been facing difficulties in supplying its order on time with an order book running into three to four months.
“I fear we may lose markets if we are unable to supply on time, so we are looking at expanding our capacity in Bangladesh to cater to these markets,” he said.
Exports – both direct and indirect — account for nearly 35 per cent of the company’s turnover, which was approximately ₹500 crore as on March 31, 2017. Gloster caters to markets in Europe, Canada, the US and Japan.
Gloster imports nearly 7-8 per cent of its total raw jute requirement of 50,000 tonnes a year from Bangladesh.
“These are some special quality fibre which is not available in India. We need these special fibres for our export market,” he said.
The company expects its topline to grow by 5-7 per cent during this fiscal, the bottomline will grow by 10-12 per cent on the back of improved efficiency and increase in value addition, he pointed out.