Energypac Power Generation Limited (EPGL), one of the leading power engineering companies in Bangladesh, is set to invest more in LPG business from its IPO proceeds to grab a significant share of the growing LPG market.
"We have planned to expand the growing LPG market to explore the massive growth opportunity in Bangladesh. This primarily includes expansion of household G-Gas LPG users, industrial and commercial clients," Humayun Rashid, managing director & CEO of Energypac Power Generation Limited, told the FE during a virtual interview recently.
He believes because of the countrywide construction of residential buildings without access to piped gas, demand for LPG will be more than double in the next five years.
"We have also planned on creating a bigger footprint in the autogas industry of Bangladesh," said Mr Humayun, who is one of the founding members of Energypac Power Generation Limited.
Autogas is the common name for LPG when it is used as a fuel in vehicles. Autogas is also widely known as a "green" fuel.
The government has also stepped forward as part of the ongoing efforts to make LPG more available as a primary fuel source for vehicles in Bangladesh where reserves of natural gas are depleting fast.
Energypac Power Generation Limited is in the process of raising Tk 1.50 billion from the capital market through book-building method for expanding its liquefied petroleum gas (LPG) business and repay bank loans.
The company has already completed its share bidding by the eligible investors-- a requirement for going public under the book building method.
As the Energypac always maintains good governance, stock market listing will help strengthen its corporate structure and expand business, he mentioned.
Beginning its journey in 1995 as an electrical and engineering business, the Energypac Power Generation Limited has three core business segments- manufacturing, trading, and service.
The company has been working in the sectors of power generation, energy, infrastructure, commercial automotive, industrial and commercial building and assembling and manufacturing.
Its energy and power division supplies generators, alongside providing operations, maintenance and installation services.
The motor vehicle division of the company imports, assembles and sells branded commercial vehicles and agro machinery.
The motor vehicle division of the company has been generating revenue for years. With a close association with globally renowned brands such as JAC, JCB India, it entered the country's commercial vehicle market and positioned as one of the leading brands in this sector.
"We also have our footstep in the construction sector with our brand Steelpac that aims to complete steel construction solution with specialist services ranging from engineering, procurement, and manufacturing," said Mr Humayun, who has 37 years of experience and contribution in the business of trading, manufacturing and distribution.
Energypac Power has entered in LPG market branding as G-GAS. The G-Gas LPG is the company's one of the pioneering brands in the energy sector, which currently offers household, commercial, bulk LPG and autogas solutions across the country, said Mr Humayun, who is the current president of International Business Forum of Bangladesh (IBFB).
"The company has invested significantly in LPG business and requires more money for further expansion as it is an investment-intensive industry," said Mr Humayun, who also served as senior vice president of Dhaka Chamber of Commerce and Industry (DCCI).
Currently, Energypac operates 30 LPG gas stations at various private filling stations and the company has received approval to set up 300 LPG refueling stations across the country and it has already entered into an agreement with the state-owned Padma Oil Company for 100 stations, said Mr Humayun.
"We always look for the opportunity to contribute more to the development of the economic sector and empowering people, which requires diversifying our avenues in a positive direction".
Mr Humayun informed that Energypac established LPG bottling and distribution plant at Chunkuri, Dacope in Khulna with an area of 1969.775 decimal. It has stepped into the business of LPG activities to import, storage, bottling, and marketing in Bangladesh under the brand name of G-Gas. It has a storage capacity of 5,400.83 MT LPG.
With the IPO proceeds, the company will establish a satellite station at Rupganj in Narayanganj with a storage capacity of 1,200 tonnes of LPG, said Mr Humayun, who is also a commercially important person (CIP).
The Rupganj station would offer the company a cost and supply chain advantage as Energypac will carry bulk LPG to Narayanganj from its Khulna base through rivers and bottle at the strategic location, he said.
The local LPG market is growing at the rate of 10-15 per cent per year, he said while explaining the prospect of the business in the country.
The Energypac expects to export cylinders next year after meeting the local demand, he added.
Referring to the company's business growth -- power, motor vehicle and LPG are the top three revenue earners for Energypac Power, he said.
"All our businesses are investment-intensive and we have already invested in diversified fields with huge growth potential," said Mr Humayun.
Currently, Energypac is exporting products to India, Malaysia, Vietnam, South Korea, Nepal, Yemen, Sudan, Philippines, and Nigeria. Consequently, the company received Export Trophy-2018.
Referring to the challenges, he said the biggest of all is infrastructure. "The lower river draft in Bangladesh acts as an obstacle to ensure smooth delivery from large LPG ships. This puts pressure on import costs, eventually raising the final price of the products".
He also noted that international price fluctuation, the absence of an adequate amount of brand awareness, quality control and safety checks of LPG products are major challenges.
The company's earnings per share (EPS) was Tk 3.13, the net asset value per share was Tk 45.15 (with revaluation reserve), while the value was Tk 30.20 (without revaluation reserve), according to the consolidated financial statement for the year ended on June 30, 2019.