Sheikh Hasina’s ouster as Bangladesh Prime Minister following violent protests over job quotas has not only made India’s neighbourhood vulnerable to security risks but also affected Indian companies, many of which are listed on stock exchanges.
The impact of the political turmoil was seen in shares of Saffola edible oil manufacturer Marico. The stock fell over 4% as its sales in Bangladesh, from where it earns around 11-12% of revenue, may be impacted.
Indian companies operating in Bangladesh could face significant challenges due to the ongoing political crisis following the ousting of Prime Minister Sheikh Hasina. Many Indian firms have a substantial presence in Bangladesh’s IT and technology sectors, and the intensified political instability could severely impact their operations and investments.
India’s trade with Bangladesh is notable. Exports total $11 billion, accounting for 1.4% of India’s total exports, and imports total $1.8 billion, representing 0.2% of India’s total imports. Bangladesh is India’s 25th largest trading partner, with bilateral trade reaching $12.9 billion. However, as reported by Business Standard, there has been a 9.5% decrease in India’s exports to Bangladesh in FY24.
Bharti Airtel Ltd. holds a 28% stake in the telecom sector in Robi Axiata, contributing 5% to its total FY24 revenue. Hero MotoCorp operates a manufacturing plant in Bangladesh with an automotive production capacity of 120,000 units per year. Ashok Leyland Ltd. supplies 65% of its locally assembled commercial buses and trucks, while Tata Motors Ltd. also maintains operations in the country. These companies may also experience repercussions from the crisis.
The political unrest also affects major Indian IT and technology companies like Wipro, TCS, and Infosys. Disruptions could lead to delays in projects and services. As Bangladesh’s economy falters, reduced IT service spending may negatively impact these firms’ revenues. Conversely, foreign entities reliant on Bangladesh for resource allocation might shift their focus to India, potentially benefiting the Indian economy.
The recent political crisis in Bangladesh, triggered by violent protests and the ousting of Prime Minister Sheikh Hasina, has raised concerns about its impact on Indian businesses.
Since Sheikh Hasina took office in 2009, Bangladesh has been a key ally for India, and her departure could pose risks to trade and economic stability in the region.
The turmoil in Bangladesh has already affected several Indian companies, especially those with significant operations or market presence in the country. The impact was evident in the stock market as shares of Indian firms with ties to Bangladesh faced declines.
Marico: The stock of Marico, known for its Saffola edible oil, dropped by over 4%. Bangladesh contributes about 11-12% of the company’s revenue, and the ongoing crisis could disrupt its sales there.
Pearl Global Industries: This company, which gets roughly 25% of its revenue from Bangladesh, reported a decline in its shares by over 3%. Its facilities in Bangladesh are temporarily non-operational due to the curfew imposed during the unrest.
Emami: Shares of Emami also fell by over 4%. The company, which has a significant presence in Bangladesh, is facing potential disruptions in its operations there.
Several other Indian companies with a presence in Bangladesh are feeling the strain. These include Bayer Corp, GCPL, Britannia, Vikas Lifecare, Dabur, Asian Paints, Pidilite, Jubilant Foodworks, and Bajaj Auto.
The unrest is particularly concerning for companies like Trent, PDS, and VIP Industries, which rely on Bangladesh as part of their supply chain.
Vikram Kasat, Head of Advisory at Prabhudas Lilladher, said the potential risks for Indian corporates, including VIP, Emami, Marico, Dabur, Asian Paints, Pidilite, Tata Motors, and Hero MotoCorp.
Textile and garment sector
The crisis has also brought mixed outcomes for India’s textile and garment manufacturers. Bangladesh is a major market for yarn exports, accounting for 25-30% of the total exports. While the situation might affect yarn exporters, the impact is not yet severe. Neeraj Jain, Joint Managing Director of Vardhman Textiles, mentioned that the current disruption is minor but could become a concern if the situation persists.
On the other hand, the crisis presents opportunities for Indian textile and garment manufacturers to increase their market share. Shares of companies such as Gokaldas Exports, KPR Mill, Arvind Ltd, SP Apparels, Century Enka, Kitex Garments, and Nahar Spinning have surged, reflecting a positive shift in the market.
Adani Power
The situation has also raised questions about the power supply agreement between Adani Power Limited and Bangladesh. Under a power purchase agreement (PPA) signed in 2017, Adani Power is committed to supplying 1,496 MW of power to Bangladesh for 25 years. The project, operational since June 2023, is crucial for Bangladesh’s power supply.
Past concerns have been raised over the pricing of coal supplied by Adani Power. With the political changes, there might be discussions on revising the agreement. However, experts believe any drastic decision could impact investor sentiment, as Bangladesh urgently needs power.
Adani Power continues to supply electricity to Bangladesh according to the PPA, and the company highlights that the power supplied from its Godda Power Plant is beneficial in replacing costly liquid fuel-based power.
Analysts suggest that the future impact on stocks tied to Bangladesh will depend on the duration and resolution of the unrest. Market expert Hemang Jani indicated that if there is a significant correction in companies like VIP or Marico, it might present a buying opportunity.
Indian stocks that have exposure in the neighbouring country ndtv profit explores the footprint of Indian companies in Bangladesh and assesses the potential repercussions.
Several Indian companies with significant operations in Bangladesh can face an impact as the nation plunges into a political crisis after Prime Minister Sheikh Hasina’s ouster. Many Indian firms have a significant presence in the neighbouring country across various sectors like auto, railways, pharma and fast-moving consumer goods.
Hasina resigned and left the country on Monday after fierce clashes in Dhaka left over 100 dead and plunged the country into chaos. Army chief Waker-Uz-Zaman said a new interim government would be formed with the participation of all parties after a meeting of senior military and political leaders at the army headquarters.
Marico Ltd. relies heavily on its international business, with 44% of its revenue coming from Bangladesh. According to its annual report, Marico Bangladesh Ltd., a wholly owned subsidiary, generated Rs 1,103 crore in the last financial year, accounting for 11% of Marico’s total revenue.
Emami Ltd.’s operations in Bangladesh are substantial. Emami Bangladesh Ltd., a wholly owned subsidiary, has a local factory and reported revenue of Rs 17,423 crore in the last fiscal, making up 6% of the company’s total revenue.
Asian Paints Ltd. also has a significant presence in Bangladesh through its wholly-owned subsidiary, Asian Paints (Bangladesh) Ltd., which recorded Rs 10 crore in revenue and Rs 12 crore in royalty payments in 2023–24. The company has a loan of Rs 12 crore from Standard Chartered Bank of Bangladesh and a profit share of 0.2% for last fiscal.
Pidilite Industries Ltd. has two wholly owned subsidiaries in Bangladesh — Pidilite Speciality Chemicals Bangladesh Pvt., contributing 4.23% to the company’s profit in the last fiscal; and Nina Percept (Bangladesh) Pvt. with a 0.21% share in profit.
Jubilant FoodWorks Ltd. has recently completed a 100% acquisition of Domino’s Pizza in Bangladesh and holds the rights for the Popeyes fried chicken restaurant chain, operating 26 stores in the country by the December quarter of the last fiscal.
Godrej Consumer Products Bangladesh Ltd. is another 100% subsidiary that underscores the company’s commitment to the Bangladeshi market. VIP Industries Ltd. sources 30–35% of its production capacity from Bangladesh, highlighting its reliance on the country.
Railways, Defence In the railway sector, Rites Ltd. secured a contract worth Rs 906 crore for supplying 200 broad-gauge passenger coaches to Bangladesh. Texmaco Rail & Engineering Ltd. exports freight cars to the country, while BEML Ltd. also has a notable presence in the Bangladeshi railway industry.
Defence companies like Garden Reach Shipbuilders & Engineers Ltd. have received a $21-million order to build advanced ocean-going tugs for the Bangladesh Navy and a total contract of $16.5 million from the Bangladesh Inland Water Transport Authority.
Oil Companies Indian Oil Corp.’s export operations include Bangladesh, where the company exports products like gas oil, jet A1 fuel, gasoline, Avgas aviation fuel and sulphur, exporting 17.4 MT of sulphur via road in the last fiscal.
Power Companies NHPC Ltd. and Bharat Heavy Electricals Ltd. are constructing a 1,320-MW coal-based power plant in Bangladesh via a joint venture known as the Rampal power station.
Auto Companies Hero MotoCorp., in collaboration with Niloy Motors Ltd., has established a significant manufacturing unit in Jessore, Bangladesh. This facility, along with others in Padmabilla, Shakharigati and Kotowali in the southwestern region of the country, highlights the company’s substantial presence in Bangladesh.
The Jessore plant boasts a production capacity of 1.2 lakh units per annum. In 2023–24, this venture accounted for 2–3% of Hero MotoCorp.’s total sales and represented a substantial 50–60% of the company’s total exports. This strategic investment underscores the importance of the Bangladeshi market to Hero MotoCorp.’s overall business operations and growth strategy.
Ashok Leyland Ltd. has an assembly plant in Bangladesh in association with IFAD Autos Dhaka. The workshop is located at Madanpur in Narayanganj District. It sells 65% of its locally assembled light and medium commercial trucks and buses.
Companies like Tata Motors Ltd. also sell light commercial vehicles via partners in the markets. The tipper truck market has also seen strong demand for both new and used tippers.
Another key segment is the bus market, which Tata Motors is targeting. Tata Motors’ manufacturing plant in Jessore produces buses specifically tailored to meet the country’s needs and preferences.
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