Winning Bizness Desk
Mumbai: Bangladesh is caught in a deep political crisis and violence. Prime Minister Sheikh Hasina has left the country and the army is in control of the country. In the last few months, the violence in Bangladesh has almost brought the business there to a standstill. Whenever a fire breaks out in a neighbor's house, its flames also damage the surrounding houses. The same is happening with Bangladesh, the ongoing political crisis here can affect India's economy. After Bangladesh PM Sheikh Hasina left the country and there was a coup in the country, the army has taken over power. This has caused turmoil in the whole of Bangladesh and its effect is being seen on the economy there. Due to this, the business of Indian companies is also getting affected.
Potential Impact on Indian Companies
VIP Industries
- Dependence on Bangladesh: This luggage manufacturer relies on eight manufacturing units in Bangladesh, which supply about 30-35% of its products.
- Risk: Disruptions in these units could severely impact VIP Industries' operations and stock performance.
Marico
- Market Significance: Bangladesh constitutes a crucial part of Marico's international business, contributing 44% of its revenue.
- Risk: The crisis could significantly affect Marico's financial health and stock prices.
Dabur, GCPL, and Britannia
- FMCG Impact: Leading FMCG companies like Dabur, GCPL, and Britannia have exposure to the Bangladesh market, although their total sales from Bangladesh are less than 5%.
- Risk: Any prolonged instability could still impact their operations and stock prices.
Jubilant Foodworks
- Operations in Bangladesh: The company operates 28 Domino's Pizza stores in Bangladesh, accounting for 1% of its sales.
- Risk: The political crisis could disrupt these operations and affect Jubilant Foodworks' overall performance.
Trent
- Sourcing Dependency: Tata Group's Trent, involved in the clothing business through Westside stores, relies heavily on Bangladesh for sourcing, after Hong Kong and Thailand.
- Risk: Disruptions in Bangladesh could affect Trent’s supply chain and stock performance.
Broader Textile Industry Impact
- Affected Companies: Textiles businesses, including Shahi Exports, House of Pearl Fashion, JJ Mills, TCNS, Gokaldas Images, and Ambattur Clothing, may consider relocating their operations from Bangladesh to India due to the instability.
- Economic Loss: Bangladesh's textile industry, which exported $47 billion worth of textiles in 2023, faces significant losses. The violence and work stoppages hinder their ability to fulfill export orders, potentially shifting some manufacturing activities back to India.
Conclusion
Investors with stakes in these Indian companies should closely monitor the situation in Bangladesh. The political crisis could have far-reaching consequences on supply chains, business operations, and stock market performance of these companies.
