sharebazar

General shareholders of BEXIMCO are likely to lose their investment in the company after the closure of its business units, which used to generate 80 per cent of its revenue.

The company experienced a loss of Tk 358.79 million in FY24 and is now struggling to pay off workers’ wages.

Meanwhile, the government has been trying to facilitate the settlement of workers’ dues worth Tk 5-5.5 billion. As part of the efforts, the labour ministry has recently disbursed a loan worth Tk 99.11 million to the company, according to a letter sent to the Central Depository Bangladesh Limited (CDBL).

In the letter, the labour ministry asked the CDBL to freeze 3 million shares of BEXIMCO owners against the loan. The shares will remain frozen until the repayment of the borrowed cash.

If the company is forced to liquidate assets to pay off the remaining dues, shareholders will be left with nothing as they are at the bottom of the payees.

General shareholders have a 33.03 per cent stake in BEXIMCO while institutes have 32.92 per cent shares, sponsor-directors 33.11 per cent and foreign investors 0.94 per cent, according to the Dhaka Stock Exchange (DSE).

“The company’s present situation does not hold out hope for shareholders,” said Md. Ashequr Rahman, managing director of Midway Securities.

The government is only trying to help pay off workers’ wages, he said, but operations of the company stalled in the absence of working capital. BEXIMCO is not in a position to resume operations and the situation is likely to deteriorate over time, added Mr Rahman.

Financial distress facing BEXIMCO

On Tuesday, BEXIMCO announced another round of layoffs, citing a lack of work orders, which affected nearly 8,000 workers across five manufacturing units in its industrial park in Gazipur.

The company officially issued a notice, saying the decision was effective from Wednesday at Beximco Yarn-2, Textiles, Denim, Knitting, and RR Washing.

“We are not receiving any work orders, which left us with no choice but to declare layoffs,” said Mohammad Asad Ullah, chief financial officer of Beximco Group.

The latest development comes a week after the interim government announced its decision to sell shares of Beximco Group’s two profitable concerns — Beximco Pharmaceuticals and Shinepukur Ceramics — to pay the salaries of laid-off employees.

The group earlier laid off nearly 30,000 workers across 16 units due to a persistent shortage of orders in its export-oriented garment and textile factories in Gazipur.

The hardship surfaced after the fall of the Sheikh Hasina-led government when the conglomerate, a large loan defaulter; and its vice chairman Salman F Rahman were brought under the regulatory scrutiny.

Salman F Rahman, who had served as private sector adviser to the former prime minister, got arrested in August last year.

Beximco Group reportedly has more than Tk 400 billion in loans, including Tk 285.44 billion taken by its 32 textile and apparel subsidiaries.

Of the 32 units, 16 exist on paper. But the factories were shown as collateral while taking loans, said Labour and Employment Adviser M Sakhawat Hossain at a press briefing last week.

A large amount of the loans have been classified.

Due to the acute liquidity crisis from October last year, production at 24 units inside the industrial park came to a halt.

Why is BEXIMCO in trouble after Hasina’s fall?

Preferring anonymity, a top official of BEXIMCO said the RMG units that announced layoffs on Tuesday had exported goods worth around $50-60 million a month and they accounted for more than half of BEXIMCO’s revenue.

After the ouster of Hasina’s government, the Group started facing difficulties in securing new letters of credit (LC) for raw material imports as banks showed reluctance in providing fresh funds.

While reporting losses for FY24 and the first half of FY25, the company said production remained almost shut due to the non availability of banking facilities during the periods.

“No bank opened any LC from August 2024,” said the company in its earnings notes.

Moreover, stocks of fabrics & yarns, which could not be used, had to be sold at low prices incurring a loss, said the company.

BEXIMCO reported a loss of Tk 358.8 million for FY24 and a loss of Tk 3.56 billion for the first half of FY25, thanks to a sharp decline in revenue.

A bigger chunk of the half-yearly loss — Tk 2.43 billion – was endured in the second quarter through December last year.

However, Beximco Pharmaceuticals, the conglomerate’s drug-manufacturing subsidiary, posted a 18 per cent year-on-year growth in profit to Tk 3.54 billion in July-December last year, riding on higher sales.    https://thefinancialexpress.com.bd/stock/bangladesh/retail-investors-of-beximco-likely-to-return-empty-handed