The interim government plans to sell ownership of 32 companies under the Beximco Group as a long-term solution to the ongoing workers’ unrest over unpaid salaries and allowances.
The decision was made during the first meeting of the Advisory Council Committee on the labour and business situation of Beximco Industrial Park, held at the Secretariat on 28 November.
Janata Bank has been instructed to finalise an Expression of Interest (EoI) for the sale of “B” category companies by 9 December. The Bangladesh Investment Development Authority (Bida) will provide weekly updates on the progress to the ministry, as per the meeting’s decisions.
Md Mazibur Rahman, managing director of Janata Bank, told The Business Standard that the decisions from the Advisory Council meeting have been placed to the bank’s board.
“We are working on preparing the Expression of Interest within the stipulated time,” he added.
The meeting was chaired by Brigadier General (retd) M Sakhawat Hossain, adviser to the Ministry of Labour and Employment, with Home Affairs Adviser Lieutenant General (retd) Mohammad Jahangir Alam Chowdhury also present.
At the meeting, the Home Adviser Jahangir recommended offering a long-term financial facility to promptly clear workers’ dues, followed by selling the Beximco companies to address the situation.
Sakhawat Hossain supported the recommendation, according to the meeting minutes.
The Beximco Industrial Park has been plagued by labour unrest since the fall of the Awami League government which left the company unable to pay its workers.
Beximco Group Vice Chairman Salman F Rahman, former private sector adviser to ousted prime minister Sheikh Hasina, was arrested on 13 August in Dhaka’s Sadarghat area while attempting to flee the capital.
Beximco companies categorised
At the meeting, Ashik Chowdhury, executive chairman of Bida and the Bangladesh Economic Zones Authority, suggested dividing Beximco Group’s 169 companies into three categories.
He recommended placing Beximco Pharmaceuticals in the “A” category as it is profitable, and suggested initiating legal action to suspend share transfers by the company’s shareholders.
Thirty-two companies currently operational, including 16 garments and textile factories, would be categorised as “B”, while the remaining 136 would fall under the “C” category.
Chowdhury proposed taking necessary steps to sell the ownership of all “B” category companies by issuing an Expression of Interest to international operators through Janata Bank and IFIC Bank.
For the “C” category companies, he recommended shutting them down after clearing three months of outstanding salaries and allowances.
Following the discussion, the meeting decided to clear three months of unpaid salaries for employees of Beximco companies located in the Beximco Industrial Park. Janata Bank was instructed to provide the necessary funds.
The implementation of these decisions will be overseen by Bida and the labour ministry, according to the meeting minutes.
Beximco’s loans
Beximco owes Janata Bank a total of Tk23,407 crore, with Tk19,507 crore classified as bad loans and Tk3,394 crore listed as overdue, which is expected to become non-performing within the next few months, according to a letter sent by the bank to the finance ministry.
Alarmingly, this borrowing has exceeded the single borrower exposure limit of 25% of a bank’s capital, reaching a staggering 410%. Despite this blatant violation of the Bank Company Act, the central bank failed to exercise its regulatory authority.
The Advisory Council meeting also resolved to take control of share transfers of Beximco companies within a week, designating the receiver of Beximco Industrial Park and the Bangladesh Securities and Exchange Commission as the implementing authorities.
Interested parties
In October, a consortium of foreign investors submitted a proposal to the government, expressing interest in acquiring four profitable companies under Beximco Group including Beximco Pharma and Beximco Limited.
Adsum Capital Management LLC, a Dubai-based financial firm, sent the proposal letter to Finance Adviser Salehuddin Ahmed on behalf of the consortium.
However, Adsum did not disclose the identities of the prospective investors.
The companies mentioned in the proposal are Beximco Pharmaceuticals, Teesta Solar, Beximco Communications (Satellite & DTH License), and Beximco Limited (Textiles and RMG division).
After discussions with Janata Bank officials responsible for handling Beximco Group’s loan files, The Business Standard learned that the Dubai-based consortium is linked to the Beximco Group itself.
“In reality, Beximco is attempting to repurchase its own companies through Dubai,” an official revealed on condition of anonymity.
Performance of listed Beximco companies
At present, four companies of Beximco group are listed with the Dhaka Stock Exchange (DSE) – Beximco Pharma, Beximco Limited, Beximco Synthetics, and Shinepukur Ceramics. Beximco Pharma is also listed on the London Stock Exchange.
Beximco Pharmaceuticals reported a 29% increase in consolidated profit, reaching Tk586.67 crore in FY24, up from Tk452.44 crore in FY23.
The company has recommended a 40% cash dividend for FY24, an increase from the 35% cash dividend paid in FY23. Its share price was above Tk80 on the last trading day.
In contrast, Beximco Limited faced a financial setback, incurring a loss of Tk36.40 crore in FY24 compared to a profit of Tk710 crore in FY23. Its loss per share stood at Tk0.41 for FY24, while its earnings per share were Tk7.92 in FY23.
Following this loss, the company recommended a 5% stock dividend for FY24, down from the 10% cash dividend it provided the previous year. On the last trading day, its share price was above Tk110.
Shinepukur Ceramics reported a 61% decline in earnings per share, which dropped to Tk0.16 in FY24 from Tk0.41 in FY23. The company has recommended a 2% cash dividend, exclusively for its general shareholders, excluding sponsor-directors. Its share price was above Tk13 on the last trading day.
Earlier, on 19 September, the High Court directed the Bangladesh Bank to appoint a receiver to manage the operations of the Beximco Group and to attach all its assets.
In compliance with this directive, on 10 November, the Bangladesh Bank appointed Md Ruhul Amin, an executive director of the central bank, as the receiver for Beximco Group.
He is supported by three deputy receivers: Sumanta Shaha, CFA, additional director; Nahim Uddin, CFA, joint director; and Atiqur Rahman, deputy director.
TBS