Owners’ loan repayment apathy pushes RSRM to the brink

The story of Ratanpur Group – better known by the name of its flagship company RSRM (Ratanpur Steel Re-Rolling Mills Ltd) – makes a rather depressing reading!

In spite of being successful in earning the trust of consumers, which is evident from its annual turnover, the conglomerate is on the verge of collapse owing to the management's apathetic attitude towards repaying loans and paying utility bills.

Founded in 1984, Ratanpur Group has established itself as one of the leading steel companies based in Chattogram. The industrial group has an annual turnover of around Tk700 crore.

However, the two manufacturing plants of the RSRM have been shuttered for the last four months, as they have had their power supply cut off due to non-payment of outstanding electricity bills amounting to Tk40 crore.

After remaining unpaid for a long period, most of the around 800 workers of the two factories have already left the company and gone elsewhere.

Even though the business volume of Ratanpur Group has been good for a long time, the circumstances of its repayment of bank loans have been deplorable. At present, four companies under the group owe a cumulative total of Tk2,200 crore in outstanding loans to 10 banks and non-bank financial institutions.

So far, 20 cases have been filed against the owners of the business group for the recovery of the loans. In two of these cases, filed by Janata Bank under the Negotiable Instrument (NI) Act, arrest warrants have been issued against the owners.

The amount of assets mortgaged by the company against the loans is also very negligible. As a result, officials of the banks concerned are worried about the recovery of this huge amount of loans.

During an on-site visit on 31 March this year, The Business Standard found the two RSRM factories located in the Nasirabad industrial area of the port city shuttered.

A senior official of the Power Development Board (PDB), wishing not to be named, told TBS that the board had severed the power connection to Ratanpur Group due to non-payment of Tk40-crore in outstanding electricity bills.   

 "The company's electricity bills were in arrears for quite a long time. Because of this, its electricity connection had been severed earlier as well. But the company twice managed to obtain orders from the High Court to pay the unpaid bills in instalments.

As the company failed to pay the bills in installments as well, the power connection was cut off again and the company went to the High Court for one more time. But the court in its latest order asked the company to pay the entire outstanding amount. As the institution is yet to clear the bill, the power connection remains cut off," said the PDB official.

Marjanur Rahman, director of Ratanpur Group, however, claimed that the factories had been shut down on account of repairing electrical transformers. "Hopefully, we will be able to go into production again by next week," he said on 31 March.

Asked about the bank loans of his company, he declined to make a comment.

On condition of anonymity, a security guard working with the company said the two factories have had their production suspended since 12 December last year.

"During this period, the salaries of about 800 workers and employees of the two factories have remained unpaid. Many of these officials and workers have left the company and moved to other organisations. At present, around 60-70 security guards are employed in these two factories."

How much debt to which lender?

Golam Mostafa, assistant general manager and head of Laldighi corporate branch of Janata Bank, told TBS that Ratanpur Group owes about Tk1,200 crore to the bank – the highest amount the group owes to a single lender, but it has not been repaying the loan for a long time.

Of the amount, Messrs Modern Steel Mills Ltd owes Tk409 crore, Messrs Ratanpur Ship Recycling Industries Tk313 crore and SM Steel Re-Rolling Mills Ltd Tk482 crore.

Against this debt, the group has mortgaged 31.17 acres of land that is too small compared to the volume of the loan, the bank official added.

The bank has filed six cases under the Artha Rin and Negotiable Instrument (NI) Acts against the three companies to recover the loan. In the meantime, arrest warrants have been issued against the owners of the company in two cases filed under the NI Act.

According to Golam Mostafa, Ratanpur Group had been taking out loans from Janata Bank for importing factory raw materials (scrap ships), building infrastructure and purchasing machineries since the 1990s.

"For a long time, the group had been maintaining good business relations with the bank. But it has been dilly-dallying in repaying loans for the last 10 years."

Ratanpur Group owes the second highest amount of Tk634 crore to Sonali Bank. Of this, Modern Steel Mills owes Tk462 crore and Ratanpur Steel Re-Rolling Mills Tk172 crore to the bank's Laldighi branch.

The bank has filed 12 cases under the Artha Rin and NI acts against the group.

According to Sonali Bank, Modern Steel Mills borrowed money from the bank during 2006-2008 for investing in the steel industry, but the loan has not been repaid yet.

After being rescheduled in 2018, the loan taken out by RSRM was classified again in December last year. Against this debt, the company has mortgaged 5.3 acres of land.

Yakub Majumder, deputy general manager and head of the Laldighi corporate branch of Sonali Bank, said the bank had continued to communicate with the owners of Ratanpur Group. Meanwhile, Yunus Bhuiyan, a director of the group, had promised to repay the bank loan soon, he added.

Ratanpur Ship Recycling Industries Limited of Ratanpur Group took out a loan from the Agrabad branch of Global Islami Bank (formerly NRB Global Bank) immediately after the bank's inception in 2013. The loan became classified in just one year. At present, the company owes Tk56 crore to the bank.

Among other lenders, Mercantile Bank, Trust Bank, LankaBangla Finance and Prime Finance and Investment have a cumulative total of Tk289 crore in outstanding loans with different subsidiaries of Ratanpur Group.

Prime Finance last month filed a case against the SM Steel Mills authorities under Section 420 of the Penal Code.

The business group also owes large sums to Rupali Bank, Premier Leasing and BD Finance. Meanwhile, BD Finance has already filed a case under the NI Act against the owners.

Ratanpur Group Managing Director (MD) Maksudur Rahman, Chairman Shamsun Nahar Rahman, MD's brother Yunus Bhuiya, two sons Mizanur Rahman and Marjanur Rahman and Modern Steel Mills Chairman Md Ala Uddin have been made defendants in the cases filed by the lenders.

Referring to the arrest warrants issued against Ratanpur Group owners in two NI cases filed by Janata Bank, Abul Kashem Bhuiyan, officer-in-charge (OC) of Panchlaish police station, said the police have already conducted a raid at the residence of the defendants but found none of them in the house.

'Loans taken out with ulterior motive'  

Ratanpur Group's founder Maksudur Rahman, from Senbagh area of ​​Noakhali, has been engaged in the ship breaking and steel industry in Chattogram since 1984.

Even though he had been doing business on a rather small scale since the beginning, he took out large bank loans in 2004-05 to expand his business.

Cashing in on long business experience and good relations with senior bank officials, Ratanpur Group managed to take out large loans very easily.

In the first few years of borrowing, the group was repaying loans on time. But after 2011-12, the owners started falling back in repaying loans.

Officials of the banks concerned and traders in the sector said Ratanpur Group initially took out loans for business purposes but later it borrowed crores of taka with an ulterior motive.

There are allegations that instead of investing in business, the group's owners have siphoned off a large amount of the bank loans abroad and spent a significant portion for purchasing land and on personal enjoyment.

It is learned that the former chairman of Janata Bank, Jamal Uddin, hails from Senbagh of Noakhali. Ratanpur Group easily availed large loans from Janata Bank with his cooperation. At the time, Jamal Uddin was serving as a director of Janata Bank.

In the same way, Maksudur Rahman managed large loans from Sonali Bank with the help of Dilip Datta of Noakhali, who was in charge of the Laldighi branch of the bank.