Crisis deepens for Renwick Jajneswar as sugar mills go out of business

Highlights:

• Established in 1881
• Suffered losses till FY2003-04
• Made profits for 16 years – from FY2003-04 till FY2018-19
• Then again started to incur losses from FY2019-20
• Losses during FY2019-20 – Tk6.47 crore
• Losses during FY2020-21 – around Tk5.50 crore

        Recovery Plans:

• Amusement park built on the unused land
• A market to be constructed on the unused land
• Five-member task force formed by Bangladesh Sugar & Food Industries Corporation to make to find ways to make the company profitable

Renwick Jajneswar & Company (Bd) Ltd – a sugar mill parts supplier – has been incurring huge losses as its sales declined due to several mills going out of business.

The government decided to shut down six sugar companies for reformation and modernisation back in 2020 amid Covid-19 pandemic.

As a result, the state-owned company could not supply its products to these mills, causing its revenue to plummet further.

According to its officials, the company, established on 38.98 acres of land in Kushtia in 1881, was initially in profit but is now suffering enormous losses due to bad debts and over-expenditure.

They said that the company, on average, used to earn around Tk15 crore every year, by repairing and manufacturing parts for the sugar mills. However, due to the closure of the six mills, income has gone down drastically.

Although it earned more than Tk13 crore during FY2019-20, it was only able to bring in Tk6 crore the following fiscal year.

Speaking to The Business Standard, Al-Wadud Amin, managing director (MD) of the company, said, "We were a profitable company. But, currently, we have been incurring losses due to bad debts amounting to Tk3 crore, lump-sum payment of government-declared arrears, and fund crisis."

"Our earnings have gone down due to the absence of work orders from the six closed sugar mills. Our whole business now relies on only nine of these mills.

"However, various efforts are being made to overcome our financial hardships. If things are done right, we will be able to make a turnaround," the MD added.

Plans for recovery

The company, in 2018, built an amusement park on its unused land, near the banks of the River Gorai, in an attempt to find alternative income sources.

It made a substantial amount of profit through the park but that too was cut short due to the coronavirus-led nationwide lockdown.

Officials have said that there are also plans to construct a market to mitigate their losses.

Meanwhile, a five-member task force has been formed by the Bangladesh Sugar & Food Industries Corporation to find ways to make the company profitable while prioritising the interests of the investors.

The committee has been directed to submit its findings to the Ministry of Industries.

Al-Wadud Amin said, "A task force has been formed to increase the company's revenue. It will submit a report on its findings.

"Our amusement park has reopened and incomes are getting better. We are hopeful for a turnaround."

Strong presence in share market

Despite the constant losses, the price of the company's shares recently stood at Tk1,261– the ninth highest for companies listed on the capital market.

The company, nationalised in 1972, however, has failed to declare any cash dividend for its shareholders ever since FY2017-18, when it was able to provide a dividend of 12%.

According to Dhaka Stock Exchange (DSE), the company's market capitalisation stands at Tk258.40 crore.

Of the total 20 lakh shares, the government owns 51% while the remaining 49% is owned by the public.