Alhaj Textile MD lost job amid internal conflict

TBS Illustration

The tug of war for the helm of Alhaj Textile Mills seemed to have a harsh pause through the board terminating its Managing Director (MD) and CEO Md Mizanur Rahman on Monday and replacing him with his cousin Md Bakhtiar Rahman, another shareholder director of the oldest textile company in the bourse.

Alhaj Textile Mills on Tuesday informed through the Dhaka Stock Exchange (DSE) that the appointment of the new MD and CEO was effective immediately.

Bakhtiar Rahman told TBS that Mizanur Rahman, also the largest shareholder of the company from the Alhaj family, was removed from the executive leadership due to his non-obeisance and non-perusal of the board instructions on what to do for the company and its shareholders. 

Also, his performance in leading the company's business operations was not satisfactory, which hurt the company's profitability, claimed the director who replaced Mizanur.

On the other hand, echoing his previous complaint letter to the Bangladesh Securities and Exchange Commission (BSEC), Mizanur Rahman said he was pursuing the regulator-assigned task of solving problems with the bank to make the business efficient but failed to accomplish it because of the "non-cooperation of other shareholder directors and the company chairman". 

He also claimed that the board violated the company's memorandum of association in his termination process.

Khondoker Kamaluzzaman, a retired judge and former BSEC commissioner who is an independent director and the chairman of Alhaj Textile at present, did not respond to the phone calls for comment on Tuesday.

Earlier on 11 May, Mizanur terminated company secretary Selim Parvez citing his non-performance, which intensified the war for the control of the company.

The discords

It appeared the division within the company was evolving around how much to bargain with the bank in the settlement of the defaulted loans and also if the sponsor family should welcome new shareholders on the board of directors or not. 

Alhaj Textile, founded in Ishwardi, Pabna by a Bengali entrepreneur family, the forefather of Mizanur and Bakhtiar Rahman in 1962, has come through long waves of rises and falls as it was nationalised after the independence, again given back to the sponsors in 1982.

It had a decade-long legal battle with state-owned Agrani Bank and one was settled after the bank paid it a huge sum of over Tk43 crore against an old FDR following the Supreme Court verdict before the pandemic. However, the bank's money loan court case filed in 2013 is yet to go.

Due to the defaulted loans, the company was unable to open letters of credit and ended up buying raw materials from local parties at higher prices also without any banking support it was unable to modernise its decades-old machinery in recent years.

Appointing many independent directors after the pandemic, the BSEC reconstructed the company board that included the sponsor family shareholders too and asked them to put an end to the deadlock. 

According to Mizanur's complaint letter to the BSEC earlier this year, following the BSEC instruction last August, his team initiated negotiated settlement with Agrani Bank, reduced the payable sum to Tk38.2 crore in December through securing an interest waiver proposal of Tk22 crore by the bank's branch office to the head office, and paid the down payment of Tk5 crore upon his board approval.

Chairman Khondoker Kamaluzzaman, the company secretary and a shareholder director, bypassing the MD and the two banking expert independent directors, went to Agrani Bank's chairman to renegotiate and the result was a letter for Tk52.6 crore total payables.

Kamaluzzaman earlier this month told TBS that he, as an independent director and the chairman, was acting to best protect shareholders' interest and he still finds space to reduce the payable through negotiations.

He, instead, alleged the MD for not caring about due diligence and complying with the corporate governance norms.

BSEC Commissioner Shaikh Shamsuddin Ahmed told TBS the regulator reconstructed the board of the publicly listed company to come out of the deadlock by solving problems with the bank and the regulator is being regularly updated on the developments. 

"A board has the right to terminate the executive chief, we will just check if the board has come through the right process or not, and also if the development has been in line with the common goal of shareholders' interest protection" he added. 

Alhaj Textile shares which soared to over Tk200 apiece in early April amid a turnaround hope have tumbled to the Tk140-160 range recently. 

Bakhtiar Rahman told TBS he would be working on the board instructions to solve the problem with the bank and he believed the bank was more interested in negotiation than before.