Gas line disconnection halts Dacca Dyeing’s partial production

Infographic: TBS

The Dacca Dyeing and Manufacturing Company has closed its dyeing unit for the time being because of the gas line discontinuation by the state-owned gas distributor Titas Gas, owing to the textile firm's failure to pay security deposit. 

The company, which is one of the oldest textile makers in the country, informed this through a disclosure on the Dhaka Stock Exchange (DSE) website on Wednesday. 

According to the disclosure, on 26 July, the Titas Gas authorities temporarily stopped Dacca Dyeing's gas metre connection. Consequently, the operations in the dyeing department were shut down. But other departments — weaving, printing, and stitching — are running as usual. 

Majibur Rahman, chief financial officer at Dacca Dyeing, told The Business Standard, "Because gas prices almost doubled this year, Titas Gas demanded Tk2.5 crore more as security deposit and Tk5 crore as bank guarantee for the gas connection."

"But at present, our company is not financially in a position to meet Titas's demand and pay up right away." 

"Also, arranging the bank guarantee is difficult for us because of non-repayment of loans," he added. 

"However, the company's owners are trying to meet the demand. They sat with the managing director of Titas and sought a time extension for the security deposit payment."

Titas Gas demanded Tk2.5 crore more as security deposit and Tk5 crore as bank guarantee for the gas connection. But at present, we're not financially in a position to pay up right away. [Majibur Rahman CFO, Dacca Dyeing]

The Titas chief asked the company to manage the bank guarantee. He also assured that the security deposit can be paid in six monthly instalments, Majibur Rahman said. He hopes the company will be able to address this issue within 30 September. 

Back in 2020, the Appellate Division of the Supreme Court ordered Titas Gas to reconnect Dacca Dyeing's gas line. 

The textile maker had been fighting the civil lawsuit over unpaid gas bills for more than four years.

It had deposited Tk1 crore in favour of the state-owned gas distributor as per a previous High Court order in 2016. It also deposited Tk35 lakh as per a verbal order of the Appellate Division.

Earlier, Dacca Dyeing shares had plummeted to Tk3 each as the company suffered back-to-back losses from the 2015-16 through 2018-19 fiscal years.

During the four years, its losses mounted to Tk136 crore mainly because its factory went out of production after the disconnection of its gas lines and the power crisis.

In addition, the company became a loan defaulter of Sonali Bank, Dutch-Bangla Bank, and Agrani Bank which stood as a big obstacle towards its exports.

After production resumed in 2020, it posted profits in the last three fiscal years.

On Wednesday, its share price closed at Tk13.2 each at the DSE.

Launched in 1963, the company is currently operating under the QC Group. Its board of directors includes Gias Uddin Quader Chowdhury, Samir Quader Chowdhury, Samiha Quader Chowdhury and Sajia Quader Chowdhury.

All of them are relatives of the former Bangladesh Nationalist Party leader Salahuddin Quader Chowdhury who was executed for crimes against humanity committed during the 1971 Liberation War.

They took ownership of the company in 1996-97. Earlier, it was under a state-owned bank.