S Alam Cold Rolled assets face auction to recover Tk2,003cr loans

Infographic: TBS

Janata Bank is set to auction the mortgaged assets of S Alam Cold Rolled Steels – the lone capital market-listed company owned by the S Alam Group.

The bank's Sadharan Bima Bhaban Corporate Branch in Chattogram announced the decision after the company failed to repay its loans despite repeated notices and summons, according to the auction notice published in newspapers this week.

The state-owned lender has float tenders for the sale of the mortgaged assets on a loan consolidation basis, with bids open until 23 January.

According to the auction notice, S Alam Cold Rolled Steels had an outstanding loan of Tk2,003 crore as of 30 November 2024. Janata Bank said the loans defaulted due to non-payment under the agreed conditions. Despite repeated demands, the borrower failed to settle the dues.

After securing the legal authority to sell the mortgaged properties under the Money Loan Court Act, the bank decided to proceed with the auction. 

The notice detailed that the company had secured the loan by mortgaging 2,971 decimals of land across Anwara, Patiya, Boalkhali, Hathazari, and Sitakunda police stations in Chattogram.

Efforts to contact S Alam Cold Rolled Steels' Company Secretary Al-Mamun for comments went unanswered.

In addition, Janata Bank has put the assets of three S Alam companies up for auction to recover loans.

According to auction notices, the outstanding loans of S Alam Super Edible Oil amount to Tk1,008 crore, while those of S Alam Refined Sugar and S Alam Vegetable Oil are Tk1,777 crore and Tk1,756 crore, respectively. 

The bank will auction 2,688 decimals of land owned by S Alam Refined Sugar Industries, 1,888 decimals of land belonging to S Alam Super Edible Oil, and 2,373 decimals of land held by S Alam Vegetable Oil.

Nearly the entire Tk10,000 crore in loans taken by the S Alam Group from Janata Bank has become non-performing, according to bank sources. 

The group has been a customer of the bank since 2004, accounting for more than 80% of the loans disbursed by the Sadharan Bima Bhaban Corporate Branch in Chattogram.

Against a total loan of Tk10,100 crore, the bank holds mortgaged land and properties valued at Tk2,749 crore.

S Alam Group recently shut down eight sugar, steel, and bag factories due to its inability to import raw materials, citing a lack of cooperation from banks.

S Alam Cold Rolled Steels, listed on the stock market in 2006, specialises in manufacturing cold rolled steel strips (CR strips), CI sheets, and GP sheets. Its factory, located in Shikalbaha, Patiya, Chattogram, spans 12.02 acres.

In a response to the Dhaka Stock Exchange (DSE) on 30 December, the company said, "Due to unforeseen circumstances beyond control, we have been facing significant challenges that have disrupted regular production." 

"Restrictions on opening letters of credit by banks have led to shortages of chemicals and raw materials, forcing us to halt production. However, delivery of manufactured goods is ongoing, and we anticipate resuming production once the situation is resolved," it added. 

Despite the conclusion of FY24, S Alam Cold Rolled Steels has not yet published its annual accounts. For the first nine months of FY24, the company reported revenue of Tk388.82 crore, an 18% decline from the same period in the previous year. Profit dropped by 56% to Tk2.50 crore.

In FY23, the company posted a net profit of Tk4.78 crore and declared a 5% cash dividend for shareholders. However, it has also missed the deadline to publish its financial statements for the first quarter of FY25.

The company's share price has steadily declined since the fall of the Sheikh Hasina-led government last August. On 9 July, its share price was Tk26.1, but it has since dropped below face value. As of last Tuesday, the price stood at Tk9.80, increasing slightly by 2.04% to Tk 10 on Wednesday.

Loans surging to 80% of total assets

According to the unaudited financial statement for the July-March period of FY24, S Alam Cold Rolled Steels reported total loans amounting to Tk2,036 crore, reflecting a 44% increase compared to the same period the previous year.

The loan amount equates to 80% of the company's total assets and 1,129% of its shareholders' equity.

Of the total loans, S Alam Cold Rolled Steels borrowed Tk639 crore from Janata Bank, Tk377 crore from Exim Bank, and Tk1,019 crore from Islami Bank. 

During the third quarter of FY24, the company recorded revenue of Tk388 crore and a net profit of Tk2.50 crore, compared to Tk 474 crore in revenue and Tk5.69 crore in net profit in the same period the previous year.

Notably, the company has yet to publish its audited report for FY24.