Western Marine Shipyard assets put on auction

Assets of the Western Marine Shipyard Limited, that were mortgaged against a loan taken from Dhaka Bank Limited, has been put on auction as the export-oriented ship builder could not pay back money to the bank.

In the auction notice published on 8 September, the bank invited interested buyers to submit tenders to buy the land by 5 October 2023.

According to the auction notice, Western Marine took three loans from Chattogram Agrabad branch of Dhaka Bank in 2012. Its mother company Western Marine Services Limited mortgaged its office space and a cruise ship as collateral for the loans.

As of 29 August 2023, Western Marine owed the Dhaka Bank around Tk94 crore including interests.

Western Marine is facing auction even after the Bangladesh Bank had given big concessions to financial institutions to renew the shipbuilding industry's defaulted loans in August this year.

These companies can now renew defaulted loans for 10 years by paying 2.5% instead of 15% of the total default amount in cash. A grace period of two years will be available for repayment of the loan under this facility.

Western Marine's Managing Director Sohail Hasan, Executive Director Tareque M Nasrullah, and Company Secretary Abul Khair could not be reached over phone for comments regarding the shipyard's auction despite calling several times.

Dhaka Bank officials said the shipbuilder took multiple loans covering various categories such as letters of credit, term loans, and cash credit (hypo) from the bank since 2012. But the company could not repay the debt in due time, and also could not avail the reschedule facilities by making the required down payments.

Founded by 15 entrepreneurs, Western Marine entered the shipbuilding industry in 2000 and earned a strong reputation in the international market, having constructed 150 ships of various categories until 2019.

The company has exported 33 ships to 12 countries, including the Netherlands, Denmark, Kenya, Finland, Germany, the United Arab Emirates, and India, with a business volume of approximately Tk2,000 crore and foreign exchange earnings worth about Tk1,400 crore.

The company's activities have shrunk since 2019 due to conflicts among its directors, huge debts owed to banks and financial institutions, and a financial crisis, said sources.

It posted profits till FY20, after which it turned into a loss-making company.

The company is also treated as a top loan defaulter in the Chattogram division as the amount of its default loan exceeded Tk1,500 crore, according to the data disclosed in the parliament in January this year.

Earlier, in May this year, the National Bank filed a case against Western Marine in the Chattogram Money Loan Court to recover default loans amounting to Tk938.72 crore.

A senior official at the bank's Agrabad branch told The Business Standard on condition of anonymity that it had previously issued a legal notice to the company after failing to recover the loans.

An attempt to auction off the company's mortgaged properties failed due to absence of bidders. As a result, following instructions from the head office, the bank had to file a loan case against the company, he said.

Earlier, in 2021, the Agrabad branch of the Bank Asia filed a loan default case involving Tk505 crore against the same company.

According to the Western Marine's annual report for FY21 and FY22, it is facing a major cash shortage.

The crisis has been exacerbated by various domestic and international situations, especially the Covid-19 pandemic. The situation worsened when banks stopped providing lending assistance. However, the company's directors are working with organisations concerned, including the Bangladesh Bank, to revive its business, said sources.

According to sources, Western Marine owes nearly Tk2,000 crore to 19 banks and financial institutions. In 2014, the company raised Tk157.50 crore from the capital market through an initial public offering.

Western Marine shares closed at Tk11.40 apiece, while its face value was Tk10 each, at the Dhaka Stock Exchange on 7 September.