Zaheen Spinning resumes production by repairing fire damages 

Zaheen Spinning Limited has resumed production in full swing after repairing damages caused by two massive fires at its factory in Narayanganj, on the outskirts of the capital.

In stock exchange filings, the company announced that it started the factory at full capacity on 16 July.

Earlier, in December 2019, a devastating fire at Zaheen's factory dealt a heavy blow to the company. Later in January 2021, the factory caught fire again.

The massive fire damaged the factory's blow room, carding, drawing, simplex, auto cone, generator, AC plant, steel building, shed, and warehouses. That is why the company was forced to shut down its factory in Narayanganj.

In July 2021, it repaired the damages, and returned to partial operation.

But failure to settle insurance claims with Crystal Insurance caused a fund shortage and that delayed the renovation work of the damaged factory.

Zaheen Spinning's Managing Director Mahmudur Rahman told The Business Standard, "We have claimed around Tk10 crore from the insurance company against the damages for fire incidents."

Despite providing all required documents to the insurance company, it has not settled the claim yet, which caused a delay in the renovation work, he added.

"We spent the fund repairing the damages and now facing a working capital shortage. If the insurance claim is settled, it will help us with the shortage," Mahmudur Rahman said.

Since 23 June, its share price jumped 29% on the Dhaka Stock Exchange on a rumour about its resuming production. Its shares closed at Tk13.20 each on Sunday.

Earlier in June this year, the Bangladesh Securities and Exchange Commission (BSEC) expressed concerns about the functioning of Zaheen Spinning as the two fire incidents threw its business into uncertainty.

In a letter, the regulator has asked the cotton yarn manufacturer of different counts to submit documents on its operational status and business strategy.

Established in 2007 at Narayanganj's Araihazar, Zaheen Spinning was listed on the capital market in 2015. It was doing well in its cotton business even after listing on local stock exchanges.

The company's financial performance has been deteriorating since its listing in 2015, and in fiscal 2019-20, it incurred a loss of Tk3.39 per share.

Also, the company extended its losses in fiscal 2020-21, while most of the spinning mills enjoyed improved profitability in their business due to an increase in yarn prices.

In the two loss-making years, the company did not pay any dividend to its shareholders, while its public shareholders did not get any cash dividend since the company entered the bourses.

The company in its last quarterly report said due to the fire incidents, its production was disrupted, revenue was hurt, and costs increased impacting its accounts.

Meanwhile, an external auditor in its qualified opinion in the last annual report said it found the company was violating income tax law by paying huge bills in cash.