Embattled Beximco Limited seeks Tk400cr fresh loan to resume operation
Beximco Limited workers, officials demand factories are reopened, labour adviser says ‘no’
Highlights:
- Beximco sought Tk400 crore from Jamuna Bank
- Beximco urged banks for rescheduling the loans for15 years
- The company wants to makke profits in 2025
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Beximco Limited has sought Tk400 crore in cash credit (CC) – short-term financing – from state-owned Janata Bank to cover operating expenses, along with the opportunity to open back-to-back letters of credit to keep its 15 embattled textile and apparel factories running.
Additionally, it has requested a 15-year rescheduling of all debts incurred until December 2024 at a 5% interest rate with a two-year moratorium, pledging to repay liabilities in the long term by sustaining employment and exports.
Beximco Limited workers and officials also put forward a similar proposal yesterday, demanding the immediate reopening of all factories, owned by Salman F Rahman, a former adviser to ousted prime minister Sheikh Hasina, and the withdrawal of layoffs.
Labour Adviser Brig Gen (retd) M Sakhawat Hussain, however, said reopening the closed Beximco Limited factories was not possible.
"These factories have accumulated so much debt that they have lost their operational viability," he said at a press briefing following a meeting of the "Advisory Council Committee on Reviewing the Labor and Business Situation of Industrial Enterprises in Beximco Industrial Park" at the Secretariat yesterday.
Plan to reduce costs, raise profits
In a proposal to the chairman and managing director of Janata Bank on 16 January, Beximco Textiles outlines a plan to increase profits for 2025 and 2026 by reducing costs and closely monitoring export-oriented companies.
"We see a cash surplus of only Tk30 crore in 2025. This is due to very low revenue/sales in the first half of the fiscal year compared to the necessary expenditures for the same period. Moreover, implementing this business plan in the first year will require the retrenchment of 8,000 workers and 500 management staff, in addition to those already laid off, which has been factored into the P&L and CF," reads the letter signed by Osman Kaiser Chowdhury, managing director of Beximco Limited.
"But if we look at profitability in the last quarter, we can expect a cash surplus of around Tk40 crore per month. We are confident that we will be able to use the factory near full capacity in 2026. If we produce at optimum scale, we expect a profit of Tk536 crore in 2026."
According to data from Janata Bank, Beximco Limited exports stood at Tk6,111 crore in 2020, Tk3,766 crore in 2023, and Tk3,052 crore in 2024.
According to information from a Janata Bank letter to the finance ministry in November last year, Beximco owes the state-owned lender a total of Tk23,407 crore, with Tk19,507 crore categorised as bad loans and Tk3,394 crore as overdue.
Beximco Textiles and PPE Division consists of 15 manufacturing companies, of which only three – Beximco Limited, Beximco PPE Limited, and RR Washing Limited – are currently operational.
Following a decision by the Advisory Council Committee formed by the interim government, the remaining 12 companies were laid off on 16 December. The laid-off workers are now protesting to have the factories reopened.
Since the fall of the Awami League government on 5 August, Janata Bank approved three months' salary for the workers, with the government covering one month's salary from the budget. Meanwhile, the activities of export-oriented factories have come to a halt due to the inability to open back-to-back LCs.
Before Hasina government's fall, Beximco Textiles had a total of 44,649 workers and employees in July, with 42,699 of them being workers. Since then, 10,112 people, including 9,778 workers, have been laid off.
As per Beximco Group's plan, another 8,000 workers and 500 executives will be laid off by May, reducing the total workforce at Beximco Textiles to 26,037.
Osman Kaiser Chowdhury said, "We can say that our business plan is very realistic and achievable. If you look at our export performance for the last five years, you'll find that our monthly average export was $32 million. Moreover, the monthly average export for 2022 was $59 million."
Beximco Textiles stated that their business estimates may be sensitive to certain factors. Among all these issues, sales, cost of sales, international market prices, energy supply, and political stability are of particular importance. If sales drop by 5%, profit decreases by 9%. If they can save 1% on material costs, it will improve profitability by 10%.
Moreover, devaluation of the taka against the US dollar will positively impact profit, as Beximco stated, "If we follow a normal standard, our profit may vary from 5% to 10%."
Beximco told Janata Bank that to achieve this business potential, it is crucial to restart the institution quickly to ensure the livelihoods of the people associated with it, secure foreign exchange earnings, and restore the debt collection system of the debt-paying institutions. Every day's delay will push the possibility of success further away.
"If the banking facility is not provided as per our proposal, there is no other option but to close the businesses," Beximco added.
If only the back-to-back LC facility is provided by banks, Beximco will be unable to accept direct purchase orders or perform export operations with foreign buyers. It will only be possible to work on a commission basis. Beximco has analysed the feasibility of running factories based on commission work only. In this case, the annual income will fall to Tk550 crore, and only 6,000 workers and 300 management staff will remain employed after related expenses are covered.
Closing down the remaining factories will cause real damage to all the factories and installed machinery. Additionally, Beximco will have to lay off the remaining 27,000 workers and 1,300 officers, which will require Tk450 crore for their final settlement.
If no facility is provided by the bank, all the industrial units will become ineffective due to inactivity. Furthermore, the entire workforce of 34,500 workers will become unemployed, and liabilities will amount to a total of Tk24,213 crore – Tk559 crore for employee liabilities, Tk368 crore for creditors, and Tk23,285 crore for bank loans.
"If the government arranges to grant us the proposed banking facility, we will do our best to repay the new loan, as well as the previous loans already disbursed by the banks," promised the managing director of Beximco Ltd.
No export orders since August
Speaking to The Business Standard, Osman Kaiser said in the months after August, the companies had no work or exports, yet they had to pay workers Tk80-120 crore monthly in salaries.
"Since then, Janata Bank and the government have paid Tk250 crore in workers' salaries, while Beximco has paid Tk300 crore from its own funds. However, these payments have not benefited the factories, as the necessary back-to-back LC facility for business operations has not been provided," he added.
Regarding the money laundering allegations against Beximco, he said, "On behalf of the company's officers and employees, we agree that any financial irregularities should be prosecuted under the law. Our only request is that such a significant state asset not be wasted due to an individual's fault."
Mistakes have been made
Regarding the negative public perception of Beximco Group, he said, "We must have made some mistakes or irregularities. In the '80s and '90s, educated youth considered it a privilege to work at Beximco. Despite leading the progress of the country's private sector, we are now facing an adverse and disrespectful outcome. This is a result of our own failure.
"However, if we consider the infrastructure of our factories, employment, foreign exchange earnings, and contribution to national production, there is an opportunity to reconsider the negative perception."
Labour adviser's remarks
Highlighting Beximco's debt status, its workers' actions, and the government's position, Adviser Sakhawat said, "On 21 January, Beximco Industrial Park employees and workers gathered at Sreepur Mayanagar in Gazipur, demanding the withdrawal of layoffs and reopening of factories.
"They threatened a shutdown and blockade of the Dhaka-Tangail Highway if the factories were not reopened by 3pm on 22 January. However, their actions, such as setting fires, are unacceptable and will lead to punishment."
The adviser disclosed that of the 32 factories in the Beximco Industrial Park, 16 no longer exist but were used as collateral for Tk12,000 crore in loans.
Twelve factories have laid off workers, a decision not made by the government, while three factories are still operational.
Sakhawat also revealed that Beximco Limited's total bank debt exceeds Tk40,000 crore, with Tk29,925 crore taken against the 32 factories in Beximco Industrial Park.
Demands by Beximco Ltd employees
At a press conference held at the Capital Market Journalists' Forum yesterday, Beximco workers, employees, and officials demanded the restoration of banking services and permission to open back-to-back LCs to facilitate export trade and receive foreign work orders.
They also called for immediate action to repay outstanding salaries and company liabilities while keeping the factories running.
Syed Md Enam Ullah, head of Personnel and Administration under the Beximco Garments Division, read out a written statement outlining three demands.
Abdul Kaium, head of Beximco Garments Division administration, stated that an internal audit of Beximco Industrial Park revealed that selling all its companies would generate Tk15,500 crore, but settling dues through layoffs and other liabilities would require Tk22,000 crore.
"We do not know what the owners have done with the loans. Permission should be granted to open LCs and let the factories operate. Expenses and workers' salaries can be paid from export earnings. If necessary, let the profits remain with the banks, but the factories must be reopened," he added.
A worker representative said, "Among us are 2,000 people with disabilities, over 5,000 senior citizens, and members of the third gender. Closing these factories will push these vulnerable groups into dire conditions."
