24 Beximco factories closed due to liquidity crisis

Amid a severe liquidity crisis and unpaid wages, Beximco Group's Shinepukur Ceramics recently ceased operations, bringing the total number of the group's closed factories to 24. The group’s inability to open new letters of credit (LCs) for importing raw materials has led to factory shutdowns since August, following the political transition. The closure issue gained attention as workers from the Beximco Industrial Park in Gazipur, which houses several factories, protested for the fifth consecutive day, causing major traffic disruptions along the Chandra-Nabinagar Highway.

"Banks are unable to resolve the LC issue," said Osman Kaiser Chowdhury, Beximco Group's director of finance and corporate affairs. "The government needs to step in to resolve the liquidity crisis and restart production."

However, Md Ruhul Amin, the recently appointed custodian of the group and executive director at the central bank, told *The Daily Star* that he had not been approached about these issues. He also stated that Beximco does not face any banking problems.

Beximco Group's financial difficulties began after the arrest of its vice-chairman, Salman F Rahman, who had been a close adviser to the ousted Prime Minister Sheikh Hasina and an influential figure in Bangladesh’s financial sector. Since the political transition in August, 23 garment and textile production units at the Beximco Industrial Park in Gazipur have shut down due to the inability to open LCs for raw material imports.

As a result of the suspension in operations for the past four months, the conglomerate is now facing a liquidity crunch and has been unable to pay its workers’ October salaries, according to Chowdhury. He noted that these 23 factories employ around 40,000 workers, with a total monthly wage bill of approximately Tk 80 crore. Normally, Beximco's textile exports totaled $30 million per month.

While Beximco was able to pay wages for July, August, and September, it currently lacks the liquidity to cover October salaries. Chowdhury has urged the protesting workers to wait until November 20 for their payments. "The total salary amount is substantial. It’s not feasible to transfer funds from other ventures to cover these dues suddenly," he explained.

Chowdhury also mentioned that they had considered declaring layoffs but were prevented from doing so by the government due to the large number of employees involved.

Beximco Group has loans totaling Tk 23,000 crore with Janata Bank, of which Tk 19,000 crore became non-performing during the July-September quarter, according to senior bank officials.

The Bank Company Act limits banks from lending more than 25 percent of their paid-up capital to a single entity (10 percent funded and 15 percent non-funded).

While Beximco seeks government intervention, Md Anwar Hossain, administrator of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and vice-chairman of the Export Promotion Bureau (EPB), believes that the large conglomerate should not rely on the government to pay its workers' salaries. "If Beximco cannot pay the salaries, the management should engage with the workers to find a mutually agreeable solution," Hossain suggested, urging the company to clarify its intentions. He recommended that Beximco sell assets to generate liquidity and pay workers.

Hossain further emphasized that the government should not take responsibility for the company’s financial obligations, and it is up to Beximco's management to resolve the labor unrest over wages.

A senior official from another Beximco venture, speaking anonymously, expressed concerns that the group’s financial troubles and the recent appointment of a receiver by the central bank could negatively affect the company’s reputation with foreign buyers. The official explained that buyers had already inquired about the reason for the receiver's appointment, which might impact the export performance of other Beximco units.

The official added that the appointment of a receiver typically signals financial insolvency and can erode buyer confidence in the company.

Meanwhile, Md Ruhul Amin, the appointed custodian of Beximco, stated, "The liquidity crisis has emerged recently, but what happened to the money the group earned over the years? Did they actually misappropriate the funds?" He assured that he would soon visit the factories and meet with management to explore potential solutions.