Beximco Community is anticipated to utter layoffs across its 16 apparel factories located at its Gazipur Industrial Park nowadays, citing no orders and the absence of banking enhance since the ouster of Sheikh Hasina’s govt in August.
The decision threatens the livelihoods of 40,000 workers as the conglomerate struggles to arrange escalating financial pressures.
Osman Kaiser Chowdhury, a director of Beximco Community and managing director of Beximco Restricted, described the difficulty as unsustainable.
“We had been before all the pieces put assured by the intervening time govt that our businesses would be supported. Primarily essentially based on this, we saved the factories operational for four months. On the alternative hand, no enhance materialised,” he stated, explaining the reason in the relieve of the impending layoffs.
Over the final four months, Beximco has spent Tk300 crore, largely on worker wages, including Tk100 crore financed by financial institution loans.
The neighborhood requires Tk60 crore per thirty days to pay wages and an additional Tk15 crore for other personnel who receive long gone unpaid for four months.
“We’re generating Tk5-6 crore in month-to-month revenue from subcontracting with other factories, which is removed from ample. Previously, these factories earned $25-30 million per thirty days [Tk250-300 crore],” Osman stated.
Global patrons cautious doing substitute
The dearth of contemporary orders since August has compounded the challenges. Osman stated necessary world patrons receive signalled willingness to resume substitute if the neighborhood can even fetch Letters of Credit (LCs) from banks. On the alternative hand, the banking sector’s reluctance to enhance Beximco, because of its financial space, has left the firm unable to fulfil these requirements.
“Some banks can even start LCs, however wonderful with a 100% margin and doubtless indicators from the govt.. We don’t receive the main cash reserves to meet such terms,” he infamous.
Closure can even merely grunt layoff
The Bangladesh Labour Act 2006 mandates compensation for laid-off workers who meet explicit standards. Per its Allotment 16, workers need to be compensated for all lay-off days, other than weekly holidays. Sub-allotment 5 stipulates extra compensation if layoffs lengthen past 45 days inner a calendar one year.
Osman indicated that the layoffs would before all the pieces put closing for 45 days, with the likelihood of a 15-day extension if conditions fail to enhance. He warned that everlasting manufacturing unit closures might per chance well grunt.
He stated the layoff in Beximco Restricted’s textile division has now not yet been finalised because it is miles a publicly listed firm and desires to warfare by certain procedures.
Loans over Tk50K crore, 50% defaulted
Beximco’s financial troubles are carefully tied to its mounting debt. A latest document submitted by the Bangladesh Bank to the Excessive Court docket revealed that the neighborhood’s loans stood at over Tk50,000 crore as of 30 November 2024, with over 50% – Tk25,524 crore – categorized as defaulted. Out of the neighborhood’s 188 companies, 78 receive borrowed from 16 banks and 7 financial institutions.
In November, the Bangladesh Bank appointed its Govt Director Ruhul Amin as the receiver for the neighborhood following an uncover from the country’s apex court.
Amin acknowledged the difficulties going by Beximco’s apparel models. “Beximco can’t start LCs because of its defaulted loans and is now reliant on subcontracting. Operating factories is now not our job, however we’re inviting to help if approached,” he stated.
He furthermore criticised the neighborhood for failing to provider its cash owed on time, arguing that Beximco’s actions had worsened its precarious financial thunder.
The disaster at Beximco has broader political implications. Salman F Rahman, vice-chairman of the neighborhood, served as an adviser to ousted prime minister Sheikh Hasina on inner most substitute and funding.
At some stage in his tenure, critics instruct, he leveraged his impression to fetch favourable terms for Beximco, including intensive financial institution loans. Salman became as soon as arrested on 13 August from Sadarghat dwelling in Dhaka and now in detention center.
With the neighborhood now under financial and operational power, the fallout from its debt disaster can even merely lengthen a long way past its apparel factories, elevating concerns about broader implications for Bangladesh’s banking and industrial sectors, in step with bankers.
