It can well seem that detained tycoon Salman F Rahman’s flagship firm, Beximco Restricted, which primarily operates in textiles, came upon Aladdin’s lamp in 2021-22, with income skyrocketing from Tk1,982 crore to Tk7,336 crore in precisely two years.
In that year, Beximco launched the first Sukuk bond—an Islamic asset-backed borrowing instrument—to finance its 200MW Teesta Listing voltaic Power challenge, a 30MW photo voltaic plant, and extra textile equipment.
Analysts now think that Salman’s aggressive promotion of Beximco’s spectacular performance and inventory rally labored to attract Sukuk investors.
After he managed to lift Tk3,000 crore by Sukuk at the quit of 2021, Beximco’s miracle began to move away and the firm’s gross sales, and profits collapsed even forward of his world collapsed with that of the Hasina regime.
Exhibiting a average drag in FY23, Beximco within the first 9 months of the FY24 posted 63% plunge in income and 90% fall in profits. Stock imprint which became pushed to over Tk180 from Tk14 in 26 months, now awaits a crash from the artificially held ground imprint at Tk115.6.
Hype and systems
Over the duration of 2020-22, Beximco Restricted chairman in his statements to shareholders were speaking about exports boost and extra upsides that wants to be fuelled by PPE potentials to enchantment investors.
The statements, nevertheless, neither disclosed how critical of its income became coming from which segments—textile, IT, Engineering and others, nor the breakdown of its exports or native income; recordsdata publicly traded conglomerates elevate out yell the necessary aspects including ACI Restricted.
Salman’s generic claims of mountainous exports esteem $400-500 million a year, lacking clear and detailed disclosures by Beximco Restricted for letting investors know the diagram critical of the expansion story is theirs, became constantly suspect to exciting investors.
Beximco Restricted, amalgamating many companies over years, has got a posh development and with out segmental breakdowns its reporting is non-clear, said Chartered Monetary Analyst Md Moniruzzaman, a out of date vice president of the Bangladesh Service provider Bankers Association.
“We, as analysts, hold realized to lift crimson flags against listed companies having multiple entities of sponsor-directors for identical companies. It risks making identical outdated investors inclined to the desires of the entrepreneurs whether or now not they want to manufacture public investors a gainer or loser,” he added.
Customs assessed price of your entire exports by Beximco Restricted became now not as much as Tk40 crore at some level of 1 July 2019 to 30 June 2024, raising eyebrows of investors who were reading the firm chairman’s optimism relating to exports.
Top 57 export consignments out of the neighborhood’s thousands over the duration became by Beximco Restricted. TBS came upon that Salman and his buddies already owned now not now not as much as 31 apparel exporting entities having membership of BGMEA to privately pocket export proceeds.
Thirty of the deepest companies are registered from their factory addresses at Sarabo, Kashimpur, Gazipur where Beximco Industrial Park is positioned.
The CID on 18 September filed 17 cases against 28 persons including Salman F Rahman for alleged cash laundering price $83 million by 17 of such entities, whereas Beximco officials claimed the companies’ $135 million export bills were caught with the international merchants due to their unwanted financial hardship and the merchants already paid over $50 million support in tranches.
When contacted, Beximco Restricted’s Managing Director Osman Kaiser Chowdhury urged TBS, Beximco Restricted mainly owns the textile flit of the neighborhood, now not the apparel palms that export readymade garments. Textile division’s exports are considered as deemed exports.
Export success determines the destiny of the backward linkage industry that makes dresses, he said, adding that Bangladesh became doing gigantic in apparel exports at some level of the pandemic and the Ukraine war-sparked economic crisis that adopted the pandemic impacts on international merchants collectively dragged the Beximco enterprise again.
When Bangladesh reported a 2.8% boost in apparel exports within the first 9 months of FY24, the Export Promotion Bureau recordsdata became announced to were inflated, it is being expected that there can were a average fall year-on-year.
Beximco Restricted’s 63% decline in consolidated income, no matter the newly added photo voltaic energy income of loads of hundred crore taka, became the glorious shock to its investors.
Beximco Company Secretary Asad Ullah blamed the put up-covid and Ukraine war-sparked crisis for the plunge in enterprise and said, “In anxious instances, push for boost may perhaps perhaps well elevate worse outcomes.”
“Salman’s desperation for Beximco Restricted’s rosy picture then and its inventory rally is clearly understandable now,” said inventory market expert Al Amin, an affiliate professor of Accounting and Data Sciences at the University of Dhaka.
The Dhaka Stock Change (DSE) surveillance issue, now not common for long by the BSEC below the chairmanship of Salman’s ally Shibli Rubayat Ul Islam, published how Salman veteran his shell companies and co-workers to push Beximco Restricted shares sky high and profit the windfall.
Also, a high imprint of the inventory has been necessary for Salman to enchantment and rake within the Sukuk investors to finance his Listing voltaic projects that the final Hasina authorities awarded with the glorious energy tariff of 15 cents per megawatt, said Al Amin.
“There I explore no resolution as to why the authorities has to aquire electricity at such an gigantic imprint whereas it buys energy from other identical vegetation at spherical 10 cents, even which is better than that in most mediate about economies,” he added.
Same auditor for decades
Engaging to all, Beximco Restricted has been the usage of easiest one auditor M J Abedin and Company, chartered accountants for decades with out any crash, whereas the Bangladesh Securities and Change Commission (BSEC) prohibited annual statements signed by the identical auditor for better than three years in a row.
Beximco filed a writ petition and secured a handle dispute long ago, said Beximco Company Secretary Mohammad Asad Ullah.
Chartered Accountant Hasan Mahmood, who vetted Beximco Restricted accounts, urged TBS, “The handle dispute allowed us to support a consumer for a truly long time. Why ought to light we lose a relationship with an outdated client?
“Why did now not the BSEC contest enough in court?” he asked, rather than responding to the allegation of letting sprint forward with the relaxation the firm wished.
BSEC Director and spokesperson Farhana Faruki urged TBS that the securities regulator, after the scorching alternate in leadership, is working on such considerations.
Salman’s muscle play
Pondering about Salman’s behaviour in financial markets, cautious institutional investors remained hesitant about Beximco’s hovering shares and high-yield Sukuk with equity conversion alternatives. Allegations hold emerged that many investors felt coerced into buying the Sukuk, lacking real desire within the matter.
Salman reportedly veteran Bangladesh Bank and BSEC to strain banks into procuring the Sukuk. After the fall of Hasina, Metropolis Bank MD Mashrur Arefin urged TBS that his bank became compelled to aquire Tk300 crore price of Sukuk against its will. This sentiment became echoed across a quantity of institutions.
A CEO from a main brokerage agency recounted to TBS that they at the muse provided Beximco shares at spherical Tk20, believing them undervalued. As the imprint approached Tk100 in now not as much as a year, they attempted to promote, easiest to be pressured by Salman and BSEC officials to retain onto their shares.
“We were compelled to aquire support the shares, and my firm faced harassment over alleged political ties,” he said, soliciting for anonymity. Now, his agency and purchasers are trapped with necessary investments in Beximco shares, unable to exit due to the ground imprint restrictions.
Hapless investors
Analysts think the five-year Sukuk plot became structured to support Salman F Rahman whereas inserting investors at likelihood.
Below the Sukuk phrases, banks may perhaps perhaps well convert 20% of their fundamental into Beximco Restricted shares yearly at a 25% slash support imprint to the one-month average market imprint. As an illustration, if Beximco shares averaged Tk 100, investors may perhaps perhaps well aquire them for Tk75.
This plot’s surge in income and inventory imprint relates to the equity conversion option. If fragment prices stay high at some level of conversion, present shares are diluted less. Alternatively, if prices plunge, investors receive more shares, reducing sponsor-director regulate since Beximco’s sponsors hold easiest 30% of the firm.
Most investors were hesitant to severely change their Sukuk into equity due to artificially inflated ground prices, which they believed did now not replicate Beximco’s appropriate price. They fear that once the ground imprint is lifted, shares may perhaps perhaps well plummet below the 25% slash support imprint provided for conversion.
When launched, Sukuk provided a extraordinarily shapely proposition with coupons payment of minimal 9 percent. Also, if Beximco ever offers a dividend better than 9 percent, then 10 percent of that differential would be added to the coupon.
Alternatively, your entire idea of sukuk fell by due to the imposition of ground imprint, making the bond unviable for investors.
Beximco Green Sukuk Al Istisna devices, at the muse valued at Tk 100, hold since dropped to Tk 40-53 from Tk 75 at the quit of July. Alternate insiders dispute Salman and Shibly orchestrated the issuance by pressuring the disaster supervisor, trustee, and investors. Earlier this year, BSEC also authorized Beximco for raising Tk 1,500 crore by but any other zero-coupon bond.
Iftaker Ahmed, a college trainer within the capital, now regrets his old conversion resolution as he fears the shares may perhaps perhaps well put off his capital erosion after the ground withdrawal.
Traders esteem Iftaker light can not think that Beximco Green Sukuk Al Istisna devices having a face price of Tk100 hold fallen free to a range of Tk40-53 apiece, from Tk75 at the quit of July.
Alternate insiders advise that Salman, with Shibly’s support, pressured the disaster supervisor, trustee, and investors to orchestrate the Sukuk issuance. In the same diagram, he compelled the issuance of Amar Bond, transferring a Tk1,500 crore default likelihood to the Salman-controlled IFIC Bank. Earlier this year, BSEC authorized Beximco to lift but any other Tk1,500 crore by a zero-coupon bond.
The particular diagram to do the investors
Beximco Restricted as a listed firm is partly owned by Salman and his family and the majority is owned by identical outdated investors. Neither the firm nor the Sukuk holders-owned resources wants to be vandalised, said Professor Abu Ahmed, chairman of the Sukuk’s Trustee Funding Company of Bangladesh (ICB).
The below development 30 MW photo voltaic plant in Panchagarh, loads of Beximco Industrial park companies and products faced arson and vandalism after the fall of Sheikh Hasina that imprint the firm loads of hundred crore, said Beximco officials.
“I relieve you all to let every wrongdoer face the song, now not their companies.”
The 200 MW photo voltaic plant had a valuation of over Tk2,000 crore and it is believed to be critical better now after the appreciation of buck and the land.
The photo voltaic energy land is owned by the firm, whereas textile equipment provided out of Sukuk is below the possession of the Sukuk investors by the actual cause vehicle (SPV).
Abu Ahmed urged TBS, the 200 MW energy plant’s bills acquired from the authorities ought to light suffice for the coupon funds and the trustee is receiving the bills now.
The trustee is making an are trying to manufacture Beximco switch the land possession to the SPV that can also be given support to the firm after fleshy compensation, he said, adding that the trustee can dump SPV owned resources in case of non-compensation by the firm.
Sources said, Beximco violated the have confidence deed by now not giving Tk5 crore every month within the sinking fund below trustee’s regulate.
A sinking fund is the cash put apart or saved to repay a debt or bond. A firm that considerations debt will want to pay that debt off within the longer term, and the sinking fund helps to soften the hardship of outlay of income.
Trustee is also making an are trying to manufacture customary funds to the sinking fund, said Abu Ahmed.
This instrument is the first Sukuk within the country’s deepest sector. If investors’ expertise flip sour, this can now not let the aptitude financial instrument flourish here, he said, declining to touch upon if the capital utilisation adopted the books or now not.
