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Shinepukur Ceramics fell 8.33 per cent on Wednesday on the Dhaka bourse in the aftereffect of the government's decision to pay salaries to the laid-off employees of Beximco Group by selling shares that had been mortgaged against loans.
Shares of Beximco Pharmaceuticals, as declared, will also be sold to pay dues to workers. The stock experienced a 1.83 per cent correction on the premier bourse on Wednesday.
Any decision tied to listed companies is expected to exert positive or negative influence on the relevant stocks as the market reacts to it. However, the announcement made on Tuesday is feared to have a much greater impact than that.
At a press briefing, Labour and Employment Adviser M Sakhawat Hossain said the government would need Tk 5-5.5 billion to settle the dues of the employees of 13 shutdown companies of the group. The fund will be collected, he said, by selling shares of the companies.
Banks have lien over the shares that he referred to against loans given to sponsor-directors of the non-operational companies, said sources who attended a meeting on Tuesday before the press briefing.
Experts say if the transaction of shares is executed in the open market, the selling pressure will drive down the stock prices.
"The impact can be avoided if the share transfers are carried out in the block market," said Md. Ashequr Rahman, managing director of Midway Securities.
Another matter of concern is the change in the board of directors.
New people will acquire positions in the board of directors of the companies by purchasing shares. So, the government has to decide who will be capable of keeping the companies up and running, said Mr Rahman.
While the workers' dues are a problem to solve, how it will impact shareholders is another issue to ponder.
Barriers to execution of the plan
Preferring anonymity, a bank official, who attended Tuesday's meeting before the press briefing, said banks had disbursed loans to sponsors of Beximco Group, holding a lien over a certain number of shares of the companies.
The loans are to be settled first through confiscation of the shares, he said, but representatives of the banks did not broach the subject at the meeting.
A detailed action plan will be made in the next meeting to be participated by representatives of the regulators and the banks concerned, said a senior official of the Financial Institutions Division (FID).
Meanwhile, the government has collected information regarding shareholding of the sponsors of Beximco Group from the securities regulator, depository authority and the Dhaka bourse.
Mohammad Rezaul Karim, spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), said the lenders will acquire the mortgaged shares.
The pledgee to whom property is delivered as a pledge will submit a prescribed form to the depository authority, seeking the ownership of the shares. Then the Central Depository Bangladesh Limited (CDBL) will transfer the shares to the banks if there is no complexity in the agreement signed between the lenders and the borrowers.
A court order may be required if any complications arise.
On receipt of the shares, the banks may sell or hold the shares.
The sponsor-directors of a listed company are obligated to hold at least 30 per cent shares jointly and the holdings cannot be sold off.
"The pledgees may be included [in the board] as sponsor-directors," said Mr Karim.
To facilitate share sell-off, regulatory intervention will be required. "The securities regulator will have to provide a no-objection certificate in that case," Mr Karim added.
On the payment of the employees' dues, he said the payments would be made with the funds to be realised through the sales of shares held by the sponsor-directors of the Beximco Group.
"Everything will be clear after the plan is finalised with the central bank and the FID," Mr Karim said.
Preferring anonymity, a senior official of the CDBL said they can facilitate the confiscation of electronic shares only. "It would be difficult if paper shares were kept as lien."
Beximco Group has loans over Tk 400 billion, of which Tk 28.51 billion was taken from 12 banks, including three state-run commercial banks.
Of the state-run banks, Janata Bank lent the highest amount -- Tk 232.85 billion, while private commercial bank AB Bank provided Tk 9.38 billion in loans.
Salman F Rahman, vice chairman of Beximco Group, holds 2.03 per cent or 9.08 million shares of Beximco Pharma and his brother A S F Rahman, chairman of the group, holds the same amount of shares of the company.
Besides, Beximco Holdings holds 24.90 million shares, Beximco 3.19 million, New Dacca Industries 14.34 million shares, Beximco Engineering 0.96 million and National Investment & Finance Company 1.31 million shares of Beximco Pharma, according to its annual report for FY24.
On the other hand, BEXIMCO holds 50 per cent shares of Shinepukur Ceramics while Salman F Rahman holds one share and A S F Rahman holds 2 shares of the company, according to Shinepukur's annual report for FY24.
As per the securities rules, the sponsor-directors of a listed company are required to hold at least 2 per cent shares each.
Hence, it is in violation of the rules that A S F Rahman and Salman F Rahman are in the company's board by holding just one and two shares respectively.
Chairman of the Dhaka Stock Exchange (DSE) Mominul Islam said they had been urging the government to take measures considering the interest of general shareholders of Beximco Group's listed companies.
"General investors will not be affected if only ownership [sponsor holdings] changes. They will be affected if the companies' assets are sold to settle debts or other dues," Mr Islam added.
Companies' performance
Beximco Pharma experienced a 26 per cent growth year-on-year in profit to Tk 5.82 billion in FY24. In the first half of FY25, the profit growth was 17.51 per cent year-on-year to Tk 3.53 billion.
Shinepukur Ceramics was on a growth trajectory for the three years to FY23. Its profit gradually rose to Tk 59.69 million in FY23 from Tk 31.59 million in FY20.
In FY24, profit declined to Tk 22.89 million. The company reported a loss of Tk 198.80 million in the first half of FY25.
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