Mithun Knitting and Dyeing Ltd shuts down after failure to modernise

Mithun Knitting and Dyeing Ltd shut-down production on September 20 after failing to comply with conditions of modernisation placed by international buyers. The textile firm located in the Chattogram Export Processing Zone, had regularly provided dividends to its shareholders till 2016.

Two leading international associations of readymade garments buyers, Accord and Alliance, placed trade embargoes on Mithun Knitting and Dyeing Ltd, pushing it towards closure. The embargoes were to be lifted only if the firm had fulfilled certain conditions such as building an environment-friendly factory and keeping safety equipment on the premises. 

Mithun Knitting and Dyeing needed an investment of Tk30cr to meet these requirements, but the amount was beyond its present capacity, a senior official of the firm informed The Business Standard. Since the firm had already defaulted on loans taken from Basic Bank, it was not eligible for more loans to tackle the crisis. 

The official also said that many other firms have also closed down after failing to meet conditions placed by Accord and Alliance. But he added that the firm will contact the government and associations involved with readymade garments to try to reach an agreement with Accord and Alliance. 

Mithun Knitting and Dyeing Ltd started operation in 1991 in the Chattogram Export Processing Zone. It was listed at the stock market in 1994. The firm suffered a loss in the 2016-17 fiscal year, but before that the company had given 20% dividends to its shareholders in the 2015-16 fiscal year. At that time its shares traded for Tk45. However, on Sunday, the closing price of the firm's share was Tk10.50.

The firm has a paid-up-capital of Tk32.49 crore, and 17.20% of its shares belong to its entrepreneurs and directors. The rest belong to institutional and private investors. The firm cannot draw any more funds from the stock exchange because its entrepreneurs and directors do not hold 30% shares, the minimum requirement, as per the securities regulations.

Buyers of Bangladeshi readymade garments formed the Accord and the Alliance associations after the Rana Plaza tragedy on April 14, 2013. The two associations have put conditions of modernisation on firms in the Bangladeshi garments and textile sector, requiring them to improve factories and increase safety measures.