Western Marine in stormy voyage
Since 2008, the shipbuilder has also exported 33 ships to 12 countries, including the Netherlands, Denmark, Kenya, Finland, Germany, the United Arab Emirates and India. The company had a turnover of around Tk2,000 crore, including Tk1,400 crore in foreign currencies
The Western Marine Shipyard still stands out at Kolagaon on the southern bank of the River Karnaphuli but what is missing now is the whirring sound of shipbuilding and hustle and bustle of its around 3,000 workers.
Now, those who did come here even a year ago will at first think that they have come to the wrong place.
The shipbuilder's three shipbuilding yards covering 40 acres of land – equivalent to 30 football grounds – have been lying abandoned for the past one and a half years.
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Recently, the shipbuilder has faced some obstacles – internal conflicts of directors, mismanagement, high-interest loans on short terms and investment in long-term projects.
Despite having enormous prospects, Western Marine is now on the verge of closure owing to a lack of working capital.
The country's leading shipbuilder based in Chattogram has reportedly not paid its workers in the last 13 months. The outstanding salaries amount to Tk8-10 crore. It has also failed to pay rents of a portion of the land it took on a lease for the yards.
While visiting the shipyard on 11 February, it was seen that Patiya Marine Shipbuilders has closed the Western Marine's main entrance and hung a signboard on it under the name of Saber Ahmed. It has also erected walls on more than half of the land used as Western Marine's yards.
No worker was found working at the factory, which used to be abuzz with several thousand workers at one time. Only 15-20 officials and workers were seen in the whole factory and its office. They are mainly engaged in clerical and security work.
Seeking anonymity, a director of the Western Marine said 28 of its 40 acres of land were bought in the company's name. The remaining 12 acres were taken on a 30-year lease. But one of the lessors, Saber Ahmed, has put up a sign on his land as the company could not pay him monthly rent in the last 18 months.
Another lessor has also issued a notice to the Western Marine, asking it to vacate his premises, he added.
In 2000, the Western Marine Shipyard joined the shipbuilding industry, one of the country's potential sectors. The company has since built 150 ships of various types, such as deep-sea fishing trawlers, port utility vessels, tugs, container ships, tankers, bulk carriers, and passenger ships, over 20 years of its journey.
Since 2008, the shipbuilder has also exported 33 ships to 12 countries, including the Netherlands, Denmark, Kenya, Finland, Germany, the United Arab Emirates and India. The company had a turnover of around Tk2,000 crore, including Tk1,400 crore in foreign currencies.
Conflict of directors
The company's current director Md Shakhawat Hossain had been its managing director for about 19 years.
At a board meeting, one of the directors complained that Shakhawat failed to increase orders and reduce bank loans. In June 2019, Shakhawat resigned as the managing director due to disputes over company management and Captain (retd) Sohail Hasan then took over.
Sohail lives in Singapore with his family. He was there when employees protested outside the dockyard during the pandemic demanding wages.
The company has not been able to export any ship since the new managing director took over in 2019.
Director Shakhawat Hossain said the company had achieved global prominence by exporting ships until he stepped down as the managing director in June 2019.
"After I resigned, the company could not export even a single ship in the last 1.5 years. A foreign company has even filed a lawsuit against them for failing to deliver on time. This has tarnished our long-standing reputation," he added.
Shipbuilders say it takes a long time to reach profits after investing in the shipbuilding industry, and Western Marine invested in long-term projects, including shipyard construction, by taking out short-term loans at a high-interest rate.
Due to incompetent manpower and various obstacles, it sometimes takes 1.5-2 years to build a ship, which is supposed to be built in just six months. Failure to deliver ships to buyers according to the contract leads to penalty or the ships have to be sold in losses.
Western Marine built ships but bank loans taken for the projects started turning into bad loans before the sale of the ships. It borrowed from one bank to repay the loan of another. Thus, the number of loans began to rise.
The company's Independent Director Captain Anam Chowdhury said unlike other countries, the government did not provide support to take the organisation to a sustainable level.
Lending banks at risk
Banks and financial institutions that invested in Western Marine are now at risk of debt recovery as shipbuilding stalled over the past 1.5 years.
According to creditors, the company owes about Tk2,000 crore to 19 banks and financial institutions so far. Most of these loans have been restructured and rescheduled by the banks for long terms according to BRPD circular-4 of the Banking Regulation and Policy Department of the Bangladesh Bank.
But a portion of the loans has again become classified (overdue and bad/loss).
The shipbuilder is in debt of Tk721 crore with National Bank, Tk448 crore with Bank Asia, Tk117 crore with Sonali Bank, Tk111 crore with Mutual Trust Bank, Tk100 crore with NCC Bank, Tk72 crore with IFIC Bank, Tk63 crore with Dhaka Bank, and Tk53 crore with One Bank.
Western Marine owes Tk45 crore to Midas Finance, Tk36 crore to Union Capital, Tk32 crore to Premier Leasing and Finance, Tk22 crore to Reliance Finance, Tk17 crore to Fareast Finance and Investment, Tk13 crore to National Finance, Tk11 crore to Uttara Finance and Investment, Tk5 crore to Pubali Bank, Tk5 crore to BRAC Bank, Tk3 crore to First Security Islami Bank and Tk2 crore to National Housing Finance and Investment.
Apart from the bank loans, the shipbuilder also owes at least Tk50 crore to the industry people including Tk80 lakh to Atlantic Marine owner Nasir Uddin, and Tk2.5 crore to Desh Ship Building owner Mohammad Sarwar. Some of the industry people have already filed multiple cheque dishonour cases against Western Marine.
AKM Saiful Islam Chowdhury, executive vice president and zonal head of Bank Asia, said the Western Marine made a profit by shipbuilding with bank loans, but it did not repay the bank on time. Therefore, the company is now burdened with numerous debts.
Monir Hossain, deputy general manager of Sonali Bank, said they granted loan approvals to the shipbuilder since the company had good business prospects in the beginning.
Monir said the company has recently undergone a series of internal disputes among its directors. Besides, Western Marine marred by mismanagements could not build any new vessel in recent years. These failures ultimately contributed to the non-payment of its mounting loans.
Delivery of eight vessels uncertain
Uncertainty grips Western Marine's delivery of eight vessels to both domestic and foreign clients since the company is in the doldrums for the last one and a half years. There is also no new order for the shipbuilder.
In June 2020, Dubai-based Al Rashid Shipping Ltd filed a lawsuit against the company with the High Court for failing to deliver vessels on time.
Meanwhile, deliveries of S Alam Group's cargo vessel Evergreen, a passenger vessel of Bangladesh Inland Water Transport Corporation, two tugboats of Chattogram port and Payra port and a landing craft of the army also see uncertainties.
When contacted, Western Marine Shipyard Ltd Managing Director Captain (Retd) Sohail Hasan said delivery of two ships was delayed as their foreign workers could not return to the construction site due to the pandemic.
"As we had to pay the workers and factory utility bills even during the pandemic-led shutdown, we are facing a financial crisis now. But we are optimistic about overcoming the crisis soon," he added.
The managing director said the government is formulating a development policy for the shipbuilding industry, allowing long-term loans at low interest.
