Bepza terminates Ring Shine’s lease of 5 plots over $12.8m dues
The company holds 50 plots under land lease agreements with Bepza
The Bangladesh Export Processing Zones Authority (Bepza) has terminated the land lease agreement for five plots allocated to Ring Shine Textiles Limited due to the company's long-standing failure to pay its dues.
The company must vacate these plots within seven days, or Bepza will take possession of them. As of 31 January 2025, Ring Shine owes Bepza $12.8 million.
Bepza issued a letter to the company regarding the matter on Thursday. Following the letter, the company's share price on Sunday decreased by 4.65%, falling to Tk4.10 on the Dhaka Stock Exchange.
Meanwhile, the company said it was unable to pay the dues because the securities regulator has not yet released its remaining initial public offering funds, despite multiple applications.
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Currently, the company holds 50 plots under land lease agreements with Bepza.
According to Bepza, Ring Shine has failed to pay its dues for an extended period. The authority repeatedly requested payment and provided multiple opportunities to settle the outstanding amount.
Despite making several commitments and submitting various payment plans, the company consistently failed to fulfill its obligations and did not pay its regular dues for several months.
Bepza believes this indicates that the company is unable to operate in Dhaka EPZ (DEPZ) and is deliberately delaying payment.
As a result, Bepza issued a 21-day notice on 15 October 2024, but the company did not make any payments after receiving it. Following this, a show-cause notice was issued on 18 November 2024, asking the company to explain why its lease agreements for plots in the DEPZ Extension Area should not be terminated due to non-payment.
In response, the company submitted an explanation regarding the utilisation of these plots in a letter on 9 December 2024. However, Bepza found inconsistencies between the company's explanation and reports from the DEPZ Zone Office.
To address the issue, a meeting was held on 9 January 2025, where the company committed to paying $1 million within January 2025, the current month's dues on 13 January 2025, and a portion of the outstanding dues in the third week of January 2025.
But as of 31 January 2025, the company had only paid $155,647, while its total outstanding dues stood at $12,797,442, against a security deposit of $254,945.
Bepza believes the company is not serious about its project, and its failure to utilise certain plots, which have remained largely unutilised.
Aniruddho Piaal, managing director of Ring Shine Textiles, said the company is working to fully resume operations. It has already increased production capacity to 50% from below 10%.
He said the company applied to BSEC for the release of its IPO funds, requesting $1 million, which it planned to use for clearing its Bepza dues. However, it has not yet received any funds.
He further said due to non-payment, Bepza has already suspended the company's import and export permissions. Ultimately, the authority terminated the land lease agreement for five plots of the company.
Piaal added that without the release of IPO funds, it will not be possible to pay Bepza.
In the July to September quarter, Ring Shine Textiles generated revenue of Tk65 crore, up from Tk27 crore in the same period of the previous year. The company reported a loss of Tk39.64 crore in this quarter, compared to a loss of Tk43 crore a year ago. Its per-share loss stood at Tk0.79, while its net asset value per share was negative Tk8.82 at the end of September 2024.
In August 2023, the Bangladesh Securities and Exchange Commission (BSEC) conditionally allowed Wise Star Textile Mills and five Singapore-based companies to acquire Ring Shine's shares, including those held by sponsor-directors.
In September 2023, Ring Shine's board of directors raised concerns about the credibility of these six companies, which were set to collectively take over a 38% stake in the firm. Of this, Wise Star would hold only 2% of the shares, while the other five companies would hold 36%.
In February 2023, the High Court stayed the operation of Ring Shine Textiles' board, which had been reconstituted by BSEC, for six months.
Ring Shine was the first large manufacturing company to raise Tk150 crore through an IPO using the fixed-price method in 2019. However, after listing, it struggled to operate due to various challenges.
