Western Marine Shipyard in Chattogram, which had gained prominence by building 150 ships in 20 years and earning remittance through exports, has almost lost its business to cash crisis.
Its operation remained suspended for one and a half years before it resumed activities about a couple of months ago on a very limited scale.
Western Marine has hardly received any domestic and foreign orders after failing to keep promises on a few international deliveries.
The sorry state of today has little resemblance with its past record of exporting 33 ships to 12 nations, including Germany, Finland, Denmark and the United Arab Emirates, bringing in Tk1,400 crore in remittance.
Wishing not to be named, a director of the company, said Western Marine Shipyard had assets of Tk552 crore at present while its debts had climbed up to around Tk2,000 crore.
Western Marine has little hope of regaining its strength after breaching its commitment to international buyers, he said.
With the company going deep into a crisis, 19 banks and financial organisations are at risk over loan recovery.
No financial organisations are willing to provide fresh loans to Western Marine. On one hand, the cash crunch has kept it from scaling up its operation while on the other, existing debts have ballooned with unpaid interests over the past two years.
Captain Tareque M Nasrullah, executive director of Western Marine, said, "We are trying to turn around and have already delivered a tugboat to the Chattogram port. Deliveries of two ships to Dubai and other large vassals to local parties have remained halted for the financial crisis."
The Business Standard, however, found the tugboat at the company's yard in a recent visit.
Ataul Hakim Siddique, assistant harbor master of Chittagong Port Authority told " We did not get any tugboat from Western Marine."
Debts and pending orders
Western Marine had easily secured loans as a company of an emerging industry but it did not pay back despite counting profits, said AKM Saiful Islam Chowdhury, an official of Bank Asia.
Deliveries of a cargo vessel of S Alam Group, a passenger vessel of Bangladesh Inland Water Transport Corporation, two tugboats of Chattogram and Payra port, and a landing craft of Bangladesh Army have become uncertain following advance payments.
Meanwhile, a Dubai based company, Al Rashid Shipping Limited, filed a lawsuit against Western Marine in June 2020 four months after it was scheduled to deliver two oil tankers.
The High Court on 19 August directed the Anti-Corruption Commission to investigate the payment of Tk23 crore to Western Marine by Chattogram port without receiving the delivery of a tugboat.
The ACC was asked to submit a probe report within two months.
The Chattogram Port Authority had inked an agreement to buy a tugboat for Tk37.75 crore and the tugboat was scheduled to be delivered by December 2018.
Western Marine has been working on another order for a tugboat by the Payra port authority. Company officials think the delivery will not be possible within the time agreed upon.
The need of the emerging industry
Executive Director Tareque said the government had launched "Ship Building Industry Development Policy" to provide long-term loans at low interest rates.
"Hopefully the company will be able to recover shortly," he added.
Captain Md Anam Chowdhury, president of Bangladesh Merchant Marine Officers' Association and Western Marine's independent director, said shipbuilding is a tech industry which can thrive on long-term and low interest loans.
Without any government support, this industry cannot survive.
Anam suggested launching a monitoring system to ensure proper utilization of loans.
It takes a long time to make profits and retain a positive business growth after investing in ship building, traders in this industry said.
But shipbuilders took short-term loans at high interest rates from banks and invested in long-term projects. Sometimes it takes around two years to build a ship which should be completed in six months due to unskilled workers and other obstacles, industry insiders said.
Therefore, company owners have to count losses for selling a vessel at a low price or pay a penalty for failing to meet the deadline for delivery, they added.
Not only Western Marine, other ship builders have also been facing similar challenges without a source of financing.