Minhar Sea Foods, a pioneer in the country's seafood export, has become a loan defaulter after winding up its business mainly due to a decline in shrimp production.
Minhar Sea Foods started its business in the Kalurghat Heavy Industrial Area of Chattogram in 1978. Later, the company established a fish processing factory in Cox's Bazar as well. Subsequently, the company's frozen shrimp exports destination reached over 20 countries. However, due to a decline in the availability of shrimp, the company is now a loan defaulter. The company had to shut down its fishing, processing, and export activities four years ago.
Recently, ONE Bank has filed a case against the three entities under Minhar Sea Foods, seeking approximately Tk178 crore. Among them, Minhar Seafoods Limited owes the bank Tk79.17 crore, Minhar Fisheries Limited owes Tk45.96 crore, and Minhar Marine Foods Limited owes Tk22.25 crore.
In the lawsuits filed with the Chattogram Money Loan Court Act on July 19, 2023, Habibullah Khan, the founder and managing director of the company, his wife and company chairman Yasmin Khan, son and director Habib Ahasan Khan, daughter and director Tahsin Khan, and director Debapriyo Barua have been named as defendants.
In addition to the loan case, three NI Act (check dishonour) cases are pending against three companies of Minhar Sea Foods. ONE Bank filed the three cases with the Chittagong Metropolitan Magistrate's Court on the same day. The hearing for the framing of charges in the three cases was scheduled for October 18. But it was deferred to January 2024 as the judge was absent on the day.
According to the lending bank, Minhar Sea Foods Limited has been operating its business with loan facilities from ONE Bank's Agrabad Branch since 2011. The company's transactions were going well from the start of the business until 2018. However, the company started to procrastinate in paying back loans from 2019. As the bank assumed that a shutting down of the company's operations had created a risk of collecting the dues, it took legal action.
"Minhar Sea Foods is a well-known company in the seafood export sector. The company secured the loan facility by dint of its good reputation in business. However, due to the ups and downs in prices in the domestic and international markets and various relevant reasons, the company has become a defaulter. We have already taken all legal measures to collect the loan. In addition, discussions are ongoing with the company's high-ups on the matter," said an officer of the bank who preferred not to be named.
Minhar's story of success and failure
Habibullah Khan established a shrimp export factory in Kalurghat in 1978 with the investment of the then Industrial Bank. The company did well in the first four decades due to the easy availability of shrimp in the sea. At that time, 100% of the factory's raw materials (shrimp) came from the coastal regions of Khulna and Cox's Bazar. It even used to collect shrimp from neighbouring Myanmar. Minhar started exporting shrimp to various countries, including the USA, Belgium, Germany, Netherlands, Japan, the UK, and France.
Minhar Sea Foods did so well that in the fiscal years 2013-14 and 2014-15 that the company's annual seafood exports exceeded Tk200 crore. At the time, the company had about 500 employees in its two factories and three fishing trawlers. For its contribution to export earnings, Minhar Sea Foods won export trophies from the government in various categories from 1981 to 2009. During this time, the company's founder, Habibullah Khan, was nominated as a CIP for several years.
However, seafood export began to decline after 2015. Although about 150 seafood export factories were established in the country at that time, the netting of shrimp from the sea decreased. At one time, the supply of shrimp from Myanmar also stopped.
In order to increase exports, the company installed modern machinery for fish processing. However, due to the shortage of raw materials, it could not increase exports in proportion to the machinery, and started incurring losses. From 2016, the company continued to incur losses, and eventually in 2019, it completely stopped exporting fish.
In the meantime, a revolution in the production of vannamei shrimp began in several countries, including Vietnam, China, India, and Thailand. The production cost of vannamei shrimp is much lower than that of shrimp harvested from the sea. As a result, these countries began exporting vannamei shrimp to the world market at much lower prices. This led to a significant drop in the price of shrimp in the world market. On the other hand, the cost of shrimp harvesting for exporters in the country increased due to the decline in fish in the sea. In addition, the reputation of Bangladesh in the world market was damaged due to some exporters not maintaining quality standards.
As a result, the cost of shrimp harvesting, transportation, and processing increased, but the company continued to incur losses due to a mismatch between income and expenditure.
Habibullah Khan, the founder and managing director of Minhar Sea Foods, told The Business Standard, "We built the factory with the investment assistance of the bank. We created employment for people in the fisheries, processing, and export sectors. We have contributed to export earnings. In the end, we could not repay the bank's debt due to poor business for several consecutive years. Before closing down the factory, we proposed to repay the loan with 70% of the total dues in 2018. But the bank did not come forward to resolve the issue."
He went on to say, "We have paid hundreds of crores of taka in interest to the bank. Since our business has closed down, we are unable to repay the money as demanded by the bank at this time. However, we have the intention to repay the bank's loans. In this case, the bank must also come forward."