Closed Mithun Knitting factory auctioned as liabilities mount

Chattogram Export Processing Zone (CEPZ) has auctioned the factory assets of Mithun Knitting and Dyeing Ltd that pulled down its shutter two years ago in the face of mounting liabilities.

But the auction rate and the buyer of the listed textile company was all a hush-hush affair as CEPZ refused to disclose the information.   

"The auction took place two months ago, and we found a buyer for the factory assets," Moshiuddin Bin Mesbah, CEPZ general manager, told The Business Standard.

He said CEPZ is now waiting for the approval of the executive committee of the Bangladesh Export Processing Zone Authority (BEPZA) for the handover.

Md Atiqul Haque Mithun, a director of the family-run company, told TBS that the factory was closed two years ago as the foreign buyers walked away after the "Accord and Alliance effects".

Accord and Alliance was the foreign apparel buyers' designated group that worked on workplace safety in Bangladesh following the 2013 Rana Plaza garment collapse. Mithun Knitting failed to pass the workplace safety screening and did not invest in the compliances either.  

Atiqul Haque said, "We wrote to CEPZ for updates regarding the auction, but did not get any response. Now we come across the auction news."

He declined to disclose the company's total liabilities in the form of unpaid bills or fees.

According to the Dhaka Stock Exchange, Mithun Knitting's total short-term loan hovered below Tk5.85 crore in mid-2008.

After being listed in 1994, the company posted its last profit in 2016 which was less than Tk7 crore for that year.

The company in the 2016-2017 fiscal year recorded a loss as the losses in the next two consecutive fiscal years surpassed Tk13 crore.

According to a CEPZ source, the company owed more than Tk20 crore to various service providers while the dues to the EPZ alone crossed Tk1 crore.

As soon as CEPZ cut off the utility connections in September 2019, production at Mithun Knitting was shut.

Mohamad Shohel Rana, Mithun Knitting company secretary, said, "We are waiting for the High Court approval for the pending annual general meetings and will further update shareholders if we have any concrete update."

With less than Tk33 crore in paid-up capital, the company had a net asset value of Tk18.52 against each share of Tk10 in face value at the end of March 2019.

Since then, there had been no financial disclosure for the shareholders.

 The rise and fall

A concern of Bangas-Tallu Group, Mithun Knitting and Dyeing began its journey in the early 1990s to manufacture and export single jersey, interlock, rib, French terry, flat knit, collar and cuff, rib with lycra and knit garments of all sorts in Chattogram.

Bangladesh Nationalist Party (BNP) politician Mozammel Haque, who also founded biscuit producer Bangas and spinning mill Tallu, was the man behind the venture.

After the political fall of BNP more than a decade ago, his successors failed to hold and grow the businesses he founded.

The business sank into further trouble after Mozmmel Haque died in 2017.

Reflecting their negative outlook and a lack of seriousness, most of the new generation directors of Mithun Knitting sold off a large portion of their shares in the company in 2016 and 2017 – just before it turned into a loss-making venture.

The company shares were trading between Tk27-77 then and later dropped to TK5.8 in early 2020.

In the bull market of 2021, Mithun Knitting shares surprisingly shot to over Tk26 from less than Tk8 in the Dhaka Stock Exchange despite no good news regarding production.  

Later in the correction phase at the end of August, the stock fell back to Tk15.7 on Monday.