BJMC seeks funds once again
The Bangladesh Jute Mills Corporation has once again sought a large amount of funds from the government to make its ailing mills profitable.
The request came at a meeting between the textiles and jute ministry and Finance Minister AMA Muhith on Thursday, where the high officials of BJMC were also present.
BJMC sought about Tk 1,800 crore for paying staff salaries and various dues and purchasing jute.
The prospects for jute have expanded and its demand on the market is on the rise, said Humayun Khaled, chairman of BJMC.
“We need the government's support to exploit this opening.”
About 5,500 employees have retired in the last few years and BJMC is unable to provide their dues, he said.
However, no decision on the matter was taken at the meeting. Muhith has directed the finance division and the textiles and jute ministry to hold separate meetings to take stock of the situation and make recommendations.
Only after finding a way to make the 25 mills profitable would a decision on paying their dues would be taken. Since 2009, BJMC has been given more than Tk 6,000 crore for buying jute, paying dues and staff salaries, said a finance ministry official.
The funds were given under various conditions such as turning the jute mills into holding companies.
Of the 25 jute mills under BJMC, at least five of them would have to be turned into holding companies. BJMC will hold the majority shares, with the rest offloaded into the stock market.
BJMC has been provided with the fund in various times but it did not fulfil any of the conditions.
This time, funds will be provided only after the mills meet the conditions.
In the last nine years, the mills suffered losses every year, save for one, in fiscal 2010-11, when a slight profit of Tk 14 crore was made. From fiscal 2006-07 onwards, they made losses of Tk 66 crore to Tk 700 crore each year.
Last fiscal year, BJMC suffered a loss of Tk 640 crore, according to provisional estimates.
As of December 2014, BJMC owed Tk 1,219 crore to state-owned banks, according to the latest economic review.
Officials of the ministries of finance and jute said there are various problems in the running of the jute mills and hence the loss-making by them.
For instance, the mills are said to be over-staffed: about 60,000 work in them. And the salaries paid to them are much higher than those in the private sector.
The jute mills cannot produce even half of their capacities but they still have to pay salaries to their employees.
In 2011, the government reopened five mills that were shuttered due to loss-making and freshly recruited workers for them.
When the jute procurement season starts, the mills fail to procure due to lack of funds. They end up purchasing when the season is over, paying a higher price.
The officials said there is a lack of transparency in the jute purchasing process. It is alleged that manipulation occurs in the weighing of the jute and their pricing.