Full text of statement of Salman F Rahman

Salman F Rahman speaks at a press briefing at Sheraton Hotel in the city yesterday.Photo: STAR

Statement of Mr Salman F Rahman
Assalamualaikum. I would like to thank and welcome you all to today's briefing. We had interacted on numerous occasions before but today I have invited you for a completely different purpose.
It is with great sadness that we have noted a vicious propaganda being unleashed by two national newspapers -- Prothom Alo and The Daily Star -- against one of the biggest industrial conglomerate in Bangladesh.
The malicious propaganda has been going on for many years now, which we kept ignoring and we are now compelled to bring the issue before the court of public.
Founded in 1972 as Bangladesh Export Import Company Ltd (BEXIMCO), it has grown into the country's one of the biggest business groups with a wide range of industrial and services companies. We would like you all to take a look at the following facts:
· Today, despite all odds, we directly employ 35,000 people, with an annual turnover of Tk 16.5 billion.
· Our six listed companies have a combined market capital of US$ 1.2 billion and enjoy the confidence of as many as 152,000 shareholders.
· Of the total daily turnover on the Dhaka Stock Exchange, our group's shares constitute over 15%.
· Beximco Pharmaceuticals Ltd (BPL) alone has the confidence of 65,000 shareholders, the single largest in Bangladesh.
· Beximco Pharmaceuticals is the only Bangladeshi company to get listed on London Stock Exchange.
· We generate thousands of highly-paid jobs in Bangladesh, and our goods and services are sold in many countries in the world, bringing in much-needed foreign exchange.
It is true we have gone through ups and downs as our country has in all these decades. Nevertheless, we have tried to protect the interests of our workforce as well as our shareholders.
Our efforts have not always been successful for various reasons, often factors beyond business contributing to the lack of success.
For the past few years, we have seen efforts -- very conscious and often beyond anyone's comprehension -- from these two newspapers to stifle our attempts to grow, create more jobs and expand our exports.
The latest example will prove our point. Now I will give you few instances of the kind of propaganda unleashed on us.

Bextex Dividend declaration
On April 30 this year, Bextex, a concern of Beximco Group, announced 10 percent stock dividend for 2008. Dividend can be declared from retained earnings or reserves even if the company has made a loss. Bextex had not declared dividend for the past few years and was in 'z' category. After the democratically elected government came to power, we were able to turn the company around and expect that InshaAllah this year Bextex profitability will increase as indicated in the Annual Report. We have also obtained shareholders' approval in the AGM held on 18th of June 2009 to convert debt of Tk 635 crore into equity, thereby saving an interest cost of over Tk 80 crore annually. Keeping this as well as the interest of our shareholders and investors in mind, we decided to declare dividend for 2008 even though the company made loss. The dividend was declared out of its accumulated reserve which stood at Tk. 77.98 crore. But both the newspapers on July 10, 2009 reported incorrectly that the dividend was declared out of revaluated reserves pursuant to revaluation of its lands, buildings and other assets. And worst of all, these two newspapers referred to Bextex shares as 'Junk Shares'. It is well known to all that Bextex has world class manufacturing facilities, 'blue chip' customer base, established brand both in the domestic and international market. In 2008 as per published figures, Bextex Sales was Tk 476 crore, Gross Profit was Tk 167 crore, Operating Profit was Tk 14 crore and after charging interest and depreciation loss was Tk 61 crores. We leave it to you to judge whether Bextex shares can be called 'Junk Shares' and the journalistic standards applied by these two newspapers.
They also quoted a Dhaka University professor who always smells rat in every initiative we take.
"We heard that the company has declared dividend from revaluated reserves pursuant to revaluation of its assets. As per my understanding dividend cannot be given by sale proceed of revalued assets in case a company does not make profits," the professor was quoted as telling Prothom Alo.
"The company is already in loss and by giving dividend from its assets will further weaken the company which is tantamount to fraudulent act with the investors," he said.
This is the same gentleman who questioned our "motive" when we went to raise fund and got listed on the London Stock Exchange, the first of its kind by a Bangladeshi company to do so.
In the very same reports both the newspapers said, I, "in connivance" with IFIC Bank Ltd and AB Bank Ltd, two private commercial banks got engaged in insider trading. This is a serious allegation, probably the worst allegation one can come up with in this context. I take this opportunity to unequivocally repudiate this allegation and invite both these newspapers to either substantiate their report or publish a retraction.
On 18 January, 2009, Shinepukur Ceramics Ltd, one of the high-performing Beximco companies, signed a contract with a reputed German company to expand the export-oriented factory's capacity by 150 per cent.
The announcement of Tk 80 crore investment from our own funds was well received by the market. We said that this was just the beginning of many such plans as a result of our return to democracy and the investors' new-found confidence in the potential of Bangladesh market.
Very soon, we followed it with another major announcement. On 26 January, 2009, an American investment firm signed a contract with Beximco Pharmaceuticals Ltd, another of our world-class manufacturing units, pledging to invest Tk 460 crore.
The deal drew an unprecedented malicious "response" from the two newspapers-- Prothom Alo and The Daily Star.
The day we announced one of the largest issue of capital in the history of Bangladesh, the Bangla language newspaper published a story under the headline Loss to investors feared -- Beximco Pharma is selling shares to Gem Global.
Such a speculative story with serious potential repercussions on the market is unthinkable in any other country in the world. Anyone with good knowledge of the capital market will understand that the story was ill-motivated and lacked any substance. But common investors do get "shaky" by such propaganda. This is a gross violation of market regulations as defined in the Securities and Exchange Commission Ordinance.
The report did have some impact, and the prices of Beximco Pharma shares fell by 0.59 per cent. Everyone knows that the existing shareholders are adversely affected when prices fall at this stage.
The following day, Prothom Alo's sister concern, The Daily Star published a similar report with similar content.
The Daily Star story referred to the ludicrous extent of the price fall -- 0.59 percent -- to claim that "investors got shaky over Beximco Pharma's deal with US firm."
Our question is: The market responded to which news -- the news on the US company investing in the expansion of Beximco or the baseless newspaper report under the headline "Loss to investors feared"?
The Daily Star also failed to convince any analyst to back up its claim. In Prothom Alo, one well-known analyst has been misquoted. The other person who was quoted is the same university professor, only this time he said: "issuance of new shares to foreign companies will increase the paid-up capital of the company. But will the company be able to increase its earning has not been made clear. So, as a consequence if company earning does not increase then investors will only incur losses," according to his hilarious quotes.
Based on his comments the Prothom Alo ran the headline: "Loss to investors feared." Isn't it obvious that if a company does not earn then investors will suffer. And if the professor's claim is right then why is SEC allowing companies to issue stock or right shares? Aren't the interest of their investors jeopardized? Doesn't that increase the size of paid-up capital? Why doesn't the Prothom Alo then write reports that investors loss is feared every time a company announces such form of dividend?
The National Budget announced recently by the Hon'ble Finance Minister contained various measures for the development of a healthy and stable capital market. This is also in line with the government's policy to reduce dependence on the banking system for corporate financing thereby reducing interest rates.

Dear friends in the media,
All these are few glaring examples of the two newspapers writing negative stories to destabilize the capital market and oppose investment in Bangladesh. This is unethical journalism which goes against the interest of the country.
Prothom Alo is owned by Mr Latifur Rahman's Transcom Group, which is also the majority owner of The Daily Star. We do not intend to conduct similar propaganda war on Mr Latifur Rahman and his Transcom Group. The world of business, we believe, should pursue interests in more ethical manner. People of Bangladesh and the market we operate in are better judges of our actions.
Therefore, we attach few reports that these two newspapers have published for consideration of the media and the members of the public.
We would also like to refer to another so-called "news analysis" that so blatantly aimed to personally malign me.
The day I organised a meeting between the President of the Awami League, Honourable Sheikh Hasina, and the leaders of the business community, just before the national election on 29 December 2008, Prothom Alo published a news analysis and raised questions about the Awami League President's judgment. The only "offense" that I committed was that I, acting as the AL's chief's Adviser on Private Sector Development, issued the invitation and organised the crucial meeting attended by leaders of business.
I appreciate your support and understanding.

Thank you once again.
Salman F Rahman
Vice Chairman
Beximco Group