Bangladesh : S Alam’s oil, sugar mills shut as banks reluctant to deal with the group
S Alam Group, formerly a powerhouse in Bangladesh’s financial sector, faces severe financial turmoil. Amid allegations of misappropriating Tk1 lakh crore under Sheikh Hasina’s regime, the group is now unable to secure import Letters of Credit (LCs) due to a damaged reputation. Consequently, factories reliant on imports, including S Alam Vegetable Oil and S Alam Refined Sugar, have shut down, leading to layoffs. Multiple banks have frozen the group’s accounts, forcing it to open new accounts at Dutch Bangla Bank and Exim Bank to manage employee salaries.
S Alam or Saiful Alam Masud, once a highly influential figure in Bangladesh’s financial sector and chairman of S Alam Group was formerly a controlling force behind seven banks. Masud is alleged to have drawn over Tk1 lakh crore from various banks during Sheikh Hasina’s more than 15-year regime.
According to S Alam Group’s website, it owns nearly two dozen companies, with total assets valued at around Tk1.5 lakh crore. These companies operate numerous factories in Chattogram and other areas.
Sources within the group and banking sector have said that banks are becoming increasingly reluctant to engage in new business with S Alam Group and those willing to open import Letters of Credit (LCs) are demanding a 100% margin due to the group’s tarnished reputation.
This situation has proven difficult for the group with reports indicating that Masud and his brothers may be in hiding or have fled the country following Hasina’s ouster from power on 5 August.
Amid financial pressures, several S Alam Group factories have reportedly halted operations resulting in significant layoffs as the company struggles to maintain its former productivity and financial stability.
Two mills, S Alam Vegetable Oil and S Alam Refined Sugar, have already shut down and other mills may follow suit, according to Ashish Kumar Nath, deputy manager of S Alam Group.
“Some factories, reliant on imported raw materials, have closed due to our inability to open LCs for imports. The remaining factories may face the same fate,” Nath told TBS.
S Alam Group, a major client of Islami Bank Bangladesh (IBBL), grabbed the bank in early 2017 by buying shares from the market in the name of paper-based firms. A senior IBBL official said that the bank has now requested a 100% margin from S Alam Group for opening import LCs.
‘To protect jobs, factories should be kept alive’
The closure of factories or business ventures means more unemployment, which is concerning given the country’s current political and economic realities.
Economist Dr Moinul Islam said that S Alam drained around Tk1.5 lakh crore from banks most of which may not be recovered. However, he stressed the importance of keeping the group’s factory operations running.
“The group’s businesses should be kept alive to protect thousands of jobs. It is up to the government, via Bangladesh Bank, to decide how this can be accomplished.”
Moinul Islam, Economist
“The group’s businesses should be kept alive to protect thousands of jobs. It is up to the government, via Bangladesh Bank, to decide how this can be accomplished,” he said.
“One option would be to allow the businesses to run by appointing a receiver [like the one appointed for Beximco Group businesses]. However, the time has not yet come to say that the institutions will recover if the receiver is appointed,” Moinul added.
M Hossain Rana, manager of HR & Admin at S Alam Group, told TBS that aside from the banking and power sectors, the group has 12 import-dependent factories, which employ at least 30,000 workers across import, production, and marketing activities.
Edible Oil and Sugar factories shut down
During a visit to the S Alam Refined Sugar factory on the south bank of the Karnaphuli River last Sunday, TBS found that its operations had been shut down.
Shamsul Alam, a food vendor situated on the opposite side of the factory gate, said that the factory had been completely shut down for nearly two weeks.
A worker at the factory, on condition of anonymity, said, “The warehouse has run out of raw sugar, which is why the factory is closed. While there has not been any official announcement, we have heard that we will be laid off.”
A senior official from S Alam Group, also requesting anonymity, said, “Our accounts have been frozen in several banks. Since 5 August, we have been unable to open LCs for importing raw materials like crude sugar, edible oil, or steel. Factories are unable to operate due to a shortage of these essential materials.”
Data from the National Board of Revenue (NBR) further supports this claim, showing that S Alam Group has been unable to import any raw sugar during the past two months (September and October) due to their inability to open LCs.
Over 60,000 tonnes of unrefined sugar were imported under the name of S Alam Refined Sugar Mills in July and August. The two units of the mill have a combined 2,500 tonnes daily refining capacity.
S Alam Vegetable Oil Mills has also been shut down due to a shortage of raw materials. The company typically imports unrefined or crude oil and refines it.
A local tea seller said, “There used to be a line of trucks supplying oil from S Alam Vegetable Oil, but the factory has been closed for the past month and a half. Sales at my tea shop have decreased due to the lack of truck drivers and their helpers.”
NBR data shows that S Alam imported 18,900 tonnes of crude soybean oil in July but none between August and October.
S Alam Refined Edible Oil Factory can refine 200 tonnes of edible oil daily.
The S Alam Group operates other factories on the south bank of the Karnaphuli River in the Moizjartek area, including S Alam Bag, S Alam Steel Mills, S Alam Cement, and Chemon Ispat.
These factories were also found to be closed between 12pm to 3pm Sunday.
Most steel factories closed
S Alam Group’s steel business includes six factories with S Alam Cold Rolled Steels Ltd and Infinity CR Strips Industries Ltd being the main facilities that convert imported Hot Rolled (HR) coils into Cold Rolled (CR) coils by reducing their thickness.
According to factory insiders, the Infiniti CR Strps factory began operations in September 2022. However, after six months of production, the factory ceased operations in March 2023. It has remained closed for over a year and a half since then.
Meanwhile, a steel sub-factory, S Alam CRM-1, has been shut down due to a shortage of raw materials and acid.
An official from CRM said, “The chemical shortage began in the first week of September. At that time, chemicals were purchased from TK Group to continue production for a while, but the factory has been completely closed since October.”
The group’s four sub-factories – NOF, Chemon Ispat, S Alam Steel, and Galco – produce steel using CR coils made in the two main factories – S Alam Cold Rolled Steels and Infinity CR Strips.
The NOF has halted production due to a lack of raw materials, including zinc and acid. Similarly, production at S Alam Steel and Galco (located in Bangsal, Dhaka) has been stopped since mid-September.
Flour mills closed
Despite securing a Tk3,500 crore loan for its three flour mills, only one is currently operational.
In the Sagarika Bscic area of the port city, the Silver Food flour mill is still in operation. S Alam secured around Tk1,000 crore loan from Islami Bank for this factory using the name of a local, Mamunur Rashid from Patiya.
Meanwhile, Ideal Flour Mill, located in Sitakunda, remains closed. Since its acquisition in 2022, the factory has yet to begin production.
Layoffs begin
After the 5 August government change, the Bangladesh Bank issued a series of directives to banks, including freezing the accounts of the S Alam Group leaders and banning property transfers.
The group has already started laying off workers across various businesses due to mounting financial pressure.
The group has already dismissed 50-60 workers from its S Alam Bag Factory. In response, workers at the factory staged a protest in the Moizzartech area of Chattogram.
Additionally, a senior official from the group confirmed that 35-40 workers have been laid off from Infinia Chemical.
Previously, the factory provided bus transportation for S Alam Steel (CRM) workers, but this service has been stopped for the past 15 days.
Furthermore, S Alam Steel employees confronted Moshiur Rahman, the GM (Steel) of S Alam Group, over delays in salary disbursement.
S Alam companies open new bank accounts
After the bank accounts of Saiful Alam Masud, the head of S Alam Group, and his companies were frozen, several companies within the group began opening new accounts at different banks.
Among these, Infinia Composite Textile Ltd, Infinia Spinning Mills Ltd, Infinia Chemicals Ltd, Infinia Synthetic Fiber Ltd, Infinia Knitting & Dyeing Mills Ltd, and Univers Enterprise have opened accounts at Dutch Bangla Bank.
An official from Dutch Bangla Bank, on condition of anonymity, said, “At the beginning of September, an officer from Infinia approached one of our branches to open an account. After checking, we discovered the institutions were part of the S Alam Group, so initially, we were hesitant. However, we eventually agreed to open the account to facilitate the payment of employee salaries.”
Similarly, several S Alam Group companies have also opened new accounts at a branch of Exim Bank, according to an official of the bank.
Fall of an empire
The once-bustling S Alam Bhaban in Asadganj, Chattogram, now stands eerily quiet, a stark contrast to just three months ago when it was buzzing with activity.
Similarly, the residence of S Alam Group’s Chairman, Saiful Alam, in the Sugandha residential area in Chattogram, does not have any visitors. In the past, it was crowded with job seekers, employees, and politicians.
On 25 November 2015, S Alam Group took over Ekushey Television with the assistance of Abdus Sobhan Golap, then special assistant to Sheikh Hasina. Following the Awami League government’s fall on 5 August, former chairman and CEO of Ekushey Television Abdus Salam took control of the private channel on the same day.
A significant portion of the loans S Alam Group secured from banks was invested in land purchases. Before 5 August, signboards displaying the group’s name were placed on properties across various districts, including Chattogram and Dhaka. However, after 5 August, these signboards were removed by the group.
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Source Link : The Business Standard
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