Western Marine Shipyard seeks working capital to survive
Once famed by introducing Bangladesh as a shipbuilding country, the Western Marine Shipyard is now languishing from capital crunch and is looking for fund to survive, officials said.
The company last week appealed to the government to provide it with working capital from the stimulus package offered to help the economy bounce back from the Covid-19 pandemic fallouts.
Indebted to banks and financial institutions by over Tk 11 billion, the export-oriented shipbuilding company is now facing severe cash-flow crisis that currently its ‘business is on the verge of complete shutdown’.
The Chittagong-based shipbuilder, which has so far earned US$100 million by exporting 33 ships in 11 countries, first suffered from world economic recession in 2012 followed by Eurozone crisis which led to cancellation of foreign orders.
According to its recent letter to the financial institution division, the company during the period had to provide huge discounts to buyers and incurred a loss of 6.50 million euro from non-repatriation of export proceeds.
“Again the impact of Covid-19 left our business completely shattered from the beginning of 2020,” the company managing director Captain Sohail Hasan wrote.
“Being dependent on China for raw materials, our supply chain system completely broke right after the pandemic breakout. It led to cancellation of more foreign and local work orders,” he added.
He also wrote that their factories remained closed for months as the factory area Patiya was categorised as ‘red zone’ for Covid-19 which resulted in a severe cash flow crisis and broke down its financial strength.
Mr Hasan stated that the company is now in “immediate need of working capital” for mobilisation and earliest delivery of ongoing work orders.
The company has work orders of four export ships for Norwegian and UAE buyers, two passenger ships for Bangladesh Inland Water Transport Corporation (BIWTC), two tugboats for Chittagong port and one for Payra port, two landing crafts for Bangladesh Army and 21 ships for local private sector. All these projects’ total value is Tk7.0 billion.
Chairman of Western Marine Shipyard Saiful Islam told the FE on Friday that the company started operation in full swing after the pandemic situation eased last year.
“Due to the pandemic, the shipping sector has been badly affected,” he said.
The sector now needs government’s policy support as well as financial support to make a comeback, he added.
Replying to a query, he said if working capital is given from the pandemic stimulus package his company will be able to make delivery of the orders smoothly and make debt servicing properly.
Source: Financial Express