Western Marine Shipyard is sinking: DSE probe report

Western Marine Shipyard, which was in business news headlines for its promises and prospects a decade ago, is now sinking due to conflict among directors, lack of business and high concentration on bank loans.

A team of the Dhaka Stock Exchange (DSE) found this in a probe report submitted recently to the Bangladesh Securities and Exchange Commission (BSEC).

The DSE report found that the company has deliberately cut off profits in its financial statements and the directors and the management lack interest in running the business. In addition, the company continues to violate securities laws, including the rules of the stock exchange.

The DSE detected these anomalies by inspecting the head office and factory premises of Western Marine Shipyard recently.

On April 22 this year, the Dhaka and Chittagong stock exchanges got the approval from the BSEC to inspect the financial viability of seven companies listed on the stock exchanges.

Western Marine Shipyard was one of those companies. The DSE visited the Western Marine Shipyard’s factory on June 13 and its head office on June 14.

“We have submitted the report on inspection of Western Marine Shipyard head office and factory premises to the BSEC. BSEC will take necessary steps considering the overall aspect,” said M Saifur Rahman Mazumder, DSE’s chief operating officer (COO), said.

According to the DSE report, the sustainability of Western Marine Shipyard’s business depends largely on the demand or work order of both domestic and international buyers. But many international buyers do not want to come to Bangladesh because of the Covid-19 pandemic.

In addition, Western Marine Shipyard has only one product line for shipbuilding. Without diversification, it will be very difficult for a company to sustain its business, says the report.

At the same time, Western Marine Shipyard has a whopping Tk 1,648 crore bank loans and it is not possible for the company to repay the loans in future with the current income level, says the report.

Also, the company does not regularly submit monthly shareholding status and free float reports, according to the report. At the same time, the company has not been paying the annual fee for listing on the stock exchange for the last seven years, it said.

The DSE probe team also noted that the company’s directors do not seem to be keen enough to run the business professionally.

When contacted, Abul Khair, company secretary of Western Marine Shipyard, declined to make any comment on the issue.

Western Marine Shipyard got listed on the DSE and CSE — two bourses in the country — in 2014. The total number of shares of the company is over 23.52 crore.

Of these, 30.01 percent are held by sponsors, 16.99 percent institutional investors and 53 percent by general investors.