Bangladesh Sugar and Foods Industries Corporation has closed five more sugar companies to curb losses
Shyampur Sugar Mills, which is listed on the country's both stock exchanges since 1996, has shut down finally, after incurring losses for a long time.
Bangladesh Sugar and Foods Industries Corporation (BSFIC), which owns Shyampur Sugar, has closed five more sugar companies to curb losses.
Although Shyampur Sugar could not pay a dividend to the investors for more than two decades, it was ahead of all the listed companies in terms of the share price hike.
So, the company was at the centre of attraction of investors all the time.
For example, Shyampur Sugar's share price jumped by 238% in just three months – from July through September – this year.
BSFIC sources said besides Shyampur Sugar, Panchagar Sugar, Setabganj Sugar, Rangpur Sugar, Kushtia Sugar and Mobarakganj Sugar have been closed till further notice.
BSFIC Chairman Sanat Kumar Saha told The Business Standard that six of its 14 companies have been shut down for a year to launch new products through modernisation.
"Because it is not possible to make these companies profitable with sugar alone."
He added that they had discussed with investors from Japan, Saudi Arabia, and Thailand for foreign investment to reform the state-owned sugar companies.
But, a director of the company said that the government sugar mills have been incurring losses for a long time. So to reduce the losses, six companies have been shut down as per the recommendation of the Ministry of Industries.
He added that the total bank loan of the sugar corporation stood at Tk7,496 crore due to continuous losses.
Because of the financial crisis, the officers and employees of the companies are not being paid on time, he added.
Sources said that in order to survive in the competitive market, the company has been selling sugar at a lower price than the production cost for a long time.
The production cost of sugar in government mills is Tk275 per kg. But in the market, sugar has to be sold at Tk60 per kg only. Because the imported sugar is sold at Tk50-60 per kg.
For this reason, Shyampur Sugar has annually incurred a loss of Tk40 crore on average over the last five years.
Another company named Zeal Bangla Sugar Mills Ltd of the corporation is also listed on the stock exchanges. It is also going through a similar situation.