Appollo Ispat bearing the brunt of ex-employees' fund mishandling

Appollo Ispat Complex – once renowned for its corrugated iron sheets brand "Rani Marka Dheutin" – is having to carry the weight of fund mismanagement by its former employees as the company is drowning in a massive loan of Tk1,100 crore. 

In a letter to the Bangladesh Securities and Exchange Commission (BSEC), Apollo Ispat said the past employees acted against the interests of the company which caused damages and piled up the debt burden. 

Therefore, citing its tough times and current situation, the company's Vice Chairman Mohammad Shoeb wrote to the BSEC and sought the waiving of surcharges, fines, and listing fees until the company's situation improves. He mentioned that the company is looking for a strategic partner. 

"We are trying to find strategic partners or investors, who can join hands with us to restructure the company. We are already in discussion with some investors who may be interested in investing in Appollo Ispat.

"The overall process to complete financial and corporate restructuring along with finding a strategic investor may take six to nine months," the letter reads.

Appollo Ispat was listed on the stock market in 2013. Back then, it raised Tk216 crore through an initial public offering (IPO). 

After its listing, the company posted handsome profits for three straight years. However, its business began to decline in 2017 after its pre-IPO shares were up for sale on the bourses. 

Shareholders had been in the dark about the firm's business performance since 2019, as there had been no disclosure after the company posted a net loss of Tk92 crore for fiscal 2018-19.

The leadership struggle

Appollo Ispat has been out of production for more than two years owing to the absence of board members and a lack of proper leadership, Mohammed Shoeb said in the letter. 

The demise of four of the company's key members and the fleeing away of another have put the company into a lack of management. 

The company's Chairman Deen Mohammad, who was a Dhaka Awami League leader, Founding Managing Director Ansar Ali, Deputy Managing Director Abdur Rahman, and Company Secretary SK Abul Hasan passed away. 

Its last Managing Director Md Rafique fled the country without informing the board which deepened the company's wound. 

"We have taken legal action against Rafique, and also against our former Chief Financial Officer Rajib Hossain for their malfeasance. Now, along with a few directors, I'm trying to manage the company," Mohammed wrote in the letter to BSEC. 

The debt burden

According to its prospectus, when it got listed on the stock exchange, its total assets were Tk733 crore, and liability Tk394 crore including Tk135 crore long-term and Tk134 crore short-term loans.

Now, its total liabilities stand at Tk1,100 crore, of which Tk900 crore is penal interest, and Tk200 crore other outside liabilities.

The fair value of the company would now be Tk1,400-1,500 crore, according to the letter.