Hamid Textile Mills Ltd.Case [ কেস নং- ৫১ ]

Hamid Textile Mills Ltd.Case [ কেস নং- ৫১ ]

Hamid Textile Mills Ltd.Case [ কেস নং- ৫১ ]

Hamid Textile Mills Ltd.Case [ কেস নং- ৫১ ]

Mr. Hamid was born into a rich family of rural area of Bangladesh. He completed his graduation from London and served there for about 20 years. In 1979 he returned to Bangladesh with a sizeable amount of his savings with an intention to start a business in Bangladesh. In 1980 he came to the Bank and submitted a loan proposal for setting up of a textile weaving factory in Mymensingh.

Subsequantly, he formed a private Ltd. company with his family members of whom he was the Managing Director. In 1982 Bank sanctioned Tk. 20 Lac in favour of the newly formed company to set-up a 20 looms textile weaving project. The imported machinery from India reached the project site in due time but the construction of the factory building along with other anciliary structures were not completed and the same were kept in the open space.

Subsequently, on completion of the construction work machinery were installed but due to shortage of working capital which was stipulated/presumed to be arranged by the sponsors as a part of their equity. They could not run the project. The loan was repayable in 20 half yearly instalments of TK 1.00 lac plus interest. Due to company’s inability to repay the bank dues the total outstanding loan was accumulated to Tk. 120.00 lac in 1992. In 1993, the borrower company approched the bank for rehabilation of the project on the following way

Hamid Textile Mills Ltd.Case [ কেস নং- ৫১ ]

1 Shifting of the project from Mymensingh to Narshingdi considering the same as a centre for textile business.

2. Rephasement of existing loan A/C by way of waiver of 100% penal interest, 75% normal interest and the

balance amount to be kept in interest free Block A/C and repayble in 20 half yearly instalment

3. Additional loan of Tk. 90.00 lac to increase the weaving capacity and an addition of back processing machinery

4. Induct new resourceful persons in the directorate of the company to increase the capital base.

“আর যদি সে (ঋণগ্রহীতা) অভাবগ্রস্থ হয়, তবে তাকে স্বচছলতা আসা পর্যন্ত সময় দেয়া উচিত। আর যদি ক্ষমা করে দাও, তবে তা খুবই উত্তম-যদি তোমরা উপলব্ধি কর।

– আল কুরআন

The Bank approved the rehabilitation proposal and the project commenced operation in 1996 in Narshingdi ara The assets of the company is mortgaged to the Bank as security of loan but no additional collateral security taken by the Bank Presently, the project is running below the Break-even-level and as such not paying the da Total loan increased to TK 340.00 lac Now. the Bank is contemplating to initiate legal action against be borrowers company.

Hamid Textile Mills Ltd.Case [ কেস নং- ৫১ ]

As a senior student of business studies MBA/M Com) as a bank executive analyze the case and find the reasons for failure of the enterprise including the following:

Hints :

1. Site selection was not appropriate in consideration with the nature of the firm.

2. Managerial incapabilities.

3. Resources stringency

4. Delay in implementation due to shortage of equity and vision.

5.  Inadequate monitoring by the Bank.

6. Over capitalization towards eventual creation of inoperative assets.

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