M/S. Sun Spinning Mills Ltd. Case [ কেস নং-৫৮ ]

M/S. Sun Spinning Mills Ltd. Case [ কেস নং-৫৮ ]

M/S. Sun Spinning Mills Ltd. Case [ কেস নং-৫৮ ]

M/S. Sun Spinning Mills Ltd. Case [ কেস নং-৫৮ ]

Mr. Ramizuddin was a pious and reputed businessman in Narayanganj He was engaged in Textile, Chemicals and Yam business. Mr. Ramiz was not so educated but was very smart and intelligent. He formed a Public Lid company with his family and employed some experienced and educated personnel to start a textile spinning project. They submitted a proposal to the bank.

The Bank sanctioned loan of Tk. 15.00 crore in 1987 for setting up a spinning project with production capacity of 7.00 lac kg of yarn/year. All documentation and machinery procurement formalities was completed in due time. The sponsors also factory on schedule from their equity but due to shortage of bank’s fund, L/C was opened about 12 months behind the schedule.

The installation was completed in 1992 and the mill there after started commercial production Loan peroid was 12 years including 2 years grace period which were repayable in 20 half yearly installments. The Company was running well and it was paying the bank’s dues regularly. In early of 1996, the sponsor submitted an expansion proposal to attain economy of scale and to make the unit commercially more competitive.

 

The Bank approved the proposal and sanctioned an additional loan of Tk 20.00 crore to enhance the production capacity to 12 lac kg/year. Expansion scheme was completed in 1997 after the main sponsor retired from the directorship His sons (other directors) are educated who maintained political lobby They were highly ambitious and started another three industrial units by diverting the fund from the Sun Spinning Mills Ltd. in addition taking loans from other banks.

The sponsors never avoided regular repayments of the loan instalments as they fell due. So for it could be gathered that they repaid only Tk. 50.00 lacs against Tk 6.00 crore considered overdues. At present it is learnt that the company reguests for rephasement of the loans.

M/S. Sun Spinning Mills Ltd. Case [ কেস নং-৫৮ ]

As a senior student of business studies IMBA/M. Com or as a bank executive, analyse the case to find the extent of the following reasons for sickness of the enterprise

1. Willfull defaulter

2.  Diversion of fund towards expansion of other business

3. Stretching business beyond their means and capacity

M/S. Mmiracle Toys Ltd. Case [ কেস নং-৫৯ ]

The main sponsor of the project was an young, energetic educated and a smart lady. Her father was politically Socially and financially renowned person Her husband was a Govt. Official She visited many countries of the world and equipped herself with the modern technological advancement Mrs Selina had easy excess in the high level bureaucratic and political persons.

She always maintained political lobby A foreign company came to Bangladesh to set up a 100% export oriented toy project on turkey basis and arranged and exhibition in a five Sur Hotal. Mrs. Selina visited the show and talked is the concerned person. Both the parties agreed and signed a MOU. The foreign company was the only machinery manufacturer and Marketing company in the world.

M/S. Sun Spinning Mills Ltd. Case [ কেস নং-৫৮ ]

As per MOU the machinery and raw materials to be imported from them. The financial arrangement was Bank loan 70% local sponsor equity 15% and foreign counterpart 15% The local sponsor submitted a proposal to the bank seeking loan amount of Tk 4.50 crore. The bank sanctioned loan of Tk 4.00 crore of which Tk. 1.00 Crore for technical fees and another 3.00 crore for import of machinery.

The sponsors selected the project site 60 km away from the Dhaka City where all infrastructural facilities were not available The bank opened L/C for import of machinery in favour of sponsors and after receiving documents bank made payment in full including the technical fee. During installation of machinery it was found that the main machinery was not shipped and without these machinery the production could not be started. In the meantime, the company issued prospectus and floated shares in the market for subscription by the public.

The unit could not start production and did not make any payment to the bank. The borrower further submitted a proposal to the bank for additional loan to diversify the product line but the bank could not consider the proposal and decided to take legal action against the company. As a senior student of business studies MBA/M. Com or as a bank executive, analyse the case to find the extent of the following reasons for sickness of the enterprise.

1 Incompetence to run the high-tech export oriented project.

2 Dishonesty of the parties.

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