M/S. surma honey processing ltd. Case [ কেস নং-৫৬ ]
M/S. Surma Honey Processing Ltd. Case [ কেস নং-৫৬ ]
Md. Hasanuzzaman Chowdhury was engaged in wholesale business/trading of cloth, cement and rod at Khulna He intended to establish a honey processing unit considering availability of raw honey in Sundarban area. He came to the bank for taking financial assistance from the bank and submitted a proposal in 1982 Mr. Zaman formed a Private Ltd. Company with his family members. The Bank sanctioned loan amounting to Tk. 40.00 lac to setup a unit with production capacity of 480 matre tons of honey considering debt equity ration of 70:30.
The sponsors imported machinery front Germany in 1982 by utilizing bank loan and made building construction by utilizing their equity. During the implementation period the bank engineer found that they invested huge amount for making office building and guest house in addition to factory building. The equipment arrived at site in 1982 but the same could not be installed until 1984 due to delay by the equipment manufacturers in visiting the factory to install the equipments and train the staff for its use.
After installation of machinery, it was found that the plant was not producing honey to “International Standards” due to excess moisture content in raw honey. Bank’s appointed engineer solved the problems partially and it started commercial operation in 1986. Meanwhile, Company’s accumulated liabilities went up to Tk 80.00 lac and they could not mobilize fund for its operation. In 1987.
Company’s interest was waived and working capital loan of Tk. 10.00 lac was extended by the Bank The project was operating below the break-ever-level due to lack of effective procurement & sales policy. Suddenly, the main sponsor died and his sons took over the management of the project but they could not run the project. In that situation the management of the company was taken over by the bank and they tried to operate jointly but again they failed to operate it.
In the meantime, inventory of raw honey and processed honey was spoiled due to defective storage system. Therefore. the plant remained closed for last ten years. The total outstanding loan now stands at Tk. 750 lac. No money was recovered since inception. The Bank has already taken legal action against the borrower company and issued sale notice in the daily newspaper for auction sale. But interested buyer did not come.
As a senior student of business studies [ MBA/ M.Com] or as a bank executive, analysis the case to find the extent of the following reasons for sickness of the enterprise:
1. Incompetence and inexperience in the line.
2 Faulty machinery
3. Shortage of W/C,
4. Quality raw Materials
3 Change of management 6. Increase unproductive assets.