Cenbank grants special exemption for Shinepukur Ceramics to open LCs
Sonali Bank to facilitate raw material imports for the Beximco concern at 100% margin until December 2027.
In a move to ensure industrial continuity, the Bangladesh Bank (BB) has granted a special exemption to Shinepukur Ceramics, allowing the company to open letters of credit (LC) for raw material imports through Sonali Bank.
The directive issued yesterday (13 July) suspends the restrictive provisions of the Bank Company Act, 1991, for the company until 31 December 2027. This section typically prohibits banks from extending credit facilities to any entity belonging to a defaulting business group.
While the parent conglomerate, Beximco Group, is classified as a loan defaulter, the central bank provided a "lifeline" to Shinepukur Ceramics. The regulator cited the necessity of maintaining the company's production activities and securing the livelihoods of thousands of workers engaged at its manufacturing units.
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Strict conditions, 100% margin
The exemption comes with stringent strings attached. According to the central bank notification, all LCs must be opened at a 100% margin, meaning Shinepukur Ceramics must provide the full value of the import in cash upfront.
Furthermore, the central bank mandated that all revenues generated by Shinepukur must be deposited into a designated account. Sonali Bank is required to recover its dues from this account on a proportional basis.
Crucially, the directive stipulates that no liability shall be created for the government's Finance Division or the Bangladesh Bank against this facility. Sonali Bank has also been barred from claiming any future financial assistance or bailouts from the state in relation to these credit lines.
Operational hurdles since 2024
Shinepukur Ceramics has been struggling to navigate import hurdles since 5 August 2024, following the country's political transition.
Under current laws, even if an individual company is not a defaulter, it can be "tainted" by the defaulting status of its sister concerns within the same group.
"Since 2024, we have faced significant difficulties in importing raw materials," Mohammad Asad Ullah, executive director and company secretary of Shinepukur, told TBS.
"Despite the hurdles, our production never stopped for a single day. This directive from the central bank will finally allow us to import essential materials through LCs without facing further obstacles," he said.
Financial, regulatory backdrop
The company, which was listed on the stock exchanges in 2008, is also navigating a complex regulatory and legal landscape.
In December 2024, the securities regulator appointed seven independent directors to the company's board. However, the company challenged this decision in the High Court. As the matter remains sub-judice, the independent directors have yet to assume their roles.
Due to the ongoing boardroom instability, Shinepukur has not published any updated financial statements since December 2024. Its last reported performance for the July-December 2024 period showed a loss of Tk1.35 per share, with a Net Asset Value (NAV) per share of Tk29.77.
Today (14 July), the company's shares closed at Tk23.80 on the Dhaka Stock Exchange.
Market analysts believe that while the LC facility provides an operational cushion, the long-term outlook for the scrip will depend on the resolution of its legal disputes and the resumption of regular financial reporting.
