After securing four posts of director in the board of state-owned enterprise Eastern Cables, leading private sector cable manufacturer BRB Group has set eyes on another state-run company, Renwick Jajneswar & Co, as it (Group) bought a significant amount of shares of the company from the capital market.
Capital market operators said that to get into the Renwick board BRB Group was using the same method — buy a significant amount of the company’s shares from the public market and get into the board by obtaining a court order — it applied in the case of Eastern Cables Ltd.
BRB Group authorities told New Age that companies and people associated with the Group bought around 27.05 per cent shares of Renwick from the public market.
The government holds 51 per cent shares of the company which has a total of 20 lakh shares with a paid-up capital of Tk 2 crore. After the purchase, BRB Group holds more than 27 per cent and other general and institutional investors around 22 per cent shares of the company.
State-run Sugar and Food Corporation Bangladesh basically holds the government shares of the company and virtually runs it as all the directors of the company are nominated by the government. There are two independent directors on the board.
BRB Group acquired 5,41,095 shares of Renwick with BRB Cables buying 1,75,055 shares, BRB Polymer 1,64,040, Group chairman Mozibar Rahman 1,26,000 shares, MRS Industries 56,000, Group managing director Parvez Rahman 10,000 shares and vice-chairman Selina Begum 10,000 shares in last two years.
After the share purchase, BRB recently proposed four names for directorship posts in the Renwick board — Mozibar Rahman, Parvez Rahman for BRB Cables, Mofizur Rahman for BRB Polymer and BRB Group director Shamsur Rahman for MRS Industries against their holdings.
The company’s push for an entry into the Renwick board has worried the officials of the state-run corporation plagued with irregularities and made stock market operators curious about BRB’s motive for getting into the board of state-run companies.
As Renwick authorities refused to give BRB Group the directorship, the company has recently filed a write petition with the High Court.
BRB recently went to the board of state-run Eastern Cables, one of the main competitors of BRB in cable manufacturing business, by obtaining a HC order after a prolonged tussle with ECL.
The High Court gave its verdict in favour of BRB as the then shareholding directors of ECL had not individually held 2 per cent shares of the company. The Group holds around 30 per cent of the company’s shares.
According to the BSEC notification issued on November 22, 2011, each director other than independent director of any listed company must hold minimum 2 per cent shares of the paid up capital, otherwise there will be a casual vacancy of director.
BRB chairman Moziber Rahman told New Age, ‘It’s our legal rights as shareholders to claim directorship of the company as per laws of the government and market regulator.’
Asked whether the cable company would have control over Renwick’s lands located near BRB Cables’ head office in Kushtia, Moziber said that no one could control any land belonged to any company, let alone government-held lands.
‘We don’t have any ill intention; we just want our rights be preserved.’
A senior BRB official said that the impact of involvement of a private company with a government run-company was so profound that it would produce significant improvements for both sides.
‘We hope that the profit-seeking behaviour of BRB would undoubtedly bring good to the flagging company.’
The official of Renwick claimed that share prices of the company shot up amid significant buying pressure from the BRB officials. In April-August last year, share prices of Renwick doubled to Tk 1,137.4 each. Share prices of the company closed at Tk 1,030.50 on Sunday.
Anomalies in the government-run company have paved the way for BRB Group seeking directorship in the board of Renwick, sources said.
The company’s financial results, public information could not be found on its web site linked with the stock exchange. As per securities rules, the company must have to make such information available on its web site.
Renwick Jajneswar is engaged in manufacturing and trading of sugar mill products and parts.
As per financial statements for the year ending June 30, 2018, the company’s retained earnings were negative Tk 6.53 crore.
The total liabilities of the government run-company increased to Tk 56.89 crore in FY18 from Tk 55.62 crore in FY17. The figure was Tk 54.21 crore in FY16.
The company has been facing other problems too. It has failed to collect huge amounts of arrears from sugarcane mills and it is allegedly plagued with widespread irregularities and corruptions.
There are allegations that hundreds of workers at Renwick have been working without pay for months.
Though the company was initially profitable, it has been running into financial crisis in recent years due to alleged corruptions and irregularities by its officials.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Trade & Commerce