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Late industrialist Deen Mohammad started his entrepreneurial journey in 1960 through trading business. He set up a dozen industrial and service units under Phoenix Group and Appollo Group of Industries.
Five of the companies are currently listed on the stock exchange. Of the five, Appollo Ispat Complex Limited remains in a fragile state for several years. Production at the debt-ridden company has already halted.
It is now unable to pay back creditors across the country. As a result, the creditors are also at risk of going bankrupt. The arrogance of Vice-Chairman Mohammad Shoeb has mainly put the company in a muddle.
Appollo Ispat’s current bank loans stand at Tk 550 crore. It owes financial institutions Tk 240 crore while party loan has amounted to Tk 55 crore. It is unable to repay the loans. This is mainly due to the incompetence of Shoeb, firing of skilled workers, and hiring of unskilled people, sources alleged.
He makes unwanted interferences in the company affairs. He is not worried about repaying bank loans. He mistreats employees. The employees are not getting paid for seven to eight months and are living an inhuman life, employees at the Appollo Ishpat alleged.
Insiders said Shoeb takes all decisions at his whims, bypassing other directors and high-ups at Appollo.
“Appollo is actually a one-man show. He fires, recruits, and humiliates people at our company without any reason and any rational,” a former Appollo Ispat official told The Business Post, requesting anonymity.
There is no initiative on his part to pay back creditors. He is delaying repayments year after year. As a result, creditors in different parts of the country have gone bankrupt. One of them is Nurul Alam of Dayaganj. Appollo Ispat owes him Tk 40 crore.
The company repeatedly promised to pay him back and issued cheques, but those could not be cashed. That is why he has taken the matter to the court. Alam said he had paid the company to buy goods, but he had received neither the products nor his money back.
“They repeatedly promised to pay me back but did not. They issued cheques thrice, but those could not be cashed. Now I have become bankrupt. I have to pay banks Tk 4-5 crore in interests every year,” he said.
“I also borrowed money from others to pay Appollo Ispat. Now I cannot repay those personal loans because the company is not paying me back. Because of the pressure to pay back my creditors, I have no peace at home,” he added.
Nipu, a businessman from Dinajpur, is the owner of Alhaj Traders. Appollo Ispat owes him Tk 3.51 crore. He has not received his money back even after repeated requests. He has already sent a legal notice to the company and is now preparing to file a lawsuit.
“I was running a small business and maintaining my family well. But Appollo Ispat has suddenly made me go bankrupt. They are not returning my money. I also borrowed money to buy corrugated iron sheets from them, but they have not delivered the products. They are not returning the money either,” he said.
“My creditors are pressuring me to pay them back. But I cannot do so because Appollo Ispat has not paid me back. I am in deep trouble,” he added.
Not only Nurul and Nipu, but Appollo Ispat owes money to many other businessmen who are now on the verge of bankruptcy. They have sought interventions of the Anti-Corruption Commission and the National Board of Revenue in the matter.
Sources said the company had sold seven cars at nominal prices without a tender, causing it to incur losses of about Tk 2 crore. In 2018, a director of the company suddenly vandalised two cars in the garage with sticks. Later, he sold seven cars for Tk 1.1 crore without tender and verifying market prices.
The general manager of the marketing department wanted to buy a car for Tk 25 lakh but was not allowed to. The car was later sold for Tk 16 lakh. Six months ago, a Honda CRV was purchased for Tk 47 lakh and was sold at Tk 25 lakh. A company director protested against this but to no avail.
On the other hand, the company sold a Tk 17 crore ATP for Tk 70 lakh. Hydrochloric acid is used in steel mills. The company set up the ATP in 2007 to ensure that water from hydrochloric acid does not cause environmental damage.
But without thinking about the environmental impacts, the plant was sold as scrap for only Tk 70 lakh. On the one hand, this caused losses for the company. On the other hand, if the facility is launched later, it will be a death trap for the people of Siddhirganj.
Sources said approval from the board of directors was not obtained before making the decision. Approval from Bangladesh Securities and Exchange Commission (BSEC), the capital market regulator, was not obtained either.
Attempts were made to contact Shoeb on the phone, but he did not answer. The company’s Managing Director Md Rafique told a media outlet that production is currently closed. Asked about loans, he said the chairman is handling it.
Appollo Ispat, now a dying company, was listed on the stock exchange in 2013, as it had been logging higher profits. It raised Tk 220 crore from the market with a Tk 12 premium and Tk 10 face value for each share.
In Bangladesh, CI sheet and galvanised plain sheets are used for above 80 per cent roofing and 40 per cent fencing in households in rural and semi-urban areas.
Thanks to higher demand, Appollo Ispat booked higher profits and a better rate of return and turnover until 2015-2016. The company started going downhill in late 2016 due to the arrogance of Shoeb, it is alleged.
After Deen Mohammad became ill, Shoeb terminated a handful of efficient officials, including Shah Alam, who had an engineering degree from Bangladesh University of Engineering and Technology (BUET), and appointed Md Rafique, an incompetent person. He also appointed a financial advisor a the Appollo.
According to the information given by the company to the Dhaka Stock Exchange (DSE), its CGL-2 unit had been closed from December 31, 2016, to February 15, 2017, as the zinc pot (where galvanising is done) had broken down.
Once a profitable company, Appollo has been incurring losses since 2019. Its profit in 2014 was Tk 37.35 crore, Tk 50.84 crore in 2015, Tk 75.34 crore in 2016, Tk 47.34 crore in 2017 and Tk 2.14 in 2018.
The company’s sales and profits have been declining since the 2017-18 financial year. That year, its profit was only Tk 2.14 crore against sales of Tk 386 crore. It incurred losses till the third quarter of the financial year 2018-19.
Since then, it has not been publishing the annual financial report. As a result, investors have been in the dark about the company’s latest financial situation.
The company was demoted from B to Z category on the stock exchange on January 1 last year due to the failure to hold the annual general meeting (AGM) for the financial year 2018-19. The company did not declare any dividend for investors in that fiscal year. Although the AGM was supposed to be held on December 30 last year, the company postponed it till receiving an order from the High Court.
According to the DSE, the Credit Rating Agency of Bangladesh (CRAB) announced Appollo Ispat’s latest credit rating result on June 24 this year. Its long-term credit was BB1, which means the company has inadequate capacity to meet financial commitments and has major uncertainties.
The short-term rating was ST-4, which suggests the likelihood of default is considerably less for lower-rated issues, but there are significant uncertainties that could impact the company’s financial commitment to the obligation.
Rani Marka Dheutin (corrugated iron sheets) once ruled the roost in rural Bangladesh. Appollo Ispat was the pioneer in CI sheet business in Bangladesh. Deen Mohammad died on April 27 this year at a private hospital in the capital.
After his death, his heirs expressed a desire to sell the company to a large industrial group in order to get rid of the debt burden. They even reportedly offered a number of big businessmen to buy the company but to no avail.
When the news spread, the company’s share price continued to rise from April to August this year. Its share price soared by 188 per cent to Tk 14.7 on August 12, which was Tk 5.1 on April 4. After mid-August, share prices witnessed a downward trend. Share prices declined by 2.2 per cent to Tk 8.9 on Thursday.
The company filed a case against its former chief financial officer Razib Hossain for embezzling Tk 9 crore this year. After the term of interim bail, he tried to surrender to the Narayanganj Senior Judicial Magistrate’s Court but was arrested and sent to jail on September 20.
