Mismanagement, financial liabilities sink Stylecraft

Stylecraft was one of the leading readymade garment manufacturers and exporters in Bangladesh just five years ago, but the company has since gone downhill amid the Covid-19 pandemic because of severe mismanagement and financial liabilities.

The company had exported apparel goods worth more than Tk 400 crore in 2015, but their annual turnover was only Tk239 crore in FY 2019-20. The company stopped paying workers’ wages since March and halted production from July this year, insiders told The Business Post.

According to Stylecraft’s annual financial report, the company’s financial liabilities stood at more than Tk 800 crore in 2020, a significant increase from around Tk 619 crore in March 2016.

The company’s investors, workers and creditors currently have no idea when the company will be able to pay back the dues, stakeholders say. The Business Post tried to contact the company high-ups for comments on the matter, but received no response till the filing of this report.

On the issue, Bangladesh Garments Manufacturer and Exporters Association (BGMEA) Vice President Md Nasir Uddin said, “Under the current circumstances, they [investors, workers and creditors] may have to wait forever, as it seems the company is not interested in paying dues.”

Shamsur Rahman launched Stylecraft in 1983, and successfully ran the company as its managing director till his death on January 31, 2016. Following Shamsur’s death, his sons Shams Almas Rahman and Sharif Almas Rahman took over the company.

Shams is now the managing director and CEO of the company, while Sharif is the acting chairman. StyleCraft has around 3,500 workers and around 400 employees.

The company got listed in the capital market in 1983, belongs to the A category and has a paid-up capital of Tk 13.8 crore. Its 32 production lines can produce 11.5 lakh apparel units per month.

Covid-19 final nail in the coffin

According to company insiders, as the Covid-19 hit Bangladesh, Stylecraft failed to secure new orders after buyers lost interest. The company managed to pay salaries and wages from the government stimulus package for some time, but ultimately, they failed to continue production.

The company was in trouble due to mismanagement even before the pandemic happened. It was having difficulties in paying salaries on time since the last two years and workers’ dissatisfaction was increasing gradually.

A number of Insiders said when Shamsur Rahman died StyleCraft fell into mismanagement after his two sons took over the company. Since taking charge, the duo failed to ensure timely delivery of goods to buyers, and resorted to costly air shipments instead.

The duo was facing consistent losses for years, but they refused to wrap up their business when they had the chance, they added.

An official of StyleCraft, on condition of anonymity, said, “When a company fails to pay salaries on time for months, it impacts the workers’ efficiency. This is why the company failed repeatedly to deliver shipments on time.

“Stylecraft already had a large liability with the banks, and when their situation began to deteriorate amid the pandemic, the banks stopped providing funds, buyers stopped placing orders and workers halted production.”

Addressing the matter, BGMEA President Faruque Hasan said, “The company has been facing crises for at least four to five years. The current management could not operate the business successfully, but they refused to back down.

“When a company fails to meet shipment deadlines regularly, buyers get concerned. Stylecraft sank because of mismanagement. When the Covid-19 hit Bangladesh, the company suffered its final crisis and failed to make a recovery.”

With months of salary due, workers finally took to streets and blocked a road in Gazipur demanding their due wages in March this year. In July, the company halted all production. The disgruntled workers then took up positions near the Department of Labour in Dhaka.

Following the demonstration, the department had set up a deadline for Stylecraft to pay the workers’ due wages, but the company failed to disburse it. Some of the workers again held a demonstration in front of the Department of Labour demanding payment on Tuesday.

Workers left in the lurch

Hasina Begum, who has been working in this factory for five years, told The Business Post, “I received no wages since the last seven months. How will I survive?”

Marufa Akter, another worker of StyleCraft, said, “The government and the BGMEA assured us that our salaries will be paid soon, but we are yet to get paid. If the government fails to resolve this situation, where will we go? I am now barely making ends meet.”

Addressing the matter, BGMEA Vice President Nasir Uddin said, “We are not authorised to pay workers’ dues. We are working with the government on this issue, but Stylecraft owners are not responding to our initiative.

“The company is not making it clear whether they will pay the due salaries or not. We are not even sure this company will resume production in the coming days.”