26 state-run jute mills to go public ==>> 49pc stakes to be offloaded within a year

FE Report (July 02, 2011)

The government has decided to offload, at least, 49 per cent stakes of each of the 26 state-owned jute mills in the capital market soon, a top official of the ministry of jute and textiles said.

Finance Minister AMA Muhith has recently approved the move of offloading the shares of the state-owned jute mills.

According to the process approved by the finance minister, divestment must be completed within the next one year. Currently the mills are running under Bangladesh Jute Mills Corporation (BJMC).

A committee headed by Finance Secretary Dr M Tareq has made a thorough study on the overall situation in the jute mills and submitted five-point recommendations to the government including offloading 49 per cent shares of the mills.

"The offloading process is under way. The government would divest the shares within the next one year," Textiles and Jute Secretary Md Ashraful Moqbul told the FE.

The secretary also said the ministry has been working hard to make the state-run jute mills operationally sound and economically viable.

He said the government decided to turn the BJMC into a 'holding company' to protect the state-owned jute mills from incurring financial losses.

"The shares will be floated once the organisation (BJMC) turns into a holding company," Moqbul added.

As part of the offloading activities, we will immediately enlist chartered accountant (CA) firms to make the valuation of assets and liabilities of the mills under BJMC," a high official of BJMC said, preferring anonymity.

The BJMC official said, "Floating of the BJMC-run jute mills in the share market will be a big venture for the government."

"Although the initiative to float shares of state-owned jute mills is good, its implementation needs a strong political will on the part of the government," a private sector jute mills operator told the FE.

He said if the shares of the state-run jute mills are floated, it will help bring transparency and accountability to the operations of the BJMC units, thus providing the much-needed boost to the country's overall jute sector.

According to the data of BJMC a good number of loss-making mills have already been shut down over the years.

Sources, however, said like the private sector mills, the state-run units are now running better than before thanks to a substantial rise in the prices of jute and jute goods in the international market in recent years, because of an increased demand for the natural jute fibre.

"Some jute mills under the BJMC are now making profits following the government's pragmatic steps that have helped the state-owned enterprises get out of recurrent financial losses in the past few years," a BJMC official said.

The mills have earned some Tk 69.3 million profit in May 2011.

According to the statistics of the government, the mills under BJMC have counted losses worth Tk 48.21 billion (4,821.41 crore) since nationalisation up to 30th June, 2009.

The government nationalised 79 jute mills after liberation through Bangladesh Industrial Enterprises (Nationalisation) Order, 1972 (P.O.27). Later the government sold out 52 jute mills to the private entrepreneurs.