Abandoned by local banks, the Saad Musa group is preparing to restart on foreign loans

It was an ambitious expansion plan based on loan pledges of over Tk 1,000 crore by state lenders.

But the Chattogram-based business conglomerate couldn’t make it happen in 2016 as approved loans were abruptly cancelled.

This was a disaster for the Saad Musa Group as it had already invested its own resources and bank money in spacious factories.

This unfinished dream now seems about to come true thanks to loans from foreign banks.

This is the story of a desperate attempt at recovery by one of the forerunners of the port city’s textile industry.

Starting out in the 1980s with the import-export business, the Chattogram-based Saad Musa Group found success when it moved into the manufacture of textile products in the 1990s.

Over time, the group has steadily grown stronger through the expansion of its activities in different textile segments.

Its business was doing well until 2010 when the company opted for aggressive investment in a new project which hit a snag for failing to secure utility connections.

To weather the bad times and return to a growth trajectory with diversified businesses, the industry group is now moving forward with massive investment plans as it plans to gain a foothold in new sectors, such as energy , steel, cement, agro, hospitality and real estate alongside increased investment in its existing textile business.

The group of companies is expected to invest around $334 million, much of it in the form of external loans, in the establishment of Sultana Habiba Fabrics Mills which will comprise eight units – cotton yarn spinning, blended yarn spinning, weaving, knitting circular, RMG dyeing, printing and finishing, dyeing, home textile printing and finishing and yarn dyeing, company officials said.

Also, it is going to invest another $90 million in Saad Musa Denim and Saad Musa Terry Towels.

The Group has several companies, 100% export-oriented, in the textile sector, and yet it is building another large factory, Sultana Habiba Fabrics Mills, driven by growing demand for ready-to-wear and home textiles. . The new plant is expected to come into operation next year.

The group has already completed partial construction of the plant with an investment of Tk 700 crore arranged from domestic sources, and it now plans to purchase the necessary machinery with foreign loans.

Muhammad Mohsin, chief executive of Saad Musa Group, told The Business Standard that some banks in China, Belgium and Germany have agreed to provide the company with around $325 million in loans at 3% interest.

“We have asked the Bangladesh Bank and the Bangladesh Investment Development Authority for their clearance for the loans,” he said.

Even though this group focuses more on the textile sector, especially home textiles, it has already grown and plans to expand its business into various other sectors focusing on the future market and business potential.

Saad Musa Group plans to diversify its business into power plants, automotive bricks, agricultural projects, cement and steel industry by 2025 and real estate sector by 2030.

Muhammad Mohsin said, “With the expansion of the group into some new sectors by 2025, we will employ more than 30,000 people. At present, about 12,000 people are employed in 27 industrial units of the conglomerate.”

As part of its expansion plan, the Saad Musa Group will invest $30 million in the manufacture of dalda, vegetable oil and other oils, $175 million in an HFO (heavy fuel oil) power plant in a power generation capacity of 200 MW, $20 million in green automotive brick manufacturing and $5 million in agricultural projects.

He also plans to invest in the cement industry which is expected to grow by 10% each year. To this end, she purchased 20 acres of land from Chattogram’s Shikalbaha.

The group plans to set up a steel mill in Chattogram’s Anwara by 2025 with the aim of producing 1,000 tonnes of steel per day, for which it has purchased 20 acres of land. The cost of this project will also depend on the implementation time, officials said.

The Saad Musa group also plans to invest in a seven-star resort and in the real estate sector in Cox’s Bazar.

Current foreign loans

Saad Musa Group took the initiative to build Sultana Habiba Fabrics Mills in 2016.

At that time, the Investment Corporation of Bangladesh (ICB) decided to invest in the factory. The company has approved a loan of Tk 485 crore through debentures for Sultan Habiba Fabrics Mills. He was also one of the main arrangers of another Tk890 crore in loans from four public banks for the company.

In total, Saad Musa Group received loan approval of Tk 1,375 crore from ICB.

But, the Tk485 crore ICB loan was later canceled as the investment was outside the capital market. Loans approved by state banks were also cancelled.

Muhammad Mohsin told TBS that, backed by the fact that Tk 1,375 crore in loans were outstanding, Saad Musa Group has started construction of a 12 lakh square foot factory by investing Tk 700 crore from banks and group’s own resources. But it is not possible to bring in the necessary machinery, he added.

Rejected by local banks, the Saad Musa group approached foreign lenders to finance its new textile factory. And it has received approval for a total of $325 million in loans from several banks based in China, Germany and Belgium for importing machinery.

Among the lenders, the Agricultural Bank of China alone will give $78.33 million, or about Tk 800 crore, Mohsin told TBS, adding that Germany’s Landesbank Baden-Württemberg will give $25 million and the Oldenburgische Landesbank AG would provide an additional $25 million, while the Bank of Belgium will provide $15 million.

Request to Bida for approval

On August 4 this year, Saad Musa Group wrote to the Bangladesh Investment Development Authority seeking loan approval from the Agricultural Bank of China to purchase machinery for Sultana Habiba Fabrics Mills.

In its letter, Sultana Habiba Fabrics Mills states: “The Agricultural Bank of China, Qingdao Branch, intends to finance 85% of the contract amount of $78.33 million in accordance with the acceptance of the China Export and Credit Insurance Corporation without any local bank guarantee only based on our company guarantor.”

How he fell in bad times

In 2010, the business conglomerate began to see the flip side of success – it developed the Saad Musa industrial park with 24 different product factories but was unable to start operations due to the lack of gas connections and electricity, which cost him a massive loss.

In 2015, some industrial units were commissioned, but there is still a shortage of gas and electricity. Not all factories in the park have yet been able to go into production as losses mount.

Group owner Saad Musa also got into legal trouble in the United States by buying a warehouse there, which resulted in a big loss.

Additionally, the group ran into trouble after leasing the state-owned Karnafuli Jute Mills. In 2008, it took over the loss-making factory and started its operation.

But four years later, in 2012, the Saad Musa group had to return the mills to the government for unknown reasons. For this, the group suffered a loss of Tk 300 crore which it had already spent in the form of new investment and payment of unpaid electricity and gas bills after taking over the factories.

Banking liabilities of the Saad Musa group

The Saad Musa Group owes around Tk 3,000 crore to a dozen banks, including state-owned banks. Part of the loans went into default following the fire at one of its factories in 2005, the cancellation of the loan by the ICB in 2016 and the Covid-induced downturn in business over the past two years.

Some of the loans were rescheduled after payment of the installments and some are still in default.

Asked about it, Muhammad Mohsin said: “I have been doing business since 1982. During that period, there were no problems with the repayment of loans. But, due to some incidents, there were problems. We try to solve them.”

The rise of the Saad Musa group

Muhammad Mohsin entered the business world in 1982 after completing his upper secondary education by borrowing money from one of his childhood friends, even though his father Abu Saad Chowdhury wanted him to become a holder of service.

He started with an import-export business in the trading sector. But the capital he arranged from his friend was lost as he suffered huge losses in the business.

The initial setback, however, could not dampen the entrepreneurial spirit of the young man who managed to take out a loan from a bank and opened a large store.

After a few years, he started in the shipbuilding sector. And as his new business was successful, he ventured into the textile business.

Mohsin’s first industrial enterprise was Chittagong Fiber Boards Mills, which manufactured and supplied leather fiber sheets and silver cans.

In 1994, he formed the Saad Musa Group – named after his father and uncle – and began expanding his business in various sectors.

Since then, he has never looked back as the Saad Musa Group has now grown into a large conglomerate made up of more than two dozen sister companies and subsidiaries in various sectors.

He is building the Saad Musa Industrial Park on 100 acres of land at Anwara de Chattogram.

There will be an educational park, which will have all kinds of educational facilities, on a land of 100 bigha, a hospital on a land of 40 bigha, villages planned for living, textile factories to meet the textile demand and agro projects for food production in industrial park.

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