Biratnagar Jute Mills, the oldest factory of the country, has closed once again due to shortage of operating capital and lack of funds to pay past electricity bills. The historical mill had resumed operations just three months ago.
Biratnagar Jute Mills, the oldest factory of the country, has closed once again due to shortage of operating capital and lack of funds to pay past electricity bills. The historical mill had resumed operations just three months ago.
The board of directors appointed by the shareholders of the mill had formed a five-member management committee three months ago. The committee was tasked with coming up with a strategy to resume operations of the mill that closed for three years.
When the mill started operations last year, it had an unpaid electricity bill worth Rs7 million. Although the committee paid Rs2 million, it failed to settle the remaining amount, which resulted in power cut again.
Shareholders of Biratnagar Jute Mills, 183 in total, decided to appoint Basant Ban as the chairman of the management committee. The committee spent Rs12 million to repair an old machine to jumpstart the mill’s operation.
The mill’s board of directors had adopted a strategy of amassing Rs60 million operating capital earmarked for the mill’s day to day finances. As the government also owned a large portion of shares of the mill, the board came under fire because shares could not be traded. This resulted in a dearth of operating capital.
Of the total 93,750 share units, 31,023 are held by the government while the remaining 62,727 are owned by private citizens.
Winsome International, an Indian company which took over the factory’s operations more than five years ago had leased out the jute mill for a fee of Rs13.5 million a year for 25 years but closed the mill more than three years ago, citing government’s failure of electrical subsidies and upgrades.
Managing Director of the mill Nil Hari Kafle said, “The mill closed after the company quit due to its failure to pay the due electricity bill.” After Winsome International closed the factory three years ago, Rs166,000 per month of electricity bill was added on behalf of the mill.
Kafle added, “The mill closed again as the managers experienced a shortage of capital for day to day operations.”
The mill which employees 105 employees is able to produce 5 tonnes of sacks and ropes daily.
Winsome International had decided to close the mill after alleging the government’s failure to upgrade the power supply line and removing subsidies on their electricity bill. The jute industry based in Eastern Nepal had also been struggling due to intense competition in jute production from other jute firms from Bangladesh and India.
The mill has been facing periodic closure and opening due to lack of raw materials, labour protests, competition from other jute mills, border blockade, and mismanagement. .
26.12°C Kathmandu
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