Keya Group’s textile closure to leave 8,000 workers jobless by May
The group’s dyeing and cosmetics-detergent wings to continue operations
HIGHLIGHTS
- Factories of knit composite garments, knitting, spinning, and cotton, and Keya Yarn Mills will be shut down
- Keya Group owes around Tk3,000 crore to banks
- Tk60 crore will be needed to compensate all affected workers
Keya Group has announced permanent closure of four factories under its textile wing, located in the Jarun area of Konabari, Gazipur, from 1 May this year, due to severe financial difficulties.
The factories that are to be closed are used by the group’s Knit Composite Garments Division, Knitting Division, Spinning Division, and Cotton Division, and Keya Yarn Mills Limited.
The decision will leave around 8,000 workers jobless, of which some 1,000 are physically challenged, said Keya Group Chairman Abdul Khaleque Pathan when speaking to The Business Standard yesterday about the closure.
“We cannot afford to run the factories anymore,” he said, adding, only the dyeing unit from the textile wing, employing some 400-500 workers, will continue operations as that still secures locally outsourced orders for yarn dyeing.
The group’s cosmetics and detergent wing, which generates about Tk25-26 crore in monthly revenue, will also continue business.
According to Abdul Khaleque Pathan, since the last bank stopped cooperating in opening letters of credit for raw material imports due to its default loans, Keya’s export oriented textile wing, under the umbrella of publicly traded Keya Cosmetics Limited, was pushed to the brink two years back.
He said the knit composite garments, knitting, spinning, cotton and the dyeing units are parts of the listed company, while Keya Yarn Mills Limited is a separate company.
Further elaborating the financial struggles, Abdul Khaleque said the cosmetics and detergent wing has been earning some revenue with profits by using locally procured raw material and his company was using the profits to pay the workers of the textile division that was not making money for months.
The textile units, for more than a year, have been dependent on outsourced orders and the frequent delays in receiving the bills was causing worker unrest in the factory complex, he added.
With their salary for November unpaid, several thousand Keya workers on 29 December took to the nearby highway as the company planned for a shutdown in the New Year. However, mediated by local law enforcement officials, the company decided to defer it till 30 April.
“By then, we will have some cash by selling the inventories and new goods under production,” said the Keya chairman.
Every month the company needs Tk7-8 crore to pay the workers, he said, estimating that the company would require Tk60 crore to compensate all affected workers when the factories are closed down.
By the end of January the workers’ dues will be cleared and they (workers) will have months to look for a new job, he added.
Keya Group, founded by the self-made businessman in 1996 had a spectacular rise through its cosmetics and detergent businesses under the brand Keya. With the two companies going public in the early 2000s, he expanded into apparel export businesses, received export trophies from the government.
However, excessive loan dependency, lack of a professional management, stock market irregularities through amalgamating the textile units with the listed company, failure in debt servicing dragged the group down to where it is today, according to analysts.
Keya Group owes around Tk3,000 crore to banks and all its three banks classified it as a loan defaulter.
However, while talking to TBS, Abdul Khaleque Pathan, claimed that the banks, violating central bank rules, confiscated his export proceeds to recover their loans and that deprived the company of working capital and workflow.
Source: The Business Standard | 02 January 2025 | Author: Mohammad Asaduzzaman Saad & Mahfuz Ullah Babu
