How a high-flying shoe entrepreneur slipped down
Zahir Uddin Tarique did not have much experience in entrepreneurship.
Still, he experienced a meteoric rise after launching his first shoe company in 1999 at Chattogram Export Processing Zone (CEPZ).
A native of Barishal, he has created five companies over the years: Papella Limited, UFM (BD) Limited, Zeil’s Ware Limited, Prime Footwear Limited and Paduka Shoes Limited.
The first two were installed at CEPZ, the third and fourth in Chauddagram in Cumilla, and the fifth in the Bayezid region in Chattogram.
With the exception of Paduka Shoes, the other four companies supplied shoes to several well-known foreign brands, such as Germany’s Deichmann SE. Business was good the first few years.
But a series of irregularities, such as not delivering products on time and maintaining product quality, over the years ultimately led to the closure of all five businesses before the Covid-19 pandemic.
Before the shutdown, workers also repeatedly protested against irregular wage payments in 2019.
Zahir now owes Tk 254 crore to banks and non-bank financial institutions.
Some of his employees alleged that he bought a lot of land with bank loans instead of putting the money in his businesses, which resulted in the downfall.
They also alleged that he built a house in Canada by laundering money.
But Zahir denied all the allegations.
He said the export sector had not performed well for a few years even before the pandemic.
Speaking of workers’ protests ahead of plant closures, he said wages were increased in November 2018.
âIt increased our costs, but we couldn’t get as much benefit from exports. At one point, we temporarily shut down the businesses.
âThen after the pandemic hit Bangladesh, we couldn’t reopen because the impacts of the health crisis led to capital shortages. We didn’t receive any stimulus support. That’s why we have to. now to the banks, âhe added.
Business success and collapse
Zahir lived in London. Back home, he first worked in his maternal uncle’s factory at CEPZ before setting up his factory.
Although his companies did good business with foreign companies in the early years, he gradually began to lose customers for not delivering the products on time.
Bata canceled its contract with Zeil’s Ware in 2010, the latter failing to maintain the quality of its products.
In 2012, Zahir started another shoe company named Zeil’s Shop. It has around thirty points of sale across the country.
But he didn’t gain much popularity and slipped into losses.
In 2019, Zahir businesses experienced order cancellations due to shipping delays.
Requesting anonymity, a former UFM (BD) official said Zeil’s Ware had done well as an export-oriented company for nearly a decade, but had struggled ever since. 2010.
âWhen the foreign buyers canceled the contracts because the quality of the products was compromised, that is when Zahir started buying the land properties with bank loans instead of settling the business problems,â he said. he alleged.
At the end of 2019, the five companies were closed after paying partial wages to workers.
This correspondent recently visited the Papella and UFM (BD) factories at CEPZ and found them closed.
Lenders in the soup
The banks and financial institutions that lent to Zahir are now in trouble.
There are uncertainties on how they will recover the Tk254 crore loans granted to them.
Of the amount, Tk 65 crore was withdrawn from the Dutch-Bangla Bank for UFM (BD) which is already overdue.
Zeil’s Ware owes 100 crore Tk to Karwan Bazar branch of BASIC Bank, Papella owes 55 crore Tk to Karwan Bazar branch of Uttara Bank and Zeil’s Shop owes 5 crore Tk to main branch of NRB Bank.
In addition, Tk29 crore was borrowed from the Agrabad branch of LankaBangla Finance.
Papella and UFM (BD) also owe around Tk 5 million to various government agencies in utility bills.
LankaBangla’s vice president of finance and Agrabad branch chief Mr Solaman Hossain said his organization had loaned Tk 29 crore to four of Zahir’s five companies.
He said no loan installments had been repaid since last year.
Forty decimal places of land were mortgaged to Chauddagram against the loans, he added.
Dutch-Bangla Bank Chattogram branch officials said the UFM (BD) started dealing with the bank in 2017 and initially everything was fine.
But the company started delaying repayments in 2019. At present, it owes around Tk 65million to the bank’s branch in Agrabad, they said.
They also said the bank would soon take legal action against the company to collect the loan.
CEPZ Director General Moshiuddin Bin Mesbah said around 2,000 workers were employed at Papella and UFM (BD).
He said unpaid utility bills from closed businesses are usually collected through the auction of their assets.
Misuse of surety facilities
There are also allegations against Zahir importing raw materials on bail and selling them in the local market.
Several cases have been filed by the office of the Chattogram Bond Commissionerate against Zeil’s Ware and Paduka Shoes.
Zeil’s Ware has been accused of secretly moving Tk 17.5 million of goods from his factory which were imported on bail.
At the end of 2018, the police station filed a complaint against the company, accusing it of tax evasion amounting to Tk 12.69 crore.
The company was also charged with the same offense a year earlier.
Later, when the allegation turned out to be true, Zahir paid a fine of 30 lakh Tk.
He also pledged never to commit such offenses.