The Bangladesh Securities and Exchange Commission (BSEC) has decided to appoint Islam Jahid & Co Chartered Accountants as special auditors at Kattali Textile Mills Ltd to investigate why the company is not using its IPO fund.
The auditor examines the proceeds from the IPO and the financial statements of the company for the last three financial years. But the BSEC has not yet issued a letter to Kattali Textile on the matter.
The Commission also wants to know about the payment of the company’s cash dividend for the 2020-21 financial year. Kattali Textile said it had completed the payout, but some shareholders said they hadn’t received a dividend.
A senior Kattali Textile official said on condition of anonymity that he was not aware of the special test.
“Our IPO exploitation process is still ongoing. He’s just been handicapped during the Covid-19 pandemic,” he told The Business Standard.
In 2018, Kattali Textile raised Tk34 crore through an IPO to buy investment machinery, repay bank loans, install an electric transformer and bear IPO costs. The company should start using the fund in October 2020.
But by January 2023, the company was only able to utilize 49.5% or 16.84 million Tk of its IPO fund.
Kattali Textile’s IPO was highly controversial. Some investors have claimed that the company relies solely on rental income from its Chattogram facility rather than using the facility for its operations.
In July 2020, the BSEC fined the director of Kattali Tk1 Crore and other directors, excluding the independent and nominee directors, Tk50 lakh each for misleading the securities regulator on the use of IPO funds by filing false updates and submitted fake bank statements to support their false claims.
Then, in July 2022, the commission expressed concern about the company’s use of the IPO funds after realizing that it had not used the money in recent months.
Kattali Textile manufactures and exports various types of garments. The production capacity is 4,37,250 garments per month.
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