The Bangladesh Securities and Exchange Commission (BSEC) is concerned about the use of proceeds from Kattali Textile Mills Ltd’s initial public offering (IPO), despite slapping a hefty fine on the company’s directors a year ago.
The Securities and Exchange Commission found that the manufacturer and exporter of clothing products has not used its IPO funds in recent months.
Although the economy has returned to normal, the company has only been able to use Tk8 Lakh this year.
As of June 2022, the company was able to use Tk12.88 billion or 37.88% of its IPO fund while paying over Tk5 billion in interest.
In June 2018, the BSEC approved the company’s IPO application despite many objections from the Dhaka Stock Exchange.
Kattali Textile’s IPO was highly controversial and there were complaints from some investors that the company relied solely on rental income from its Chattogram factory rather than using the facility for its own operations.
Thereafter, the controversial company attempted to mislead the Securities and Exchange Commission on this matter by filing false updates and submitting fake bank statements to back up its false claims.
As a result, the regulator fined the managing director of Tk1 Crore and other directors other than the independent and nominee directors Tk50 lakh each.
The Company’s main activities are manufacturing and exporting various types of apparel products and catering to its international buyers.
The company’s production capacity is 4,37,250 garments per month.
Kattali Textile Limited reported a 17% increase in profit for the first nine months of fiscal 2021-22.
But its earnings fell 31% year over year in the third quarter — January through March of this year.
According to the company’s stock documents, earnings per share (EPS) rose to Tk1.05 in the July-March period of fiscal 22, compared to Tk0.90 in the same period last year.
The company said its EPS rose thanks to tremendous efficiencies in manufacturing costs and operating expenses.
In the January-March period, earnings per share fell to Tk0.20, which was Tk0.29 in the corresponding period of FY21.
In fiscal 21, the company recommended a 10% cash dividend to shareholders.
As of June 30 of this year, sponsors and directors together held 30.32% of the company’s shares, while institutions held 33.46%, foreign investors 0.11% and public investors 36.11% of the company’s shares.
The company’s last trading price on Dhaka Stock Exchange was Tk23.10 per share on Thursday.
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