Aman Cotton profit plummets in FY20

Before it was listed on the stock exchanges in 2018, Aman Cotton Fibrous Limited's profit had been more than Tk25 crore on average since 2012.

But after the listing, its profit declined a little in FY19 before falling drastically to Tk4.83 crore in the last financial year.

Company Secretary Shariful Islam could not be reached for comment on the reasons behind the steep decrease in profits. 

A listed firm usually gets 120 days to publish its annual financials. But because of an order of the High Court, Aman Cotton held its board meeting on 24 March after a delay of around five months.

After the meeting, it posted a 76% decline in profits in FY20, which ended on 30 June 2020, compared to the previous year.

Although its profit fell significantly, the company recommended 10% cash dividend only for general shareholders for FY20. Sponsors and directors of the company will not be eligible for the dividend.

As per the financial statements, in FY20, Aman Cotton made a profit of Tk4.83 crore and its earnings per share stood at Tk0.48. The profit was the lowest since FY12.

In 2019, Aman Cotton's revenue was Tk127.88 crore while net profit was Tk20.48 crore. The profit was 20% lower than that in FY18 and the company paid a 10% cash dividend.

In FY12, Aman Cotton's net profit was Tk30.54 crore. 

Aman Cotton – a sister concern of Aman Group – was incorporated as a private limited company in 2005 and started operation on 1 November 2007. It became a public limited company on 22 April 2012.

In 2018, the company raised Tk80 crore through an initial public offering (IPO) under the book building method for business expansion.

The cut-off price of Aman Cotton's each share was Tk40 for eligible investors and Tk36 for the general public in 2018.

The company manufactures 100% cotton carded, combed and semi-combed ring spun grey yarn for knitting as well as weaving. It has an installed capacity of producing 6,780 tonnes of cotton yarn per year.

Aman Cotton also failed to utilise its IPO funds within the deadline. It received IPO proceeds on 5 August 2018 and was supposed to utilise the fund within 12 months.

But after failing to meet the deadline, the company decided to extend it till 5 August 2021 at the last general meeting.

At the end of February this year, the company utilised Tk8.25 crore out of Tk80 crore of the IPO funds.

Of the funds, the company proposed Tk66.33 crore for machinery acquisition and installation, Tk5.39 crore for business expansion, and Tk4.76 crore for loan repayment. But it was able to repay loans only.