BSEC seeks to trace Ring Shine’s funds raised through private placements

Highlights

• Ring Shine Textiles Ltd raised Tk150 crore through IPO
• The company's short term loan was Tk370 crore in FY2018-19
• Its exported goods were worth Tk982.37 crore in FY2018-19
• The company has remained closed since September 2020
• Its share price has stayed at the floor price of Tk6.40 for the last few months

Ring Shine Textiles Ltd collected Tk275 crore through private placements before its initial public offering (IPO), but did not properly mention – in its audited financial statement – where that funding went.

To trace the funds, the Bangladesh Securities and Exchange Commission (BSEC), last week, asked the shareholders who acquired Ring Shine's stocks privately to submit supporting documents in this regard. 

The commission sought a copy of allotment letters, pay orders and bank deposit slips of the transactions.

Additionally, the commission has also sought the name of the bank where the funds were deposited against an allotment of the aforesaid shares and the name of contract details.

BSEC officials are due to visit Ring Shine's factory this week to investigate the overall situation of the company. 

Investors who acquired the company's shares privately will have to submit the documents to the commission within five working days from the date of issuing the letter.

Those who fail to submit the documents on time will risk the cancellation of their shareholdings by the commission, said sources.

On the other hand, the first meeting of the new board of directors of the company will be held on Sunday.

Istak Ahmmed Shimul, an independent director of the company, said the first initiative of the new board will be reactivating all the bank accounts of the company.

After that all problems about bill payment – like water, gas, electricity and others – will be resolved, he added.  

Additionally, the new board will discuss the existing loans of the company and will take an initiative for repayment, he further added.    

According to the audited report of 2019, the term loan of the company was Tk370 crore.  

On 26 January this year, the securities regulator restructured the board of directors of Ring Shine Textiles Ltd in a bid to rescue the company from its worsening condition.

For this to be attained, the BSEC appointed seven independent directors to observe the company's overall condition and make a plan on how to operate it.

The BSEC wants to know where the large amount of the money the company had earned from exports went, and why the company is in trouble.

The commission will receive recommendations from the newly appointed directors on how to reopen the factory, added the sources.

The BSEC appointed Hoda Vasi Chowdhury and Co as a special auditor to review the financial statements, including the export data.

The company exported goods worth Tk982.37 crore in the fiscal year 2018-19 but faced a shortage of working capital within the first nine months of the fiscal year 2019-20.

The company's sales declined and it incurred a loss in the third quarter of the last financial year.

Due to a shortage of working capital, a decline in orders from foreign buyers and a shortage of imported raw materials, the company's factory has been closed since September last year.

Meanwhile, Ring Shine has not been able to use its initial public offering funds yet.

The company raised Tk150 crore from investors in 2019 to set up denim plants and repay bank loans. It issued each share at the face value of Tk10.​​​​​​​