ML Dyeing delays IPO fund use

ML Dyeing Limited, listed on both stock exchanges, has failed to import machinery using its initial public offering (IPO) funds in scheduled time.

Company officials claimed that due to Covid-19 pandemic, they did not use this fund. But the company did not apply to the securities regulator for its time extension.

The company's IPO utilisation period expired on March 22 this year.

The principal activities of the company are to carry on the business of dyeing and finishing yarn for 100 percent export-oriented sweater industries in Bangladesh.

It raised Tk20 crore from the stock market to acquire machinery and equipment to extend its business in 2018. But it could not complete the project on time.

Until June this year, ML Dyeing could use Tk7.45 crore, which was only 37.25 percent of the IPO fund.

The company used Tk5.60 crore for machinery and equipment, which is only 31.44 percent of the allocated amount.  

Preferring anonymity, an official of the company told The Business Standard that due to the global spread of coronavirus, they could not complete the IPO proceeds on time.

They even did not open any LC (letter of credit) to import the rest of the machinery. The company was expected to import machinery from china, Japan, Italy, India and Germany.

The official also said that they were yet to apply to the commission for the time extension, but would do so very soon.

The securities regulator approved ML Dyeing's IPO on May 14, 2018.

According to the company's financial report of the nine months of the last fiscal year, its net profit was Tk26.98 crore, which was Tk19.47 crore during the same period of the previous fiscal year. 

At the same time, its earnings per share (EPS) was Tk1.22 and net asset value per share was Tk16.69.

But in the third quarter, between January and March, its earnings per share was Tk0.28, which was Tk0.37 during the same period of the previous fiscal year. 

The company recommended a 20 percent dividend (5 percent cash and 15 percent stock) for the fiscal year 2018-19. During this time, its net profit was Tk19.66 crore, which was Tk19.51 crore in the previous fiscal year.

On April 8 last year, a fire incident occurred at RN spinning mills Ltd, its associate company, and the accumulated loss was Tk612.33 crore. 

As of June 30, 2018, ML Dyeing's investment was Tk37.60 crore in an associate company against 8.81 percent of shares of that company. Its market value was Tk22.48 crore as of June 30 last year.

The balance of investment in the associate company was Tk0.00 (nil) as of June 30 last year. 

The proportion of the loss caused by fire has been adjusted with the investment and cumulative profit from the associate company. As a result, net asset value per share decreased by 27 percent as of June 30 last year.

The company's sponsors and directors jointly own 31.40 percent of its shares, while institutional investors share 22.84 percent, foreign investors 21.89 percent and general investors 23.87 percent.

Incorporated on March 21, 2001, ML Dyeing Ltd went into operation on July 1, 2002.

The last trading price of each share of the company at the Dhaka Stock Exchange was Tk50.80.