Auditor appointed to probe why Kattali Textile is failing to use IPO fund
The Bangladesh Securities and Exchange Commission (BSEC) has decided to appoint Islam Jahid & Co Chartered Accountants as a special auditor at Kattali Textile Mills Ltd to find out why the company is failing to utilise its initial public offering (IPO) fund.
The auditor will review the company's IPO proceeds and financial statements for the last three fiscal years. But the BSEC is yet to issue any letter to Kattali Textile about this.
Also, the commission wants to know what's the deal with the company's cash dividend disbursement for the 2020-21 fiscal year. Kattali Textile said it has completed the disbursement but some shareholders say they did not receive any dividend.
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A senior official at Kattali Textile said on condition of anonymity that they are not aware of the special audit.
"Our IPO utilisation process is still going on. It just got hampered during the Covid-19 pandemic," he told The Business Standard.
Back in 2018, Kattali Textile raised Tk34 crore through an IPO to purchase capital machinery, repay bank loans, install an electric transformer, and bear IPO expenses. The company was supposed to use the fund within October 2020.
But as of January 2023, the firm has only been able to use 49.5% or Tk16.84 crore of its IPO fund.
Kattali Textile's IPO was highly controversial. Some investors alleged that the company depends only on rental income from its factory building in Chattogram, instead of using the facility for its business operations.
In July 2020, the BSEC fined Kattali's managing director Tk1 crore, and other directors, except for the independent and nominated directors, Tk50 lakh each for misleading the securities regulator about IPO fund utilisation by filing false updates and submitting fake bank statements to back their false claims.
Then in July 2022, the commission expressed its concern about the company's utilisation of IPO funds after observing that it did not use the money in the past few months.
Kattali Textile produces and exports different types of garments. Its production capacity is 4,37,250 pieces of garments per month.
