BSEC rejects Al-Haj Textile's 35% stock dividend proposal

The Bangladesh Securities and Exchange Commission (BSEC) has rejected a 35% stock dividend proposal announced by Al-Haj Textile Mills Limited for the financial year that ended in June 2024.

On 14 January, the textile sector firm recommended a 5% cash and 35% stock dividend for its shareholders for FY24. The stock dividend component was subject to the approval by the BSEC.

The company's share price increased today (23 February) by 2% to Tk132.80 on the Dhaka Stock Exchange.

The company's audited financial statements show that the sharp rise in profit was largely driven by a one-off accounting gain following the settlement of a long-running legal dispute with Agrani Bank, rather than a genuine operational recovery.

According to the audited results for FY24, Al-Haj Textile recorded a net profit of Tk22.45 crore, compared to a loss in the previous year. Earnings per share rose to Tk10.07, a significant reversal from a loss per share of Tk0.78 in FY23.

The company's net asset value per share jumped by 119% to Tk18.52, reflecting the impact of the recognised income.

However, the financial statements also show that net operating cash flow per share remained negative at Tk2.58, indicating continued pressure on cash generation from core operations.

The sharp turnaround is particularly striking as the company had posted a net loss of Tk7.56 crore in the nine months to 31 March 2024. This indicates that bulk of the profit was recorded in the final quarter after changes in accounting treatment linked to a disputed fixed deposit receipt with Agrani Bank.

Recently, Alhaj Textile Mills has decided to invest an additional Tk7.80 crore in the Balancing, Modernisation, Rehabilitation and Expansion (BMRE) of its factory to upgrade machinery and enhance operational efficiency. The decision was taken at the company's latest board meeting, according to a disclosure issued last Thursday. 

According to the disclosure, the fresh investment will be used to replace older equipment, introduce modern technology and strengthen production capacity at its manufacturing facility.

Company officials said the BMRE initiative is aimed at improving product quality, reducing wastage and optimising energy consumption, while boosting overall productivity. The move is also expected to help the mill respond more effectively to evolving market demand and buyer requirements.

Industry insiders noted that with competition intensifying in both domestic and export markets, textile manufacturers are increasingly focusing on modernisation and efficiency to sustain profitability. In that context, the additional investment is seen as a strategic step to ensure long-term operational sustainability.