C&A Textiles faces DSE inspection amid prolonged non-compliance

The Dhaka Stock Exchange (DSE) is set to inspect C&A Textiles Limited amid prolonged regulatory non-compliance that has left investors in the dark about the listed textile company's operations and financial position for years.

At the request of the premier bourse, the capital market regulator, the Bangladesh Securities and Exchange Commission (BSEC), approved the inspection in mid-September, according to a letter.

The move comes as the company has failed to publish its quarterly financial statements for more than two years. According to DSE data, C&A Textiles last published its third-quarter financial statements for the period ending March 2024, leaving investors without subsequent financial information.

The company's latest operational and financial status also remains unclear, as officials of Alif Group, which took over the troubled company, did not respond to queries.

A DSE official, seeking anonymity, said the bourse planned to inspect the company to ascertain its current operational status after receiving approval from the capital market regulator.

According to sources, the decision came as C&A Textiles continued to violate securities rules, depriving investors of information about its operations and financial health.

C&A Textiles entered the capital market in 2015, raising Tk45 crore through an initial public offering (IPO). However, its operations collapsed in 2017 after its original sponsors fled the country amid a major loan scam.

The company announced a sudden shutdown of production in June 2017, citing renovation work, and its offices remained closed for several years.

The company remained closed for around four years before Alif Group stepped in to revive it. The conglomerate acquired C&A Textiles in 2021 and injected fresh capital into the company, with operations resuming in 2022.

Infographics: TBS

As part of the revival effort, the new management held several pending annual general meetings (AGMs) after obtaining court permission, completing meetings up to FY23.

However, despite the initial momentum following the takeover, the company has again fallen into severe regulatory non-compliance.

The DSE has since downgraded C&A Textiles to the Z category for failing to hold mandatory AGMs on time.

Alif Industries Limited, a concern of Alif Group, had also planned to merge with C&A Textiles, subject to approval from banks, other creditors and shareholders. The proposed merger has yet to be completed, according to sources.

The prolonged lack of disclosure has raised concerns for general investors, who collectively hold 82.86% of the company, compared with just 7.10% held by sponsor-directors.

C&A Textiles currently has paid-up capital of Tk293 crore, while its shares were trading at Tk3 apiece.

According to the latest information available on the stock exchange, the company posted a net profit of Tk4.5 crore and paid a 0.5% cash dividend to shareholders for FY23.

After resuming operations under the new management, its net profit rose to Tk5.5 crore in the first nine months of FY24.

According to the company's IPO prospectus, it raised Tk45 crore from the capital market in 2015 and used Tk30.87 crore for loan repayment and business expansion.

The company's troubles date back to 2017, when it shut down production amid financial difficulties. In 2020, former managing director Rukshana Morshed was arrested in Chattogram in a case filed over a defaulted loan.

The BSEC also found that Rukshana, director Sharmin Akther Lovely and Bangladesh Shoes Industries Limited had jointly sold around 1.22 crore shares of C&A Textiles without prior declaration, earning about Tk12 crore from the sales.

In February 2021, the commission restructured the company's board, appointing seven directors as part of efforts to revive the underperforming company.