DSE inspection finds New Line Clothings headquarters, factory closed
A Dhaka Stock Exchange (DSE) inspection team has found that New Line Clothings headquarters and factory in Gazipur were completely shut down.
The textile firm, which was listed on the bourse in 2019, has not officially disclosed the closure.
The DSE published the findings on its website today, prompting a 4.44% drop in New Line Clothings' share price, which closed at Tk8.60.
According to the DSE, the inspection team visited the company's Gazipur premises on 8 April and confirmed the halt in operations. Attempts to contact Managing Director and CEO Zakir Chowdhury were unsuccessful, as his phone was found switched off.
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A senior DSE official, speaking on condition of anonymity, told TBS that the bourse had received multiple complaints from investors alleging that the company had ceased operations without proper disclosure. Following these reports, the DSE team visited the company's factory after getting approval from the Bangladesh Securities and Exchange Commission (BSEC).
The DSE also got approval from the BSEC to inspect 10 companies named Associated Oxygen Limited, Far Chemical Industries Limited, Krishibid Seed Limited, Nahee Aluminium Composite Panel PLC, Ring Shine Textiles Limited, Khan Brothers PP Woven Bag Industries Limited, Beach Hatchery Limited, Global Heavy Chemicals Limited, Indo-Bangla Pharmaceuticals Limited and Fu-Wang Ceramic Limited.
The BSEC approved the inspection after reviewing a DSE's application, with a focus on protecting the interests of general investors. The inspection will involve visiting the head offices, factories, and other relevant sites of the companies to assess their current status.
Earlier, the DSE team found that the factories of Dula Mia Cotton, Safko Spinning, Megna PET and Meghna Condensed Milk were closed.
New Line Clothings turns into non-compliant
Only three years after fundraising from the stock market in 2019, the company became non-compliant starting in early 2022, failing to release its quarterly and annual financials, according to the DSE.
As a result of the company's failure to disclose its financial reports, shareholders are left in the dark, lacking any updates about the company's performance.
Furthermore, the company failed to hold its annual general meeting (AGM) for three consecutive years, leading to its demotion into the Z category, commonly referred to as the junk category.
DSE data shows that the company consistently paid dividends for the first three fiscal years since 2019. It distributed a 12.25% cash dividend for the fiscal year 2020-21, but since then, it has failed to pay any dividends to its shareholders.
The company posted the last update on the Dhaka bourse on 5 October 2023, saying that it has shifted its Dhaka office to Gazipur.
Tk30cr raised through IPO
In 2019, New Line Clothings raised Tk30 crore through an initial public offering (IPO) under the fixed price method, intending to expand its business through the acquisition of machinery, loan repayment, and civil works.
According to the IPO prospectus, the fund would be used to expand the production capacity by up to 80%, which will help to grow the revenue by 15%, 18% and 11% respectively in the next three years.
Interestingly, the New Line Clothings' corporate sponsor Sigma Technologies is also a loan defaulter with IFIC Bank. Sigma Technologies holds an 11.42% share of the New Line Clothings.
Meanwhile, New Line Clothings borrowed the largest portion of its loans from Southeast Bank, to which it had committed to repaying Tk9 crore from its IPO proceeds. However, the company has faced difficulties in repaying the loan, creating concerns over its financial discipline.
