Imam Button's profit, dividend flagged
In a letter sent to the company earlier this month, which was seen by TBS, the Dhaka Stock Exchange (DSE) stated that Imam Button owed Prime Finance Investment Tk4.83 crore – Tk4.37 crore as long-term loans and Tk45.82 lakh as short-term loans.
The country's premier bourse has found that Imam Button Industries has failed to comply with stock regulations on a dozen counts, including showing profit without adjusting loan expenses and paying dividends based on its basis.
In a letter sent to the company earlier this month, which was seen by TBS, the Dhaka Stock Exchange (DSE) stated that Imam Button owed Prime Finance Investment Tk4.83 crore – Tk4.37 crore as long-term loans and Tk45.82 lakh as short-term loans.
The bourse mentioned that Imam Button paid a 1% interim cash dividend only to its general shareholders based on the audited financials of the October-December quarter, which is a non-compliance with the Bangladesh Securities and Exchange Commission (BSEC) order issued in February 2024.
The company did not consider its loans and other financial expenses in its profit or loss account. If the expenses are charged, its net profit would be negative, and then the interim dividend would not be justified, according to the DSE findings.
Keep updated, follow The Business Standard's Google news channel
Now, it is in the process of changing its category from Z to B, and it is also changing its name to Hami Industries PLC. If the category is changed, investors will receive some benefits in terms of buying shares with margin loans and a reduced settlement cycle.
After examining July-December financials of FY24, and FY23, the DSE found various non-compliances with BSEC's order and, on 12 March sought clarification on its findings from Imam Button Industries.
Besides, the Dhaka bourse found non-compliance with the corporate governance code issued by the BSEC in 2018.
ASM Hasib Hasan, chief executive officer of Imam Button, told The Business Standard, "The loan was taken by the previous management, and we, the new management, did not receive the funds in the company's account. The lender filed a lawsuit against the loan, which is pending in court. That's why we did not charge interest."
"If interest is charged, the loan is acknowledged by us. But we know nothing about this loan," he pointed out.
Regarding other non-compliances, he said, "We took charge of the company for its rebirth as it had been out of production for years. We brought it back into production and are running the company with the help of the previous management."
As the company was out of production, it failed to meet compliances, and the new management is now trying to meet all the compliances and gradually improve its condition, he added.
With the expanding footprint in the agro- and leather sector business, the company returned to life last year, he said, adding, "We hope in the future, the business will grow significantly as we see huge potential."
DSE findings
The DSE has found several non-compliances regarding orders issued by the BSEC and has sought explanations from the company regarding these issues. According to the letter, the DSE found non-compliances related to not maintaining a separate bank account to hold unpaid dividends and the non-transfer of unclaimed dividends.
To retain unclaimed dividends, any listed company must maintain a separate bank account, as per a directive from the BSEC, and unclaimed dividends should be transferred to the Capital Market Stabilization Fund (CMSF). However, Imam Button did not transfer Tk23.78 lakh of unclaimed dividends to the CMSF.
Every listed firm is required to disclose its dividend distribution policy on its website, publish a year-wise list of unclaimed dividends, and provide an explanation for significant deviations in earnings per share (EPS) and net operating cash flow per share, as per a notification from the BSEC. However, the DSE found that Imam Button Industries failed to comply with this notification, constituting non-compliance.
In requesting an explanation, the DSE also sought necessary supporting documents regarding turnover, cash received from customers, trade receivables, justification of raw material purchases, cash payments to suppliers and trade payables, working capital in progress, and share money deposits.
Imam Button Industries, a sister concern of the Chattogram-based Imam Group, was listed on the bourse in 1996.
In January 2020, Imam Group's owner Mohammad Ali, and his wife Jabunessa Akter fled to the United Arab Emirates after arrest warrants in 55 cases filed by the banks and financial institutions concerned for defaulting on loans.
Mohammad Ali owns 18.11%, and Jabunessa Akter 4.52% stake in Imam Button.
As the owner left the country, it publicly fell into hot water as its operation closed down, and general investors turned to despair.
With a plan for revival, the stock market regulator recast the board of Imam Button Industries in 2022.
ASM Hasib Hasan, who holds over a 2% stake in Imam Button, had sat on the board to run the company.
In August last year, Imam Button Industries — the producer of buttons for ready garment industries — resumed its operation as it expanded its footprint in agro-projects with an investment of Tk1 crore.
The button unit of the pharmaceutical and chemical sector firm remained closed, in December last year, it had entered into a tannery business on its factory premises in Chattogram.
According to available data on DSE's website, from FY19 to FY23, it incurred a loss in a row, and did not pay any dividends to its shareholders'.
It came back to life in August last year and made a profit of Tk13.70 lakh in the first half of the current fiscal year during the July–December period.
Based on the profit, the new management paid a 1% interim cash dividend only for the general shareholders'.
The shareholders got Tk5.07 lakh in interim dividends.
