Insurance claim boosts Dulamia Cotton to make first profit in over a decade

Dulamia Cotton Spinning Mills posted a net profit in the first quarter of the current fiscal year 2024-25, marking its first profit in over a decade, primarily driven by an insurance claim received during the quarter.

Despite the milestone, the company's production remains suspended due to outdated machinery and a persistent liquidity crisis. As a result, Dulamia Cotton has not generated any revenue since FY20.

According to the company's unaudited financial statement for the July-September quarter of FY25, Dulamia Cotton reported a net profit of Tk15.84 lakh, a significant turnaround from the loss of Tk19.86 lakh in the same quarter of the previous year.

At the end of the September quarter, the company's earnings per share (EPS) stood at Tk0.21, compared to a loss of Tk0.26 per share in the corresponding period of the previous year.

A senior official of the company told TBS that during the quarter, the company received Tk37 lakh as an insurance claim stemming from an incident at the factory a few years ago.

"This helped the company achieve a profit in the first quarter; however, the factory remains closed," he added.

The company last reported a profit in FY11 and declared a dividend for the last time in FY2009.

According to market insiders, the company's share price stood at Tk85.6 on 28 October and surged by 44%, reaching Tk123.2 by 4 December.

The company disclosed its quarterly financial results on 3 December on the stock exchange. A brokerage firm official suggested that the unusual price hike raises suspicions of potential insider trading.

Dulamia was established in 1987 and got listed on the DSE in 1989. Abdul Awal Mintoo is the key promoter of the company. It is also an associate organisation of Multimode Group led by Mintoo.

Its factory is located in Feni and it started its journey by installing Romanian spinning machines.

"Dulamia Cotton is unable to upgrade its factory as it is a loan defaulter of BDBL Bank. As a result, the factory remains closed for more than a year," senior official of the company said.

According to its annual report for FY24, BDBL Bank filed a case against Dulamia Cotton in 2013 to recover a defaulted loan of Tk7 crore by selling the company's assets. In response, Dulamia Cotton filed a petition to the High Court to remove its name from the Credit Information Bureau (CIB) report, where it was listed as a loan defaulter.

In 2018, the High Court directed the bank to classify Dulamia Cotton as a company in financial distress. The court ordered the company to pay 30% of the defaulted loan while instructing the bank to waive the remaining amount and take necessary steps to remove the company's name from the CIB report maintained by the Bangladesh Bank.

Following the court's decision, Dulamia Cotton agreed to pay the interest and engaged a firm to assess the updates needed to comply with the order.

A senior company official said, "The company is still unable to resolve the issue due to the bank's lack of cooperation. However, in the interest of shareholders, discussions are ongoing with the bank to settle the matter out of court." 

The bank has a representative on the company's board but does not have any share in it, he said.

At present, Dulamia Cotton is borrowing from other companies and promoters of Multimode Group to meet its expenses.