Kattali Textile declares low dividend as share price plummets
Kattali Textile was a highly controversial company during the M Khairul Hossain Commission (2011-2020). The commission had approved its IPO, despite concerns raised by market analysts and media reports. However, within six years, the company incurred losses and failed to meet investor expectations
Financial highlights end of June 2024
- Net loss of Tk9.77 crore
- Board recommends only a 0.25% cash dividend
- Per-share loss at Tk0.84
- Net asset value per share at Tk15.02
- Share price closed at Tk11.60
After two consecutive years of no payouts, Kattali Textile has recommended a cash dividend of only 0.25% for the fiscal year ending June 2024.
The recommendation came from a board meeting on Saturday and is subject to approval in an annual general meeting (AGM) expected to be held soon.
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Kattali Textile was a highly controversial company during the M Khairul Hossain Commission (2011-2020). The commission had approved its initial public offering (IPO), despite concerns raised by market analysts and media reports. However, within six years, the company incurred losses and failed to meet investor expectations.
On Sunday (29 September), the company's share price dropped by 16.55% to Tk11.60 on the Dhaka Stock Exchange.
According to the disclosure of the stock exchanges, its per-share loss stood at Tk0.84, which was the loss of Tk0.32 in the previous year. Its net asset value per share stood at Tk15.02 at the end of June 2024.
Market insiders suggest that the irregularities in the IPO approval process under the last two commissions have eroded investor confidence, severely affecting both the primary and secondary markets. Investors have received only a 0.25% cash dividend in the previous three years, which they find unacceptable.
In 2018, despite being flagged by the DSE for irregularities, the company was allowed to raise Tk34 crore through IPO to purchase capital machinery, repay bank loans, and install an electric transformer, but much of the fund remains unused six years later.
According to a DSE report, Kattali Textile has been unable to provide adequate documentation to back up its financial claims. For instance, in its 2016-17 prospectus, the company reported sales of Tk59.53 crore and costs of Tk45.93 crore.
However, when the DSE requested supporting documents such as bank statements, VAT and tax records, and Letters of Credit (LC), the company failed to produce sufficient evidence for these transactions, as highlighted in a DSE report.
Due to these issues, the DSE's Regulatory Affairs Committee raised further concerns and concluded that Kattali Textile was not eligible for IPO approval, citing the company's inability to provide valid proof of its sales, costs, and financial transactions.
In January this year, the Bangladesh Securities and Exchange Commission slapped a Tk1 crore fine on each Kattali Textile director, except independent ones, this time for not cooperating with the special auditor appointed by the commission.
In 2020, the company's managing director was also fined Tk1 crore, and other directors, except the independent and nominated ones, Tk50 lakh each for filing false updates and submitting fake bank statements to back their false claims regarding its business and financials.
The company failed to utilise its IPO fund properly. Moreover, it did not cooperate with the special auditor in this regard.
