Non-compliance with auditor gets Kattali Textile directors fined again
Earlier, the directors were fined for submitting fake bank statements
The securities regulator has again 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.
Back in 2020, the company's managing director was 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 Bangladesh Securities and Exchange Commission (BSEC) issued a warning letter in this regard.
Seeking anonymity, a BSEC official told TBS that in March 2023, the commission appointed Islam Jahid and Company Chartered Accountants at Kattali Textile as a special auditor to review the company's financial statements for the 2019-20, 2020-21, and 2021-22 fiscal years.
Keep updated, follow The Business Standard's Google news channel
The auditor will also check how much of the company's initial public offering (IPO) fund, which was raised six years ago, has been utilised.
The company failed to utilise its IPO fund properly. Moreover, it did not cooperate with the special auditor in this regard, he added.
However, Kattali Textile's Company Secretary Fazlul Hoque told TBS that the company is unaware about the new fines and it also did not receive any letter about this.
In April last year, the company informed the BSEC that its server was damaged and that the official responsible for cooperating with the auditor had been hospitalised for weeks.
As a result, the Chattogram-based garment exporter sought a 120-day extension for the special audit completion.
It also informed the BSEC that its purchase orders decreased significantly due to an adverse business environment.
In October last year, the BSEC formed a three-member committee to find out why Kattali Textile failed to utilise its IPO fund.
In 2018, the company raised Tk34 crore through IPO to purchase capital machinery, repay bank loans, and install an electric transformer. Even after six years the fund remains unused.
Meanwhile, investors found its business to have started declining in the January-March quarter of 2022. More worrying for them was that they never had any financial update since then.
The regulator also started receiving investors' complaints that the company did not disburse the announced dividends among its shareholders.
The commission appointed a special auditor to find out the reasons behind Kattali Textile's repeated failure to use the IPO funds, disburse dividends for FY21, and publish financial statements for more than a year.
In June 2018, the BSEC approved the company's IPO application despite lots of objections from the Dhaka Stock Exchange (DSE).
According to the company's stock exchange filings, in the July-March period of FY22, its earnings per share (EPS) rose to Tk1.05 from Tk0.90 during the same period a year ago.
In the January-March period, its EPS declined to Tk0.20, which was Tk0.29 in the corresponding period in FY21. The company recommended a 10% cash dividend for its shareholders in FY22.
The last trading price of each share of the company on the DSE was Tk23.7 on Sunday.
