Sonali Bank auctions Apex Weaving's assets to recover Tk390cr loan

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Sonali Bank has called an auction to sell the assets of Apex Weaving and Finishing Mills to recover the outstanding loans of Tk390 crore from the textile maker, following an order of the money loan court.

The auction notice was published in daily newspapers last week, with an invitation to interested buyers to submit the price quotation within 10 June.

According to the notice, the state-run bank will sell the company's 11.43 acres of land, along with the factory building and machinery, located in Gazipur.

Serajul Islam, company secretary of Apex Weaving, told The Business Standard that they had not received the auction notice yet. "Once we receive it, the management will decide on the course of action."

According to sources at Sonali Bank, Apex Weaving engaged in the textile business securing loans from the bank in 1995. The loan amount surged in several phases as the bank created forced loans due to non-payment for LC settlement.

In 2019, Sonali Bank rescheduled the loans and asked Apex Weaving to pay Tk225 crore. However, the company failed to make any instalments afterwards, causing the loan amount to increase to Tk390 crore, including interest.

According to the company's financial statement, its liabilities surpassed its assets, resulting in a negative net asset value per share of Tk15.92 as of June last year.

Apex Weaving shares are traded on the SME platform of the Dhaka Stock Exchange (DSE). It was listed on the DSE main board in 1995 and delisted in 2010.

Former minister Iqbal Hassan Mahmood Tuku, who was previously the managing director of the company, now serves as a director. Harun-Ar-Rashid, a former lawmaker, and his wife, Anar Koli Rashid, currently serve as the managing director and chairman of the company, respectively.

At present, its paid-up capital is Tk38.85 crore and the market capitalisation is around Tk55 crore.

As of 31 December 2023, sponsors and directors jointly held 30.12%, institutions 14.94%, foreign investors 0.01%, and general investors 54.93% of the company shares.

Auditor opinion

In the financial report for FY23, the auditor of the company raised significant doubts about Apex Weaving's ability to continue, indicating that the company's financial position is so poor that it may not survive in the future.

The auditor said the company has been incurring losses since 2009, with its accumulated loss reaching Tk152 crore as of 30 June 2023.

Besides, its inability to access banking facilities for working capital, coupled with defaults in loan payments, indicated a significant uncertainty.

Meanwhile, the company has reported that no revenue was earned during the last fiscal year.

However, the auditor observed that the company had incurred charges for electricity and water bills.

Furthermore, the auditor stated that upon inquiry with management, it was revealed that the existing factory premises were being utilised by a related party, yet no contract regarding this arrangement was made available. 

The auditor also noted that there was no further clarification provided as to why there were no sales, purchases, or production activities, despite the consumption of electricity and water services.

Additionally, no price-sensitive information was provided regarding the factory's non-operation or the absence of reported sales throughout the year.

Apex Weaving reported that it has property, plant and equipment worth Tk77.63 crore but could not provide any documents to the auditor. 

The company has recorded an amount of Tk0.73 crore as unclaimed dividend. The auditor noted that the company did not maintain a separate bank account for this purpose. 

However, Apex Weaving asserted that they disbursed Tk1.65 crore as dividends to shareholders, yet they failed to provide any documentation regarding this payment.