Sonali Paper seeks exemption from rule to issue right shares

Sonali Paper and Board Mills, a concern of Younus Group of Industries, has applied to the  Bangladesh Securities and Exchange Commission (BSEC) seeking relaxation of a rule relating to issuing right shares in order to comply with the regulatory obligation to maintain a minimum paid-up capital of Tk30 crore.

As per the guidelines, a company cannot issue right shares within three years of listing on the main board of the stock exchanges but Sonali Paper got relisted on the bourses only one year ago.

Currently, the paid-up capital of the company is Tk21.96 crore.

The company has also applied to the commission to issue the right share at a ratio of 1R:2 (1 right share against 2 existing shares held) at Tk10 per right share.

The Dhaka Stock Exchange (DSE) launched its over-the-counter (OTC) market in October 2009 with 51 poorly performing listed companies, including Sonali Paper and Board Mills.  

In July 2020, the company relisted on the main board of the stock exchanges taking exemption from the listing regulations.

The share price of the company witnessed an unusual hike of around 337% over the last six months. The company has focused on the capital market instead of the manufacturing business.

In the July-September period this year, its operating income increased by 23% when compared to the same period of the previous year.

The company has invested Tk55.55 crore in the capital market but its inventories are worth only Tk22.68 crore.

A big portion of the revenue has been generated through capital market investment.

The company revalued its asset by SH Khan & Co Chartered Accountants in 2016. The 1150 decimals of land brought by the company at Tarabo, Rupganj, Narayanganj for Tk1.13 crore in several years were revalued at Tk517.50 crore, each decimal valued at Tk45 lakh.

Company Secretary Rashedul Hossain Imon said, "We want to comply with the regulatory obligation to have Tk30 crore paid-up capital through issuing right shares."

The company decided to invest in the capital market amid the pandemic when the business slowed down, he said.

Its principal activities are manufacturing and marketing of media, liner, simplex, and duplex paperboards, and quality papers such as newsprint.

Earlier in the 2020-21 fiscal year, Sonali Paper and Board Mills posted a 235% year-on-year growth in profit based on other income while its revenue growth was 0.42%.

That year, its annual revenue stood at Tk141.46 crore and profit jumped to Tk8.94 crore, highest in eight years.

As profit rose significantly, the company recommended the highest 40% dividends in the last decade for its shareholders; of which 20% was cash and 20% stocks.

Sonali Paper & Board Mills was incorporated in 1977 and got listed on the Dhaka Stock Exchange in 1985 and on the Chittagong Stock Exchange in 1996.

Younus Group took over the company after buying all its shares in 2006.

After 17 years of acquiring, the new management has applied for bringing the company back to the mainboard in 2020.

The BSEC approved the application and it was re-listed on the stock exchange.