Tamijuddin Textile to invest Tk50cr for expansion 

After a 584% increase in its share price in June-July, Tamijuddin Textile Mills – a cotton and polyester yarn maker – has declared it will invest Tk50 crore for balancing, modernisation, rehabilitation and expansion (BMRE).

When its share price was skyrocketing in July based on rumors regarding fresh investments, the Dhaka Stock Exchange (DSE) sent several queries to the company to know the reason behind the unusual hike in its share price, but the company said there was no undisclosed price sensitive information.

In a disclosure published on the stock exchanges' websites on Wednesday, the company said its board decided to invest for BMRE to enhance profitability, yarn quality, production capacity and efficiency.

A top broker firm official said the decisions regarding new investment are not made suddenly as it is a matter of planning. But since the company was re-listed, there have been rumors of new investments in it and this rumor seems to be correct. There is a possibility of insider trading here.

Meanwhile, a senior official of the Bangladesh Securities and Exchange Commission (BSEC) said, "We are keeping an eye on the recent activities of the company. The reasons for the increase in share price are also being investigated."

Earlier, in 2015, the BSEC fined the company's directors and executives for artificially showing excessive profits in its financial statements.

Bidyut Kumar Roy, company secretary of Tamijuddin Textile Mills, told the Business Standard, "The decision regarding investment was taken at the board meeting on Tuesday. It had nothing to do with the rise in share prices earlier."

The company was listed on the stock exchange in 1992. It was traded on the over-the-counter (OTC) platform for a long time due to weak financial performance but it was re-listed again in 2021.

When its first trading commenced on the stock exchanges after it returned to the main board on 13 June, its share price was Tk13.2 each, but it rose to Tk87.2 each on 25 August.

Why Tk50 crore investment for BMRE

Tamijuddin Textile Mills, one of the oldest textile mills in the country, has celebrated 50 years of incorporation in 2020 as it was registered in 1971.

After the liberation war, it was nationalised in 1973 and then again de-nationalised in 1985.

In the 1987-88 period, it came into commercial production with the Bangladesh Shilpa Bank's financing. At that time it had 14,135 spindles.

In 1990-92, the company had done the first phase BMRE and completed the second phase BMRE in 2004-05. 

It completed the third phase BMRE in 2014-2020, and increased the number of its spindles to 70,000 and its average production per day was around 36,000 kilograms.

After a one year of the third phase BMRE, the company again decided to invest in BMRE for the fourth phase. 

The company will invest Tk50 crore to enhance the production capacity of oldest machineries and efficiency. The expansion will be financed by its own equity and bank loan. Most of the machinery will be added or replaced gradually with state-of-the art spinning production equipment from China, Japan and European countries.

Revenue grows slightly but profit jumps

Amid the pandemic, Tamijuddin Textile Mills registered 1% growth in revenue but it saw 21% growth in profit in the first nine months of FY21.

In the July-March period of FY21, its revenue stood at Tk185.72 crore and profit at Tk2.94 crore, which were Tk183.84 crore and Tk2.43 crore respectively in the same time of the previous year.

The company's earnings per share stood at Tk0.98 during the July-March period of FY21, which was Tk0.81 in the same period of the previous fiscal year.

In the third quarter (January-March) of FY21, the company saw 173% increase in net profit compared to the same time of the previous year.

During the period, its revenue grows to Tk61.90 crore from Tk61.28cr and profit to Tk89.26 lakh from Tk32.67 lakh in the same time of the previous year.