Why Libra Infusion shares climb to nine-month high 

Infographic: TBS

Libra Infusions Limited's stock price, with only 22.52 lakh shares, surged by 58% to Tk1,063.80 in just 13 days since August 25, hitting a nine-month high on the Dhaka Stock Exchange (DSE) on Thursday.

Market insiders say the country's largest saline producer, Libra Infusions, currently has a paid-up capital of only Tk2.25 crore, while the regulatory requirement is Tk30 crore. The Bangladesh Securities and Exchange Commission (BSEC) had previously instructed the company to raise its paid-up capital to meet the regulatory standard last year.

Additionally, the company is set to launch the country's largest dialysis fluid production plant, which could significantly enhance its profitability. Market insiders have also said that the company might take steps to increase its paid-up capital, with an announcement expected in the coming days.

A group of investors on social media is buzzing with speculation that the company will soon announce a significant development related to its earlier plan to raise its paid-up capital.

On 22 October 2023, Libra Infusions declared the highest-ever dividends for fiscal year 2020-21, including a 30% cash dividend and a 50% stock dividend. The stock dividend was intended to boost the paid-up capital. In November of that year, the company announced the launch of the dialysis fluid plant.

Prior to the announcement, the company's share price had surged by 109%, reaching a record high of Tk1,690 between 24 September and 26 October of the last year.

Meanwhile, investors are left in the dark about the company's financial health, as it has not disclosed any financial results since FY21.

In FY2021, Libra Infusions posted a net profit of Tk0.02 crore, recovering from a loss of Tk1.16 crore in the previous fiscal year.

Roushon Alam, managing director of Libra Infusions, could not be reached by phone as his number was found switched off.

Company Secretary ANM Mainuddin told The Business Standard that the company is seeking guidance from the BSEC on how to comply with regulatory requirements for increasing its paid-up capital. However, the commission has not yet provided any recommendations.

He further explained that raising the paid-up capital to Tk30 crore within a short timeframe is challenging, and the company needs more time to meet the requirements.

Regarding the delay in publishing the financial report, Mainuddin noted that the annual general meeting was not held on schedule and therefore, the report's release had to be postponed. The company obtained High Court approval to conduct the overdue meeting, but recent changes in top management have complicated the retrieval of necessary documents.

He also mentioned that the new plant's launch is pending approval from the Drug Administration before commercial operations can begin.

The fall of Libra Infusions

The manufacturer of intravenous fluids, widely known as IV Solution, started business in 1985. At the time, Libra Infusion's factory was built in Mirpur with the technical assistance of a Switzerland-based company.

In 2009, the company undertook a project to build a second unit at its Mirpur factory. For this, it took a loan of Tk84 crore from Al-Arafah Islami Bank. However, the company began to collapse following a standoff over the repayment of the loan.

A former Libra Infusion official, speaking on condition of anonymity, said the bank had invested in Unit 2 at the time. But, the project could not take off on time as the lender did not release the funds on time. The company had to count losses.

And since the bank had invested here and the losses have been due to the lender, Libra's managing director did not repay the loan instalments. The company filed a case against the bank seeking compensation, he added.

Later in 2015, Al-Arafah Islami Bank filed a lawsuit against Roushon Alam on charges of threatening bank officials. The lender also filed 13 cases for bounced cheques and another for the recovery of defaulted loans.

In addition, in 2019, the bank issued a notice to sell Libra Infusion's assets at auction to recover defaulted loans. However, due to the ban imposed by the High Court, it did not see the light of day.

In such a tug-of-war between the two sides, Libra Infusion suffered a working capital shortfall. Therefore, its production got affected, said the former official of the company.

Earlier in 2017, BSEC had fined the directors of the company Tk12 lakh for non-compliance with financial statements.