Salvo Organic MD to buy 4.40 lakh more shares to meet minimum shareholding rule

Salvo Organic Industries Managing Director Salam Obaidul Karim is continuing to increase his stake in the company as part of an effort to meet the minimum shareholding requirement set by the Bangladesh Securities and Exchange Commission (BSEC), after the regulator rejected the firm's repeated attempts to raise capital through private placement.

On Sunday, Salam announced through the Dhaka Stock Exchange (DSE) that he plans to purchase an additional 4.40 lakh shares from the public market at the prevailing market price within the next 30 days.

This follows his earlier acquisition in November, when he bought 18.96 lakh shares – equivalent to 2.91% of the company's paid-up capital.

The move comes after Salvo Organic, formerly known as Salvo Chemicals, failed to meet the BSEC's mandatory requirement for sponsors and directors to jointly hold at least 30% of the company's shares, as stipulated in the May 2019 directive.

According to the auditors' report, the company's current sponsor-director holding stands at 25.18%, leaving a shortfall that the management has been attempting to address for over a year.

To comply with the rule, the company convened an Extraordinary General Meeting (EGM) on 18 July 2024, where shareholders approved a plan to raise Tk6.40 crore in paid-up capital through the issuance of 64 lakh ordinary shares at Tk16 each – including a Tk6 premium – to be allotted to existing sponsors and directors. 

However, the BSEC rejected the proposal on 7 October 2024. When Salvo reapplied in December, the regulator again denied approval on 20 April this year.

The company had planned to use the proceeds to strengthen its working capital by Tk4.20 crore and finance imported machinery worth Tk2.20 crore, aiming to support continuous production and operational efficiency. 

With the private placement route now closed, the responsibility has fallen on individual sponsors – primarily the managing director – to raise their collective holding to the required level through direct market purchases, according to the market analysts.

Salvo Organic is a prominent player in Bangladesh's bulk chemical industry, specialising in sulphuric acid and battery-grade water. The company says it has grown into one of the country's leading sulphuric acid producers.

In the financial year that ended 30 June 2025, Salvo paid a 2.5% cash dividend. Its earnings per share (EPS) fell sharply to Tk0.58 from Tk1.66 in FY24, reflecting a 65% decline. 

The company's net asset value (NAV) per share rose slightly to Tk16.57 from Tk16.24 a year earlier, while its net operating cash flow per share (NOCFPS) improved to Tk5.68 from Tk5.43.

In the first quarter of FY26, the company posted an EPS of Tk0.14, marginally higher than Tk0.13 during the same period last year. Salvo Organic's share price closed 0.33% higher at Tk30 on Sunday.