BSEC to review Kattali Textile’s utilisation of IPO funds
The Bangladesh Securities and Exchange Commission (BSEC) is going to appoint an auditor to review the initial public offering (IPO) fund utilisation of Kattali Textile Mills Ltd.
In July this year, the commission expressed its concern about the company's utilisation of IPO funds after observing that it did not use the money in the past few months.
Kattali Textile raised Tk34 crore through an IPO in 2018 to purchase capital machinery, repay bank loans, install an electric transformer, and bear IPO expenses.
This year, even after the economy returned to normalcy, the company could only use Tk8 lakh of its IPO fund.
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As of this June, it was able to use a total of Tk12.88 crore or 37.88% of its IPO fund since its stock market listing.
In June 2018, the BSEC approved the IPO application of the company despite a lot of objections from the Dhaka Stock Exchange.
Kattali Textile's IPO was highly controversial and there were complaints from some investors that the company depends only on rental income from its factory building in Chattogram, instead of using the facility for its own operations.
After that, the controversial company tried to mislead the securities regulator in this regard by filing false updates and submitting fake bank statements to back their false claims.
In the aftermath, the BSEC fined its managing director Tk1 crore and other directors, except for the independent and nominated directors, Tk50 lakh each.
The principal activities of the company are to produce and export different types of garment products.
The monthly production capacity of the company is 4,37,250 pieces of garment products.
Kattali Textile reported a 17% increase in profit during the first nine months of fiscal 2021-22.
But its profit fell 31% year-on-year in the third quarter – January to March – of the current fiscal.
According to the company's stock exchange filings, in the July-March period of FY22, its earnings per share (EPS) rose to Tk1.05 from Tk0.90 during the same period a year ago.
The company said its EPS increased because of a huge efficiency at cost of goods sold and operating expenditure.
In the January-March period, its EPS declined to Tk0.20, which was Tk0.29 in the corresponding period in FY21.
In FY21, the company recommended a 10% cash dividend for its shareholders.
As of 30 June this year, sponsors and directors jointly held 30.32% shares, while institutions held 33.46%, foreign investors 0.11%, and public investors 36.11% shares of the company.
The last trading price of each share of the company on the DSE was Tk23.7 on Thursday.
