Four years not enough for Golden Harvest to use right share fund

TBS Illustration

Even after four years of raising nearly Tk90 crore through the issuance of right shares, publicly listed Golden Harvest Agro Industries Limited—one of the leading frozen food and ice cream sellers in the country—failed to deploy the whole fund.

Back in 2019, the company raised the fund by issuing 8.99 crore right shares for business expansion. It offered right shares at a ratio of three right shares for the existing four shares at a face value of Tk10 each.

But till June this year, the company has been able to use Tk70 crore of the fund. The remaining amount has still not been utilised.

Requesting a time extension to use the fund, Golden Harvest has already applied to the Bangladesh Securities and Exchange Commission (BSEC), but the application is pending.

Seeking anonymity, an official at Golden Harvest said the main reason behind the delay was the Covid-19 pandemic, adding that a big portion has already been used though.

Also, the company faced difficulties in opening letters of credit (LCs) for machinery acquisition because of the dollar crisis and other economic uncertainties, he added. 

Now, the company seeks more time to use the rest of the amount for opening an LC for machinery, the official further stated.

Earlier, the BSEC questioned the company for not using its right share fund properly.

According to BSEC sources, the firm had used funds from Braintrain Studio Ltd, which is Golden Harvest's own company, and provided excessive advances for its infrastructure development.

Also, the commission found that the same person holds the post of managing director at both Golden Harvest and Braintrain Studio.

This means, the payment between the companies is known as a related party transaction, which is permissible only upon approval by investors. However, the company made the transaction without following the due process.

Business ups and downs

Before its stock market listing in 2013, the company had shown promising business.

In June 2011, its revenue stood at Tk52.65 crore, and net profit after tax Tk13.23 crore, which was the best year for Golden Harvest's business.

Then in 2018, the company filed for issuing right shares to expand its business, and it secured the BSEC approval in October 2019.

However, after receiving the right share fund, its revenue and net profit have faced declines.

In the 2020-21 and 2021-22 fiscal years, the company's revenue dropped significantly and it incurred huge losses.

As a result, the general investors are deprived of their expected returns from the company.

In the July to September quarter of 2023, the company's revenue stood at Tk28.45 crore, which was Tk24.55 crore in the same period of the previous year.

Its finance cost rose 24% to Tk4.02 crore, and after-tax net profit stood at Tk5 lakh.

In the last fiscal, the company recommended a 1% cash dividend for its shareholders.

As of 31 October 2023, sponsors and directors jointly held 30.42% shares of the company, institutions 36.97%, foreign investors 0.40%, and general investors 32.21%.

Golden Harvest's shares closed at Tk16.50 each at the Dhaka Stock Exchange on Sunday.