C&A Textiles gears up to resume manufacturing after four years

After more than a four-year hiatus, the troubled C&A Textiles has geared up to resume manufacturing as it got all utility connections – gas, electricity and water – restored.

The company had earlier cleared its longstanding dues thanks to Alif Group, which came forward to save the textile mill by investing Tk50 crore as a share money deposit.

Its shares ended 4.67% higher at Tk11.20 each on the Dhaka Stock Exchange (DSE) on Monday as investors were optimistic about the factory reopening.

Earlier on 15 February, the C&A Textiles board decided to issue new shares against the share money deposit of Tk50 crore to Alif Group.

To get approval from its shareholders, the listed textile manufacturer will arrange an extraordinary general meeting (EGM) on 30 March.

The board also appointed Azimul Islam as managing director of C&A Textile. Azimul is also the managing director of Alif Group, which is engaged in different businesses including textiles.

However, sources in the Bangladesh Securities and Exchange Commission (BSEC) said Alif Group wants C&A Textiles shares at a discount on the face value of Tk10. The group has offered to buy each share at a price of Tk5.

A BSEC official said they are taking a risk to restart the closed company. Therefore, in the interest of investors, the commission has in principle agreed to approve the proposal. The commission will not object if shareholders approve the proposal in the EGM.

In March last year, the market regulator restructured the C&A Textile board and nominated seven individuals as independent directors for the company.

The company will use the fund to deposit the required down payment to its lender, paving the way for rescheduling its total outstanding loans.

The board has also approved the existing shareholding directors of C&A Textiles to enter into a share sale or transfer agreement with the Alif Group.

In a media briefing last year, arranged by the Alif Group to disclose details on the acquisition, Azimul Islam said, "Previously we have bought CMC Kamal Textile and Sajeeb Industries which are currently doing rather well under Alif Group. Likewise, we want to take C&A Textiles forward."

Alif Group started its business in the country in 1967 through oil trading. From there, its business has expanded to various sectors such as readymade garments, textiles, yarn, financial institutions, the housing sector, electronic media, education and technology. The group earns about Tk2,500 crore a year.

In its presentation on C&A Textiles, the company said its factory in the Bangladesh Small and Cottage Industries Corporation area in Chattogram closed down in 2016. By 2021, its loans amounted to Tk250 crore plus around Tk22 crore in interests and other debts.

Earlier in 2020, C&A Textiles' managing director Rukshana Morshed was arrested in Chattogram in a case filed over a defaulted loan.

Police officials said, C&A Textiles borrowed around Tk20 crore from Union Capital in 2013 but did not repay it on time. Union Capital filed a case in 2019 with the Artha Rin Adalat, a special court set up for dealing with loan-related cases. A warrant was subsequently issued against Rukshana Morshed.

In 2015, the Chattogram-based C&A Textiles got listed on the Dhaka Stock Exchange by floating 4.5 crore ordinary shares at a face value of Tk10. It raised Tk45 crore through an initial public offering to purchase machinery, construct buildings and repay bank loans.

The market regulator had also found that C&A Textiles' managing director Rukshana Morshed, director Sharmin Akther Lovely and Bangladesh Shoes Industries Limited had together sold around 1.22 crore shares of the company without prior declaration, earning around Tk12 crore from these sales.

As a penalty for violating several rules, the regulator imposed a Tk19 crore fine on the company's directors, further banning them from assuming the roles of directors at any other listed company.