Regent Textile extending deadline instead of utilising IPO

Regent Textile Mills Ltd raised funds from the stock market in 2015 through an initial public offering (IPO). However, instead of utilising the full fund, the company has extended the initial deadline four times from the securities regulator.

According to sources, the company's management has repeatedly approved the proposals of time extensions showing the expectations of general investors at the Annual General Meeting.

However, the investors are being deprived of real profit because the IPO fund has not been unutilised for the development of the company, and the company's share price has dropped to rock bottom.

In 2015, the company raised Tk125 crore for implementing balancing, modernisation, rehabilitation and expansion (BMRE), and for forming a new ready-made garment (RMG) factory.

The company wanted to complete the BMRE in 12 months and the RMG project in 18 months, but the initial deadline for doing so expired on December 19, 2016.

Regent Textile then extended the deadline for the first time on October 31, 2017, then for the second time on October 31, 2018, the third time on June 30, 2018, and the last time on June 30, 2019.

The company has utilised Tk79.49 crore, which is 64 percent of the total IPO fund within this period.

Anjan Kumar Bhattacharya, the chief financial officer of Regent Textile Mills, said, "The Company is facing numerous challenges because of the present situation in the RMG sector. It was not possible to implement the new RMG project in time for this reason."

"We did not get any suitable factory certified by Accord and Alliance at a fair price. Moreover, the management wants to buy a factory which produces items that are in demand now," he added.

He also claimed that the company's BMRE projects have already been completed.

The Bangladesh Securities and Exchange Commission (BSEC) approved the IPO of Regent Textile Mills Ltd in August 2015. General investors bought each share for Tk25 along with Tk15 premium at that time.

Regent textile's financial performance
Regent Textile Mills Ltd paid five percent stock dividend to its investors in the last fiscal year that ended on June 30, 2019.

In the 2018-19 financial year, the company's net profit was Tk11.79 crore, a reduction of 12.10 percent from that in the previous year.

Also in the 2018-19 financial year the company's earnings per share were Tk0.97, a reduction of 13.39 percent from that of a year earlier.

In the 2018-19 financial year, the net asset value per share was Tk30.21, which was around two percent less than that in the previous year.

Also in the 2018-19 financial year, the company's long-term loan was Tk164.09 crore, an 81.84 percent increase from the previous year.

The current portion of the loan is Tk19.80 crore and non-current portion Tk144.29 crore.

Company's declining share price
The company's share price reached Tk31.40 on August 12, 2018, but it has been decreasing ever since.

On January 15, 2020, its share price on the Dhaka Stock Exchange closed at Tk8.

The company's sponsors and directors jointly own 54.55 percent of total shares, institutional investors own 5.51 percent, and general investors 39.94 percent.

The journey of Regent Textile
Regent Textile Mills Ltd was established in 1994 and started commercial operation in 1999.

It is an export-oriented textile mill producing woven fabrics, and has dyeing, printing, finishing and packaging facilities.

The mill is running with a 12 million meters weaving, and 14 million metres dying and printing capacity per year. It has the capacity to produce around 40,000-50,000 metres of fabrics per day.

The company was listed on the Dhaka Stock Exchange in 2015.

Currently, Regent Textile Mills has a reserve and surplus of Tk165.57 crore and its paid-up capital is Tk127.34 crore.

It has 12.73 crore shares with a face value of Tk10 each.