Special auditor appointed for Esquire Knit

The securities regulator has appointed a special auditor to investigate the use of initial public offering (IPO) proceeds of Esquire Knit Composite Ltd.

Howladar Yunus & Co, Chartered Accountants will complete the special audit within 30 days.

Earlier, Esquire Knit started using Tk100.42 crore from its IPO fund of Tk150 crore through Pinnacle Construction Management Ltd without disclosing it to the regulator.

Pinnacle, a private company, was set up in August 2018. The company's Chairman Ayesha Habib and Managing Director Tamanna Habib are daughters of Esquire Knit's Managing Director Md Ehsanul Habib.

The Bangladesh Securities and Exchange Commission (BSEC) fixed the audit firm's fee at Tk1.40 lakh as per quotation. The firm will receive the payment after submitting the special audit report on time. 

The BSEC also asked Ehsanul Habib to cooperate with the auditor. 

BSEC Executive Director and Spokesman Md Saifur Rahman confirmed that a letter was issued for appointing the special auditor.

Malek Siddiqui Wali Chartered Accountants Firm has been regularly auditing Esquire Knit's IPO projects. 

Md Mizanur Rahman, Esquire Knit's IPO project official, however, told The Business Standard the company's management did not receive any formal letter from the securities regulator, but it heard about the letter informally.

Any listed company's transaction with its related party must be disclosed, as per the regulatory condition, which Esquire Knit failed to follow.

Also, the company put its investors at risk by using the IPO fund without disclosing Pinnacle's name, said the BSEC sources.

They also said Esquire Knit violated the terms of an arms-length transaction as its neutrality is dubious here.

But the company claimed it is using the IPO proceeds following the international accounting standards.

Esquire Knit got IPO approval on September 27, 2018, to raise Tk150 crore from the stock market. 

The company received IPO proceeds in March 2019. It used Tk50.32 crore of its committed expenditures as of January 31, 2020.

Since the start of its construction work in August 2018, the company spent Tk43.88 crore till January 31, 2019, through Pinnacle.