Libra Infusions investors left in the dark for years

Libra Infusions Limited, which once paid its investors a good dividend, has now turned into a risky stock. The pharmaceuticals company has not released its financial data for the past three years, thus keeping the investors in the dark.

The shares of the small-cap company with a paid-up capital of only Tk1.5 crore is currently traded at over Tk900 each on the Dhaka Stock Exchange (DSE).  

According to its earnings per share (EPS) of fiscal 2018-19, its price-earnings ratio was 861.52% at Monday's closing, which is more than 21 times higher than the upper threshold of 40% for a risk-free stock.

A senior analyst of an asset management company said due to low paid-up capital, the company's share price can be easily increased by manipulation. So its share price is manipulated two to three times a year.

He said in December-January, its share price rose by 51% to Tk1,130 each.

The Bangladesh Securities and Exchange Commission (BSEC) recently wrote to the company seeking reasons for not releasing its financial statements for the last few years.

A BSEC senior official, seeking anonymity, said the commission is trying to contact the company's board members but has not yet reached any of its officials. If the letter is not answered, a special audit of the company will be conducted.

In fiscal 2016-17, the company paid a 30% cash dividend. Dividends have been steadily declining since then. In fiscal 2018-19, it paid only a 5% cash dividend for the last time and has not released any report after that.

The fall of Libra Infusions

The manufacturer of intravenous fluids, widely known as IV Solution, started business in 1985. At the time, Libra Infusion's factory was built in Mirpur with the technical assistance of a Switzerland-based company.

In 2009, the company undertook a project to build a second unit at its Mirpur factory. For this, it took a loan of Tk84 crore from Al-Arafah Islami Bank. But the company began to collapse following a standoff over the repayment of the loan.

A former Libra Infusion official, speaking on condition of anonymity, said the bank had invested in Unit 2 at the time. But the project could not take off on time as the lender did not release the fund in a timely manner. The company had to count losses.

And since the bank had invested here and the losses have been due to the lender, Libra's managing director did not repay the loan instalments. The company filed a case against the bank seeking compensation, he added.

Later in 2015, Al-Arafah Islami Bank filed a lawsuit against Dr Roushon Alam, managing director of Libra Infusions, on charges of threatening bank officials. The lender also filed 13 cases for bounced cheques and another for the recovery of defaulted loans.

Dr Roushon Alam was arrested in connection with the cases and released on bail later.

In addition, in 2019, the bank issued a notice to sell Libra Infusion's assets at auction to recover defaulted loans. However, due to the ban imposed by the High Court, it did not see the light of day.

In such a tug-of-war between the two sides, Libra Infusion suffered a working capital shortfall. Therefore, its production got affected, said the former official of the company.

He said despite being among the first companies in the country, at present its business is lagging far behind the others. Moreover, there is a lack of good governance in the company behind such tensions with the bank.

The correspondents called Dr Roushon Alam but found his mobile phone switched off while an official of Al-Arafah Islami Bank declined to comment on the matter.

Earlier in 2017, BSEC had fined the directors of the company Tk12 lakh for non-compliance with financial statements.

Current status

On a working day recently, a reporter from The Business Standard visited the company's factory in Mirpur. The gate of the factory was found closed from noon to afternoon.

No vehicles were seen in front or inside the gate.

A security guard at the factory gate said it has two units and both are in production. Transport vehicles arrive in the morning and at night.

Its human resources department did not allow the correspondents to go inside the factory but agreed to talk on the intercom.

About financial reports and stalemate with the bank, an HR manager said they had sought the High Court's permission for holding annual general meetings and publishing financial reports.

And the problem with the bank has been resolved, he said, declining to comment further.