BSEC concerned about Kattali Textile’s IPO utilisation

The Bangladesh Securities and Exchange Commission (BSEC) is concerned about the utilisation of the initial public offering (IPO) proceeds of Kattali Textile Mills Ltd notwithstanding that it slapped a big fine on the company's directors a year ago.

The stock market regulator observed that the manufacturer and exporter of garments products did not use its IPO fund in the last few months.  

Even though the economy has returned to normalcy, the company could use Tk8 lakh only this year.

As of June 2022, the company was able to use Tk12.88 crore or 37.88% of its IPO fund, while it paid over Tk5 crore in interest.

In June 2018, the BSEC approved the IPO application of the company despite a lot of objections from the Dhaka Stock Exchange.

Kattali Textile IPO was highly controversial and there were complaints from some investors that the company depends only on rental income from its factory building in Chattogram, instead of using the facility for its own operations.

After that, the controversial company tried to mislead the securities regulator in this regard by filing false updates and submitting fake bank statements to back their false claims.

In the aftermath, the regulator fined its managing director of Tk1 crore and other directors except for the independent and nominated directors Tk50 lakh each.

The principal activities of the company are to produce and export different types of garment products and provide for its international buyers.

The production capacity of the company is 4,37,250 pieces of garment products monthly.

Kattali Textile Limited reported a 17% increase in profit during the first nine months of fiscal 2021-22.

But, its profit fell 31% year-on-year in the third quarter – January-March this year.

According to the company's stock exchange filings, in the July-March period of FY22, its earnings per share (EPS) rose to Tk1.05, up from Tk0.90 during the same period a year ago.

The company said its EPS increased thanks to a huge efficiency at cost of goods sold and operating expenditure.

In the January-March period, its EPS declined to Tk0.20, which was Tk0.29 in the corresponding period in FY21.

In FY 21, the company recommended a 10% cash dividend for its shareholders.

As of 30 June this year, sponsors and directors jointly held 30.32% shares, while institutions held 33.46%, foreign investors held 0.11%, and public investors held 36.11% shares of the company.

The last trading price of the company on the Dhaka Stock Exchange was Tk23.10 per share on Thursday.