The securities regulator has restructured the Board of Directors of Ring Shine Textiles Ltd in a bid to rescue the company from its worsening condition.
For this to be attained, the Bangladesh Securities and Exchange Commission (BSEC) has appointed seven independent directors to observe the company's overall condition and make a plan on how to operate it.
The regulator has also nominated Mejbah Uddin, an additional inspector general of police – who is on post-retirement leave – as the new chairman of the company's Board of Directors.
Sources said the BSEC wants to know where the large amount of the money the company had earned from exports went and why it is in trouble.
The commission will receive recommendations from the newly appointed directors on how to reopen the factory, added the sources.
After getting recommendations from the independent directors, the commission will take next steps to overcome the situation, added the sources.
The BSEC appointed Hoda Vasi Chowdhury and Co as a special auditor to review the financial statements, including the export data.
The company exported goods worth Tk982.37 crore in the fiscal year 2018-19 but faced a shortage of working capital within the first nine months of the fiscal year 2019-20.
The company's sales declined and it incurred a loss in the third quarter of the last financial year.
Ring Shine said its regular production has been badly affected by the Covid-19 pandemic.
Due to a shortage of working capital, a decline in orders from foreign buyers and a shortage of imported raw materials, the company's factory has been closed since September last year.
Meanwhile, Ring Shine has not been able to use its initial public offering funds yet.
The company raised Tk150 crore from investors in 2019 to set up denim plants and repay bank loans. It issued each share at the face value of Tk10.
The regulator imposed an embargo on Ring Shine's IPO account in February last year for its non-compliant IPO fund utilisation.
Now the company has also applied to the securities regulator to use 60% of its IPO fund as working capital and the remaining 40% to purchase machinery for denim.
The company's shares have been stuck at the floor price of Tk6.40 on the DSE for the last few months.
The company recommended 1% cash and 1% stock dividends for its shareholders for the fiscal year 2019-20. In the last fiscal year, its earnings per share fell by 83% to Tk0.29.
During the third quarter of last fiscal year, the company's export earnings were Tk80.94 crore, down from Tk257.24 crore in the same period of the previous fiscal year.
Seven independent directors
The seven independent directors are: Mejbah Uddin, Professor Mizanur Rahman of Dhaka University, Professor Sogir Hossain Khandaker of Jagannath University, Professor Md Moniruzzaman of Dhaka University, former managing director of Janata Bank Dr Md Foroz Ali, Independent Director of Power Grid Company Istak Ahmmed Shimul, and Director Operation of Inspectorate Griffith Ltd Abdur Razzak.