Due to increased financing costs, the net profit of Tosrifa Industries Ltd dropped gradually since it was listed in the stock market in 2015.
The company's net profit was spent to pay deferred tax and meet financing costs. On the other hand, sale turnover, cost of goods sold and gross profit increased in last three years, according to the annual report of the company.
In the last fiscal year, Tosrifa Industries' net profit decreased by 90.55 percent.
Meanwhile, the company's financing cost increased by 223.83 percent from the previous year. Besides, the company paid deferred tax worth Tk4.83 crore in the last fiscal year.
On condition of anonymity, an official of the company told The Business Standard, "Tosrifa Industries planned to set up a dyeing unit – with a capacity of producing 15 tonnes per day – using the initial public offering proceeds in 2015."
"Later, the company management altered the decision and planned to set up a larger dyeing unit with a capacity of producing 28 tonnes a day considering the future production strategies."
"Consequently, the project cost has increased from Tk156 crore to Tk220 crore. The additional amount comes from bank loans," said the official.
"We have paid deferred tax of Tk4.83 crore last year. For these reasons, company's net profit is dropping. But the company's management has taken some initiative to overcome this situation," he added.
Financial performance of Tosrifa
After the first six months of the current fiscal year, Tosrifa's net loss was Tk6.28 crore. But the net profit was Tk1.62 crore in the same period of last year.
At the same time, the loss in earnings per share in the first six months of the current fiscal was Tk0.95.
The company's net profit was Tk0.78 crore in fiscal year 2018-19, which is 90.55 percent lower than its net profit of Tk7.99 crore in fiscal year 2017-18.
During the fiscal year 2018-19, Tosrifa's earning per share was Tk0.12 and its net asset value per share was Tk31.68.
The company's bank loan jumped to Tk170 crore in fiscal year 2018-19, while it was Tk124 crore in the previous fiscal.
The company recommended 1 percent cash dividend for fiscal year 2018-19 for its shareholders, which was 10 percent for the previous year.
The company's share prices also have declined gradually over the years.
The company's sponsors and directors jointly own 49.72 percent shares, while institutional investors own 22.89 percent, and general investors own 27.39 percent shares.
Tosrifa Industries Ltd, established in August 2002, is a 100 percent export oriented ready-made knit garments manufacturing company.
It procures raw cotton yarn from various local and foreign sources, and converts the yarn into grey fabric.
The company commenced its commercial operation in 2005.