Restructured board to meet BSEC on restarting Ring Shine factory

The restructured board of Ring Shine Textile Limited, which shut down its factory a year after raising capital on the stock market, has prepared a roadmap to bring the company back to production.

The board will meet with the Bangladesh Securities and Exchange Commission (BSEC) next week to present the plan.

It will also seek the regulator's cooperation in resolving legal obligations and issues with the National Board of Revenue (NBR) regarding the company's operations.

According to board sources, the garment manufacturer currently has buyers but is unable to go into production due to a shortage of raw materials and working capital.

The factory is in production on a limited scale but is not capable of meeting its operating costs now, they added.

Ring Shine has loans of around Tk350 crore from several banks but the debt has not yet turned defaulted. The reconstituted board held a meeting with banks on Sunday.

According to the meeting sources, initially banks showed a strict attitude towards the collection of loans and their non-rescheduling, but later they became flexible.

However, it has not been decided yet whether loans will be rescheduled.

The board is also trying to get a loan to meet the working capital shortfall.

Istak Ahmed Shimul, an independent director of the reconstructed board, told The Business Standard, "There is some progress in starting the factory. In a meeting with the commission next week, the progress will be upheld and cooperation will be sought on some issues."

"Meetings have been held with banks and efforts are being made to meet the financial shortage from various sources. I hope the company will go into production as soon as possible," he added.

EPZ rent and Titas Gas bills for several months – for the factory located in the Dhaka Export Processing Zone (DEPZ) in Gazipur – are also due.

Titas authorities have cut off two of the company's three gas lines for not paying the bills. Now the board of the company is insisting on starting the factory by paying a certain amount of money even though it cannot pay all its bills.

In 2019, the company raised Tk150 crore through an IPO to expand its business.

According to the IPO proceeding, Ring Shine was supposed to use Tk96.40 crore for the acquisition of machinery and equipment and Tk50 crore for loan repayment.

As of August 2020, the company used the funds for loan repayment and the remainder is unutilised.

The new board will seek the commission's approval to use the unused IPO fund to meet the working capital shortfall to get the factory operational.

The board thinks the company will be able to go into production faster if it gets the funding.

The company is also facing difficulties in opening letters of credit (LCs) on raw material imports due to tax issues.

Now the company cannot open LCs if it wants to, so the board will also seek the help of the commission in that regard.