The management of Ring Shine Textiles Ltd has decided to close its factory for a month till October 25 owing to a decline in business orders because of the Covid-19 pandemic.
The factory will be reopened as usual from October 26, 2020, said a disclosure posted on the Dhaka Stock Exchange (DSE) website on Sunday.
A senior officer of Ring Shine told The Business Standard, "The company has decided to close the factory for a month because of the decline in orders from foreign buyers and shortage of imported raw materials due to the worldwide impact of the prevailing Covid-19 pandemic."
The company's share price slipped 8.97% to Tk7.10 per share at the DSE on Sunday, following the announcement.
Ring Shine was irregular in the utilisation of its initial public offering (IPO) fund and had a shortage of working capital. Moreover, there were also rumours of its owner leaving the company.
A senior officer of a brokerage firm said, "From the beginning, the company has created various controversies. So, we have several doubts about its future."
The company raised a fund of Tk150 crore from investors to set up denim plants and repay bank loans.
But it used only Tk22 crore to pay off its loans taken out from Premier Bank. Ring Shine also took out a loan from Woori Bank, but is yet to repay the amount.
Consequently, the Dhaka branch of Woori Bank has requested the Bangladesh Securities and Exchange Commission (BSEC) to intervene and ensure the recovery of the loan.
Meanwhile, the Taiwanese sponsors, directors and other high-ranking officials of Ring Shine flew home to celebrate the Chinese New Year without prior notice. Investors think that the owner has left the company.
Therefore, considering such scenarios of the company, the securities regulator froze the IPO account of Ring Shine in February this year. However, the regulator withdrew this decision in September.
In the first nine months of last fiscal year, the company's net profit was Tk29.41 crore, which was Tk42.05 crore in the first nine months of the previous year.
But in the third quarter, Ring Shine suffered a loss of Tk7.92 crore. The company's exports fell by 68.54% during the period.
An official of the company said, "During the Covid-19 period, the company performed at around 35% capacity. That is why its exports and production have been affected."
He also said that the company is seriously suffering from a working capital shortage. To come out of this situation, it needs to restructure the utilisation of its IPO fund.
"Ring Shine wants to use 60% of its IPO fund as working capital and 40% to purchase denim machinery," he added.
The company was listed with the DSE in 2019 through IPO. Its share trading debuted on December 12 last year. The opening price of the company's shares was Tk15 each on the DSE trading floor.