BSEC to appoint special auditor for Alhaj Textile

Key Takeaways:

• Special auditor will scan FY19, FY20 financial statements
• A committee will be formed to oversee all the firm's affairs
• Sponsors, directors hold 12.78% of shares
• Net loss was Tk2.07 crore in FY2019-20
• Net revenue was Tk9.37 crore in FY2019-20
• Production has remained stopped since 25 June, 2019

The Bangladesh Securities and Exchange Commission (BSEC) will appoint a special auditor to investigate the financial statements of Alhaj Textile Mills Limited – for the financial years ended on 30 June, 2019 and 2020.

The issuer company will provide assistance to the auditor as required.

BSEC has already issued a directive to the company in this regard. But the regulator has not appointed an auditor yet.

The principal activities of Alhaj Textile, throughout the year, are to manufacture cotton yarn and sell its product on the local and foreign markets. But the production of the company has remained stopped since 25 June, 2019.

The commission has directed the company to form a committee – consisting of an executive director of the commission, a senior official of the Dhaka Stock Exchange (DSE) and an independent director appointed by the commission – to oversee all the company's affairs.

The company will not be allowed to sell, mortgage, pledge, transfer, transmit, or dispose of assets including Fixed Deposit Receipts (FDR) – without the prior approval of the commission.

The sponsors and directors of the company hold 12.78% shares of its paid-up capital.

As per the securities regulator's directive, sponsors or promoters and directors must jointly hold a minimum 30% share of the paid-up capital of a company all the time. But the company has not followed this direction.

The commission deems that the company is not growing appropriately. A total 87.22% of shareholders of the company have not been getting dividends for the last two years – which is detrimental to the interest of investors and undesirable to the commission.

Alhaj Textile received Tk25 crore out of Tk55.83 crore from Agrani Bank Ltd in January 2019. But the company did not consider the amount as income as per its latest financial statements.

Additionally, one director sold a significant amount of shares without declaration, violating the rules.

The trading price of the company at the DSE was Tk33.20 per share, on Wednesday.

According to the financial statements of fiscal year 2019-20, the net loss of the company was Tk2.07 crore. Its net revenue was Tk9.37 crore.

The company received Tk3.58 crore as interest income against Tk48.52 crore as FDR.

Alhaj Textile Mills Limited was incorporated on 3 March, 1961.

In 1972, the company was nationalised and the mill was operated under the management of the Bangladesh Textile Mills Corporation.

Thereafter on 12 December 1982, the company was denationalised and returned to its previous owners.

After that, the company was listed on the stock exchange in 1983.

General investors in the company hold 75.92% of its shares while institutional investors hold 11.27% of its shares.