BSEC rejects B Brothers Garments’ IPO application | The Business Standard
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SATURDAY, DECEMBER 02, 2023
BSEC rejects B Brothers Garments’ IPO application

Stocks

Salah Uddin Mahmud
06 August, 2020, 10:25 pm
Last modified: 06 August, 2020, 10:50 pm

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BSEC rejects B Brothers Garments’ IPO application

The company wanted to raise Tk50 crore from capital market through fixed price method

Salah Uddin Mahmud
06 August, 2020, 10:25 pm
Last modified: 06 August, 2020, 10:50 pm
Photo: Collected
Photo: Collected

The Bangladesh Securities and Exchange Commission (BSEC) has rejected the initial public offering (IPO) application of B Brothers Garments Co Ltd for violating securities rules.

It wrote to the company and the issue manager concerned on Thursday in this regard.

B Brothers Garments wanted to raise Tk50 crore from the capital market through the fixed price method.

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Sources said that the company violated the rules and overstated in its financial statements so that investors would be more interested in buying its shares.

The company has deposited its share money deposit in several bank accounts. But it was supposed to deposit in a separate account. As a result, the company has violated the consent letter condition.

Also, the company has failed to submit the approved layout of the building to be constructed from IPO funds. 

The commission observed that the "Text Line" and "Sportswear" units have contributed 67 percent of the total revenue of the company. If anyone cancels the order, the company may fall in trouble in future. 

The sources also said, the company's audited financial statement as of June 30, 2016, has been signed by only one director which is a violation of Companies Act 1994.

The commission thinks the company is heavily dependent on bank loans that may result in a cash flow crisis as well.

The BSEC also has opined that the company will have a significant impact of Covid-19 pandemic shortly on profitability, which can also threaten the shareholders of the company. 

Shahjalal Equity Management Limited is the issue manager of the company.

Earlier, the regulator also rejected the IPO applications of four other companies – Beka Garments and Textile Ltd, JMI Hospital Requisite Manufacturing Ltd, SF Textile Industries and BD Paints Ltd for showing inflated revenues and profits.

It was found that these companies had inflated revenues and profits, and overstated inventories and assets in their financial statements.

Several issue manager sources claimed that recently the commission has rejected some IPO applications. But all the issues are being cancelled without prior discussion or informing the issue manager and company concerns.   

If the regulator gets any deficit in documentation, it may seek explanation to the companies. But rejection of several issues within a short time will discourage the issue managers to bring new companies in the capital market.

Economy / Top News

BSEC / rejects / IPO application

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