Embargo on Ring Shine Textiles’ IPO fund use lifted

 Highlights

• Ring Shine raised Tk150 crore from IPO
• It incurred a loss of Tk7.92 crore in 3rd quarter of 2019-20
• It reported Tk0.19 negative EPS
• Company suffered 68.54% export fall
   

The securities regulator has withdrawn an embargo on the use of the initial public offering (IPO) fund of Ring Shine Textiles.

As a result, the company will be able to use the IPO fund from now.

It is mainly engaged in manufacturing and marketing gray and finished fleece fabrics of various qualities and dyed yarn to garments industry in Bangladesh and international market.

Earlier, the management could not use this fund due to a freeze on the IPO account of the company for the last six months.

BSEC had earlier requested the Bangladesh Bank to freeze the IPO account of the company on charges of irregular cash disbursements.

The firm raised Tk150 crore from the country's stock market by issuing the IPO in October 2019.

As of July 2020, it has repaid loans of Tk50 crore.

The company repaid a loan of Tk22 crore to Premier Bank instead of the Dhaka branch of Woori Bank Ltd.

After that, Woori Bank requested the regulator to intervene and ensure the recovery of its loan.

But Ring Shine claimed that the repayment of the Premier Bank's loan, instead of that of Woori Bank, was discussed and approved in its annual general meeting.

Company Secretary of Ring Shine Textiles Asraf Ali told The Business Standard that the firm did not receive any formal letter from the regulator in this regard.

Besides, all the sponsors and directors of the textile firm are Taiwanese, and they, along with a number of high-ranking officials, had gone home to celebrate the Chinese New Year, without any prior notice.

The uncertainty created by their departure made the stock market regulator request the central bank to freeze the firm's IPO fund account.

The commission approved the IPO of Ring Shine in March last year.

The company wanted to use the capital raised from the IPO for purchasing and repairing machinery and equipment and paying off loans.

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 previous year.

But in the third quarter, the company suffered a loss of Tk7.92 crore.

During the period, the company's export has fallen by 68.54 percent.

Sources said, during the Covid-19 period, the company is running at its around 35 percent capacity. That is why its export and production has been affected.

The firm was launched in 1997, as a private company and went into production the following year.