A number of companies have entered the capital market during the Covid-19 pandemic but the projects articulated under the initial public offerings (IPOs) could not make enough progress.
These companies are suffering commercially and are not able to complete the work of these projects within the stipulated time, resulting in cost overruns.
Returns from such projects are also lagging due to implementation delays and investors are losing out by investing in these businesses.
Many such companies could not import machinery due to the pandemic while others imported machinery, but could not install them.
Although many companies were supposed to construct buildings, this has progressed slowly. Many have changed their business plans and fallen victim to the pandemic.
Many have put their money in fixed deposits, unable to use the money in their stagnating businesses. All in all, the implementation of projects for business growth has been delayed.
On 17 May 2017, Intraco Refueling Station Limited raised Tk30 crore from the stock market to set up an LPG bottling and distribution plant. The company wanted to implement the project within 15 months.
Intraco later changed its IPO plan and decided to buy an LPG plant. It imported some machinery but could not install the machinery, hampered by Covid restrictions.
GM Salahuddin, secretary of Intraco Refueling Station, said, "We were able to complete the import of machinery before the pandemic but could not complete the installation."
The people through whom the machines were imported are supposed to install the machines. But because of Covid-19, they have left for China and they have not returned yet. As a result, work on the project has stalled. Now there is no other way but to wait.
The same is the case for New Line Clothings Limited. The company raised Tk30 crore in April 2019 for the construction of a building and the installation of machinery. But, it has been able to use only 30% of the funds until now.
Due to the pandemic, the company is also unable to complete the installation of imported machinery.
Meanwhile, ADN Telecom Limited is not moving ahead with their projects. In 2019, the company raised Tk57 crore for infrastructure development, bank loan repayment, and setting up of data centres. Although it has repaid the loan, the other projects are not being implemented due to the pandemic.
The company has recently extended the deadline for the implementation of their IPO projects, approved by the Bangladesh Securities Exchange Commission (BSEC) till September 30 this year.
Md Monir Hossain, Secretary of ADN Telecom said the management of the company does not consider the implementation of the project in the pandemic to be fruitful. But it expects the work will be completed before the situation returns to normal.
Runner Automobiles Limited raised Tk100 crore from the stock market for research and development, purchase of equipment, and repayment of bank loans.
But, it later changed its IPO plans and decided to manufacture and market three-wheelers of Bajaj, an Indian brand.
Out of the Tk100 crore IPO fund, the company has utilised Tk37 crore and the remaining Tk63 crore will be used to make a total Tk300 crore investment to set up a new factory in Bhaluka of Mymensingh.
But due to the coronavirus, it did not make significant progress. It has parked its IPO money in fixed deposits or FDR.
Dominage Steel Building Systems Limited, like Runner Automobiles, has also kept its IPO money in FDR with the permission of the regulator.
Sources at BSEC say, due to the coronavirus pandemic, many companies were not able to implement their IPO projects on time. Many companies have applied for an extension while some others have opened FDRs with their IPO funds with permission from the regulator.
Aman Cotton Fibrous Limited could not use their IPO funds even after three years of the listing. According to BSEC sources, it has kept Tk72 crore of investors' money in FDR to provide support to another company of the group.
The regulator has already conducted a special audit on the use of the IPO money.