The stock market regulator has decided to appoint a special auditor to review the financial statements of Alif Manufacturing Company Ltd, which was previously known as CMC-Kamal Textile Mills Limited.
The auditor will also review the company's statements on utilisation of its rights share fund. However, the Bangladesh Securities and Exchange Commission (BSEC) has not appointed any special auditor yet.
The company has been manufacturing and marketing high quality "cotton yarn" for making clothes to be used by the local weavers, textile mills, and the readymade garments sector for apparels.
Relevant sources said the securities regulator recently requested the authorities concerned to bar the company's managing director from leaving the country till further notice regarding pending legal actions over financial irregularities.
The company did not use the fund of rights share properly, added sources.
Market insiders alleged that the company deceived the investors in the capital market. The company raised capital by issuing rights share to raise hope among the investors. But the investors suffered a big loss by holding the company's shares.
The business situation of the company has been worsening after changing its management. The company did not complete annual disclosure till now, added insiders.
In the July to March quarter in the last fiscal year 2019-20, the company posted a net profit of Tk10.14 crore.
During this period, the company's earnings per share decreased by 38% to Tk0.39, compared to that in the same period in the previous fiscal year.
Emerging Credit Rating Limited (ECRL) assigned the surveillance rating of the company as "A-" in the long term and "ST-2" in the short term as of 30 June, 2019.
On 30 January, 2018, the company received Tk109.40 crore through rights share from the capital market.
The company wanted to use this fund within 15 months, but they could not do it on the scheduled time.
Till December 2019, the company utilised Tk74 crore from its rights share fund.
Sources said there are some irregularities regarding the company's rights share fund.
The BSEC said the company had collected a large amount of money from the stock market by repeatedly issuing initial public offerings, rights shares, and bonus shares.
After that, it sold a big number of shares in the secondary market at high prices.
The company was incorporated in Bangladesh on 25 May, 1995.
It also changed its name from CMC-Kamal Textile Mills Limited to Alif Manufacturing Company Ltd on 28 September, 2017.
The company was listed in the stock exchanges in 1997.
The last trading price of its share at the Dhaka Stock Exchange was Tk6.60 per share on Tuesday.
The sponsors and directors jointly hold 30.46% shares, institutional investors hold 16.26% shares and general investors hold 53.28% shares of the company.