SS Steel has now come under the scanner of the stock market regulator for its decision to invest around Tk160 crore to acquire 99 percent of Saleh Steel Industries' stakes.

On Sunday, the Bangladesh Securities and Exchange Commission (BSEC), in a letter, asked the listed company to provide information about Saleh Steel Industries Limited.

It also sought a copy of Saleh Steel Industries' feasibility report prepared by an independent third party.

The BSEC asked SS Steel to provide the details of all its directors – including independent ones – who were present at the board meeting, along with the meeting minutes.

The stock market regulator also wanted to know about the share money deposits from its directors.

Moreover, the company did not fully disclose the value of each share of Saleh Steel Industries Limited.

Earlier, the company's board of directors decided to make an equity investment in Saleh Steel to subscribe to 99 percent of its existing equity shares worth Tk24.75 crore.

Also, SS Steel will invest Tk134 crore in Saleh Steel. Following the move, Saleh Steel will issue new shares to SS Steel.

SS Steel will finance its investment from the company and partly by taking share money deposits from its directors.

SS Steel's board of directors made the decision at a time when the steel industry has already been struggling for a year. Things have become more difficult for the industry amid the pandemic outbreak.

Saleh Steel produces and sells rods and coils under its brand name and its annual production capacity is around 84,000 tonnes, according to SS Steel.

Meanwhile, Saleh Steel has not paid its workers' salaries since April – which has been met with protest by its factory workers.

Dr Syed Serajul Huq, a pioneer industrialist, who was the chairperson of Saleh Steel, passed away in January this year.

After completing the acquisition, SS Steel expects to increase its turnover by 100 percent or Tk500 crore yearly; which can increase the profitability of the company substantially.

For the approval of the shareholders, the company will hold an extraordinary general meeting whose venue, date and time will be announced later.

An SS Steel official, preferring anonymity, said, "We have been trying to buy a factory – that is operational – for a long time to increase steel production. And we found Saleh Steel at a low price due to the outbreak."

In the three quarters of the last financial year, the company posted nine percent growth in revenue to Tk306.46 crore. Its net profit stood at Tk42.47 crore and earnings per share Tk1.51 at that time.

The company disbursed a 15 percent stock dividend for the financial year that ended on June 30, 2019.

Listed in January 2019, each share of the SS Steel closed at Tk 10.90 on August 4 on the Dhaka Stock Exchange.

Its shares were traded between Tk8.60 and Tk34.10 in the last year.

The company's paid-up capital is Tk 281.75 crore.

Sponsors and directors had a 32.33 percent stake, institutional investors 19.96 percent, and the general public 47.71 percent in the company on June 30, 2020.