After remaining closed for two years, the factory of Alhaj Textile Mills Ltd is going to resume operation from 15 June this year as per a decision of its board of directors.
After the information was revealed on the Dhaka Stock Exchanges (DSE) website on Tuesday, the company's share price rose by 9.86% to Tk40 each from Tk36.40 in the previous session, which gave hope to its investors who were deprived of dividends for two years.
The principal activities of Alhaj Textile are to manufacture cotton yarn and sell it on the local and foreign markets.
Due to the severe fall in volume of sales and the lack of demand of its product, the company temporarily closed down its factory on 25 June, 2019,.
It also failed to sell its yarn worth Tk28 crore lying in its warehouse and faced a working capital shortage.
After extending the factory closure period for five times, the company management decided to close it down for an indefinite period of time in September 2019.
All the staff and workers of the factory were retrenched, which was effective on 8 October, 2019.
The regulator's initiatives to improve Alhaj Textile's performance
To improve Alhaj Textile's performance, the stock market regulator has taken some steps including reconstructing its board, appointing a special auditor and forming an investigation committee last year.
Alhaj Textile failed to comply with the rule that the sponsors and directors must jointly hold at least 30% share of the company.
As of 30 April, 2021, Alhaj Textile's sponsors and directors held only 12.78% of its total shares.
In January 2021, the Bangladesh Securities and Exchange Commission (BSEC) restructured the company's board with three independent directors in its board of directors.
The BSEC also directed the company to appoint two more independent directors with the approval of the commission.
The commission also formed a committee, consisting of BSEC officials, government officials, and DSE officials to look after the company's overall situation.
Last year, the BSEC also appointed a special auditor to investigate Alhaj Textile Mills' financial statements for the financial years 2019 and 2020.
Battle with lender
Alhaj Textile Mills has been fighting a decade-long battle with Agrani Bank as the lender claims that the company had defaulted on its loans and it was not bankable with other lenders.
Due to the decade-old dispute with the bank, Alhaj Textile could not open any letter of credit with banks for importing raw materials, which was one of the reasons for closing down its factory.
The company sued its lender claiming Tk437 crore in compensation for the "bank's non-cooperation."
To end the long-lasting legal battle, the Supreme Court ordered the bank in 2019 to pay more than Tk55 crore to the company to settle the case.
In response, Agrani issued bank drafts worth more than Tk35 crore in favour of the company. It also applied for reviewing the apex court's order.
The bank still holds its claim on the 'defaulted' loan of Tk36 crore and did not clear the way for Alhaj Textile to turn bankable again.
About the Al-haj Textiles
Alhaj Textile Mills, one of the oldest manufacturers of cotton yarn in Bangladesh, was incorporated as a private limited company in 1962.
After Bangladesh achieved independence, Alhaj Textile, along with all the other textile entities in the country, were nationalised. It was denationalised again in 1982.
In the first nine months from July-March of FY21, its revenue stood at Tk11.89 crore, which was Tk8.67 crore in the same period of the previous year.
In this period, its net profit after tax stood at Tk84.50 lakh and earnings per share (EPS) stood at Tk0.38.
At the same time of FY20, the company incurred a loss of Tk1.70 crore and its loss per share was Tk0.76.
In January-March of FY21, its revenue stood at Tk5.94 crore, which was Tk5.18 crore in the previous year, while its net profit stood at Tk45.35 lakh and EPS Tk0.23.
At the same time of FY20, it incurred a loss of Tk29.90 lakh and loss per share was Tk0.13.
In FY20, the company incurred a loss of Tk2.06 crore and it did not pay any dividend to its shareholders.
However, the company has paid a 1% interim cash dividend based on the FY20 financial statements.