Aman Cotton continues to illegally benefit from IPO fund
The company has sought till July 2023 to use its IPO proceeds in the original project
Aman Cotton Fibrous Ltd wants to continue benefiting from investors' funds raised through an initial public offering (IPO) in 2018 by using the money for other than its original purposes.
The company, which went into commercial production in 2007 and got listed on bourses in 2018, has sought till July 2023 to use its IPO proceeds in the original project.
In January this year, the Bangladesh Securities and Exchange Commission (BSEC) fined the company directors, and its auditor ATA Khan & Co Chartered Accountants for anomalies in its IPO fund utilisation plan, and financial statements.
The regulator made the direction to cancel the lien of Tk72 crore in fixed assets of the company within seven days but the firm is yet to comply with it.
Keep updated, follow The Business Standard's Google news channel
Reversely, the firm – engaged in manufacturing 100% cotton-carded, combed, and semi-combed, ring-spun grey yarn for knitting and weaving – applied to the commission for a time extension, as the IPO fund provided good interest income for the group.
A source said the BSEC sat with the company officials on Sunday and discussed with them how to resolve the issues in a short time.
Company Secretary Shariful Islam declined to comment on the matter.
The auditor of the company found that the Tk73 crore fixed deposit receipts (FDRs) made from the IPO proceeds were pledged as security for credit facilities enjoyed by other entities.
Of the entities, Akin Carries Limited enjoys credit facilities as an overdraft on the balance of the Tk38 crore FDR in Meghna Bank and another one of Tk15 crore in Al-Arafah Islami Bank. Also, Aman Food Limited enjoys similar facilities from a Tk20 crore FDR in Commercial Bank of Ceylon PLC, it added.
The auditor found that the company had repaid Tk2.16 crore out of Tk4.77 crore of IPO fund accounts. It also repaid Tk1.48 crore which came from FDR made from IPO proceeds.
Due to the irregularities, in June 2020, the securities regulator appointed a special auditor – Howladar Yunus & Co – to investigate the use of IPO proceeds and audited financial statements of the company.
The company gave loans to one of its sister concerns without the approval of its general investors. As a result, investors were deprived of gains and lost a lot of capital.
Back in August 2018, Aman Cotton collected Tk80 crore from the share market to buy new machinery and repay its loans.
But to date, the company has only repaid its loans and is yet to buy machinery, leaving around Tk72 crore of its IPO funds unused.
From the July-December period of 2021, its revenue was Tk77.83 crore, which was Tk44.41 crore in the same period of 2020.
During the period, its net profit was Tk5.53 crore and earnings per share were Tk0.55.
As of 31 March 2022, sponsors and directors jointly held 65.06%, institutions 10.64%, foreign investors 0.09%, and the general public 24.21% shares in the company.
The last trading price for each company share on the Dhaka Stock Exchange was Tk26.8 on Tuesday.
