Aramit Cement Ltd has continued lending money to its affiliate firms without collecting due payments for the last 17 months, thus violating a regulatory order and depriving investors of expected returns.
Expressing concern about the dues, the Bangladesh Securities and Exchange Commission (BSEC) recently issued a letter to Aramit seeking an explanation. The regulator has also asked the company to submit a list of its top 20 customers in the last two fiscal years.
Sources said Aramit Cement is owed a huge amount of money by its affiliate firms. But instead of collecting the dues, Aramit has continued to provide further loans to the companies.
Although the company at times charges interest against the loans, there are instances of interest being waived as well.
In November 2020, the stock market regulator asked the company to recover the non-interest-bearing loans from its affiliate business entities at 9% interest within 15 days. More than one and a half years later, Aramit Cement authorities are yet to comply with the order.
According to media reports at the time, Aramit Cement Limited had provided interest free loans of around Tk77 crore to its affiliate companies in the five years running up to 2020. The dues have continued to grow in amount since then without any significant progress in loan recovery.
According to Aramit Cement's financial statement published on 30 June 2020, the company is owed Tk89.27 crore by its affiliate companies. In 2021, the dues increased to Tk104 crore.
According to their annual statement, the company has been lending money to Aramit Thai Aluminum since 2005, and Aramit Footwear and Aramit Power from 2006.
In fiscal year 2020-21, Aramit's short-term loan amount significantly increased from Tk422.65 crore in the previous FY to Tk472 crore.
The financial statement also showed the company's trade and receivables for the year stood at Tk227.91 crore but its net sales for the period was much less– Tk201.71 crore.
From July to December of 2021, the net sales of the company stood at Tk39.87 crore, while its net profit was Tk13.94 crore.
Aramit Cement's Company Secretary, Syed Kamruzzaman, did not respond to a call seeking comments in this regard.
Aramit Cement Limited is a sister concern of the Aramit Group. The company was incorporated in August 1995 and was listed in the stock exchanges in 1998.
The paid-up capital of the company is Tk33.88 crore. As of 31 January 2022, sponsors and directors retain 47.14%, institutions hold 13%, and general investors hold 39.86% of the company. As of Wednesday, the closing stock price of Aramit on the DSE was Tk35.10.