BSEC to look into Associated Oxygen's factory operation

The Bangladesh Securities and Exchange Commission (BSEC) has formed an inquiry committee to look into Associated Oxygen Limited's financial statements and activities as irregularities are suspected in its operation.

Sources at the Dhaka Stock Exchange told The Business Standard that when its officials, seeking anonymity, recently contacted Associated Oxygen – a listed company – on the pretext of buying products, the company told them that their factory was closed for a few months.

Then the Dhaka Stock Exchange informed the Bangladesh Securities Regulator and Exchange Commission about the matter and expressed its interest to investigate it.

Consequently, an investigation committee comprising BSEC Additional Director Muhammad Ziaur Rahman and its Assistant Director Md Abdul Awal were formed on 23 August to review Associated Oxygen's financial statements and other issues, BSEC Executive Director Mohammad Rezaul Karim told TBS.

The inquiry committee will submit a report to the commission within 60 days of its formation.

Dhaka Stock Exchange acting Managing Director Saifur Rahman Mazumdar said, "We have information that the factory was closed for a few months. Now, we want to look into details."

Currently, the factory is operating. We have the capacity to run the factory 24 hours, but we produce oxygen as per buy orders.

Md Delwar Hossain, CFO of Associated Oxygen

Md Delwar Hossain, chief financial officer of Associated Oxygen, told TBS that mainly the shipyards are their buyers. The volume of their buy orders drops in the rainy season as shipyard workers cannot work in heavy rain.

He also said normally Associated Oxygen's factory remains closed during Eid holidays when the workers go to their village homes. Besides, it is also closed during the maintenance work.

"However, currently the factory is operating. We have the capacity to run the factory 24 hours, but we produce oxygen as per buy orders," Delwar added.

From January to March of FY23, the company earned Tk15 crore revenue, which was Tk13.82 crore in the same period of the previous fiscal year.

During the period, its net profit rose by 12% to Tk5.68 crore, from Tk5.06 crore in the previous year.

From July to March of FY23, its revenue stood at Tk38.11 crore and its net profit after tax stood at Tk13.84 crore.

The company was incorporated in 1990 and started commercial operation in 1992.

Associated Oxygen, which has been producing and supplying gas products for the last three decades, raised Tk15 crore from the capital market to expand its business in 2020.

At the time, the company issued 5.08 crore pre-initial public offering (pre-IPO) shares which were 63% of its paid-up capital.

The company said it would use the money within two years of receiving the initial public offering fund, but 75% of it has been used so far.

It also wanted to purchase new machinery worth Tk4.24 crore within two years of raising funds, but 81% of the fund set aside for buying machinery is yet to be used.

The company recommended a 10% cash dividend for general shareholders only – excluding sponsors and directors – for the year that ended on 30 June 2022.

In November last year, the company planned to make a fresh investment of Tk250 crore after raising the money with a convertible bond.  

The company entered into an agreement with Janata Capital and Investment Limited as the fund arranger.

The last trading share price of Associated Oxygen at the Dhaka Stock Exchange was Tk36.50 per share on Monday.

As of 31 July 2023, sponsors and directors jointly held 30.65%, institutions 9.50%, foreign investors 0.29%, and general investors 59.56% of the company shares.