BSEC to probe Lovello’s failure to utilise IPO proceeds

The securities regulator has formed an inspection team to review Lovello Ice Cream's failure to fully utilise the initial public offering (IPO) fund raised in 2021.

The Bangladesh Securities and Exchange Commission (BSEC) formed the three-member inspection team in the first week of March.

The team is led by BSEC Additional Director Md Al Masum Mirdha, while Deputy Director Md Sirajul Islam and Assistant Director Tanmoy Kumar Ghosh are the team members.

The inspection team will go over the whole IPO proceeds utilisation of the company. It will also check the related party transaction since the listing of the company.

The inspection team will review and submit the report to the commission within 30 working days. 

To expand business, Taufika Foods and Lovello Ice-Cream PLC — an ice cream maker and marketer with the brand name Lovello —  went public and raised Tk30 crore from the stock market in 2021.

The ice cream maker was supposed to use funds within two  years. However, the Ice cream maker was able to use 85.56% of the fund till January 2024. For this delay, its procurement of plant and machinery is hampered, compelling the company to keep the fund idle. 

An official of the company, seeking anonymity, said 85% of the IPO fund was completed within the stipulated period. 

The company also had bank approval for a Letter of Credit for machinery import. However, owing to the dollar crisis the company could not make imports and fully utilise the fund, he added.

Besides, the company has already applied to the commission for increased time one year after approval of shareholders, he added. 

The company did not get any letter regarding the inspection team till now, the official said.

At present, of the raised funds, the company utilised Tk25.67 crore till January 2024. Now Tk4.32 crore remains unutilised. The unutilised fund is mostly allotted for the procuring capital machinery and freezers.

Before the shareholders' approval, the board of directors of the company in October last year had decided to extend another year.

In the first six months of the current fiscal year, the revenue of the company stood at Tk42.56 crore, which was Tk50.55 crore in the same period the previous year. Its profit after tax stood at Tk4.84 crore which was Tk6.18 crore a year ago.

Its earnings per share was Tk0.57 and its net asset value per share stood at Tk12.51 end of December 2023. In FY23, Lovello witnessed a fall in revenue as its sales dropped by 1.73% to Tk94.36 crore and net profit by 13% to Tk10.52 crore.

The company's share price dropped by 3.94% to Tk53.70 on the Dhaka stock exchange on Thursday.

As of 29 February 2024, sponsor directors retain a 41.12% stake, institutional investors hold 24.15%, and general shareholders possess 34.73% of the company's shares.