BSEC rejects IPO application of Islam Oxygen
Highlights:
● The company failed to submit relevant documents in time
● A VAT evasion case against the firm is pending
● Overstated assets in financial statements
The Bangladesh Securities and Exchange Commission (BSEC) has rejected the initial public offering (IPO) application of Islam Oxygen Limited after the company's non-compliance and failure in submitting relevant documents.
Earlier, the company applied to the commission for raising Tk93 crore from the capital market through an IPO under the book-building method. The firm wanted to use the fund for business expansion.
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BSEC Executive Director Mohammad Rezaul Karim said Islam Oxygen has overstated its assets in the financial statements. Also, it failed to submit the documents regarding its sales within the stipulated time.
"Besides, a VAT evasion case filed by the National Board of Revenue (NBR) against the company is pending in court."
Therefore, considering all these, the commission has cancelled the company's IPO application, he added.
Sources said Islam Oxygen plans to resubmit its IPO application after resolving the issues.
Islam Oxygen was established in 2009. The company wanted a premium on the Tk10 face value of each of its primary shares. Hence, according to the book-building criteria, the company arranged a roadshow in October last year where it introduced itself to institutional investors.
The company manufactures and supplies medical, industrial, and laboratory gases. Its manufacturing plant is located in Narayanganj's Tarabo area.
In the roadshow, Islam Oxygen's Managing Director Nurul Islam said "Our business expansion will help Bangladesh to be self-sufficient in supplying the increasingly needed medical and industrial gases, and reduce foreign dependence. After meeting the local demand, the company also eyes to export the manufactured gases."
According to the audited financial report of the 2020-21 fiscal year, the company's net profit stood at Tk41.48 crore, which was Tk26.34 crore in fiscal 2019-20.
During the period, its revenue was Tk145.42 crore, which was Tk110.82 crore in the previous fiscal year.
In FY21, the company's earnings per share stood at Tk4.37, which was Tk2.77 in FY20.
The net asset value per share stood at Tk38.37 with revaluation and at Tk25.09 without in FY21.
Linde Bangladesh, Spectra Oxygen Limited, Islam Oxygen Limited, DR Industries Limited, and Bangladesh Industrial Gas Limited are the major players in the local market. Linde alone meets 75% of the total oxygen demand in Bangladesh.
Associated Oxygen, KROL Oxygen, Median Oxygen, Oxycon Limited, Sima Oxygen, and SL Oxygen Limited are the other local oxygen producers.
Local merchant bank Janata Capital and Management Ltd will be the issue manager for Islam Oxygen's IPO, while Sonali Investment Ltd the registrar to the issue.
