Envoy Textiles shares soar as Kutubuddin bids for higher stake

Highlights:

• Kutubuddin founded Envoy Group in 1984 and left the group on 9 March this year

• Kutubuddin and his family members owned 13.54% stake in the company as of Sunday

• They bought another 12.34% stake on Monday

• His son and daughter are shareholder directors at the company

Envoy Textiles Ltd Chairman Kutubuddin Ahmed is increasing holding in the company even though he has left the Envoy Group.

Kutubuddin and his family on Monday announced buying shares to increase their share in Envoy Textiles, which is the world's first platinum-certified green factory.

The family bought 12.34% shares of the company for around Tk88 crore in yesterday's trading session, according to the Dhaka Stock Exchange (DSE).

Kutubuddin Ahmed, his son Tanvir Ahmed, and his daughter Sumayyah Ahmed bought 2.61%, 7.12%, and 2.61% shares, respectively, of the company in the block market at a cost of Tk46 each share. They bought the shares from institutional investors' holdings.

Currently, Kutubuddin's son and daughter are acting as directors at Envoy Textiles where Abdus Salam Murshedy is the managing director and Mushedy's son and daughter are also directors.

On 9 March this year, Envoy Group's founder Kutubuddin Ahmed left the business group after handing over its ownership to his business partner Abdus Salam Murshedy. They agreed on running the group's flagship company – Envoy Textiles – independently.

Kutubuddin Ahmed told The Business Standard that they have bought the shares of Envoy Textiles to increase their holding in the company. Earlier in January this year, Fontina Fashion Limited, a company owned by Kutubuddin, bought 24 lakh shares of Envoy Textiles.

Abdus Salam Murshedy said he does not see any problem with Kutubuddin Ahmed and his family members' increasing holding in Envoy Textiles. Kutubuddin got a lot of money by handing over the ownership of Envoy Group and he is investing that money in the listed textile company, he said.

Meanwhile, Kutubuddin's announcement to increase holding helped the company log a 9.6% rise in its share price and have second place in the top10 gainers' list at the DSE on Monday.

On the day, its share price closed at Tk46.8 on the premier bourse, up from Tk42.70 on the previous session.

Currently, Envoy Textiles' paid-up capital is Tk167.73 crore. The company raised Tk90 crore from the capital market by issuing 30 crore shares in 2012 to expand its business.

According to DSE sources, Kutubuddin Ahmed's family owns a 13.54% stake in Envoy Textiles. Their holding in the company increases to 25.88% if the shares they bought on Monday are included.

Abdus Salam Murshedy and his family, on the other hand, own a 13.86% stake in Envoy Textiles.

Envoy Group, which started its journey in 1984 with a business in the garment sector, now has 40 companies. In all, these companies have an annual turnover of more than $400 million.

Envoy Textiles to expand spinning unit

Envoy Textiles has decided to invest Tk176 crore to enhance the production capacity of its spinning project by setting up an expansion unit.

The new project's production capacity will be 3,710 tonnes of yarns a year.

Out of the total investment, the company will provide Tk56 crore from its retained earnings and the rest will come from banks.

It has also decided to issue a non-convertible zero-coupon bond worth Tk200 crore at a coupon rate of 6.5% to 7.5%.

Of the amount, the company will use Tk168.4 crore to finance its new gas-based 19MW captive power plant project and to repay some bank loans.