Rahman Rahman Huq, an audit firm, will reevaluate Evitex Fashions, a subsidiary company of publicly listed Evince Textiles Limited, in line with a court order – for the merger of the two companies.
The High Court has recently ordered the firm to carry out the audit within the next 30 days after the stock market regulator opposed the amalgamation saying the company had overstated its assets and overpriced the value of the shares.
Evince Textiles, which got listed on the capital market in 2016, had earlier decided to merge with Evitex Fashions to curb operating costs.
The main activities of Evince Textiles are to engage in manufacturing, dyeing and finishing 100% cotton woven fabric, and exporting the same abroad.
After the merger news, the share price of the company rose by 5.13% to Tk8.10 each.
An official of the company said the merger will help it reduce the management costs and corporate tax, and accounting would also be easier.
The Bangladesh Securities Exchange and Commission (BSEC) has also alleged that the proposed amalgamation was for illegal gains over the general shareholders of the listed company.
The court has selected Rahman Rahman Huq for finding out the actual value of the assets and properties of Evitex Fashions Ltd.
According to the order, the audit firm will carry out an audit of the company as per the laws, norms, and practices of Bangladesh as well as in compliance with the international accounting standard.
As Evitex Fashions does not have a market price, the auditor will conduct a special audit of the company from the date of its incorporation to find out the standing of cash, stocks, properties, and assets of the company.
For a fair valuation of Evitex Fashions' shares, the audit firm will scrutinise all documents.
Evitex Fashions was incorporated on 11 April 2004 as a private company with Tk8.80 crore in paid-up capital. It started commercial operations in 2005 and its factory is located in Gazipur.
Evince Textiles owns 95% of Evitex Fashions. The remaining 5% share is owned by Chairman Anwar-Ul-Alam Chowdhury, Director Shabnam Shehnaz Chowdhury, Managing Director Abu Kawser Majumder, directors AK Gouhor Rabbani, and Akhter Shahid of Evince Textiles.
In fiscal 2020-21, Evitex Fashions reported Tk19.24 crore in revenue and its net loss stood at Tk2.68 crore.
The board of directors of Evince Textiles recommended 2% cash dividends for the financial year that ended on 30 June 2021.
That year its turnover was Tk142.45 crore, while the net profit stood at Tk2.57 crore only.
As of 28 February 2022, sponsors and directors jointly held 36.67%, institutions 23.27%, and the general public 40.06% shares in the company.
The last trading share price of the company on the Dhaka Stock Exchange was Tk10.70 per share on Monday.