The stock market regulator has suggested National Tea Company issue fresh primary shares – known as Repeat Public Offering (RPO) – to increase its paid-up capital to comply with regulatory requirements – instead of issuing the right shares.
The Bangladesh Securities and Exchange Commission (BSEC) came up with the advice this week in response to an application the company had filed earlier seeking permission to issue the right shares.
Incorporated in 1978 and listed on the capital market in 1979, National Tea Company Limited carries on the business of plantation, cultivation, manufacturing, and selling of tea and rubber in Bangladesh.
The annual average production of the company is about 5.2 million kg and its major portion is sold through the Chattogram auction market.
An official of the BSEC, seeking anonymity, said the company had sought regulatory exemptions so that it can issue rights shares to increase its paid-up capital. But the commission did not give an exemption in this regard.
In 2000, National Tea started selling tea in the local market on a small scale through its dealers. It has a sales centre at its registered office, which is open to all consumers.
There are about 12,500 permanent labourers in the company's 12 tea estates. Most of them are from ethnic groups. They stay in the gardens with their dependents.
The company has been generating profits from 2000 to 2019. But the state-owned firm suffered losses over the last two years due to the Covid-19 pandemic.
In the July-December period of 2021, the net profit of the company was Tk5.72 crore, up from Tk1.59 crore a year earlier.
But it again suffered losses in the January-March quarter of 2022. In this period, the company incurred a loss of Tk26.26 crore due to an increase in the cost of goods sold.
As of 30 June 2021, the short-term loan of the company was Tk137.18 crore, while the long-term loan was Tk63.32 crore.
As of 31 May 2022, sponsors and directors jointly held 48.60%, the government 4.33%, institutions 8.55%, and the general public 38.52% shares in the company.
The last trading share price of the company on the Dhaka Stock Exchange was Tk671.10 per share on Sunday.
The tea estates are Patrakhola, Kurmah, Champarai, Madanmohanpur, Madabpur, Jagadishpur, Teliapara, Chundeecherra, and Lackatoorah.
Following a government decision three other tea estates namely Parkul, Premnagar and Bejoya were also taken over by the company in 1982.
The company has to provide food grain at a subsidised rate and free medical facilities for the labourers and their dependents along with free housing facilities.