Alhaj Textile Mills Ltd, a loan defaulter, has announced that it will suspend production for an indefinite period because it has not been able to sell its stock of yarn. The company has also decided to lay-off its workforce.
The factory was shut-down for a month on June 24 this year because the company could not sell its stock of yarn. The shut-down was extended five more times since then. But this time the company has decided to make the shut-down indefinite.
Md Shawkat Ali, the chief financial officer of Alhaj Textile Mills told The Business Standard that they still have unsold yarn worth Tk28 crore lying in their warehouse.
A source in the company said foreign buyers prefer sourcing yarn from China at a lower cost. This has resulted in a decrease in demand for locally produced yarn.
The source added that the company also has a shortage of working capital.
He also said the company has Tk36 crore worth of default loans with Agrani Bank, and a legal dispute with the bank is pending at court.
Earlier this year, Alhaj Textile Mills, which is listed at the stock exchanges, released price sensitive information where the company claimed that it had received Tk56 crore as FDR (fixed deposit receipts) after disposal of a case with Agrani Bank.
But the Bangladesh Securities and Exchange Commission found that the information was not true.
According to the commission, the company's sponsor-directors do not jointly hold at least 30 percent stake in the firm.
Therefore, the commission has decided to trade the stocks of Alhaj Textile Mills on the spot market.
On the spot market, securities are traded for same day trading and cash settlement, without the use of a financial adjustment facility.
Meanwhile, the commission found that Md Shamsul Huda, a shareholder-director of Alhaj Textile, violated securities laws by selling five lakh shares and buying nine thousand shares without declaration.
The commission has instructed its Enforcement Division to take legal action against Shamsul Huda.
Alhaj Textile's earnings per share (EPS) for the first nine months of the outgoing fiscal year stood at Tk0.43 in the negative, according to the Dhaka Stock Exchange. During that period, the company sold only Tk8 crore worth of yarn.
The company got listed with the stock exchanges in 1983. It faced a loss for the first time in the 2018-19 fiscal year, whereupon the share of price of the company decreased by 67 percent from Tk116 to Tk43.
On 30 June 2018, the company distributed 10 percent stock dividend amongst its shareholders.
On Monday, the closing price of Alhaj Textile's share was Tk47.60 at the Dhaka Stock Exchange.