The Bangladesh Securities and Exchange Commission is probing the utilisation of initial public offering proceeds of Regent Textiles as the company did not use more than two-thirds of the fund.
The commission had asked the company to respond to a number of queries related to IPO fund utilisation and financial accounts, but it failed to provide replies with appropriate documentations to the regulator, a BSEC official said.
On March 11, the commission enquired about the company’s failure in utilising the IPO proceeds by the deadline of June 2017 in accordance with the company prospectus, the official said. The commission in August 2015 approved the IPO of Regent Textiles to raise Tk 125 crore to spend on balancing, modernisation, rehabilitation and expansion, building a new readymade garment unit and to pay the IPO expenses. The company, however, used just Tk 9.13 crore or 7.3 per cent of the total fund until March this year after receiving the proceeds in December 2015.
Most of the earnings of the company were coming from banks’ interests as the company kept a huge amount from the fund as fixed deposits.
The regulator had asked the company for details of fixed deposit receipts but it did not provide the details to the commission, the BSEC officials said.
The commission also asked to explain its 55 per cent profit fall in 2016-17 fiscal compared with that in the previous year. The company also avoided this in its replies, they said.
The textiles company also failed to give documents of VAT 19 that the company has to provide to the National Board of Revenue every month, the BSEC officials said.
A senior official of the company told New Age on Friday that the company replied to all the queries appropriately on April 5.
The official added that the commission could ask the company if there were any lack in their submitted documents.
Another official of the company said that due to some unavoidable reasons, the company could not complete the BMRE and the RMG project. The company now expected to complete both within the extended time of October 2018, which was approved in an extraordinary meeting.
The company disclosed in September last year that it opened letters of credit to import capital machineries worth $7.1 million from Germany, Netherlands, Italy and China. The said machineries would be installed under the BMRE of new textile unit.
In November last year, the company also disclosed that it was set to acquire a fully-compliant RMG factory using the non-utilised portion of its IPO fund.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Stocks