• Tuesday, Sep 28, 2021
  • Last Update : 12:48 am

Ring Shine’s board fails to show up at EGM once again

  • Published at 01:26 am January 1st, 2021
Ring Shine Textiles

The EGM was originally scheduled for November 14 to go over the unaudited financial statement for the first quarter of its 2020-21 financial year and also to review the utilisation of its initial public offering funds

Ring Shine Textiles, which has been in the news the past year for all the wrong reasons, continues to confound. After announcing a second date for its extraordinary general meeting, its board of directors simply did not turn up at the gathering scheduled for yesterday.


The EGM was originally scheduled for November 14 to go over the unaudited financial statement for the first quarter of its 2020-21 financial year and also to review the utilisation of its initial public offering funds, over which there are some complications.


But it was called off for “unavoidable circumstances” without any prior notice. A new date was not announced until December 17 and then yesterday, the meeting did not happen at all.


Contacted, Ashraf Ali, company secretary of Ring Shine Textiles, said the management would announce a new date and time soon.


“We received such an allegation from the investors – we will look into the matter,” said Md Rezaul Karim, spokesperson of the Bangladesh Securities and Exchange Commission.


The development is yet another blow for its retail investors, who have been hit by one bad news after another ever since the company got listed on December 12 last year to raise Tk 150 crore, and are now completely in the dark about what is going on with the textile manufacturer.


Production at its plant in Savar’s Dhaka Export Processing Zone has been on halt since September 27 for want of orders from foreign buyers and a shortage of imported raw materials for the global coronavirus pandemic.

The decision was taken in line with section-11 of the Bangladesh EPZ Labour Law, 2019, he added.

A factory layoff within a year of listing, when all the other listed textile manufacturers are running their plants in full steam, is a bad omen, a handful of stock brokerage houses told Dhaka Tribune requesting not to go on record for the report.

To add to the concern of its retail investors is the disclosure in its 2019-20 financial year report that the company has a negative cash flow per share.

Cash flow per share is calculated as a ratio, indicating the amount of cash a business generates based on a company’s net income with the costs of depreciation and amortisation added back. 

Since the expenses related to depreciation and amortisation are not actually cash expenses, adding them back keeps the company’s cash flow numbers from being artificially deflated.

Because cash flow per share represents the net cash a company produces, some financial analysts view it as a more accurate measurement of a company's financial health.

Ring Shine Textiles posted a negative net operating cash flow per share of Tk 0.76 for the 2019-20 financial year that wrapped up on June 30, in contrast to Tk 1.83 a year earlier.

The company logged in a profit of about Tk 14.5 crore for the year that ended on June 30, down 70.5 per cent year-on-year.

Then last month, news surfaced that the sponsor-directors of the debt-burdened company, all hailing from either Singapore or Taiwan, are frantically trying to sell their 31.5 per cent stake and get out of Bangladesh.


The sponsors have reached out to several institutional investors offering to sell their stake, Dhaka Tribune learnt from the parties who were approached. 


However, rumours of Ring Shine’s foreign owners’ looking for an exit have started floating a month after its stock market debut.

As per rumours, the export-oriented textile manufacturer’sforeign staff, including its directors, were abandoning their posts and leaving the country for good. The exit en masse had been prompted by either loan defaults or an anonymous death threat issued to the managing director.

This precipitated the slide of the stock, which made its debut just at Tk 15, and at one point went below its face value of Tk 10.

Then later in January, the securities regulator asked the Bangladesh Bank to freeze the initial public offering (IPO) account of the textile maker citing irregular cash disbursement.

The company had raised Tk 150 crore from the public for purchasing machinery and repayment of bank loans and instantly withdrew Tk 50 crore from the account to pay off loans taken from different banks before the public share issuance.

Then in February, a key sponsor offloaded holding: Universe Knitting Garments, whose owner Sung Wey Min is the sponsor and MD of Ring Shine Textile, sold 36.9 lakh shares.

This only led to an increase in the supply of Rung Shine shares in the market, forcing the stock price to plummet even more.

According to market analysts, when a company's sponsor sells his or her shares just after being listed, it gives a bad signal to general shareholders.

A sponsor can sell his or her shares as they wish but when they do so under a stock's face value, then it raises questions about the company's potential, they added.

When Universe Knitting offloaded the Ring Shine shares, the stock price was languishing at around Tk 8, which is less than the face value.

Shares of Ring Shine closed at Tk 6.4 on December 30, the last day of trading for the year, which is the same as the previous day.

Ring Shine’s issue managers, AFC Capital and CAPM Advisory, declined to comment for the report.


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