'This has been done purely in the interest of investors'
The Bangladesh Securities and Exchange Commission (BSEC) on Tuesday appointed seven independent directors to Ring Shine Textiles for the restructuring of higher management (including company secretary and chief financial officer) and resume production.
Production at the export-oriented textile manufacturer’s plant in Savar’s Dhaka Export Processing Zone has been on halt since September 27 last year.
The directors are: Mejbah Uddin, additional inspector general of police; Dhaka University professors Mohammad Mizanur Rahman and Mohammad Moniruzzaman; Mohammad Sogir Hossain Khandaker, a professor of Jaganath University; Md Foroz Ali, former managing director of Janata Bank; Istak Ahmmed Shimul, an independent director of Power Grid Company; and Abdur Razzak, director of operation of Inspectorate Griffith.
Independent director Mejbah Uddin has been made chairman of the new board of the company.
“This has been done purely in the interest of investors,” Md Rezaul Karim, spokesperson of the BSEC, told Dhaka Tribune.
The board cannot take any decision without the advice of the newly-appointed independent directors, he added.
Ring Shine could not be reached for comment.
For Ring Shine’s retail investors, the development is a stroke of good news after one bad news after another ever since the company got listed on December 12, 2019 to raise Tk 150 crore.
In the first week of this month, the BSEC appointed Hoda Vasi Chowdhury & Co. to conduct an audit into the books of Ring Shine Textiles to get a handle on the elusive company’s financial health.
Meanwhile, the Dhaka Stock Exchange asked for clarification regarding the non-submission of un-audited first quarterly financial statements for the period that ended on September 30.
The export-oriented textile manufacturer failed to submit the report within the stipulated time, which is a violation of the listing rules.
The company will pay a penalty of Tk 5,000 for each day that it fails to submit the report.
The company was supposed to have its rescheduled extraordinary general meeting on December 31 but its board failed to turn up at the gathering. A new date is yet to be announced.
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 IPO funds, over which there are some complications.
But it was called off for “unavoidable circumstances” without any prior notice and a new date was not announced until December 17. But that meeting did not happen at all.
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.