C&A Textiles faces DSE inspection amid prolonged non-compliance
DSE to Examine C&A Textiles After Years of Missing Disclosures
Bdbusinessdaily.com – C&A Textiles Limited is facing an inspection by the Dhaka Stock Exchange as the listed company remains far behind on financial reporting and other market obligations, leaving shareholders with limited visibility into its current condition.
The Bangladesh Securities and Exchange Commission approved the planned inspection in mid-September after a request from the DSE. The exchange intends to determine whether the textile manufacturer is operating and to clarify its latest financial and business position.
The action follows more than two years of missed quarterly financial disclosures. DSE records show that C&A Textiles last released third-quarter results for the period ending in March 2024. No later quarterly statements have been made public, creating a prolonged information gap for investors.
Officials at Alif Group, which took control of the troubled company in 2021, did not respond to questions about the company’s present operations or finances. The uncertainty has become particularly important because ordinary investors hold the overwhelming majority of the company’s shares.
Investors Await Clearer Picture
General shareholders collectively own 82.86% of C&A Textiles, while sponsor-directors hold 7.10%. With such a large public shareholding, delayed financial information makes it difficult for investors to assess earnings, production, cash flow, liabilities or management progress.
The company has paid-up capital of Tk293 crore, and its shares were trading at Tk3 each. Its most recently available exchange information shows net profit of Tk4.5 crore for the 2022-23 financial year, when it declared a 0.5% cash dividend.
After restarting production under new ownership, the company recorded net profit of Tk5.5 crore during the first nine months of FY24. However, the absence of updated statements means investors cannot see whether that recovery continued after March 2024.
The DSE has placed C&A Textiles in the Z category because it did not hold mandatory annual general meetings within the required timeframe. The category downgrade adds to the concerns surrounding the company’s compliance record and its ability to keep shareholders informed.
A Revival That Lost Momentum
C&A Textiles entered Bangladesh’s capital market in 2015 through an initial public offering that raised Tk45 crore. Its IPO prospectus stated that Tk30.87 crore of the proceeds would be used for repaying loans and expanding the business.
The business later entered a severe crisis. Production stopped abruptly in June 2017, with renovation work cited as the reason. The shutdown came amid financial difficulties and followed the departure of the original sponsors from the country in connection with a major loan scam.
For roughly four years, the company remained closed and its offices were shut. The long interruption weakened confidence in the listed textile manufacturer and left its future uncertain.
Alif Group acquired C&A Textiles in 2021 and provided fresh capital in an effort to restore the business. Operations resumed in 2022. The new management also sought court approval to clear a backlog of annual general meetings, eventually completing meetings through FY23.
Those developments initially suggested that the company was moving toward a more stable footing. Yet the renewed failure to publish quarterly accounts and to maintain AGM compliance has raised fresh questions about the durability of that recovery.
Proposed Merger Still Pending
Alif Industries Limited, another concern of Alif Group, had planned to merge with C&A Textiles. The proposal required consent from banks, other creditors and shareholders. The merger has not yet been completed.
A completed merger could potentially reshape the company’s ownership and operating structure, but no final outcome has been announced. Until there is clarity on the proposal and the company’s latest financial position, shareholders remain unable to judge how the plan may affect their investment.
The forthcoming DSE inspection is expected to focus on the company’s actual operating condition and compliance failures. For investors, the key issue is whether the review leads to timely disclosures that explain the company’s production status, finances and plans for resolving its outstanding regulatory obligations.
Earlier Governance and Loan-Related Problems
The company’s difficulties have a longer history. In 2020, former managing director Rukshana Morshed was arrested in Chattogram in a case involving a defaulted loan.
The securities regulator also found that Rukshana, director Sharmin Akther Lovely and Bangladesh Shoes Industries Limited jointly sold nearly 1.22 crore C&A Textiles shares without prior declaration. The sales generated about Tk12 crore.
In February 2021, the BSEC restructured the board by appointing seven directors as part of the effort to revive the underperforming company. Alif Group’s subsequent takeover formed a central part of that attempted turnaround.
The next inspection will test whether the company has moved beyond its past disruptions and whether it can meet the transparency standards expected of a listed business. Until updated accounts and operational information are released, C&A Textiles shareholders will continue to face uncertainty over a company in which the public owns most of the equity.
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