No fish in Imam Button's 'profitable' fish farm

Despite resuming operations last year by transitioning from button business to fisheries and tannery, Imam Button's ponds have been found without any fish, and its shoe factory not capable of making more than 20 pairs a day. 

The company failed to provide any documentation for its fish business, and the disclosure provided by the tannery unit at the start of business is "misleading and fabricated," according to an inspection report by the Dhaka Stock Exchange (DSE). 

However, in the half-year (July-December) of the fiscal year 2023-24, the company has shown an income of Tk1.14 crore and a profit of Tk13 lakh from sales of fish. It has also paid a 1% cash dividend to shareholders from the profit. 

The company's officials, however, denied any wrongdoing and asserted that the DSE team had not conducted their inspection thoroughly. They said the company had just resumed operations and growth will be more in the future. 

Imam Button, previously inactive since the 2018-19 financial year, reconstituted its board in January 2023 under the supervision of the exchange commission. ASM Hasib Hasan took over as managing director after acquiring company shares. 

Later, in August, Imam Button, a producer of buttons for ready garment industries, resumed its operation as it expanded its footprint in agro-projects. In December, it entered into a tannery business on its factory premises in Chattogram. 

A subsidiary of Chattogram-based Imam Group, the company changed its name to Hami Industries PLC with the trade code "HAMI" on 24 March. Its sector was also changed to "Miscellaneous" instead of "Pharmaceuticals and Chemicals". 

It is also in the process of changing its category from Z to B. To approve the category change process, the Dhaka bourse inspected Imam Button's shoe factory and fisheries project last month. The inspection report was submitted to the securities regulator on 26 March.

Report on fish business 

Imam Button, now Hami Industries, invested Tk1.40 crore in agricultural projects, allocating Tk1 crore to fish and quail bird farming and Tk40 lakh to leasing ponds. It bought fish fry in October and November 2023, claiming to have sold them all by December. 

However, the DSE team found it inconsistent to sell small fish within just two months. The report also said the company failed to provide any documentation for the sale of fish and feed purchases. The inspection team also couldn't verify the authenticity of documents related to feed, quail bird, and fish fingerling purchases, even after contacting suppliers. 

Besides, the company's Managing Director ASM Hasib Hasan, the owner of the pond on 8 bighas of land, leased it to Imam Button for Tk1 lakh per month. 

The DSE, in its report, said the leasing rate for the land is higher than the market price. 

In response to the report, Hasib Hasan said they had invested in existing agricultural projects from which they sold fish. Regarding the absence of fish in the pond, he said, "The inspection team didn't enter the water or use nets, so their findings might not be accurate." 

Explaining the lack of vouchers for fish sales, he said that cash transactions are common for fish sales in their area, and the proceeds have been deposited in the company's bank with details shared with the stock exchange. 

On the purchase of fish fry, Hasib Hasan said they sold the previous batch and introduced new fry. He further said production has resumed since their reopening and they are making progress with the potential for further growth.

Report on tannery business

In a disclosure on the DSE, the company stated that its shoe factory can produce 530 pairs of shoes per day and 1.60 lakh pairs per year. It also claimed an expected annual turnover of Tk25 crore and a profit of Tk2 crore for the tannery unit. 

However, upon visiting the factory, the inspection team found that the claimed production capacity was false. The factory could only produce 15-20 pairs of shoes per day. 

The DSE team also deemed the projected profit of Tk2 crore per year unrealistic given the current production capacity. Furthermore, the team suggested that much of the provided information and documents seemed to be "intentionally misleading".

The inspection report mentioned that disclosure of false or fabricated information on price-sensitive information is a violation of Section 45 of the Listing Rules and the Securities Act. 

Regarding the tannery's production capacity, Hasib Hasan said that on the day of the inspection, there were around 30 workers in the factory making shoes. "It's hard to understand how they [the inspection team] said only 15-20 pairs of shoes are produced in a day." 

Jump in share price 

In January 2021, each share of Imam Button was priced at Tk20, which rose to Tk24 by January 2022. Despite stagnant earnings and halted production, the share price surged to Tk156 within six months by July 12, 2022, marking a 6.5-fold increase. 

The company's failure to restart production in August 2023 caused a slight dip in share price to Tk128.40. 

However, following an announcement on 10 August, stating that Imam Button would shift focus to fish farming, the share price surged to an all-time high of Tk220 on 23 November. Currently, the share price stands at Tk166. 

Hami Industries, a small-cap company, has 7.7 million shares, with its owners and new stakeholders owning 34%. 

Market observers said regulatory assistance might be aiding struggling companies, but new owners could be manipulating shares using this support. Due to no visible business or income improvement, they suspect that share prices are being manipulated due to this ownership structure.

Why Imam Button closed operations

Imam Button Industries was listed on the bourse in 1996. In January 2020, Imam Group's owner Mohammad Ali and his wife Jabunessa Akter fled to the United Arab Emirates after arrest warrants in 55 cases filed by the banks and financial institutions concerned for defaulting on loans. 

Mohammad Ali owns 18.11%, and Jabunessa Akter 4.52% stake in Imam Button. As the owner left the country, it publicly fell into hot water as its operation closed down. As of December 2020, Imam Group had defaulted on loans amounting to approximately Tk800 crore. 

Despite court orders to repatriate the group's executives or sell mortgaged properties to repay the debt, no concrete action has been taken yet. 

Dividend payout in question

After Imam Button paid a 1% interim cash dividend only to its general shareholders, the DSE found the company failed to comply with stock regulations on a dozen counts, including showing profit without adjusting loan expenses and paying dividends based on its basis. 

In a letter sent to the company earlier in February, the DSE stated that Imam Button owed Prime Finance Investment Tk4.83 crore – Tk4.37 crore as long-term loans and Tk45.82 lakh as short-term loans. 

The bourse mentioned that Imam Button paid a 1% interim cash dividend only to its general shareholders, which is a non-compliance with the exchange commission order issued in February 2024. 

The company did not consider its loans and other financial expenses in its profit or loss account. If the expenses are charged, its net profit would be negative, and then the interim dividend would not be justified, according to the DSE findings.