As a loan defaulter, the company could not upgrade its machines due to financial crisis
Dulamia Cotton Spinning Mills Ltd is unable to upgrade its factory as it is a loan defaulter of BDBL Bank. As a result, the factory remains closed for more than a year.
Despite this, its share price soared by 123% in the last two months at the Dhaka Stock Exchange (DSE). On Monday, its share was traded at Tk91.90 at the DSE.
The DSE sent a query to the company in this regard, but the latter replied that there was no undisclosed information about the unusual share price hike.
Dulamia was established in 1987 and got listed on the DSE in 1989.
Abdul Awal Mintoo is the key promoter of the company. It is also an associate organisation of Multimode Group led by Mintoo.
Its factory is located in Feni and it started its journey by installing Romanian spinning machines.
Spinning machines have become more modern in the last two decades, but as a loan defaulter of BDBL Bank, Dulamia could not upgrade its machines due to the financial crisis.
The cost of yarn produced with Romanian machines is much higher than that of the one made with modern machines. So, the company has been incurring losses since 2000.
In 2013, BDBL Bank filed a case against the company to recover the default loan of Tk7 crore by selling its assets. The company then filed a petition with the High Court to have its name removed from the CIB report as a loan defaulter.
The High Court in 2018 ordered the bank to treat Dulamia as a company of ill financial health. It ordered the company to pay 30% of the default loan while the bank was directed to waive the remaining amount and take necessary steps to remove the company's name from the CIB report of the Bangladesh Bank.
As per the High Court order, the company agreed to pay the interest. After that, the company assigned a firm to verify what needed to be updated.
But in 2019, BDBL Bank appealed against the High Court order and obtained a stay order on the High Court verdict. The case is currently pending.
A senior officer of the company told The Business Standard, "We are not able to get out of this problem due to non-cooperation of the bank. For this, our work has also stalled. However, in the interest of the shareholders, discussions are underway with the bank to resolve the issue out of court."
The bank has a representative on the company's board but does not have any share in it.
At present, Dulamia is borrowing from other companies and promoters of Multimode Group to meet expenses.
The auditor of the company said in the 2018-19 annual report that its current liabilities had exceeded total assets by Tk19.25 crore and accumulated net asset was Tk26.42 crore negative.
The company's working capital and retained earnings were also negative, indicating that there is a significant doubt about the company's ability to continue as a going concern.
The company could not pay any dividend to its shareholders since 2009.
Its paid-up capital is Tk7.55 crore. Sponsors and directors hold 33.16% of shares while institutional investors own 4.37%, and general investors 62.47%.