RN Spinning Mills continues to incur losses as its production has been closed for a year and a half following a fire in the factory
- Shareholders did not receive any dividends in 2019 and 2020
- Loss in 2020 stood at Tk34.54 crore, Tk0.88 loss per share
- Loss in 2019 was Tk607 crore, Tk15.47 loss per share
- Production remains suspended, no possibility of immediate resumption
RN Spinning Mills, which has been closed for a year and a half following a fire, continues to incur losses and has failed to provide any dividends to its shareholders for the second consecutive year.
There is no hope in sight for investors as the company is not able to provide a timeline for a return to production in the factory, which caught fire on 8 April 2019.
RN Spinning on Tuesday released its financial statements for fiscal 2019-2020.
During this time, it has incurred a loss of about Tk34.54 crore and the loss per share was Tk0.88.
Although the factory remained closed, the loss was due to the salaries of officers and employees and other fixed expenses.
The company's share price continues to dip as there has been no improvement in the financial situation. The share price stood at Tk3.8 on Tuesday.
The annual general meeting will be held on 22 December, with a record date of 19 November.
In 2019, the company had a loss of Tk607.11 crore and the loss per share was Tk15.47. The shareholders did not receive any dividend that year either.
However, RN Spinning was in profit in 2017 and 2018.
RN Spinning Mills, which manufactures acrylic, cotton and synthetic yarn, was listed on the stock exchange in 2010. It raised Tk30 crore by issuing 30 lakh shares through an Initial Public Offering.
After failure to pay dividends, the company was downgraded to Category-Z in 2019.
RN Spinning was established in 2004 as a backward linkage company of Sweater and Knit Industries.
The company started its business as a joint venture with a Korean entrepreneur to manufacture acrylic yarns.
An official of the company, who did not want to be named, told The Business Standard, "The factory fire caused huge losses last year. Now the company has no production and the inventories that existed have been sold.
"The losses are climbing as the company has to bear the fixed expenses. Given its location within an export processing zone, it cannot make a unilateral decision about repairs and reopening."
The decision to reduce the paid-up capital was not implemented.
RN Spinning announced the reduction in paid-up capital by issuing one share for every seven shares to existing shareholders.
It has already held an Extraordinary General Meeting (EGM) to seek shareholders' endorsement to reduce the paid-up capital and is now awaiting final approval from the High Court.
The company's fixed assets and inventories are covered by the insurance of Union Insurance Company Limited.
RN Spinning has not yet received the money for the insurance claim as it has not submitted the final report.