The company has decided to extend its factory shutdown till 24 December this year
The stock market regulator wants to investigate the financial statements of Ring Shine Textiles Ltd and an inquiry committee for this purpose may be formed very soon, said sources.
Sources at the Bangladesh Securities and Exchange Commission (BSEC) also said the company faces a shortage of working capital to continue its operation.
Furthermore, the company has decided to extend its factory shutdown till 24 December this year, said a disclosure posted on the Dhaka Stock Exchange (DSE) website on Tuesday.
A senior official of Ring Shine said the company's factory had been closed due to a working capital shortage, a decline in orders from foreign buyers and a shortage of imported raw materials.
Earlier in September, the company announced it would shut its factory for a month.
On the other hand, the company has not been able to use its initial public offering fund yet.
Ring Shine raised a fund of Tk150 crore from investors in 2019 to set up denim plants and repay bank loans. The company issued each share at the face value of Tk10.
But it used only Tk22 crore to pay back loans it took from Premier Bank. Ring Shine also took a loan from Woori Bank, but has not repaid it yet.
Consequently, the Dhaka branch of Woori Bank has requested the BSEC to intervene and ensure the recovery of the loan.
Meanwhile, the Taiwanese sponsors, directors and other high-ranking officials of Ring Shine flew home to celebrate the Chinese New Year without prior notice. Investors fear that the owner has left the company.
Considering such developments, the securities regulator froze Ring Shine's IPO account in February this year. However, it withdrew the decision in September.
The company's share price has been stuck at the floor price of Tk6.40 on the DSE for the last two months.
The company recommended 1% cash and 1% stock dividends for its shareholders for the 2019-20 fiscal year. In the last fiscal year, its earnings per share fell by 83% to Tk0.29.
An official of the company said during the Covid-19 pandemic, the company performed at around 35% of its capacity. That is why its exports and production have been affected.
Of the total shares of Ring Shine, its sponsors and directors hold 31.54% while institutional investors own 17.16%, foreign investors 0.02% and general investors 51.28%.