Category: DYES AND CHEMICALS
Country: Bangladesh
Also, the BSEC is to sue the company for its IPO fraud
Ahsan Habib Tuhin 03 October, 2022, 09:35 pm | Last modified: 03 October, 2022, 11:06 pm
Agrani Bank is going to auction the factory and land of Feni-based Nurani Dyeing and Sweater Limited – entrepreneurs of which fled from the country after embezzling the fund raised from the stock market – on the charge of loan default.
To make this happen, the state-run commercial bank has recently floated an auction circular seeking tenders from interested buyers by 27 October.
As of 31 August, Nurani Dyeing owes Tk35.46 crore, including loan principal and interest, to the Amin Court corporate branch of the bank, reads the circular which was recently published on a national daily, adding that the company did not repay the loan despite several notices.
When contacted, Agrani Bank's Amin Court corporate branch General Manager AKM Fazlul Haque told The Business Standard that the auction notice has been issued to sell the Nurani Dyeing's asset kept as mortgage against the loan.
Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) on last Wednesday decided to file cases against Nurani Dyeing and Sweater, its sponsor-directors, issue managers, and auditors, on account of fraud with the company's initial public offering (IPO) in 2017.
Meanwhile, the company has also been sued by AB Bank on the charge of defaulting another loan of Tk226 crore. "The process of recovering the defaulted loan from the company is underway," KM Mohiuddin Ahmed, chief financial officer of AB Bank, told TBS.
EarIer in 2021, the Dhaka Stock Exchange (DSE) in its inspection, found Nurani Dyeing's factory and offices closed and its owners had fled the country after embezzling everything they collected from investors and banks.
For further investigation, the securities regulator BSEC formed an inquiry committee, where its Deputy Directors Sirajul Islam and Mohammad Ratan Miah were made the committee members.
The committee found that during its IPO, the company gave misleading details of its liabilities to an unbelievable extent.
The company said in its IPO prospectus that the long-term loan from AB Bank was Tk100.15 crore from 2016 to 2017, whereas the committee found it was Tk578.05 crore from 2018 to 2020.
The Feni-based sweater exporter embezzled Tk41.14 crore of the Tk43 crore IPO funds by making fictitious payments to related parties and sister concerns.
Three local investment banks – Imperial Capital, EBL Investment, and CAPM Advisory Ltd – as the issue managers, provided the due diligence certificates which were later proven false.
The statutory auditor in 2017 certified that all information in the financial statements was true which was actually not so.
In 2019 and 2020, the company prepared financial reports showing fake exports, sales, receivables, and bank certificates. But the auditor provided a clean report, despite the company's factory being closed then.
In the meantime, sponsor-directors – using their 30.93% company shares as collateral for loans - finally defaulted, and their shares got seized by the bank.
Not only did it embezzle the IPO funds and fake the operational status of its business, the company also kept submitting false utilisation reports of the funds it collected from investors.
Ahmed Zaker & Co Chartered Accountants was the IPO auditor as per the prospectus.
According to the IPO prospectus, Mrs Rehana Alam is the chairman, and Sk Nurul Alam is the sponsor and managing director of the company.
SK Nurul Alam passed away on 16 April 2019. His son SK Nur Mohammed Azger became the managing director of the company.
Courtesy: https://www.tbsnews.net/economy/stocks/agrani-bank-auction-nurani-dyeings-factory-507918
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