Dulamia Cotton Spinning Mills may have to shut down permanently for the company has failed to revamp its production unit, replacing outdated machinery.
It has been out of production for the last three years. The auditor said the company might never be able to resume production as its current liability was 16 times current asset.
The cotton spinning mill has assets worth only Tk 0.22 for every Tk 1 of liability. It means if the company sells its entire assets, it will be able to pay back only 20 per cent of its liabilities.
Though it has approximately 27,000 spindles able to produce around 75,00,000 pounds (lbs) of cotton yarn per annum, what can be produced is not up to the current market standards.
According to the Dulamia's financial statement, it had imported machines from European country Romania. Those machines are out of date now. The yarn made with those old machines can longer compete with yarn available in the market.
Of the many reasons cited by the auditor in a qualified opinion as contributing factors behind the business's decline, the loss of market and customers seems to be the major problem that led to other issues, such as difficulty in essential new product development and discontinuity in production.
Having been incorporated in 1987, the Dulamia Cotton Mills has been showing losses for more than a decade. According to the FY23 financial statement, its accumulated loss reached Tk 372 million.
Its short- and long-term liabilities amounted to Tk 382 million until FY23, whereas current and fixed assets were worth Tk 86 million.
The listed cotton mill has not declared any dividend for shareholders for at least one decade.
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