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Malek Spinning to shut textile unit of its subsidiary

Its share price plunges 3.19pc after the news

FE REPOPRT | December 20, 2021 00:00:00

Malek Spinning Mills, a listed company, has decided to close down the textile unit of its subsidiary- Salek Textile- due to accumulated losses.

The board of directors has approved the closure of the textile unit with effect from December 31, 2021 due to accumulated losses and expiry of lease agreement of the factory building and premises, the company said in a filing with the Dhaka Stock Exchange on Sunday.

The Malek Spinning Mills holds 97.92 per cent shares in Salek Textile.

The parent company, Malek Spinning Mills, will not be required to provide any funds for closing-down of the RMG unit of Salek Textile, according to the filing.

The liabilities of the Unit shall be settled by selling off assets of the unit (Factory plant and machinery and others) and borrowing from Salek Textile, the filing added.

After the news, stocks of Malek Spinning Mills plunged 3.19 per cent to Tk 27.30 on the DSE on Sunday.

Its shares traded between Tk 12.80 and Tk 41.40 in the last one year.

On June 23 this year, Malek Spinning announced that the company will invest Tk 2.13 billion to expand its production capacity in order to meet the growing demand for yarn.

Following the news, the company's stock price started to rise and soared 62 per cent or Tk 15 each in two months between June 20 and August 20, this year.

The company's consolidated earnings per share (EPS) more than doubled in the first quarter (Q1) for July-September, 2021 compared to the same quarter a year earlier.

The company has reported consolidated EPS of Tk 0.87 for July-September 2021 as against Tk 0.43 for July-September 2020.

EPS has increased because net profit substantially rose during the period due to increase in turnover/sales and decrease in cost of goods sold percentage on sales compared to previous period, said the company.

The company has recommended a 10 per cent cash dividend for the year ended on June 30, 2021. In 2020, the company declared no dividend. In 2019, it provided a 10 per cent cash dividend.

The company's paid-up capital is Tk 1.93 billion, authorised capital is Tk 3.0 billion and the total number of securities is 193.60 million.

The sponsor-directors own 47.34 per cent stakes in the company while the institutional investors own 24.09 per cent and the general public 28.57 per cent as of October 31, 2021, the DSE data shows.

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