BSEC rejected the IPO applications of seven companies Including Few Garment Companies in Bangladesh
The Bangladesh Securities and Exchange Commission (BSEC) has so far rejected the initial public offering (IPO) applications of seven companies for violating securities rules, after a new chairman took charge in May.
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BSEC officials said that the commission found a number of inconsistencies

The BSEC cancelled the IPO proposals of seven companies based on its own observations and of the stock exchanges themselves. The companies whose IPO proposals have been rejected had many inconsistencies detected in their financial statements, he added.

The BSEC found that Beka Garments and Textiles Limited, and SF Textile Industries, showed inflated revenues and profits, overstating inventories and assets in their financial statements.

Beka Garments showed Tk13.19 crore in profits in financial year 2019. It also showed Tk216.34 crore in sales and Tk271.88 crore in total assets in the same fiscal.

SF Textile showed a net profit after taxes of Tk21.33 crore for 2019, and Tk21.7 crore for 2018. It also showed Tk175.81 crore in sales and Tk319.02 crore in total assets in 2019.

BD Paints showed higher sales, with a lower inventory turnover ratio and return on equity to paint a rosy picture in their financial statements, BSEC officials said.  

Their pre-IPO paid-up capital stood at Tk50 crore after issuing a huge number of placement shares worth Tk28 crore in 2018 and Tk12 crore in 2015.

B Brothers Garments violated rules and overstated in its financial statements so that investors would be more interested in buying its shares.

The company deposited its share money deposit in several bank accounts, but it was supposed to be deposited in a separate account.

The readymade garment (RMG) company failed to submit the approved layout of the building to be constructed from IPO funds.  

The company's audited financial statement as of June 30, 2016, was signed by only one director, which is a violation of Companies Act 1994, BSEC sources said.

Infinity Technology International Ltd did not submit audit certificates on the utilization of  funds raised earlier. The company has also violated the Public Issue Rules 2015.

Al Faruque Bags Limited was involved in irregularities before coming to the stock market. The BSEC fined the company Tk10 lakh for the irregularity.

The commission had previously rejected the IPO applications of the company for violating rules.

Besides, the company's two issue managers and its audit firms were fined Tk10 lakh and Tk2 lakh respectively by BSEC, for violations of guidelines on corporate governance.

BSEC rejected JMI Hospital Requisite Manufacturing Limited’s IPO due to the company's falsified financial data.

The company overstated receivables to display high revenue in its financial statement, sources said.

The BSEC found that the Investment Corporation of Bangladesh (ICB) held 30% shares of JMI Hospital and was also issue manager of the company’s IPO, which was a violation of securities rules, BSEC officials said.

Srinivasan Perumal is the Chief Marketing Officer at KnitBrain International Pvt Ltd and loves helping source, merchandising, and launch new fashion clothing lines for the fashion brands and clients.

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