Al-Amin Chemicals gets BSEC approval to raise paid-up capital

Al-Amin Chemicals Industries has received consent from the Bangladesh Securities and Exchange Commission (BSEC) to increase its paid-up capital from Tk5 crore to Tk30 crore, according to a company disclosure.

The chemical products manufacturer, listed on the capital market since 2002, has been trading in the over-the-counter (OTC) market since 2009 due to various irregularities.

The company had applied to the Dhaka Stock Exchange (DSE) for relisting on the SME platform. However, due to the irregularities and a lack of consent from the BSEC, the DSE rejected the company’s application.

Al-Amin Chemicals raised Tk25 crore through private placement with some investors. A portion of this capital has been invested in renovating the company, acquiring raw materials, and for working capital. Around Tk10 crore has also been invested in the stock market, according to its managing director, Munshi Shofiuddin.

“We provided the company’s business plan to the commission. Due to difficulties in opening letters of credit (LCs) and the economic crisis, we did not fulfil the plan. We hope to fulfil the plan very soon. Our revenue is growing, and profits will increase,” Shofiuddin told The Business Standard, earlier.

In October last year, the DSE inspected Al-Amin Chemicals and uncovered several anomalies. According to the inspection report submitted to the BSEC, the company’s new owners raised capital without the regulator’s consent and issued shares to shell or shadow firms.

Additionally, the new owners altered the investment plan for utilising the funds, and their new strategic business plan does not support the company’s present performance.

As a result, the DSE expressed concerns about the company’s efforts to protect investors’ interests and its contribution to developing a sustainable capital market.

The new owners issued 2.5 crore fresh shares at Tk10 each. The company’s shares last traded at Tk31 each at the DSE on 30 November. The free-float shares now stand at 8.64%, down from 51.82% before the issuance of new shares.

According to the DSE inspection report, Al-Amin Chemicals was supposed to invest Tk5 crore of the raised funds in the capital market. Instead, the company invested Tk10.28 crore in the stock market and took a margin loan of Tk4.63 crore, making the total investment in the stock market Tk14.16 crore. As of 12 October 2023, its unrealised loss stood at Tk75 lakh due to the downturn in the stock market.

The DSE inspection team found that Al-Amin Chemicals issued new shares to three corporate shareholders with no visible operations since their incorporation. Eshaal Communication Limited, represented by Aminul Islam Sikder and Md Khirul Bashar, held 32.4% of Al-Amin Chemicals. The company was incorporated in 2002 and reported no revenue for 2022, with retained earnings of Tk15 lakh as of 30 June 2022.

Lava Electrodes, formed in 2016, with retained earnings of Tk72 lakh as of 30 June 2022, owns 5.4% of Al-Amin Chemicals. Monarch Mart Limited, incorporated in 2022, owns 10.8% of Al-Amin Chemicals, with revenue and retained earnings in 2022 at Tk7.82 crore.

The report noted that Eshaal Communication and Monarch Mart invested in Al-Amin Chemicals by taking a loan from Lava Electrodes Industries Ltd. The DSE team raised concerns that Md Abul Khayer Hiru, his wife Kazi Sadia Hasan, and their associates are the lenders of Lava Electrodes, which had borrowed Tk19.73 crore as of 30 June 2022.