Concern looms over Dacca Dyeing as financial hardships terrific

Several financial difficulties including the negative retained earnings, significant current maturity of long-term and short-term borrowings and lower capacity utilisation might pose a serious threat to Dacca Dyeing and Manufacturing Co Ltd.

These troubles the company has been facing for a long time were revealed in an auditor’s qualified opinion, according to a filing posted on the website of the Dhaka Stock Exchange (DSE) on Tuesday.

The company, which is one of the oldest home textile makers in the country, was also facing many undisclosed material uncertainties that might cast significant doubt over its financial progress, according to the auditor’s opinion.

The financial hardships the company was now facing include negative retained earnings, significant current maturity of long-term borrowings and short-term loans, and lower capacity utilisation.

The company’s management, however, hoped that they would be able to survive despite having several financial strains. But the auditors expressed their concerns about whether it might have the ability to continue as a going concern, the DSE filing read.

Incorporated in 1963, and listed in 2009, the home textile maker had not paid any dividends for four years since 2016, the year when it had filed a writ petition with the court seeking the restoration of gas lines in its factory.

The firm is currently being operated under the QC Group.

The board of directors of Dacca Dyeing and Manufacturing Company recommended a 0.25 per cent cash dividend for the year ending June 2022.

After a four-year gap, it paid a 1 per cent cash dividend to its shareholders for FY20.

The company’s earnings per share (EPS) stood at Tk 0.14 for the fiscal year 2021-22 against Tk 0.60 for the previous fiscal year.

Dacca Dyeing, a company with a paid-up capital of Tk 87.15 crore, now belongs to the ‘B’ category
at the DSE.

“The company had reported property, plant, and equipment worth Tk 471 crore values but except for the land, we could not find the existence of any other assets because it did not maintain a properly fixed asset register or used any fixed asset management system,” the auditor’s report stated.

“The home textile maker had shown a provision worth Tk 8.12 crore under the workers’ profit participation fund (WPPF), but it did not share any profits with its employees, which was a violation of the country’s existing
labour law.”

The company, however, had established a trusty board for the management of the workers’ profit participation fund.

Its non-current assets held for sale and discontinued operations stood at Tk 31.32 crore, according to the auditor’s report, though the company recently decided to restart its operations with the discontinued operations as disclosed.

The company’s financial statements show its current maturity of long-term borrowings reach Tk 83.08 crore, while the short-term borrowings amount to Tk 42.11 crore which remained unadjusted since 2014.

The company’s share price stood at Tk 17.9 each on the DSE on Tuesday.