Ring Shine Textiles incurring losses despite resuming production

Ring Shine Textiles, a publicly traded company, has reported incurring losses despite resuming its production, due to the rise in financial expenses, shortage of working capital and gas crisis.

The company said that its net asset value (NAV) per share has decreased due to the incurred losses as the company is operating at 17 to 25 per cent capacity and has yet to reach its breakeven point.

Earnings are negative because of the incurred losses and are highly impacted by the increase in financial expenses.

According to company sources, the company had orders of $12 million in March but managed to export only $3 million. It is unable to export despite having enough orders due to a lack of capital, old machineries and rising gas prices.

The company disclosed its first six-month (H1) financial report for FY22–23 on Wednesday, after nearly two years.

Sagir Hossain Khandkar, a professor of finance at Jagannath University and director of the reconstituted board, told The Business Post, “As the company was closed for a long time, it is not possible for it to suddenly make a profit. But the release of the financial report is a good thing.”

“The company is doing well internally and hopes to do even better in the future,” he added.

In the second year of its listing, the company announced closure for a month in September 2020, citing a decrease in foreign buyers and a shortage in the import of raw materials due to Covid-19. Later, the closing period was extended three times.

In June 2021, the company declared to resume production after almost nine months of closure. The company said it would resume production on June 13 at 25 per cent capacity.

Earlier, on January 27, 2021, the regulatory body BSEC dissolved the company’s board of directors and tasked a new board to take necessary measures to restart the company.

The regulatory authority has taken such initiatives to revive six closed companies. The first company, Emerald Oil, has returned to production but could not publish its financial report whereas Ring Shine is the first company to release its financial report after going out of production.

In 2022, the Union Group of Companies Ltd expressed its interest in acquiring Ring Shine Textiles Ltd.

In the proposal, Managing Director of Union Group Raquibul Kabir said, “We would like to introduce ourselves as a conglomerate having numerous companies under one umbrella. Union Group, having experience in the same track of business as Ring Shine Textiles, is expanding its business in the same line and is considering taking over the listed company.”

“Union Group is eager to take over the company. Discussions with them are ongoing. As the company has been closed for a long time, Union Group is also doing a lot of calculations to take it over. As a result, there is some delay,” said Sagir Hossain Khandkar.

In the first six months (Jul-Dec’22) of FY22-23, the company’s loss per share was Tk 0.75, compared to Tk 0.34 loss in the same period of the previous year, stated the company in a filing on the Dhaka Stock Exchange on Wednesday.

The company released its first and second quarter results on the same day, in which the loss per share in the first quarter (July-September, 22) was Tk 0.37 and the loss per share in the second quarter (October-December, 22) was Tk 0.38.

Ring Shine Textiles raised Tk 150 crore from the market in 2019 to purchase machinery and to repay bank loans.

Listed on the Dhaka Stock Exchange in 2019, Ring Shine Textiles share’s price stood at Tk 9.80 at the Dhaka bourse on Wednesday.