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ACI answers DSE probe body’s query

  • Published at 10:48 pm March 30th, 2019
aci
Logo of ACI Limited Collected

The DSE inquiry committee had asked ACI to respond within 15 working days of receiving the letter

The inquiry committee of the Dhaka Stock Exchange (DSE) sent a letter to ACI Limited, asking the company to explain the huge losses incurred by its subsidiary, Shwapno.

The committee had asked ACI to respond within 15 working days of receiving the letter.

A member of the committee, not wishing  to be named, said: "The company has been given a letter requesting additional information about why Shwapno has been continuously incurring losses since its inception in 2008."

Speaking to the Dhaka Tribune, Company Secretary of ACI Limited, Mohammad Mostafizur Rahman, said: “We have received the letter and already responded to it.”

He refused to say exactly what was written in their response to DSE.

But sources say ACI’s response  elaborated the reasons for continuous losses at its subsidiary, Shwapno, that has resulted in losses over the years for its parent organization, ACI.

Previously, on February 12, DSE launched an inquiry committee to unearth why ACI Logistics Limited (Shwapno), a chain super shop brand, has been losing money and gobbling up the profits of its parent company.

The inquiry committee was formed following a Dhaka Bank Securities’ complaint, claiming that by carrying the burden of ACI Logistics’ losses, the board of directors of ACI Limited failed to carry out their legal duties and responsibilities to protect the interests of small shareholders.

The DSE-formed five-member committee, led by its director, Justice Siddiqur Rahman Miah, will submit its report to the DSE board, following which the board will hand over the report to the chief regulatory officer (CRO).

After a decade of losses, Shwapno—comprising 76% of ACI Logistics—has weighed heavily on the profitability of ACI Ltd, registering a loss for the parent company ACI.

ACI Limited’s share prices and its earnings per share (EPS), have been declining since last year, with 115% cash and 3.5% stock dividends disbursed to its shareholders last year.

The situation has aggrieved ACI shareholders, as its stock price at the DSE fell by nearly Tk125 in a year.

In the previous fiscal year (FY2017-18), Shwapno incurred losses worth Tk135 crore, and its cumulative loss stood at Tk891 crore, according to ACI’s annual report.

According to the financial statement posted on the DSE website, ACI Limited’s EPS for the October-December quarter of FY2017-18 stood at (negative) Tk0.78, in contrast to Tk5.44 a year earlier.

ACI’s EPS was Tk1.26 for the July-September period of 2018, compared to Tk2.36 for the corresponding period in 2017.

In a statement posted on the DSE website, ACI cited a number of reasons for the dismal earnings of the company, including currency devaluation, higher interest rates, and a decline in profits from joint ventures and associates, purchase rate variances due to international price hikes, and high income tax expenses.

At the last annual general meeting of ACI Limited, Chairman M Anis Ud Dowla, urged  shareholders not to be disappointed by the losses of ACI Logistics, saying that Shwapno would make profits very soon.

ACI, presently an 'A' rated company, was listed in the stock exchanges in 1976.  The company's sponsor-directors hold 45.45% shares, institutions 29.52%, and general shareholders hold 25.03% shares.