Dhaka Stock Exchange, (DSE) S. Alam Cold Rolled Steels Limited listed in the stock market has debt ratio is much higher than the paid-up capital. A review of the company’s report showed that the debt was about 13 times higher than the paid-up capital. Added, the company’s assets against debt are one-seventh. Meanwhile, the interest amount is more than 7 times compared to the annual income of the company. The matter came up after analyzing the information given to DSE and the financial report of the company for 2021.
According to sources, the paid-up capital of this company, which was listed in the Bangladesh Stock Market in 2006, is Tk 98 crore 37 lakh. According to the current share price, the market value of the company is Tk 327 crore 57 lakh. But the company has taken loans of more than Tk 1 thousand 300 crore from many banks.
S. Alam Cold Rolled Steels Limited has received short-term loans of Tk 1,347 crore and 87 lakhs from various banks. Even if calculated at the rate of 8 percent, the company will have to pay Tk 59 crore 11 lakh in one year only for interest. But according to the financial report of the company for the year 2021, the company made an after-tax income of Tk 8 crore 23 lakh 15 thousand in one year. A question has also been raised about how to pay the interest of Tk 59 crore with an income of Tk 8 crore a year. Stock market people say that if the company’s income does not match the bank loan, there is a possibility of the company going bankrupt. This also increases the risk of casual investors being harmed.
It is reported that the inventory of S. Alam Cold Rolled Steels has also been dropping continuously for the last 4 years. In 2019, the asset value per share of the company was 19 taka 46 paisa. And the value of total assets was 191 crore 43 lakh 1 thousand 606 taka. On the other hand, according to the latest financial report of the company, the asset value per share of the company as on June 30, 2022 was Tk 18.56 paisa. As such, the asset value of the company in 2022 stood at 182 crore 57 lakh 67 thousand 616 taka.
When asked, the company secretary of S. Alam Cold Rolled Mills Limited. Sohail Amin told Orthosongbad, S. Alam Cold Rolled Public Company, all details are given, please check. Also, when asked whether a company with a paid-up capital of less than 100 crore takas can get a loan of 1,300 crore taka, while he refused to answer the question.
Al Amin, associate professor and share market analyst of Dhaka University’s accounting and information department, asked whether a company can get 13 times more debt than its paid-up capital. He told Orthosongbad that banks give loans to companies considering the equity-debt ratio. Banks review whether the company has the assets to give such a large amount.
In response to the question whether there is a risk in investment if the amount of debt is more than the paid capital, he said that many ordinary investors invest with the advice of others. But no one forces them to buy any shares. They often invest without looking at a company’s credit rating, risk etc. Therefore, investment decisions can be correct if the risk is taken into account.
Incidentally, S. Alam Cold Rolled Steel Mills Limited was listed in the stock market in 2006. General investors are holding 17.43 percent shares of the company. Institutional investors hold 29.50 percent shares. The remaining 53.07 percent shares are owned by its entrepreneurs-directors.
