Seven listed companies have shuttered their factories in the past year for the pandemic, weak fundamentals and lack of corporate governance, leaving the scores of retail investors who poured crores in them in a state of suspense.
The companies are Ring Shine Textile, Aziz Pipes, Shyampur Sugar Mills, Alltex, CVO Petroleum, Dulamia Cotton and Tallu Spinning Mills.
The first to shutter production Tallu Spinning Mills: on April 7 last year. And the reason put forward was the pandemic.
The company, which has been racking up losses since 2016 and is trading as a ‘Z’ category stock, is yet to resume production.
Two months later, Dulamia Cotton Spinning Mills, another ‘Z’ category company that has been in the red since 2016, also announced the indefinite closure of its factory for the pandemic.
Then on September 27 last year, export-oriented Ring Shine Textiles, which had made its debut on the bourse just nine months earlier, announced shutting down production at its plant in Savar’s Dhaka Export Processing Zone for a month for want of orders and raw materials.
Initially, the production recess was for a month, but it was extended by a month each time.
Production is yet to start, so a team from the stock market regulator will pay a visit to its factory on February 8 to look into its production capacity, reasons for stopping production, raw material stock and future management plans.
In October, CVO Petrochemical Refinery, whose production was on hold for three months already, announced it would not be resuming production in the foreseeable future due to shortage of condensate, a gas by-product used as a main raw material by refineries.
The company, which logged in losses amounting to Tk 1.3 crore in its 2019-20 financial year, said Petrobangla, who supplied the condensate, has not conveyed when it would resume supplies.
In November last year, Alltex Industries, a ‘Z’ category share, decided to temporarily shut down the factory for 45 days to carry out the refurbishment and reinstallation of underground gas lines.
The company, which has been loss-making since 2017, is yet to resume production.
On December 2 last year, the state-owned Shyampur Sugar Mills, which has been listed since 1996, brought down its shutters for good after incurring losses for years.
The Bangladesh Sugar and Foods Industries Corporation (BSFIC) sources said that Shyampur Sugar, Panchagar Sugar, Setabganj Sugar, Rangpur Sugar, Kushtia Sugar and Mobarakganj Sugar will be closed until further notice.
The latest to hit the brakes on production is Aziz Pipes, which on January 10 this year announced that its supplier has failed to deliver PVC resin, the main raw material for the pandemic, making it unfeasible to continue manufacturing.
The company, whose profit has been on the wane since 2018, will resume its production when the PVC resin will be available and the situation improves.
Some of the companies’ initial public offering applications should have never gotten the nod, while some furnished misleading financial statements, said market insiders on condition of anonymity to speak candidly on the matter.
Then there was the perennial problem of weak regulatory supervision, they said.
The stock market regulator, the bourses and the issue managers also deserve a portion of the blame, said AB Mirza Azizul Islam, a former chairman of the Bangladesh Securities and Exchange Commission.
“If the stock exchanges acted as the primary regulators, which they were supposed to, and if the BSEC was serious and vigilant, such a grave situation in the market would not have happened,” said Abu Ahmed, a stock market analyst and an honorary professor at the Dhaka University’s economics department.
He went on to urge the stock market regulator to emphasise on the quality of IPOs for winning back investors’ confidence.
