Jute Spinners Limited, a company listed on the stock market, is causing a buzz with its shares. Despite being listed on the stock market almost four decades ago, the company did not offer any returns to ordinary investors for a long time. However, the company’s share price has recently witnessed an unprecedented surge. Surprisingly, the management of the company denies any specific reason for the increase in the share price. A.T.M. Mostafa, the company’s secretary, claims that it will take at least 50 years to overcome the losses of Jute Spinners.
Market insiders claim that there is undoubtedly a speculative frenzy behind the abnormal surge in the shares of this downturn company. The appropriate authorities at the Bangladesh Securities & Exchange Commission BSEC should investigate the matter and bring those involved to justice. Over the past few days, a vicious cycle fueled by weak and speculative companies has created an artificial crisis, leading to an increase in share prices. This poses a higher risk of long-term losses for ordinary investors. Recently, the DSE has cautioned investors about this issue. Even the company itself has informed investors that there is no reason for the increase in share prices other than speculation.
It has been reported that on April 18th, the share price of downturn Jute Spinners Limited was Tk 214.40. On May 25th, the latest transaction took place at Tk 445.90. Within just 22 trading days, the company’s share price has increased to Tk 231.50, indicating a growth rate of 107.97% in percentage terms.
Jute Spinners Ltd., a prominent company listed on the Dhaka Stock Exchange, is being scrutinized for an unusual surge in its share prices. According to the latest information obtained on May 15th, the Dhaka Stock Exchange (DSE) is eager to uncover the reasons behind the abnormal increase in Jute Spinners’ share prices. However, the company has informed the DSE that there is no undisclosed sensitive information behind the growth of its share prices. In other words, the company’s shares have risen without any specific cause.
It has been revealed that Jute Spinners did not offer any dividends to its investors despite being listed on the stock market for the past four decades. The company has struggled to generate profits over the last ten years, with its last recorded income occurring in 2012. Even though the company earned a modest amount of Tk 2.06 per share that year, it failed to distribute any dividends to ordinary investors. Since 2012, Jute Spinners has been unable to generate any substantial earnings. Instead, the company ia making losses every year, The company is losing Tk 8 crore every year. The production of the company has been stopped for a long time. As a result, shareholders of the company have been left uncertain for an extended period.
According to the source from Dhaka Stock Exchange, Jute Spinners’ shares were valued at Tk 48.14 per share in 2013. However, over the next two years, the value of the shares declined. In 2014, the shares were priced at Tk 43.64, and in 2015, they dropped further to Tk 19.69 per share. That year the company had a loss of 42 taka 10 paisa per share. In 2021, the loss (per share) increased to Tk44.59 paisa. The company suffered more losses in 2022. In the last year, the loss per share of the company was 44 taka 82 paisa.
Meanwhile, the debt amount of downturn Jute Spinners is 23 times higher than the paid-up capital. It is known that when the company was listed on the stock market in 1984, the paid-up capital was Tk 1 crore 70 lakh, while the company’s outstanding loans amounted to Tk 40 crore 68 lakh. Among the loans, Tk 31 crore 77 lakh were short-term loans, while the remaining Tk 8 crore 91 lakh were long-term loans.
The company’s assets are also negatively affected by the loans, as indicated by the net asset value per share in the 2022 financial report, which stands at a negative Tk 438.42 per share.
According to the auditors’ report of Jute Spinners, submitted in 2016, the company’s operations are considered risky due to ongoing losses. Continuous losses and the accumulation of losses have impacted the company’s financial stability, as stated by the auditing firm.
A.T.M. Mostafa, the Secretary of Jute Spinners, stated to Orthosongbad that there is no undisclosed information behind the increase in the company’s share value. It will take 50 years to recoup the company’s existing losses, despite the fact that the company’s net worth is currently losing by Tk 8 crore annually. However, even if there is a profit, it will not amount to Tk 8 crore per year. Out of the Tk 8 crore losing in net worth each year, Tk 6 crore goes towards bank interest. Even if the company shuts down, it will still have to pay this Tk 6 crore to the bank.
Regarding this matter, Mohammad Rezaul Karim, the Executive Director and Spokesperson of the Bangladesh Securities and Exchange Commission (BSEC), advised investors to exercise caution when investing. Companies with weak fundamentals have a lower chance of providing returns. Currently, shares of weak companies are experiencing volatility. The commission is closely monitoring these issues and has instructed the Dhaka Stock Exchange (DSE) to investigate several companies.
He further emphasized that investors need to be aware when making investments. The commission takes time to investigate any irregularities and impose penalties, during which many investors suffer losses.
