ACME Pesticides becomes worst loser after declaring nominal dividends
Had ACME Pesticides not declared any dividend, it would have been transferred to Z category
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A significant decline in profits and nominal cash dividends declared by ACME Pesticides frustrated investors, dragging the stock down on the Dhaka Stock Exchange to be the worst loser on Thursday.
The company topped the day's chart of top 10 losers as it plunged 6.72 per cent to close at Tk 22.20 per share on the DSE.
It has experienced a 31 per cent year-on-year decline in profit to Tk 130 million in FY23. But the company will pay only Tk 1.35 million in cash dividends at a rate of 0.01 per cent recommended by the board for FY23.
An official of the company, requesting not to be named, said the sharp devaluation of the taka against the dollar and higher business costs cut their profit during the year.
"We have to depend on imported raw materials, so the taka becoming cheaper impacted the profit," he said.
Experts have termed the company's dividend declaration a mockery to its shareholders.
They say shareholders deserve a good return on their investment in the company.
"The dividend declaration has shattered the shareholders' confidence. It [the board] could recommend no dividend instead of such a mockery," said Md. Moniruzzaman, managing director of Prime Bank Securities.
The official of Acme Pesticides said the company's board declared a nominal dividend in a bid to retain profits for future business expansion and to meet high business costs.
Countering that argument, Mr. Moniruzzaman said shareholders should be informed of expansion plans, if any, which would be implemented with the retained profits.
Many non-performing companies earlier declared nominal cash dividends so they could remain as 'B' category stocks to avail of the benefits of reduced trading cycle and margin loan facility.
Had ACME Pesticides not declared any dividend, it would have been transferred to Z category to become a non-marginable security.
The company distributed a 5 per cent cash dividend for FY22.
Legal tussles
The company raised a capital worth Tk 300 million floating an IPO (initial public offering) in 2021 for business expansion and to repay loans to the National Finance.
However, the company is yet to pay dues amounting to Tk 55 million as both the parties are locked into a legal battle in the High Court.
The company said it had kept Tk 55 million aside in a separate account from the IPO proceeds.
After the issue is resolved in court, the company will pay the amount.
Acme Pesticides is engaged in manufacturing and marketing of Agro products in the categories of fertilizer, insecticides, pesticides and certified seeds, household toiletries and other consumer products, which are sold in the local market under the "ACME" brand.