Jute Spinners flying high on DSE despite mounting losses

Jute Spinners has been flying high on the Dhaka Stock Exchange (DSE) while the company has been counting losses for more than a decade without any chance of recovery.

The factory has produced nothing since 2016. Revenue is zero. Other financial indicators are in the negative too. Liabilities shot up exceeding almost triple the value of assets of Tk 154 million.

The producer of jute yarn and jute goods recently reported another year of loss of Tk 110 million for FY24. With this, the aggregate loss in the last 12 years reached Tk 1.01 billion.

Jute Spinners was in profit in FY12 and declared 20 per cent cash dividends for that year. Since then it has paid no dividends to shareholders.

Despite the grim performance, the company's stock surged 7.18 per cent on Thursday to Tk 256.6 per share on the Dhaka bourse.

The stock jumped an astounding 24 per cent in the month to Thursday without any disclosure of price-sensitive information, such as dividend declaration.

The non-operational Jute Spinners' stock had never been stuck on the floor during the nearly one-and-a-half years' time when securities were not allowed to go below a certain price level. The stock traded at Tk 180 to Tk 418 each share in the last one year.

Such an unusual price movement in recent times prompted the prime bourse to issue multiple show-cause notices to the company, enquiring about the reasons behind that.

The company said there was no undisclosed price-sensitive information.

Company secretary A T M Mostafa even expressed shock at the inexplicable price surge.

The company has a history of hiding its financial information and has rarely explained the reasons for losses. Its stock is one of the junk stocks.

A stock is labelled as junk when the company's commercial production has remained shut for six months in a row; it has failed to arrange annual general meetings on time, or has failed to provide dividends to shareholders.

The company's low paid-up capital -- Tk 17 million -- makes it an easy target for gamblers seeking to manipulate stock price. The number of its free float shares is 1.7 million.

"A hike in the share price was reported in mid-September, which was unusual considering the current status of the company," said the company's auditor.

Jute Spinners does not even have a website, although it is mandatory for a listed company to make financial data public on a regular basis.

In FY24, its net asset value per share was Tk 587.87 in the negative, worsened from the previous year -- Tk 522.19 in the negative.

The company will be unable to pay off debts even if it sells all assets.

Jute Spinners' outstanding loans amount to Tk 599.46 million in Janata Bank. The company paid back only Tk 19.66 million as of June 2023.

A money suit case has been filed by the state-owned bank against the company and its directors.

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