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Both the stock exchanges have downgraded Runner Automobiles to 'Z' category from 'A' category for the company's failure to pay off cash dividends approved for FY22 within the stipulated time.
Dhaka and Chittagong stock exchanges on Wednesday confirmed this through separate filings on their websites.
Runner Automobiles recommended 10 per cent cash dividends for FY22 but declared no dividend for FY23.
As per the securities rules, a listed company is required to disburse at least 80 per cent of the dividends within one month after the annual general meeting (AGM).
The company's Chief Financial Officer (CFO) Shanat Datta said they had completed the disbursement of cash dividends to general shareholders within the timeframe.
But sponsor shareholders, who are supposed to get 51 per cent of the recommended dividends, have not been paid yet due to a shortage of working capital.
"With our board's consent, we had notified the issue to the securities regulator and sought time extension for completing the distribution of dividends," Mr. Datta said.
However, the securities regulator did not make any suggestion, keeping the proposal pending.
Finally, on Wednesday the stock was moved to the junk category.
The CFO said an additional margin imposed against LC (letter of credit) created the crisis of working capital.
Before 2022, the companies could open LCs, giving 10 per cent of import expense as margin to the banks.
"Now, we are required to give 100 per cent margin against LCs and this additional cost increased the import cost abnormally," said the CFO of Runner Automobiles.
The company's board will decide the next course of action to resolve the issue of dividend distribution.
Runner Automobiles experienced a loss of Tk 879.90 million in FY23 after reporting profits for four years in a row.
The company witnessed the loss due to a decline in revenue as the sales dropped of two wheelers, three wheelers, and commercial vehicle segments.
In FY24, the company endured a loss of Tk 2.27 per share in July-September while the loss was Tk 1.35 per share in January-March because of the same reasons.
It then reported positive earnings per share (EPS) of Tk 0.05 in October-December, FY24 as the three wheelers' business secured a growth in revenue.