10 companies not paying dividends for a decade

Ten companies listed on the Dhaka Stock Exchange have failed to announce any dividend for at least 10 years in a row largely because they failed to generate enough profits to make payments to their shareholders.

The companies are: Dulamia Cotton Spinning Mills, ICB Islamic Bank, Jute Spinners, Meghna Condensed Milk, Meghna Pet, Rahima Food Corporation, Samata Leather Complex, Savar Refractories, Zeal Bangla and Shyampur Sugar Mills.

Analysts said any company can fall into trouble financially for a while, but the status quo cannot go on for a decade at stretch if the authorities pay attention.

The regulator should ask the companies that fail to either liquidate or file for bankruptcy, they said.

But the Bangladesh Securities and Exchange Commission, surprisingly, though maintains a hands-off approach on such companies.

“All we can do is raise awareness about the perils of investing in such stocks,” said Saifur Rahman, executive director and spokesperson of the BSEC.

The stock market regulator routinely warns the public, according to Rahman. “But people don't listen,” he added.

For instance, more than three-fourth of the shares of Dulamia Cotton Spinning Mills are held by the public, while 75 percent of Rahima Food's shares are with general and institutional investors.

The regulator can downgrade the companies from the main board to the over-the-counter market, said AB Mirza Azizul Islam, a former chairman of the Securities and Exchange Commission.

DSE officials said the regulator should take initiative because investors are being swindled by the companies.

“If the BSEC takes any measure, the DSE will execute the decision,” said a DSE official requesting anonymity.

Islam, also a former adviser to a caretaker government, advised investors not to park their funds in any company that has not given dividend for a long time unless there is a strong reason to believe that they would return to profitability in the foreseeable future.

ICB Islamic Bank is not in a position to make profit, let alone pay any dividend, according to its managing director Muhammad Shafiq Bin Abdullah.

Savar Refractories, a brick-maker, has only Tk 1.39 crore in paid-up capital, whereas it requires at least Tk 100 crore to Tk 150 crore to return to profitability, said its company secretary Sayed Mohammad Zakaria.

There is a ban on land mining, so Savar Refractories has to import raw materials. With a 10 percent duty on the imported raw materials, the company cannot compete with foreign products, he added.

AKM Delwar Hossain, chairman of the Bangladesh Sugar & Food industries Corporation, which runs Zeal Bangla Sugar Mills Ltd and Shyampur Sugar Mills, said sugar price is lower than production cost, so the losses of the two companies cannot be overlooked.

“But we have started to do well recently and the loss is minimising,” he added.

Rahima Food Corporation is trying to rearrange its product portfolio, according to the Dhaka Stock Exchange.

Officials of Dulamia Cotton Spinning Mills did not respond to requests for comment from The Daily Star.

The telephone number given on the website of Jute Spinners was found to be not in service and there was no response from the listed email address.

Officials of Meghna Condensed Milk and Meghna Pet could not be reached.

Samata Leather Complex's telephone number available from the DSE website was found to have been deactivated.

“Why are people still putting their money in such stocks?” questioned BSEC spokesperson Rahman.

Yesterday, shares of Dulamia Cotton Spinning Mills lost 4.3 percent to close at Tk 48.9. Meghna Condensed Milk slipped 1.81 percent to Tk 32.5 and Meghna Pet 3.38 percent to Tk 25.70. Rahima Food Corporation crawled down 0.79 percent to Tk 150.20, and Samata Leather Complex shed 0.79 percent to Tk 62.9. 

Jute Spinners gained 0.85 percent to end the day at Tk 177, Savar Refractories 1.87 percent to Tk 202, Zeal Bangla 3.41 percent to Tk 69.7, and Shyampur Sugar Mills 0.45 percent to Tk 67. ICB Islamic Bank was unchanged at Tk 5.70.

Khairul Bashar Abu Taher Mohammed, chief executive officer of MTB Capital, said every capital market has these types of companies. Subsequently, he urged the regulator to conduct an inspection into such countries.