Northern Jute resumes production after accounts unfreeze
Northern Jute yesterday resumed operations at its factory at the BSCIC Industrial Estate in Kushtia after the Supreme Court issued a ruling to unfreeze all bank accounts related to the business.
The news sent Northern Jute's shares up 2.31 per cent to Tk 406.70 on the Dhaka Stock Exchange (DSE) yesterday.
On February 23, Northern Jute announced that their factory would be closed indefinitely due to a Bangladesh Bank directive to freeze all of the bank accounts related to the firm, which left the listed jute producer unable to clear workers' wages.
"The labourers at the factory are paid on a weekly basis and since all the bank accounts are frozen, the operations had to be shut down," said Shahadat Hossain Patwary, company secretary of Northern Jute.
Since the chairman of Northern Jute, Uzzal Kumar Nandi, is also chairman of People's Leasing and Financial Services (PLFS), the decision to discontinue production could have been considered as an outcome of the PLFS's ailing financial situation.
PLFS has been undergoing liquidation since July last year.
However, Patwary denied allegations that his company's current situation was related to that of PLFS despite both firms having the same chairman.
Stock market analysts said the PLFS's liquidation has had a huge impact on the depositors, stock investors and many listed companies, which have deposited their money in the non-banking financial institution.
"The sponsors and directors of PLFS should be punished," analysts said, adding that the government should remain cautious so that such sufferings are not inflicted on other companies.
Due to the account freeze, Northern Jute could not realise any export proceeds. As a result, it could not procure raw jute or make party payments to spare part suppliers, it said.
Besides, the company could not disburse any cash dividends to its shareholders although adequate funds have been kept aside.
According to data from the DSE, Northern Jute's stock price was unstable over the past two years due to its earnings volatility.
By the end of June 2018, the company's earnings per share (EPS) were Tk 17.15 in the negative and it provided no dividend. As a result, it was demoted to Z category on the DSE.
Just a year later, the EPS jumped to Tk 23.29, which catapulted Northern Jute to A category.
In the second quarter of the ongoing financial year, the jute product producer's EPS dropped to Tk 2.94, down from Tk 9.06 a year earlier.
Comments