Share value 16 times inflated

Share price of CMC-Kamal Textile Mills was sixteen times its face value in 2010 although the company suffered loss in the previous year, the probe committee on stockmarket debacle has found.
The company suffered a loss of Tk 40 lakh in first quarter of 2009 when its earning per share was Tk 2.61 the negative.
CMC-Kamal, however, declared 10 percent dividend for the shareholders at the end of 2009, according to a case study of the probe committee.
In the first quarter of 2010, the share value skyrocketed to Tk 1,600 -- sixteen times the face value.
Thanks to the overheated share prices, company's directors made huge money.
Of them, Company Chairman AHM Mustafa Kamal, an Awami League lawmaker, sold shares of Tk 3.05 crore and Ms Kashmiri Kamal of Tk 2.32 crore, Nafisa Kamal of Tk 13.66 crore, Kashfi Kamal of Tk 99.5 lakh, and Golam Sarwar of Tk 59.8 lakh -- all company directors and family members of Kamal.
Even though the probe committee has evidence that Mustafa Kamal did sell shares in the overheated market, Kamal said: "I didn't sell shares when the price went up."
"There is no allegation against me and my company in the probe report," said Kamal, also chief of the parliamentary standing committee on finance ministry.
Kamal said SABINCO, a joint venture of Bangladesh and Saudi Arab governments, has 20 percent share in the company while he has 40 percent share.
But, the website of Lotus-Kamal Group yesterday showed: "50 percent share of the company is owned by the general public and different financial institutions and 50 percent by Mr Kamal and his family members."
Of the 20 percent share owned by SABINCO -- Saudi-Bangladesh Industrial and Agricultural Investment Company Limited -- the Bangladesh government owns 15 percent share.
The probe committee held the following responsible for the overheated price of CMC Kamal's share:
Declaration of 10 percent stock dividend;
Declaration of Tk 70 lakh net profit in the first quarter of 2010;
Change of face value of the company's share to Tk 10 from Tk 100;
Upgrading the company's status to category A from Z following the declaration of 10 percent dividend;
The company offered right shares at the ratio of 2:1 of Tk 17.5 each including a premium of Tk 7.5 to increase its paid-up capital;
The company proposed to increase paid-up capital to Tk 200 crore from Tk 50 crore;
On September 20, 2010, it revalued its land and factory building. After the revaluation, its land value stood at Tk 33 crore, up from Tk 1.55 crore, and the building value stood at Tk 20 crore, up from Tk 6.13 crore; and
In the same year, the company declared Tk 3.1 crore net profit after tax.