The share price of Jute Spinners, a junk stock, is rising on the Dhaka Stock Exchange (DSE) despite the company incurring losses.
The company is also not in operation for more than five years.
Within a month, the company's share price jumped 30 per cent to close at Tk 172.50 each on Sunday. The company's share price was Tk 133.20 a month earlier.
Despite the suspension of the company's production and failing to declare dividends over the years, its share price did not stop rising and rose 81 per cent or Tk 77 each in the past three months.
Following the recent abnormal price hike of the company's share, the DSE served a show-cause notice on the company on Sunday.
The company, however, in a knee-jerk response replied there is no undisclosed price sensitive information for the recent unusual price hike and increase in the volume of shares of the company.
Jute Spinners has incurred a loss of Tk 57.51 million in nine months for July 2020 to March 2021 and the company has reported the loss of Tk 33.83 per share for July 2020-March 2021 as against a loss of Tk 32.20 per share for the same period last year.
The company incurred a net loss of more than Tk 77.23 million during the year ended 30 June 2020 and the accumulated loss of the company as of 30 June 2020 stands at Tk 610.27 million.
The company's liabilities stood at Tk 615.72 million which exceeded its total assets of Tk 291.99 million by Tk 323.73 million as of June 30, 2020, according to its auditor's report.
"We also drew attention to the labour difficulties, inability to pay creditors on due dates, adverse key financial ratios, discontinuation of dividends, inability to obtain financing for essential new product development, discontinuation of existing production or other essential investments, inability to comply with terms of loan agreements, inefficiency of key management and negative operating cash flows indicated by financial statements of the company," said the audit report.
The report gave an opinion that these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern.
Share prices of many companies are on the rise, although transaction and price movement of these companies' shares do not match their fundamentals, said an analyst.
He noted that some influential investors by disseminating rumours are trying to manipulate the prices of shares of the companies under question.
The investors need to be cautious and should not pay heed to any rumours related to companies and take their investment decisions prudently, he added.
Senior executives of the company could not be reached over the telephone.
The "Z" category company, which was listed on the Dhaka bourse in 1984, failed to pay dividends over the years.
The company's paid-up capital is Tk 17 million and authorised capital is Tk 35 million, while the total number of securities is 1.70 million.
Sponsor-directors own 39.82 per cent stake in the company while the institutional investors own 23.20 per cent and the general public 36.98 per cent as on July 31, 2021, the DSE data shows.
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