Jute Spinners Ltd., a listed company, on Thursday resumed trial production at its manufacturing unit, which remained closed for more than six years since 2016.
Earlier, the board of directors of Jute Spinners decided to re-start its mills with a 'Trial Production' following successful completion of renovation of two raw jute godowns, out of three, and necessary maintenance of machinery.
The date of commercial production will be notified in due time after ensuring acceptable quality of the trial production, said the company in a filing with the Dhaka Stock Exchange (DSE) on Thursday.
Following the news, the price of the company's share jumped 8.73 per cent to close at Tk 227.70 on Thursday, becoming the day's eighth highest gainer on the DSE.
The company's factory remained closed from 2016 and no revenue was generated since then. So, all financial indicators of the company are negative and the company's liabilities have exceeded assets.
In spite of poor performance, the company's junk stock jumped 42 per cent or Tk 67 each in the past nine trading days.
The stock price soared 70 per cent or Tk 94 each in the last three months although its production remained suspended for long and the company failed to declare dividends for many years.
A company's stocks are termed as junk when its commercial production remains shut for six months in a row, it fails to arrange annual general meetings on time or fail to provide dividends to shareholders.
Jute Spinners incurred a net loss of Tk 55.25 million in nine months from July 2021 to March 2022 in FY '22 as against a loss of Tk 57.51 million in the same period of the previous fiscal year.
The company has reported a loss of Tk 32.50 per share in nine months from July 2021 to March 2022 in FY '22 as against a loss of Tk 33.83 per share in the same period of the previous fiscal year.
The company's liabilities stood at Tk 688.60 million, exceeding its total assets of Tk 289.07 million by Tk 399.53 million as on June 30, 2021, according to its auditor's report published earlier.
The recent price surge prompted the prime bourse to serve show-cause notice on the company several times to know whether there was any price sensitive information for recent unusual price hike.
The company, however, in a knee-jerk response, said that there is no undisclosed price sensitive information (PSI) of the unusual price hike.
Market insiders pointed at price manipulation, saying that as the company has a small volume of shares, it is easier to create an artificial crisis of shares.
Its paid-up capital stands at Tk 17 million while the total number of securities is 1.70 million.
Jute Spinners, listed on the DSE in 1984, failed to declare dividends for many years.
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 of August 31, 2022, the DSE data shows.
