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Monday, March 16, 2009

Junk companies under scanner


The Dhaka Stock Exchange will investigate how ill-performing or 'junk' companies have declared dividends.

The DSE will also analyse the legal aspect of how some of those companies have upgraded their status by declaring dividends less than 5 percent.

The premier bourse took the twin decisions at a meeting yesterday, following allegations that the laggard companies had declared dividends to boost their share prices.

After the meeting, DSE President Rakibur Rahman said the dividend declaration resulted in an "unusual" price hike in the shares of the companies.

Dhaka Fisheries, which declared 2 percent cash dividends for the year 2008, and was placed in B category from Z category, posted a net loss of Tk 2.99 million in 2008. But the company did not declare dividends in 2007, despite profit it made at the time.

In line with the Companies Act, any loss-making company cannot give dividends to shareholders.

“We will investigate the practice of declaring dividends by loss-making companies,” the DSE president said. “We will also suggest that the market regulator take action against those companies.”

Alltex Industries that posted a net profit of Tk 6.05 million in 2008 declared 2.5 percent dividends for 2008. But the company did not declare dividends in 2007, although it made a higher net profit of Tk 10.77 million in 2007.

Gulf Foods, which declared 4 percent cash dividends, recorded a net profit of Tk 0.52 million in 2008. But the company did not give any dividend in 2007 despite making a higher profit of Tk 0.94 million a year earlier.

Turnover on the Dhaka Stock Exchange hit the second highest at Tk 611.08 crore yesterday.

The market maintained the momentum after it recorded the highest turnover on Thursday, Equity Partners Ltd, an investment bank, said in an analysis.

The DSE General Index rose 18.27 points, or 0.68 percent, to 2,671.38. The DSE All Share Price Index also gained 15.82 points, or 0.71 percent to 2,222.01.

Chittagong stocks also marked a rise. The CSE Selective Categories Index gained 53.03 points, or 1 percent to 5,327.77. The CSE All Share Price Index increased 82.46 points, or 1 percent to 8,255.17.


The Daily Star

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