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17 companies end up in 'Z' category in two years

Mohammad Mufazzal | January 11, 2019 00:00:00

A total of 17 listed companies were downgraded to 'Z' category, meant for worst-performing enterprises, in the last two years.

They were downgraded from the best- and medium-performing categories for not recommending dividends or not being in operation for more than six months or for non-compliance regarding the annual general meeting (AGM).

Of them, eight companies were sent to the 'Z' category in 2017 and nine others in 2018.

According to the Dhaka Stock Exchange (DSE) settlement and transactions regulation, a listed company has to declare at least 10 per cent dividend for its shareholders to be traded under the 'A' category.

If the company declares less than 10 per cent dividend, it will be placed in the 'B' category.

A company will be downgraded to 'Z' category if it does not declare any dividend or do not hold annual general meeting regularly or is not in continuous operation for more than six months.

The companies which were sent to 'Z' category in 2018 are Emerald Oil Industries, Tung Hai Knitting & Dyeing, Fareast Finance & Investment, AB Bank, Eastern Cables, Padma Islami Life Insurance, Evince Textiles, Northern Jute Manufacturing Company and GBB Power.

Eight of them were in the 'A' category earlier and only Fareast Finance was in 'B' category.

Of these companies, GBB Power, Northern Jute and Evince Textiles did not recommend any dividend for the year ending June 30, 2018.

Padma Islami Life Insurance, AB Bank and Fareast Finance & Investment Fareast also did not recommend dividend for the year ending on December 31, 2017.

Tung Hai Knitting and Emerald Oil were downgraded as they failed to hold their AGMs in 2017.

Eastern Cables was placed in the 'Z' category from the 'A' category, as it failed to hold AGM within the 45 working days from the record date. The company did not seek any permission from the securities regulator to conduct their AGM after 45 working days from the record date.

Another eight listed companies were shifted to 'Z' in 2017 as two of them were not in operation for over six months and others did not recommend dividend.

The companies are Aramit Cement, United Airways (BD), Hakkani Pulp & Paper Mills, Standard Ceramic Industries, C & A Textiles, Golden Son, Mithun Knitting and Tung Hai Knitting & Dyeing.

However, the category of the Hakkani Pulp and Standard Ceramic will be changed as they declared dividend ranging from 2.0 per cent to 3.0 per cent for the year ending on June 30, 2018.

The upgrade of these two companies also depends on compliance regarding the AGM and disbursement of dividend.

There is no possibility of change in the category for Mithun Knitting, Golden Son and Aramit Cement in this financial year as they recommended no dividend for the year ending on June 30, 2018.

C & A Textiles was also downgraded to 'Z' category from 'A' category as the company was not in continuous operation for over six months. No disclosure of the company has been available on DSE website since November 2, 2017.

For not holding AGM in 2017, Tung Hai was shifted to 'Z' category on January 1, 2018. Since then no disclosure of the company was found on the DSE website.

Dacca Dyeing has also published no disclosure on DSE website since May 6, 2018.

At present, the number of 'Z' category companies listed with the stock exchanges is 45.

Thirteen 'Z' category companies presently are under the scanners of the premier bourse, as they failed to 'declare' any dividend in the last five years in violation of the listing regulations.

Of the 13 companies, only three disbursed dividends in 2012 for the last time, and another one paid its last dividend in 2010.

The DSE is now reviewing the performance of the companies as per the listing regulations.

As per the regulations, a company can be de-listed for not declaring dividends for five years since its declaration of the last dividend.

The 'Z' companies which failed to declare dividends in the last five years are Jute Spinners, Meghna Condensed Milk Industries, Meghna Pet Industries, ICB Islamic Bank, Dulamia Cotton Spinning Mills, Samata Leather Complex, Shyampur Sugar Mills, Zeal Bangla Sugar Mills, Imam Button Industries, Savar Refractories, Beximco Synthetics, Shinepukur Ceramics and Sonargaon Textiles.


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