Textile issues performing poorly in stock market

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FE Report
Although the bourses are in bullish trend for a long time, the textile issues have been showing dismal performance in the capital market. Except one or two, most of the issues are traded below their face value and they are offering low or marginal dividends for the shareholders.
Bangladesh Textile Mills Association (BTMA) claims that spinning mills in the private sector could now meet around 100 per cent demand for yarn at the domestic level as well as 85 per cent of the demand for yarn for export oriented knit fabric mills. But this claim does not match with their performance in the capital market.
According to the brokers, most of the mills are showing loss in their balance sheets for a long time.
"I am really surprised how this happens when I see that many of the prominent companies are offering very low amount of dividends or not offering dividends at all," says Abdul Hai Sakar, President of BTMA. "They pretend loss, but make large amounts of donations to many places and spend a lot for many other purposes," Hai Sarkar adds. He however says that all are not doing the same, some are really not in good health.
Mozammel Huq Bhuiyan, Director of Sharp Securities Limited says, to most of his clients the textile issues are not attractive. "Except Square Textile and sometimes the Bextex, I don't see traders discuss about any textile issue", he says further. A total of 39 textile companies are listed in the bourses.
Another member of BTMA, requesting for anonymity said, "if you see the growth of the spindle capacities of the spinning mills you can judge their profits. There are instances that some people, starting by one mill eight to ten years ago, now own five to six mills. Do you think these are made without earning profits?"
In 2001 the spindle capacity of the spinning sector was slightly over 2.3 million which rose to over six million in 2007.
There is something wrong here which needs a full scrutiny, commented a BTMA official. Mozammel Huq Bhuiyan said by keeping the share prices below the face value, many textile mill owner buy shares from the market.
Brokers and investors are of the opinion that the market watchdog, the Securities and Exchange Commission (SEC), should take a closer look into the matter. SEC Executive Director Anwarul Kabir Bhuiyan said in 2002 they promulgated a rule to change directorship of the 'Z' category companies. After winning the legal battle that continued for years together, the SEC sought the opinion of the legal adviser to apply the rule. As soon as we get the opinion, we will go for action," Bhuiyan added.