DSE finds factories of two listed Meghna Group concerns closed

The Dhaka Stock Exchange (DSE) in a recent inspection found the factories of two listed concerns of the Meghna Group of Industries-KA (MGOLD) Limited closed.

The two companies are Meghna Condensed Milk Industries Limited and Meghna PET Industries Limited.

Confirming the news, Shaifur Rahman Mazumdar, chief operating officer of the DSE, told The Business Standard, they will now prepare a report on the two companies and send it to the regulatory authorities. Then, action will be taken as per the instructions given by the regulator, he added.

The two companies released their financial statements and held annual general meetings regularly, but did not inform investors about the factory shutdown.

Even the auditor of the companies, Islam Quazi Shafique and Co, did not mention anything on the state of production at the factories. In its qualified opinion in the companies' financial statements, the auditor, however, expressed doubts about the future of the companies stating that their liabilities were more than their assets.

News that the companies were not in production was there in the stock market in the form of a rumour. Even so, the shares were popular among investors as the companies are low-cap ones and prices of the two companies' shares jump two to three times every year.

For example, the share price of Meghna PET increased 100% in the time between July and September 2020. The company's share price rose more than 250% in the middle of this year as well. The share price of Meghna Condensed Milk also increased in a similar fashion.

Officials of several brokerage firms said that it is easy to increase the share price of these companies by manipulating them as they have less capital. However, their share prices fall in the same way they rise. In this way, ordinary investors eventually incur losses by investing in these shares.

Meghna Condensed Milk started operations in 1999 with the announcement of setting up the largest condensed milk plant in the country. The company was established with a loan from Sonali Bank under ICD Agro Based Project. It got listed on the stock market in 2001.

On the other hand, Meghna PET started business in 1997. It mainly produces PET bottles.

The DSE does not have any information on when these two companies were last in profit or paid dividends.

AS Shahudul Huque Bulbul, managing director of Bulbul Securities, has been trading shares for a long time. When asked about these companies, he could not remember when they last made a profit or paid dividends.

Earlier, the Bangladesh Securities and Exchange Commission sent a letter to the two companies asking them to explain the reasons behind their continuous losses. But they did not reply to the letter, sources at the commission said.