Yeakin Polymer out of production for 2 years but investors in the dark

Yeakin Polymer has gone out of production for more than two years but the plastic bag manufacturer did not disclose it, keeping its shareholders in the dark about its latest status.

The company allegedly stopped production three years after it was listed on the capital market in 2016 owing to a decrease in demand for plastic bags in the market and a shortage in its working capital.  

Fames and R audited the company's accounts for three years from fiscal 2018-19 to fiscal 2020-21 but did not give any qualified opinion on its production, which is a violation of the securities law.

The Bangladesh Securities and Exchange Commission (BSEC) believes general shareholders have been misguided by the audit reports, an official at the commission told The Business Standard.

The company did not even inform the Dhaka Stock Exchange (DSE) about the production shutdown, he added.

However, the plastic bag manufacturer published earnings information regularly.

This correspondent tried to reach Yeakin Polymer's Chairman Quazi Anwarul Haque, Managing Director SM Akter Kabir and Company Secretary Akhtaruzzaman for their comments on the production shutdown but found their phone numbers switched off.

A BSEC official, speaking on condition of anonymity, because he was not authorised to speak to the media, said the commission had received a complaint that Yeakin Polymer was not in production and the company did not pay any dividends in fiscal 2020-21.

"Therefore, to protect the interests of investors, the commission will summon the board of the company and ask for an explanation. They will be investigated as well. In addition, the auditor will be brought under accountability," the official added.

A former official at Yeakin Polymer said the company was in a working capital crisis owing to default on Islami Bank's loans. As a result, it has not been able to continue production since 2019.

In the financial report for fiscal 2020-21, the company chairman said the government imposed an obligation to use jute bags instead of plastic, resulting in severe damage to the business of plastic bags.

In 2016, the company raised Tk20 crore by offloading 2 crore shares in the capital market to increase its production capacity.

In the initial public offering (IPO) prospectus, the plastic bag manufacturer had shown 183% growth in revenue and 4.18% in profit during the previous five years till 2016.

In the year of listing, the company paid a 10% stock dividend to its shareholders.

Since then, its dividend has dropped steadily and it did not pay any dividend due to incurring losses in the last financial year.

Speculators are quite active on the DSE with the shares of Yeakin Polymer. In five months from April last year, its share price soared 104% without any reason and fell sharply during the following three months.

Again, the share price rose 40% in the last three months to close at Tk13.70 at the DSE on Tuesday.  

Since June last year, institutional investors have been selling shares of the company regularly. Institutional investors held a 14.01% stake in the company in June and it dropped to 11.30% in December.