DSE demotes Generation Next Fashions to Z category
The Dhaka Stock Exchange (DSE) has downgraded Generation Next Fashions to the Z category, commonly referred to as the junk stocks category, due to its failure to hold the annual general meeting (AGM) for the fiscal year 2023-24.
In an announcement today, the DSE stated that the downgrade from B category to Z was in compliance with a securities regulator directive issued on 20 May 2024. The directive mandates that any issuer failing to hold its AGM within the stipulated time must be reclassified as a Z category stock.
As per DSE listing regulations, companies are required to hold their AGM within 45 working days after the record date set during the year-end board meeting.
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A DSE source revealed that Generation Next has yet to disclose its audited financials or announce the AGM date for the fiscal year 2023-24, which ended on 30 June.
Moreover, the company did not seek an extension from the Bangladesh Securities and Exchange Commission (BSEC) to hold the AGM within the required timeframe. Consequently, the DSE decided to downgrade the company's category.
Today, shares of Generation Next closed at Tk3.60, marking a 5.26% decline from the previous session.
On 4 November, Generation Next Director Shaheen Akther Chaudhury submitted a letter to the BSEC highlighting labour unrest and a halt in operations caused by a working capital shortage.
In the letter, the director also reported that the company's chairman and managing director were uncontactable and possibly out of the country.
Their absence, along with that of other key directors, has left the company facing several critical challenges including inability to make decisions during board meetings due to the lack of a quorum and inability to conduct banking transactions due to the absence of authorised signatories.
Given these pressing issues, the director sought guidance from the BSEC to navigate the crisis and ensure the company's operations could resume.
However, according to a company source, no response has yet been received from the BSEC regarding the matter.
The source said Generation Next Fashions halted its factory operations on 9 September after facing labour unrest over unpaid wages. Workers continued staging protests and strikes throughout September and October, demanding their salaries.
According to the company's financial reports, it generated Tk518 crore in revenue and Tk21 crore in profit in FY19, Tk292 crore in revenue with a Tk0.33 crore profit in FY21 and Tk596 crore in revenue and Tk3.41 crore in profit in FY23.
In the first nine months of FY24, the company incurred around Tk1.86 crore in losses.
Since its listing in 2012, it paid only stock dividends ranging from 10% to 20%. It did not pay any dividends in FY19, FY20 and FY21 amid declining profitability. It issued a 1% cash dividend in FY22 and FY23.
As of November, sponsor-directors held only a 16.26% stake in the company, while institutional investors and public shareholders owned 21% and 62.74%, respectively, according to its shareholding reports.
