Troubled Shyampur Sugar’s abrupt stock surge raises eyebrows
Till June 2023, the company’s accumulated loss stands at more than Tk600 crore
The share price of Shyampur Sugar Mills, a state-owned publicly listed firm that has been swamped with losses for years, jumped 156% in only two months, leading to suspicions of market manipulation.
Because of losses piling up over the years, the government in the fiscal 2020-21 suspended the operations of six state-run sugar mills including Shyampur Sugar. Since then, the company has been non-operational and shows no sign of resuming anytime soon.
Till June 2023, the company's accumulated loss stood at more than Tk600 crore.
Despite these predicaments, the sugar miller's share price is skyrocketing. Its shares that traded at Tk92 each on 17 September, shot up to a peak of Tk236 on 16 November this year. And, in seven months, the stock reported a 223% surge to Tk203.9 on Thursday, from Tk63.1 on 1 March.
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Seeking anonymity, a top official at a brokerage firm remarked, "While fundamentally sound stocks are stuck at floor prices, the unexpected surge in share price of this loss-making firm appears highly suspicious considering its low free-float shares."
The Bangladesh Securities and Exchange Commission (BSEC) has taken notice of this abnormal price hike, directing the Dhaka Stock Exchange (DSE) to conduct a thorough inquiry and submit a comprehensive report within 20 working days.
A DSE official confirmed the initiation of the inquiry process, as per the regulator's directive.
No sign of resuming operations
Since its suspension in FY21, Shyampur Sugar Mills has shown no sign of resuming its operations, nor has it come up with any plan to do so.
The Bangladesh Sugar and Food Industries Corporation (BSFIC), which controls and supervises all sugar mills, has formed a committee in November to conduct a feasibility study of Shyampur Sugar so that the company can be back in business.
The eight-member committee shall prepare a business plan for Shyampur Sugar and submit a complete report to the BSFIC chairman within ten working days.
A committee member told TBS that the study is underway.
"Based on the study report, the BSFIC with the approval of the government, will decide on resuming operations of the listed firm, keeping the interest of investors at utmost priority. But that will not be anytime soon," he added.
Md Masud Sadik, the person in charge of Shyampur Sugar Mills told TBS, "The mills have been closed for a long time with no immediate plan of returning to operations. That decision is now BSFIC's to make."
Shyampur Sugar Mills dates back to the Pakistan era when its mills were set up in 1967. The company, publicly listed since 1996, mainly produces sugar from sugarcanes and manufactures molasses as a by-product. Both the products are sold in the local market.
Because of its outdated machinery and shortage of raw materials, its production reduced significantly, according to sources.
After its suspension, the firm's collected raw materials were shifted to the nearby state-run Joypurhat Sugar Mills, a sugar miller which is up and running.
