34 sick firms deprive shareholders of dividends

Owing to a business decline for years, including the pandemic period, 34 companies listed on the capital market have deprived their shareholders of dividends in fiscal 2020-21.

A dividend is a token reward paid to shareholders for their investments in a company's equity, and it usually originates from net profits.

According to the Dhaka Stock Exchange (DSE), a total of 46 firms would not pay any dividend, of which 34 maintain fiscal year, while others maintain calendar year.

Twelve firms such as banks and non-bank financial institutions (NBFIs) have declared no dividend for 2020, but are yet to disclose their annual financials for 2021.

The highest number of the poorly performing 34 firms is from the textile sector.

The sector has 58 firms listed on the capital market, but 12 of them have failed to declare a dividend for fiscal 2020-21.

A number of them did not pay any dividend for years.

Tung Hai Knitting and Dyeing, a textile firm that got listed on the stock market in 2014, have not paid any dividend to its shareholders since fiscal 2016-17.

Once profitable, the firm plunged into a crisis after its owner died in a fire in 2014. Since then, his family tried to keep it afloat until 2017.

Zahintex Industries, another firm has deprived its shareholders of dividends in three fiscal years since FY18.

Seven engineering firms in trouble

Seven firms – including three state-owned ones – out of 47 companies listed on the market from the engineering sector have declared no dividend for shareholders.

The state-owned Eastern Cables, Atlas Bangladesh, and Renwick Jajneswar have deprived their shareholders of dividends for several years, with business melting down because of stiff competition from private sector peers.

Eastern Cables – a manufacturer of various types of domestic, control, flexible and power PVC cables – did not pay a dividend for the last three years since FY19 as it incurred heavy losses.

Renwick Jajneswar paid a 12% cash dividend in FY18 for the last time. It failed to pay a dividend to its shareholders for three years in a row as the business situation has not improved.

Like the government firms, Aziz Pipes, RSRM, Yeakin Polymer, and Oimex Electrode also will not pay any dividend.

Yeakin Polymer in FY20 paid a 1% cash dividend, but after listing in 2016, it failed to pay a dividend for FY21 when it incurred a Tk4 crore loss.

After getting listed in 2014, Ratanpur Steel Re-Rolling Mills (RSRM) failed to declare any dividend for the first time as it incurred heavy loss amounting to Tk37.98 crore due to Covid-19.

After listing in 2017, Oimex Electrode has failed to declare a dividend. 

Khairun Nesa Lucky, chairman of Oimex Electrode, said in its annual report, due to the pandemic, the company suffered a lot.

"In the past, we tried to pay a handsome dividend but hikes in raw material costs, lockdowns and shutdowns have hampered our business. Due to insufficient funds, we could not pay dividends."

Aziz Pipes in FY20 had paid a 1% cash dividend, but in FFY21, it did not pay as it incurred losses.

Hasina Akther, chairman of Aziz Pipes, said in its audited annual report, due to Covid-19, the company's crisis has deepened. It had earlier paid dividends as it made a good profit in the last four years."

She said, "The sales have declined due to the pandemic which halted business temporarily, and finally, the company incurred a loss of Tk43.93 lakh. Due to classified loans, now the company is facing a working capital crisis, and other obstacles in running the business." 

Food and allied firms also in thick soup

Including state-owned mills Zeal Bangla, and Shyampur Sugar Mills, a total of six out of 21 companies listed on the capital market from the food and allied sector have decided not to pay any dividend.

Zeal Bangla Sugar Mills have been incurring huge losses for many years and failed to pay any dividend to its shareholders, although its share price sometimes skyrocketed without any financial upgrading.

In the first half of the current fiscal year, its loss per share rose to Tk37. 

The financial situation of Shyampur Sugar Mills is similar to Zeal Bangla Sugar Mills. 

The other firms from the food and allied sector, Fu-Wang Food, Meghna Pet, Meghna Condensed Milk, and Fine Foods also failed to pay a dividend for its shareholders for FY21.

Three troubled Pharma in the row

As the pharmaceutical industry has witnessed a big leap – with jumps in both sales and profits – during the Covid-19 pandemic, three firms from this sector have failed to cash in on the opportunity. 

Due to trouble in business, these firms' financial health was not sound, and they ended up depriving their shareholders of dividends.

Ambee Pharmaceuticals, Central Pharma, and Acme Pesticide have decided not to pay dividends as the firms failed to make break-even from the business.

Also, Khulna Paper and Printing Packaging from the paper sector, Aramit Cement from the cement sector, Information System and Service Limited, Usmania Glass Sheet Factory – a government firm, and Khan Brother PP Oven have also declared no dividends.

BD Services Limited – a state-owned firm – which owns the five-star hotel Intercontinental has also failed to declare dividends.