Two individual investors on Sunday requested the Dhaka Stock Exchange (DSE) to scrutinise the production and inventory status of Alhaj Textile Mills.
Mamun Ur Rashid and Md Abdul Mannan, the two small investors, claimed that after declaring a lay-off in October 2019, the company again started its production activities at the end of November.
But it did not disclose this vital information to the exchange and shareholders with an ill intension of pushing down the price of its shares.
However, in an interview with The Business Standard over phone, the Alhaj Textile Mills authority denied the allegation.
"We are selling the stock lot of yarns gradually at a lower price and we still do not know when the mill will resume production," said Md Shawkat Ali, the chief financial officer and also the company secretary of Alhaj Textile Mills.
He also said, "Some share traders are trying to spread rumors about the company's production status with an intension of increasing the share price. We shall inform everyone in time if we manage to resume production."
The two investors, in their letter addressing the acting managing director of the DSE, have demanded the exchange to ask the company about its official plan about resuming production.
They also sent copies of the letter to the chairman of the Bangladesh Securities and Exchange Commission (BSEC) and the managing director of the textile company.
Both the DSE and BSEC officials confirmed that they received the investors' letter.
The layoff questioned by investors
Alhaj Textile had initially shut down its factory for a month on June 24 this year, citing inability to sell the huge stock lot of yarn amid adverse market condition and working capital shortage as the reasons behind the decision.
Later, the shutdown was extended five more times, and in October 8, the company came up with a declaration of lay-off for an indefinite period.
At that time, Md Shawkat Ali told The Business Standard that they still had unsold yarn worth Tk28 crore lying in their warehouse.
An employee of the company had informed that foreign buyers now prefer sourcing yarn from China and India at a lower cost. This has resulted in a decrease in demand for locally produced yarn.
But investors have been questioning the excuse of working capital shortage as the company declared that they received Tk56 crore from Agrani Bank following a court order in a long pending litigation.
The two investors in their complaint mentioned that at least Tk22 crore fund of the Alhaj Textile Mills is sitting idly in banks.
The conspiracy theory
Mamun Ur Rashid and Md Abdul Mannan wrote to the DSE that in the 2017-18 annual report of the Alhaj Textile Mills, they saw sponsor-directors collectively hold 30.2 percent shares of the company.
Surprisingly, it has come down to 12.78 percent by now and the sponsor-directors have sold shares bypassing mandatory disclosures.
Many investors had bought the company shares based on various price sensitive information, like the possibility of receiving more than double the company's paid-up capital from bank, that that ignited optimism.
Its share prices in January peaked at Tk123 and the sponsor-directors capitalized on the price hike by dumping a large portion of their shares secretly.
Allegedly, after dumping the shares, the company insiders are no longer interested in seeing the company progress.
Now they are desperately trying to push the share price further down with an ill intention of recollecting the previously sold shares at a price less than a half of the price at which they sold those.
The alleged ill attempt pushed the stock price down to Tk23 in October. Now it is hovering at around Tk40.
In this situation, the investors requested the exchange, as the primary regulator of stock market, to investigate the matter.
The allegation of conspiracy is not completely baseless as the BSEC recently fined Md Shamsul Huda, a shareholder-director of Alhaj Textile, for violating securities laws by selling five lakh shares and buying nine thousand shares of his company without any declaration.
Incorporated as a private limited company in 1962, Alhaj Textile Mills Ltd is one of the oldest manufacturers of cotton yarn in Bangladesh. The company's mill is located in Ishwardi, Pabna.
Converted to a public limited company in 1967, it was nationalised after the liberation of Bangladesh. However, in 1982 the mill was denationalised and got listed in the stock market in 1983.
The company handed out a ten percent stock dividend to its shareholders in the financial year 2017-18. It gave a five percent cash dividend and a ten percent stock dividend to its shareholders in the financial year 2016-17.
But it is yet to call a board meeting to discuss the annual financial statement for the latest financial year.
Alhaj Textile posted a loss of nearly Tk1 crore for the first three quarters of 2018-19 fiscal year, almost equal to the previous year's net profit.