The price of each share of Aziz Pipes Limited rose 46% in the last nine working days to trade at Tk140.3 on Sunday, despite its production halt.
The company officials said the reason for this sudden price increase is not known. However, on Sunday evening, the company suddenly announced that it will resume production on 1 October.
On 20 September, in response to a Dhaka Stock Exchange (DSE) query, the company said there is no price-sensitive information to explain the increase in share price.
In November last year, the company was forced to halt production due to a lack of working capital and raw materials. The company could not even apply to any bank for financing due to defaulting on loans.
About resuming production, Aziz Pipes Company Secretary AHM Zakaria told The Business Standard, "It was decided in a board meeting on Sunday and conveyed to the stock exchange."
Regarding the lack of working capital and raw materials, he said, "We are not able to import raw materials with Letter of Credit (LC) through banking channels. Therefore, the money from the sale of products has been taken in advance from customers, and raw materials will be bought from the local market with that money. Production is being started this way for the time being."
Earlier, the company had announced the production closure in January last year. It was then launched in October of that year but closed again in November. Before announcing the production resumption in October 2021, the company's share prices were hiked through market manipulation.
As a loan defaulter, Aziz Pipes has not been able to import raw materials since 2005. Since then, the company had been purchasing raw materials at higher costs from the local market.
Even after being a weak company, Aziz Pipes is always liked by gamblers of the stock market due to its low paid-up capital. Its paid-up capital is only Tk5.37 crore.
For example, the company's share price rose from below Tk20 per share in 2015 to above Tk250 per share in 2018. In August 2018, the Bangladesh Securities and Exchange Commission (BSEC) sent the company into the spot market as punishment because of excessive speculation.
In the spot transactions at stock exchanges, buyers need a cash balance in their investment accounts instead of using sales proceeds the day before maturity.
In July 2020, the BSEC allowed the company to return to the public trading market after it observed some satisfactory changes with respect to its corporate disclosures and other factors.
A top official of a brokerage firm, on condition of anonymity, said "Aziz Pipes shares were manipulated but no disciplinary action has been taken against those involved, which gives more incentive to manipulators and lowers investors' confidence in the market."
According to the company's annual report for fiscal 2020-21, a lawsuit involving Aziz Pipes and Uttara Bank is under trial over a loan of Tk5.72 crore. Besides, in the report, the company claimed that Dutch Bangla Bank's loan of Tk6.68 crore has been regularised.
The company's net asset value per share stood at Tk18.44 negative at the end of March 2022.
The company was listed on the country's stock exchanges in 1986. It could not pay dividends regularly as it incurred losses due to high-cost productions in the last decade.
Aziz Pipes could not pay any dividend to its shareholders for FY21. Now, its shares are being traded under the 'B' category at the DSE. Companies that pay less than 10% dividends are placed under the 'B' category.
The company's board of directors held only 23.93% of its shares, where the minimum regulatory requirement was 30%. The auditor of this company also noticed it in the annual report.