BSEC fines two investors for manipulating shares

The Bangladesh Securities and Exchange Commission (BSEC) has recently fined two investors for manipulating the share price of the Index Agro Industries Limited — a publicly traded feed maker. This is the second time the same investors have been fined within a span of one and half years.

An investigation of the commission found that AG Mahmud and Md Saif Ullah were engaged in manipulating the share price of Index Agro. Later the commission imposed a total fine of Tk55 lakh - AG Mahmud Tk25 lakh and Md Saif Ullah Tk30 lakh.

The investors were penalised in the second week of this month as both of them violated the securities laws by trading shares. However, the commission did not disclose how AG Mahmud and Md Saif Ullah manipulated the shares of Index Agro Industries.

In October 2022, the commission had fined AG Mahmud and Md Saif Ullah for manipulating share prices as well.

AG Mahmud was fined Tk3 crore for manipulating the share price of National Feed Mills, and Md Saif Ullah was fined Tk85 lakh. Saif Ullah was also penalised Tk25 lakh for manipulating Safko Spinning's shares.

Earlier, the commission had penalised four individuals, including AG Mahmud, Saif Ullah, Kazi Sadia Hasan, and DIT Co-Operative Limited Tk2.40 crore for manipulating Bangladesh National Insurance Company Limited shares, even though the four investors profited around Tk5 crore from the scheme.

According to the Dhaka Stock Exchange website, in May 2021, its share price was around Tk60, which rose 145% to Tk147 in a few months without any price-sensitive information.

After that, in April 2022, its share price stood at the Tk90 level but rose 72% to Tk155 without any valid reason.

In December 2022, the company's share was traded at floor price, which stood at Tk71.30 today.

Index Agro Industries Limited began operations in the year 2000. The poultry and fish feed maker collected Tk50 crore through an Initial Public Offering (IPO) to construct buildings and execute other civil work alongside acquiring new machinery and equipment.

Index Agro Industries Limited invested around Tk14 crore to expand the capacity of storing the raw materials by 16,000 tonnes. The company installed two silos – each having a capacity of 8,000 tonnes – with automatic loading and unloading facilities at the feed mill division in Bhaluka, Mymensingh. A silo is a tall tower or pit on a farm used to store grains.

Index Agro has five automatic storage facilities with a total capacity of 26,000 tonnes.

According to the company, till February this year, Tk9 crore of its IPO fund remained unspent. The company will spend the rest of the amount to construct buildings and purchase machinery. The company was supposed to use this fund in August 2023. However, the feed maker could not use this fund properly.

In July to December 2023, the revenue of the company stood at Tk192.60 crore, which was Tk230.33 crore in the same period the previous year.

During the period, its net profit after tax was Tk9.71 crore, which was Tk10.51 crore a year ago. Profit after tax decreased due to foreign exchange rate fluctuation loss and increase in finance cost.

Its finance cost rose 23% to Tk13 crore, from Tk10.07 compared to the previous year.

Its earnings per share was Tk2.06 and its net asset value per share was Tk78.70 at the end of December 2023.

As of 29 February 2024, sponsor directors retain a 57.77% stake, institutional investors hold 20.22%, and general shareholders possess 22.01% of the company's shares.