DSE flags 42 firms over survival concerns

Auditors raise concerns over firms, placing more than Tk6,650 crore of investors’ capital at heightened risk

Shakahwat Hossain Sumon

The Dhaka Stock Exchange (DSE) has identified 42 listed companies facing significant uncertainty over their ability to continue as going concerns, putting more than Tk6,650 crore of investors’ capital at risk and raising fresh concerns about market stability.

Based on auditors’ observations in their latest financial statements, the companies have been flagged as facing a “going concern” threat, indicating substantial doubt about their ability to sustain business operations in the foreseeable future.

According to the DSE, persistent liquidity shortages, recurring losses, mounting debt burdens, operational disruptions and weak asset management have cast serious doubts on the sustainability of these firms.

To alert investors, the bourse has published the names of the companies on its website.

An analysis of DSE data shows that although investors hold shares with a combined face value of more than Tk6,650 crore in these companies, their market value has fallen to around Tk2,195 crore, reflecting a sharp erosion of shareholder wealth.

Md Shafiqur Rahman, deputy general manager of DSE’s Public Relations Division, said the list was published to enhance investor awareness of potential risks identified by auditors.

He noted that inclusion on the list does not automatically lead to delisting, as companies may still recover if management takes effective corrective measures and improves financial performance.

The banking and financial sector accounts for the largest share of capital exposed to risk. 

Three banks – First Security Islami Bank, Social Islami Bank and ICB Islamic Bank – represent approximately Tk3,013 crore in face-value investment, nearly 45% of the total capital tied up in the 42 firms.

Nine non-bank financial institutions (NBFIs) – BIFC, Fareast Finance, First Finance, FAS Finance, GSP Finance, International Leasing, Peoples Leasing, Premier Leasing and Prime Finance – account for another Tk1,603 crore.
Together, banks and financial institutions account for around Tk4,616 crore, or nearly 70% of the total face-value investment exposed to risk.

Among individual companies, First Security Islami Bank has the highest paid-up capital at more than Tk1,208 crore, followed by Social Islami Bank with Tk1,140 crore and ICB Islamic Bank with Tk665 crore.

The power sector is another area of concern. Four listed power companies – Khulna Power Company, Baraka Power, Doreen Power Generations and Systems, and GBB Power – account for nearly Tk916 crore in face-value investment. Several textile, spinning and manufacturing companies, including Alltex Industries, Anlima Yarn Dyeing, Dacca Dyeing, Dulamia Cotton Spinning Mills, Jute Spinners, Metro Spinning, Mithun Knitting & Dyeing, Safko Spinning Mills, Tallu Spinning Mills and Sonargaon Textiles, have been struggling with production disruptions, declining competitiveness and prolonged financial distress. 

Many have either partially suspended operations or remained closed for extended periods

The weak financial health of these firms is also reflected in their share prices. 
Several NBFIs, including Fareast Finance, FAS Finance, Peoples Leasing and International Leasing, have traded at only a few taka for years.

Meanwhile, the shares of ICB Islamic Bank, Social Islami Bank and First Security Islami Bank continue to trade below face value, signalling fragile investor confidence.

The DSE has also separately published a list of 30 companies with suspended operations. 

Several firms appear on both lists, including Aziz Pipes, Baraka Power, Khulna Power Company, GBB Power, Metro Spinning, Mithun Knitting & Dyeing, Meghna Condensed Milk Industries, Meghna PET Industries, Shyampur Sugar Mills and Usmania Glass Sheet Factory.

Anam Ataullah Nayeem, president of the Bangladesh Capital Market Investors’ Unity Alliance, said the DSE’s disclosure serves as an important warning for investors.

“Many listed companies have suffered from financial distress, operational stagnation and governance weaknesses for years, but retail investors often fail to fully understand the level of risk involved,” he said.

He added that while some firms may still have recovery potential, sustaining operations has become increasingly difficult for many. 

Investors should therefore carefully examine financial statements, auditors’ observations and the actual operational status of these companies before making investment decisions, as exposure to such high-risk stocks could result in further losses.