Home ›› 23 Feb 2023 ›› Stock
Hakkani Pulp and Paper Mills Limited since June 2019 announced two big investment plans to scale up its production capacity, but none of them did see any progress so far.
Though all publicly traded companies are obliged to unleash any of their business developments through the bourses, the paper manufacturer did not comply with this securities
guideline.
But those announcements had not taken much time to reach investors which helped its shares rise on a whopping scale.
The paper manufacturer in June 2019, announced to invest Tk 6.51 crore to expand its production line, which it mentioned in its annual report for FY21, but the decision did not make any further headway.
Later, the Chattogram-based company in March 2022, decided to go for a big expansion move with an investment of Tk 19.60 crore for the factory modernisation, according to its first half-yearly financial statement of the fiscal year 2022-23.
But interestingly the listed firm did not put any investment so far to implement that expansion move.
Hakkani Pulp shares stood at Tk 64.2 per share at the end of FY21, but each of its shares reached Tk 91.4 in the next three months.
Moreover, after unleashing the latest expansion move in March 2022, its shares gained by 45 per cent to Tk 82.3 till December last year.
But its shareholders during those times did get not get any significant returns by putting their funds into the company’s shares because it has been a loss incurring one over the past five years.
The company even had not paid any significant dividends to its shareholders in the last few years.
The factory modernisation initiative was mainly taken to increase its production capacity and reduce long-term losses, officials of the company said.
The company, however, was currently utilising some 63 per cent of its existing production capacity.
According to its FY22 financial report, the company has an annual production capacity of 13500 metric tonnes of paper but it produces only 4914 metric tonnes.
Although the paper manufacturer had not implemented their expansion decisions it did not inform the updates to its investors, a clear violation of the securities rules.
After going through the company’s one-year data available on the DSE website no announcement on the investment plan or the cancellation of such any plan was found.
When contacted, Mohammad Musa, company secretary of Hakkani Pulp and Paper Mills said although an initiative was taken to build a new factory under the balancing, modernization, rehabilitation, and expansion (BMRE) programme in 2020, it could not be implemented due to the outbreak of the coronavirus epidemic.
Concerning the last year’s investment plan, he said an investment plan of Tk 19 crore was initially made last year, but later it was found the plan required more investment. That’s why that investment plan got halted.
The producer of newsprint paper and tissue paper reported a net loss of Tk 1.53 crore in July-December of the current fiscal year against a loss of Tk 1.72 crore in the same period last fiscal.
The company in the first six months of FY23, earned a total revenue of Tk 50.14 crore, of which newsprint sales accounted for Tk 29.90 crore.
Meanwhile, the company had spent Tk 36.33 crore on the purchase of raw materials compared to Tk 7.58 crore in the same period of FY22.
The paper manufacturer’s expenditure jumped by 380 per cent in July-December of FY23 on a year-on-year basis after the prices of raw materials hiked many times due to global economic volatility. The company registered the second-highest H1 loss in FY23 over five years.
Talking about the company’s failure to publish its investment decisions on the DSE website, Mohammad Rezaul Karim, executive director and spokesperson for the securities regulator Bangladesh Securities and Exchange Commission (BSEC) told Business Post that any information related to any listed company’s financial development must be published on the
DSE website.”
The company’s shares closed at Tk 49.5 per share on the Dhaka bourse on Wednesday.
“If the company does any wrong by violating the securities rules, appropriate legal action will be taken against it,” he added.
The National Curriculum and Textbook Board is the prime buyer of the company’s paper.
Hakkani Pulp delivered 3,000 tonnes of paper to the national textbook authority in 2017.
But despite having a work order, it could not deliver papers in 2018, and it failed to participate in the tender bidding in 2019.
