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RSRM shares jump 42% in 2 months, despite no production

Staff Correspondent
15 Jan 2024 22:16:02 | Update: 15 Jan 2024 22:17:06
RSRM shares jump 42% in 2 months, despite no production

The price per share of Ratanpur Steel Re-Rolling Mills (RSRM) Ltd stood at Tk 16.9 on November 11, but within the span of just two months, the stock soared to 42 per cent at Tk 24.1 on January 14 – the highest recorded figure in 52 weeks.

However, on January 15, the company’s share price traded down by 2.90 per cent to Tk 23.4 compared to the previous day. The company had disclosed in June last year that their production had halted.

And yet, no information about the start of production has been released on the Dhaka Stock Exchange (DSE) website.

Under the circumstances, RSRM responded to an inquiry letter from the DSE on Monday regarding the increase in share price, saying there is no undisclosed price-sensitive information about the company for the recent unusual price hike, and increase in volume of shares.

This has happened before. In May 2023, the price per share was Tk 16. From there, the share price reached Tk 20 step by step in June, without any reason. But when the company announced that its factories had closed, prices began to fall. The share price fell again to Tk 16.

Ratanpur Group is one of the industrial companies in Chittagong’s steel sector, which is popularly known as RSRM [Ratanpur Steel Re-Rolling Mills]. The company was established in 1984.

But two of its factories remain closed from December 2020 due to outstanding power bills of Tk 40 crore. Although the company announced in September 2021 that it would be back in production, production has since failed to materialise.

On June 25 last year, the company informed DSE website with a statement saying, “We are in a tremendous financial crisis.

“Production remained closed in the factory, there were no sales, and the company could not recover receivables from the market, so all the company's cash inflow remained almost stopped.”

It further stated, “Due to a shortage of funds, we could not acquire the raw materials, but the company management is trying to arrange funds, as well as the raw materials for restarting production in the factory.”

On January 20, 2022, A Chattogram court issued a rule barring the managing director of RSRM from leaving the country in connection with a case filed for Tk 312.82 crore default loan.

A total of 10 cases have been filed against RSRM so far on grounds of cheque dishonour and loan collection worth Tk 1,500 crore from different banks.

In 2014, RSRM Steel got listed after raising Tk 100 crore from the stock market. Each share is issued at Tk 40 with a premium of Tk 30.

After its IPO, the company's shares were known as “blue chips” due to good profits and dividends. But later, when the production stopped, the share price fell due to the inability to pay dividends to the investors.

One of its non-listed companies, Ratanpur Ship Recycling Industries, enabled the group to source scraps from its own shipbreaking yard, while Modern Steel Mills was founded to make billets out of scrap metal to cater to the construction rod plant owned by the listed company.

In 2014, RSRM Ltd was listed in the bourses, and according to the DSE, the company has short-term loans of Tk 94.99 crore, while the long-term loans total over Tk 98.67 crore.

Sponsors and directors jointly hold 29.93 per cent of the company's shares, the institute holds 36.26 per cent, and general investors hold 33.81 per cent of the company, until November last year.