Intech sinks to junk category as losses wipe out paid-up capital

The Dhaka Stock Exchange has downgraded Intech Limited to the “Z” category – commonly known as the junk stock segment – following a regulatory directive after the company’s accumulated losses wiped out its entire paid-up capital.

The regulatory move, effective from today (8 July), follows a mandatory policy by the Bangladesh Securities and Exchange Commission requiring companies with negative retained earnings exceeding their total paid-up capital to be shifted to the lowest trading tier. 

The announcement triggered an immediate sell-off, causing Intech’s share price to hit the lower circuit breaker, plunging 9.77% to close at Tk31.40. Under the BSEC (Margin) Rules 2025, stockbrokers and merchant bankers are now strictly prohibited from providing margin loan facilities to investors for purchasing Intech securities.

Capital erosion deepens financial distress

According to the company’s unaudited financial statements for the first nine months of the fiscal 2025-26, Intech reported negative retained earnings of Tk33.58 crore during the July-March period, exceeding its paid-up capital of Tk31.32 crore.

The capital erosion pushed the company’s net asset value (NAV) per share into negative territory at negative Tk0.72.

Its operating performance also deteriorated during the period. Revenue declined by 12% to Tk0.55 crore, while the company posted a net loss of Tk0.87 crore.

Years of weak performance

The downgrade marks the latest setback for the company following several years of financial difficulties.

Intech has reported recurring losses since 2020, including losses of Tk2.32 crore in FY23 and Tk1.18 crore in FY25. Although it returned to a modest profit of Tk0.50 crore in FY24 and declared a 0.20% cash dividend, the recovery proved short-lived.

In its audit report for FY25, the company’s statutory auditor expressed “substantial doubt” about Intech’s ability to continue as a going concern, citing negative shareholders’ equity of Tk1.39 crore as evidence of severe financial weakness.

Management cites legacy issues

Listed on the stock exchanges in 2002, Intech restructured its board in November 2021 to include individuals associated with major business groups, including S Alam Group and KDS Group.

Responding to the auditor’s observations, the current management said the company’s financial problems stemmed from “fabricated and overstated assets” inherited from the administration before 2020.

The company said it had requested the BSEC to appoint a special audit to determine the full extent of the alleged irregularities and had restated its historical financial statements. It also said directors had been providing interest-free loans to support the business while pursuing new projects and operational improvements aimed at restoring profitability.