The share price of many companies is trading below their face value. Among the reasons are: high costs of production, over capacity, competition, an unfavorable exchange rate and lower prices from international buyers. Public shareholders account for over 60 per cent of the stakes in a company while sponsor shareholders have a less than 14 per cent share. At present, some 15 textile companies are ranked as junk stock due to their failure to provide dividends or hold an annual general meeting or shuttering of their factory.
Many companies expanded their business seeing lucrative growth in the sector and their sales volume soared and so did their revenue. However, with higher costs to meet compliance after Rana Plaza, the price per unit dropped in the international market. Overall, the sector is suffering from lower profits. The cost of production of apparel items increased 30 per cent between 2014 and 2018. Further, the minimum wage of garment workers has increased 51 per cent since December last year. Between 2015-16 and 2018-19, the industry’s value addition has gone down 1.61 per cent though apparel exports have increased during the period.
