Nearly half of the listed state-run companies have been incurring losses for many years due to a lack of competitiveness, in turn affecting stock investors.
Of the total 18, seven are incurring losses while the rest booked profits in 2019-20, according to the data of the Dhaka Stock Exchange (DSE).
State-run companies, which enjoy natural monopoly and do business in strictly regulated markets, are booking profits.However, those running in a competitive atmosphere are mostly incurring losses, according to the companies' business analysis.
The seven loss-incurring companies deal with producing sugar, motorcycles, hotel services, cables and glass sheets.
A big number of government run companies are not giving any dividends for many years so the stocks are providing nothing to their investors, said stock investor Abdul Alim.
Renwick Jajneswar and Usmania Glass did not provide any dividend for the last two years.
Moreover, Shyampur Sugar and Zeal Bangla Sugar have not paid any dividends in at least for the past two decades, the DSE data shows.
The state-run sugar mills are 60 years old but their economic lifespan ended at least 30 years ago, said Sanat Kumar Saha, chairman of the Bangladesh Sugar and Food Industries Corporation (BSFIC).
So they are incurring losses for many years, he said.
The listed three state-run companies named Shyampur Sugar, Zeal Bangla and Renwick Jajneswar are under the BSFIC.
Now, modernisation is needed to ensure their commercial viability, Saha added.
Atlas Bangladesh was once a profit-making state-run motorcycle producer and distributor but now it has been incurring losses for the past five years.
The situation became so bad that its auditor expressed uncertainty about future continuation of business.
A lack of competitiveness is the main reason of the state-run companies' fallouts, Alim said, adding that most of the companies did not take to modernisation and product diversification over the years.
The drive to attain profitability is rare in the companies, the stock investor added.
A top official of an asset management company said they refrain from buying state-run companies' stocks because their performance may get hampered by the government decisions at any time, something that was witnessed in case of Titas Gas.
In 2015, the energy regulator decided to reduce its service charge so its earnings fell suddenly. Thus the stock price of the gas distribution company dropped.
Some state-run companies have huge potential because many of them work in an uncompetitive but prospective fields, he said.
About the loss-making state-run companies, he said inefficiency and a lack of competitiveness and accountability were the main reasons behind the state-run companies' fall.
So most of them are profitable only in regulated markets but not in the competitive arena, the asset manager added.
Eleven listed state-run companies are making profits. Of the 11, seven are doing business in strictly regulated areas where the private sector was not allowed to do business.
The companies are Meghna Petroleum, Jamuna Oil, Padma Oil, Titas Gas, Powergrid, DESCO, and Bangladesh Submarine Cable.
Only four state-run listed companies are making profits competing with the private sector. The companies are National Tubes, Eastern Lubricants, Bangladesh Shipping Corporation and Rupali Bank.
The government should bring companies with good performance records to the market rather than companies with bad records, said a top official of a leading merchant bank.
Otherwise, the main objective of bringing them would be spoiled, he said.
The government has taken steps to bring some state-run companies to the stock market in order to boost stock investors' confidence.
Already, three state-owned commercial banks announced their commitment to get listed and Rupali wished to offload more shares within the current year although it has been delayed due to the pandemic.
Some banks are not in a good shape due to higher non-performing loans so the government should reconsider such decisions so that their listing does not increase woes of the stock investors, said the merchant banker.
Once the listed state-run companies were profitable, but they became loss-making entities due to a lack of efficiency and monitoring, said Prof Abu Ahmed, a stock market analyst.
The government should have offloaded their shares and controlling power so that efficient people came to the boards. But the government holds a majority share for unknown reason, he said, adding that bureaucrats do not want to give up power to the private sector.
"What the majority power is giving to the government is yearly losses," he said.
If the government sold the shares, it could get a huge amount of money back, on the other hand, efficient directors could bring in profits for the companies that would pay them tax at the year's end, Ahmed said.
The companies have huge idle resources that could be used for making the companies profitable, he added.