Debt defaulter Aman feed | Daily StockBangladesh

Staff Reporter: The Dhaka Stock Exchange (DSE) has expressed concern over the business stability of Aman Feed Limited. The company is already unable to import raw materials due to default. Buying raw materials at high prices from local sources increases production costs. That is why the company is trying to survive in the competition with ‘production loss’.

The DSE has recently found various inconsistencies by inspecting the head office and factory premises of Aman Feed. There is a lack of transparency and accountability in running the business. Bank loans have risen to Rs 350 crore and rising production costs have raised concerns about the survival of the listed company in various sectors.

In the meantime, the effect has been felt in the published picture of the third quarter (January-March ’21). The company’s earnings per share (EPS) for the third quarter was 45 paise. Earnings per share (EPS) for the same period last fiscal year was 61 paise.

These inconsistencies have been reported to the Bangladesh Securities and Exchange Commission (BSEC) by the DSE.

The DSE stated in the inspection report that the financial report prepared by the company provided false information. The company’s management and board members are reluctant to disclose financial and non-financial information. The financial report contains biased and untrue information.

In the case of financial transactions, there is a lack of adequate documentation. As such, the inspection team feels that Aman Feed’s management is incapable of conducting business. They lack transparency and accountability in running their business. In this case, the management of the company is not willing to create a transparent environment.

The attitude of the senior executives of the company during the visit was smoky and unprofessional. They try their best not to give the inspection team any information about the actual condition of the company.

In addition, the inspection team said, the company is burdened with a large amount of bank loans. The company has already been declared a defaulter. As a result, they cannot import raw materials.

They are being forced to purchase raw materials at high prices from local sources. As a result production costs are rising compared to their competitors. Which could degrade their business stability. According to the company’s prospectus, Aman Feed had a debt of Rs 90 crore in 2015. But in 2021, the amount of debt has increased to Tk 350 crore.

The amount raised through initial public offering (IPO) from the stock market was Tk 72 crore. The company authorities could not give a satisfactory answer to the question of the inspection team as to where the company has used this huge amount of money with IPO funds and loans.

The report further states that the company has exaggerated its financial statements in the financial statements. According to the VAT return of the company for the year ended June 30, 2020, the purchase was Rs 443.94 crore. However, on page 104 of the company’s annual report for the financial year ended June 30, 2020, it was stated that purchases amounted to Rs 520.7 crore (raw materials Rs 499.64 crore and packaging materials Rs 20.94 crore). As a result, the company has exaggerated Tk 6.84 crore in its annual report for the financial year ended June 30, 2020.

Meanwhile, the company’s VAT return for the year ended June 30, 2019 was Rs 462.54 crore. However, on page 104 of the company’s annual report for the financial year ended June 30, 2019, it was mentioned that purchases amounted to Tk 8.20 crore (raw materials Tk 638.92 crore and packaging materials Tk 26.28 crore).

As a result, the company has exaggerated Tk 193.7 crore in its annual report for the financial year ended June 30, 2019. As a result, net earnings and earnings per share (EPS) for the fiscal year ended June 30, 2019 and 2019 showed lower.

Similarly, according to the Fixed Asset Register provided by the company for additional expenditure on building and civil construction, the cost of building and civil construction at Ullapara in Sirajganj is shown as Rs. 100.19 crore.

While inspecting the factory at Nulipara, the inspection team saw a five-storey building, a power substation, four semi-finished production units and 12 tinshed warehouses (most of which were rented from Aman Cement Mills).

Also, while inspecting the head office, the inspection team noticed that Aman Feed was managing their head office with a rented office. However, the company could not provide the required documents and bank statements to the inspection team to verify the cost of building and civil construction. As a result, the Rs 100.19 crore shown as the cost of building and civil construction seems to be materially surplus. It also said the company had violated the law.

In the case of sales overvaluation or devaluation, the report states that the company did not provide the inspecting team with separate customer-based information and relevant bank statements for the fiscal year ended June 30, 2020. As a result, it was not possible to prove the veracity of Tk 750.20 crore mentioned for sale in the financial year ended June 30, 2020.

The inspection team thinks that the company is more likely to overestimate or devalue sales at the time in question. The company also violated the law by issuing relevant sales documents.


Source: Daily StockBangladesh by www.dailystockbangladesh.com.

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