BSEC team to probe Gemini Sea Food's 'inflated' revenue

TBS Illustration

The Bangladesh Securities and Exchange Commission (BSEC) will investigate the financial disclosures of Gemini Sea Food Limited following the discovery of "inflated revenue figures" during a preliminary inquiry by the Dhaka bourse.

To this end, the commission on Tuesday formed a three-member committee.

The committee, composed of BSEC Additional Director Mollah Miraz-Us-Sunnah, Assistant Director Anwarul Azim, and Dhaka Stock Exchange (DSE) Manager Rumana Ferdous Mou, will present its findings to the commission within 60 days.

Gemini Sea Food, a pioneer in exporting certified organic shrimp to EU retailers, processes, packages, and exports quality frozen raw shrimp, cooked shrimp, and whitefish.

Listed on the DSE since 1985, the company exports its products to the US, the UK, Germany, Denmark, the Netherlands, Belgium, and Russia.

Officials at the DSE and BSEC said questions have been raised about the authenticity of the revenue the company reported for the first nine months of the last fiscal year. Now, the commission wants to investigate this along with other issues.

According to the officials, in the July-March period, its revenue stood at Tk66.60 crore, with Tk27.36 crore from local sales and the remaining Tk39.24 crore from exports. But the stock exchange did not get any evidence regarding local sales, which were sold to seven companies through 16 transactions.

An official at the company said in the July-March period it achieved revenue through local sales as two containers of seafood returned after export and the company was compelled to sell the products locally. And the company made local sales for the benefit of general shareholders and to ensure expected growth. Perhaps, the local buyers did not have any comment in this regard, he added.

However, the inquiry committee will review the balance sheets and other parts of the financial statements to present a true and fair view of the assets, liabilities, and equity of the company.

It will also review related party transactions between the company and other related parties over the last five years.

The inquiry team is expected to look into revenue from customers, cost of goods sold, cash received from customers, cash paid to suppliers, bills receivable, payables, inventories, and their underlying documentation and compliance as per laws.

It will also review investments in land and land development and other items of property, plant, and equipment, and identify the transactional parties, their independence, and a fair assessment of those assets.

The team will examine the internal control system of the company and its effectiveness in ensuring operational efficiency, reliable financial reporting, and compliance with laws, regulations, and policies.

It is tasked with scanning the role of the board of directors, audit committee, and top management in the overall governance of the company and also submitting evidence regarding false and biased financial information to investors.

The committee will investigate the possible price manipulation activities of the board of directors, top management, and other related parties of the company using false and misleading price-sensitive information in financial statements.

Earlier in October last year, the commission set up a two-member committee to investigate the unusual increase in the price of Gemini Sea Food shares.

In FY22, the company recommended 10% cash and 30% stock dividends for its shareholders.

As of 31 July 2023, sponsors and directors held 30.01%, institutions 8.70%, foreign investors 0.41%, and general investors 60.88% of company shares.