Sonali Aansh overstates profit by not charging depreciation
Sonali Aansh Industries Limited has overstated its net profit by not charging depreciation of the fixed assets, said an auditor.
The Bangladesh Securities and Exchange Commission (BSEC) has recently taken the issue into cognizance and sought clarifications from the company.
Situated on 22 acres of land in Daudkandi Upazila of Cumilla, the leading export-oriented jute yarn and diversified jute products manufacturer in the country went into production in 1982.
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Its yearly turnover at present is 9,000 tonnes. The revaluation of fixed assets such as land, plant, and machinery was Tk50.43 crore in fiscal 2006-07.
The company has not charged any depreciation on the financial value since then.
Thus the company overstated its net profit, earnings per share, and net asset value throughout the financial years.
The company reported an amount of Tk87.67 lakh from 24 customers which remained uncollectible for more than five years. It is very unlikely to recover these amounts in full. It would have adversely affected the EPS and the NAV of the company.
The company has shown that Tk66 lakh has been kept in the "Workers Profit Participation Fund and Welfare Fund" as of June 2021.
However, the amount has not been distributed yet as per the mentioned proportion of the labour law.
It is also found from the auditor's opinion that the deferred tax liability is understated by the company.
The auditor didn't find the bank statements of the company properly. As a result, they didn't confirm these bank accounts' balances.
The company was listed on the local stock exchange in 1985.
As of 30 April 2022, sponsors and directors jointly held 50.78%, institutions 5.63%, and the general public 43.59% shares in the company.
The last trading price for each of its shares was Tk431 on the Dhaka Stock Exchange on Sunday.
Bangladesh exports 282 types of products made with jute – which has a long history and is fondly dubbed "golden fibre" for its high value – to around 135 countries, according to the Export Promotion Bureau (EPB).
In the last 12 years, the annual exports of jute and jute products have exceeded the $1 billion thresholds four times.
In fiscal 2020-2021, exports of these products saw a 31% year-on-year growth.
Exports of jute bags and sacks increased by 30%, other products by 5%, and hand-picked jute fibre and staple fibre by 10%.
