BSEC asks Meghna Condensed Milk to explain continuous loss

The stock market regulator has asked Meghna Condensed Milk Industries Ltd to explain the reasons for its continuous loss in the last five years and the auditor's opinions in its financial statements for the year ended on 30 June, 2020.

The Bangladesh Securities and Exchange Commission (BSEC) has recently issued a letter in this regard and the firm will submit an explanation to the commission within seven working days of receiving it, said sources.

The commission has also asked about their current plan in the capital market to ensure the general investors' rights. 

In the financial statement as of 30 June, 2020, the company has shown a Tk16.73 lakh as payable dividend, which was declared and approved in an earlier year, but the company has not paid the amount yet.

As per the Listing Regulation 2015, the declared dividend is supposed to be paid within 30 days of approval, so the regulator has asked why the company has not paid the dividend yet.

The commission observed that the company has shown Tk35.34 crore as cash credit and overdrafts, but the auditor did not find any bank statements to account for Tk22.78 crore out of that amount.

The BSEC further observed that the auditor could not find any bank statement for Tk9.03 crore out of Tk10.41 crore shown as the company's financial expenses. Besides, the auditor did not get any bank statements for the Tk64.28 crore bank loan taken by the company.

Moreover, Meghna Condensed Milk Industries showed an unsecured loan of Tk2.59 crore as an investment in its sister concern, but there is no financial gain from this investment. The BSEC also inquired about it.

Another thing the BSEC inquired about was that the company has shown Tk3.15 crore in cash and cash equivalent and inventories worth Tk8.02 crore which were certified by the management, not assessed by the auditor.

Meghna Condensed Milk Industries owns and operates an industrial plant for producing sweetened and non-sweetened condensed milk.

According to the financial statement as of 30 June 2020, the company's revenue was Tk3.61 crore and net loss was Tk12.27 crore. Its retained earnings was negative Tk123.29 crore.

The company was incorporated in 1999 and listed on the stock exchanges in 2001.

Currently, the company's paid-up capital is Tk16 crore. The last trading price of its shares at the Dhaka Stock Exchange was Tk10 each on Thursday.

As of 31 March this year, sponsors and directors jointly held 50% and general investors 50% of the company shares.