Fu-Wang Food’s new board stresses up-gradation of factory, marketing channel

Three new directors, nominated by Minori Bangladesh – a subsidiary of the Japanese farming company Minori Co Ltd – have taken the initiative to upgrade Fu-Wang Food's factory and strengthen its marketing channel, according to company officials.

Since its inception in 1997, the company has had confectionery items – cakes, breads, biscuits, toasts, snacks, and instant noodles.

In February this year, Minori Bangladesh nominated Miya Mamun, Md Afzal Hossain, and Sidratul Mahabub Hasan to Fu-Wang's board who replaced the food company's managing director Arif Ahmed Chowdhury and directors Afsana Tarannum and Lubaba Tabassum.

Miya Mamun is now the new managing director of the food company.

Minori Bangladesh had earlier bought a 7.61% stake in Fu-Wang Food's former entrepreneur-director.

The Bangladesh Securities and Exchange Commission (BSEC) approved the new owner on the condition that he would invest another Tk20 crore in the development of the company in the interest of the general shareholders.

A senior Fu-Wang Food official, speaking on condition of anonymity, said there had been a number of irregularities in the previous board.

Besides, the company's production and sales system were stagnant and this is why no product of this company is available in the market, he added.

The official said the new board took up the initiative of upgrading the machinery of the factory to increase the production capacity of the company. Besides, work is underway to set up machinery for new products as per the market demand.

In addition, new appointments have been made to strengthen the marketing channel. Besides, a sales centre has been set up in the capital which will be gradually rolled out across the country, he said.

Md Afzal Hossain, one of the new directors in the company, had earlier told The Business Standard, "Fu-Wang Food has good potential, but it needs proper management."

The company's financial statements for the first three-quarters of FY22 were published under the new board on 30 March.

According to its financial statements, its revenue jumped 58% to Tk93.52 crore in the July-March period. But its net profit dropped by 56% to Tk1.25 crore during the period.

In this regard, the official said that in the last three months, the cost of product distribution and selling has increased. Besides, profit has decreased due to an increase in raw material prices.

Prior to Minori Bangladesh's engagement, BSEC restructured the Fu-Wang board and recruited five independent directors as the previous board failed to comply with the minimum shareholding of 30%.

Under that board, the company's accounts for the FY21 were audited. Auditor MABS & J Partners has identified severe anomalies in Fu-Wang Food's accounts for the fiscal.

Earlier, Rahman Mostafa Alam and Co audited the company's annual accounts seven times from 2012 to 2020. In between, MABS & J Partners audited the accounts for FY16 only. But no auditor found any irregularities.

In the audit report for FY21, the auditor said in a qualified opinion that the company has shown sales of Tk89 crore but it could not provide any documents regarding its sales.

Meanwhile, the company mentioned Tk53.15 crore receivable from its customers. But it could not provide any list of debtors of Tk32.40 crore. On the contrary, out of the list of debtors the company did provide, the auditor has been able to confirm only Tk0.38 crore.

The company informed the auditor that it has an inventory of Tk28.30 crore. But it could not show the inventory worth Tk20.57 crore to the auditor.

Besides, it could not show any documents and satisfactory explanations against Tk0.28 crore given as advance against salary, Tk0.19 crore given to Bristy Biscuit Factory, Tk8.41 crore given to subsidiary company Fu-Wang Beverage and Tk1.32 crore in the raw material purchase.

Another official of the company said the auditor's findings were being resolved as directed by the BSEC.

The company got listed on the capital market in 2000. It paid only stock dividends to the shareholders till 2018.

After the dividend policy was amended by the regulator, the company paid only 2% cash in FY19, 1.65% cash in FY20, and recommended the same in FY21.

Its share's closing price was Tk21.40 each on Wednesday on the Dhaka Stock Exchange.