A mysterious case of Meghna Cement profit

Meghna Cement Mills Limited – a concern of Bashundhara Group – had reported a 43% year-on-year profit growth in fiscal 2020-21, but one year later the company has now backtracked on its disclosed financials, saying it had actually incurred a loss in that year.

According to audited financial statements, its net profit that year was Tk7.44 crore despite the coronavirus outbreak in the country.

And based on that profit, the cement manufacturer also paid 5% cash and 5% stock dividends to its shareholders.

Almost a year after FY21's financial statement was published, the company in its financial disclosures for fiscal 2021-22 reports that it suffered a loss of Tk2.34 crore in the previous fiscal year.

Company Secretary Md Asaduzzaman declined to comment about the mismatch in the company's financial accounts, saying, "I cannot say anything about it."

Mohammad Pijirul Alam Khan, chief financial officer of Meghna Cement Mills Ltd, did not pick up his phone or respond to an SMS sent to his mobile phone by TBS correspondents.

Mahfel Huq and Co, Chartered Accountants, was the auditor for preparing Meghna Cement's financial report for fiscal 2020-21. The company has appointed a new auditor on the expiry of a three-year contract with the previous one.

Abdus Satter Sarkar, a partner of Mahfel Huq and Co, told The Business Standard, "The audited report is not supposed to be changed. But if there is any change, as per international accounting law, it should be made as a disclosure."

In its latest financial report, the company said it registered a profit of Tk5.58 crore in fiscal 2021-22 despite suffering losses in the previous fiscal year.

As such, the company's business has grown well and it has declared 5% cash and 5% stock dividends based on this growth.

According to data from the Dhaka Stock Exchange (DSE), the company's financial report for fiscal 2020-21 was released on 11 November last year.

However, prior to the release of the financial report, the company's share price on the DSE rose 44% to Tk100 in the three-month period from June to September last year.

A top official of a brokerage firm believes that Meghna Cement's share prices soared on the advance news that it would pay good dividends besides posting business growth.

The cement sector took a hit in fiscal 2019-20 owing to the pandemic outbreak in March 2020, affecting construction activities. However, Meghna Cement's revenue was unaffected but profits fell by 25%.

The company's revenue grew by 25% in the following fiscal year, with a profit growth of 43%. During that period, its earnings per share (EPS) increased from Tk1.91 to Tk2.73.

Meghna Cement Mills said its annual general meeting (AGM) will be held on 29 December through a digital platform. To identify the company's shareholders, it has fixed 1 December as the record date.

The net asset value per share declined to Tk57.90, which was Tk62.49 in the previous fiscal year.

The company said it declared stock dividends for utilising the retained amount as capital.

Meghna Cement Mills, the first manufacturing unit of the Bashundhara Group, is the largest cement maker in the country. It produces more than 1.5 million tonnes of cement a year.

Established in 1992, the company began commercial operations in 1996.

The company got listed on the Dhaka Stock Exchange (DSE) in 1995, and Chittagong Stock Exchange (CSE) in 1996.

The company markets its products under the trade mark "King Brand Cement".