The company substantially overstated its sales, inventory, the value of its property, plant and equipment, and the price at which it purchased raw materials in its financial statements
Oimex Electrode, a manufacturer of electrode, nails and galvanised wire that raised Tk 15 crore from the public three years ago, has massive irregularities in its financial reports, found an inspection by the Dhaka Stock Exchange.
The financial reports of the past two years were prepared by the chartered accountancy firm ARTISAN, which, coincidentally, is the auditor of Le Méridien Dhaka’s parent company Best Holdings that has been in the news for its inflated valuation among others.
The DSE inspection, which came following instruction by the Bangladesh Securities and Exchange Commission, found that Oimex substantially overstated its sales, inventory, the value of its property, plant and equipment, and the price at which it purchased raw materials.
“This is a violation of International Accounting Standard and Securities and Exchange Ordinance, 1969,” said the report by the DSE team to the BSEC.
Dhaka Tribune has a copy of the report submitted to the BSEC on January 6.
After assessing ledger on a sample basis, the DSE team found that Oimex had overstated sales by 66 per cent, inventory by 310.2 per cent and raw materials by 40.59 per cent.
Oimex showed recognised sales of Tk 43.43 crore, inventory of Tk 28.36 crore and raw materials of Tk 21.77 crore for the year that ended on 30 June 2020.
The addition of the property, plant and equipment (PPE) as on June 30, 2019 was Tk 9.13 crore.
The company officials confirmed that they did not purchase any fixed asset from external sources during the year.
There was an addition of some fixed assets internally but it was not worth Tk 9.13 crore.
The financial reports mention Oimex has a 6-acre factory premise in Daulatpur, Kushtia, but the DSE inspection team found only 173 decimals are registered in the name of the company.
The rest are owned by its chairman Khairun Nesa Lucky and managing director MA Maleque, who is Lucky’s spouse.
And Oimex managed to get away by materially misstating facts as no auditor from ARTISAN visited the factory.
ARTISAN completed its audit based on documents provided by the head office in Dhaka and did not feel the need to give any qualified opinion to the discrepancies.
“This is a violation of accounting standard and securities rules,” the report said.
Besides, Oimex did not provide information or documents as per the requirement of the inspection team.
“In this circumstance, prompt and strict regulatory measures should be undertaken by the BSEC against the directors and management of the company for the greater interest of the capital market,” the report said.
Mohammad Rezaul Karim, the spokesperson of the BSEC, acknowledged receiving such findings from the stock exchange.
“We are looking into the matter,” he told Dhaka Tribune.
Md. Suzzal Hossain Sajal, company secretary of Oimex Electrode, vehemently denied the allegation of falsifying financial reports.
“We have not overstated anything in the report,” he told Dhaka Tribune.
ARTISAN could not be reached for comment.
Shares of Oimex, which lost 33.6 per cent in value over the past two years, closed at Tk 24.6 on Sunday, down 3.9 per cent for the previous day.
It logged in profit of Tk 3.3 crore in its 2019-20 financial year, down 65.5 per cent year-on-year.
The company is yet to announce any cash dividend for its shareholders since getting listed in 2017.
It announced a 5 per cent stock dividend for its last financial year, down from 12.5 per cent from a year earlier.