Sonali Aansh overestimates her profits by not charging depreciation

Sonali Aansh Industries Limited overstated its net profit by not charging for fixed asset depreciation, an auditor has said.

The Bangladesh Securities and Exchange Commission (BSEC) recently became aware of the matter and sought clarification from the company.

Situated on 22 acres of land at Daudkandi Upazila of Cumilla, the country’s leading export oriented manufacturer of jute yarn and diversified jute products entered production in 1982.

Its annual turnover is currently 9,000 tons. The revaluation of fixed assets such as land, plant and machinery was Tk 50.43 crore in the financial year 2006-07.

The company has not charged any impairment on the financial value since then.

Thus, the company has overestimated its net income, earnings per share and net asset value throughout the years.

The company reported an amount of Tk 87.67 lakh from 24 customers which has remained uncollectible for more than five years. It is highly unlikely that these amounts will be fully recovered. This would have had a negative impact on the company’s EPS and NAV.

The company showed that Tk66 lakh has been kept in the “Workers Profit Participation Fund and Welfare Fund” from June 2021.

However, the amount has not yet been distributed in accordance with the proportion mentioned in the labor law.

It also appears from the auditor’s opinion that the deferred tax liability is understated by the company.

The auditor did not find the company’s bank statements correctly. Accordingly, they did not confirm the balances of these bank accounts.

The company was listed on the local stock exchange in 1985.

As of April 30, 2022, sponsors and directors jointly owned 50.78%, institutions 5.63% and the general public 43.59% of the shares of the company.

The last trading price of each of its shares was Tk 431 on the Dhaka Stock Exchange on Sunday.

Bangladesh exports 282 types of products made with jute – which has a long history and is affectionately dubbed “golden fiber” for its high value – to around 135 countries, according to the Export Promotion Bureau (EPB).

Over the past 12 years, annual exports of jute and jute products have exceeded the $1 billion threshold four times.

In fiscal year 2020-2021, exports of these products grew by 31% year-on-year.

Exports of jute sacks and sacks increased by 30%, other products by 5% and jute and hand-picked staple fibers by 10%.

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