Share price of the CopperTech Industries Ltd, a firm embroiled in controversy over inconsistencies and lack of information in its financial reporting, has witnessed a 355 percent gain on the first day of trading.
At the opening, the shares of the company, enlisted within the engineering category, reached Tk30 at both the bourses of the country, showing a 200 percent return over the issue price of Tk10 per share.
A buying spree, fuelled by the consistent increase in price of the share, pushed the CopperTech stock prices over the Tk45 mark. The company’s share price at the Dhaka Stock Exchange (DSE) ultimately stood at Tk45.50 at the closing.
A significant number of investors who bought the company’s shares in the primary market chose to sell-off the stocks to take on the unexpected profit. In the process, more than one-third of the primary shares of CopperTech has been sold out yesterday.
After Monday’s trading, investors who had bought CopperTech Industries’ primary shares ended up with a gain of 355 percent over face value within less than a period of 6 months.
DSE sources informed, CopperTech's after-tax (net) profit for the first three quarters of the last fiscal stood at Tk3, 48, 70,000 with an earnings per share (EPS) of Tk0.58 (diluted).
At the time CopperTech started IPO process, its total paid-up capital was Tk60 crore, divided into six crore shares. The company collected Tk20 crore through IPO.
In December of last year, CopperTech's IPO process was approved at a Commission Meeting of the Bangladesh Securities and Exchange Commission (BSEC).
Crises arose with CopperTech’s enlistment at the bourse in consequence of the publication of media reports on inconsistencies with its financial reporting, Ahmad and Akhtar Chartered Accountants being the auditors of the company. Subsequently, DSE authorities and the Financial Reporting Council (FRC) took steps to investigate the inconsistencies in CopperTech's financial reporting.
Subsequently, the DSE authority sent their observations regarding the case to the BSEC, seeking opinion on the matter.
On the other hand, the FRC instructed the Institute of Chartered Accountants of Bangladesh (ICAB) to investigate into Ahmad and Akhtar Chartered Accountants as it pertains to CopperTech’s financial reporting and its audit.
ICAB authorities reported back to the FRC that the case cannot be reviewed by them anymore due to the auditor company’s non-cooperation. Meanwhile, ICAB revoked the audit company’s license for its continued irregularities and professional misconducts.
Although the Chittagong Stock Exchange (CSE) board decided to approve the company's listing, the DSE authority took time to make the final decision regarding the enlistment, while seeking BSEC's opinion regarding inconsistency in the company’s financial reporting.
This resulted in a disagreement between the two stock exchanges of the country over the approval of CopperTech's listing.
Meanwhile, the BSEC has given DSE five business days to enrol CopperTech under the IPO Act as the time for enlistment of CopperTech has already passed.
On July 25, the Commission issued a letter to the DSE. Earlier, the DSE had sent a letter to the Commission seeking exemption from the provision of section 5 (3) of the Listing Regulation.
According to this provision, any trading company is obliged to register with the stock exchange within 30 business days after the end of the IPO subscription period.
The DSE could not approve the company's enlistment within the allotted period due to the review on the complaints regarding lack of information in financial reporting. DSE finally approved CopperTech’s enlistment on July 23 as per the commission's directive.
Despite strong criticisms, controversial CopperTech Industries Limited makes debut with both the burses on Monday.
After a long dilemma the Dhaka Stock Exchange (DSE) finally on July 30 set the date for the debut following the exchange’s board decision to approve the for listing and the decision is believed to be in line with securities regulator’s unofficial order.
There had been a strong feeling of pressure from different quarters to bring the company on board even though it is alleged for manipulating the initial public offering (IPO) disclosures that includes faking paid-up capital and fabricating financial accounts.
BSEC awarded its IPO consent letter to CopperTech Industries on February 27. In April, the company received applications and subscriptions from investors to issue primary shares worth Tk 20 crore at a face value of Tk 10 each share.
The company started its commercial operations in mid-2014 to manufacture and sell copper bar, copper rod, copper strip, copper wire, copper pipe and copper tubes – which are mainly used in air coolers, refrigerators, transformers, electric wires, plumbing works, building construction works and power plants.
In the accounting year ending on June 30 of 2018 with revenue over half a billion Taka, the company disclosed a profit of Tk 41 million after tax.
CopperTech showed profit growth to Tk 3.4 crore in July,2018-March, 2019 period from that of Tk 3.2 crore in same period in the previous year. But, the company’s earnings per share decline to Tk 0.87 in the above period against Tk 1.62 due to the rise of paid-up number of shares.
But a lot of elements from its financial statement were alleged to be fabricated.
There had been a strong allegation from capital market groups that CopperTech Industries presented false data in IPO prospectus and concerned institutions like auditor and even securities regulator failed to stop the company misleading investors.
Ahmed and Akhtar Chartered Accountants – the audit firm that okayed CopperTech Industries IPO prospectus has recently lost its auditing right as The Institute of Chartered Accountants of Bangladesh (ICAB), the self-regulator of local chartered accountants, denied to renew the license as audit practitioner because of its professional misconducts.
Meanwhile, the auditor also had been kicked out from the panel of auditors approved by the Bangladesh Securities and Exchange Commission (BSEC). In spite of that the BSEC too did not step in to stop the listing.