The Bangladesh Securities and Exchange Commission (BSEC) will take action against listed company Deshbandhu Polymer Ltd for not giving a satisfactory explanation about the significant deviations in its cash flow statements.
BSEC sources said the deviations were in the company's financial statements of 2017 and 2018 but were not mentioned in the directors' report on the audited financial statements of those years.
As a result, the company has violated the Corporate Governance Guidelines and the Corporate Governance Code.
Besides, the company showed the cost value of its investments in shares in the audited financial statements of the last three fiscal years. But according to the rules, it was supposed to show the fair value of investments.
By doing so, the company has violated the Bangladesh Financial Reporting Standards (BFRS) and the International Financial Reporting Standards (IFRS).
In this connection, the BSEC asked the company to explain the deviations. But the regulator was not satisfied with the answer the company had provided.
Consequently, the BSEC has decided to take regulatory actions against the company. The commission's enforcement department will take necessary steps in this regard.
Deshbandhu Polymer Company Secretary Liakat Ali Khan told The Business Standard, "We have already replied to the securities regulator's query about our cash flow deviations in the financial statements. So, we do not want to comment on this now."
In the 2017 financial statement, the company showed that its net cash flow was Tk3.42 crore. In the statement of the previous year, the amount was Tk1.11 crore.
So, in a year, the net cash flow increased by Tk2.31 crore.
Then in 2018, the net cash flow was Tk1.58 crore, down from the previous year's amount by Tk1.84 crore.
In the financial statement of 2019, the company has recommended a five percent cash dividend for its shareholders.
In 2019, the company's earnings per share was Tk0.47, which was less than 16 percent from that of the previous year.
In the same year, the company's net profit was Tk2.87 crore, which was less than 16.49 percent from that of the previous year.
Also, the company's net sales were Tk79.92 crore, down 15.48 percent from that of 2018.
According to the 2019 financial statement, the company has been facing restrictions on the use of polymer products for the last few years.
As a result, the company's sales revenue, selling price and profitability declined in 2019.
Deshbandhu Polymer started its commercial operations on December 17, 2007. It manufactures and markets PP woven bags and liner.
The company was listed on both stock exchanges in 2011. Its shares were last traded at Tk11.70 yesterday.