B Mirror Report: The business performance of National Feed Mill, a company listed on the stock market, has remained weak since its debut in the capital market. However, this weakness existed even earlier. Before its Initial Public Offering (IPO), the company allegedly inflated its profits through manipulated financial statements.
In the financial report for the 2024–25 fiscal year, the company published artificial profit figures by not showing the actual expenses an act considered serious fraud and a punishable offense under securities law.
These findings emerged in the audit report of the company’s financial statements for the 2024–25 fiscal year.
According to the audit, National Feed authorities showed artificial profits by understating production costs and interest expenses. The company reduced production costs by Tk 2.26 crore and interest expenses by Tk 1.96 crore in its income statement, lowering total expenses by Tk 4.22 crore. This means expenses were reduced by Tk 0.45 per share. As a result, the company reported earnings per share (EPS) of Tk 0.03 for the 2024–25 fiscal year, although in reality the company incurred a loss of Tk 0.42 per share.
The auditor stated that the financial statements reported raw material purchases of Tk 7.83 crore under the cost of goods sold. However, according to the VAT return (Mushak 9.01), the purchase amount was Tk 10.10 crore. Thus, the company understated purchases by Tk 2.26 crore in the income statement, reducing expenses and inflating net profit, which had a significant impact on EPS.
Apart from raw material costs, the company also reduced interest expenses to show artificial profits. In Note No. 13.00 of the financial statements, the balance sheet shows interest and charges of Tk 4.41 crore under long-term loans for the 2024–25 fiscal year. However, only Tk 2.45 crore was reported as an expense in the income statement. This means the management understated expenses by Tk 1.96 crore, exaggerating profits and significantly affecting EPS.
Additionally, a large amount of receivables from credit sales has become uncollectible, causing losses for the company. However, the company did not write off these uncollectible amounts from the accounts for the 2024–25 fiscal year nor created any provision, which further reduced reported expenses and affected the company’s artificial profit and EPS.
Attempts were made to contact National Feed Secretary Zahidul Islam for comments, but he did not answer phone calls. No response was received to email inquiries either.
It is worth mentioning that National Feed has a paid-up capital of Tk 93.36 crore, of which 69.60 percent is owned by general investors in the stock market (excluding sponsors and directors). On Tuesday (March 10), the company’s share price stood at Tk 14.60.
