BM Desk : The stock market is discussing Fine Foods as a corporation that manipulates shares. Despite its poor business performance, its share price is soaring. Authorities at the corporation have been displaying fictitious financial accounts in an attempt to manipulate share prices. In this instance, they have demonstrated increased assets and profit by cutting costs. This was disclosed in the company’s auditor’s audit report.

The shares of Fine Foods, a small-capitalized company, have been manipulated for a while. As a result, the share price has increased above 200 taka. which the company’s executives are directly involved in. They have been working together in a number of ways, such as creating fictitious bank accounts, in order to manipulate shares. But now, as part of the selling strategy from the high-priced share, it has shown abnormal profits in the second quarter of the current fiscal year.

According to the company’s financial statements, its profit per share for the nine months of the current fiscal year was 4.12 taka. During the same time last year, the sum was 0.57 taka. According to reports, the profit climbed by 623 percent, or 3.55 taka.

Investors began discussing in brokerage houses that they would either park shares or feed regular investors after noticing Fine Foods’ extraordinary profit. For this reason, inflated profits were displayed. However, because Fine Foods was aware of this time’s trap beforehand, investors were spared.
Previously, as part of their strategy, the Fine Foods management announced a dividend that exceeded the profit to entice investors for the 2023-24 fiscal year. Despite the company reporting a profit of 88 paisa per share during that period, they declared a dividend of 1 taka. Nevertheless, the entrepreneurs and directors were so magnanimous that they opted not to take the dividend themselves, reserving it solely for ordinary shareholders.

In the most recent financial audit of the company, the auditor reported that for the 2023-24 fiscal year, the financial statements indicated an income of 7.34 crore taka, with 9.1 lakh taka remaining in accounts receivable, 3.68 crore taka spent on raw material purchases, and 2.28 crore taka on fingerlinks. However, the company claims that nearly all these transactions were conducted in cash. Consequently, due to the absence of reliable information and the cash nature of these transactions, the auditor was unable to verify their authenticity. Thus, the auditor suggested that the details regarding these transactions might be misleading.

The Fine Foods management reported a capital stock of 3 million taka in their financial statements, presenting this asset at its historical cost value. This approach directly contravenes International Accounting Standards (IAS)-41, as they failed to consider the actual value of the asset. However, the auditor could not determine the extent of any inaccuracies or falsehoods in the information provided due to insufficient data.

The company’s management reported stock products valued at 8.94 crore taka in their financial statements. However, the auditor faced a lack of cooperation from the company regarding the audit of 4 crore 52 lakh taka related to fingerlings and 1 crore 6 lakh taka concerning closing raw materials (totaling 5 crore 58 lakh taka). Consequently, the auditor was unable to confirm the legitimacy of these assets either through direct inspection or alternative audit methods. Therefore, the auditor indicated that there might be inaccuracies in the reported inventory and cost of goods sold.

In the auditor’s remarks, it was noted that if the company has understated the cost of goods sold, it would lead to an inflated net profit. This practice is not uncommon for a company engaged in stock manipulation.

The auditor also mentioned that the company failed to provide a list or register to confirm the existence of fixed assets. As a result, the auditor could not ascertain whether the fixed assets reported in the financial statements are genuinely present.

According to the directives from the stock market regulator, the Bangladesh Securities and Exchange Commission (BSEC), Maxons Spinning has not allocated the unallocated dividend to the Capital Market Stabilization Fund. The company holds an unallocated dividend amounting to Tk 8 lakh.

Regarding these issues, a senior official of the Bangladesh Securities and Exchange Commission (BSEC), which oversees the stock market, told Finance Business that the commission receives the annual report of the listed businesses at the conclusion of the fiscal year, along with the auditor’s view. It is examined and categorized by the commission’s appropriate section. The commission acts in accordance with the law if any anomalies or contradictions are discovered in it.

Notably, Fine Foods had Tk 139.7 million in paid-up capital when company went public on the stock exchange in 2002. Investors from a variety of stock market classes own 84.75 percent of this, excluding directors and entrepreneurs. On Monday (June 9), the company’s share price was Tk 227.60.