In a recent development, Prime Textile Spinning Mills Limited (PTSML) has come under scrutiny as its auditor issued a qualified opinion in the financial report for the year that ended on June 30, 2023.
The auditor's findings have raised several red flags, indicating serious financial discrepancies and governance issues within the company.
The report highlighted the inability to obtain essential bank certificates and export ledgers, which hindered the verification of outstanding balances and finance costs related to multiple accounts, including the EDF Loan and Sundry Accounts.
This lack of documentation has raised concerns about the company's financial integrity, according to a disclosure published on the Dhaka Stock Exchange website on Monday.
Further complicating matters, a significant deposit of Tk 16.59 crore from cash to bank accounts was noted, with no clear source provided. The absence of approved directors' remuneration, which is a requirement under the Companies Act of 1994, added to the growing list of compliance issues.
PTSML’s investments in associates, namely Prime Ship Recycling Limited and Prime FSS Ship Breakers Limited, have reportedly been impaired. However, the auditor noted a lack of updated financial statements from these associates to substantiate the impairment.
Another critical issue raised was the outstanding unclaimed dividend of Tk 2.92 crore, which has remained unresolved for over three years. The company has failed to deposit this amount with the Capital Market Stabilization Fund as mandated by the Bangladesh Securities and Exchange Commission (BSEC).
The auditor's concerns extend to inventory valuation, with insufficient documentation preventing confirmation of raw materials, finished goods, and work in progress.
Additionally, a significant advance of Tk 25.37 crore against land lacks supporting documents, and discrepancies related to previous liabilities were identified.
The report indicated severe operational challenges for PTSML, which has halted production since December 2023 due to material shortages and maintenance issues.
The company’s financial performance has also been alarming, with a net loss of Tk 30.73 crore and negative retained earnings of Tk 13.06 crore, raising questions about its future viability.
With outstanding loans amounting to Tk 196.71 crore and no supportive documentation for PTSML’s financial assessments, the auditor expressed material uncertainties regarding its ability to continue as a going concern.
Alarmingly, these uncertainties have not been adequately disclosed in the financial statements.
This qualified opinion serves as a critical warning for stakeholders and investors, urging them to scrutinise the company’s financial health and governance practices closely.
As Prime Textile Spinning Mills navigates these tumultuous waters, the need for transparency and corrective action is more crucial than ever, said market insiders.
Sponsors and directors jointly own a 50 per cent stake in PTSML, while institutional investors hold 5.20 per cent, foreign investors 0.25 per cent and the general public represents 44.55 per cent as of August 2024.
PTSML is a concern of Prime Group of Industries, a leading industrial group in the country. Currently, there are 35 industrial and commercial organisations under this conglomerate.
The group is heavily involved in textile, garments, engineering, steel, ship-breaking, captive power production, poultry, dairy, fisheries, real estate, clearing and forwarding, coal-based power plants, shipbuilding, and others.
