New owners too failing to stop Fu Wang Food’s struggles

Although it was given three new board members by the securities regulator in the hope to ensure more profits and better compliance, publicly-traded company Fu Wang Food Limited still continues to display dismal earnings performance.

The listed firm registered a 35 per cent year-on-year slump in its net profit in the first quarter (July-September) of the fiscal year 2022-23.

It posted a net profit of TK 0.44 crore in July-September of the current fiscal against TK 0.68 crore in the same period last fiscal which was also its lowest quarterly profit in the past four years.

The food manufacturer’s earnings per share stood at Tk 0.04 in the latest quarter from Tk 0.06 in the same quarter last fiscal.

Following many irregularities by the previous management and board, the Bangladesh Securities and Exchange Commission (BSEC) in February this year handed the company a new investor – Minori Bangladesh – citing it would invest Tk 20 crore in the firm to make it viable and ensure its compliance.

Following that development, Minori Bangladesh bought a 7.61 per cent stake in Fu-Wang Food and secured three seats on the company’s board by replacing the firm’s previous three directors.

Minori Bangladesh had nominated Miya Mamun, Md Afzal Hossain, and Sidratul Mahabub Hasan as directors to Fu-Wang Food’s board replacing the then managing director Arif Ahmed Chowdhury and directors Afsana Tarannum and Lubaba Tabassum.

Minori Bangladesh, a subsidiary of Japanese farming company Minori Co Ltd, subsequently, took initiatives to upgrade Fu-Wang Food’s factory facilities and expand its marketing channels.

At least nine months have passed since Fu-Wang Food’s overhaul, and the company released three quarterly reports after the takeover.

The company posted a profit of Tk 0.23 crore in the third quarter (January-March) of the fiscal year 2021-22 compared to Tk 0.33 crore in the same period of the previous fiscal.

Fu-Wang Food’s Chairman Md Afzal Hossain said, “We took over the company less than nine months ago which was a too short time to overhaul a company. We are now working on several issues, including the production boost, and increasing market share through a strong marketing policy.”

“The initiatives we have so far taken were not reflected in the latest quarterly report. We must do better in the upcoming quarters,” he added.

Fu Wang Food’s revenue also fell by 4.7 per cent to Tk 28.3 crore in Q1, FY23 versus Tk 29.7 crore in the same period of the previous year.

The company’s auditor in its audited report prepared for the fiscal year 2020-21 stated that the firm had shown Tk 89 crore worth of sales but it could not have provided the necessary documents on that.

The company had also shown an inventory of Tk28.30 crore in FY21, according to the auditor’s note, but a gap was found worth Tk 20.57 crore in this regard.

Besides, the listed firm could not have shown any documents or satisfactory explanations against Tk 0.28 crore given as advance salary, Tk 0.19 crore given to Bristy Biscuit Factory, Tk 8.41 crore given to subsidiary Fu-Wang Beverage, and Tk 1.32 crore spend for raw material purchase.

Citing these issues, the company said in its first quarterly report of the current fiscal that based on the statutory auditor’s reports’ given for FY21, required steps would be taken by the board after conducting a special audit on the issues.

Listed with the capital market in 2000, Fu-Wang Food used to pay stock dividends to its shareholders till 2018.

Later, it paid only a 2 per cent cash dividend for FY19 and 1.65 per cent cash for FY20 and FY21 each.

It, however, declared no dividend for the fiscal year 2021-22.

Fu Wang Food’s shares were traded at Tk23.5 per share on the trading floor of the Dhaka Stock Exchange (DSE) on Wednesday.