32% of Walton revenue came from related party transactions in FY23

Around 32.29 per cent of revenue of Walton Hi-Tech Industries, an electrical and electronics appliance giant, came from transactions with its related party – Walton Plaza Limited – in the fiscal year 2022–23.

The company’s auditor after auditing its financial statement for the year ended on June 30, 2023 revealed this information and said in an opinion.

The locally grown multinational’s total revenue stood at Tk 6,637 crore in the last fiscal year, down 18.74 per cent than that in the year before.

As per the publicly-traded company’s policy, a trade rebate has been allowed to the related party, the auditor stated in the opinion.

Walton Plaza is a partnership entity, in which partners and directors are common to Walton Hi-Tech Industries.

Walton Hi-Tech Industries in FY23 made sales with Walton Plaza amounting to TK 2,143.03 crore, which was TK 2,239.74 crore or 27.42 percent of its net revenue in FY22, as per the auditor’s opinion.

The mega-cap company’s net revenue was Tk 8,168 crore in FY22, which was Tk 6,995 crore in FY21.

When contacted, Md Rafiqul Islam, company secretary of Walton Hi-Tech Industries, told The Business Post that if a listed company’s transactions with related-parties, as per securities law, exceed 10 per cent of its total annual revenue, then the company needs to take approval from shareholders in time of the annual general meeting (AGM).

“In necessary case, we always place this issue before our shareholders during the AGM and receive their approval,” he added.

The locally grown multinational posted a net profit of Tk 782.76 crore in FY23, compared to the profit of Tk 1,216 crore in the year before. With this figure, the publicly traded company’s annual profit plunged by 35.66 per cent in the last fiscal year.

As per the company's sources, its earnings plummeted due mainly to the vulnerable global market situation and the significant currency devaluation of the local currency against foreign currencies in FY23.

Moreover, higher payments to the suppliers as well as a high inflationary impact also pushed up the company’s costs, decreasing its profitability, they said.

Meanwhile, the mega-cap company declared a 300 per cent cash dividend for its general investors and 90 per cent cash for sponsor directors for the year ended June 30, 2023.

The company will hold an annual general meeting (AGM) on October 29 to get shareholders’ approval for financial statements and dividends.

Walton gave a 250 per cent cash dividend to its general investors and 150 per cent cash to sponsor directors for FY22.

The company’s earnings per share (EPS) fell to Tk 25.84 in FY23 from earnings per share of Tk 40.17 reported for the year before.

The listed company reported a net profit of Tk 14.36 crore in the first half of FY23 against a profit of Tk 446.14 crore in the same period last fiscal year.

The company’s H1 earnings per share fell to Tk 0.47 in the fiscal 2022–23 from Tk 14.73 for the same period the year before.

“Earnings have plunged mainly due to the pandemic and post-pandemic effects and the current global economic shocks created by the recent Russia-Ukraine war,” Walton said at the end of the H1 financial result.

The company made a net profit of Tk 249 crore in the first three quarters of FY23, while its earnings per share (EPS) stood at Tk 8.25 for the July–March period of the last fiscal.

The local giant had posted a net profit of Tk 819.93 crore, and EPS of Tk 27.07 in the July–March period of FY22.

The listed firm’s annual net profit was Tk 1,639 crore in FY21, Tk 726 in FY20, and Tk 1,376 crore in FY19.

The electrical and electronics appliances maker’s earnings per share stood at Tk 40.17 in FY22.

The listed engineering-sector firm posted earnings per share of Tk 1.52 negative in the first quarter of FY23, against earnings per share of Tk 9.28 for the same period the year before.

Walton shares remained stuck at its floor price of Tk 1047.7 each on Wednesday.

Walton Hi-Tech Industries is the second largest listed company in terms of market capitalisation.

In 2020, Walton had raised Tk 100 crore through the capital market. The company has a paid-up capital base of Tk 302 crore.

Sponsor and directors held a 98.99 per cent stake in the company, while Institutional investors owned 0.38 per cent, foreign investors 0.10 per cent, and the general public 0.53 per cent until July this year.

Incorporated in 1977, Walton Hi-Tech Industries started manufacturing refrigerators, freezers, air conditioners, and compressors in early 2008.