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Auditor casts doubt over resumption of production

Shakhawat Hossain Sumon
14 Dec 2023 20:48:41 | Update: 15 Dec 2023 00:09:05
Auditor casts doubt over resumption of production

The state-owned company, Usmania Glass Sheet Factory Limited, had no gas connection since August 2023. In such a situation, the auditor has recently expressed doubt about the operation of the company in future.

As a result, the loss increased 10 times in the first quarter of FY24 as compared to the same period of the previous year due to the suspension of production.

An auditor's opinion, typical after a professional audit, indicates that the information provided may be limited in scope or that the company's adherence to generally accepted accounting principles may be questionable.

The auditor expressed the opinion that the Board of Directors, in its meeting held on August 27, 2023, has resolved to temporarily disconnect its gas connection on the ground of no production due to a loss.

This discontinuation of production may create uncertainty for the company to continue in the future, the auditor added.

This issue came to light through the auditor's opinion, published on the Dhaka Stock Exchange (DSE) website recently following a review of Usmania Glass Sheet Factory financial report for the year ended June 30, 2023.

Usmania Glass Sheet company secretary Abdul Mazid said such a decision has been taken by the board to reduce the company's losses. So far, no decision has been communicated from the government or the board regarding the reconnection. As a result, the production of the company remains suspended.

He said it is also unknown whether it will decrease. If the approval for the gas connection is received from the government, it will be informed to the shareholders.

Meanwhile, a team from the Dhaka Stock Exchange (DSE) went to the company to see the production of Usmania Glass Sheet Factory on September 26 and found the company closed.

In this regard, the DSE website informed them that Dhaka Stock Exchange Limited (DSE) visited the premises of Usmania Glass Sheet Factory Limited on September 26, 2023. During the visit, the inspection team found that the company was closed.

The company's net loss rose abnormally in the first quarter (July–September) of FY24 as compared to the same period last year due to production shutdown.

The company posted a loss of Tk 5.39 crore in the financial year 2023–24, compared to a loss of Tk 48 lakh in the same period of the previous year.

Abdul Mazid said as the reason for such a loss, non-operating or other income, an increase in other expenditures, an increase in the price of raw materials and other products, and an increase in the rate of gas bills for industrial and captive power, as a result, additional costs were added to production. In respect to the selling price of sheet glass, it is not up to par compared with the cost of production after adding additional gas bill.

Usmania Glass Sheet Factory started its journey in Chattogram before the independence of Bangladesh in 1959.

It was the country's first glass manufacturing industry, with the aim of meeting local demand at an affordable price.

With the expansion of the private sector in the glass industry after the independence of the country, Usmania Glass Sheet Factory gradually lost its market share.

Officials said the company is now more than 50 years old and most of the machinery is outdated, which failed to meet the production target, and old machinery is creating a burden with high production costs.

As a result, the company has been incurring huge losses, and the demand for its products is on the decline.

According to its financials, the company was a profitable entity in fiscal year 2013–14 with a Tk 3.91 crore profit. Since then, it has incurred losses for eight years up to fiscal year 2022–23.

Usmania Glass got listed on the capital market in 1987.

As of February this year, the sponsor-directors held 2 per cent share of the company while the government 51 per cent, institutional investors 13.95 per cent and general investors 33.05 per cent.

On the last trading session on Thursday, its share price was Tk 53.80 each.