The auditor of Bangladesh Industrial Finance Company (BIFC), a non-bank financial institution (NBFI), has expressed doubt over the listed company’s survival as a turnaround possibility was not found in sight owing to its fragile financial health.
The auditor said this in a qualified opinion after auditing the NBFI’s financial statement for the year ended in December 2021.
Around 96 per cent of the NBFI’s investment was classified, while it also failed to meet CRR and SLR requirements throughout the year, also the loans disbursement remained very poor, the auditor noted.
The situation indicates a serious material uncertainty that the non-bank might fail to continue as a going concern, the auditor said.
A qualified opinion is a statement issued after an audit is completed by a professional auditor, suggesting that the financial information provided is limited in scope or that the company has not maintained generally accepted accounting principles.
The auditor had also not found documents on mutation, demarcation, and Khazna receipts of the NBFI’s Tk 44 crore worth land property situated in the capital’s Motijheel area, that’s why the auditor was not sure where BIFC had control over that land.
Besides, in absence of a statement or confirmation from the banks concerned, the auditor could not confirm the actual liability status of a term loan of Tk 322.55 crore which BIFC received from banks.
As per the auditor’s statement, Bangladesh Industrial Finance Company’s total outstanding of loans, leases, and advances against various concerns of Sunman Group stood at TK 622 crore as on December 2021, equivalent to the NBFI’s 79 per cent of the total outstanding balance of TK 790 crore.
It is here mentionable that former BIFC chairman Major (retired) Abdul Mannan is the owner of Sunman Group.
The company had a shortfall of Tk 1208 crore in capital adequacy at the end of December 2021, the auditor said.
It is surprising that, the company’s shareholders had not approved its financial statements for 2018, 2019 and 2020 at the respective annual general meetings.
Financial status of 2021
The company recently published its financial report for 2021 but did not offer any dividend to the shareholders.
The company posted earnings per share (EPS) of Tk 9.78 negative for 2021 against Tk 8.10 negative for the year before.
The company also reported NAV per share of Tk 106.83 negative and NOCFPS of Tk 2.64 negative for the year ended December 31, 2021, against Tk 102.37 negative and Tk 2.78 negative, respectively, for the year ended December 31, 2020.
Former BIFC chairman Major (retd) Abdul Mannan and his wife Umme Kulsum Mannan together had embezzled a huge amount of capital from BIFC using their massive shareholding of 62 per cent in the company, the Bangladesh Bank in a report said in 2015.
BIFC made profits in 2014, when its EPS was Tk 0.55, the DSE data showed. The NBFI had disbursed 5 per cent cash and 5 per cent stock dividend for 2014, the year it had paid dividends to its shareholders for the last time.
Founded in 1998, BIFC started to deteriorate in 2008. The central bank had removed Mannan’s wife Umme Kulsum Mannan and their two daughters from the BIFC board between 2015 and 2016 for their alleged involvement in sanctioning loans unlawfully.
In 2019, the central bank had asked the Bangladesh Securities and Exchange Commission (BSEC) to freeze shares of Mannan, other organisations owned by him, and people close to him from transferring shares of the company.
The central bank’s move came following an Anti-Corruption Commission (ACC) advice asking it to impose such a ban until Mannan cleared the outstanding loan of Tk 397.78 crore owed to BIFC, excluding interest.
Currently, a court-appointed board is operating the BIFC.
Sponsor-directors held 40.55 per cent of the company’s total shares, while institutions owned 40.96 per cent, and the general public 18.49 per cent till July 2023.
On Tuesday, BIFC shares remained unchanged at Tk 9.50 each on the DSE.
