Emerald Oil Industries Ltd – a company that resumed operations last year after a hiatus of four years – has run into further complications with its FY23 financial report, as the auditor tracked down Tk 102 crore of the company’s undisclosed deposits.
This issue came to light through the auditor's opinion, published on the Dhaka Stock Exchange (DSE) website this December following a review of Emerald Oil Industries financial report for the year ending on June 30.
A qualified opinion, typical after a professional audit, indicates that the information provided may be limited in scope, or the company's adherence to generally accepted accounting principles may be questionable.
The auditor points out, “We received balance confirmation certificates from two banks and a financial institution, and found that there was a difference between the amount shown on the company's books and financial statements, and the balance confirmation certificates/statements received from the two institutions.”
According to Emerald Oil Industries’ financial report, in their account 2335000430 in Bank Asia had Tk 6.28 crore in deposits. Another company account in the same bank, 2335000491, mentions Tk 20 crore in deposits.
But when the auditor wrote to the bank to confirm the amount deposited, the bank informed that the two accounts have a total of Tk 53.75 crore. But as per the company’s financial report, two accounts had Tk 26.28 crore in deposits, showing a discrepancy of Tk 27.45 crore.
Moreover, in their FY23 financial report, Emerald Oil showed Tk 72.45 crore in deposits under six accounts of the Basic Bank Dilkusha Branch. But the bank had informed the auditor that Emerald Oil had Tk 141.66 crore in those accounts, showing a discrepancy of Tk 69.21 crore.
Emerald Oil had also claimed that its account number LAD#2013/015 in the Prime Finance and Investment Ltd had Tk 7.33 crore in deposits. But Prime Finance had informed the auditor that Emerald Oil actually had Tk 13.41 crore in deposits, showing a discrepancy of Tk 6.08 crore.
According to the auditor's opinion, Emerald Oil has a Tk 102.78 crore discrepancy in its FY23 financial report.
Responding to a query, Emerald Oil Industries Company Secretary Emran Hossain said, “The amount not mentioned in the financial report is basically banks’ interest. Interest did not accumulate during the audit period, but it added up when the auditor reviewed our report.”
The auditor opinion mentions that the evidence with respect to inventory having a carrying amount of Tk 5.32 crore was limited, as they could not observe the physical inventory count as of 30 June 2023, since their appointment was on 16 July, 2023.
As a result, the accuracy of the physical existence of the inventory on 30 June 2023 could not be ascertained.
Emerald Oil Industries Ltd, a producer of rice bran edible oil, had halted its production in 2017 owing to a shortage of working capital following several scams of its sponsors.
Later, the publicly traded company announced to resume its production on June 28, 2022, after an investment was poured in from the Japanese firm Minori Bangladesh following an intervention of the securities regulator.
Back in March 2021, the stock regulator BSEC had restructured the board of the company by appointing five independent directors on its board in a bid to bring the non-functioning company back to business and protect the interest of its investors.
Later, the company published its annual financial statement in November 2023. The previous financial report of this company had come out in 2016. The company has not offered any dividends since FY17.
In the edible oil producer’s latest financial report, it reported earnings per share (EPS) of Tk 0.73 for the year ending in June 2023. Its net asset value (NAV) per share stood at negative Tk 10.37, and net operating cash flow per share (NOCFPS) negative at Tk 0.03.
Incorporated in 2008, Emerald Oil Industries Ltd went into the production of rice bran oil under the brand “Spondon” back in 2011. Listed in 2014, the company had raised Tk 20 crore through IPO from the capital market.
Emerald Oil shares rose 6.88 per cent to Tk 88.60 per share on the DSE trading floor on Tuesday.
The sponsors and directors held a 38.26 per cent stake in the company, while institutional investors and the general public owned 1.16 per cent and 50.58 per cent respectively till November 2023.
