Sunday, April 28, 2024
The auditor has found a Tk 70 crore discrepancy in the books of Ring Shine Textiles Ltd (RSTL) – a publicly traded company – relating to the purchase of machineries in FY23.
This matter came to light as an audit team performed a field visit to the company, and found that the funds spent on machinery purchases shown on the Ring Shine financial statement for FY23 is significantly less compared to the machines currently installed at the company.
Moreover, the auditors also found a large discrepancy between the actual value and value of inventories shown by the company in their financial reports.
This issue came to light through the auditor's opinion, published on the Dhaka Stock Exchange (DSE) website recently following a review of Ring Shine Textiles Ltd financial report for the year ending on June 30, 2023.
A qualified 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 found that the company property, plant, and equipment in the Financial Statements of June 30, 2023 represent an amount of Tk 169.16 crore as carrying value, out of which the total machinery cost is Tk 99.33 crore.
Out of the total machinery cost, 26.62 per cent of machinery cost of Tk 26.44 crore was manufactured within 1-10 years range, 32.10 per cent of the machinery cost of Tk 31.88 crore was manufactured within 11-20 years range, 28.35 per cent of the machinery cost of Tk 28.16 crore was manufactured within 21-30 years range, 8.54 per cent of the machinery cost of Tk 8.48 crore was manufactured within 31-40 years range, and 4.39 per cent of the machinery cost of Tk 4.36 crore was manufactured above 40 years range, it stated.
The auditor said in the note, "We also note that most of the company machinery was not in use due to technical problems arising from the time lag in maintenance due to a shortage of funds, as well as insufficient order."
Ring Shine Textiles has reported losses despite resuming its production due to the rise in financial expenses, shortage of working capital, and gas supply crisis.
Last fiscal year (2022-2023), the company's loss per share was Tk 2.53, compared to Tk 1.54 loss in the same year of the previous fiscal year, according to the financial statement. The inventories of the financial statements represent an amount of Tk 151.31 crore.
The auditor mentioned, “We observed the process of maintaining physical inventory and consumption.
“The inventory's amount is verified and counted by internal management. The company has non-moving inventories amounting to Tk 5.30 crore and slow-moving inventories amounting to Tk 12.26 crore.”
As a result, the auditor has received Tk 133 crore less inventories than the amount mentioned in the company’s financial report.
Founded in 1997, Ring Shine Textiles Ltd raised Tk 150 crore from the market through an initial public offering (IPO) in 2019 to purchase machinery and repay bank loans.
The company had declared a stock dividend of 15 percent for the shareholders on the audited financial statements as of June 30, 2019, disbursed bonus shares to the respective shareholders, and raised its paid-up capital to Tk 500 crore.
In the second year of its listing, the RSTL's Savar plant had announced a month-long closure in September 2020, citing a decrease in foreign buyers and a shortage in the import of raw materials due to the Covid-19 crisis.
The closing period was later extended three times. On January 27, 2021, the BSEC dissolved the company's board of directors and tasked a new board to take necessary measures for restarting the company.
In June 2021, the company declared that it would resume production after almost nine months of closure. The company said it would resume production on June 13 at 25 per cent capacity. RSTL did not pay any dividends for FY21, FY22 and FY23.
On April 18 this year, The Business Post carried a news report that the top management of RSTL had laundered nearly Tk 2,000 crore in the last 22 years utilising a myriad of financial anomalies, with the help of its now ex-managing director Sung Wey Min, an Indonesian citizen.
The staggering tale of gross irregularities came to light in a report, compiled by an inquiry committee and special auditor under the Bangladesh Securities and Exchange Commission (BSEC).
Documents had shown that between 1998 and 2020, RSTL's management laundered $124 million or nearly Tk 1,242 crore through telegraphic transfers (TT), moving funds from corporate to overseas accounts of the then managing director, sponsor directors, and parties unknown.
