Auditor flags discrepancies in National Feed Mill's FY25 results

FE REPORT
National Feed Mill may have overstated its profit in FY25 by tampering with the cost of goods sold and by reducing financial expenses, according to its auditor.
The auditor has issued a qualified opinion on the company's financial statements for the year ended June 2025, highlighting significant inconsistencies, a lack of supporting documents, and possible misstatements.
According to the auditor's report, several financial items could not be verified due to missing records and the management's failure to provide adequate explanations.
One of the key issues relates to material purchases. The company reported purchases worth Tk 78.34 million in the income statement, while the VAT return showed Tk 100.96 million, indicating a possible understatement of purchases by Tk 22.62 million.
This discrepancy may have overstated net profit.
The auditor also raised concerns about receivables amounting to Tk 876.46 million, stating that the company did not create any provision for doubtful debts as required by IFRS 9. In addition, balance confirmations from debtors were not received, and sufficient evidence to verify the recoverability of receivables was unavailable.
In another observation, the auditor noted inconsistencies in loan interest reporting. Interest and charges related to long-term loans were shown as Tk 44.06 million, while financial expenses were reported at only Tk 24.47 million, suggesting a possible understatement of expenses by Tk 19.59 million.
National Feed Mill Limited (NFML) is a Bangladesh-based manufacturer of poultry, fishery, and cattle feed, founded in 1999 (operations began in 2003) by Akhter Hossain Babul. Based in Gazipur, it is a public company listed on the Dhaka and Chittagong stock exchanges.
The audit also identified unverified inventory worth Tk 553.14 million, as the company failed to provide inventory valuation reports, physical count sheets, or details of slow-moving and damaged stock. No physical inventory verification could be conducted during the audit.
Another concern relates to advances given to related parties totaling Tk 24.63 million, including Karnopur Agro Industries Ltd. and National Hatchery Ltd., which were reportedly provided without clear business justification. Supporting documents for other advances and deposits were also unavailable.
The auditor further noted irregularities in unclaimed dividends, stating that Tk 170,072 from FY21 should have been transferred to the Capital Market Stabilization Fund (CMSF) as per the regulator's directive. However, the company failed to do so. Moreover, a mismatch was found between the reported unclaimed dividend and the balance in the dividend bank account.
Additional audit findings include a lack of supporting documents for accounts payable balances, the Workers' Profit Participation Fund (WPPF) of Tk 24.8 million remaining unpaid for several years, and the absence of documentation for the general reserve reportedly invested in government bonds.
Meanwhile, the share price of National Feed Mill rose 0.68 per cent to Tk 14.80 per share on Thursday on the Dhaka Stock Exchange (DSE). With that, the price-to-earnings (P/E) ratio stood at 486.67 based on the latest financial results.
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