Auditors cast doubt on survival of Imam Button


FE Report | Published: December 02, 2018 22:13:24


Auditors cast doubt on survival of Imam Button


The auditor has expressed 'significant' doubt on survival of Imam Button Industries as a going concern in foreseeable future.
The doubt on the company's survival came following some 'effects' including retained loss and insufficient current ratio mentioned in the audited report prepared for the year ended on June 30, 2018.
The company has been suffering from recurring losses since 2009-2010 that effectively creates a retained loss of above Tk. 36.12 million at reporting date.
"The underutilisation of production capacity is primarily responsible for such recurring loss," said the basis of qualification.
The auditor said the company has been able to utilise only 28 per cent of its production capacity during the year under audit.
"The underutilisation of production due to machine break-down and frequent power failure failed to locate new buyers and so on."
The current ratio of the company has dipped to 0.48 at reporting date, meaning that the company has maintained current asset Tk 0.48 against Tk 1.00 current liabilities.
"The effect of such poor ratio exposed that the company may not be able to pay its debt, whether current or non-current liability, when they fall due or on demand by creditor," the auditor said.
The accompanying financial statements have been prepared assuming that the company will continue as going concern, the auditor's opinion said.
".. but considering the effects described in the basis of qualification paragraph herewith has exposed significant doubt about survival of the company as going concern in foreseeable future," said the basis of the auditor's qualified opinion.
Imam Button Industries, presently an 'A' category company, was listed on the stock exchanges in 1996.
The company's sponsor-directors hold 31.53 per cent shares, institutions 9.01 per cent and public shareholders 59.46 per cent as of October 31, 2018.
The company's share price closed at Tk 27 each on Sunday with a loss of 3.24 per cent or Tk 0.90 on the Dhaka Stock Exchange (DSE).
The company's board of directors has recommended no dividend for the year ended on June 30, 2018.
According to DSE's website, the company's last dividend was recommended in 2010. In that year, the company disbursed 10 per cent stock dividend.

mufazzal.fe@gmail.com

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