Oimex Electrode fakes its financial statements

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The company significantly overestimated its sales, inventory, the value of its property, plant and equipment, and the price at which it purchased raw materials in its financial statements

Oimex Electrode, a manufacturer of electrodes, nails and galvanized wire that raised Tk 15 crore from the public three years ago, has massive irregularities in its financial reports, according to an inspection of the Dhaka Stock Exchange.

The financial reports for the past two years were prepared by the accounting firm ARTISAN, which coincidentally is the auditor of Méridien Dhaka’s parent company, Best Holdings, which made the news for its inflated valuation. among others.

The DSE’s inspection, which followed the instructions of the Bangladesh Securities and Exchange Commission, found that Imex significantly overestimated its sales, inventory, the value of its tangible capital assets, and the price at which it purchased raw materials.

“This is a violation of the International Accounting Standard and the Securities and Stock Exchange Ordinance 1969,” the DSE team’s report told BSEC.

Dhaka Tribune has a copy of the report submitted to BSEC on January 6.

After evaluating the ledger on a sample basis, the DSE team found that Imex overestimated sales by 66%, inventory by 310.2%, and raw materials by 40.59%.

Oimex posted recognized sales of 43.43 Tk crore, inventory of 28.36 Tk crore and raw materials of 21.77 Tk crore for the year ended June 30, 2020.

The addition of property, plant and equipment (PPE) as of June 30, 2019 was Tk 9.13 crore.

Company officials confirmed that they did not purchase any fixed assets from outside sources during the year.

There was some internal fixed asset added, but it was not worth Tk 9.13 crore.

Financial reports mention that Omex owns a 6-acre factory in Daulatpur, Kushtia, but the DSE inspection team found that only 173 decimal places are recorded in the name of the company.

The rest belongs to its chairman Khairun Nesa Lucky and its managing director MA Maleque, who is Lucky’s wife.

And Oimex managed to get away with distorting the facts because no ARTISAN auditor visited the factory.

ARTISAN completed its audit based on the documents provided by the head office in Dhaka and did not feel the need to give a qualified opinion on the discrepancies.

“This is a violation of accounting standards and securities rules,” the report said.

In addition, Oimex did not provide any information or documents in accordance with the requirements of the inspection team.

“Under these circumstances, prompt and strict regulatory action should be taken by the BSEC against the directors and management of the company in the best interests of the capital market,” the report said.

Mohammad Rezaul Karim, spokesperson for BSEC, admitted to receiving such findings from the scholarship.

“We are looking into the matter,” he told Dhaka Tribune.

Md. Suzzal Hossain Sajal, Secretary General of Omex Electrode, vehemently denied the allegation of falsification of financial reports.

“We haven’t exaggerated anything in the report,” he told Dhaka Tribune.

ARTISAN could not be reached for comment.

Shares of Omex, which have lost 33.6% in value over the past two years, closed at 24.6 Tk on Sunday, down 3.9% from the previous day.

It posted a profit of Tk 3.3 crore in its fiscal year 2019-2020, down 65.5% year-on-year.

The company has yet to announce a cash dividend for its shareholders since its IPO in 2017.

It announced a stock dividend of 5 percent for its last fiscal year, down from 12.5 percent a year earlier.


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