Auditor flags dividend mismatch and tax discrepancies at RD Food

The auditor of Rangpur Dairy & Food Products Limited, popularly known as RD Food, raised flags over a mismatch in unclaimed dividends in banks and discrepancies in deferred tax calculations.

Faruk Ahmed, partner of Khan Wahab Shafique Rayhman & Co, Chartered Accountants, in a qualified opinion, said that the company calculated deferred tax using the prior SRO at the rate of 15% instead of the current year's applicable 22.5%.

This resulted in an under-provision of approximately Tk2.63 with a corresponding effect on earnings per share (EPS).

According to the company's financial statements, RD Food reported a profit of Tk4.61 crore for the year, with an EPS of Tk0.61, marking a year-on-year decline of about 40% from Tk7.68 crore and an EPS of Tk1.01 in the previous fiscal year. The fall in earnings was attributed to higher import costs, inflation and increased bank interest rates.

Attempts by TBS to contact Company Secretary Yeasin Arafat for comments were unsuccessful, as calls went unanswered.

The auditor also noted that Tk57.37 lakh from the IPO subscription money remained unadjusted under non-claimed general share applications and included IPO application refunds that had not yet been settled, which overstates the capital position.

Additionally, the auditor identified discrepancies regarding unclaimed dividends, observing that the amount remaining in the dividend accounts was less than expected.

An unclaimed dividend refers to a shareholder's portion of a company's profits that has not been cashed or claimed within the stipulated period.

Unclaimed dividends that remain unclaimed for a period of three years from the date of approval or the date of subscription must be transferred to the Capital Market Stabilisation Fund (CMSF), as per BSEC directive.

The auditor reported that RD Food has unclaimed dividends amounting to Tk18.89 crore, but only Tk1.94 lakh is available in the bank account. 

It was noted that the company has deposited Tk4.04 lakh into the CMSF. After the deposit, the remaining amount should have been Tk12.90 lakh; however, this amount is not available in the bank and has instead been used for operational activities.

The auditor also raised concerns about the company's ability to repay bank loans and other liabilities, citing lower cash inflows. 

The report stated that the net operating cash flow of the company decreased to Tk0.16 crore from Tk1.47 crore in the previous fiscal year, primarily due to changes in the timing of collections and payments.

As a result, the report noted, the company is facing liquidity constraints, as reflected by delayed payments of bank loans and other liabilities.