Central Pharma may face regulatory sanctions over unpaid fees, audit flags

Central Pharmaceuticals Limited could face regulatory sanctions, including penalties, the suspension of trading privileges, or even delisting from the stock exchange, as flagged by the company's external auditor, Ashraf Uddin and Co, in the FY25 audit report.

The auditor highlighted that the drug maker has failed to pay key statutory and regulatory charges, including the Dhaka Stock Exchange (DSE) listing fees and Central Depository Bangladesh Limited (CDBL) fees.

The audit report paints a grim picture of the company's financial health, flagging a "material uncertainty" regarding its ability to continue as a going concern.

The auditor observed that Central Pharma suffers from negative retained earnings that are almost equal to its paid-up capital.

Management has failed to secure fresh funds to generate sufficient operating cash flows to meet current obligations. Compounding these operational struggles, the company has not renewed its drug license, faces substantial tax demands from the National Board of Revenue (NBR), and is operating with a cost of goods sold that exceeds its turnover due to high fixed costs and limited production capacity, said the auditor.

Significant opacity surrounds the company's financial statements. The auditor noted that out of the reported assets, they could not verify an Advance Income Tax balance of Tk28.66 crore because the management could not provide any supporting evidence. 

Furthermore, the status of three loans taken from Janata Bank remains unverified. The reported loan balances have been carried forward unchanged since June 2022. The management has neither repaid any instalments nor booked provisions for interest, and the bank did not respond to the auditor's request for balance confirmation as of November 2025.

Transparency regarding revenue was also called into question. While management provided monthly VAT returns, they failed to produce authentic sales invoices to substantiate the transactions, according to the audit note.

The auditor reported that all sales were conducted in cash without product-wise reconciliation, making it impossible to verify the accuracy and completeness of the company's revenue in accordance with International Financial Reporting Standards.

In addition to financial irregularities, the company is in violation of securities laws regarding shareholding. The sponsors and directors currently hold only 7.67% of the paid-up capital, falling far short of the mandatory 30% requirement.

Central Pharma, which was listed on the capital market in 2013, has not declared any dividends since the 2019 fiscal year. On Thursday, the company's shares closed at Tk9.50 on the Dhaka bourse.