Global Heavy in deep crisis as liabilities exceed assets by 8 times
Statutory auditors doubt its ability to continue as a going concern
The statutory auditors of Global Heavy Chemicals Limited have raised serious concerns regarding the company's financial sustainability, as its liabilities exceed its assets by over eight times, and its ability to continue as a going concern.
According to the audited financial statements for the year ended on 30 June 2025, several material uncertainties exist that cast significant doubt on the company's ability to maintain operations.
Despite these risks, the company's management prepared the financial statements on a going-concern basis, stating that there is no plan to liquidate or significantly curtail operations in the near future. However, auditors noted that these significant risks were not adequately disclosed in the financial statements.
The share price of the company closed at Tk19.90 on the Dhaka Stock Exchange (DSE) today (17 December).
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Auditors highlighted an acute liquidity crisis. As of 30 June 2025, the company's current liabilities stood at Tk138.25 crore, including bank loans of Tk91.55 crore, intercompany loans of Tk19.74 crore, and accounts payable of Tk18.84 crore.
In contrast, current assets totalled only Tk16.98 crore, resulting in a current ratio of 1:8.14. This means the company has only Tk1 in current assets for every Tk8.14 of short-term obligations.
Auditors warned that this imbalance indicates inability to meet immediate liabilities and could disrupt the supply chain.
The company's net sales fell 58% to Tk31.32 crore, compared to Tk74.42 crore the previous year. Its material and packaging costs amounted to Tk6.95 crore, with additional purchases of Tk5.05 crore. Auditors also raised concerns over the closing inventory of Tk2.89 crore, noting that it appears disproportionately high given reduced sales and partial factory shutdowns.
Selling and distribution expenses increased by 16% to Tk2.05 crore, despite the 58% drop in revenue, raising questions about the necessity, appropriateness, and authorization of such expenditures.
The company was forced to temporarily halt operations from 15 October 2024 due to an unexpected shortage of critical materials, following a Board decision on 14 October 2024. Production resumed on 31 October 2024, but gas-dependent units remained non-operational. This disruption has heightened uncertainty regarding continuous production.
The company reported Property, Plant, and Equipment (PPE) valued at Tk704 crore, largely due to repeated land revaluations, most recently on 31 March 2024, increasing land value to Tk436.92 crore. This revaluation increased total assets by Tk2,56 crore and net assets by Tk2,43 crore, raising NAV per share by Tk33.81. However, auditors noted that no impairment or revaluation was performed for buildings, machinery, and other production assets, despite decreased efficiency and useful life, potentially overstating the true NAV.
Despite taking a short-term bank loan of Tk91.55 crore, there was no improvement in sales. Provisions were made for the Provident and Gratuity Funds, but audited statements of these funds were not provided to the auditors.
The company reported a net loss of Tk15.77 crore for the 2024-25 fiscal year. Its loss per share was Tk2.19, down from Tk7.58 the previous year, while net asset value (NAV) per share stood at Tk71.89. The company declared no dividend for shareholders due to severe gas shortages affecting production.
Company Secretary Khondoker Ahaduzzaman stated that 85% of production was halted due to persistent gas shortages. Limited electricity-powered production was insufficient to cover operational costs, resulting in continuous financial losses, he said, adding that despite repeated requests and meetings with Titas Gas, gas pressure could not be increased, leaving production and finances at risk.
Founded in 2000 and listed on the stock exchange in 2013, Global Heavy Chemicals began in the chlor-alkali industry, historically a major source of chlorine in Bangladesh. The company produces import-substitute industrial chemicals, including caustic soda, hydrochloric acid, bleaching powder, chlorine, sodium hypochlorite, and chlorinated paraffin wax, and also exports chlorine to India.
In addition, the company manufactures toiletries and household cleaning products, including formalin, carbide and pesticide removers, disinfectants, dishwashing liquids, and floor and toilet cleaners.
Auditors concluded that severe liquidity constraints, declining sales, operational instability, asset valuation gaps, and governance weaknesses collectively pose a substantial threat to the company's ability to continue as a going concern. Without prompt and effective corrective action, the company's future remains uncertain.
