Stock regulator to re-audit accounts of CVO Petrochemical

The stockmarket regulator will open an investigation into the accounts of CVO Petrochemical Refinery as it suspects discrepancy in the accounting process of the company.

The regulator will re-audit the company's accounts of two fiscal years -- 2011-12 and 2012-13, said Saifur Rahman, executive director and spokesperson of Bangladesh Securities and Exchange Commission.

The company might have violated accounting rules to prepare profit and loss accounts, he said.

“If we find an anomaly, we will take action against the company,” Rahman said.

The regulator appointed ACNABIN Chartered Accountants in August last year to re-audit the company's financial reports, he added.

However, CVO Petrochemical is yet to receive any letter from the regulator regarding the audit, said Mizanur Rahman Zaved, the company's chief financial officer. “We will help the nominated auditor in the auditing process,” he added.

The company had paid a fine of Tk 6 lakh in 2011 for failing to maintain acceptable accounting standards in financial reporting, according to the BSEC.  Also, in December 2013, the share price of CVO had soared 956.47 percent to Tk 946.6, from Tk 89.6 in April, without any significant change in fundamentals.

The regulator had fined a bank, a merchant bank and a stockbroker a total of Tk 22 lakh for manipulating the share prices of the company. The three market intermediaries were involved in raising the price of CVO Petrochemical shares artificially during the third quarter of 2013, a regulatory probe had found.

The BSEC fined Bangladesh Development Bank Tk 10 lakh, as the specialised bank played a role in raising the price.

Also, Prime Finance Capital Management, the merchant bank, and PFI Securities, the stockbroker, were fined Tk 7 lakh and Tk 5 lakh respectively for their involvement. The two institutions influenced the price by trading from different accounts.

The regulator has launched investigation into the company to identify misleading information on profit, earnings per share and asset, said AB Mirza Azizul Islam, a former finance adviser to the caretaker government. “It is a good initiative by the regulator.”

The company has stopped producing edible oil owing to loss in business in 2010. It invested Tk 120 crore to set up a refinery unit to produce fuel in Nasirabad Industrial Area in Chittagong. It has also changed its existing edible oil plant to a condensate fractionation plant to produce fuel like petrol, diesel and kerosene using gas condensate, Zaved said.

Gas condensate is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields. It condenses out of the raw gas if the temperature is reduced to below the hydrocarbon dew point temperature of the raw gas.

Energy and Mineral Resource Division of the government permitted the company to set up the condensate refinery by using natural gas condensate, he said. The company started production in April last year and has a daily capacity of 150 tonnes.

At the same time, BSEC has changed the company's business category from food sector to fuel and power. The company also received a five-year tax holiday from the National Board of Revenue, he said. CVO has announced 5 percent cash dividend in fiscal 2013-14.

CVO is expecting a turnover of Tk 450 crore in the current fiscal year, Zaved said. Each share of the fuel producer traded between Tk 491 and Tk 506 before closing at Tk 493.7 yesterday. 

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