Titas Gas faces Tk 736cr shortfall in pension fund
The state-run Titas Gas includes a provision shortfall of Tk 736 crore in its pension fund, according to the company's audit report.
Besides, the listed gas distribution company did not keep any provision against its fixed deposit receipts (FDRs) with Padma Bank and ICB Islamic Bank, it said.
In its financial statements, Titas Gas showed that it's owed about Tk 168 crore as cumulative penal interest since 2002, that was doubtful to the auditor.
The company also did not comply with an order from the Financial Reporting Council on transferring share money deposits to talk about money capital.
Against this backdrop, the business's auditor provided a professional view on its financial reports for the entire year that ended on June 30, 2020.
The info was disclosed yesterday on the Dhaka STOCK MARKET website.
A qualified judgment is a statement issued within an auditor's report that suggests the financial information supplied by a company was limited in scope or there is a material issue with regard to the application of generally accepted accounting principles.
The financial statements of Titas Gas showed that the company required a provision because of its pension fund for eligible employees.
According to the actuarial valuation, the pension fund amounted to Tk 819.74 crore by June 30, 2018.
However, the provision for the pension fund was only Tk 30 crore, producing a shortfall of around Tk 789 crore, the audit report said. Therefore, the actuary firm recommended making a twelve-monthly provision of Tk 188.90 crore for another five years to create up the said deficit.
In addition, the required provision for the pension fund for the years 2018-19 and 2019-20 has been increased by Tk 59.62 crore and Tk 59.55 crore respectively.
The business also paid Tk 51.58 crore and Tk 49.28 crore respectively as your final settlement for the outgoing employees for the preceding 2 yrs.
As such, the mandatory provision for the pension fund stood at Tk 838.05 crore by June 30, 2020.
But citing an inadequacy of funding together with insufficient yearly profits, the company had initially decided to provide Tk 188.90 crore in 3 years commencing from 2018-19.
It could later review the provision amount for the subsequent years, against that your company has made a provision of only Tk 124 crore as of June 30 this year.
A further provision of Tk 24.84 crore for 2018-19 and Tk 24 crore for 2019-20 have been kept in the accounts, the audit report said.
Titas gas showed in its financial report that its penal interest and other costs for delays in bill payment from bulk customers, like the Power Development Board, amounted to Tk 168.33 crore.
It showed that amount has been produced since 2002 but there is still no realisation till date.
"We also came to know that the clients aren't interested to pay such penal interests," the auditor said in its report.
And so, there is substantial doubt that the business should be able to realise this interest, it added.
Titas Gas also needs to receive Tk 60.62 crore altogether by cashing in its FDRs with Padma Bank and ICB Islamic Bank.
But since these lenders have poor credit worthiness, it really is doubtful if the company will secure returns upon this investment, which require provisions against the accounts.
Meanwhile, the Financial Reporting Council had ordered all listed companies to convert their share money deposits into capital within half a year while calculating the wages per share by taking into consideration the new capital.
However, the gas distribution company failed to comply as its share money deposit stands at Tk 178.49 crore by June 30.
Titas Gas also issued loans to the Gas Transmission Company and Bangladesh Petroleum Exploration and Production Company amounting to Tk 1,079.97 crore and Tk 113.75 crore respectively.
However, loans to such companies cannot be disbursed as per the BSEC order for the reason that companies had some directors in common, the auditor said.
Mahmudur Rab, company secretary of Titas Gas, didn't respond to calls for a comment by the time this report was filed.
