The securities regulator has cancelled the IPO (initial public offering) proposal of BD Paints after finding some inconsistencies in the company's financial statement.
The incongruities detected in the financial statement include overstated profit and excess receivables.
The Bangladesh Securities and Exchange Commission (BSEC) has issued a letter to the company on Tuesday cancelling its IPO proposal.
"A joint team of the stock exchanges submitted a report after conducting inspection in the company. The report was in favour of approving the company's IPO proposal," said Md. Rezaul Karim, a BSEC director and spokesperson of the stock market regulatory body.
He said the BSEC has cancelled the company's IPO proposal based on its own observation and the exchange's report as well.
Apart from overstating the profit, the amount of the company's receivables was very large, Mr. Karim said.
"The company's IPO proposal has been cancelled as many inconsistencies were detected in the financial statement," said Mr. Karim, also a BSEC spokesperson.
He said the company's information on sales was also not authentic.
BD Paints submitted its IPO proposal under the fixed price method to raise capital worth Tk 200 million issuing 20 million shares at Tk 10 each.
The company was supposed to use the IPO fund to purchase machinery, to conduct construction and civil works along with bearing the IPO expenses.
The company showed its earnings per share (EPS) of Tk 1.03 for the fiscal year 2018-19.
The securities regulator recently has cancelled the IPO proposal of JMI Hospital Requisite Manufacturing Ltd after finding a number of non-compliances including overstating the profit.
The BSEC also found some inconsistencies in the financial statement of JMI Hospital Requisite Manufacturing Ltd.