Auditors flag 'going concern' threat for 37 listed companies
A “going concern” warning in an audit report signals significant doubt about a company’s ability to continue its operations in the foreseeable future.
A growing number of listed companies are facing serious questions over their financial viability after auditors raised "going concern" warnings for 37 firms, highlighting deep-rooted vulnerabilities within the capital market.
According to data from the Dhaka Stock Exchange (DSE), these companies account for more than 10% of all listed entities, underscoring the scale of the issue and raising concerns among investors and regulators alike.
A "going concern" warning in an audit report signals significant doubt about a company's ability to continue its operations in the foreseeable future. Such warnings typically arise from persistent losses, mounting debt burdens, liquidity shortages, or operational disruptions, all of which threaten a company's survival and its ability to meet financial obligations.
Among the firms flagged are several well-known names across sectors, including Baraka Power, Doreen Power, BD Thai Food, First Security Islami Bank, and Social Islami Bank, as well as a number of textile, pharmaceutical, and financial firms. The list also includes multiple non-bank financial institutions (NBFIs), a sector already under strain from rising non-performing loans and liquidity stress.
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Nine of the 37 companies identified by auditors are currently out of operation, further compounding investor concerns. Analysts note that such companies not only fail to generate revenue but also often lack transparency, leaving shareholders in the dark about their financial condition and prospects.
Audit findings reveal a troubling pattern of financial distress. For instance, Indo-Bangla Pharmaceuticals reported consecutive annual losses, with auditors highlighting weak internal controls and insufficient liquidity to withstand shocks. Similarly, Safko Spinnings has incurred massive losses and has unpaid bank loans exceeding Tk140 crore, with operations effectively halted and inventory sold off at minimal value.
The power sector has not been immune either. Auditors flagged Baraka Power after one of its major plants remained shut since October 2024 following the expiry of its contract with the Bangladesh Power Development Board. Without confirmation of contract renewal, the company's standalone viability remains uncertain. In contrast, Doreen Power, despite facing expired power purchase agreements for some plants, may continue operations by relying on dividends from its subsidiaries, offering a rare example of partial resilience amid broader sectoral challenges.
Financial institutions are among the hardest hit. Several NBFIs, including Prime Finance and International Leasing, are grappling with severe liquidity crises, ballooning default loans, and deeply negative retained earnings. These conditions have significantly increased their risk of insolvency, prompting auditors to raise red flags about their sustainability.
In another case, Bangladesh Services Limited reported accumulated losses exceeding Tk700 crore, coupled with a substantial deficit in current assets and high levels of debt. Such financial indicators, auditors warned, cast significant doubt on the company's ability to continue as a going concern.
Beyond these 37 companies, market participants are increasingly worried about an additional 23 listed firms that have remained inactive and have failed to publish financial statements for extended periods. This brings the total number of troubled or opaque companies to around 60 out of approximately 360 listed entities – a situation analysts describe as alarming for market integrity.
A senior analyst of a brokerage firm said the prevalence of going concern warnings reflects broader structural weaknesses in the capital market, including poor corporate governance, weak regulatory enforcement, and limited accountability for underperforming firms. Investors, particularly retail participants, are often left exposed to significant risks due to inadequate disclosure and delayed financial reporting, he said.
Market insiders argue that decisive action from regulators, including the Bangladesh Securities and Exchange Commission, is urgently needed. Suggestions include stricter monitoring, enhanced disclosure requirements, and the potential delisting of persistently non-compliant or non-operational companies to protect investor interests and restore confidence.
