WATA Chemicals financial analysis: finance cost took 92.8% of operating profit, qualified FY2025 audit (Oct 2026)

Investment considerations: positive operating cash flow and lower receivables; finance expenses at 92.8% of operating profit and a qualified audit

WATA Chemicals Limited was incorporated in Bangladesh on 19 August 1981 and has been listed on the Dhaka Stock Exchange since 1992. Its factory is at Murapara, Rupgonj, Narayangonj. The FY2025 notes describe the business in one sentence: 'The Company produces Alum, Zinc Sulphate, Magnesium Sulphate, Sulphuric Acid, Basic Chrome Powder (BCP) and Linear Alkyl Benzene Sulphonic Acid (LABSA) for 100% local consumption' [1 p.15]. The company reports one segment [1 p.17]. The managing director, Md. Nazrul Islam, held 4,804,032 shares and the Investment Corporation of Bangladesh (ICB) 3,984,091 shares in the FY2024 annual report's shareholding annexure [9 p.18].

In FY2025 (the year to 30-Jun-2025) revenue net of VAT was BDT 813.5m, gross profit BDT 240.8m, operating profit BDT 202.4m, finance expenses BDT 187.9m and profit after tax BDT 11.0m, or BDT 0.74 a share [1 p.12]. The auditor, Khan Wahab Shafique Rahman & Co., gave a qualified opinion on five bases [1 p.3] [1 p.4]. Borrowings (long-term loan, bank overdraft and loans, current portion and short-term loans from directors) were BDT 1,476.2m at 30-Jun-2025 against equity of BDT 905.4m [1 p.10] [34]. On 29-Oct-2026 the company posted FY2026 EPS of BDT 2.08 on DSE; the FY2026 audited report is not in the corpus at 1-Nov-2026 [15].

Business: sulphuric acid was 67.5% of FY2025 gross sales; alum plant used at 33.71% of capacity

The company's revenue note splits FY2025 gross sales of BDT 931.9m into sale of goods (BDT 883.9m) and revenue from services (BDT 48.0m) [1 p.33]. Sale of goods was Sulphuric Acid BDT 629.1m, Alum Sulphate BDT 217.2m, Linear Alkyl Benzene Sulphonic Acid BDT 37.1m, Zinc Sulphate BDT 0.24m and Magnesium Sulphate BDT 0.26m [1 p.33]. Note 26.02(b) states: 'The company earned Tk. 4.80 crore from contract manufacturing of Zinc Sulphate for Asad Trading during FY 2024-25, which has been recognized as revenue from services under IFRS-15' [1 p.33]. VAT on sales was BDT 118.4m, giving revenue net of VAT of BDT 813.5m [1 p.33]. Sulphuric Acid was 67.5% of FY2025 gross sales [34].

The plant-capacity note gives attainable annual capacity of 48,000 tonnes of Sulphuric Acid, 18,000 tonnes of Alum Sulphate, 7,200 tonnes of LABSA, 6,000 tonnes of Zinc Sulphate and 6,000 tonnes of Magnesium Sulphate. FY2025 production was 44,034.390, 6,067.400 and 266.028 tonnes for the first three, and the Zinc Sulphate and Magnesium Sulphate rows show a dash and 0.00% [1 p.39]. The FY2024 directors' report gives FY2024 production of 43,298 tonnes of Sulphuric Acid (90.20% of capacity), 5,269 tonnes of Aluminium Sulphate (29.27%) and 20 tonnes of LABSA 'for test operation purpose' [9 p.15].

The FY2024 annual report lists the company's milestones: production in the Alum Plant from 1986, a Sulphuric Acid Plant in 1987, Zinc Sulphate from 1994, BCP from 1997, Magnesium Sulphate from 2002, a new Sulfuric Acid Plant in 2018 and 'Sodium Lauryl Ether Sulphate/Linear Alkyle Benzene Sulfonic Acid' against 2021-2022 [9 p.5]. The same report states that the 'SLES (Sodium Lauryl Ether Sulphate), LABSA (Linear Alkyle Benzene Sulphonic Acid) plant set up works have been completed and waiting for starting production' [9 p.12], and the management discussion says the 'SLES and LABSA plant set against finance provided by Agrani Bank Ltd., has been completed and efforts are being utilized for quick starting trial production but present volatile market situation we cannot start yet' [9 p.25]. The FY2025 revenue note labels LABSA sales of BDT 37.1m as 'LABSA (Test Manufacturing)' [1 p.33]. The auditor's first basis for qualification states that the LABSA plant and the BCP plant 'are not in use since 2008' [1 p.3]; the filings do not state whether these are the same LABSA facility.

Inputs are imported. FY2025 raw materials consumed were BDT 474.1m: rock sulphur BDT 347.2m, alum hydrate BDT 83.8m and linear alkyl benzene BDT 43.1m [1 p.33]. Note 48 states that no payment in foreign currency other than the import cost of materials was made and that no foreign currency was earned [1 p.39]. The open letters of credit listed under materials in transit at 30-Jun-2025 are for sulphur, hydrate, bentonite powder and LAB [1 p.26] [1 p.27]. Note 49 states that the company had no selling agent [1 p.39]. The key audit matter on revenue refers to 'various contracts with local customers and the government for different products' [1 p.5]. No customer list or customer concentration figure is printed in the FY2025 notes read (notes 1-53 and schedules 4, 5 and 7).

Seven-year record: finance expenses rose from BDT 68.4m to BDT 187.9m and profit after tax fell from BDT 138.0m to BDT 11.0m

Seven years of audited statements, FY2019-FY2025, give the record below; each year is taken from that year's own annual report except FY2019, which uses the IFRS-format comparative in the FY2020 report. Revenue net of VAT was highest in FY2023 at BDT 1,011.0m and lowest in FY2021 at BDT 569.8m [10 p.13] [12 p.49]. Gross margin ranged from 28.0% (FY2023) to 38.1% (FY2021) [34]. Finance expenses were BDT 68.4m (FY2019), 65.5m (FY2020), 73.7m (FY2021), 129.9m (FY2022), 143.5m (FY2023), 160.7m (FY2024) and 187.9m (FY2025) [13 p.49] [12 p.49] [11 p.49] [10 p.13] [9 p.49] [1 p.12]. Profit after tax over the same years was BDT 138.0m, 119.3m, 91.0m, 60.0m, 45.0m, 9.9m and 11.0m; the seven years sum to BDT 474.1m, against BDT 829.6m of finance expenses (both derived) [34].

Where a comparative was reprinted differently, both printings are recorded. FY2019 EPS is 11.63 in the FY2019 report (on 11,858,095 shares) and 9.31 in the FY2020 report (restated for the 25% bonus issue), and FY2019 NAV per share is 66.85 and 53.48 respectively [14 p.49] [14 p.48] [13 p.49] [13 p.48]. FY2019 cost of sales is 573,458,281 in the FY2019 report and 573,458,282 in the FY2020 report. FY2020 operating profit is 242,781,036 in the FY2020 report and 242,781,035 in the FY2021 report [13 p.49] [12 p.49]. FY2022 income tax is 20,921,725 in the FY2022 report and 20,921,726 in the FY2023 report [11 p.49] [10 p.13]. FY2023 EPS is 3.03 in the FY2023 report and '3.035' in the FY2024 report [10 p.13] [9 p.49]. FY2019 NOCFPS is 14.50 in the FY2019 report and 11.60 in the FY2020 report [14 p.51] [13 p.51]. June 2021 total assets are printed as 2,624,072,956 in the FY2022 comparative; the FY2021 page prints the two sub-totals, which add to 2,624,072,955 [11 p.48] [12 p.48].

The FY2024 annual report's five-year table labels gross sales including VAT as 'Turnover': BDT 819.8m for FY2024, 1,110.4m for FY2023, 1,036.0m for FY2022, 649.1m for FY2021 and 838.0m for FY2020 [9 p.18]. These differ from revenue net of VAT in the statements (BDT 713.4m, 1,011.0m, 953.8m, 569.8m and 770.5m). The same table prints FY2023 net profit before tax as 52,487,194 on the page image; the extracted text reads 92,487,194 (OCR) [9 p.18].

Line items: Agrani C.C interest was 47.4% of FY2025 finance expenses; sulphur was 73.2% of raw materials

Revenue. FY2025 revenue net of VAT rose to BDT 813.5m from BDT 713.4m [1 p.12]. Sulphuric Acid gross sales were BDT 629.1m on 40,791 tonnes sold, against BDT 587.4m on 39,825.070 tonnes; Alum Sulphate gross sales were BDT 217.2m on 6,254 tonnes, against BDT 226.5m on 5,423 tonnes [1 p.46]. Gross sales per tonne sold, a derived figure, were BDT 15.42 thousand for Sulphuric Acid (FY2024: 14.75) and BDT 34.74 thousand for Alum Sulphate (FY2024: 41.78) [34]. The company's own explanation in note 26: 'Sales of Alum Sulphate was Decreased in value by Tk.9,307,878 but increased sales quantity and Sulphuric Acid, LABSA (Test Manufacturing), Zinc Sulphate and Magnesium Sulphate were Increased by Tk.41,695,077/-, Tk. 31,177,761/-, Tk. 240,000/- and Tk. 260,000/- respectively' [1 p.33]. The FY2025 total also includes BDT 41.7m net of VAT from contract manufacturing for Asad Trading, which was nil in FY2024 [1 p.46].

Cost of sales. FY2025 cost of sales was BDT 572.7m: raw materials consumed BDT 474.1m, stores and spares BDT 0.5m and factory overheads BDT 103.2m (no carriage-inward amount is printed for FY2025; FY2024: BDT 0.14m), with finished goods stock up from BDT 14.3m to BDT 19.4m [1 p.33]. Rock sulphur was 73.2% of raw materials consumed (FY2024: 78.9%) [34]. Factory overheads included wages and salaries of BDT 43.4m (FY2024: 50.7m) and factory depreciation of BDT 35.4m (FY2024: 38.8m) [1 p.34]. The utility lines in note 27.03 are printed as Gas Bill 2,736,329 and Electric Bill 14,585,905 for FY2025, against Gas Bill 23,338,440 and Electric Bill 3,222,122 for FY2024 [1 p.34]; note 32 states 'increase of Natural Gas bill by 1.80 times' [1 p.36]. The two printings do not agree with each other, and this note does not choose between them.

Gross margin. Gross margin was 30.7% in FY2024 and 29.6% in FY2025; across FY2019-FY2025 the series was 34.3%, 36.9%, 38.1%, 29.3%, 28.0%, 30.7%, 29.6% [34]. For 9M FY2026 the gross margin was 26.0%, against 32.7% for 9M FY2025 [2 p.3] [34].

Administrative, selling and distribution expenses. These were BDT 38.3m in FY2025 and BDT 45.1m in FY2024 [1 p.12]. They include directors' salary and allowances of BDT 10.6m, office salaries of BDT 14.6m and office depreciation of BDT 2.9m [1 p.34] [1 p.35]. Carriage outward was BDT 0.80m (FY2024: 2.30m) and advertisement BDT 0.32m (FY2024: 1.07m) [1 p.35]. As a share of revenue the line was 4.1%, 5.3%, 8.3%, 7.2%, 8.6%, 6.3%, 4.7% over FY2019-FY2025 [34].

Finance expenses. FY2025 finance expenses of BDT 187.9m comprised interest on the Agrani Bank C.C (Hypo) of BDT 89.1m, interest on the stimulus package loan of BDT 26.3m, interest on the project loan of BDT 69.6m, interest on the IPDC loan of BDT 2.5m and lease interest of BDT 0.4m [1 p.35]. The C.C (Hypo) interest was the largest of the five components, 47.4% of the total [34]. Note 29 states: 'The continuous rise in finance costs is mainly due to increased bank borrowings and higher interest rates, which have adversely affected the company’s profitability and liquidity position' [1 p.35]. Finance expenses divided by average borrowings, a derived figure, were 5.1%, 4.9%, 7.8%, 8.0%, 9.3%, 12.1% for FY2020-FY2025 [34]. The finance-expense line is printed gross; non-operating income (fish sale BDT 2.6m, miscellaneous sales BDT 1.0m and FDR interest BDT 0.9m in FY2025) is shown separately [1 p.35].

Tax. FY2025 income tax expense was BDT 7.1m: current tax BDT 11.1m, a prior-year over-provision of BDT 0.2m written back and deferred tax income of BDT 3.8m [1 p.36]. Note 31 states that current tax is the higher of 1% of gross receipts, tax deducted at source on sales under section 89 and tax at the applicable rate, and that the tax deducted under section 89 (BDT 11,149,343) was the highest [1 p.36]. The note prints an effective tax rate of 61.44% for FY2025 and 68.87% for FY2024 [1 p.36]; total tax over profit before tax, a derived ratio, was 39.2% and 48.0% [34]. The auditor's fourth basis for qualification states that 'the provision was not calculated properly which leads to shortfall of provision' [1 p.4].

FY2026: nine-month EPS of BDT 0.87; full-year EPS of BDT 2.08 announced on DSE, audited report not in the corpus

Nine months to 31-Mar-2026. Revenue net of VAT was BDT 707.2m (9M FY2025: 551.6m), gross profit BDT 183.6m (180.3m), finance expenses BDT 136.2m (140.3m) and profit after tax BDT 12.9m (9.9m); EPS was BDT 0.87 (0.67) [2 p.3]. Trade payables at 31-Mar-2026 were BDT 228.4m, against BDT 1.3m at 30-Jun-2025, and cash was BDT 186.4m (BDT 33.6m) [2 p.2]. Bank overdraft and loans were BDT 672.9m (BDT 900.4m) and the current portion of the long-term loan BDT 202.0m (BDT 103.9m) [2 p.2]. Net cash from operating activities for the nine months was BDT 292.9m and NOCFPS BDT 19.76 [2 p.5].

Quarters. The quarterly statements print revenue of BDT 276.6m (Jul-Sep 2025), 186.6m (Oct-Dec 2025) and 243.9m (Jan-Mar 2026), and profit after tax of BDT 10.0m, 1.8m and 1.1m [4 p.3] [3 p.3] [2 p.3]. The three quarterly revenue figures add to BDT 707.2m, equal to the nine-month figure; the three quarterly profits add to BDT 12.796m, BDT 0.075m short of the printed nine-month BDT 12.871m (derived) [34]. For FY2025 the quarterly profits add to BDT 9.933m against a nine-month BDT 9.934m [34]. The DSE posts of 16-Nov-2025 and 1-Feb-2026 give the company's reasons: for Q1, 'Sales has been increased by 61.45% as against same period of the previous year'; for the half year, 'Sales has been Increased by 38.08%' [15].

FY2026 results announced on DSE. On 29-Oct-2026 DSE posted the board's recommendation of a 15% cash dividend for the year ended 30-Jun-2026, with the AGM on 24-Dec-2026 (virtual) and a record date of 26-Nov-2026, and reported EPS of BDT 2.08, NAV per share of BDT 62.11 and NOCFPS of BDT 4.43 [15]. The board meeting was notified for 28-Oct-2026 [15]. Figure by figure against FY2025 (EPS 0.74, NAV 61.09, NOCFPS 19.93) and against the nine months (EPS 0.87, NOCFPS 19.76), the derived fourth quarter (April-June 2026) is EPS BDT 1.21 and NOCFPS BDT -15.33; EPS of 2.08 on 14,822,618 shares implies profit after tax of about BDT 30.8m (all derived) [34]. The FY2026 audited report, its notes and its audit opinion are not in the corpus at 1-Nov-2026, so revenue, margins, borrowings and the audit opinion for FY2026 are not stated here.

Ratios: interest cover fell from 3.84x to 1.08x over FY2019-FY2025; ROE was 1.2% in FY2025

Returns. ROE (profit after tax over average equity) was 14.3%, 10.3%, 6.7%, 4.9%, 1.1%, 1.2% for FY2020-FY2025 [34]. Equity includes a revaluation reserve from the 2008 revaluation of plant, land and buildings, BDT 373.2m at 30-Jun-2025, 41.2% of equity [1 p.29] [34]. NAV per share excluding the revaluation reserve was BDT 35.90 at 30-Jun-2025 (derived) [34].

Coverage and leverage. Interest cover fell from 3.84x (FY2019) to 1.08x (FY2025); finance expenses were 92.8% of operating profit in FY2025, against 26.0% in FY2019 [34]. Borrowings over equity were 1.40x at 30-Jun-2019, 1.97x at their highest (30-Jun-2022) and 1.63x at 30-Jun-2025; borrowings were 7.29x FY2025 operating profit [34].

Working capital. Receivable days (trade receivables over revenue) were 38, 168, 279, 240, 231, 226, 115 for FY2019-FY2025, and inventory days 86, 106, 113, 94, 101, 127, 42 [34]. Note 6 ages FY2025 receivables at BDT 252.3m below 180 days and BDT 4.0m above, and states that 'no such alloawance has been provided as 100% of the Trade Receivable is recoverable in time' [1 p.27]. Inventory fell from BDT 171.4m to BDT 65.1m in FY2025; raw-material stock went from 3,638.383 tonnes to 352.710 tonnes [1 p.26].

Cash conversion and payout. Operating cash flow exceeded profit after tax in 5 of the 7 years FY2019-FY2025; the ratio was 25.3x in FY2024 and 26.8x in FY2025 [34]. The cash dividend of 10% for FY2025 equals BDT 1.00 a share against EPS of BDT 0.74; the 15% for FY2026 equals BDT 1.50 against announced EPS of BDT 2.08, a payout of 72.1% (derived) [15] [34].

Peers. Two DSE-listed companies with June year-ends and published AnalystBro notes are set beside WATA [29] [30]. They are different businesses and are not like-for-like. ACI Formulations PLC reports revenue from 'Agrochemical products' (BDT 3,927.2m in FY2025) and 'Consumer products' (coil, aerosol, Vanish, paint; BDT 1,243.0m) and states that it manufactures the aerosol, coil and Vanish products for S.C. Johnson & Son, Inc., marketed by ACI PLC [22]. ACME Pesticides Limited reports 'Net Revenue' from 'Agro products (Fertilizer & Seeds)' (BDT 474.4m) and 'Consumer Brand Products' (BDT 7.3m) [28]. The audit opinions are headed 'Opinion' for ACI Formulations and 'Qualified Opinion' for ACME Pesticides [18] [24]. Gross margins are shown for each company and are not ranked.

Borrowings, loan by loan as printed. WATA: Agrani Bank CC Hypo BDT 694.9m and Agrani Bank Incentive Loan (stimulus package) BDT 205.4m under bank overdraft and loans; Agrani Bank term loan BDT 397.5m non-current and BDT 103.9m current; short-term loans from Md. Nazrul Islam BDT 5.1m and A.H.M Abdullah BDT 69.3m; the IPDC Finance term loan was settled early in FY2025 [1 p.30] [1 p.31]. ACI Formulations: bank overdrafts BDT 245.0m and loans and borrowings of BDT 3,643.1m from BRAC Bank (320.0m), The City Bank (26.2m), Prime Bank (753.6m), Bengal Commercial Bank (597.2m), Commercial Bank of Ceylon (876.3m), Pubali Bank (275.2m), Al-Arafah Islami Bank (500.0m), Jamuna Bank (171.3m), Mercantile Bank (23.4m) and ONE Bank (100.0m), with a corporate guarantee from Advanced Chemical Industries PLC among the securities [19] [21]. ACME Pesticides: a Mutual Trust Bank long-term loan of BDT 61.7m (BDT 50.1m non-current, BDT 11.6m current) and a National Finance Ltd. lease liability of BDT 260.8m [25] [27]. No lender appears in the loan notes of both WATA and either peer.

Balance sheet: borrowings of BDT 1,476.2m and CWIP of BDT 1,097.2m at 30-Jun-2025

Borrowings. Total borrowings were BDT 1,111.2m at 30-Jun-2019, BDT 1,812.3m at their highest (30-Jun-2023), BDT 1,476.2m at 30-Jun-2025 and BDT 1,359.6m at 31-Mar-2026 [34]. Note 14 states that Agrani Bank sanctioned a project loan of Tk. 50.91 crore on 18 December 2018 'for financing BMRE project cost at 70:30 debt equity ratio', repayable in 30 quarterly instalments at 11%, later revised to 28 instalments of Tk. 2,59,71,241 from 13-Apr-2021 [1 p.30]. Note 17.01 states that Agrani Bank sanctioned a stimulus-package working capital loan of Tk. 19.00 crore on 15 June 2020 at 13% [1 p.31]. The Agrani term loan balance was BDT 501.4m at 30-Jun-2025 (non-current 397.5m plus current 103.9m) [1 p.30] [1 p.31].

Loans from directors. The short-term loan line, unsecured, was BDT 388.9m at 30-Jun-2023, BDT 176.6m at 30-Jun-2024, BDT 74.4m at 30-Jun-2025 and BDT 80.4m at 31-Mar-2026 [10 p.11] [9 p.48] [1 p.10] [2 p.2]. Per named party for FY2025 (note 19): Md. Nazrul Islam (Managing Director) opening BDT 71,301,258, received 107,950,000, repaid 174,117,334, closing 5,133,924; A.H.M Abdullah (Director) opening 105,300,000, received nil, repaid 36,048,003, closing 69,251,997 [1 p.31]. Both parties are listed in the related-party note 51, which states 'Short Term loan to Managing Director (Mr. Nazrul Islam) was free of interest' [1 p.40]. The auditor's fifth basis for qualification refers to these flows [1 p.4].

CWIP-BMRE. Capital work-in-progress was BDT 148.8m at 30-Jun-2019 and rose each year to BDT 1,097.2m at 30-Jun-2025 and BDT 1,105.8m at 31-Mar-2026 [34]. FY2025 additions were BDT 105.0m, including a machine with an LC value of Tk. 93,435,613.62 transferred from asset in transit; note 3 states that 'BMRE Project cost will be capitalized after successfully completion of test Production' and that 'some portion of addition in Capital Work-In-Progress (CWIP) were made through cash channel' [1 p.26]. CWIP was 43.3% of total assets at 30-Jun-2025 [34].

WPPF and tax balances. The Workers' Profit Participation Fund and Welfare Fund liability was BDT 48.6m at 30-Jun-2025; note 22 shows the opening 47,690,608 plus FY2025 additions of 907,297 equal to the closing 48,597,905, with no payment line for the year [1 p.32]. Advance income tax was BDT 163.0m and the provision for taxation BDT 35.8m at 30-Jun-2025 [1 p.10]. Note 44 prints a 'Tax Liability as per Final Assessment' of 17,992,989 for assessment year 2022-2023 and no final-assessment figure for 2023-2024 to 2025-2026 [1 p.39]; the auditor's taxation key audit matter states 'Assessment orders since Assessment year 2022-2023, 2023-2024 & 2024-25 are yet to be finalized' [1 p.6]. The two printings differ on AY2022-2023; both are stated and the conflict is flagged. Contingent liabilities (note 50) are a VAT claim of Tk. 41,427,896 under appeal after a 10% deposit, and a cancelled rebate of Tk. 22,81,103 with a fine of Tk. 45,62,206 under a writ petition; 'No additional liability had been accounted' [1 p.40].

Cash. Cash and cash equivalents were BDT 33.6m at 30-Jun-2025, of which BDT 27.1m was in an Agrani Bank margin account; note 9 states that 'Few Bank accounts are inoperative and carried on accounts for number of years without movement' [1 p.28]. Cash at 31-Mar-2026 was BDT 186.4m [2 p.2].

Audit: a qualified FY2025 opinion on five bases, six emphasis-of-matter items and three key audit matters

The FY2025 independent auditor's report, signed by Faruk Ahmed FCA of Khan Wahab Shafique Rahman & Co. on 06 November 2025, is headed 'Qualified Opinion' [1 p.3] [1 p.9]. DSE posted 'Qualified Opinion' & 'Emphasis of Matter' for the year on 24-Nov-2025 [15] [17]. The paragraphs below are quoted in full, word for word from the page images.

Opinion paragraph [1 p.3]:

“In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of WATA Chemicals Limited as at 30 June 2025, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs), the Companies Act 1994, the Securities and Exchange Rules 2020 as amended up to date and other applicable laws and regulations.”

Basis for qualified Opinion [1 p.3] [1 p.4]:

“1. No depreciation was charged on LABSA plant and BCP plant. The management reported that these plants are not in use since 2008. According to IAS 16 (paragraph 55), a company should not cease the depreciation when the assets become idle or is retired from active use unless the asset is fully depreciated. As a result, depreciation was undercharged by Tk. 4,415,006 for this year.”

“2. The company has revalued its Plant & Machinery and Factory Building in 2008 but has not transferred depreciation on revaluation from Revaluation reserves to Retained earnings for 04 (four) years from 2008 to 2011. As such consistency was not maintained as per paragraph 34 of IAS 16 “Property, Plant & Equipment”. Therefore, retained earnings has been understated and Revaluation reserve has been overstated to the same extent. Moreover, the company has not maintained fixed asset register properly.”

“3. The company has utilized the Workers Profit Participation Fund (WPPF) as an internal source of financing but has neglected to provide interest for such usage, contravening section 240(3) of the Labor Act 2006, as amended in 2013. Notably, an amount of Tk. 48,597,905 has been categorized under “Workers Profit Participation Fund” as a current liability, without any corresponding disbursement as employees' benefits to the workers, although the company has executed Trust Deeds for the same. This discrepancy points to a transgression of the provisions outlined in the Labor Act 2006, section 242(1), as amended in 2013.”

“4. While checking current tax provision we found that the provision was not calculated properly which leads to shortfall of provision.”

“5. During the year the company has received BDT 107,950,000 from its directors as loan using Banking Channel to repay Company’s bank loan liability and subsequently repaid BDT 210,165,336 to them. While checking we observed that substantial part of amount of repayments were made using cash cheques.”

Emphasis of Matters [1 p.4] [1 p.5]:

“We draw attention to the following: a. Note 32.00, “Earnings Per Share,” within the financial statements elucidates the rationale behind the slight increase in Earnings Per Share (EPS) from BDT 0.67 (2023-24) in the preceding year to BDT 0.74 (2024-25) in the current year. In addition, as indicated in Note 41.00, there is a noteworthy increase in Net Operating Cash Flow Per Share (NOCFPS), rising from BDT 16.83 to BDT 19.93, mainly due to higher collection of sales and accounts receivables than payments.”

“b. Note 50.00, “Contingent Liabilities,” found in the notes accompanying the financial statements. It discloses that the Commissioner of Customs Excise and VAT Directorate has raised a claim of Tk. 41,427,896 against the company due to a VAT audit objection. Subsequently, the company has lodged an appeal with the Appellate Tribunal following the payment of Tk. 4,142,790, equivalent to 10% of the claimed amount. As of now, the appeal remains pending in the Appellate Tribunal. Another demand claimed by Customs Excise & Vat Commissionerate, Dhaka by cancelling rebate for Tk. 22,81,103 and imposed fine for Tk. 45,62,206/- as because non-submission of price declaration in time. Against this claim a writ petition has been filed on payment of Tk. 456,220 before the Hon'ble High Court Division. Hon'ble Justice stayed the order of claim and the writ petition now pending for hearing.”

“c. Note 6.00, “Trade Receivables,” where the company has disclosed that the impact of expected credit loss, in accordance with IFRS 9, has not been reflected in the financial statements.”

“d. In accordance with Section 99 of the Labor Act 2006, as amended in 2013, it is incumbent upon establishments employing a minimum of 100 permanent workers to institute group insurance in accordance with the prescribed regulations. Regrettably, the company has yet to introduce group insurance for its permanent employees, despite employing more than 100 permanent personnel. This points to a non-compliance with the provisions set forth in Section 99 of the Labor Act 2006, as amended in 2013.”

“e. Note 1.17 where the company has disclosed in respect of transactions which were made using cash channels, including the purchase of land and others, we are not aware of any consequences associated with the cash transactions.”

“f. We draw attention to Note 29.00, where the company has disclosed the finance cost, which shows a notable increase in the company’s finance expenses for the last 3 years. Our opinion is not modified in respect of these above matters.”

Key audit matters [1 p.5] [1 p.6]. Revenue:

“The company reported revenue net of VAT of Tk. 813,487,372 including Revenue from Services (Contract Manufacturing), reflecting a slight increase in the preceding year to current year. But there is a significant decline in revenue net of VAT from Tk. 1,010,976,301 (2022-23) in the preceding year to Tk. 813,487,372 (2024-25) in the current year due to reduced customer demand, particularly for Sulphuric Acid, Alum Sulphate, and LABSA. Revenue recognition for WATA is considered complex due to various contracts with local customers and the government for different products. There is also a risk that revenue may be overstated due to fraud through manipulation of the invoices, discounts, incentives and rebates recognized resulting from the pressure of management may feel to achieve performance targets. Thus, we considered this as key audit matter.”

Trade Receivable:

“Trade receivable BDT 256,380,058 being about 10.12% of the total assets of the Company is a material item to the financial statements. There is a significant risk regarding recoverability of the amounts and misstatement of the items. As such, management is required to make judgments in determining whether accounts receivable are being appropriately valued and also need to make sufficient provision for aged accounts receivable, if required.”

Taxation & VAT:

“The Statement of Profit & Loss and Other Comprehensive Income of the company shows amount of Tk. 11,149,343 as tax charged on current year’s profit before tax. In the last two years the company has submitted its income tax return under Income Tax Act 2023. Assessment orders since Assessment year 2022-2023, 2023-2024 & 2024-25 are yet to be finalized for which additional tax charges may be imposed. Moreover, the company has tax & VAT positions including matters under dispute, which involve significant judgment to determine the possible outcome of these disputes. Given the company’s exposure to complex tax issues, the high level of management judgment in estimating the amounts provision for tax and involvement with regulatory authorities, taxation was considered to be a key audit matter.”

The FY2025 corpus document holds the audit report and financial statements only; no directors' report for FY2025 is in the corpus at 1-Nov-2026, so no company explanation of the FY2025 qualification is quoted. The FY2024 annual report printed this explanation of the FY2024 qualified opinion, quoted in full [9 p.17]:

“EXPLANATION ON QUALIFIED OPINION: Regarding qualified opinion no. 01 we would like to state that since those plants are out of production from 2004 as such no depreciation were charged in line with paragraph-55 IAS 16. If depreciation of both the plant would have been charged, then there would have adverse impact on cost of production of all other products of running units. Regarding Qualified opinion 02, we complied with this observation from 2012 onward. According to BAS-16 Para 82 of Bangladesh Financial Reporting Standard 2013 Volume II -“An entity shall apply this standard for annual periods beginning on or after 1st January 2013. Earlier application is encouraged, if an entity applies this standard for a period beginning before 1st January 2013, it shall be disclosed that date”. Regarding Qualified opinion 03, Trust deed has already executed and disbursement process will be started. Regarding Qualified opinion 04, as per Income Tax Act 2023, Section 163, Subsection 3 (Kha), Minimum Tax will not be considered for amounts deducted at import stage under section 120 of Income Tax Act; 2023 because of WATA is a manufacturer and imported raw material are used for own consumption. Regarding Qualified opinion 05, Amount has received from its director’s as loan using Banking Channel properly as per the guideline though in few cases for repaying the loan instantly used cash cheques. Next time we will try to repay the loan amount as per guide line.”

Dates as printed differ between filings: the FY2024 explanation says the plants are 'out of production from 2004'; the FY2025 auditor says 'not in use since 2008'; the FY2024 PPE note says depreciation on the BCP and LABSA plants 'had not been charged since year 2010' [9 p.17] [1 p.3] [9 p.58].

Governance: sponsors/directors 36.41% on DSE (30-Sep-2026); the MD held 4,804,032 shares and each of two sons 296,453 (FY2024 report); ICB held 3,984,091 shares; one DSE correction in 24 months

Ownership. The DSE page shows sponsors/directors at 36.41%, institutes 35.72% and the public 27.87% at 30-Sep-2026 (30-Jun-2025: 36.41%, 38.59%, 25.00%) [16]. The FY2024 shareholding annexure lists Md. Nazrul Islam (Managing Director) with 48,04,032 shares, A H M Abdullah and Md. Mahmudul Hasan, each described as 'Son of Mr. Md. Nazrul Islam', with 2,96,453 shares each, the CFO Md. Ali Ahsan with 1,000, and ICB with 39,84,091 shares [9 p.18]. The three family holdings add to 5,396,938 shares, 36.41% of 14,822,618 (derived) [34]. The same annexure lists 'PARENT/SUBSIDIARY/ASSOCIATED COMPANIES AND OTHER RELATED PARTIES' as 'NONE' [9 p.18].

Board. The latest board list in the corpus is in the FY2024 annual report: Chairman Mr. Md. Anwar Shamim, General Manager (ICB) (Nominated Director); Managing Director & CEO Mr. Md. Nazrul Islam; Directors Mr. A.H.M. Abdullah and Mr. Md. Mahmudul Hasan; Independent Director Mr. AMM Zeaul Haq [9 p.3]. The FY2025 statements are signed by Md. Nurul Huda as Chairman, Md. Nazrul Islam as Managing Director and A.H.M. Abdullah as Director [1 p.11]; the Q1 FY2026 statements are also signed by Md. Mahmudul Hasan as Director [4 p.3]. No FY2025 board list, attendance table or committee report is in the corpus at 1-Nov-2026.

Director profiles as printed in the FY2024 report. Md. Nazrul Islam: 'He has wide Experience in Management of Chemical Industry, Construction & Survey Firm and Import businesses' and 'He is also Chairman of Board of Trustee of Sakhawat H. Memorial Trust having under it different educational organizations named S.M. Institute of Medical Technology & MATS, Sakhawat H. Memorial Nursing College' [9 p.6]. A.H.M. Abdullah: 'He performs as member of the board's audit committee' [9 p.7]. The committee list on page 3 and the audit committee report name Mr. AMM Zeaul Haq, Mr. Subrata Pal- FCMA and Mr. A.T.M. Najmul Hussain as members and do not name Mr. Abdullah [9 p.3] [9 p.22]. Both printings are stated and the conflict is flagged.

Committees as printed. Audit Committee: Mr. AMM Zeaul Haq (Independent Director, Chairman), Mr. Subrata Pal- FCMA (Non Executive Director, member), Mr. A.T.M. Najmul Hussain (Non Executive Director, member); the company secretary is secretary [9 p.3] [9 p.22]. The committee report says it held 04 meetings and that 'All members of Audit Committee were present in all meeting' [9 p.23]. NRC: the same three names, with Mr. Zeaul Haq as Chairman (the corporate-information page prints 'Member of Audit Committee' under the other two NRC names); the NRC report says it held two meetings in FY2024 and was formed by the board on December 25, 2023 [9 p.3] [9 p.30]. Mr. Subrata Pal and Mr. A.T.M. Najmul Hussain are described as Non Executive Directors in the committee lists; neither name appears in the board list on page 3 or in the attendance table in Annexure-2 [9 p.3] [9 p.18]. This conflict is flagged; the filings do not resolve it.

Key management as printed in the FY2024 report: Company Secretary Mr. Shamsul Huq; Chief Financial Officer Mr. Md. Ali Ahsan; General Manager (Factory) Mr. Abu Taher Bhuiyan; General Manager, Finance & Accounts Mr. Md. Ashraful Alam; Head of Maintenance Engineer Civil Mr. SM Farhan Ali Reza; Head of Maintenance Engineer Mechanical Mr. Md. Basherul Islam; Head of Internal Audit Md. Milan Hossain; Manager Accounts Mr. Tapos Chandra Sarkar; Commercial Manager Mr. Mohammad Ali; Marketing Incharge Md. Abdul Jobbar; Production Manager Mr. Babul Das; Accounts Officer Mr. Md. Abdul Hakim [9 p.3]. The FY2025 note 51.01 lists the top five salaried officers: Shamsul Huq (Company Secretary) BDT 1,110,504; Md. Ali Hasan (Chief Financial Officer) 1,738,344; Md. Mahbubul Hasan Bhuiyan (Financial Controler) 560,000; Md. Abu Taher Bhuyan (General Manager (Factory)) 1,459,308; A S M Farhan Reza (Maintenance Eng. (Civil)) 1,163,532 [1 p.40]. The CFO's name is printed 'Md. Ali Ahsan' on the statements and 'Md. Ali Hasan' in note 51.01 [1 p.14] [1 p.40].

Related parties, per named party (FY2025). Note 51 lists director salary and allowances: Md. Nazrul Islam (Managing Director) BDT 4,805,429, payable 334,571; Mr. A.H.M. Abdullah (Director) 3,000,000, payable 218,396; Mr. Mahmudul Hasan (Director) 1,800,000, payable 139,600; festival bonus 960,000, payable 240,000 [1 p.40]. Note 21.01 prints the Managing Director's payable as 574,571, against 334,571 in note 51; both are stated and the conflict is flagged [1 p.31] [1 p.40]. The directors' loans are in the balance-sheet section. Note 51 g) states that apart from these the company 'didn't made any transaction with related parties' [1 p.40]. ICB, a 39,84,091-share holder in the FY2024 annexure with a nominated chairman, is not listed in note 51 [9 p.18] [1 p.40]. Note 46(c) refers to 'Note-29.01' for directors' remuneration; the remuneration note printed is 28.01 [1 p.39] [1 p.35].

Dividends. The DSE page lists cash dividends of 10% for 2025, 12% for 2024, 15% for 2023, 20% for 2022, 30% for 2021, 35% for 2020, 30% for 2019 and 10% for each of 2018, 2017 and 2016, and stock dividends of 25% (2019), 30% (2018), 5% (2017), 10% (2016), 25% (2014), 30% (2013) and 20% (2012) [16]. The FY2024 five-year table prints the FY2022 dividend as 'General Sharholder 20% cash, Directors 10% Cash' [9 p.18]. The board recommended 15% cash for FY2026 [15]. Note 40 states that unclaimed dividend of Tk. 12,75,338 was transferred to the Capital Market Stabilization Fund during FY2025 [1 p.38].

DSE news, 24 months. The DSE archive holds 44 posts under the WATACHEM code dated 11-Nov-2024 to 29-Oct-2026 [15]. They are board-meeting notices, quarterly and annual results, record-date and spot-market notices, dividend disbursements, two credit-rating posts (Emerging Credit Rating affirmed 'BBB' long term and 'ST-3' short term with a stable outlook on 26-Dec-2024 and 14-Dec-2025), auditor's-opinion posts (12-Dec-2024 and 24-Nov-2025), a query response of 31-Aug-2025 stating 'no undisclosed price sensitive information' and 1 correction: on 30-Aug-2026 a WALTONHIL dividend item was disseminated under the WATACHEM code and DSE posted 'Please disregard the said news' [15]. None of the 44 posts is a board approval of capital expenditure or expansion [15].

What's next: record date 26-Nov-2026, AGM 24-Dec-2026 and Q1 FY2027 results from mid-November (inferred)

Dated items after 31-Oct-2026. Notified dates come from DSE posts. The Q1 FY2027 board date is inferred from five years of first-quarter statement dates printed in the filings: 15-Nov-2020, 7-Dec-2021, 14-Nov-2023, 14-Nov-2024 and 14-Nov-2025 [8 p.4] [7 p.3] [6 p.4] [5 p.3] [4 p.3]; the Q1 statement for September 2022 is not in the corpus (the doc key WATACHEM_QUARTERLY_Q1_2022 holds the FY2023 annual statements). No Q1 FY2027 board meeting was notified on DSE at 1-Nov-2026, and the range depends on that notice [15]. The credit-rating range rests on two DSE posts. The FY2026 audited accounts were approved on 28-Oct-2026 and announced on 29-Oct-2026, within the precedent of annual board dates from 20-Oct (2019) to 20-Nov (2021) [14 p.48] [12 p.48] [15]; they are not overdue.

The AGM row's wording: the DSE post of 29-Oct-2026 gives 'Date of AGM: 24.12.2026; Time: 4:00 PM; Venue/Mode of AGM: Virtual AGM/Digital Platform' [15]. The FY2025 note 45 called the December 2025 meeting the '43th AGM' [1 p.39]; the FY2026 AGM number is not printed in the corpus.

Risks: finance expenses at 92.8% of operating profit, a qualified audit, open tax years and an undepreciated BMRE project

Each item below is a fact from the filings with the line it relates to. For scale, FY2025 revenue was BDT 813.5m, operating profit BDT 202.4m and profit after tax BDT 11.0m [1 p.12].

The rebate and fine figure in the table is the sum of Tk. 22,81,103 and Tk. 45,62,206 printed in note 50 (derived) [1 p.40]. The figure 92.8% is finance expenses over operating profit (derived) [34].

Key questions: the FY2026 audit opinion, the BMRE capitalisation and the fourth-quarter cash outflow

At 31-Mar-2026, equity was BDT 902.8m, borrowings BDT 1,359.6m and cash BDT 186.4m [2 p.2] [34]. At the 29-Oct-2026 close of BDT 122.10, the stock traded at 58.7x FY2026 announced EPS, 165.0x FY2025 audited EPS and 1.97x announced NAV at 30-Jun-2026 [33] [15] [34].

FAQ

What does WATA Chemicals make?

Sulphuric Acid, Alum Sulphate, LABSA, Zinc Sulphate, Magnesium Sulphate and Basic Chrome Powder, for local consumption; Sulphuric Acid was 67.5% of FY2025 gross sales [1 p.15] [1 p.33].

What was the FY2025 result?

Revenue net of VAT BDT 813.5m, operating profit BDT 202.4m, finance expenses BDT 187.9m, profit after tax BDT 11.0m, EPS BDT 0.74 [1 p.12].

What did the auditor say about FY2025?

A qualified opinion on five bases, six emphasis-of-matter items and three key audit matters (revenue, trade receivable, taxation and VAT) [1 p.3] [1 p.5].

Who lends to WATA Chemicals?

Agrani Bank: C.C (Hypo), a stimulus-package loan and a project loan for the BMRE project; the IPDC Finance loan was settled in FY2025; directors lent BDT 74.4m at 30-Jun-2025 [1 p.30] [1 p.31].

What was announced for FY2026?

EPS BDT 2.08, NAV per share BDT 62.11, NOCFPS BDT 4.43 and a 15% cash dividend; record date 26-Nov-2026 and AGM 24-Dec-2026 [15].

Who owns WATA Chemicals?

Sponsors/directors 36.41%, institutes 35.72% and the public 27.87% at 30-Sep-2026 [16].

What is the 52-week range?

BDT 106.6 (13-Nov-2025) to BDT 150.9 (23-Apr-2026) on unadjusted DSE trading-day closes, 30-Oct-2025 to 29-Oct-2026 [33].

Sources

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