Tallu Spinning Mills Ltd faces significant uncertainty over its ability to continue operating after seven consecutive years of losses and mounting finance costs, according to its auditor for the year ended on 30 June 2026.
The company posted a net loss of Tk25.34 crore in 2025-26, taking accumulated losses to Tk186.12 crore. Annual losses have remained above Tk24 crore since 2020.
The auditor said Tallu’s finance costs stood at Tk17.45 crore against an operating loss of Tk6.76 crore, leaving the company with a negative interest coverage ratio.
Tallu may be unable to meet debt, auditor warned, adding that if banks and financial institutions refuse to reschedule loans, the company could face a shortage of working capital needed to continue regular operations and fund capital expenditure.
The audit also found a Tk9.54 crore discrepancy in reported turnover.
Tallu reported gross turnover of Tk19.36 crore, while its VAT return showed Tk9.82 crore. The difference remained unreconciled.
Auditors were also unable to verify Tk45.13 crore in accounts receivable and Tk18.24 crore in advances, deposits and prepayments because of insufficient supporting documents.
They said a significant portion of the advances, deposits and prepayments might not be recoverable or adjustable.
The company also failed to maintain a complete fixed-assets register, preventing auditors from adequately verifying its property, plant and equipment.
The report said there were indications that the assets could be substantially impaired, meaning their carrying value might be materially overstated.
Management also failed to provide sufficient documents to verify the secured term-loan balance.
Auditors found inconsistencies in bank-loan interest calculations, while management acknowledged that interest expenses had been undercalculated against applicable rates.
The auditor issued a qualified opinion and flagged several compliance failures, including non-submission of income-tax and tax-deduction-at-source returns, failure to obtain the required annual credit rating and pending legal proceedings involving banks and a non-bank financial institution.
Tallu said it was trying to improve its financial position by increasing capacity utilisation, finding new customers and seeking loan rescheduling to secure working capital.
