The value of the land and the building of Le Méridien Dhaka in Nikunja doubled in a single revaluation in 2019 and the total value of assets of Best Holdings, which owns the 5-star hotel, jumped 126 percent in rounds of reassessments.

Best Holdings flaunted these valuations while applying for direct listing to raise Tk 2.83 billion from the stock market by selling Tk 10 share at Tk 65 with Tk 55 premium.

Bangladesh Securities and Exchange Commission has scuttled the private firm’s bid to debut on Dhaka Stock Exchange through direct listing, raising legal questions and noting that the direct listing is a privilege available for only government companies.

Market analysts have questioned the rate at which Best Holdings raised its asset value.

One of those people who help companies and clients make informed decisions about the market said Best Holdings should be evaluated again by an eligible firm and if any anomaly is found, the company that had re-evaluated the owner of Le Méridien Dhaka hotel earlier be penalised.

Amin Ahmad, chairman of Best Holdings, did not take phone calls nor did he respond to text messages from bdnews24.com requesting comments for this report.

Le Méridien Dhaka

HOW THE VALUE JUMPED

Best Holdings’ total asset value was shown Tk 77.2 billion on Jun 30, 2020 after several rounds of revaluation, a Tk 43.04 billion or 126 percent rise from Tk 34.16 billion on Jun 30, 2016.

The prices of land owned by the company at several places were shown several times higher than the previous prices while the value of Le Méridien doubled through the revaluations.

“It can be a rise to 20 from 19 in a revaluation, but a rise to 99 from 19 is impossible. The land and building prices shown here (in Best Holdings’ financial records) appear wrong,” said Dewan Nurul Islam, managing director of Grant Thornton Bangladesh, an international accountancy firm.

Best Holdings, after a revaluation in 2017, showed that the price of its 23.86 acre land in Mymensingh’s Bhaluka jumped to Tk 2.51 billon from 77 million. It raised the price of its 1.49 acres land in Dhaka’s Bashundhara Residential Area to Tk 2.02 billion from Tk 146.5 million the same year.

In 2019, it revaluated its properties in the capital’s Nikunja, where the five-star Le Méridien is situated.

The cost of purchase and development of the 95-acre land there was raised to Tk 12.29 billion from Tk 5.35 billion, which means the land was priced at Tk 214 million per Katha (1 Katha = 1.65 decimals).

The hotel building was valued at Tk 25.46 billion from Tk 13.32 billion and together, the total price of the land and the building of the hotel was put at Tk 37.57 billion.

“Nowhere in Bangladesh is the price of land so high. It needs to be checked whether the re-evaluator raised the prices in collusion with Best Holdings,” said Professor Mohammad Musa of United International University’s finance department.

The revaluation of Best Holdings by Mahfel Huq & Co also caused a nearly tenfold jump in the hotel owner’s paid-up capital to Tk 8.71 billion on Jun 30, 2020 from Tk 883.1 million a year ago.

A former director of Dhaka Stock Exchange, who has been working on stock brokerage and asset valuation for around three decades, asked similar questions.

A company shows a higher value of its assets than normal to increase paid-up capital and share prices, he said.

“But the way Best Holdings raised the value of its assets through revaluation is nothing short of abnormal,” he said. The former DSE director, who requested anonymity, also said an eligible firm should be appointed to revaluate Best Holdings’ assets.

“And the suspicion increases when the revaluation is done by a firm like Mahfel Huq & Co,” he added.

The Bangladesh Bank has recently dropped Artisan Chartered Accountants, the auditor of Best Holdings, and Mahfel Huq & Co along with 34 other firms from the list of firms eligible to audit banks and financial institutions.