Dairy manufacturer Lucky Lanka Milk Processing Company Ltd has made a net loss of Rs.10 million for the December quarter (3Q15), the interim financial accounts released to the Colombo Stock Exchange (CSE) showed.

Interestingly, the financial performance of the corresponding quarter of the previous year was not available in the interim accounts, making it difficult to enter into a conclusion how the company has fared during the quarter under review on a year-on-year basis.

And also, any financials for the period between March 31, 2014 and September 30, 2014 were neither available on the CSE website or the company’s Initial Public Offer (IPO) prospectus. 

Lucky Lanka raised Rs.300 million through an IPO during the mid-part of last year. The company said Rs.200 million out of the IPO proceedings would be utilized for debt settlement, Rs.75 million for capacity expansion and Rs.25 million for the implementation of a new project.

The company in the December quarter incurred a finance cost of Rs.11 million undermining gains from operating activities. 

The interest-bearing long-term borrowings as at December 31, 2014 stood at Rs.186 million. In the financials presented in the prospectus, as at March 31, 2014, the long-term borrowings stood at Rs.116 million. 

The company has listed Rs.56.2 million under other current liabilities as at December 31, 2014. As at March 31, 2014, the company’s short-term interest-bearing borrowings amounted to Rs.113 million. 

According to these figures, the total gearing of Lucky Lanka remains more or less the same despite the company’s plans to settle debts with the IPO proceeds. 

Or else, the company may have borrowed again after settling the previous debts.

The companies which raise money through public share issues utilizing IPO proceedings for activities other than the objectives mentioned in the IPO prospectuses has been a recurring issue in the CSE.

According to analysts, the CSE and Securities and Exchange Commission (SEC) should make more effort in tackling misuse of IPO proceeds, making the companies which raise public funds more accountable.