The company has bought 100,000 litres, but has so far managed to sell 4,000 litres only.
The liquid fertilizer has been obtained without following the tender procedure, and by selecting one of the two companies that had submitted proposals.
Agriculture ministry secretary B. Wijeratne said an internal audit has questioned this purchase, adding that he has made an inquiry from the company regarding the matter.
The Strategic Enterprise Management Agency which is under this ministry has introduced liquid organic fertilizer, but the stock bought by the company does not belong to the kind of fertilizer being promoted by SEMA.
Farmers have now refused to use the company-given liquid fertilizer.
As the company had promised to pay the supplier after selling the stock, the supplier has obtained Rs. 100 million from a bank against the Rs. 125 million worth of securities given by the company as the bond.
The company only had a fixed deposit of Rs. 225 m, and it has now lost Rs. 100 m from that deposit.