Karachi: Globe Textile Mills Limited, once a thriving entity in the textile industry, is facing significant financial difficulties as revealed by its latest audit report. Dated June 30, 2023, the financial statements indicate that the company is no longer considered a going concern, prompting a shift in the basis of accounting to estimated realizable and settlement values of its assets and liabilities.
The audit report, conducted by Parker Randall-A.J.S. Chartered Accountants, highlights key concerns regarding the company's financial health. Among the most pressing issues is the amount due from the former Chief Executive Officer, totaling Rs. 50.35 million. This amount has been recorded following an interim order from the Securities and Exchange Commission of Pakistan (SECP) aimed at retrieving certain financial transactions of the company.
According to information available from the Pakistan Stock Exchange (PSX), Globe Textile Mills Limited has not been in operation, leading to the non-preparation of a code of conduct and the absence of major decisions regarding its corporate strategy. The company's board, chaired by Arshad Arif, consists of seven directors, with a majority being female. However, the board has not established significant policies or maintained comprehensive records due to the company's dormant status.
The audit report further addresses the implications of preparing financial statements on a non-going concern basis, which involves significant judgment and estimation by management. The estimated realizable value of assets and liabilities is based on historical experience, available information, and future events that are believed to be reasonable under the circumstances. The auditors have evaluated these estimates and confirmed compliance with relevant guidelines issued by the Institute of Chartered Accountants of Pakistan.
The statement of financial position as of June 30, 2023, shows total assets of Rs. 51.90 million, with current liabilities amounting to Rs. 1.56 million. Notably, the company’s plant and equipment, valued at Rs. 1.43 million, are stored at a related party's premises in Kotri due to a lack of storage space.
Despite these challenges, Globe Textile Mills Limited's board has developed a vision and mission statement, although no corporate strategy has been effectively implemented. The company, which has complied with the Listed Companies (Code of Corporate Governance) Regulations, 2019, is now under a winding-up petition initiated by the SECP, further complicating its financial outlook.
As the company navigates these tumultuous times, stakeholders and investors remain cautious, closely monitoring the developments and potential outcomes of the ongoing financial and legal proceedings.