Karachi: Fazal Cloth Mills Limited (FCML), a prominent entity in the textile industry, has received official exemption from the Securities and Exchange Commission of Pakistan (SECP) concerning the consolidation of its financial statements with its subsidiary, Fazal Gas Distribution Company Limited (FGDCL), for the fiscal year ending June 30, 2026. This development follows an application submitted by FCML on August 27, 2026, seeking relaxation under Section 228(7) of the Companies Act, 2017.
The SECP, in a letter dated September 9, 2026, acknowledged the absence of active financial operations by FGDCL during the specified financial year. This determination led to the conclusion that consolidating FGDCL's financials with those of FCML would not materially impact FCML's standalone financial statements. Consequently, FCML has been relieved from the obligation to prepare and present consolidated accounts for the fiscal year in question.
According to information available from the Pakistan Stock Exchange (PSX), the exemption is subject to specific conditions. These include the requirement for FCML to disclose the financial highlights of FGDCL within its own financial statements for the year ended June 30, 2026. In the absence of financial data due to FGDCL's non-commencement of business activities, FCML must provide a disclosure indicating the subsidiary's current status, reasons for non-consolidation, and the non-inclusion of financial highlights.
Moreover, FCML must ensure that the financial accounts of FGDCL are available for inspection by its members at the company's registered office or any other designated place of business, free of charge. This measure is intended to maintain transparency and provide stakeholders with access to relevant financial information.
The exemption granted by the SECP reflects an understanding of FGDCL's dormant status during the fiscal year and allows FCML to streamline its financial reporting process without the need for consolidation. This decision will likely influence the company's financial reporting strategy and ensure compliance with regulatory requirements while maintaining transparency for its stakeholders.