Karachi: An independent auditor's report has highlighted significant financial distress at Dadabhoy Construction Technology Limited, issuing a disclaimer of opinion on the company's financial statements as of June 30, 2023. The auditor was unable to obtain sufficient evidence to support an audit opinion due to severe discrepancies and limitations in accessing essential financial records.
The financial statements under scrutiny reveal that the company has suffered an after-tax loss of Rs. 3.785 million in 2023, exacerbating its accumulated losses to Rs. 40.676 million. The company's liabilities significantly exceed its assets, leading to a complete erosion of equity, which stands at a negative Rs. 17.448 million. Operations have been halted since 2016, and the company has struggled to meet its financial obligations or sustain any operational momentum.
According to information available from the Pakistan Stock Exchange (PSX), the company's difficulties are compounded by unresolved legal issues related to property acquisitions, further clouding its financial stability and operational viability. The report notes that despite financial injections from related parties for land development, these funds have been locked due to disputes over property titles, with no resolution in sight.
The management has attempted to restart operations, as mentioned in note 1.2 of the financial statements, but these efforts remain unmaterialized, casting serious doubts about the company's ability to continue as a going concern. The ongoing unfavorable socioeconomic conditions have also hindered the feasibility of planned business diversifications.
The Securities and Exchange Commission of Pakistan (SECP) had previously authorized a winding-up petition for the company, reflecting the gravity of its financial collapse. The inability of the auditors to access necessary financial records has severely restricted the audit process, preventing any meaningful assessment of the company's financial state or compliance with the Companies Act, 2017.
The responsibility for financial statement integrity rests with the company's management and board of directors, tasked with ensuring accurate and fair financial reporting in compliance with applicable standards. However, the auditor's inability to verify the financial statements or ascertain the company's compliance with legal and regulatory requirements underscores the profound challenges facing Dadabhoy Construction Technology Limited.