Karachi: Independent auditors have issued a disclaimer of opinion on the financial statements of Dadabhoy Construction Technology Limited, citing a lack of sufficient audit evidence and significant uncertainties about the company's future.
According to information available from the Pakistan Stock Exchange (PSX), the auditors' report highlighted several critical issues in the financial statements as of June 30, 2023. The company reported an after-tax loss of Rs. 3.785 million for the current year, increasing its accumulated losses to Rs. 40.676 million. The losses have completely eroded the equity, which stands at only Rs. 17.448 million.
The financial turmoil is compounded by the company's operational halt since 2016, which has led to a shutdown of its core activities. The company's current liabilities have now matched its current assets at Rs. 17.448 million, both starkly reduced from the previous year. Furthermore, the company has not managed to keep up with installments for land acquisitions due to legal issues over property titles, adding to its list of woes.
The auditors were unable to verify several crucial aspects of the financial statements due to restricted access to the company’s books and records. This has prevented them from forming an opinion on the appropriateness of using the going concern assumption in preparing the financial statements. The going concern assumption underpins the belief that a company will continue its operations in the foreseeable future, which in this case, is heavily questioned.
Moreover, the company's dependence on financial support from directors and sponsors without any incoming funds during the year further exacerbates the uncertainty surrounding its ability to continue as a going concern. According to the auditors, without a viable business and financial restructuring plan amidst the challenging socioeconomic climate in Pakistan, the company's survival is highly uncertain.
The Securities and Exchange Commission of Pakistan (SECP) has already taken steps towards winding up the company, with a petition filed in 2019 for its dissolution. This move, however, remains pending in court.
In addition to financial discrepancies, the audit also raised issues with compliance, as the auditors could not confirm whether the financial statements align with the Companies Act, 2017, or whether transactions made were for the purpose of the company’s business.
The auditors have made it clear that without access to necessary documents and an improvement in internal controls, the financial health and operational viability of Dadabhoy Construction Technology Limited cannot be determined, casting a significant shadow over its future.