Lahore: Pakistan Engineering Company Ltd. (PECO) has released its financial results for the year ended June 30, 2023, revealing significant financial challenges largely attributed to an unlawful management takeover. The announcement was made following a board meeting held on January 20, 2025, where directors convened via Zoom Workplace to discuss the company's financial standing.
According to the financial statements, PECO reported a marked decrease in sales, dropping to 30.08 million rupees from the previous year’s 137.93 million rupees—a decline of over 78%. The cost of sales exceeded the revenue, amounting to 65.86 million rupees, culminating in a gross loss of 35.77 million rupees compared to a 183.38 million rupees loss in the previous year. The company’s operating loss was recorded at 45.50 million rupees, a reduction from a staggering 237.14 million rupees in the prior year. Despite the decline in losses, the company remains in a precarious financial position.
Most notably, PECO’s external auditors, Messrs. Maqbool Haroon Ahmad & Co., refrained from expressing an opinion on the financial statements, a move that highlights significant concerns regarding the company's financial transparency and governance. This decision comes amidst revelations that from October 2018 to October 2022, an ex-MD appointed by the government, Mr. Mairaj Anees Ariff, unlawfully seized control of the company. During his tenure, Mr. Ariff allegedly barred the Board of Directors and key financial officers from fulfilling their duties, leading to a suspension of essential corporate operations.
The financial results further disclosed an accumulated loss of 2.09 billion rupees as of June 30, 2023, up from 2.06 billion rupees the previous year. The company’s assets stood at 15.03 billion rupees, with liabilities amounting to 1.79 billion rupees directly associated with assets held for sale. Despite the financial turmoil, the company did not declare any cash dividends or bonus shares for the period under review. The directors also reported no other entitlements or corporate actions.
The financial review revealed that PECO's equity and liabilities were valued at 12.39 billion rupees, slightly down from 12.43 billion rupees the previous year. The company’s cash flow from operating activities showed a deficit of 19.30 million rupees, indicating a negative cash generation from operations compared to a positive 2.45 million rupees in the prior fiscal year.
According to information available from the Pakistan Stock Exchange (PSX), PECO operates within the industrial and engineering sector, which has faced numerous challenges in recent years. The company's basic and diluted loss per share was reported at 8.34 rupees, a significant improvement from the previous loss of 42.54 rupees per share, yet still reflective of ongoing financial struggles.
In conclusion, PECO's financial results for the year ended June 30, 2023, underscore the severe impact of the unauthorized management takeover and subsequent financial mismanagement. As the company seeks to recover, stakeholders are left to grapple with the lasting repercussions of these turbulent years and the path forward in restoring the company's financial health and operational integrity.