Lahore: Pakistan Engineering Company Ltd. (PECO) has announced its financial results for the year ended June 30, 2020, amidst a backdrop of legal challenges and financial distress. In a meeting held on January 20, 2025, via Zoom Workplace, the company's directors disclosed that no cash dividends, bonus shares, or other entitlements would be distributed to shareholders. This announcement comes as the company continues to grapple with the fallout from unauthorized management and significant financial losses.
According to the audited Profit and Loss Account for the fiscal year ending June 30, 2020, PECO reported sales of 259.60 million Rupees, a slight increase from the previous year's 249.64 million Rupees. However, the cost of sales, totaling 479.50 million Rupees, resulted in a gross loss of 219.90 million Rupees. Operating losses were recorded at 208.81 million Rupees, a marginal improvement from the previous year's loss of 320.34 million Rupees. The loss before taxation stood at 218.17 million Rupees, while the loss after taxation was 215.48 million Rupees. Consequently, the basic and diluted loss per share was calculated at 37.87 Rupees.
The financial distress of Pakistan Engineering Company Ltd. is compounded by external auditors Messrs. Maqbool Haroon Ahmad & Co. Chartered Accountants refraining from expressing an opinion on the financial statements. This decision, outlined in the external auditors' reports, suggests potential concerns over the company's financial health and accounting practices.
The company's financial woes are further exacerbated by the unlawful seizure of control by ex-MD Mr. Mairaj Anees Ariff, appointed by the government. From October 2018 to October 2022, Mr. Ariff allegedly barred the Board of Directors, the Board-appointed CFO, Company Secretary, and Head of Internal Audit from entering company premises and performing their duties. This unauthorized management led to the suspension of essential corporate functions and contributed to PECO's financial instability.
According to information available from the Pakistan Stock Exchange (PSX), the company's total assets as of June 30, 2020, were 15.55 billion Rupees, a slight decrease from the previous year's 15.73 billion Rupees. Equity and liabilities were reported at 12.99 billion Rupees, down from 13.20 billion Rupees in 2019. The company's accumulated losses increased to 1.53 billion Rupees from 1.33 billion Rupees the previous year.
The cash flow statement reveals a net cash outflow from operating activities of 34.13 million Rupees, a reversal from a positive cash generation of 64.45 million Rupees in the preceding year. Despite a minor inflow from investing activities amounting to 20.73 million Rupees, the overall cash and cash equivalents at year's end stood at 31.37 million Rupees, down from 44.78 million Rupees at the beginning of the year.
As Pakistan Engineering Company Ltd. continues to navigate its financial and legal challenges, stakeholders await further developments regarding the company's governance and financial strategies.