Karachi: TPL Life Insurance Limited is confronting significant financial challenges following a reverse merger with Dar-es-Salam Textile Mills Limited (DSML), amid reports of understated liabilities and growing losses, according to an independent auditor’s review. The review, completed for TPL Life’s interim financial statements as of June 30, 2025, highlights several areas of concern that have raised doubts about the company’s financial stability.
The merger, effective from June 10, 2024, integrated TPL Life Insurance Limited’s operations with DSML. However, the financial statements of DSML have not been audited since June 30, 2023, and the fair values utilized in the financials were drawn from September 2023 instead of the merger date. There is a lack of sufficient records to verify opening balances and pre-merger financials of DSML, which has impeded a comprehensive review of the merged financial statements.
Additionally, the company reversed claims totaling Rs. 37.296 million in 2024, resulting in understated insurance liabilities. The lack of supporting documentation for this adjustment means the company’s accumulated losses and solvency could be affected if the reversal had not occurred. The review also noted limitations in the company’s information system, restricting access to complete ledgers and journal entries, thus preventing verification of transaction accuracy and management control processes.
According to information available from the Pakistan Stock Exchange (PSX), the company’s financial state is further complicated by a net loss of Rs. 96.8 million as of June 30, 2025, following a previous loss of Rs. 119.729 million on June 30, 2024. Accumulated losses now stand at Rs. 2,351.038 million, which, coupled with an inadequate solvency margin, contravenes directives from the Securities and Exchange Commission of Pakistan. This raises serious concerns about the company’s ability to continue operating.
The auditor emphasized potential tax liabilities related to the Sindh Revenue Board’s sales tax on premiums. These issues add to the financial uncertainties facing TPL Life Insurance Limited, with the auditors refraining from modifying their conclusion despite these concerns.
The company’s interim financial statement for the first half of 2025, as well as its annual financial statements for 2024, were previously reviewed and audited by another accounting firm, which also identified similar issues. The current review was led by Muhammad Khalid Aziz, who highlighted the ongoing material uncertainties and the need for more robust financial controls and disclosures.
As TPL Life Insurance Limited navigates these challenges, stakeholders will be watching closely to see how it addresses the financial discrepancies and regulatory compliance issues that have been identified.