KARACHI: The Pakistan Stock Exchange (PSX) said on Friday it intends to delist Hamid Textile Mills Ltd (HTML) — a manufacturer and exporter of yarn and grey cloth — for failing to comply with its compulsory buyback directive.
PSX Head of Listed Companies Compliance Hafiz Maqsood Munshi said the company failed to comply with the buyback condition despite “repeated reminders” and a lapse of considerable time.
HTML posted sales and earnings of Rs554.8 million and Rs8.4m in 2021-22, respectively.
Earlier, the frontline regulator of the listed sector suspended trading in HTML shares for multiple reasons, such as not paying the PSX its fees and not joining the Central Depository System, which handles the paperless settlement of shares on the stock exchange.
Another key reason for the regulatory action is that HTML’s statutory auditor has issued an adverse opinion, which means the company’s financial statements do not accurately reflect its financial performance.
According to the PSX regulations, upon a company’s failure to comply with the compulsory buyback directions or failure to rectify the non-compliance within the given timeframe, the exchange will delist the firm within 90 days through a notice in writing.
The PSX has asked HTML to raise any objection to the proposed delisting before Nov 13. Otherwise, the exchange will start the process of delisting.
The textile maker’s bottom line turned positive in 2021-22 after many loss-making years of operations.
According to HTML CEO Khawar Almas Khawaja, the company’s overall performance remained “satisfactory” in 2021-22 as its revenue mix consisted of the sale of own production as well as the mill’s operation on a conversion (third-party) basis. The company is facing a “liquidity problem” for the last decade due to the “litigation with the banks”.
The auditors have been issuing the adverse opinion since 2012-13 because the company hasn’t been able to reach a liability settlement agreement with National Bank of Pakistan Ltd (NBP).
The CEO said in the latest report to shareholders that the management believed the external auditors’ adverse opinion showed their “over conscious approach” and ignored the fact that the carrying value of property, plant and equipment of HTML on the balance sheet was Rs403.28m. In contrast, the bank liability was about Rs110m or 27.3 per cent of the carrying amount of the fixed assets.
Therefore, the company believes it’ll be able to meet its obligation in the normal course of business. “The management is contesting the case in (a) court of law and expects that (the) settlement with NBP will also be achieved within (the) foreseeable future,” the report said.
Published in Dawn, October 15th, 2022
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