Eight state-owned entities added to non-functional list due to ongoing losses

ISLAMABAD: A total of eight government institutions have been added to the list of non-functional state-owned enterprises in the country at present, as revealed by the official document available with the Hum Investigation Team (HIT).

According to the details, the total loss of these federal institutions had reached more than 30 billion rupees. Officials say that the ten-year financial volume of these institutions was more than 100 billion rupees. The institutions include Pakistan Automobile Corporation (PACO), Republic Motors Limited, Sindh Engineering Limited, MORAFCO Industries Limited, Pakistan Motors Company Limited, Pakistan Gems and Jewellery Development, and Pakistan Hunting and Sports Arms Development Company, Eik Hunar Eik Nagar. These institutions have been closed for years and have been included in the privatisation list. At present, PACO is dormant and awaiting liquidation. No employee is on its payroll. The company’s mandatory expenses are borne by PIDC.

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Republic Motors Limited (RML) and Sindh Engineering Limited (SEL) have been on the privatisation list with PC since 1992. These companies are defunct or dormant but have never availed of any financial assistance from the government of Pakistan; rather, both of these companies are managing their administrative, legal, and general expenses from their own resources, i.e., rental income. On the privatisation list with PC since 1992 and is a defunct organization. Its business completely closed down, and there was no activity.

At present, their security expenses are borne by the Pakistan Industrial Development Corporation (PIDC). PHSADC has not been able to financially due to its peculiar business model as a sector development entity, i.e., insufficient revenue generation to meet the administrative and operating costs. As a result, the company has been running into consistent operating losses since its inception.

 

As per the audited financial statement of the company for the financial year 2021–22, it has sustained an accumulated operating loss of Rs 240 million and accrued liabilities of Rs 23 million, whereas the total assets are worth Rs 65 million. Furthermore, the statutory auditors of the company have expressed doubts over the ability of the company to continue as a going concern.

Furthermore, the liabilities are accruing continuously due to its negligible operations, high administrative and operating costs, and non-availability of funds. Presently, a number of court cases filed by the employees for the recovery of arrears of salary are pending in different courts. The company’s office rent agreement has expired due to non-payment of monthly rent.

The company’s website and official emails have been suspended due to non-payment of domain renewals. Utilities will also become outstanding this month due to the non-availability of budgets. Due to the financial loss and unsustainability of AHAN, the Federal Government of Pakistan, via the Cabinet Division’s notification dated December 23, 2019, decided to wind up or liquidate Aik Hunar Aik Nagar.

Thereafter, certain statutory requirements that were required to be met before formally applying for liquidation or winding up the company were completed. Following this, an application for revocation of the licence of the company was made to SECP, and consequently, the licence of the company has been revoked.

Subsequently, another application seeking to strike off the name of Aik Hunar Aik Nagar from the register of companies by availing of the easy exit scheme as provisioned under Section 426 of the Companies Act 2017 has been made to the Security & Exchange Commission of Pakistan, which is pending for consideration.

Hence, Aik Hunar Aik Nagar has completed all statutory obligations to ensure compliance with the decision of the Federal Cabinet regarding the winding up or liquidation of Aik Hunar Aik Nagar.

Zahid Gishkori