Service Fabrics Limited has said that it considers the placement of its shares in the defaulter's segment by the Pakistan Stock Exchange (PSX) as a "unilateral" interpretation of PSX's regulations.
This was stated by the company in a rejoinder to the PSX notice on Wednesday. Since being placed on the defaulter's segment, the company has lost 4.70% of its share value in the bourse.
“While reserving its right to initiate appropriate proceedings for the potential untold damage to the investors and the good name of the company, its sponsors and directors by this blindsided action; the company informs the shareholders that the above has been done without any consideration to the notices of material information.
“The company considers that these material notices would have given a clearer picture about the business affairs of the company, which, unfortunately, has not been the case,” read the company’s rejoinder.
The PSX in its notice on Tuesday had notified all concerned that “as a consequence of defaults of Clauses 5.11.1 (b) & (i) of the PSX regulations i.e. suspended commercial production/business operation in its principal line of business for a continuous period of one year and adverse opinion of the statutory auditor in the audit report for the year ended June 30, 2021, M/s Services Fabrics Limited (SERF) will be placed in the Defaulter Segment with effect from Wednesday, November 10th, 2021”.
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Meanwhile, SERF responded that the matter of suspension of commercial production/business operations under Regulation 5.11.1(b) is not applicable to it.
It said that the memorandum for the change of the principal line of the company's business stands submitted to CRO, SECP, Lahore since July 09.2021. It informed that the “certified copy of the same is awaited due to the delay in the receipt of the discharge certificate from a bank, which is expected shortly.”
It added that with regards to the new business activities of the company, the company has already commenced the following business operations/activities, which include; calcium carbide project, super capacitor project, and investment in GCIL.
On Regulation 5.11.1 (i), SERF responded that the matter of the qualified opinion on the Going Concern or adverse opinion in the audit opinion pertains to the financial year ended June 30th 2021.
The company said that the existence of the opinion for the past period should have been analyzed from the post-balance sheet developments.
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“Since then the company has undertaken the implementation of the revival business processes which became possible when the Lahore High Court disposed of the matter of winding up against a company on June 28th, 2021, i.e. just two days before the close of the last financial year,” stated the company.
It added the fact that the shareholders have put their faith in the future prospects of the company by subscribing to the right shares to the tune of Rs2.314 billion is sufficient proof that the investors disregarded the existence of any qualified opinion on the Going Concern or any adverse audit opinion belonging to the past period.
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