Haseeb Waqas Sugar Mills: A Bitter End?

July 23,2025(MLN): Haseeb Waqas Sugar Mills Limited (PSX: HWQS), long stuck in operational limbo, is now inching toward delisting from the Pakistan Stock Exchange (PSX). But behind the official letters and regulatory filings, a deeper story is unfolding, one that raises uneasy questions about transparency, timing, and whether minority shareholders are being quietly swept aside.

HWQS, a Lahore-based sugar manufacturing company incorporated in 1992, has formally expressed its intent to delist from the PSX following prolonged operational and financial turmoil, subject to the approval of a buyback price to be finalized in the upcoming Board meeting scheduled for July 25, 2025.

But while the company is heading for the exit door, it leaves behind a trail of concerns, ranging from late disclosures and selective “disclosure of interests” to unclear handling of associated company shares and audit red flags.

From Legal Wrangling to Operational Paralysis

The unraveling of HWQS began when it attempted to relocate its mill from Nankana to Alipur, Muzaffargarh, a move it claimed would boost efficiency and profitability. However, competitors challenged the relocation in the Lahore High Court, ultimately leading to a Supreme Court order directing the company to dismantle and return to its original site.

The legal setbacks left the mill dormant for years, pushing it into financial distress. Despite obtaining regulatory approval in February 2023 to operate at the new location, efforts to revive operations have since faltered.

Management cited failure to secure working capital, even after plans for the sale of off-balance sheet assets, leaving no viable option but delisting.

Buyback or Bypass?

As part of the delisting process, PSX regulations mandate that majority sponsors offer a buyback of shares to minority investors at a price determined by the exchange.

The company, in a letter dated June 26, 2025, affirmed its willingness to comply.

Just days after trading in Haseeb Waqas Sugar Mills’ shares resumed on April 3, 2023, following a prolonged suspension due to multiple regulatory non-compliances, key insiders, Mian Abdullah Ilyas and Mian Haseeb Ilyas, swiftly bought 1.65 million shares on the open market at an average price of Rs6.55 per share, a move that felt far from coincidental.

As of writing, the share is being traded at Rs29.80.

No formal buyback notice had been issued at that time. Should insiders be allowed to accumulate such large volumes before a formal delisting plan is finalized?

The Silent Transfer:

Digging deeper, an even more curious development surfaces. Abdullah Sugar Mills, an associated private firm, quietly divested its 8.955% stake in HWQS to Yousuf Ilyas without any material disclosure to PSX or shareholders. This lack of communication further clouds the transparency of insider dealings during a critical time when shareholder confidence is already on edge.

Going Concern or Going, Gone?

While HWQS’s management claimed optimism in their 2024 annual report, citing upgraded capacity from 10,000 to 14,000 TPD and projected sugar price surges, these statements contrast sharply with their plea for delisting due to a lack of funds.

Worse, this capacity upgrade was never disclosed as material information to the exchange, despite its potential to influence investor decisions. The silence on such a significant development adds to the credibility gap between what the company reports and what it withholds.

In addition, the company owns around 72 acres of prime land near the motorway in Nankana Sahib, valued at roughly Rs1.75bn after discounts. Despite a Rs4.5bn debt load, it holds deferred tax assets worth Rs1.68bn from accumulated losses.

Audit Alarms:

According to the company’s annual report 2024, the auditors have flagged a laundry list of serious concerns.

 These include unfunded gratuity liabilities amounting to Rs17.7 million with no actuarial valuation, sales tax defaults that led to the company being blacklisted by the FBR since 2018, and defaults on long-term loans, resulting in at least five ongoing legal proceedings.

Additionally, there are unresolved issues such as unclaimed dividends and weak confirmations on third-party payables.

While management maintains that these matters will be addressed once the mill resumes operations, such assurances appear overly optimistic, especially when the delisting plan itself suggests that a restart is not viable in the foreseeable future.

A Need for Vigilance

The regulatory bodies must now actively ensure transparency, equity, and full disclosure throughout the process.

The events surrounding HWQS highlight a familiar script: companies are temporarily restored, insiders quietly accumulate shares, and then just as quietly exit the exchange, leaving retail investors bruised.

Conclusion

The saga of Haseeb Waqas Sugar Mills isn't just about one company failing; it's a litmus test for corporate governance in Pakistan's capital markets. Retail investors, who once placed their trust in a listed entity, are now at risk of being shortchanged.

Unless regulators step in assertively, such delisting cases may set a dangerous precedent, where exits are made easy for sponsors, but costly for the public.

 Copyright Mettis Link News