Suhail Jute struggles with operational resumption

January 06, 2024 (MLN): Suhail Jute Mills Limited (PSX: SUHJ) continues to face significant challenges in its efforts to resume commercial operations, citing difficulties in securing adequate financing for working capital and settling outstanding obligations to creditors.

The aforesaid information was disseminated through the Progress Report of the Company today.

Despite the company's best efforts, there has been no meaningful progress in respect of the sale of land in the quarter under report.

The company attributes the lack of progress in land sales to the political and economic uncertainties currently affecting the country, particularly in Khyber Pakhtunkhwa.

"The Company has assets that have become available for disposal as a consequence of the Merger of (Colony) Sarhad Textile Mills Ltd, with and into, Suhail Jute Mills Limited.

Additionally, the Company owns a fully functional Jute Manufacturing facility, which has been maintained in running order.

The existing unit is capable of generating revenue, once working capital becomes available, and commercial production recommences.

As reported earlier, the Plan was presented to the SECP and the viability of the plan was accepted by the SECP after being duly scrutinized.

Based on their recognition of the viability of the proposed Plan, the SECP, on 18 April 2023, concluded their proceedings against the Company initiated under Section 304 of the Companies Act 2017.

The Plan for Land development involves the conversion of existing Land to smaller-sized industrial plots.

This proposal entails the outright sale of 20 acres of land for approximately RS 480 million, with the funds generated from the sale, in turn, being applied to the costs of converting576 kanals of Land into Industrial plots of different sizes; it is estimated that the proceeds from the sale of plots would be approximately RS 2.5 Billion.

As indicated in the plan, the physical infrastructure required to divide the subject land into plots requires initial financial outlays, which, was to be generated by the outright sale of a parcel of land of 20 Acres.

It is projected that the finances generated from the sale of land would be sufficient to cover the most pressing and immediate liabilities and leave the Company with sufficient margin to raise working capital for reviving commercial operations.

In any event, the plotting and sale of land would not impact the existing jute manufacturing and ancillary facilities, which remain intact.

The principal sponsors continued to substantially increase their financial stake in the Company and have injected further funds to keep the Company afloat during the period under report.

As is evident from the record, the sponsors have financially sustained the Company during the entire time it has remained nonoperational and are most interested in being able to restart operations to recoup their investment and benefit all stakeholders.

We are encouraged by the recent trend towards lower mark- up rates and economic stability and are making strenuous efforts to materialize the plan to generate the necessary funds to sustain and revive the commercial operations”, the reported added.