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Suhail Jute’s land development plan remains stalled in 3QFY24

Suhail Jute's land development plan remains stalled in 3QFY24
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April 18, 2024 (MLN): Suhail Jute Mills Limited (PSX: SUHJ) has reported no progress in its land development plan aimed at addressing most of its liabilities during the quarter ended March 31, 2024 (3QFY24) as investors are showing hesitancy due to economic and political uncertainties.

General Elections were held during the quarter under report and there was intense political activity with potential investors eschewing long-term commitments involving large amounts of financial resources.

According to the company, these circumstances still prevail, due to the acute political and economic uncertainties prevailing in the country and especially in Khyber-Pakhtunkhwa.

As reported from time to time, SIHJ has assets that have become available for disposal, as a consequence of the Merger of (Colony) Sarhad Textile Mills Ltd, with and into the company.

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

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

As indicated earlier, the company had prepared a plan for Land development involving the conversion of existing Land to smaller-sized industrial plots.

This proposal entails the outright sale of 20 acres of land for approximately Rs480 million, with the funds generated from the sale applied to the costs of converting 576 kanals of land into Industrial plots of different sizes.

The process of conversion and sale of the industrial plots would take effect over a three-year period.

Moreover, it is estimated that the proceeds from the sale of plots would be approximately Rs2.5 billion.

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

This amount 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.

“As you are aware, the plan outlined above was presented to the SECP and was duly scrutinized by them based on their recognition of the viability of the plan, the SECP, on 18 April 2023, concluded their proceedings against the company initiated under Section 304 of the Companies Act 2017,” it added.

As stated earlier, the restart of commercial operations hinges entirely upon our ability to raise adequate financing for working capital and the discharge of outstanding obligations to creditors principal among which is the settlement of obligations to institutions who have secured Decrees from the Courts.

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.

Moreover, the sponsors have financially sustained the company during the entire time it remained non-operational and are eagerly anticipating the company's ability to restart operations to recover their investment and reap benefits.

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Posted on: 2024-04-18T12:27:04+05:00