Chenab Limited Announces Financial Position Amid Winding-Up Proceedings

Karachi, Chenab Limited, currently in the process of winding up under the orders of the Honourable Lahore High Court, has disclosed its financial position as of March 31, 2021, alongside details of a proposed scheme of arrangement aimed at reversing the winding-up order. The financial statements reveal a complex picture of liabilities, assets, and commitments as the company navigates through its legal and financial challenges.

The financial statements detail the company’s share capital and reserves, with an issued, subscribed, and paid-up capital of Rs. 1,150,000,000 and cumulative preference shares amounting to Rs. 800,000,000. Despite substantial assets, including property, plant, and equipment valued at over Rs. 9 billion, and a mix of non-current and current assets totaling approximately Rs. 10.8 billion, the company faces significant financial strain, as evidenced by revenue reserves in deficit by over Rs. 9 billion and a substantial volume of current liabilities exceeding Rs. 10 billion.

In response to its financial difficulties, Chenab Limited has outlined a scheme of arrangement approved by 100% of its contributories/shareholders and 90.40% of secured creditors. The scheme, sanctioned by the Lahore High Court in September 2021, involves the bifurcation of the company’s principal debt into Tier 1 and Tier 2, with repayment schedules extending up to 14 years from the effective date of the scheme. This plan also includes proposals for the disposal of non-core assets, rescheduling of loans, additional working capital facilities, and the induction of fresh equity aimed at revitalizing the company’s operations and financial health.

The company’s financial disclosures also cover its interim statement of profit or loss, comprehensive income, and cash flows for the nine months ended March 31, 2021. Notably, the financial summary does not specify sales, gross loss, or operating loss figures, reflecting the company’s suspended commercial activities due to the winding-up order and the ongoing legal proceedings. Nevertheless, the disclosed finance costs, adjustments for depreciation, and other income highlight the ongoing financial management efforts amidst the company’s restructuring process.

Chenab Limited’s financial statements serve as a critical update for its shareholders, creditors, and other stakeholders, offering insight into the company’s efforts to navigate its challenging financial and legal landscape. With the scheme of arrangement now in place, the company expresses confidence in its ability to continue as a going concern, aiming for a turnaround that would enable it to resume its principal business activities in the textile sector.