Peco seeks revival after years of mismanagement, Rs1.2bn losses

KARACHI: Pakistan Engineering Company Limited (Peco), a publicly listed firm, has approved five years of delayed financial accounts, marking a pivotal step towards recovery after years of operational and financial mismanagement. The accounts, reflecting accumulated losses of Rs1.2 billion, will be presented for shareholder approval at a general meeting scheduled for February 17, said a statement on Tuesday.

Peco faced operational collapse due to severe governance failures, including disregard for directives from regulatory authorities and ministries. During the previous management’s tenure, per the statement, board members were barred from company premises, and financial accounts were operated without legal authorisation. The company’s accounts went unaudited for over four years, annual general meetings (AGMs) were not convened, and tax returns were left unfiled, leading to its placement on the Pakistan Stock Exchange’s (PSX) defaulters’ list.

The neglect extended to financial mismanagement, with trade receivables worth hundreds of millions, stock-in-trade and creditors’ balances consumed to cover operational losses. Defaults to financial institutions and suppliers further damaged the company’s creditworthiness. These issues culminated in the retrenchment of nearly 450 workers, reducing the workforce to just 34 employees, and a near-total halt in operations.

The newly restored board of directors has focused on reversing these setbacks by reconstructing financial records, stabilising operations and re-establishing governance protocols. “This is a tragic example of the damage caused by unchecked mismanagement,” said PECO Chairperson Mirza Mahmood Ahmad, adding that the latest development marks a “turning point” for the company.

As part of its recovery strategy, the board announced plans for a rights issue to address the company’s liquidity crisis and fund overdue liabilities. The capital raised will also support operational stabilisation and provide shareholders an opportunity to contribute to Peco’s turnaround.

The revival efforts aim to restore Peco’s historic prominence as a leading industrial player and generate new employment opportunities.