PSX suspends trading of two Diamond Group companies

LAHORE: The Pakistan Stock Exchange (PSX) on Friday suspended trading in the shares of Diamond Industries Limited (DIIL) and Shaffi Chemical Industries Limited (SHCI).

According to a notice issued by the exchange, “Trading in the shares of DIIL was suspended due to ‘adverse opinion’ in the audit report, whereas trading in the shares of SHCI was suspended owing to ‘suspension of its production and operations, non-payment of dues to the exchange and winding up of petition that was filed by the Securities and Exchange Commission of Pakistan (SECP) against the company’.”

As per the PSX, despite repeated notices on the subject matter, the DIIL and SHCI, both owned by Iftikhar Shaffi, have so far failed to rectify or remove the cause of suspension of trading in the shares.

“In view of above, PSX has decided that trading in shares of both DIIL and SHCI would remain suspended until the cause of suspension has been rectified or another period of 60 days effective from February 7, 2020.”

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The decision has been taken in exercise of the powers vested in the exchange under Sub-Section (7) of Section 19 of the Securities Act, 2015 and clause 5.11 of the PSX regulations, the notice stated.

The financial statements of DIIL audited by the independent auditors don’t give a true and fair view of the company’s affairs as of June 30, 2019.

BASIS FOR ADVERSE OPINION

The independent auditors mentioned in the report that they would like to draw attention to note 2 of the financial statements, which states: “The company is no longer a concern, therefore, these financial statements have been prepared on the basis of estimated realisable value.”

The DIIL management has estimated the realisable value equivalent to historical cost. The management is of the view that the fixed assets valued on December 31, 2014, need no further revaluation.

The independent auditors were of the opinion that the DIIL management’s estimates may need revision as changes occur in the circumstances on which the estimates are based or as a result of new information. Hence, the value declared at which the assets will be realised and liabilities will be settled may be different from those carried in the financial statements of DIIL.

The independent auditors also mentioned that the company has not complied with the requirements of section (244) of the Companies Act, 2017 regarding unclaimed dividend amounting to Rs0.433 million.

As per the independent auditors, another reason for adverse opinion is that the company has classified the financial liabilities, written off, amounting to Rs0.17 billion in year ended June 30, 2018, in “statement of comprehensive income” rather than charging the same in the “statement of profit or loss” in compliance to International Financial Reporting Standards (IFRS) as adopted in Pakistan.

“The management has not rectified the error in the current year,” the independent auditors mentioned.

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Hassan Naqvi
The writer is a staff reporter and can be reached at [email protected]
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