By mid-2023, Chakwal Spinning Mills was a company seemingly on its last legs, its share price hovering at a mere Rs2.06 per share in trading on the Pakistan Stock Exchange. The business had been dormant since 2017, racking up losses, and its auditors had all but written it off as a lost cause. Yet, within a year, its stock skyrocketed to an eye-popping Rs156.33 — a 75-fold increase. What happened?
Chakwal Spinning Mills, a former textile stalwart, had been teetering on the brink of insolvency. With operations shuttered since 2017 and its factory leased to Yousuf Weaving Mills Ltd, the company was plagued by mounting debts and no revenue stream to speak of. By June 2023, it had accumulated losses of Rs893 million, pushing its equity deep into the red, at negative Rs125 million. The assets on its balance sheet, worth Rs737 million, were dwarfed by liabilities totaling Rs862 million, of which Rs567 million were short-term borrowings. The situation was so dire that auditors questioned its ability to continue as a going concern.
In an attempt to stave off complete collapse, the company pursued a reverse merger which went nowhere. It then tried stopgap measures, including allowing its premises to be rented out to other companies in a desperate bid for revenue generation. Yet by March 2020, even this modest income had dried up, and the company was left with nothing but a grim outlook.
Fast forward to December 2023, and the company announced that it had revalued its property, plant, and equipment, transforming its negative equity into a positive figure. It also signed a memorandum of understanding with an IT firm, sparking hopes of a turnaround. New auditors lifted their qualified opinion, and rumours swirled about a potential debt restructuring deal with its banks.
In July 2024, the company officially rebranded itself as Quantum Cloud & AI Technologies Ltd, reflecting its new direction and ambitions. By then, the stock had already begun its ascent, rising from Rs2.06 in November 2023 to Rs 50.31 by July 2024 — a staggering 25-fold increase. But the market was not done yet. After the name change and the introduction of a new ticker symbol, “CLOUD,” the stock hit Rs156.33 in August 2024, leaving analysts scratching their heads. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
