It was not long ago when Al Shaheer was seen as one of the stars of the stock exchange. The company was one of the first ones to be listed on the market which was involved in distribution and marketing of meat products for the local and international market. Now it seems that the company has been plummeting towards its demise.Â
The company touched new highs in 2016 recording highest profits in its short history and showed net profits of Rs 36 crores. This came on the back of sustained growth and profitability being seen at the company. 2023 saw the company have its worst year in its history as the company started to see its losses accumulate and reach Rs -1.8 billion leading to loss per share of Rs 5.5. The situation would have been much worse if the company had not recorded other income that it was generating which was attributed to exchange gain the company was earning due to its export business. The core business at the company had been slowly decaying and recent results would have shown a loss of Rs 2 billion if it had not been for the other income component.
While the company has seem worsening financial performance, the boardroom at the company has seen a complete meltdown as well. In the last year or so, the company has seen all of its directors resign one after another. This has taken place while the company has fired its own CEO, CFO and the company secretary has resigned as well. The last board of director elections were held on the 4th of November 2022 and seven directors were elected. From June 2023 to 2024, the company saw a mass exodus take place at the company which signalled that things were not fine. Zillay Nawab, Qaysar Alam, Babur Sultan, Sabeen Fazli and Imtiaz Jameel left the company in a span of one year. In place of the five, the new board only appointed Muhammad Altaf and Amir Shehzad who also resigned later in the year.
The board also chose to appoint a new CEO in place of Kamran Khalili who was the person responsible for taking the company to new heights in its past. Khalili also served as one of the directors and he was replaced by Muhammad Harris on the board. The last surviving director from the previous elections was Umair Khalili who was also shown the door and his place was taken by Muhammad Idress. When the dust settled, the company had no CEO, no CFO and only two directors with a company secretary named Mubasshar Asif. This was the situation that existed at the company at June end 2024. On October 11th 2024, even the remaining directors and company secretary resigned and it seemed like the company had no one in its board room.
While the financial performance was deteriorating and the board room was seeing a revolving door, the company also started to lag behind in terms of filing its accounts. The company submitted its last annual report in November of 2023 and has only filed its 1st quarter results for 2024 as far back as December of 2023. The results showed that the company had made a loss per share of Rs 2.41 where it had earned a profit just a year before. The half year accounts should have been filed by the company by February of 2024 according to the rules and regulations of Securities and Exchange Commission of Pakistan (SECP). The company asked for an extension in the date for the filing which was rejected by the regulator.
Al Shaheer seems to be fighting a war on three fronts and seems to be losing on all of them. First of all, the company is suffering from losses which have been accumulating over time. The company has also been falling behind in terms of its regulatory obligations by filing its accounts and the board room is also being deserted by the directors of the company. Al Shaheer seems to have three huge gaping wounds and does not have the resources to plug any of them properly.
Trying to rationalize and understand the reason behind the mass exodus looks to be difficult but it can be seen that there is some sort of power struggle that is going on inside the company. A board which was standing together by December end of 2023. Kamran Khalil and Umair Khalili resigned as directors in February of 2024. Kamran was also fired as the CEO and the position was left open until a new CEO was appointed. A board meeting was called on the 6th of June which was later postponed due to lack of quorum. At this point, five directors were still active and serving on the board. After this, three more directors resigned which hints towards the fact that they had reservations in regards to the agenda that was being presented in the board meetings. As three of the members abstained from attending the meetings, the quorum would not be fulfilled and no agenda items could be passed as board resolutions. Over time, it has been seen that even the two directors left have resigned which has left the whole board to be vacant for now.
In such a chaotic environment, there is some normalcy that is being restored at the company. Sunridge Foods (Private) Limited as a subsidiary of Unity Foods which chose to invest in Al Shaheer. By September of 2023, the company held 69 million shares making up 18.42% of the shareholding. The investment was a vote of confidence being shown by Sunridge in Al Shaheer which was expected to lead to mutual benefit for both the companies. Since the investment was formalized, Al Shaheer saw a free fall in their board room. Hedging some of its losses, Sunridge first chose to sell some of their stock in Al Shaheer as it sold 10 million shares in July of 2024.
Sunridge has now requested that Al Shaheer call new elections for its board. Section 133 of the Companies Act 2017 dictates that a shareholder holding more than 10% of the issued share capital can use his powers to call an Extraordinary General Meeting to discuss certain matters that they can put on the agenda. In this case, Sunridge has asked the company to hold elections as mandated under Section 159 of Companies Act 2017 which outline how elections of directors are supposed to be carried out. In the normal course of business, elections are mandated after three years which would have meant elections taking place in 2025, however, due to extenuating circumstances, they are being called early.
This announcement needs to be made by the management at the company as well, however, as it has no company secretary present, no such disclosure or announcement has been communicated to the market. The shareholders have been informed by the share registrar of the company, Central Depository Company, through an email. The elections are expected to be held on the 17th of December in Karachi and the direction the company goes in will become apparent once the elections are carried out. With a lack of financial records from December 2023 to June 2024, nothing can be said with any certainty. Hopefully, new elections would be the solution that will jump start and bring the past glory back to the company.
