The Pakistan Engineering Company Limited (PECO) Board of Directors (BoD) has announced a rights issue worth Rs284.5 million to address the company’s financial challenges. The move aims to stabilize operations and rectify the damages caused by years of alleged mismanagement under former managing director (MD) Mairaj Anis Ariff.
In a notice to the Pakistan Stock Exchange (PSX) and a press statement, the BoD detailed the issuance of shares to existing shareholders at a price significantly below the market value. The board also approved five years of pending financial accounts, which will be presented for approval during a general body meeting on February 17, 2025.
“This marks a turning point for PECO,” stated Chairman Mirza Mahmood Ahmad. “By approving these accounts, we are re-establishing transparency, accountability, and laying the groundwork for PECO’s revival.”
The financial crisis stems from what the board termed “catastrophic mismanagement” during Ariff’s tenure, which resulted in losses exceeding Rs1.2 billion. Ariff, a nominee of the Ministry of Industries and Production, allegedly disregarded directives from the Ministry of Industries, the Securities and Exchange Commission of Pakistan (SECP), and the Ministry of Law. The company’s accounts remained unaudited for over four years, and no Annual General Meetings (AGMs) were held during this time.
This negligence led to PECO’s placement on the PSX defaulters’ list and rendered the company unable to meet financial obligations. Essential assets deteriorated, trade receivables worth hundreds of millions were depleted, and the company defaulted on payments to suppliers and financial institutions. Operations came to a halt, and the workforce was reduced from 484 employees to just 34.
Significant progress has been made since Ariff’s removal in 2022, facilitated by intervention from the PDM government led by then-Prime Minister Shehbaz Sharif. The restored board has worked to rebuild financial records, re-establish systems, and repair the company’s reputation.
To address the liquidity crisis, the rights issue will offer one share for every two shares held at Rs100 per share, including a Rs90 premium, generating Rs284.5 million. The funds will be directed toward settling overdue liabilities, clearing recovery suits, paying utility bills, and restarting operational activities.
“These measures are critical to ensure PECO’s revival, prevent future mismanagement, and create significant employment opportunities,” the board stated.
The funds will also be used to maintain day-to-day administrative functions and invest in income-generating avenues to support operational expenses. The discounted offer price is designed to encourage shareholder participation and secure the capital needed for the company’s recovery.
PECO’s board remains optimistic about the company’s future, emphasizing that these reforms are vital for restoring its former status and safeguarding its operations against further disruptions.
