⚡ Flash Summary

Dewan Farooque Spinning Mills Limited’s AGM held on October 27, 2025, addressed key issues including approval of the previous meeting’s minutes and the audited financial statements for the year ended June 30, 2025. The company’s net revenue has significantly decreased, resulting in a gross loss. Despite these challenges, the company is focusing on modernization by replacing outdated technology and planning further automation. Auditors expressed concerns about the company’s ability to continue as a going concern due to default in repayment of restructured liabilities.

📌 Key Takeaways

• ✅ Minutes of the preceding General Meeting held on November 28, 2024, were confirmed.
• ✅ Annual Audited Financial Statements for the year ended June 30, 2025, were approved.
• ✅ M/s. Feroze Sharif Tariq & Co. re-appointed as Statutory Auditors.
• ✅ CEO authorized to negotiate auditor remuneration.
• 📉 Net revenue decreased to Rs. 219.249 million from Rs. 446.380 million YoY.
• ❗ Gross loss of Rs. 239.680 million, compared to a profit of Rs. 441.078 million last year.
• 📉 Operating expenses decreased to Rs. 34.460 million from Rs. 41.495 million YoY.
• 🔄 Company replaced outdated ring spinning with Auto Coro spinning technology.
• 🏭 Aiming for enhanced efficiency and productivity.
• ⚙️ Planning further automation to strengthen market position.
• 🚧 Working capital constraints persist.
• 🤝 Production of yarn on contract basis continues.
• ⚠️ Auditors expressed concerns about the company’s ability to continue as a going concern.
• 💰 Markup outstanding is Rs. 208.531 million pending restructuring.
• ✅ Management expects favorable outcome on legal matters.

🎯 Investment Thesis

SELL. The company’s significant revenue decline, gross losses, and the auditor’s concerns about its ability to continue as a going concern make it a risky investment. While the company is attempting to modernize its operations, the working capital constraints and existing financial challenges present substantial obstacles. The legal matters add another layer of uncertainty. Price target is significantly lower than the current market price, reflecting the elevated risks and negative financial outlook. Time horizon: Short to medium term.