⚡ Flash Summary

Gulistan Textile Mills Limited’s annual report for the year ended June 30, 2025, reveals a company grappling with significant financial distress. The company reports a substantial loss of Rs.(51,667,958) compared to a profit of Rs. 735,259,823 in the previous year. This drastic shift is attributed to ongoing financial constraints and the blocking of working capital facilities by lending institutions. The company is operating under a Scheme of Arrangement sanctioned by the Sindh High Court to restructure and settle debts, with a focus on selling assets to meet obligations.

📌 Key Takeaways

• 📉 Gulistan Textile Mills reports a net loss of Rs. (51.67) million in 2025, a sharp decline from a profit of Rs. 735.26 million in 2024.
• ⚠️ The company is operating under a Scheme of Arrangement to restructure debts, sanctioned by the Sindh High Court.
• 🔒 Working capital facilities remain blocked by lending financial institutions, hampering operations.
• 🏭 All three spinning units were sold by the asset sale committee in the last year.
• 🏛️ Significant litigations with banks persist, although the Scheme of Arrangement aims for their withdrawal.
• 🚫 The Board of Directors does not recommend a dividend for the year ended June 30, 2025.
• 💼 There is a deferred liability for gratuity of Rs. 80.49 million as of June 30, 2025.
• 📉 Loss per share is reported at Rs. (2.72) compared to earnings per share of Rs. 38.73 in the previous year.
• 🏦 Major bank accounts remain blocked due to ongoing litigations.
• ⚖️ The company is involved in multiple legal battles related to the levy of infrastructure cess and income tax.
• 📉 The company carries accumulated losses of Rs. (9,626.95) million as of June 30, 2025.
• 🏦 Payable to banking companies under the scheme of arrangement stands at Rs. 8,216.83 million.
• 🔍 Auditors have expressed a qualified opinion due to the inability to verify bank balances and balances payable regarding post-employment benefits.
• ❗ The company has adopted a non-going concern basis of accounting, reflecting doubts about its ability to continue as a going concern.

🎯 Investment Thesis

Given the financial distress, qualified audit opinion, non-going concern basis, legal uncertainties, high debt, and blocked operations, a ‘SELL’ recommendation is warranted. There is significant uncertainty about the company’s future viability and ability to generate positive returns. There is a price target of zero, with a short-term time horizon.