struggling Fauji Foods given lifeline by seCP

COnTInuD fROM BACK PAgE

The Fauji Foundation shareholder loan to FFL is meant to enable it to meet its working capital requirements. The loan is interest free for a period of two years after which it will carry mark-up at the rate of 6 Month Kibor +2%, according to the announcement to the PSX. Fauji Foundation also has the option to convert this loan into equity capital at any time. In addition to this, another notification announced that assistance was also coming in the form of an agreement with Remount Veterinary Farms Corps (RVFC), to provide 1,250 tonnes of skimmed milk powder for the year 2022-23, according to an announcement on the PSX website posted last week. This, of course, is not the first time something like this has happened. The FFL has made a habit of needing the army to bail it out. The assistance from the RVFC is no different, since RVFC in Pakistan was established by the army college of veterinary sciences some 30 years ago. This contract, according to the announcement, is supposed to help grow both revenues and profit.

EgM decisions: The EGM on October 18th, 2022, gave its approval for the new share issue pending approval from the SECP. Now the SECP has finally given the green light to FFL to raise more equity in order to save its bleeding business.

It is interesting to note here that two new subsidiaries of the Fauji Group, namely FPCL and FFCEL, are investing 8.65 billion PKR into FFL. This suggests that the Fauji group’s problem child has become so big of a burden that it now needs the support of the remaining members of the business conglomerate as well.

Even though the company has not disclosed its financial results for the year ended December 2022, the company is again expected to post a negative net profit of at least Rs 2 billion, judging by the losses incurred in the first three quarters of the previous year. The share price of FFL increased by 4.09% during the Tuesday trading session to close Rs 4.58.