KARACHI, Feb 4: Globe Textile Mills Limited -- a stock market listed spinning mill -- which finds itself deep in deficit has decided to cash in on the price of land in Karachi, while the going is still good.

The company informed investors on Monday that it intended to sell all of the land; mill buildings and residential quarters, which together stood in the books at the value of Rs336 million, including the price of land which was re-valued at Rs31 million, from the original cost of scarcely more than Rs1 million. According to the company the approximate market price of land and building, located in the Landhi Industrial Area, Karachi, would be around Rs600 million.

The financial results of Globe Textile Mills, for the year ended on June 30, 2007 announced on January 12, showed loss in the sum of Rs102 million, almost twice the loss of Rs507 million suffered by the company the previous year. The statement did not post the accumulated deficit that the company carried on its balance-sheet. But the notice released by the company on Monday stated that the “directors decided to close the unit in April 2006 and there is no activity at all since then”. The accounts for the latest year showed sales at Rs200 million, compared to sales of Rs500 million last year which ought to be the clearance sale of available finished goods, remaining in the godowns. The ‘financial and other expenses’ for the year stood at Rs32 million, though the previous year, a staggering sum of Rs420 million had been booked under that account, which suggested that the balance-sheet was saddled with heavy debts.

The company stated on Monday that out of the sale proceeds of land and building, the company intended to clear its outstanding liabilities ‘other than those of directors and related parties’.

Of what would remain after the settlement of dues, the directors propose to establish an open-end spinning unit by acquiring ‘cheaper land at Nooriabad or any other suitable location’. The cost of the new project was estimated at Rs100 million, of which 30 per cent would be financed by equity and 70 per cent through debts.

The expected time of completion of the new project has been visualised at June 30, 2010. Annual general meeting (AGM) of shareholders is scheduled for Wednesday, Feb 6, but the proposed relocation of the unit is to be discussed at the company’s extraordinary general meeting to be held on February 26. Shareholders would of course put forward their views about the directors’ decision at the AGM. But there is no excitement over the company’s prognosis, which is represented by the market price of the share in the company, at the Karachi Stock Exchange, displaying a discount of about 30 per cent. The company sits on the ‘defaulters’ counter’. The company has empowered Mr. Arshad Arif, a director of the company and Mr Arif Haji Habib to preside over the transaction. Lest someone gets a wrong notion, it may be clarified that Mr. Arif Haji Habib, the chief executive of Globe Textile Mills should not be confused with the old timer, stock broker, Mr. Arif Habib.