Pakistan-based Azgard Nine Ltd (ANL), one of the largest denim products company by sales in Pakistan, continues to be in the grip of liquidity crisis as there is strong resistance to fresh working capital loans from the lenders, who have also held up its asset sale plans.

Operating at sub-optimum capacities due to serious working capital crunch, the company posted a consolidated loss after tax of Pk Rs 427.72 million in quarter ended September 2013, although down from the year ago period when it had posted a loss after tax of Rs 1,270 million. Losses have been narrowed down on back of cost cutting and price changes.

The company’s debt restructuring agreement with the banks didn’t materialize completely, preventing ANL from achieving optimum utilization of production capacity. ANL was supposed to receive Rs 926.8 million for working capital purposes as part of the agreement through which the holding in Agritech Ltd (AGL) was disposed off. The company had decided to divest 100 per cent stake in AGL. However, it received only Rs 226.8 million as 20 million shares out of total number of shares to be sold were not released by Dubai Islamic Bank Pakistan Ltd.  ANL has now started second round of restructuring and is eagerly waiting for the rest of Rs 700 million.

In addition, the company has also faced challenges such as power outages and extreme increase in input costs.

The management of the company however hopes to turn around the affairs of the company through second round of restructuring, the development of an improved product mix and cost cutting.