Illegal takeovers and declining financial performance push investors away

Big troubles at K-Electric have finally come to light. The company is caught up in legal battles and facing serious performance issues. Because of all these problems, investors are no longer interested in K-Electric.

The Financial Times has released a detailed report on K-Electric’s (KE) performance and current situation. Financial Times is an internationally respected daily newspaper that is read by investors all over the world.

According to the Financial Times report, KE is plagued by legal disputes and continuous poor performance, resulting in its failure to attract investors.

K-Electric is also currently entangled in a legal conflict. The dispute revolves around management control of the company between Saudi minority investors and Pakistani majority investors. A minority investor has allegedly taken control of KE, while the majority investor is reportedly being prevented from even sitting on the board. The minority investor is now allegedly threatening the Government of Pakistan and the Special Investment Facilitation Council.

K-Electric’s performance has also been disappointing for consumers. An external confidential report related to distribution companies has revealed how KE imposes additional financial burdens on Karachi consumers to cover its internal inefficiencies. KE has failed to work on improving the electricity transmission system, including power generation.

In terms of financial performance, the trend of KE’s stock price over the past one, three, and five years compared to the Karachi Stock Exchange Index shows that investors have lost confidence in the current management of K-Electric.

GOP is a major stakeholder of KE. GOP has not received any dividends from KE and KE stock price has not moved. In fact, GOP has been paying KE around PKR200 billion in subsidies each year! These massive subsidies from GOP to KE partly emanate from lack of strategic leadership and poor management.

Overall, K-Electric is facing a challenging situation due to legal disputes, alleged illegal takeover, and continuous poor management performance. This situation has not only alienated investors but has also negatively impacted the citizens of Karachi. The relevant authorities must take serious notice of this situation and find solutions to these problems.