RM8.59m loss due to liquidity problems

PETALING JAYA: A subsidiary of the Perak state economic development corporation, Perak Industrial Resources Sdn Bhd, accumulated losses amounting to RM8.59 million, according to the 2012 Auditor-General’s (AG) report.

“The company’s financial position was not satisfactory due to the company encountering liquidity problems and declining revenues in 2011,” revealed the report.

The report highlighted that the company has not been able to get a return on its investment.

“This is based on the percentage return on assets and negative equity for the year 2011 whereby the company was unable to accommodate its responsibilities with the total assets,” said the report.

Perak Industrial Resources Sdn Bhd is a wholly owned subsidiary of the Perak State Economic Development Corporation (SEDC) holding 100% equity.

Established on December 4 1997 under the Companies Act 1965. The principal activity of the company is to assist in development of the domestic economy through the promotion of investments and ventures into new businesses.

By the end of 2011, the company operated with an authorised share capital of RM25 million and paid-up share capital of RM2.

The report stated that the management fee of subsidiary companies has not been received on a regular basis.

“Also, there was invasion of squatters in industrial estate lots and the standard operating procedure (SOP) used was not approved by the Board,” noted the report.

It was recommended that the SEDC assess and review the position of all its subsidiary companies to determine those that are no longer active and incapable of paying the company’s management fee.

“SEDC must also ensure the company’s SOP is approved by the Board of Directors,” it said.