Auditor doubts loss-making Kinsteel and Perwaja abilities to continue ops

(The Star) – The auditor of loss-making Kinsteel Bhd and its unit Perwaja Holdings Bhd, Crowe Howath has expressed doubts about the group’s ability to remain in business, as the two steelmakers struggled with deepening losses and mounting debts.

Kinsteel’s current liabilities at group level exceeded its current assets by RM646mil while the gap was RM430mil at company level.

Crowe Howath in a statement posted on Bursa Malaysia by Kinsteel, said this indicated a “material uncertainty” which might cast significant doubt about the group’s ability to continue as an ongoing concern.

The auditor also cast similar concerns about Perwaja after the company continued to miss paying its debt obligations.

Perwaja’s total borrowings amounted to RM1.1bil as at June 30. The company is currently in the midst of restructuring its debts and is required to submit a plan by the end of the month.

Crowe Howath said it had also raised concerns to the management about the validity and recording of certain transactions.

It said it had not been able to verify certain transactions by Pewaja from July 1 to Sept 30 last year, which amounted to about RM12.8mil.

“We have not been able to obtain sufficient appropriate audit evidence to provide a basis of an audit opinion,” it said.

Meanwhile, in a separate filing, the external auditor of another loss-making steel manufacturer Lion Corp Bhd had said the company might not be able to continue its operation if it failed to renew or extend repayment of existing borrowings among others.

Messrs Ong Boon Bah & Co said Lion Corp incurred a net loss for the financial year ended June 30, 2015, attributed to the owners of the company of RM523mil.