Damietta Spinning down LE641 million in FY08/09

The public-sector Damietta Spinning and Weaving Company suffered LE641 million in losses in the 2008/2009 fiscal year, according to a recently-released report by the state-run Central Audit Agency (CAA). The company’s net losses in the current 2009/2010 fiscal year, the report states, have so far reached LE21 million.

The combined losses correspond to more than 2000 times the company’s total capital — a state of affairs, which, according to the law, calls for fiscal intervention by the government.

The report also notes that the company failed to register all of its unsold inventory for the last fiscal year, pointing to a total of LE57 million worth of unsold stock compared to LE44 million the year before, representing an increase of 27 per cent. The report further finds that the company never claimed compensation for a portion of its property previously sequestered by the authorities, nor did it claim entitled tax reductions.

The spinning company was also found to have extended exceptionally high lines of credit to clients, who were later unable to meet half their contracted orders — leaving the company with some LE5 million in uncollected receivables and deficits in both its short- and long-term liabilities.

According to Damietta Spinning Chairwoman Hoda Eraqi, the company is currently applying new marketing methods in an effort to boost sales and improve its financial position.

Translated from the Arabic Edition.

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