Kohinoor Power and Saritow spinning postpone planned merger due to economic barriers

Kohinoor Power Company Limited, based in Pakistan, on Monday announced that it would not proceed with the proposed merger with Saritow Spinning Mills Limited, citing adverse economic and operational conditions. The issue was made through a notice issued to Pakistan Stock Exchange (PSX).

The said notice states that the BoDs of both the companies had met on September 30, 2024 and decided to withdraw the approval given earlier for the proposed amalgamation. The proposal of merger was approved in-principal in October 2018.

KOHP said the decision came upon an all-rounded review of the present economic situation and the financial position of SSML. SSML has since stopped production from February 2024. The statement noted that, in the current scenario, the envisaged merger benefits would not be achieved .
The company appreciated its shareholders for the supportive aspect and continued to say that it will consider other strategic options going forward.

The fiscal year ending June 30, 2023, and the first half of the current fiscal year had been such disappointing times for SSML as it faced losses running into the millions. In such circumstances, the management firm decided to close down operations as a way of not witnessing further deterioration in terms of finance.

The company had, at the start, attributed its plight to a combination of falling sales rates and volumes coupled with rising input costs. Electricity cost has doubled it is difficult for the company since high markup rates have gone up to 25%. So after considering all these issues, the management has come to the conclusion that it is just apt to close down the unit temporarily.