Kohinoor Power, Saritow Spinning cancel proposed amalgamation citing economic challenges

Kohinoor Power Company Limited (KOHP) on Monday announced that it is no longer pursuing a merger with Saritow Spinning Mills Limited (SSML), citing economic and operational conditions.

The listed company shared the development in a notice to the Pakistan Stock Exchange (PSX).

“The Boards of Directors (BoD) of Kohinoor Power Company Limited (KPCL) and Saritow Spinning Mills Limited (SSML) wish to inform stakeholders that, during their respective meetings held on September 30, they have decided to retract the previously granted approval for the proposed amalgamation of KPCL into SSML,” read the notice.

In October 2018, the KOHP board had given in-principal approval for a merger with and into SMML, another listed company.

“This decision follows a thorough review of the current economic conditions and the financial status of SSML, which has ceased production as of February 2024. Given these circumstances, it has been concluded that the anticipated benefits of the merger are no longer achievable,” KOHP said in its notice on Monday.

“We appreciate the ongoing support of our shareholders and will continue to evaluate strategic options moving forward,” it added.

Earlier in February, SSML, which suffered heavy losses during the year ending June 30, 2023, and thereafter during the first half ending December 31, 2023, decided to close the unit.

“The main factor contributing to the decline is a decrease in sales rate and volume coupled with ever-increasing input cost. The electricity cost is doubled during the period along with exceptional markup rates which reached 25% level make the operations of the company quite hard,” the company said in its back then.

“In order to avoid further losses, the management of the company has decided to close the unit for the time being with immediate effect,” it added.