Lahore: Kohinoor Power Company Limited (KPCL) has announced the reversal of its previously approved merger with Saritow Spinning Mills Limited (SSML), citing the economic downturn and SSML's financial instability as primary reasons. According to information available from the Pakistan Stock Exchange (PSX), the decision was formalized during the Board of Directors meeting on September 30, 2024.

The Lahore-based power generation company disclosed its financial results for the fiscal year ending June 30, 2024, highlighting a significant downturn in its financial performance. KPCL reported a revenue decline to PKR 11.118 million from PKR 17.552 million the previous year. The company also recorded a net loss of PKR 15.728 million, compared to a loss of PKR 1.699 million in the prior period. The earnings per share deteriorated from PKR -0.13 last year to PKR -1.25 this year.

In its detailed statement, KPCL attributed the worsening losses mainly to the doubtful recovery of a sales tax refund. The company's management has expressed confidence in the recovery of the stock market, which is expected to positively influence future viability. Additionally, KPCL confirmed that its business operations have no adverse environmental impacts and no significant trends or factors are expected to affect future business performance.

KPCL has retracted its merger approval with SSML after a thorough review of SSML's ceased production since February 2024 and current economic conditions. The board concluded that the anticipated benefits of the merger are no longer achievable. This decision marks a significant shift in KPCL's strategic direction, as the company now looks to explore other options to enhance shareholder value.

Further insights into KPCL's financial health were provided, noting that the company is nearly debt-free and has sufficient resources to meet its obligations. Despite the challenges, KPCL is actively engaging with social bodies and authorities to support community programs and projects. This includes establishing robust internal controls to ensure operational efficiency and compliance with statutory laws.

As KPCL navigates through these challenging times, the company remains committed to maintaining transparent communication with its shareholders and seeking strategic avenues to stabilize and grow its operations.