BMR initiative to spur SPL business revival
As per the company's correspondence to Pakistan Stock Exchange in its Half Yearly Report of 2023, SPL's financials reveal a sharp decline in net sales, plummeting to just Rs 14.9 million during the half-year, compared to Rs 385.7 million in the same period a year earlier. The drastic fall is primarily attributed to the plant's shutdown, which has remained non-operational since June 12, 2023. Despite this, the company managed to narrow its losses from Rs 220 million last year to Rs 76.37 million, aided by reduced depreciation and a one-time gain of Rs 84.8 million from the sale of non-current assets.
The gross loss stood at Rs 77.5 million, slightly improved from Rs 112.8 million a year ago. The loss per share also shrank from Rs 3.99 to Rs 1.39. However, liquidity pressures persist—current liabilities exceed current assets by an staggering Rs 834 million, and the firm remains unable to meet debt obligations on time.
In a bid to reverse the fortunes, SPL has pinned its revival strategy on a multi-pronged BMR (balancing, modernization and replacement) initiative, which includes a transition to modern slurry bed catalyst technology from the outdated fixed bed system. This upgrade is projected to enhance annual production capacity from 30,000 to 40,000 tons, improve yield efficiency, and significantly reduce costs. The company has already entered negotiations with international technology and equipment suppliers and made initial advance payments to that effect.
SPL CEO Imran Ghafoor stated that the management aims to 'make the company debt-free and competitive in the long run,' while acknowledging the current economic uncertainties. He also disclosed a rescheduling of a Rs 167 million Sukuk facility, with Rs 296.7 million in accrued markup potentially being waived—conditional upon timely payments under new terms.
To finance the BMR, the sponsors plan to inject Rs 355 million by selling assets from an associated company, in addition to seeking fresh bank loans.
The management emphasizes that resuming operations under the current obsolete setup, combined with high RLNG and power tariffs would lead to 'unsustainable operational losses.' Therefore, the transition through BMR is being pursued not only as a revival strategy but as an existential necessity. Despite its current struggles, the board has reaffirmed its commitment to long-term sustainability, thanking stakeholders for their continued patience.
Copyright Business Recorder, 2025
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