Sitara Peroxide Ltd is a chemical plant that has not been operational almost all year. On December 10, 2023, the company informed the Pakistan Stock Exchange (PSX) that the suspension of production had been extended for another 30 days. The company quoted repair work and the replacement of heavy cables as the reason for the plant shutdown.
Previously, in a letter dated October 13, 2023, the company secretary Mazhar Ali Khan said the company would pause production for a month due to a theft incident. According to the letter, some heavy electrical cables worth Rs 65 million had been stolen, and an FIR along with an insurance claim, had been filed.
The suspension was first extended for another 30 days in November, as seen in an announcement issued by the company on November 7, 2023.
The most recent notification highlights that the company was not able to fix the problem in the last two months and would be taking another 30 days to resume operations.
However, the company had been struggling much before the robbery. The company has not resumed production since June 2023, which was before the robbery in October 2023.
In fact, when the company released its financial results of the fiscal year ended June 30, 2023, it was revealed that Sitara Peroxide had only been operational from July to September in 2022 and March to June in 2023. That means the plant was only operational between five to six odd months in the last financial year.
According to the company’s financial statements, it defaulted on the installments of long term financing and rental payments of sukuks. The company’s material uncertainty has proven to be a roadblock in production. Consequently, Sitara Peroxide reported a gross loss of Rs 273.4 million and a net loss of Rs 792.8 million in the financial year 2023.
In January 2023, Sitara Peroxide temporarily halted production due to the quickly dwindling production capacity of the plant. This was due to a series of unfortunate circumstances: from the economic downturn that Pakistan experienced this year, to limited access to raw materials from the non-clearance of L/Cs due to forex shortage, to overdue plant maintenance.
This shutdown was expected to last for 30 days, however, on February 14, 2023, the plant closure was extended for another 10 days. Finally, on March 2, 2023, Sitara Peroxide finally resumed plant activity and production. Not for too long though.
According to the financial report for fiscal year 2023, the chemical plant has been closed since June 2023, however, no notification regarding the closure in June was issued to the PSX.
On July 7, 2023, the company announced that it was once again temporarily suspending production activity due to the non-availability of chemicals and raw materials. This temporary closure was supposed to be two weeks long but lo and behold, on July 24, the suspension was extended for another 14 days.
On August 16, 2023, the closure was extended for an additional three weeks, and again for another month in September. Then October rolled around, and an already struggling Sitara Peroxide, which we can assume was still nowhere ready to resume production, was dealt yet another unfortunate hand, with the theft of electrical cables.
The company has not been operational for a single month in the current fiscal year and now the Sitara Peroxide’s company profile on the PSX features a bright red sign that reads “DEFAULTER” in all upper-case bold fonts.
Will the company carry this baggage over to the next year or will it make this almost chronic ‘temporary’ closure a permanent one?
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