Lotte Chemical Pakistan closes its operations for 10 days

Lotte Chemical Pakistan has announced to suspend its plant operations for 10 days from January 15, 2024, to January 24, 2024.

As per a notice sent to the Pakistan Stock Exchange (PSX) on Monday, Lotte Chemical Pakistan made the plant suspension decision to manage inventory efficiently. The company’s reported financials reveal an increase in stock-in-trade in previous years, as the figure below reflects.

Lotte Chemical’s financials suggest an increase in stock-in-trade value by 45.83% from 2021 to 2022 and by 73.42% from 2022 to nine months ending September 2023. Additionally, stock-in-trade also reduced the cash flows from operations in 2021 and 2022 – reflecting inventory management issues. 

The Annual Report 2022 of Lotte Chemicals Pakistan explains that stock-in-trade comprises raw materials and finished goods, which are stated at lower of cost and estimated net realisable value. 

Earlier, in a notice to PSX on January 12, Lucky Core Venture (LCV) Limited, a wholly-owned subsidiary of Lucky Core Industries Limited, terminated the share purchase Agreement signed on January 26, 2023, with Lotte Chemical Corporation for the acquisition of approximately 75.01% of issued capital of Lotte Chemical Pakistan. 

However, LCV specified the reason for not acquiring the LCPL as the conditions required for completion could not be met within the time stipulated in the Share Purchase Agreement.