Lotte Kolson (Private) Limited (Lotte Kolson or 'the Company') was incorporated in 1975 as a private limited company.

The Company was formerly known as KS Sulemanji Esmailiji & Sons (Private) Limited. It was renamed to Lotte Kolson (Private) Limited after it was acquired by Lotte Corporation, a multinational conglomerate headquartered in South Korea, in 2014.

The Company manufactures and sells five product categories, namely, i) Snacks, ii) Biscuits, iii) Pasta, iv) Cakes, and v) Gum. Lotte Kolson's overall capacity utilization increased to 7.9%. Gum segment, namely Spout, had the highest utilization level at ~58.9%, and the Biscuit segment had low utilization level at ~11.6% due to a halt in its production owing to high costs. Production facilities are located in Karachi, Islamabad, Multan and Lahore, whereas, the head office is in Karachi.

Major shareholding of the Company lies with Lotte Wellfood (96.5%). Remaining stake is held by Mr. Dong Bin Shin (3.5%), son of the founder, Mr. Shin Kyuk-Ho, whereas, Mr. Jin Hun Tag, Mr. Abdul Latif (non-executive director) & Mr. Yong Sung Shin (executive director) owns one share each

The Company ownership remains stable in the period with majority (96.5%) of the shares owned by Lotte Wellfood (previously known as Lotte Confectionary).

Lotte Corporation, is a Korean multinational conglomerate, which has business ventures spread across the globe, in addition to having a strong footprint in South Korea and Japan. The Corporation has business interests in food, retail, chemicals, infrastructure and finance, among other areas. Moreover, the Group has established a strong presence in Pakistan and operates in the confectionery, chemical, beverages and construction industries.

The Company is considered to have strong financial strength owing to support from Lotte Wellfood and Lotte Corporation. Additionally, Lotte Corporation is the fifth largest conglomerate in South Korea and had a turnover of ~KRW 2885bln (USD 2.10bln).

Board of Directors comprises four members that include the Chairman, two executive directors and a non-executive director. The Company lacks representation of independent members on its Board.

Board represents qualified individuals who specialize in retail and production, in addition to confectionery. Mr. Jin Hun Tag was appointed as Chairman on March 7, 2025. He holds a degree in International Trade from Keimyung University. Mr. Jin has been associated with Lotte Wellfood for 28 years and joined the Board of Directors of Lotte Kolson in March 2025. Mr. Khayyam Rajpoot, Chief Executive Officer, has over 22 years of professional experience in sales, marketing and general management and has previously worked in multinational corporations. Mr. Yong Sung Shin, Chief Financial Officer and Company Secretary has ~18 years of experience working in South Korea and Pakistan. A brief profile of the board can be found in

The Company has no Board committees in place. The Board meets twice a year to discuss matters pertaining to current performance and future strategy, with minutes of meetings being captured in a formal manner.

Yousuf Adil., Chartered Accountants are the external auditors of the Company. The auditor has expressed an unqualified opinion on the financial statements for the year ending 31st December 2023.

The Company’s organizational structure is spread across twelve departments. It includes sales, supply chain, production, quality, finance and internal audit, among others. Each department head is required to report to the Chief Executive in addition to reporting to the Chief Financial Officer, both of whom report to the Chairman. Additionally, General Manager Operations and General Manager Technical also report directly to the Chairman. The complexity of the organizational structure and a large number of people reporting to the CEO hinders the efficient flow of communication. The Company is also changing the structure within the sales department to increase efficiencies and to reduce cost

The management team comprises experienced individuals in the retail industry with diversified skills. Mr. Khayyam Rajpoot, the Chief Executive Officer, holds an MBA and specializes in sales, marketing and general management. He joined the Company in 2018 and has previously worked for multi-nationals. The Company also receives support from Lotte regional platform in terms of strategy and best practices.

In order to ensure efficient operations, the Company has in place a management committee, which meets twice a month. Meetings are chaired by the CEO and are attended by all functional heads. Purpose of the Committee is to improve coordination in operations while ensuring compliance.

The Company has deployed Oracle 12-C as its Enterprise Resource Planning (ERP) system and operates five modules.

The Company has a strong control environment represented by strict quality control measures, with an increased emphasis on hygiene, and an efficient internal audit department. Findings are reported to the CEO, in addition to headquarters in South Korea.

In Pakistan, the convenience food market is primarily dominated by domestically produced products. This industry is highly competitive, with products that are particularly sensitive to price fluctuations. A significant portion of the market is also held by unbranded products, which play a notable role. Production of food groups increased by 1.7 percent in FY24, compared to a contraction of 7.1 percent in FY23. The food sector in Pakistan is experiencing rapid growth, driven by population increase, inflation, urbanization, and evolving consumer lifestyles.

The Company has high brand recognition in the snacks industry with its product ‘Slanty’. However, the market is dominated by well-established brands such as ‘Lays’. Although, the Company holds a strong position in the pasta industry, it is yet to establish a notable presence in other product categories.

The Company sources its revenue from five product categories, namely, i) Snacks, ii) Biscuits, iii) Pasta, iv) Cakes and v) Gum, with snacks dominating the turnover. The Company sells 18 products, the majority of which are sold locally and only a small portion is exported to the United Kingdom, USA and Canada.

The Company’s leading product ‘Slanty’ accounted for 44% of total revenue during CY24, indicating high product concentration. Due to several marketing campaigns to build product awareness, the share of ChocoPie has increased substantially.  During CY24, the Company’s revenue stood at PKR 13.5bln (CY23: PKR 12.6bln), with the growth rate of 7% (CY23: -4%). The increased CGS and selling  and marketing expenses has led to operating loss of the Company amounting PKR 169mln during CY24 (CY23: PKR 163mln).

The Company demonstrated a marginal improvement in its gross operating margin, increasing to 13% in CY24 from 12% in the prior year. This indicates a slightly enhanced ability to manage direct costs relative to revenue. However, despite this improvement at the gross level, the Company continued to experience operating losses. The operating loss, as a percentage of revenue, showed a minor contraction to -1.2% in CY24 (CY23: -1.3%). This persistent operating loss is directly attributable to a notable increase in operating expenses, which rose to PKR 1.9 billion in CY24 from PKR 1.6 billion in CY23. The magnitude of this increase offset the gains in gross margin. Consequently, the Company reported a net loss of -4% in CY24, an improvement from the -6.9% net loss recorded in CY23. While the net loss has narrowed, the continued negative profitability highlights ongoing challenges in achieving sustainable earnings.

Going forward, given the economic situation the Company does not have plans to introduce new products. The Company is looking to reduce its borrowings and improve its margins to be able to survive the current economic downturn.

The Company's management of its short-term assets and liabilities, known as working capital, is significantly tied to how efficiently it manages its inventory. Because the industry operates largely on a cash basis, the Company collects payments from its customers quickly, resulting in very few days of sales outstanding in trade receivables, which remained stable at a low 5 days in both CY24 and CY23. A slight improvement was seen in inventory management, with the time it takes to sell inventory decreasing slightly from 41 days in CY23 to 40 days in CY24. Consequently, the total number of days the Company's current assets are tied up (gross working capital days) saw a minor reduction from 46 to 45 days. However, a more notable change occurred in the Company's management of its payables. The time taken to pay its suppliers increased considerably from 42 days in CY23 to 55 days in CY24. This longer payment period has a direct impact on the net working capital days, which is calculated by subtracting trade payable days from gross working capital days. As a result, the net working capital days shifted from a positive 4 days in CY23 to a negative 11 days in CY24. A negative net working capital indicates that the Company is effectively being financed by its suppliers, as it receives cash from customers before it needs to pay its own obligations. While this can boost short-term cash flow, a significant and sustained increase in payable days could signal potential strain in supplier relationships or an over-reliance on this form of financing, which would require careful observation for any future implications on the Company's liquidity and operational flexibility.

The Company demonstrated a substantial improvement in its financial health during CY24, as evidenced by a near doubling of its free cash flow, which rose to PKR 1.2 billion from PKR 666 million in the previous year. This positive development was largely attributable to a decrease in the expenses related to its debt financing, with finance costs declining from PKR 571 million in CY23 to PKR 551 million in CY24.   This stronger free cash flow position has a direct and positive impact on the Company's ability to manage its debt. We can see this through the coverage ratios, which are key indicators of a company's capacity to meet its financial obligations. The free cash flow to debt coverage ratio, which measures the company's ability to cover its total debt with the cash it generates after all operating expenses and capital expenditures, improved significantly from 1.2 times in CY23 to 2.2 times in CY24. This indicates a much stronger ability to service debt principal and interest payments.   Similarly, the total coverage ratio, which likely takes into account the company's earnings before interest and taxes relative to its interest expense, also showed a marked improvement, increasing from 0.4 times in CY23 to 1.1 times in CY24. A coverage ratio above 1.0 generally suggests that the company is generating sufficient earnings to cover its interest expenses. The substantial increase in both coverage ratios signals a considerable strengthening of the Company's financial risk profile and its capacity to handle its debt burden. This improvement is a positive indicator for the Company's creditworthiness.

The Company maintains a capital structure characterized by a prudent level of debt relative to its equity. This is clearly demonstrated by the decrease in its leverage ratio from 23% in CY23 to a more conservative 17% in CY24. A lower leverage ratio generally signifies a reduced reliance on debt financing, which in turn lowers the financial risk associated with the Company's operations. Further underscoring this commitment to a strong financial position, the management's accounts indicate a significant step taken at the close of CY24: the complete repayment of all short-term borrowings. Short-term debt typically includes obligations due within a year, such as lines of credit or short-term loans. Eliminating these obligations entirely further strengthens the Company's balance sheet, enhances its liquidity position, and reduces its exposure to short-term interest rate fluctuations and refinancing risks. The combination of a lower overall leverage ratio and the absence of short-term debt suggests a deliberate strategy by the management to maintain a financially sound and flexible capital structure. This conservative approach is generally viewed favorably from a credit perspective as it enhances the Company's resilience to economic downturns and provides greater financial flexibility for future growth opportunities.