One of Pakistan’s leading textile companies, Nishat Chunian Limited, warned investors on Wednesday that it was temporarily turning down some spindles due to market conditions.
The spinning section of Nishat Chunian Limited (NCL) has an installed capacity of 219,528 spindles and 2,880 rotors, according to a filing with the Pakistan Stock Exchange. Due to market conditions, the company has chosen to temporarily close 51,360 spindles after one month.
The spindles that were being shut down would be reactivated as soon as market conditions improved, while the remaining units would carry on as usual.
The most recent business to temporarily halt operations is Nishat Chunian Limited. The manufacturer of Toyota automobiles, Indus Motor Company, Pak Suzuki Motor Company Ltd., Bolan Castings Limited., and Baluchistan Wheels Ltd. are among the others. Since December 16, Millat Tractors Limited has observed no-production days.
This year has been quite difficult for Pakistani industry, as evidenced by the 7.75 percent year-over-year fall in large-scale manufacturing in October, with declines in the textile, machinery, and equipment, and automobile sectors of 30.56 percent, 24.62 percent, and 38.01 percent, respectively.
Separately, PBS statistics revealed that in the first five months of the current fiscal year, overall auto sales fell by 39% from the prior year.
The State Bank of Pakistan (SBP) has been slow to approve imports, and the auto businesses have claimed weak demand as reasons to halt operations.
They claimed in separate PSX filings that the introduction of a prior approval mechanism for imports under the HS Code 8703 category (including completely knocked-down kits) by the central bank on May 20 had negatively impacted the clearance of imported consignments and consequently had an impact on inventory levels.
The import of goods falling under several HS Codes, such as power-generating machinery and CKD for mobile phones and cars, was requested by the central bank in May, and authorized dealers were urged to obtain this approval in advance from the central bank.
However, the SBP revoked the earlier notification yesterday night (Tuesday), eliminating import restrictions beginning January 2, 2023, making it possible to approve requests for import transactions that have already been made to the SBP.
The most recent notification states that authorized dealers (banks) should give the following imports priority: food and pharmaceuticals; petroleum and coal; raw materials and spare parts for export-oriented industries; seed, fertilizers, and pesticides; deferred payment and self-funded imports; and plant and machinery for export-oriented projects close to completion.
The SBP established these administrative import limits in an effort to stem the outflow of dollars because Pakistan’s foreign exchange reserves fell precipitously this year and the rupee also lost a significant amount of value.
The central bank’s reserves stood at $6.1bn as of Dec 16 — barely enough to cover a month’s imports.