Khalid Siraj Textile Mills extends production halt till May end

KARACHI: Khalid Siraj Textile Mills Limited (KSTM), one of leading textile mills in the country, on Monday announced to extend a temporary production shutdown till end of May 2023, citing import restrictions, political unrest, and devaluation of the rupee.

The company shared the development at the Pakistan Stocks Exchange (PSX). KSTM had been already on a production break till March 31 under a notification issued on February 10, 2023.

“Further to our letter dated 10-02-2023 … kindly note that the situation has worsened due to continued political unrest, import restrictions, and an unchecked dollar increase.

These factors have increased inflation, undermined the rupee, driven up cotton prices, driven up the cost of electricity per unit, and, most importantly, harmed business confidence,” read the notice.

Prevailing economic conditions in the country have forced import-oriented companies to temporarily shut down or reduce their production as import has been difficult due to restrictions on opening of letters of credit. Besides textile mills, other industries especially automobile original equipment manufacturers as parts vendors are also facing temporary shutdowns on hurdles in raw materials import.

The scarcity of foreign exchange reserves has worsened the situation. Pakistan is waiting for the extended fund facility program revival by the International Monetary Fund, which is delayed, and the country is forced to meet several demands by the financial institute for the revival of the programme.

The textile industry is one of the most significant contributors to Pakistan's economy, and the shutdowns will have a considerable impact on the country's overall economy. Khalid Siraj Textile Mills Limited is one of the most prominent textile mills in the country, and its shutdown will adversely affect the company's employees, stakeholders, and suppliers.

Analysts said the government should take immediate steps to resolve the issues faced by the industry and ensure the availability of foreign exchange reserves. It is crucial to provide a favourable environment for businesses to operate in and promote business confidence. The political unrest and economic uncertainty must be addressed to prevent further harm to the country's economy.

Productions shutdowns are concerning development for the textile industry and the country's economy. It is essential to address the underlying issues to ensure that businesses can operate smoothly and contribute to the economy's growth. The government needs to take urgent steps to resolve the current crisis and promote a favourable environment for businesses.