After a month, Nishat Chunian declares a partial shutdown.

KARACHI: According to a bourse filing on Wednesday, Nishat Chunian Limited, Pakistan’s fifth-largest textile manufacturer by sales, has declared a partial shutdown of its production facility “after one month due to present market conditions.”

The spinning divisions of the industrial behemoth have 2,880 rotors and 219,528 spindles.

Samina Aslam, the firm’s secretary, informed the Pakistan Stock Exchange that “the company has chosen to temporarily close 51,360 spindles (23.4% of the total) after one month” (PSX).

The remaining units, however, are running normally. The notification stated that the corporation will resume these spindles as soon as the market situation improved.

“On the domestic front, fluctuations in the US dollar exchange rate and the recent surge in political instability are turning out to be very challenging for the industry,” the textile firm reported in its interim financial information for the quarter ended September 30, 2022.

“On the international front, the Russia-Ukraine war is a huge blow to the global economy, which has yet to fully recover from the effects of the pandemic,” it said.

Nishat reported a net loss of Rs130.83 million in the Jul-Sept 2022 quarter as compared to a net profit of Rs2.22 billion posted in the same period of previous year.

“This period (Jul-Sept) has turned out to be a difficult one, with reduced profit margins and high cost of borrowing being the primary reasons for the loss,” the company explained. The bulk of textile businesses in the nation produce goods primarily for export. Pakistan’s two main export destinations for textiles are the US and Europe.

In recent months, the textile exports of local businesses have started to suffer from the global economic slowdown and a scenario resembling a recession in Europe.

About 60% of all export revenue goes to textile companies. At a time when the nation’s foreign exchange reserves have been reduced to $6.11 billion, or less than five weeks’ worth of import coverage, their partial or entire closure is cause for alarm.

According to the Pakistan Bureau of Statistics, Pakistan’s textile export revenues fell by 18.15% to $1.42 billion in November 2022 from $1.73 billion in the same month the previous year (PBS).

Total textile export revenue for the first five months of the current fiscal year was $7.36 billion, down 5.10% from the $7.75 billion earned during the same period last year.