Shrinking demand: Frontier Ceramics too suspends production

Energy crisis and the currency devaluation forced the Frontier Ceramics Limited (FRCL) on Monday to shut down the tile production plant for an indefinite period.

Hence, it is the third company to shut their operations in recent days, following a move decision by Bolan Castings Ltd (BCL) and Baluchistan Wheels Ltd (BWL).  

In a notification issued to the Pakistan Stock Exchange, the company also mentioned government restrictions and economic instability as the reasons behind the move.

“The unforeseen devaluation of rupee coupled with the government’s restrictions, including letter of credit (LC) approval constraints and general economic instability are also the reasons behind the decision,” it read

However, the FRCL noted that they would keep the bourse posted about the resumption of production when the decision was to be taken.

At the time of announcing the closure, the FRCL share was being traded at Rs25.96, down by Rs1.05 or 3.88 percent on day-on-day basis.

However, the Frontier Ceramics isn’t first entity to take this decision as two auto part vendors suspended their production last week after a massive drop in sales of automobiles since July.

The move means many workers have been jobless in a market where there very few new employment opportunities amid a rising cost of living and shrinking purchasing power.

In this connection, Bolan Castings Ltd (BCL) – the makers of various auto parts of tractors and commercial vehicles – informed the Pakistan Stock Exchange about suspending the production activities from Dec 5 to Dec 23. It cited the drop in sales due to a drastic fall in orders from its assemblers as the reason.

BCL’s revenue had plunged to Rs474 million during the first three months of the current financial year from Rs621 million when compared with the last fiscal year.

Similarly, the production activities of Baluchistan Wheels Ltd (BWL) – the makers of steel wheel rims for cars, heavy vehicles and farm tractors – said the production activity would remain suspended from Dec 12 to 23 amid a reduced demand.

Earlier, the company’s revenue had dipped 26 percent to Rs403 million in the first quarter from Rs547 million in the same period last fiscal year.


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