Kohinoor Spinning Mills announces temporary shutdown as downturn bites

An increase in the cost of production and low demand amid the ongoing economic downturn has pushed another company in Pakistan to “temporarily” shut down its operations.

Kohinoor Spinning Mills Limited (KOSM), a manufacturer and exporter of yarn and cloth, and stitched cloth, on Thursday, informed the Pakistan Stock Exchange (PSX) that it has decided to temporarily close its production facility, refraining from giving a timeline on the length of the shutdown.

“Due to prevailing global and economic downturn, overdue plant maintenance, high cost of production and low demand, it is not feasible to operate the production facility.

“Therefore, the management of the company has decided to temporarily close/stop the production activities of the company with immediate effect,” said the textile company in its notice to the PSX.

The company said it remains hopeful that the current situation will improve in the first quarter 2023, enabling the company to restart its operations.

Incorporated on 23rd July, 1970 as a public limited company in Pakistan under the Companies Act, 1913 (Now Companies Act 2017), Kohinoor Spinning Mills Limited remains engaged in the business of textile spinning.

The development comes as Pakistan faces multiple challenges, including rising debt, low foreign exchange reserves, and energy shortage.

The textile sector, which remains Pakistan’s largest generator of export receipts, is feeling the heat as well.

The country’s textile group exports witnessed a decline of 15.23% in October 2022 on a year-on-year basis and remained at $1.36 billion when compared to $1.6 billion during the same month of last year.

On a month-on-month basis, the textile group declined 11.13% compared to $1.53 billion in September 2022.

Experts attributed the decline to a recession in the west –- mainly in the US — that is curbing demand.

Last month, Pakistan Hosiery Manufacturers and Exporters Association (PHMEA) expressed serious concern over the declining trend in textile exports and called for the continuation of Duty Drawback of Local Taxes & Levies (DLTL) Scheme to ensure growth in the country’s exports, besides releasing the stuck up claims of 2019-20 under this scheme.