- Cites current economic situation and its effect on the ability of the banks to open LCs for import of raw materials as reason
Bannu Woollen Mills Limited plans to temporarily shut production as import restrictions imposed by the State Bank of Pakistan (SBP) continue to aggravate woes of industries across Pakistan.
In a notice to the Pakistan Stock Exchange (PSX) on Wednesday, the manufacturer of woollen yarn and cloth said it will close its production activities for over 40 days.
“Due to current economic situation and its effect on the ability of the banks to open Letters of Credit (LCs) for the import of raw materials, and as a result, it is unable to continue with the production activities,” read the notice.
“Therefore, the company has decided to temporarily shut down/close its production activities from 25 March 2023 to 5 May 2023,” and will resume production activities from 6 May onwards.
The country’s central bank, after unabated rupee depreciation, has imposed restrictions on the opening of LCs, as the country’s foreign exchange reserves remain low and Pakistan remains engulfed in a balance of payment crisis. The country’s central bank chief has said import compression will be eased after the completion of the International Monetary Fund (IMF) review.
In recent months, dozens of industries including automobile and textile have either shut down or partially curtailed production citing various reasons including inventory shortage, lack of raw material and supply chain disruptions.
In a span of days, a string of companies, particularly from the auto sector, have announced plant shutdowns as they face the consequences of government’s import restrictions and struggles to continue production.
On Tuesday, Hinopak Motors Limited (HINO) said it will shut operations on a temporary basis.