Pakistani conglomerate Crescent Steel and Allied Products suspends cotton plant operation

Crescent Steel and Allied Products Limited (CSAP), a Pakistani conglomerate, has decided to shut its cotton division plant on a temporary basis due to a deterioration of the country's economic situation.

The company, which operates in five segments (steel, cotton, Investment and Infrastructure Development (IID), energy and Hadeed (billet)) shared the development in a notice to the Pakistan Stock Exchange (PSX) on Friday.

“Due to current economic situation prevailing in the country, shortage of raw cotton, withdrawal of Zero Rate Industry status and reduction in demand for the company’s products, the management has decided to shutdown its cotton division plant operations temporarily with immediate effect till further notice,” read the notice.

The company said that its steel division will remain operational. “Further update, if any, in this regard will be communicated in due course,” it added.

The development comes as Pakistan’s economy is in dire straits, stricken by a balance-of-payments crisis as it attempts to service high levels of external debt amid political chaos and deteriorating security.

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Inflation has skyrocketed, while the rupee has plummeted and the country continues to face a shortage of US dollar, which leaves little space for imports, causing a severe decline in industry.

On Friday, the Ministry of Finance in its latest ‘Monthly Outlook’ report said current monetary restriction and fiscal consolidation may cause further short-run pain to the domestic economy.

It also noted that year-on-year growth of Large Scale Manufacturing is expected to remain negative in February while month-on-month growth is expected to remain positive.

Days ago, Khalid Siraj Textile Mills Limited (KSTM) announced it will extend the shutdown of operations until May 31, citing issues ranging from the high cost of doing business to import restrictions.