Aziz Pipes suspends development for insufficient funds
Aziz Pipes, a listed PVC product maker, has suspended production for a non permanent period as it cannot buy raw materials due to a shortage of money.
"Our supplier didn't deliver PVC resin, the key raw material, promptly because of Covid-19," the company said in a filing on the Dhaka STOCK MARKET (DSE) website yesterday.
Having less stocks of PVC (polyvinyl chloride) resin hampered production.
Due to the abnormal upsurge in the selling price of recycleables in the neighborhood market, the price tag on production may also be much higher for the business, Aziz Pipes said.
As a final result, the company will suffer in marketing products. Beneath the circumstances, development was temporarily halted from C-shift on January 10, the disclosure said.
Production activities can resume once the way to obtain PVC resin begins, and the situation improves, the company added.
However, stocks of Aziz Pipes had been unchanged at Tk 97.50 on the DSE despite the suspension of production.
The price of recycleables has risen 3 to 4 times since July. Moreover, they aren't coming from China, said a high official of the business, preferring anonymity.
Although the price tag on PVC pipes has truly gone up by about 10 per cent through the period, the increase is not more than enough to offset the hike in the price tag on recycleables, he said.
"Our peer businesses have funds. A lot of them keep up with the stock of recycleables and can import recycleables through letters of credit rating," he added.
Aziz Pipes cannot import raw materials through LCs as a result of its bad record found in the Credit Facts Bureau report, the state said.
Dutch-Bangla Lender and Uttara Bank own classified Aziz Pipes, based on the 2019-20 annual statement of the pipe-maker. The mortgage loan amount cannot be known immediately.
"We wrote to the banks to reschedule the loans in order that we can run procedure. They are yet to approve our proposals, so we happen to be struggling," the state added.
As it can't open up the LCs to procure the recycleables from international markets, Aziz Pipes has to count on local suppliers, who are also importers. Because of this, the price tag on goods is higher for the company than its peer firms.
An official of another PVC pipe-maker said the cost of raw products rose but the hike had been lower, not the three to four times being claimed.
"We are also sense heat of the upsurge in the raw materials price. But we are not suspending our development," the state said.
Due to the working capital shortage, the manufacturing of PVC plastic lumber and flexible corrugated conduit pipes was suspended earlier.
