Safko Spinning still closed 7 months after scheduled reopening
Safko Spinning Mills – which was scheduled to resume production in July last year after a four-month closure – was still found closed during a Dhaka Stock Exchange (DSE) inspection this week.
The cotton and polyester yarn manufacturer initially shut down its factory in February last year for two months, later extending the closure for another two months, with plans to resume operations in July.
However, the company did not update the DSE on whether production had resumed, prompting an inspection.
During a 3 February visit, the DSE team confirmed that the factory was still non-operational.
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The disclosure, published on the DSE website yesterday, led to a 5.10% drop in the company's share price yesterday, closing at Tk 9.30 per share.
Temporarily closures
According to DSE records, on 18 February 2023, Safko Spinning Mills announced a two-month temporary production suspension, stating that maintenance activities would continue.
Before the suspension ended, the company reported that the situation had not improved, leading to an extension for another two months from 12 April 2024.
On 12 June 2024, referring to its previous disclosure, the company stated that production would resume, with the mill reopening on 1 July and operations restarting on 7 July. However, it failed to update the DSE on whether production actually resumed.
About Safko Spinning Mills
Safko Spinning Mills commenced commercial production in 1997 with machinery imported from Europe, Japan, and China.
It manufactures cotton yarn, polyester, cotton-blended yarn, and synthetic yarn for the local market and was listed on the stock exchange in 2000.
Production halted in January 2009 due to heavy losses but resumed on 25 May 2010, according to the company's latest annual report.
In the fiscal 2022-23, revenue dropped 39% to Tk41 crore, while the company incurred a loss of Tk16.53 crore.
The report cited inflation, dollar shortages, gas and electricity crises, and rising yarn production costs as major disruptions.
Additionally, yarn prices declined for a year, forcing the company to sell below production cost, leading to severe financial losses.
The company struggles with capital shortages and has failed to repay bank loans due to ongoing losses.
Over the last two fiscal years, Safko Spinning Mills suffered total losses of Tk55 crore – Tk16.53 crore in FY23 and Tk38.89 crore in FY24.
While it turned a profit in FY21 and FY22, it incurred a loss of Tk17 crore in FY20. As of June 2024, its accumulated losses have surged to Tk75 crore, according to its FY24 audit report.
