Shares slide as Standard Ceramics halts production for gas, power crisis

Shares in Standard Ceramics Industries plunged after the tableware manufacturer suspended production due to a shortage of raw materials and a lack of gas and electricity supply.

In a stock exchange disclosure on Sunday, the company announced that the factory went out of operation on 26 January and will remain shut until normal gas and power supplies resume.

This prompted investors to offload their holdings, resulting in a slide of 8.93% to Tk115.30 per share in just a single session, according to the Dhaka Stock Exchange (DSE).

The disclosure states that production in the factory is currently halted due to the post-Corona financial crisis, the current global negative situation, shortages of raw materials, and the closure of gas and electricity supply. Consequently, the authority has decided to temporarily close the factory.

In December of the previous year, amidst challenges such as the dollar crisis, high inflation, and a shortage of working capital, the share price of Standard Ceramic Industries notably surged, despite facing losses in the previous two fiscal years. The tableware manufacturer's share price jumped by 76% to Tk191.4 each on Tuesday, up from Tk108.7 on 28 November.

The company suffered consecutive losses in the 2021-22 and 2022-23 fiscal years due to a significant drop in demand for its products as well as higher prices of gas and raw materials.

In FY23, its net loss stood at Tk12.29 crore, resulting in an accumulated loss of Tk20.12 crore. In FY22, it incurred a Tk1.93 crore loss. The company had last paid a dividend in FY21, and that too was only 1% in cash, according to its financial statements.

For its substantial loss in FY23, the company attributed it to the cumulative effects of Covid-19, the Russia-Ukraine war, and the high cost of imported raw materials, which slowed down production and adversely impacted sales and profits.