Beco steel halts production due to delay in L/C approval

ISLAMABAD: Delays in approval of letter of credit (L/C) and reduction in inventory has forced Beco Steel Limited (BECO) to temporarily halt production starting next week. The company made the announcement to the Pakistan Stock Exchange (PSX) on Friday.

The notification read, “Due to delays in L/C approval and significant reductions in inventory levels, which have a negative impact on the supply chain and production activities, the company has decided to temporarily halt production activities from January 16, 2023 and continuing until further order.”

L/C is issued by commercial banks to businesses who want to import crucial raw materials for their production activities. The L/C acts as a guarantee by the bank to the foreign seller/exporter that they will receive their full payment on time. Because of a shortage of dollars in the market since the middle of last year, commercial banks in Pakistan have been delaying issuing L/C to many manufacturing businesses which have led to their suspension of production.

Without L/Cs, industrial activity in Pakistan has been paralysed and many manufacturing businesses have suspended operations leading to mass unemployment across the country.

Company profile

Beco Steel Limited, formerly Ravi Textile Mills Limited, is a public limited company incorporated in Pakistan in 1984. The name of the company was changed in 2021 after two steel mill owners Chauhdry Muhammad Shafique and Muhammad Ahmad Raza bought a defaulting Ravi Textile Mills.

BECO has a total melting capacity of 99,400 Metric Ton and re-rolling capacity of 99,000 Metric Ton, and is based in the heart of Pakistan Steel Industry Cluster of Badami Bagh in Lahore. The mid country location allows the company to service both central and northern Pakistan and export to Afghanistan.

BECO is an integrated steel producer from scrap to billet to various end products. It also does downstream steel processing and distribution, and manufactures billet to re-rolled products including specialty steels.

According to the last quarterly report ending September 2022, the company demonstrated 81% topline growth resulting in profit after tax (PAT) of Rs. 190.521 million as compared to a PAT of Rs. 2.323 million in the previous year. The net sales made in the year amounted to Rs. 6.310 billion as compared to previous year sales of Rs. 230.770 million mainly due to start of commercial operations of the company resulting in successful outcome.