Disinfectant Sales Help Pakistan’s Descon Oxychem as Its Major Clients Shut due to COVID-19 Outbreak
A sudden increase in demand of disinfectants such as chlorine dioxide, hydrogen peroxide, peracetic acid, etc., has provided relief to Descon Oxychem Limited in these difficult times when Pakistan is in a state of lock down, to stop the spread of novel coronavirus (Covid-19) that has forced textile mills to close operations, the major buyers of chemicals in the country.
Descon’s shares have increased significantly when it started selling hydrogen peroxide, used for killing bacteria and viruses, to banks such as Dubai Islamic Bank, Faysal Bank and MCB Bank, according to Imran Qureshi, Chief Executive Officer at Descon Oxychem Limited. The increase in demand for the disinfectant came at a time when textile companies, which contribute 70% of the sales of the chemicals, closed operations during the lockdown.
He further said that sale of hydrogen peroxide is really helping the company in continuing its operations during these difficult times. Any industry resuming its operations right now will only help us in getting to a better position.
Most of the South Asian countries have imposed lockdown due to thousands of confirmed coronavirus cases. As soon as the situation gets better and factories, offices and other businesses slowly resume operations the demand for disinfectants will increase further. Lately, the cement factories operating in the province of Punjab were allowed to start operations on the condition of disinfecting their premises on a daily basis, while there is expectation that Sindh province may also ease restrictions on industries in the coming weeks.
As per the independent trade analysts Suleman Rafique, the chemical producing company is being cherry picked by the investors. The sustained increase in the company’s stock price will continue since it will see dropping of major costs as the lock down restrictions eases in coming weeks that in turn will improve the company’s bottom-line significantly.
However, if textile companies don’t resume operations then there is a risk of company missing the analysts’ target of increasing sales by 30% in the year ending 30 June 2020.
Many companies including Engro Corporation, one of the country’s largest business corporations, are using odorless chemical, which can also be used in offices as it also works as a sanitizer.
Imran Quereshi also said that company is benefiting from decrease in prices of liquefied natural gas (LNG), the key element used for making the chemical. Descon is one of the only two publicly listed companies that make the disinfectant and plans to increase its production of the disinfectant from 25,000 to 42,000 tons a year in the third quarter of the year 2020.