Borosil shares drop 6% as OMCs restrict LPG supply amid fuel disruption

Borosil said it received communication from OMCs regarding the curtailment of LPG supplies amid disruptions in global fuel availability arising from the geopolitical tensions in West Asia

Shares of Borosil Ltd. fell over 6 per cent on Thursday after oil marketing companies (OMCs) announced restrictions on the supply of LPG due to a force majeure situation arising from the ongoing West Asia conflict.

 

The company's stock fell as much as 6.12 per cent during the day to ₹243.6 per share, the biggest intraday fall since April 7 last year. The stock pared losses to trade 4.5 per cent lower at ₹247.7 apiece, compared to a 0.97 per cent decline in Nifty 50 as of 09:51 AM. 

 

Shares of the company snapped a three-day winning streak and currently trade at 4.6 times the average 30-day trading volume, according to Bloomberg. The counter has fallen 12 per cent this year, compared to a 9.5 per cent decline in the benchmark Nifty 50. Borosil has a total market capitalisation of ₹2,978.19 crore.  

 

Why Borosil shares are under pressure

 

Borosil said its production activities at the Jaipur facility have been impacted following restrictions on the supply of liquefied petroleum gas (LPG) from OMCs due to a force majeure situation linked to the ongoing conflict in West Asia. The company said it received communication from OMCs regarding the curtailment of LPG supplies amid disruptions in global fuel availability arising from the geopolitical tensions in the region.

 

As a result, production at the company’s borosilicate glass furnace for pressware products at its Jaipur, Rajasthan facility has been temporarily suspended. The opal glass furnaces at the same location are currently operating at reduced capacity, the company said in an exchange filing.  

 

Borosil said it is coordinating with the OMCs and relevant government authorities to secure LPG supplies, which are critical for its manufacturing operations, in order to maintain production continuity to the extent possible. It added that it is assessing the impact of the disruption in LPG supply and is closely monitoring the situation. 

 

On Tuesday, Borosil's board approved setting up a new manufacturing facility in Gujarat and expanding the production capacity of its Borosilicate Glass Furnace in Rajasthan. It also approved an expansion of Borosilicate Glass Furnace capacity for Pressware Products from 25 tonnes per day (TPD) to 32 TPD at its Rajasthan facility. 

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The proposed capacity expansion is expected to support the company's growth strategy. It is expected to remove current capacity bottlenecks, enable new product development and product diversification with portfolio expansion, improve furnace utilisation and operating efficiency and low cost of production with cost competitiveness.