Afghan turmoil dents bilateral trade
Affects India’s exports of plastics, cotton, tea, coffee; Shares of Tejas Networks, KEC International fall on bourses
Share prices of Tejas Networks and KEC International tumbled after the Taliban took control of most of Afghanistan, raising doubts over the two Indian companies' projects in the country.
Shares of Tejas Networks declined by daily five per cent limit, their biggest single-day slump since August 11. Tejas has signed a multi-year contract with Asia Consultancy Group for supply of network gear that will be used for setting up a high-capacity national backbone and packet access network in Afghanistan, according to an exchange filing January 27.
The company designs, develops and sells high-performance and cost-competitive networking products to telecommunications service providers, internet service providers, utilities, Defence and government entities in over 75 countries.
"Exporters to Afghanistan are likely to be badly hit as receivables from such customers will take a long time unless backed by bank LCs. However, medium prospects are ruled out as air travel is the only mode of transport here," Avinash Gorakshakar, Head (Research), Profitmart
Securities, told Bizz Buzz.
Shares of KEC International declined as much as 2.29 per cent; heading for lowest since August 12. The power transmission and distribution company is implementing a project in Afghanistan, according to its annual report for the year ended March.
"We have the largest Indian presence in Afghanistan building the country's power infrastructure. It is heartbreaking to see the scenes of pain, terror and despondency," Harsh Goenka, Chairman of KEC International, said in a Twitter post on August 13. Tejas Networks had announced on January 27 that it has signed a multi-year contract with Asia Consultancy Group (ACG), a leading independent private company providing Telecommunications infrastructure, managed & engineering services across Afghanistan. ACG
with its headquarters in USA, is a full life-cycle managed network service provider in Afghanistan for last many years. As part of this contract, Tejas will supply its state-of-the-art 100G-600G capable DWDM/OTN and PTN products to establish a high-capacity national
backbone and packet access network in Afghanistan.
The country used to export plastics worth $30 million per annum on an average which had gone to as high as over $50 million until the pandemic hit the world. However, it has come to almost a standstill since Taliban troops took over the reins of Kabul.
Arvind Goenka, Chairman, PLEXCOUNCIL, says, "yes the plastic export has stopped from the country to Afghanistan since the news of Taliban taking over Kabul was spread. However, we are confident, by the way the announcements are being made by the Taliban leaders, that there will be peace and they will welcome the plastic export as usual as these items are of prime necessity for people living in that country. Still, it may take a couple of weeks from now for the picture to get clearer. If all goes well, we do hope to export $39 million this fiscal from $30 million we did a year ago, a growth of 30 per cent," Steel majors like JSW were also having some exposure in joint venture with SAIL for a huge iron ore mine in Afghanistan until 12 years ago. However, that venture was closed long back.
"We did form a JV with SAIL for a huge iron ore mine in Afghanistan until 12 years ago. However, as the mine was so huge and we were unable to go ahead with it, hence we had to severe ties with SAIL for the venture," a company official said requesting anonymity. Citing the reason, he said that the mine in Afghanistan was so huge that we thought it would not be possible for us to go ahead with the project.