Indus Motor halts production for fifth time in 2023

KARACHI: Indus Motor Company (IMC), Toyota vehicles maker in Pakistan, on Friday announced a two-day plant shutdown on “insufficient inventory level”, making its fifth announcement for production cuts in the ongoing calendar year.

The company will observe June 26 and June 27, 2023 as non-production days at the plant. It shared the development in a notice to the Pakistan Stock Exchange (PSX).

“The company has insufficient inventory levels to maintain production, therefore the company is unable to continue its production activities,” Muhammad Arif Anzer, IMC company secretary informed the PSX. According to the notice, IMC and its vendors have been facing hurdles on import of raw materials and receiving clearance of their consignments, on account of challenges in opening of letters of credit (LCs) and supply issues by certain foreign vendors.

“This has disrupted the supply chain of the company and the vendors are unable to supply raw materials and components to the company,” the notice read.

Earlier, IMC has observed non-productions four more times in 2023 from February 1 to February 14, March 24 to March 27, May 2 to May 3, and June 3 to June 8.

Auto is one of the sectors affected by Pakistan’s ailing economy as the importers have been struggling to get their LCs issued amid low foreign exchange reserves of the country. The forex reserves held by the State Bank of Pakistan are standing at $3.5 billion as June 16, which can hardly cover a month’s imports of the country.

The incumbent government, since taken office, has been trying to curb imports to save fast depleting forex reserves of the country. The center managed to post a current account surplus in recent months but at a high cost of an economic slowdown across the country. Restricting imports left some cascading effects on industries relied on imports to complete their finished goods.

Earlier this week, Pak Suzuki Motor Co. Ltd has also announced another shutdown at both its bike and automobile plants for two weeks, blaming inventory shortages, which has contributed in a drastic decline in car sales as well as massive layoffs in the industry.

Car sales plunged by 80 percent year-on-year in May 2023, according to Pakistan Automotive Manufacturers Association. In the 11 months of FY23, a total of 92,554 units have been sold, down 56 percent against 210,633 units sold during the same period in FY22.

In July-March period of FY23, IMC profit declined 62 percent to Rs5.843 billion from Rs15.292 billion in the same period the previous year. Earnings per share came in at Rs74.35/share in the said period, compared with Rs194.56/share last year.