KARACHI, June 24, 2023: The Indus Motor Company (IMC), the Toyota manufacturer in Pakistan, has announced it is shutting down its plant for two days due to “insufficient inventory level”.
This is the automobile company’s fifth such announcement made due to production cuts in the ongoing year.
The company said June 26 and 27 would be observed as non-production days at the plant. The development was shared via a notice with the Pakistan Stock Exchange (PSX).
“The company has insufficient inventory levels to maintain production, therefore the company is unable to continue its production activities,” IMC company secretary, Muhammad Arif Anzer, informed the PSX.
As per the notice, IMC and its vendors have been facing hurdles in importing raw materials and receiving clearance for their consignments due to challenges opening 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 times already in 2023. It halted productions 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 the low foreign exchange reserves of the country. The forex reserves held by the State Bank of Pakistan are standing at $3.5 billion as of June 16, which can hardly cover a month’s imports of the country.
Since taking office, the incumbent government 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 that relied on imports to complete their finished goods.
Earlier this week, Pak Suzuki Motor Co Ltd also announced another shutdown at both its bike and automobile plants for two weeks, blaming inventory shortages, which have contributed to a drastic decline in car sales — as well as massive layoffs in the industry.
Car sales plunged by 80% year-on-year in May 2023, according to Pakistan Automotive Manufacturers Association.
In the 11 months of FY23, a total of 92,554 units were sold, down 56% against 210,633 units sold during the same period in FY22.
In the July-March period of FY23, IMC’s profits declined 62% 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 period, compared with Rs194.56/share last year.