KARACHI: Millat Tractors Limited (MTL) has extended the closure of its assembly plants and related shops/departments for another one week due to lingering market slowdown.

MTL’s Senior Executive Director Sohail Bashir Rana told Dawn from Lahore on Saturday that the plant and other departments would remain closed from Feb 3 for one week.

He recalled that the assembly plant and related shops/department remained closed from Jan 20 to Feb 1 due to sharp drop in sales after increase in general sales tax from 10 per cent to 17pc from Jan 1, 2014.

“We have laid off more than 500 temporary workers employed in different job categories in view of depressed sales and production,” he said, adding that the company would resume services when production and sales would normalise.

“We delivered only 190 units in January as compared to our monthly production of 2,500-3,000 units per month,” he said.

Procurement of parts had already been suspended due to unsatisfactory sales, he said, and added that sales usually remain brisk in February, but it seems that the industry has to undergo some testing time due to thin demand.

The company is also worried over stocks of over 1,000 tractors at the plants and shops countrywide.

Besides, he said that another issue was about 2pc additional tax which has been imposed on vendors’ supplies to assemblers which is not adjustable against output tax, therefore, it has become part of the cost. This issue has not been resolved yet, he added.

Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Chairman Usman Aslam Malik said many tractor-based vendors had already shut down their production after getting no orders for parts from Millat Tractors. Besides, vendors had also retrenched workers.

He said the government was not realising that the shrinking tractor sales would only result in low GST collection.

Usman said that the government had decided to release 900 used vehicles to get instant revenues, but for the tractor industry, which gives employment and pays handsome revenues, the government is yet to show any seriousness.

Growers have put on hold purchase of high-priced farm machinery as they are waiting for a firm reply from the government over the fate of enhanced GST.