KARACHI: The crisis in the automobile sector continues to metastasise, with local tyre manufacturing Ghandhara Tyre and Rubber Company Limited (GTR) announcing its second plant shutdown for 2023 and Pak Suzuki Motor Company Limited (PSMCL) stating it has been hit adversely due to its inability to settle foreign currency liabilities.

In a stock filing on Monday, GTR said it has decided to temporarily suspend production activities from March 24 to April 3, 2023.

The company said the prevailing economic conditions and their impact on banks’ ability to issue letters of credit for raw material imports have severely disrupted its supply chain, rendering it unable to continue production. GTR had earlier shut shop from February 13-17 for same reasons.

Meanwhile, PSMCL said its exchange losses continue to exacerbate due to restrictions imposed by the central bank, warning that these could adversely impact its equity in FY23. The company wishes to settle its foreign currency liabilities held up due to the restrictions.

The PSMCL, in a Monday stock filing, said its outstanding foreign liabilities stood at $184 million on Dec 31, 2022, but have since increased to $218m. Up to Dec 31, 2022, the company had accrued an exchange loss of Rs3.55bn on its foreign currency transactions and balances.

Subsequent to the year end, however, the rupee-dollar parity deteriorated and created an unrealised loss of Rs9bn for the company, which may impact its equity in the ongoing year.

Though Pak Suzuki sales had increased to Rs202bn in 2022, compared to Rs160bn in 2021, the company posted a net loss of Rs6.3bn for the year compared to its Rs2.67bn profit the year earlier.

Published in Dawn, March 21st, 2023