KARACHI: The board of directors of Indus Motor Company (IMC) has approved an investment of around Rs3 billion for additional localisation of parts and components of various existing vehicles.

The investment is planned to be completed by the third quarter of 2025, the company said in a stock filing on Thursday.

The fresh investment is part of the company’s overall plan to continuously increase the localisation of parts and components of vehicles manufactured locally to reduce the outflow of foreign exchange and promote the local industry.

The announced investment will be made towards expenditure in plant and machinery, moulds, dies, equipment and related expenses for localisation of parts and components to be manufactured locally for various existing vehicles.

Profit surges

IMC reported a 88.6 per cent surge in profit after tax to Rs4.96 billion during July-December FY24 from Rs2.63bn despite a 41.4pc drop in net sales turnover to Rs51bn as compared to Rs86.83bn in the first half.

Profits soar 89pc in first half of 2023-24

The company’s overall market share for the quarter stood at 18pc.

The earnings per share of the company during 1HFY24 is Rs63.07 in comparison to Rs22.15 in the same period last year. The board of directors declared a second interim cash dividend of Rs13.20 per share compared to Rs10.2 for the same quarter last year.

The combined sales of CKD and CBU vehicles fell by 61pc to 7,324 units from 18,672 units.

Vehicle production plunged by 66pc to 6,391 units as compared to 18,562 units due to weak consumer demand and vendor supply chain limitations, which led to regular plant shutdowns during the period.

Challenges ahead

IMC Chief Executive, Ali Asghar Jamali said the country’s economy continues to grapple with high fiscal deficit, skyrocketing inflation and power tariff hikes.

Customer traffic at dealerships remained lacklustre owing to several factors, such as higher duties and taxes, unprecedented interest rates, low auto financing availability and relatively dampened consumer purchasing power.

Moreover, he said supply chain challenges continued to adversely affect the auto sector, as a consequence of which, it operated at below 30pc production capacity, the lowest in the last decade, leading to forced frequent plant shutdowns.

As Pakistan steers through this pivotal period, he said challenges persist, particularly in maintaining a level playing field within the automotive sector due to the consistent rise in duties and taxes for locally manufactured vehicles.

On the other hand, normalising the import of used cars through relaxation of import and taxation regime, thereby emphasising the need for fair competition, he added.

“Despite all the challenges, I am hopeful that with the new government in place, the country and the overall business environment shall well be on its path to stability,” Jamali hoped.

Published in Dawn, February 23rd, 2024