The company notified the Pakistan Stock Exchange (PSX), that the State Bank of Pakistan (SBP) had introduced a mechanism for prior approval for import under HS Code 8703 category including CKD through circular No. 09 in May this year. This restriction has adversely impacted the clearance of import consignment and inventory levels.
PSMC is facing a severe shortage of raw materials for the past few months, despite which it had announced a temporary closure of its production. However, the company has decided to extend its shutdown period for the automobile plant due to a shortage of inventory levels following the State Bank’s decision. On the other hand, the company has confirmed that the motorcycle plant will remain operative.
Pak Suzuki Motor Company #PSMC said on Tuesday that it has extended the shutdown of its automobile production plant till September 23.
Ban on Import adversely impacted clearance of import consignment which resultant affected the inventory levels. #StockMarket #BreakingNews pic.twitter.com/M3uLjcyIOi
— Pakistan Stocks 📊📈🇵🇰 (@Stockkse100) September 6, 2022
In its official notice to the Stock Exchange, the company said;
“However, due to continued shortage of CKD raw material, management decided to extend the shutdown of automobile plant from September 12, 2022, to September 16, 2022,”
The notice further said;
“Further, instead of periodic maintenance, the automobile plant will also be shut down from September 19, 2022 to September 23, 2022.
Previously in August also the company had to shut its automobile production due to a shortage of raw materials and CKD kits.
Conclusively, Pakistan’s auto industry is highly dependent on imports and has been caught amid of an exchange-rate crisis, as the SBP, after the persistent rupee devaluation, imposed restrictions on the opening of Letters of Credit (LCs).
Therefore, since July the automakers have seen intervention from the central bank for opening LCs for the import of CKD kits to avoid delays in car deliveries and further cost escalation.