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Pak Suzuki Shuts Down Car And Bike Plants

Pak Suzuki Motor Company (PSMC) is facing operational issues, and the company has announced that it will shut down its car and bike assembly plants in May 2023. The reason cited for the plant shutdown is the shortage of inventory. This shutdown will last from May 2 to May 9, 2023. Unfortunately, this is not the first time the company has had to close its plants, as they have been facing intermittent production shutdowns since last year.


Suzuki Financial Situation

The financial situation of PSMC is not looking good either. The company has announced a loss after tax (LAT) of Rs. 12.91 billion in the first quarter that ended on March 31st, 2023, which is the highest-ever reported loss for the company. The loss is attributed to the high finance cost, which includes exchange loss, the markup on late delivery, and demurrage and detention charges, and was up 12x year on year and 3x quarter on quarter to Rs. 12.8 billion.

The net sales of the company have decreased by 54 percent year-on-year (YoY) to Rs. 21.8 billion, compared to Rs. 47.7 billion last year. The decrease in sales can be attributed to the subsequent price hikes and production slowdowns in the past few months. The unavailability of completely knocked down (CKD) kits and the State Bank of Pakistan’s (SBP) reluctance to approve letters of credit (LCs) for the clearance of imported goods are some of the main reasons for the heavy losses incurred by PSMC during Q1.

The situation is concerning, as the company’s financial performance will affect the entire industry. Moreover, PSMC is one of the largest automobile manufacturers in Pakistan, and it provides employment opportunities to a significant portion of the population. The company’s current financial situation may lead to layoffs or reduced salaries for employees, which will have a ripple effect on the country’s economy.

The continuous shutdown of Pak Suzuki Motor Company’s plant and the company’s financial situation is a matter of concern for everyone. It remains to be seen how the company plans to tackle these issues and what steps it will take to ensure its future sustainability.

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