Millat Tractors Limited (MTL) Thursday announced halting its production for an indefinite period commencing from tomorrow (Friday), stating that they could not plough ahead with their operations amid a plunge in demand and cash crunch.
Analysts identified that the worsening economic crisis has thrown spanners in the works of many industries until recently, bringing their productions to a standstill and in some cases causing massive layoffs of their employees.
The MTL is not the first to shut down its production to save it from further losses as a number of others have also fully or partially quit operations because of demand, inventory, energy, and supply chain constraints.
The tractor-maker expressed these views in a notice submitted to the Pakistan Stock Exchange (PSX).
“Due to continuing reduced demand for tractors and cash flow constraints, the Company will remain closed from Friday, January 06, 2023 till further notice,” the MTL said in the bourse filing.
Talking to Geo.tv, former advisor to the Ministry of Finance Dr Khaqan Hassan Najeeb said Pakistan’s economy suffered a number of shocks, including floods, high commodity prices, and inflation.
“It is the continued dollar liquidity crunch which has forced a need for contraction of the economy and a shutdown of many companies,” he however noted.
“Without resolving this issue by engaging with multilateral and bilateral [institutions] and a resumption of the IMF programme, Pakistan would find it difficult to come out of present challenges,” the economist said.
Last month, the MTL, in a statement sent to the PSX, announced the closure of its production on Fridays citing a decline in demand for tractors in the country.
“Due to reduced demand for tractors, the company will observe Fridays as non-production days from December 16, 2022, till further notice,” the company secretary of MTL said in a statement.
As per the analysts, the agricultural land of Sindh was still under water in many areas due to the cataclysmic floods in the country.
They added that there was also an increase in inflation in the country which has led to a reduction in demand for tractors.
In October, Millat Tractors recorded a decrease of 75% month-on-month and 72% year-on-year to reach a sales figure of 638 units due to the shutdown of plants for 23 days in September amid floods.
In a report published on December 13, sales of all other variants of cars, trucks, buses, tractors, jeeps, pick-ups, three-wheelers as well as two-wheelers saw a decline in November 2022 compared with November 2021.