More companies announce temporary shutdowns as economic woes continue

Despite the government’s decision to ease restrictions on the approval of Letters of Credit (LCs), Pakistan’s manufacturing sector continues to remain engulfed in issues including decline in demand, resulting in companies either shutting temporary or rolling back operations.

Agriauto Industries Limited, a manufacturer of auto parts, on Monday announced to observe a partial shutdown in October.

“Due to reduction in production volumes of our major customers, the company will be observing partial shutdown during the month of October 2023 ,” it said in a notice to the Pakistan Stock Exchange (PSX) on Monday.

It added that Agriauto Stamping Company Pvt. Limited, its wholly owned subsidiary, will also observe a partial shutdown in October 2023, citing similar reasons.

It is pertinent to mention that Agriauto made a similar announcement in September as well.

Its clients include Suzuki, Toyota and Atlas Honda, currently struggling and have shut down plant operations on multiple occasions as the sector deals with inventory shortages due to import restrictions.

Last week, Indus Motor Company – one of the major players in the auto sector – made its eighth announcement of production closure this year.

“Escalating car prices, expensive auto financing, and low purchasing power of consumers are among the primary reasons for the decline in YoY sales,” brokerage house Topline Securities said in a report earlier.

Apart from the auto sector, the country’s crucial textile sector, responsible for a majority of Pakistan’s exports, is also bearing the brunt of a plunge in demand and escalating economic woes.

“Due to lesser market demand for yarn, and other economic adversities, the board of directors has decided to shut down Units No. 1 and 4 from September 29, 2023, for an indefinite time,” announced Shahzad Textile Mills Limited, whose principle business is to manufacture and deal in all types of yarn, in a notice to the bourse on Monday.

“However, Units No. 2 and 5 will remain operative.

“We believe that this strategic decision will lead to several long-term benefits for our company.

“Our board of directors and management team have thoroughly evaluated the associated risks and benefits, and we are confident that this action is in the best interest of our company and its shareholders,” it added.