KARACHI: Managing Director Hussain Kuli Khan said that GTR incurred losses in the last quarter due to factors that were beyond their control.
“The main issue affecting the local tyre industry and specifically GTR is the restriction on opening Letter of Credits. This caused a shortage of raw materials forcing the plant to operate below capacity, we even shut down for two weeks in April, and as a result our fixed overhead cost was not fully absorbed. It is to be noted that GTR has high local value addition to their products thus saving precious foreign exchange,” said Hussain.
Besides this, the severe volatility in exchange rate badly affected profitability and the company incurred exchange loss of Rs331 million in the nine months ended March 31, 2023.
“Another issue that hurt the company’s finances was a heavy flood of smuggled tyres into Pakistan,” said Hussain. He added that most of the smuggled tyres are passenger car radial tyres openly available in the market, which not only hurt the local tyre industry but deprive the government of revenue. It can be easily curbed as it has been done before.
Moreover, he added, that plant closures and lower production from car manufacturers in the country due to the same LC restrictions also dented our numbers. But we have pivoted to increase sales to the after market and export markets. Compared to last year ended March 31 the exports have significantly increased. He further added that GTR has been saving forex for the country by exporting high quality standard tyres.
He added that these issues were inherent in making the GTR incur losses, but we believe this is a temporary phase as the GTR will be able to regain profits in the next quarter as the raw materials supply is improving with banks opening more LC’s.
“GTR has a capability to meet the market demand if the supply side issues are taken care of,” said Hussain.
Copyright Business Recorder, 2023
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