A massive decline in profits has been recorded by the Indus Motor Company Limited (IMC). The profits declined by 76% in the first quarter of fiscal year 2022-23 ending on September 30, 2022. In the same quarter of last fiscal year 2021-22, the profits were recorded at PKR 5.42 billion, while in this fiscal year’s first quarter, they came down to a mere PKR 1.30 billion.

The profits decreased over the previous year because the massive depreciation of rupee against the dollar increased the costs of inputs. The sales of completely knocked down (CKD) and completely built Units (CBU) also declined, causing a lower influx of sales revenues.

The sales of CKD and CBU declined collectively by 52%. In the first quarter of last fiscal year, these sales were recorded at 18,855 units, while in the same quarter of this fiscal year, they stood at mere 8,994 units. The total production of vehicles also declined by 45% in the same period of this year as compared to last fiscal year.

This year the company produced only 9,218 vehicles in the first quarter, whereas last year it produced 16,896 units. State Bank of Pakistan did not allow the company to import the required number of CKD kits because of government’s policy of import restrictions and exchange rate stabilization.

The total market share of the company stood at 19% whereas the total sales turnover decreased by 43% from PKR 65.55 billion in the first quarter of last fiscal year to PKR 37.25 billion in the same period of the going fiscal year.

Ali Asghar Jamali, Indus Motor Company’s Chief Executive, said, “the first quarter of fiscal year 2022-23 has had a bad start for business. All industries are suffering form it. Our plant capacity has been reduced to 50% since July. All this is because of the general business environment and external challenges that the auto sector is facing, and the continuing restrictions on CKD imports by SBP. The government should reconsider its import ban placed on CKD imports.

Auto sector imports only a mere 30% of the total imports of the country. This adversely affects the industry, resulting in a decreased productivity. Auto industry employs more than 3 million labour. Shutdown of the auto-industry means unemployment for these 3 million people.”

“IMC will continue to deliver vehicles at old committed price to customers, despite the volatility of PKR against USD and an increase in international commodity prices. However, going forward, continuing restrictions on CKD imports by the SBP, decline in demand due to lower purchasing power of customers and impact of the devastating floods may continue to impact the volumes and sales of auto sector,” he continued.

After carefully assessing the profits earned, Board of Directors of the company announced an interim cash dividend of PKR 8.20 per share for the quarter.

Credit: Independent News Pakistan-WealthPk