Ghandhara Tyre and Rubber Company Closes its Second Manufacturing Plant in Pakistan

Crisis in the automotive industry continues to spread.

GTR Tyre

With local tyre manufacturer Ghandhara Tyre and Rubber Company Limited (GTR) announcing its second plant closure for 2023 and Pak Suzuki Motor Company Limited (PSMCL) claiming it has been negatively impacted by its inability to settle foreign currency liabilities, the crisis in the automotive industry continues to spread.

GTR announced its decision to temporarily halt production operations from March 24 to April 3, 2023, in a stock filing on Monday.

The business claimed that the current financial climate and its effect on banks’ capacity to grant letters of credit for the import of raw materials have significantly affected its supply chain and prevented it from continuing operations. For the same reasons, GTR previously closed its doors from February 13 to 17.

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The central bank’s restrictions, according to PSMCL, are making its exchange losses worse and could have a negative impact on its equity in FY23. The business wants to pay up its foreign currency obligations that have been delayed by the limitations.

In a Monday stock filing, the PSMCL stated that its outstanding foreign obligations were $184 million on December 31, 2022, but had since grown to $218 million. The company had incurred an exchange loss of Rs3.55 billion on its foreign currency operations and balances up to December 31, 2022.

However, after the year ended, the rupee-dollar parity weakened and the corporation had an unrealized loss of Rs9 billion, which could have an effect on its equity in the next year.

Despite the fact that Pak Suzuki’s sales rose to Rs202 billion in 2022 from Rs160 billion in 2021, the firm reported a net loss of Rs6.3 billion for the year as opposed to its Rs2.67 billion profit the year before.

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