Millat Tractors Limited (MTL), yet another victim of the economic crisis, stated Thursday that it would shut down production for an indefinite time beginning Friday, claiming that it could not continue operations due to poor demand and severely constrained cash flow.
According to analysts, the worsening economic crisis has thrown spanners in the works of numerous industries until lately, halting production and, in some cases, triggering significant layoffs.
The MTL is not the only corporation to choose a shutdown to avoid further losses; a number of organizations have also stopped operations entirely or partially due to 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.
According to specialists, the agricultural land of Sindh is still under water in many locations as a result of the country’s catastrophic floods.
They also stated that there has been an increase in inflation in the country, which has resulted in a decrease in demand for tractors.
Millat Tractors saw a 75% month-on-month and 72% year-on-year drop in sales in October, reaching 638 units due to a 23-day manufacturing stoppage in September due to flooding.
According to a December 13 study, sales of all other kinds of automobiles, trucks, buses, tractors, jeeps, pick-ups, three-wheelers, and two-wheelers fell in November 2022 compared to November 2021.
