KARACHI: Millat Tractors Ltd (MTL) has announced that the production halt at its assembly will continue for another 17 days in the ongoing month taking the shutdown period to 29 days.

The company had stopped its production operations from Dec 11, 2019 to Jan 3.

The company on Friday informed the Pakistan Stock Exchange (PSX) that the date for restarting operations has been extended till Jan 20. However, MTL in its stock filing did not disclose the reason for extending the shutdown.

MTL suffered a 48 per cent fall in sales to 8,223 units during the July-November period in 2019. The persistent decline in demand of farm machinery and lack of orders from growers are the main reasons behind the shutdown, he said, adding that December 2019 sales were around 1,000 units.

Tractor sales are falling as growers face poor crop production

“We still have over 1,000 unsold tractors at the plant and countrywide dealership network. So far the company had kept its regular work force intact by sending them on forced leave.

However, some contractual workers and staffers are also sent home on reduced compensation pay package,” he further added.

The MTL official said that tractor prices had increased by only 7-8pc in the last one year as higher localisation of over 90pc had averted a big jump in price owing to rupee-dollar parity.

He urged the Zarai Taraqiati Bank and commercial banks to provide loans on low interest rates to growers who cannot afford double digit interest rates of 17-18pc. Loan on low interest would encourage them towards tractor buying, he added.

A number of growers, he said, are not keen on buying tractors due to low production of cotton, rice and sugarcane.

Tractors are also used in hauling construction materials at public and private sector construction projects. “The [construction] segment has also been facing a slowdown, thus hitting tractor sales,” he added.

Another market player — Al-Ghazi Tractors — assembler of Fiat tractor had also faced 27pc drop in sales to 5,741 units during July-November 2,019.

The year 2019 had so far proved highly challenging for the entire auto sector owing to shrinking sales on account of imposition of federal excise duty (FED) by 2.5-7.5pc and additional customs duty on imports of raw materials.

Sales have also been damaged by rising interest rate in the last few months.

Prices of automobiles had been surged multiple times by the assemblers on account of falling rupee against the dollar, which pushed up price of imported parts and accessories.

Overall car sales plunged 44pc to 49,110 units during the first five months of current fiscal year as demand for WagonR, Bolan, Toyota Corolla and Honda Civic/City slumped by around 35-75pc.

Meanwhile, General Tyre and Rubber Company (GTR) informed PSX on Friday that it will shut down its manufacturing plant from January 6-15 due to plant maintenance and annual boiler inspection.

The company does not foresee any adverse impact on its sales and the supply of products to its customers will continue as normal during the period, GTR said.

Published in Dawn, January 4th, 2020