Tractor industry in acute crises as suppliers face severe cash shortage

January 14, 2019 (MLN): A four member delegation of PAAPAM met with Secretary Mr. Azhar Ali Chaudhry and briefed him about the overall down turn in auto industry with decline of up to 30% in supply schedules of car part makers, motor cycles, and total closure of the tractor industry for the second month running, revealed an official press release.

According to the press release, the delegation explained the impact of devaluation, unsettled price and subsidy issues of the sugar cane industry with government, slowdown of public and private construction projects, and overall slowdown of the economic activity in the country for this crisis.

Sudden drop in sales has resulted in pile up of huge inventory of finished tractors at dealers and tractor and parts with OEMs, and finished, in process and raw material inventories at the Part makers.

With no sales in December and now in January the suppliers are faced with acute cash shortage, and bank defaults and bankruptcies are a real possibility if tractor production doesn’t start in February, the report said.

The minister was also informed about the number of jobs that will be affected if this industry is closed, and the revenue loss to FBR.

Moreover, the issue of stuck up GST refunds for months was also brought in the notice of the secretary that if released, will give much breathing space to the OEMs and their suppliers. The secretary was also informed about the drop in sales due to the news of 5 year old used imported tractors.

Issues like RD on steel raw materials, inclusion of new localized in SRO 693, review of AIDP and formulation of an auto parts development policy (APDP) to further the process of localization of hi tech engine and transmission parts was also discussed.

The secretary listened to the issues and ideas with keen interest and instructed EDB to prepare a summary for the cabinet.

A four member delegation comprised of former chairmen PAAPAM Mr.  Mumshad Ali, Mr. Iftikhar Ahmed, former senior vice chairman Mr. Saeed Iqbal, and MC member Salman Saleem.

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