Machinery, Pakistan Agriculture News

Tractor assembler warns of shutdown due to cash crunch

LAHORE: Considering a severe slowdown in market activity coupled with persistent delay in the release of sales tax refunds by the government, Al-Ghazi Tractors has announced that it is on the verge of taking a major decision on shutting down its plant.

“Past four to five months proved quite tough for the local tractor industry when it displayed one of the lowest trends in the last few years, resulting in a substantial slowdown and considerable non-utilisation of capacity,” the tractor manufacturer said in a statement on Friday.

Tractor sales volume declined 30% in the second half of 2018 compared to the same period of 2017.

“We are barely surviving in the current situation,” said Al-Ghazi Tractors CEO Mohammad Shahid Hussain. “If the government does not immediately release the funds to tackle cash crunch, the plant’s shutdown may become inevitable.”

He recalled that the industry had been pleading the government to address the anomaly in the input-output tax system, which caused an imbalance and hefty accumulation of tax refund claims amounting to nearly Rs2 billion for Al-Ghazi Tractors alone.

“Therefore, serious attention is required combined with swift action from government authorities to save us from irreversible damage,” he added.

The CEO expressed dismay at news that the Punjab government was contemplating importing used tractors which, he said, would not only eat up the country’s foreign exchange but would also cripple the domestic manufacturing industry, which already had inventory of tractors.

Such a move at this point in time could only act as a catalyst to diminish the already ailing industry and will not only lead to negative repercussions for the tractor assemblers but will also cause considerable unemployment among parts’ suppliers,” he cautioned.

At present, thousands of people are engaged in businesses that supply parts and components for tractor assembly.