KARACHI: Indus Motor Company Limited (IMC), announced its financial results for the third quarter ended March 31, 2023, that witnessed a drop in Profit After Tax (PAT) by 61.8 percent to Rs5.84 billion, as against Rs15.29 billion in the previous year.
The decline in net profit was mainly due to lower Completely Knocked Down (CKD) and Completely Built Units (CBU) sales volume, and an increase in input costs mainly on account of severe PKR devaluation against USD and the rising costs of production. The net operational loss was off-set mainly by higher other income owing to higher interest rates.
During the nine-month period, net sales turnover decreased by 33.6 percent to Rs135.03 billion, as compared to Rs203.41 billion for the same period last year. The Company’s overall market share for the nine months stood at 23 percent. The combined sales of CKD and CBU vehicles decreased by 55 percent to 26,055 units compared to 57,367 units sold in the corresponding period last year.
Price hikes of vehicles due to rising input cost primarily caused by severe devaluation of Pak Rupee, high inflation, high interest cost and increase in duties and taxes, especially increase in GST from 17 percent to 25 percent contributed to decline in sales demand and volumes during the current fiscal period. Vehicle production too decreased by 51 percent to 26,848 units as compared to 55,192 units produced in the same period last year.
The decline in production was mainly due to restriction on import of CKD kits and vendor supply chain limitations, which led to frequent plant shutdowns during the period.
Expressing himself, IMC Chief Executive, Ali Asghar Jamali, commented, “We’ve been sailing through rough seas since the beginning of the year with the economy continuing to bend under the weight of skyrocketing inflation and devaluation of the PKR, depleting forex reserves and high interest cost.
The third quarter too has adversely affected the auto industry; frequent shutdowns forcing it to operate at less than 50 percent production capacity as a consequence of continuing import restrictions, which in turn has resulted in deteriorating consumer demand and expected to continue going forward.”
He further added, “Survival of the auto industry is at stake and we appeal to the Government to permit the necessary imports to the auto-sector for maintaining current production level thus safeguarding the jobs of over 3 million, direct and indirect workers in the auto sector.
Unless import restrictions are eased out, forced plant shutdowns and non-production days will continue to persist. The Company also requests consistency in policy making, particularly regarding the Hybrid incentives provided in the AIDEP 2021-26.”
During the quarter ended March 31, 2023, the Company received various accolades, such as the “Corporate Social Responsibility Award 2023” by the National Forum for Environment & Health (NFEH), 1st Prize in the “Multinational Category for Living the Global Standards Business Sustainability Award 2022” by the UN Global Compact Network Pakistan (GCNP) and, four awards in the categories “Business Leader”, “Reporting & Transparency”, “Employee Volunteer Program”, & “Corporate Community Partnerships” under the banner of Corporate Social Responsibility Awards 2023 by The Professionals Network (TPN).
The Earnings Per Share of the company for the nine-month period ended March 31, 2023, is Rs74.35, compared to Rs194.56 in the same period last year. Despite the challenging quarter faced by the company, the Board of Directors declared a third interim cash dividend of Rs24.40 per share.
Copyright Business Recorder, 2023
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