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Pakistan’s Toyota manufacturer shuts down plant for two weeks

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  • Plant will be completely shut down from July 21 to August 3.
  • Company faces significant hurdles in importing raw materials.
  • It isn’t only automotive manufacturer affected by raw material scarcity.

KARACHI: Indus Motor Company Limited, a prominent player in Pakistan’s automotive industry and the manufacturer of Toyota vehicles, has temporarily closed its production plant for two weeks, The News reported Friday.

The decision comes as the company faces significant hurdles in importing raw materials, leading to disruptions in its supply chain.

Last month, Indus Motors experienced a brief shutdown of its production plant due to similar challenges with raw material imports.

However, the current situation has worsened, leaving the company with insufficient inventory levels to sustain its production activities.

The company secretary of Indus Motor released a statement to the Pakistan Stock Exchange, outlining the difficulties the company and its vendors are facing in importing raw materials and clearing consignments.

These challenges are primarily due to issues with opening letters of credit (LCs) and supply problems from certain foreign vendors.

As a result of these obstacles, the company has no choice but to halt its production activities temporarily.

The plant will be completely shut down from July 21, 2023, to August 3, 2023. Indus Motors is not the only automotive manufacturer affected by raw material scarcity.

Other prominent companies like Pak Suzuki Motors and Honda Cars have also experienced several shutdown days in recent months due to similar issues.

The automotive sector, along with other industries reliant on imported raw materials, has been grappling with these challenges due to a shortage of foreign exchange reserves in Pakistan.

The struggle to open LC has severely impacted the smooth functioning of the supply chain, leading to disruptions in production activities.

Indus Motors has a significant presence in Pakistan’s automobile industry and has invested $100 million in local production of hybrid electric vehicles (HEVs).

The company has played a crucial role in establishing the local automotive ecosystem, with over 50 part manufacturers contributing to the value chain by producing parts worth over Rs250 million every working day.

Additionally, the company has established 53 independently owned authorised dealerships that provide aftersales service to customers, generating employment opportunities for over 450,000 people directly and indirectly across Pakistan.

The temporary closure of the production plant presents challenges for the company, its employees, and the overall automobile industry.

The management of Indus Motor Company Limited is likely to be exploring solutions to address the raw material scarcity and resume operations as soon as the situation allows.

One analyst said the government and relevant stakeholders may also need to collaborate to find long-term solutions to ensure a stable supply of raw materials for the automotive and other affected industries.

Swift action and strategic measures will be essential to mitigate the impact of these closures on the economy and preserve the growth trajectory of Pakistan’s automotive sector.

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With a loss of 32 paisas, the US dollar is now trading at 277 rupees on the interbank market.

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In the Interbank market, the United States dollar is currently trading at 277 rupees and 63 paise, indicating a depreciation of 32 paise. Yesterday, it reached a closing price of 277 rupees and 95 paise on the Interbank market.

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The price of gold has skyrocketed in Pakistan.

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Pakistan’s gold price recovered on Friday following a sharp drop the day before, mirroring worldwide market patterns.

According to data released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold per tola rose by Rs2,000 in the local market, ending at Rs278,800.

Likewise, the cost of 10 grams of 24-karat gold increased by Rs1,715 to Rs239,026.

With an extra $20 premium, the price of gold increased by $21 on Friday to $2,683 per ounce on the global market as well.

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The PSX-100 index reaches a record high and surpasses 93,000 points.

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Historically, the Pakistan Stock Exchange (PSX) exceeded the 93,000-point threshold for the first time, with the KSE-100 index increasing by 480 points to attain a record high of 93,001 points.

A significant milestone was reached on the final business day of the week, establishing a new record for the nation’s stock market.

Economists ascribe the market’s expansion to expectations of an enhanced economic rating for Pakistan and a favorable perspective on economic reforms. The session commenced positively, with the 100 index initially increasing by 250 points, reaching 92,770 points prior to the day’s zenith. The market concluded the prior day at 92,520 points.

Simultaneously, the Pakistani rupee appreciated as the dollar decreased by 20 paisa in the interbank market, now valued at 277.75 rupees. Economists attribute this enhancement to heightened remittances and a current account surplus, which have strengthened the rupee’s status.

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