Millat Tractors suspends operations indefinitely

Cites reduced demand, cash flow constraints as reasons

KARACHI:

With the decline in farmers’ income and the resultant fall in tractor demand, Millat Tractors Limited (MTL) has decided to suspend operations from January 6, 2023.

In a bourse filing on Thursday, MTL announced that due to the reduced demand for tractors and cash flow constraints, the company would remain closed from January 6 till further notice.

“Year 2022 was the worst for tractor sales,” remarked Muhammad Ali Iqbal, President Concave Agri Services, while talking to The Express Tribune.

MTL is the second tractor manufacturer that has reported a decline in sales that came in at 1,103 units in November 2022, down 27% month-on-month, according to Topline Securities.

Earlier, Al-Ghazi Tractors posted a 65% month-on-month fall in sales that stood at 137 units.

Sales of the entire tractor industry reached 10,498 units in first five months (Jul-Nov) of current financial year, down 52% year-on-year, dragged down by floods, lower consumer buying power and higher prices.

“The agricultural sector has been hurt thrice in recent years,” said Mahmood Nawaz Shah, Senior Vice President Sindh Abadgar Board.

First, the Covid-19 pandemic hit, then the flash floods and after the deluge the cost of production soared.

“The cost of production has more than doubled in the agricultural sector,” he said.

Citing an example, he pointed out that a urea bag was available for Rs1,700 about six months ago but now “it is being sold for around Rs2,500”. At that price too, urea is not available as hoarders have become active.

“In this situation, machinery purchase is the last priority of farmers, who have delayed it for at least six months,” he pointed out.

“The buying power of farmers has taken a hit due to flood losses and at the same time MTL is awaiting significant tax refunds, which have disturbed its cash flow,” said Muqeet Naeem, auto analtyst at Ismail Iqbal Securities.

Published in The Express Tribune, January 6^th, 2023.

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