Ghandhara Nissan announces first plant shutdown since Covid lockdowns  

Company blames SBP for shutdown this week, decides to shift to bi-weekly production cycle from next onward 

LAHORE: Ghandhara Nissan Limited has notified the Pakistan Stock Exchange (PSX) that it will observe non-production days (NPD) from March 6 to March 10. Furthermore, the company has also stated that it will switch to an alternating bi-weekly production schedule from March 13. 

Ghandhara has stated that the decision was made in light of the State Bank of Pakistan’s (SBP) letter of credit policy for imports, as outlined in EPD Circular Letter No. 20 of 2022. The company has cited that the new mechanism has disabled it from building the inventory levels needed to sustain production, and thus it has opted to observe NPDs. This marks the first plant shutdown the company has observed since April 1 2020, when it did so on account of the outbreak of Covid-19. 

Company Profile 

Established on August 8, 1981, Ghandhara Nissan Limited is a subsidiary of Bibojee Services (Private) Limited. It was a private limited company that later became a public limited company on May 24, 1992. The company’s registered office is at F-3, Hub Chowki Road, S.I.T.E., Karachi, with manufacturing facilities at Port Qasim, Karachi, and regional offices in Lahore and Rawalpindi. 

The company’s primary activities include vehicle assembly, importing and selling Nissan, Dongfeng, and Renault vehicles, and assembling other vehicles under contract agreement. Most recently, the Gandhara entered into an agreement with  Chery Automobile Co.,Ltd on February 4, 2021, for the manufacturing and distribution of Chery’s passenger vehicles. As part of the agreement with Chery, Ghandhara has been locally manufacturing the Chery Tiggo 4 Pro and Chery Tiggo 8 Pro since March 31, 2022. 

What is the EPD Circular, and why has it forced Ghandhara to shut its plant? 

The SBP unveiled EPD Circular Letter No. 20 of 2022 on December 22, 2022, as an alternative to the oversight that it had over the import of products under Chapters 84, 85, and certain items of Chapter 87. The new system, per the EPD Circular, allowed authorised dealers (banks) to authorise all transactions for these imports. The decision originally seemed to be the lifeboat the struggling automotive industry needed as it had been crippled by the mechanism the SBP had in place prior to the Circular. 

“This has not only saved the industry but also the employment of thousands of employees,” Shafiq Shaikh, Head of Public Relations and Official Spokesperson at Pak Suzuki Motor Company Limited, told Profit when the circular was originally released.  Authorised dealers were, however, told to prioritise essential imports over those relating to conspicuous consumption. This clause raised concerns about the degree of relief that the automotive industry would receive in the months to come. 

Profit was told by Munir Bana, Chairman of the Pakistan Association of Auto Parts & Accessories Manufacturers, that “The auto industry is not an essential item and therefore our imports will continue to be controlled and rationed by SBP,”when the circular was released. Ghandhara’s notice attests to the veracity of Bana’s claims as the company has highlighted in the letter how its vendors have been unable to provide the company with the requisite parts due to the circular. The inability of Ghandhara’s vendors to cater to its demand is what Ghandhara has attributed its NPDs to.  

Another one bites the dust 

Ghandhara’s decision comes on the back of Agriauto Industries announcing a partial shutdown for the entirety of March last week. Earlier this year Sazgar announced its first ever plant closure for its four wheel division from February 27 to March 4. Similarly, Suzuki has also announced plant closures from January 2 to January 6, from January 9 to January 13, from January 16 to January 20, and from February 13 to February 21. Toyota too observed plant closures from February 1 to February 14 with the decision to shift to a single shift upon the resumption of regular production from February 15. Finally, Millat Tractors also observed a plant closure from  January 6 January 15

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Daniyal Ahmad
Daniyal Ahmad
The author is a member of the staff, and covers the automobile sector as a sector analyst. He can be reached at [email protected]


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