Agriauto Industries set to observe a partial shutdown for all of March

LAHORE: Agriauto Industries Limited (AGIL) has notified the Pakistan Stock Exchange (PSX) on March 2, that it will be observing a partial plant shutdown for the entirety of March. The company has stated that its subsidiary, Agriauto Stamping Company will also be observing the partial closure. Agriautos has cited a reduction in demand for its products as the reason for this decision. 

Agil’s decision comes on the back of a wave of industry wide non-production days. Sazgar, earlier this year,  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 observed a plant closure from  January 6 January 15. 

The key part of the aforementioned plant closures is that they all likely influenced AGIL’s decision to partially shut its own plant down. 

Company Profile

Agriauto Industries Limited (AGIL) is a parts manufacturer in Pakistan. Founded in 1981, the company is listed on the Pakistan Stock Exchange and is part of the House of Habib Group. In 2012, AGIL established Agriauto Stamping Company, a wholly-owned subsidiary in Port Qasim that specialises in producing sheet metal parts, jigs, and accessories for the automotive sector. The facility operates in collaboration with Ogihara-Thailand. 

AGIL supplies Original Equipment Manufacturers (OEMs) like Indus Motor Company Limited, Pak Suzuki Motor Company, Atlas Honda Limited, and Yamaha Motor Pakistan (Private) Limited, as well as the replacement market. The company offers a range of products, including shock absorbers, struts, power window regulators, door and hood hinges, catalytic converters, sheet metal stamping parts, and more. AGIL also supplies steering boxes and camshafts to the tractor segment and pipe fork and front fork assembly to the two-wheeler segment.

Demand Destruction All Around 

AGIL’s decision comes on the back of both industry wide demand destruction, and with the company recording its lowest half yearly earnings over the past five years. Total industry volume was down 31% year-on-year in January 2022, with the overall 7MFY23 volume down a further 34% year-on-year based on the figures provided by the Pakistan Automotive Manufacturers Association. All of this has also taken its toll on AGIL as well. The company recorded its lowest consolidated and unconsolidated half yearly earnings in the past five years. Its consolidated earnings stood at Rs 160 million, whilst its unconsolidated earnings stood at a meagre profit of Rs 41.7 million based on the company’s half yearly filings to the PSX.