ISLAMABAD: Pakistan’s largest automaker, Pak Suzuki Motors, announced its plan of delisting from the Pakistan Stock Exchange.
The company is considering a proposal from its parent company, Suzuki Motor Corp, to acquire the remaining shares from minority shareholders and delist from the Pakistan Stock Exchange (PSX).
Pak Suzuki Motors company sent a notice to the stock exchange, stating that the board of directors would deliberate on the matter on October 19, 2023.
The notice read, “This is to inform you that a meeting of the Board of Directors of PSMC will be held on 19 October 2023. It will review and consider the majority shareholder’s intentions to purchase all outstanding shares of Pak Suzuki Motor Company Limited held by other shareholders and delisting under Rule 5.14.1 of the listing regulations. The decision taken by the board shall be communicated after the board meeting.”
Following this announcement, the company’s share price experienced a 5% increase, reaching Rs146.20. Investors interpreted this move as a significant shift in the company’s ownership structure.
Market analysts believe that if this decision is approved, it would signify the majority shareholder’s desire to exert complete control and influence over the company’s future direction.
This potential move is expected to bring about substantial changes in Pak Suzuki’s dynamics and governance, with potential repercussions for Pakistan’s automotive sector.
Pak Suzuki’s consideration of delisting comes at a time when the company is grappling with reduced sales, escalating costs, and currency fluctuations in Pakistan.
Operating in Pakistan since 1983, the company reported a net loss of Rs9.68 billion ($58 million) in the first half of the current fiscal year. It shows a significant decline from the Rs1.15 billion profit it recorded in the previous fiscal year.
The company attributed this loss to factors such as declining sales, increased financial expenses, rupee depreciation, and rising energy costs.
Additionally, stiff competition from new entrants like Hyundai and Kia, offering lower-priced models with enhanced features, has intensified the company’s challenges.
During the year, Pak Suzuki also had to temporarily halt production at its vehicle and motorcycle plants in Pakistan due to weak demand and supply chain disruptions. This decision aligns with broader industry challenges, including high energy costs, political instability, and difficulties in obtaining letters of credit for imports due to a shortage of dollars.
In September, car sales plummeted by 30% year-on-year, with only 6,410 units sold. For the first quarter of the fiscal year 2023/24, passenger car sales declined by 44% to 16,021 units, down from 28,571 units during the same period in the previous year.
