ISLAMABAD: An emergent meeting of the Board of Directors has been scheduled for January 19, 2024, to assess the progress of the delisting proceedings of Pak Suzuki Motor Company Limited and decide on appropriate actions, as per the company’s filing on PSX.
Recall that on October 19, 2023, the Board of Directors had resolved to delist the company from PSX.
In light of this decision, Suzuki Motor Corporation, the majority shareholder, has been granted the authority to repurchase ordinary shares from minority shareholders, with the extent and price to be determined in accordance with regulations or as specified by the PSX or the Securities Exchange Commission of Pakistan (SECP).
On October 12, 2023, the majority shareholders of PSMC expressed their intention to acquire all outstanding shares and potentially delist the company.
Recently, investor Nadeem Nisar formally notified the company’s management of his increased ownership stake, surpassing the 10% threshold of the total issued, subscribed, and paid-up shares. This adjustment in shareholding strictly adheres to the regulations and guidelines established by the SECP and other relevant authorities.
Meanwhile, the automotive market is currently experiencing a prolonged downturn, with a drastic 53% decline in sales of passenger cars, light commercial vehicles (LCVs), and SUVs during the first half of the fiscal year (Jul-Dec). This trend mirrors the financial challenges faced by Pakistani households, where the ability to make substantial purchases, especially of new cars, is diminishing, and purchasing power is constrained.
The extravagant nature of these expenses is evident, as a significant portion of the population is unable to afford a car, whether through cash transactions or bank financing. Even if banks offer car loans, the escalating costs of petrol, diesel, and vehicle maintenance contribute to the overall unaffordability, resulting in an untapped car market.
The surge in interest rates has added to the woes of car owners who had previously opted for adjustable rate loans, leading to potential regrets. Government authorities have played a role in dampening the demand for automobiles by imposing restrictions on tenors and equity requirements, making it more challenging for car owners to secure financing. Coupled with interest rate hikes affecting the private sector at large, this has significantly reduced the pool of potential car buyers relying on auto loans.
The remaining market participants consist mainly of investors willing to part with their money and cash buyers with savings. However, this group is shrinking as automobiles become more expensive, and supply constraints persist due to lingering issues with letters of credit limitations for over a year.
Interestingly, despite an overall decrease in market share, the percentage of LCVs and SUVs has risen to 22% of the total. This shift is attributed to the introduction of new models and competitors, such as Hyundai’s Tucson and Sazgar’s Haval, which generated considerable interest.