For the year ended December 31, 2022, Pak Suzuki Motor Company (PSMC) recorded a large loss of Rs6.3 billion and $184 million in unpaid international liabilities.
The company had outstanding foreign liabilities of $184 million at year’s end (December 31, 2022), which escalated to comparable $218 million after year’s end, according to a notice sent to the Pakistan Stock Exchange (PSX) on Monday.
Tahir Abbas, Head of Research at Arif Habib Limited (AHL), noted in an interview that these are dollar-denominated liabilities that keep expanding with the dollar’s strengthening versus the rupee. In just one year, the rupee has depreciated against the dollar by around 65%, from around Rs 175 to about Rs 280 to a dollar.
According to Abbas, because businesses purchase their raw resources from foreign nations in dollars, they must reimburse them in dollars as well. Yet, the company’s liabilities are growing as a result of the situation in the country.
“Up to December 31, 2022, the company incurred an exchange loss of Rs3.55 billion on foreign currency transactions and balances,” said Pak Suzuki, adding that, “After the year end, the rupee to dollar parity has further deteriorated and resulted in a massive unrealized loss of approximately Rs9 billion—which may impact the equity of the company in 2023.” Â
“If the foreign currency liability is not paid due to the restrictions imposed by the State Bank of Pakistan (SBP), the exchange loss of the company would further increase, which would adversely impact the equity of the company in the financial year 2023,” added the statement.
