Karachi: Millat Tractors Ltd. (MTL) continues its operational activities despite facing significant challenges with the supply of tractor parts and unresolved tax refund issues, according to a disclosure made to the Pakistan Stock Exchange.

The disclosure, following Sections 96 and 131 of the Securities Act, 2015 and Clause 5.6.1 of the Rule Book of the Pakistan Stock Exchange Limited, aims to clarify concerns raised by a recent report in the "Daily Dawn" dated Friday, August 9, 2024. The report had suggested a potential halt in operations due to vendors stopping the supply of tractor parts to assemblers.

According to information available from the Pakistan Stock Exchange (PSX), MTL confirmed that its operations have not ceased and reassured stakeholders that it would promptly notify the exchange should such an event occur. The company also highlighted the tax challenges it faces, noting that the Goods and Services Tax (GST) on tractors is set at 10%, whereas the GST on all input raw materials stands at 18%. This disparity has led to a buildup of tax refunds due from the Federal Board of Revenue (FBR), which has yet to implement a mechanism for processing these payments.

Despite these challenges, MTL is maintaining limited sales and bookings, restricting them to agricultural loan customers. This limitation has led to an accumulation of Completely Built-Up (CBU) inventory and a strain on working capital. MTL has reached out to the FBR for clarification on these tax issues. The company warned that if these issues persist and if there is a delay in receiving necessary clarifications from the FBR, it might consider a shutdown of operations.

Stakeholders, including TRE Certificate Holders of the Exchange, have been advised of the situation as it develops. MTL’s proactive communication aims to ensure transparency and maintain investor confidence during these turbulent times.