Pak Suzkui Motor Company will avail a financial facility of Rs. 744 million from Meezan Bank to set up a plant of automobile glass manufacturing within its associated company, Techno Auto Glass (TAG) Ltd.
According to the stock filing, the decision was taken in the board meeting held recently which resolved that company may seek approval of its members to be authorized to issue Corporate Guarantee up to Rs. 744 million to Meezan Bank Limited for Tecno Auto Glass Limited.
A corporate guarantee is a guarantee to a bank that a loan will be repaid, guaranteed by a company other than the one who took the financing. Typically, a larger company (often a parent company, (Pak Suzuki in this case) will make the guarantee on behalf of a smaller company which may not be well known or have developed a relationship with the lender.
The establishment of the new plant is being carried out mainly for the expansion of the localized manufacturing and engineering unit in Pakistan in the automobile and its related industry.
This unit will cater to the rising needs of glass related parts being used in the passenger cars and commercial vehicles, which have high demand at present in the local market.
Not only the demand of local industry will be met through this unit, but the generation of skilled jobs is on the cards in automobile and its related sector.
Tecno Auto Glass is a joint venture between Pak Suzuki and Techno Pack Telecom (Pvt) Limited (TPT) where Pak Suzuki holds 40% of paid up capital and the rest 60% with be with TPT and its nominees.
Pak Suzuki Motor Company is investing long term equity investment of Rs344.4 million by way of purchase of 34,440,000 ordinary shares of Rs10 each for setting up Tecno Auto Glass Limited.
The final approval will be taken in the extraordinary meeting to be held in October 30, this year.