PACRA Maintains Entity Ratings of Hyundai Nishat Motor (Pvt.) Limited

Hyundai Nishat Motor (Pvt.) Limited’s (“the Company” or “HNMPL”) ratings reflect a strong financial strength and business profile of the sponsors as the company is a Joint Venture among three leading business groups: Nishat Group, SOJITZ Corporation (Japan), and Millat Tractors Ltd. The presence of Pakistan’s eminent business conglomerate, Nishat Group, and Japan’s leading general trading Company- Sojitz Corporation (a trading partner of Hyundai in Pakistan) having expertise in auto parts manufacturing and trading, as the major shareholders provide comfort to the ownership of the company. HNMPL’s core operations are to assemble and distribute a range of Hyundai brand vehicles in Pakistan, including passenger cars, light commercial vehicles, vans, and others.
The Company operates in the premium segment of cars which comprises vehicles in the C-segment (Hyundai Elantra, Hyundai Tucson), D-segment (Hyundai Sonata, Hyundai Santa Fe), and Pickups (Hyundai Porter) in terms of CKDs and Light commercial vehicles (Hyundai Staria ) in terms of CBU. During CY23, Hyundai introduced its locally assembled 7-seater HEV, Hyundai Santa Fe, to cater to the growing demand for Hybrid vehicles in the market. The board of HNMPL comprises highly experienced members with extensive technical expertise and a strapping industry-specific experience. The board effectively provides strategic advisory and oversight augmented by a team of professionals and industry specialists to run the Company's operations.
During recent years, the automobile sector of Pakistan has witnessed a significant downturn on the back of dwindling macroeconomic factors including high inflation and extensive PKR depreciation coupled with elevated interest rates, these have increased the cost of imported raw materials and finance costs and triggered substantial price hikes. Non-lucrative vehicle financing and high inflation have also diminished the purchasing power of consumers. As per PAAMA’s statistics, a substantial decline of ~64% was witnessed in the vehicles’ sales during CY23. (82,216 units sold in CY23 compared to 227,407 units sold in CY22) Although, a relatively new player, the Company has introduced 05 CKD variants in a brief time. In terms of volume, Tucson is their prime selling product, followed by Porter, Elantra, Sonata, Staria and Santa Fe.
As per the financial information shared by HNMPL management, the company’s topline has shown a decline of 12%. However, the profitability margins have improved at all levels. HNMPL has offloaded a significant portion of its borrowings through the injection of PKR 9,000mln as equity. The Company’s financial risk profile is considered good with comfortable coverages, cashflows, and a stretched working capital cycle depicting industry’s norm. Capital structure is leveraged where borrowings are mainly comprised of long-term to support BMR.
The ratings are dependent upon sustainability in the Company’s revenue growth, profitability margins, and vigorous financial matrix. The ability of the Company’s Cashflows to meet the operating expenses of the Company is considered pivotal. Sponsors’ support remains imperative for the ratings.

About the Entity
HNMPL is a private limited company incorporated on March 03, 2017, under the Companies Act, 2017). The shareholding consists of Nishat Group 44.14%, SOJITZ Corporation 40.0%, and 15.86% by Millat Tractors Ltd. The board consists of eight members, two executive and six non-executive directors. Mr. Mian Raza Mansha is the board chairman and Mr. Mian Hassan Mansha is the CEO.