The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Obaid

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PACRA Maintains Entity Ratings of Honda Centre (Pvt.) Limited

Rating Type Entity
Action Maintain Initial
Long Term BBB BBB
Short Term A3 A3
Outlook Stable Stable
Rating Watch - -

Car dealership (authorized) rides on the strength of the Principal (auto manufacturer/assembler). The stronger the Principal in the respective market, higher is the standing of the car dealer. There is a pre-defined set of criteria – qualitative & quantitative – that the Principal demands of the dealer network. The rating takes comfort from Honda Centres' alliance to Honda Atlas Cars Pakistan Limited– owned by Atlas Group and Honda Motor Company Limited, Japan. Honda Centre is one of the largest authorized 3S dealership for Honda Atlas Cars Pakistan Limited in Pakistan. Honda Centre (Pvt) Limited (HC) has been in the auto dealership industry for over a decade now. The sponsors have a good understanding of the business. The company’s profitability and leveraging is good. The sponsors have injected a sizeable amount as subordinated debt. The overall auto sector business is dependent on economic indicators and demand led by businesses and investors. Honda Centre has built a sustainable position in the competitive auto industry of Pakistan. The volumes are rising. Honda Centre has captured adequate market share over a decade of operations. It is important to sustain the growth while managing the rising competition, which is more of a Principal’s domain. Foreign players are also taking interest in the local market. Control environment may be strengthened by including independent directorship and adopting quarterly accounts.
The ratings are dependent on sustaining a steady revenue stream and financial risk profile. Any prolonged downturn in subdued business volume can have a detrimental effect on the rating. Good corporate governance practice is considered pivotal for a growing business concern.

About the Entity
Honda Centre was incorporated in 2007 as a private limited company. It was incorporated to function as an authorized 3S (Sales, Services and Spare Parts) dealership for Honda Atlas Cars Pakistan Limited. The dealership is owned by the three brothers from the sponsoring family. Mr. Yasir Raza as the CEO and Mr. Taimur Raza and Mr. Hassan Raza as executive directors.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.