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The Pakistan Credit Rating Agency Limited
Press Release

Date
22-Feb-19

Analyst
Muhammad Obaid
muhammad.obaid@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Upgrades Entity Ratings of Toyota Jinnah Motors (Pvt.) Limited

Rating Type Entity
Current
(22-Feb-19 )
Previous
(26-Sep-18 )
Action Upgrade Maintain
Long Term BBB BBB-
Short Term A2 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 imposes on the dealer’s network. The rating takes comfort from Toyota Jinnah’s alliance to Indus Motor Company – owned by Habib Group, Toyota Motor Corporation and Toyota Tsusho Corporation. Toyota Jinnah Motors (TJM) operates as 4S car dealership. Toyota Jinnah has built a sustainable position in the competitive industry of Pakistan. The volumes are rising, so are the profits. Toyota Jinnah Motors has seen rising business in its early years of operations. It is important to sustain the growth while managing the rising competition, which is more of the principal’s domain. The profitability is being supplemented by the 'After Sale' segment - reporting net profitability for the dealership and covering its operational cost. Hence limiting and/or cushioning the unforeseen drag on the risk absorption capacity. The dealership also hails good position in the Customer Relationship. Foreign players are also taking interest in the local market. The financial risk profile of Toyota Jinnah Motors is adequate. The company intends not to raise any long term debt borrowing in future.
The ratings are dependent on the management's ability to sustain its business profile while benefiting from positive demand fundamentals; financial discipline/transparency is crucial. Moreover, strengthening of governance framework is pivotal for any growing business concern.

About the Entity
Toyota Jinnah Motors, incorporated on Jan 17, 2014 as a private limited company and inaugurated its operations on 2nd June 2016. The Company was incorporated to set up 3S authorized dealership (Sales, Service and Parts) of Indus Motor Company Ltd, the partners of Toyota Motor Corporation Japan. The Company is owned by sponsoring family. Mr. Khursheed Ahmad is Chairman and his nephew Mr. Asad Munir is the CEO of the company.

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.