The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Upgrades Entity Ratings of Panther Tyres Limited

Rating Type Entity
Action Upgrade Maintain
Long Term A A-
Short Term A1 A2
Outlook Stable Stable
Rating Watch - -

Panther Tyres Limited has built strong brand equity. In an industry, which is volume driven and price sensitive, brand name provides inherent strength. This has enabled the company to sustain its market share. Panther Tyres has strong positioning in its respective niches. The company has a formidable market share in 2 & 3 wheeler tyres, tractor tyres, and tubes segments. The company has recently expanded its product range and introduced two new types of tyres which are related to trucks and buses and earth movers (caterpillar). The company has received favorable market response in these new segments. The distribution network designed along product lines and nature of segment plus longstanding relationships with Original Equipment Manufacturers (OEMs) are of crucial help. The sponsors have built a strong management team with a wholesome mandate: roles are clearly demarcated with high degree of delegation. The new leadership from the sponsor side is in full control. The company has improved its overall organization structure and is inculcating financial transparency as per Code of Corporates Governance. Further, role of chairman and CEO has been segregated and four new directors including 3 independent directors have been elected on the board to strengthen the governance of the company. All in all, the company is poised for listing. Revenue stream is segmented into OEMs and Replacement Markets (RM), wherein (RM) has a higher inclination. The company's financial risk profile is demonstrated by stable margins, healthy coverages and adequate capital structure. Despite Covid19 outbreak with associated lockdown period the company managed to sustain its growth in revenues and margins during FY20 and 1QFY21 which show consistency in growth. Export side of the company is gradually escalating, currently the company exports 2, 3 & 4 wheeler tyres to 12 countries in the world. The management believed that grey channels are curtailed thus demand from replacement market is expected to rise in future which will be complemented through planned capacity expansion, whereas the OEMs demand will be subject to multiple challenges.
The ratings are dependent on the management's ability to sustain its business profile with cautious management of market risks, increase in international outreach and improvement in governance structure.

About the Entity
Panther Tyres Limited is an unquoted public limited company incorporated in 1983. The company is primarily engaged in the production of tyres and tubes of vehicles. Panther is the pioneer in the motorcycle tyre manufacturing industry of Pakistan. The company sells its product with the brand name "Panther: and it has since been renowned for quality products.
Mian Iftikhar Ahmed, a renowned businessman, along with his family owns the entire shareholding of the company. He has served as the chairman of All Pakistan Tyres & Tubes Manufacturers Association. The overall control of the company vests in seven members (Board of Directors). Out of seven, three are executive directors including the chairman, one is a non-executive member of the sponsoring family and remaining three are independent directors. Mian Faisal Iftikhar is the CEO of the company and is supported by a team of qualified and experienced professionals.

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.