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The Pakistan Credit Rating Agency Limited
Press Release

Date
06-Feb-21

Analyst
Harris Ghaffar
harris.ghaffar@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 Maintains Entity Ratings of Loads Limited

Rating Type Entity
Current
(06-Feb-21)
Previous
(06-Feb-20)
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The ratings reflect the niche industry positioning of Loads Limited in the auto parts industry. With a presence of up to four decades in the automotive industry, the company has established a considerable forte in the domestic market along with a committed client base. Post June-20, the auto sector has started to regain its momentum; currently it is growing at a considerable pace. Decline in discount rate is also a major contributing factor in growth, enabling auto financing and savings on borrowings. The company employs its specific business model i.e., working through subsidiaries catering to the current product suite, Multiple Auto parts Industries (Private) Limited, Specialized Auto parts Industries (Private) Limited and Hi-Tech Alloy Wheels Limited. Loads has an admirable market share (~95%) in the sales of exhaust system, strength in this segment emanates from exclusive agreements signed with the leading OEM’s (Suzuki, Toyota and Honda) in the country and technical collaborations with international players. The other prominent products include metal sheet components and radiators.

Loads Limited is gearing towards further diversification and is in the process of completing an Alloy Wheels plant under Hi-Tech Alloy Wheels Limited. The plant completion is advancing but there are certain challenges on the way like COVID-19 and rupee devaluation has interrupted the momentum but management is committed to resolve all issues including arrangement of remaining portion of requisite funding. The recent right issue of PKR 1,000mln is pivotal; it will inject much needed liquidity to pay off liabilities and supplement working capital needs. The IPO of Hi-Tech or strategic partnership could be resorted to for further advancement on Alloy Wheels Plant completion. The company is engaging new automotive players emerging in the industry to increase its business volumes, focus remains to augment business and financial profile of Loads Limited.
The ratings are dependent on the management's ability to sustain the financial risk profile while embarking into the new business venture. Maintaining market share in all segments remain crucial. The sustained uptick in recent topline and size of gross profit is crucial, while buffering cash flow position from internal and external income. Timely and seamless COD, followed by envisaged pattern of sale, at the new project is important.

About the Entity
Loads Limited was established in 1979 as a private limited company. The company was converted to a public limited company in 1994 and was listed on Pakistan Stock Exchange in 2016. The company is engaged in the manufacturing of auto parts for passenger cars, buses, tractors and trucks while also participating in the spare parts market. The auditors for the company, KPMG Taseer Hadi & Co, expressed an unqualified opinion on the latest financial statements. Sponsored by Treet Corporation Limited, a group dealing in razor blades, soap, batteries and motor cycles, the company has a seven-member board of directors. The board includes two Non-Executive Directors including the Chairman, Mr. Syed Shahid Ali . The CEO - Mr. Munir K. Bana, a Chartered Accountant, has been associated with the company for 25 years. An able management team assists him.

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.