Wajahat Arjumand Ansari
PACRA Maintains Entity Ratings of Loads Limited
The ratings reflect the niche industry positioning of Loads Limited (the Company) 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. Increase in discount rate is a concerning factor for auto financing however, momentum is continuing especially in self-financial vehicles purchases. 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 Limited 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 in Mar-21 is pivotal; it provided the 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. This is crucial. 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 and completion of the new ventures remain crucial. The sustained uptick in recent topline and size of gross profit is essential, 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.
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 26 years. An able management team assists him.