PACRA Assigns Initial Entity Ratings to EXIDE Pakistan Limited

EXIDE Pakistan Limited (EXIDE) is a pioneer in the battery industry; it has presence in Pakistan since 1953. EXIDE offers wide range of batteries, catering the demand of automotive, industrial, and household portable energy backup solutions. Demand of automotive battery picked up to match unprecedented growth in automobile sector due to favorable policy rates. Overall economy has witnessed recovery after ease of pandemic and created a positive impact on industries at large. To serve this surge in demand all battery manufacturers are operating on their higher capacity utilizations as against, over supply situation in previous years. In-line with the industry dynamics EXIDE revenues posted a healthy growth ~ 34% as of year-end March-21 and similar growth pattern has been observed during six months Sep-21 financial results. The Company was able to achieve breakeven on year-end March-21 and also reported slight profits in Sep-21, there is still room for improvement. The market share is expected to stand around ~ 20%. On the other side challenges like stiff competition, low margins are expected to sustain in future. The Company is well aware of any technological shift and associated demand within battery sector and have appropriate plans intact for its adoption. By understanding the need of market the Company has introduced a “Tubular Battery” which has a deep cycle technology, ideal for industrial/household long power back-up solution i.e. Solar & UPS. As a part of product diversification EXIDE is also offering end-to-end solar power backup solution for industrial/household customers and will build its market share gradually. The sponsors have a good understanding of the business and the Company is led by experienced management. Financial profile of the Company is demonstrated by stretched working capital and moderate cash flows & leveraging where borrowings are mainly comprising short term.
Ratings are dependent on upheld market share with improvements in profits and margin while retaining sufficient cash flows and coverages. However, adherence to maintain its debt metrics at an adequate level is a prerequisite.

About the Entity
EXIDE Pakistan Limited was incorporated in Pakistan in 1953 as a private limited company in association with Chloride Group PLC of United Kingdom and got listed on the Karachi Stock Exchange in 1982. EXIDE is majority owned by the Hashwani Family (75%) while the financial institutions and the general public hold approximately 25% of the company shares. Over the years, no major change has been observed in the shareholding structure. Mr. Altaf Hashwani is the Chairman of the Board. Mr. Arshad Shahzada is the managing Director/CEO of the company.