September 11, 2019 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained the entity ratings of Loads Limited at ‘A’ for long-term and ‘A1’ for short-term. The outlook on the assigned ratings is ‘stable’.
As per the press release issued by PACRA, the ratings reflect the strong industry positioning of Loads Limited in its respective niche. With a presence of up to four decades in the automotive industry, the company has established a formidable forte in the domestic market along with a committed client base.
The company employs its specific business model i.e. working through subsidiaries catering to the current product suite, Multiple Autoparts Industries (Private) Limited and Specialized Autoparts Industries (Private) Limited.
Loads Limited has nurtured its relationship over the years with the OEMs, providing comfort to the ratings. The company 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 company is gearing towards further diversification and venturing into manufacturing of Alloy Wheels. A new subsidiary, Hi-tech Alloy Wheels Limited, has been formed for the upcoming project. Commercial production is expected towards the end of the year. The company intends to go for an IPO to partially finance the new project.
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 coverages.
