PACRA Maintains Entity Ratings of Honda Centre (Pvt.) Limited

September 27, 2018: Pakistan Credit Rating Agency (PACRA) has maintained the entity ratings of Honda Centre (Pvt.) Limited at ‘BBB’ for Long term and ‘A3’ for short term. The outlook forecasted for the company is ‘stable’.

According to the rating agency, the rating takes comfort from Honda Centres' alliance to Honda Atlas Cars Pakistan Limited– owned by Atlas Group and Honda Motor Company Limited, Japan.

The report suggests that the company’s profitability and leveraging is good. The sponsors have injected a sizeable amount as subordinated debt. The overall auto sector business is dependent on economic indicators and demand led by businesses and investors.

Honda Centre has built a sustainable position in the competitive auto industry of Pakistan following a rise in its volumes. The company has captured adequate market share over a decade of operations. It is important to sustain the growth while managing the rising competition, which is more of a Principal’s domain.

“Foreign players are also taking interest in the local market. Control environment may be strengthened by including independent directorship and adopting quarterly accounts”, it added.

As per the press release, the ratings are dependent on sustaining a steady revenue stream and financial risk profile. Any prolonged downturn in subdued business volume can have a detrimental effect on the rating.

Good corporate governance practice is considered pivotal for a growing business concern, the report further added.
Honda Centre was incorporated in 2007 as a private limited company. It was incorporated to function as an authorized 3S (Sales, Services and Spare Parts) dealership for Honda Atlas Cars Pakistan Limited.

It is one of the largest authorized 3S dealership for Honda Atlas Cars Pakistan Limited in Pakistan. Honda Centre (Pvt) Limited (HC) has been in the auto dealership industry for over a decade now.