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The Pakistan Credit Rating Agency Limited
Press Release

Date
16-Jan-25

Analyst
Faiqa Qamar
faiqa.qamar@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
(16-Jan-25 )
Previous
(16-Jan-24 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Negative Negative
Rating Watch Yes Yes

Pakistan's auto industry is a part of large-scale manufacturing, accounting for ~73% of the overall value of manufacturing activities within the country. The industry is fairly fragmented with a large number of players. There are over ~2,000 Automotive Parts vendors in Pakistan, of which ~400 vendors belong to the Tier-1 category and are suppliers for the OEM market. The demand is primarily driven by auto sales and is met through OEMs, replacements, and export markets; while the remaining is met through imports. However, during FY24, production level and thus, sales of the auto industry posted a decline, primarily due to import restrictions imposed by the SBP; encompassing essentials like CKD and SKD kits. Overall the sector’s margins remain sensitive to inflation, interest rates, and exchange rates.
Loads Limited ('Loads' or the Company') is associated with Treet Corporation. The assigned ratings reflect the Company's position in the niche market of automotive products. Loads is a prominent automotive parts manufacturer catering to Original Equipment Manufacturers (OEMs) and Replacement/Aftermarket (RM). Persistent economic instability, inflationary pressures, and exchange rate fluctuations have impacted the Company's overall performance. Subdued topline, a decline of ~0.1% during FY24 driven by a volumetric dip of ~29% and reduced business margins has impacted the Company's overall performance outlook. Profitability remains impacted due to impairment booked on the markup to be received from Hi-Tech Alloy Wheel Limited ('Hi-Tech'), a subsidiary company. The Company holds a significant investment in Hi-Tech and its commissioning got delayed due to economic uncertainty and a downturn in the auto sector. The expected sale of the asset (Hi-Tech) may bring in substantial liquidity to manage the Company's repayment schedule. However, materialization of the same remains a challenge. This along with working capital related challenges and a declining equity base remains critical. The financial risk profile is weak. However, the management projects to revive and diversify the revenue generating avenues, and envisions to strategize its financial risk by managing the overall debt quantum on the balance sheet. Timely and successful materialization of these initiatives remain imperative. In the meantime, technical and financial support from the sponsors add the requisite respite; thus, provides comfort to the ratings.
The ratings are dependent on the Company’s ability to improve its business risk vis-à-vis financial risk profile along with a strategy revamp to sustain the margins. Cautious management strategies amidst challenging industry environment are pertinent. Moreover, prudent management of financial affairs remains important.

About the Entity
Loads Limited ('the Company') was established in 1979 as a private limited company and got listed on Pakistan Stock Exchange in 2016. The Company is mainly engaged in the production of auto parts namely: exhaust systems, metal sheet components and radiators. Major stake of ~37.67% is held by Mr. Syed Shahid Ali. Mr. Shahid chairs the Company's BoD; while, Mr. Mohtashim heads as the CEO, and is assisted by team of experienced professionals.

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.