PACRA Maintains Entity Ratings of Loads Limited

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). Earlier persistent economic instability, inflationary pressures, and exchange rate fluctuations had impacted the Company's overall performance. Pakistan's auto industry is fairly fragmented. The demand is primarily driven by auto sales and is met through OEMs, replacements, and export markets; while the remaining is met through imports. During FY24, production level and, thus, sales of the auto industry posted a decline, primarily due to import restrictions imposed by the SBP. Lately, as the sector's overall outlook has begun to stabilize, Loads management has diversified its revenue-generating avenues, i.e. a mix of OEMs, replacement/aftermarket (RM) sales, along with identifying and catering to export orders. This, along with a reduced quantum of debt on the balance sheet, gives a breather. In the meantime, technical and financial support from the Group - Treet Corporation - adds the requisite respite, thus providing comfort to the ratings. On the Group level, a considerable revamp in the overall financial position and performance is also visible and adds cushion. The Company's business risk profile, including margins, is gradually picking up; thus supporting the Company's overall performance. Earlier, the Company had to impair the investment in its subsidiary company, Hi-Tech Alloy Wheel Limited ('Hi-Tech'), as its commissioning was considerably delayed due to economic uncertainty and a downturn in the auto sector. Lately, cautious cost control efforts have revived the Company's profits. This, along with the management's stringent efforts to sell the asset (Hi-Tech), is expected to bring in substantial liquidity. The Company had working capital-related challenges and a declining equity base. However, the ongoing efforts are expected to stabilize the otherwise weak financial risk profile. The Company seems fairly able to timely and successfully materialize the envisioned initiatives; this remains imperative to the ratings. A strong governance framework and managerial practices are beneficial.
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 a challenging industry environment are pertinent. Moreover, prudent management of financial affairs remains important.

About the Entity
Loads Limited ('Loads' or 'the Company') was established in 1979 as a private limited company and was 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 BoD; while, Mr. Mohtashim Aftab heads the Company as the CEO. They are assisted by team of experienced professionals.