PACRA assigns Initial rating to Loads Limited - ICP-1 - Dec-22 - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- January 30, 2023 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

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The assigned ratings of Loads Limited reflect the niche industry positioning in the auto parts industry. With a long-lived presence of up to four decades in the automotive industry, the Company has established a considerable forte in the domestic market along with a committed client base. Pakistan's automotive and allied industry witnessed a dip owing to economic instability, persistent inflationary pressures and policy rates hikes. The rising input costs of imported raw materials suppressed the profitability of all players in the automotive segment. The Company employs its specific business model i.e., working through subsidiaries catering to current product suite.

Loads Limited has segment concentration risk with 3W accessories contributing majority to total sales. Though, the Company has a long association with reputed OEMs, the revenue base remains concentrated with top two customers contributing to ~81% to its operating revenue and a single customer contributing to ~54% in FY22. The high dependence on one of the OEMs exposes the Company to fluctuation in 3W sales and profitability dependent on the key customer's growth plans. Moreover, Loads Limited is gearing towards further diversification and is in the process of completing Alloy Wheels plant under Hi-Tech Alloy Wheels Limited. The ramp-up of operations and the ability to derive the envisaged benefits will remain crucial from the credit perspective.

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