Lahore, February 22, 2023 (PPI-OT):Hyundai Nishat Motor (Pvt.) Limited (“the Company” or “HNMPL”) ratings reflect a sponsor’s strong financial strength and business profile. The Company is considered inceptive among the other three established auto OEMs (Honda, Toyota and Suzuki) operating in Pakistan. The Company is a joint venture among three leading national and international business groups; Nishat Group, Sojitz Corporation (Japan) and Millat Tractors Ltd. The presence of Japan’s leading general trading Company- Sojitz Corporation (trading partner of Hyundai in Pakistan) having expertise in auto parts assembling and trading as one of the major shareholders provide comfort to the ownership of the HNMPL. The Company’s core operations are to carry out the assembly and distribution of the Hyundai brand vehicles in Pakistan including passenger cars, light commercial vehicles, vans and others.
The Company operates in the premium segment of cars which consists of the C-segment (Hyundai Elantra, Hyundai Tucson), D-segment (Hyundai Sonata) and Pickups (Hyundai Porter) in terms of CKDs and Light commercial vehicles (Hyundai Staria) in terms of CBU. Hyundai offers a passenger car product power range starting from 1600CC to 3500CC. The board of HNMPL is more of an advisory nature as all members are well-experienced and possess technical expertise along with strapping industry-specific experience. A team of professionals and industry specialists augments the Company’s operations.
Currently, the automotive industry is facing a downturn due to various challenges such as overall economic contraction, consistent hikes in policy rates, massive rupee devaluation resulting in higher raw material costs and frequent price escalations, and import restrictions on CKD kits triggered non-production days. Pakistan Automotive Manufacturers Association (PAMA) recent statistical data revealed a ~40% decline in the sales of passenger cars during 1HFY23 (68,900 units sold) as compared to the same period last year (114,774 units sold). In 2 years, the Company has produced 04 variants in terms of CKDs. In terms of volume, Tucson is their prime selling product followed by Elantra, Hyundai Porter, Sonata and Staria. In the recent quarter, the margins of the Company have shown a slight decline mainly on the back of under-stress volumetric growth and higher finance cost.
As per the financial information shared by HNMPL management, fresh equity of PKR 9.0bln was injected in December-22 to unload short-term debt from its balance sheet and optimize the finance cost and capital structure. As of January 2023, HNMPL has paid off all of its short-term loans and has partly cleared long-term loans as well. The Company’s financial risk profile is considered adequate with comfortable coverages, cashflows and a working capital cycle. Capital structure is moderately leveraged where borrowings are only comprised of long-term to support BMR.
The ratings are dependent upon sustainability in Company’s revenue growth, margins, profitability and vigorous financial matrix. The ability of the Company’s Cashflows to meet the operating expenses of the Company is considered pivotal. Sponsors’ support remains imperative for the ratings.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com