Loads Limited was established in 1979 with the purpose of manufacturing auto parts (exhaust systems, radiators, sheet metal components). Commercial production started in 1985 with the first order from Pak Suzuki Company. In 1987, the company started manufacturing parts for buses, trucks and tractors. Expansion into export market was achieved in 1989, when the company started selling radiators to Land Rover in the United Kingdom. In 1994; Loads Limited was converted into an unlisted public company.
Loads Limited has three fully owned subsidiaries namely Specialised Motorcycles (Pvt) Ltd, Specialized Autoparts Industries (Pvt) Ltd and Multiple Autoparts Industries (Pvt) Ltd. Loads Limited is part of the well-recognised Ali Group that includes listed companies such as Packages Limited (PSX: PKGS), IGI Insurance Limited (PSX: IGIIL), Treet Corporation Limited (PSX: Treet). The main sponsor of the company is Treet Corporation with a holding of 20 percent. The
management of Loads Limited is in the able hands of Mr Munir Bana who is the CEO. Mr Munir Bana is a qualified Chartered Accountant and also serves on the board various companies. He also served as the chairman of Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) for the year 2012-2013 Recently Loads Limited has filed for an Initial Public Offering (IPO) and the proceeds will be utilised for expansion and modernisation of its production facilities and easing the working capital requirement.
IPO Purpose
Pakistan automobile sector is going through a golden period. The demand is increasing every year and Loads Limited wants to place themselves in a position from where they can able absorb the projected growth in this sector. According to the documents filed by the company, the total requirement of funds is 750 million rupees, of which 550 million rupees will be used for expansion and modernisation, while 200 million rupees for working capital.
To accelerate its expansion, the company has already opened LC facilities for the import of six machineries worth 488 million rupees. The company has planned to complete both expansion and modernisation by second quarter of FY18. To achieve the above objectives, Loads Limited will be issuing 50 million ordinary shares which will represent 40 percent of the post IPO paid-up capital. The book building portion of the issue will comprise of 35.625 million shares while the retail issue will have 14.375 million shares on offer.
A base price of 15 rupees has been set by Loads in consultation with its IPO manager and book-runner. Any excess funds received from the IPO will be used to pay off short term liabilities.
Historical Performance
Loads Limited track record over the last few years has been outstanding. During the past five years the company has posted revenue CAGR of about 17 percent, while its net profit CAGR has been 8 percent. The company has been able to achieve this growth on the back of technical collaboration with numerous Japanese companies. Employees are sent on rigorous training sessions every year to Japan and Thailand. The skill-set acquired by these training sessions has enabled the company to maintain exemplary quality and venture into new variants of its product line.
Government schemes such 'Apna Rozgar 'and 'Tractor scheme' have also helped the company to boost its sales and maintain high level of capacity utilisation.
Sales Composition and Market Share
Main component of the company's sales mix is the exhaust system, which contributes 63 percent towards the overall revenue. Contribution from radiators and sheet metal components stands at 20 and 17 percent, respectively.
Loads Limited market share is 100 percent in exhaust systems and sheet metal components as far sales to Indus Motors and Honda Atlas is concerned. In the radiator segment, where the main customers are the truck and bus manufacturers (Hinopak, Ghandhara Nissan etc), the market share here is also 100 percent.
Future Outlook
According to the estimates submitted by Loads Limited, the company expects to increase its revenue by an average of 25 percent starting from FY17. The main thesis behind this growth is the expansion that would be carried out from the IPO proceeds ultimately resulting in sales due to its high market share.
Pakistan averages 18 vehicles per 1,000 persons which are significantly lower than that of countries such as Indonesia at 69 and Iran at 200. This ratio would increase as the GDP grows; disposable income rises and car financing rates get slashed down.
The management believes that with the new auto policy in place, the arrival of new entrants would also bode well for the consumers and the market would expand further. Currently all incumbents are also in the process of announcing expansion.
Loads Limited being a key player in the auto sector value chain (OEM and replacement market) would have valuable insight into what car manufacturers and consumers are thinking and doing. Their decision to expand and modernise comes on the back of thirty years of delivering, learning and experience.