PACRA Upgrades Rating of Honda Centre (Private) Limited

Lahore, February 25, 2019 (PPI-OT): Car dealership (authorized) rides on the strength of the Principal (auto manufacturer/assembler). The stronger the Principal in the respective market, higher is the standing of the car dealer. There is a pre-defined set of criteria – qualitative and quantitative – that the Principal demands of the dealer network. The rating takes comfort from Honda Centres’ alliance to Honda Atlas Cars Pakistan Limited– owned by Atlas Group and Honda Motor Company Limited, Japan. Honda Centre is one of the largest authorized 3S dealership for Honda Atlas Cars Pakistan Limited in Pakistan.

Honda Centre (Pvt) Limited (HC) has been in the auto dealership industry for over a decade now. The sponsors have a good understanding of the business. The company’s profitability and leveraging are good. The sponsors have injected a sizeable amount as a subordinated debt. The overall auto sector business is dependent on economic indicators and demand led by businesses and investors. Honda Centre has built a sustainable position in the competitive auto industry of Pakistan. The volumes have seen substantial jump; with consequent rise in topline and profitability.

This is an outcome of the dealership’s well-articulated plan to link-up with some financial institutions to cater to the leasing market. Honda Centre has captured adequate market share over a decade of operations. It is important to sustain the growth while managing the rising competition, which is more of a Principal’s domain. Foreign players are also taking interest in the local market. Control environment may be strengthened by including independent directorship and adopting quarterly accounts.

The ratings are dependent on sustaining a steady revenue stream and financial risk profile. Any prolonged downturn in subdued business volume can have a detrimental effect on the rating. Good corporate governance practice is considered pivotal for a growing business concern.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425